Risks rise, but the bull won’t budge

00:00:00: Hi and welcome to Swisscodes, daily market talk.

00:00:03: It's Monday the seventeenth of August.

00:00:05: Middle East tensions were rising this weekend as U.S.-Iran ceasefire nears its end.

00:00:10: yet good news is that oil prices remain surprisingly steady this monday morning.

00:00:21: Global bond markets on the other hand look more nervous this morning with Japanese, Australian and New Zealand yields jumping.

00:00:27: This Monday but US yields remain steady on easing hawkish fed beds And that's helping sentiment sweet and focus on strong second quarter earnings into the European and U.S Open.

00:00:38: So we will talk about what driving in market sentiment today?

00:00:41: What to watch throughout this new week of trading.

00:00:44: But before we do as always Please keep in mind that opinions are my own and this is not financial advice.

00:01:03: And today, as soon as this Monday Israel struck Lebanon.

00:01:09: On the other hand we have news that U.S is preparing now fresh sanctions on Iran to pressure country to negotiate while Iran on its end showcased a more offensive stance last week suggesting peace isn't necessarily in sight for near future.

00:01:27: But that said, Denmark's reaction to weekend news today is quite muted.

00:01:32: Investors seem to the news on the wire that Gulf nations have somehow found ways out of the Strait of Hormuz by going dark sometimes and ferrying oil through this strait, then transferring oil into the oil tankers in the Gulf of Oman.

00:01:53: According to Bloomberg, Gulf producers actually channel more than full million barrels per day of crude out-of-the-persion gold from this way keeping oil prices in check despite the deteriorating geopolitical situation and outlook in the Middle East.

00:02:32: jobs data from the US in last weeks, but Asia yields gets higher this Monday with Japanese ten year yield jumping past a two point ninety-two percent level.

00:02:42: That's highest since nineteen ninety six.

00:02:45: We saw comparable jump in Australian and New Zealand yields this morning telling that the mood we see today was rather global than Japan century As per Japan while the rising hawkish bank of Japan expectations due to losing ground so fast but has so far failed to give support to the Japanese bonds and to the japanese yen as well.

00:03:10: So, the dollar yen this morning is softer still due to a broad-based softness in the US seller on the back of fading Fed rate hike.

00:03:19: bets soften by latest weakness in U.S jobs inflation and retail sales data As I said earlier.

00:03:26: But overall any fresh value oil prices could throw a floor under U.S.

00:03:31: dollars.

00:03:31: weakness at least in the short one temporarily because a long-term outlook for both, The US dollar and the u.s sovereign bonds looks bearish investors very much dislike the boiling Middle East war today that is costing to the us way more than it should have.

00:03:47: this world was supposed To be a few weeks operation remember?

00:03:49: And now there even news on the wire that u?

00:03:51: s doesn't have enough ammunition left to fight along war to tell how Much this is costing you the USA economy.

00:03:58: and while they're exploding us out with no such thing as budget discipline from the Trump government.

00:04:03: The trade fractions and loss of appetite for U.S.

00:04:06: generally is waiting on US debt, as national debt off the United States is about to surpass a US dollar mark!

00:04:14: And that doesn't echo well among investors.

00:04:16: – the U. S. Ten-Year Auction last week settled at the highest yield since its new year, as a thirty-year bond auction was settled past five point twenty percent double despite softening hawkish expectations reserve and for the September rate hike bets.

00:04:32: So there is a chance that rising global yields will at some point, well threaten equity risk appetite.

00:04:38: but that's not going to be the case today apparently because US and European futures are in the green of time.

00:04:45: I'm talking here this morning into weakly opening bell.

00:04:50: In fact, the second quarter earnings have been so strong on both sides of the Atlantic Ocean that investors are not willing to jump off the bat off a bull quite conscious at underlying economic and geopolitical issues around the world have not necessarily being bad for company earnings.

00:05:07: On the contrary The higher and volatile energy prices having a boon for global energy companies especially for European ones while banks printed strong quarterly results due increased activity both on trading and financing of the massive AI build out around the globe.

00:05:23: So overall, if oil prices remain unchecked keeping the central bank hogs at bay today I see little reason for investors to jump ship.

00:05:31: this week however we will have a better idea on the possible K-shaped US growth with big big retailers in the U S due to announce how they are performed quarter of this year with, remember rising energy prices that was pushing inflation and inflation expectations higher.

00:05:48: And waiting on consumer sentiment now I expect to see soft results for many of these retailers and quite a strong quarter or four those retailers who are proposing low prices to attract the consumers That have been hit by rising oil prices like Walmart For example.

00:06:04: but letter will probably not change The fact at the biggest earners off s&p.

00:06:09: five hundred earn, beg and that despise essentially weakening consumer consumption and consumer sentiment in the consumer leg of the US economy altogether.

00:06:18: On the contrary results pointing at weaker domestic conception could further Tame inflation worries for the US and that would help easing the Fed hike bets even more, hence positive pressure on the short end of U.S.

00:06:33: yield curve.

00:06:34: That's a positive development for major US indices heavy in technology and rely increasingly on debt sales to finance their massive AI build-up with free cash flow levels falling to critical and even negative levels.

00:06:51: We still continue to see that the fading hawkish fed beds are being supportive of major US indices.

00:06:58: similar story for Europe, underlying economies maybe struggling with higher energy prices and rising inflation worries.

00:07:05: but this stock six hundred index actually makes more than half its revenue outside the European continent while printed a strong, strong earnings season in the second quarter of this year.

00:07:18: And earnings were also boosted by robust energy and bank earnings here as well.

00:07:23: now The biggest stress for the european companies is obviously a renewed rise in energy prices which would then push the europeans yields higher on hawkish european central bank bet.

00:07:32: so oil prices will continue to matter for keeping the stock six hundred appetite in check near their all-time high levels.

00:07:39: Any fresh push that we might see in the brand's career about a ninety dollar per barrel level could eventually spoil sentiment across European stocks and appetite would become increasingly sensitive to energy prices if brands make.

00:07:57: Interestingly or not so much, there is one place where yields are pressured lower today despite the rising energy prices and not higher.

00:08:04: And that's China!

00:08:05: Chinese.

00:08:06: while markets diverged notably from Western and major Asian peers The Chinese ten-year yield has actually fallen to the lowest level in a year on back of the weakening consumer spending In China.

00:08:19: That keeps their Chinese economy near the cost of deflation.

00:08:24: The ten-year paypal now yields around one point sixty eight percent.

00:08:27: In two thousand four it was near five percent.

00:08:30: And a letter, along with the technology and AI support is actually supportive of Chinese stock prices.

00:08:36: Like news this morning that Alibaba's open-weight models accumulated more than three billion!

00:08:41: Yes... Three billion global downloads helps left Alibabas' stock price in Hong Kong this Monday morning ahead of Thursdays earnings from the company.

00:08:50: Zooming out, episode for Hansang Index has peaked early August on worries that the Chinese AI companies are also facing headwind due to their huge spending needed to keep up with the US rivals like open AI and Anthropic, while American AI champions OpenAI and Anthropic especially have been announcing fast-growing revenues on their ads into their upcoming iPiers.

00:09:14: So other ways is on.

00:09:15: no one can afford to lose And having a certain exposure to Chinese technology champions in this context could eventually be an interesting hedge against the impact of China's competition On Western technology peers because obviously.

00:09:30: So this is all for this Monday, I'm Ipeko Skardishkaya and thank you for joining me!

00:09:35: And Thank You For All Your Beautiful And Supportive

00:09:38: Comments!!

00:09:39: I hope This Episode Of Market Talk Has Been Helpful & It Has Been Insightful To You so please do not hesitate to leave your comments, reactions or questions below.

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00:10:09: I will meet again tomorrow and until then good day trading!

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