US jobs, growth, inflation data in focus |

00:00:00: Oil prices fell sharply yesterday, but rising long-term yields and a stronger US dollar kept equities under pressure.

00:00:07: So today's U.S growth jobs and inflation data will be shaping the Fed expectations while migrants' latest earnings face an exceptionally high bar now.

00:00:17: AI optimism could obviously help keep technology stocks defiant of higher yields But we'll not repair the weakening foundations underneath the broader equity market.

00:00:28: So welcome to Swisscoutes, daily Market Talk is Wednesday, the thirtieth of September.

00:00:34: I'm Ipekos Kardashian and everything i will say in this video it's based on my own opinion analysis.

00:00:50: So crude oil fell more than five percent yesterday, pulling the US two-year yield lower along with it.

00:00:56: But longer term yields just kept rising!

00:00:59: The U.S.

00:01:00: third year yields spiked past a five point sixty per cent mark – the highest since two thousand and two, the highest in twenty four years yes And the two to ten years spread wide into thirty five basis points.

00:01:13: The US dollar extended gains meanwhile while equities remain under pressure of rising long term yields.

00:01:19: Now broadly, the U.S.

00:01:21: dollar index has now extended its gaze above a key Fibonacci resistance of thirty-eight point two percent Fibbonacci resistance level on twenty thousand twenty five to two thousand twenty six selloff pushing into the medium term bullish consolidation zone The one that may mark the end off this bearish trend building since the beginning of two thousand and twenty five.

00:01:43: And as stronger US dollar regime could develop in the short run it's good developed further As long pushed to a multi-decade high levels, whether it is because strong economic fundamentals of the United States or spiraling debt levels prices that's pushing inflation higher, but it is only when investors will feel they have sufficiently pushed the hawkish Fed expectations point, but we see the gap between us two and ten year yield widen again right now following the september depth to below twenty basis points.

00:02:38: And a lot of suggest that investors are already scaling back apart off their hawkish expectations on that is comforting for the risk takers.

00:02:48: Now latter softening in the US Two Year Yield was also back yesterday by Soft Joll's data telling that job openings fell more than expected in August in the

00:02:58: U.S.,

00:02:58: to a five-month low, while consumer confidence on other hand retreated to a twelve year

00:03:04: low."

00:03:05: It's very different from the story that the S&P Five Hundred Nasdaq hundred tell us right?

00:03:10: Moving into Europe, economic data from Euro area countries looked mixed yesterday.

00:03:14: Industrial sales in Italy for example rose more than expected by analysts this month of July but Business and Consumer Survey from The Broader Euro Area actually can't is at week and weakening confidence in September in the euro area economies as inflation expectations rose further on rising energy prices due to the Middle East tensions that won't resolve.

00:03:38: And it's not only expectations, mind you!

00:03:40: Inflation in Spain actually accelerated faster than Pencilden by analysts through September hitting a five-percent mark on an annual basis as way above the two percent target that the European Central Bank has fixed for itself to keep inflation under control.

00:03:56: More inflation data are due in next hours and days.

00:04:00: Now with combo of Mexiconic data Spanish inflation couldn't give the European Central Bank hawks to strength that they needed advance in yesterday's trading session.

00:04:12: The US raise story continues to dominate the price action and the U.S.

00:04:16: dollar actually slipped below a critical technical level yesterday, at the one point thirteen fifty level which is the major thirty-eight point.

00:04:23: two percent Fibonacci retracement on twenty five to two thousand twenty six rally that distinguishes between almost two year long year appreciation against u.s.

00:04:34: dollar and end of this bullish trend.

00:04:37: As a result, the pair is now in the medium term bearish consolidation zone with potential to deepened losses.

00:04:45: Today investors will be closely watching the US ADP report, latest U.S.

00:04:49: GDP update, USPC data and cool PC data being Federal Reserve's favorite Goat of Inflation.

00:04:57: so everybody will watch.

00:04:58: these data points would allow the Federal Reserve to hike its interest rates, to fight rising inflationary pressures in

00:05:14: U.S.,

00:05:15: provided that price pressure continues look concerning.

00:05:19: And the latter scenario, the latter combination would keep upside pressure especially on short-term yields and the US dollar as well with continuing to gain while we will see some pressure on equities.

00:05:31: Then if growth in jobs data fall below expectations whilst inflation remains elevated you could see that U.S.

00:05:37: two to ten years spread narrow further and the latter could continue to threaten the risk appetite globally while eventually reversing.

00:05:45: part of is recent strength as well.

00:05:48: Then a combination of soft GDP, soft jobs and softer than expected inflation could soften the hawkish Fed expectations that would pool yields lower across the curve weaken the US dollar lower yields.

00:06:03: And there is this last scenario, strong GDP jobs data and softer than expected PC read.

00:06:10: that would be the best possible scenario The goldilocks scenario as they call it but does have a lower probability.

00:06:16: obviously It's with ease pressure on yields in support equities Obviously.

00:06:21: But again ,it is farthest away from our base case scenario of Strongest GDP.

00:06:27: growth with elevated inflation and rising inflation Is major headache off-the market and needs to be addressed.

00:06:33: Now, the S&P five hundred as a hundred are new record high levels.

00:06:37: but what's going at the index level doesn't necessarily tell the full story.

00:06:41: so we discussed in yesterdays comments long Lee S&p Five Hundred equal weighted version is actually diverging.

00:06:48: it is diverging notably and negatively compared with this market cap version hinting that The Market Breath is narrowing again right now And that if you technology companies AI related companies are masking the loss of appetite across sectors and companies.

00:07:18: If demand slows.

00:07:31: on the other hand, if there are any doubts regarding the strength of AI growth then valuations could come lower.

00:07:38: and because we have a lot but a lot of circularity and interdependence in technology variations today one weak link could trigger a broader chain reaction across the sector.

00:07:49: That would look really bad as this is the cornerstone.

00:07:53: So this brings me beautifully to micro and earnings that are due today after the closing bell.

00:07:59: The company heads into earnings with an exceptionally high bar, marketing itself guided for around fifty billion US dollars in quarterly revenue An extraordinary eighty six percent gross margin And roughly thirty one dollar in adjusted EPS.

00:08:13: strong AI driven demand For HBM and type DRAM supply remain decode drivers of course and a forward P ratio of around seven times only.

00:08:27: That gap reflects how much earnings are expected to grow from here, therefore simply meeting or even beating these expectations may not be enough guidance and signs that today's exceptional demand for chips, the pricing power of these companies and margins can be sustained.

00:08:53: Otherwise at seven times forward PEU ratio could quickly become less attractive if earnings expectations are revised lower Obviously.

00:09:02: Now, I believe that Markin has very little reason to get investors doubting about the strength of demand for his chips for the coming months, quarters and years.

00:09:11: Questions remain around the pace of development or frontier AI models and sustainability of AI spending but it's the financial weight.

00:09:19: companies like OpenAI & Anthropik carry on their shoulders today will certainly weigh heavier in decision making process and could throw a floor under any meaningful and wanted to slow down in the development of these models.

00:09:34: These companies can simply not afford as such strong migrant earnings could help AI stocks resist the pressure from higher yields by keeping cornerstone of current strong growth, solid earnings growth narrative well-lived but it won't fix cracks beneath this surface.

00:09:53: So that's all for today!

00:09:55: I'm Yipega Oskar Deshkaya and thank you for joining me.

00:09:58: Thank you to all your beautiful and supportive comments.

00:10:01: i hope this episode has been helpful and insightful so please do not hesitate to leave your comments, reactions and questions below.

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00:10:31: So I will meet again tomorrow.

00:10:33: now until then good day trading.

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