AI rally extends on resilient tech earnings

00:00:00: Hi and welcome to Swiss Codes, Daily Market Talk.

00:00:04: Equities kick off the new week on Wave of Optimism as resilient earnings & relentless AI momentum continue to overshadow geopolitical noise around Middle East and the Strait of Hormuz and mix ecomic signals pushing technology & smile conductor names higher hence reinforcing the narrative that for now... Innovation is actually masking broader economic fragilities.

00:00:31: And well, even economic weaknesses are not necessarily bad news depending on where you sit today!

00:00:37: So we will talk about all that and more but before we do – as always please keep in mind that opinions.

00:00:45: So

00:00:53: this

00:00:56: new week kicks off on optimism, not because the Iranian war is coming to an end and to be perfectly honest with you.

00:01:03: I also try to look past headlines today as US leaders' statements sound nothing more compelling or interesting than just cheap propaganda.

00:01:12: but on Optimism.ai continues to mask the pain elsewhere.

00:01:17: And well, The Pain on US Manufacturers was unclear as Friday's manufacturing data actually clashed each other with one metric showing that things were going right and another one pointing at softer numbers.

00:01:29: Atlanta Fed GDP now forecasts on the other hand products today that U.S.

00:01:33: economic growth may have accelerated to three-and a half percent in second quarter of this year from around two per cent in first quarter though it was revised slightly down.

00:01:45: But anyway, the corporate earnings today clearly hint at resilience.

00:01:49: Sixty-three percent of the S&P five hundred companies already reported their earning so far and eighty four percent Of these companies have reported a positive EPS surprise And eighty one percent of them reported it positive revenue surprise.

00:02:06: according to fax head banks and technology Companies did particularly well in the first quarter this year on both sides of the Atlantic Ocean, while European oil companies navigate the Middle East chaos and disruptions that we see in the straight-up homes gracefully.

00:02:23: While the picture for US players such as ExxonMobil and Chevron is actually a bit more balanced than that because both companies reported earnings last Friday but they also told their profits fell this year due to Iran war disruption divergence is because US and European oil giants actually play a different game.

00:02:48: The Europeans are not just oil producers, they're also big traders.

00:02:52: so when disruption hit key roads like the Strait of Hormuz and Price's Jump well They profit from the chaos by moving oil around the world and capturing these price gaps Whereas US firms rely more on steady oil production and weaker volume seen to have weighted on their profitability as the trading upside is missing there.

00:03:14: So in simple terms, The Oil Company's results were just about higher oil prices than the first quarter.

00:03:20: but it was also about who could actually turn volatility into profits?

00:03:25: And answer for this first quarter was while Europeans did better!

00:03:29: That's rare so let us sit back a moment.

00:03:33: Anyway, ExxonMobil and Sharon couldn't bank on better than expected earnings last Friday.

00:03:39: Bell's companies gave back the pre-market gaze to finish this session.

00:03:43: more then one person down.

00:03:45: And for those who don't like volatility in oil prices to trade oil but still want to take advantage of their rising oil prices Well Oil Giants remain an interesting place till European companies stand out as a better option.

00:04:00: Speaking of crude oil, crude oil kicked off the new week.

00:04:03: Slightly lower on needs that U.S would begin guiding ships not involved in Iran conflict through the Strait of Hormuz.

00:04:11: But geopolitical uncertainties and hectic diplomacy suggest that price volatility will likely continue.

00:04:19: On other hand OPEC met over this weekend without United Arab Emirates for their very first time in six decades to announce a slide increase to their production quotas.

00:04:31: Alas, with many members now unable to move oil around due the near closure of the stratoformers, the news will likely not impact short-term price dynamics.

00:04:41: The decision was rather a demonstration of unity from OPEC countries Rather than an effective impactful move for market prices In long run.

00:04:50: however more oil means cheaper prices.

00:04:53: But right now world continues to grapple with negative effects on high energy cost due to the missing barrels, due to closure of the Strait of Hormiz in the Sanskrit Airlines for example shut down entirely as they couldn't secure funding or bail out after years of losses worsened by spike infill cost recently from the Iran war.

00:05:15: Nonefless Asian indices kicked off the week with great optimism.

00:05:20: Japan was closed but KOSPI indexing Korea rallied more than four and a half percent today to a fresh, all-time high level on AI optimism simply while the TSMC rallied nearly seven percent in Taiwan.

00:05:35: SoftBank, on the other hand which got hammered last week by the news that open AI has not met internal targets due to rising and tougher competition from rivals like Gemini and Anthropic rebound at nearly four percent of Friday on broad-AI optimism.

00:05:54: And now Zach Futures this morning are actually leading gains among major futures!

00:06:01: After extending games to a fresh all-time high level last Friday on strong cloud growth from three big cloud providers Google, Amazon and Microsoft that was actually taken as the sign of AI adoption and healthy and strong growth in this sector.

00:06:18: So this week, earnings will continue to flow in with AMD and ARM holdings in focus for the SMI Conductor investors.

00:06:26: The SMI conductors had a stellar month on April with Van Ag's SMI conductor ETF gaining nearly forty percent from beginning-to end.

00:06:37: And results of these SMI Co.

00:06:39: companies would likely be strong.

00:06:41: but whether they'll be the sky high expectations is key for continuation.

00:06:48: On the economic calendar, The Reserve Bank of Australia is expected to hype interest rates tomorrow to Iranian on rising inflationary pressures.

00:06:57: A hawkish divergence here that justifies accelerating bullish strength in the Aussie dollar above a seventy-two cents level.

00:07:04: The U.S.

00:07:05: dollar on other hand illustrating pretty flat this morning in Asia.

00:07:09: The US jobs data will be major event next week with predictions quite diverging.

00:07:16: A consensus analysts' estimates on Bloomberg's survey suggest that the US economy may have added around seventy-three thousand new non-farm jobs last month.

00:07:27: But some expect a number much smaller than that due to the AI-related job losses, while others expect an amount way higher on AI infrastructure construction related job additions.

00:07:39: In all cases The Federal Reserve decided to maintain its interest rates unchanged when it met last week remember?

00:07:45: That was during Powell's last FOMC meeting.

00:07:49: but the path of U.S monetary policy and the path off the monetary policies elsewhere as well will depend on economic data.

00:07:57: in this context the european central banks are more focused on inflation as they have a single mandate that's controlling inflation price pressures while the Federal Reserve has got a dual mandate, meaning that despite inflation risk building and soft jobs data from the US could revive the Fed doves.

00:08:17: If that's the case The technology complex could attract more inflows not only because investors are quite happy with the fact they can reduce their cost today by slashing jobs thanks to AI but also lower jobs in economy would lead to lower interest rates.

00:08:35: So bad news this week will certainly resonate as being good news and swimming against this tide, so betting on a correction right now across the global financial markets looks like it losing bet even when we're in May.

00:08:59: This episode of Market Talk has been helpful and it's been insightful to you.

00:09:04: So please, do not hesitate to leave your comments, reactions or questions below as usual!

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00:09:30: so let us know that you enjoy them.

00:09:32: So I will meet again tomorrow!

00:09:35: And until then... Good day

00:09:52: trading!