Narrative flips from AI to Middle East, but Tech hasn’t said its last word

00:00:00: The market narrative is shifting from AI optimism to Middle East worries as tensions between US and Iran flare up again.

00:00:07: And a key oil facility is targeted in the UAE, yields are rising in reaction along with U.S.

00:00:14: dollar and equities fall with pressure on European indices exacerbated by renewed trade tensions.

00:00:23: At the same time, the spotlight remains on US technology earnings.

00:00:27: Palantir's strong results yesterday after the bell failed to revive appetite while AMD is set to test whether AI-driven rally can withstand rising macroeconomic uncertainty and intensifying competition.

00:00:41: across to my conductors space.

00:00:43: So welcome to Swissco's daily market talk, it is Tuesday the fifth of May.

00:00:49: I'm Ipega Skardyshkoja.

00:00:50: we will talk about geopolitics earnings and more.

00:00:54: but before we do as always please keep in mind that opinions are on our own.

00:00:59: this not financial advice.

00:01:09: So yesterday the US announced it would escort ships through the Strait of Hormuz.

00:01:14: They called it a humanitarian operation, how nice are them?

00:01:18: Iran in reaction said that they will bomb if this happens.

00:01:21: U.S.

00:01:21: reportedly once against that warning and escorted ships outside the Strait of Hormuz, an Iran bomb ship's and a key oil infrastructure in Fujairah in the UAE.

00:01:33: That was one terminal that could eventually avoid The Strait Of Hormaz for exporting its oil as it is just on other side of the strait.

00:01:42: Unsurprisingly Oil prices spiked to nearly one hundred ten dollars per barrel level Brands to one hundred fifteen dollars per barrel mark.

00:01:52: This morning, uncertainty remains high yet we see a slight easing in oil prices.

00:01:57: now this pattern is similar to the earlier ones.

00:02:00: The one hundred fifteen to one hundred twenty dollar per barrel range Is again acting as strong resistance above this level?

00:02:08: The market shifts from pricing supply constraints To pricing Demand destruction.

00:02:14: And the latter includes rising inflation expectations, rising hockey central bank expectations and rising sovereign yields all of which were activated yesterday.

00:02:25: The US two-year yield for example spiked near the four percent level while the third year yield bridged a five per cent psychological mark.

00:02:33: Here in Europe a benchmark for European ten year yield was higher as well.

00:02:37: As such, the dominant market narrative from AI optimism to Middle East worries yesterday.

00:02:44: The US dollar index rebounded past its two hundredth day moving average.

00:02:48: as a reaction gold is to forty five hundred dollar per ounce level as a stronger US dollar and the rising yields that increase opportunity costs of holding non-interest bearing Gold way on gold appetite.

00:03:03: I believe that for gold, The fact we witness a speculative bubble right into the Middle East crisis Is also responsible For this strangely poor performance during This latest geopolitical crisis in the middle east.

00:03:18: but gold remains at excellent asset in the actual geopolitical setup.

00:03:22: This is why central banks are said to be amassing gold as prices retreat, so cheaper gold is still very interesting for long-term portfolios.

00:03:32: elsewhere there's a bank of Australia delivered its third straight rate hike today In line with expectations to rein in on inflation, the Aussie dollar is non-athletes despite a hawkish RBA decision pressured by a broadly stronger US dollar across the board.

00:03:48: It results of rising geopolitical tensions and rising oil prices as well And The U.R Dollar is testing its own two hundredth day moving average to the downside this morning while the dollar yen console days at touch below it's own hundred-day moving average, with the Japanese yen bears somehow scared of further FX intervention.

00:04:08: Now, the FX moves will likely be driven by U.S.

00:04:11: dollar in coming hours and days.

00:04:14: The higher the tensions in Middle East, the higher oil prices, and the higher the U. S. Dollar, well...the higher inflation expectations for the rest of the world that buy more expensive oil is also denominated as a stronger US dollar.

00:04:31: And the higher inflation expectation, the high coal force central banks raise their interest rates to tame these price pressures and the stronger the hawkish expectations for global central bank policies, lower appetite for risk assets.

00:04:46: Two as such major US and European indices were treated yesterday.

00:04:50: The stock's six hundred index also got hit by a notable sell-off that we saw in European callmakers on news that Trump would slap twenty five percent tariff on them arguing that Europeans do not comply with the trade pact.

00:05:02: but what trade pact?

00:05:09: But beyond the terrorism, trade war which no one knows is a thing or it's not.

00:05:14: The problem for European car makers are that they can't really replace the US market right now Because the US is pushing back against Chinese EVs, and their car market as a result will likely remain obsolete.

00:05:28: But outside these markets there are left to become increasingly obsolete by pushing back China's competition for survival while other parts of the world like Asia or Africa will likely opt-for this transition towards electric cars led kind of luxurious models.

00:05:50: And longer the Middle East tensions, higher prices at the pump and faster EV transition.

00:05:56: So to me European car makers are in trouble with or without the US market wage but without it the unravelling will be faster.

00:06:05: As per oil prices, I believe that renewed tensions and damages to key oil infrastructure in the Middle East will keep upside pressures tight.

00:06:13: Depending on developments we could at some point see a spike above the critical one hundred twenty dollars per barrel resistance.

00:06:21: yet i do not see a sustainable rise above this level as when oil becomes too expensive this expensive, the demand softens to balance out price spikes.

00:06:32: That's it for the big picture!

00:06:34: The recent spike in oil prices keeps European futures under pressure while Nasdaq futures are slightly in the positive leading gains.

00:06:43: This morning, yesterday after the battle, Palantir reported an eighty-five percent jump in his first quarter sales compared with last year.

00:06:53: Revenue was boosted by strong US military demands.

00:06:57: Alas, good results and strong guidance from this AI play didn't surface.

00:07:01: The stock price fell in the after I was trading on worry that maybe all of the good news around AI have already been priced during past few weeks rallying But keep in mind that the technology sucks didn't say their last word just yet.

00:07:19: Last week we had strong, strong results from cloud providers including Google Amazon and Microsoft And today AMD will go to the earnings confessional with expectations pointing at a solid thirty percent or plus year on your growth driven by AI and data center demand.

00:07:39: Well, of course here as well the bar is quite elevated after a strong rally.

00:07:44: we are talking about more than eighty five percent rise since the end of March Here in AMD stock price.

00:07:51: The real question isn't just the print it's whether AMD can beat convincingly especially versus NVIDIA dominance and ongoing supply constraints.

00:08:01: MVDL on the other hand Is feeling the heat these days of rising competition from AMD, but also from custom chips from hyperscalers like Amazon and Google.

00:08:11: So far none have matched Nvidia's full stack ecosystem especially its CUDA software mode which keeps it firmly in the driver seat.

00:08:20: But what a shift is happening between training and inference since awhile, inference being running the already trained AI models.

00:08:29: And keep in mind, training large models remains compute heavy complex and deeply tied to NVIDIA's ecosystem.

00:08:35: but inference is quite different game.

00:08:38: it's about cost It's about efficiency And that's where competition starts to worry.

00:08:46: Think of Google's TPUs or Amazon's Inferentia chips designed specifically for inference?

00:08:53: Anyway, let's see how AMD earnings will resonate across the stock price, across the broader industry and across their broader financial markets and whether the latter could continue to help mask the geopolitical mess for some more time!

00:09:07: So this is all for today.

00:09:09: I'm Ipeko Skardishkaya and thank you for joining me, And Thank You For All Your Beautiful And Supportive Comments!

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00:09:47: So I will meet again tomorrow….

00:09:49: Until then, good day trading!

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