Borrowed stability

00:00:00: Every new point added to the S&P.

00:00:02: five hundred and as like and cost they all feel like another Jenga block balancing on borrowed stability.

00:00:09: The rally keeps climbing, dip buyers keep showing up.

00:00:12: an AI optimism search only keeps convincing investors around the world that this market can absorb absolutely anything.

00:00:20: but underneath the surface, The pressure is building fast.

00:00:23: Yesterday's US inflation data for example came in hotter than expected by analysts with both headline and core CPI figures moving away from the Fed's two percent inflation target just as oil prices are pushing back above a hundred dollars per barrel level.

00:00:40: And while global oil inventories falling at record speed Bond deals are climbing again on inflation expectations and the Middle East war remains stuck in a dangerous impasse around the Strait of Hormes.

00:00:52: So, the big question is can this keep going?

00:00:55: Welcome to Swiss Girls Daily Market Talk!

00:00:58: It's Wednesday, the thirteenth May.

00:01:00: I'm Ipeko Skardyshkaya And everything i will say here Is based On my own opinion and analysis.

00:01:06: This

00:01:14: show brought you by SWISQUO.

00:01:17: No surprise, ladies and gentlemen.

00:01:18: The US inflation accelerated in April but the data released yesterday in the U.S pointed that it accelerated more than expected by analysts for both headline and core inflation figures.

00:01:31: The former rose to three point eight percent heavily impacted by the rapid rise in energy prices .The latter, the core inflation ,the version that excludes food and energy prices due their volatile nature rose two point eight per cent year over a Both significantly higher and decidedly moving away from the Fed's two percent inflation target.

00:01:52: That was a predictable outcome of the Iranian war, which pushed U.S.

00:01:56: guests in prices around sixty-five percent higher since beginning March.

00:02:02: On the front line The Middle East War is at its stand still today.

00:02:06: Latest news suggests that the Iranian crewed exports for the main export port Kark Island have also Stopped?

00:02:13: On the diplomatic front, US and Iran are not capable of finding an agreement to open this trade-off homes.

00:02:18: Oil flows are disrupted And global oil reserves Are nose diving pushing oil prices higher.

00:02:25: Crude oil indeed was up by more than three percent again yesterday.

00:02:28: It is consolidating above a hundred dollar per barrel level This morning.

00:02:32: A little bit softer but with risk off another upside.

00:02:35: move Cherry on top, the Russian oil flows also slowed last week as several drone warnings reported disrupted ship loadings there.

00:02:43: So oil prices remain high.

00:02:45: higher oil prices press inflation higher.

00:02:47: but not only it also tames economic activity by rising operating costs for businesses For households its squizzes affordability.

00:02:55: In the US for example The headline inflation now equals the wages growth.

00:03:00: Leading names including McDonald's and Kraft Heinz warned just last week during their earnings call that consumers in the US are now running out of money, meaning that if Americans who love spending will keep spending they would have to do it by taking on more debt.

00:03:17: And well consumer loans in the US are at highest levels on record!

00:03:21: They're mounting decidedly while interest rate cuts no longer on many users in the U.S.. That's not an excellent build up for a healthy graph is there?

00:03:30: The thing is elsewhere.

00:03:31: this picture isn't sunny either... In Germany for example the diverging expectations inflation and growth is as striking.

00:03:40: It's screaming stagflation, which has high inflation low-growth something that central banks absolutely hate.

00:03:47: an energy crisis view of two surging inflation.

00:03:49: trade war.

00:03:50: Chinese EV competition too much regulation to much bureaucracy in Germany while the country has not been able To keep his head above water since the Ukrainian wars started a few years ago while the rest of Europe is as slow and desperate to see their energy prices eat into its own purchasing power.

00:04:10: To make matters worse, The European Central Bank is expected.

00:04:20: Let's continue the horror tour.

00:04:22: Across the channel, Brits are grappling with their own political shake-ups after Nigel Farage scored big in the latest elections.

00:04:30: The name Farage in the markets resonates as a clearer path toward loser fiscal policy in the UK higher spending and larger deficits just as investors already very much worried about Britain's debt and inflation outlook.

00:04:46: And that terrible combination is pushing investors to demand higher compensation, to hold the UK's government debt.

00:04:52: Sending the UK ten-year guilt yield back above a five percent level.

00:04:56: That's the highest since nineteen ninety eight by June.

00:04:59: and the higher the borrowing cost The less the government could borrow and impact on growth would be negative.

00:05:05: That's exactly why the higher yield is waiting on starting appetite instead of boosting it.

00:05:10: Cable indeed has tested the one point thirty-five level to the downside.

00:05:14: yesterday, bears were also encouraged by stronger US dollar past the UICPI data.

00:05:20: and well even in quiet and peaceful Switzerland price pressures are loudly felled at the pump meaning that event a strong Swiss Frank as not being enough to fight back energy.

00:05:31: let inflation to say.

00:05:33: As such, global bond traders are worried.

00:05:36: Worried that central banks will have to raise the interest rates to tame inflation.

00:05:40: Economists are worried, worried.

00:05:42: at rate highs we'll not do much other than further slowing down economies without necessarily deflating prices as a problem here doesn't come from demand side but an external factor which won't go away with higher rates overnight.

00:05:57: and I'm telling you for US cutting their interest into rising inflation is no option anymore even the Federal Reserve's brand new central banker who would, we all know lower interest rates as soon he could.

00:06:09: But The War in the Middle East should end first.

00:06:12: Meanwhile, we all understood that the AI spending keeps US economic growth afloat.

00:06:17: At least better than European peers?

00:06:19: The U.S.

00:06:20: jobs market slows but payroll numbers there defy mass job terminations announced by big technology companies and threat of slowing consumer spending as such to a two-year yield that best captures federal reserve rate expectations rose just after the inflation data came in hotter than expected.

00:06:42: Here, U.S.

00:06:42: dollar rose to on back of higher oil prices and a hawkish shift in Fed expectations aimed at inflation report as it resolved the dollar yen advance about one hundred day moving average headed into the one-hundred fifty eight.

00:06:55: that was soon going be time for shorting the dollar Yen and waiting On the equities from S&P-Five.

00:07:03: Hundred, which has fully ignored rising yield since months have finally blanked and fell yesterday after the CPI data, but recovered losses as dip buyers joined in near the seventy-three forty level.

00:07:16: Amazingly futures have also flipped into the positive territory this morning from earlier losses news ad NVIDIA CEO Jensen Huang will join Donald Trump and his trip to China apparently helped In all cases.

00:07:28: The market is so crowded with dip buyers today that the dips fairly become perceptible Every new point on the S&P.

00:07:36: five hundred now as I actually feels like another Django block balancing on borrowed stability.

00:07:42: Now, I'm saying that because the Korean Cosplay Erased USUSD worth of value in less than a hundred minutes yesterday after high ranking politician there threw-in an idea that big winners of the AI race should pay citizens a dividend via taxes on AI profits.

00:08:05: And earlier this month, Samsung's labor union also claimed fifteen percent of operating profit to be handed to chip division employees.

00:08:13: Fifteen percent or employers would go through an eighteen day strike.

00:08:17: apparently the company and The Union couldn't reach an agreement just yet increasing their chance off a strike according To do latest news.

00:08:25: while the memory chip shortage due to massive AI demand remains major headline in the tech industry The timing would be indeed very bad.

00:08:34: Nevertheless, Samsung rebounds this morning thanks to a strong appetite on expectation that the company will be earning two hundred and twenty billion U.S.

00:08:42: salary in operating profit This year?

00:08:43: Yes!

00:08:44: That's more than Apple.

00:08:45: And yes...that also more than Alphabet.

00:08:48: It is just less than NVIDIA which is the world most valuable company So it has huge amount.

00:08:54: Obviously the latter had been wetting investors' appetites for months now leading to four hundred fifty five percent in Samsung's stock price since a year, and more than thousand percent really an SK high-necked stock price.

00:09:07: And at two hundred fifty percent rise in cost to be over the same period all are deep into overall territory.

00:09:14: All our calling for health correction to release building pressure to keep going.

00:09:19: So when will investors say enough?

00:09:20: we're taking her profit time?

00:09:22: We'll tell.

00:09:23: I guess so.

00:09:23: this is all four today.

00:09:25: i'm epic oscar deshkaya.

00:09:26: Thank you for joining me of comments.

00:09:31: I hope this episode of Market Talk has been helpful and it's been insightful to you, so please do not hesitate to leave your comments, reactions or questions below as usual!

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00:10:02: So I will meet again tomorrow and until then, good day

00:10:21: trading!