Pricing Mars

00:00:00: Global markets continue behaving as if nothing can stop the AI and IPO frenzy.

00:00:05: But while oil prices remain volatile, global yields near the highest level since the subprime crisis, economic activity slowing & recession risk building beneath the surface, while reports that open AI, Anthropic & SpaceX could seek trillion-dollar worth valuations help boosting this speculative fever across global financial markets, even as market bread deteriorates and companies outside the technology room struggle with rising costs.

00:00:36: So welcome to Swisscoats daily Market Talk.

00:00:39: it's Friday twenty-second of May.

00:00:42: I'm Ipekos Kardeshkaya And we will talk about Earth & Mars economics very shortly.

00:00:48: But before we do... Please keep in mind that opinions are my own and this is not financial advice.

00:01:05: So yesterday morning in Europe, the news that Iran wanted enriched uranium to stay in Iran was equing quite negatively across the markets pushing oil prices and yields higher and equities lower.

00:01:18: Some European indices in the closed yesterday's trading session in the red also due a set of terrible looking PMI numbers released yesterday.

00:01:28: I will discuss shortly.

00:01:30: The DAX eased .

00:01:52: But as the session went on, pessimism over Iran turned into optimism.

00:01:58: Optimism.

00:01:58: that gap between US and Iran in these peace negotiations is somehow maybe Narrowing.

00:02:05: Some officials made very vague commentaries from the US, as always I mean you know music but the latter just helped pulling oil prices lower yesterday sending the barrel of U.S.

00:02:18: crude below a hundred dollars per barrel.

00:02:21: psychological level and also below is fifty day moving average.

00:02:26: an easy pressure on yields moving forward in this session gave support to us indices which finally ended in the positive, unlike most European peers.

00:02:36: And this morning US spirit console days below the fifth day moving average but upside risk prevailed obviously because there is a chance that the latest optimism results and disappointment as it has been the case over almost three months now.

00:02:50: And well, as we are approaching the third month anniversary of the Iran War and having watch markers go through an impressive emotional roller coaster.

00:03:01: I can say with certainty that uncertainty won't disappear until it does.

00:03:07: what's certain However is that?

00:03:09: The clock is ticking louder.

00:03:11: come July if the traffic in the straight-off homes Is not established the oil reserves will retreat to alarming levels a scenario have repeatedly refused to price in as a base case scenario.

00:03:24: And come September, recession and many global economies will become the base-case scenario.

00:03:30: The latter we'll probably help keep oil prices capped on upside by lowering global demand.

00:03:36: that demand destruction remember?

00:03:38: It could also get central banks to rethink the strength of their policy response to the rising energy prices but none off.

00:03:45: these scenarios today are supposed be supportive equities which today however consolidate near all time high levels despite risk that start materializing judging by the fresh economic data.

00:03:59: Because global inflation has been rising almost everywhere including China that has been battling with falling consumer prices since the post-pandemic months.

00:04:08: All of the latest UK figures and this morning Japanese figures poured some cold water on rising inflation expectations, while yesterday's PMI figures confirmed a notably slowing activity across major economies with rising price pressures due to higher energy prices.

00:04:32: or a fall toward contraction in April, as higher costs weigh on the economic activity.

00:04:39: US manufacturing PMI stood out this jungle of down pointing data though certainly thanks to massive AI infrastructure spending from big technology companies that helps keeping activity levels afloat and growing.

00:04:55: But outside technology & energy, while companies do struggle to keep up with rising energy costs.

00:05:01: Choices are being made!

00:05:02: Businesses with little pricing power actually decrease their activity level While those with better pricing power try to pass these cost.

00:05:10: These additional energy led costs onto their clients To keep their margins well protected.

00:05:16: but all of them fear the rising bourbon cost and tighter finding conditions moving forward.

00:05:23: Walmart, for example saw his shares tank more than seven percent yesterday after announcing strong results.

00:05:29: Their U.S.

00:05:30: comparable revenue rose more than four percent and e-commerce sales jumped twenty six percent in the first quarter.

00:05:36: yet retailer rang the alarm bell yesterday regarding rising price pressures due to higher fuel prices.

00:05:43: their CFO actually highlighted that average number of gallons customers in the West pumped fell below ten for in the year two thousand and twenty-two indicating stress, he said.

00:05:56: You bet it indicates stress!

00:05:58: The US guest on prices have doubled since beginning of this year.

00:06:02: For the

00:06:02: U.S.,

00:06:03: however, the AI technology is masking the ugly truth off the main street And for rest of world.

00:06:08: a couple of technologies firms clearly carried entire global financial markets onto their shoulders.

00:06:16: They made indices look like there's nothing to worry about.

00:06:19: But the rally that was broadening from technology and US toward rest of the world is now at jeopardy.

00:06:27: Because equal weighted version of S&P, for example has well fallen behind a technology heavy and market cab-weighted version.

00:06:36: And when tech valuations looked this stretched more likely direction would be correction.

00:06:42: But that will probably not happen today because soft man jump ten percent to day and gain as much as forty percent.

00:06:50: Yes for you percent in just three sessions since the news that two of his portfolio companies, open AI and SP energy are progressing toward us initial public offerings.

00:07:02: And well, I feel Morgan in the US is heating up for exciting technology companies because huge entries are being prepared for the coming months.

00:07:10: among them.

00:07:11: The very open AI anthropic and space XR all seeking enormous valuations for SpaceX.

00:07:18: we're talking about it.

00:07:22: That's two-thirds of the total value of entire Swiss market, including big names like Nestle, Rush, Novates and UBS.

00:07:32: OpenAI and Anthropica on the other hand are targeting valuation approaching the one trillion dollar mark.

00:07:38: The latest news suggested numbers around seven hundred eight hundred million dollars worth of valuations is going up Bye today.

00:07:47: And the excellent news here is that these companies will be included in a major U S indices because The Major US Indices are considering changing their rules to include them as fast, As possible and later.

00:08:00: we'll certainly keep the frenzy going once they're in this indices for these indices at least for awhile.

00:08:06: So chances or dad recontinues seeing technology sucks on technology heavy indices up and away.

00:08:13: But what happens once the initial euphoria is over and a bubble of stress creeps back in?

00:08:18: Because not that SpaceX, for example wants to make some four point three percent off his total shares available.

00:08:25: To public trading.

00:08:26: I mean That's quite low And they could have never made its way into an index like this.

00:08:31: MP.

00:08:31: five hundred For example before just traditionally the SMP.

00:08:35: five hundred required sufficient liquidity A broad enough shareholder base any meaningful public float.

00:08:42: Oh well change.

00:08:43: Not only that SpaceX is going to have very little floating shares available to the public, but Elon Musk will be keeping eighty-five percent of the voting power himself!

00:08:53: So seriously though what happens next?

00:08:56: Well maybe I say we'll stop fighting each other on earth colonize Mars and be starved by robots who won't need money anymore.

00:09:04: everybody's going to be rich.

00:09:05: everything will be abandoned as says Elon musk ever after, but maybe not.

00:09:13: So I'm preparing a full episode on these huge IPOs for Monday talking about the opportunities But also their risks that are surrounding this huge and very exciting technology companies.

00:09:26: They're crazy dreams they're life-changing Technology, but also there actual balance sheet challenges in your business outlook.

00:09:33: so This is all four this week.

00:09:35: I am Ipeco Skardiske And thank you for joining me.

00:09:37: Thank you for all your beautiful and supportive comments.

00:09:41: This episode of Market Talk has been helpful and it's been insightful to you.

00:09:46: So please do not hesitate.

00:09:49: leave your comments, reactions or questions below.

00:09:52: as usual Follow us on Instagram, on X, on LinkedIn but also on Whatsapp, Threads, Telegram & Blue Sky for regular market updates.

00:10:02: Subscribe to our YouTube channel for daily market commands And don't forget to hit the like button on these videos that you enjoy them.

00:10:13: So I will meet again next Tuesday, Monday.

00:10:16: You'll get the video on IPOs and until then good day trading!

00:10:21: And have a lovely long weekend for those who will enjoy the three-day weekend this weekend.

00:10:34: SwissQuote assumes no responsibility for accuracy or losses from its use.

00:10:38: Products and services are offered only where legally

00:10:40: permitted.".