Stuck in Hormuz

00:00:00: Headlines regarding US and Iran, peace negotiations become confusing on Iran's new ambition to control the Strait of Hormuz.

00:00:08: Forget with Oman once the peace deal is end.

00:00:11: So oil is up again, yields are appreciate higher And this time around even the technologies big names appear to be annoyed.

00:00:18: so it's in this confusing macroecomic and geopolitical context that The U.S Is Preparing To Reveal Its Latest Growth & Inflation Updates.

00:00:27: Today Daily Market Talk is Thursday, the twenty-eighth of May.

00:00:33: I'm Ipekos Kardashian.

00:00:35: We will talk about geopolitics macrocomics and technology.

00:00:39: But before we do as always please keep in mind that opinions are my own And this not financial advice.

00:00:52: This show was brought to you by SwissQuam.

00:00:54: A new issue!

00:00:55: An unknown surprise an unexpected factor In US.

00:00:58: Iran peace negotiations has just.

00:01:02: Iran now wants to control the Strait of Hormuz with Oman.

00:01:07: I hear it as a two are now willing to control and charge ships passing through the strait once the Middle East tensions are over.

00:01:17: Well, i just realized how important The Watergate was for the entire world economy.

00:01:22: Hadn't the US gone in they would have never known it.

00:01:26: So yesterday investors swung between hope, aimed at an Iranian memorandum including that this trade would be open within a month after Israel is reached and were slashed again.

00:01:37: After the US denied these reports with U.S President Donald Trump saying that no nation will control the strait.

00:01:46: The news somehow cast its shadow on how close two parties really are to reaching a concrete deal.

00:01:55: So in summary, AUS Iran peace deal and the reopening of the strait of Hormuz now look more complex than they did just a few days ago.

00:02:07: higher oil prices.

00:02:08: USM Brent created our up this morning around three percent at the time I'm talking here and the U?

00:02:14: S ten year yield rebounds past a four-and-a half per cent mark, so it's in this uncertain context that the us will release its latest growth an inflation updates later today.

00:02:25: In terms of growth The u?

00:02:26: s economy is expected to have grown about two percent in the first quarter Of this year with price pressures so broadly above Three percent mark which is way high than the Fed's two percent policy target, and the core PCE for the first quarter is expected to have bounced from The Fed's favorite gauge of inflation is expected to have advanced from three point two, to three-point.

00:02:58: Three percent year over a year.

00:03:00: in April as the initial impact on higher energy prices that echo through the price of other goods was already visible and last month reading their reasoning is always the same.

00:03:11: I hired.

00:03:12: an expected inflation print today will further boost.

00:03:15: hawkish fed expectations fuel the probability of a rate hike in the US by the end this year.

00:03:21: An activity on Fed Fund's futures already assesses an nearly sixty percent chance for a December rate hike versus the expectation of two to three rates cuts prior to the Iranian War.

00:03:34: Can it figure, in line with expectations or ideally softer than expected could ease the rate-hike beds?

00:03:42: for the Fed this year, but won't take the idea of tighter monetary policy after table as long as the geopolitical uncertainties loom and energy prices remain persistently high with risk of further rise.

00:03:55: And yes even with Kevin Walsh who wish he could deliver his first rate hike this year while the rates might have to stay where they are or maybe go higher.

00:04:05: That is the good, all the mean of reasoning for financial markets.

00:04:09: Higher rates push yields higher.

00:04:10: Higher borrowing costs share limit borrowing.

00:04:13: by doing so they should also limit growth and hiring And lower growth and lower hiring could tame a part of inflationary pressures.

00:04:21: But not all because inflation today is not caused by excess demand but limited supply.

00:04:27: Infinite is up to the White House and not the global central banks to ease inflation.

00:04:32: Scared?

00:04:32: And there's more!

00:04:33: Remember, before the Iran war started There were two major worries among investors for technology space.

00:04:39: It was actually carrying equity price and equity indices higher.

00:04:43: Those were massive AI spending increasingly financed by debt from big technology companies Delayed ROI and circular deals.

00:04:52: remember Then too The software meltdown member threatened replacement, resulting in private credit stress and bank stress.

00:05:00: The first set of worries to the massive AI spending increasingly financed by debt on circular deals and delayed ROI return on these investments is almost fully forgotten!

00:05:13: The AI demand remains so strong indeed that investors join companies in worrying about not being able catch up with rising demand then investing too much on that with prospects of structurally higher yields.

00:05:26: But the second set All, all of his shares and investor credit strategic landing in the first quarter this year.

00:05:42: And I sounded bad because retail investors willing to get their money back is one thing an institution seeking to get redemption as another level of stress.

00:05:50: but the good news Is that?

00:05:51: The software company valuations have improved since April making yesterday's new sound a little bit less dramatic Because today's softwares stress is more about not being able fun businesses rather than immediate business failures due to AI replacement.

00:06:08: But the latest news is a warning, still that private credit stress now goes beyond retail investors' exposure and their level of stress.

00:06:17: Who cares?

00:06:18: The new king of technology headlines rose another three point sixty-three percent yesterday pushing its total gains past thirteen hundred sixty per cent levels since last April.

00:06:29: Van acts my conductor ETF on the other hand, advanced to a fresh all-time high level yesterday before finishing this session.

00:06:37: One percent lower though while SoftBank was down by more than five per cent in Japan.

00:06:42: and Korean Cosby Index which is basically the reflection of two membership makers that are down by two point seventy six percent.

00:06:50: at time I'm talking here this morning.

00:06:52: maybe it's just a little blip But looking at the extremely narrow market bread right now in major technology hubs like US, Korea and Taiwan for example being the top three.

00:07:03: Well there are two possibilities from here.

00:07:06: either The Middle East tension is real ease And their markets rally will extend to non-technology sectors which could cool down demand In technology but prevent a sharp sell off or the middle east hopes Will fall of a cliff.

00:07:19: Yet again, oil prices, inflation expectations and yields will continue to rise also increasing the likelihood of a sharp market correction.

00:07:29: that would also concern technology names.

00:07:32: Now, opinions are mixed.

00:07:33: Goldman Sachs analysts suggest that this MP-Five hundred could hit to eight thousand mark This year while The European Central Bankers in another set Of folks obviously warn That asset prices look stretched and financial markets Are in danger of Correction Elsewhere.

00:07:49: investor surveys remain incredibly bullish While Main Street Surveys are weakening by And truly the weaker, the mainstream sentiment.

00:07:58: The better it feels in the financial markets as weaker consumption and weaker economic activity only mean weaker interest rates, weaker yields.

00:08:07: that are mathematically positive for valuations especially provided that earnings growth also remains robust and earning expectations are very strong.

00:08:17: Let's take a moment to remember that the S&P five hundred companies printed an earnings growth of more than twenty eight percent in the first quarter off this year, despite the trade war.

00:08:28: Despite the Middle East War, despite all.

00:08:30: so The best is probably to chase it up and stay invested because part of valuations reflects the stock price inflation due to ample liquidity injection.

00:08:40: That must find a place you go And the good news is if there's no place left on earth to go, space has become the next shiny option.

00:08:47: Look Procure Space ETF for example Is literally targeting the moon today with a three hundred and sixty-three percent wise in two years.

00:08:56: All that saw as impressive as Micron but clearly exciting For those who have the nerves To jump onboard of this UFO, which happens to be the ticket of that ETF.

00:09:07: On this note let's keep an eye on US growth and inflation numbers today!

00:09:11: Hope for the best but stay prepared for the worst.

00:09:14: so This is all fourtoday.

00:09:16: I'm Yipega Skardishkaya And thank you for joining me and Thank You For All Your Beautiful and supportive comments.

00:09:22: 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 below as usual.

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00:09:54: So I will meet again tomorrow, until then good day

00:10:13: trading!