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17:05
PDT

Investors are optimistic about equities despite inflation.

S&P AI US Iran NVIDIA CAPEX FEDFUNDS S&P

– S&P price target set at 8,200.

– AI growth and US-Iran negotiations are positive economic indicators.

– Concerns about infrastructure investment and CAPEX levels persist.

– Circular funding arrangements are facilitating significant capital movement.

equity market optimismAI investmentinflation impactUS-Iran negotiations

▸ Full transcript

Investors are not as concerned with inflation at this point. They remain focused on the overall market and the strength of the economy. Even with inflation where it is, the Fed is still on hold, and the progress in the US-Iran negotiations and AI growth leads to optimism about the economy. They believe the economy will remain intact, and they are positive and optimistic towards equities, despite potential bumps. They have a price target for the S&P reaching about 8,200. Investors should continue to stay invested, as AI and market strength are expected to push equities higher. Regarding the AI hyperscalers, there are ongoing concerns about infrastructure investment and CAPEX levels, but there is also a rotation of huge amounts of funds in circular funding arrangements.

Analysis

Investors remain optimistic about equities despite inflation concerns, with a price target for the S&P at 8,200. The ongoing strength in AI growth and potential US-Iran negotiations are seen as positive factors for the economy.

Smart money should note the resilience in market sentiment despite inflation, indicating a strong belief in the underlying economic fundamentals. The rotation of funds in AI infrastructure investments suggests a strategic shift that could enhance long-term growth prospects in the tech sector.

17:02
PDT

Samsung and SK Hynix are gaining in early trading.

NVIDIA Samsung SK Hynix South Korea Brent Crude US Federal Reserve COSPI SK Deputy Minister NVDA COSPI CL=F

– South Korea is launching a $700 million sovereign wealth fund.

– The Korean won is experiencing weakness amid market volatility.

– Strong demand in the three-year auction indicates cautious investor sentiment.

– Brent Crude prices are up by four-tenths of a percent.

tech market volatilitySouth Korea investmentinflation anticipationoil price dynamics

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Sort of explained that perhaps NVIDIA will not be as directly exposed to all of that spending. Take a look at some of the tech stocks coming online in the COSPI, because we have seen a lot of volatility for this market, right? We're talking about a drawdown of about 40 percent or so since its June peak. We're seeing Samsung and SK Hynix gaining early in the session today. This, as we continue to see a little bit more upside, a little bit more calm in this market. We have now heard from the Deputy Minister for Innovation and Growth in South Korea talking about a fresh $700 million investment into a new sovereign wealth fund in South Korea for strategic sectors just for 2027. So we'll be watching how those industries grow in South Korea. But we continue to see the weakness in the Korean won. That's been the divergence in this market, right? Yes, divergence is what we're watching at the moment, right? Because we continue to have this rotation and volatility in that tech trade as well at a time where, broadly, we're seeing quite a bit of risk aversion. But this is a picture as we have that sort of anticipation ahead of the US inflation print, that three-year auction seeing some pretty strong demand. That was the highest yield overnight since 2025. We do see that sort of short-dated bill front looking like we are seeing pretty robust demand there. But broadly speaking, as you said, we're just waiting, watching and waiting for that inflation print. Brent Crude coming online, high by four tenths of a percent. So we are seeing oil prices hanging on to gains for oil.

Analysis

South Korea's tech stocks, particularly Samsung and SK Hynix, are showing early gains amid a volatile market, with a notable $700 million investment into a new sovereign wealth fund aimed at strategic sectors by 2027. However, the Korean won continues to weaken, highlighting a divergence in market conditions as investors await the upcoming US inflation print.

The strong demand seen in the three-year auction, yielding the highest rates since 2025, suggests that investors are positioning themselves cautiously ahead of inflation data. This could indicate a broader risk aversion trend, impacting tech stocks and commodities like oil, which is currently holding onto gains.

17:00
PDT

US CPI numbers are critical for Fed policy direction.

Pakistan U.S.Iran Oman Bank of Japan Bloomberg Economics AI US CPI BOJ FEDFUNDS CL=F PRIVATE DXY

– Weaker jobs report raises inflation concerns.

– Japanese yen approaches a key threshold against the dollar.

– Market pricing in a high chance of BOJ rate hike.

– Geopolitical tensions may affect oil prices.

inflation riskcentral bank policygeopolitical tensionscurrency volatility

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It opens after strong earnings hiding when it comes to the AI trade. We're talking about CoreWeave, Supermicro, as well as Storage in late trading. But at the same time, when we see the macro reassert itself, we're headed towards US CPI numbers, which will really decide the direction of where the Fed could go from here given a weaker than expected US jobs report and of course the upside on inflation from higher oil. Yeah, this is a high stakes inflation print, isn't it Sherry? You're very right to point out that this would really shake up these Fed expectations. And of course, that energy print will be particularly interesting as we are, as you say, continue to watch for that pass-through of oil prices. We are hearing from Pakistan potentially getting closer to a deal to reopen the Strait of Hormuz between the U.S. and Iran and also Iran and Oman as well. Both parties have been really hardening their positions over the last few days and sharing the meantime if the trajectory changes for the Fed, obviously big implications for the Bank of Japan as well, with that 160 level looking precariously close for the yen now. Especially now that we have markets pricing in a two-thirds chance that the BOJ will actually hike rates in September. In fact, Bloomberg Economics is bringing forward their call for a hike to October instead of December. But at Yusen and Heidi, we're talking about the Japanese yen very close to that 160 level against the US dollar again. The very important threshold after we saw the intervention from the U.S. and Japan joint yen buying for the first time since the 1990s and that as we approached that one.

Analysis

The market is poised for significant movement as the upcoming US CPI numbers could reshape Fed expectations, especially following a weaker-than-expected jobs report and rising oil prices. The Japanese yen is nearing a critical 160 level against the US dollar, raising concerns about potential Bank of Japan rate hikes as markets price in a two-thirds chance of a September increase.

Smart money should note the implications of the CPI data on Fed policy, which could lead to volatility in both US and Japanese markets. Additionally, the geopolitical developments regarding the Strait of Hormuz may influence oil prices further, impacting inflation and central bank decisions globally.

16:55
PDT

Taiwanese stocks are attracting foreign investment amid a $6.2 billion sell-off in Korean equities.

Taiwan Korea TSMC Suno Udio Clay Spotify YouTube Warner Music Universal Bloomberg Lucas Shaw PRIVATE

– The performance divergence is linked to Taiwan's stable AI supply chain versus Korea's cyclical businesses.

– Major record labels are engaging with AI music platforms, raising questions about artist compensation.

– Legal disputes in the music industry could impact the future of AI-generated content.

– Market futures show mixed signals with Japan returning from a holiday.

AI investment trendsmusic industry disruptionforeign investmentmarket volatility

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Are we seeing any big-name proponents of this technology at this point? Well, look, obviously there are a lot of companies that have started and are using AI music in some way. So, Suno is one of several. There is something called Udio, there is Clay, Spotify, and YouTube are developing AI music products. Even though it's divisive in the artist community, like I said, Warner Music, which is one of the three big majors, has done a deal with Suno. Universal has done deals with Udio. All of them have done deals with Clay. I think the question is, what is the nature of those agreements? I think everyone sees that people are going to want to use AI tools to make music, but are artists going to be protected and compensated in order for that to be fruitful for them instead of damaging to their careers? Lukashan, really good to have you with us. He oversees Bloomberg's media and entertainment coverage. As we head towards the market opens at the top of the hour, Japan is coming back from a holiday, not a lot of movement in the future space. Cosby futures are pointing higher by more than 1%. Of course, we have strong AI earnings in the Wall Street sessions, Sine Futures to the downside of four-tenths of 1%. The market opens are next. This is Bloomberg. Every modern economy depends on one invisible advantage, reliable power. Without it, there is no AI economy.

Analysis

Taiwanese equities have seen a resurgence as foreign investors turned net buyers, accumulating $1.7 billion this month, while Korean equities faced a $6.2 billion sell-off. The divergence in performance is attributed to Taiwan's stable AI supply chain, particularly with TSMC, compared to Korea's more cyclical businesses.

The ongoing legal battles between major record labels and AI music platforms highlight a critical tension in the industry. As companies like Suno and Udio gain traction, the question of artist compensation and protection becomes increasingly relevant, signaling potential shifts in the music business landscape that investors should monitor closely.

16:53
PDT

AI music generation platform faces lawsuits from major record labels.

Lucas Shaw Warner Music Sony Universal AI music generation platform AI

– Warner Music has settled, while Sony and Universal continue litigation.

– The platform allows users to create songs with simple prompts.

– Legal outcomes could influence AI's role in creative sectors.

– The platform's popularity contrasts with its legal challenges.

AI in creative industriesCopyright lawLitigation risks

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For more on today's big take, let's bring in Lucas Shaw, who leads our media and entertainment coverage. There's a significant existential battle at the moment between artists of all platforms and all genres against the use of AI. Why has this particular platform gotten so much traction? Well, because it's the biggest right now. They created a pretty cool tool that allows anyone to generate a song with a simple prompt. You can type in a few words, and it'll generate a song, or you can give it very detailed instructions in terms of different instrumentation. You can upload music that you record on your own and have it manipulated, and that's proven to be quite popular with users. That has also put a target on its back when it comes to lawyers, artists, and the big music companies. A few years ago, the three biggest record companies in the world all sued it. One of them, Warner Music, has since settled with them, but Sony and Universal are still in active litigation. It's just a really interesting story about this company that thinks that AI is going to change the music business, but is itself becoming a villain pretty quickly. Is there legal precedent at this point in terms of whether scraping copyright material, whether you're talking about music or written material, otherwise, is actually legal? You know, it's an open legal question.

Analysis

The ongoing legal battles between major record companies and an AI music generation platform highlight the tension between innovation and copyright law. While the platform has gained popularity for its user-friendly song generation capabilities, it faces significant legal challenges from Sony and Universal, raising questions about the future of AI in the music industry.

Smart money should note that the outcome of these legal disputes could set important precedents for the use of AI in creative industries. As the platform positions itself as a disruptor, it risks becoming a target for litigation, which may impact investor sentiment and the broader market for AI technologies in entertainment.

16:49
PDT

Foreign investors are net buyers of Taiwanese equities, accumulating $1.7 billion this month.

Taiwan Korea TSMC Apple KOSPI Taiwan Stock Exchange AI AAPL

– Korean equities have seen a $6.2 billion sell-off by foreign investors.

– Taiwan's stock market is recovering faster than Korea's, despite both being down significantly since July.

– Korean stocks are viewed as more cyclical, leading to larger market swings.

– Valuation attractiveness in Korea is not translating into buying interest.

investment sentimentcyclical volatilityAI spending

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We're seeing the foundry in TSMC, but along with the hardware supply chain that's very wide. You know, the entire supply chain of things that are in your Apple iPhone is actually coming from Taiwan. Investors are telling us that when compared to Korea, a lot of the businesses there are quite cyclical, which means that you're going to have bigger swings there. Yeah, and you can see it on that graph comparing the KOSPI with the Taiwan Stock Exchange, right? I mean, that incredible drawdown that you see in the Korean stock market is about 40 percent since the June peak. But wouldn't you think that that would lead to some bargain hunting at this point? But that's not happening. Yeah, when you look at the valuation itself, you're right on that; the KOSPI is extremely low. They're talking about financials, industrials, and technology. But again, the underlying question is the same for the two markets, right? Is the AI spending...

Analysis

Taiwanese stocks are currently favored over Korean equities, with foreign investors turning net buyers of Taiwanese stocks while dumping Korean equities. The cyclical nature of Korean businesses is leading to larger swings in the market, which is reflected in the significant drawdown of around 40% since June's peak.

Smart money should note that despite the valuation attractiveness of Korean stocks, the lack of bargain hunting suggests deeper concerns about the sustainability of earnings in cyclical sectors. The divergence in recovery stories between Taiwan and Korea indicates a potential shift in investor sentiment towards more stable growth prospects in Taiwan.

16:47
PDT

Foreign investors are net buyers of Taiwanese equities.

Taiwan Korea AI Asia Equity Sangmi Cha PRIVATE

– Korean equities have seen significant outflows, totaling $6.2 billion this month.

– Taiwanese stocks are up 50% year-to-date despite recent losses.

– Investor sentiment is shifting towards Taiwan as a safer investment.

– The divergence in stock performance may signal changing regional dynamics.

AI investment trendsforeign investment flows

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the Bloomberg video hub. More stable AI investment story. Bloomberg's Asia Equity reporter Sangmi Cha joins us with more on this. We've been talking about this phenomenon recently, Sangmi, because you would think that both economies are sort of the bellwether for the AI boom and yet Taiwanese stocks are seen as safer at this point. That's right, Sherry. Taiwan and Korea have sort of been that paired trade always, but not since the July. We're seeing the foreign investors actually turned net buyers of Taiwanese equities last week after they have accumulated $1.7 billion so far this month compared to where they dumped $6.2 billion in Korean equities. You can see that recovery stories since the July route is just diverging between these two markets. Of course, since July, they both have lost quite significantly, but still are up 50 percent so far this year. And it is just that big rebound that we're seeing in the Taiwanese.

Analysis

Foreign investors have shifted their focus, becoming net buyers of Taiwanese equities while dumping Korean stocks, with a notable $1.7 billion inflow into Taiwan this month compared to a $6.2 billion outflow from Korea. This divergence highlights a recovery in Taiwanese stocks, which, despite both markets facing significant losses since July, are up 50% year-to-date.

The contrasting investor behavior suggests a growing perception of Taiwan as a safer investment amid the AI boom, while Korea's appeal is waning. Smart money should note this trend as it may indicate a longer-term shift in regional investment dynamics, particularly in the tech sector.

16:45
PDT

Jet fuel prices are currently between $150 and $170.

Samsung SK Hynix National Growth Fund Korea Sovereign Wealth Fund

– Airlines are experiencing rising costs that are not fully offset by fare increases.

– Demand for travel remains strong, but there are concerns about future bookings.

– The sovereign wealth fund will focus on Series B companies for investment.

– Relay investments may be used to support scaling businesses.

airline profitabilityinvestment strategyhigh-tech growth

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For example, the National Growth Fund, which has been operating and investing since last year, aims to invest around 150 trillion Korean won. Its main focus is centered on loans or indirect investments through funds. In contrast, when we speak of the sovereign wealth fund, we plan to invest primarily with long-term patient capital and directly make equity investments rather than simple indirect investments, which differentiates it. Rather than solely focusing on differentiation, we're also actively considering co-investing together. If necessary, we use the term relay investment, where we actively consider taking over positions when major public funds seek to exit. Does that mean that it would actually include the possibility that given the funding is going to flow into stocks initially for this entity that you could see actually buying, say, chip makers like Samsung, SK, Hynix or contributing to projects that some of these companies are involved in? Rather than investing in large enterprises like Samsung or SK, our interest lies in companies beyond the very early startup stage, what is typically referred to as Series B. Series B refers to companies whose business models have been somewhat validated and are at a stage ready to scale up. Among such companies, we are considering relay investments to support them.

Analysis

Jet fuel prices remain high, currently between $150 and $170, significantly impacting airline costs despite a slight decrease from previous peaks. While demand for travel is holding up well, the rising costs and fuel surcharges are not fully offsetting the financial pressures on carriers, leading to a cautious outlook for the latter part of the year.

The focus on Series B companies for investment indicates a strategic shift towards supporting businesses that have validated their models and are poised for growth. This approach may provide better long-term returns compared to investing in larger, established firms, reflecting a trend towards nurturing innovation in high-tech sectors.

16:42
PDT

Japanese yen shows signs of weakening post-intervention.

Japan Korea US Iran Pakistan EIA Hanam region strategic sovereign wealth fund Asian carriers

– Inflation pressures persist due to geopolitical tensions.

– Korea plans to establish a strategic sovereign wealth fund.

– International investors are considering investments in Korea.

– Airlines face ongoing challenges from high fuel prices.

geopolitical riskinvestment strategyinflation pressures

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The government, particularly recently, has been actively considering various ways to enhance international competitiveness and raise the declining potential growth rate through active investments in key high-tech strategic industries. Internationally, as recently discussed, we are pursuing active investment in regional areas including the Hanam region for three major mega projects. With this as a new initiative, we are actively pushing forward to establish a sovereign wealth fund, which we refer to as a strategic sovereign wealth fund, to actively lead investments in high-tech strategic industries. Through this, we aim to actively foster potential growth and proactively fulfill a role in responding to future challenges, such as population decline and increasing fiscal demands of various forms. Internationally, we understand that various types of investors, including sovereign wealth funds, PFs, and sovereign wealth funds in general, are considering investments in Korea. To serve as an anchor investor to attract investment into Korea and co-invest alongside these key international global investors, we are pushing for the establishment of this sovereign wealth fund. How much deployment are we talking about, for example, in a year out of this 20 trillion won? For next year, while exact details are difficult to specify, we estimate the...

Analysis

The Japanese yen is weakening again, giving up half of its recent rally following US-Japan intervention, while inflation pressures remain amid geopolitical tensions. The establishment of a strategic sovereign wealth fund in Korea aims to attract international investments in high-tech industries, addressing potential growth challenges and fiscal demands.

16:38
PDT

Travel demand is holding up well despite higher costs.

JPM Stephen Engel Japan Akasaka Palace Bloomberg US Iran Strait of Hormuz Pakistan EIA Asian carriers COVID

– Airlines are implementing fuel surcharges to offset rising expenses.

– Geopolitical tensions continue to affect fuel price stability.

– Current market conditions show no signs of price gouging.

– Future demand may face headwinds as costs remain elevated.

travel demandfuel pricesgeopolitical risk

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yang menjaga perjalanan yang lebih tinggi... yang akan mempunyai perjalanan yang lebih tinggi. Apa yang awak fikir perjalanan ini akan menjaga keadaan? Ia masih kekat yang lebih kekat? Atau awak rasa itu akan menjaga perjalanan? Ya, saya rasa ia susah untuk berkata... sebab saya... saya fikir apabila saya bercakap dengan perjalanan... dan saya berfikir perjalanan masih bagus. Maksud saya, perjalanan yang paling tinggi... saya akan tetap berhenti dengan perjalanan. Tapi, bolehkah mereka cukup untuk menghiaskan... yang ada yang perlu diberi. Saya rasa ia akan menjadi... saya pasti akan menyebabkan kecepatan. Apa pendapat awak tentang kecepatan yang lebih besar? Jika kita cuba melihat kecepatan... keempat warna dan kecepatan... apa kecepatan yang paling besar... yang anda memberi? Ada beberapa lagi masalah yang... atau penyelesaian telah menyebabkan. Ia tidak menyebabkan. keadaan, keadaan, dan keadaan. Ia masih di sana. Ia berlaku sejak COVID-19. Sebelum dua-tiga tahun, alias ini telah menghadapi keadaan keadaan dari pembinaan dan dari sisi perniagaan. Ia berkongsi untuk membuat atau membuat keadaan dalam keadaan keadaan yang telah diberikan. Dan kemudian itu menyebabkan keadaan keadaan keadaan keadaan keadaan keadaan. Sekarang, berhenti.

Analysis

Travel demand remains resilient despite rising costs, with airlines managing to maintain higher fares. However, the ongoing uncertainty around fuel prices and geopolitical tensions could pose risks to future demand and profitability.

Smart money should note that while current bookings are strong, the potential for price gouging appears limited, indicating a competitive market. The situation in the Strait of Hormuz remains a critical factor influencing fuel prices, which could impact airline operations significantly going forward.

16:36
PDT

Jet fuel prices remain elevated, impacting airline profitability.

Strait of Hormuz airlines Asian carriers

– Airlines are experiencing a dip in passenger traffic of over 1% year-on-year.

– Demand is expected to hold up in the short term, but risks loom for the final quarter.

– Airlines are adjusting pricing strategies, but cost pressures persist.

– Geopolitical tensions continue to influence fuel supply dynamics.

fuel price volatilityairline profitabilitygeopolitical risk

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That might impact obviously the degree of bookings. The flip side of that resilience is I do wonder if you're seeing any indications of unfair pricing or price gouging over the past six months? I wouldn't say so. I think if you would see that happening, prices obviously are very, very sensitive and they would adjust very quickly. At this point, from my observations around the region, that hasn't really been the case. The recent half-year traffic stats actually show a dip in passages overall of just over 1% here on year. For the next six months, rest of the year, what's your outlook? I would say we are a little bit tentative, meaning to say, I mean, the first two to three months, July, August being the summer, I think we're going to have a decent set of top-line revenues coming through. But I think the risk is obviously coming off that from the final quarter of the year. I suspect that might be some headwinds that we would see as far as demand also. Cost, I suspect. It's really hard to tell, given the changes in condition. But of course, we all want to see a better relief coming out from the Strait of Hormuz where fuel prices can ease off. I mean, it is still high. I think nonetheless, airlines are pretty much prepared. Some airlines are hedging. Even if they're hedging, I think their prices have already gone up. Those that are not just completely exposed and said that continues to be a risk for airlines operating into the end of the year. So they have done some adjustments, some airlines have...

Analysis

Airlines are facing headwinds as jet fuel prices remain high, impacting profitability despite strong demand. The outlook for the latter half of the year is tentative, with potential risks to demand and costs looming due to geopolitical tensions affecting fuel supply.

While airlines have managed to maintain revenues through increased fares and surcharges, the sustainability of this demand amidst rising costs is uncertain. The situation in the Strait of Hormuz remains critical, as any easing in fuel prices could provide much-needed relief to the sector.

16:34
PDT

Jet fuel prices are currently between $150 and $170.

airlines jet fuel Tazer

– Airline fare increases and fuel surcharges are not fully offsetting rising costs.

– Travel demand remains strong despite high fuel prices.

– Airlines are reporting mixed financial results due to cost pressures.

– Future profitability may be challenged by sustained high fuel costs.

fuel price volatilityairline profitability

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Although what we're seeing now is prices have come off, I think jet fuel prices are now a lot less than $200 and above. They're still pretty high, I would say in the range of around $150 to $170. So that's a massive hit as far as the airlines are concerned. And going forward, there continues to be some degree of uncertainty as to how much fuel prices would be able to come off. Well, that's it. And as you say, even though it's come off, we're still sort of roughly double from the start of the year or prior to the war, give or take? Correct. Some amount. So how are you seeing individual carriers weather that and how is that passing through to travel demand? Yes. Well, you see fuel surcharges applying and fares have generally gone up. But by and large, I would say most carriers are quite glad to see actually demand still holding up pretty well, just come off the summer period right now, and I think bookings are still holding up quite well, which is a good relief. But still, nonetheless, all these fare increases and fuel surcharges that we're seeing, they're really not sufficient to offset the increasing costs. Which is why you see from the April to June set of results that are coming out from various carriers reporting, many of them would reflect that cost. On the top line side, revenues are still holding, which is a reflection of course of the strengthened bookings, but as far as costs are concerned, that's still a headwind.

Analysis

Jet fuel prices remain elevated, currently ranging between $150 and $170, significantly impacting airline profitability despite a slight decrease from previous highs. While demand for travel is holding up well, fare increases and fuel surcharges are insufficient to fully offset rising costs, leading to continued financial pressure on carriers.

Smart money should note that despite strong bookings, the persistent high fuel costs are a headwind for airlines, potentially affecting their margins and profitability in upcoming quarters. The resilience in travel demand may not be enough to counterbalance the financial strain from elevated operational costs, indicating a challenging environment for the sector.

16:32
PDT

US dollar weakens against Japanese yen.

US Japan Iran Pakistan EIA Strait of Hormuz Asian carriers New York Traded Crude DXY

– Inflation data may reduce market risk.

– Strait of Hormuz tensions persist despite potential progress.

– EIA reports supply disruptions could last until 2027.

– Jet fuel price increases are impacting Asian carriers.

geopolitical riskenergy supplyinflation impact

▸ Full transcript

US dollar trade, which is a Japanese yen, is already weakening again, giving up half of that rally that we've seen since the US-Japan intervention. You mentioned the sort of inflation print, and if that comes across as benign at least, that takes a little bit of risk and pressure off the table, given that we know there is still going to be pass-through from this ongoing standoff between the US and Iran, and the lack of progress that we're still seeing when it comes to the reopening of the Strait of Hormuz. Hearing that potentially there is a little bit more progress there despite what appears at both sides in recent days have really been kind of firming their stances and getting further away from an agreement rather than closer. But if you take a look at New York Traded Crude at the moment, we're still holding on to gains for what is a fourth straight day, watching the potential for a deal with Pakistan's defence minister saying that the two sides are close to some sort of agreement on being able to reopen the Strait of Hormuz. In the meantime, we do have the latest reports from the EIA, the US regulatory body when it comes to energy. Their outlook is that these supply disruptions from the wall reach about 600,000 barrels per day through to the end of next year. So these disruptions could continue through to 2027. Obviously, that comes through in the inflation basket as well. A big part of that obviously has been the implications of various industries. The elevation of jet fuel prices has become a major financial challenge for some Asian carriers this year, with impacts ranging from sharp profit declines to outright losses. Our next guest leads the industry body.

Analysis

The US dollar is weakening against the Japanese yen, reversing gains from recent US-Japan intervention, while inflation data appears benign, easing some market pressures. Ongoing tensions between the US and Iran, particularly regarding the Strait of Hormuz, continue to pose risks, although there are reports of potential progress towards reopening the strait.

16:26
PDT

Commonwealth Bank's profit growth indicates resilience in lending despite economic pressures.

Commonwealth Bank Shopee Nvidia Apollo KKR Blackstone BlackRock Brookfield Goldman Sachs US AI Wall Street TSLA NVDA PRIVATE GC=F

– The bank's dividend increase reflects confidence in its financial health.

– Alternative asset managers are gaining traction, outperforming traditional financial firms.

– The AI financing coalition highlights significant investment momentum in the sector.

– Shopee's earnings guidance upgrade suggests competitive strength in the e-commerce space.

banking performanceAI investmente-commerce competition

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Australia's Commonwealth Bank has reported stronger-than-expected annual profit with growth in mortgage and business lending, helping offset signs of a cooling housing market. Cash profit climbed 7% to $7.8 billion in the 12 months through June. Australia's largest lender also raised its dividend while noting economic pressure from higher interest rates and inflation. The US is to share the Singapore-based C surge after the company raised full-year earnings guidance for its e-commerce arm, Shopee. The upgrade suggests that Shopee is holding off intense competition from rivals including TikTok shop, Lazada, and Teemu. The company also reported ad revenue jumping 70% in the second quarter. And take a look at how alternative asset managers have performed; they're actually doing better than financial peers, surprising given that we're seeing this increasing rule of private capital in the AI build-out, especially with the latest announcement from Nvidia about a $500 billion Wall Street AI financing coalition which includes the likes of Apollo, KKR, Blackstone, BlackRock, Brookfield, and Goldman Sachs.

Analysis

Australia's Commonwealth Bank reported a stronger-than-expected annual profit of $7.8 billion, driven by growth in mortgage and business lending, despite signs of a cooling housing market. The bank raised its dividend while acknowledging economic pressures from higher interest rates and inflation.

The performance of alternative asset managers is noteworthy, as they are outperforming financial peers amid increasing private capital involvement in AI developments. The recent $500 billion Wall Street AI financing coalition, including major players like Apollo and Blackstone, signals a robust commitment to AI investments, which could reshape market dynamics.

16:22
PDT

Chris Luxon faces pressure to manage coalition tensions.

Chris Luxon Winston Peters New Zealand National Party Green Party China MMP MP New Zealand First Chris Bishop Attorney General Education Minister USDCNH

– Winston Peters' comments have drawn ire from China.

– Potential for early elections looms due to internal conflicts.

– Leadership options within the National Party are limited.

– Political instability could affect economic policies.

political instabilitycoalition dynamics

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Of reasons in the past few weeks. First, Chris Luxon made some unfortunate comments about small business leaders, telling them they were being negative and should stop looking to the government for help. He had to walk that back. Then he made a rather confusing call to revisit through referendum New Zealand's electoral system, MMP, that blindsided colleagues as well. But since then, also the New Zealand First leader, Winston Peters, who is the foreign minister and in coalition with the government, made some very disparaging remarks about a Chinese-born Green's MP, so bad that it provoked the ire of China as well. Now, there was a call for Chris Luxon to sack Winston Peters, but he can't really. He's the foreign minister and also the leader of the coalition partner. That would mean the end of the government and heading to an early election with the polls in dire straits. So, this is actually the second time we've been here. Chris Luxon called a vote back in April to bring this to a head. He won that, but it hasn't gone away. It's quite extraordinary how far things have swung since the election, right? But you mentioned Winston Peters. Is he one of the names that could possibly be a replacement? Well, that would have to happen at the election, and Peters would have to win the majority of the votes within the National Party itself. There are options. None of them are great. Chris Bishop, the Attorney General, is a front-runner. He publicly supports Chris Luxon. Another option is the Education Minister, Erica Stanford. But her own friend and Minister for Women said this morning heading into the caucus meeting that Stanford's not prime minister material, so that kind of puts a line through that. Nicola Willis, the finance minister.

Analysis

New Zealand's political landscape is facing turmoil as Prime Minister Chris Luxon grapples with backlash from his coalition partner, Winston Peters, following disparaging remarks about a Chinese-born MP. This situation complicates Luxon's leadership, as sacking Peters could trigger an early election amidst poor polling results.

The internal strife within the government highlights the fragility of coalition politics in New Zealand, particularly with the looming threat of an election that could reshape the political landscape. Investors should note that political instability may impact economic policies and market confidence in the region.

16:20
PDT

U.S. military's defensive capabilities are under strain.

U.S.Iran Pakistan Central Command U.S. military Panama Trump

– Active conflict in shipping routes persists.

– Potential for strategic shifts in U.S. military focus.

– Geopolitical tensions could impact global supply chains.

– Iran-linked maritime activities remain a concern.

geopolitical riskmilitary readinessshipping disruptions

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Critical to protecting U.S. forces, installations, and allies and partners around the world, those are in rather dire shape. The U.S. certainly has enough offensive weapons to continue striking targets in Iran. But what really starts to come into question is the ability to protect U.S. forces, and potentially, this could affect decision-making by the president and the military for potential future conflicts, including potentially in Asia. And yet, when it comes to the shipping environment right now, it seems that it remains an active conflict territory. We're hearing from U.S. Central Command that more missiles have been fired against cargo vessels as well. What do we know in terms of the state of these different waterways and where U.S. personnel are at the moment? Absolutely. So, I mean, the U.S. military has an array of warships. Central Command has indicated that more than 20 U.S. warships are detailed or deployed in the region right now, enforcing that blockade of Iran-linked ships. Including today, U.S. forces fired two Hellfire missiles at a Panama-flagged vessel that was attempting to break the blockade. So that continues. It resumed July 14th, and the U.S. has redirected 55 vessels since then.

Analysis

The U.S. military's capability to protect its forces and allies is in question due to dwindling stocks of air defense interceptors and long-range missiles, which could impact future military decisions. The shipping environment remains tense, with U.S. forces actively enforcing a blockade against Iran-linked vessels, indicating ongoing geopolitical risks in the region.

Smart money should note that while the U.S. has sufficient offensive capabilities, the strain on defensive resources may lead to strategic recalibrations, particularly in Asia. The continued missile strikes against cargo vessels highlight the volatility in maritime trade routes, which could have broader implications for global supply chains and energy markets.

16:18
PDT

U.S.-Iran negotiations show mixed signals.

U.S.Iran Pakistan Strait of Hormuz Pentagon Courtney McBride President Trump Bloomberg Economics National Security Courtney Mc The Strait PRIVATE

– Low-level military actions continue despite optimism.

– Traders should be cautious about market volatility.

– Potential for sustained high oil prices remains.

– Geopolitical tensions could impact energy markets.

geopolitical riskoil market volatilitydefense sector dynamics

▸ Full transcript

and Iran were close to some sort of arrangement over the Strait of Hormuz. Meanwhile, a new report from Bloomberg Economics says the Pentagon's stocks of hard-to-replace air defense interceptors and long-range missiles are dwindling. For more, let's bring in National Security reporter Courtney McBride. Courtney, let's start with the state of play here around Iran, because we're getting different comments when it comes to the Oman deal track with the U.S.-Iran negotiations. Where are we at? Certainly. You know, we're hearing optimistic messaging from Pakistan and a little bit of hardening of rhetoric, both from the U.S. and from Iran. It's hard to say that a deal is really close, despite the optimism out of Islamabad. The status quo of sort of low-level strikes, including today, U.S. forces hitting a ship that tried to break its blockade, seems to be more likely to continue. The Strait of Hormuz does not appear to be opening anytime soon, despite this optimistic messaging we're hearing. And we've heard recently some more patient rhetoric coming from President Trump. What do we know about the state of...

Analysis

Optimism surrounding a potential U.S.-Iran deal over the Strait of Hormuz is tempered by ongoing low-level military actions, suggesting that a resolution may not be imminent. The current geopolitical tensions and mixed messaging indicate that traders should remain cautious, as the status quo of conflict is likely to persist despite optimistic rhetoric from Pakistan.

Smart money should note that while there is hope for a deal, the reality of continued military engagement could lead to sustained volatility in oil prices and broader market reactions. The divergence between optimistic statements and the actual situation on the ground may create opportunities for strategic positioning in energy and defense sectors.

16:16
PDT

NVIDIA is prioritizing open-source AI models to stimulate demand for its chips.

NVIDIA Core Weave Federal Reserve S&P index Bank of Japan South Korea North Korea Pakistan Iran US Middle East Treasury PRIVATE

– Traders are hesitant to take risks ahead of crucial US inflation data.

– CPI report outcomes could lead to high market volatility.

– Geopolitical developments, particularly in the Middle East, are influencing market optimism.

– The Bank of Japan's potential interest rate hike is under scrutiny.

energy infrastructuregeopolitical riskAI market dynamicsinflation impact

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Analysis

NVIDIA is intensifying its efforts in developing open-source AI models to bolster demand for its AI chips, signaling a strategic move to enhance its ecosystem. Meanwhile, traders are cautious ahead of key US inflation data, which could lead to significant market volatility depending on the outcomes.

The focus on open-source models by NVIDIA highlights a broader trend where tech companies are leveraging community-driven initiatives to drive hardware sales. Additionally, the upcoming CPI report is pivotal, as it could either reinforce or alleviate concerns regarding Federal Reserve actions, impacting market sentiment significantly.

16:14
PDT

South Korea's jobless rate rose to 2.8% in July.

South Korea North Korea U.S.Iran Strait of Hormuz Haidi Bloomberg Mark Cranfield In October North Korean PRIVATE

– Population over 15 years old increased by 0.6% year-over-year.

– North Korea's missile flew over 700 kilometers, raising geopolitical tensions.

– Potential U.S.-Iran deal could stabilize oil markets.

– Ongoing supply disruptions are affecting petrochemicals and construction.

geopolitical risklabor market trendsoil market stability

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In October. Anything less, and the yen will probably stay as a big underperformer, and we'll have to look towards intervention, yes, again, to stabilize the currency. Bloomberg and live strategist Mark Cranfield there with his views on what's happening across markets as we're also following the latest economic data out of South Korea. We are getting now that just a jobless rate coming in at 2.8 percent for the month of July. This is rising from the previous month also coming in above expectations. We are also seeing that the population over 15 years old has increased slightly to 0.6 percent from a year ago. We will continue to follow these job numbers because of course we have seen the impact from the Iran war supply disruptions weighing on petrochemicals, construction weakness, which has really partly offset some of those gains by the tourism and services side of things. In today's session in South Korea, Haidi will also be watching some geopolitical tensions. We're now hearing from local media that North Korea's missile flew more than 700 kilometers on that announcement earlier that we had heard from Japan as well confirming that North Korean suspected ballistic missile, Haidi. We are sharing staying with geopolitics and taking a look at this potential deal that Pakistan says is getting closer between the U.S. and Iran over the Strait of Hormuz. They're saying that even as the two sides of the...

Analysis

South Korea's jobless rate rose to 2.8% in July, exceeding expectations, while geopolitical tensions persist with North Korea's missile activity. The potential U.S.-Iran deal over the Strait of Hormuz could provide market relief, but ongoing supply disruptions from the Iran war continue to impact sectors like petrochemicals and construction.

Smart money should note that while the jobless rate increase may signal economic weakness, the slight population growth could indicate resilience in the labor market. Additionally, any progress on the U.S.-Iran negotiations could stabilize oil prices, which have been a significant concern for investors amid geopolitical uncertainties.

16:11
PDT

S&P index at record highs amid optimism.

S&P Bank of Japan Japan US Middle East oil BOJ Bloomberg Economics JGB Mountain Day CL=F PRIVATE DXY

– A major oil price shock needed to alter market sentiment.

– Bank of Japan may hike rates sooner than expected.

– Yield spread suggests traders anticipate multiple rate hikes.

– Geopolitical tensions are being largely ignored by equity markets.

market optimisminterest rate expectationsgeopolitical risk

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People are reassured that these big names can meet estimates regardless of what is happening in the Middle East or whether oil is near $100 or not. So there's a lot of optimism there, and no wonder the S&P index continues to make record highs as we stay in an elevated position like that. Looking ahead, people are still very optimistic. It would need a really huge shock from the oil market, probably something like going back to $120 that we saw in March, before people start to get really negative on the outlook for global stocks, let alone US stocks. Also, perhaps a very big shock is needed in order to support the yen on a sustainable basis. I mean, we're very close to that 160 level against the US dollar again. We're coming back from Mountain Day holidays here in Japan. How much would an early BOJ hike help in this scenario? Bloomberg Economics is just bringing forward that call, which was for December, now to an October hike. It would probably need back-to-back hikes. If you look at the two-year JGB yield, it is a very good indicator of where people's expectations are for what's going to happen with the Bank of Japan. Currently, the spread between two-year yields and the target rate is almost as wide as it was at the end of May, which was just before the Bank of Japan raised interest rates in June. We're back up to those kinds of levels, and we're approaching a time when there are going to be three Bank of Japan speakers coming up in the next couple of weeks.

Analysis

The S&P index continues to reach record highs, buoyed by optimism despite geopolitical tensions and high oil prices. A significant shock in the oil market would be required to shift sentiment negatively, particularly regarding global and US stock outlooks.

Market participants are closely monitoring the Bank of Japan's potential interest rate hikes, with expectations shifting towards an October move. The current yield spread indicates that traders are preparing for possible back-to-back hikes, which could impact the yen's strength against the dollar.

16:09
PDT

CPI report is the key focus for market direction.

Federal Reserve US Iran Pakistan Hormuz Treasury CPI New York FEDFUNDS CL=F

– Traders are hesitant to take large positions ahead of the report.

– Geopolitical developments could influence market sentiment positively.

– High oil prices remain a concern for investors.

– Market volatility is expected regardless of CPI outcome.

inflation riskgeopolitical stabilitymarket volatility

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Volatility and some swings in the oil market are making people a little bit nervous. But by far, the CPI report is the biggest thing on the agenda for the next couple of weeks. If we get a reinforcement that the Federal Reserve needs to do something at the September meeting, that will be a very big shakeout for markets. On the other side, there will be a huge relief if we get inflation numbers that come in below expectations; the market will be much happier about that, and we can probably see stocks start to perform much better. It's understandable if traders don't want to take huge positions going into that number; you can see why the concerns are there. Whichever way, we're going to get some pretty high volatility, either positive or negative, once those numbers drop tonight in New York. It's interesting. We've seen these equity markets at least pretty happy to ignore the negative when it comes to the ongoing geopolitical situation. Do you think a deal on the shadow of Hormuz could have upside that's perhaps more meaningful? Yes, certainly any peace deal will be a relief for markets in general. We've seen it every time there's a suggestion. We saw it just last night when Pakistan authorities were saying that the US and Iran were getting close to some sort of agreement on Hormuz. We saw that there was a little pop higher in the markets, and Treasury yields came down, which is probably more significant. The fact that people are concerned that the extended period of high oil prices is really...

Analysis

The upcoming CPI report is poised to significantly impact market volatility, with traders cautious ahead of potential Federal Reserve actions. A positive inflation reading could lead to a market rally, while negative data may trigger a sharp downturn.

Smart money should note that geopolitical developments, particularly regarding a potential US-Iran agreement on Hormuz, could provide unexpected market relief, as evidenced by recent market reactions to similar news. The interplay between inflation data and geopolitical stability is critical for market sentiment in the near term.

16:07
PDT

NVIDIA is focusing on open-source AI models to drive chip demand.

NVIDIA Core Weave Mike Grunfield Bloomberg AI US CPI Wall Street NVDA PRIVATE

– Traders are hesitant to take risks before US inflation data.

– Core Weave continues to outperform estimates.

– Market sentiment is currently risk-averse.

– NVIDIA's strategy may reshape AI competitive dynamics.

AI development strategymarket risk sentiment

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We have heard some reports about NVIDIA wanting to develop this open-source model. So what do we know? You know, there was a report out by another media outlet about the fact that it really is putting a lot of resources and working on advancing its open-source models. This is an ongoing effort and quite honestly, it's exactly what I was talking about just now about how NVIDIA is trying to build this ecosystem and reinforce the demand for its products. A better way to reinforce the demand for NVIDIA's AI chips than to put out a bunch of open-source AI models that seed the market and increase the demand for its chip. So that's the end game here. It's not like NVIDIA is, you know, striving to be the leading AI model developer of the world, but having AI models out there are going to increase the demand for its hardware. Bloomberg managing editor for US tech and cybersecurity, down there. Well, agent stocks are posed broadly to follow Wall Street lower as traders are holding back on any risky bets ahead of key US inflation data. Let's take a look at the broader outlook on bringing up Bloomberg and Mlythe strategist Mike Grunfield. So, you know, unsurprising that we're not seeing a whole lot of risk-taking at this point. Yeah, I mean, the CPI numbers are huge as far as investors are concerned as you've just been hearing, even though companies like Core Weave are producing great results, beating estimates.

Analysis

NVIDIA is intensifying its efforts to develop open-source AI models, aiming to bolster demand for its AI chips. This strategy is not about becoming the top AI model developer but rather about seeding the market to enhance hardware demand.

Smart money should note that despite strong results from companies like Core Weave, traders are cautious ahead of critical US inflation data, indicating a risk-averse sentiment in the market. The focus on open-source models could signal a shift in how tech companies approach AI development, potentially reshaping competitive dynamics in the sector.

16:04
PDT

Supermicro's sales forecast exceeded analyst expectations.

Supermicro NVIDIA Apollo AI But Supermicro Wall Street NVDA

– The stock rose significantly in extended trading.

– AI demand remains a strong driver for tech companies.

– NVIDIA's earnings report is highly anticipated.

– Market sentiment may still be underestimating AI growth potential.

AI demand growthTech sector momentum

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For this company that only went public not too long ago, we had already heard from Supermicro as well just last month how their backlog was at a record. Did we get a similar AI demand story from this company as well? Yes, it was very similar. They aren't in the same business; Supermicro makes the servers that the chips go into, while CoreWeave rents out or purchases or leases those servers to sell back to people who need the AI cloud computing. But Supermicro's results tell a very similar story in that they gave a sales forecast for the current quarter that very much topped analysts' estimates, and that was yet another sign of booming AI demand. Now, what I thought was interesting about Supermicro was it's funny; I said it's a bit of a toss-up when it comes to how the market will react. Because, as you said, last month they already released preliminary results, and the market went up about 25% as a result of that. So I thought maybe it's all baked in and they won't react, but they exceeded expectations despite those preliminary results and we're up very much in extended trading today as well. And of course, a big one is coming up: NVIDIA's earnings. What can we expect? Yeah, so NVIDIA reports on August 26. And of course, the big news from last night going into this morning was the fact that they had tapped a bunch of big Wall Street names like Apollo.

Analysis

Supermicro's strong sales forecast for the current quarter exceeded analysts' estimates, indicating robust demand for AI-related infrastructure. Despite previous preliminary results, the company's stock surged in extended trading, reflecting continued investor confidence in the AI sector.

The market's reaction to Supermicro's performance suggests that expectations for AI demand are not fully priced in, as evidenced by the significant stock movement. Additionally, NVIDIA's upcoming earnings report on August 26 could further influence market sentiment, especially given its recent engagement with major Wall Street firms like Apollo.

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