Our Daily Notes

05/29/2024 10:45 Geopolitical risks and bond yields are prominent in pricing… Yesterday, the S&P 500 closed flat. However, as of this morning, both Asian markets and US/European index futures are selling. In the S&P 500, the energy sector (due to the increase in oil prices), technology (due to the rise in semiconductors) and communication services were positively separated, while financials, healthcare services and industrials were selling by over 1%. The fact that the 2 and 5-year US bond auctions were not as strong as the market expected is causing increases in US bond yields. The hawkish statements of Fed member Kashkari are also causing the pricing of interest rate cuts to ease. Geopolitical risks are effective on the main pricing of raw material markets. Brent oil: Above the 200-Day Moving Average for the first time since the beginning of May. Technically, there is also a “short-term” rise potential of 1.5%-2%… Precious metals: The reason they are not “negatively” affected by the increase in real returns is “geopolitical risks”. If we see a decrease in these risks, we may face a rapid profit taking. The dollar index continues to trade above 104.5. Elon Musk also contributed to Nvidia’s rise This time, with xAI receiving 6 billion USD funding in its Series B financing round, talk of “increased demand/continuation of growth” increased for Nvidia (with expectations that xAI will use a significant portion of this funding to purchase Nvidia chips…) Among the names that made the 6 billion funding are names such as Sequoia, Andreesen Horowitz, Fidelity, Ark Invest & Valor Equity Partners. Two issues that caught our attention: Nvidia’s largest customers (MSFT, AMZN, META, GOOG etc.) are also its largest “cloud system” providers. They are already using Nvidia chips in “data centers”. The information up to this point is the part that everyone knows. The part that the market has “slightly” overlooked is that Nvidia has committed to giving “a portion” of the money coming from these customers back to them in the name of “using cloud systems” with its “DGX Cloud Services” business line. A great ecosystem A large portion of those who put 6 billion USD into Elon Musk’s xAI are also the names that financially supported Elon in purchasing Twitter at the time. A great network Today, the Fed’s Beige Book will be important on the US side. Inflation data will be followed on the European side. BlackRock’s Bitcoin ETF is approaching 20 billion USD in size… It has been a few months since the fund started receiving investments.