板块轮动仍有空间：MLIV 3分钟分析

I know, Mark, you have an eye on what's happening in South Korea. Again. We're expecting maybe the government to step in or the regulators to step in to address the leverage ETFs. Part of that story is that something to be welcomed is that's what's needed. There is this incredible volatility. And the cost is down again today. So those announcements we're expecting in two hours time they probably won't be game changing.

The public kind of raise the minimum deposit required change has a little bit of a rebalancing happens. But I think what's important it's a Korean holiday tomorrow. So these announcements are basically coming at the end of the week when the cost is closing, kind of near the lows after a large correction in the last few weeks. And we're going to get the reaction in lower liquidity futures or US traders or US based two times ETFs, etcetera, so that there's the Hong Kong two times ETF which will trade.

So I think there's a chance for kind of a very misplaced and oversized reaction, even though this won't be game changing. And I think technically it's not looking great that we're kind of closing this week at the low because we're closing those because you're trading tomorrow in the benchmark index. So I think that the price action in semis and chip stocks is remaining globally extremely poor. And I think Casp is the leading light for that.

So I think we got a bit more pain in. That's actually next week. And Mark, I want to take it to the oil market because I was just listening to owner speaking there and thinking a little bit about how the dynamic now on the Strait of Hormuz is a little bit different than it was in the in the first half of this conflict. And the question of the sort of binary nature of the open or close to the Strait of Hormuz when it's closed, the market can freak out.

It can sort of push prices higher and higher and higher. That puts pressure on Trump. When you don't have clarity on that, the market is going to have a much harder time pricing. Now, what kind of risk do you think is associated with that kind of condition? Yeah, I think there's two things. I think it's not just that that the changed narrative on their moves. We've talked about that quite a bit this week about how, you know, people now are realizing there needs to be a structural higher premium oil, but it's what's happening in Russia, Ukraine, arguably that's I won't say it's more important, but it's it's as important because it's happening at the same time as people are realizing that or this is not going to normalize this year.

I mean, it might have periods of higher flow, but we're not going back to the where it was. We saw this before with what happened around the Hutus and around the Red sea. Is this so you know that normalization doesn't come through. So oil prices are are going to be slightly higher than we were thinking maybe a couple of weeks ago. However, the one other facet is that we've realized that there are a lot of fossil fuels out there, and the supply is large.

Do you think that's why? Because the market reaction to the producer prices, consumer prices, this backward looking looking to June was positive and we saw yields down. We saw a repricing of the fed. And yet we know that what is happening what you've detailed is is real and material is there. Is there a disconnect. Or are the market saying that this is still an oversupplied energy market globally? I mean, we've got to remember this is a supply side shock for inflation.

And therefore like, you know, if we're going to have inflation purely because of supply chain disruption, there's the whole Covid debate. Do you want to be hiking rates anyway. So it's easier for the fed to argue to kind of look through that and kind of dismiss the fact that they haven't had inflation anywhere near target for a gazillion years. Um, so I think it's more about the the warsh fed reaction function, which people are still trying to work out and what the overall committee reaction function is.

Uh, I'm still in the camp that they're going to try doing nothing for as long as possible. Uh, and, you know, ultimately we might get a hike in September, but that's assuming the market's still super strong. And I think there's more fragility out there in the market. And I remember and Mark Cudmore before the I boom. Before that was the conversation that was dominating the say a much more sort of bearish, a little bit more worried about the risks on the horizon thinking about this and I.

But it seems everything we're hearing today in the last couple of weeks, it's got more runway. We've been talking about it here. What about the risks that are building out under the under the surface. How are you guys taking the view of sort of that unwind if and when it comes. So my story hasn't really changed for the last couple of years. So like I think the bubble keeps on fading until an earnings season change. And what I'm looking for in earnings season is a slash in CapEx.

So I think it is a tremendous I CapEx bubble. I think it's going to be very painful what happens. But I don't think you can pre-empt it. And I think it's it's uh, I think, you know, is this is this a turning point now? I don't think so. Um, but like, I'm open minded, but, like, basically, I think you've got to stay, uh, underlying the positive until we get that CapEx reduction. However, as we've discussed since May, I think we're in a much more volatile stage.

And the volatility you see in the last few months is what we're gonna get for the next months. But like the prior bubbles, that volatile stage lasts about six months. So to me, you know, my my base case is we're another earnings season away always. But I'm going to be open minded to every single hyper scalar earnings report as soon as CapEx gets slashed. That's game over.