Oil Is the Real Risk for Another Week: Market Analysis

Looking pretty good. That lifts Asia. That comes on the back of Wall Street session where tech was back in favor again. Uh, all positive. There nothing to be negative about. Is that your take? I think the setup right now is positive, but with real risks. That is that is a healthy way to be whatever a market looks like, you know, positive from every angle. It means you're probably missing something. And whenever you get too bearish, it's probably the time that you're actually missing that the real positive coming in. So an environment where the setup is naturally for prices in stock markets to go higher. But there are real risks on the horizon is it's one of the most healthy markets. And it is one of the the most common types of markets in terms of the stocks are an inflationary asset. So one of those real risk if the oil prices are right at the highs, and I just don't see how that risk gets resolved until we get clarity on what the US action is on Iran post midterms. So I think that's with us for another week. And while SK Hynix was very reassuring results. The big ones, as you've just discussed, are really ahead of us. Alphabet, Microsoft are much more important. And SK Hynix results came into a stock that have been hit massively over the last few months. I think I can't know exactly how much is down from the highs, but about 4,050% down from the highs, I think. Um, whereas Apple and Microsoft are both near their record highs so that yes, their results will be strong, but they'll be strong with the stock price the very elevated where SK Hynix were strong results in the stock price. That's depressed relative to recent price action. Okay. So oil could reduce sentiment. It could make the market nervous at what level we're like where are we now 116 26 I think we've got to we nearly had a touch at 117 a couple of days back. What's the level that makes people nervous? Uh, I've heard a lot of people mention 120, but I don't see any particular logic, not just apart from this. The next round number. To me, it's when this starts feeding back into bond market concerns. So one of the positives for the markets out there apart from obviously good earnings is that we've got yields a chunk lower than they were only a few weeks ago. And we've also got a repricing of stocks in a much of the world outside the US in particular. So that's the positive setup. If if the oil prices jumping off again that everyone goes, oh my God, the inflation problem is going to get much worse. Central banks are going to have to hike much more aggressively. It's one that feeds back into the right story. That's what people are going to get much more concerned about then feeding back into the stock story again. Markets fed Day as well. That's there's some evidence that some positions long positions have been built up in treasuries again. Is there a risk if we get a hawkish hawkish statement from from the from the check at most that there is there's some pain potentially to be had across investors and treasuries if they built those long positions. What are you looking for. Yeah I think the risk reward is for the yield curve in the US to steepen from here to see long and yields rise because of what's happening in oil prices, and also just because of what we've seen in the positioning recently. Um, so I think that globally, I think that steepening dynamic is probably the base case assumption. I will say that with before I went on leave for the last couple of weeks, I did get the yields market very wrong. So that's the disclaimer there.