Run or done?

Ipek Ozkardeskaya ipekScope

The technology stocks, especially those that spiked in a parabolic move, are being battered due to

1) their massive AI spending, increasingly financed by debt, with an unclear path to profitability for some of them, and

2) the prospects of higher interest rates that will increase the cost of debt in the months to come.

Note that the unease in US tech stocks started after the latest Federal Reserve (Fed) announcement, which came in more hawkish than expected, as the new Fed Chair Kevin Warsh put ‘price stability’ at the centre of his statement. The dot plot suggested that half of the Fed members are looking for at least one rate hike this year to tame inflation, which spiked above 4% last month for the headline figure and remains near the 3% mark for the core figure.

I highlighted that technology stocks have unusually outperformed their non-tech peers during the latest Fed tightening cycle thanks to the nascent AI boom and the ample free cash flow that Big Tech had at its disposal.

Read the full article here.

Author

Ipek Ozkardeskaya

ipekScope

Ipek Ozkardeskaya began her financial career in 2010 in the structured products desk of the Swiss Banque Cantonale Vaudoise. She worked in HSBC Private Bank in Geneva in relation to high and ultra-high-net-worth clients.

GBP/USD consolidates recent losses around 1.3200

GBP/USD enters a bearish consolidation phase around 1.3200 in early Europe on Wednesday. The pair's rebound remains capped amid a broadly firmer US Dollar and chaotic UK political environment. The focus is now on BoE-speak for fresh trading impetus.

EUR/USD hits yearly low, eyes 1.1350 on USD strength

EUR/USD sits at yearly lows, eyeing 1.1350 in the European morning on Wednesday. The pair remains vulnerable to further declines amid a bullish US Dollar. The Greenback continues to draw support from hawkish Fed bets and US-Iran peace deal uncertainty.

Gold bounces off $4,050 but downside risks persist

Gold rebounds from a nearly two-week low of $4,050 in the early European session on Wednesday. Despite easing inflationary concerns in the face of the recent fall in Crude Oil prices, traders have been pricing in a greater chance of a rate hike by the US Federal Reserve, which will continue to limit the bullion's recovery.

Dogecoin tests a key make-or-break point amid waning retail support

Dogecoin trades below $0.08000 maintaining a steady decline for the seventh straight week. The meme coin is losing its retail strength as DOGE futures Open Interest drops 10% in 24 hours, while institutional demand remains muted with zero inflows so far this week.

"Rearranging the deckchairs on the Titanic": UK's fiscal crisis outlasts another Prime Minister

Keir Starmer's resignation as the UK Prime Minister comes ten years after the Brexit referendum vote, a coincidence that financial markets have been quick to note. The British Pound trades around 1.3220 against the US Dollar on Thursday.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.