00:00A lot of enthusiasm yesterday stateside into the start of the Asia session about Muse
00:04from Meta, Argentic AI, how that's changing or boosting the AI narrative right now.
00:09How much is the rise in oil prices sort of weighing on risk appetite though in that context?
00:17It's the very dominant short-term asset as Guy just outlined there. So I think that the bigger
00:22backdrop is we've got a constructive kind of macro backdrop for stocks. We've talked about this a lot
00:28with the liquidity, the fiscal expenditure, the CapEx out there and the generally easy financial
00:33conditions. Now that occasionally hits hurdles of higher oil prices and higher yields, not unrelated
00:38but sometimes coming from separate drivers. So that's kind of the general backdrop. We've still
00:42in the AI CapEx inflationary stage. That got an extra boost into the US session with the Meta's Muse
00:48really getting excitement there. Then we had the Alibaba's chips. So it seemed like a great session
00:54in Asia. The price action has been very disappointing. And that's because oil prices ticked higher.
01:00Now, the way we're kind of going at the moment is it means that if oil prices fall, we kind
01:05of get
01:05super boosted gains because the macro backdrop is good, especially with optimism around Xi Trump.
01:11So that's if oil prices fall, we get super boosted gains. If oil prices rise, then it just kind of
01:16cancels out the other positives and we kind of meander on a little bit directionless. And that's where we
01:21are today. So oil prices have bounced back up and we've kind of gone net nowhere overall throughout
01:25the Asia session. We're a little bit flattish. But the backdrop is still optimism around Trump's Xi.
01:31I think fundamentally we're in a good spot for more optimism around assets. I'm a little bit concerned
01:37by the price action, though. I'm surprised that oil prices aren't even lower given the large risk
01:42premium we priced in two weeks ago. In terms of what yesterday did in terms of changing
01:49positioning? Do we have a clue? Because we will like going into this in terms of in terms of
01:55positioning, particularly with the CTAs. How much have we closed that gap? Are we back to neutral?
01:59There was a big move yesterday. How far does that take us? Do we have any idea actually what the
02:04positioning picture looks like? Because normally this time of the year is a difficult one. So I'm
02:08just wondering kind of what that backdrop looks like as well.
02:12I don't think positioning is too extreme either way. I think a lot of people are kind of waiting for
02:18the year end trade. The bias for me and for many people out there is that's a bullish trade. There
02:25was nervousness about September seasonality, which I kind of share a little bit nervousness. We're seeing
02:30little sign of that. There's wondering whether the Fed might be a catalyst. Higher oil prices might be a
02:35catalyst. The fiscal concerns around U.S. debt inflation concerns might be a catalyst for that
02:39seasonality to kick in. So that's kind of the backdrop is here. We're really waiting for the
02:44kind of the green light. Do you get on the bullish year ahead trade or is there one kind of
02:48more big
02:49swoon to come first? That big swoon is meant to come in September. So what's going to happen is if
02:54you don't get that negative catalyst soon, a market that is not heavily long is going to start
02:59pushing this aggressively higher. And then I'd say we could really run through to Christmas if that
03:04happens with the last big hurdle to get through, perhaps being October earnings season. If the AI
03:11say that kind of look, they're starting to deflate the AI CapEx bubble, but no sign of that just yet.
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