00:00We're just hearing there from Kat about some of the dynamics around the Asia tech story, Paul,
00:04but we're going into a really busy week for Asia tech, aren't we? With Samsung earnings,
00:07SK Hynix, ADR at the end of the week. How does sentiment feel this Monday?
00:15Yeah, good morning, Anna. So 3-2 is the score on everybody's lips this morning,
00:18but for South Korean equities, at least, there's more 2-all and going into extra time.
00:22A couple of positive points for the bulls out there. One, we had decent earnings and read
00:28across from Taiwan's Honghai, the technology company, still kind of pushing forward those
00:34very large increases in sales. And two, we had some local reports that Samsung is going to be
00:39raising its prices for its chips again in the third quarter. So those are a couple of things
00:43that have been on the positive side. Samsung stopped up a little bit today. But on the negative
00:47side, as Kat was talking about this, talk of a possible tax on excess earnings for South Korean
00:52chip makers. It doesn't have to be a bad thing, because if they're reinvesting that money in
00:57infrastructure and so on to support the businesses, it could be good. But I think investors hear
01:01tax and think, uh-oh. And also, there's been more and more consternation about these leveraged
01:05ETFs on the single stocks. In South Korea, people calling the cost be something like a casino,
01:10which, if you've been covering it day-to-day, it certainly does feel a little bit that way
01:13sometimes. So, to all, what's the extra time? The tiebreaker is Samsung's earnings, which we get
01:17tomorrow. Very lofty expectations. But if it can match them or exceed them, then maybe the market
01:22takes heart from that. Okay, let's put another score up. 165 dollar yen. We've just had Kamakshaya
01:31Trivedi on the show from Goldman Sachs. That's their target. He thinks they get there relatively,
01:35that we get there relatively slowly, Paul. Is that what you're hearing elsewhere? Are we still
01:41going to see upward drift in dollar yen? And what is the pace?
01:48Yeah, it's a good question, isn't it? I think that what the BOJ, oh, sorry, the MOF and the Japanese
01:53authorities have managed to do through their rhetoric and their threats of intervention is
01:57slow the pace of declines, at least for the yen, although it continues to push lower. So,
02:01the Goldman Sachs call of 165 for a year from now is not very far from where we are now,
02:06but it is
02:06still pointing to that sort of bearish direction. And we have hedge fund positioning, net short
02:11positions, the biggest and the most extended since 2017. So, that tells you that the market
02:16is also looking for more weakness in the yen. Goldman Sachs is recommending it as a funding
02:21currency for carry trade. So, that's not so much leaning on the idea the yen will depreciate,
02:25but that because its interest rates are extremely low, you can make money by borrowing the yen and
02:29investing it in higher yielding currencies elsewhere. Paul, on energy, we're looking at Brent at $72
02:35a barrel. What is the level of conviction in the markets that oil remains at or below these levels?
02:42Yes, I think if you're bearish on the yen, if you're looking for market sentiment, much more bearish
02:46on crude oil. We had the symbolic meeting again talking about increasing production over the
02:52weekend. We've got pressure from short-term levels because of the amount of crude that's flowing out
02:58from the Strait of Hormuz and production elsewhere as well. We've got the front end of the curve, I think,
03:04back
03:04into Contango, which tells you that there's plenty around at the moment for people. And the Citigroup coming in
03:09with quite a radical call looking for $60 by year-end. So, plenty of fodder for the bears there, too.
Comments