Macro trend

Crude oil prices rebounded under interest rate cut expectations.

On Friday, WTI crude oil futures remained above $81 per barrel, up more than 3% this week and poised for a second consecutive week of gains. This upward trend is supported by the decline in US crude inventories and the intensification of conflicts in the Middle East. Thursday's data showed that US crude oil supply decreased more than expected, with a drop of 2.547 million barrels last week, exceeding the expected 2 million barrels. In addition, the prospects for multiple interest rate cuts by central banks, including the European Central Bank and the Swiss National Bank, are changing economic prospects and may affect energy markets.

US housing permits and new home starts continue to decline.

A report from the US Department of Commerce showed that new home starts in May fell 5.5%, with an adjusted annual rate of 1.277 million sets, the lowest level since June 2020. Economists had previously predicted that new home starts would rebound to 1.37 million sets.

The momentum of new home construction growth was strangled by the surge in mortgage rates this year. Freddie Mac data showed that in early May, the average rate for a 30-year fixed mortgage soared to a six-month high of 7.22%, before falling to slightly below 7.0% at the end of the month.

US initial jobless claims slightly decreased from the previous week's high.

In the second week of June, US initial jobless claims were 238,000, higher than the market's expected 235,000, the second highest level since August 2023, trailing only the revised 243,000. Continuous claims for unemployment benefits increased by 15,000 to 1,828,000, the highest level since January, reflecting increased difficulty for job seekers to find suitable work.

Chart: Initial jobless claims.

Fund Flows.

Bank of America survey: global fund managers have high stock allocation and low cash allocation.

A survey (FMS) by Bank of America shows that sentiment among global fund managers is the most optimistic since November 2021, pushing cash levels to a three-year low and stock allocations to a high level.

The divergence of US stocks continues.

In the past 30 days, only 17% of the constituent stocks of the S&P 500 index have performed better than the index, the lowest level in the past 10 years.

Goldman Sachs predicts that the S&P 500 will achieve stronger earnings growth in the second half of 2024 under flexible economic conditions and sales growth.

Company news.

It is reported that Nvidia's competitor, Cerebras Systems, a manufacturer of artificial intelligence chips, is applying for an IPO.

Cerebras Systems, a high-performance computing chip startup that competes with Nvidia in the field of artificial intelligence, has submitted confidential documents and is preparing to go public on Nasdaq later this year. The company produces powerful chips specifically designed for handling artificial intelligence and high-performance computing workloads, claiming that they are more powerful and economical than Nvidia's graphics processing units.

The company has raised a total of $720 million in funding, with a valuation of approximately $4.2 billion to $5 billion. Sam Altman, co-founder and CEO of OpenAI, participated in Cerebras' $80 million Series D financing.

The rise of Apple in the field of artificial intelligence has boosted its valuation.

Apple's recent rebound driven by artificial intelligence has sent the company's market value to a historic high, surpassing Microsoft at one point, which has raised doubts among some skeptics about the sustainability of its valuation. Apple's current expected price-to-earnings ratio hovers around 30 times. Although investors are eagerly anticipating new artificial intelligence functions that could trigger significant user upgrade cycles, there is still uncertainty about the timing of revenue growth and return on investment.

Senior technology investor reduces Nvidia shares due to business risk.

Paul Wick, a senior technology investor from Seligman Investments, has recently been reducing his stake in Nvidia, citing concerns about the chip maker's earnings growth potential. At an event hosted by UBS in Singapore, he pointed out that people's enthusiasm for Nvidia has declined and compared it to Cisco's unstable heyday in the internet era. His fund, the Columbia Seligman Technology & Information fund, manages $13.5 billion in assets.

Taiwan Semiconductor's valuation is approaching $1 trillion, and the upgrade of the target price boosts its bullish trend.

Wall Street's confidence in Taiwan Semiconductor is soaring, with several brokerages raising their target prices. The company's stock price has been rising all the way, approaching the coveted $1 trillion valuation. Goldman Sachs leads the bullish sentiment and raised its target price by a significant 19%, expecting moderate price increases for the production of 3-nm and 5-nm chips. At the same time, JPMorgan suggests that Taiwan Semiconductor's revenue forecast and capital expenditure may increase, expecting artificial intelligence to account for 35% of its sales by 2028. Citigroup and Morgan Stanley have also been optimistic about Taiwan Semiconductor, as its profit prospects are even stronger.

Masayoshi Son will create a "super" artificial intelligence in the next round of investment.

SoftBank Group Corp. founder Masayoshi Son has laid out a bold vision for the future, aiming to create an era of super artificial intelligence that surpasses human intelligence by thousands of times using Arm Holdings Plc's chips. He envisions a world powered by advanced artificial intelligence-driven robots and data centers capable of performing monumental feats, from curing cancer to doing chores and interacting with children. This is SoftBank's most ambitious statement since undertaking financial adjustments following some notable entrepreneurial missteps.

Important economic data of the week

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