Iran Ballistic? Bonds shift & Yuan spreads. PCE as is. Java! 28May26

Ajouté : 2026-05-30

[00:00:00]Welcome to Java. Thank you, kind of, for joining again. It's May 28th, 2026.

[00:00:07]It is also Thursday. Now, we have PCE numbers just coming in. I kept uh hold on this for a short so that we could come into these numbers that are the main ones that are going to make a difference this morning. And it looks as if they're coming in just below what they had expected. So, this will leave the door open to the Fed to do whatever action uh they see necessary coming forward.

[00:00:31]Kind of split. I still believe it's going to be a hold throughout the rest of this year. Now, I've got on here a little bit of a joke. Of course, it's Aruba, but we'll be talking about Cuba because they are coming into play coming forward. But let's get started, as always, with what's going on in the markets this morning.

[00:00:50]Now, we did hold off slight bit cuz I did want to get those numbers to see if there would be anything significant.

[00:00:56]We've got a bit of pressure on the market starting this morning. It looks like these numbers are beginning to uh kind of hope it level off a bit. Our fear greed meter still in greed territory.

[00:01:08]So, still buy the dip mentality coming in here. A lot of AI for the trade, but there's some uh alternate views that are beginning to show here. They are uh five straight days of gains for the stock market. Time for a bit of a breather, if you will. We'll see if it actually happens now. 10-year yield given a little bit of room here, but the relative strength of the dollar is up.

[00:01:35]And this is pressuring stocks as well as crude oil up. Now, what happened with this? The ceasefire uh last night had a couple of issues. US and Iran exchanging fire, as this says, uh couple of drones uh got shot down from United States. And Iran actually fired a ballistic missile is what is in the news. So, the short this is that Kuwait also went on alert again as well as UAE. So, it's not just the tensions that are in the straight with the United States but also with the partners. But still coming out the narrative is that thesis buyers still holds. For now, we'll see if what happens with that. A consumer sentiment is at an all-time low. Coming out with these numbers, this is from the Fed itself.

[00:02:31]Why are we still seeing a lot of these gains? We'll talk a little bit about Taiwan. But there is semiconductor scarcity. So, this is kind of driving a little bit of FOMO into this market.

[00:02:42]We've still got huge IPOs coming out from SpaceX, Anthropic, and also OpenAI expected coming out very soon here. I believe they're all racing to get these out while there's still some retail liquidity to take off the table, if you will.

[00:03:01]We've got the upper-end consumer still closely tied to this market. What does that mean?

[00:03:08]That means your upper-end consumer has a lot of assets tied up in this market.

[00:03:13]And we're seeing what we call the wealth effect. So, as long as this market is going up, looking strong, as long as it's fine, that upper-end consumer is doing well and will continue to spend and hold up this market. But the moment there's real trouble that appears in this market, uh they will also exit. So, lower-end consumer also in trouble. Now, we saw uh earnings from Dollar Tree come out. And as we've seen the shift of the middle class down into uh they've got a lot of names for it. But the short of it is they're trying to save money, whether it is uh moving down and they say they say seeking value. All of these mean the same thing. They don't have money to spend like they used to, so they are looking for less expensive alternatives.

[00:04:05]Now, the alternate argument of this is that there can be growth without jobs via AI. Well, there can to a point. But if no one has income, there is zero spending. If there's zero spending, it eventually does filter back up. So, can't create value from nothing in that case.

[00:04:27]We did have Marvell and Salesforce did come out with their earnings. They're dropping this morning.

[00:04:34]So, it's not cross board any longer.

[00:04:36]It's definitely stock picker's market, which means that there is a lot of strength that is being lost into this one. So, caution on this one. So, stocks this morning looking a bit weak. There are a lot of headwinds it's got to face, including this increase in the oil price. So, a lot of caution heading in this morning. Bitcoin acting kind of as harbinger started dropping yesterday, showing there's weakness ahead. How far will it go down before it decides that's enough for it to gather some strength?

[00:05:13]We'll see. Now, back to this apparent consumer being closely tied to these markets.

[00:05:20]Once these markets start dropping significantly, this could cause that spiral if they stop spending because consumer sentiment is already not very good.

[00:05:32]Calendar this morning we're looking also the GDP and this is part of what they're saying is that there can be growth in the GDP via robotics and this artificial intelligence without actually having uh working. And as I said, they can only work for so long. Now, the core inflation way above their 2% target, but they're saying it's transitory.

[00:05:57]And we've heard that before.

[00:05:59]So, we'll see how all of this goes forward. Also be looking at new home sales, but I'm not going to wait for those to come out. I do believe those numbers going to be weak uh going forward. The uh that is mostly on the homes that were being built and ordered to rent out has uh abated. So, lot less of that going on. We've got housing uh numbers coming down.

[00:06:24]Snowflake is one of the few holding up.

[00:06:27]Popped 35% pre-market saying that they've got a blowout quarter that came in, but really what gave it the boost was not so much the earnings cuz that's not enough now.

[00:06:39]It's because they had a $6 billion deal going forward with Amazon Web Services. So, the short of that is that it continues to look as if they're going to be one of the larger survivors going forward. Any of the smaller more questionable corporates are going to be dropping out, I see.

[00:06:59]So, smartphone sales, good indicator here. Everyone's got one. Everyone's kind of rotating into those. So, the next level up is electronics. Those are in decline. So, smartphone sales tumbling. Uh expected to decline an additional 14% 2026.

[00:07:20]This is huge. So, this could alleviate a lot of what they're operating off of, which is saying there's a squeeze forward for this demand for all of this stuff that's not available. Well, if demand drops precipitously across the board, uh they won't have that problem.

[00:07:38]Nvidia came out saying they're going to spend $150 billion dollars a year in Taiwan. Now, this is huge for Taiwan, Taipei.

[00:07:47]More importantly, calling it the epicenter of AI revolution.

[00:07:52]So, this will be an interesting shift and kind of a boost EMS as far as that side. Now, we've got a few other things happening um not just politically, but that will kind of come back and affect globally. Now, we've got of course the new pandemic, which is going to act as a shutoff valve. So, they can choose the timing of this effect mechanism as we can see uh Canada.

[00:08:22]Temporary, we've heard that num- that name again. Also, their language coming back. I we've heard all of this before.

[00:08:30]Uh border measures. Notice very uh very careful about the wording that they choose, not saying short not uh any of this. So, measures in response to this outbreak.

[00:08:46]So, couple of other things that happened. We've got treasuries that are in decline for the United States. The bonds, also German bonds selling off.

[00:08:55]Now, Putin just visited China and the interesting thing is now they are issuing bonds in yuan. So, more of a push to de-dollarize, go away from the USD.

[00:09:10]But on the other hand, we're watching major polarity because uh currencies, as you know, we're in a currency war.

[00:09:18]Um one of the casualties of this war recently was Venezuela.

[00:09:23]So, with Venezuela recently experiencing hyperinflation, their currency went to well, in short, trash. They're now back on the US dollar. So, we're going to see more of this polarity happen as that currency war heats up. We're going to watch the war shifting if it kind of meters itself out and not just Russia-Ukraine, but also Israel-Gaza. I know we've got Iran over in the Middle East, but it's going to spread over Southeast Asia. We've got things heating up a bit there. We've also got it heating up in the trade.

[00:10:01]China's offering what they're calling mini max and this is their uh answer to Nvidia and some of the tech there. So, as they increase their tech, we're going to see a lot more pressure points here as well as with the rare earth minerals tie-ups from both sides. So, with all of this, a lot of interesting dynamics happening here. I wish you all a wonderful day. Until I see you again, my friends.

[00:10:27]Resist.