Oil, Fed, and Tech Outlook (with Yvonne Man, Avril Hong)

Asks about the impact of the Strait of Hormuz reopening on oil prices and the broader market outlook.

Avril Hong

Tony Sycamore

The repricing in oil this week has been drastic due to the instantaneous resumption of Iranian oil, taking crude into the low $70s. The next phase is execution risk regarding the deal details and Israel's actions in Lebanon.

The energy sector has been hit hard, but cyclical stocks are seeing relief from the easing of the protracted closure of the Strait.

Asks about the Fed's next steps given persistent price pressures.

Avril Hong

Tony Sycamore

The new Fed Chair is focused on restoring credibility around the inflation target. The market has repriced from pricing in two rate cuts to now pricing in a definite rate hike before year-end and two hikes by March 2027. Early indications are that Kevin Warsh will be more hawkish, and forward guidance will be reduced.

This repricing is permeating through markets, and there is a transition period where markets will have to respond more to data.

Notes that the lack of forward guidance is causing volatility in bonds and FX, while equities, particularly tech, seem to be carrying on. Asks if the Fed impact is fully absorbed.

Yvonne Man

Tony Sycamore

The Nasdaq has rallied 35% over nine weeks, putting valuations in the spotlight. There is a rotation away from the Mag 7 (Amazon, NVIDIA 12% below recent highs) into names like Intel and AMD. The question is how much further the index can go without the Mag 7 leading.

It might be a good time to take stock of the move in tech stocks, especially with post-conflict uncertainty.

Asks if the same lens applies to South Korea, where chipmakers are doing well and valuations look attractive.

Avril Hong

Tony Sycamore

South Korea does not look expensive compared to the US. Samsung remains a good thematic for AI exposure in the weeks and months ahead, as US tech valuations are lofty and capex spending is a question.

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