00:00 Speaker A
You’re getting this economic data. Yeah. It keeps coming in better than expected. Existing home sales today, beat. Jobs report last week, beat. And then investors think, okay, well the Fed, they’re they’re not moving. They may be even hiking. We’re higher for longer, that’s a problem for tech.
00:09 Speaker B
Yeah, you know what the big problem here? Good news is bad news in the market. and that’s because rate cuts are kind of out the door now. Now we’re talking about how many rate hikes and when are they coming. Let’s go back to the Wi-Fi interactive. I just want to show you this chip sell off. This was textbook, okay? This is a one-month chart of the socks here and right at the high which came on 63, that was June 3rd, five days ago. If you take that and you draw a line down to the close, which was last Friday, sorry I’m not drawing this very well. And then you do a fib retracement here, the sellers came in exactly where they were supposed to. So what’s going on here? You’ve got day traders kind of swinging the market back and forth.
00:46 Speaker B
I’m going to show you that year-to-date chart of the socks and I’ll put lines on it. It got so far extended that the market is using any excuse here to kind of take profits and there’s something on Wall Street called value at risk. When you have such uh extendedness in the market, uh that can can factor into and actually precipitate more selling.
01:07 Speaker A
SpaceX is on deck. I’m just curious what what impact if at all, do you think that’s already having on the market?
01:14 Speaker B
So the concern is Wall Street has all this stock issuance coming out, these three big IPOs, plus you got Google, which is raising 80 billion dollars in stocks. So these big hyper scalers, they’re not the cash kings that they used to.
01:30 Speaker B
I’ve posted a chart here. I’m writing about this. It’s going to come out tomorrow morning. Retail buying of space stocks just hit the highest level since 1224. and this goes back to uh July of 2023. So basically two years here. Investors are piling in the space stocks because that is the hot new thing. What they also flagged is that investors are selling chip stocks. So, you know, there’s only so much money to go around. So yeah, there’s kind of a crowding out effect that we’re seeing here.
01:54 Speaker A
What would hikes potentially mean for these mega IPOs on the way?
01:58 Speaker B
I don’t think we could get any hikes until later in the year, but a lot of this is getting priced in right now. I was just reading a note from Alfonso Peccatiello over at the Macro Compass. He doesn’t think that the the Fed shatter is a big deal. He doesn’t think that uh he thinks it’s overblown right now and the market’s getting ahead of itself. If I could just show you one more chart real quickly, uh and this kind of relates to the crowding out. This is on the Wi-Fi interactive. Um this shows you that IPO supply going back all the way to 1995. It is rising, but it is and here is the dotcom peaks right in here. But when you print it as a share of market cap, it’s really not that big. You can see that white bar, that’s where we are this year. So, yeah, there is huge IPOs coming about, but in relative, relative to the rest of the market, it is not that big.