Stocks hold up despite surging rates and oil... What about AI and cash-securing strategies?

In the market, three warning signs — a 5% US Treasury yield, a dollar index of 100, and $100 oil, the so-called '500' — were presented, and stock prices were predicted to fall. However, contrary to expectations, the market continued to hold firm. Personally, regarding the market's movement, I expressed how I felt after being mocked with the taunt, "They talked about the 500, but it's not dropping."

The 10-year US Treasury yield, the dollar index, and oil prices are the three main variables driving the market. Oil once exceeded $100 but has recently lost steam and turned downward. If oil returns to a downward trend, the market's bad news is likely to be resolved, and if high oil prices persist for a long time, there is concern that variables other than oil will dictate the market.

However, this pressure is assessed as having a low level of enforceability, and the possibility of Iran pushing back remains. Whether the Houthi rebels can deter attacks on Saudi Arabia is the key to the Middle East situation.

Even though the market has moved away from concerns, trading volume shows a pattern of not increasing significantly. It is judged to still be too early to discuss a full-scale uptrend along with the AI theme. It is necessary to maintain a conservative view while confirming the market's direction.

After the summit, the possibility of tariff cuts and easing inflation is being discussed. However, in preparation for uncertainty during the holiday period, a strategy of prioritizing securing cash rather than aggressive investment is recommended. "Since there are variables, wouldn't it be a bit hard to go into next week aggressively loading up and spend the Chuseok holiday all relaxed? I think we should still hold on to some cash," he said.

The unanimous decision is interpreted as evidence that there is no recession concern. Currently, US AI investment and consumption indicators remain solid.

During periods of demand-pull inflation, rate hikes tended to drive stock prices higher. However, in the case of supply-driven inflation, rate hikes act as a burden on the market. The US is currently supported by a solid 5.1% economic growth rate, but the market impact of rate hikes varies depending on the cause of inflation.

Former President Donald Trump recognizes that maintaining AI CAPEX (capital expenditure) is key to economic growth. This shows that the will to continue investment is reflected more strongly than the theory of slowing AI investment.

The rise in long-term bond yields is the result of a combination of questions about the Fed's independence and concerns about the Treasury's fiscal management. If war issues reignite on top of this, yields could rise again due to increased defense spending. Oil price fluctuations are closely linked to other indicators and affect the market. "The rise in long-term bond yields was due to overlapping concerns about the Fed's independence and worries that the Treasury would not manage fiscal affairs properly. If war flares up again, they will rise again," he said.

US energy authorities claim that 18 million barrels of oil per day are being moved through the Strait of Hormuz. This is a position that there is no major problem compared with 24 million barrels before the war. However, doubts are being raised that the reliability of these statistics is low because many ships are currently operating with AIS (Automatic Identification System) transponders turned off.

Nvidia forecasts that next year's sales volume will double compared with this year, and expects revenue to grow even more. However, specific sales volume figures are still unknown. There is also a possibility of a gap between expectations for the entire AI infrastructure ecosystem and actual performance.

Power demand from AI data centers is growing rapidly, but the power supply infrastructure to meet it is absolutely insufficient. Difficulties in securing power could lead to delays in companies' capital expenditure (CAPEX). If the power bottleneck persists for a long time, there is concern that it could even have a negative impact on GDP growth.

A representative case is Amazon securing a stake in Generac and signing a generator contract. Onsite power generation facilities are expected to serve as a leading indicator for easing power shortages, and attempts to secure emergency power using shipbuilding generators are also appearing.

Ahead of the Chuseok holiday, market trading volume may decrease and volatility may increase. In particular, caution is needed over the possibility of disappointed selling after expectations for the September 24 US-China summit. Therefore, it is necessary to respond cautiously to the market while securing cash during the holiday period.