“Focus on Earnings in October”… Nasdaq New High, Where Next?

The U.S. releases GDP and employment figures as advance, preliminary, and final estimates. Such frequent data revisions are considered customary, and changes in corporate guidance are also made flexibly.

Data revisions are not an embarrassment in the U.S. economy, and the market accepts them as routine. This downward revision of employment figures is also widely interpreted as a sign of economic slowdown and poor employment.

Hedge funds that took short positions on bonds just before the September interest rate hike pushed up market interest rates to avoid losses.

Ultimately, it is believed that bond sellers, rather than the Fed's policy decisions, drove the rise in interest rates.

The rising trend in 10-year Treasury yields shows that strong bond selling continues even with low expectations for an October rate hike.

While interest rates are rising, investors sell bonds, posing no major threat to the stock market.

When interest rates peak and fall sharply, investors tend to sell highly liquid stocks to repurchase bonds.

In 2018, when key interest rate hikes were expected to end, the stock market also experienced significant corrections.

Falling interest rates linked to price stability, along with stable oil prices, are positive for the market, but sharp interest rate drops due to economic contraction cause stock market corrections.

Asset allocation strategies between stocks and bonds have a greater impact on interest rates, and investors' view of directly linking oil prices and interest rates is far from reality.

With increasing bond supply and continued selling due to AI investment, investors adopt an asset allocation strategy of dividing bonds and stocks in a 6:4 or 7:3 ratio.

Funds moving from bonds into the stock market are helping to prevent a significant overall index decline.

The Dow Jones, where high-priced stocks like Goldman Sachs and Caterpillar significantly influence the index, contrasts with Nasdaq's market-cap-centric structure.

The underperformance of high-priced stocks like Goldman Sachs and Caterpillar restricts the rise of the Dow Jones, and the differences in the timing of new highs across indices since August resulted from a rebalancing process.

The actual decrease in traffic was only about 6-7%.

Contrary to initial concerns during the Middle East war, the market adapted to the situation by finding alternative routes to replace volumes. Crude oil traffic did not show a noticeable decrease in data either.

The possibility of a change in U.S. policy regarding the protection of the Strait of Hormuz after the November midterm elections is a key variable for oil prices.

Saudi Aramco is widening discounts on official selling prices (OSPs) for East Asian regions to maintain supply volumes.

Geopolitical risks and the pursuit of profitability are complexly intertwined, making it difficult for the price increase driven by Europe's reliance on Russian oil to easily subside.

While oil price growth is expected to slow after February-March next year, a sharp drop will also be limited until the war ends.

The U.S. policy stance acts as a major factor determining the upper and lower limits of oil prices.

As oil price growth slows after February-March next year, its impact on overall inflation is also expected to gradually decrease.

With the strengthening of the U.S. self-sufficiency system, it is uncertain whether strategic petroleum reserves will be replenished after the war. Crude oil production is expected to surpass 14 million barrels this year.

With the strengthening of the U.S. self-sufficiency system, it remains uncertain whether strategic petroleum reserves will be replenished even after the war ends.

The structure shows consumer prices maintained while service quality improves. The drop in token prices means that product costs have decreased due to producing more tokens with the same GPU, while GPU rental fees tend to remain stable.

This means that more tokens can be produced with the same GPU, leading to a structure where consumer prices are maintained while service quality improves.

The continued investment by big tech companies hinges on their ability to prove their own earnings. Falling costs are expected to lead to improved profitability for service companies, and next week's earnings announcements are crucial.

Whether big tech companies are generating enough profit to cover their own investments is key this earnings season, and next week's U.S. corporate earnings announcements and management comments will be crucial.

As the EPS growth rate of U.S. companies is trending upward, greater weight should be given to earnings announcement data when making investment decisions.

The earnings per share (EPS) growth rate of U.S. companies is trending upward, so it is recommended to give greater weight to earnings announcement data when making investment decisions.

The upcoming U.S. midterm elections in November could be a significant event determining market liquidity.

For the current bull market to continue, it is essential for the Dow Jones to hit a new high, following Nasdaq and S&P 500. If the Dow Jones fails to break its new high, a correction period cannot be ruled out.

Accordingly, we suggest conservative investing, adhering to the 7:3 principle through portfolio adjustments.

Caterpillar has risen sharply recently on the back of AI and data center demand, and short-term corrections are temporary phenomena that should be approached from a long-term upward perspective.

For market-leading stocks based on earnings, like Nvidia and Apple, increasing their weighting during price corrections is an effective strategy.

Caterpillar's stock price has risen significantly over the past few years, comparable to many semiconductor stocks.

While it was once heavily influenced by the Chinese economy, artificial intelligence (AI) data center demand is now the key driver of its stock price increase, and the recent three-month stock price correction is interpreted as a temporary phenomenon.

Cases like Nvidia and Apple, which set new highs after corrections, suggest that temporary dips in market-leading stocks should be seen as buying opportunities.

It is important to pay attention to patterns like Nvidia and Apple, where new highs are achieved again after corrections, and to maintain a consistent approach to core themes that hold market leadership.

The past examples of Nvidia setting new highs after a pause, and Apple emerging as one of the top stocks during the July-August stock rebound despite initial criticisms of AI shortages earlier in the year, validate this approach.