Oil Prices Plummet on Truce Rumors, Nvidia Earnings, Jackson Hole Meeting, and Midterm Elections as Key Variables

According to Russian reports, international oil prices fell after rumors of a truce between the U.S. and Iran surfaced. This news served as a short-term positive for the market ahead of major events such as Nvidia's earnings release and the Jackson Hole meeting.

Park Myung-seok, Department Head, commented, "In any case, it's welcome news. The mere fact that oil prices fell is good news. Regardless of the veracity of this situation, it brought a much-needed breath of fresh air to a market anticipating two big events: Nvidia's earnings release and the Jackson Hole meeting." However, the absence of official confirmation from the U.S. side leaves doubts about the report's reliability.

In the recent trend of a weakening dollar, preference for gold, Bitcoin, and commodity sectors has increased. In particular, the uranium sector showed strength, coinciding with Canada's tariff issues.

Park Myung-seok, Department Head, explained, "Recently, in what's called the 'debasement trade,' there's been a very good trend for gold, Bitcoin, and commodity sectors, leveraging the weak dollar. Connecting to that trend, it seems Canada is heavily linked to uranium production."

Asset manager Druckenmiller directly criticized Treasury Secretary Yellen's long-term bond buyback strategy. He argued that using stock buybacks to counter rising interest rates in a normally functioning market is fundamentally flawed.

Yellen's policy is seen as an attempt to artificially suppress yields and has been criticized for not helping to resolve the fiscal deficit. Doubts about the effectiveness of this policy are also spreading among major investment banks.

The recently released consumer confidence index fell short of expectations. This led to sluggish consumer data, which in turn suggests that it could put a brake on the central bank's future interest rate hike decisions.

Park Myung-seok, Department Head, stated, "The consumer confidence index fell below expectations. In fact, credit card-related companies yesterday showed very good results despite continued weak consumption, so I wondered if things were okay, but this is bad again. If this happens, it becomes difficult to raise interest rates, right? That's the inference we can make."

Russia's Novosti news agency reported that the U.S. and Iran had reached a truce agreement, with an official announcement expected within days. The report included conditions such as guaranteeing free navigation in the Strait of Hormuz and resuming negotiations.

However, the market is questioning the reliability of this report and remains cautious.

The U.S. has eased sanctions against China, excluding major Chinese banks and companies that import over 80% of their items from the list of sanctioned entities. This appears to be a U.S. strategy to de-escalate economic sanctions and avoid the risk of armed conflict.

The U.S. plans to implement tariffs on Canadian goods starting January 1st next year. In response, Canada announced retaliatory measures, imposing a 50% tariff on various U.S. products, including steel, aluminum, furniture, medical devices, video game consoles, and smartphones, among other electronic products.

The existing consensus for the U.S. midterm elections was a divided government, with Republicans holding the Senate and Democrats taking the House. However, recent trends suggest that the possibility of Democrats taking both chambers is also quite high.

Indeed, the probability of Democrats taking both chambers is presented as 47% to 39%, and local variables such as redistricting exist.

The U.S. midterm election results could significantly impact AI and data center policies. While Republicans strongly support such policies, Democrats have expressed concerns about regulating the data center industry.

As a result, the relevant industries are worried that policy implementation could be hampered if Democrats take power.

If there is a change from the current structure where the White House, Senate, and House are all controlled by the Republican Party, policy implementation is expected to face difficulties. The possibility that government-led investment trends may not be maintained could act as a market volatility factor.

The speaker commented, "Currently, the White House, Senate, and House are all Republican (Red Wave), but if that starts to twist, policies like 'we want to pour money into this,' which is what the U.S. is doing now, might not happen. So the market sees potential volatility." This expresses concern about a lack of policy consistency.

Institutional investors' futures long positions have reached an all-time high. This generally reflects a positive market outlook, suggesting that institutions are maintaining long positions and are not in a situation to easily sell stocks.

However, volatility factors such as geopolitical truce issues still remain.

Ahead of Nvidia's earnings release, the market is focusing on several key watch points. The first, of course, is overall performance, and the second is the progress in data center networking technology, particularly Nvidia's focus on optical communications.

The third is whether a 75% margin can be maintained, and finally, the progress in the transition to the next-generation Rubin architecture, especially concrete plans like the release timing of Rubin Ultra, are becoming important concerns.

There are predictions that Rubin Ultra's HBM capacity could be significantly reduced from 1024 to 192. This is interpreted as an alternative design direction for Nvidia to continue selling GPUs and racks in a situation where production is not smooth due to a memory shortage.

Such a capacity reduction could negatively impact memory and substrate-related stocks in the short term.

Apple is launching a new Mac Mini that emphasizes security and can run AI models in a local environment. This device, based on Thunderbolt 5, can cluster multiple units to run larger AI models.

This is Apple's strategy to personalize OpenAI models, creating a competitive dynamic with Nvidia's AI computer strategy.

Apple's target price has been raised to $365, strengthening its status as an AI company. OpenAI is also collaborating with Broadcom to develop its own AI chip, 'Jalapeno,' and an increasing number of companies are entering the race to develop their own chips.

Park Myung-seok, Department Head, reported, "Apple also has a new target price of up to $365. And OpenAI also seems to be trying something. It's an AI chip called Jalapeno, which they are developing with Broadcom, and they raised a lot of capital, saying 'ours is super good.'" This suggests that competition in the AI chip market will intensify further.

Dick's Sporting Goods, which announced earnings yesterday, plunged 30%, marking its worst day ever. This reflects overall difficulties in the consumer goods market, with a notable decline in demand for sneaker brands like Nike.

Park Myung-seok, Department Head, commented, "Dick's Sporting Goods, which announced earnings yesterday, had its worst day ever, with a 30% plunge." This trend suggests that consumer contraction may continue.