Yoo Sa-nam Shifts from Optimism to Risk Warning

Yoo Sa-nam had expected the market to rise next week, but after reviewing the current situation, he believes it has entered a very dangerous phase. Despite the market closing higher amidst various negative factors, he places more weight on the possibility of a decline. He announced that he would analyze risk factors in detail, stating, "Honestly, it seems very dangerous now. Let's delve into each reason one by one."

The US 10-year Treasury yield reached 4.98%, nearing the 5% mark. This indicates increasing upward pressure on interest rates. Additionally, while the Consumer Price Index exceeded expectations, consumer sentiment recorded its second-lowest level since 1952. Yoo Sa-nam analyzed that a stagflationary environment is forming, stating, "What do we call it when consumption is bad but inflation is high? We call that stagflation."

This pipeline is a critical infrastructure transporting 7 million barrels of crude oil daily, and its shutdown poses a major risk for a surge in oil prices. Yoo Sa-nam reported the situation, saying, "Yesterday, a drone from Iraq attacked pipelines in the Riyadh and Menina regions multiple times, leading to a preventive shutdown of the East-West pipeline." He warned that if negotiations between Iran and Saudi Arabia fail, oil prices could surge further.

As Japan's 10-year government bond yield entered the 3% range, the risk of Japan's Government Pension Investment Fund (GPIF) adjusting its overseas bond holdings emerged. Calculations showed that GPIF, with $2 trillion in assets under management, could sell up to $62 billion in US Treasury bonds. Yoo Sa-nam stated, "Calculations show that Japan's public pension fund GPIF, with $2 trillion in assets under management, could sell up to $62 billion in US Treasury bonds," pointing out that this could exert additional upward pressure on US Treasury yields.

Oracle reported an earnings surprise, with both revenue and EPS exceeding market expectations and cloud infrastructure revenue growing by 121%. The company also announced impressive results, with a backlog of $664 billion. However, Yoo Sa-nam pointed out cost issues, stating, "Earnings were good. Oracle beat on both revenue and EPS, guidance was good, cloud infrastructure revenue increased by 121%, and the backlog was an enormous $664 billion. But as I explicitly mentioned in the earnings call, they didn't talk about costs." Oracle failed to clearly indicate the timing of its free cash flow conversion, and excessive spending was a concern, with quarterly capital expenditure reaching $90-95 billion. Consequently, major investment banks such as RBC, BMO, and Stifel downgraded Oracle's target stock price.

$2.1 billion has already been recognized, with an additional $700 million in costs expected. This implies further layoffs and severance payments. Yoo Sa-nam explained, "They announced a restructuring plan for this year. The total cost for this year's restructuring plan was set at $2.8 billion. $2.1 billion has already been accounted for, and another $700 million will be added, meaning more people will be laid off and given more severance." Oracle has already reduced its workforce by about 20%, or 20,000 employees, compared to a year ago, and it is understood that the additional layoffs are intended to secure funds for data center investments.

Yoo Sa-nam analyzed that a situation where US interest rates are low and Japanese interest rates are even lower is most favorable for the yen carry trade. He explained, "It's best if US interest rates are low and Japanese interest rates are even lower. It's best if the interest rate difference between the US and Japan is maintained while only the Japanese yen appreciates." However, if the yen carry trade is unwound due to interest rate hikes or other factors, it could have significant ripple effects on the market. Yoo Sa-nam also suggested that a US interest rate hike, while a short-term negative, could be a long-term positive.

Yoo Sa-nam, who had maintained a forecast of interest rate freezes, now mentioned that interest rate hikes are slowly coming into view. He stated, "Whether an interest rate hike is a constant or a variable, it seems like interest rate hikes are slowly coming into view." The duration of the Saudi oil pipeline blockade is expected to be a major variable, and if the blockade persists until the Fed's FOMC, the logic for an interest rate hike will gain more traction.

He mentioned that if negotiations fail, considering a short position might be necessary.

Yoo Sa-nam pointed out that the lack of cash flow generation is a major reason for stock price declines, stating, "As I always say, a price lower than the current one is bound to come again. Why? Because there's no cash." He analyzed that SMR-related companies are inevitably facing greater difficulties amidst continuous corporate investments and rising bond yield pressures.

Yoo Sa-nam stated his opinion, "I think Berkshire buying back its own shares means they believe there are no worthwhile stocks to buy right now." This also suggests an indirect warning about overall market valuations.

He candidly expressed his feelings, "Of course, the Cybercab event was a bit disappointing, and I was left wondering why they did that, which was a bit regrettable." However, he maintained a cautious stance on the event's future impact on Tesla's stock price and did not offer specific forecasts.

He explained, "How much is free? It's free, but there's a limit on the number of questions you can ask. They've made all non-AI features free, and for AI features, you can use them for a limited time each month, or if you want to use them more, that's when you pay." This means that if users wish to use AI features beyond the limited usage, they can do so by paying a fee.

Yoo Sa-nam expressed surprise, saying, "A Reuters breaking news report says Iraq has closed its border with Iran? Crazy. What's going on? Why has Iraq closed its border with Iran?" This is understood to be a preventive measure following the attack on the Saudi Arabian oil pipeline, and the market is keenly watching the outcome of the Middle East conference scheduled for Monday.

Yoo Sa-nam stated, "The 7 million barrels reported in the news is an exaggeration, and the closure is not yet confirmed. That's correct, the closure isn't confirmed... If there's a full closure, the dangerous export volume would be 4 to 5 million barrels." Analysis suggests the actual impact would be around 700,000 barrels, and even in the worst-case scenario of a full closure, it would only result in a 4 to 5 million barrel reduction. The possibility of alternative transportation was also suggested.

He said, "I don't want to be a YouTuber who tells you, 'Buy this now,' or 'Sell this now.' ... I want to be a YouTuber who connects the dots in between." His goal is to help viewers understand and judge the market themselves by analyzing the connections and causal relationships between individual news items.