Oil Prices, Rates, AI, and Market Volatility

Semaphore reported that increased Saudi crude exports may be behind the drop in oil prices. Warning signs from Nvidia's valuation decline are being detected in the market, and risks from the formation of an AI consensus are also being raised.

Semaphore reported that increased Saudi Arabian crude exports may be one of the reasons international oil prices fell over the past few trading days.

Concerns were raised that if everyone uses similar models, AI could scan multiple sites and produce a common conclusion, and people judging based on that could lead to homogenized market judgment.

He advised paying attention not only to AI's analysis results but also to information AI does not mention, and sometimes taking positions different from the consensus.

Expectations for an end to the war created an atmosphere that pulled oil prices down, with oil at one point falling to $89.8.

However, the Iranian delegation's demands are considerable, so difficulties are expected before an actual end to the war.

President Trump mentioned the possibility that the war could end even before the midterm elections, but Bank of America forecast that even if reconciliation with Iran is achieved, the decline in oil prices could be slower than expected.

There is an expectation that around 2028, when the AI productivity revolution occurs and innovations in employment and other areas become visible, rate cuts might happen.

There is also an expectation that the high-rate period may last until the first half of next year, but that this will not collapse the market. Institutional bets on long dollar positions are on a declining trend.

Former President Trump has expressed support, while diplomatic fallout such as harm to allies is also being raised. Former President Trump also expressed support for the measure, but diplomatic controversy such as harm to allies is a variable.

This measure could cause diplomatic controversy, including harm to allies, so the U.S. government is approaching it cautiously.

Given the composition of the Chinese delegation, the possibility of major economic agreements is low, and President Trump and President Xi are expected to discuss AI, tariffs, and the war.

It was also mentioned that China may raise the issue of arms exports to Taiwan, and it is observed that President Trump will avoid commenting on it.

Anthropic released Claude Opus 5.5, stating that prices were cut by 40% and output speed improved by more than 30%.

OpenAI's GPT-6 Sol and Luna improved intelligence, alignment, task productivity, coding, and computer use capabilities, with price per token halved and price per task much cheaper.

OpenAI emphasized price competitiveness per task and pushed a low-cost model strategy, while Sam Altman stressed preventing concentration of AI power and establishing safeguards through external evaluation bodies.

A test is underway in which humans give orders during AI calls, and technology ethics and privacy controversies remain challenges. It is currently in internal testing, and the process includes humans intervening to give instructions during AI phone tasks.

During internal testing of this feature, it was confirmed that humans, not AI, intervene to give orders, raising concerns about privacy and other issues. Meta stated that it is still in internal testing before public release.

Cloud companies such as DigitalOcean are launching managed runtimes as agents increase, simplifying the agent invocation process.

Advances in AI-related technologies such as OpenAI's Astra and Meta's Muse are driving gains in semiconductor and AI-related stocks.

However, expert Kim Hyo-jin assessed that the burden from the aftermath of rate hikes has not been fully resolved, and the market is currently in the process of digesting its impact.

Oil prices acted as a decisive variable complicating economic and inflation outlooks. After the war broke out, oil soared to $120, then fell to $69 in early July, showing extreme volatility over nine months.

Although oil prices are a major variable with a decisive impact on inflation and the economy, their unpredictable movements are causing great difficulty in inflation forecasting.

Oil prices have now fallen to $89, but it is difficult to assert that this decline will continue, and U.S. Treasury yields also do not fully trust the oil price decline.

Considering that the difference between the high and low in 2008 was $120 and during the 2020 pandemic it was $100, the current oil price volatility amounts to a serious crisis level.

Economist Kim Hyo-jin recommended that during the Chuseok holiday, a precise review of held stocks is necessary.

He emphasized that in the late stage of an uncertain rally, rather than blindly increasing the number of stocks, a concentrated strategy is needed to narrow investments to sure stocks with proven growth potential, such as semiconductors and AI.

On Wall Street, forecasts for the number and size of rate hikes differ, and market participants are feeling fatigue as they digest the news of hikes.

Current leading stocks are highly profitable large-cap companies, so signs of overheating are relatively few, but increasing investments unconditionally during a rate hike cycle should be avoided.

Despite expectations for continued growth in AI technology, uncertainty is high at the beginning of the rate hike cycle, so hastily increasing holdings or investing excessively is not a good strategy.

An analysis emerged that the current AI technology competition resembles the conflict when the Soviet Union developed nuclear technology that the U.S. had monopolized. In the late 1940s, the U.S., recognizing the dangers of nuclear technology, proposed a monitoring system through international organizations, but the Soviet Union rejected it and succeeded in developing its own nuclear weapons, intensifying the arms race.

The current proposal to slow down AI is likely a strategy to maintain a substantial technological gap, given that the U.S. holds an overwhelming lead in frontier AI models.

Just as defense spending surged as the arms race intensified during the Cold War, AI development and investment are expected to become more active regardless of regulatory discussions.

Through this historical similarity, we should recognize that the AI technology supremacy race is a geopolitical issue beyond a simple stage of technological development, and approach it from a long-term investment perspective rather than short-term stock market movements.

There are forecasts that substantive agreements on AI or the war may be difficult at the U.S.-China summit.

Political scientists warn that maintaining the 'hotline,' a communication channel between the two countries, is far more important for preventing accidental clashes than substantive agreement at the meeting.

Mutual visits by top leaders, such as President Trump's past visit to China and President Xi's visit to the U.S. this time, are interpreted as a positive signal that partially reduces the risk of bilateral relations escalating to an extreme.

Although the U.S. is the world's largest oil producer, its high share of overseas exports means domestic diesel prices rise. This contrasts with how Korean refiners offset losses in domestic supply prices with overseas profits to stabilize prices.

If the U.S. actually controls diesel exports, the U.S., a major axis of global petroleum product supply, would disappear, causing severe disruption in the global diesel market.

Currently, U.S. diesel prices are at $6.52 per gallon, breaking a record in which they had never exceeded $6 in history, and in some agricultural regions they are approaching $8 per gallon, reaching a serious level.

This investment is part of a strategy to establish a local production system for ammunition, following the self-propelled artillery prototype contract at the end of last month.

Current 155mm shell production is 36,000 rounds per month, far short of the target of 100,000 rounds per month by October 2025, making securing a production base urgent.

In this situation, rather than worrying that there are no customers to buy electricity in advance, securing generation capacity in preparation for future power price increases may be more advantageous.

It is the first Korean company and the third overall after global competitors, seeking to expand into the prefabricated module business. This is the first case outside the U.S.

LG Electronics plans to supply a 2.5MW-class CDU capable of cooling 20 servers, exceeding Nvidia's requirement of 2.3MW.

LG Electronics plans to specify the direction of supplying large-capacity cooling solutions in the short term and, in the mid-to-long term, expand cooperation into the prefabricated data center business by modularizing servers, cooling, and power facilities for one-time production.

The possibility of collaboration with Microsoft Azure data centers has also been raised.

It is a special configuration emphasizing price competitiveness compared to buying individually.

Considering that a single pair of underwear typically costs in the 10,000 won range, this is a very cheap price of about 2,980 won per pair.

The product boasts excellent elasticity and breathability, and is easy to wash and wear daily.

In particular, the generous quantity allows for wearing clean underwear every day, which is also an advantage in terms of hygiene.

This difference is analyzed to be related to expectations for quarter-end dividends and special dividends. A debate over preferred share cancellation is currently underway.

In particular, a strong breakout of the box range through a bullish candle is essential for stock price movement.

Some express the view that SK Hynix will go to the 2 million won range, but the current frustrating price action is interpreted as due to the absence of such a technical breakout.

The U.S. Nasdaq index rose 0.45% to hit a record high, and WTI futures fell to $89.8, dropping below $90 per barrel. This appears to be an oil price decline amid related circumstances such as the UN General Assembly.

After the blackout period ended, Fed officials' remarks have maintained a hawkish tone.

Yesterday, our market started up 2.2% and closed up 0.15%. In particular, selling by institutional investors, including the pension fund, continued.

This is analyzed to be because earnings announcements, the end of share buybacks, and the timing of easing rate hike concerns coincide. In particular, Micron Technology's earnings announcement scheduled for September 30 (local time) is expected to be an important turning point.

A debate is underway over whether AI-driven economic growth can offset the burden of rate hikes. Expectations are emerging that if Samsung Electronics surpasses the 300,000 won level and SK Hynix reaches around 2.1 million won, the index will settle above the 7,500 level.

The company began developing the technology in 2013 and introduced it in early 2022.

The unveiled technology implements a vertical structure penetrating electrodes within the glass substrate and reportedly successfully verified a 24-layer stacked structure.

Meanwhile, Westinghouse filed for an IPO confidentially in July and plans to proceed with listing procedures by submitting documents in October. The company was acquired by Toshiba for $5.4 billion in 2006, went bankrupt in 2017, and was sold for $8 billion to a Canadian private equity firm and a mining company with 51% and 49% stakes, respectively. The IPO targets a corporate value of about $50 billion, and 57% of the world's 417 reactors use Westinghouse technology.

The current market is marked by caution, with a clear tendency for only rising stocks to keep rising while ambiguous stocks show weakness.

If considering securing cash, it is advised to sell stocks other than leading stocks whose rise is uncertain.

Lagging stocks often repeat a pattern of temporary spikes followed by a return to decline, exhausting investors.

The stocks classified on April 14 have since shown declines, and currently, strength is concentrated in stocks within the top 4 by market capitalization.

SK Hynix also has a high possibility of extending upward to 2.2 million to 2.38 million won if it breaks 2 million won. That is 15-20% upside from the current price.

Selling by individual investors is appearing at highs, but if key price levels are broken, individual buying is expected to flow back in.

Positive outlooks for the memory semiconductor industry, earnings expectations after September 30, and strengthened shareholder return policies can be catalysts for stock gains. WTI oil rose 1.5% yesterday but has now fallen to $89, which is expected to maintain a strength centered on tech stocks. U.S. diesel prices have risen to $6 per gallon, burdening farmers.

Korean Air has resistance around the 35,000 won level on the monthly chart, leaving room for about 10% upside.

When selecting investment stocks, expected returns should be considered; if other sectors such as semiconductors show 20% expected returns, relative investment attractiveness may decline.

When trading at new highs, the potential upside of the stock should be confirmed through long-term charts, and stocks trapped in a long box range are likely to have limited upside.

After the COVID-19 environment, platform companies such as Naver and Kakao faced a changed environment and increasing substitutes.

In the AI era, deep consideration is needed on what clear role and differentiated business direction Naver should have.

In the current market, quantum technology-related stocks are showing strength through rotational buying, and interest is also focusing on related security stocks.

There are concerns about volatility from short-term selling by foreigners aiming for Samsung Electronics' special dividend.

An opinion was raised that to encourage long-term investment, a plan to differentiate dividend income tax by stock holding period should be discussed.

Whether foreign supply is maintained before and after the holiday is key to defending Samsung Electronics' share price.

For shipbuilding stock investment, attention should be paid to shipbuilding equipment, especially engine-related stocks, which can respond solidly, rather than large caps whose charts have broken down.

Individuals dislike uncertainty and continue selling due to the failure to break out of the short-term box range.

Treasury yields remain in the 4.9% range, acting as a market concern, and a strategy of taking profits and securing cash during short-term rallies driven by foreign supply is needed.

Risk management is not a bad thing, and if the market rebounds after the holiday, a short-term rally could be strong unless foreigners sell.

The longer the large amount of supply above 7,500 is digested, the lighter the upward momentum may be when a breakout occurs later.

If breakouts repeatedly fail, investors should be wary of wishful thinking and consider their positions.

If the technical resistance line is successfully broken, one should prepare for the possibility of a strong surge.

In a Bloomberg survey, 70% of respondents also assessed this meeting as symbolic, noting that reducing volatility in bilateral relations has a positive side for risk assets.

China's leadership is employing a strategy to buy time by focusing on internal technological self-reliance and supply chain control, and it is interpreted as focusing on promoting external stability for the stabilization of President Xi's fourth term in October 2027.

Since last year, China has strengthened controls on key minerals such as magnetic materials through dual-control legislation, modeling its management of key mineral supply chains after the semiconductor industry.

Although rare earth prices have risen in the global market, China's export volume growth rate continues to remain negative, using a strategy of selectively supplying only needed countries such as the U.S. and Japan.

If the U.S. extends tariffs, China is likely to present a corresponding extension card for 3-6 months, and if formal dual control is implemented, supply chain tightness is expected to continue for the time being.

U.S. companies complain of insufficient supply relative to demand, with dependence on China for robots and key minerals exceeding 80%, but China is expected to continue maintaining high price levels and controlling export volumes.

For local governments to raise investment funds and exit (recover investments), the success of IPOs is important.

With the strong will of the Chinese government, aggressive capacity expansion in high-tech manufacturing is expected over the next three years.

A pattern is repeating where they buy when the index reaches the 6,500 level and release supply when it rises to the 7,100 level.

This strong-early, weak-late pattern appears as a learning effect of responding with selling whenever the index rebounds, acting as a kind of 'index trap.'

The Nasdaq market trend and strength in small and mid-cap stocks are affecting domestic market sentiment.

Nuclear power analysts viewed the situation as 'unavoidable selling.' This also connects to market sentiment that equipment stocks had risen a lot on the weekly chart, making profit-taking supply likely.

There are criticisms that the valuations of major equipment stocks such as Jusung Engineering have reached PER 80-90x, making them expensive.

However, there is an opinion that current equipment stock valuations can be tolerated because they reflect earnings expectations two years out, such as winning orders for deliveries after 2026.

Customers are not opening MTS often.

This is because dopamine flowed during market uptrends, but in downturns, the psychology of stopping trading and just holding without looking, fearing they might sell, is at work. Along with the sharp drop in trading volume, the old scenes in the securities industry of opening laptops and drinking or sharing information are disappearing.

The possibility of a negative impact on securities firm earnings is being raised. Meanwhile, with the increased use of AI, the way materials are written and information is obtained has changed, and the atmosphere in Yeouido is changing as creators' influence grows.

Ordinary people often use high-performance paid AI services, then switch back to cheaper services or use free versions due to cost issues. In this way, investors' information acquisition methods and attitudes toward the market are changing.

Unlike previous versions, this version has a display mounted on the glasses.

There are forecasts that advances in edge devices such as smart glasses could affect demand in hardware sectors such as CPUs, SSDs, and memory.

Equipment stocks (such as Exicon) are showing large volatility depending on news flow. Simmtech has a price burden, and Haesung DS stands out for the growth potential of its new substrate business beyond its lead frame main business. Exicon has a history of its stock price surging from a low of 10,000 won to 43,000 won.

An opinion was presented that share buyback momentum alone is unlikely to produce a dramatic gap-up, and individual investors' selling sentiment remains strong. Amid this, buying is flowing mainly from financial investment.

Along with the forecast that robots and AI new drugs will be the final destination of the AI field, there is an analysis that Nvidia will also play a big role in that field. Recently, the importance of AI-based new drug development in the pharmaceutical and bio sectors has been mentioned.

The details of the negotiations were not specifically known, but the possibility of additional talks was mentioned, creating a negotiating mood.

Reports that the conditions for reopening the Strait of Hormuz were eased from four to one affected the oil price decline, and the resumption of the Saudi oil pipeline also drove oil prices down. Falling oil prices mean lower inflation pressure, and as a result, Treasury yields fell, with FedWatch lowering the probability of a Fed rate hike in October to 54.2%.

However, Iran later increased the conditions for opening the Strait of Hormuz back to three. Expectations for talks had already been priced in before the UN General Assembly, so the market moved sideways after the meeting.

White House officials judge that the uncertainty of passing bills during the lame-duck session after the November midterm elections is strong, and are leaning toward rulemaking using the SEC and CFTC instead of congressional legislation.

Patrick Witt, White House Executive Secretary of the Digital Assets Capital Committee and a digital asset-friendly figure, also expressed skepticism about passing bills during the lame-duck session. Luke Pettit, U.S. Treasury Deputy Assistant Secretary for Financial Institutions, also predicted that the focus will shift to executive branch agencies as the congressional atmosphere freezes. The Treasury official mentioned that stablecoins could increase demand for U.S. Treasuries.

This is interpreted as an extension of Binance's move since last year to set the default for major services to USDC instead of USDT. As USDC-based trading volume increases in Binance futures markets, USDT's share has fallen to the 60% range and USDC has risen to around 25%.

Investors showed negative reactions due to controversy over the purchase price at the $84 level, but some in the digital asset industry view it as positive, seeing Circle as showing its resolve.

Meanwhile, Democratic Party lawmaker Min Byeong-deok argued that digital asset taxation should be postponed until after the passage of the basic law. Accordingly, some in the media and political circles predict that the taxation timing could be pushed to 2028 or 2029.

Coinbase's move is evaluated as materializing its exchange super-app strategy.

However, a condition was introduced that IPO participation is restricted for 60 days if shares are sold within 30 days after IPO subscription.

This is a method of transferring underlying stocks in a brokerage Alpaca account to an Ondo-side Alpaca account, helping token issuance without separate cash or stablecoins.

This feature is expected to establish a process for directly tokenizing underlying stocks, speeding up tokenization progress and contributing to easing the burden of holding cash.

This implies opening, first in the U.S. market, a one-to-one tokenization that goes beyond existing price-tracking tokens to allow actual shareholders with exercisable rights.

However, it is pointed out that decentralized services such as Ondo Finance may find it awkward to attach a custodian structure, and they remain exposed to risks because shareholder rights exercise is not directly guaranteed.