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Jeremy Hutton: Milford Asset Management expert on the 'choppy' markets incoming for tech sector · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks Be follow
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  Speaker 2: Andrew Dickens, Oh, let's go to befor Acid Management and
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  Speaker 2: we'll talk to Jeremy hatton Halla.
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  Speaker 3: Jeremy, Hi, Andrew, how are you going?
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  Speaker 2: Very good? The hot chip and tech sector on the
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  Speaker 2: share market apparently taking a bit of a breather, had
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  Speaker 2: some falls last night. So what's going on.
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  Speaker 3: Yeah, we talked a little about this last week, and
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  Speaker 3: we mentioned the potential for a little bit of market
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  Speaker 3: choppiness just given some of these big IPOs coming online
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  Speaker 3: and then just how stretched certain pockets of the market
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  Speaker 3: had become. In a particular focus at the moment is
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  Speaker 3: the Red Hot Philadelphia Semiconductor Index, and that's also known
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  Speaker 3: as the Socks Index, and this is the thirty largest
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  Speaker 3: US chip companies and it's been getting a lot of
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  Speaker 3: attention recently, particularly given the seventy nine per scent gain
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  Speaker 3: that it's had so far yet to date, so very strong,
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  Speaker 3: and we know the companies in this space and this
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  Speaker 3: index are performing strongly given that linkage to the AI
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  Speaker 3: data center build out. Now, the index, it was down
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  Speaker 3: ten percent on Friday, which is a huge one day move,
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  Speaker 3: and then it was also down yesterday over seven percent
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  Speaker 3: at a point, but it did really back, so showing
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  Speaker 3: that investors in the space they need to have very
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  Speaker 3: strong stomachs just given the amount of volatility there at
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  Speaker 3: the moment.
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  Speaker 2: Yeah, there's a bit of hype from time to time,
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  Speaker 2: there's reality check from time to time, and you're quite right,
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  Speaker 2: ten percent on one day is huge. But what was
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  Speaker 2: interesting is the data out this week show that long
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  Speaker 2: semis is actually the most crowded trade in the market
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  Speaker 2: right now.
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  Speaker 3: Yeah, that's right, so very well known Investment Bank of
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  Speaker 3: America they conduct a very well followed fund manager survey
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  Speaker 3: and currently the survey is saying that long semis or
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  Speaker 3: chip makers is the most popul a trade in the
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  Speaker 3: market right now. So effectively, investors are betting that this sector,
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  Speaker 3: this trade is going to continue going up. And on
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  Speaker 3: one hand, it does make sense, you know, it's a
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  Speaker 3: very informed thematic link to AI and they've probably made
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  Speaker 3: some pretty good money on it this year given the returns.
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  Speaker 3: But it does come with risks having people relatively position
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  Speaker 3: the same way, being very extended in the space, and
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  Speaker 3: if you do have some hiccups like we saw earlier
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  Speaker 3: this week, late last week, then you can get some
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  Speaker 3: pretty sharp corrections down as everyone rushes to underwind this trade.
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  Speaker 2: At the same time, what amuses me though, a lot
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  Speaker 2: of people are using AI to make their trades, and
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  Speaker 2: so we go actually got AI deciding to invest or
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  Speaker 2: de invest in AI, which is quite remarkable in America.
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  Speaker 2: There were a few data points and news out over
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  Speaker 2: the past week which that helped trigger some of these selves.
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  Speaker 3: Yeah, I mean, we've had consecutive monthly strong US job updates,
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  Speaker 3: so a bit of that US economy strength coming back,
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  Speaker 3: and that's triggered fears of higher interest rates coming through,
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  Speaker 3: and investors did rotate into slightly more defensive sectors in
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  Speaker 3: response and out of that sort of racy tech and
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  Speaker 3: chip sector. And then we also had Meta aka Facebook
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  Speaker 3: considering a large equity raise as well to help fund
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  Speaker 3: this data center build out. And this is similar to
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  Speaker 3: what Google did the week before, and again has investors
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  Speaker 3: raising questions, can these mega companies, these are the biggest
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  Speaker 3: companies in the world, keep funding this level of AI investment.
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  Speaker 3: And we've got these big IPOs coming, SpaceX coming on Friday,
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  Speaker 3: Open AI, Anthropic shortly behind as well. So there is
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  Speaker 3: a lot for investors to digest and absorb in the
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  Speaker 3: US market at the moment.
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  Speaker 1: Yeah.
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  Speaker 2: Absolutely, it's going to be a fascinating week, that's for sure.
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  Speaker 2: With SpaceX Now Kevin Wash or Kevin Wsh, we say,
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  Speaker 2: how do we say that?
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  Speaker 1: Wash?
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  Speaker 2: Or Wash never said this man's name before Wash? Kevinsh.
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  Speaker 2: He's the new Fed chair. Welcome to the big chair,
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  Speaker 2: and he's got a big next week because he's got
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  Speaker 2: his first interest rate meeting.
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  Speaker 3: Yeah, and we know that one of his bosses, President Trump,
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  Speaker 3: loves to put the pressure on pressure on the Federal
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  Speaker 3: Reserve to cut interest rates. And we've got some inflation
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  Speaker 3: data coming out in the US tonight and tomorrow, and
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  Speaker 3: unfortunately these are going to be pointing higher just given
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  Speaker 3: the Iran situation and the strong stronger jobs numbers. Really
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  Speaker 3: does make it hard a hard setup for the Federal
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  Speaker 3: Reserve to cut interest rates, and usually this setup is
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  Speaker 3: a hiking rate scenario. So any disappointment here could forget
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  Speaker 3: the wrath of both President Trump and the market too.
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  Speaker 2: There's any times we live in and I thank you
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  Speaker 2: for your advice. Jeremy Hutton, Milford Asset management.
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