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Jeremy Hutton: Milford Asset Management expert on US equity markets going up after 'tough' July · Best of Business

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  Speaker 2: Jeremy Hutton Milford Asset Managements with US Hi, Jeremy, Good evening, Heather, Hey,
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  Speaker 2: So the US market, it's the equity markets have ripped
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  Speaker 2: back up after a pretty tough July. A seems the
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  Speaker 2: market thinks that all is right in the world, do.
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  Speaker 3: They, Yeah, that's right. I've been given the market reaction
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  Speaker 3: this week. One would assume that there are no big
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  Speaker 3: issues out there, but we've had the collapse of a
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  Speaker 3: fairly high profile and very highly leveraged hedge fund in
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  Speaker 3: the tech space late last week, which has sort of
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  Speaker 3: marked the bottom of the short drawdown that we got
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  Speaker 3: in textocks in July. And since then, the Nasdaq, which
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  Speaker 3: has these big tech companies and it has rallied a
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  Speaker 3: massive nine percent over the past few days, the S
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  Speaker 3: and P five hundred up to six and back to
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  Speaker 3: all time record highs. I mean, partly this is driven
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  Speaker 3: by some very strong results out of US corporates over
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  Speaker 3: the past week, but also helping some of the comments
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  Speaker 3: from the White House that there could be another Iranian
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  Speaker 3: deal this week. I'm in that scent. Oil down six
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  Speaker 3: percent overnight, which is good for inflation, good for US
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  Speaker 3: bond yields, interest rates heading down, but let's face it,
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  Speaker 3: in the Iran situation, it's likely to flip back the
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  Speaker 3: other way very soon. But in the meantime, the market
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  Speaker 3: is plowing on upwards.
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  Speaker 1: Yeah.
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  Speaker 2: Can we thank Amazon and Microsoft last week for some
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  Speaker 2: of this recent rally?
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  Speaker 3: Yeah, you can. I mean there has been a mark
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  Speaker 3: change and narrative, particularly around these very large tech companies
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  Speaker 3: or hyperscalers. We had their second quarter results, and I
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  Speaker 3: mean in July, the market was a little bit concerned
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  Speaker 3: with these hyperscalers, that's Amazon, Microsoft, Google. They were selling
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  Speaker 3: off on just concerns or the financial return of their
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  Speaker 3: huge AI spend that all these businesses are funding, and
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  Speaker 3: on their respective calls. Management did a much much better
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  Speaker 3: job at pitching the return case to investors, so that
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  Speaker 3: was well received.
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  Speaker 2: Okay, now are you seeing this AI return come through
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  Speaker 2: in their cloud business units at all?
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  Speaker 3: Yeah? We got to see some of this in their
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  Speaker 3: financial numbers, which which gave the market confidence, and it
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  Speaker 3: is coming through their very very big cloud business units.
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  Speaker 3: I mean for Amazon it's called AWS for Microsoft, it's Azure,
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  Speaker 3: and we saw an acceleration in their cloud revenues where
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  Speaker 3: also saw margins increasing. And then we also saw a
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  Speaker 3: very strong and growing backlog of future spend in the pipeline.
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  Speaker 3: And that's the trifecta the market really was looking for.
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  Speaker 3: And all of this is being driven by this AI
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  Speaker 3: compute demand and as a result in very big companies.
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  Speaker 3: But Microsoft, Amazon up fifteen percent on their earnings results
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  Speaker 3: days and now Amazon it's the fifth company to reach
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  Speaker 3: the very impressive milestone of a three trillion dollar market
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  Speaker 3: cap valuation.
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  Speaker 2: Hey, what did you make of SpaceX's first public earnings
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  Speaker 2: since the IPO.
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  Speaker 3: Yeah, I mean their financial results were solid. It was
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  Speaker 3: It was a beat to expectations across revenue and earnings,
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  Speaker 3: and also a beat in both their important divisions Starlink
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  Speaker 3: and their AI business too. But the market is very
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  Speaker 3: concerned with some very large potential insider and early investors selldowns,
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  Speaker 3: and this is a lot of supply potentially coming onto
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  Speaker 3: the market, and unfortunately for SpaceX, the evaluation isn't that compelling,
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  Speaker 3: so fundamental investors are just waiting on the sidelines, and
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  Speaker 3: the stock has been under a little bit of pressure
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  Speaker 3: I mean it was down eight percent in the aftermarket
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  Speaker 3: last night. It's at one hundred and sixteen dollars a share,
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  Speaker 3: a little bit down from its IPO price of one
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  Speaker 3: thirty five in June.
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  Speaker 2: Yeah, brilliant, Hey, thank you very much. Jeremy really appreciated.
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  Speaker 2: Jeremy Hutton Milfit Asset Management.
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