Samsung Beats...and Loses...
- Marc Bentin
- Jul 13
- 7 min read
BentinPartner Weekly
Dear Reader,
Please find below our latest Weekly Trend Report.
Have a nice start of the week.
Marc Bentin,
Bentinpartner GmbH
While stocks showed some impressive resilience last week, it was tainted by a fairly counterintuitive trading pattern, evident in the way SP500 futures traded, immediately rewarding higher yields and the war in Iran restarting.
At the same time, the story around SPCX lost further momentum as the stock traded back close to where it was IPOed.
I thought I would consider buying some SPCX shares towards the end of the Summer but I will now most likely pass on that idea until the passive bid of SP500 trackers gets forced to buy which, most likely, remains several quarters away. The passive bid (entrance of SPCX) into Nasdaq trackers did not suffice last week to sustain any gains for SPCX.
Trying to escape from the poor reaction to the good news of Samsung earnings, the week before, stocks were further jolted on Friday by South Korean memory chipmaker SK Hynix pulling off the largest public listing by a foreign company in US market history, soaring 13% on its first day of trading (trading at a significant premium to the local share price). SK Hynix raised $26.5 billion with its American depositary receipt offering, with much of that money to be channeled at building more chip manufacturing, a move the industry had for years resisted after being burned by past supply gluts.
Perhaps traders think they make a good deal jumping into Hynix by selling MU. I would carefully avoid both at this time…
Kwak said. “They(customers) believe that the shortage situation will last for longer”, later predicting that the deficit may extend beyond 2030.
My (simple) view on this is that as long as sand will be available on beaches, there cannot be structurally a long-term memory chips supply shortage and that the speculation that has grappled this sector is just the continuation of NVIDIA’s exuberance, flowing into storage producers (SNDK…), then into INTC, AMD on circular financing arrangements to finish up with the bottom of the food chain of the AI tech catching fire namely memory chips….
“I have some confidence that the demand will grow and our supply capacity is never going to catch up,” SK Group Chairman Chey Tae-won also said in a Bloomberg Television interview.
On a more cautionary note, the Bank of Korea warned that single-stock leveraged exchange-traded funds tied to Samsung Electronics and SK Hynix could deepen market concentration, amplify volatility and intensify one-way trading flows.
The next step for SK Hynix might be to tap more corporate debt as well except that the appetite for AI related corporate debt has seemingly started to wane as well.
We’ll monitor the flows as usual but compelled to be more and more selective.
Bond yield rose 8bps last week. At the same time, an auction of 30Y Treasury bonds on Thursday drew the highest yield in nearly 20 years with the market now pricing a 4.10% Fed fund rate for the April 28, 2027, FOMC meeting, implying almost two rate increases.
The increase in yields resulted from the (corporate) supply glut with 2026 USD gross corporate supply reaching USD1.36trn YTD, well above the pace of the past few years and following an especially active June and July issuance and with the latest AMZN USD25bn mega deal showing investors’ appetite starting to crack with the lowest recent cover rations of the past 7 deals. The war in Iran restarting which drove a 6% oil price increase also contributed to drive yields higher along with the defense of JPY against a further devaluation (which requires selling of USD reserves to buy back JPY).
European yields also rose 13bps with French yields reaching their highest level since 2009 at 3.81% while Japan’s borrowing costs also shot to their highest in 30 years (to 2.87%) as investors were concerned about the tumbling yen and the effect of a $2tn long-term spending plan on the country’s massive debts. JGB’s dropped -14bps on Friday after Japan’s finance minister called for the nation’s massive pension funds to increase investments in domestic assets.
In FX, the dollar gained 0.3% on the week with JPY weakness remaining the focus of attention although it was boosted slightly from near four-decade lows on the same MoF comments. KRW increased 2.1%, BRL 1.2%, and NZD 0.9%.
Precious metals found no fertile ground from rising yields and a higher dollar but all evidence is showing that Central Banks (in particular China) are grabbing the opportunity of lower gold prices to raise the share of gold in their global reserves.
On the economic side…
The data calendar was light last week with the US service sector expanding in June at a slightly slower pace while back-to-school spending among U.S. households with school-age children also expected to decline by about 6% this year on an inflation-adjusted basis. Existing home sales also came in weaker than expected (-2.4% MoM from +2.3% MoM for the previous reading).
This week (tomorrow) comes the CPI (expected to show a decline from last month (-0.1% MoM expected from +0.5% MoM last month) and +3.8% YTD (from +4.2% last month).
On geopolitics…
Iran’s regime claimed its memorandum of understanding (MOU) with the U.S. gave it the right to levy a passage toll at the SoH, and that it was using force to get its way. D. Trump has a different understanding of the Memorandum and restated the war on Wednesday in response.
Geopolitical developments were poor on both fronts with the Iranian conflict intensifying and the NATO summit offering another platform to V. Zelinski to advance his procuration and pro war (because what else can he do) agenda.
For what it is worth, Russia is now openly talking about a “war” rather than a “a special military operation” which means it has now chosen to escalate to restore deterrence among European and NATO politicians, seemingly unconcerned and at times eager, to “poke the bear” and encourage strikes deeper and deeper into Russia.
All of that being said, democratic forces are still at work in Europe as European parliament condemned V. Zelensky for naming a military unit after the UPA (pro-NAZI) heroes which reignited tensions between Warsaw and Kyiv.
Over the past week, the S&P500 gained 1,4% (10,7% YTD) while the Nasdaq100 gained 1,8% (18,1% YTD). The US small cap index dropped -0,5% (20,2% YTD). AAPL rallied 2,2% (16,0%).
The Equally Weighed SP500 dropped -0,3% (11,9% YTD), underperforming the S&P500 by-1,6%. The median SP500 YTD return closed the week at 8,9%.
Cboe Volatility Index sold off by -6,9% (0,5% YTD) to 15,03.
The Eurostoxx50 sold off by -2,1% (10,3%), underperforming the S&P500 by -3,5%.
Diversified EM equities (VWO) gained 1,4% (11,4%), outperforming the S&P500 by 0,1%.
The Dollar DXY Index (UUP) measuring the USD performance vs. other G7 currencies gained 0,2% (5,0%) while the MSCI EM currency index (measuring the performance of EM currencies vs. the USD) gained 0,3% (0,7%).
10Y US Treasuries underperformed with yields rising 8bps (39bps) to 4,56%. 10Y Bunds climbed 13bps (21bps) to 3,07%. 10Y Italian BTPs underperformed rising 10bps (25bps) to 3,80%, outperforming Bunds by -3bps.
10Y French OAT's underperformed rising 10bps (27bps) to 3,83%, outperforming Bunds by -3bps.
US High Yield (HY) Average Spread over Treasuries dropped -4bps (-3bps) to 2,63%. US Investment Grade Average OAS climbed 2bps (0bps) to 0,84%.
In European credit markets, EUR 5Y Senior Financial Spread climbed 1bps (0bps) to 0,54%.
Gold dropped -1,4% (-4,6%) while Silver sold off by -4,1% (-16,5%). Major Gold Mines (GDX) sold off by -3,7% (-11,9%).
Goldman Sachs Commodity Index rallied 3,6% (23,1%). WTI Crude rallied 4,0% (24,4%).
Overnight in Asia…
S&P future -43 points; Hong Kong -0.1%; Nikkei -2.5%; China -1.3%
Stocks and government bonds fell as fresh US strikes on Iran pushed up oil prices with the two sides issuing conflicting declarations over whether the SoZ is open or not.
The death of Senator Lindsey Graham left Ukraine without one of their most effective conduits to the White House. Days before he died, L. Graham met V. Zelenskyy, strolled through a drone production factory in Ukraine and sealed an agreement with senators to advance a Russia sanctions bill. Replacing him won’t be easy.
This week, the start of earnings season will test whether companies can deliver the profit growth needed to support the AI-fueled rally, while US inflation data and Fed Chair Kevin Warsh’s congressional testimony will offer fresh clues on the outlook for interest rates, Bloomberg reported.
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