News and analysis

Taiwan Semiconductor's (TSM) report this week added another bright chapter in the global AI history. The world's very first dedicated semiconductor foundry and now the exclusive supplier of NVidia's and Apple's most advanced chips announced its revenue for June reached 207.87 billion in Taiwan’s Dollars (roughly $6.4 billion). This marked a substantial growth of nearly 33% YoY, while the company's revenue number for the last 6 months (January through June) has also been 28% better compared to the similar period in 2023. Both figures were above average analyst projections, so that TSM shares listed on NYSE quickly rose by more than 3.5% on July 10, adding one more percentage point at the pre-market on July 11.

US-Sino trade war threats surrounded the island's economy for many years, and so I personally keep myself aside from direct investments into Taiwan stocks. Meanwhile, this prominent chipmaker's shares are not only outperforming the US broad market barometer but are serving as a bellwether for the further stage of the NVidia-led AI rally. For example, some of my long-term favourites like Micron Technology (MU) and Advanced Micro Devices (AMD) already added about 4% to their corresponding market value in sync with TSM's extra step up.

You may say that AMD jump was supported by the acquisition deal of Silo AI, which brought AMD's a reputable European team in open-source, and multilingual large language models. That's true but this bare fact alone was hardly a sufficient reason for many investment houses to instantly raise their target prices for AMD to $200 or above. By the way, the AI behemoth Microsoft added more than 1.5% the same day, while the NVidia flagship suddenly put 2.63% in its piggy bank. Well, this is another stage of the AI trend, which is hard to stop. The S&P 500 (US 500) just closed above 5,600 points for the first time.

It is all obviously coming to more record highs in NVidia, along with the whole circle of its satellite stocks like MU, AVGO, QCOM etc. A perfect moment to swear an oath of holding the entire AI-based part of the stock portfolio at least for two or three more months.

Dash (DSH) is adding 6.5% to $23.77 this week, though it reached a higher point at $24.37 on July 9. The altcoin has fully recovered from its 20% decline experienced in early July. Currently, Dash prices are nearing the trend resistance at $24.00-25.00. If prices manage to surpass this resistance, they could continue to rise towards $30.00.

There are minor internal developments to support Dash. Its price movement is likely to align with the broader market trend. If Bitcoin (BTC) climbs above $60,000, DSH could also rise above the $25.00 level.

U.S. Federal Reserve (Fed) chair Jerome Powell is heading to Capitol Hill today for a semi-annual congressional testimony. Only one week ago, Mr Powell noted he and his colleagues need additional data to be sure that inflation pressure has already laid down on the track to the central bank's notorious 2% target. So, similar comments are expected from the Fed's Chair. Meanwhile, the FedWatch Tool on Chicago Mercantile Exchange (CME) shows that more than 70% of private traders are betting on the launch of interest rate cutting already on September 18, with less than 15% feeling the Fed may keep rates unchanged even after its next meeting in early November. The cautious rhetoric of Fed officials does not bother the Wall Street optimists as most of them are inclined to attribute uncertain words to central bankers' intention of just doing no harm to price dynamics ahead of proper time. Yet, most investors hope that the Fed will do what's necessary in a crucial election year to avoid even a slightest hint, which could potentially derail the current market rally, as neither political side would like to see the S&P 500 surprisingly tumbling. In addition, Trump's chances of coming back to the White House look high. During his previous term, the ex-president persistently vowed for low or better extremely low, interest rates for the sake of economic growth. If so, Fed members would obviously like to take their first step on this path with their own hands, and not upon a potential request from the White House.

There is little doubt among Wall Street legends, as a herd of bulls is marching ahead. Strategists at Oppenheimer, a New York City based brokerage and investment bank, which was founded in 1950, raised its year-end target price for the S&P 500 broad market barometer to 5,900, up from 5,500. Analysts mentioned economic "resilience, driven by the Fed’s cautious monetary policy", and also increased their average earnings projection in 2024 for the S&P 500 to $255, up from $250, citing an "innovation cycle that could benefit all 11 sectors of the S&P 500", as it shows signs of "being both cyclical and secular coupled with cross generational demographic needs that suggest a shift in mindset regarding equities".

To put it simply, every Dick, Tom and Harry could say the cash is burning their hands while assets are not. Constant desire to save each bundle of Dollars or Euros from the fire of inflation is one driver, while the generative AI (artificial intelligence) based hope for investigating consumer data to raise corporate profits from smart offering goods and services is another one. This is probably not the last revision for the S&P 500 target by various investment houses.

As to the camp of sceptics, it looks relatively rare and divided. Morgan Stanley's Mike Wilson said in an interview with Bloomberg that "the chance of a 10% correction is highly likely sometime between now and the election", only adding that the "third quarter is "going to be choppy", while he estimated the probability of "stock prices closing the year higher than they are now" at 20% to 25%, with "your likelihood of upside from now until year-end is very low, much lower than normal", because the rally drove the S&P 500 to a 17% increase this year following its 24% surge in 2023. Yet, Morgan Stanley's analyst, who was calling for a bigger market correction since last Christmas, now has nothing against an opportunity of new price highs in nearest months before predicted correction. He also added that he "isn't particularly concerned about a pullback", but instead, it could create more opportunities for investors to buy in since current valuations are "unexciting".

Fantom (FTM) is rising by 4.0% to $0.4400 this week, outperforming the market. Bitcoin (BTC) has added 1.7% to $57,420. However, it is unclear how long this recovery could last. BTC is consolidating below the crucial level of $60,000. The pressure from defunct Mt. Gox BTC payouts and German government BTC sales is waning. Large investors are trying to support BTC at current levels.

Fantom has its own news to support the altcoin. The Sonic update sent it up by 163% in March. The Fantom Foundation recently announced a $120 million fund to drive the development of the Sonic blockchain. If BTC hadn't lost 15.0% in June-July, the altcoin could be trading well above $0.6000-0.8000. This highlights a strong recovery potential for FTM, but it is unlikely to materialize while BTC remains below $60,000.