) are taking hits leading into the final trading hour of Wednesday, July 17, in connection to a selloff by semiconductor companies.bring on the leading experts and market strategists to talk about where the market is headed and how US-China trade relations could impact growth., touching on which direction tech sector trends could move in based on the Federal Reserve's commitment to interest rate cuts.That's Josh Lip in live from our New York City headquarters.
One could call it a rotation, but it's not going by exactly the same playbook that we've seen in recent days today.It is not going into small caps, at least not today.If you look at the five day chart, we've had a big run up in those small caps, but that is ending or at least pausing today, Josh.
So that's thing one thing two for President Trump in a just published interview, talked about pulling back on some support for Taiwan or at least having Taiwan pay for its own defense suggesting they'd have to pay if they want us protection.So you're seeing Taiwan semiconductor in particular by 8% today to your point, the stock is still up 64% this year.
They, they made it pretty clear that's what they wanna do and the inflation rate is definitely going to go in there in the right direction in that case.It had been very focused on the mega cap and now I think it's spreading to the rest of the market and I particularly like the S and P 493. I do want to get your take just to drill down a bit more into that because listen, it's been such a subject of, of conversation for investors, the move they're in just quick and aggressive.Although, you know, you look at the Russell in 2000, I mean, it's down less than the SPX.
Well, I think, uh, from what I understand, uh, that the, the market indicators are showing, is there 100% probability that the fed will cut the fed funds rate by 25 basis points in September.And I think, uh you know, when you, you look further out over the next 12 months, the federal funds futures markets are basically anticipating five rate cuts over the next 12 months.
And now they seem to be changing the rules and saying, well, you know, we're almost there and that's getting close enough.Uh I'm concerned that if they uh lower rates when it's not really necessary, uh We'll get a melt up in the market and the problem with melt ups is they tend to be followed by meltdowns.
Us China relations front and center chipmakers are under pressure as the Biden administration reportedly considers tighter trade rules on China the trade conflict with China.Meanwhile, former President, Donald Trump, speaking out about Taiwan sidestepping a question of whether the US would come to the island's defense.
Uh there is bipartisan consensus in the US Congress and really throughout Washington um that is forming or has formed around a more hawkish, more muscular policy towards China. Um with regard to the Trump comments related to Taiwan, uh look America's policy towards the defense of Taiwan since 1979 has been based on this idea of strategic ambiguity if you will leaving open the question of the extent to which the United States would actually respond with its own troops.So I think the Trump comments are consistent with American policy since 1979.
It sounds like you were, you were saying David that you don't think um we're gonna have much success in that effort.Uh and I think um it's in America's interest to try to run faster uh rather than trip your opponent in this race towards, you know, a technological advantage. Then what do you think whether it's this administration or whoever the next administration ends up being?The alternative really is to double down on um the US and and Taiwan's chip manufacturing ecosystem and create a dependence if you will, so that China is dependent on foreign manufacturing and foreign boundaries for chips.And I just worry that export controls if they're too strict, can have unintended consequences.
Do you think that uh people should be taking these threats seriously or because of what you're saying? Um But in terms of a, again, um things shifting immensely for, for someone like NVIDIA um where, you know, China is a relatively small portion of the revenue because there's already uh such a significant restrictions in place.II, I just don't think there's any real implications, right?
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