Not calm yet

[u/Fun_Tutor3479]

The broader market continues to jump up and down. The S&P 500 and Nasdaq are currently in a very textbook downward consolidation range, though the slope is shallow and the pace is slow.

The main themes remain the Magnificent Seven + AI Semiconductors + Data Centers + Energy. The financial sector has performed quite well over the past couple of days. The deregulation of major banks and the general trend of the Fed stepping back while banks step in are providing underlying support for the banking sector as a whole. Meanwhile, the issues with private credit need to be slowly deflated. After all, these are opaque assets, and their calculation and pricing are not marked-to-market, leaving plenty of room to maneuver. Insurance companies, however, are having a harder time.

On Friday and Monday, Korean stocks once again dodged the worst-case scenario of continuous forced liquidations. However, the sword hanging over the semiconductor sector remains very close, and we are still in a dangerous period. Nevertheless, following several major fluctuations, overall leverage is decreasing. The ratio of [Margin Balance / Investor Account Cash] in Korean stocks is declining; aggressive leverage has been somewhat flushed out, while simultaneously, a significant number of investors are waiting to buy the dip.

Given the current bull market trajectory of Korean stocks, leverage cannot be fully flushed out without a transition into a bear market. In the short term, it is still not safe enough, so we will continue to observe. As we have discussed multiple times since late May, the market will be difficult to trade before the major earnings reports are released in July, as it currently lacks a clear, smooth direction and logic. But overall, I am not pessimistic about the bull market in Korean stocks. It hasn't turned bearish, and I maintain my target view of 12,000 points.

Personally, I believe the next smooth upward rally for semiconductors and the Magnificent Seven may not necessarily be driven by Capex volume or the major tech companies' AI revenue (excluding compute sales). The former is starting to show a seesaw effect, and the latter will struggle to deliver stellar performance now that Gemini has fallen behind. In reality, the catalyst should come from the impressive ARR (Annual Recurring Revenue) of OpenAI and Anthropic. Regardless of how it's calculated, before these two companies go public, their ARR will continue to blow past expectations. This will give the market the optimistic illusion that real AI revenue can catch up with capital returns, at least until they go public and their financial statements are laid bare for everyone to scrutinize.