Tracking indicators for the semiconductor cycle
The guest argued that the semiconductor trade remains highly cyclical, requiring investors to monitor specific leading indicators to time their exit.
The argument
Rather than believing the cycle has permanently flattened, the guest views the market as currently being in a strong upcycle. To avoid getting caught in a downturn, investors should track Taiwan DRAM spot prices, South Korean monthly export data, and US ISM manufacturing trends.
The thesis, stress-tested
✓ What validates it
- ✓South Korean semiconductor export growth rolling over below current levels
- ✓Taiwan DRAM spot prices beginning to decline
▸ Risks discussed
- ▸Leading indicators can give false positives or lag real-time market turns
- ▸US business cycle could decelerate faster than expected
Hear it yourself
"So a new version of the transitory narrative of of Jay Powell, with maybe slightly better hopes of an actual resolution to the inflation issue here. Okay. So team transitory potentially coming back around. Does he have the votes for that, though? No. That's the big issue. But, you know, we're not close to a majority favoring a rate hike. So in that sense, it'll probably have some leeway in terms of communicating how to wait and see. If if you look at what Chris Waller said, he's basically in favor of scrapping the easing bias, but he also said that he's not close to moving to an outright hawkish bias."
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