Wall Street: A Record-Breaking Party in a Tense World

While war continues in the Middle East, Wall Street is cashing the biggest foreign check in its history today. It's a rather fascinating paradox: on one hand, missiles are flying; on the other, the market is celebrating a record-breaking IPO. I'm going to break down the three major issues of the day for you: the debut of the Korean company SK Hynix, the expected earnings from Delta Airlines, and a slight tension on long-term rates that could become serious.

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The SK Hynix Euphoria, the New King of Wall Street

Today is a historic day. SK Hynix, the Korean king of memory for artificial intelligence, is arriving on Wall Street. We're talking about a fundraising of $26.5 billion. Never before has a foreign company raised so much money.

Why such enthusiasm? SK Hynix dominates more than 50% of the high-bandwidth memory (HBM) chip market, the ones used, for example, by Nvidia for AI development. The demand was so high that it exceeded the supply sevenfold. Basically, for every available share, there were seven buyers ready to fight for it. So, we can expect a significant surge in the stock right from the opening.

This excitement has also pulled the entire chip sector upwards. Even its competitors like Micron or SanDisk have seen their stocks jump. The party continues!

A Generally Well-Oriented Market

Yesterday, the markets were already showing very strong momentum. The CAC 40 and the DAX bounced back, driven by general optimism. The DAX, for example, held firm at the famous 25,000-point level, an important psychological threshold. This isn't just a small technical rebound; you can feel the appetite.

Across the Atlantic, the Dow Jones is taking a little breather after hitting its all-time high earlier this week. It remains very high, with no concerns for now. Everyone is positioning themselves ahead of the earnings reports from the major US banks next week, which are likely to shake up the index.

The Nasdaq, for its part, is being carried by the SK Hynix effect. Everything related to chips and tech is buzzing, a bit like during the dot-com bubble when just saying you were doing something on the web was enough to make your stock soar.

Warning Signs Not to Be Ignored

In this almost ideal world, there are still a few details that deserve our attention. We have missiles flying around the Strait of Hormuz... minor details, let's not nitpick.

More seriously, I'd like to draw your attention to the US 30-year rate. It has returned to the 5% level. That's a lot. To put it simply, it's the price of a generation of debt. 5% over 30 years is starting to get very expensive. This increase is explained by the Fed's threat to raise its rates and the war that is fueling inflation.

Another point of caution: the new Fed chairman wants to lighten the central bank's balance sheet. To put it simply, during crises, the Fed massively bought stocks to support the market. Now that prices are at their highest, it wants to cash in on the profits. The problem is that selling huge quantities of stocks tends to cause the market to stagnate, or even fall. So, all of this isn't necessarily great news.

The Little Story Behind IPO Records

This record-breaking IPO from SK Hynix reminded me of another one. On September 19, 2014, Alibaba, the Chinese giant, raised $25 billion. Its CEO, Jack Ma, a former English teacher, became a legend. That record is broken today.

By the way, for a little anecdote, the Alibaba stock jumped 38% on its first day, before returning to its initial price a few weeks later. It's a good reminder about getting carried away.

Why do these Asian companies come to list in the United States? The answer is simple: to rake in much more money. It's like selling a painting: at the local auctioneer, you'll get a certain price. At Sotheby's, you can hope to add a few zeros. The Nasdaq is the Sotheby's of finance. It hosts the world leaders.

Conclusion

To sum up, the market is partying in the middle of a war. We have rebounds, records, a giant IPO. But this party, in my view, does not excuse a certain discipline.

Personally, after a good week, today is a day of rest. The goal is not to trade at all costs. Of course, if an obvious opportunity presents itself, I will seize it, but without pressure. The most important thing is to know when to stop once the objectives are met.

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