Week issues: Consumer price index, retail sales, U.S.-China, U.S.-Iran, conference, options market

05/11~05/15 Week issues: Consumer price index, retail sales, U.S.-China, U.S.-Iran, conference, options market

In the Cleveland Fed’s daily “Nowcasting,” the consumer price index is forecast to rise 0.45% month-on-month in April, while the core consumer price index will hit 0.21%. However, it is noted that the recent gasoline price hit $4.56, the highest level since it exceeded $5 in the aftermath of the war in Ukraine in 2022. Such a surge in gasoline prices could highlight the tendency to raise prices. In fact, major investment companies are predicting that the base effect of housing costs and soaring aviation oil prices will lead to a significant increase in core prices to over 0.4% and that the headline figure will also exceed 0.6%, raising pressure on government bond rates.

U.S. retail sales are driven by gas station sales due to soaring gasoline prices, which is expected to increase by 0.4 percent. However, investment companies expect management group sales to increase by 0.7 percent last month, but will slow down significantly in April. In particular, the sharp rise in gasoline prices is expected to lead to a contraction in real consumption. This is expected to be reflected in industrial production next day. In the end, when the U.S. economic indicators are combined, prices are higher than expected, retail sales have good headline figures, but real consumption is shrinking, which will stimulate economic instability. This, coupled with a surge in interest rates on government bonds after the announcement of price indicators, is likely to put downward pressure on the stock market.

Meanwhile, the U.S.-China summit is important in that the leaders of China, which plays the most important role in the Russia-Ukraine, the U.S.-Israel-Iran war, and the U.S. will meet in Beijing from the 14th. In particular, it does not rule out the possibility of easing economic regulations between the U.S. and China, given that they are visiting China with many large companies. Recently, high-level officials such as Secretary of State Rubio and Chinese Foreign Minister discussed improving stable relations. Rather, we cannot rule out the possibility that President Trump’s remarks on China and Iran will have a greater impact on the market than the outcome of the talks themselves. In particular, the market is highlighted that the U.S.-Iran negotiations can proceed this week, so President Trump is expected to mention the relevant details. Of course, the market believes that the possibility of an intensification of the U.S.-Iran war is not high, and that both countries have no choice but to implement an exit strategy in consideration of politics and economy.

Amid these changes, major conferences are held every day, and large technology stocks are attending, and changes in related stocks are also noted in their announcements. At the Son Investment Conference on Tuesday (12th), the market’s attention is Jonathan Ross of Nvidia, who is the founder of AI semiconductor startup Groq and is now a key figure of Nvidia, and LLM acceleration and inference AI are expected to be announced. And related conferences are events attended by many hedge funds, institutions, and VC, and there are many ideas about their long/short positions, so they cannot rule out the possibility of expanding volatility in the mentioned stocks.

On the same day, there are mobile, client, and edge forums in San Jose, and announcements from MS, Meta, Micron, AMD, Intel, Dell, SuperMicro, Cadence, and Synopsis are also important. Especially in the memory sector, whether to discuss the LPDDR6 standard is key. Coreweave has a speech at the bio-partnering conference. On Tuesday, IONQ presented at the 21st Needham Technology, Media and Consumer Conference. In addition, there are many speeches from large companies at financial and pharmaceutical conferences. Many of the companies’ comments mentioned at these conferences may eventually affect individual stocks, which should be noted.

Meanwhile, the recent U.S. stock market is based on easing of the U.S.-Iran and companies’ performance. However, in detail, there is a high tendency to be led by supply and demand due to excessive movement in the options market. Currently, in the U.S. stock market options market, the S&P 500 Index’s call option transaction price has exceeded 2.6 trillion dollars in nominal value, breaking a record in history. This is the result of about 60% of all option transactions focused on call options, which are upward bets, and some in the market say that they have entered an “irrational overheating” phase centered on semiconductors and AI.

On Friday, SanDisk saw an unusually intense buying flow into call options in the $1,400 to $1,700 range of strike prices, and surged on supply-demand factors, with volume of $1,600 and $1,500 call options significantly above open interest. Micron also firmly supports the bottom of the stock price through a strategy in which institutional investors sell a large number of OTM (OTM) put options below $600 at the same time as the number of call option transactions above the strike price of $650 has soared. In response to these changes, institutions have seen a gamma squeeze throughout the last week, which is a mechanical stock buy, accelerating the upward momentum of the stock market as a whole. Considering this, there are many issues that could change the trading of these options this week, and caution should be taken as the volatility of stocks may increase during the liquidation of speculative positions.

• Key events by day of the week

05/11 (Monday)
China: Consumer Price Index (April), Producer Price Index (April)
US: Existing Home Sales (April)
Bonds: U.S. 3-year Treasury bid
Remarks: Governor Williams
Korea Performance: S-Oil, Lotte Shopping, Lotte Chemical, Samsung Securities, KEPCO KPS
LOADING PERFORMANCE: Constellation Energy (CEG), Circle Internet (CRCL), Monday Dotcom (MNDY)
Long-Term Earnings: Simon Property (SPG), AST SpaceMobile (ASTS), Mara Holdings (MARA), Plug Power (PLUG), Quantum Computing (QUBT), HIMS

05/12 (Tuesday)
China: Car Sales (April)
Germany: Consumer Price Index (certain, April), ZEW Economic Expectations Index (May)
US: Small Business Optimism Index (April), Consumer Price Index (April)
Reports: WASDE Reports
Bonds: U.S. 10-year Treasury bid
Remarks: President Williams (4:15 p.m. KST), Governor Goolsbee
Korea Performance: KT, CJ Seafood, NHN, Mirae Asset Securities, Seoul Semiconductor, Shinsegae, Pearl Abyss, WeMade
LOADING PERFORMANCE: JD, On Holdings, ON, D-Wave Quantum, QBTS, and Eon