US LNG exports surge but will buyers in China turn up?
BCA Research noted that the 10 percent selloff in the USD/SEK pair has now reached a critical point that historically indicated a possible rebound. BCA suggests investors should consider going long on USD/SEK, with a profit target and symmetrical stop-loss at 10.6 and 9.4, respectively.
In contrast to the short-term currency strategy, BCA expressed a more cautious outlook for long-term investors in the technology sector. The firm pointed out that the artificial intelligence (AI) bubble, which has been inflated by ultra-low liquidity from Japan, is expected to deflate. BCA warned that as the liquidity from Japan diminishes, US technology stocks could face a significant valuation adjustment.
BCA further elaborated on the potential impact on US tech stocks, specifically if their valuations were to decouple from the Japanese real bond yield, which has been a key factor since 2022. Should the valuations revert to their previous correlation with the US real bond yield, BCA anticipates a potential downside of approximately 35 percent for US tech stocks.
The firm acknowledged that some of this adjustment might occur through a rise in bond valuations, which would mean a fall in real yields. However, even with this factor, BCA believes there remains substantial room for US tech valuations to decrease.
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