Intel's foundry win meets a bond market that isn't buying the peace.

Transcript

Tom Intel rockets ten percent on an Apple chip deal, but bond yields are stuck — and that's the tug-of-war you need to hear about. Welcome in.

Marie Friday June nineteenth, London Edition. I'm Marie, joined by Tom and Gerald. Markets are giving us tech fireworks and a bond mystery — let's get into it.

Tom Alright, Intel and Apple — a US chip partnership announced by Trump himself. Intel shares surged ten point six percent last session. This is huge, buddy. Concrete foundry wins, political tailwinds — I'm buying the momentum.

Gerald Tom, you're buying at eighty-six times forward earnings? The stock is already one percent off its fifty-two-week high. That ten percent pop prices in the dream — the risk-reward is stretched, mate.

Marie Hold on — I'm going to push back here. This deal is political, sure, but it's also a real step toward domestic manufacturing. The question is sustainability, not the headline.

Tom Sustainability? Marie, the foundry story is finally turning. This isn't just a one-off. The stock's at one thirty-four dollars — I think there's more room.

Gerald Yeah look, I've seen this film before. Analysts revising price targets after a spike is basically a free retirement plan. At that multiple, you're betting Intel becomes TSM tomorrow.

Tom Ha — fair enough. But Gerald, the alternative is missing the next leg. Apple diversifying supply is a massive signal.

Marie But while we're cheering Intel, Accenture just cratered eighteen percent to twenty-seventeen lows after warning AI will undermine its consulting model. The sell signal is clear — this is a structural threat.

Gerald Right, and the cheap eight-six times forward P E ratio is not a bargain — it reflects existential risk, not a value trap. The business model is genuinely under siege.

Tom See, this is what I mean — hardware wins, services bleed. SMH and Intel are flying while Accenture gets crushed by AI. Rotation in action.

Gerald Alright, but let's pivot to European trade risk. The US launched a Section 301 probe into Germany over pharma underpayment — that means potential retaliatory tariffs. Sell Germany equities via EWG.

Marie And it's not just the index — Bayer, already down two point two percent year to date at a low multiple, and Merck KGaA at fifteen times forward earnings could get squeezed. The probe adds real downside.

Tom But German equities are already near lows, down almost three percent year to date. Is this escalation fully priced? I'm not so sure.

Gerald Honestly, I doubt it. And while we're on Europe — Goldman Sachs says sterling is the most overvalued G10 currency. Post-Brexit recovery priced in but now it's leaving the pound overbought. Sell GBP-USD, sell FXB.

Marie Gerald, you've been waiting for this one. But the pound is already down one point two percent year to date — a hawkish Bank of England surprise could snap it back.

Gerald Fair point, but Goldman is a heavyweight here. The trend is breaking lower — sterling at one twenty-seven, down zero six percent last session. I'll take that bet.

Tom Currency markets — yawn. But I'll note the sell call. Now, let's get to the real action: emerging market chips. Apple CEO says price hikes are unavoidable due to chip costs, and South Korean and Taiwanese stocks hit records. EWY surged nearly seven percent, up over one hundred percent year to date!

Gerald Tom, you're chasing a rocket already in orbit. EWY at its fifty-two-week high, up one hundred percent — that's not a buy, that's a prayer.

Marie But the fundamental demand story supports it — Apple's supply chain needs more chips, and these companies are delivering. The risk is momentum crowding, not a lack of demand.

Tom Exactly. Buy South Korea, buy Taiwan, buy semiconductors — SMH is up sixty-seven percent year to date, and it's still the rotation trade. CoinDesk reports investors are rotating out of Mag Seven and crypto into AI bottlenecks like chips and memory.

Gerald But SMH is already at a record, one percent from its high. The rotation trade is crowded — you're buying the top of the momentum. Remember yesterday's buy semis call? It's up again, but fading it with puts is our view.

Marie Wait — you're already there. Our synthesis says consider fading the semis rally. But the flip side is crypto under serious pressure. Bitcoin down twenty-nine percent year to date, ETF outflows, and the dollar index breaking higher.

Tom Right — sell Bitcoin, sell GBTC. And the dollar breakout? Buy the DXY. Hawkish Fed killed rate-cut hopes, and the buck is surging.

Gerald And Strategy's preferred stock, STRC, hit a record low below par — funding distress. Yesterday we said sell Strategy preferred, and it's down another leg. Forced Bitcoin sales could add pressure.

Marie Tom, your sell call on MSTR yesterday? Not direct, but STRC is the pain point. The negative feedback loop is real.

Tom Yeah, I know — I said hold MSTR. But that preferred stock collapse is ugly. Alright, we've got private credit stress too — BIZD down thirteen percent year-to-date, redemptions continuing. Sell BDC income.

Gerald Liquidity concerns in direct lending are deepening — BIZD twenty-seven percent below its high. The discount isn't an opportunity yet.

Marie Let's pivot to the bond mystery. FT Alphaville asks: the Iran war is over, oil dropped nine percent, so why aren't bond yields lower? TLT is near its fifty-two-week low. That's the most original take of the day.

Gerald That piece is spot on. Structural fiscal drag or sticky inflation is anchoring yields. It's a regime change — geopolitical calm doesn't automatically send rates down anymore. Sell TLT.

Tom Wait — the peace deal should be bullish for bonds. But yields are stuck? That's bizarre. So we're saying the bond market is pricing something worse?

Marie Yes — maybe a fiscal risk or sticky inflation. And on top of that, Fed Chair Warsh pledges to listen more to markets, and Morgan Stanley warns markets may regret it. Policy uncertainty is high, and the next F O M C minutes are due.

Gerald And nobody's talking about PCE data tomorrow. The focus is all over the place — chip deals, oil flows, sterling. Complacency could be jarred if inflation prints hot.

Tom But oil supply is resuming faster than expected — JPMorgan says Hormuz flows jumped to five point one million barrels a day in June. That could ease inflation. Sell USO, sell BNO.

Gerald Right, oil is already down nine percent in a week, but the trend is lower. However, yields aren't falling despite cheaper crude — that's the anomaly reinforcing the sticky-yields view.

Marie So we have a market wrestling with dispersion: tech euphoria from Intel-Apple versus a bond market that isn't buying the peace. Our view: favor short-duration over long bonds, and consider fading the semiconductor rally with puts on SMH.

Tom Okay sure, but the bear case: Intel's deal is tangible, the rotation into chips is backed by real demand, and if Friday's PCE comes in cool, yields could finally break lower and TLT could rally. Goldman's sterling call might be early if the BoE surprises hawkishly.

Gerald Fair enough — those are the counter-arguments. But the FT Alphaville piece is the key: the bond market is stubborn, and until yields crack, the dispersion trade is our cleanest expression.

Marie Exactly. As always, none of this is investment advice — just our read of the signals. If you're just finding us, hit follow on Spotify — or check investmentflash.com for the full digest with charts and sources.

Tom We're back with the New York Edition later today at nine a.m. New York time. Until then, watch those yields.