Jeremy Hutton: Milford Asset Management expert on why the US share market dropped this week

The US share market took a hit this week, with leading AI companies seeing a decline.

Market darlings Palantir and chip behemoth Nvidia were among the big names that saw a drop.

Milford Asset Management expert Jeremy Hutton explained further.

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Episode Transcript

Speaker 1 (00:00):
Ever, Jeremy hasn't lil fed Asset Management is with me. Hello, Jeremy.
Good evening, Heather. So a bit of a fall in
the US share market overnight. What happened? Yeah, just a
short reminder that markets just don't go up in a
straight line. But yeah, short, sharp two percent drop in
the in the Nasdaq overnight, but just highlighting it's still

(00:22):
been a very strong year. But overnight, Yeah, there was
the lead market was led down by two market darlings.
This was Pellanter down nine percent and the chip behemoth
and Video down three and a half. And it looks
like it was driven by a short bet in both
these names that was disclosed by an investor called Michael Bury. Now,
putting a short bet in is that you're expecting these

(00:44):
stocks to fall and Bury he's a originally famous investor
who shorted the US housing market just before the GFC
crash in two thousand and nine, and you know that
led to the famous movie The Big Short. But you know,
it is just one man's view, one participant's view, and
shift down on the day. But you know, we'll just
have to see how this plays out, and there's any

(01:05):
trend here. Yeah, But I mean, it is possible that
there are a few other risks that are popping into investors' minds, right, yeah, potentially.
I mean, we have just gone through a reasonably catalyst
rich period where you know, we had the third quarter
earnings of a lot of these big tech and AI companies,
and once more, they did report really strong numbers, and

(01:25):
the markets just continued to rally as it has over
over the year as well. And you know, the strip
feeding of positive AI spend and deals and announcements has
helped this. But you know, there are a few reminders
of risks out there still. You know, the US government
shutdown that's nearing the longest ever. The China US deal
or trade agreement was pretty lukewarm, pretty light on detail,

(01:48):
so you know, maybe not cooling the trade war at all.
And then you know, you had this Bury news last night,
and then some other Wall Street executives too, just calling
or just warning of a potential AI bubble. And then
and then finally, you know, market valuation, they are very
high verse history at the moment, so you don't need
much negative news for a short shut pullback. Here in
New Zealand, we're seeing some green shoots out we got

(02:08):
the Freightways and the ports of toating they're having quite
strong updates. Yeah, that's right back in New Zealand. So
starting with starting with Freightways. You know, Freightways is a
career and delivery company, so it is generally seen as
a really good bow weather for local activity in New Zealand,
and they had a strong update last week at their
AGM there. Their first quarter profits are up around twenty

(02:29):
percent versus last year, and importantly they're seeing volumes or
same customer volumes starting to grow versus last year. So
that's that's pretty clear that there's some cyclical recovery coming
through there. And then portataroing. Yeah. Also, you know, their
first guidance in there for the year and then their
first quarter volume update again looking for mid to low

(02:50):
teens profit growth, and then their volumes are up nine percent.
And we know exports are very strong at the moment dairy, kiwi,
fruit and the like, but there's also bound to be
some really good import growth coming through there, so potentially
that's consumers bringing in some more goods and feeling a
bit better. So yeah, another couple of data points there
showing that you know, hopefully we're through the worst of

(03:12):
the economics cycle here in New Zealand. Yeah, good stuff, Jeremy,
always good to talk to you. Thank you mate. That's
Jeremy Hutton, Wulford Act Management. For more from Heather Duplessy
Allen Drive, listen live to news Talks. It'd be from
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