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Edward Yardeni joins us. He is the president of Yardeni Research and joins us now. Dr. Yarden , thank you very much for your time. Regarding the direction for emerging markets, there is a lot of talk now that as the hype around AI dies down, global investors may start to look at non- AI markets a little more favorably .
Do you think this is just wishful thinking on our part right now? Well, I think it turns out that the stock markets of Korea, South Korea, and Taiwan have become very, very volatile. Some extraordinary movements both up and down. And as a result of this volatility, I think we'll see global investors looking for emerging markets that aren't necessarily AI-related, but are bets on the middle class, consumers, healthcare, banking.
These are the industries that I think global investors will increasingly look to for some kind of safe haven from the volatility that we're currently seeing in the technology sector. What is your forecast, Dr. Yardeni, regarding the commodity cycle, as you see it? As oil has fallen to around $72 and seems to be stuck there as it has been lately.
Everyone is watching the dollar very closely to see which direction it will move. Will it strengthen from this point, or will it lose momentum a bit? What is your opinion? Yes. Well, that's a very good question. You know, all last year and, in fact, up until the start of the war in the Middle East, there was a lot of pessimism about the dollar.
Many people look at this dollar index, called DXY. The problem with this index is that it is composed of developed market currencies relative to the dollar. So , the euro has about 57% weight in it. This is actually not a very good indicator of what is happening in the general currency markets. The fact is that the dollar has been quite strong against emerging market currencies.
And then , because of the war, we saw the dollar strengthen as Europe became more dependent on oil imports. The US exports oil. I think the outlook for commodities is still pretty good. I mean, I think one of the AI strategies is buying raw materials . And I think, especially things like copper, lithium, all these types of raw materials are necessary for high technology.
I think they will continue to show good results. Gold has become quite a difficult game lately. It went up to 5,500 and now it's back down to 4,000. I think this is more of a correction in a " bull" market. The key level is $4,000 per ounce. It looks like it will hold, and if it does, I think the price could rebound.
I'm still expecting 5,000 by the end of the year. I used to expect 5500. But overall the global economy looks surprisingly good, despite the recent oil shock. By the way, oil was in a "bear" market even before the war, and it seems to be recovering as the Chinese economy seems to need less oil. Interesting.
I hope many other economies will do the same . Dr. Yardeni, you don't believe in the existence of an artificial intelligence "bubble" because fatigue has already set in, and therefore it won't burst. However, if you are bullish on the US markets, and I believe you are, what would happen if leverage were to be partially de-leveraged in other hot AI markets, such as South Korea?
I mean, the risks behind credit ETFs are really high. If these markets start to fall, will the US remain the main beneficiary, or will the money go to emerging markets in Asia, such as India? Well, when we talk about the South Korean market, we're actually talking about two memory manufacturer stocks.
And the prospects for the memory industry are still quite good. I know that memory chips are considered particularly vulnerable to ups and downs, and maybe it will happen again, but I don't think so this time. I think semiconductors are used literally everywhere, not just in AI. As a result , I'm not convinced that these memory chips will suddenly drop in price significantly.
It takes a long time to build new capacity to produce new chips. So in the meantime, demand for memory chips and other semiconductors will continue to grow. The same can be said about Taiwan. The Taiwan stock market is essentially one stock: Taiwan Semi. And their business prospects look just great.
So I'm not too worried about a sudden burst of a speculative bubble in South Korea or Taiwan. And if that happens, I don't think it will cause the US stock market to fall. I think what we see in the US market is rotation. We are seeing some AI fatigue. People are a little tired of all the uncertainty around AI.
We see, for example, that small- cap stocks have reached an all-time high. Stocks related to quantum computing are performing very well. The software is not so good. So, there is a lot of rotation going on in the market, and I think that is a healthy development . I think this is a bull market and it will remain that way for some time.
Dr. Yardeni, please say a few words about India. If you follow this line of thinking, some of the biggest obstacles, such as high oil prices, seem to have eased. Do you think this will at least stop the outflow of foreign capital from India? Yes, I think so. I believe that India is particularly vulnerable to oil supply disruptions, and now that the oil market has opened up, and it's not just the Strait of Hormuz.
I think we see that global demand has actually stabilized. We see that OPEC+ countries are already discussing increasing oil production. And, as I said before, before the war broke out, a bearish trend began in the oil market in 2022 . So I think we may actually be back to a bear market in oil, which is very good for India.
Also, I think the Indian tech sector has been hit hard by fears that AI will replace all software companies, call centers, etc. And I think people are becoming a little more realistic, realizing that it doesn't have to be that way. And this is important for India. But there is no reason why India cannot join the AI game .
And I think we will see more efforts from Indian technology companies in this direction. Fair comment. Well, Dr. Yarden, as always, thank you very much for taking the time. It was nice talking to you . Thank you.
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