(The opinions expressed here are those of the author.)

By Anna Szymanski

June 26 (Reuters) -

Everything Mike Dolan and the ROI team are excited to read,

watch and listen to over the weekend.

From the Editor

Huge moves in global tech stocks hogged the spotlight this

week. But given how much many AI darlings have run up in the

first half of the year, such volatility should probably be

expected - especially with the end of the quarter fast

approaching.

Global stocks were on the back foot early in the week, with

major U.S. indexes dragged down on Monday by weakness in tech

megacaps. Why? Some assumed it was concern about sky-high AI

capex, but the next day the selloff broadened into chip stocks -

some of the main beneficiaries of all that spending - with

Korea's KOSPI sliding nearly 10% and the SOX chip index shedding

some 8%.

A blockbuster set of earnings from memory chipmaker Micron

Technology on Wednesday initially calmed the horses. But the

tide turned yet again after Apple announced on Thursday that it

was raising the prices of iPads and MacBooks in response to the

surging cost of memory and storage chips, highlighting one

downside of the AI frenzy. Apple's share price slid more than 6%

overnight, leading to another selloff in Asian markets on

Friday.

Amid this week's ructions, the important question - to

paraphrase the late Federal Reserve Chair Alan Greenspan, who

passed away at 100 this week - is whether AI exuberance has

become irrational, leaving markets poised for a bigger

correction.

Opinions on that remain as contentious as ever, with SoftBank's

Masayoshi Son declaring this week that talking about an AI

bubble was "blasphemy against AI". Meanwhile, many Wall Street

shops are upping their year-end S&P forecasts significantly,

offering compelling reasons why the current rally could have

plenty of road to run.

Will the Fed ultimately play spoiler if the AI mania keeps

pushing up asset prices? Probably not - at least not explicitly.

Newly appointed Fed Chair Kevin Warsh appears to have no more

appetite to pop asset price bubbles than his predecessors. There

are reasonable arguments in favor of this stance, as equity

booms - even irrational ones - can help fuel technological

advancement and economic growth over the long term. But the

Fed's "bubble blind spot" remains a cause for concern.

In the meantime, markets appear to be growing confused about the

Fed's policy trajectory, with massive gaps in rate expectations

between Wall Street banks. This suggests that Warsh's push for

less Fed communication - including the elimination of forward

guidance - may end up being a recipe for volatility.

Elsewhere, Britain also grabbed attention this week with news

that it's about to get its seventh prime minister in a decade.

Prime Minister Keir Starmer announced his resignation on Monday

after months of mounting pressure and the dramatic return to

parliament of key Labour party challenger Andy Burnham.

UK markets took the news in their stride, with no major

movements on the day. But their attention has turned firmly to

Burnham, Starmer's likely successor, who could take office as

soon as next month if no other contenders come forward.

Investors are searching for more detail on how he might handle

the economy and, importantly, who his all-important pick for

finance minister may be.

But replacing another leader won't fix the UK's underlying

issues, namely tepid productivity growth and a bloated welfare

bill. If prime ministers aren't given time to make reforms -

especially the painful ones - the revolving door at 10 Downing

Street may simply reinforce the idea that the UK has become

ungovernable. That could weigh on investment and accelerate an

already vicious cycle.

A key agenda item for the next UK leader will be energy policy,

especially now that the Iran war has highlighted the importance

of domestic energy stockpiles and the danger of overreliance on

imports. Could that alter the British government's position on

oil and gas activity in the North Sea? It may.

Meanwhile, the UK and Europe have been sweltering this week as a

dangerous heatwave has hit the region. Here's a breakdown of the

impact on Europe's power systems.

In other energy news, oil prices continued to tumble throughout

the week, touching pre-war levels on Thursday, as crude

shipments through the Strait of Hormuz reached their highest

volumes since the war began. Traders seem convinced that the

interim U.S.-Iran peace deal will lead to a sustainable

agreement and the normalization of energy flows - even as a

Taiwanese ship transiting the strait was reportedly attacked on

Thursday.

(To better understand the possible long-term implications of the

Hormuz closure, check out Ron Bousso's essay on the lessons that

can be learned from the 1973 Arab oil embargo.)

While falling crude is lowering prices at the U.S. pump, markets

aren't yet drastically trimming bets on Fed rate hikes. The U.S.

economy was already running somewhat hot before the war and

lower energy prices may well boost spending and other economic

activity. That could push prices up further and complicate the

Fed's calculus moving forward.

Speaking of inflation, markets got more data on U.S. price

pressures with the release on Thursday of the personal

consumption expenditures (PCE) index, the Fed's preferred

inflation gauge. The index rose 4.1% in the year through May,

topping 4% for the first time in three years, while core PCE

increased by 3.4%.

Both of those prints were in line with economists' expectations.

Bets for a rate hike as soon as the Fed's next meeting fell back

after the report, though markets still see about an 80% chance

of a hike at the September meeting.

Expectations for tighter Fed policy have helped strengthen the

U.S. dollar in recent months, pushing it to one-year highs

against major peers this week, though it softened slightly after

Thursday's PCE print.

The yen remains particularly weak against the greenback,

languishing near a 40-year low past the 160-per-dollar level.

That has left markets on intervention watch, though a further

round of yen-buying has not been forthcoming - nor has there

been much clear communication from Japanese financial

authorities.

Next week will be shortened for America's Independence Day,

but there will still be plenty of economic data releases to sift

through - including U.S. June nonfarm payrolls - as the country

celebrates its 250th birthday.

For more data-driven insights on markets and commodities, check

out Reuters Open Interest. You can learn:

* What political strategy might Andy Burnham borrow

from former U.S. President Richard Nixon?

* Which country filled India's energy import gap in June?

* Why have copper smelting economics been upended?

* What key area are many portfolios lacking diversification

in?

* Which small African country has China become dependent on

for a key raw material?

* Why is China buying more seaborne thermal coal?

* What country is the DRC turning to as it trims its cobalt

industry's dependence on China?

* Which energy markets are struggling to return to

normal even after the Hormuz reopening?

I'd love to hear from you, so please reach out to me at .

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Opinions expressed are those of the authors. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.