Preview of the week starting 25 Mar 24 - Is Carnival hitting another peak?

Public Holidays

This is a short week with Singapore, the USA, and Hong Kong celebrating Good Friday on 29 March 2024.

Here is wishing all Christians a blessed Good Friday.

The Significance of Good Friday and Easter in Christian Tradition

Economic Calendar (25 Mar 2024)

Notable Highlights

• Core PCE would be the most watched macro data for the coming week. This is the main indicator news by the Federal Reserve to understand inflation in the economy. Should the PCE index outcome be unexpected, this should lead to some volatility in the market.

• New home sales is a good reference pertaining to the real estate industry.

• CB Consumer Confidence and durable good orders will share insight into the sentiments of consumers in the US economy.

• Chicago PMI will be a good indicator of the manufacturing sector.

• Initial jobless claims will also be a key macro data that the Federal Reserve will look into as they ponder the next interest rate decision

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. If the trend of excess inventories continues, demand erosion can lead to reduced production & weakening consumer spending.

Earnings Calendar (25 Mar 2024)

r/EarningsWhisper - The Most Anticipated Earnings Releases for the Week of March 25, 2024

For the coming week, the earnings of GameStop and Carnival are interesting.

Let us look at the earnings of Carnival in greater detail.

Observations from recent earnings:

• Carnival witnessed one of the best revenues for 2023 with revenue growth of 77.4%.

• The company has turned profitable from the losses incurred during the COVID-19 years.

• The operating profit stands at $1.9 billion as of 2023

• The company has stopped issuing dividends since the COVID-19 years

• The 10-year CAGR for free cash flow stands at 5.9%

• Unfortunately, EPS TTM has turned negative at -0.06 in 2023.

Looking at the one-year chart above, we can see the formation of a potential wedge that implies a potential breakout in the coming days. This could go either way.

For the coming earnings, the forecast for EPS and revenue are -0.1733 and $5.33 billion respectively.

Will Carnival be able to post another good result in the coming earnings? Will the outlook dampen its earnings?

With threats of a recession, the tourism industry can be seen as one of the early indicators. If the earnings outlook appears bearish, could this be a prequel for a recession?

Market Outlook of S&P500 - 25Mar24

Technical observations of the S&P500 1D chart:

• The MACD indicator is ranging sideways despite having completed another top crossover. We are expecting a reversal to a downtrend in the coming days.

• Chaikin Money Flow (CMF) advises that the bullish run is fading away though the line remains above zero (typically bullish).

Interpretation of CMF from the CFI website:

When there is a continuous buying period (when the CMF value is sustained above zero), the trend is considered bullish and indicates that price will continue to rise with the trend. When there is continuous selling pressure (CMF value below zero), this points to a bearish trend, indicating price will continue downward.

Higher readings, either positive or negative, indicate a stronger trend. Increasing readings indicate gaining momentum.

Crosses may be bullish or bearish. Bullish crosses occur when the CMF crosses the zero line from below, and stock prices continue on an upward trend. Bearish crosses occur when the CMF crosses the zero line from above, and prices continue to fall.

• Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. The last candle is above both the MA 50 line and the MA 200 line. Thus, it could be read as bullish for the long-term and mid-term.

• Exponential Moving Averages (EMA). The 3 EMA lines have yet to converge and they are spreading outwards in a fan-like shape that implies an uptrend.

• I have replaced Stochastic with CMF to incorporate consideration of volume. Stochastic and MACD are similar with Stochastic being “more active” and more capable for “false” signals.

From investing, it recommends a “Strong Buy” for the S&P500 (based on 1D chart).

From the 21 technical indicators and moving averages, a “Strong Buy” rating was suggested. This comprised of indicators showing 20 (Buy), 0 (Neutral) and 1 (Sell).

From the indicators above, we can expect an uptrend though it is due for a correction.

News and my thoughts from the last week (25 Mar 2024) - Huawei, BYD & AI

• Huawei's auto unit expected to become profitable this year, exec says Huawei's automotive business is expected to turn a profit this year, bolstered by mid-to-high-end models built in partnership with automakers, the unit's chairman said. - CNEVPost

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Another great example of sanctions backfiring. In 2019, due to US sanctions, Huawei was banned from using Android, the operating system on which most of its devices ran. The US thought this would be a killer blow to the company. Undeterred, Huawei decided to develop its own homegrown OS - HarmonyOS - something everyone at the time said was impossible, due to the enormous complexity of the task. Fast forward 5 years, HarmonyOS is now running on no less than 700 million devices in China and is about to overtake Apple’s iOS. - X user Arnaud Bertrand

• Used Tesla cars lost nearly 30% of their value since last February, as Elon Musk kept cutting prices of new vehicles in order to stay competitive. - Notebookcheck

• The Los Angeles Police Department has formed a task force to counter a rise in gangs from Latin America that have been targeting luxury homes in Southern California. - NY Post

• Copper scrap exports to China were forecast to nearly double to 24,967 tons in the Q1 from a year earlier. That was likely to account for 73% of the country’s total copper scrap exports. - KED Global

• Magnetic-electrical disks will reportedly feature 90% less power consumption compared to hard disk drives and 20% less power consumption than tape drives while having 2.5x the performance of tape drives. - Tom’s Hardware

• BYD, Xpeng and GAC Aion’s Hyper brand announced expanded collaborations with Nvidia on Monday BYD, will use Nvidia’s Drive Thor chips to enable increased levels of autonomous driving and other digital functions, Nvidia says - SCMP

• Hapag-Lloyd CEO predicts early peak season for ocean shipping

  Expect a softer March then a volume build, Habben Jansen says - FreightWaves

• AI is here to stay. Do not miss the train or we maybe left behind.

• Currently, the half-day express delivery service has been expanded to 20 cities such as Hangzhou, Shanghai, Chengdu, Guangzhou and Shenzhen across the country. - China Daily

• BYD to begin producing EVs in Indonesia in 2026, local official says

  BYD plans to hold a groundbreaking ceremony for a factory in Indonesia this July, a senior local official said. - CNEVPost

• GDP growth, strong job market and sticky inflation are reasons for interest rate hikes. If decisions are made based on data, it is uncharacteristic to suggest any number of rate cuts. This would make sense if it is politically driven - to suggest such intent.

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from X user Robin Dhar

• BYD launched the new Seagull EV Honor Edition (Dolphin Mini overseas) earlier this month with a “shocking price” starting at around $9,700 (69,800 yuan). - Electrek

My Investing Muse ( 25Mar24)

More Layoff news from last week:

• UNILEVER would spin off its ice cream unit into a standalone business and cut 7,500 jobs in a new cost-savings programme, sending shares surging in early trading. Unilever aims to deliver modest margin improvement after the split. - Business Times

• China’s Longi is to cut as much as 30% of its workforce, in an acceleration of cost reductions that began late last year, Bloomberg reported. - The Guardian

• Citigroup has flagged approximately 20 positions within its UK investment bank as potentially at risk, as the Wall Street institution persists in reducing its workforce as part of its ongoing restructuring efforts. - People Matter

• Shell plans to close 500 locations a year in 2024 and 2025 - The Street

Layoff news continues. While some can land better jobs, it may not be the case for all.

FACTSET Q1/2024 Forecast

Factset has recently posted some forecasts for S&P500 Q1 2024 in its Twitter (X) account. Here are some of the posts:

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$SPX is expected to report Y/Y revenue growth of 3.6% for Q1 2024, which is below the estimate of 4.3% revenue growth on December 31.

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$SPX is expected to report Y/Y earnings growth of 3.4% for Q1 2024, which is below the estimate of 5.7% earnings growth on December 31.

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78 $SPX companies have issued negative EPS guidance for Q1 2024, which is above the 5-year average of 58 and above the 10-year average of 62 .

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Analysts have lowered Q1 EPS estimates for $SPX companies by 2.6% since December 31, which is below the 5-year average (-3.7%) and the 10-year average (-3.4%) for a quarter.

Analysts are expecting lesser growth in both Y/Y revenue and earnings. EPS estimates are also lower. With more companies issuing negative EPS guidance, are we looking at a weakening economy that is still growing?

With Q1/2024 earnings at our door, are we expecting a good quarter with slowing revenue and profits?

Conclusion

This was one of the famous stories about the shoeshine boy that triggered an investor to get out of the market. I am not sure if this has similar applications in current times. With more retail investors having access, is this a levelling of the investing field or is this reamining a world controlled by a few?

There are different theories and ideas about this. Let us not forget to learn, which is the biggest reward for my investing journey. I could not be satisfied with my current returns but I think I am in a better position than years ago. Do I still make mistakes? Yes. Do I still have times when I could not get my emotions under check? Yes. Yet, I have learnt much more about myself and the market.

It does not matter what I think should happen. There are greater forces at work and I have learnt to “ride” the wave and learn along the way.

The greatest returns of investment are not money, but time. Hopefully, all these can translate to more time for myself, my family and the things I am passionate about.

@TigerStars

$Carnival(CCL)$

$BYD Co., Ltd.(BYDDY)$

$S&P 500(.SPX)$