Public Holidays
There are no holidays in America for the coming week.
Singapore and Hong Kong celebrate Labor Day on 1st May 2024.
China celebrates Labor Day from 1st to 3rd May 2024.
Economic Calendar (29 Apr 2024)
Notable Highlights
China will review its manufacturing PMI in the coming week. This will be a good indicator of the growth of its manufacturing sector.
US will be releasing its Chicago PMI data. This will be an important indicator of how the Chicago market is growing or shrinking.
CB consumer confidence data will also be released in the coming week. The forecast stands at 104.5 which indicates growing confidence.
The US will share its ADP non-farm employment change in the coming week. This is good data coming to employment and one that the Federal Reserve will consider as part of its calming interest rate decisions.
The US will also be sharing a few important manufacturing data. This includes S&P global US manufacturing PMI, ISM manufacturing PMI and ISM manufacturing prices. These will provide a good insight into the growth or shrinkage in US manufacturing and the inflationary prices that they face.
JOLTs job opening will be an important job data that the Federal Reserve will use.
The most important macro data for the coming week will be the Federal Reserve interest rate decision on the 2nd of May 2024. The Federal Reserve opened in 2024 with the hope of several rate cuts. With the recent CPI and PCE data, it seems unlikely that the Federal Reserve can start cutting interest rates. Some have suggested interest rates can increase should the inflation trend continue away from the 2% target.
Other important job data will include the unemployment rate, average hourly earnings and the non-farm payrolls. The Federal Reserve has a tough job of balancing inflation with employment using the only tool they have which is the interest rate.
The week will close with Services-related data. S&P Global Services PMI, ISM non-manufacturing PMI and ISM non-manufacturing prices will be released. These will reveal the growth in the services sector and any inflationary pressures that they face.
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 (29 Apr 2024)
There are a few earnings of interest in the coming week. Some of these companies include SOFI, Amazon, PayPal, AMD, Coca-Cola, Starbucks, Qualcomm, MasterCard, Apple and Coinbase
let us look at Coinbase in detail.
Observations:
The revenue of Coinbase grew from $534 million in 2019 to $3.194 billion in 2022
The company ended 2022 with an operating loss of $2.67 billion.
The 10-year median margin for gross profit is at an impressive 84.2%.
However, the P/E ratio is over 600 based on its current price.
The stock price has grown over 339% in one year. It hit a recent all-time high in March and seems to be ranging sideways.
Investing has a neutral rating for the stock and has a target price of $233.
For the coming earnings, Coinbase has a forecast of 1.01 for its EPS and $1.3 billion for its revenue. With Bitcoin ETFs, should we expect a good strong surge following its coming earnings?
Market Outlook of S&P500 - 29Apr24
Technical observations of the S&P500 1D chart:
The MACD indicator is on a downtrend and there is a setup for a potential reversal in the common days.
Chaikin Money Flow (CMF) has hit below the zero line. This can be seen as a bearish signal with more selling volume. Note that there may be a reversal in this coming up as the line moves toward the “0” line.
Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. The last candle is above the MA 200 line and below the MA 50 line. Thus, it could be read as bullish for the long term and bearish for the mid-term.
Exponential Moving Averages (EMA). The 3 EMA lines have converged and started a downtrend.
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.
Let us look at the technical analysis for the S&P 500.
Investing has indicated a neutral rating using daily intervals.
There are a total of 13 indicators with a “Buy” and 6 indicators with a “Sell” rating. 4 technical indicators show a “neutral” rating.
I think that the S&P 500 should have a downtrend but we can expect a reversal to an uptrend in the coming days.
News and my thoughts from the last week (29 Apr 2024)
TSMC pushed back initial manufacturing at its first Arizona factory to 2025 from this year, saying local workers lacked expertise in installing sophisticated equipment. TSMC said the second plant wouldn’t produce chips until 2027 or 2028. - NY Times
Exxon Mobil Corp. plunged the most in six months after higher-than-expected maintenance costs diminished oil-refining results. - Yahoo Finance
The Houthis resumed their attacks on shipping Wednesday after a break of more than two weeks, targeting another US military-linked vessel, Maersk Yorktown. More than 80 attacks on merchant ships have been claimed since November last year. - Splash247
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Core PCE price index rose 0.32% in March and was up 2.8% from a year earlier January's gain of 0.45% was revised to a gain of 0.50%. The 6-month annualized rate of core PCE inflation held steady at 3% in March The 3-month rate was 4.4%, up from 3.7% in February - X user Nick Timiraos
First quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 1.6% during the period, missing the 2.5% growth expected. Meanwhile, the "core" Personal Consumption Expenditures index grew by 3.7% in the first quarter, - Yahoo Finance
Safety and security are basic needs and expectations. People would move from such places to safer places for their families if their work allows.
BYD has more people in R&D than the rest of the auto industry outside of China, COMBINED. And we are starting to see what they’ve been up to. X user Taylor Ogan
JUST IN: President Biden pushes 44.6% capital gains tax. The highest capital gains rate ever in the USA.
Apple reportedly cuts Vision Pro production due to low demand - The Verge
Tesla can be a good indicator of cyclical market conditions.
$1.13 trillion in credit card debts at about 22+% interest rate with a total consumer debt of above $17T. Would this be a factor or potential pitfall? Are we in a debt spiral?
How can we invest knowing the coming infrastructure failures in America? How can we protect our families from these?
People are becoming credit card delinquents. This surged to 6.4 per cent in the fourth quarter, up from just over 4 per cent at the end of 2022 and the highest level in more than a decade.
BREAKING: A building in San Francisco just traded hands at a shocking 90% 'discount' 995 Market St was acquired for $6.5M ($72 SF) at a public auction on April 18 The previous owner paid $62M in 2018 Office in SF has been apocalyptic and remains challenging for the foreseeable future - X user Triple Net Investor
Total household debt rose by $212 billion to reach $17.5 trillion in the Q4 of 2023. Credit card balances increased by $50 billion to $1.13 trillion over the quarter. - New York Fed Org
What are the consequences of the end of the BTF program? Are there banks that need such support? How much of the loan has been repaid? - Financial Express
The U.S. crime rate is still dropping, FBI data shows How much crime is underreported by underfunded police in different cities? - NBC News
China will account for about 21 percent of the world's new economic activity by 2029, compared to 20 percent from the entire G7, and almost double the nearly 12 percent for the U.S. - CGTN News
Citigroup’s deposits saw a reduction of $23.3 billion in 12 months. Meanwhile, deposits at Wells Fargo dropped by $15.1 billion over the same time frame. - DailyHodl
My Investing Muse (29Apr24)
Layoff & closure news
Some are laid off to trim the excess. Some are laid off to reduce costs. Some are laid off due to innovations and improvements. Some are laid off due to falling demand. The last one would be of most concern for the economy.
Theft and organized crime were the reasons why Target in October 2023 closed nine stores in four states. Walgreens in early 2022 and 2021 closed seven stores in San Francisco because of crime. Walmart in 2023 closed 24 stores in 14 states. - The Street
Layoffs under Swiss banking giant UBS's cost-cutting programme announced after its takeover of Credit Suisse will take place in five waves this year starting in June, the newspaper SonntagsZeitung reported on Sunday. - Reuters
A recent string of mass layoffs across the U.S. could be the sign that the country's economy is finally sliding into the recession many feared would hit the nation last year, financial analyst Gary Shilling told Newsweek. - Newsweek
Schools across the U.S. announce teacher layoffs American schools are facing layoffs as enrollment falls and pandemic-era aid dries up. - Straits Times
Whirlpool, the owner of the Maytag and Amana appliance brands, is cutting about 1,000 salaried positions worldwide to reduce costs. - Straits Times
Bayer executive has suggested that those managers impacted will be in the thousands, not hundreds. - Fortune
Space and defence startup True Anomaly has laid off around 25% of its workforce and cancelled its summer internship program, TechCrunch has learned. - TechCrunch
Tesla is laying off more than 6,000 employees in the states of Texas and California, according to reports. Reuters reported that 3,332 jobs will be eliminated in California, while 2,688 roles will be cut in Texas starting June 14. - HCAMag
U.S. regulators have seized Republic First Bancor and agreed to sell it to Fulton Bank, underscoring the challenges facing regional banks a year after the collapse of three peers. - Reuters
March 2023 - Chad is nationalizing all assets from multinational oil giant Exxon Mobil, including its hydrocarbon and exploration permits, said the government. What happens to foreign investment should this continue?
Control of media
Control of our minds is a constant battle. We owe it to ourselves for due diligence. People see what they want to see, and hear what they want to hear. And yet mainstream media is losing trust when their delivery comes with propaganda and inadequate content.
Behind every post is content, applied with delivery. Yet many of us do not question the intent behind this post. We owe to ourselves to do necessary due diligence for the information we digest. I recommend multiple sources for validation then the need to conduct research before we incorporate some of this news into our action plans. Using the recent Iraq war as an example, most of us bought into the news of Iraq having weapons of mass destruction. At the end of the war, we have not uncovered any of these weapons.
Inflation
Inflation data from CPI and PCE have shown resilience in inflation. We have seen inflation data moving upward in the last few months. We have increasing tensions in the Persian Gulf as the shipping route faces more threats. This has led to shipping lines rerouting their vessels. This will lead to a delay of two weeks and increased costs for the various shipping routes affected. For some items such as food and other perishables, this increase in shipping lead time is not good for its products. Industries will need to contend with shipping delays that will lead to production disruptions. The result is likely to be inflationary for the affected countries and companies.
This has pushed up the price of crude oil. Should this price remain inflated, we should see an increase in costs hitting both producers and consumers alike. It could start with an increase of petrol prices.
While the market hopes to get interest rate cuts in the coming months, we can no longer rule out the possibility of interest rate increases too. The cost of living is becoming an issue for more families. This has led to them taking on additional jobs, people delaying retirement and some coming out from retirement back to work.
Investing considerations
Price is what we pay. Value is what we get. The disconnect is a reason to buy or sell. Don't forget the margin of safety.
I need to remind myself the price of a company stock does not always represent the value and fundamentals it possesses. The price is the result of demand meeting supply. When the price is far away from its value, it is an opportunity to reconsider the positions. If the price is far below its intrinsic value, this can be a good entry point to buy up stocks of good company at great discounts.
Coming to value investing, having a margin of safety is the most important factor. It is not just about buying the stocks of a great company, but it is also about buying the stock when it is available at a good discount. Some of us use different methods to value a business. This can lead to different valuations due to the different considerations and risk rewards we embedded into our formula. This is easier said than done. For me, using a technical approach to buy and sell helps me insulate my feelings from the news and the stock.
My final thoughts
The earnings of the big tech are ongoing. The results of the magnificent 7 should conclude soon after Apple and NVIDIA. The magnificent 7 have played a big role in the recent rally of the various indices. The magnitude of the stock price change can take place in either direction.
I am paying more attention to the banking sector following the end of the BTF program. I am monitoring closely the commercial real estate (CRE) space as more buildings were transacted at great losses.
I doubt that America can support multiple war fronts. Money, supply chain and finance should play their part in limiting America’s influence.
Let us continue to exercise caution and consider hedging as one of our current strategies.
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