Public Holidays
There are no public holidays in Singapore, Hong Kong, America, or Singapore in the coming week.
Economic Calendar (04Nov24)
Notable Highlights
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The most watched event of the coming week will be the US presidential election. The results will likely affect American and global sentiment towards business and the conflicts in the various regions. With presidential candidate Trump promising to end the conflict quickly, this should bring some relief to the market though the defense industry should suffer.
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The next most important news will be the Federal Reserve's interest rate decision, which is due on Thursday night US time. The general forecast is looking at a 25-basis point cut. The recent inflation data from PCE would leave the Fed with some consideration as inflation remains stubborn.
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S&P Global Services PMI will be released with a forecast of 55.3. This represents an expansion of the services sector and its demand.
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ISM non-manufacturing PMI and ISM non-manufacturing prices will also be released. This will provide some insight into the outlook of the non-manufacturing (that is, services) sector and the expected inflationary pressures.
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The 10-year note auction and the 30-year bond auction will also represent the outlook for the bond market. Typically, the bond market and the equity market worked in opposite directions.
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Initial jobless claims will be announced. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.
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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.
The macro component will play a bigger role in the market’s movement in the coming week.
Earnings Calendar (04Nov24)
Some notable earnings in the coming week are Palantir, Coupang, ARM, Rivian and Berkshire.
Let us look at Rivian - the touted competitor to Tesla.
From investing dot com, the technical analysis recommends a “Strong Sell” with the stock price falling over 42% from a year ago.
However, Analysts Sentiments recommend a “Buy” with a price target of $16.42 (an upside of over 61%).
Observations about Rivian:
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The company started to collect revenue from 20/21 and ended 2023 with $4.4 billion.
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The operating losses grew from $409 million in 2019 to over $5.7 billion in 2023.
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Even though there is a drop in the earnings per share (EPS), the losses incurred have been falling since 2022.
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After five years, the business remained unprofitable. Based on current trends, it could take years before breaking even.
From the recent news, Rivian seems to be struggling with internal processes and safety incidents.
For the coming earnings, the forecast EPS and Revenue are -0.9535 and $1.01B respectively.
Rivian would require time to break even. If there is a healthy trend of increasing sales and moving closer to breakeven, Rivian can be a strong contender to challenge in the space of EV. For now, I prefer to be a spectator and not an investor in this company.
Market Outlook of S&P500 - 04Nov24
Observations:
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The MACD indicator has started a downtrend following a top crossover.
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Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. Both MA50 and MA200 lines are below the last candle. Thus, it could be read as bullish for both the mid and the long-term.
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The 3 Exponential Moving Averages (EMA) lines are on an uptrend and are starting to show signs of converging. This demonstrates a potential change in trend. This could be confirmed in the coming days.
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Chaikin’s Monetary flow (CMF) shows a downtrend. This implies more selling momentum than buying. The CMF seems to be moving sideways - applying similar momentum by both buyers and sellers.
From Investing dot com, the daily technical indicators are showing a “SELL” rating. 7 indicators show a “BUY” rating and 12 indicators show a “SELL” rating.
From the candlestick patterns, there seems to be a good mix of both bullish and bearish candlestick patterns. From the most recent candlestick patterns, there seem to be more bullish patterns.
From the above, the market should be going on a downtrend in the coming days.
News and my thoughts from last week (04Nov24)
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There are an increasing number of data points that would show that the US is in a recession. The reason we can’t see it is the distortion caused by government hiring and spending Countries thrive via its private economy. Not money printer spending by the government. Non-farm payrolls today + the revisions to August and September on top of data like this below should be concerning. - X user and Billionnaire Chamath Palihapitiya
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Singapore is on the radar for 74,000 ultra-rich UK foreign residents hit by the tax change. These wealthy foreign UK residents contributed £6.2 billion in direct tax revenue in 2023 Can this lead to imported inflation for Singaporeans? - Business Times
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According to a recent SEC filing, Karp sold shares over three days, totalling approximately $254 million. - Investing dot com
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GOLD FUTURES RISE TO NEW RECORD HIGH ABOVE $2,800 FOR THE FIRST TIME IN HISTORY
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U.S. Q3 CORE PCE PRICES RISE 2.2% Y/Y; EST. 2.1%; PREV. 2.8% - Investing dot com
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REUTERS SOURCES: CHINA'S LEADING LEGISLATIVE BODY WEIGHS APPROVAL OF NEW FISCAL PACKAGE EXCEEDING 10 TRILLION YUAN ON NOVEMBER 8 SOURCES: CHINA INTENDS TO APPROVE RAISING NEW 10 TRILLION YUAN DEBT THROUGH SPECIAL TREASURY AND LOCAL GOVERNMENT BONDS IN UPCOMING YEARS FISCAL PLAN TO ALLOCATE 6 TRILLION YUAN FOR LOCAL GOVERNMENT DEBT AND UP TO 4 TRILLION YUAN FOR IDLE LAND AND PROPERTY ACQUISITION CHINA COULD UNVEIL ENHANCED FISCAL MEASURES IF TRUMP SECURES U.S. PRESIDENCY.
From X user The Kobeissi Letter
September PCE inflation, the Fed's preferred inflation measure, falls to 2.1%, in line with expectations of 2.1%. Core PCE inflation was unchanged, at 2.7%, above expectations of 2.6%. It has been 6 months since Core PCE has fallen. Did we really need a 50 bps cut?
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Mortgage rates are skyrocketing: The average interest rate on a 30-year mortgage just jumped another 8 basis points yesterday alone. Homebuyers can now expect an average interest rate of 7.23%, up sharply from 6.70% seen just 1 month ago. In Q3 2024, the median US home sold for $420,400 which means a mortgage payment with 20% down would be $2,343/month. Including taxes and insurance, homebuyers can now expect to spend over $3,000/month. In other words, homebuyers are now spending over 50% of their post-tax income on home payments.
My Investing Muse (04Nov24)
Layoffs & Closure news
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Surprise, surprise…
August jobs revised: 159K to 78K (-81k)
Sept jobs revised: 254K to 223K (-31k)
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Chevron Corp. indicated potential US job cuts as part of a new cost-cutting plan. - LiveMint
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Manulife Financial has cut hundreds of jobs in its global wealth and asset management business, representing about 2.5 per cent of the division’s staff. - Business Times
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Publicis Groupe to lay off up to 200 employees at its digital agencies The holding company let go of more than 100 people at its media shops last week - Adage
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Broad Institute of MIT and Harvard Lays Off 87 Workers in Restructuring Effort - The Crimson
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Intel's biggest revenue decline in five quarters to hit amid broad layoffs and missed AI boom - Calcalistech
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Dropbox is laying off 20% of its workforce as the cloud company undergoes what CEO Drew Houston calls a “transitional period.” - Techcrunch
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Visa to lay off around 1,400 employees and contractors, WSJ reports
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The entire 410,000-bpd plant (in China) is due for shutdown around mid-2025. Half of the capacity has already been mothballed. Dalian govt pushed for refinery relocation after accidents. - Reuters
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Volkswagen plans to shut at least three factories in Germany, lay off tens of thousands of staff and shrink its remaining plants in Europe's biggest economy as it plots a deeper-than-expected overhaul - Reuters
Layoff & closure news continued into the week.
Has the oil price provided a warning for the market?
Oil markets are trading like we are in a recession: Oil prices are down another -7% today and now down -20% over the last 6 months. Despite record-high stock prices and a Fed calling for a "soft landing," oil markets are crashing. What are oil markets telling us? - X user the Kobeissi Letter
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While all of the focus has been on the Fed, oil markets have been flashing recessionary signals. Headlines like the one below are the new norm. The reality is that global oil demand has cratered, particularly in China. China is the largest consumer of oil in the world. - X user the Kobeissi Letter
Oil can be seen as a forward indicator. While there are sustainable energy options, the demand for oil and its derivatives remains. Oil goes into many products and this can reflect the outlook of the producers in anticipation of market demand.
Revision of governmental data
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The Labor Department has revised the last TWO jobs reports LOWER by a combined 112,000 jobs. Initially reported numbers showed that the US added 254,000 jobs in September which was just revised down by 31,000, to 223,000. At the same time, the August jobs report was revised down by 81,000 jobs, from 159,000 to 78,000. 8 out of the last 11 jobs reports have now been revised lower. Neary, 1 MILLION jobs have now been revised LOWER over the last 2 years. What is happening here? - X user the Kobeissi Letter
Does this frequent revision warrant concern? Should we give them more time? Would people prefer something delayed over something wrong? Is the methodology under review?
My final thoughts
The most important event of the coming week will be the US presidential election, followed by the federal reserve's interest rate decision. Both events will cause volatility in the market. There are concerns about civil unrest should unfavorably result surface. From the current oil prices in China's market outlook, we are expecting a drop in the demand of oil. China is the world’s global factory and this drop in demand can be a good reference for the economic outlook in 2025. Some have expressed concerns about a pending recession. Some remain bullish and suggested that this could be a retracement in the short term.
It is possible for both outcomes to be correct but differ in time frame and duration. Market fundamentals can be tossed aside during this week of election results an interest rate decisions. While it is important to be data-driven, let us not ignore how sentiment can swing the market too.
Continuous revision of macro data such as job numbers can lead to a gradual erosion of the confidence of governmental data. When trust is lost, it would be difficult for the government to drive their policies in an objective manner. When negative market sentiments take over, the result could be amplified as the market tend to swing from extremes of overbought to oversold.
Berkshire Hathaway is seating on cash estimated at $325 billion, following their sales of apple and Bank of America stocks. Should we exercise some caution for the big tech and banking sector in lieu of such sales? Let us consider some hedging and caution for the coming weeks.
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