Preview of the week starting 02Dec2024 - Have you considered Asana?

Public Holidays

There will be no public holidays in Singapore, Hong Kong, The USA or China in the coming week.

Economic Calendar (02Dec24)

Notable Highlights

• S&P Global US Manufacturing PMI and ISM Manufacturing PMI will be shared in the coming week. A figure above 50 implies growth in this sector. Of late, there has been a contraction in the manufacturing sector. ISM Manufacturing prices reflect the price pressures faced by the manufacturing.

• S&P Global US Services PMI and ISM non-manufacturing PMI have been showing a growing services sector. The ISM on-manufacturing prices reflect any inflationary pressures faced by the service sector.

• There are a few important job data including JOLTs Job openings, ADP Nonfarm employment changes, Unemployment Rate, and Average Hourly Earnings. These are barometers of the employment market that form key considerations for Fed’s coming interest rate decisions.

• 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.

• 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 (02Dec24)

A few earnings of interest are Salesforce, Kroger, Asana and UIPath.

Let us look at Asana.

Asana’s stock price fell 21.8% from a year ago.

From the technical analysis, it has a rating for “Strong Buy” and for Analysts Sentiment, it has a “Neutral” rating with a price target of $14.26.

Compare this to the latest closing price, with a potential downside of nearly 7%.

Observations about Asana:

• Sales grew from $77M (2019) to $653M (2024).

• Gross profit grew from $63M (2019) to $588M (2024).

• EPS remained negative since 2019 - with 2024 showing an EPS of -$1.17.

• The 10-year median margin for Gross profit is about 88.5% and the 10-year median margin FCF is -33.0%.

• While the gross profit margin is good, the company could not break even since 2019.

For the coming earnings, the forecast of the revenue and EPS are $180.61M and -$0.068 respectively.

I prefer to consider Asana after they break even or demonstrate a trend of loss reductions. For now, I am an observer, not an investor.

Market Outlook of S&P500 - 02Dec24

Observations:

• The MACD indicator is showing an uptrend.

• 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.

• The 3 Exponential Moving Averages (EMA) lines are on an uptrend.

• Chaikin’s Monetary flow (CMF) shows an uptrend. This implies more selling momentum than buying. The CMF seems to be moving sideways - applying similar momentum by both buyers and sellers.

However, do note that there is a drop in volume that suggests a drop in the current buying momentum.

From the 21 indicators, all are pointing to a “Strong Buy” rating for the S&P500 (for Daily interval).

There are 21 indicators that recommend a “Buy” and none that recommend a “Sell”.

From the candlestick pattern, the latest seems to point to a more “bearish” outlook.

With the volume, there is a chance that the market may tire after the recent run-up. The technical indicators mostly point to a bullish outlook but it is possible for some retracement for profit-taking or other macro factors.

From the above, the S&P500 should continue its uptrend but we see falling momentum from this bullish run.

News and my thoughts from last week (02Dec24)

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Tender rejections hit 29-month high at 6.67%. While the trucking industry always reacts to the Thanksgiving holidays, in 2022 and 2023 rejections were muted. This Thanksgiving is the first since 2019 that the industry is reacting to "normal" events. - X user Craig Fuller.

• TRUMP: BRICS TO FACE 100% TARIFFS IF NOT COMMITTED TO US DOLLAR. How far can one go in a tariff war when you are having a trade deficit?

• Big Tech spent a decade doing everything possible to be the best conceivable progressive ally. They got treated with utter contempt, pounded daily, crucified in return. A full rethinking is required. X user Marc Andreessen

• UKRAINE TO NATO: SEND US AN INVITE, NOW! Ukrainian Foreign Minister Andrii Sybiha urges NATO for a formal membership invitation at the upcoming Brussels meeting. This bold move aims to thwart Russia's efforts to block Ukraine's entry—a top Kremlin agenda. Despite NATO's assurances of Ukraine's "irreversible" path to membership, no set timeline or formal nod has emerged, as consensus among the 32 members remains elusive. Source: Reuters

  What a nice way to drag NATO into the conflict. What do I know? The people should be smarter than me. When bombs fly over the head, things change. Will it be too late?

• Mark Zuckerberg reportedly desires to be a part of the “reform movement” Trump is leading and views Trump’s second term as a chance for “national renewal.” - from X user Leading Report

• there is a risk of being "de-banked" after being identified as a politically exposed person (who expressed a different political perspective). The amount of overreach.

• The Financial Stability Board (FSB) places JPMorgan Chase as the only bank in “bucket 4” – a distinction that forces the lender to hold an additional 2.5% of common equity as a percentage of its risk-weighted assets. - Daily Hodl

US household debt HIT an all-time high of $17.94 TRILLION IN Q3 2024. Household debt has been rising for 10 years STRAIGHT. What is the true shape of the US consumers' finances? - X user Global Market Investor

• AMAZON WORKERS PLAN BLACK FRIDAY STRIKES Workers in 20+ countries, including the U.S., Germany, and Brazil, are striking over low pay, unsafe conditions, and weak climate policies. In Germany, thousands will walk out. In New Delhi, workers protest heatwave mistreatment, while NYC demonstrators target Jeff Bezos’ penthouse. Amazon downplays the strikes, touting $22/hour wages and benefits. Critics call it union-busting and stalling. Will packages be delayed? Probably not. But with $170B in holiday sales last year, workers want Bezos to notice. Source: ABC

• JAPAN'S MINISTRY OF ECONOMY, TRADE AND INDUSTRY EXPECTS NOVEMBER OUTPUT TO DECLINE BY 2.2% MONTH ON MONTH.

• The shipping industry is contending with a worldwide shortage of seafarers, and it is fueling a troubling mix of fake resumes, accidents at sea, and elevated freight rates. - CNBC

• Record renewables go into the grid in 2024, generating 45% of electricity in 2025 - The Conversation

• Germany closing factories at home, opening them in China Rising energy costs, renewable energy emphasis and rigid regulations all driving Germany’s deindustrialization and exodus to China - Asia Times

• A market must be sustained by value and not hype. What happens when the hype is over?

• The Bargersville, Indiana Police Department spends $400 a month to charge its 13 Teslas, compared to $3,100 a month to fuel the same number of gas-powered F-150 police trucks. Fuel and maintenance savings from its Tesla fleet, along with a couple other smaller things, enabled the department to hire two additional officers. Source: Police1

• RFK Jr. exposes the truth about the United States proxy war in Ukraine "It's a money laundering scheme."

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Texas Sues BlackRock, State Street, and Vanguard for Illegally Conspiring to Manipulate Energy Markets, Driving Up Costs For Consumers Texas will not tolerate the illegal weaponization of the financial industry in service of a destructive, politicized ‘environmental’ agenda. BlackRock, Vanguard, and State Street formed a cartel to rig the coal market, artificially reduce the energy supply, and raise prices. Their conspiracy has harmed American energy production and hurt consumers. This is a stunning violation of State and federal law. - X user Attorney General Ken Paxton

• Many of Morgan Stanley’s high-net-worth clients’ assets were flagged as being at high risk for money laundering. - Fortune

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PCE rises. Federal Reserve, What is your next move? What does it mean when the rise of inflation meets expectations? -CNBC

• Biden administration to loan $6.6B to EV maker Rivian to build Georgia factory that automaker paused

• 25% tariffs on North American production means that production is likely to move to other parts of Asia and doesn’t secure our supply chains. - X user Craig Fuller

• Volkswagen is set to lose $1.6 billion after EV battery maker Northvolt filed for bankruptcy in the U.S. Northvolt is one of the largest tech failures ever and could lose more than $13 billion of investor money.

• Germany says Russia produces as many weapons in three months as the entire European Union does in a year. Affordability, Sustainability and supply chain - without which, how to win a war if this can be dragged out into years?

• Data centres powering artificial intelligence could use more electricity than entire cities -CNBC

From X user The Kobeissi Letter

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US personal savings have just been revised down by a MASSIVE $140 billion for 2024. The savings rate for September was revised to 4.1% from the 4.6% initially reported in October. The rate for August was adjusted down to 4.4% from 4.8% reported last month. Overall, the savings rate for October came in at 4.4%, near the lowest since the beginning of 2023. Even US personal savings data is now being revised lower. What is happening here?

Are we able to see a breakdown by the different demographics and income bracket?

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This is concerning: Auto loan early delinquency rates jumped to 8.12% in Q3 2024, the highest in 13 years. Serious delinquency rates surged to 2.90%, also the highest in 14 years. 90+ day delinquencies are now just 58 basis points below the record levels seen in 2009. In 2024, auto loan delinquencies have risen at the fastest pace since the 2008 Financial Crisis. All while US households' auto debt rose by $18 billion in Q3 and hit a new all-time high of $1.64 trillion. Americans are missing loan payments as if a recession is here.

Without cars, it is very challenging to live outside major cities. How can the citizens go to work or get groceries?

My Investing Muse (02Dec24)

Layoffs & Closure news

• SF payments giant Visa lays off hundreds in Bay Area after turning record $19.7B profit. - SF Gate

• Thyssenkrupp Steel has announced plans to eliminate 11,000 jobs by the end of this decade — about 40% of its workforce — becoming the latest German industrial giant to opt for drastic action to prop up its fortunes. - CNN

• Accounting firm Grant Thornton laid off about 150 U.S. workers across its business lines about six months after selling a majority stake in the U.S. unit to private-equity investors. - WSJ

• Global car giant Nissan is on the brink of collapse after longtime partner Renault revealed plans to sell off its interests in the Japanese carmaker. - Reuters

Below is a summary of layoffs in the USA in recent week - done by GROK:

In the last week, several notable layoffs have been announced across various sectors in the USA:

• Tech Sector: Companies like Meta, IBM, Google, and Microsoft have continued to reduce their workforce. LinkedIn, part of Microsoft, laid off approximately 200 employees.

• Media: NowThis, a news organization in New York, cut about half of its unionized newsroom, affecting 13 out of 21 members of the Writers Guild of America East. Other media entities like CNN, MSNBC, the Los Angeles Times, the Associated Press, and the Washington Post are either implementing or planning significant staff reductions.

• Manufacturing and Automotive: Ford and Bosch have also announced layoffs. Ford's cuts are part of broader cost-cutting initiatives, while specifics on Bosch's layoffs are less detailed.

• Travel and Hospitality: Marriott International and Booking Holdings have announced staff reductions, reflecting ongoing adjustments in the travel industry.

• Other Sectors: Various smaller-scale layoffs have occurred in companies like Packers Sanitation Services, Kronos Bio, Inc., and United Parcel Service, Inc., with cuts ranging from 20 to over 300 employees.

These layoffs have contributed to a significant number of job losses, with reports suggesting over 14,327 known jobs lost in the last week across more than 170 companies. The actual number of layoffs might be higher as not all are publicly reported or announced.

(This is a decent summary done by GROK).

Does America (and the rest of the world) need a DOGE - Department of Government Efficiency?

Pete Buttigieg will leave his post as Transportation Secretary having spent $7.5 BILLION to build 8 EV charging stations. His legacy will be squandering billions on something nobody wants, while millions struggle to afford the things they need.

• NYC IS PAYING PAKISTAN TO HOUSE MIGRANTS IN MANHATTAN Pakistan’s cash-strapped government has found a financial boost from Manhattan real estate. New York City is renting the iconic Roosevelt Hotel—owned by Pakistan’s government—to house migrants, in a deal worth $220 million. Vivek criticized the arrangement, highlighting an issue that DOGE may need to address soon. Vivek: "A taxpayer-funded hotel for illegal migrants is owned by the Pakistani government which means NYC taxpayers are effectively paying a foreign government to house illegals in our own country. This is nuts!" Source: The Economic Times

• Summary of California High Speed Rail Project: -Originally projected (in 2008) to cost $33 billion; now projected to cost between $88.5 and $127.9 billion -Estimated completion date was 2020; as of 2024, zero passengers have been transported and the majority has not even been fully designed -Received $6.8 billion in federal funds -Requesting $8 billion in additional federal funds - DOGE

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The Federal Reserve just reported a $19.9 BILLION operating loss in Q3 2024 up from $16.9 billion in Q2. This marks the 8th consecutive quarter of operating losses for the central bank. As a result, cumulative operating losses reached a massive $210 billion over the last 2 years. This comes as the Fed has been paying hundreds of billions in interest to banks and money market funds. At the same time, income the Fed has earned on Treasuries and Mortgage-Backed-Securities has declined. Even the Fed is losing money.

Is this sustainable? If this is sustainable, is there a need for citizens to pay tax if they borrow to fund the deficit?

DOGE will help the government to reduce wastage and drive productivity - something that is needed for all countries in the world.

Insider Sales

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Buy for one reason but sell for a million. Could it be profit taking or are there concerns?

My final thoughts

PCE has shown that inflation has remained stubborn. The Federal Reserve needs to balance inflation using interest rates and it is getting challenging.

Ukraine is trying to drag other countries into this regional conflict and I hope that level heads will prevail. The USA likely will be feeding these potential black swans. Is this shooting yourself in the foot?

After the recent Thanksgiving reunion, I am reminded other things should be higher in life’s priority and I trust that we can find that place.

Let us continue to invest with research and caution.

@TigerStars

$Asana, Inc.(ASAN)$

$.SPX(.SPX)$