Public Holidays
There will be no public holidays in China for the coming week.
America, Singapore and Hong Kong are closed on Christmas Day (25 Dec 2024). Some countries are operating half a day on Christmas Eve (24 Dec 2024).
Here's wishing all a “Blessed Christmas.” May 2025 be an awesome year of good health and success.
Economic Calendar (23Dec24)
Notable Highlights
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CB consumer confidence data will be released this coming Monday. This is a reflection of how the consumer sees the market.
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On the other hand, Durable goods orders are expecting a decline of 0.4%.
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New home sales data will be released with a forecast of 650,000 new home sales. This data provides some insight into residential real estate.
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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.
Earnings Calendar (23Dec24)
Due to the holiday season, there are 2 notable earnings this week - Anavex and Limoneira.
Let us look at Anavex.
Who is Anavex?
Anavex has clocked a price decline of 3.6% from a year ago.
The EPS is -0.50 and thus, has a (negative) P/E ratio of -17.2
From the technical analysis, it has a “Neutral” rating.
From Analysts Sentiment, it has a recommendation for “Strong Buy”. Its price target of $35.472 implies an upside of 311.031%.
The company has yet to generate any revenue, making a loss from the last 10 years as per the screenshot above.
The operating losses peaked at $56M in 2023.
For the coming earnings, the forecast of its EPS and Revenue are -0.157 and no revenue respectively.
It seems that the company will end the last quarter with a loss. There are some products in clinical trials and the outlook of these would be important for the business.
I do not know this industry adequately and prefer to skip Avanex.
Market Outlook of S&P500 - 23Dec24
Observations:
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The MACD indicator is showing a downtrend.
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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 above the last candle. Thus, it could be read as bearish for both the mid and the long-term.
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The 3 Exponential Moving Averages (EMA) lines are on a downtrend.
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Chaikin’s Monetary flow (CMF) shows a downtrend.
The 20 indicators point to a “Sell” rating for the S&P500 (for Daily intervals). Seven indicators recommend a “Buy” rating, and 13 recommend a “Sell” rating.
The latest candlestick pattern seems to point to a more “bullish” outlook. Based on the above, the S&P500 should see a downtrend in the coming days.
News and my thoughts from last week (23Dec24)
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Powell has said that "it's pretty clear we've avoided a recession." Do you agree?
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China is dominating the global auto market: China’s share of world car production is now at 39%, the highest on record. Since the 2008 Financial Crisis, this percentage has doubled. Its share is also ~11 percentage points larger than Europe, Japan, and the US combined. To put this into perspective, China’s share in global automotive production was just 1% in 2000. By comparison, the US, Japan and Europe accounted for 14%, 20% and 32% of production in 2000, respectively. China has taken over the global car market. X user The Kobeissi Letter
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Globalization brings access to bigger markets, costs savings and leads to better quality of life. When we limit access, will the reverse happen?
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Corporate injustice has a separate path of mitigation. Murder cannot address the issues. Is this a systematic issue that demands policymakers' review? Can we go after a child for what the father has done? There should be a way for accountability but to justify murder is wrong.
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Does a government shutdown imply that there will be a total collapse of the country & the essential services? Is this Congress failure who waited till recently to lodge a bill too big and bundled with too many other topics? - USAToday
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The Walmart Recession Signal has jumped to the highest level since the 2020 pandemic. This is a recession indicator measured by Walmart's stock price, $WMT, divided by the S&P Global Luxury Index of luxury goods stocks. The gauge has almost doubled this year, as $WMT has risen 83%, while the S&P Global Luxury Index has remained unchanged year-to-date. In previous economic cycles, such a significant divergence signaled a recession was coming. Is the US economy headed for a recession? - X user The Kobeissi Letter
In 2001 it took over a year to get the final estimate for Q1 GDP. It was revised from +2.0% to -1.3%. It took more than 12 months to find out that the US economy fell into a recession in Q1 2001.
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XPO, UPS, and now FedEx will soon be out of the "trucking business"
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Can AI make one lazy and less smart?
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30-Year Mortgage Rate soars to 7.512%, the highest level since May
https://www.mercatus.org/research/data-visualizations/what-if-us-regulatory-burden-were-its-own-country
The regulatory burden in the United States adds up to $4 trillion. X user The Rabbit Hole
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3 Layers of Debt: - Budget Deficit (1.4 trillion) - Current National Debt (31.5 trillion) - Unfunded Obligations (75.3 trillion) - X user The Rabbit Hole
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*U.S. DECEMBER PHILADELPHIA FED FACTORY INDEX TUMBLES TO -16.4; EST. +2.9; PREV. -5.5 *LOWEST SINCE APRIL 2023 - Investing
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New Zealand’s economy sank into recession in the third quarter as activity dived far more sharply than expected and output in the prior quarter was slashed, a dire result that cements the case for more aggressive rate cuts. - CNBC
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LA Port, the busiest U.S. container hub saw a total volume of 884,315 twenty-foot equivalent units in November - an increase of 16% from November 2023. It was also 15% above the port’s five-year running average for the month of November. - FreightWaves
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Only 32% of S&P 500 stocks have outperformed the index year-to-date. This marks the second consecutive year with such a low percentage after 29% was recorded in 2023. Over the last 70 years, there was only one other period when such a streak occurred: in 1998-1999, before the Dot-com bubble popped. To put this into perspective, the historical average has been ~50%. Meanwhile, since 2023, the S&P 500 has rallied 57.6% while the equal-weighted index is up just 28.8%. A few stocks are driving the entire market. - X user The Kobeissi Letter
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Retail investors are buying stocks like never before: Off-exchange trading as a % of total market volume hit 57% in December, an all-time high. Off-exchange trading run by firms like Robinhood or Charles Schwab is a proxy for retail investors' participation in the stock market. This year, off-exchange trading has jumped by ~15 percentage points. This is also nearly DOUBLE the percentage seen before the 2020 pandemic. Tesla, $TSLA, and MicroStrategy, $MSTR, have been among some of the most actively traded stocks by retail. Retail investors are piling into the market. - X user The Kobeissi Letter
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*NY FED DECEMBER EMPIRE STATE MANUFACTURING INDEX PLUNGES TO +0.2; EST. +6.4; PREV. +31.2 - Investing
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The Magnificent 7 stocks now reflect a record 33% of the S&P 500. This percentage has DOUBLED in just 5 years. Furthermore, the total market cap of the Magnificent 7 stocks now exceeds $18 trillion for the first time in history. The group is up 50% year-to-date, nearly doubling the S&P 500's gain of 28%. At the same time, the remaining 493 companies of the index have returned just 20%. Big Tech is massive. - X user The Kobeissi Letter
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Electricity prices in Germany break historical records - Handelsblatt. 936 euros per MWh - electricity prices in Germany, which broke a historical record! - X user Geo Monitor
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33 European companies have defaulted on their debt year-to-date, the most since the 2020 CRISIS. This is also way above the 2009 levels during the Great Financial Crisis. The European economy is in dire straights. - X user Global Markets Investor
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Low cost labor is not actually the most important consideration. More critical factors include: access to raw materials and a network of suppliers, skilled labor, distribution and logistics infrastructure and tax incentives. - Forbes
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US debt interest costs are mind-blowing: Interest costs on federal debt hit a whopping $87 BILLION last month, the most out of any November on record. This is up $7 billion from $80 billion seen a year ago. This means the US government paid $2.9 BILLION of interest PER DAY last month. Interest costs came in at $80 BILLION or higher in 9 out of 11 months this year, a trend that has never occurred before. The worst part? Interest payments are set to reach as high as $150 billion in December, a new monthly record. Truly concerning. X user The Kobeissi Letter
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US banks face rising distress as commercial property values slump Modifications are typically sought by struggling landlords looking to put off making payments and get short-term extensions on loans. Their increased use is the latest sign of rising distress in CRE credit as a wave of loans come due for refinancing. - SCMP
My Investing Muse (23Dec24)
Layoffs & Closure news
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BREAKING: Party City is closing all of its stores, and corporate employees were told today is their last day of employment - X user Unusual Whale
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Aerospace company Boeing has announced another round of layoffs, this one impacting 396 workers in Washington state. - NWPB
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Google has once again reduced its workforce, targeting 10% of its management roles, including directors and vice presidents. CEO Sundar Pichai announced the changes during an all-hands meeting. - DNAIndia
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Thyssenkrupp faces massive job cuts and plant closures amid international competition and possible management lapses. - DW News
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The Mersen Manufacturing plant said it is set to furlough 80% of its workers in Columbia. The furloughs were announced just weeks before the Christmas holiday and 25% of its workforce was permanently laid off as of Dec. 15. - KSNBlocal4
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Germany Officially in Recession, Bundesbank Slashes Growth Forecasts Germany’s economy has entered a recession, with GDP expected to shrink by 0.2% in 2024, according to the Bundesbank’s latest report. Growth for 2025 has also been downgraded to a marginal 0.2%, significantly lower than the 1.1% forecasted in June. The downturn is exacerbated by structural challenges, including struggles in the industrial sector, and potential US tariffs under Donald Trump’s trade policies. Bundesbank President Joachim Nagel warned of prolonged economic weakness, affecting both industry and the labor market. Risks remain high, with forecasts suggesting that US trade conflicts could further stagnate or shrink the economy in 2025. Inflation is projected to stay elevated at 2.4% in 2025, though it is expected to return to 2% in subsequent years due to tighter monetary policy and easing labor costs. Source of image: Bloomberg, based on Bundesbank
The Case of Argentina
Source https://www.aljazeera.com/news/longform/2024/12/7/a-year-into-javier-mileis-presidency-argentinas-poverty-hits-a-new-high
Argentina has exited recession but there is more poverty. How can we reconcile the above? Inequality in income distribution?
An opportunity for America Energy
https://x.com/B2RKN/status/1868492014398091745
This is a great opportunity for energy investment. You need to power your progress. Do not let infrastructure let you dow
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In 2025-28, we project ~57 gigawatts (GW) of US data center power demand, and we quantify available power capacity to serve this demand as: near-term grid access of ~12-15 GW, plus ~6 GW of data centers under construction, resulting in a ~36 GW shortfall of US power access for data centers in 2025-28 " (Morgan Stanley) - from X user ZeroHedge
My final thoughts
When there is much news surrounding a business, I prefer to monitor it. Some news leads to overvaluation and some to undervaluation. The market can swing in extremes. The long-term value proposition helps to put things in perspective.
The market can remain irrational longer than we can be solvent.
There is a mixture of euphoria and concerns over the market. Some hedging can help manage the situation. Let us do our review for 2024 and start planning for 2025.
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