To The Moon

Before diving into the wonderful world of Disney (see above), a quick recap of US market last week’s performance is in order?

US market last Thursday performance was so dismal that I did not have the hart to post something positive for reading when there isn’t anything positive to write about going into Fri, 25 Aug.

Don’t even mention about posting a “negative” slanted post lest I am accused of being the harbinger of pessimism (again!) as feedback by some readers. So…

In a twist of event, US market ended a tad higher when compared to its very disappointing Thu, 24 Aug performance.

Interestingly, US market turned for the “better” (see above) after Mr Powell’s speech at Jackson Hole, Wyoming that began at 10am US time.

US Market 3 Major Indexes on Friday:

• DJAI: +0.73% (+247.48 to 34,346.90). Dow ended the week -0.53% lower than it started.

• S&P 500: +0.67% (+29.40 to 4,405.71). S&P 500 ended the week +0.58% higher than it started.

• Nasdaq: +0.94% (+126.67 to 13,590.65). Nasdaq ended the week +1.82% higher than it started.

• All 3 indexes are way below its respective 20-day & 50-day moving averages (ma).

• All 3 indexes’ RSI readings are in the low to mid 40 range; not yet an overbought or oversold scenario.

To me the Fed’s chairman speech’s content remains intact - “The central bank is prepared to raise rates further as it continues its fight to bring inflation back to its 2% target, said Mr Jerome Powell.

The significant change is felt in the latest CME FedWatch tool dated Fri, 25 Aug 2023.

• Probability of Fed maintaining current interest rates (525 to 550 range) in September 2023 has fallen from 86.5% to 80.5%; down -6.0%.

• Conversely, probability of Fed raising interest rates by another 0.25% (550 to 575) has risen from 13.5% to 19.5%; upped +6.0%.

• Will the parameters continue to evolve as official economic data / report begin its release cycle once again starting this week?

2023 August’s Last Week, How Will US Market Trade?

• It should remain largely a lacklustre week with good and bad days.

• Reason being the quarterly earnings report are beginning to tail off.

• Most of the pertinent stocks have already reported their keeps.

• They are either now “enjoying” or “suffering” from (a) its earnings data and (b) its outlook for impending Q3 2023.

• Last earnings reporting day would be Thu, 14 Sep 2023.

• This week alone, below stocks will be in focus as they hand up their earnings report cards.

• Tuesday (29/8/2023) - $Pinduoduo Inc.(PDD)$ (am). $NIO Inc.(NIO)$ (am). $HP Inc(HPQ)$ (pm).

• Wednesday (30/8/2023) - $Salesforce.com(CRM)$ (pm). $CrowdStrike Holdings, Inc.(CRWD)$ (pm).

• Thursday (31/8/2023) - Broadcom Inc. UBS AG (am). Lululemon (pm). Dell (pm).

• Last Thu, 24 Aug 2023 Disney reached a 9-year low on what has been a challenging 2023 for Disney investors.

• Last Thursday closing price was $82.47 a share.

• The lowest Disney closed was back in 17 Oct 2014 at $82.68 a share.

• Since then, it has never closed below $84 until last Thursday.

• Disney have also underperformed the S&P 500 benchmark S&P 500 (see above).,

• YTD (see above), Disney have fallen nearly by -5% compared to S&P that has gained +14.75%.

• Over last 6 months, Disney have fallen -16.31% compared to S&P that has gained +9%.

• Main causes for Disney’s fall from grace includes (1) Theme parks businesses is slowing (2) Disney is not spared from cord-cutting and shifts of television advertising to connected TVs. (3) Falling subscription to Disney+; its streaming service. (4) No blockbuster hit movies for a while.

My Viewpoints:

• Disney’s theme parks businesses will remain a challenge as long as US & China are on a collision path.

• Who were the most populous visitors to these theme parks in the Florida-US, Shanghai and Hong Kong? The Chinese of course.

• With 5G network becoming a reality in the very near future, a sweeping change through the entertainment industry is imminent. Who emerges the winner rests solely in the hands of the consumers; a factor that is most difficult to predict and attract.

• One positive move by Disney is to extend its returning CEO Bob Iger's contract by 2 more years through 2026.

• This takes the pressure off the company and the CEO as Mr Iger continues with his restructuring plan to polish and bring the shine back to Disney, while on the lookout for a CEO in-training to assume Bob Iger after 2026.

• Do you think Disney stock price will fall further in the last days of August and September?

• Do you think Disney’s Management team will be able to navigate the company thru the eye of the storm?

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