To The Moon

I think there is no need to sugar coat US market, last week’s performance on the run up to FOMC announcement and after.

With all 3 composite indexes below their respective moving averages of 200day, 50day & 20-day, it was dismal to put it mildly.

Last week’s performance (in summary):

• DJIA: -1.87% (-648.45 to 33,963.84).

• S&P 500: -2.81% (-125.07 to 4,320.06).

• Nasdaq: -3.35% (-458.15 to 13,211.81). Biggest loser and dipped below the 14,000 mark.

Will US Market Crash & US Government Shuts Down?

In my Sunday post — UAW strike raises Ford, GM, Stellantis stock prices? (click title to read & give a “like” ok) I have talked about strike escalation & extension; it is unfolding as we speak.

• As the strike heads into its 11th day, the end is nowhere insight.

• Only $Ford(F)$ is actively engaging the union leaders but still the demands are impossible to meet (see above). With a demand of 40% pay increment might as well shutdown, I say.

• $General Motors(GM)$ and $Stellantis NV(STLA)$ have started laying off workers.

• To muddle the water further, President Biden join-in the fray by picketing with UAW (see above).

• He has started his political campaign early by “canvassing” for the autoworkers’ votes in-advance.

• Instead of fervently trying to avert a calamity, Mr Biden chose to stir emotions in an already “charged” environment. Hmm…

I am curious how the on-going strike will affect US market, this week?

• There are only 6 days left before the US government runs out of money and has to shutdown.

• The House of Representatives, Republican majority is caught in an “internal” deadlock.

• They have not even finish any of the 12 regular spending bills to fund federal agency programs in the fiscal year starting on 1 Oct. 2023.

Fallout Is Read, Impact Serious:

1. For starter, - it reduces consumer and business confidence, leading to lower spending, investment, and hiring. This will negatively affect the economic growth and corporate earnings, which are the main drivers of stock prices.

2. Next, it heightens uncertainty and volatility about US [a] fiscal policy, [b] debt ceiling, and [c] economic outlook. This will not bode well for the US market.

3. The emotions triggered by a shutdown may invoked panic selling among investors, leading to increased volatility and wide US market swings.

4. Last but not least, will shutdown lead to US’s last “AAA” maintained by Moody’s to be taken away in the end (see below)?

If the US President is not even worried, should mere mortals like us be overly concerned?

With the Quarterly Earnings season upon us again (see below), will any reporting help to avert another week of downward spiral in the US market.

Or will poor earnings reports further exacerbate the market’s fall?

How I See This Week:

• This is an “opportunity” week I feel especially if there are any stocks that you have been eyeing. I have a few on my watchlist.

• There just might be buying opportunities for some of the heavy weights eg. $JPMorgan Chase(JPM)$, Microsoft and Google (Alphabet).

• Case in point - $Nike(NKE)$

• Nike will be reporting its Q1 2024 earnings on Thu, 28 Sep 2023.

• On the run up to the reporting, the leading sports apparel retailer is likely to [a] witness top-line growth in the fiscal first quarter, while [b] its earnings per share (EPS) are expected to decline YoY.

• How will market react to a mixed earnings result?

• Do you think US market will continue to fall for this week?

• Do you foresee the Auto-industry strike, or US government shutdown averted by this week?

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