To The Moon

On Thu, 12 Oct 2023 — US stocks finished lower, snapping a 4-day winning streak.

Its a direct reaction to Bond yields tracking higher again, after dipping on Wed, 11 Oct 2023.

By the time market closed:

• DJIA: -0.51% (-173.73 to 33,631.14).

• S&P 500: -0.62% (-27.37 to 4,349.61).

• Nasdaq: -0.63% (-85.46 to 13,574.22).

Two “supposed” catalysts to spur US market:

• US weekly jobless claims. Weekly report was overshadowed by CPI report.

• September 2023 — Consumer Price Index (CPI) YoY.

• US weekly jobless claims for week ending 7 Oct 2023 stood at 209,000 claims (see above).

• There was neither increase nor decrease to weekly jobless claims from last week.

• This is 1,000 jobless claims “lower” than Wall Street analysts’ estimates.

• Last week’s jobless claims can be regarded as off “end-March 2023 high” — refer to above “RED” line indicator.

• This indicates US job / labour market remains strong despite [a] elevated interest rates and [b] other economic challenges (eg. inflation, GDP etc...).

• US consumer price index (CPI) YoY, for September 2023 came in at 3.7%, status quo from August CPI.

• It is +0.1% higher than Wall Street estimates of 3.6%.

• September 2023 Core CPI (less food & energy) came in at 4.1%. This is -0.2% “lower” than August’s Core CPI of 4.3%.

• It is same as Wall Street estimates.

• Strictly speaking, the Fed should be “happy” as Core CPI is clearly indicating that inflation is tapering since June 2023, at a slower rate than what the Fed has wished for.

• Immediately after both CPI and Core CPI reports were released, the CME Fedwatch tool data changed.

• Probability of a US interest rate “pause” in November 2023, rose to 90.3% from previous probability of 78.9%.

• Probability of a US interest rate “hike” in November 2023, fell to 9.7% from previous probability of 21.1%.

Despite above 2 glowing reports, [a] rising bond yield and [b] investors’ concern about rising interest rate overwhelmed US market, changing its trend from “rise” to “fall” from 1:00pm onwards for an hour.

Weak US market sentiments aside, $Microsoft(MSFT)$ has received the “best” possible news for this tech firm (see above).

UK regulator, Competition and Markets Authority (CMA) that blocked Microsoft from acquiring game developer $Activision Blizzard(ATVI)$ back in April 2023, has finally given the “go ahead”, paving way for Microsoft’s acquisition.

Microsoft's acquisition of Activision Blizzard, the largest gaming company in the world, is a strategic move that could boost its stock price and position in the gaming industry.

The deal, which is valued at $68.7 Billion, will give Microsoft access to popular franchises:

• Call of Duty.

• World of Warcraft.

• Candy Crush.

Microsoft plans to integrate Activision Blizzard's games into its Xbox Game Pass subscription service, which has over 25 Million users.

This could increase the revenue and profitability of both companies, as well as attract more gamers to Microsoft's platforms.

• So far in 2023, Microsoft stock price has risen by +38.23%, YTD performance.

• It bottomed on 5 Jan 2023 at $222.31.

• It peaked on 18 Jul 2023 at $359.49.

With the last obstacle surrounding Activision Blizzard removed, the future for Microsoft certainly looks brighter overnight.

• Do you think Activision Blizzard stock price will continue to rise until it is absorb into Microsoft?

• Do you think Microsoft stock price will continue to rise despite market sentiments in short term?

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