To The Moon

Public Holidays

America, Hong Kong, Singapore and China do not have public holidays in the coming week.

Economic Calendar (22Jul24)

Notable Highlights

• The core PCE price index will be the most watched economic data in the coming week. This is the main reference preferred by the Federal Reserve coming to inflation. The year-on-year PCE price index is expected to be 2.6%. This will form a key consideration for the coming Federal Reserve interest rate decision.

• The other important economic data will be the GDP result for Q2 with a forecast of 2.0%. If the reported GDP is higher than reported, this should be bullish for the market in general.

• Existing home sales and new home sales data will be released in the coming week. This will be an important reference on the real estate market in America.

• S&P Global US manufacturing PMI and S&P Global Services PMI results will be released in the coming week. From the previous PMI, both the manufacturing and services sectors are experiencing growth. Will the growth continue?

• Durable goods orders will also be released with a forecast of 0.3%.

• Initial jobless claims will also be key macro data that the Federal Reserve will look into as they ponder the next interest rate decision.

• 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 (22Jul24)

Q3/2024 starts and a few earnings are coming in the coming week.

In the coming week, there are a few earnings of great interest as the earnings for The Magnificent 7 start. Some of the important earnings releases for the coming week will include the following: SAP, Tesla, Alphabet, UPS, General Motors, visa, Coca-Cola, Ford, Honeywell and Chubb.

Let us look at the earnings of Tesla

Tesla's share price fell about 9% from a year ago.

Observations about Tesla's recent performances:

• Revenue grew from $3.2 billion in 2014 to $96.7 billion in 2023.

• The 10-year median margin for gross profit stands at 21.9%.

• Operating profit started with a loss of $187 million in 2014 and $8.89 billion in 2023.

• The price-earning P/E ratio stands at 58.4

These are some of the news concerning Tesla. I think that Tesla is one of the most innovative and sustainable businesses in the world. Let us not forget that Tesla Energy has the potential to overtake Tesla automobiles in terms of revenue. There are new product lines such as the Tesla bot, Tesla Semi, and Tesla Insurance that have the potential for growth in the market.

For the coming earnings, the forecast for the EPS and revenue stands at $0.6043 and $24.07 billion respectively.

While I think that Tesla is one of the best companies in the world, the macroeconomy may play a part in the outlook, affecting the prices in the short term.

Market Outlook of S&P500 - 22Jul24

Observations:

• The MACD indicator has completed a top crossover that implies a current “bearish” run.

• Chaikin Money Flow (CMF) is below the zero line in the middle which implies a downtrend. From the volume, the bear is having momentum.

• Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. The last candle is above both the MA 50 line and the MA 200 line. Thus, it could be read as bullish for the long term and the mid-term.

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

• I have replaced Stochastic with CMF to incorporate consideration of volume. Stochastic and MACD are similar with Stochastic being “more active” and more capable for “false” signals.

From investing dot com, the S&P500 is on a downtrend. Technically, it looks to be a “sell”.

Using 21 technical indicators, they largely point to a “Sell” rating with 9 showing a “buy” rating and 12 showing a “sell” rating.

In my opinion, the S&P500 should continue its downtrend in the coming week though some earnings could add to the volatility in the market.

News and my thoughts from the last week (22Jul24)

• Some are getting bullish with the recent market runs. Is America getting too big to fail or too big to save

• Why would we fund a failing business? Should this be applied to the government?

• Now that we realize the extent of censorship and misrepresentation from mainstream media, can we look at China again? China is more into collaboration than competition. There is no yearning to be the #1 superpower if they can not first take care of the citizens.

• Bangladesh is suffering a nationwide internet shutdown as students armed with sticks and hurling stones clash with police in protests against the government that reports said have left at least 39 people dead. - Bloomberg

Maritime security firms reported yet another Houthi attack off Yemen. A Singapore-flagged container ship was hit by two missiles as it was sailing 83 nautical miles (154 kilometres) southeast of Aden. - Trade Wind News

• Chinese investors offloaded a net US$42.6 billion worth of long-term securities consisting of Treasury, agency and corporate bonds as well as equities. - Business Times

• No concern for the federal deficit? The deficit remains high, debt continues to climb, and demand for US Treasuries stays robust, in part because of global reserve currency status. Debt cannot rise infinitely. - FT

• Disruption to its container shipping via the Red Sea had extended beyond trade routes between the Far East and Europe to its entire global network. - Reuters

• Top Democrats have told President Joe Biden that he will drag the rest of the party down with him if he does not withdraw from the race. That includes Chuck Schumer, Hakeem Jeffries, and even former Speaker Nancy Pelosi. - Business Insider

This is absolutely brutal... Goldman Sachs and Ballast are set to surrender 82 apartment buildings (~1,200 units) in San Francisco to lender Royal Bank of Canada They recently defaulted on loans totalling $687.5M The apartments were purchased between 2017 and 2020 for $704M ($587K per unit) The dominoes are starting to fall one-by-one in commercial real estate w/ multi-family starting to feel the pain... Source: The Real Deal

West Coast imports near all-time highs. Very bullish for 2H trucking. - X user Craig Fuller

• “I can be wrong" is wise, not an understatement of oneself.

• When we promote tools to agents, we have empowered tools that can act on their own. A gun is a tool, requiring an agent for use. An agent is one that can use tool at its discretion or programming. Can AGI become an agent?

• We have rising deficits. The U.S. deficits are the largest in the world—growing at the fastest rate in the world—and we need to find ways to minimize the role of the deficit on the economy, on interest rates, on inflation. - Fortune

• "While market valuations and credit spreads seem to reflect a rather benign economic outlook, we continue to be vigilant about potential tail risks," CEO Jamie Dimon said. - Reuters

The owner of San Francisco's largest apartment community has defauled on ~$1.8B in loans tied to the complex The 152 acre, 3,200 unit apartment community known as Parkmerced was just appraised at $1.4B, plummeting $700M from 2019 and $400M less than the total loan balance This is incredibly concerning given cracks have begun to appear in sizable apartment/multi-family buildings across the largest cities in the US... Source: The Real Deal

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One of the main challenges for China is population collapse. Not good for China and the world. How should we invest?

• Is there even one LLM and AI that is 100% safe & secured?

My Investing Muse (22Jul24)

Layoffs & Closure news

• Salesforce, a cloud-based software company, has reduced its workforce by around 300 employees, reports Bloomberg, citing sources. - Yahoo Finance

Layoff & closure news continued into the week.

Crowdstrike Saga

News about the Crowdstrike

Crowdstrike lost the falcon and it cost us billions ... and more. Spain said billions of dollars of productivity and commerce would have been lost across the world due to this outage. - NZ HeraldTelevision channels, airports and banks around the world have been knocked offline in a massive IT outage causing Windows computers to suddenly shut down. - Telegraph UKPlanes are grounded due to IT outage. - Sky News

What other stocks should we look at after Crowdstrike tumbles? Keep away from Microsoft for now.

Is this a time to short Crowdstrike? How about Microsoft?

Following the global outage, the likes of AWS, Alibaba Cloud, Tencent Cloud, Oracle Cloud, Google Cloud and more should note the companies affected and prepare their pitch. The same should be done for CrowdStrike competitors.

Where are our business continuity plans when we need them? Do not ignore the training and the drills. It is no longer about just in time (JIT) but let us also look at just in case (JIC). What can AI do in this case? Let's consider and plan.

S&P493 & The Mag7

I came across a blog post dated 17 July 2024 about S&P493. In this article, we learnt about the Magnificent 7 (let’s call them Mag7 for short). The Mag7 has demonstrated strong growth in 2023 as per the Yahoo Finance chart below:

Infographic: The Year of the 'Magnificent Seven' | Statista

Here are some of the highlights of the S&P493:

You’ve heard of the “Magnificent Seven” stocks: seven names that have carried U.S. markets to one new all-time high after another.But what if you were told that just three of these stocks were responsible for almost half of the S&P 500’s overall gain in 2024?These seven companies–Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA)–are up a collective 31% in the first six months of 2024, compared to 7.4% for the rest of the index (the “S&P 493”). The overall S&P 500 has risen 14.5%.However, NVIDIA, Alphabet, and Microsoft collectively posted a 49.3% gain between January and June 2024, adding around $2.85 trillion in market cap. The S&P 500 overall gained $5.8 trillion of market cap in the first six months of the year, meaning these three companies drove 49% of the index’s total gains. (All seven “Magnificent Seven” stocks as a collective accounted for 64.3% of S&P 500 market cap growth for the first half of the year.)

The magnificent 7 collectively account for 64.3% of the market capital growth for the first half of 2024. This implies that these seven companies could drive the market in any direction. They can lead the rally in one day, and they can plunge the market in another.

If the Mag7 are the main players behind the S&P500 growth, the performance of the 493 companies could be hidden behind a singular chart.  The S&P 500 represents more of the magnificent 7 than the rest of the 493 companies. Treating the S&P 500 as a representation of the economy could be skewed because of such weightage.

Let us look at the 493 businesses separately. Their struggles may not be reflected in the S&P 500 chart. Looking at the average in such cases may not give us a better sense of the general market or economy.

My final thoughts

Following the failed assassination attempt on presidential candidate Trump, the country is in an upheaval. America is one inch away from having a civil war should the assassination be successful. This is not the way democracy should work. We should have the freedom to express our opinions and yet big enough to respect any differing opinions. We need the coming election to be done well as America plays a big part in the global economy.

The Federal Reserve needs to look at the macro data closely before deciding on the interest rate decision in the coming months. The earnings season is an important reference as many investors will look at the outlook closely. The outlook can affect the stock price much more than the revenue and earnings from the previous quarter.

The Democrats are having cold feet towards President Biden. There is much room for volatility in the coming weeks. Let this consider hedging as part of our current portfolio.

$Tesla Motors(TSLA)$

$S&P 500(.SPX)$

@TigerStars