To The Moon

US January 2025 Inflation.

The much-awaited inflation report, the Personal Consumption Expenditure (PCE) - was finally released. (see below)

Matched against the Fed’s 2% target,

• The 12-month change in the inflation index fell to 2.5% for January 2025, from December’s 2.6%, in lined with analysts’ forecasts.

• Core PCE measure, fell to 2.6% from an upwardly revised 2.9%. The central bank targets an inflation rate of 2%.

PCE at a glance:

On surface, it looks like good news.

On closer look, consumer spending that accounts for more than 67% of US economy, dropped 0.2% after an upwardly revised 0.8% increase in December 2024.

This could complicate the Fed's deliberations on monetary policy, according to Spartan Capital Securities, Chief market economist, Peter Cardillo.

This is because,

• Spending came in lower than economists were looking for.

• Most of it could be attributed to a cooling US economy.

• This presents a dilemma for the Fed because (a) inflation is still persistent and (b) an economy is moving lower.

• Add them together and that equals stagflation.

Definition of stagflation - a combination of high inflation, high unemployment, and slow economic growth.

Based on above definition, all that is missing now is “high” unemployment which is not hard to come by, given the pace of Trump’s DOGE is doing a excellent job of mass layoff across all government agencies.

News of US cooling inflation could have boosted a strong market recovery, had it not been sidetracked by the clash between Trump and Zelensky in full view of international media. (see below)

This created fresh uncertainty over Ukraine's war with Russia for investors already worried about sticky US inflation and a tepid economy.

The S&P 500 moved lower immediately after the clash before recovering and ending the day with a gain.

By the time market closed for February 2025:

• DJIA: +1.39% (+601.41 to 43,840.91).

• S&P 500: +1.59% (+92.93 to 5,954.50).

• Nasdaq: +1.63% (+302.86 to 18,847.28).

What’s In Store Next Week.

It will be a new trading month come Mon, 03 Mar 2025.

It could only mean that inflation data (or worries) trade places with jobs data, and a host of other economic reports.

Economic reports to watch out:

• Mon, 03 Mar 2025 - S&P final US manufacturing purchasing manager index (PMI).

• Wed, 05 Mar 2025 - ADP non-farm payroll (private sector).

• Wed, 05 Mar 2025 - Federal Reserves beige book.

• Thu, 06 Mar 2025 - US weekly jobless claims.

• Fri, 07 Mar 2025 - US Non-farm payroll**

Quarterly earnings reporting:

• Tue, 04 Mar 2025 - $CrowdStrike Holdings, Inc.(CRWD)$

• Tue, 04 Mar 2025 - $Sea Ltd(SE)$ - Asian investors interests only.

• Tue, 04 Mar 2025 - $Target(TGT)$ - will be interesting to note CEO’s address on China’s 10%+10% tariffs’ effect.

• Wed, 05 Mar 2025 - $Marvell Technology(MRVL)$

• Wed, 05 Mar 2025 - Veeva Systems Inc.(VEEV)$.

• Thu, 06 Mar 2025 - $Broadcom(AVGO)$

It’s been 7 months since I last posted on CrowdStrike Holdings. (click here ! for details !)

It is a timely revisit, on the run up to its quarterly earnings reporting.

Since its major outage in July 2024, CrowdStrike (CRWD) has shown remarkable resilience, which initially suffered a significant drop in its stock price.

Despite the setback:

(a) Stock price recovery:

• CRWD's stock plummeted to as low as $217.89 after the outage but has since rebounded strongly.

• As of Fri, 28 Feb 2025, it ended trading day at $389.66, representing a remarkable recovery.

• The stock has gained approximately +79% since its post-outage low.

• This also demonstrated investors’ confidence in CRWD's ability to overcome the crisis.

(b) Performance and forecast:

Its last quarterly earnings (Q3 2025) were released on 26 Nov 2024.

• Earnings per share (EPS) : was $0.93 vs $0.81 expected. (see below)

• Revenue : came in at $1,010.2 million, a +29% YoY gain from Q3 2024 ($786.0 million) vs $928.8 million expected. (see below)

• Average Recurring Revenue (ARR): surpassed $4 billion and quarterly revenue exceeded $1 billion for the first time - 2 significant milestones for CRWD.

• Customer retention: remained strong at 97%, committing to CRWD’s technological superiority of the Falcon platform and the benefits of cybersecurity consolidation.

(c) Q4 2025 Forecast.

For the upcoming earnings report on Tue, 4 March 2025:

• Analysts maintain a "Strong Buy" rating on CRWD stock.

• Earnings per share has forecasted to be $0.86, a -9.47% YoY decline.

• Revenue is expected to be between $1,028.7 - $1,035.4 million.

• Management expects fiscal 2025 revenue growth of 28% and adjusted earnings growth of 21% YoY.

• Wall Street's highest price target for CRWD is $450, suggesting potential upside.

While the 2024 outage was a significant challenge, CrowdStrike's swift response and continued strong financial performance have helped it regain investors’ trust.

The upcoming earnings report is crucial in determining whether CRWD can maintain its growth trajectory and recover fully from the 2024 debacle.

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• Do you think CRWD will be able to prove its resilience through its earnings report ?

• Do you think the market sentiments will remain “positive”, so as not to derail CRWD’s comeback rally ?

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