To The Moon

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Earnings

Earnings for the week starting 12 Dec 2022

In the coming week, there are a few notable earnings that we can monitor Oracle, Adobe and Accenture.

AdobeADBE0.00

Adobe has suffered a price drop of 49.48% within one year. Since its 52-week low of 274.73 in October 2022, the company has risen to the latest close of 330.64. This is a far cry from the 52-week high of 675.21.

For the coming earnings, investing has set a forecast of 3.5 and 4.53B for its EPS and 4.53B respectively. Can Adobe continue her recent run after a near 50% collapse?

Economic Calendar

Economic Calendar for the week starting 12 Dec 2022

Here are some indicators to look out for in the coming week:

• Consumer Price Index (CPI) - this will probably be the 2nd most important economic data for the coming week. This reflects the inflation in the economy and the main reference for the Fed to decide how much interest rate they should raise for the following day’s “Fed interest rate decision”. Should the inflation remain stubborn, the Fed should remain hawkish.
• FOMC interest rate decision - this should be the main news moving the market. It seems certain that the interest rate will increase. The only question is the magnitude of the rate increase. There are various market “implications” that the increase will be 50 basis points (as they seek a Fed pivot). However, I think that a 75 basis point or more hike is needed. On top of this, interest rate affects the demand side of things and can offer little or no solution for supply and supply chain side challenges. While this can erode away demand, there are other bottlenecks to be solved.
• Crude oil inventories. This is an important pulse leading to market consumption. The consumption of crude oil inventories is based on how the producers anticipate market consumption. Thus, I treat this as a forward indicator of market consumption. If there is less than expected drawdown, it is usually treated as a bearish signal for the market. However, one week’s data does not make a trend. Thus, it is best to view from a longer timeframe to get a better picture of consumption.
• China’s Industrial Production (YoY) (Nov) will be an important data point that speaks on the world economy as China is still a big part of global consumption. If the production declines, the economy is likely to be shrinking too.
• Sales data (Core retail sales MoM and Retail Sales Nov MoM) will also provide an indication of the US economy that is driven by consumption.
• Philadelphia Fed Manufacturing Index (Dec) - this will be a good reference of how the manufacturing sector is doing.
• Initial Jobless Claims will be an important data point for the Fed as they seek to manage unemployment with inflation. If the claims remain low, the Fed can afford to remain hawkish.

News and my muse

• There is an emerging trading bloc BRICS comprising Brazil, Russia, India, China & South Africa. With China & Saudi Arabia forming a strategic partnership, let us monitor.
• <CGTN> A new strategic partnership (Saudi Arabia & China) is in the pipeline for better sustainability, value creation and economic partnership.
• <SuccessfulFarm> Watch for it. 2023 can be a year of food insecurity for many more.
• When sh!t hits the fence, who can predict the splatter? The least we can do is to predict the projectile and avoid them. Same for life. Same for the economy.
• <CNBC> Our industry has been adversely affected by the ongoing COVID-19 pandemic & the global microchip shortage, but the most impactful challenge is the increasing cost related to the electrification of the automotive market - Stellantis

• Inventories build-up needs to be one of the areas that we look out for companies carrying products as part of the fundamental analysis of their financial statements. stockyard is the graveyard of business.
• Moving away fromglobalizationis inflationary but may be needful for resource self-reliance. Thus, companies are near-shoring, re-shoring, or on-shoring. It is interesting if this is based oninsecurity, leading toisolation& eventually being left out.
• It is important to be objective and even more so when you are invested. Buyer bias is real. I appreciate input from bears - they either point out something that I have missed out or convince me that I am on the right track. Signed, sealed & delivered.
• <Yahoo Finance> About 270,000 homebuyers who bought during the red-hot housing market this year already owe more than their house is worth, a new analysis found.
• Carbon credit for sales sounds wrong. Can we look into the sales criteria? Can we limit such sales to companies who have demonstrated efforts in sustainability through plans, implementation & review?

Marslow’s hierarchy of needs

• When basic needs are not met, is there still room for integrity and morality? The government that fails to provide the basic needs runs a risk to be replaced. Will empires collapse in the coming months?
• <CNBC> When survival is at stake, people turn to debt. With interest rate hikes, some will become bad debts. Desperation may turn some towards crime. If change doesn't come from the top, people will take matters into their own hands.
• Striking Russian airbase & Russian oil price cap? Is this the right diplomacy towards a man who does not hesitate to weaponize oil & nuclear? Do not corner the animal. If its survival is threatened, rules will not apply.
• <Oilprice> G7 Price Cap Causes An Oil Tanker Traffic Jam In The Black Sea
• <Yahoo Finance> $PEP reportedly plans to lay off hundreds of corporate workers, while $GME lays off more of its staff including crypto engineers.
• <Reuters> Samsung, LG plan multi-billion-dollar additional investment in Vietnam
• Interest rates affect the demand side of inflation but what can we do to the supply side of inflation coming from the supplies & supply chain? Let us not forget food & energy challenge.

We can have financial panic without financial recessions. We can have financial recession without a financial panic. We can have both financial panic with recession - Jim Rickards

• <CNBC> U.S. manufacturing orders in China are down 40% in what a logistics manager described to CNBC as an unrelenting demand collapse. China to U.S. container volume was down 21% between August and November.

Market Outlook (10 Dec 2022)

1D chart of S&P500

Technical Analysis of S&P500 (1D chart):

• The stochastic indicator remains at a downward trend as the lines enter the oversold region.
• The MACD indicator has completed a crossover and is on a downward trend.
• Moving Averages (MA). The MA50 line (mid-term) is on an uptrend whereas the MA200 line (long-term) is still on a downtrend. The candle inches towards the MA50 line. While this implies that it is bullish in the mid-term but there is also a potential reversal to a “downtrend” coming up. The candle remains under the MA200 line and this is bearish in the long term.
• Exponential Moving Averages (EMA). The EMA lines are starting to merge but not all 3 lines have converged and thus, the reversal to downtrend is yet completed. Thus, this remains on an “uptrend”.
• The volume from the last 5 days is under the average of 4.5 billion and thus, the current downtrend (based on stochastic) looks to be losing its momentum.

From the above, it looks to be mostly a downtrend based on technical indicators for S&P500.

1D chart of Nasdaq

Technical Analysis of Nasdaq (1D chart):

• The stochastic indicator remains at a downward trend as the lines enter the oversold region. A bottom crossover looks to be forming soon. This means that we can expect a reversal to an uptrend in the coming days.
• The MACD indicator has completed a crossover and is on a downward trend.
• Moving Averages (MA). The MA50 line (mid-term) is on an uptrend whereas the MA200 line (long-term) is on a downtrend. The candle inches towards the MA50 line. While this implies that it is bullish in the mid-term but there is also a potential reversal to a “downtrend” when the candle cuts the MA50 line from above. The candle remains under the MA200 line and this is bearish in general for the long term.
• Exponential Moving Averages (EMA). The EMA lines are starting to merge but the 3 lines should converge within the next few days. and thus, the reversal to the downtrend will soon be completed. Thus, this implies a downtrend soon.
• The volume from the last 5 days is under the average of 4.746 billion and thus, the current downtrend (based on stochastic) looks to be losing its momentum.

From the indicators used, the trend remains downwards although a reversal is expected.

My Investing Muse ~ PPI, Twitter files, CPI & final Fed rate hike in 2022 (10 Dec 2022)

Producer Price Index (PPI) released on 9th Dec 2022

From investing, U.S. NOVEMBER CORE PPI INFLATION RISES 6.2% Y/Y; EST. 5.9%; PREV. 6.8%

A screenshot is taken from investing website about PPI

What could be the implications of a higher-than-expected PPI?

The producer Price Index (PPI) precedes Consumer Price Index (CPI) as it is the inflationary cost impact faced by the producer during their production.

This inflation is likely passed on to the consumer pending the price inelasticity of the goods.

This can imply that inflation can continue its climb, thus, the Fed can remain hawkish with this news. The following important data is CPI next week before the Fed concludes its last rate hike for 2022.

While the market expects a Fed pivot with a 50 basis points increase, we should not be surprised by a 75 basis points hike. Should the Fed feel that the inflation is heightened, they can have the option to remain hawkish.

The Twitter Files

Elon Musk has been shedding insights on various manipulations and censorship exclusive to Twitter. What is interesting is the extent of manipulations. Thus, it is important for us to remain objective in our views. Let us go beyond the delivery & content and also consider the intent. We have falsely accused some of spreading fake news when they are actually trying to tell us the truth.

I am interested to understand how they will address accountability going forward.

The final interest rate hike of the year

The inflation target is 2%. Last month's inflation figure came out to be 7.7%. Yet many have asked for a Fed pivot. When the market celebrates lesser-than-expected inflation, this shows how bad the sentiments are. It is not a time to be brave but rather to save. The market seems to have reached a “consensus” of a 50 basis points rate hike. I would think that it is still a long way to go before the Fed slows down.

Final thoughts

I am not sure if we will get a Christmas rally but I think that we definitely need to prepare for more downsides to come. No trade can also be a good trade. Let us be prudent.

@TigerStars

$Adobe(ADBE)$ $NASDAQ(.IXIC)$ $S&P 500(.SPX)$