To The Moon

Public Holidays

The United States celebrates Memorial Day on 29 May 2023. I will like to give a shout-out to the veterans who have served the country.

Singapore celebrates Vesak Day on 02 Jun 2023

No other public holidays for China & Hong Kong this week

Economic Calendar (29 May 2023)

Economic Calendar starting 29 May 2023

Notable Highlights

• Payroll & Jobless claims. There are a few important announcements like JOLTs Job Openings, ADP Nonfarm employment change, initial jobless claims, Average Hourly Earnings, Nonfarm Payrolls and Unemployment Rate. All these would form important data points for the Fed to decide on the next interest rate adjustment.

• <From investing> Conference Board (CB) Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.

• PMI updates from both US & China- This reflects the global and US domestic manufacturing outlook and can be a good reference for the market outlook.

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. If the trend of excess inventories continues, this implies demand erosion that can lead to reduced production & weakening consumer spending. The last crude oil saw a bigger drawdown than expected.

Earnings Calendar (29 May 20230) - Can Salesforce beat the expectations?

Earnings Calendar for the week starting 29 May 2023

There are some interesting earnings coming up namely, HP, Dell and Salesforce. Let us look at the earnings of Salesforce.

Earnings of Salesforce

Here is the summary of their recent earnings provided by Google Bard.

Earnings of Salesforce (2018 - 2022)

Salesforce's earnings have grown significantly over the past 5 years. This is due to a number of factors, including:

• The growth of the cloud computing market, which has been a major driver of Salesforce's growth.

• The company's focus on innovation, which has helped it to maintain its competitive edge.

• The company's strong sales and marketing team, which has helped it to acquire new customers.

Salesforce is expected to continue to grow in the future. The cloud computing market is expected to continue to grow, and Salesforce is well-positioned to benefit from this growth. The company is also continuing to innovate, which will help it to maintain its competitive edge.

However, there are some risks that could impact Salesforce's earnings in the future. These risks include:

• A slowdown in the global economy, which could lead to decreased demand for cloud computing services.

• Increased competition from other cloud computing providers.

• Changes in the regulatory environment, which could make it more difficult for Salesforce to sell its products and services.

Overall, Salesforce is a well-run company with a strong track record of earnings growth. The company is expected to continue to grow in the future, but there are some risks that could impact its earnings.

For the coming earnings, the forecast (from investing) for EPS and Revenue are 1.61 and 8.18B respectively. Will Salesforce be able to beat the forecast?

News and my muse

• <NYPost> The Minneapolis-based Target said its profit will be squeezed by “$500 million more than what we saw last year” – when the company lost as much as $800 million from “inventory shrink.”

• <Business Insider> Cloud major Oracle reportedly sacked over 3,000 employees at the electronic healthcare records firm Cerner which it acquired for $28.4 billion.

• <The Verge> After last November layoffs, Meta announced job cuts affecting an additional 10,000 workers by May. Meta slashed an additional 4,000 jobs in April. This latest round of layoffs is expected to affect workers in business-focused positions.

• <Wion News> The job cuts in the technology sector neared 90,000 in January 2023 & came down to 39,471 in February, 37,662 in March, 19,807 in April & 11,491 in the month of May so far, according to layoffs tracking platform

• <Yahoo Finance> TransUnion recorded nearly 20% year-over-year growth in credit card balances, while the NY Fed report put the annual increase at 18%. Both have total outstanding balances just below $1 trillion at the end of the first quarter.

• <WSJ> Ocean Freight Rates Slump as Apparel, Electronics Demand Weakens. Los Angeles & Long Beach, Calif., handled about 1.74 million import containers in the first quarter of 2023, a 32% decline from last year’s record volumes.

• "There's never enough currency to pay the debt. There is always more debt in the system than there is currency in existence to pay the debt." - Mike Maloney

• Spend within your means and you will not have a debt ceiling.

  It may be delayed, but the debt ceiling will be raised. I do not give good appraisals to those who could not spend within budget and fail to address the situation in a timely fashion.

• <Yahoo Finance> ZIM Integrated Shipping Services (ZIM) reported a quarterly loss of $0.50 per share versus an estimated loss of $0.18. Revenues were $1.37 billion for the quarter, missing the Estimate by 11.91% (revenues of $3.72 billion 1 year ago).

• <WSJ> Big retailers are signaling they are nearly done paring back their excess inventories and are preparing to fill their shelves with new merchandise this fall.

• <CNN> Disney begins third round of expected layoffs, cutting more than 2,500 additional jobs

• <Washington Post> Amazon hiring freezes follow mass layoffs amid a looming potential recession. At Meta, morale has plummeted as top bosses received big bonuses while layoffs continue. At Google, staffers are bracing themselves for more job eliminations.

US - deal or no deal

• US government has overspent. They need to raise the debt ceiling to raise more money. And now, Biden and McCarthy enters to play "deal or no deal" as global market goes through duress & uncertainty.

• There will be many other applications ~ for good and some, for manipulations, distortions & fabrications. AI is amoral ~ only as good or evil as the user.

  What is reality to you?

• Fitch Ratings - London - 24 May 2023: Fitch Ratings has placed the United States' 'AAA' Long-Term Foreign-Currency Issuer Default Rating (IDR) on Rating Watch Negative.

• <Reuters> JP Morgan job cuts

Market Outlook - 29 May 2023

S&P500 1D chart dated 28 May 2023

Technical observations of the S&P500 1D chart:

• The stochastic indicator is on track to complete a bottom crossover. With that, it could be on an uptrend soon.

• The MACD indicator is trending sideways and could break either way.

• Moving Averages (MA). The MA50 line implies an uptrend in the mid-term. The MA200 line is turning upwards and implies an uptrend in the long term. With the last candle being above both the MA50 line and MA200 lines, this can be interpreted as an uptrend in the mid-term and the long term. Note that the MA200 line is turning horizontal. We need to watch out should the MA200 dip in the coming days.

• Exponential Moving Averages (EMA). The lines are on an uptrend and imply an uptrend in the short term.

From the list of technical indicators (1D interval), they are pointing to a “Strong Buy” ie an uptrend. Out of the various technical indicators and moving averages, we have the following:

• 1 neutral

• 20 Buy

• 0 sell

From the technical indicators, the market should be on an uptrend in the coming week. Personally, the market is expecting some volatility due to macro factors like Debt Ceiling and other economic data.

My investing muse

Nvidia

Nvidia took off and made one of the biggest single one-day gains in recent times following its bullish outlook and earnings. The vibe about AI is real and the potential is great. Yet, I have mixed feelings towards the stock.

The P/E of Nvidia is 222. If I can buy all the stocks of Nvidia right now, it will take me 222 years to recover my investment based on the current EPS. Yahoo Finance stated that its diluted TTM EPS is 1.75

While there is big potential, we should consider investing with a good margin of safety.  Personally, I think that I may have missed the window of opportunity for this season. 

There is a chance that the price of the stock failing to go down significantly for weeks or longer, I did not buy because I have not researched adequately too. For now, I plan to monitor and will watch from the sidelines. I do not wish to end up being a bagholder for a stock that looks overvalued. Hope is not a strategy.

Debt Ceiling & PCE

It seems that the government is closed on some agreements. President Biden and Speaker McCarthy would need to convince their respective parties to accept the “compromise” before this is finally accepted and signed off. Both sides understand the impact of a debt ceiling default. We will soon see the amount of collateral damages inflicted by this saga. This should see the market responding positively. Thus, the market has brushed aside Friday’s PCE data which could allow the Fed to remain hawkish coming to interest rates.

Conclusion

With the S&P500 challenging the 4,200 price ceiling, it will be interesting to see how the market holds up. Will the ceiling be breached or will there be more rejections? This should unfold in the coming days.

Q1 earnings season is wrapping up and for most, it is a satisfactory earnings. Europe is starting to go under with Germany entering a recession. The shipping industry outlook looks gloomy ~ a good prelude to global product movements & consumption.

While the technicals point to a likely uptrend, there could still be volatility coming from the debt ceiling. Let us exercise caution.

@TigerStars

$S&P 500(.SPX)$

$Salesforce.com(CRM)$