To The Moon

Public Holidays Nil for Singapore, Hong Kong, China & USA Economic Calendar (12Jun2023) Economic Calendar for the week starting 12 June 2023 Notable Highlights CPI & PPI. After the FOMC interest rate decision, this will be the most important news of the week. This CPI (inflation) data could steer the direction of the interest rate, though it is known that the Fed prefers PCE. However, this would be an important consideration for the Fed to conclude its interest rate decision. PPI is a forward indicator that provides insight into the inflation that hits the producer, something that is likely passed on to the consumer pending the price elasticity of the products. FOMC interest rate decision. This should be the main event of the week. Whether the indices like S&P500 hit a new recent high or see a correction, will be highly dependent on this decision. Jobless claims. Initial jobless claims will be announced on Thursday. This would form important data points for the Fed to decide on the next interest rate adjustment. Production updates from the US - Industrial Production (YOY) and Philadelphia Fed Manufacturing Index reveal the situation of the US domestic manufacturing 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 (12 Jun 2023) ~ Will Adobe rise again? The earnings calendar for the week starting 12 Jun 2023 As the earnings season reaches the end, there are a few companies of personal interest for this week’s earnings namely Oracle, Kroger and Adobe. Summary of Adobe (provided by Google Bard) As you can see, Adobe's revenue and net income have both grown steadily over the past 5 years. In 2022, Adobe's revenue grew by 11.5% and its net income grew by 1.37%. This growth was driven by the continued adoption of Adobe's cloud-based products, such as Creative Cloud and Document Cloud. Adobe is a well-established company with a strong track record of growth. It is a leader in the software industry and its products are used by millions of people around the world. I believe that Adobe is a good investment for the long term. Here are some additional details about Adobe's earnings for the last 5 years: Adobe's revenue growth has been driven by the continued adoption of its cloud-based products. In 2022, cloud revenue accounted for 90% of Adobe's total revenue. Adobe's net income growth has been driven by a number of factors, including cost savings, increased operating margins, and share repurchases. Adobe's earnings per share (EPS) has grown at an average annual rate of 18.2% over the past 5 years. Adobe's stock price has outperformed the S&P 500 index over the past 5 years. From the forecast above, the EPS and revenue for Adobe are 3.79 & 4.77B. Will Adobe be able to continue its run? News and my muse ~ Office vacancy, debt cycle, supply chain Office vacancies in cities The Inside 1031 survey found that 49% of Americans depend on credit cards to cover essential living expenses. 61% of Gen Zers, 53% of millennials & 26% of boomers rely on credit cards to cover essential expenses. the market can be irrational longer than we can be solvent. key is to invest in great companies, at a good margin of safety without leverage. It's likely for some smaller banks to consolidate, Treasury Secretary Janet Yellen said Wednesday morning Yellen also said she expects there to "be issues" in the commercial real estate sector given the changing approach to work. US import demand positioned to find a new bottom in 2023 SONAR bookings data trending at 2019 levels, but major downside risks to volumes continue to rise Ray Dalio, founder of the worlds biggest hedge fund, says the U.S is going to issue a large amount of government debt and there is a shortage of buyers. He calls this the beginning of “big cycle debt crisis”. Stanley Druckenmiller fears a recession is on the way after more than a year of aggressive interest rate hikes from the Federal Reserve have failed to quash inflation. "We're way past the peak [on inventory]. Many leading brands and retailers have cleared it off their balance sheets." - Bernstein Analyst Aneesha Sherman. Further improvements in supply chains have also helped retailers. Equatorial Guinea, like other West African producers, faces the common problem of declining production mingled with a lack of immediate new projects coming on, Petro-Logistics noted. The market is in a bull run. Raising the debt ceiling will work if there are buyers of newly issued US bonds. Let's monitor. Across the U.S. as a whole, workers lost $125 billion a year due to wildfire smoke, the paper found — about 2% of all labor income. Middle-income households, or those with annual earnings of up to $75,000, can afford only 23% of the homes listed for sale in the U.S., according to recent data from the National Association of Realtors (NAR). The 2023 recession is still coming, economists say. It just might not happen until 2024. Macroeconomic outlooks between bond & equity markets continue to diverge, JPMorgan said. If the bond market is right about inflationary risk, stocks would face 20% potential downside. The warning comes as the bear market in the S&P 500 has ended. Mark Zuckerberg credits Elon Musk with kicking off the tech trend of firing middle managers when other CEOs were ‘a little shy’ $5.2 billion in cargo stuck off West Coast ports in truck and container bottleneck USA port congestion “We are already slowing,” Prof. Campbell Harvey said last week. “The question is how deep the recession will be.” A contraction could begin this month and last two to three quarters, he said. Market Outlook - 05 Jun 2023 S&P500 1D chart dated 11Jun2023 Technical observations of the S&P500 1D chart: The stochastic indicator looks to complete a top crossover in the coming days, signifying a potential reversal of the uptrend. The MACD indicator is trending upwards. Moving Averages (MA). The MA50 is on an uptrend. The MA200 line is turning flat and there could be a trend change coming up. 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. Exponential Moving Averages (EMA). The lines are on an uptrend and fanning in an upward & outward direction. This implies an uptrend in the short term. From the technical indicators above, 20 of them have pointed to a “STRONG BUY”. Note that 3 of the indicators have pointed to “overbought” which implies a potential reversal may happen soon. My investing muse Inflation is sticky and there could be rate hikes coming. With the rise of the debt ceiling, this could be inflationary. I am monitoring LEI, office vacancy, credit card debts, student loans (starting in Sep 2023 with 10.8M expected to default), home foreclosure and car repo ~ good indicators of the US debt situation. Add the GDP, earnings, inflation, unemployment & import/export data ~ this helps me to get a perspective. I need more of these data to reverse for me to see a different outcome. For CRE to improve, we need more people to get back to the office. Using SF, the cellular traffic is down over 30% in downtown SF with increased crime rates & drug abuse (blatant). With high taxation in SF, places like Texas and Florida have become attractive. There are multiple issues that could cause an economic decline or collapse. Could it be CRE, banking, real estate, manufacturing and government fiscal mismanagement? The market is hitting a bull run and there is money to be made. In the end, the market is a weighing machine. Unfortunately, there would be some bag holders. I am monitoring the following data points: 1. LEI (which is a better overview than GDP growth, inflation and unemployment are the standard macro indicators) 2. Import/export volume and value ~ focus on US & China (This does not include services) 3. Debts including Credit Card, student debt, home foreclosure, car repo 4. Federal spending/revenue 5. Real estate ~ including CRE vacancy, etc 6. Oil production & consumption 7. Earnings On the side, I am monitoring capital/funds movement. As per the previous data, institutional players have been largely selling their assets over the last few months. With the Fed planning to issue a new batch of bonds, this should contest with the other asset classes like equities, real estate, gold & digital assets for a share of the available funds. Conclusion It takes time for the various scenarios to play out ~ there would be black swans, sudden resolutions, and natural disasters. So long, as the items that I monitor continue to trend in the wrong direction, my "bearish" outlook remains. I am not in control but I am in control of my reaction to these events. I do not have a prediction on the timeline or magnitude of events that may happen. I prefer to respond to them, hopefully, take advantage of them. @TigerStars $S&P 500(.SPX)$ $Adobe(ADBE)$