Public Holidays
China is closed on 3rd Feb 2025 to celebrate Chinese New Year. There is no public holidays in America, Hong Kong and Singapore in the coming week.
Economic Calendar (03Feb2025)
China is closed on 3rd Feb 2025 as they celebrate Chinese Lunar New Year.
Notable Highlights
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The S&P Global manufacturing PMI is expected to be 50.1. This represents a slight growth compared to the previous. ISM manufacturing PMI will also be released. This represents the growth or contraction of the manufacturing industry. ISM manufacturing prices will be released. A figure of above 50 implies an increase in manufacturing cost. This can lead to inflationary costs that are passed onto the consumers.
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S&P Global Services PMI is expected to hit 52.8. This implies a growth in the global services sector. ISM non-manufacturing PMI shows us the growth or contraction in the non-manufacturing or services sector. ISM non-manufacturing prices reflect the cost increase or decrease for the non-manufacturing or services sector. With a previous figure of 64.4, there seems to be much cost increase for the non-manufacturing (services) sector.
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ADP Nonfarm employment change and JOLTS job opening will also be unveiled in the coming week. Together with average hourly earnings and non-farm payroll, we can get a pulse of the employment market. The above data will provide a good overview of the employment situation in America
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Initial jobless claims will be announced. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.
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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 (03Feb2025)
Some interesting earnings include Palantir, Tyson, Amazon, Disney, Alphabet and Affirm.
Let us look at Affirm - one of the Buy Now Pay Later (BNPL) companies
The Technical Analysis is recommending a “Strong Buy”. The Analysts’ Sentiment has a “Buy” rating with a price target of $66.06. This implies an upside of 8.17% from the current price of $61.07.
Observations for Affirm:
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The revenue grew from $264M in 2019 to $2,323M in 2024.
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The gross profit grew from $156M in 2019 to $1,478M in 2024.
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The operating profit remained at a loss since 2019.
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The business has yet to break even since 2019. But the operating loss has been improving.
The forecast of EPS and revenue for Affirm is -0.162 and $805.62M respectively. I would monitor the stock till it can break even.
Market Outlook of S&P500 - 03Feb2025
Observations:
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The MACD indicator is showing an uptrend.
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Moving Averages (MA). Both the MA50 line and the MA200 line are on an uptrend. The last candle is above both the MA50 line and the MA200 line. This implies a bullish outlook for both the mid-and long-term.
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The 3 Exponential Moving Averages (EMA) lines are showing an uptrend.
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Chaikin’s Monetary flow (CMF) shows an uptrend.
Using 1D intervals, the technical analysis shows a “Strong Buy” rating for the S&P 500. 19 indicators show a “Buy” rating. 3 indicators show a “Sell” rating.
The latest candlestick patterns are showing a mixture of bullish and bearish signals.
From the above, the S&P500 should go up in the coming week. (The tariff war started by the USA with Mexico, Canada and China is likely to bring some volatility.)
News and my thoughts from last week (03Feb2025)
US private sector full-time jobs have DROPPED by nearly 2 MILLION over the past year. Such a drop has never happened outside of recessions. The only gain in jobs has been in the government sector. - X user Global Markets Investor
16.2% of total pending home sales in December fell out of contract, the highest December rate on record. This also marks the third-largest percentage since data began in 2017. Nominally, a whopping ~40,000 home-purchase agreements were canceled last month. Home purchase cancellations have surged since 2022 as mortgage rates remain historically high. The weekly average 30-year-fixed mortgage rate reached 7.04% last week, the highest since May. Homebuyers have lost confidence in the market. - X user The Kobeissi Letter
The general contractor complains that ICE raids are resulting in illegals he depended on to do roofing now disappearing. Guess he needs to stop hiring illegals and profiting off of their slave labor. - X user Paul A. Szypula
In the last year alone, gold is up almost +40% A move we haven't seen in years
Mark Zuckerberg's $META in talks to exit Delaware and reincorporate in Texas, per WSJ
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The US stock market has become a CASINO-like place. US total options volume 60-day moving average hit a new RECORD of ~53,000. Notably, a very risky 0DTE (options expiring at the same day) accounted for over 60% of total options volume on Tuesday. This market is crazy. - X user Global Markets Investor
The LA Times, the largest news site in California, just released an article confirming that President Trump's orders are entirely responsible for the massive new water flow into Californian cities. - The U.S. Army Corps of Engineers abruptly increased the amount of water flowing from two California dams. - After President Trump signed an order calling for increased water deliveries. - Local water managers, who were caught off-guard by the decision, said they convinced Army Corps officials to release less water than originally planned. In other words, Democrat leaders in California deliberately screwed the people over. The next time you Liberal Californians turn on your showers or drink water, please take a moment to thank God for giving you Trump to undo the damage the Democrats have done to your state. X user BehizyTweets
"Businesses outside the fire zones are experiencing ripple effects from power outages, infrastructure strain and shifting consumer demand,” Lisa Anderson said. - Constructiondive
50% of TSMC's Arizona employees are from Taiwan, despite recent controversies — the company plans to hire more US workers over time (Nov 2024) - Tom’s Hardware
"If the rates had been adequate... I don't think we'd have seen these non-renewals," said Tom Quirk, a 40-year veteran insurance broker based in San Jose. "You know, right now it's really a disaster." From fire to insurance crisis. - ABC7News
Boeing loses almost $1bn every month in 2024 - BBC
China increasingly using dry bulk carriers to move project cargoes around the world There has been a remarkable doubling of the amount of project cargoes leaving China on dry bulk carriers over the past year. - Splash247
75,000+ CANADIANS DIED WAITING FOR HEALTH CARE New data reveals over 15,000 Canadians died in 2023-24 while stuck on waitlists for surgeries or diagnostic scans. Since 2018, that number has surpassed 75,000. Some patients waited years for treatment they never received, while others turned to euthanasia due to lack of timely care. Experts say Canada’s system is failing compared to better-performing universal models in Europe. For a country that pays high taxes for "free" health care, many are left asking—at what cost? Source: ZeroHedge
My Investing Muse (03Feb2025)
Layoffs & Closure news
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Microsoft has initiated a wave of performance-based job cuts, with impacted employees losing their jobs effective immediately and receiving no severance packages, according to termination letters sent to staff.
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Berkshire Hathaway said on Friday it has shed more than 4,000 jobs over the last year, on pace to post a record annual operating profit. In a regulatory filing, Berkshire said its dozens of operating businesses employ about 392,000 people, down from 396,440 shown in its most recent annual report last February. - Reuters
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The JG Summit conglomerate will shut down its petrochemical business — which makes raw materials for the production of plastic products and industrial chemicals — due to a China-induced global oversupply of resins. - InsiderPH
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Deutsche Bank has suffered a 92pc slump in its profits amid a major downturn in the German economy. Germany’s largest lender on Thursday vowed to slash jobs after its profits attributable to shareholders dropped to €106m (£89m) in the final three months of 2024, down from €1.26bn in the fourth quarter of 2023. - Telegraph UK
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Last year, the teams responsible for Pixel hardware and Android software were merged into one division, and Google today announced a “voluntary exit program” for employees working in the Platforms & Devices group. - 9to5google
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(Bloomberg) -- Amazon Inc. is laying off dozens of people in its communications department, the latest culling of the corporate workforce amid executives’ efforts to cut costs and reduce bureaucracy.
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Nissan plans to cut up to 2,000 U.S. jobs, and slash factory output by 25%, per Automotive News Meanwhile VW Volkswagen is prepared to hand its factories to Chinese electric carmakers, per Telegraph
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Volkswagen has confirmed that it is considering selling some of its German car factories to Chinese manufacturers as part of a cost-cutting plan to save billions. - MSN
The above are some snippets of news about layoffs, and closures in the past week.
Forecast of the market through oil
(Bloomberg) - Profits for Exxon Mobil Corp. and Chevron Corp were slammed by slumping fuel margins as the prospect of US tariffs on two major oil suppliers threatens to make the refining business even worse.
Tariffs can make it worse for oil producers. Source: https://www.ttnews.com/articles/exxon-chevron-refining-slump
Oil is the starting point of many products. It is not just gasoline, or diesel. We are surrounded by plastics. Oil products make their way into our makeup, roads, lubricants and more. It takes months to convert crude oil into these products. Thus, the oil industry production can be an outlook.
With a stagnating demand, let us be cautious.
USA credit card
Here are extracts from last week’s news about the credit card challenges.
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The share of US credit card accounts making ONLY the minimum payment hit 10.8% in 3Q 2024. This is the highest since 2012, the aftermath of the GREAT Financial Crisis. Consumers cannot afford to pay out their credit card debt.
Average credit card rates have climbed to 21.5%, or about 50% higher than three years ago, according to Fed data - X user Unusual WhalesA record number of consumers are making minimum credit card payments, per CNBC. The share of active credit card holders just making minimum payments rose to 10.75% in the third quarter of 2024, the highest ever in data going back to 2012 - X user unusual whales
We are seeing more credit challenges for the citizens. At a 21.5% average credit card rate, debt can be a spiralling pit.
My final thoughts
DeepSeek has brought much attention to the costs of AI, applications and infrastructure. While there is much debate about its affordability, its performance has shocked some industry players.
Much investment has been poured into AI and its ecosystem. With investments, there are expectations of returns, within a timeframe. DeepSeek has added some pressure to the expectations. With leading players like OpenAI yet to be profitable, we can expect more duress and scrutiny in this sector.
We can expect more challenges to arise after the LA Fire with issues in housing, retail, insurance, banking, construction and more. From an estimated $250 billion worth of losses, about $40 billion can be covered by insurance. California’s state-run insurance “FAIR PLAN” may not have enough to pay out.
President Trump has his work cut out for him - not to forget the recent plane-related accidents. Let us be cautious and consider some hedging.
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