To The Moon

Public Holidays

The USA, Hong Kong & Singapore have no public holidays in the coming week.

America, Hong Kong and Singapore celebrate Good Friday on 18 Apr 2025. I wish you all a great weekend as Christians celebrate the love, sacrifice, and victory of Jesus.

Economic Calendar (14Apr25)

Notable Highlights

• China's GDP (Q1) is expected at 5.2% YoY (vs. 5.4% prior). This can be a good indicator of both Chinese production and global consumption.

• The Core Retail Sales (Mar) are forecasted at 0.4% MoM (vs. 0.3%), and Retail Sales at 1.4% MoM (vs. 0.2%).

• The Philadelphia Fed Manufacturing Index (Apr) is forecasted at 3.1 (vs. 12.5). From investing dot com

  A level above zero on the index indicates improving conditions; below indicates worsening conditions. The data is compiled from a survey of about 250 manufacturers in the Philadelphia Federal Reserve district.

• Initial jobless claims will be announced. This weekly report tracks the number of new unemployment claims, serving as a leading indicator of labor market health. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. This event tracks the weekly change in U.S. crude oil inventories, an indicator of oil supply and demand, which can impact oil prices and energy markets. If the trend of excess inventories continues, demand erosion can lead to reduced production & weakened consumer spending.

Earnings Calendar (07 Apr 2025)

I am interested in the earnings of Goldman Sachs, Citi, Bank of America, United, ASML, TSMC and Netflix.

Let us look at TSMC.

The Technical Analysis has a “Strong Sell” rating, in contrast to the “Strong Buy” recommendation from Analysts Sentiments. The target price of 241.69 suggests a (potential) upside of over 53%.

Below is the financial performance review using GROK:

Revenue

• Growth Trend: TSMC's revenue has shown strong growth, increasing from $25.724 billion in 2015 to $88.552 billion in 2024. The 10-year compound annual growth rate (CAGR) for revenue is 13.8%, reflecting robust expansion.

• Key Milestones: Revenue growth was particularly strong in 2020 (34.3%) and 2021 (20.5%), driven by global demand for semiconductors. There was a slight decline of 6.3% in 2023 due to market cyclicality, followed by a significant recovery of 28.5% in 2024.

• Competitive Advantage: TSMC’s consistent revenue growth underscores its position as the world’s leading semiconductor foundry, benefiting from its advanced manufacturing capabilities and strong demand in tech sectors like smartphones, AI, and automotive.

Operating Profit

• Growth Trend: Operating profit grew significantly from $9.812 billion in 2015 to $40.585 billion in 2024. The operating margin has remained high, increasing from 38.1% in 2015 to 45.7% in 2024.

• Operating Margin: The operating margin has averaged around 35-46% over the decade, with a peak of 49.5% in 2022, reflecting exceptional profitability and cost efficiency.

• Competitive Advantage: The high and improving operating margin highlights TSMC’s operational excellence, driven by its technological leadership in advanced nodes (e.g., 3nm, 5nm) and economies of scale in semiconductor manufacturing.

Earnings Per Share (EPS)

• Growth Trend: EPS increased from $1.78 in 2015 to $6.95 in 2024, with a 10-year CAGR of 16.1%. Notable growth includes 54.8% in 2020 and 51.7% in 2022, though there was a -17.2% decline in 2023, followed by a 34.3% recovery in 2024.

• Volatility: EPS growth has been mostly positive, with the 2023 decline reflecting semiconductor market challenges, but the overall trend is upward.

• Competitive Advantage: The strong EPS growth demonstrates TSMC’s ability to deliver shareholder value, supported by its dominant market position and ability to meet growing global chip demand.

Price-to-Earnings (P/E) Ratio

• Valuation: The P/E ratio is 22.6, indicating that TSMC is valued at a premium, which is reasonable given its growth prospects and leadership in the semiconductor industry.

• 10-Year Median Returns: The 10-year median return on assets (ROA) is 18.6%, return on equity (ROE) is 26.5%, and return on invested capital (ROIC) is 21.8%, reflecting exceptional returns.

• Competitive Advantage: The premium P/E ratio, combined with high ROA and ROE, underscores TSMC’s ability to generate strong returns, driven by its technological edge and critical role in the global tech supply chain.

Free Cash Flow (FCF)

• Growth Trend: The EV/FCF ratio is 28.7, and the 10-year CAGR for FCF is 20.2%, indicating robust cash flow generation. The 10-year median FCF margin is 23.5%, reflecting strong cash flow relative to revenue.

• Capital Structure: The median debt/equity ratio is 0.2, and debt/assets is 0.1, indicating a low-leverage position.

• Competitive Advantage: TSMC’s strong FCF growth and minimal debt provide significant financial flexibility to invest in R&D, expand capacity (e.g., new fabs), and return capital to shareholders, reinforcing its competitive position.

Overall Assessment

Over the past 10 years, TSMC has demonstrated exceptional growth and resilience, with revenue growing at a 13.8% CAGR and EPS at a 16.1% CAGR. Operating margins have expanded (from 38.1% to 45.7%), and the company has consistently raised dividends, reflecting financial strength. The P/E ratio of 22.6, alongside high ROE (26.5% median) and ROIC (21.8% median), indicates a premium valuation justified by its market leadership. TSMC’s strong FCF growth (20.2% CAGR), high gross margin (56.1% in 2024), and low debt (debt/equity of 0.2) underscore its competitive advantages, including its technological leadership in advanced semiconductor nodes, unmatched scale, and critical role in the global tech ecosystem. Despite a slight revenue dip in 2023, the 2024 recovery highlights its ability to navigate industry cycles effectively.

The forecast for EPS and revenue is 2.07 and $25.37 billion, respectively. TSMC is an attractive offering with strong growth and profitability, backed by low debt (leverage) and strong cash flow.

This is a company that deserves more research and good consideration for shortlisting.

Market Outlook of S&P500 - 14Apr25

Observations:

• The MACD indicator has yet to complete the bottom cross-over, which suggests a potential reversal. It is possible to range or go lower before the actual reversal. I prefer for MACD’s bottom crossover to be completed before acknowledging a reversal (as it forms a part of considerations).

• Moving Averages (MA). The MA50 line has started a downtrend, while the MA200 line is on an uptrend. This implies a downtrend in the mid-term and a bullish in the long term. We are seeing the setup of a Death Cross (when the MA50 line cuts the MA200 line from above). A death cross can be seen as a bearish indicator.

Death Cross Definition: How and When It Happens

• Candle. The last candle is below the MA50 and MA200 lines, implying a bearish outlook for the medium and long term.

• The three Exponential Moving Averages (EMA) lines are showing a downtrend.

• Chaikin’s Monetary Flow (CMF) is in the “uptrend zone” (above the 0 line). This implies more buying than selling.

• Let us monitor the magnitude of the rise and fall alongside the volume.

S&P 500 index grew 4.68% from one year ago.

Based on daily intervals, the technical indicators show a “Strong Sell” recommendation. The 15 indicators are showing a “Sell” rating versus 5 with a “Buy” rating. Here are the technical indicators and moving averages in summary.

The candlestick patterns suggest a “bullish” outlook in the coming weeks.

Given the above indicators and patterns, the S&P 500 points to a “bearish” outlook. I prefer a bottom crossover for the MACD indicator before seeing the reversal.

News and my thoughts from last week (14Apr25)

Delinquent C&I loans rose by approximately 6.4% from the previous quarter and 19.8% year over year, reaching $31.04 billion – with a delinquency ratio of 1.31%. - DalyHodl

Tim Cook explains why Apple manufactures products in China. The true reason is because of the skill, the quantity of skill in one location, and the type of skill it is. Not because of labor cost since China stopped being a low-labour-cost country many years ago. The Apple CEO elaborated on the advanced tooling and precision required to produce the products and highlighted China's vocational expertise in these areas. - X user by Shen Shiwei

At the moment, Apple makes more than 80% of its products in China. Those products now receive a 145% tax when they’re imported into the U.S. after Trump’s tariffs went into effect this week.

Minneapolis Federal Reserve President Neel Kashkari said recent market trends show investors are moving away from the U.S. as the safest place to invest. - CNBC

JPMorgan Chase CEO Jamie Dimon expects estimates for corporate earnings to fall amid the uncertainty created by President Donald Trump’s trade negotiations. “Analysts have generally reduced their S&P estimate earnings by 5%,” - CNBC

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Homebuyers need $117,000 a year to afford the median home. That’s $52,000 more than renters. This isn’t sustainable. X user Michael Burry Stock Tracker

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11.1% of active credit card accounts are now ONLY making the minimum payment, the most in history - X user Barchart

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42% of Mortgage Refinance Applications are being rejected, the most in history - X user BarChart

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30-Year Mortgage Rate back up to 7.37%, the highest level in 2 months - X user Barchart

Over 30 years, by outsourcing manufacturing, US corporates made massive profits, more than the 4 largest banks in China. So where did the money go? War and Wall St banker pockets. Nothing on infrastructure. - Jack Ma interview

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China's total debt to GDP rose to a RECORD of ~370%. The share has DOUBLED over the last 14 years. - X user Global Markets Investor

VanEck confirms that China and Russia are officially settling some energy trades in Bitcoin as the trade war ramps up. Maybe a trade war is what crypto actually needs. - X user The Kobeissi Letter

And don't let some of these politicians...let me tell you. These countries are calling me, kissing my ass, they are dying to make a [trade] deal..."please please sir let me make a deal, I'll do anything, I'll do anything sir." - RSBN"Kissing my ass" is not good diplomacy. This can be seen as rude in several cultures. Countries reach out with intent to work something out, as equals, respectfully. It may sound like begging but it is probably not. What's going to happen after this?

Is reshoring the best option? What is needed for reshoring to be successful? What can be its returns of investment?

It is always possible to build anything back in America. It is about the supply chain, procurement, skilled labor, maintenance, raw materials, packaging materials, policy and infrastructure (roads, energy, utilities). What would be the cost and lead time?

Disney's theme park division reported its lowest profit in two years in its November earnings report, and a possible looming recession would likely drive those numbers down even further. - SF Gate

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Margin calls have been made after the recent decline in the market. Can this lead to default, bankruptcy, and back runs? - MacroMicro

“Rates, equities and oil were down significantly . . . it was the breadth of moves across the board [which caused the scale of the margin calls],” adding that it was reminiscent of the sharp and broad market moves in the early months of the Covid pandemic.

My Investing Muse (14Apr25)

Layoffs & Closure news

• The Lululemon store on the corner of 25th and Broadway in Uptown Oakland has quietly closed its doors for good. - SF Gate

• Meta, the Menlo Park-based tech giant behind Facebook, WhatsApp and Instagram, is shutting three side-by-side buildings at its large office complex across the bay in Fremont. - SF Gate

• LL Flooring agreed to sell up to 219 stores and the company's Sandston, Va., distribution center to a subsidiary of private equity firm F9 Investments for a $1 million fixed amount, an inventory price of 57% of landed cost value of acquired inventory and assumed cure costs. - The Street

• ENERGY DEPT FLAGS 8,500 JOBS FOR POSSIBLE TERMINATION UNDER TRUMP’S FEDERAL WORKFORCE CUTS The U.S. Energy Department has identified over 8,500 “nonessential” positions—including 500 tied to nuclear weapons programs—that could be eliminated under Trump’s executive order for federal downsizing. The cuts span both the Department of Energy and the National Nuclear Security Administration (NNSA), which manages the U.S. nuclear arsenal. Of DOE’s 17,500 federal workers, only 9,004 were labeled “essential.” Critics warn such reductions could endanger energy security, nuclear safety, and innovation. Though no final decisions have been made, the move follows a February mistake in which layoffs at NNSA were reversed after it was found those workers were vital to nuclear stockpile maintenance. Source: AP News

• Large US companies filed for bankruptcy at the fastest rate in 15 years in the first three months of 2025, S&P Global Market Intelligence said on Thursday (Apr 10). - Business Times

The above are some of the layoff and closure news. Let us monitor this, as this can lead to market-wide concerns.

Tariff Updates

Here are some news extracts concerning tariffs:

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China has imposed new trade restrictions on samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. These metals are critical to American big tech. - X user Astraia Intel

Commerce Secretary Lutnick says tariffs on semiconductors and electronics will come in “a month or so.” - X user The Kobeissi Letter (13Apr25)

The US publishes reciprocal tariff exclusions for computers, smartphones, and chip-making equipment. - X user The Kobeissi Letter. It is a concession, but it can also look like inadequate planning. Is this the first list of several exemptions? Why does this start with technology? Is there a different queue for other products for tariff review? Who is listening to the smaller businesses?

Can the tariffs be a way to drain the swamp so that future federal funds do not suffer abuse, waste and fraud? Temporal pains were mentioned. Are tariffs the means to an end that we do not understand? Will the pain be too much for some?

What happens between America and China is not a clash of Tariffs. It is about a clash of cultures.

When there are no orders at 54%, there would be no orders at 104%. Who will suffer more? It is not about folding. It is about how it is done. Let us build bridges instead of walls.

If globalization brings prosperity, what happens when we move away from it? It will be interesting to see how the USA will respond. There will be a few groups of countries:

1. Those who accepted and decided not to contest the tariffs.

2. Those who do not accept the tariffs and asked to meet up

3. Those who decided to drop their tariffs against the US and asked to meet up

4. Those who have responded by raising their tariffs.

The US responses will set precedences for the countries to take reference. Singapore has an FTA in place, and both countries enjoy trade without existing tariffs. However, the Liberation Day announcement has applied a base 10% tariff on Singapore exports to the USA. While the government has asked not to contest, it is interesting to hear from Trump how we can revert back to "no tariffs" - how can we work towards to revert back to the status quo? More volatility is expected. Let us consider some hedging.

My final thoughts

The USA has made some exemptions concerning tariffs. We can expect more “exemptions” made when understanding of their impact reaches the ears and considerations of the leaders.

The current global economy is built upon globalization. Protectionism and De-globalization are inflationary. The idea of reciprocal tariffs is a good move to restore some fairness in the market. The tension and hassle that the tariff have brought much distress. The perception of America as a reliable and consistent global leader has been questioned.

Will there be new trading blocs and alliances formed? Will there be a new world order in a few weeks? Can this be done in time to avoid a possible downturn?

Sometimes, sentiments drive the market more than data. Kingdoms rise and kingdom fall.

Let us review our expenditures, income, and savings. Let us spend within our means, invest with what we can afford to lose, and avoid leverage. I am reviewing my holdings and plan to cut losses with businesses losing their competitive advantages. I would also consider hedging and adding some defensive positions.

Let us do our due diligence before we take up any positions. Let us have a successful week ahead.