Preview of the week starting 15Aug22 - Will both Walmart and Sea Limited continue their recovery?

Public Hoildays (SG, Hong Kong, China & USA)

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Earnings Calendar

Earnings Calendar for the week starting 15 Aug 2022

Walmart

In the one last year, Walmart has fallen by 11.58%.  It hit the recent 52-week low of 117.27 after reaching the high of 160.77.

The forecast for the coming earnings is 1.63 and 150.93B for its EPS and Revenue respectively.  Will Walmart continue to recover despite inventory challenges (overstock) recently.

SEA Limited

Sea has fallen over 71% from a year ago.  Though it is away from the 52-week low of 54.06, it remains a long distance from the 52-week high of 372.70.

The forecast for the coming earnings is -1.14 and 2.99B for its EPS and Revenue respectively.  Will Sea Limited be able to continue its recovery?  Personally, I will prefer for Sea Limited to enter into profits before willing to invest into the company.

Economic Calendar

Economic Calendar for the week starting 15 Aug 2022

Following China's Industrial Production (YoY) falling to 3.8% from the forecast of 4.6%, we see more slowing down in China than expected.  The lockdown situation in China seems to be improving with Shanghai schools set to be opened from 1st September 2022 barring any Covid outbreaks.  With China being the world's factory, if the production trends downwards, it is not a good sign for the global economy in general.

Crude Oil Inventories are an important (forward-looking) indication.  Oil needs to be bought, delivered, refined and shipped out to the manufacturers before it can be turned into products like plastic that easily surround us.  Thus, if the oil inventory demand is "weak" (seen by having a lesser than expected drawdown of the crude oil inventories), this can lead to a further drop in oil prices.  However, this also implies that the oil producers are seeing a lesser demand for oil in the coming months by both manufacturers and consumers.  Such demand drop can lead to a recessionary cycle.

Retail Sales (MoM) for July is also a good indicator of the recovery of the market as we try to live with Covid.

Initial jobs claims are the other key data as the Fed needs to incorporate this into their interest rate adjustments.  The next FOMC interest rate announcement will only take place in September.  They will be looking at a few more such updates before finalising their interest rate adjustment.  

News and my Muse

My muse: to beat Tesla, you need more than a better car. You need a better factory.

News - 61% of Americans who are living paycheck to paycheck - what should one prepare for potentially tough times?

EU expects a lesser harvest in lieu of the climate

Drought affects Europe's crop yield.

PPI is down 0.5% MoM and initial jobless claims (262K) are lesser than the forecast of 263K.

BYD contributes 32.7% of China's NEV sales in July

SAIC-GM-Wuling had an 8.3% share of China's NEV retail sales in July, NIO at 2.1% & Tesla China at 1.7%. BYD achieves zero carbon emissions at Shenzhen headquarters

CONSUMER PRICE INDEX - JULY 2022

The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in July on a seasonally adjusted basis. Over the last 12 months, the all items index increased 8.5% before seasonal adjustment. Source: U.S. Bureau of Labor Statistics

CNBC reported thatt grain shortage is expected to last into next year.

China starts autonomous self-driving taxi with Baidu,

Market outlook

S&P500 1D chart dated 15 Aug 2022 (SGT)

From the 1D chart above, we have the following observation:

• The stochastics indicator is ranging.  S&P500 can range in stochastic and continue to climb as per the previous trends.  However, it is also in the overbought region and the market may peak soon.
• The MACD indicator is still on the uptrend and thus, we can expect the uptrend to continue.
• EMA lines are in an up trend and spread out - thus, the uptrend is likely to continue and be strong.
• The moving average (MA) lines of 50 & 200 are providing the following signals.  MA50 is on an uptrend (mid-term) and MA200 is on a downtrend (longer term).  With the candles above MA50, it should remain bullish in the short term.

My considerations:

• with inflation remaining at 8.5%, it remains elevated though we should see some relief due to falling fuel costs.  It is important to monitor if there is any demand erosion.  From the manufacturers and oil producers, there are possibilities of a decline coming up as explained earlier.
• Weather > Europe's agriculture looks to be challenged and the USA's coming crop yield may be affected with the floods, droughts, fire and heat waves.  We need to monitor closely.
• Fertilizer - with the Russian sanctions, the world needs to find alternatives for 40% of the world's fertilizer from Russia.
• Elevated housing and rental costs are inflationary in nature.
• More failings of crypto firms
• Expecting the rest of the earnings to be "less" hopeful.
• With the coming winter, the gas situation in Europe needs to be worked out as they remained hostage to Russia.
• There are few global hotspots with tension, wars and rumours of wars - Taiwan, Israel, Armenia, etc

While the market can be irrational longer than we can remain solvent, I continue to remain cautious about the market in lieu of the above reasons.  I hope that I am wrong but I still think that we have more trying times ahead.