🧸Fire on Recession🍎

Snap provided what investors feared the most- an imminent sign of a recession. As social media icon Snap warned about a slowing business spending on ads, large indices such as the technology-rich Nasdaq composite fell off the roof. The lower revenue and profit guidance is a strong catalyst of a signal toward a deteriorating economy. 

Beneath the narrative is the genuine concern that consumers might spend less. Moreover, this latest realisation from Snap’s CEO is consistent with Target’s latest earnings report that showed consumers are shifting their spending towards essential items rather than discretionary products such as clothes and electronics. 

There’s little doubt that inflation and interest rates were the two main culprits. After all, the Ukraine war had caused skyrocketed commodities prices, and companies are still struggling to meet the relatively high economic demand. 

🕹Gone are the strong abs – Abercombie & Fitch✈️

The latest retailer reported a disappointing earnings result, which led to a lowering of full-year guidance and outlook. As a result, the stock experienced its most significant one-day collapse of around 29%. This showed how Wall Street punish poor performing stocks these days. 

The profit margin was down to 55.3%, primarily due to higher freight costs, which were $80 million more than last year and $15 million higher than estimated. Margin has been a critical focus among analysts these days as it is a reflection of the company’s strength in passing higher prices to consumers. 

⏳Our Outlook💰

Overall the market outlook appeared milky, and Pika World continue to execute only short term trades with long term accumulation through Endowus (consider using our referral) and DCA key stocks. We expect discretionary consumer spending stocks to be hammered as the market rides out uncertainty.