ð The Bank of Japan finally raised interest rates to a positive level⦠March 20, 2024 | Peel #671 Silver Banana goes to... [CapLinked. ](=) In this issue of the Peel: - ð The Bank of Japan finally raised interest rates to a positive levelâ¦
- ð Hang onâdid this stock literally double overnight?!
- ð The NAR settled a $418mn class-action lawsuit on agent commissions. Market Snapshot ð¸ Banana Bits ð - The Fed meets today. Hereâs some wild speculation on what [might go down]()
- March Madness tipped off, and degenerates just like ourselves are expected to throw >$2.7bn on this yearâs tourney⦠and thatâs [just legal betting](
- Microsoft is poaching some big-time AI players [from Google]()
- We didnât think it was possible, but equity sentiment is [getting even higher]( Caplinked Enterprise VDR = Team Dinner! $1.2k towards a team dinner at a restaurant of your choice when you open a 6-month enterprise level data room with Caplinked. Imagine the possibilities: a gourmet feast, a cozy team gathering, or a culinary adventure, all on us! Plus, there are no minimum term requirements, ensuring flexibility for your needs. For each month your new data room is open, Caplinked will pay $200 towards your team's dinner. It's our way of saying 'thank you' and celebrating your success. Close deals faster with Caplinked, and [enjoy a delicious bonus on us.]() Let's toast to a fruitful partnership and memorable team moments! Macro Monkey Says ð Itâs All Over Negativity has been outlawed across the global economy, and it only took us 12 years to do it. Nobody likes a Negative Nancy, especially when it comes to the amount of money we have. But, for the last 12 years, Negative Nancies have run national and, at times, even global economies. Well, not anymore. Yesterday, the Bank of Japan (BOJ) finally raised the countryâs benchmark interest rate for the first time since 2007. And in doing so, theyâve ended the worldwide experiment of negative interest rates. Letâs get into it. What Happened? On Tuesday, policymakers at the BOJ raised the nationâs benchmark interest rate for short-term loans out of negative territory and into the range of 0.0%-0.1%. [Source]() Money costs money in Japan once again. The 17-year experiment brought a mix of results, but the only commonality among them now is their lack of clarity. Quick explanation: Negative rates mean exactly what youâre thinkingâyou would deposit money and then pay for the absolute privilege of letting a nice, sweet, innocent bank hold onto your own money for you. $100 at a -1% rate leaves you $99 next year. You would literally be âmakingâ money by storing cash under your mattress. Thatâs like if a bartender paid you to come and run them dry, although Iâm sure every bartender in the world would pay you apes to leave after a few drinks. [Source]( At peak in December 2020, the world had more than $18.3tn in total negative yielding debtâroughly the value of Chinaâs entire estimated 2024 GDP. So, the natural question becomesâwhy the hell would anyone sign up for this? As always, weâre glad you asked. What Happened? Interest rates provide central banks a blunt tool to tweak liquidity, thus tweaking loan volume, thus tweaking economic activity, and thus tweaking growth, inflation, and employment. When rates get taken to the woodshed, central banks are lowering the cost of money in order to increase liquidity and (hopefully) in everything else listed above too. Following the GFC, borrowers, and lenders trusted each other about as much as my dog trusts that the vacuum isnât going to kill him. So, to compensate for that lack of trust, central banks lowered rates to the floor to revive economic activity following the crash. Now, the big question isâdid it work? [Source]() Kind of. As we can see in the above chart of Japanâs annual GDP growth rates, not much changed following the advent of negative rates. But, looking a little deeper into the data, we can start to see that they did have some effect. [Source]() The biggest impact negative rates had in Japan can be seen in the value of the yen. Relative to the dollar, the yen fell almost universally from 2015 until early 2021. This allowed Japanese exports to grow while the domestic economy changed little. That is, until the reopening. When Japanâs economy started getting back on its feet in the aftermath of the pandemic, workers finally started to see material raises in pay for the first time since the 1990s. [Source](=) So, economists largely attribute most of the return to growth seen in Japan to a post-pandemic recovery and increase in exports triggered by the war in Ukraine in addition to falling yen values. So, whatâs the verdict? Negative rates probably helped, but interest rate cuts and the impacts they have can only go so far. The Takeaway? Taking a step back, we can see that the long, historic path of interest rates is headed straight for the floor. [Source](=) Rates fall as growth slows, trust increases, and demographics age. This asymptotic process finally hit its limit following the GFC, so despite this being the first foray into paying other people to hold your money, it doesnât buck the trend of history. While rates likely wonât move back to negative territory, barring unforeseen shocks to national or global growth, economists expect central bankers to keep this move in their back pocket for the most extreme environments. Negative rates are the underhanded free throw of macroeconomics. They look funny, nobody feels good about it, but for some things, they undeniably work. What's Ripe 𤩠Fusion Pharmaceuticals (FUSN) ð99.1% - First, they killed C-19, and now biotech and pharma firms are setting their sights on a way bigger d*ckhead disease: cancer.
- And yesterday, reports hit that AstraZeneca was stepping up its cancer-killing game with the $4bn acquisition of Fusion Pharma.
- The deal is set at $21/sh with an additional $3/sh contingency on certain regulatory milestones. Weâll see what walking Lina Khan has to say about this one. Nordstrom (JWN) ð9.4% - The best outcome for many startups is to go public. And the best outcome for many public firms is to realize their mistake and go back to private.
- And Nordstrom is the valedictorian of the week for that lesson. The founding family is working with Morgan Stanley and Centerview to test the waters.
- This is round 2 of a similar attempt made in 2018. Without adequate capital to buy out the remainder of shares, PE firms will make the call soon. What's Rotten 𤮠Super Micro Computer (SMCI) ð9.0% - Super Micro went from captain of the football team to the kid that sh*t his pants on the school field trip. But sh*tting yourself only builds character in hindsight.
- And this week, Super Micro isnât just building character, but capital. Cashing in on the stock's >2,000% 2yr rise, the chip maker is raising $2bn.
- Depending on the sale price of the 2 million shares, that amount could vary, but the dilution still isnât ideal. But, shares are up so much execs could care less. Digital Asset Stocks (MSTR) ð5.7% - Well, if you listened to the âhave fun staying poorâ advice of BTC bulls lately, you, in fact, will be staying poor. But sadly, it wonât be fun.
- BTC has sunk more than 7.2% in the past 7 days, shedding over $10k from its recent all-time high. As I write this, the asset sits at ~$62.69k.
- Digital asset stocks trade alongside BTC price action, leading to a fall across the board for names like MicroStrategy, Coinbase (COIN, -4.0%), and others. = Thought Banana ð¤ NAR Lowers The Bar When you play tug-of-war, generally the team thatâs stronger and/or using better techniques will win. But what happens when the two sides team up against the rope? Apparently, a $418mn settlement. At least, thatâs what happened in the latest nationwide tug-of-war game when home buyers and sellers teamed up against real estate agents. Getting Real (Estate) Late last week, the National Association of Realtors (NAR) agreed to settle a class-action lawsuit alleging the industry group conspired to artificially inflate agent commissions with a $418mn check. = [Source](=) Now, we can add commission competition to the list of things that are so BACK in 2024. We talk a lot about how home buyers in the U.S. are getting screwed by high costs and low new construction. But, in this case, home sellers were the ones in trouble. In the United States, unlike almost anywhere else in the world, upwards of 89% of real estate transactions involved an agent for both the buyer and the seller. Since the 1990s, the industry norm has been for the home seller to pay a 5%-6% commission of the sale price that gets split between both the buyerâs and the sellerâs agent. This is because NAR realtors in the U.S. follow a âcode of ethicsâ in which the sellerâs agent guarantees a certain amount to the buyerâs agent. = [Source]( Historically, home buyers have needed an agent themselves to access the multiple listing service (MLS), long the only large-scale source for nationwide residential listings. But now that Zillow, Redfin, and other services donât require an active real estate license to access (like the broker-owned MLS does), the need for a buyerâs agent has been reduced, leading to home sellers to call bullsh*t on paying them a commission too. New EState of Play Because sellers have typically set the fees for buyersâ agents, competition for commissions among buyersâ agents has been nonexistent. The biggest part of this settlement is the new change in industry rules that abandons the age-old practice of requiring home sale listings to include an upfront, guaranteed payment to the buyerâs agent. This allows home buyers to now have the freedom to 1) negotiate payments for themselves and/or 2) tell buyer agents to f*ck off. And, with only one agent to pay in the transaction now, home sellers will keep a greater percentage of their homeâs sale value. Itâs a win-win for both sides of the market but a big loss to the 1.6mn real estate agents in the United States looking to fleece you for artificially high rates. So, maybe call up your real estate agent friend and offer them a few bucks to help out with this monthâs cocaine purchases. Or, if they still want to work in finance, send âem on over to the [WSO Academy]()! ð The Big Question ð: How will these changes impact employment dynamics in real estate? Will this ruling really have an impact on commission rates? Could this cause any material change to home prices too? Banana Brain Teaser ð¡ Previous ð Over the past 7 weeks, the Smith family had weekly grocery bills of $74, $69, $64, $79, $64, $84, and $77. What was the Smithsâ average weekly grocery bill over the 7 week period? Answer: $73 Today ð 125% of 5 equals what? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says ð¤ âIt all comes down to interest rates. As an investor, all you're doing is putting up a lump-sum payment for a future cash flow.â â Ray Dalio How Would You Rate Today's Peel? ð[All the bananas](=) ð[Meh](=) ð©[Rotten AF](=) Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]() // [WSO ALPHA]() // [ACADEMY](=) // [COURSES]() // [LEGAL]() [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis")
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