✈️ What Are Your Vacation Plans?

Do you have travel plans? Apparently, every 1 in 5 Americans do. April 19, 2024 | Peel #692 Silver Banana goes to... [FinanceBuzz. ](20Street%20Oasis///) In this issue of the Peel: - 🤔 It doesn’t make sense, but… higher rates equal stronger economy…? - 🤖 Seems like the chip industry is priced to perfection. TSMC is down. - 🛩 Do you have travel plans? Apparently, every 1 in 5 Americans do. Market Snapshot 📸 = Banana Bits 🍌 - The streaming giant reported earnings, immediately drawing a mixed reaction yet [falling almost 5% after-hours]( - Rising treasury yields are vaulting the dollar to outperformance [against other currencies](=) - Home remodeling registered an annual decline [for the first time since]() the industry blew up back in ‘08 - Trump Media is literally instructing users on how to [prevent their shares from getting shorted](=) Hands Down The Laziest Ways People Are Making Extra Cash 20Street%20Oasis/// Feeling lazy but still want to earn some extra cash? We've done our research and found some unusual (but legit) ways that people can stack their bank accounts without having to leave their house. Some will help you save. Others will help you pad your wallet right away. If your bank account could use a boost but you don't want to start a second job, [then these could be right for you.](20Street%20Oasis///) Macro Monkey Says 🐒 Quantum Economics We’ve finally figured it out. The age-old (3ish years) question of “How is the economy doing so well?” (not in a depression) has finally found a reasonable answer (random theory) Interest rate hikes might actually be stimulating the economy more than they are slowing it. Perhaps the biggest macro takeaway from the pandemic is that everything we thought we knew about shock response was completely backward. Maybe Socrates was onto something in saying that true wisdom is realizing we know nothing. Perchance. The Numbers Treasury yields are back on their bullsh*t, with the 2-year yield recently approaching >5% territory once again. Since January 11th, 2-year treasury yields have spiked over 20%. To anyone with a WSJ account before 2020, that kind of volatility would mean either there’s yet another war going on or the U.S. has cured cancer, and it’s all growth from here on out. Back in December, the Fed’s newly adopted dovish tone got the “smart money” bond market thinking that maybe the Fed would actually do what they said they would and loosen monetary policy. But since then, all the data we’ve gotten has moved yields in opposite directions. 2-year treasuries tend to be the key barometer of where bond markets—a.k.a. the “smart money”—think rates are heading. Strong industrial production, retail spending, labor markets, and higher-than-expect inflation are the key culprits here. Clearly, the macroeconomy is firing on all cylinders, suggesting that cutting rates would only further fuel inflation. [Source]( As we can see above, steroid-driven data has led to not only a rise in the treasury yield curve but also a steepening across maturities for the last year. We talked a few weeks ago about the bear steepening seen forming in the treasury curve. As we explained then, bearish outcomes tend to follow when longer-dated maturities rise significantly faster than those on the shorter end. Now, at the time, that was the prevailing narrative in treasury markets and was supported by yield curve data. Now, the glass is a little foggier, with shorter-dated yields catching up in response to strong macro data and… JPow’s absolute inability to keep his mouth shut, as we discussed just yesterday. Comments from his old *ss along with other Fed officials have recently started to suggest the next move for rates might be higher rather than lower. The thing is—at least part of the strong economic data mentioned above (and the travel boom described below) could be attributed directly to those higher rates. Ritholtz Wealth Management CEO and CNBC talking head Josh Brown has for the past few weeks been espousing a theory suggesting that rates have risen so much that the interest earned from these holdings is giving Americans even more income. This is by definition true, but the fact that the rate spike may have carried a greater magnitude in interest income received by consumers than paid is something hardly anyone was considering. And, looking at the above data, we can certainly see that’s the case when it comes to APYs paid on deposits at the 4 largest consumer banks in the U.S. So, the very mechanism that was intended on slowing economic growth may have actually sped up that growth even more. The Takeaway? A global pandemic and a $6tn bazooka sure can do a lot to an economy. In physics, the laws of the universe are absolute… until we get down to the quantum level. That’s where things start to get so weird that even people like Einstein, Hawking, and Sid the Science Kid haven’t been able to link quantum properties to these laws. And in the current macro environment, we may have reached a point of quantum economics. Higher rates could be stimulatory in an environment where inflation is running rampant, yet all other economic conditions remain strong. This might make negative sense, but I’m all for anything that gets us apes more money. Capitalism FTW, as usual. What's Ripe 🤩 Snap Inc (SNAP) 📈6.7% - The social-media-for-nudes app was poppin’ on Thursday as the potential banning of the social-media-spyware app is speeding up. - This is on top of Wednesday’s gains driven by U.S. HoR Speaker Mike Johnson expressing a desire to expedite the voting process on the TikTok “Ban” bill. - As a reminder, this wouldn’t “ban” TikTok, so not sure why social stocks gained. Plus, does anyone even advertise on Snapchat anyway? Alaska Air Group (ALK) 📈4.0% - From the airline that brought you skydiving doors, Alaska Air posted strong quarterly numbers and hyped-up guidance for the year. - The nation’s 5th largest airline reported a narrower loss than expected at $0.92/sh vs $1.09/sh loss expected. Sales beat by about 2.5% as well. - The company increased its cash balance by >210%, while debt only grew 4%. Upbeat EPS guidance of $3.25/sh-$5.25/sh for FY’24 was the biggest driver. What's Rotten 🤮 Taiwan Semiconductor Manufacturing Co. (TSMC) 📉4.9% - Good isn’t good enough in the chip sector this earnings szn, as TSMC and ASML on Wednesday learned the hard way. - The world’s largest chip maker beat on sales and EPS. And, investors got more hyped with execs saying AI-based sales should make up ~10% of sales in 2024. - But, shares sank as execs gave an outlook on the chip sector that was slightly less ecstatic than taking molly, sending shares lower. Blackstone (BX) 📉2.3% - It’s good to be in private equity—at least if you’re an investor, that is. But, despite strong numbers, PE giant Blackstone sold off on Thursday. - The firm’s infrastructure portfolio benefited the most, rising 4.8% in Q1 and helping to drive the nearly 10x growth in profits to $847.4mn. - But to Wall Street, 10xing profits is like doing CrossFit—literally, no one cares nor wants to hear about it. But, shares tanked as distributable earnings are facing a “hibernation” period. = Thought Banana 🤔 Catch Flights, Not There’s a reason your Instagram feed is extra full of photos of your friends looking less ugly and miserable than usual. That’s because they’re most likely in another country. Or, at the very least, they went to one not too long ago. Or maybe they’re just planning on going on one of those trips soon. According to data from the Conference Board, more than 1 in 5 Americans plan to take a vacation outside the country in the next 6 months—the travel boom rolls on. What Happened? = [Source]( Since the pandemic has finally f*cked off, Americans are valuing their travel and leisure time more and more. Many expected the travel boom to play out as a limited phenomenon, increasing flight and Airbnb prices in the Summer and Fall of 2022, and then going back to normal. However, demand for travel has only increased since then. According to actual smart people like our boy Torsten S[løk]() at Apollo, gains in interest rates and equity markets are fueling further demand for high-end leisure in our discretionary spending. The extra cash has led to TSA lines blowing up for much longer than anticipated. If we were to chart daily traffic through the TSA line in the last 5 years, it’d look a little something like this: By late 2022, we had returned to pre-pandemic levels of travel demand. At the time, most travel watchers expected demand to fall because of 1) getting delayed trips out of their system and 2) expected economic contraction. But, we’ve pretty much seen the opposite occur. Torsten and others have recently begun to make the argument that high rates are actually stimulatory to certain—especially luxury—parts of the economy. The basic idea is that interest earned on fixed-income assets and high-yield savings deposits has risen to such a degree that passive income has exploded. This creates a wealth and income effect, making Americans feel richer. But, extending the travel boom to other sectors, S[løk]() goes on to say that “... rates will stay higher for longer as strong gains in employment and wealth continue to provide a tailwind to consumer services.” The Takeaway? This isn’t just limited to a travel boom. The shift in consumer demand towards more experience-based expenses, as opposed to simple goods and services, looks like the overarching trend that’s here to stay. This could partially explain why we’ve seen some weakness and heightened inflation in areas like clothing, as consumers are saving those dollars for experiential spending like travel. These are small changes in percentage terms, but across a $27tn economy with 340mn people, small percentages can make a big difference. So, whose got travel plans set for the year? According to the above data, at least 1 in 5 of you Americans should, so where’s everyone headed? 💭 The Big Question 💭: Is the travel “boom” more of a long-term trend than we expected? Could this hurt consumer spending if a higher percent of U.S. income is spent abroad? Banana Brain Teaser 💡 Previous 🗓 The price of gasoline at a service station increased from $1.65 per gallon last week to $1.82 per gallon this week. Sally paid $26.40 for gasoline last week at the station. How much more will Sally pay this week at the station for the same amount of gasoline? Answer: $2.72 Today 🕐 City X has a population 4 times as great as the population of City Y, which has a population twice as great as the population of City Z. What is the ratio of the population of City X to the population of City Z? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “Every once in a while you must go to cash, take a break, take a vacation. Don't try to play the market all the time. It can't be done, too tough on the emotions.” — Jesse Livermore How Would You Rate Today's Peel? 😁[All the bananas]() 😐[Meh]() 😩[Rotten AF](=) Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]( // [WSO ALPHA](=) // [ACADEMY](=) // [COURSES]( // [LEGAL]( [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353