Break The Pumps

What's pushing oil back up to its recent highs... Silver Banana goes to... [image]() Market Snapshot *Sigh!* Not this again. After a few glorious days of green (shoutout JPow), stocks have decided to fall once again, while oil has decided to rip back up. Treasuries had a hell of a day, so for maybe the first time since the 1980s, being a fixed income investor was actually cool. The Nasdaq ended the day down 1.32%, while the Dow was eerily close, losing 1.29%, and the S&P joined the party, posting losses of 1.23%. Considering business school? Don’t miss your chance to network with top business schools such as Harvard, Wharton, Columbia, UC Berkeley, Toronto Rotman & more! [Save your spot in The MBA Tour]() Let’s get into it. [image] Banana Bits - As if they need it, banker bonuses [skyrocketed](=)another 20% in 2021. - If you've been considering business school, [take this as a sign](=) from the universe. - It’s 2002 again: [NATO](=) sending defenses to Ukraine to fight Russian WMDs - NFT startup Yuga Labs, makers of Bored Ape Yacht Club, valued at [$4bn]( by A16z. - The Big Switcharoo: Koch invests its oil-made billions into a slew of [battery startups](). - F*ck me sideways. Oil is back above[$120/bbl](. - The NFL is one step closer to becoming a league of [32 shitcoins](=). - Theranos-lovebirds [trials continue](=), now turning to former President Sunny Balwani [image] [image] Macro Monkey Says Living is Expensive — Have truer words ever been spoken? I don’t think so, and judging by yesterday’s new home sales report, definitely not. Let’s take a look. Ahh, economists. Another big swing and a miss. Like Scotty Smalls in The Sandlot, they just can’t seem to make contact. Predictions were for an annualized rate of new home sales in February to reach 805,000. Instead, the number dropped to 772,000. For context, that’s a 2% drop from 2021 and 6% drop from January. Better luck next time. In fact, that ‘better luck next time’ is meant for both economists and the economy. While it’s great for bullying fellow econ nerds, falling new home sales is not great for the economic pie. [image] Housing drives a huge portion of the economy, largely through things like the velocity of money, construction, and credit. A slowdown in home sales can sometimes be looked at as a proxy for a further overall economic slowdown, especially now as the average consumer is wealthier than they ever have been before. Consumers are rich, yet homes sales slowed, all while inventory has done nothing but rise, even setting a fresh record from highs set in 2008. So, demand is falling, and supply is increasing. Prices haven’t changed much in the past few months, so what could possibly be driving such a weird dynamic? While we can’t be too sure, let me introduce you to the elephant in the room. We’ve talked a lot about rates lately, and they’re coming back to bite homebuyers. Mortgage rates have ballooned to back above 4% for the first time in years. It’s no doubt that low borrowing costs played a role in the WFH-induced buying spree seen during the pandemic, so it wouldn’t be too surprising to see higher rates scare off a few discouraged homebuyers. Long story short, to say housing is weird right now is an understatement. Supply is up, demand is down, prices are (somewhat) stable, and rates are mooning. Want to know what happens next? Your guess is as good as mine. Network with Harvard, Wharton, Columbia & more top business schools! [image]() Join Harvard, Wharton, Columbia, UC Berkeley, Toronto Rotman & more top business schools this March at The MBA Tour. This is your chance to attend interactive presentations to compare various programs, improve your application, get exclusive GMAT tips from the exam creators & more! [Register for The MBA Tour here](=) What's Ripe GameStop ($GME) — GameStop was following NASA’s playbook yesterday because apes, we’re going back to the moon. Well, maybe. GameStop Chairman Ryan Cohen certainly thinks so. The professional $GME and $BBBY whale is back to moving markets, buying up another 100,000 shares of his company’s stock, pushing it up 14.5% yesterday. And with that skyrocketing share price comes skyrocketing memes. $GME’s social media volume blew up like January 2021 again, so we might be looking at Meme Mania round 2. Good luck! [image] Oil (Brent, WTI) — Are you beginning to see the trend here? Oil rises, stocks fall, and Putin carves out another chunk of Ukraine. Fun stuff, huh? No, it’s not. The conflict between Russia and Ukraine is getting more and more harebrained by the day, with “experts” on the topic theorizing that we’re approaching a stalemate (NOT a ceasefire). Meanwhile, Russia’s taunts of chemical and radiological warfare certainly don’t signal that the war is anywhere close to over. As a result, the consensus view on future oil supply remains constrained, and thus, higher oil and pump prices. What's Rotten Cresco Labs ($CRLBF) — Like you and your friends before going to see The Batman, Cresco just bought a whole lot of weed. Unlike you and your friends, however, Cresco actually has the money to do it. Early yesterday morning, Cresco Labs and Columbia Care announced the acquisition, valued at $2.1bn, with the goal of creating one of the largest and most dominant MSOs in the U.S. Still, shares dove 7.5% on the day. Terms indicate that Columbia shareholders will receive roughly 0.56 shares of Cresco for each share of Columbia they owned before, representing a 16% premium and retaining 35% of the combined company. So what do you think, will they smoke the competition? (Bah dum tss!) Adobe ($ADBE) — Adobe sure is glad they invented Photoshop because today, they’re definitely gonna want to edit their recent price chart. $ADBE tanked 9.4% yesterday despite a solid earnings report, proving once again that Mr. Market has the attention span of an 11-year old with ADHD halfway through math class. Analysts were looking for $3.34/sh on $4.24bn in sales and instead were handed $4.37/sh on $4.26bn. However, Adobe teased a $75mn revenue write-off going forward, thanks largely to Putin and sparking yesterday’s rout. Thought Banana Pump the Brakes or Break the Pumps? — If you’ve been anywhere near a gas station lately, something tells me you’re on team ‘Break the Pumps.’ Yeah, me too. And we have a damn good reason for it. Just a few weeks ago, average gasoline prices across the U.S. topped their all-time record, and if you run some technical analysis on Mobil’s ticker tape, I’m sure it’s pointing towards the sky. So, what is going on? Didn’t Joey B say prices were gonna fall? Yes, he did, and no, they didn’t. But it’s not like the President has a “Gas Prices Down” button like a lot of us seem to think. Let’s take a look at what’s actually making your drive more expensive and what’s not. For starters, even prior to the war in Ukraine, oil prices were largely still in rebound mode, coming off of pandemic lows. Now that people are allowed to move around again (W), Putin has decided it’s the perfect time to invade Ukraine (L), leading to a supply crunch in an already increasing-demand environment. Putting these two factors together has been little different than dropping Mentos in your bottle of Coke. But, a few factors less spoken of are helping out too. Let me introduce you to my friend inflation. If you haven’t heard, I’m glad you climbed out of your cave, but inflation is at the highest level since the early 1980s. After factoring in this dramatic increase across base price levels, oil prices are even higher from a historical lens; just look at the WSJ chart below. [image] Buuuttt... there’s another factor to consider: technology. Technology and its development in the auto space don’t get enough respect, outside of EVs, of course. But having driven a 1999 F150 for the past 4 years, I can confirm the advancements are ridiculous. Most notably, perhaps, is fuel mileage. Compared to the 1980s, cars today are able to travel about 25% farther with the same amount of gas. So, by historical comparison, our cost for gas per gallon per mile is actually not all that insane. Too bad that doesn’t help at all, huh? Sorry, but we have no solution for the heart-pounding fear you feel every day driving by the Shell station. Maybe find a therapist. Or a lottery ticket. Wise Investor Says "I will forever believe that buying a home is a great investment. Why? Because you can't live in a stock certificate. You can't live in a mutual fund." — Oprah Winfrey Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? Sign up for the WSO Daily Peel [here](. [ADVERTISE]() // [WSO ALPHA]() // [COURSES](=) // [LEGAL](=) Don't want The Daily Peel? [Unsubscribe here](. Click to [Unsubscribe]( from ALL WSO content IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353