A Soft...ish Landing?

A dysfunctional government, and playing defense... Silver Banana goes to... [M&A Science. ]() Market Snapshot After a rip-roaring afternoon on Wednesday, Thursday morning’s futures pointed towards a pullback, and a pullback is what we got. Yesterday was a bloodbath. Markets closed near session lows, giving back the post-JPow rally over the course of the day. The Nasdaq, as you can imagine, was under pressure all day, closing down 4.99%, the Dow was down 3.12%, and the S&P retreated by more than 153 handles, finishing the day down 3.56%. It was not a good day to be a bull. For today’s Banana Brain Teaser, we will be shipping our winner some swag in the form of a bada$$ WSO t-shirt that your friends will immediately envy. The long winter is officially behind us, and it’s time for some spring cleaning of your M&A habits!! Join us on May 19 for the M&A Science Spring Summit. We will be covering go-to-market strategy planning, deal sourcing, and process improvement. [Register for Free Today]() Let’s get into it. Banana Bits - [Hyperinflation]() in Turkey? You don’t say - Deal sourcing skills a little rusty? [Dust them off]() later this month - Watching Elon and Bill Gates [feud](=) is like seeing a cute old couple fight - Russia is still pummeling Ukraine, and the costs to clean up the damage [won’t be cheap](=) - Trade alert: WSO Alpha’s lead trader has [trimmed his Costco position](), making some room in the portfolio to BTFD Banana Brain Teaser The answer to yesterday’s Banana Brain Teaser was “Ryan.” He’s the fourth child. Today, the first Ape to respond with the right answer to this banana brain teaser will get a baller WSO t-shirt. Dance, monkeys, dance! A bishop slides past a castle and lands on a man. The man disappears. What’s happening? Macro Monkey Says A “Softish Landing” — Earlier this week, our Fed Chief and Savior Daddy JPow announced a 50 bps rate hike, the largest in more than 20 years. The market was euphoric. We ate that $hit up because JPow’s sentiment signaled to us that the Fed was serious about getting it done. To say that the government of the United States is somewhat dysfunctional is an absolute understatement. Have you tried to mail a package at the Post Office? I rest my case. Compared to industry, the government is actually more or less bad at everything it does. It just so happens that government intervention, a traditionally agreed-upon economic inefficiency, is the only way to complete some of these functions. Think about it; the US military has a monopoly on violence in defense of the Constitution and the American way of life. Could Google and Apple and some other contractual relationship amongst the Fortune 500 do it better? Probably not. That’s just one example. Think about paving an interstate system or creating a system to provide retirement benefits to the entirety of the population. The complexity and scope of these efforts are massive. No one in their right mind would volunteer to run them, not even for a pretty penny. If you haven’t had the pleasure of being audited by correspondence, I’ll let you in on a little secret: it’s like you know more about the tax code than whomst intern on the other side of the certified mail asking you for clarification on your taxes. After all, they work for the government. The government is inherently inefficient. Period. Probably my favorite and the most hilarious example of this in recent memory is the distribution of C-19 stimmy and aid money in the last two years. Something like a quarter to a third of all the trillions of dollars was siphoned away by fraudsters taking advantage of the government’s incompetence. So how can we possibly hope for, in the words of Daddy JPow, a “softish” landing? Well, no crystal balls or financial advice over here. But I will say this: I followed him when the soft brrrrrrrr of the money printer made us all fat and happy on yolo’d up high-growth gains, so I’m prepared to follow him through the gates of Hell. [In JPow, we trust.]( M&A Science Virtual Spring Summit [image]() The cold of the long winter is officially behind us, & it’s time to do some spring cleaning on your M&A habits. M&A Science is here to help you reflect on your techniques and workflows to get off to a fresh start and help blossom some novel ideas. Join us on May 19 for our M&A Science Spring Summit! During the event, we will be covering go-to-market strategy planning, deal sourcing, process improvement, and more. [Register for Free Today]() What's Ripe Booking Holdings ($BKNG) — While their post-earnings pop isn’t really anything to write home about, when the rest of the Nasdaq is down 5%, closing in the green is a nice way to finish the day. Shares of the travel booking conglomerate closed up 3.26%. Demand for travel is back, and their major EPS beat showed the Street that they’re doing something right. Epam Systems ($EPAM) — The digital transformation and platform engineering company closed up 10.82% after announcing its fantastic earnings yesterday. Epam beat its revenue consensus estimate by 10% and smashed EPS by more than 40%. This beat marks four consecutive quarterly beats for the digital consulting company. After being down 50% year-to-date, their stock can hopefully get back on track. What's Rotten WSO Alpha — Just like everyone else, WSO Alpha’s portfolio did not start 2022 on the right foot. Re-tabulating when he can retire after getting his a$$ kicked by the reverse money printer, our lead trader admitted that he was down 11% for the month of April. In this market, being down 11% isn’t bad… if you’re Cathie Wood. Have you ever had a Craigslist-worthy missed connection? Well, that’s how our trading a$$hat feels about missing the boat on the rotation from growth to value earlier this year to provide a little bit of downside protection. Don’t worry, apes. All is not lost. After being down like $300k this year (sucks to suck), WSO Alpha still has averaged a 17% year-over-year return since its inception more than a decade ago — stronger returns than the S&P, if I can toot our own horn. If you get a minute and want to learn something, feel free to [check it out](). E-Commerce ($SHOP, $ETSY) — Well, more growth names bite the dust. $SHOP and $ETSY were both down over 10% pre-market. Even though revenues met expectations, Shopify couldn’t string together the type of EPS number the Street was looking for. Shopify closed lower yesterday, down 14.91%. Etsy had what I thought was a decent quarter. Shares closed down 16.83% on its less optimistic guidance. All in all, yesterday was a rough day for e-commerce. Thought Banana Wait, Stonks Don’t Only Go Up? — A 1000-point slide in the Dow from a psychological perspective seems like an absolute shelling for the major index until you realize that it’s an arbitrary, price-weighted index of around 30 companies. On the other hand, when you hear that the Nasdaq and the S&P pissed away 5% and 3%, respectively, in a day, you should be more concerned. This backsliding seems to be happening a lot lately. Finding some alpha during a bear market can be tough. One way to generate some yield in a downward trending environment is through covered calls. If you’re not big into options trading, a covered call is a very basic options strategy in which the investor owns shares of the underlying and sells an out-of-the-money call option against that position. If the stock remains below the strike price of the call option contract, the contract expires worthless, and the investor keeps the premium. However, if the stock moves above the strike price, the investor has a choice in front of him: close the short call contract through a transaction called “buy to close” or allow the underlying shares to be “called away,” aka bought out from under him at the strike price of the options contract. Think of it as a way to play a little defense, especially as we have been seeing a lot of red on the big boards lately. Another pro to options trading in a downturn is that bear markets are usually tied to increased volatility. Higher volatility means that options contracts cost a little bit more. Yesterday we saw the VIX climb above 30 again; I would say that this increased volatility is priced into options contracts of late, so a covered call strategy might result in increased yield if you’re successful. This is, of course, a simplification, but it’s worth thinking about. While this isn’t financial advice, I will say that stock options are complex financial instruments not to be taken lightly. Don’t ask us for help or advice because we can’t give it. If you’re going to try anything new (in life, not just in the markets), you should probably do a little homework before exposing yourself to some new set of risks. Wise Investor Says “Trading doesn’t just reveal your character, it also builds it if you stay in the game long enough.” — Yvan Byeajee 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