Kim K Knows Best

[The Daily Peel... ]() May 8, 2023 | Peel #456 Silver banana goes to... [SRS Acquiom. ](=) Market Snapshot Happy Monday, apes. Hope you had a great weekend. We know markets did for sure, closing Friday on a high note as traders were ready to hit the bar in force. We saw U.S. equities steamroll the haters and losers on the day, gaining seemingly across the board as strong macro data lifted shares and lowered fears for a recession. Every single S&P sector was higher, and the day’s trade saw a push to the key resistance level of around 4,150 but wasn’t able to break through. Meanwhile, treasury yields saw gains on the day as investors sold out of these assets in favor of more risk on trades for the day. 2-year notes sit right around 3.9%, while the 10-year saw less of a selloff and rose to 3.45%. The dollar had a wild day of trading but ultimately settled basically unchanged by the DXY. Let’s get into it. To Win the M&A Game, It Helps to Know the Terrain [image](=) Ah, the annual SRS Acquiom M&A Deal Terms Study. It’s back again already? You bet it is. And, as always, it’s bubbling over with the deal data and insights you need to be truly in the know. You won’t get this intel from industry news sites, regulatory filings, or any other sources, by the way. Nope, only the SRS Acquiom Study provides analysis of more than 2,100 private-target acquisitions valued at more than $460 billion—most of which aren’t required to be publicly reported. Why should you care? Think: better negotiating and smoother due diligence. Think: avoiding potential transaction issues. Think: competitive advantage for you and your clients, and all the good stuff that comes with it. By the way, the Study is free. You have no excuse not to download it right now. [Click here to get the good stuff >>]( Banana Bits - Treasury Secretary JYell continues to sound the alarm, pound the table, and make noise in any way she can to bring attention to the [debt ceiling crisis]( - The enemy of my enemy is my friend, said the West in reference to leaning on China for help in [bringing Moscow to the negotiating table]( - King Charles III of England was officially [crowned as King,]( as the British apparently still live in the 16th century - No new shows for you, as the writer’s strike [starts to hurt]( Macro Monkey Says Jobs Day Highly respected, distinguished American lawyer and private equity executive Kim Kardashian once said, “Get your f*cking *ss up and work.” Inspirational. And inspirational it was, particularly last month, according to the freshly released April jobs report. Despite what the rumors say and the best efforts of a hellbent Federal Reserve, Americans are working. Well, kinda. For those in the workforce, things are swell. But the number of Americans outside the workforce remains elevated – very disappointing news to our hero of the American dream, Kim K. Total non-farm payrolls across the U.S. grew by 253,000 in April, exceeding consensus guesstimates of 180,000 by 1.4x. Unemployment sits at a rate of 3.4%, holding even with a record set during the first year of the Nixon administration in 1969 and well below the 3.6% expected rate. In short, this is not what Powell expected nor probably wanted. The Fed’s war on inflation has lasered in on a tight labor market as the primary enemy combatant, and this report shows a strong enemy remains. But investors were still hyped as macro fears dominating markets have shifted recently more in fear of a looming U.S. recession than maintained elevated inflation. It’s almost as if the market is confident inflation will fade away while the Fed has been far less confident in itself. One of the primary sticking points in the report was the 0.5% monthly wage growth observed in April, amounting to 4.4% for the year. Despite still growing by less than inflation, this was also below expectations for wage growth. [image] Broader measures of employment that include discouraged workers ticked lower as well. A measure of those “marginally attached” to the labor force, those who have looked for a job in the past year but not in the past month, grew to 1.5mn. Participation in Kim K and JPow’s labor force remains well below pre-pandemic levels, however, remaining unchanged in April at 62.6%, while the employment-to-population ratio was unchanged as well at 60.4%. Somehow, someway, amid the mini-panic running through the U.S. banking system, jobs in finance increased along with other professional service roles. On that note, it was also good to see we survived another month without ChatGPT stealing everyone’s jobs. Fingers crossed for May. For now, the market took the report as fine and dandy as it provides evidence suggesting a lower probability of a general economic slowdown this year. Rate hike odds in June were a little changed in response, but we’ll get the May report prior to the next FOMC meeting anyway, and that’s the one that’ll matter. Enjoy the optimistic vibes for now. If the last year has taught us anything, it’s that moments like this, when our portfolios aren’t bringing us to the brink of financial collapse, are what we really like more. Now get out there and take on some more margin, y’know, for the economy. What's Ripe Carvana ($CVNA) ↑ 24.44% ↑ - Some stocks are like cockroaches; no matter what happens, they just won’t die. After its >98% decline from its peak, Carvana just won’t go away. - It honestly might be the greatest underdog story since Michael Oher in The Blind Side. After issuing upbeat guidance for the second quarter, including expectations for a positive adjusted profit, shares took off. - But don’t get too excited yet. Much of the rise comes from short covering as this thing still remains one of the most shorted tickers around (see above, underdog story). Coinbase ($COIN) ↑ 18.33% ↑ - Being subject to the whims of someone else is never smart, especially when that someone else is the U.S. government. Unfortunately for Coinbase and its shareholders, that’s the exact situation they face. - Back in March, the SEC told Coinbase they were probably going to sue them at some point through a Wells notice issued to the exchange. Despite begging for regulations and seemingly trying their best to be the opposite of FTX, there’s been no luck. - Still, shares managed to surge on a stronger-than-expected earnings report showing that the firm is still setting money on fire but moved from a $2.46/sh loss in Q4’22 to just $0.34/sh in Q1. Bitcoin’s sneaky 2023 gain has been a big help, but Coinbase also said they cut costs by almost a quarter over the past few months, which I guess might help a little too. - None of this is going to matter if the company gets slapped with the full force of Gary Gensler’s Napoleon complex. Good luck. What's Rotten Lyft ($LYFT) ↓ 19.27% ↓ - No amount of a revenue beat is going to be able to lyft Lyft shares (lmao) out of this dumpster fire. - Shares tanked to close last week as the firm dropped its first report under fresh, new CEO David Risher. Spoiler alert: it did not go how he would’ve liked. A wider-than-anticipated loss and unexpectedly pessimistic outlook dominated the conversation despite the $1bn top line beat. - With shares down almost 90% all-time and over 50% in the past year, it’s clear the hype around the rideshare market has disappeared and arguably become commoditized for most users. Volatility Index ($VIX) ↓ 14.44% ↓ - And the above pretty much sums it up for every stock that was down on Friday. Mr. Market must’ve woken up and ripped molly or something because Friday’s trade was about as green as Augusta National. - But, volatility fell too, as measured by the VIX and MOVE (-7.46%) indexes tracking stock and bond volatility, respectively, through options trading. Both serve as a measure of expected volatility, and if Friday’s drastic move for each is any hint, it seems traders could be narrowing their expectations for short-term activity. - But, the VIX especially has come under criticism as not really being a great measure of anything due to its lack of any actual predictive power and seemingly random movements, as pointed out by people way smarter than me, like AQR founder Cliff Asness. - Still, the drops on Friday point to a mellow market, even if it was only for the day. Maybe the stronger-than-expected earnings szn is putting a smile on traders’ faces, or maybe it doesn’t matter at all, and the last 45 seconds you spent reading this was a total waste of time. Thought Banana Geckos Are Green Once a year, a financial event arguably bigger than the Super Bowl and World Cup combined goes down in the 487,000-person town of Omaha, Nebraska. One Omaha resident, in particular, makes this happen and brings up the average net worth of the town quite a bit. We’re speaking, of course, about the annual Berkshire Hathaway shareholder’s meeting, co-starring everyone’s favorite elderly billionaires, Warren Buffett and Charlie Munger. In addition to seeing the firm’s latest numbers, which get released over the weekend, we get several hours of questioning and pontificating from the slow-talking yet hysterical pair. Here’s a [link to the full thing.](=) Maybe tune in here for this week’s movie night? As Berkshire is such a spanning conglomerate, it’s kind of like a microcosmic pulse check on the U.S. economy. This quarter, none other than the Geico Gecko heralded Berkshire to an earnings beat as underwriting revenues surged thanks to the firm’s stemming of a market share bleed to rival Progressive. The company’s railroad and energy units both saw earnings decline year over year as market prices for things like oil and transportation have relaxed in recent months. The company also now holds a whopping $130bn on the balance sheet that it’s, presumably, ready to deploy given Buffett’s historical eagerness to go hard in the paint when a rare opportunity he likes comes his way. Speaking of which, one of the Oracle’s favorites of the past year has been Occidental Petroleum, which Berkshire began buying in February ‘22 following Russia’s invasion of Ukraine. Now, the holding company holds almost 25% of Oxy, but Buffett made clear at this weekend’s meeting that Berkshire will not be fully taking over the company. Outside of Berkshire’s business, Buffett and Munger like to opine on general macro goings on. For one, both proved confident in the U.S. Dollar’s ability to remain the global reserve currency as they say there is not really any alternative in response to this stud of a 13-year-old’s [question.]() As the radical 99-year-old he is, Charlie Munger came out and dished out a diss to a love of inventors and advisers everywhere, saying that diversification can sometimes act as “di-worse-ificiation.” Basically, the idea is that holders of common stock should only invest in companies that are actually worth it and should not diversify into worse ideas just for diversification’s sake. It was a wild one, as always, and there were, of course, plenty of jokes and innuendos, mostly of a sexual nature, that everyone loves to hear from their grandfather… Another 10/10 from Buffett and Munger, and we can’t wait to see them again next year. The big question: What will Berkshire’s next big investment be, with all that extra $130bn sitting on the sidelines? What kind of questions can we expect at Berkshire’s 2024 annual meeting? Banana Brain Teaser Friday — Some cogs are tigs. All tigs are bons. Some bons are pabs. Some pabs are tigs. Therefore, cogs are definitely pabs. True or False? False. Some cogs may be pabs, but not all of them. Today — It’s 50 bananas off the [IB Interview Course]() for the first 3 correct respondents. LFG! What do you throw out when you want to use it, but take in when you don't want to use it? Shoot us your guesses at [vyomesh@wallstreetoasis.com](mailto:vyomesh@wallstreetoasis.com?subject=Banana%20Brain%20Teaser) with the subject line “Banana Brain Teaser” or simply [click here to reply!](mailto:vyomesh@wallstreetoasis.com?subject=Banana%20Brain%20Teaser) Wise Investor Says “The three most important words in investing are margin of safety.” — Warren Buffett How would you rate today’s Peel? [All the bananas]() [Decent]() [Rotten AF]() 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