Reddit's recent changes, involving charging certain third-party app developers for API access, have stirred controversy... [The Daily Peel... ]( June 21, 2023 | Peel #485 Silver banana goes to... [Brilliant. ]( In this issue of the Peel: - There's a hint of skepticism around the unexpectedly high U.S. housing starts, with some attributing it to regional phenomena.
- Builders FirstSource and Tesla performed well yesterday, with BLDR gaining on housing start trends and TSLA benefiting from a recent partnership with Rivian. On the other hand, Lemonade and Alibaba had a disappointing performance, with Lemonade's future profitability in question and Alibaba's leadership shake-up causing concern.
- Reddit's recent changes, involving charging certain third-party app developers for API access, have stirred controversy. Over 80% of the top 5,000 subreddits have gone into blackout in protest. Market Snapshot Happy Wednesday, apes. Weâd like to say it was a happy Tuesday, but after asking Mr. Market, Reddit moderators, and those people stuck in that submarine, youâd be hard-pressed to make that argument. Anyway, weâre still here, so letâs see how this 24hr period goes. For equity markets, theyâre not exactly coming into the day on a high note. After a few days of bottle poppinâ and no-stock-droppinâ, the tides have turned at the close of last and start of this week. What many are now calling the âworry rallyâ may have run its course, according to traders everywhere reducing their equity exposure given recent upswings. Bull markets are often said to âclimb a wall of worryâ right up until people start calling for a bubble, so take it as you will. Treasuries, on the other hand, saw a more moderate session. The 2- and the 10-year yields both fell, but barely. And in case you forgot, yes, in fact, they are still wildly inverted. Anyway. Letâs get into it. The Smartest Person in the Room [image]() From mastering the concepts behind AI to navigating a sea of data, [Brilliant](=) helps you stay one step ahead of the pack. They have thousands of bite-size, interactive lessons on everything from math and logic to data science and programming that make it easy to level up in just 15 minutes a day. Brilliant's highly-visual, first-principles approach makes even complex topics feel insanely understandable. Plus, hands-on problem solving keeps you engaged, so itâs easy to build a daily habit. Try Brilliant for zero bananas for a full 30 days. Plus, Daily Peel readers will get [a surprise when they click through.]() Banana Bits - Wall Street rotates [from JPow to JYell](, and itâs just what the treasury market ordered
- A bro-down between the leaders of the worldâs largest democracies is set to begin Thursday as [Big Daw Biden and Indiaâs own Big Dawg Modi](=) are set to meet
- Oh no. The $100bn man thatâs fueled the likes of WeWork, Zumeâs pizza-making robots, and even compared himself to literally [Jesus Christ]() is back in the game as [SoftBank sets its sights on AI](
- The [absolute nightmare scenario]() going on deep under the Atlantic right now is still raging. Prayers to those people involved and their families Macro Monkey Says Oprahâs Housing Starts Many of you have no doubt heard about the U.S. governmentâs [free lighthouse giveaway](, but just like that push along with moves like Oprah giving away cars to anyone with a pulse, the U.S. housing market may be headed in a similar direction. Well, the median sales price of an existing home in the U.S. is still approximately $388k away from $0, but still getting closer! Nevertheless, nothing drives down prices like supply. And in May, the U.S. housing supply, as measured by groundbreaking on new single-family homes, hit a 33-year high. According to the Census Bureau: - May saw a 291k increase in starts, the largest since January 1990
- Thatâs a 21.7% jump, the largest since October 2016
- Annual growth in starts was +16% in every U.S. region except the North East
- Growth in apartment building starts (5 or more units) grew almost 39.6% annually and 28.1% monthly and
- Homebuilder sentiment measured by the Wells Fargo Housing Market Index is up 77% since December (not the Census Bureau but f*ck it, this isnât for a grade) "Basically, theyâre calling cap on the Census Bureau ..." And those were just some of the highlights of the report. In fact, the rebound in U.S. housing starts was so stark that some, if not most, economists simply donât believe what their eyes are seeing. One Wall Street bank economist called the data âso far off trend that it calls substantially into question.â Another was even nerdier with his critique and quipped that âhousing starts data tend to be volatile, and this figure may be revised down in coming months.â Basically, theyâre calling cap on the Census Bureau, if that wasnât obvious enough. The idea is that numbers were so good and so against recent trends that minor, regional situations have to be considered. For example, another nerdâexcuse meâ*economist reminded us that a brutal tornado season seen in the midwest has spurred a need for new construction, a phenomenon that canât (and for the apes in the midwest shouldnât) be relied upon for future support. Nevertheless, the sheer magnitude of the change, the Fedâs decision to pause rate hikes, and the sheer acceleration of sentiment among homebuilders tell us thereâs something new in the water. "... breathed life into a sector that has seen the average interest rate on their products nearly double in just over a year." Even though credit conditions continue to tighten given an adjustment of expectations to higher rates for longer, along with the lagged effect of those existing rate hikes barely having worked their way through the economy, JPowâs Pause appears to have breathed life into a sector that has seen the average interest rate on their products nearly double in just over a year. And, as always, weâll save the best news for last. While we donât have the hard data to confirm yet, the two key ingredients in knocking down the price of any asset are 1) higher discount rates and 2) increased supply. We already know the mortgage market has seen its fair share of #1 above in the past year, but it looks like #2 might be getting in the mix as well. For all you millennials desperately trying to not be homeless once your lease ends, things may have just gotten a little easier to drop that down payment. Best of luck, apes. What's Ripe Builders FirstSource (BLDR) â 4.41% â - Allow us a second to take a bow on this one. Since our in-house Warren Buffett first snagged some BLDR on 6/25/2021 (happy early 2-year anniversary), shares are up well over 180%. The S&P in that time? 2.52%. Do your own research, of course, but maybe let us help out with that.
- Okay, gloating aside, Builders FirstSource had one hell of a day (for a $16bn homebuilder/grandpas stock), gaining almost 4.5% pretty much entirely on [see Macro Monkey].
- âNuff said. Homes to the moon, but hopefully just their stock prices, not the actual ones for us youngins out here. Tesla (TSLA) â 5.34% â - Speaking of recent successes from our in-house Buffett and the WSO / Berkshire collab (jk, calm down), Tesla has been winning for us, and hopefully you, for quite a while.
- Shares surged even further yesterday, once again riding the wave of some good news around those far-too-sparse EV chargers.
- After a deal announced yesterday, the two most memed and maybe most traded EV stocks of all joined hands and gained over 5% together. Rivian is signed up for Teslaâs SuperCharger network and is gonna be ready to âfuelâ up (can we still say that?) in 2024.
- Shareholders in both camps loved it. More partnerships to come, maybe? What's Rotten Lemonade (LMND) â 7.97% â - So, we know what to do when life gives us lemons, obviously. But what do we do when life gives us Lemonade? Sell it, apparentlyâat least, thatâs what traders said on Tuesday.
- The start to this 4-day trading week was not kind to Lemonade as shares took a nearly 8% tumble on shade being thrown from Morgan Stanley. Analysts at MS now price the fair value of LMND at $14, an implied expected return of -22.8% from yesterdayâs close.
- MS cited a shaky path to profitability, a (somehow) still pricey valuation, and all around non-compelling risk-reward tradeoff. Okay, now letâs say all the nice things we think about the stock: ... Alibaba (BABA) â 4.53% â - Alibaba is trying to take apart a massive ship in the middle of the water and still keep the thing afloat. Letâs just hope itâs nothing like a certain ship from 1912 that a certain submarine is still (allegedly) exploring.
- As part of the Chinese Amazon-like conglomerateâs plans to restructure into 6 separate business units, Alibaba has announced plans to shake up its leadership at the very top.
- Current CEO Daniel Zhang will be stepping down from the top slot and replaced by Eddie Wu, a co-founder of whom markets apparently arenât big fans.
- Itâs exactly this vote of (lacking) confidence that a new CEO hates to see but probably gives the old CEO a big olâ smile on their way out the door. Letâs just enjoy it while it lasts. Thought Banana Have You Read It? You know, the big changes going on at Reddit? So, have you read it? Well, if not, fear notâwe got you (as always). Most of you likely got your introduction to Reddit when r/WallStreetBets became the worldâs leading hedge fund and Bloomberg left actual airtime to explain meme lingo on the subreddit (sorry, thatâs the best video I could find after a ~4min search). But you get the point. Then, Reddit was all over the financial news and largely praised by retail traders for being a platform for the people. Now, the app is in the news for the exact opposite reason. On June 8, 2023, Reddit co-founder and CEO Steve Huffman (aka âspezâ) announced plans for the platform to begin charging certain third-party app developers for access to Redditâs APIs (the tech bullsh*ts used to scrape data from a given site). Huffman and Reddit claim the move is to create a âmore sustainable business modelâ in addition to their ad sales platform as the app prepares for a long-awaited IPO (ideally) later this year. Now, Reddit has pissed off the group their business arguably relies on the most: the moderators (or âmodsâ). "Huffman and Reddit claim the move is to create a âmore sustainable business modelâ in addition to their ad sales platform ..." The mods tend to be those power users that often rely on 3rd-party sites to browse the app. The role of the moderators is basically to manage their own specific subreddits or particular pages on the website focused on a specific topic, such as r/WallStreetBets, r/History, and our personal favorite, r/Aww. Mods, who are unpaid and do it simply for the love of the game, enforce the community guidelines specific to their subreddit, basically doing all of Redditâs work for them, including filtering out spam and other mundane tasks. "Now, over 80% of Redditâs top 5,000 subreddits by daily active users have gone full-blackout or partial blackout." Now, over 80% of Redditâs top 5,000 subreddits by daily active users have gone full-blackout or partial blackout. Meaning some are no longer allowing new users of posts in their forums (full blackout) while others have updated and memeified their rules, such as r/Aww limiting posts to content that involves John Oliver (aka John âAwwliverâ). Itâs a battle for the ages and a standoff on par with that guy and that tank on that day when absolutely nothing happened in T. Square in â89. Reddit isnât backing down, but given the siteâs reliance on users to create the content that then subsequently drives more usage, Huffman and his posse are caught between a keyboard and a hard place. The big question: Who is going to win the epic Reddit Standoff of 2023? How will this move and the end result impact other businesses reliant on user-generated content? Banana Brain Teaser Yesterday â Unscramble the words below, then take the letters from each word as instructed to form another word that is the answer to this teaser: - AXRET Take letters 1 & 4
- MBGHUU Take letters 1 & 3
- ENCLAC Take letters 1 & 2
- NIILST Take letter 5 Unscramble the letters you collected. What do you get? Answer: - AXRET, take letters 1 & 4: EXTRA, take E R
- MBGHUU, take letters 1 & 3: HUMBUG, take H M
- ENCLAC, take letters 1 & 2: CANCEL, take C A
- NIILST, take letter 5: INSTIL, take I Unscramble the above letters to get CHIMERA. Today â The following sentences have two blanks that can be filled with two words that are anagrams of each other. Please find those words. - Marcus had to take his telescope to a __________ location so he could watch the __________ showers back in June.
- The jazz fest was made up __________ of adults over 30. On the other side of the fairgrounds, the art __________ had people from 8 to 88.
- The anxious patient in the doctor's office was __________ that so little time had __________ between his appointment time and the time he was actually seen. Shoot us your guesses at [vyomesh@wallstreetoasis.com](mailto:vyomesh@wallstreetoasis.com?subject=Banana%20Brain%20Teaser) with the subject line âBanana Brain Teaserâ or simply [click here to reply!](mailto:vyomesh@wallstreetoasis.com?subject=Banana%20Brain%20Teaser) Wise Investor Says âInvesting without research is like playing stud poker and never looking at the cards.â â Peter Lynch How would you rate todayâs Peel? [All the bananas]() [Decent]() [Rotten AF](=) Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? [Be smart like your friend.](=) [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")
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