Fitch downgrades US debt rating from AAA to AA+... [The Daily Peel... ]( August 2, 2023 | Peel #513 Silver banana goes to... [Brilliant. ]( In this issue of the Peel: - Fitch downgrades US debt rating from AAA to AA+ citing reasons such as increasing political instability, rising interest payments, and a steady deterioration in governance standards over the last 20 years.
- Tupperware Brands and Caterpillar stocks performed well with significant gains, while Norwegian Cruise Line and Uber stocks struggled yesterday.
- The latest Job Openings and Labor Turnover Survey (JOLTS) data shows a minor decline in job openings, indicating a possible slowdown in inflation and a possible soft landing for the economy. Market Snapshot Happy Wednesday, apes. We may not have gotten the start to August that we hoped for, but we managed to make it to the eighth month of the year without a recession, regional banking failure, or alien invasion (so far). Man, do I really hope I didnât just jinx us right there. On the first day of trading in this historically lower-volume month, equities saw an average day in terms of trading with a mild bias lower, largely thanks to a certain credit rating agency hating on the Start & Stripes (more below). The Dow led as the only major U.S. index to break into the green, while the Nasdaq, S&P, and Russell 2k were all mildly lower. Treasury yields were higher on the day, in the meantime. The 10-year briefly crossed back above 5% before coming back down to the dayâs opening levels in the late night / early morning session. Letâs get into it. Invest in Your Biggest Asset: Your Brain [image](=) From unpacking AI to navigating a sea of data, [Brilliant](=) helps you conquer the complex concepts you need to stay one step ahead of the pack. With thousands of highly-visual, bite-sized lessons that break down essential topics in everything from math and logic to data science and programming, Brilliant makes it easy (and fun) to level up in just minutes a day. Interactive content and hands-on problem solving keep you engaged and motivated, 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 - Credit rating agency Fitch (the little brother of the Big 3) downgrades the US debt rating [from AAA to AA+](=)
- [Binance and following rules]( appear to go together like San Francisco and attractive office propertiesâ¦just completely incompatible
- Olâ Donnie T gets slammed with [yet another charge]() for alleged actions taken in relation to the 2020 electionâ¦here we go Macro Monkey Says Shouldâve Studied More We all had this kid in high school, the guy/gal that would âfreak outâ as the teacher was handing back freshly graded tests, dramatically concerned that their âlackâ of studying would take them out of the valedictorian running. Then, inevitably, they get the test back with a fat 97-100%, aka, an A+. In the world of global credit markets, the equivalent to your A+ is a little different, represented by AAA. No, not alcoholics anonymous (thatâs AA), but an AAA rating indicates the least risk of default by a credit issuing institution. In English, that means whoever gets this rating is the least likely to default on their debt payments. "... Microsoft and Johnson & Johnson ... more likely to pay back their debts than the US government." In the US, we have two companies that carry AAA ratings from all the rating institutionsâincluding S&P Global, Moodyâs, and FitchâMicrosoft and Johnson & Johnson. As of yesterday, and according to Fitch, those companies are more likely to pay back their debts than the US government. Even if you read that correctly, go read that last sentence again. An organization that can hold all organizations that are under its purview at gunpoint and demand tax dollars has a lower rating than two companies it actually taxes. Wild. In case you missed it, yesterday, Fitch downgraded the US governmentâs credit rating from AAA to AA+. Now, like any rambunctious student, the US is used to this, having been downgraded in the same manner by the way-more-respected Standard & Poors Global back in 2011. Safe to say this one caught investors off guard. On a day in which we were geared up for (and got confirmation of) some better than expected macro data including the ISM report, JOLTS, and others, all eyes turned toward this downgrade. "Safe to say this one caught investors off guard." Of the reasons Fitch cited for the downgraded, the most prominent include: - Rising interest payments as a percentage of the federal budget
- Increasing political instability (Summer â20 protests, Jan 6th, etcâ¦)
- Overall, â...a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt mattersâ¦â - Fitch
- The new trend of down-to-the-last-possible-second debt ceiling votes Just to name a few⦠But then again, many investors expect this headline of today to be a nothing-burger of tomorrow. Itâs not like these (glaring) problems werenât already screaming in investorsâ faces; itâs just that now, the least respected of the Big 3 credit rating agencies has confirmed that it concurs with those fears. To sum it up, the US fiscal picture is simply not good. Who knew that after a decade of ZIRP and trillions of dollars in stimulus, we might be digging ourselves into a hole? If only we couldâve seen it coming⦠What's Ripe Tupperware Brands (TUP) â 26.00% â - Damnit, here we go again⦠If you thought this whole âmeme stockâ thing was over and that you could make money in markets by being sane again, well, youâre sorely mistaken. Tupperware and its nearly 800% rise in the last two weeks is here to prove you wrong.
- Itâs a classic short squeeze for the most part but fueled by nothing but nonsense, hype, and testosterone, as far as anyone can tell. Keep in mind that more than 3 months ago already, Tupperware issued a statement questioning their viability as a âgoing concern,â the ever-so dreaded phrase.
- Naturally, after falling over 97% since late 2020, shares have rallied unbelievably in the aftermath. Canât wait to see how this plays out! Caterpillar (CAT) â 8.85% â - Caterpillar managed to crawl their way into a beautiful butterfly this past quarter, largely as a result of a major uptick in overall construction spending.
- The manufacturing and construction giant saw sales jump 22% compared to last year on a stark revenue beat while EPS of $5.67 over delivered against $4.50 expectations as well.
- Not bad. In a strange turn of events, however, Caterpillar managed to give a rather weak outlook for Q3 and still managed to earn a spot in Whatâs Ripe (congrats, btw - youâre welcome). What's Rotten Norwegian Cruise Line Holdings (NCLH) â 12.05% â - Clearly unable to get the same love as Caterpillar above, Norwegian delivered a handy beat on earnings with a relatively pessimistic near term outlookâ¦and shares got hammered.
- EPS of $0.30/sh on $2.2bn in sales vs. expectations for $0.26/sh adj. on $2.17bn wasnât exactly close to the beat needed to overcome the firmâs weak numbers anticipated next quarter.
- Adding salt to the wound, Q3 is supposed to be all sunshine and rainbows for cruise operators who see their best business during the summer months in the northern hemisphere. Guiding for 0.70/sh next quarter vs. Mr. Marketâs hopes for $0.80/sh was simply more than we could stomach. Uber Technologies (UBER) â 5.68% â - Unfortunately, shareholders canât simply call a Lyft to get themselves out of this one (sorry about that, Iâll do better).
- First and foremost, letâs begin with a big Congratulations. Q2 2023 was the first-ever quarter in which Uber delivered an actual operating profit, raking in $326mn vs. a $713mn loss for the same period last year. Of course, the stock tanked as a result.
- Now, the tanking here was also mostly due to weaker-than-expected projections for Q3 and the rest of the year. But Uber also came out and just plain said that competitor Lyft is effectively competing in areas like pricing.
- Itâs not normal for companies to mention specific competitors and, much less so, compliment them in the meantime on an earnings call. Nevertheless, Uber apparently woke up on the ballsy side of the bed Tuesday morning. Thought Banana JPow <3s JOLTS No, I didnât just have a stroke on the keyboard to type the aboveâ¦just hear me out. Yesterday, we received the latest JOLTS data, which in English means the Job Openings and Labor Turnover Survey for the month of July. Spoiler alert: itâs just what Fed Chair JPow wouldâve wanted to see. Yesterday, we learned that job openings declined by a measly 34,000 last month, bringing the total down to a grand 9.6mn open jobs. As you can see above, thatâs still ~1.6x the number of unemployed Americans out there, but the key word is declined. "... thatâs still ~1.6x the number of unemployed Americans out there, but the key word is declined." Lately, weâve talked a lot about how JPow and the rest of our FOMC overlords want you to be unemployed, make less money, be ugly (probably), or some combination of the three. Wage earners growing their pay by less and less generally signals a slowdown in inflation, which means Powell can chill on the rate hikes, and we can remember what itâs like to feel rich again. In all seriousness, the Fed has identified the tightness of the labor market as the primary enemy in the battle against inflation. Too much labor demand from employers meeting with too little supply from you, me, and the rest of the apes out there has meant one thing: cost of labor go moon. "... we are seeing evidence that the US economy is moving in the right direction ..." The main takeaway here is that - yet again - we are seeing evidence that the US economy is moving in the right direction on inflation without causing much damage to unemployment. Whatâs the word weâve been using for that again? Itâs on the tip of my tongue, but for some reason, I just canât seem to bring this section to a soft landing⦠The big question: Will the Fed actually be able to achieve a soft landing? If so, how much credit do JPow and the FOMC deserve? Banana Brain Teaser Yesterday â What can be driven yet has no wheels and can be sliced yet still remain whole? A golf ball. Today â Find a rhyme for each word below so you end up with a familiar three-word phrase in the form â__, __, and __.â Example: - Clue: âCook, Wine, Drinkerâ
- Answer: âHook, Line, and Sinkerâ - Won, Dune, Cars
- Wed, Night, Two
- Shove, Goner, Betray
- Blast, Pheasant, Suture Shoot us your guesses at vyomesh@wallstreetoasis.com with the subject line âBanana Brain Teaserâ. Wise Investor Says âIf you have trouble imagining a 20% loss in the stock market, you shouldnât be in stocks.â â Jack Bogle 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")
20705 Saint Charles St
Saratoga, California 95070
United States