Why Pot Stocks are Blazing

Pot stocks experienced a significant boost as the DHHS recommended a lower legal classification for marijuana... [The Daily Peel... ]() August 31, 2023 | Peel #534 Silver banana goes to... [Onfolio. ](=) In this issue of the Peel: - R* is considered the “neutral” rate of the Fed Funds, and there’s an argument for long-term rates being “higher for longer.” Updated data indicates the US GDP growth for Q2 has been revised down from 2.4% to 2.1%. - Insulet unveiled a new generation of insulin pods in Germany. Palantir saw a share surge with connections to bullishness in AI. Ambarella faces a weak outlook despite beating on top and bottom line. HP Inc. shares dived due to a decreased market for their products. - Pot stocks experienced a significant boost as the DHHS recommended a lower legal classification for marijuana, hinting at a move towards more widespread legality in the US. Market Snapshot Happy Thursday, apes. It might’ve taken a big effort from pot stocks to keep the green going for the day, but whatever gets the job done, we’ll take it. Investors and their portfolios moved higher as general optimism remained—or at least didn’t get eviscerated—the main theme of the day. Wednesday’s gains were lower and less widespread than Tuesday’s, with two sectors actually falling into the red, including utilities and financials. Modest gains dominated with still below-average volume, giving us less action to go off of, but the Nasdaq still led with a 0.58% rise. Treasury yields had a similar, to use the technical term, mid day. Yields didn’t see much action despite all the talk about “R*” and the US GDP revision that largely dominated the day’s media cycle. At the same time, the dollar was mostly higher, but it was still far from exciting. It’s time to make investing fun again. Let’s get into it. Nasdaq Listed Company Re-Opens Its 12% Dividend Preferred Shares [image](=) In January 2021 Onfolio Holdings Inc launched its preferred shares, which pay a 12% annual dividend, in quarterly payments. Since then, they've become a publicly traded company on the Nasdaq. While they've been paying every dividend on time for the past 2.5 years (10 consecutive quarters), they haven't offered new shares to anyone since their IPO. Until now. Since they use the funds to acquire profitable businesses, Onfolio are raising new funds to replenish their war chest and make new acquisitions. Accredited investors can now invest a minimum of $20k to buy newly issued preferred shares and earn 3% per quarter from the very first quarter. What's more, Onfolio will list the preferred shares on a US market soon too, giving investors liquidity as well as those high returns. For income investors, this is worth learning more about, or investing right away. [Learn More]() Macro Monkey Says The Star of the Show Show of hands: Who here has played sports before? And who has played on an all-star team? You probably felt pretty cool on that team, but it’s time to meet the MVP of the all-star team for the US economy. That would be none other than my boy R* (read “R-star”). And it’s about time you met because, as you’ll see below, the FT thinks this thing is “the most important chart in the world.” [image] Like a lot of other things in economics, R* isn’t actually real. It’s meant to serve and be interpreted as the “neutral” or “natural” rate of the Fed Funds rate, seeking to identify the level at which rates would be neither restrictive nor accommodative in their impact on economic activity. "... it supports the argument that long-term rates really might be in that 'higher for longer' state ..." Compared to most of the last decade and a half, we’re just coming off of all-time highs for that “neutral” rate. Basically, it supports the argument that long-term rates really might be in that “higher for longer” state, as we all feared. Like we said above, and as pointed out by the FT, this is an estimated (aka, not f*cking real) rate of neutrality. Fortunately, the market gives us its own thoughts in the form of treasury yield futures. Like the neutral rate, these yields have seen growth absent for the last 10 years, only to skyrocket as soon as Chair Powell decided the economy should f*ck around and find out. Both rising in tandem just further adds support to the above argument but at the same time… We already could be seeing signs that rates have risen through that neutral and into restrictive territory already. Simultaneously, as all this R* chatter was forming Wednesday morning, US officials released updated data on the economy’s Q2 growth. "We already could be seeing signs that rates have risen through that neutral and into restrictive territory already." Last quarter, it was reported that US GDP had accelerated by 2.4% annualized for the 3 months ended June 30th. As of yesterday, that’s been revised down to 2.1%. Given that all of these things—accommodation/restriction via rates, changes in treasury yield futures, and GDP growth—all fall subject to the “long and variable” lag of monetary policy that we’ve all been hearing about. While “too restrictive” could be an exaggeration, the fact that we’re seeing these trends simultaneously…well, it might suggest…something. Welcome to macroeconomics. What's Ripe Insulet (PODD) ↑ 6.41% ↑ - Who knew diabetes could be so fun? No one, that’s who, and that’s why Insulet is out here trying to make it suck a little less. - The Massachusetts-based insulin pod maker, a device one can attach to their body in order to release the therapy, shook the world with the release of a new generation of insulin pods kickstarting over in Germany. - The Omnipod 5 automated insulin delivery system, which is already in use here in the US, will continue to roll out throughout the nation until full release is hit in October. Like most iOS updates, it promises to fix some bugs and make some aspects more efficient, but users may not necessarily notice the changes every day. - But, more importantly for your portfolio, Wall Street sure did notice, and they were lovin’ it. Palantir (PLTR) ↑ 6.04% ↑ - Following in the shoes of other shills for the “current thing,” like Tesla and other companies going with the “AI + tech billionaire” strategy, Palantir made it work yesterday. - Shares surged over 6%, strange for a $35bn name with no actual news out on the day, but likely in connection to recent new-found bullishness in AI as it related to government contracts. - Palantir loves nothing more than to hook up with governments and protect & manage the sh*t out of their data. With those existing relationships, it’s only natural that they have a damn good shot at being a big winner as the AI wave develops. - We’ll see. Maybe there’s something under the hood that we missed, which certainly wouldn’t be \out of scope for co-founder Peter Thiel, but like everything else we talk about, it’ll take time to find out. What's Rotten Ambarella (AMBA) ↓ 20.37% ↓ - I guess not all semiconductor stocks are created equal. Looking at Ambarella’s performance yesterday, some are certainly more equal than others (makes sense, right?). - The small-cap chipmaker out of California that specializes in video compression, image processing, and computer vision (wtf is that) semis managed to beat on the top and bottom line last quarter, but it wasn’t enough to overcome a weak outlook. - Basically, the firm’s view going forward is the exact opposite of Nvidia’s. Revenue is expected to decline to $50mn for Q3 from the $62.1mn raked in last quarter. I’m no mathematician, but I think that’s below the ~$68mn the Street had priced in. - Not to mention, it hurts a little extra when analysts are expecting growth, and you come out swinging with a fat decline. Ambarella might need to stand under my umbrella going forward. HP Inc (HPQ) ↓ 6.63% ↓ - Hewlett-Packard, aka the boomer-a**, OG version of Apple (they wish), saw shares take a deep dive on Wednesday. - Basically, the problem is that no one wants to buy their stuff. As a seller of primarily PCs and printers, the market for their stuff has been all too cool for just about the whole year. Spending for these items has pulled back in the face of high inflation and concerns about go-forward economic conditions. - With that pullback in spending, the company’s quarter took a beating. Margins managed to hold well as the company kept up with price hikes, but guidance going forward tanked shares for the day. Thought Banana Pot Stocks Get High(er) Much like you and your roommates now that you’re back on campus, weed erupted back into the minds of investors yesterday. Thankfully, this time, it was good news. But it wasn’t only you and your pothead friends that joined Wall Street in remembering how dope weed is (no pun intended), but politicians, too. Officials at the Department of Health and Human Services (DHHS) announced on Tuesday their official recommendation to the Drug Enforcement Agency (DEA) was to lower the legal classification of marijuana. To say the least, this is a big step in the United States’ move towards nationwide legality / decriminalization instead of this state-by-state sh*tshow we have now. "... this is a big step in the United States’ move towards nationwide legality / decriminalization ..." We’re still gonna have to wait on agencies and politicians alike before any actual changes are made, but Wall Street had no interest in waiting. After all, you’re supposed to buy the rumor and sell the news, right? [image] [Source](=) Well, so far, the “buy the rumor” part is definitely working out for cannabis bulls. Anything exposed to weed lit up on the day (again, no pun intended), as seen above, with ETFs like MSOS ripping as much as 21.24% by close. "If you’re driving down I-95 with a bag in the car, you could either be totally fine or subject yourself to a potential prison sentence." Don’t get too excited yet, however. If you’re driving down I-95 with a bag in the car, you could either be totally fine or subject yourself to a potential prison sentence. The confusion will linger for longer, but this is certainly a step in the right direction. And, not to mention, it’s a much-needed win for pot stocks that have had the snot beaten out of them since the glory days of early 2021. That ETF above alone (even after yesterday’s gain) is still down nearly 90%. Lesson of the day: keep smoking pot. The more you consume, the higher both you and your stocks will get. It’s the ultimate win-win. The big question: Will cannabis ever be legal nationwide in the United States? What about at least decriminalized? C’mon Uncle Sam… Banana Brain Teaser Yesterday — When you behead a word, you remove the first letter and still have a valid word. You will be given clues for the two words, longer word first. Example: Begin -> Sour, acidicAnswer: The words are Start and Tart. - Percussion instrument -> Distilled spirit from sugarcane - Unit of musical rhythm -> Consume - Property of sound based on frequency of vibration -> Rub; urge - A note raised by a semitone; crisp -> Angelic instrument - Drum -> Rum - Beat -> Eat - Pitch -> Itch - Sharp -> Harp Today — I am found in great fields. With my kin, provide great yields. Decapitate me with no regret. What makes me bread is what you'll get. Cut once again, again I implore And you will do this thing evermore. What have you found from me? Give me the words above, all three. Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says “Buy a stock the way you would buy a house. Understand and like it such that you'd be content to own it in the absence of any market.” — 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? [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