The End for Sam Bankman-Fraud

As of yesterday, the defense has rested their case on Sam Bankman-Fried's FTX trial [The Daily Peel... ]() November 1, 2023 | Peel #576 In this issue of the Peel: - For the 12-month period ending in September, wages and salaries increased by 4.5%, a sizable decline from the 5.2% gain seen for the same period in 2022. - Pinterest and Anheuser-Busch InBev had an absolute day for themselves, whereas Chegg and JetBlue struggled to remain green for the day. - As of yesterday, the defense has rested their case on Sam Bankman-Fried's FTX trial, and if all goes according to plan, the jury will start their deliberation tomorrow. Market Snapshot Happy Wednesday, apes. Hope that the sugar rush didn’t keep you up too late last night and the crash wasn’t too bad this morning. Trick or treating is a young person’s game, and we had to learn that one the hard way. Equity markets, on the other hand, couldn’t spell “the hard way” on Tuesday. This week’s gains just kept coming as Wall Street prepares for another FOMC rate meeting tomorrow. This time, they actually seem excited (crazy) with the Russell 2k’s small-cap base leading the way for stocks. Gains were broad, and once again, all 11 sectors saw green prints for the session. Treasury yields spiked for the day, too, with the 10-year ripping like it was a guy named Jack living in London in the late 1800s. This note closed the session just below but flirting with 4.95%, while the 2-year was glued to that 5.10% level. The Dollar moved higher as well, rising close to 107 as seemingly every asset joined Snoop Dogg in getting higher. Let’s get into it. The Ultimate Program to Land a 6-figure Job in High Finance [image]( With over 17 years of experience, 900k+ members, and an insane network, WSO has cracked the code to making 6 figures right out of undergrad. We’ve helped over 1k students from all backgrounds break into these careers. 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Banana Bits - Nvidia’s little sibling reported earnings yesterday, and after-hours investors had no idea what to make of it as AMD looks to [ramp up AI chip sales to $2bn next year.]() - The [SBF trial]() enters its final stages today (more below). - ~3 years too late; WeWork is officially [set to file for bankruptcy](=)… and founder Adam Neumann still walked away with the >$1bn he was paid to f*ck off. - The most important debate of the modern age: Which [Halloween candy]() is the top dawg? Macro Monkey Say Greedy Employees Apes, we have another national emergency on our hands. One of the most downtrodden, abused, and well-intentioned groups of people in the United States is in trouble: the poor, sweet, and, most of all, innocent shareholders. Needless to say, nothing gets us up out of bed faster than remembering that the next 8-12 hours spent grinding at our desks and ignoring friends and family is all for the love of the shareholder. They obviously need corporate weapons like us. Otherwise, how could they afford life’s essentials like that more expensive vacation home, an 11th Rolex, and a helicopter at the very least? But now, the employees that shareholders are kind enough to let work for them are getting a bit greedy, at least according to the latest Employment Cost Index report out of the Bureau of Labor Statistics (BLS). For the 3-month period ending in September, employers were forced to shell out an entire 1.1% more than the prior quarter. Blasphemous! Although only slightly higher than the 1% raise greedy employees saw in the previous three months, it’s a sign that as economic growth picked up, employees were rude enough to take some of those gains away from the shareholders. "... it’s a sign that as economic growth picked up ..." [image] [Source]() As you can see in the above chart, growth in wages, benefits, and health benefits compensation costs is certainly slowing but still moving higher and in the right direction for the average worker. For the 12-month period ending in September, wages and salaries increased by 4.5%, a sizable decline from the 5.2% gain seen for the same period in 2022. But, on an inflation-adjusted basis, those wages and salaries this year still gained 0.8%, so stop complaining and get back to your cubicle already. The only person who is more victimized by paying the average American more money than the poor, sweet shareholder is the poor, sweet Chairman of the Federal Reserve, Jerome “JPow” Powell. Shareholders don’t like it, but JPow is out here making sure they don’t like it. It’s the same old story. Wage-push inflation was arguably the primary driver of inflation in the post-pandemic environment, so in order to kill that, along with the dreams of many workers, JPow hiked interest rates to essentially make operating a company more expensive and kill demand for labor. "... the report was kind of a win-win with a lot of mixed results." That means that shareholders and execs alike had to chill on raises, job openings, and more to assist JPow in getting inflation to mix in water and calm down. From a less sarcastic point of view, the report was kind of a win-win with a lot of mixed results. Wages and salaries continued to increase and, more importantly, outpace inflation. Adding in benefits—both medical and more general—and we get a reading of “Compensation Costs,” which increased 4.3% nominally and 0.6% inflation-adjusted for the 12 months ending last month. All of the growth figures we’ve laid out above have been slower than that of 2022. That suggests that, while wages still outpace inflation, employment cost trends are moving in the right direction (aka, growth in labor costs is slowing), which brings a Grinch-like smile to JPow’s face. Employees are still making more (so greedy), but JPow is seeing labor costs decline, and with an FOMC rate decision day tomorrow, this report might matter more than usual. So, why don’t we all just shake hands, go home, and pretend like all is well in the world for once? Bullish on happiness. What's Ripe Pinterest (PINS) ↑ 19.04% ↑ - Most people go to Pinterest to get inspired for costumes, decorations, or some other nonsense. Now, we can go to it to make money—but we’re not going to the app. We’re going to the way more fun part: the financial statements. - Pinterest defined kicking *ss this last quarter. Revenue of $763.2mn grew 11% and crushed the $743.5mn expected. Operating expenses, meanwhile, grew just 2%, allowing EPS to leap estimates too at $0.28/sh vs the $0.20/sh analysts were looking for. - User growth vaulted what had been priced in as well, coming in at 482mn vs 473mn expected. All of this was phenomenal, but the icing on the cake was the firm’s guidance, including an expected 9%-13% drop in operating expenses for Q4 as well. - Although Snap may have suggested otherwise, it turns out that digital ads are confirmed officially BACK for non-garbage companies. Anheuser-Busch InBev (BUD) ↑ 5.26% ↑ - The last time this stock was featured by the Peel, videos of randos firing damn 50 cals into cases of the firm’s signature beer, Bud Light, were going viral. Now, the only thing going viral is the stock price. - AB InBev reported a beat on the top and met expectations on its bottom line, raking in $0.86/sh on $15.57bn in sales. That represents sales growth of 5.0%, a hair above the 4.7% growth expected. - But Bud Light sales are still moving in the wrong direction. The company has said its marketing efforts for the brand will shift back to horses, sporting events, and concerts. - We’ll see how that goes because despite owning the other most popular American beer brands, sales were still down 13.5% in the U.S. last quarter. The hallmark of American beer is still struggling to find solid footing, so if there’s any chance to save this iconic brand, it’s gotta come soon. How funny would it be if they had, like, Donald Trump come out as the next spokesperson, huh? What's Rotten Chegg (CHGG) ↓ 15.11% ↓ - While AI is creating generational wealth for some, it’s already absolutely ruining the lives of others. Welcome to Corporate America. - Yesterday, Chegg reported earnings and immediately regretted the decision because securities fraud looks pretty good next to this one-day performance. The firm’s business model runs on helping students cheat on exams and other “educational” material, so it’s not like they’re strangers to unethical behavior. - EPS for the quarter clocked in at $0.18/sh on $157.8mn vs expectations for $0.17/sh on $152mn. But as we’ve learned through every earnings szn this year, no one cares about what happened—just what might happen next. - So far, this story has been a classic one of technical disruption. We’ll see how they react and if it can be overcome, but that’s gonna take a whole lotta finger crossing in the meantime. JetBlue (JBLU) ↓ 10.48% ↓ - Shareholders in this name were certainly feeling extra blue on Tuesday as it turns out the company’s jets just don’t make that much money. Shares nosedived. - JetBlue, the 6th-largest North American airline, saw shares crash into a fiery explosion yesterday after releasing Halloween-level-spooky figures for the last quarter. The firm lost $0.39/sh last quarter, way more than expected, although sales did come right in line with estimates. - Even spookier, however, was the ironic fact that the DoJ’s antitrust lawsuit against the company began yesterday as well. For those that don’t recall, JetBlue is tryna buy Spirit for $3.8bn all-cash in order to save Americans from ever having to fly Spirit ever again. - As nice as that sounds, antitrust regulators don’t like it. The combo would create the 5th-largest airline in the U.S., but for now, it’s pain and suffering time as we wait to find out. That Q4 loss the company guided for should be fun, too. Thought Banana No Rest for the Wicked It’s been about 17 seconds since we last talked about the SBF trial, so obviously, we’re dying to get back into it as there is little more fun to be had in financial media right now than sh*tting on Scum Bag-Fraud. As of our last check-in, SBF had just been permitted by the judge to testify, but with heavy restrictions on what he could say in front of the jury. Now, as of yesterday, the defense has rested their case, and if all goes according to plan, the jury will start their deliberation tomorrow. Today, both sides have one final say in the form of closing arguments. Both are expected to last 2-3 hours, but to get ready for that, it’s probably important to know what Scum Bag-Fraud had to say (unfortunately). "... both sides have one final say in the form of closing arguments." Perhaps the saddest part about it, as discovered yesterday, was that SBF couldn’t use his boyfriend Michael Lewis’s love letter posing as a “book” during his testimony. There were allegedly quotes in the book the defense was hoping to use to paint SBF as a sweet and innocent toddler who didn’t know what he was doing, but the judge pulled the legal version of calling cap and labeled the book as inadmissible on the grounds of hearsay. One of the best parts, however, was when SBF was asked about his reaction to the $8bn in customer deposits that vanished like his own self-respect (we hope, at least). Scum Bag-Fraud enlightened us to the fact that he wasn’t “particularly trying to build out blame for it.” Obviously, because who cares? What’s a little $8bn, right?? Yeah, anyway, SBF also reiterated his glory days of that apology media tour he went on after the collapse in November of last year. Between D-Day and his arrest, this man claimed to have spoken with over 50 journalists while trying to deflect his “f*ck regulators” comment. "... this man claimed to have spoken with over 50 journalists while trying to deflect his 'f*ck regulators' comment." But here, we can find the one thing we actually agree on—regulators do suck, most of the time. Aside from that quote, SBF used the “I don’t recall” defense he must've picked up watching The Wolf of Wall Street when answering more questions related to his media tour. At least the “I don’t recall” plan worked well for Jordan Belfort! Regardless, pay attention to closing arguments today, and then all else we’ll have to do is wait for the jury to return a verdict. Anybody wanna throw some bets on how long it takes? I’ll put the over/under at 7.5 days. The big question: What will the jury’s verdict ultimately be? If guilty, how much time will SBF actually serve? Will other execs like Wang, Singh, or Ellison serve time too? Banana Brain Teaser Yesterday — Grandpa Jones says: “My son Adam is 24 years younger than me and 35 years older than my grandson, Joey. Together, our total ages add up to 100.” Can you figure out the age of each one of them? Answer Grandpa Jones was 24 when Adam was born, and Joey was born 35 years later, so Grandpa has to be at least 59 years old. Add this to Adam’s age at Joey’s birth to get a total age of 94. If Joey was one year old, the total combined ages would be 97 (adding one year to every age.) But, if Joey is two years old, then Grandpa would be 61, and Adam would be 37, and their combined ages would be 100. Today — Mad Ade is waiting for the local Kebab shop to open. He glances at his clock and notices the time is 3:15 pm. Out of sheer boredom, Mad Ade works out the angle between the minute and hour hand. What was the angle between the hour and the minute hands at 3:15 pm? Shoot us your guesses at vyomesh@wallstreetoasis.com Wise Investor Says “The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap)” — Jason Zweig How would you rate today’s Peel? 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