As of yesterdayâs FOMC meeting, the Fed went back to back in holding rates steady at 5.25%-5.5%. [The Daily Peel... ]( November 2, 2023 | Peel #577 Silver banana goes to... [CapLinked. ](=) In this issue of the Peel: - As of yesterdayâs FOMC meeting, the Fed went back to back in holding rates steady at 5.25%-5.5%.
- Scotts Miracle-Gro and Advanced Micro Devices had a ripe day, whereas Paycom and Estee Lauder struggled to remain green for the day.
- WeWork has filed for Chapter 11 bankruptcy after missing an interest payment made payable on October 2nd. Market Snapshot Happy Thursday, apes. What a dayâthat was a fun one, huh? Letâs hope Thursday keeps the party going because I damn sure know that you will tonight. Equities did yesterday, at least. Consumer staples and energy were the only two S&P sectors down on the day, ruining the 2-day streak of all 11 rising that had been going on this week, but still, every major U.S. index gained, so we canât be mad. Large caps led, allowing the Nasdaqâs 1.64% day to dominate the session. Things were a little hesitant at first, but after JPow spit some game on rates, it was off to the races. Meanwhile, treasuries were throwing a party in response to the Fedâs actions and the Chairâs comments as well. Yields dove as investors snatched up government bills, notes, and bonds amid expectations that rates might not be going up again anytime soon. The 10-year yield fell below 4.8% while the 2-year pushed back below 5.0%. Letâs get into it. Get Amazing Rewards Just for Opening a CapLinked Data Room [image](=) CapLinked knows that all too often, hard work goes unrewarded. So theyâre doing what others wonât: giving you whatever you want.* Coveting courtside tickets? Dreaming of a fresh designer suit? Itching for a day on the course? Open an enterprise-level data room and CapLinked will make it happen. Why? Because CapLinked is the most rewarding data room on the market. Not only do they love hooking clients up with bonuses, but theyâve also created a VDR designed to make the workday easier with features like⦠- Cutting-edge activity tracking for personalized, hyper-efficient follow-ups
- Advanced Q&A functionality that automates due diligence
- Simple permissioning tools to expedite decision-makers access to key info
- Turbocharged upload speeds & 99.9% Uptime SLA for seamless deal management Ready to experience the VDR that rewards you for a job well done? [Connect with our team now to claim your bonus.](=) *Terms and conditions apply. Banana Bits - It's good news for chipmakers to end the day, as [Qualcomm](=) actually has something positive to say for once.
- Toyota nailed it last quarter, ripping yesterday on the back of its [latest earnings.](
- The terms of Comcastâs sale to Disney are becoming more clear, setting a [floor at $8.61bn]() yesterday.
- Maybe they donât want WWIII? Either that, or theyâre doing a really good job acting like it as China and the U.S. plan to [discuss nuclear controls.]( Macro Monkey Says Hold Up When the legendary Canadian artist and poet Drake beautifully wrote, âThey gonâ ask if I can play this sh*t back to backâ in his critically acclaimed 2015 masterpiece Back to Back, little did he know that he was also influencing American monetary policy. Or maybe he did know. Drakeâs the type of guy to mail JPow a letter after a rate hike and say, âI knew you could do it. The sky's the limit.â Thankfully, however, he didnât have to do that this time because, as of yesterdayâs FOMC meeting, the Fed went back to back in holding rates steady at 5.25%-5.5%. For the second meeting in a row, the effective fed funds rate was unchanged, andâbased on the marketâs reactionâyou wouldâve thought that money printer JPow was back or something. But, the excitement seems to stem from an upgrade to the view of recent economic performance that came along with it. Letâs dive in. After 10 consecutive and 11 total rate hikes of varying degrees since March 16th, 2022, the FOMC officially has entered âwait and seeâ mode. "For the second meeting in a row, the effective fed funds rate was unchanged ..." The Fedâs preferred inflation metric, Core PCE, clocked in at 3.7% annual growth last week, still far above the Fedâs 2% target, but the language in the new Oct/Nov statement could hint at the game plan. [image] [Source]() For starters, we should note there was barely anything at all changed from the September vs Oct/Nov statements, as you can see [here.]( Most notable as it related to plans for the December meeting was the expansion of the phrase âTighter credit conditions⦠are likely to weigh economic activityâ to âTighter financial and credit conditionsâ¦â Now, the Fed is recognizing that even without an additional rate hike at their last meeting, the market did its job for them and raised market rates anyway. As if we havenât discussed this enough, the Fed is almost definitely referring to recent spikes in treasury yields, particularly of the 10-year note. For context on certain relevant dates, the 10-year treasury has sat at: - 2.19% on March 16, 2022âthe date of the first FOMC rate hike since 2018
- 3.86% on July 14th, 2023âthe last time the Fed raised rates
- 4.35% on Sept 20th, 2023âthe date of the last FOMC meeting
- 4.77% on Nov 1, 2023âyesterday Further, the 10-year yield has breached 5% a few times between both the July and September meetings and now. Mr. Market is effectively doing the Fedâs job anyway, and now, rate cuts arenât expected until at least June of 2024, according to CME market-implied probabilities. âHigher for longerâ is setting into Fed watchers, the broader market, and the economy in general. Really, the only other change to the statement that mattered even a little was the reframing of recent economic activity to âexpanded at a strong pace in the third quarterâ from âhas been expanding at a solid pace.â "... JPow and the FOMC gang seem to think the best of 2023âs economic growth is behind us." Thatâs Fedspeak for âwe were killing it, and now weâre not so sure going forward.â Basically, JPow and the FOMC gang seem to think the best of 2023âs economic growth is behind us. Meanwhile, the [GDPNow](=) tracker at the Atlanta Fed, which seeks to forecast short-term economic growth (about as possible as forecasting earthquakes on Mars), plummeted while listening to JPow drone on in his boring *ss voice. Q4 annualized growth expectations fell from 2.3% to 1.2%, almost as far as your portfolio fell yesterday. Lastly, JPow obviously had some comments of his own to come along with the release. Some of our favorites include: - â⦠the wage increases have really come down significantly over the course of the last 18 months⦠they're substantially closer to that level that would be consistent with 2% inflation over time⦠making the standard assumptions about productivity over time, it's much closer than it was.â (hyped youâre getting a smaller raise this year)
- âI will say that we're not confident this time that we've reached such a stance; weâre not confident that we haven'tâ (when asked if the policy is restrictive enough yet)
- âPersistent changes in broader financial conditions can have implications for the path of monetary policy.â Just as weâd expect, and that last one gives a glimpse as to a potential reason why equities jumped in response: if financial conditions (aka bond yields) are becoming too restrictive (homebuyers sure think so), the Fed may change course on upcoming policy. Itâs the first time Powell didnât outright dismiss suggestions of rate cuts, meaning we may just be moving back to the money printer JPow we all know and love. What's Ripe Scotts Miracle-Gro (SMG) â 18.52% â - What is this, the 1960s?? I thought weed was certified cool again, even by Wall Streetâ¦
- But apparently not. Scotts Miracle-Gro, a producer of gardening and cannabis supplies, reported earnings Wednesday that largely disappointed investors (no, thatâs not a typo). Sales of $374mn beat expectations, but that was still a stellar decline from last year, while losses of $2.77/sh beat minimally as well.
- And shares popped because the market doesnât want to make sense, only cents. The biggest thing here was CEO Jim Hagedorn (I wish his name was Scott) saying the firm is considering alternatives to its Hawthorne Gardening unit, including potential partnerships with cannabis companies.
- The idea is to get that sh*t off the books. Hawthorne sells things like hydroponic and other pot-growing equipment. This thing has been a detriment to earnings for far too long, according to management, so investors were hyped at the idea that they might finally break up. Advanced Micro Devices (AMD) â 9.69% â - So, Nvidia isnât the only one who can do well in the semiconductor space. The companyâs little brother, Advanced Micro Devices, had a fairly solid earnings day of their own on Wednesday.
- AMD reported EPS of $0.70/sh on $5.8bn in sales vs the $0.68/sh on $5.7bn expected. It was a small beat, but simply seeing the firm wasnât totally getting its lunch eaten by Nvidia was a plus, as sad as that is.
- Guidance for 2024 was lower than expected, but no one cared, as CEO Lisa Su assured investors that GPU sales would pick up. She and the company expect $400mn in sales here in Q4 and then as much as $2bn in 2024.
- Those are the AI-powering chips Wall Street is even more addicted to than cocaine. Itâs still not nearly on par with the now-legendary numbers from Nvidia, but one firm has a lot to gain while the other has a lot to lose. The fight to the death rolls on⦠What's Rotten Paycom (PAYC) â 38.49% â - To quote a particularly unhappy audience member during [SpongeBobâs standup comedy special](, âOh brother, this guy stinks!â
- That about sums up Paycomâs day and most recent quarter. Earnings of $1.77/sh beat expectations for $1.62/sh, but that was where the fun stopped. Sales of $406mn were light of the $411mn expected, and donât even get me started on guidanceâ¦
- Paycom estimates Q4 will bring $400-$425mn in revenue to the firm, well off from the Wall Street estimate of $452mn. Not only was that well off expectations, but it implies a substantial slowdown in sales growth, too. Basically, they reported every analystâs least favorite things, and yup, shares felt the pain. Estee Lauder (EL) â 18.90% â - Much like the country that the company is based in, Estee Lauderâs got some China problems. And it turns out itâs worse than expected.
- Analysts had been expecting softer-than-usual results from the firm given its weakness in China, but apparently, last quarterâs guidance didnât account for that. EPS of $0.11/sh on $3.52bn in sales was mixed against estimates for a $0.21/sh loss on $3.53bn.
- But that wasnât nearly enough to keep the ship afloat after disappointing guidance for the next quarter and into the next fiscal year. Normally a boon for the firm, Chinaâs recovery has been slower than expected, and as such, sales of nonessentials like makeup havenât caught up to history. Thought Banana WeRan-Out-Of-Money 2 years and 11 days ago, WeWork Inc. went public. Since then, billions of dollars were paid to the firmâs founder to f*ck off, several documentaries were made, and as of yesterday, the company is bankrupt. Welcome to the story of WeWork. Well before the coworking firmâs IPO date, WeWork was already making international news with some of its shenanigans. To review the timeline: - WeWork was founded in 2010 and first began operating in April 2011.
- By late 2012, the firm had grown quickly and was profitable.
- On August 24th, 2017, WeWork announced it had received a $4.4bn investment from Japanese investment giant Softbank after CEO Masayoshi Son went on a tour of the firmâs Manhattan headquarters⦠a tour he was on for 12 minutes.
- In January 2019, WeWork got a $47bn valuation from an additional planned investment from Softbank⦠this didnât last too long becauseâ¦
- On August 14th, 2019, [this legendary S1]() was filed with the SEC so the firm could IPO, and thatâs where it all went wrong. Now, the story is officially reaching its closing chapters. Specifically, that chapter is Chapter 11, which allows the firm to restructure debts and continue operating. "... the story is officially reaching its closing chapters. Specifically, ... Chapter 11 ..." So, itâs not necessarily all over yet, but going from a $47bn to a $64.97mn valuation in just a few years shows a truly impressive ability to eviscerate shareholder capital. I mean, that takes talent, and for the math nerds out there, thatâs a -99.86% total return. But hey, they still have 100% left to fall to $0! The bankruptcy process first began on October 2nd, when WeWork missed an interest payment and started the stopwatch on the firmâs 30 days to make payment. Thirty days later, and no dice. Maybe if they still had that ~$1bn exit package they gave CEO Adam Neumann back in early 2021, they couldâve made it, but oh well. Neumann effectively brought the firm from $0 to â$47bnâ to $9bn right before leaving. He started it, ruined it, and left a billionaire. Gotta love corporate America, huh? "He started it, ruined it, and left a billionaire. Gotta love corporate America, huh?" But hey, weâre not here to judge. King got his bag and has been out there raising money for new ventures ever since. In the meantime, Neumanâs former homie Masa has compared himself to and seems to have the corporate version of dementia setting in. Basically, WeWork was the quintessential embodiment of the craziness that was the latter days of ZIRP pre-pandemic exuberance. Now that investors are as good and depressed as they should be, thereâs no time for hope like this. Still, canât wait to see how Neumannâs latest venture turns out. Itâs called Flow, and naturally, itâs essentially a crypto-fueled residential version of WeWork seeking to create a ânew type of social interaction.â Yeah, I know, but they already got $350mn from Andreessen Horowitz⦠so⦠The big question: Whatâs next in the epic saga of WeWork Inc? Will Flow fail as miserably? Banana Brain Teaser Yesterday â 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? Answer 7.5 degrees At 3:15, the minute hand will be perfectly horizontal, pointing towards 3, whereas the hour hand will be moving towards 4. Also, the hour hand must have covered 1/4 of the angle between 3 and 4. The angle between two adjacent digits is 360/12 = 30 degrees. Hence, 1/4 of it is 7.5 degrees. Today â The day before yesterday, Suzie was nine years old. Next year, she will be twelve. How is this possible? Shoot us your guesses at vyomesh@wallstreetoasis.com Wise Investor Says âInterest rates are the prices of financial goods, and financial goods are the means by which we move resources through timeâ â Paul Volcker 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