Over the weekend, OpenAI competitor xAI announced the release of their brand new LLM chatbot, Grok. [The Daily Peel... ]() November 9, 2023 | Peel #582 In this issue of the peel: - Yesterday, the U.S. Treasury Department auctioned off 10-year U.S. notes for the fourth and final time this year.
- Roblox and The New York Times had a ripe day, whereas Toast and Warner Bros Discover closed with a lower share price.
- Over the weekend, OpenAI competitor xAI announced the release of their brand new LLM chatbot, Grok. Coincidentally, OpenAI subsequently announced upgrades to ChatGPT. Market Snapshot Happy Thursday, apes. Another day, another 24 hours spent wondering where Amelia Earhartâs plane went. Much like getting to the center of a tootsie pop, the world may never know. What we will know, however, is how equity markets performed yesterday. We might not know why, but who cares, as markets were flatter than the state of Kansas for the most part. It was a hella mixed day across the board, with the real estate and tech sectors leading the way, allowing the Nasdaq and S&P to inch out gains of less than 0.1% while the small-cap Russell 2k lost the most with a 1.07% fall. Treasuries, on the other hand, had quite the day for themselves, as youâll see below. Longer-dated yields saw yields fall on the day as investors snatched up these bonds amid a massive 10-year note auction. Shorter-dated yields were much more flat, with the 2-year barely moving and staying right around 4.95%. Weâll see you apes live right around 10 am ET (set your alarms) but for now⦠Letâs get into it. Financial Modeling Skills Get You Paid [image](=) Attention all financial wizards and career climbers, are you ready to take your modeling skills to the next level? If you're looking for an undervalued investment in your career, look no further than [WSO's Elite Modeling Package!](=) With 6 courses designed to turn you into an absolute Excel master, this is the package that keeps on giving. From building a 3-statement model to tackling complex LBO modeling and M&A transactions, this package has got you covered. You'll also build a solid foundation in trading comparables and precedent transactions analysis and DCF modeling, all using the versatile and relatable example of Nike, Inc. And as if that wasn't enough, the first 3 Peel readers to sign up for the Elite Modeling Program in the next 24 hours will also get access to our Foundations Program! That's right, a two-for-one deal that'll have you feeling like a baller in no time. So don't miss out on this opportunity to boost your career and invest in [WSO's Elite Modeling Package](=) now! #ModelOn #FinancialGains #CareerGoals Banana Bits - The Mouse House was looking nice and renovated this quarter as [Disney posts]() better than expected numbers amid a huge cost-cutting effort.
- But it was a different earnings story for Arm in their [first quarterly release]( as a public firm, diving hard in after-hours trading.
- Amazon leans [further into healthcare](=)⦠and controlling each and every American's entire life. Macro Monkey Says Reluctant Treasure Some people will literally dive to the bottom of the ocean purely in the hope that there might be a slight chance they stumble onto some treasure. Others, on the other hand, wonât even take them when the government is begging you to. And, in some sense, thatâs what we saw on Wednesday. Yesterday, the U.S. Treasury Department, led by the fear(ful?)(less?) Secretary Janet âJYellâ Yellen auctioned off 10-year U.S. notes for the fourth and final time this year. It couldâve been worse, but it certainly wasnât good. JYell, as she prefers to be called, was probably expecting something approximating the outcome she got. Demand was weak, but still there, confirming that the U.S. government isnât going bankrupt for at least another⦠actually, letâs not finish that sentence. So, what the hell are we talking about here? Well, Iâm sure weâre all familiar with U.S. treasuriesâthese are debt securities the federal government sells in order to raise money and finance itself. "... the U.S. government isnât going bankrupt for at least ... letâs not finish that sentence." They are sold through (highly) regulated auctions in which buyers place either Competitive or Non-Competitive bids. Competitive bids are sorted from lowest yield (aka, highest price and most money given to the treasury, as yields move inversely to bond prices) to highest and accepted in this order until the full auction is allocated. Non-Competitive bids are assigned the âhighest accepted yield,â meaning the highest yield (lowest price and least money given to the treasury) that is still low enough is set to be included in the auction. Itâs designed so the treasury can maximize the cash it takes in at the lowest cost of financing possible and so that investors donât get totally fleeced by their own government. Good, now that we all know more about treasury auctions than the average Wall Street professional, youâll know what I mean when I say this auctionâthe largest one for 10-year notes in the past 2-yearsâwas assigned the highest accepted yield of 4.519%. Prior to the auction, 10-year yields were trading around 4.511%. While not a huge difference (although some might say 0.8bps is huge), this does tell us that the government was forced to sell at below-market prices in order to entice investors to buy. "... the government was forced to sell at below-market prices in order to entice investors to buy." That spread is called the âtail,â which was more than 2x wider during the October auction at 2bps, meaning that this auction had noticeably more demand. Investors were watching this thing like a teenage boy watches⦠certain videos on his phone⦠before going to sleep at night. Like that teenager, they were happy with how it all played out, but it was hard to be proud of this kind of performance. Demand for treasuries has been called into question given the enormous $1.7tn deficit weâre set to rack up this year, along with the seemingly endless threats of default or government shutdown that have plagued us all in 2023. Oh yeah, I almost forgotâthe House has 9-days to pass yet another stopgap bill to avoid a full-scale shutdown. At the same time, commentary from Fed officials, including Chair JPow, suggested that the last rate decision may not have been as dovish as we originally thought. The [CME Groupsâs tool](=) is still pricing a 90% chance of a hold in December, but as we know, it doesnât take a lot to change Mr. Marketâs mind, even in the âsmart moneyâ bond world. Furthermore, we got an update on mortgage ratesâwhich base themselves on U.S. 10-yearsâthat showed rates taking a much-needed dive from 7.86% on average for U.S. 30-year fixed products down to 7.61%. Homebuyers are feeling like the [farmer in that meme]( as itâs not much, but it sure is honest work. What's Ripe Roblox (RBLX) â 11.83% â - Lemonade stands and leaf-raking side hustles mustâve been popping off this summer and fall because, apparently, young children are rich.
- 55% of Robloxâs daily active users are under 13 years old, but given that the company beat revenue estimates for $830mn by reporting $839mn, little kids are clearly dishing it out.
- The low-key âVRâ gaming environment makes money primarily by selling the only digital currency that still serves a purpose in Robux. Users were buying them hand over fist, but unfortunately, Roblox couldnât make it work to meet their bottom line as EPS of $0.45/sh missed the $0.51/sh expected.
- However, both DAUs and hours spent playing increased by 20% for the quarter. Wall Street takes that as a phenomenal sign, suggesting plenty more Robux to be purchased in the future. Maybe JPow should look into the firmâs monetary policy strategies. The New York Times (NYT) â 6.03% â - Turns out enragement really does equal engagement because as the world seemingly gets madder and madder, The New York Times is raking it in.
- In reality, people arenât actually that mad, but online, they sure are, and thatâs all the NYT and shareholders care about. And finally, the publication has crossed the 10mn subscribers, further cementing itself as the most subscribed ânewspaperâ in the world.
- That was helped by the 210k wannabe philosophers that subscribed to the digital-only version last quarter, which the firm loves to see as publishing online is presumably a lot more margin-friendly than printing out those desk decorations/fly swatters they call papers.
- Overall, the NYT missed revenue estimates by the slimmest margin imaginable, while EPS eked out a beat at $0.32/sh vs the $0.29/sh estimate. What's Rotten Toast (TOST) â 13.68% â - The only company in the world that runs the restaurant industry more than Gordon Ramsey still managed to deliver a quarter worthy of calling every investor an â[idiot sandwich](=).â
- Or, maybe itâs Wall Street thatâs the idiot sandwich, as analysts were anticipating earnings of $0.10/sh and instead were treated to a $0.09/sh loss. Revenue still looked strong, growing 37.3% annually, but not enough to overcome poor guidance, even with the ARR portion of revenue jumping 40%.
- Full-year guidance was increased on the lower end but reduced on the higher end, from $3.87bn to $3.86bn. This reduction, along with Prozac-inducing Q4 guidance, seemed to be the main issue. Warner Bros Discovery (WBD) â 19.04% â - I guess this is what happens when you take one of the most beloved, storied, and respected brands in all of the media with HBO and turn it into some nonsense âMaxâ just to show that youâre in charge now. Nicely done by CEO David Zaslav.
- Zaslav apparently just woke up from a 5-year coma as he was bold enough on the call to say that media is going through a âgenerational disruptionâ with streaming. Just wait until this guy learns about AI or mobile phones.
- Warner Bros did have a disgusting quarter, however, reporting a wider than expected loss at $0.17/sh on $9.98bn in revenue vs. expectations for a $0.06/sh loss on the same top-line value.
- Max and Discovery Plus subscribers totaled 95.1mn subscribers, missing the 95.4mn expected, while the firmâs TV networks saw ad revenue dive 17%. Once again, Zaslav, nicely done. Thought Banana Grok & Turbo At the end of this month, everyoneâs favorite study buddy, cheating tool, and friend, ChatGPT, will officially turn one year old. I hope you have big plans to celebrate because it is an AI platform, and, as we already know, with Big Tech, theyâll certainly be watching. Leading up to ChatGPTâs first birthday, we were recently treated to some brand-new developments by the tech nerds building these AI products. By the time this goes out, Iâm sure some more news will be made, but letâs do what we can. "... OpenAI competitor xAI announced the release of their brand new LLM chatbot, Grok." First, letâs check in with Elon. Over the weekend, OpenAI competitor xAI announced the release of their brand new LLM chatbot, Grok. Compared to others, Grok is like the Bart Simpson of the LLM spaceâit likes to f*ck around. Donât get me wrong. Iâm sure its answers are just as (in)accurate as ChatGPT, Bard, and the rest, but at least it makes an attempt to entertain while also informing you (sound familiar??). There are plenty of examples [here](), but you might want to have your NSFW filter on⦠Further, like when Pam Beesly laughed at the idea of her and Andy dating in The Office, xAI wants to make sure you KNOW they are a separate entity of X Corp⦠at least for now. They just work closely together, yâknow, like Pam and Jim. Over at Elonâs (former) AI playtoy, OpenAI, changes are abounding as well. This week, CEO Sam Altman came out to remind us that he himself is controlling the simulation we all live in and that ChatGPT is getting an upgrade. "The latest model powering the chatbot, GPT-Turbo, has some pretty cool updates." The latest model powering the chatbot, GPT-Turbo, has some pretty cool updates. Without plugins enabled, the base model now knows: - Information through April 2023 (although Iâm sure GPT itself was a lot happier with that September 2021 cutoff).
- How to handle up to 128k âtokens,â which Altman says is roughly equivalent to 300 book pages (please go to therapy if this is you).
- How to follow instructions more clearly, such as âonly respond in sentences that rhymeâ or, way more intelligently, âonly respond in XML format.â
- How to automatically use enabled plugins to get what you need instead of making you go through those dropdowns to select your own plugins, a practice Altman said was âextremely annoying.â Sounds pretty sweet. With all this going on, weâre just glad the world hasnât been hacked yet or whatever the hell these things can do to kill us all. Fingers crossed, we didnât just jinx humanity. The big question: When will xAI become available to more than just X Premium subscribers, if ever? Which platform is truly âbetterâ? Aside from chatbots, what will be the next great consumer-facing AI tool? Banana Brain Teaser Yesterday â I occur twice in January, once each in February, March, April, and May.
But when you get into June, I just fade away.
It isn't until August that I reappear,
And that's the very last time that I occur all year. What am I? Answer The letter âA.â Today â Michelle Knaw bought a used car for $600 and sold it for $800. She later bought it back for $1000 and resold it for $1200. Did Michelle make any profit, and if so, how much? Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says âThe United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.ââAlan Greenspan 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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