Black Friday Football Madness

For the first time ever, Amazon made the decision to stream Black Friday Football [The Daily Peel... ]() November 28, 2023 | Peel #594 Silver banana goes to... [Brilliant. ](=) In this issue of the Peel: - Yesterday, we learned that median home prices dropped to $409k in October, a 2% decline from September and a massive 17.6% annual drop. - Affirm and Shopify had an absolutely ripe day, whereas Albemarle and Okta closed at a lower share price. - For the first time ever, Amazon made the decision to stream Black Friday Football, a move that is anticipated to be wildly successful. Market Snapshot Happy Tuesday, apes. Alright, I hope we’re all recovered from the turkey hangover and violent bathroom visits this weekend certainly induced. Markets are back at it and open for a full day again, and naturally, we’ve got a lot to talk about. Despite closing at 4 pm once again, it turned out equity markets didn’t have a whole lot to talk about themselves. Stocks were mostly flat this Cyber Monday, all closing slightly lower in the U.S. as the small-cap Russell 2k index led the team lower with a 0.33% loss. Only 3 S&P sectors were up on the day, but the WSO Alpha team still managed to put up BIG gains of 0.05%. Absolute legends. Sounds like they got the next Jim Simons over there or something. Treasury yields followed equities in their pursuit to put us to sleep to start the week. The 10-year yield lost just about 10bps and settled near 4.40% for the first time since September. The 2-year moved similarly, but less so, and closed chilling just below 4.9%. Let’s get into it. [image]( Is your firm solidifying their AI strategy? [Hebbia’s](=) clients have combined over $4 trillion in AUM. It is the suite of AI productivity tools used by the largest investors in the world. Excel is to numbers, what Hebbia is to words. Join the waitlist [here](. Banana Bits - RIP to the SVBs of the world, but apparently, regional banks still aren’t totally [out of the woods just yet.]() - Investors are continuing to bet on interest rate cuts, or at least, continuing to [bet against higher for longer.](=) Macro Monkey Says Houses, Homes, and Hope In one of the greatest hit songs of the 21st century, fry cook-turned-musician SpongeBob Squarepants famously said, “Gary, come home.” Poetic, but what if Gary had no home to come to? The tragedy speaks for itself… Unfortunately, many prospective home buyers here in the United States have had to follow in Gary’s footsteps and “come home” to their parents or simply not leave at all. Buying a home in the U.S. and many other countries has become about as difficult as it was for SpongeBob to get Gary back. Once again, the tragedy speaks for itself. Particularly since we’ve turned the corner on that whole pandemic thing and Fed Chair JPow began nuking the global economy with massive interest rate hikes, the challenge has reached new levels. However, recent data suggests this borderline traumatizing process may become easier over time. In case you forgot, home prices are still well over [31% higher]( now than in Q4 of 2019. That’s on par with some of the fastest growth rates we’ve ever seen for this asset class, and while inflation, supply chains, and stupid sh*t like title insurance have certainly contributed to that rise, the primary driver is far more basic: supply. "... housing supply in the United States has been crippled since we went a little crazy with it back in the pre-GFC days ..." The housing supply in the United States has been crippled since we went a little crazy with it back in the pre-GFC days. Demand for homes had surged while Wall Street made getting into those homes way too easy, and since then, we’ve been scared sick. Now, we don’t even build new homes at rates comparable to the [late 1990s.]()Keep in mind we’ve also got 1) a lot more people nowadays and 2) stronger laws that prevent Wall Street from Wall-Yeeting us into the next recession due to the “subprime borrowing” that contributed to the Global Financial Crisis. But, what we don’t have is homes to fit that supply. At the same time that our laws have improved, the population has grown, and demand for housing ballooned, homebuilders have been hunkered down to not get hurt again, kind of like your friend who got dumped 4-years ago and still refuses to download Hinge. They haven’t exactly gotten over it. Plus, given that rates have been at rock bottom for the decade leading up to 2022, homeowners are far less likely to sell and exit their 3-4% mortgage for one of 6-7% (or even higher if your credit is bad) as we’re seeing now. And that, apes, is largely why we haven’t seen the expected drop in prices as rates have spiked. Normally, higher rates = lower prices, but because of such a severe supply shortage, that relationship remains mostly broken. Keep in mind this is all very regional, but when we speak about the U.S. broadly, it’s hard to miss. But we just might be reaching that breaking point where homebuilders decide to… build homes again. "Yesterday, we learned that home prices are actually beginning to fall ..." Yesterday, we learned that home prices are actually beginning to fall—markedly. To summarize some of the day's most important stats, we found out the following: - Median home prices dropped to $409k in October, a 2% decline from September and a massive 17.6% annual drop - Building Permits increased 1.8% from September after falling 4.5% in the prior period - Sales of new homes dropped 5.6% monthly but remained 17.7% higher than in 2022 In other words, things are moving in the right direction for homebuyers. That 17.6% annual drop in median home prices is the largest on record, and it only represents the start of a potential thawing of the U.S. housing market. With prices declining at such an obscene rate, home sellers are far less incentivized to actually list their homes. But the thing is, selling a home and moving isn’t always a choice. A new child, the discovery of asbestos, or a frat moving in next door often force the marginal seller to pull the trigger, and despite the drop, prices are still far higher in the aggregate than in prior years. Match that gradually expanding supply of home sellers with strong building permit data, and we can start to see the puzzle come together. Building permits represent municipalities allowing home builders to actually build homes, so seeing increased permitting rates could be indicative of increased supply down the line. This double-whammy of increased supply really is the only thing that can start to thaw out this frozen market, and unless JPow wants to put his hard hat on and start pouring some cement, we can expect a gradual return to “normalcy” in this market. Now, all we can really do here is cross our fingers and hope these gradual trends continue in the long term. At least, if you’re a homebuyer, that is. Suppose you’re a homeowner looking to sell… best of luck. At the end of the day, we all just wanna come home, right? What's Ripe Affirm (AFRM) ↑ 11.97% ↑ - Americans love spending money. We know this all too well. But it turns out they love spending even more when they don’t have to pay full price. - Enter Affirm Holdings. It’s a good time to be a BNPL firm as ostensibly thousands of our fellow citizens will certainly be purchasing gifts they can’t afford and the recipient likely doesn’t want. Regardless of making sense, this is the true beauty that drives our glorious economy. - And with all that spending set to come and—more importantly—getting started over the course of this 4-day spending holiday, Affirm and others are almost sure to see an uptick in usage. They sure hope to see a lot of missed payments and interest charges as well. Prayers up. Shopify (SHOP) ↑ 4.89% ↑ - Do I even need to explain this one? Remember, yesterday concluded our 4-day spending holiday, and just look at the ticker symbol on this thing. ‘Nuff said? - Sadly, no, that’s not enough. Aggregate spending this holiday weekend compared to last year might not have surged all that much, but the breakdown of that spending between brick-and-mortar and online certainly shifted in Shopify’s favor. - That means that even if holiday season spending isn’t as strong as we hope, traffic to these online platforms sure will be (allegedly). What's Rotten Albemarle (ALB) ↓ 6.28% ↓ - Remember roughly a year ago when everyone was hyping up lithium like a 4th-grade classroom hyped up silly bands back in 2009? Well, just like those silly bands, I guess the love for lithium broke pretty easily. - And that was on full display yesterday. Albemarle shares tumbled over 6% as the world’s largest lithium provider to the EV industry tumbled along with just about every other clean energy stock. Once again, JPow’s rate hikes are suspect #1. - Actually, no, JPow and his hikes have been convicted as guilty already. The EV battery ETF, which has potentially the coolest ticker symbol of all time, tumbled as well, losing well over 2% (LIT, -2.36%). Okta (OKTA) ↓ 4.05% ↓ - Imagine a police station that gets broken into and robbed. Or a fire department that burns down. Or, better yet, a cybersecurity company that gets hacked… - Probably not a great look, huh? Well, fortunately, we haven’t received any reports of police station break-ins or fire departments burning, but unfortunately for Okta and their shareholders, we can’t say the same for them. - As a result, shares were hit hard following the hack. But as of yesterday, the damage wasn’t done as the investment bank JMP Securities downgraded shares to market perform from outperform saying that Okta’s brand as a security provider has been “significantly degraded.” Say less. Thought Banana Friday is the New Thursday Holiday weekends like this throw everything up in the air. This year, Friday became Thursday, Sunday, and Monday became Saturday, and I’m still trying to recover from a hot gravy-related incident from Thursday. What a weekend. And those days became each other thanks entirely to the NFL. Counting days is hard, especially when we’ve only used this calendar for ~441 years or so. Give ‘em some time. They’ll figure it out. But, easily, the most important of those changes was turning Thursday into Friday. In case you forgot, Amazon paid the NFL $11 billion for the right to stream Thursday Night Football games exclusively through 2033. Now, they’re doing what Amazon does best: f*cking around to see what happens. Not only was the decision to stream a Black Friday game new but it’s expected to be wildly successful as well. We don’t have good ratings data just yet, but ad inventory was completely sold out as the Dolphins manhandled the Jets to a 34-13 win, with 30-second spots going for upwards of ~$900k, according to preliminary reports. That’s far higher than the $450k-$500k Thursday night slots typically see. Now, there are obviously other reasons for this, like it being a Friday and a holiday, for example, but the degree of outperformance sure came as a shock. "They added even more f*ckery to see what happens, most notably by shoving QR codes down your throat ..." But Amazon didn’t stop at just turning Thursday into Friday. They added even more f*ckery to see what happens, most notably by shoving QR codes down your throat as ads for Amazon products were shown on screen. This means you didn’t have to go through all that nightmarish effort of searching for something on your phone and then having to do the back-breaking work of clicking a link to buy a product. All you had to do was point your camera and click, and whatever you bought had probably already arrived. And people still question why Jeff Bezos is as rich as he is. That’s a conversation for another day, but as sweet as this enhancement was for consumers, it was probably even better for Amazon. "... Amazon hyped up its own music streaming services as well." But the firm didn’t stop there either. During the exclusive Garth Brooks concert following the game, Amazon hyped up its own music streaming services as well. Essentially, the firm is using these ancillary channels like Thursday Night Football (on Friday) to create a flywheel and get customers to not only watch the game on their platform but to buy sh*t from them as they watch. I know we just used a horrific cringe business school word in “flywheel,” but for the first time ever, it might actually have some meaning here. So, even if you’re a Jets fan and had to watch that humiliation, we hope you at least got some sick Black Friday deals while you watched. After all, a win is a win—whether it’s for your team or your wallet. The Big Question: How much did Amazon make off of Black Friday Football? Will Black Friday Football happen annually, and if so, what will that mean for Amazon's stock? Banana Brain Teaser Yesterday — If I lost 50% of all my money and then regained 50% but am now $50 off my old total, what was my old total? Answer $200 Today — When Carl Friedrich Gauss was six years old (back in 1783), his school teacher asked the students to add up all the numbers from 1 to 100. Unfortunately for the teacher, who was hoping to keep the class occupied, it took young Gauss only a few seconds to work out the answer. Can you figure out what Gauss did to come up with the answer? Shoot us your guesses at vyomesh@wallstreetoasis.com Wise Investor Says “If stock market experts were so expert, they would be buying stock, not selling advice.” — Norman Ralph Augustine 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