At 99 years old, Charlie Munger passed at a California hospital on Tuesday morning, surrounded by family and other loved ones. [The Daily Peel... ]() November 29, 2023 | Peel #595 Silver banana goes to... [CapLinked. ]() In this issue of the Peel: - With respect to interest rates, markets seem to be pricing in a Hold at 5.25%-5.50% at least until January, with the odds of an interest rate cut increasing after March.
- PDD Holdings and Twilio saw their stock rise over the day, whereas Interactive Brokers and Micron suffered share price declines.
- At 99 years old, Charlie Munger passed at a California hospital on Tuesday morning, surrounded by family and other loved ones. Market Snapshot Happy Wednesday, apes. It was a sad day on Wall Street yesterday despite mostly green prints from equity markets. One of the best to ever press âBuy,â Mr. Charles T. Munger of Berkshire Hathawayâand much moreâpassed away at age 99. More (much more) below. But alas, equities did have a fairly calm day prior to the news getting released out of Berkshireâs HQ. The Nasdaqâs 0.29% rise, along with the Dowâs close-second place move of 0.24%, showed a good day for large-cap names, but smaller caps in the Russell 2k broadly fell with the index losing 0.39%. Naturally, the team at WSO Alpha obviously managed to drastically underperform the Nasdaq all day, gaining just 4bps, so we can all point and laugh. Be sure to join your fellow apes and follow Alphaâs holdings, research, and other tomfoolery [here](. Letâs get into it. CapLinkedâs Data Room Hits Different [image]() CapLinked has never been one to care much about the way things have been done. Theyâre not here to waste your time with superficial drinks meetings, and theyâre not here to trap you into an overpriced data room contract. Instead, theyâre doing what other data rooms wonât â giving you your time back. Their VDR is designed for you to spend as little time in it as possible with features like⦠- Cutting-edge activity tracking for personalized, hyper-efficient follow-ups
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- What was once a Romeo-and-Juliet-style relationship of star-crossed lovers, Apple is looking to [break up](=) with Goldman.
- Hyped up and meme-ed on for years now, keep your head on a swivel on Thursdayâs commute because the [Cybertruck]( is finally here.
- Hereâs a link to Charlie Mungerâs first book, â[Poor Charlie's Almanack]()â and his second, â[On Success.](â Macro Monkey Says The Great Rate Gamble The Boston Tea Party, the Emancipation Proclamation, and World Wars 1 and 2 (back-to-back champ, NBD) were some of the most pivotal moments in American history. Now, itâs about time we add something else to that list. And that something else, of course, is a line going up on a chart, like this one below: [image] [Source](=) Of course, weâre talking about JPowâs rate hikes. While these may not have involved millions of deaths, mass suffering, and newfound freedoms like those above, they did involve my stocks falling, which is more than enough for me. But then again, my stocks fall every day, so I canât be too mad. Other people, however, like prospective home buyers and anybody else looking for a loan, have been understandably pissed. However, weâre coming to a moment where that anger might finally have reason to go away. At least, Wall Street seems to think so, based on its current position with regard to the Great Rate Gamble of 2023. "... the FOMC hiked rates at ten meetings in a row, beginning in March of 2022 through June of 2023." And thatâs what weâre seeing unfold now. Investors, who have had âhigher for longerâ dumped on them like the Sons of Liberty dumped tea into a certain harbor, are starting to call cap on JPow and the rest of the FOMCâs messaging. Letâs see whatâs going on. As we all know far too well, the FOMC hiked rates at ten meetings in a row, beginning in March of 2022 through June of 2023. July gave us the icing on the cake with one more hike, and since then, weâve been held in the range of 5.25%-5.50%. âHigher for longerâ has been the narrative since the start, but now investors arenât so sure. In September and October/November, rates were maintained, but the marketâs reaction to each outcome was surprisingly divergent. Equities sold off in September on the âhawkish holdâ as it was labeled and surged in November as the âdovish holdâ was seen as confirmation that rates arenât going higher. Following that âdovish hold,â investors are desperately trying to read between the lines and figure out what the f*ck is going on at the Eccles Building in DC. Right now, markets are pricing for: - 96% odds of a Hold in December, with 4% odds of a hike
- The exact same thing in January
- 64% odd of Hold in March with a 32% chance for a cut 4% chance of a hike
- 48% odds of a cut by May with a 35% chance they stay the same, along with a 15% chance rates are cut 50 bps by then and a 2% chance theyâre moved higher And then itâs all over the place from there, but feel free to check it out [here](). While the Fed has been adamant that rates will remain âhigher for longer,â thatâs about all theyâve said, just in a million different ways with layers of Fedspeak on top. But âhigher for longerâ can mean a lot of things. For example, a 4.5% fed funds rate is certainly higher than what we saw during the ZIRP era, but that would imply a 75-100bps of cutting by then, so does that destroy the âhigher for longerâ narrative? Further, why exactly are we cutting rates? "There are a lot of opinions out there and even more at stake here." There are two schools of thought here, both conveniently on display for us right now. In equity markets, the surge in prices following the recent rate cut conjecture weâve seen is suggestive of expectations for a soft landing. They seem to think inflation will fall back to the 2% target range, and the Fed will be able to ease policy without us dipping our toes into a recession or drastic slowdown. The bond market, however, might be seeing something different. Yields tend to move along market expectations for the path of interest rates for the life of the bond. So, seeing longer-dated yields continue to fall lower than shorter-dated ones suggests much further cutting will be necessary in the longer term, further indicating expectations for a recession sometime in the not-so-distant future. And then, the Fedâs credibility is further at play here. Their messaging of âhigher for longerâ has been so adamant because if they give Mr. Market even a whiff of the possibility for cuts, heâs gonna go crazy and could potentially ruin the plan. But, if the Fed says one thing and does another, its soft tool of âforward guidanceâ will be all but destroyed. There are a lot of opinions out there and even more at stake here. As usual, we donât have the answers, but we sure can try to ask the right questions and use a probabilistic framework for thinking about these things. And, we can potentially get ready to jump for joy at any rate cuts that do occur, as these should give equities a boost for the day⦠we all know my portfolio needs it. What's Ripe PDD Holdings (PDD) â 18.08% â - The most wonderful time of year (earnings szn, obv) may be coming to a close, but some names out there still have something to say. For PDD Holdings, that something was âwe killed it.â
- The firm, formerly known as Pinduoduo, has been on a major e-commerce expansion as it ups the competitive dial with Alibaba, Amazon, and others. The owner of Temu and other (mostly Chinese-based) platforms saw a revenue boom of 94% from last yearâs Q3, while net income jumped a huge 35%.
- Needless to say, both of those slammed the âOverâ on analystsâ expectations. PDD reported Â¥11.64/sh (thatâs yuan-per-share), adjusted, vs the Â¥8.94/sh expected.
- The explosive growth of Temu, the firmâs international discounted e-commerce platform, along with a less-bad-than-expected consumer spending picture in China were the primary drivers here, and if Temu keeps selling, like, full-*ss winter jackets for ~$4 and somehow making money off of that, this might have some long legs to run on. Twilio (TWLO) â 3.61% â - When your knees get sore from sitting all day, or you lose your breath walking up the stairs, you know itâs time to get active. For companies, it might be a little harder to notice.
- But, for the team over at Anson Funds, itâs clear Twilio needs to get activeâor, more specificallyâget an activist. Anson is calling for a full business sale or a divestiture of two business units, getting investors excited at the idea of a sale of either at an assumed premium.
- The move comes after Anson snatched up some talent from fellow activist Legion Partners, who had already built a similarly sized, $50mn stake in the communications platform. The second try is the charm, I guess. What's Rotten Interactive Brokers (IBKR) â 5.49% â - Do we hate digital currencies so much that even offering them on exchanges sends shares to the gutter? Probably not, but that was some weird action from Interactive Brokers on Tuesday.
- Without much major news, shares dumped almost 5.5% for apparently no reason at all. We know Mr. Market is a fickle beast, to say the least, but the firmâs announcement of expanding the scope of its crypto trading offerings in Hong Kong was⦠just about it for news yesterday. And, shares tanked.
- Now, there very well could be something else going on behind the scenes here. Unfortunately, despite what the rumors say, we here at the Daily Peel actually arenât completely omniscient like many think.
- Many banks, in fact, are gearing up on this name. Bank of America and some others have called for much higher price targets, and maybe Mr. Market just wanted to convince you to dive in. Our only advice: proceed with caution. Micron (MU) â 1.79% â - Oh, you thought exceeding expectations would count as âgood enough? Câmon apes, this is Mr. Market weâre talking about.
- Chipmaker Micron on Tuesday announced updated revenue guidance weâre sure they thought was gonna bring the house down. Instead, all it did was bring the stock down as investors were either hoping 1) for an even higher range or 2) for a mention of something about profitability, something Micron hasnât seen since August⦠of 2022.
- Prior to yesterday, Micon was expecting $4.4bn with ~200mn as a margin of error to take it or leave it. Now, the company expects sales in a range of $4.7bn while still planning to burn ~$1/sh for their current fiscal quarter ending on November 30th.
- This is exactly why we canât have nice things on Wall Streetâbecause even exceeding expectations isnât good enough. Thought Banana Rest In Peace, Charlie There we were, sitting in The Daily Peel Global Headquarters, just minding our business, when suddenly one of the saddest and most deeply feared headlines came across our screen: investing-and-life-genius Charlie Munger passed away at age 99. Born on January 1st, 1924, Munger was set to turn 100 years old this coming New Yearâs Day. He passed at a California hospital on Tuesday morning, surrounded by family and other loved ones. We had something else planned to write about, but I guess weâll have to wait for tomorrow. The life of thisâpardon my Frenchâf*cking legend deserves a celebration. Munger was Warren Buffett's right-hand man at Berkshire Hathaway and, as such, was one of the most brilliant and successful investors of all time. He and Buffet began their relationship in the 1960s and 70s, despite both working at Buffettâs grandfatherâs grocery store in their youths, but it wasnât until 1978 that Munger formally joined Berkshireâs board as the #2 guy to Buffett. At roughly 54 years of age at the time, Munger had already amassed a fortune through his investments and his other professions, including as a real estate attorney, an architect, philanthropist, and more. Later, Munger added to his resume positions, including chairman of the Daily Journal, board member at Costco, CEO of Wesco Financial, and a whole lot more. While surely a sterling resume any of us would kill to boast by the time weâre 99 (provided we apes are lucky enough to make it to such an age), it wasnât Mungerâs professions and ~$2.3bn fortune that left the greatest impact on society. "At roughly 54 years of age at the time, Munger had already amassed a fortune through his investments ..." Munger was what we like to call a quote machineâa wordsmith capable of dropping sage, perspicacious advice at the drop of a hat. To highlight this gift he had and shared with us, some of our favorite Munger quotes include: - "If youâre not learning while youâre earning, youâre cheating yourself out of the better portion of your compensation."
- "In my whole life, I have known no wise people (over a broad subject matter area) who didnât read all the timeânone, zero."
- "No success in public life can compensate for failure in the home."
- "The most important decision in your life is who you marry."
- "Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ."
- âShow me the incentive, and I will show you the outcome.â Those are just some of the dozens, hundreds, and maybe even thousands of quotes and quips Charlie leaves us. Seriously, I encourage opening up ChatGPT and prompting it to give you some of his best quotesâyou (and your wallet) wonât regret it. "RIP, Charlie. A true man and legend, but there was no myth about his greatness." To do Charlieâs storied 99 years any justice, weâd need a lot more room than the âThought Bananaâ section of a daily newsletter, so definitely check out this much deeper dive from [CNBC](=) or his very last interview ever given at the [Acquired Podcast]() released one month ago today on October 29th, 2023. For now, weâll leave you with more gems from Charlie, but these are some of this absolute legendâs best, most entertaining quotes: - "You don't have to pee on an electric fence to learn not to do it."
- âIn marriage, you shouldn't look for someone with good looks and character. You look for someone with low expectations.
- âIf you rise in life, you have to behave in a certain way. You can go to a strip club if youâre a beer-swilling sand shoveler, but if youâre the bishop of Boston, you shouldnât go.
- âIt is, of course, normal for self-appraisal to be more positive than external appraisal. Indeed, a problem of this sort may have given you your speaker today.â
- âYou donât want to be like the motion picture executive who had many people at his funeral, but they were there just to make sure he was dead. Or how about the guy who, at his funeral, the priest said, âWonât anyone stand up and say anything nice about the deceased?â and finally, someone said, âWell, his brother was worse.â RIP, Charlie. A true man and legend, but there was no myth about his greatness. Banana Brain Teaser Yesterday â 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? Answer Gauss realized that the series 1+2+3+4...+97+98+99+100 could be written as 1+100+2+99+3+98+4+97... or 101 times 50 to get the total 5,050. Today â Two men, starting at the same point, walk in opposite directions for 4 meters, turn left, and walk another 3 meters. What is the distance between them? Shoot us your guesses at vyomesh@wallstreetoasis.com Wise Investor Says âSometimes I call it crypto 'crappo,' sometimes I call it 'crypto s---. ' It's just ridiculous that anybody would buy this stuffââCharles Thomas (Charlie) Munger 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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