According to CBRE data, the national average monthly cost to afford a home has surged to $3,322. [The Daily Peel... ]() December 12, 2023 | Peel #604 Silver banana goes to... [SRS Acquiom. ]( In this issue of the Peel: - American consumers expect inflation to increase only 3.4% over the next 12 months, the lowest reading since April 2021.
- Macy's and Snap Inc. had a ripe day, while Digital Assets and Eli Lilly saw their share price decline in the last 24 hours.
- According to CBRE data, the national average monthly cost to afford a home has surged to $3,322. Market Snapshot Happy Tuesday, apes. Hope your week has been good so far. Unless you're the president of an elite American university, then things probably arenât going so hot. It's always fun to see the mighty fall, huh? Speaking of the mighty falling, we saw a whole lot of that as mega-cap stocks sold off broadly yesterday, yet the indexes were still able to find the strength to rise above. The 6-largest stocks in the U.S. all sold off yesterday, but widespread underlying strength carried all the U.S. majors to a green day. The Nasdaqâs 0.2% gain played catch up while the Dowâs 0.43% led for the session. Despite the willpower shown by markets to continue to rise through the dayâs struggles, the WSO Alpha portfolio couldnât get it done and shed 0.19% for the session. Disgusting, but last monthâs 7.86% gain is something we can all get behind, I guess. Stop missing out on all the pure, sweet, degenerate, fun, and go check out the portfolio today (first reports are coming soon⦠stay tuned *eye emojis*). Letâs get into it. Up Your M&A Game with Exclusive Deal Intel [image](=) Gordon Gekko said it right: âThe most valuable commodity I know of is information.â By that measure, SRS Acquiom is loadedâand weâre always happy to share the wealth. Take our Private M&A Deal Terms Quick Reference Guide. It draws on data from more than 3,400 private-target transactions to equip you with the exclusive deal terms and claims insights you need to keep delivering the absolute best results for your clients. Weâve consolidated everything into a tight four pages of quick-hit graphs, charts, and takeaways particularly pertinent to investment bankers like you. Less time required to read it means more time available to use it. But âitâ is still all there: buyer type behaviors, due diligence trends, post-closing factors that can impact your pitchâ¦you get the idea. Did we mention itâs free? [Itâs all right here](=) >> Banana Bits - Itâs a big week, so I hope Fridayâs jobs report didnât take too much out of you because weâll get the CPI print for November in just a few hours [right here.](=)
- And if thatâs still not enough for you, the FOMC is meeting tomorrow, too, with the odds of a hold [chilling at 99.7%.]()
- Google took a big L late in the day yesterday, losing a lawsuit to Epic Games where the Play Store was determined to be acting in an [anti-competitive manner.](=)
- Putinâs top critic and former Presidential candidate is [âmissingâ from prison,](=) reports say. Macro Monkey Says Survey Says Thereâs not much we can all agree on, but considering Steve Harvey the GOAT of TV show hosts is as much a fact of life as gravity at this point. Guys gotta be up there with Alexander the Great, Caesar, Napoleon, and all of âem at this point. In addition to dazzling the hearts, minds, and eyes of Americans across the country, our boy Steve is probably the best surveyor of all time, tooâor at least, the best survey revealer. Weâre gonna try to channel our inner Steve Harvey today, much like the Federal Reserve Bank of New York. And thatâs because, despite our general hatred of surveys, weâve got one that might actually matter. To quote the great Steve Harvey, in this case, âsurvey saysâ¦â American consumers expect inflation to increase only 3.4% over the next 12 months, the lowest reading since April 2021. That was a 0.2% fall compared to last month while looking out over the next 3 and 5 years, expectations remained the same at 3.0% and 2.7%, respectively. Most consumers have no idea what they expect to eat for dinner tonight, but clearly, we need to take their 5-year inflation expectations into account, right? I mean, we wouldnât expect anything less than for you all to be modeling aggregate price levels before bed, like reading a lullaby. "I mean, we wouldnât expect anything less than for you all to be modeling aggregate price levels before bed ..." But, in this case, inflation is one of those weird economic phenomena in which expectations drive future reality. If we expect prices to rise, weâre gonna go out and spend now, and that increased demand itself can (and does) aggregate price levels higher, so when we go out and spend next month, weâre paying more and probably thinking the exact same thing. Ask Siri to define a âvicious cycleâ for you. It works the same way in the opposite direction, too. The self-fulfilling prophecy that is inflation has, however, reached a 31-month low, giving economists and other onlookers even more hope that JPow might actually be able to land this plane softly. Moreover, the Fed Bank of New York quantifies consumer confidence, or lack thereof, in this survey too. Essentially, they subtract the 25th percentile of expectations from the 75th percentile, which decreased at the one-year mark in November. So not only do we expect inflation to decline over the next year, but weâre even more sure of it, too. "Something tells me that the last one should be a lot higher ..." Steve, Iâll take âMacro Trends You Love To Seeâ for $500, please. Oh, sh*t wait, thatâs Alex Trebek on that one, my bad⦠and RIP. Anyway, the survey asks respondents about much more than inflation, too, diving into household finances, the labor market, and much more. Some of the other highlights include: - Expectations that the unemployment rate will be higher one year from now declined by 0.2% to 38.4%
- Expected growth in household incomes for the next year was unchanged at 3.1%
- The perceived probability that stock prices will be higher one year from now increased by 2.3% to 36.5%
- Growth in government debt expectations increased from 9.8% to 10%
- The perceived probability of losing oneâs job over the next 12 months increased by 0.9% to 13.6% Something tells me that the last one should be a lot higher for most of you, and especially me. Unfortunately, however, most of those donât fall victim to the self-fulfilling prophecy inflation finds itself in, so this is more of that normal, pure speculation that we expect to see in surveys. It's always good to stay on your toes, right? What's Ripe Macyâs (M) $20.77 (â 19.44% â) - Macyâs shareholders were ready to party like it was 1858 again as the 165-year-old retailer had its first good day since people cared about their Thanksgiving Day parade. Needless to say, it took some outside help.
- Specifically, it took ~$5.8bn of outside help from a group of investors ready to buy the old department store chain. Shares ripped to just under that proposed price on Monday, closing just underneath the $21/sh acquisition price tag.
- That doesnât sound too bad until you realize thatâs even ~70% off from the high-60s share prices Macyâs was seeing just a few years ago in 2015. Despite closures in recent years, Macyâs still operates just under 500 locations, and you can be damn sure Iâm gonna make a trip or two or six before the Holidays arrive.
- So, while clearly falling apart, Macyâs has maintained some degree of cultural relevance despite its flaws. The group of investors has already proven their lack of a poker face, too, indicating they could be willing to slap a higher price tag on the store at some point. It's time to sharpen those pencil apesâdeals are back. Snap Inc (SNAP) $15.75 (â 4.37% â) - Snap shares have been on a streak lately, bringing back memories of the days of yore when rates were low and gains were high. Itâs been a rough past few years, but it certainly makes for quite the story.
- Yesterday, Wells Fargo decided they liked that story enough to give shares and upgrade, nearly tripling their price target on the social media/photo messaging app from $8 to $22/sh. Basically, they think Snap may have finally figured out how to properly monetize users⦠just about a decade after every other digital ad company did.
- With that, Snap shares hit a high not seen since spring of 2022 yesterday. Investors seem to be on board with Wells Fargo here, crossing their fingers that the firmâs next earnings report delivers a high (snap)score. What's Rotten Digital Assets (BTC) $40,795.28 (â 7.78% â last 24hrs) - This could be wildly inaccurate by the time you read this, but as I sit here at 4 pm today (a.k.a. yesterday), BTC prices and its associated stocks have been down badly after this weekend.
- For an asset class thatâs used to insane swings designed to give investors whiplash, this is a walk in the park. But shareholders in names like Coinbase (COIN, -5.87%), MicroStrategy (MSTR, -7.27%), and Riot Platforms (RIOT, -11.43%) must be pissed.
- Allegedly, this is just a âhealthy correctionâ given the huge, nearly 60% runup seen in the last ~90 days. BTC is all too familiar with âhealthy correctionsâ of 20, 50, or even 80% every now and then, so just keep those diamond fingers crossed and hope the whales HODL, I guess. Eli Lilly (LLY) $584.04 (â 2.34% â) - Obesity drugs have become almost as popular in the U.S. as obesity itself lately. But for Eli Lilly, yesterday was the first day those drugs came back to bite them⦠and sadly, that bit didnât contain any food.
- Zepbound, Eli Lillyâs version of Ozempic, Mounjaro, and all those other similar drugs, was found to not promote long-term weight loss once patients stop regularly taking the medication.
- And itâs not like this is a pill or anythingâZepbound is administered via injection once a week, or patients would regain roughly half the weight theyâd previously lost while taking the drug, according to the findings of an 88-week study Eli Lilly ran themselves and released yesterday.
- Talk about shooting yourself in the foot. But, when youâre the largest Big Pharma stock the world has ever seen, like these guys are, maybe this is a loss you can afford. If only it was just a loss of weight instead⦠Thought Banana Math Ainât Mathing In the U.S., it feels like being poor alone is a crime these days. The only difference is that, instead of going to jail, youâre just banished to 5 more years of living with your parents. Iâm not sure which is worse, either. But what we do know is that actually going outside (as crazy as that sounds alone) and buying a house is harder now than it ever has been in American history. Letâs find out why. In a word? Money. I think by now, we all know who to point the finger at, as JPowâs rate hikes have had almost the exact opposite impact on the housing market than many would expect. Rate hikes should have brought home prices down, but because of the PTSD suffered by homebuilders in the wake of the 2007â2008 housing crisis, building more homes feels about as dangerous as a situation in which someone might actually get PTSD. "... home prices reached new all-time highs in October, at least judging by the Fedâs numbers ..." Because of this and the enormous demand for homes from the largest generation in U.S. history since the baby boomersâmillennialsâhome prices reached new all-time highs in October, at least judging by the Fedâs numbers for median existing home sale prices. And now, the spread between payments for living in a home vs renting an apartment has widened to the most on record. According to CBRE data, the national average monthly cost to afford a home has surged to $3,322. Meanwhile, leasing a new spot will âonlyâ run you $2,184/month. Thank god Mom and Dad paid off the house when rates were at literally 0%, and home prices were, in retrospect, reasonable. If only we could just kick them out of the house⦠When we look back at 2023âs data on homebuyers, the story stays nice and clear, too. The proportion of ânewâ home buyers in any given year historically has hovered right around 38-40% for most of American history. This year, they made up barely 1/3rd of the market, emphasizing the plight of the young and not-yet-rich in a situation where they seem to be getting priced out of the country. In time, with enough new homes built, we should eventually see this trend start to move back in the right direction, or at least slow down a little bit, but donât expect to ever see pre-pandemic prices come back. "... we should eventually see this trend start to move back in the right direction ..." It's time for not only the Fed but JPow himself to get out there and start hanging some drywall. Obviously, that ainât gonna happen, but itâs about as likely as finding an affordable home here in the U.S. The Big Question: Will young people be stuck renting for most of their lives? Can home prices drop to an affordable range for most Americans again? How can I kick my roommates (aka parents) out of the house? Banana Brain Teaser Yesterday â Each child in a family has at least 4 brothers and 4 sisters. What is the smallest number of children the family might have? Answer If each boy in the family has at least 4 brothers, then the smallest number of boys is 5. Similarly, if each girl in the family has at least 4 sisters, then the smallest number of girls is 5. Thus, the smallest number of children the family might have is 10. Today â You have two cards, one red on both sides, one red on one side and black on the other. You reach into a hat and pull out one card, viewing only the top. It is red. What`s the probability that the other side is red? Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says âA winning strategy must include losingâ â Robert Kiyosaki 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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