Under the category marked "Macro Story of the Year," the 2023 Platinum Banana award goes to âThe War on Inflation!â [The Daily Peel... ]( December 26, 2023 | Peel #613 In this issue of the Peel: - The Leading Economic Index (LEI) fell 0.5% for the month of November, which was an improvement to the (revised) 1% fall in October.
- Karuna Therapeutics and Rocket Lab had an absolutely ripe day, while NetEase and Nike saw their share price decline.
- Under the category marked "Macro Story of the Year," the 2023 Platinum Banana award goes to âThe War on Inflation!â Market Snapshot Happy Tuesday, apes. Of course, Happy Holidays to you all. Hope the resale value of all your gifts this year is enough to plug your portfolioâs losses, and if youâre sitting on gains, congrats on the additional funding for FY 2024. We canât wait. And markets couldnât wait either. Trading is back in action today after yesterdayâs shutdown for Christmas, but we canât forget about Friday. We ended the week alright, but it was a choppy session to get there. The Dow did end up shedding 5bps while all the other U.S. majors were higher, with the Russell 2kâs 0.93% leading the way. WSO Alpha was in the holiday spirit as well, managing to put 0.31% on the board and reminding us all about the true meaning of Christmasâmaking money. In the meantime, treasury yields moved higher on the day after a high and fast spike late in the session. âHigh and fastâ also happens to be how I took most exams in college, but unlike me, that spike probably at least worked out well for someone. The 10-year settled a hair below 3.9% while the 2-year was hanging around 4.35%. Letâs get into it. The Ultimate Program to Land a 6-figure Job in High Finance [image]( With over 17 years of experience, 900k+ members, and an insane network, WSO has cracked the code to making 6 figures right out of undergrad. Weâve helped over 1k students from all backgrounds break into these careers. WSO Academy is a 12-week program (with many lifetime benefits) that puts everything weâve learned on a silver platter for youâto dramatically improve your odds at landing a high finance offer. The waitlist for WSO Academy just opened again, and weâre only accepting 20 students into the next cohort. So if youâre serious about breaking into high finance, you need to sign up for the waitlist asap because we are opening applications next week (people on the waitlist will be the first to know). [Get on the waitlist -> Applications opening next week and capped at 300]( (so we can review all of them carefully). No reason for you to be sleeping on this. Macro Monkey Say Losing Economic Index Despite all the economic fears abounding throughout 2023, Santa Claus was ostensibly still able to make the rounds this year. The pile of coal under my tree confirms this, but it also confirms that those economic fears may have been just a tad bit justified. We learned last week that Q3 GDP growth, while still coming in hot, was below what we first estimated. Donât get me wrong, weâll take the growth, but Fridayâs biggest macro drop gives some insight into why. The Leading Economic Index (LEI) tracks 10 leading economic indicators to attempt to gauge the direction of a given economy. They release indexes that track the whole globe, certain regions, and certain countries, and because weâre feeling selfish today, weâre gonna stay focused on the U.S. Spoiler alert: it wasnât great. Overall, the index fell 0.5% for the month of November, which was right in line with expectations and an improvement to the (revised) 1% fall in October, but still⦠not great. [image] [Source]( Meanwhile, the Conference Boardâs sister index released alongside the LEI, the Coincident Economic Index (CEI), managed to spread some holiday cheer. "Spoiler alert: it wasnât great. Overall, the index fell 0.5% for the month ..." Where the LEI seeks to predict future performance, the CEI uses a basket of just 4 âcoincidentâ indicators, meaning they try to measure the economy as it is now. These include: - Payroll Employment
- Personal Income less Transfer Payments
- Manufacturing and Trade Sales
- Industrial production All four moved higher in November, bringing the index 0.2% higher overall. Moreover, in the past 6 months, the CEI has seen a 1% gain overall, accelerating from the 0.7% gain seen in the prior 6 months. "... weâre not trying to kill the vibe. Itâs a light week ahead in terms of economic indicators, trading volume, and basically anything ..." We have, again, something we seem to be getting a little too used to in the U.S. economyâa tale of two cities. Now, things are purported to be okay, but as has been the case for the past *checks notes* seemingly forever, we canât be sure who to trust. Now, the LEI doesnât actually mean a whole lot because anytime indicators seek to measure everything, they largely end up measuring nothing⦠of value, at least. But it could be the case that now that we seem to have beaten inflation like Israel Adesanya did to Sean Strickland, this could be a burgeoning sign that we may have gone too far. But, for once, weâre not trying to kill the vibe. Itâs a light week ahead in terms of economic indicators, trading volume, and basically anything that doesnât involve conspicuous consumption of food, alcohol, or all of the above. Remember, itâs what Santa would want. What's Ripe Karuna Therapeutics (KRTX) $317.85 (â 47.71% â) - Christmas came early for shareholders in this biotech name, with Friday combining both the holiday and a stockâs equivalent of draft day at the same time.
- Despite the fact that Karuna has ânot generated any product revenue related to its primary business purpose to date,â according to their latest quarterly filing, shares boomed on Friday in response to news of a $14.5bn acquisition by pharma giant Bristol Myers Squibb.
- Karuna makesâor better yet, has been trying since 2009 to makeâa kind of drug that Mr. Market could really use: antipsychotics. Seeing that the firm has never earned a dollar related to their products, maybe their acquirer could use a dose, too.
- But, as is common in biotech, theyâre not buying necessarily for the business but simply for the research and âeventualâ product (fingers crossed). Getting bought like this is how biotechs get pulled up to the big leagues, so weâll see if they can speed things up now that theyâre up in the major leagues. Rocket Lab (RKLB) $5.44 (â 22.80% â) - Some of the best holiday gifts are when mom & dad, grandma & grandpa, or someone else who has to get you something but doesnât know what to get just decides to give you cold, hard cash.
- Thatâs when you realize that Santa might not be real, but that dreams really do come true. And for Rocket Lab, that happened on Friday as the space companyâs mom & dad (a.k.a. the U.S. government) decided to toss them $515mn.
- Thatâs just slightly more than what I got, but for that cash, Rocket Lab actually has to do something useful for society. For that $489mn base + $26mn in options and incentives, Rocket Lab will be custom building, delivering, and operating 18 âspace vehiclesâ for Uncle Sam. What's Rotten NetEase (NTES) $87.64 (â 16.07% â) - Sometimes the holidays giveth, and sometimes they taketh away. And leading into this holiday weekend, China chose the latter path.
- Since 2021, Chinaâs government has essentially declared war on online gaming. The country hostsâby farâthe largest online gaming market in the world, and as of Friday, there are some new laws to restrict playing.
- To close last week, Beijing passed legislation that will ban games âfrom giving players rewards if they log in every day, if they spend on the game for the first time or if they spend several times on the game consecutively,â according to Reuters.
- If youâre smelling what Iâm smelling, it seems like thereâs a lot of wiggle room within that loose framing. But investors were spooked by the resurgence of policy risk this presents, which they thought was pretty much over. Nike (NKE) $108.04 (â 11.78% â) - Speaking of trouble over in China, Nike jumped on that train on Friday as well. But in this case, itâs kinda their own fault.
- In their earnings released on Friday, Nike cited demand weakness in the worldâs second-largest economy as a reason to drastically cut their revenue forecast for next year. EPS of $1.03/sh on $13.38bn in sales beat the bottom line, but that sales figure couldnât overcome the $13.39bn expected.
- So, the sneaker firm missed last quarterâs target and killed the vibe even more by saying next yearâs sales are probably gonna suck too. In addition to Chinaâs demand weakness, upstart brands like Allbirds, On, and others are threatening the kingâs market share as well. Thought Banana Platinum Banana: Macro Story of the Year Back at it again to finish out the year, weâve got even more Platinum Banana awards to bestow upon the soon-to-be forever-changed heads of our lucky winners. This week, weâre getting into the big ones, so letâs get right into it. 2023 has been a crazy year on the macro side, and thatâs saying something. Rarely (if ever) does the macroeconomic picture, and especially trying to invest based on short-term macro views, ever add value. And like author Tom Peters said, âIf you're not confused, you're not paying attention.â "... but 2023 has just been confusing." That was especially the case this year. We often hear about years that are particularly bad or good, but 2023 has just been confusing. You have morons on TikTok claiming weâre in the âworst economic time in U.S. historyâ as if the Great Depression is chopped liver or something while unemployment is near a 50-year low and inflation is falling by the month. Itâs not and never is perfect, but it could be and has been a helluva lot worse. But amid all that chaos, confusion, and calamity, one story has been the overarching driver of it all. If you havenât guessed it already, I suggest you go back and re-read every Daily Peel ever (or just one over the past year), and youâll see why the lucky winner of the 2023 Platinum Banana award for Macro Story of the Year is⦠The War on Inflation! Fed Chair Powell declared war on this economic phenomenon back in March of 2022. Then, the word âtransitoryâ was used as frequently as the F-word in the menâs bathroom at a crowded college bar ThursdayâSunday night. It was met with a lot of skepticism, but the Fed went on a tirade. The effective federal funds rate, the base interest rate across the economy in which just about everything is linked, was hiked 10 times in a row and 11 in total, taking us from effectively 0% to the 5.25%-5.5% range where we sit today⦠in just 16-months. Historically, thatâs almost completely unprecedented in U.S. economic history. The best historical comparison we can make is to the bombing of Nagasaki⦠because it was brutal, painful, and (almost) unprecedented. "Fed Chair Powell declared war on this economic phenomenon back in March of 2022." Back in March of last year, headline CPI clocked in at 8.5%. Not only had rates not been touched, but the Fed was still actively buying mortgage-backed securities, driving up asset values in the housing and other markets in which it operates. June 2022 saw CPI hit a PR at 8.9%, and since then, JPow has been able to lasso the beast back down to 3.1%. The impacts on everything from the housing market to consumer spending to damn Argentina deciding to dollarize their economy have roots in this war against inflation, but weâll need more time to properly dive into that. Basically, every other economic release this year was immediately met with the question, âBut wait, what does it mean for the inflation picture?â When indicators that usually are the story, like the monthly jobs report, for example, become just part of a larger narrative, you know something crazy must be going down. Weâll be going deep into that dynamic later this week as well with our 2023 Macro Recap, but for now, just be sure to congratulate the War on Inflation for securing such a high, prestigious, and esteemed honor of winning this Platinum Banana award. Stay tuned. The Big Question: When will inflation go back to the targeted 2%? Did JPow manage to achieve a soft landing? What will be the Macro Story of the Year for 2024? Banana Brain Teaser Friday â How many times do the hour and minute hands cross each other in a twelve-hour period? Answer 10 times if you start when the hands are already on top of each other; otherwise, it's 11 times. Today â Can you find three consecutive even numbers that total 85,008 when multiplied together? Shoot us your guesses at vyomesh@wallstreetoasis.com Wise Investor Says âI have no idea on timing. Itâs easier to tell what will happen than when it will happen.â â Warren Buffett 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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