WSO Platinum Banana: Business Story of the Year

Under the category marked "Business Story of the Year," the 2023 Platinum Banana award goes to “The Collapse of Silicon Valley Bank (SVB)." [The Daily Peel... ]( December 27, 2023 | Peel #614 Silver banana goes to... [SRS Acquiom. ]( In this issue of the Peel: - Yesterday, we got the last release from the Case Shiller Home Price Index for 2023, which gives a pulse on the housing market around July or August. - Nio Inc. and Manchester United had a ripe day, while Bristol Myers Squibb and Apple suffered a share price decline. - Under the category marked "Business Story of the Year," the 2023 Platinum Banana award goes to “The Collapse of Silicon Valley Bank (SVB)." Market Snapshot Happy Wednesday, apes. Although Santa has come and gone, the holiday spirit remains strong in markets heading into 2024. There’s not much action going on in these latter weeks, but thankfully, the market gods seem to be giving us some luck in the meantime. Especially in equity markets. Overall positive market breadth was widespread today, with the Russell 2k leading the 4 major U.S. indices higher with a 1.30% gain on the day. The S&P brought up the rear with a 0.42% gain as the giant Apple misstepped mildly while the rest of the market surged (more below). Still, all 11 S&P sectors were higher, so it's hard to complain. Meanwhile, the apes at WSO Alpha managed to keep us afloat on the day, underperforming said major indices with a 0.22% gain on the day, once again victimized by Apple’s mild decline. Smh, just plain rude. Let’s get into it. Paradise Means Leaving Thumb Drives Behind [image](=) You’ve got enough things to worry about. A thumb drive full of deal docs and data shouldn’t be one of them. With SRS Acquiom, it doesn’t have to be. Because once your files are up and organized on the VDR, they can stay there until you decide to take them down. Since there’s no additional charge to keep the VDR open, it’s totally up to you whether and when to close it. In the meantime, all that confidential data stays as secure as ever. It gets better: transparent, flat-rate pricing for however many users and uploads you need, for as long as you opt to keep the VDR open. No pay-by-the-page nonsense or unexpected upcharges here. It’s obviously a win-win as far as VDRs go. It’s also one more way SRS Acquiom maximizes efficiency throughout the deal process— from due diligence, to payments, all the way through post-closing. That’ll keep your clients happy and you looking great at what you do. Need more convincing? [Here’s more convincing]( > Macro Monkey Says Last of this Year Do you know that guy from high school that you bump into once or twice a year who insists on having the same conversation about the same story from “back in the day” every single time you see them? Yeah, we hate them too. But today, we’re gonna have to be them once again. And that’s because once again, and for the last time this year, we have to talk about housing. Yesterday, we got the last release from the Case Shiller Home Price Index for 2023, but don’t think that it actually has anything to do with the end of the year. This data comes from October 2023, which really means it comes from as far back as July or August, at least in part. So, is the data itself useful? Probably not, but it can give us a glimpse into how the market, central bank officials, and prospective home buyers/sellers are thinking… "Yesterday, we got the last release from the Case Shiller Home Price Index for 2023 ..." And what they’re thinking is largely: “F*ck, I can’t believe prices rose again.” The tone in which you read tells a lot about which side of the market you’re on, but if you’re in the prospective buyer category, it’s definitely not a happy one. In October, home prices per Case Shiller increased by 4.8% compared to October of 2022, with the national composite rising 0.2% monthly, the fastest growth rate since 2022. Now, home prices are 7% higher than at the start of this year and have surpassed their 2022 peak by 1%, meaning that October’s prices set a new all-time high. Keep in mind this was during a month when average mortgage rates hit a multi-decade high, crossing just beyond 8% on October 19th. "... home prices are 7% higher than at the start of this year and have surpassed their 2022 peak by 1%, meaning that ..." But, as we always like to point out with Case Shiller, it’s a terrible index built on delayed and unreliable data. Still, it always grabs the attention of market watchers because it was actually a pretty good measure—relative to alternatives—when it was released way back in the 1980s. However, there’s no denying that home price gains haven’t gone away. Other, more real-time measures like the RHPI have confirmed this data, and taken altogether, they speak to a housing market as resilient as I’d like my stocks to be. Rates go up, and so do home prices. Rates go down, home prices still rise—there’s only one possible explanation: demand for homes in the U.S. is absolutely out of this world. From October through November, however, interest rates fell alongside expectations for a more dovish Fed, only getting more extreme over this past month. We’ll have to wait a while to get this data again, but keep in mind home prices generally rise when rates fall. Evidently, the housing market has been in a weird state of frozen limbo for quite a while now, so anything to increase transaction volume sounds worth it at this point. Heading into 2024, the housing market and the appreciation in the value of the primary asset for most Americans is expected to have the potential to play a key role in averting any kind of looming recession that may be around the corner. As usual, we’ll find out soon enough. What's Ripe Nio Inc (NIO) $9.33 (↑ 10.81% ↑) - Taking a page out of Tesla’s playbook, Nio has decided to carry the entire EV industry on its back for Tuesday. It’s a day late, but I’m sure that gift was still well received. - At a recent investors and analyst conference, Nio finally unveiled their long-awaited flagship sedan vehicle. Analysts always love to see a new product release, so naturally, shares were much higher. - The rest of the industry, including names like Tesla, Rivian, etc., got in on the action too. So I guess, Merry belated Christmas, EV shareholders! Manchester United (MANU) $20.52 (↑ 3.43% ↑) - It’s always fun when watching the stock of a certain sports team becomes more exciting than watching the actual sport itself. And this was the story of Manchester United yesterday. - Sorry to the rest of the world, but yes—money is more fun than soccer here stateside. As such, Manchester United was able to grab our attention with a $1.3bn investment from British chemicals tycoon Sir Jim Ratcliffe. - Ratcliffe earned himself a 25% non-controlling stake in the club, which is still owned by the Glazer family. The investment values Man U at $6.3bn (including debt) and is hopefully step one for the club to start to actually be relevant once again, especially in their own city after losing favor to Man City in recent years. What's Rotten Bristol Myers Squibb (BMY) $51.45 (↓ 1.61% ↓) - Much like the guy at the club who just blew his whole week’s salary on a VIP table, Bristol Myers Squibb is making it rain. And both are facing the same question: y’all got the money for this? - For bro at the club, it’s almost definitely no. But, for Bristol Myers Squibb, with $7.5bn in cash and $27bn in current assets at the end of Q3, they might actually be able to afford the things they buy. - After announcing a $14.5bn acquisition of neurological therapy maker Karuna Therapeutics on Friday, BMY followed that up with the $4.1bn acquisition of RayzeBio, a radiopharmaceutical platform provider. - Basically, RayzeBio delivers targeted doses of radiation to treat patients with cancer. Markets clearly weren’t too happy and might not think Bristol Myers has the cash to go for it, but we gotta respect the boldness. Apple (AAPL) $193.05 (↓ 0.28% ↓) - I don’t have my Apple Watch on. Can someone tell me what time it is? Oh, is it time for those watches to be banned in the U.S.? Oh sh*t… - Well, it’s time for an import ban on the Apple Watch Series 9 and Ultra 2, that is. Both models contain what *allegedly* constitutes patent infringement from a company called Masimo and their “pulse oximetry technology.” - Basically, it’s a medical tracking system that Masimo alleges Apple stole from them, in addition to stealing away employees, money, and plain-out joy from them as well. - Apple has since appealed the decision right up to Joey B, so we’ll see how this one plays out. Thought Banana Platinum Banana: Business Story of the Year Time to get serious. We’ve officially got only three trading days left in 2023, and with that, it’s time to give out our top three Platinum Banana awards. As highly regarded and envy-inducing as the others have been, the final three are like Best Picture, the Heisman Trophy, and Triple Crown combined. For today’s Platinum Banana award, we’re recognizing the business story that shook the game up more than any other this year. Not necessarily the one with the single most market impact (although it probably was), but the one that caused the most… shock. "Not necessarily the one with the single most market impact ..." We wish we had a better way to describe it, but we promise you’ll understand what we mean in just a few lines. Runner-ups for the glorious title include stories like Sam Altman’s ousting as OpenAI CEO, the collapse of Yellow in shipping, or Affirm’s rise from the ashes to go on offense all year and dig itself out of its own grave, but no. The lone business and business story to leave the greatest impact on us in 2023 hurt much deeper. And that’s why the winner of the 2023 Platinum Banana Award for Business Story of the Year is… The Collapse of Silicon Valley Bank (SVB)! That’s right, apes. How could it be anything else? On March 9th, 2023, a crisis of confidence and eventual bank run engulfed SVB, leading to its eventual permanent, government-enforced shutdown on March 10th, 2023. This marked the second-largest bank failure in U.S. history, just after the collapse of Washington Mutual in 2008. You remember how much 2008 was, right? Most of us could probably barely think for ourselves (bunch of sheep), but still—when we recall that the collapse of SVB was the 2nd largest bank failure in U.S. history for only ~1.5 months. "... recall that the collapse of SVB was the 2nd largest bank failure in U.S. history for only ~1.5 months." On May 1st, 2023, First Republic Bank collapsed despite assets worth an estimated $212bn, just $3bn beyond that of SVB. Objectively, this collapse was largely induced by the shattering of SVB, and panic spread across the banking sector in its aftermath, officially commencing in the 2nd and 3rd largest banking collapses in U.S history happening within just a few weeks of each other. Oh, and did I forget to mention the 4th largest was Signature Bank… on March 12th, 2023? Yup, just two days after SVB. Hey, never forget. But, from February 7th to March 13th, the S&P only fell just below 7.8%. Regional bank ETF $KRE lost nearly 1/3rd of its value in that time, spreading to a 44% loss by May 4th. Safe to say the fourth was not with you here… if you were invested in regional banks, that is. Many more bank failures were postulated at this time, but thankfully, the successive collapses of the 2nd, 3rd, and 4th largest bank failures in U.S. history managed to remain relatively contained. And honestly, we gotta say, that’s some good sh*t. Enormous banks like J.P. Morgan and other antitrust-level behemoths came in and saved the day, of course, with the most notable being UBS’s arranged marriage/life preserver with Credit Suisse. But it all largely stems back to the same reason: losses in SVB’s bond portfolio brought on by JPow’s enormous rate hikes (remember, bond prices and interest rates move inversely to each other). And as always, thanks JPow! Congrats again to our lucky winner of the Platinum Banana Award for Business Story of the Year in 2023! We can’t imagine the employees and especially the executives over at this bank are too proud of themselves, but hey, this has to make up for it for the most part, right? The Big Question: Does winning the Platinum Banana award overcome the pain and strife suffered by SVB employees this year? Who will win next year? Banana Brain Teaser Yesterday — Can you find three consecutive even numbers that total 85,008 when multiplied together? Answer 42, 44 and 46. Since 4^3 equals 64, and 5^3 equals 125, the three consecutive even numbers must lie between 40 and 50. Given that multiplying 2,4,6 ends in 8 and multiplying 4,6,8 ends in 2, the answer must be 42, 44, and 46 Today — What U.S. state has the name of another U.S. state in it? Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says “The stock market is a long-term game, and people who realize this make money” — Peter Lynch 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