JPow Drops the Mic 🎤

💬 Fed Chair Powell’s testimony at Capitol Hill just concluded… March 8, 2024 | Peel #663 Silver Banana goes to... [CapLinked. ]( In this issue of the Peel: - 👊 The BLS is set to drop the latest Employment Situation report… - 💔 Victoria’s Secret might be struggling to stay sexy after this quarter. - 💬 Fed Chair Powell’s testimony at Capitol Hill just concluded… Market Snapshot 📸 = Banana Bits 🍌 - JPow confirms we’re getting closer to rate cuts [once again]() - Time to press CTRL + ALT + DEL for America in [China’s tech market]( - U.S. senior citizens made a bag in [the C-19 aftermath]( - Did China [take it on the chin]( for the rest of us?? Swipe Right on Caplinked: Your Perfect Match Still stuck with your old VDR? Time to ditch your current shitty relationship and swipe right on Caplinked. Think of it as the badass dating app for your deal-making game. Say 'hell yes' to deals that close faster than your ex can text back. Caplinked isn’t just another pretty face; it's got the brains too—unmatched security, slick interface, and the kind of performance that makes every transaction a victory lap. Ready to stop messing around with the rest and get serious with the best? [Upgrade to Caplinked.]( It’s time to fall hard for your VDR again. Macro Monkey Says 🐒 The Previews Everybody loves their job and working in general, that’s obvious. And while we dread that first-weekend beer we just have to drink later today, let’s commiserate as we remember what life is really all about—contributing to the economy. But, based on the data we’ve gotten so far this week, contributions to the economy and shareholder value creation seem like it’s not the vibe anymore? Not sure why that would be, but let’s get into it. The Numbers It’s jobs day in America, with the Bureau of Labor Statistics set to drop the latest Employment Situation report later today at 8:30 am EST. Before we get the latest print, let’s check out the previews and speculate widely about what we might see. [Source]( Since the boom that followed the economic reopening of 2021 and 2022, we’ve seen a steady downtrend in the number of job additions per month. That’s ideal while trying to quell inflation, but December and January saw two months in a row of increases. Despite the continued job additions and recent uptick in the number of jobs added, unemployment has stayed relatively stable below 4%. Factoring this in with the decline in inflation we continue to see, and that’s a recipe for a soft landing. [Source]( But, just because we landed softly doesn’t mean the runway is all clear for another takeoff. On Wednesday, the giant HR software provider ADP released their latest data tracking private, non-farm payroll additions. Being the giant that they are, these numbers give us a sense of what we can expect for a print later today. ADP reported total additions of 140k in February, far lower than the 353k that the BLS reported in January. But it turns out that counting is hard for ADP because, in January, they reported only 107k job additions. [Source]( My grandparent’s guess would’ve been closer than ADP’s January figure, so let’s take that with a grain of salt. The ADP report did, however, give us reason to believe that job additions could continue to be headed higher. Wage growth for job switchers—people who finally had the balls to stick their finger up to their managers and get a new job—accelerated for the first time in over a year. Since December of 2022, the growth in pay increases for job switchers has slowly trended lower, reaching 7.2% in January. According to ADP, that figure ticked up to 7.6% last month. That’s great for those people, but it kinda sucks for the rest of us. Rising pay bumps for job switchers suggest labor demand is moving higher, which could put us right back on the path of the wage-push inflation we’ve been seeing for way too long. [Source](=) Here, we can see that January already saw a slight uptick in wage growth. So, now that ADP has reported 1) accelerating job growth and 2) increasing pay raises for job switchers, there’s a scary amount of reason to believe the labor market is getting too jacked again… The Takeaway? Someone’s gonna need to call my parents to come pick me up if this inflation bullsh*t comes back. If we are seeing a re-tightening of the labor market, then throw away everything I’ve said since December (or, more accurately, since birth). The ADP report isn’t a super reliable indicator, as we can see above with their struggles to count numbers. But, this data alerts us to the fact that there could be trouble brewing. The exact numbers aren’t necessarily what matters, but the trend. And, the trend is starting to suggest inflation might not have taken the knife to the heart that we thought JPow had killed it with. That’s a scary thought, so please just go watch [this video]( of a Senator asking JPow about sex from yesterday’s testimony. What a time to be alive, huh? What's Ripe 🤩 New York Community Bancorp (NYCB) 📈5.8% - I thought BTC was supposed to be the riskiest asset, but it turns out it’s actually regional banks. But NYCB got a breath of life, and it’s worth $1bn. - The embattled bank, drunk on exposure to faltering CRE loans, is getting a $1bn infusion to plug losses from Steve Mnuchin and other investors. - Backing from the former Treasury Secretary is huge, but NYCB is getting a new CEO too. Although dilutive, this stock CPR just might save the bank’s life. Kroger (KR) 📈9.8% - One of the biggest winners of inflation, Kroger, killed it in Q4 by attracting a more loyal, high-income consumer base than typical. - That optimism blessed the firm with a good day as it fought the FTC over the Albertson merger, creating a grocery giant second only to Walmart. - The store beat on the top and bottom line and is even getting in on the AI craze as well, experimenting with other wild sh*t like grocery store drive-thrus. What's Rotten 🤮 Victoria’s Secret (VSCO) 📉19.7% - Not only is our society not having nearly enough sex, but we’re not looking sexy enough, either. Victoria’s Secret learned that the hard way (no pun intended). - The store that still makes me nervous to walk by with Mom & Dad had its worst day ever after missing on sales in Q4 and guiding for a worse Q1. - The Secret is apparently that the company will only pull $6bn in revenue in 2024, well below the $6.2bn expected by the Street. ADT Inc. (ADT) 📉10.2% - You probably haven’t traded ADT, but you’ve damn sure complained about their commercials. This anti-burglary company is now robbing shareholders. - The security monitoring firm announced yesterday the pricing of a secondary offering, with firms like Apollo and others selling shares at $6.50 a pop. - ADT isn’t selling shares here, but rather, this is part of the firm’s $350mn stock repurchase plan… we’ll explain in tomorrow’s video. Thought Banana 🤔 JPow Drops the Mic The question that was going around the internet last year of “$500k or dinner with Jay-Z?” has an easy answer—take the money every time. But, $500k or dinner with JPow, now that’s a different question… Politicians don’t have to make that decision, especially yesterday, as Senators got their chance to roast JPow for a few hours after House Representatives sufficiently grilled him yesterday. What Happened? Chair Powell is officially well done as he’s finally wrapped up a 2-day trip to Capitol Hill to update our Reps on the status of monetary policy and bank regulations in the U.S. If you click on the video at the end of Macro Monkey, you can get a sense of how productive this testimony was. But hey, when JPow speaks, we listen. [Source](=) And when JPow speaks, the market listens as well. We didn’t see much of a change in target range probabilities on Wednesday, and we didn’t get much yesterday either, but the two together added up to a notable move. A week ago, the highest odds for the end-of-year fed funds range was 4.5%-4.75%. Now, the highest odds are just a bit lower, chilling in the 4.25%-4.5% range. That pretty much throws cold water all over our take in Macro Monkey, but certainly could changed based on tomorrow’s jobs data. What Else Happened? We all know politicians are like children, and as such, they get bored pretty easily. So, expecting them to spend hours talking about monetary policy, the economic situation in the U.S., and other totally trivial issues is unrealistic. The Fed is also in charge of regulating bank policies alongside other agencies like the SEC and FDIC. The rules around capital requirements for banks in the U.S. are soon set to face “significant change.” Back in the day of the GFC, lawmakers decided banks probably should face some kind of costs for the shenanigans that led to the crisis. Obviously, that involved bailing them out, but now, stronger capital requirements are coming into play. Capital requirements force banks to set aside a pile of cash to absorb losses for purposes ranging from defaults to cyberattacks. Originally, the Fed wanted to lower these, but pushback from both sides of the political aisle killed that. Now, capital requirements are moving higher. The policies fall under the umbrella of “Basel Endgame,” which is the final step for many established by Basel III policies in the post-GFC era. Banks aren’t happy about it for obvious reasons. They claim it will hurt consumers and small businesses, but no matter what happens, we know it won’t hurt executive pay. 💭 The Big Question 💭: What updates can we expect the next time Powell speaks on March 19th and 20th? Where will rates be at the end of the year? Banana Brain Teaser 💡 Previous 🗓 During a trip that they took together, Carmen, Juan, Maria, and Rafael drove an average (arithmetic mean) of 80 miles each. Carmen drove 72 miles, Juan drove 78 miles, and Maria drove 83 miles. How many miles did Rafael drive? Answer: 87 Today 🕐 Each week, a clothing salesperson receives a commission equal to 15 percent of the first $500 in sales and 20 percent of all additional sales that week. What commission would the salesperson receive on total sales for the week of $1,300? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “I believe that the market is slowly waking up to the fact that the Federal Reserve is a clueless organization. They have no idea what they're doing. And so the confidence level of investors is diminishing, in my view.” — Marc Faber How Would You Rate Today's Peel? 😁[All the bananas]() 😐[Meh]() 😩[Rotten AF](=) Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE]() // [WSO ALPHA]() // [ACADEMY]( // [COURSES]( // [LEGAL](=) [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353