Market Sentiment Soars: Are We Justified? 🤔

What are your thoughts on current markets? March 15, 2024 | Peel #668 Silver Banana goes to... [CapLinked. ]( In this issue of the Peel: - 📒 The BLS dropped the latest Producer Price Index report… check it out. - 🚨 It’s doomsday for Fisker as it seems they’re running out of battery… - 🆙 Pulse check—what are your thoughts on current markets? Market Snapshot 📸 Banana Bits 🍌 - 7% mortgage rates just might be the [norm from here on out](=) - Big swing-and-a-miss for [Adobe following earnings](). Stay tuned for our [video coverage]( later today - SpaceX’s 3rd Starship launch went a lot better than the others. Plus, it still exploded, which is [always cool to watch]( - Short interest on the average U.S. stock is [near all-time lows](=) Fine Dining is on Caplinked for You and Your Team! When was the last time opening a data room got you $1,200 to spend at a restaurant of your choice (and you weren’t forced to have the salesperson join you)? Caplinked is sending you and your co-workers to Nobu, Peter Lugers, or whatever celebrity chef owned Michelin-star restaurant you want to go to when you launch a new Enterprise data room. That’s right! You’ll dine in style, and also get to use the easiest data room software available today, that helps you close deals faster. [It’s time to make the switch to CAPLINKED!]( Macro Monkey Says 🐒 Oh No Here we go again. Following Tuesday’s slap-on-the-wrist uptick in consumer inflation, wholesale prices figured it was their turn to escalate things to a full-on roundhouse kick to the temple. Yesterday, the latest Producer Price Index (PPI) report was released by the Bureau of Labor Statistics (BLS). Expectations were for an increase of 0.3% in February, but the PPI said, “Hold my beer.” The Numbers In February, wholesale prices increased 0.6% for the month, doubling economist expectations. Annually, PPI rose 1.6%, the largest increase since September. [Source]( But, then we quickly realize the headline numbers were far-and-away the worst part of the report. The spread between goods and services inflation is serving as our macro melatonin, helping everyone with a WSJ subscription to sleep at night. Core PPI, which strips the headline index of food, energy, and trade service costs, rose just 0.4%, a downtick from January’s 0.6%. Meanwhile, the annual core PPI rose just 2.8%, continuing to move towards the holy grail of 2%. Final demand goods were the primary culprit of a rising PPI, accounting for nearly 67% of the overall increase, according to the BLS. And nearly 70% of that rise can be attributed to the exact same thing killing the CPI’s vibe… Energy prices were back on the rise, accounting for 70% of the increase in final demand goods. Of that, gasoline prices alone made up 33% of the increase for final demand goods, rising 6.8% for the month. Markets weren’t happy following the release of the report, seeming to confirm a return of higher-than-we’d-like inflation. Plus, the PPI report is considered a leading economic indicator, meaning it’s one of our macro crystal balls giving insight to what the future holds. We doubt it would be enough to cause a change to the interest rate environment, but we never know… JPow and PVol [Source]( Looking at yesterday’s movement in interest rate expectations, we can see there was a slight change in the leading theory on rate moves for the year. This can best be seen in the movement among expectations for interest rate levels following the July meeting. Expectations for rates to remain where they currently sit moved nearly 4% higher, while the odds for only one cut by the end of the July FOMC meeting moved 3% higher. It’s not a major move, but this is yet again another instance of the trend being more important than the level. Nearly every economic report we’ve gotten this month—Jobs, CPI, and now PPI—has led to less confidence for rate cuts to come soon. That doesn’t mean the game is over; it just implies that maybe we should listen to the Fed when they say “higher for longer” as much as Metro Boomin says he “wants some more.” [Source]( Given this context, the above chart is probably the single most important chart in financial markets right now. Fed Chair JPow is a student of Paul Volcker, learning from the mistakes of prior Fed Chairs like Arthur Burns in the 1970s. Burns is commonly credited (blamed?) for the rip seen in the 70s and 80s, with Volcker having to come in and save the day. JPow does not want to be another Arthur Burns. And, it’s clear in his communications he’s cognizant of the potential for inflation to really rip back higher if the Fed goes too dovish too soon. But this is only one data point… and it’s really not a large enough change to worry about just yet. Just take a look at the quote at the bottom for your daily chill pill. What's Ripe 🤩 Dick’s Sporting Goods (DKS) 📈15.5% - Ahh, okay. Now I get what’s going on in the U.S. economy. Discount retailers are getting pummeled, but premium outlets are setting record highs. - Dick’s destroyed Q4 earnings expectations, reporting all-time high quarterly revenue of $3.88bn. EPS of $3.85/sh trounced the $3.35/sh estimated too. - Compared with the results from Dollar General (DG, -5.72%) and Dollar Tree on Wednesday, it’s clear U.S. spending is moving in two directions. - Lower-income shoppers are continuing to pull back despite disinflation, while high-income shoppers are still throwing bands as usual. Build-A-Bear Workshop (BBW) 📈16.8% - However, whether low or high-income, we all know kids will never stop actively trying to bankrupt their parents. Their M.O. in Q4? Teddy bears. - The Chipotle of teddy bears, Build-A-Bear Workshop, is also setting a record on revenue for the quarter, with sales growing 3.9% and beating estimates. - EPS popped off on a beat as well, growing 16%. The retailer also announced plans to pay a $0.20/sh dividend, officially confirming teddy bears as the new AI. What's Rotten 🤮 Fisker (FSR) 📉51.9% - Was this it? The straw that finally broke this impoverished camel’s back? It seems like it, with the WSJ reporting yesterday, that Fisker is on the brink. - Bankruptcy speculations have long run rampant with Fisker. Now, the WSJ says the firm has hired advisers to restructure its debt. - As the EV market has been pummeled over the past few years, Fisker has taken the worst of it. Now, the firm appears to be officially out of battery. Under Armour (UAA) 📉10.7% - Getting slapped in the face sucks, but we can’t even imagine the pain of the slap in the face Under Armour’s new CEO just got. - Well, “new” probably isn’t the right word. Under Armour is reinstating Kevin Plank, the founder and former CEO, back to the top position. - Wall Street is pissed. Evercore and others immediately downgraded their price targets as Stephani Linnartz was booted out of the CEO role after just 1 year. Thought Banana 🤔 Feelings Don’t Care About Your Facts Are we feeling good, apes? Summer is coming, March Madness begins next week, and everyone’s portfolios—even mine—are still moving higher. There’s a lot of reason to be feeling good these days. And, in case the all-time high in all-time highs we’re seeing isn’t enough to convince, maybe this will be. Soaring Sentiment = [Source]() Market sentiments are breaking out to recent records. According to Hi Mount Research, we are seeing the following: - Most Bulls since July 2021, - Fewest Bears since February 2018, and - The Highest Bull/Bear spread since April 2021 Investors are feeling great. Despite the trepidation becoming popular among concentration in U.S. markets and tech stocks specifically, most investors are still confident that tomorrow’s portfolios will be worth more than today’s. And it’s not just survey results confirming the good vibes. = [Source]( Call buying among “large traders” is breaking out to recent highs once again. For the uninitiated, calls are contracts investors can buy, betting that the price of a stock will rise. So, seeing high activity among these trades signals that investors, especially those “large traders,” are putting their money where their mouth is. Who Cares? The common, cool-guy, contrarian take on Wall Street now is something along the lines of “just wait until Nvidia misses earnings, then we’ll be wishing we were back in the damn Great Depression” or something. But that hasn’t been the case at all. Yes, these run-ups can seem concerning, but the rise in the stock market has been more of a rise in the entire market of stocks. = Here, we can see there have been plenty of winners in the post-C-19 rally. Since lows in October of 2022, just about every followed U.S. equity index has moved higher. Yes, large-cap tech is leading the way, but why wouldn’t they be? They’ve been leading earnings growth as well, so surprisingly, current market events actually align with what you might read in your textbook. Along with the fundamentals of high earnings growth, momentum stocks are reaching all-time highs in terms of market leadership as well. = [Source](=) With momentum surging alongside fundamentals, we’ve been living through a Goldilocks period for markets. The Everything Rally has continued in 2024 and, at least as of right now, shows no sign of stopping. Economic sentiment is a slightly different story, with high gas and grocery prices killing the vibe for Americans who don’t wear fleece vests to work every day. Fingers crossed, it can last. 💭 The Big Question 💭: Is sentiment undeservedly high, or are we justified in feeling this good? How long can the Everything Rally last? What will it take to kill Mr. Market’s vibe? Banana Brain Teaser 💡 Previous 🗓 Last year $48,000 of a certain store’s profit was shared by its 2 owners and their 10 employees. Each of the 2 owners received 3 times as much as each of their 10 employees. How much did each owner receive from the $48,000? Answer: $9,000 Today 🕐 On a vacation, Rose exchanged $500 for Euros at an exchange rate of 0.80 Euro per dollar and spent 3/4 of the Euros she received. If she exchanged the remaining euros for dollars at an exchange rate of $1.20 per Euro, what was the dollar amount she received? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “If we’re arguing about decimal points, we’ve already won the game.” — Ben Carlson 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