75 And Sunny | The Daily Peel | 9/22/22

Silver Banana goes to...

Market Snapshot

There ya have it, folks. 75 basis point hike for September, right in line with expectations.

Down the street from the Fed, head honchos from Wall Street’s megabanks took questions from Congress.

Busy day overall in D.C. Stocks opened in the green but turned red in the afternoon as the 2-year sailed past 4%. At the close, the Dow dropped 1.70%, the Nasdaq sank 1.79%, and the S&P lost 1.71%.

Let’s embrace the crisp days of fall, turn over a new leaf, and hear what other M&A practitioners are doing every day to source the biggest and best “pumpkin” of a deal. Join us on October 20 for the M&A Science Academy Fall Virtual Summit, registration is free! Sign up today

Let’s get into it.

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The M&A Science Academy’s Fall Summit, Oct 20

What's Ripe

General Mills ($GIS) — Bottomless mimosas are great, but have you ever downed a bowl of Cocoa Puffs and then had the chocolate milk that’s left over? Nothing compares.

Anyway, $GIS managed to eke out a strong day after a stellar earnings report.

It beat estimates on the top and bottom lines as it benefited from higher prices and a consumer shift to cheaper, non-perishable food.

It even raised its FY forecast. Who else is doing that these days?

At the end of the session, $GIS was up 5.72%.

Lithium Carbonate — Car makers have turned on their heels and moved to EV manufacturing seemingly overnight.

More EVs means more battery manufacturing, which means a lot more lithium.

The industry has been scrambling to secure a stable supply and price of the metal, but both have been made difficult by a lack of mining infrastructure.

Energy prices are going to have a big effect on lithium in the near future. A lack of power will shut down lithium mining, which could send the price even higher.

Lithium carbonate is up 615% since the start of 2021.

What's Rotten

iRhythm Technologies ($IRTC) — This medtech focused on cardiac arrhythmias fell through the floor on the same day it hosted analysts in NYC.

While it has maintained revenue growth and solid gross margins around ~70%, the problem is still the bottom line.

EBITDA for the year is projected to be about negative $15mn. It just ain’t that kinda market anymore; you actually need to make money these days.

Maybe they’ll change investors’ minds during their presentations Wednesday.

$IRTC closed the day down 14.8%.

Las Vegas Sands ($LVS) — $LVS rode the wave of gaming stock optimism yesterday on reports of valuable Macau loosening quarantine restrictions.

It came back down to Earth Wednesday.

Growth opportunities are out there, especially in Singapore.

But ultimately, an economic slowdown will outweigh any reopening benefits, so expect the likes of $LVS and $WYNN to continue to be choppy through the rest of 2022.

By the end of the day, $LVS was down 6.72%.

Thought Banana

“Theater, Not Oversight” — That’s what North Carolina Rep. Patrick McHenry, a prominent GOPer on the House Financial Services panel, had to say about Wednesday’s hearings from big bank CEOs.

Can’t say I disagree with him.

Is there a single ape out there that’s going to fire up C-SPAN and actually watch this thing? Hopefully, it’s not as embarrassing as those tech CEO hearings from a few years ago.

Based on prepared remarks, there probably won’t be a whole lot of juicy content. The theme seems to be, “yea, prices are way too high, war and supply chain creates an uncertain future, yada yada.”

Most of these sessions will probably be dominated by political posturing ahead of the midterms, but there are some topics that could actually have some substance.

Overdraft fees and savings rates are two big ones. Most think the former is too high and the latter too low.

Despite rates likely landing at 3% after the FOMC meeting, the average savings account rate is just 0.17%. Something doesn’t add up there.

Overdraft fees are criticized for punishing the poor, and while they’re not as harsh as they used to be, there’s probably room to bring them down further.

Other than some substance in these two areas, expect a lot of political posturing.

Wise Investor Says