A Snapped Streak | The Daily Peel | 8/18/22

Silver Banana goes to...

Market Snapshot

Futures yesterday were flat, pointing towards a softer opening for the broader markets. Student loan payments were back in the news, and WTI Crude was up about a percent to $87.

Retail was in the spotlight after earnings reports from Target, Wally, and Home Depot.

At the closing bell, the Dow was down 0.5%, the Nasdaq down 1.25%, and the S&P lost 0.72%.

Get in on the fastest growing data room available today with Caplinked. From boutique firms to the big boys in IB and consulting, our digital data rooms are the right price while still housing the tools and functionality you need to get the deal done.
Set up your data room today

Let’s get into it.

Banana Bits

Monkey Wanted: The Daily Peel is Hiring

Banana Brain Teaser

Macro Monkey Says

The Data Room Your Deals Deserve

What's Ripe

Manchester United ($MANU) — I literally can never tell if Elon is serious or not, and apparently, neither can the markets.

After a tweet claiming that he was buying Manchester United, shares of the football club climbed 6.35%. To add to the mess, the Glazer Family said that it was even open to selling its stake in the storied soccer franchise.

Agilent Technologies ($A) — Shares of Agilent rose 7.14% yesterday.

The medical technology company put together a nice little quarter, beating estimates and crushing it in terms of year-over-year performance. But that’s not all.

Compared to its peers in the medical technology space, this type of beat and outlook was rather unique when you listen to their earnings call and read through the lines of the transcript.

What's Rotten

Krispy Kreme ($DNUT) — One of America’s most beloved donut brands got crushed yesterday. Have you ever tried one? Was it Krispy? I digress.

Shares of $DNUT retreated badly, closing down 11.64% after the company posted worse-than-expected earnings.

Maybe after reading this new study about nutrition from Tufts University in Boston, these Donuts will move back into favor.

Analog Devices Inc ($ADI) — Semis have been in the news a lot lately, and yesterday had some familiar news.

Shares of $ADI lost ground yesterday, closing down 5.02%. They had solid earnings on the top and bottom lines beating analysts’ expectations, but their outlook was rather bearish.

The chipmaker quipped that economic uncertainty is already impacting its bottom line, and that trend is likely to continue in the marketplace. This spooked investors, sending shares lower.

Thought Banana

A Logical Tradeoff — The price of gas has been on the decline for almost the last 60 days.

For the working poor and the middle-class who tend to rely on their vehicles to get around, this has been a welcome reprieve. For many reasons, having an extra few bucks in your pocket for discretionary spending can change your quality of life. It can really turn things around.

Indeed, the average price of gas is back below $4 after peaking above $5 back in June. The run-up in gas prices has been a slow slog that you can trace back basically to the 2020 election, with gas prices moving between about $1.80 all the way above a fiver for a gallon.

The American consumer has continued to open his wallet, even as inflation takes a bite out of everyone’s paycheck. But as gas prices have declined, this spending has accelerated.

Here’s the tradeoff: less money at the pump means more money to chase retail goods. Lower gas prices have been somewhat of a tailwind for retail in particular.

Look at Wally and Home Depot. They both had good quarters on the backs of consumers who are still opening their wallets at the retail giants even as the economy sputters. But that doesn’t mean the consumer isn’t struggling.

In nominal terms, the consumer is spending more money, but in real terms, inflation is shrinking the real, economic impact of every dollar out of the consumer’s wallet. Sure, retail customers are paying more, but they’re ending up with fewer goods. Shrinkflation is also a thing.

Cutting costs during a time like this is on everyone’s mind. From businesses cutting hours and instituting hiring freezes to consumers trading down to private label goods and buying only the necessities, it’s clear that our economic future is not completely certain.

Wise Investor Says