Bondtober | The Daily Peel | 10/12/22

Market Snapshot

Bond yields have been steadily rising over the past week, with the 10-year once again threatening 4%.

It’s a big week for markets, and investors are jittery. Aside from a bunch of crucial earnings reports, we’ll get September’s CPI reading on Thursday.

Across the pond, the Bank of England is expanding its bond-buying program to try to keep the peace in its debt markets. British bond yields dipped in response.

At the close, the Dow ticked up 0.12%, the Nasdaq dropped 1.1%, and the S&P fell 0.65%.

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Let’s get into it.

Monkey Meme of the day

Source

Banana Bits

J.P. Morgan head honcho Jamie Dimon predicts the U.S. will face recession in 6 to 9 months
Ben Bernanke was one of 3 economists to win the Nobel prize
Aldi and other bargain grocery brands are booming as Americans continue to feel the pinch of inflation
The IMF is the latest agency to warn of slowing growth in 2023

Banana Brain Teaser

Yesterday — 13 people went to a hotel which had 12 rooms and each guest wanted their own room. The bell boy solved this problem.

He asked the thirteenth guest to wait a little with the first guest in room number 1. So, in the first room there were two people.

He then took the third guest to room number 2, the fourth to number 3, ..., and the twelfth guest to room number 11. Then he returned to room number 1 and took the thirteenth guest to room number 12, still vacant.

How can everybody have their own room?

Of course, it is impossible. 2nd guest should have gone into the 2nd room, because the 13th guest was waiting in room number 1.

Today — It's 100 bananas off our PE Master Package for the first 15 correct respondents. LFG!

I have a name, but it isn't my name. My face shows signs of age. I always mean the same thing, no matter what I say. I'm born in mourning, and I last 'til the end of days. Men plant me, but I never grow. They run from me, but I never move. They look at me and see their future, rotting in the fields where I bloom. What am I?

Shoot us your guesses at [email protected] with the subject line “Banana Brain Teaser” or simply click here to reply!

Macro Monkey Says

Salaries vs. Contracts — The relationship between companies and workers has been a hot topic in the past few years.

What does each side owe the other? Do companies own workers’ time, or are workers simply required to produce the output they’re paid for (quiet quitting)?
Is there a “labor shortage,” or are companies just not ponying up enough dough to attract new employees?
Should America turn to immigration to fill long-standing labor gaps?

But flying under the radar has been the employee vs. contractor debate. The gig economy was on the rise before the pandemic, and it has continued growing since then.

It has pros and cons for workers. On the plus side, they control their own time and when they want to earn cash. But at the same time, they have slippery job security and don’t receive benefits in a country without universal healthcare.

The Labor Department is currently looking at this issue, and the answer doesn’t seem so obvious.

If you talk to Uber drivers, there’s a rift between those that would rather be employees and those that prefer being their own boss. The companies have made it clear that they prefer the latter, but that’s obviously self-serving, so they don’t have to pay benefits.

Maybe a better solution is a way for freelancers to get healthcare and other benefits in an affordable way, be it a government program or private mechanism. We’ll have to see how it shakes out.

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What's Ripe

Amgen ($AMGN) — The giant biotech firm has had a nice year, and investors had more reasons for optimism Tuesday.

Morgan Stanley issued a bullish analyst note highlighting the potential of its obesity drug.

It also noted significant competition in that market, but it’ll be hard for smaller players to compete with $AMGN.

$AMGN was up 5.72% by the end of the day.

China Evergrande Group ($EGRNF) — Evergrande hasn’t been the epic collapse that many were predicting last year, but it has been on a steady slide downward.

Negotiations with bondholders have kept it afloat, and investors are expecting that it’ll get another extension on a domestic bond payment this week.

Asking your teacher for an extension doesn’t usually work, but it does when you’re a giant real estate company.

$EGRNF was up 10.61% by the end of the day.

What's Rotten

Lyft & Uber ($LYFT & $UBER) — The ride-sharing duopoly has been dealing with employee vs. contractor issues with its workforce for the last few years.

Reports came out Tuesday that the Department of Labor has a proposal in the works to force companies to treat drivers as employees rather than contractors.

This would send labor costs through the roof, as companies would have to pay benefits and guarantee driver hours. Both stocks plummeted on the news.

$LYFT ended the day down 12.02%, and $UBER ended down 10.42%.

Wynn Resorts ($WYNN) — Wynn and other casino stocks saw big gains in recent weeks on the news that Macau could be fully opening soon.

Well, the market giveth, and it taketh away.

Domestic travel in China during a recent holiday was still drastically lower than in the past few years.

A combination of restrictions and general travel anxiety contributed to the decline, but it’s bad news for casino operators.

By the end of the day, $WYNN was down 7.02%.

Thought Banana

Duuude, I Just Hit My Parlay — Apes based in California are familiar with the deluge of Prop 27 ads in the last few months.

For the rest of you, Prop 27 would legalize online sports betting in California. Its main backers are, unsurprisingly, DraftKings, FanDuel, and BetMGM.

The opponents include Native American tribes, who want to protect their control of California’s gambling market. Revenues from tribally-owned casinos are the lifeblood of many of those communities.

Legalizing sports gambling has many similarities to legal weed.

Both have a taste of the “if you can’t beat em, tax em” mentality—they’re popular vices that can bring in big tax revenues
There are legacy industries that oppose new entrants (the alcohol and cigarette industry with weed, Native American tribes with sports gambling)
Both are legal in many states, but neither is legal on a federal level

The root of both of these issues is weighing the pros and cons. The pros in both cases tend to be money—just tax the sh*t out of weed and gambling, and everyone will be fine.

But there are also societal implications, especially for kids. Nobody thinks weed and online gambling are good for kids, but legalization makes it easier to access.

On the gambling front, allowing out-of-state companies to enter the California market could devastate Native American communities.

We’ll see what Californians decide, but current polls show a big L for online gambling companies coming up.

Wise Investor Says

”It’s not what we do once in a while that shapes our lives. It’s what we do consistently.” — Tony Robbins

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