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.

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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