Dollar Tree becomes $1.50 | The Daily Peel 9/30/21

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Market Snapshot

Yesterdays market was certainly more welcome than the nightmare we saw on Monday. Big tech struggled, leading the Nasdaq to a loss of 0.24%, while the S&P gained 0.16% and the Dow saw a 0.28% bump.

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Let's get into it.


Macro Monkey Says

Debt Ceiling - Like a drug dealer who you owe a lot of money, people are gonna be very upset if the United States defaults on its obligations. As the expiration for the current U.S debt limit level approaches (Friday at 12:01am), investors, traders, and civilians are having trouble falling asleep, commencing a flight to safer assets. A temporary government shutdown is all but guaranteed if Congress is unable to extend the deadline or raise the debt limit. The real trouble, however, comes in the weeks following.

Treasury Secretary Janet Yellen has estimated that if the ceiling is not lifted, the U.S government will default on its payments on October 18th. As treasuries are seen as "risk-free" and much of the world relies on U.S, defaulting on interest payments would be the exact opposite of good. Now, Senators are working towards a resolution that could already be in place by the time this hits your inbox, so we'll find out how this plays out soon. Does blockchain fix this?

U.S. Dollar - The greenback is back and ready to party. The value of the U.S dollar against a basket of other meaningful currencies, such as the Euro and Swiss Franc, reached its highest level in almost a year on Wednesday. The US Dollar Index, known as DXY, reached as high as 94.432, as demand amongst traders and investors for safe-haven assets grows amid major global economic concerns. Despite how it sounds, a stronger dollar isn't necessarily tied to a strengthening economy. Deleveraging plays a role and the dollar's status as a global reserve currency puts it in position as a reliable safe-haven during tumultuous economic periods. But hey, for what it's worth, those $1's in your wallet can buy more of other currencies now than it could a year ago.



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What's Ripe

Dollar Tree ($DLTR) - Dollar Tree, that convenient store that supplies your snacks for when you get high, surged 16.5% on news of soon becoming $1.50 Tree. Yesterday, the company announced plans to increase prices on certain items at all Dollar Tree Plus stores, and may even be close to doing so in legacy stores. If this isn't a sign of inflation, I don't know what is, but I'll be damned if I can't get my Taki's for $1.

Boeing ($BA) - A 3.2% gain isn't much, but it certainly is welcome news for Boeing after the pummeling they've taken since early 2019. Still down 47% from their all-time high, the firm saw a boost yesterday thanks to analysts at Bernstein upgrading shares to outperform. The analysts covering the beleaguered aerospace manufacturer hold optimistic views on account of an anticipated rebound in travel, and thus airplane demand. Still in a tough spot, they'll take the win while they can.


What's Rotten ($JD) - You may have heard that Chinese tech stocks aren't catching the vibe this year, and that was particularly true yesterday for Falling 5.0%, the second-largest e-commerce firm in China fell victim to continued volatility and loss of confidence in Chinese tech, learning, and gaming names. The mountain of fresh regulation dumped on these firms this year has pulled valuations so low many investors are reportedly asking the legend Keith Gill if he sees any deep f*cking value.

Applied Materials ($AMAT) - The semiconductor market is having a mild apocalypse of its own at the moment, leading to losses across the sector. The semiconductor manufacturing-machine maker fell 3.5% yesterday as the sector reels from shortages and supply chain constraints. Shares were also downgraded to neutral by New Street research, adding insult to injury. Safe to say semiconductor firms are semi-shitting the bed right now.


Thought Banana:

Housing - Although July seems like ancient times to us now, data around housing prices for the month recently emerged and they're white hot. The Case-Shiller survey of home prices of 20 U.S cities was at an all-time high for 19 of the 20 cities, with Chicago being the lone exception. Despite previous monstrous monthly gains in home prices already this year, July prices rose at an ever faster clip, indicating that sky-high prices can't stop massive demand in a period where Americans have more money than ever. We can't ignore the element of iBuyers in the market, as it has been unveiled that firms like Zillow will buy a slew of homes in a single market at a common price, and then buy one more home at a sizable price increase. Naturally, this drives up the value of all the homes in the peer group, including the previously purchased homes. Good for Zillow, but bad for anyone looking to ever buy a home.


Wise Investor Says

"Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the models. Beware of geeks bearing formulas."

Warren Buffett


Happy Investing,

Patrick & The Daily Peel Team

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