Fed Kills the Rally | The Daily Peel | 11/18/22

Nov 18, 2022 | Peel #341


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Market Snapshot

Such a weird environment right now where the Fed is trying to crater the stock market in any way possible.

Four and a half percent used to be the long-run rate expectation. Now it’s clearing 5% “at a minimum.”

On the plus side, it looks like workers will maintain the high ground even in a recession.

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Banana Bits

  • JPMorgan is laying the foundation for a nation of renters after investing $1 billion in a built-to-rent joint venture
  • Yale and Harvard want nothing to do with bullsh*t U.S. News rankings going forward
  • Bosses in Europe have done a complete 180 and are now asking workers to log in from home so they can save on energy bills
  • TikTok is zagging the industry and scooping up laid-off workers from the likes of Meta, Twitter, and Amazon

Macro Monkey Says

Go Ahead and Ask for That Raise

Bosses around the country have been salivating at the thought of a recession lighting a fire under employee asses, forcing them to sprint back to their cubes.

High-profile layoffs from Big Tech seemed to point to a big spike in unemployment on the horizon, but all the high-fiving in corporate boardrooms might be premature. Unless robots start doing all the work, the American economy has way too many structural workforce issues to lay off workers en masse anytime soon.

Despite the recent parade of tech layoffs, a toxic cocktail of demographic trends points to worker shortages for the foreseeable future.

  • Boomers can only hold on to the corner office for so long. They’ve already been retiring in waves, which will only accelerate as their gray hairs accumulate
  • It was widely expected that 50-somethings who left the workforce during C-19 would be forced back due to inflation, but they’re not budging
  • Pre-pandemic, about 1 million immigrants were flowing into the country each year, padding employee ranks across industries. That’s slowed to a paltry quarter-million
  • The kids aren’t baby-making at the same rate as their parents, which will steadily shrink the working population going forward

Employers are pulling their hair out trying to find people, but they may have to just take the L and hike wages to lure them in. Pay raises have been higher than usual this year but are still well behind inflation.

2023 could see an airtight labor market continuing and further wage gains that people desperately need. Households are running up huge credit card balances and even tapping into hellish HELOCs to stay afloat, and widespread layoffs could blow up their balance sheets.

For the economy to keep chugging along as rates march higher, Main Street needs a steady paycheck that’s within a stone’s throw of inflation. We’ll see how employers respond.

Meme of the day



What's Ripe

Macy’s ($M) ↑ 15.02% ↑

  • Bears have been patiently waiting for the Macy’s collapse, but the 97-year-old retailer ain’t dead yet
  • Shoppers are snapping up suits and other high-margin dressy clothes and aren’t trading down to Nordstrom Rack despite higher prices

Bath & Body Works ($BBWI) ↑ 25.18% ↑

  • $BBWI did its part to blow up retail puts Thursday after doubling EPS estimates in Q3
  • It has threaded the inflation needle incredibly well, slimming itself down while continuing to unload products through promotions and loyalty programs

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What's Rotten

WeWork ($WE) ↓ 5.78% ↓

  • 40 of its locations are getting axed, and a Masa bailout isn’t coming—he’s still licking his wounds from all his other awful investments
  • The new shoes-wearing management team is taking hits on the top line in pursuit of profitability, but whether the flex working model will really take hold is still up in the air at this point.

Crude Oil ↓ 4.33% ↓

  • It’s no bueno for the oil market when tankers blow up, which happened in Oman this week. But the prospect of WW3 is even worse, and easing tensions over a missile strike in Poland sent prices down.
  • Prices have settled below $90/bbl for the past several months, but another Poland-like scare could rattle the market really quickly.

Data Peel



Thought Banana

Paid Social Media Could Be Way Better

Remember those first few years when cutting the cable cord made you some kind of trailblazer?

People watched in awe as a determined few gave up traditional TV for good, opting instead for on-demand streaming. You didn’t get the full array of cable channels, but who needed SoapNet and QVC anyway? Plus, it was a satisfying middle finger to old, lazy cable companies.

The new world of content is more dizzying but also more customizable. It’s not as easy to flip through channels, but you only need to pay for the shows you want, rather than ponying up for the fishing channel just to watch football on Sundays.

Why can’t we do the same with social media?

  • The immediate uproar following Elon’s $8/month for Twitter suggestion was easy to predict, as people hate paying for things that they’re used to being free
  • But paywalls can enable better content. I want to throw my phone through a window when I see an ad every 10 seconds on a Snap video I got baited into watching.

Obviously, there are pros and cons. Social networks would probably scale down, as only a select few would opt for a paid tier. But do you really care about what a bunch of randos are posting on Twitter anyway?

  • Substack has made it easy to follow and pay specific writers that you like, just like Patreon has done for creators
  • Removing people as the product from social media would reduce the incentive to vacuum up every piece of data possible to sell to advertisers. Just let me pay 5 bucks a month and leave me the hell alone when I’m browsing other sites.

What are your thoughts, fellow apes? Would you pay for Twitter, Insta, TikTok, or Snap? Why, or why not? Drop some feedback below; we’re curious to hear what you think.

The big question: Will Elon’s monetization of Twitter implode, and if so, how will other social media companies get their arms around the coming decade?

Banana Brain Teaser

Yesterday — I don't have eyes, but once I did see. Once I had thoughts, but now I'm white and empty.


Today — It’s 100 bananas off the WSO's PE Deals Process Course for the first 10 correct respondents. LFG!

Take away my first letter and I remain the same. Take away my last letter and I remain unchanged. Remove all my letters and I’m still me. What am I?

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

Wise Investor says

“You make most of your money in a bear market. You just don’t realize it at the time.” — Shelby Cullom Davis

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