Friday Pop | The Daily Peel | 7/18/22

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Market Snapshot

Futures Friday pointed towards a positive day as earnings season started to take off. Oil was soft, still trading below $100 and signaling a potential economic slowdown. The yield curve remains inverted, and ETH and BTC are still significantly depressed.

At the closing bell, the Dow was up 2.15%, the S&P climbed 1.92%, and the Nasdaq moved 1.79% higher.

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Let’s get into it.

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What's Ripe

Citigroup ($C) — Often referred to as Sh*ttygroup, their earnings call on Friday proved that they are far from the underlying snark of that moniker. By all measures, they had what I’d call a home-f*cking-run of a quarter.

Their earnings were so great that they buoyed other big banks and our WSO Alpha position $KCE in the process. On their earnings blowout, $C rose 13.23%.

Netflix ($NFLX) — As far as big tech names go, if you’re holding $NFLX into their earnings on Tuesday afternoon, you probably are asking yourself, what’s the worst that could happen?

Investors left and right are bracing for impact. There are some pros to owning the name right about now, but the Street is concerned about subscriber loss, competition, forex hits to revenues due to a strong dollar, and a general subscription fatigue that I so eloquently outlined a few months ago.

On Friday, $NFLX was up 8.20%. Will it be up again this week?

What's Rotten

Tilray Brands, Inc ($TLRY) — The weed industry isn’t really set up for success just yet, hence why the US House of Reps just passed verbiage for a bill called SAFE for literally the 7th time. Yes, 7 times.

That bill is still likely to be defeated in the Senate, leaving the mary jane industry out blowing smoke in the cold once again.

At the same time, $TLRY ended an allegedly strategic partnership with Hexo after investing more than $155Mn into the Canadian cannabis company. It’s likely that those untold millions have gone literally up in smoke as the partnership soured.

Friday, $TLRY lost 10.57%.

First Solar ($FSLR) — Joe Manchin is at it again. This guy has a penchant for crushing souls, and $FSLR, apparently, was on his list.

After the Democrat from WV ran his mouth espousing that additional climate change spending is stupid and inflationary—his words, not mine—shares of $FSLR took an 8.12% dump on Friday.

Inflation is out of control; additional taxes to fund tax credits for luxury goods like solar panels as well as subsidies to solar companies don’t seem like the brightest idea right now.

Thought Banana

The Ponzi Scheme Rolls on — When my parents were my age, everyone told them not to expect to receive social security.

That check won’t be there when you’re our age, they said to them. But now that many Baby Boomers are in retirement or it’s right around the corner, the social security coffers floweth to an entire generation of Americans.

Social Security, by all means, is a bit of a Ponzi scheme. Given the way that Congress borrows against it like a teenager taking margin loans to buy OTM GME calls in 2021, it would seem tough to run your household budget as the government runs the SSA.

For the sake of the Boomers, the millennial generation had to be huge. Not just in physical stature, although there probably is something in the water because only 20% or so of young Americans are in good enough physical shape to join the military, but I digress.

There had to be a sh*t load of millennials so that the government could afford to pay Boomers their social security. It’s science. That’s how Ponzi schemes work.

This is great for Boomers, especially as Millennials hit their stride in the workforce, entering their earnings prime.

But when you consider the large millennial generation hitting their prime, there are some potentially inflationary pressures.

Millennials tend to wait a little longer than their Boomer parents to buy homes, have children, and save for retirement. But it looks like loads of millennials decided to enter the housing market all at once in the last few years, especially as the pandemic raged.

Now that they’ve broken the seal, this trend might not cool off for a while. This might mean that a lot of millennial money is going to be chasing too few goods and homes in this country.

Long term, that’s bad for inflation, and it also means that interest rates might remain elevated for some time.

This is purely a little bit of a hot take. I usually write with a few datasets in front of me and then synthesize ideas from them into words, but this time, it’s the seat of my pants.

Interest rates and home prices over the next decade will paint the full picture and determine if I’m wrong. Which one of you is going to call me out in 2030?

Wise Investor Says