Hide And Seek | The Daily Peel | 5/4/22

Silver Banana goes to...

Market Snapshot

Futures were boringly flat yesterday morning, and then markets moved only slightly higher during the trading session. Australia’s central bank raised rates yesterday for the first time in 11 years, and the UK’s fed equivalent is meeting later this week to consider a similar move. Consumer discretionary and staples had a rough day, and small caps moved higher. The 10-year yield again flirted with 3%.

At the closing bell, the Dow ended up 0.20%, the Nasdaq was up 0.22%, and the S&P was up 0.48%.

We’re trying a new section today: take a look at our Banana Brain Teaser right below today’s Banana Bits. Show us your nerd skills for a chance to unlock access to our Company Database for zero bananas.

Yieldstreet lets you invest beyond the stock market with investments in real estate, art, supply chain finance, venture capital, and more - all at more attainable minimums than institutional funds. Deals target annual yields of 3-18% to help diversify and grow your portfolio. Come learn why over 350k members have invested over $2.5B to date.

Let’s get into it.

Banana Bits

Banana Brain Teaser

Macro Monkey Says

Invest like you own the Mets

What's Ripe

Western Digital ($WDC) — Shares of the digital storage solutions provider ripped 14.47% yesterday.

This major move came shortly after news of an activist push by Elliott to split $WDC’s businesses. Elliott sent a strongly worded letter to the board, urging $WDC leadership to spin off its flash media business.

Airbnb ($ABNB) — Shares of Airbnb moved higher after its earnings announcement yesterday, trading up 5.69% after hours.

Airbnb posted a slimmer loss than expected, and it looks like they might be on their way to turning a profit this year as the Street expects. It is also notable that volume for the accommodations marketplace has returned to pre-C19 levels, an indicator of the company’s progress in the past few quarters.

What's Rotten

Estee Lauder ($EL) — Shares of the cosmetics brand took a steaming dump pre-market yesterday, dropping like a ton of bricks before the opening bell. $EL announced its quarterly earnings, and the Street wasn’t happy.

Estee Lauder beat on the bottom line, but revenues didn’t live up to expectations. The biggest gripe investors had with the makeup brand was its guidance. The company cut its full-year outlook, predicting headwinds compared to its previous expectations. On the news, shares fell 5.81% yesterday.

Expedia ($EXPE) — To put it lightly, Expedia didn’t have a good quarter. Sure, they posted a narrower loss than analysts expected, but apparently, the rest of their quarterly results were so bad that analysts at eight firms cut their price targets for the stonk.

Expedia took an absolute thrashing yesterday, and in spite of the reopening play, shares closed down 14.02%. This could be a buying opportunity if you’re bullish on travel.

Thought Banana

Where to Hide — Generating alpha during a bear market is a challenge. Period. Not only is it tough to pick individual positions in a market that is trending lower, but it’s also a mentally and emotionally draining proposition.

Let’s talk about hypotheticals for a minute; the Fed continues with quantitative tightening and its hawkishness as you’d think they will, given everything that’s been in the public eye lately, and Daddy JPow squeezes us *just a little* too tightly, and there is no soft landing. What next?

Well, the mythical r-word, of course.

During a recession, how should I invest?

Historically speaking, investors tend to seek risk-off assets during a recession. Safe havens like treasuries and gold end up helping preserve wealth. Equities and higher-risk bonds lose value.

Technically speaking, a recession is two consecutive quarters of GDP contraction. So after last week’s GDP print, there’s a chance that three months from now, we will be hit with more surprising news: the feared r-word could be here.

Lately, we’ve seen the major crypto benchmarks move relatively in sync with the Nasdaq, but I have a hypothesis that if we have a significant r-word, BTC and ETH might be reliable stores of value in a broad downturn more significant than the correction we have lived through in the last few months.

As far as stonks go, Utilities and Consumer Staples tend to attract capital during a recession. This makes sense: people have to keep their electricity on, and when you take a $hit, you probably need to wipe. Thanks, Procter & Gamble.

If we do dig ourselves an even deeper hole, another sector to consider is Energy. If we have a hot summer when hydrocarbons are already priced at decade highs, it won’t just be utility companies raking in the profits; you’ll see ESG’s favorite sector grow fat with gainz.

Wise Investor Says