India's Demographic Dividend | The Daily Peel | 4/20/2023

Apr 20, 2023 | Peel #444

Silver banana goes to...

Market Snapshot

Happy Thursday, apes.

And most importantly, Happy 4/20 to all those who celebrate. Those who don’t are probably pretty confused right now, but hey, IYKYK. Take a nice, fat bong rip for me.

Equities certainly tried to get in the Holiday spirit yesterday, getting high all day compared to the session’s open but failing to really do anything once again. The Nasdaq’s enormous 0.03% led the Big 3 US indices, while the Russell 2k popped off in comparison, booming a whole 0.22%.

Yields didn’t help for most of the day, either. Treasuries barely budged as well, and the only thing that seems clear across markets now is that no one knows what is going on. The dollar moved similarly, with both moving higher late in the session. Meanwhile, BTC has reverted almost 5% in the last 24hrs, falling below $30k, while ETH dips below $2k after losing a not-so-nice 6.9% over the same period (10:03 pm).

Let’s get into it.

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Banana Bits

• Apple opens some of its very first retail stores in the soon-to-be most populous nation in the world
• For the downbad among us, here’s a positive spin on Tesla’s quarterly figures
• Good guy, local guy, and also a family guy, apparently. Meet the world’s richest man Bernard Arnault and his children
• Making tax day mildly less boring this week by memeing on the scumbaggery of tax collectors and the pure genius of tax evaders alike

Macro Monkey Says

India to Infinity

While its economy rebounds out of the pandemic, China will soon have to give up what has been the nation’s key flex since the UN started keeping track of this measure in 1950…soon, China will no longer be the world’s most populous country.

And in all honesty, this could very well be the case right now. According to new projections released yesterday, India’s population is projected to surpass 1.428bn while China is expected to boast 1.425bn people, a 3mn person difference. It’s unfortunately impossible to know national populations down to the individual level on a real-time basis, so don’t expect India to start Tweeting on China the moment they take over.

India will no longer have to claim the “World’s Largest Democracy” as it can simply just say the “World’s Largest”...except for land size, of course, thanks to you know who.

This might seem like just a petty flex, and it totally is on certain levels. But population growth is such a fundamental economic growth driver that no one ever talks about it – like, it’s so obvious we don’t even think about it most of the time.

Without a growing population, whether globally, nationally, or however you wanna draw the lines, an economy can grow in two ways: sell more things or sell things for more. Like any company, sales grow via more sales or higher revenue pulled in on those sales through higher prices. At the simplest level, economies can be crudely viewed in a similar way.

A declining population, as China reported in 2022 for the first time in 60 years, is a nightmare for a national economy. The equation of “less people = less demand” on a scale like this doesn’t just mean inflation slows; it means fewer people to buy houses, cars, or that soy milk you freaks drink, and the dominoes start to fall from there. Lacking that velocity of money means people and businesses spend less frequently, and yes, more dominoes fall from there; you get the point.

Population growth does tend to slow as economies become more developed, poverty alleviates, and more economic opportunities open for citizens. China’s booming growth over the last 5 decades has been unlike anything the world has ever seen before, so it’s not exactly a surprise to most experts that growth in people took a dip.

Despite population growth being a fundamental force in avoiding economic collapse, growth alone doesn’t guarantee explosive prosperity. That growth has to be managed appropriately, with the Chinese government going as far in this regard as to limit offspring to 1 per couple (the replacement rate is 2.1 children per couple).

President Modi and the rest of the government have a high bar to step over. The UN predicts growth rates will continue to accelerate until midway through this century, and dammit, we’re not even halfway there just yet.

Best of luck to all. You having fun in the 21st century yet??

What's Ripe

Western Alliance Bancorporation ($WAL) ↑ 24.12% ↑

• This is the kind of stock that gives hope to all of us out there. The thing has lost nearly 70% from peak to trough in 2023 alone, but yesterday, shares still managed to erupt with a 24.1% gain.
• Sure, net income declined 50% annually, and sales missed guidance miserably, but earnings per share still managed to beat as the Street was clearly pricing in a nightmarish quarter. To be fair, barely a month ago, we were questioning the stock’s solvency, so it makes sense to see minor positive news drive multiplicative returns.
• The real positive of the day was the company’s announcement that deposits grew this month alongside a ratings upgrade from Wedbush. That’ll get the people going even if earnings can’t move shares already priced for death…and it did, bigly.

United Airlines ($UAL) ↑ 7.50% ↑

• United we stand, and United shares rise. That was certainly true yesterday, as shareholders of this patriotic-a** stock had to be feeling much more unified than pretty much the entire rest of the country.
• And a solid earnings beat will do that. Oh wait, did I say earnings? Sorry, I meant *lost less than they were expected to. Yes, despite robbing passengers more than landlords rob single mothers, the major airlines are still somehow losing money. This kind of incompetency just seems impressive.
• Guidance was fairly weak as investors were crossing their fingers for s stronger recovery. Unfortunately, management was unable to rally investors with their muddled full-year projections yesterday. I’ve said it before, and I’ll say it again: maybe just lie next time?

What's Rotten

Tesla ($TSLA) ↓ 2.02% ↓

• Someone grab the puke bucket; I’m gonna get car sick.
• As Barron’s envy-inducingly puts it, Tesla is apparently, in fact, a car company. It just so happens to be the most valuable one in the world. As such, expectations were high, so when gross margins fell from 21% in Q4’22 to a disgusting 16% last quarter, it’s no wonder investors were a tad rattled.
• Earnings still came roughly in line with expectations, but it’s clear the concern isn’t with the immediate term for the stock that seems to trade alongside the wind and Elon Musk’s blood pressure. The firm’s drastic price cuts and strategy behind this are coming into question.
• Meanwhile, Musk has enjoyed a week of embarrassing a BBC journalist and sadly calling off big huge rocket launches. Still, the company puts up big numbers and managed to continue to see some decent sales growth, as shown in last month’s deliveries report.
• But, like betting against the United States, betting against Elon hasn’t worked out too well in the past. We’ll see.

ASML Holdings ($ASML) ↓ 3.07% ↓

• Despite many of us probably not being aware of this $252bn company’s game prior to now, the Dutch chip maker still managed to disappoint yesterday.
• Net income nearly doubled expectations and tripled compared to the same period last year, while sales grew handsomely as well. Despite the stellar quarter and impressive guidance, investors were sussed out by caution among the firm’s largest customers.
• ASML sells to chipmakers like TSMC, Intel, and others, for the most part. Demand has been spiking from these firms as governments like the US beg and plead with chipmakers to make the damn things inside our borders, but reports claim that the Dutch big dawg has struggled to meet demand.
• A feeling I’m sure we can all relate to. Still, profit-taking could be at play here as well, with shares up double digits on the year anyway, so can’t be too mad.

Thought Banana

BloombergGPT

Everyone, try to keep your pants on, or at least try your hardest; who am I to be a hypocrite?

Anyway, the coolest AI bullsh*t GPT thing to arrive yet is officially here: Bloomberg has launched BloombergGPT, a “50-billion parameter large language model, purpose-built from scratch for finance.”

This is wild. BloombergGPT has been trained on news articles, press releases, regulatory filings, and more. The thing uses a newly constructed 708bn token dataset from both public records as well as Bloomberg archives to build this LLM, with tokens representing basically the AI version of atoms – they’re the base unit of the datasets the models get trained on, essentially.

If your mind isn’t racing already, it definitely should be. The possibilities are enormous, and the hours saved, along with (probably) jobs taken from this thing’s eventual ability to streamline research, publish written pieces (oh no), and answer personal financial questions, will change the game, to say the least.

Moreover, a financial AI would be able to allow idiots like finance majors to utilize tools and concepts like professional-level risk analysis, modeling, and much more without actually having to know what these things mean. All you’d need to know is the right words to use.

And it turns out that for pretty much all large language models, the exact words you use make a world of difference. AI prompting has become a hot topic in the midst of the ChatGPT-inspired craze, with some proposing “prompt engineers” as a prominent job in the not-so-far future.

Apparently, we’ll just throw “engineer” behind any job title on the planet now as choosing words seems mildly different than sh*t like building bridges, but idk maybe I just didn’t have the best learning engineers in school.

Regardless, an LLM dedicated to finance will be a big help to those learning the Way. As we realized when $GME hit $420/sh, however, finance is an industry where learning the wrong thing is all too easy and all too margin call-inducing. Can’t wait to see how this goes.

The big question: Will BloombergGPT become the new lead analyst on your team or underwriter on your deal? How will this LLM change the learning process for finance and economics students? How commercially successful will this be for Bloomberg?

Banana Brain Teaser

Yesterday — Three lives have I. Gentle enough to soothe the skin. Light enough to caress the sky. Hard enough to crack rocks. What am I?

Water.

Today — It’s 150 bananas off the Venture Capital Course for the first 3 correct respondents. LFG!

I sit on a bridge. Some people will look through me, while others wonder what I hide. 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

“The biggest risk in investing is not volatility, but the possibility of not achieving your long-term goals.” — Mark Mobius

Happy Investing,

Patrick & The Daily Peel Team

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