Mid-Year Market Checkup | The Daily Peel | 7/5/2023

The Daily Peel...

July 5, 2023 | Peel #494

 

Silver banana goes to...

Brilliant.
 

In this issue of the Peel:

  • Markets have remained steady despite the shortened trading session, with positive trends in equity and treasury markets, a stable unemployment rate, and an appreciating housing market.
  • Coinbase and Tesla are on the rise due to potential ETF collaboration and smashing delivery expectations, respectively, while AstraZeneca and Apple face a slump following disappointing trial results and slashed production estimates.
  • Competitive eater Joey Chestnut is highlighted as a unique American hero, having eaten a record-breaking 63 hotdogs in 10 minutes at the annual Nathan's hotdog eating contest.
 

Market Snapshot

Happy Wednesday, apes.

Hope you had a great 4th of July and managed to keep all your fingers. Now that you’re good and sunburned, hungover, hotdog-filled, and miserable at school/work, let’s talk markets.

Monday gave us a shortened session, with equity markets closing at 1 pm, and as you may expect, it was far from the most exciting day. All the volatility and adrenaline must’ve been saved up for the 4th because the US majors barely moved at all, seeing a mixed day across the board to finish mostly in the green.

Yields followed a similarly boring mood. Closing at 2 pm, treasury markets fluctuate minimally, if at all, with the 2-year yield still hovering around that 4.9% level.

Let’s get into it.

 

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Banana Bits

  • You guys never fail to impress/surprise/deeply concern me as Bed Bath & Beyond shares continue to get way too heavily traded
  • Evan Gershkovich, the WSJ reporter currently detained in Russia on allegations of espionage, may be up for a prisoner swap
  • Twitter tried its damnedest to make me actually go touch grass over the past couple of days, but I mean, gimme a break
  • The Joey B administration, social media companies, and a federal judge walk into a bar
 

Macro Monkey Says

Time for a Check Up

If fireworks, hotdogs, gallons of beer, and a whole lotta freedom weren’t enough to get you fired up this 4th of July, maybe this will.

The great thing about the 4th is that it comes basically right at the midpoint of the year. Naturally, with all attention on the Red, White, & Blue anyway, this gives us a great chance to take a beat and reflect on exactly what the hell is going on.

Spoiler alert: It’s going pretty not-terrible, mostly. In large part, economic and financial market data YTD has been, if anything, a surprise to the upside. Specifically, let’s take a look at…

Equity Markets have been on an absolute tear, with the Nasdaq seeing its hottest start to a year since 1983. That means the index has been outpacing even dot-com year numbers—and please, take that as you will.

Meanwhile, the S&P is pushing around double its lifetime average annual return, sitting above 16.5% YTD.

"Inflation has continued to steadily fall just about all year ..."

 

Safe to say investors are pleased, and there’s a lot of good reason for it. Inflation has continued to steadily fall just about all year from both a consumer and a producer perspective.

Most recently, we saw Core PCE, the Fed’s fav inflation reading, clock in at 4.6% while the headline number registered 3.8% annual growth, the lowest in 2 years.

While consumer and producer prices have been moving in the right direction, unemployment has remained mostly stable (albeit while hovering around half-century lows) and remains at a tight 3.7%.

image

Much of that goes back to the snail’s-pace growth seen in the labor force participation rate, slowly moving back to that ~63.5% pre-pandemic level (currently 62.6%).

Behind all of this, certain sectors of the economy have been either carrying the team or adding bricks to the load. The housing market has managed to keep demand elevated well above pre-pandemic levels even in the face of monstrous interest rate rises.

Given that the housing market is to the US economy essentially what Tom Brady was to the Patriots, we can thank this industry for holding up and (so far) keeping us from collapse.

 

"... we can thank this industry for holding up and (so far) keeping us from collapse."

We’ll get some fresh data on the labor market this Friday, though, as the June jobs report drops. But in case you forgot, we saw a +339,000 strong army of workers raised in May. Everyone (notably except JPow) was pretty psyched, but we’ll see if that can continue.

So, all in all, we may not be where we want to be, but major signs have been pointing in the right direction, in large part, all year. And isn’t it all about the journey rather than the destination anyway? Let the fun roll on.

 

What's Ripe

Coinbase (COIN) ↑ 11.71% ↑

  • Can it be? Good news for Coinbase? No, pigs haven’t started flying over a frozen Hell yet…or have they?
  • Well, based on yesterday’s filing from the CBOE, maybe they have. Basically, CBOE’s in-house equity exchange, BZX, had already refiled its application with the SEC for a spot BTC ETF.
  • Coinbase—not to flex or anything—was name-dropped in the filing as the digital currency exchange of choice for surveillance-sharing agreements used by these funds if they ever magically do someday get approved.
  • That essentially means Coinbase will provide the data powering the ETF’s ability to stay on spot prices. Not a bad gig, but we still gotta convince ol’ SEC Chair Gary Gensler to chill tf out a bit.

Tesla (TSLA) ↑ 6.90% ↑

  • The only thing that could’ve made Tesla’s nice +6.9% day better would be if it closed at $420/sh. Elon may have missed a key meme here, but I’m sure they’ll take what they can get.
  • Shares surged on the EV maker’s delivery posted over the weekend. Elon must think he’s Buffett reporting on the weekends or some sh*t, but based on these numbers, he just might be.
  • Tesla smashed delivery expectations by nearly 21,000 vehicles, posting 466,140 total for the quarter. Discounts, new prices, and the US government’s $7,500 EV tax credit clearly helped, but hey, much like ball, numbers don’t lie.
 

What's Rotten

AstraZeneca (AZN) ↓ 8.83% ↓

  • On Monday, despite the shortened session, AstraZeneca still managed to royally disappoint with its preliminary data dump from its latest phase three trial of a (hopefully soon-to-be) new lung cancer treatment.
  • Although not bad, the UK-based pharma name called the data around survivability results “not mature,” which is, ironically enough, the same words used to describe me in our midyear performance report.
  • Nevertheless, the lack of statistical significance of any kind was heavily punished by the Street, but AstraZeneca says their drug did slow progression, so we may see them back at the plate soon enough.

Apple (AAPL) ↓ 0.78% ↓

  • Just like every day can’t be Christmas, Apple can’t always be the hero. Equity markets had a solid day mostly, but it’s damn hard to do when $3.03tn Apple is feeling lousy.
  • After posting record highs, shares pulled back to start the shortened week on reports that the giant of Cupertino was reportedly forced to slash production estimates for its hyped-up VR headset.
  • Now, the report is from the FT and cites “people familiar with the matter,” so take that as you will. Wall Street sure did, taking almost 0.8% off the top.
 

Thought Banana

An American Hero

George Washington, Abraham Lincoln, John F. Kennedy, and Joey Chestnut—these men round out the complete list of the most American Americans of all time.

Unfortunately, the first three have been dead for decades and centuries. So today, we’ll be focusing on the fantastic number four: Joey Chestnut.

Hotdog eating contests are pretty much the only thing more American than un-walkable cities, and our boy Joey Chestnut is the undisputed best to ever do it. Yesterday, this man ate a ridiculous 63 glizzies in 10 minutes to win his 16th Mustard Belt at the annual Nathan’s hotdog eating contest.

 

"Yesterday, this man ate a ridiculous 63 glizzies in 10 minutes to win his 16th Mustard Belt at the annual Nathan’s hotdog eating contest."

Like Chestnut’s toilet, none of the other participants are pleased with the outcome, but they must just be glad it happened. The organizers originally wanted to cancel the contest due to weather, but then they realized their “sport” was literally just eating, and Chestnut himself saved the day in saying, “I’m gonna get the rest of the guys out, and we’re gonna do this f---er.”

"That’s about 22,800 calories, which is about the amount of calories the average adult man should eat in a 7-11 day period."

 

Inspiring. More so, 63 dogs is a light day for the aptly named eater. Chestnut’s all-time record is 76 hotdogs downed in a 10-minute (aka 600-second) span. That’s about 22,800 calories, which is about the amount of calories the average adult man should eat in a 7-11 day period.

Absolutely ridiculous. That’s also approximately 15 lbs of dogs, roughly 6.5% of the 230lb man’s body weight. Honestly, the more you think about it, the crazier it gets, but absolutely no one in the history of competitive eating holds a candle to this guy.

You could make a damn good argument that Joey Chestnut is the most dominant athlete in the history of American sports. The fact that his sport of choice happens to be slamming glizzies like a goddamn coked-out rottweiler is one of the most American things I can think of. All we can say is: Thanks, Joey.

 

Banana Brain Teaser

Monday — In these Word Pyramids, the first letter is given to you (which is the first answer). Use the clues to build the pyramid to find the answer. In each consecutive answer, a letter is added to the previous answer. However, the answer letters might not be in the same order. Go

Starting letter: D

Clues:

  • pop-up material
  • assist
  • uttered aloud
  • surprise attacks
  • render harmless
  • indefinite number
  • polyhedrons

Answer:

  • D
  • AD
  • AID
  • SAID
  • RAIDS
  • DISARM
  • MYRIADS
  • PYRAMIDS

Today — In each sentence below, two words are incomplete. The two words end in the same three letters, so they look like they should rhyme, but they don't. See if you can figure out the missing letters in each sentence.

Example: One symptom of bronchitis is a ro___ co___. (The two words are: rough & cough.)

  1. I was in the l___ until I tripped and ended up d___ last.
  2. I cr___ the last time I sk___ because I broke a leg.
  3. We want to know wh___ book you ch___ for the award.
  4. A particular fast car could be called a qu___ Bu___.

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

 

Wise Investor Says

“Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.” — Warren Buffett

 

Happy Investing,

Patrick & The Daily Peel Team

Was this email forwarded to you? Be smart like your friend.

 

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