Quantum Problems | The Daily Peel

Don't you hate it when you miss out on a good investment? Us too. That's why we're kicking ourselves for not investing in art with Masterworks sooner.

This fintech powerhouse secured 10%, 27%, and 35% net returns from three of their recent sales. Of course, past performance doesn't guarantee future results, but getting +10% returns in this market isn't easy.

And if you want to sell your shares early, you can use their secondary market to cash out.

Plus, they get every offering qualified by the SEC. And not everyone does that. Just ask the crypto-hopefuls: they're still waiting on the Bitcoin ETF to drop.

You're probably thinking "but it's art, why wouldn’t I just stick with stocks?" We thought the same thing – until we saw these numbers:

• Near 0 correlation to stocks, according to Citi
• Prices increased by 20% annually on average during high inflation (MW All Art Index)
• Contemporary art prices outpaced the S&P 500 by 131% (1995-2021)

The best part? You're not too late. You can get priority access to their offerings with our Daily Peel link.

*“Net Return" refers to the annualized internal rate of return net of all fees and costs, calculated from the offering closing date to the date the sale is consummated. IRR may not be indicative of Masterworks paintings not yet sold and past performance is not indicative of future results. See important Regulation A disclosures.

• Okay, you got your day off already, now take a second to appreciate the legacy of Dr. Martin Luther King Jr while looking at this new and uhh, let’s just play it safe and say “unique” statue in Boston
• Wow, I guess limiting freedom of movement as much as reasonably possible is actually bad for a country’s economy, even one that’s grown as fast as China’s
• But not only did economic growth slow, but the population of the world’s most populous country (for now) actually fell in 2022 for the first time ever
• The king of meme stocks (besides the legend Keith Gill) is moving onto bigger and better things with a new stake in Alibaba

The Most Wonderful Time of the Year

It might be winter in the Northern hemisphere, but the only season me and my homies care about is the earnings szn.

The party got started on Friday with some of the largest US banks dropping their latest figures, blessing us with data, and making my job of finding content to write about a whole lot easier.

In an attempt to minimize their own individual scrutiny, the big banks like to drown us in data all at once, hoping we won’t notice that one line item that could lead to another GFC. Fingers crossed, that’s not the case here, but everyone from J.P. Morgan to BofA to BlackRock came out swinging.

While they’re for sure swinging for the fences, there’s certainly no Aaron Judge to be found. Revenues and net incomes nearly beat across the board, but not by much, driving Wall Street’s general “meh” response. Here’s a quick look at the basics:

• JPM → EPS: $3.57 act. vs. $3.11 exp., Revenue: $34.5bn act. vs. $33.9bn exp.
• BofA → EPS: $0.85 act. vs. $0.78 exp., Revenue: $24.5bn act. vs. $24.1bn exp.
• WF → EPS: $3.57 act. vs. $3.11 exp., Revenue: $19.6bn act. Vs. $19.8bn exp.
• Citi → EPS: $1.10 act. vs. $1.18 exp., Revenue: $18.0bn act. Vs. $17.9bn exp.

But as always, the devil is in the details. A lot of eyes were immediately drawn to loan loss provisions, cash piles that banks hoard for when you miss your car payment(s). Basically, it quantifies exactly how scared banks are. JP, for one, beefed this up nearly 50% from $1.54bn to $2.3bn hardcore while saying that a mild recession is now the firm’s “central case.”

While that’s not ideal, we love to hear that in comparison to Dimon’s “economic hurricane” freakout rant from last year.

Arguably the most important part, however, is a bank’s net interest margin, aka the spread between what they make from lending activities and what they pay you in deposits.

As I’m sure you noticed, your deposit rate is moving a whole lot slower than JPow is. Right now, the nation’s average is a diabolical 0.22%, which is still more than 3x last year’s miserable 0.06% and 2x the long-term average of 0.09%. But damn, it really makes you miss the definitely-not-fake-or-scammy 100% or 1,000% rates some crypto projects offered.

So with those deposit rates moving slower than the line at the DMV, net interest margins (NIM) jumped pretty much across the board. Wells Fargo, the silver medalist in consumer banking (behind Chase ofc), saw NIM spike to 3.1% from 2.1% last year. Despite that, the apparently slow-reading skills of investors gave bank stocks a scare in the morning, with Wells falling 3.7% by 10 AM. But once those mouthbreathers got to the NIM line item, the bottle started popping, and $WF finished up 3.3%

And although it’s not technically a bank, taking a peek at BlackRock’s $8.6tn of assets and their flows is like staring into the 401(k)s of every US investor all at once. In short, they are still scared, with a net of $15bn in long-term retail holdings leaving the firm’s products.

Hate to make you apes read so much, but with bank earnings, you gotta let the party run a little long. Don’t worry, though; we got plenty more coming our way today when Morgan Stanley and Goldman drop.

Stay tuned for part 2.

Virgin Galactic ($SPCE) ↑ 12.34% ↑

• If trying to manifest future events was a business model, Virgin Galactic would be worth more than Apple. I’d say it’s not rocket science, but…
• After sister company Virgin Orbit’s stock plummeted last week (much like their rockets), the future of European space travel was thought to have the potential to go up in flames. But fear not! The management team behind this down-90%-from-peak-stock said they remain “on track” for planned Q2’23 launches.
• As a result, shares ripped as investors either 1) were previously just assuming the company wouldn’t make its targeted launches or 2) were just reminded the stock still exists.

Wendy’s ($WEN) ↑ 5.97% ↑

• I mean, you don’t even have to own Wendy’s shares to be happy this thing is going up. No matter what, we’ll probably never be able to repay them for blessing the world with the 4 for $4.
• Actually, after reading (*skimming) preliminary figures from last quarter, maybe we have paid them back…in spades. Shares ripped on Friday on the company’s beat and raise release as well as the announcement to DOUBLE their dividend for this year. Really y’all, in this economy??
• I guess so. The firm is also instituting a big time organizational redesign, but as long as they keep slinging those God-like spicy nuggets, they can do whatever they want.