RIP to SPY Puts | The Daily Peel | 11/11/22

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• The owner of Dr Pepper invested $50mn into a nonalcoholic brewing company, highlighting the rapid rise of guilt-free booze
• The layoff bug is spreading from tech to finance, with multiple banks mulling over hefty cuts
• After steadily rising for the past decade-plus, corporate bonds have fallen off a cliff
• Birth rates around the globe are diverging, setting up big shifts in population density in the future

The World Will Make a Lot Less Stuff in 2023

Imagine managing a factory in the last few years, say starting in 2017.

There are a lot of moving parts you have to keep track of—making sure you have enough staff to cover demand, staying close with vendors to know what raw materials are coming in, and keeping an eye on the market to guess what demand is likely to be.

It’s a game of predicting the future and crossing your fingers that you’ve guessed right. When you’re wrong, it’s like trying to turn a massive ship around in a tight river.

• Now it’s 2020—the world goes into lockdown, and you prepare for the worst
• Furloughs are made where possible, but layoffs are inevitable. Any cost that’s not absolutely essential is on the chopping block.
• Wait—never mind! The money printer is in full gear, and consumers have spending power again. Demand is coming back!
• But…you don’t have any employees. They’re terrified of a still-unknown virus, and stimmies are keeping them afloat for the time being. Plus, you can’t get any raw materials to service that demand.
• Supply chain woes give you headaches for all of 2021, and you’re relieved when the snags finally start to unwind

Whoops! Consumers already bought all the durable goods they wanted during lockdowns when they had nothing to do but browse new patio furniture and home gym equipment. Now they’re antsy to get out and spend on experiences.

• The manufacturing industry is reeling from these wild swings and isn’t designed to adapt to jagged changes in demand
• Rate hikes have kicked off a nasty feedback loop—consumers tighten their belts in anticipation of a slowdown, producers make less stuff as a result and need to lay people off, causing those people to tighten their belts…on and on

The industry is praying for some kind of soft landing. That’s looking less and less likely, but at the same time, the consumer has been unbelievably resilient in the face of all kinds of headwinds.

For anyone that’s been managing a factory lately—I feel u.

Source

Pretty Much All Crypto

• After falling off a cliff yesterday thanks to FTX, the crypto universe rallied, although many coins still have heavy losses for the week
• Despite recovering some ground, BTC has sunk through its $20k floor, bringing its yearly return down to -63%

YETI Holdings ($YETI) ↑ 31.58% ↑

• The official cooler of Chads everywhere blew the lid off of Q3, proving the power of its brand
• The focus is now on “winning the fourth quarter gifting occasions” as inventory levels have normalized