Rishi to the Rescue | The Daily Peel | 10/25/22

Oct 25, 2022 | Peel #323

Market Snapshot

Rishi Sunak is the latest holder of the Prime Minister hot potato after the spectacular Truss flameout.

The market seemed happy with the pick, but he has one epic clusterf*ck to get his arms around.

Stocks ground higher despite rising bond yields. Big Tech earnings are on the docket later this week, along with Boeing and Coca-Cola.

Banana Bits

American students are regressing in math and reading based on national exam data
Chinese stocks sold off on news that President Xi would be tightening his grip on power
Twitter is set to shoulder Elon’s massive acquisition-related debt if the deal goes through
Pfizer is targeting $100 to $130 per C-19 vax once government freebies expire next year

Macro Monkey Says

Hoping For a Christmas Miracle

Stocks have had a positive last month or so after a choppy year, igniting hope for a Santa Claus rally to close out 2022.

Historically, stocks tend to do pretty well in the last two months of the year. With so much bad news priced in, the setup looks decent.

But recent earnings have been iffy and haven’t done much to shake the anxiety on Wall Street.

In an average quarter, about 3/4 of companies beat earnings estimates. So far, Q3 reports are trending slightly below that level
Tesla did everything the Street expected in the quarter and still got hammered
There’s still a “bad news is good news” mindset, where things like rising unemployment are a bullish signal for stocks since it could slow the Fed’s tightening pace
Projections for next year will have a big impact on performance going into the holidays

Meme of the day

Source

What's Ripe

Snap ($SNAP) ↑ 7.09% ↑

The widespread dancing on Snap’s grave last week may have been premature after a nice bounce Monday
Despite monetization struggles, it’s still an incredibly sticky platform that has proven it can consistently grow DAU

Avis Budget Group ($CAR) ↑ 16.63% ↑

JPMorgan is bullish on $CAR, citing higher expected demand for rental cars amid limited supply, along with a strong balance sheet
Management has investors’ full confidence after prudently cutting costs during lockdowns

What's Rotten

Chinese Tech Stocks ($CQQQ) ↓ 9.40% ↓

Alibaba, Tencent, Baidu, and their peers tanked on fears that a changing political landscape will hamper growth
The government’s insistence on “C-19 zero” at the expense of the economy hints at a priority of political wins over economic ones going forward

Las Vegas Sands ($LVS) ↓ 10.29% ↓

Political ramifications coming out of the CCP gathering over the weekend are likely to hurt the casino industry
Despite beating Q3 estimates last week, $LVS’s especially large presence in Macau has investors worried about future growth

Data Peel

Source

Thought Banana

Big Tech Haircuts

It’s hard to know what Elon’s bullsh*t level is on any given day, but his pledge to cut 3 out of every 4 workers at Twitter once he buys it has Big Tech employees trembling.

The days of essentially free capital are over, and the industry is starting to reckon with the implications.

Throughout the free money era, Big Tech has vacuumed up gobs of engineers without demonstrating a clear need for the extra hands
Startups have been starved for talent as a result, widening the moat between the big boys and everyone else
When treasuries are paying over 4%, all of your Opex needs to have a clear purpose of staying competitive

The big question: If Big Tech hiring is dramatically slower in the coming decade, will startups be able to close the gap?

Banana Brain Teaser

Yesterday — He has one and a person has two, a citizen has three and a human being has four, a personality has five and an inhabitant of earth has six. What am I?

Syllables.

Today — It’s 100 bananas off the Real Estate Modeling Course. LFG!

How can you add eight 8's to get the number 1,000?

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

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