SHEIN ♥️ Forever 21 | The Daily Peel | 8/25/2023

The Daily Peel...

August 25, 2023 | Peel #530


Silver banana goes to...


In this issue of the Peel:

  • Guess and Splunk stocks soar after beating expectations, while and Snowflake take a nosedive amidst a rough market day.
  • Durable goods orders in the U.S. fall for the first time since February, signaling a potential slowdown in the business cycle.
  • Fast fashion giants SHEIN and Forever 21 announce an acquisition deal, but financial details remain undisclosed.

Market Snapshot

Happy Friday, apes.

I think we’ve finally figured out the market over here, apes—whatever you think is going to happen, it’s actually gonna be the opposite. You’re welcome, accepting tips over Venmo.

That is if anyone still has money left to tip after yesterday’s rout. Equity markets dumped throughout the day, putting a nail in the coffin right at the closing bell. Aside from Nvidia, just about every other company whose name you’d recognize was big in the red.

The Nasdaq led the way down with a 1.87% fall, while financials, with their 0.30% decline, was the strongest performing sector.

Treasuries joined in on the selling, with yields rising almost the full way across the curve. The 2-year yield settled back above that key 5% level while the 10-year is again flirting with 4.25%.

Fingers crossed that inversion keeps moving in the right direction (the sooner, the better!), but we’ll see. The dollar was the only one with an actual strong day, ripping through 104 by the end of the day session.

Let’s get into it.


Nasdaq Listed Company Re-Opens Its 12% Dividend Preferred Shares


In January 2021 Onfolio Holdings Inc launched its preferred shares, which pay a 12% annual dividend, in quarterly payments. Since then, they've become a publicly traded company on the Nasdaq.

While they've been paying every dividend on time for the past 2.5 years (10 consecutive quarters), they haven't offered new shares to anyone since their IPO. Until now.

Since they use the funds to acquire profitable businesses, Onfolio are raising new funds to replenish their war chest and make new acquisitions. Accredited investors can now invest a minimum of $20k to buy newly issued preferred shares and earn 3% per quarter from the very first quarter.

What's more, Onfolio will list the preferred shares on a US market soon too, giving investors liquidity as well as those high returns. For income investors, this is worth learning more about, or investing right away.

Learn More


Macro Monkey Says

Durable Goods Lack Good Durability

Old things suck, and new things are super cool, fast, hot, brilliant, etc., etc. This is a basic fact of life we can all obviously agree on, right?

Apparently not. In the United States, the country that’s arguably the King, “New! New! New!” and “More! More! More!” new orders were not the vibe last month.

A few weeks ago, on a popular financial podcast, JPMorgan’s Chairman of Market and Investment Strategy in its Asset Management division, Michael Cembalest, revealed one of his favorite but rarely used economic indicators that we’d like to blow your mind with.

"... the spread between the changes in durable goods orders ... compared to changes in inventory ..."


Essentially, it’s the spread between the changes in durable goods orders in any given month compared to changes in inventory levels over the same period.

It almost makes too much sense. When growth in new orders outpaces growth in inventories, it suggests companies are having to place a higher degree of emphasis on getting new sh*t rather than trying to push out the old sh*t. It’s a sign that companies believe a trend in strong secular demand is present.

Last month that is not at all what happened, unfortunately. New orders for durable goods fell for the first time since February. This was in line with expectations, but the 5.2% annual drop disappointed against a 4.0% expected decline.

Excluding transportation as a category, however, that decline gets bumped to a growth rate of 0.5%, outperforming the 0.4% expected on the ex-aviation line item.

Here, we can essentially point all the blame at Boeing. With the Paris air show in June frontrunning big ticket plane orders for the year, it was no surprise to see a staunch decline in the month following. Taking Boeing out of the equation, the report didn’t give us much to fear.

For those of us who like Cembalest’s thought process above, it’s important to note that inventories for manufactured durable goods increased 0.2% for the month of July, roughly in line with expectations.


"... it’s important to note that inventories for manufactured durable goods increased 0.2% for the month of July ..."

And while there wasn’t much of a market reaction following the release, believe it or not, that’s actually the norm for far-reaching economic releases. Dump 2020-2022 from your mind because the only way to get the people going with reports like this is if there’s a big surprise, which is (supposed to be) rare.

Still, from a business cycle perspective, this is not at all what we want to see. Your boomer Econ professor who still teaches you monetary theory based on scarce reserve environments would say this is a sign of a slowing business cycle.

But it’s 2023; who knows when a combo of Nvidia’s chips, Tesla’s robots, and David Goggins’s work ethic will all combine to solve all of our problems. Keep your fingers crossed, apes.


What's Ripe

Guess? (GES) ↑ 26.00% ↑

  • I bet you’ll never guess what this stock did today.
  • Alright, you can stop cringing. The corny jokes are over with (for now). Guess, the owner of a slew of overpriced clothing lines reported a fat beat for the past quarter, and analysts were loving it.
  • Sales grew 3% to $665mn while EPS of $0.72 eviscerated estimates and nearly doubled the Street’s $0.38/sh guesstimate. Even during what we may have expected to be trying times economically, Americans just confirmed they’re still willing to pay hundreds of dollars for a shirt Target and Amazon have (probably) already knocked off. Sounds bullish to me!

Splunk (SPLK) ↑ 12.91% ↑

  • Despite the name of this company sounding all too similar to the sound a rock makes when you drop it in a pond, shares actually moved in the entirely opposite direction yesterday.
  • Splunk was legitimately carrying the entire team yesterday. Shares surged almost 13% on the back of a strong earnings report along with reiterated bullishness from the Street. Adjusted EPS of $0.71/sh vs. $0.47 expected was a good start…but it was just that—the start.
  • Revenue trounced expectations, still growing in the double-digits, and guidance was drastically jacked up, adding more fuel to the fire.
  • The cybersecurity and data management firm has been a low-key, sneaky player in the AI trade of late, but maybe not anymore after this one.

What's Rotten Inc (AI) ↓ 11.56% ↓

  • is going to cry after the day that it had yesterday, and per rumors swirling around the Street, investors have been crying since 9:30 a.m. yesterday.
  • The quite literal “poster child” of the AI trade (I mean, look at the f*cking ticker) shares dove on a day when overall bearishness, especially with regard to the legs of this “AI bubble” we’re in, dominated the day.
  • There was no idiosyncratic news on the day worth wasting our time on, but the nosedive is representative of investor confidence in the space going forward. Someone drop another ChatGPT or something already; my portfolio needs it.

Snowflake Inc (SNOW) ↓ 5.16% ↓

  • The ice caps are melting, and after today, we know the Snowflakes are too.
  • Shares in the Buffett-approved data warehousing and cloud technology company tanked on a very Buffett-friendly Q2 earnings report. Despite beating on both the top and bottom lines, shares got dumped partly as a result of Mr. Market’s rampant depression in the day and partially because they suck, too.
  • And by “suck,” we, of course, mean “didn’t overdeliver.” EPS of $0.25/sh on $674mn in sales easily beat the $0.10/sh on $662mn priced in. But apparently, that beat wasn’t enough.
  • At the same time (as we saw above), AI stocks not named Nvidia were absolutely assaulted yesterday as everyone with a couple of bucks who’s heard the term “AI” seemed to rotate into the big chip maker.

Thought Banana

Forever SHEIN

Playing Donnie Azoff in the most inspirational movie of all time, The Wolf of Wall Street, Jonah Hill, at one point, takes off his shoe, pounds it on the table, and yells, “WOMEN’S SHOES!!”

What he’s referring to, of course, is the Steve Madden (aka “sTeEeeeVve MmaaAaddenn,” to quote the film directly), a women’s shoemaker, IPO, and all the magic that’s expected to work for the firm. You all know how that one worked out.

Well, today, it’s time to pound all your clothes on the table as two of the most popular names in women’s clothing are coming together.


"... two of the most popular names in women’s clothing are coming together."

SHEIN, the blockbuster fast fashion retailer out of China that has burst onto the scene in recent years, has entered a deal to acquire/combine with the legendary American brand Forever 21.

No financials were disclosed whatsoever, much to the ire of you, myself, and probably every single ape reading this. But still, the implications are arguably even more important.

Fast fashion retailers get a lot of hate. Their products are often considered overly wasteful, and the labor practices at these kinds of companies are…well, let’s just say there’s a reason they have safety nets inside these factories.

"But hey, if they wanted to go with negative prices and pay me to take something, I wouldn’t mind at all."


Maybe the combination of the two will create a better experience, but with sh*t like this shirt already costing just $5, they quite literally can’t sell clothes for much cheaper. But hey, if they wanted to go with negative prices and pay me to take something, I wouldn’t mind at all.

We’ll see how this plays out in the fashion industry long-term, and hopefully, financial details will drop at some point. We’ll continue to speculate wildly and hope we can learn a little more eventually, but for now, as one of my good friends described the deal earlier today, it’s nothing more than “trash buying trash.”

The big question: Will SHEIN and Forever 21 rebrand or keep their iconic namesakes in this new combined entity? Who is buying who, and for how much?


Banana Brain Teaser


5 + 5 + 5 = 550

Add ONE STRAIGHT LINE to the above to make the sum correct.

5 4 5 + 5 = 550

Add a straight line to a “+” to make it a “4”.

Today — Here is a group of common three-letter words. Can you take these and turn them into half as many six-letter words? Each three-letter word is used only once.

act, age, bed, can, cat, cud, dam, did, don, dot, for, gel, get, ion, lam, nap, out, par, pen, rag

Shoot us your guesses at [email protected].


Wise Investor Says

“The history of bubbles, manias, and crashes is as old as investing itself.” — Michael Cembalest


How would you rate today’s Peel?

All the bananas




Rotten AF


Happy Investing,

Patrick & The Daily Peel Team

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