Thanks, Pete Davidson | The Daily Peel | 2/17/23

Attention all financial wizards and career climbers, are you ready to take your modeling skills to the next level?

If you're looking for an undervalued investment in your career, look no further than WSO's Elite Modeling Package! With 6 courses designed to turn you into an absolute Excel master, this is the package that keeps on giving.

From building a 3-statement model to tackling complex LBO modeling and M&A transactions, this package has got you covered. You'll also build a solid foundation in trading comparables and precedent transactions analysis and DCF modeling, all using the versatile and relatable example of Nike, Inc.

And as if that wasn't enough, the first 3 Peel readers to sign up for the Elite Modeling Package in the next 24 hours will also get access to our Foundations Package! That's right, a two-for-one deal that'll have you feeling like a baller in no time.

So don't miss out on this opportunity to boost your career, and invest in WSO's Elite Modeling Package now! #ModelOn #FinancialGains #CareerGoals

• This labor market has us so…tight
• Do Kwon, a literal fugitive and founder of TerraUSD and Luna, two coins that kickstarted the crypto collapse, was officially hit with charges of securities fraud by the SEC
• If the 33,000-word report didn’t prove that Hindenburg had the conviction of its call against Adani, maybe details on the trades themselves will
• They’ve only existed for like 5-seconds, but Microsoft’s AI chatbot, called “Sydney,” is already giving us the heebie-jeebies

PP-High

Can this whole inflation thing maybe just f*ck off? Right when we think we’re just about out of the woods, the newest inflation reports jump out of the bushes just to give us a good scare.

The Producer Price Index, a measure of wholesale inflation tracking the prices of raw goods, inputs, and materials, spiked in January well above expectations. The Labor Department reported a jump of 0.7% for the month, well above the 0.4% expected and representing a 6.0% jump for the year. Core PPI, which once again strips out food and energy, rose 0.5%. Not bad, but still kinda trash, given expectations were for 0.3%.

Mr. Market had a mild-mental breakdown afterward, crashing to start the day only to rebound slightly on some midday optimism. But of course, Mr. Markets hates you and your portfolio, so the good vibes couldn’t last, and he ended the day at his most downbad.

It was a “deja vu all over again” kind of day as the same fears lingered. Higher wholesale prices mean JPow and the gang have more work to do, and as we know all too well, a teensy little 25 bps bump in base rates is apparently more than enough to bankrupt a $25tn economy, judging by the market’s reaction at least.

The same risk-off trade was apparent in treasuries as well, with the ocean of yields surging so much that Noah almost had to build another ark. Treasuries, and especially the sub-2-year yields, can serve as a proxy for the bond market’s best guess of where rates will be over that maturity period. And unlike stocks, the bond market actually does kinda-sorta know what it’s doing (allegedly).

But it wasn’t just the PPI that made markets cry (rhyme intended). Yesterday also blessed us with the Philly Fed’s manufacturing index, a measure of overall production across the economy. Just like Philly’s sports teams, the city’s manufacturing index disappointed immensely and caused heartbreak among millions (shoutout Eagles, Phillies, and Union…RIP).

Fortunately, Philly is one of those cities that gets way less destroyed when their teams lose. They wildin’, but markets are very different. The index posted a reading of -24.3, more than 3x the -7.8 drop economists guesstimated. An above 0 reading = growth, and a below 0 reading = gross (aka a contraction).

So while wholesale price levels spiked, meaning as manufacturers had to pay more for their goods, activity absolutely plummeted. This makes sense, but the magnitudes were so extreme that it’s likely the dynamic between these two readings that spooked Mr. Market so badly.

Not only is inflation still high, but seeing a slowdown in production at the same time is the economist’s version of watching The Exorcist on Friday the 13th inside a haunted house while 10 black cats walk by. Safe to say it’s a tad unnerving of an omen.

But then again, it is just one piece of data. There are heroes in every battle, and luckily we have Walmart on our side as Reuters reports the company is using its buying power to b*tch suppliers into not hiking prices so much.

Maybe if we just sent the company’s 2.3mn employees to go square up with inflation instead, this would all be over.

Roku ($ROKU) ↑ 11.15% ↑

• Roku needs to change its ticker to RKO because that’s what they just did to analyst expectations on their latest earnings report.
• This stock has been calling 1-800-273-8255 on a daily basis since at least early 2022. Shares had fallen as much at 92% from peak to trough, so yesterday’s action might’ve just pulled them off the ledge.
• Earnings are still egregiously negative at -$1.70/sh, but hey, that’s $0.03 less negative than expected! Still, the top line was the real reason to party, with sales of $867mn destroying expectations.
• Plenty of analyst commentary followed, but the basic idea was that the alleged “ad armageddon” that slapped everyone from Snap to Google in the face managed to play a little nicer with Roku.

Crocs ($CROX) ↑ 4.40% ↑

• The drippiest shoes you own had a damn good day yesterday, gaining almost 4.5%, as ugly has been confirmed to be the new hot (thanks, Pete Davidson).
• Crocs shares stormed higher (for a shoe company) on the back of solid earnings released early Thursday. We learned Crocs pulled in $2.65/sh, a +21% beat, while nearly $950mn in sales was far from disappointing.
• And the outlook for 2023 only got better. The HEYDUDE acquisition is key here as the Italian-founded brand is (allegedly) just beginning to run in the U.S. Stay tuned.