June 7, 2023 | Peel #476

Silver banana goes to...

In this issue of the Peel:

• Data suggests that lower-wage earners have seen a gain in their wages post-pandemic. This might signal a shift in the balance of power from capital to labor.
• Gitlab and Dave & Buster’s saw a good day yesterday, while Coinbase and Novocure faced a decline.
• A surprising merger between the PGA Tour and LIV Golf is happening, putting an end to all ongoing litigation and creating potential opportunities and drama for players and fans alike.

Market Snapshot

Happy Wednesday, apes.

Without many planned major news releases between now and JPow’s rate decision one week from today, markets have held steadfast in their classically boring 2023-style.

Yesterday’s equity trade saw a broad gain across all the major U.S. indices. The Nasdaq led the way with a 0.36% gain as over-bullishness reigned supreme, yet deep market breadth remained as out of reach as a blue whale.

Once again, treasuries and their respective yields held mostly flat on the day, once again thanks to the lack of anything fun going on outside the world of golf yesterday (more below). USD was mildly lower as digital assets like BTC fell nearly all day amid the SEC’s shakedown of the sector.

Let’s get into it.

The Hottest (And Coolest) Innovation In Smart Home Tech

Ring 一 Acquired by Amazon for $1.2B

Nest 一 Acquired by Google for $3.2B

If you missed out on these spectacular early investments in the Smart Home space, here’s your chance to grab hold of the next one.

RYSE is the tech startup that’s in pole position to dominate the Smart Shades market, and their exclusive public offering of shares priced at just $1 is closing soon.

Their Smart Shade tech that can slice and dice energy bills, cutting cooling costs up to 24% and lighting costs up to 74% 一 the type of savings office budget managers (and dads) drool over.

The Smart Home space is scorching, and best-in-class specs have RYSE positioned as the next industry heavyweight:

• Unmatched Convenience: Build with the consumer in mind, their tech can make manual shades smart in under 5 minutes.
• Affordable Luxury: Priced at $169 vs. competitors’ pricing of up to $1,000 per window.
• Retail Distribution: Scheduled to launch in 100+ Best Buy stores by this summer.

Get a piece of RYSE before their brand becomes synonymous with Smart Shades.

Banana Bits

• Forbes: how to manage inflation and debt as a business owner
• Data shows flight bookings for work trips are close to pre-pandemic levels, but climate and economic issues may dampen the demand for flying
• Lloyds Banking Group is threatening to call in administrators for the parent firm of the Telegraph newspapers as it looks to recover loans.

Macro Monkey Says

Started From the Bottom

…and now we’re at a slightly higher bottom.

Like the internet’s favorite farmer, who is now sadly deceased, lower-wage earners can officially say that “it ain’t much, but it’s honest work.”

Last week, Politico dropped one helluva report suggesting that low-income workers were surprisingly some of the biggest winners coming out of the pandemic. Sure, going from $12.50/hr to $13.25/hr, even on an inflation-adjusted basis, isn’t much individually, but scaling that out could trigger a nice Butterfly Effect for the economy. Let’s take a look at the chart:

Broadly, what we’re seeing here is a 5.7% gain in average wages and salaries for the bottom 10% of income earners from 2020 to 2022, alongside a simultaneous 1% and 5% drop for those in the 50th and 90th percentile of earners.

And for those of you wondering, yes, that 5.7% is measured on a real basis—meaning that the growth rate has already been adjusted for the (obscene) inflation we’ve seen since the start of the period.

With all that said, the raise itself isn’t exactly much, and nor is it the main story here. As the above Politico chart shows, throughout the prior long-term periods observed in the last decade, only those on the highest end of the wage and salary spectrum could claim any kind of W. Long story short, in the past few years, we actually did eat the rich.

Obviously, that’s cap, but the clear divergence in wage growth trends relative to their earnings might signal a fundamental change in the balance of power from capital to labor. And believe it or not, JPow might be the only homie to thank for that.

"Recalling all the way back to 2020 might be a challenge for some, especially those of us wise enough to trauma-block ..."

Recalling all the way back to 2020 might be a challenge for some, especially those of us wise enough to trauma-block all the memories from that year. But that was the year that the White House, Treasury, and JPow’s trust ol’ printer decided to go absolutely apesh*t on the money printing, eventually leading to calls (mostly from us) to burn your economics textbooks.

In addition to the trillions of dollars in fiscal relief issued by Donnie T, Joey B, and Congress, the Federal Reserve’s yanking of rates down to effectively 0% essentially created the C-19 asset bubble that eventually led to the GFC-like correction and banking crisis seen over the past year and a half.

Beginning in 2022 and (apparently) continuing through the present, albeit at a slower rate, power in the eternal Capital vs. Labor battle shifted back to the good guys for the first time, arguably since literally ‘Nam.

"... the decline in shorter-term wage growth could very well forebode a future of reduced wage growth..."

Higher rates and the drawback in federal spending, along with this year’s super fun banking crisis, have eviscerated liquidity faster than SpongeBob and Patrick in Sandy’s tree dome.

Moreover, the decline in the labor participation rate that has still held below 2019 levels reduced the supply of available labor at the same time as that liquidity drain, forcing Capital (aka managers, companies, and anyone else deciding how much you make)—again, for the first time arguably since ‘Nam—to the negotiating table.

As we’ve seen in recent months, the decline in shorter-term wage growth could very well forebode a future of reduced wage growth among lower-income earners, but we might as well enjoy it while it lasts. Go out and spend that extra 6%; it’ll be good for the economy.

What's Ripe

Gitlab ($GTLB) ↑ 31.19% ↑

• One thing we know is that nerds love reading, and it doesn’t get much nerdier than a “DevSecOps” company.
• Yeah, I know, that sounds like some old military thing your grandfather rants about over a stuffed Turkey dinner, but apparently, it’s actually what the code-hosting and management company Gitlab does.
• Not to be confused with Github (learned that the hard way), which is owned by Microsoft (what isn’t??), Gitlab beat the hell out of earnings and delivered a loss for the quarter far smaller than expected.

Dave & Busters ($PLAY) ↑ 5.70% ↑

• Arcades, wings, and beer—does it get any better than that?
• For most of us, and especially you apes out there, it definitely doesn’t. Yesterday, Dave & Busters saw shares surge nearly 6% on the back of yesterday’s earnings report. We often think of places like McDonald’s as the go-to place for food amid economic fears, but apparently, Dave & Buster’s can step up to the plate too.
• Earnings of $1.45/sh on $597.3mn in top-line sales leaped expectations while management’s guidance for the next quarter and year remained strong enough for the likes of Wall Street. As always, a win is a win.

What's Rotten

Coinbase ($COIN) ↓ 12.09% ↓

• Well, we tried to warn them. Following in the footsteps of its estranged older brother, Coinbase has now itself been butted by the full force of Gary Gensler’s bald head.
• In case today’s share price action isn’t clear enough, this is bad…real bad. In the past two days alone, shares are off 1/5th of Friday’s closing value. In total, shares are now down >85% from the peak.
• The details of the suit are largely the same, with a focus on their failure to register as a broker with the SEC. But, with Coinbase, the suit is FAR more absurd.
• Absurdity seems to be the SEC’s new bread and butter. Basically, since its inception, Coinbase and CEO Brian Armstrong have been begging for some kind of regulatory guidance. I guess they got that yesterday, but I’m sure anything besides “regulation by enforcement” would’ve been far preferred.

Novocure ($NVCR) ↓ 43.04% ↓

• Cancer is a horrific ordeal for any one individual and one of the primary problems plaguing our society, but it turns out the disease affects stocks in just about the same way.
• Novocure, a maker of a device meant to treat cancers with a focus on the most commonly lethal form of the disease, lung cancer, plummeted yesterday as data from clinical testing proved far weaker than analysts had anticipated.
• Here, however, it’s not even like the data was bad. For analysts and shareholders alike, the trouble comes in the methodology behind the study and a lack of standard levels of rigor high enough to drive any feeling of certainty.

Thought Banana

Batman, Meet Joker

Imagine if, all of a sudden, Batman decided that the Joker actually wasn’t all that bad of a guy.…that is essentially what happened in the world of golf yesterday.

In a move Phil Mickelson described as “Awesome” that also caused the group 9/11 Families United to be “shocked and deeply offended,” the PGA Tour and LIV Golf have announced plans to merge into a combined, global golf entity.

If you’re not a golf nerd, let’s get you up to speed. The play-by-play was kind of like this:

• In 2021, the Saudi Arabia Sovereign Wealth Fund announced the launch of “LIV Golf,” a global competitor to the long-established, storied PGA Tour
• Old-school golf fans were ripsh*t that there was a competitor to the PGA while others were drowning in concern of where the money to run this league came from (aka, Saudi Arabian officials)
• Lawsuits ensued. The number of antitrust and other suits filed by LIV and the PGA against each other skyrocketed like Zoom during the pandemic
• On June 9th, 2022, the first LIV tour kicked off
• Big names like Phil Mickelson signed deals to leave the PGA and sign with LIV for upwards of $200mn
• On May 21st, 2023, LIV-signed golfer Brooks Koepka won one of the biggest tournaments in golf, the PGA Championship, despite having received a reported $150mn from the Saudi Wealth Fund (also known as “PIF”)
• On June 6th, 2023, not one year following LIV’s first-ever event, the two mortal enemies laid down their swords (clubs?) and agreed to merge into one entity

The announcement yesterday morning came like a defibrillator straight to the golf world’s heart. Not only did these two programs absolutely despise each other as of Monday’s close, but literally, no one had even postulated this as a possibility previously.

Sometimes, events are anticlimactic. This announcement, on the other hand, was just purely climactic—no build-up at all.

Of course, all of the details and the exact end result of the deal are very much up in the air, but one thing we do know now is that this puts an end to all pending litigation between the two bodies.

"Regardless, perhaps the biggest winners from yesterday’s news are the players ..."

First, LIV sued PGA on antitrust grounds for banning their players from joining the Saudi-backed league, while PGA slapped the Saudis with a lawsuit on anti-competitive pay and pricing grounds.

Regardless, perhaps the biggest winners from yesterday’s news are the players, specifically the ones who betrayed the PGA Tour that they called home for years for a fatty paycheck on the other side of the world.

Naturally, pros like Rory, John Rahm, and Scottie Scheffler, who stayed loyal to the PGA and didn’t get a free $100-$200mn, are a little upset.

This is one you’re certainly gonna wanna stay tuned in on—golf fan or not. Even if we can’t make money on it (yet), we’re here for the drama (we’ll let you know when that changes).

"Could we see further international mergers between “competing” sports leagues?"

The big question: How will the combined entity operate and brand itself around the world? Could we see further international mergers between “competing” sports leagues?

Banana Brain Teaser

Yesterday — Always old, sometimes new. Never sad, sometimes blue. Never empty, sometimes full. Never pushing, always pulling. What am I?

The moon.

Today — When you behead a word, you remove the first letter and still have a valid word. You will be given clues for the two words, longer word first.

Example: Begin -> Sour, acidic

The answer is Start -> Tart.

1. More heat -> Semi-aquatic mammal
2. Flying mammal -> Specifies location
3. Hibernating mammal -> Sensory organ
4. Emote; touch -> Snake-like fish
5. Type of fish -> Donkey
6. Wild pig -> Boat tool
7. Black bird -> Move a boat

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

Wise Investor Says

“The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the man of inferior emotional balance, or the get-rich-quick adventurer. They will die poor.” — Jesse Livermore

Happy Investing,

Patrick & The Daily Peel Team

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