You Think Meta’s Bleeding Cash? Take a Look at the Fed… | The Daily Peel | 11/1/22

Nov 1, 2022 | Peel #328

 

Give your silver bananas to...

Market Snapshot

After marching higher throughout October, stocks traded down slightly on Halloween.

Meanwhile, JPow’s rapid tightening is making the Fed lose money, Brazil has a new president, and nat gas prices are soaring.


Banana Bits

  • Don’t feel too bad for Twitter’s recently-canned execs—they’re taking home $141mn in golden parachutes
  • Brazil’s former leader Luiz da Silva edged out current president Jair Bolsonaro to win the presidency
  • Rising inventory levels are finally bringing new car prices down
  • That blue check on Twitter is going to cost you $20/month going forward

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Macro Monkey Says

Americans Have Too Much Cash

The idea behind the monetary pain we’re all feeling is pretty straightforward—when borrowing costs go up, people spend less, and inflation comes down.

But when you print trillions in new dollars, the equation gets distorted.

  • If consumers and businesses have plenty of cash to fund expenses, higher borrowing costs won’t dent inflation as much
  • U.S. households still have over $1 trillion in savings they can burn before dipping into credit, and local governments are flush as well
  • Some Fed governors are expressing concern that rates may have to clear 5% to sufficiently tame inflation
  • A tight labor market further dampens the effects of higher rates

Meme of the day

meme

Source


What's Ripe

Getty Images Holdings ($GETY) ↑ 34.65% ↑

  • You probably know Getty from its watermarks on stock images, but it’s gotten caught up in the meme stock frenzy lately
  • Anyone shorting this thing better get the hell out of the way

Natural Gas Futures (NG00)

  • After plunging for the last month and a half, nat gas prices shot up Monday
  • Panic over shortages ratcheted up nat gas supply in September, which sank prices initially, but the market is snapping back to a more normalized level

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What's Rotten

Doordash ($DASH) ↓ 7.50% ↓

  • The food delivery market leader reports earnings on Nov 3rd, and sh*tty results from other instant delivery companies have the market bearish
  • $DASH has maintained its market leadership despite Uber’s much deeper pockets, but a downturn could change that

Airbnb ($ABNB) ↓ 7.20% ↓

  • Higher mortgage rates have squeezed Airbnb hosts’ profits, and properties are starting to come off the platform as a result
  • CEO Brian Chesky will make his case during its earnings call Tuesday, and the entire travel industry will be tuning in

Data Peel

chart

Source


Thought Banana

Fed’s 2023 Guidance: $60 Billion in Losses

Losses aren’t really losses when you have a money printer in hand.

But the Fed is technically now losing money as higher rates have increased what it pays banks to keep money in its coffers.

  • Its bond-buying spree in response to the C-19 shock swelled its balance sheet to nearly 10 times its level in the early 2000s
  • Fed “losses” basically just mean writing IOUs to the Treasury, which are expected to reach $60 billion next year
  • Monetary policy shouldn’t really be affected by the losses, but it highlights the difficulty of managing a $9 trillion balance sheet

The big question: Will the Fed’s balance sheet ever return to its pre-Great Recession level of less than $1 trillion, or has all that money printing guaranteed it will only get bigger in the future?


Banana Brain Teaser

Yesterday — A man builds a house with all 4 sides facing south. A bear walks past the house. What color is the bear?

White. The house is built directly on the North Pole.

Today — It’s 100 bananas off the Hedge Fund Interview Course. LFG!

If you were standing directly on the south pole facing north, which direction would you travel if you took one step backward?

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



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1 Comments
 

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