Guess Who's Back? | The Daily Peel | 12/19/21

Silver Banana goes to...

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Market Snapshot

Volatility was the name of the game to close the week. Stocks moved up, down, and all over while treasury movements flattened the yield curve as the dollar gained. Still, equities overall couldn't hang, leading the Dow to fall 1.48% while the S&P slid 1.03% and the Nasdaq barely moved, losing 0.07%.

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Let's get into it.

 

Macro Monkey Says

Demanding Supply - The classic tale of 2021 marched on in December, strong demand from consumers was no match for continued supply chain and labor market hurdles. On the one hand, we have consumers who are wealthier and broadly have more spending power than ever before, while on the other hand the same compounding issues of supply chain disruptions and labor market tom foolery exists. Let's see how it plays out.

For the month of December, per IHS Markit, U.S. economic activity continued to ramp up, but at the slowest rate in months. PMI numbers for manufacturing and services came in at 57.8 and 57.5, respectively. Being above the crucial 50 mark, these figures show a continued expansion but a decelerating one, as November's figures were both at or above 58.

As true friends do, fellow Western economies also saw slowdowns in monthly manufacturing growth too. The Eurozone saw its lowest growth since March largely on account of Germany, the "engine of Europe" seeing a decline in services for the first time since April. 

Its the same old song and dance. Inflation, supply chain, labor market, Omicron, do I even have to say it? The only certainty here is that at least one item on your wishlist won't be here in time for the Holidays. Godspeed, apes.

F*ckin COVID - Yeah so this sucks. At this rate, future generations of middle and high school students are gonna see "two weeks to stop the spread" as the biggest meme of all time. We really thought we had a shot against this COVID thing (no pun intended).

London and New York are on fire, colleges are going back to Zoom, and Broadway shows are getting cancelled left, right, and center. Sound familiar? The eerie similarity between December 2021 and March 2020 can't be lost on any of us now. Only difference is, we're about 20 months wiser than we were when this sh*t-show got started, maybe that wisdom will see us through. Additionally, we've realized what works and what doesn't. No need to wipe down groceries and Amazon packages anymore, but maybe a better performance of mask-wearing could help.

The worst part? With the Fed insisting on policy tightening, JPow likely won't be there to save your calls again. Praying for you all.

 

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What's Ripe

AMC Entertainment ($AMC) - Meme investors rejoice! The strategy of putting cash into literal joke companies is back on top, at least for a day. AMC shares saw their steepest gain in months, rising 19.1% on a whirlwind of good news. First, the premier of the new Spiderman movie looks set to deliver big-time. Second, a boatload of options on the stock expired on Friday with primarily bullish views, pushing prices ever higher. And lastly, probably as a result of the first two, social media mentions and sentiment both spiked dramatically, proving once again that diamond hands is the only way to go.

Fedex ($FDX) - If it seems like the delivery people that have been showing up at your house everyday for over a year are becoming part of the family, you are definitely not alone. Meanwhile, the companies behind those deliveries are loving it, especially Fedex. After reporting earnings late on Thursday, shares opened up +7.5% and closed out the day with a nice 5.0% gain. While GAAP EPS underwhelmed, the 5% revenue beat and increased guidance was more than enough to please traders. 

 

What's Rotten

Rivian Automotive ($RIVN) - Who knew having no sales wasn't a great strategy for driving share price returns? Definitely news to me, but seeing Rivian report earnings for the first time as a public company was enough confirmation. Shares hit a new low and closed the day down 10.3%. But actually, Rivian did report $1mm in revenue for the quarter and beat its own expectations on preorders, seeing a 28% jump to 71,000 vehicles. Still, the firm incurred a massive loss and copied the classic 2021 excuse of "supply chain issues" to explain management's new expectation to come "a few hundred vehicles short" of this years production target.

Oracle ($ORCL) - It's time for Oracle to prove if they really are an oracle, because with the announcement of plans to acquire Cerner, the prophecy has been set. Cerner, a ~$25bn IT firm specializing in health-tech, will soon join Oracle as part of their rapidly growing cloud business, assuming the $30bn deal goes through. As is typical on an acquisition announcement, Oracle stock sank 6.4% while Cerner saw a 12.9% boost.

Thought Banana:

Ratio'd - At this point, we should have an entire section in The Peel solely dedicated to Elon Musk's twitter feed. "Elon's Antics", "Trolling Twitter", "He Needs Some Banana" all sound great, but for now, I guess we'll cover it here.

In the latest, Elon once again went toe-to-toe with famed and powerful haters Senator Elizabeth Warren and Senator Bernie Sanders. If you're still wondering what the beef was about, kindly punch yourself in the face. Obviously, we're talking taxes and climate change.

Basically, Sen. Warren once again went to Twitter to get her base fired up about rich people's paying of taxes (or, lack thereof). Elon, never one to be outdone, fired back explaining how this year he will have the highest individual tax bill in American history. Although, taxes are often a well-kept secret, so we can't really know what the most ever paid was. However, Steve Cohen's $3bn 2017 tax bill is certainly up there, but we couldn't really find others to match. This year, on account of his stock sales and option exercises, Mr. Musk will pay somewhere between $7.6bn and $15bn in individual taxes, certainly hard to compete with.

Wise Investor Says

"The best stock to buy is the one you already own." - Peter Lynch

 

Happy Investing,

Patrick & The Daily Peel Team

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Comments (1)

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