Stop The Sugar | The Daily Peel | 11/26/21

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Market Snapshot

Warren Buffet told us that the key to being rich was to "be fearful when others are greedy and be greedy when others are fearful." Investors have taken this to heart, as buying the dip has become a faster race than F1. This led markets to see a mostly positive day on Wednesday, with the Nasdaq gaining 0.44% and the S&P following with a 0.23% rise, while the Dow fell 0.03%.

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Let's get into it.


Macro Monkey Says

Consumer Check - "F*ck your inflation" - every consumer in America last month.

That's what the story seems to be because despite inflation levels that have FinTwit on a nonstop panic attack, consumers are spending like hell. October saw a 1.3% boost in spending from consumers, who also happen to drive close to 70% of the economy. That's more than double the growth that September saw with a 0.6% increase from the previous month, suggesting strong demand to holiday presents is buoying the nation's economy. 

The most unsurprising part, obviously, was that economists were once again wrong with their forecast. Expectations of 1% got sh*t on by over 30%. Meanwhile, core inflation numbers emerged, known as the personal consumption expenditure (PCE). No surprise here, but the price level of core consumption goods increased in October by about double the increase seen in September, meaning October saw a 0.4% boost in core inflation.

Honestly, PCE is kinda like the worst metric ever. It's super weird - very similar to the CPI, the PCE measure price jumps of "core" expenditures. Basically, PCE excludes food and energy. This is done to reduce volatility in this measurement, as these factors tend to jump around even more than House of Pain, but food and energy are also like *the* single most "core" expense consumers have.

Weird. But either way, consumers don't seem to rattled by the rise in price levels. Keep in mind that Americans are, across the board are wealthier than ever in terms of net worth. With the holiday season incoming, declines in spending for the rest of the year seem unlikely.


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What's Ripe

Zillow ($Z) - It's been literally forever since Zillow has qualified for What's Ripe, but finally they've earned their spot in this elite territory once again. We spoke about buying the dip at the start of today's edition, but Zillow could have experienced a microcosm of that sentiment on Wednesday. Shares rose 3.16% on basically no news, but buying the dip has become a hotter trend than Silly Bandz were in 2009. 

Deere & Co. ($DE) - A massive worker strike and utter chaos within their supply chain would make you think Deere had a lousy quarter. You would be wrong. The farm tool and outdoor equipment provider smashed earnings this week, sending shares up 5.2% on the day. Earnings clocked in at $4.12/sh on $11.3bn in sales as opposed to expectations of $3.87/sh on $10.5bn.


What's Rotten

Clothing Retailers ($GPS, $JWN) - Despite many company's best attempts to dress up their most recent earnings reports, Wall Street isn't exactly buying it. This became abundantly clear as Nordstrom and Gap both got hammered following earnings announcements. The same old story rings true; supply chain issues and labor difficulties are squeezing margins almost as much as a bear hug from your overbearing aunt on Thanksgiving. 


Thought Banana:

Can't Trust Antitrust - Lina Khan, Jonathan Kanter, and Tim Wu were praised into their federal government positions by antitrust proponents like KD was welcomed by Golden State fans (originally). Most of this hope was generated with the view that the trio would crack down hard on big tech mono/oligopolies. Well, sizable antitrust action is taking place as we speak, and boy is it disappointing.

Julia Louis Dreyfus - aka Elaine Benes, aka Selena Meyer - is a distant relative of long-dead business magnate Leopold Louis-Dreyfus. Leo happened to start a massive company, called Louis-Dreyfus Co., which is now trying to offload their sugar division to U.S. Sugar. The $315mm deal, however, is being halted by the DoJ.

None of that really matters. But what it shows is that antitrust action at a large scale is back, but in the completely wrong place. Most market and economic observers have been praying for years for action to take place against you know who(s). Barely any substantial antitrust claims have taken place against Amazon, Google, Facebook, or Apple, like everyone has been waiting for.

Not sure why the DoJ is choosing to go after sugar and seemingly not doing much about our tech overlords, but that's the state of American antitrust right now. Sure, let Zuck keep his total and utter dominance of social media, but sugar conglomerates? Hell no!

Wise Investor Says

"Risk and time are opposite sides of the same coin, for if there were no tomorrow there would be no risk.  Time transforms risk, and the nature of risk is shaped by the time horizon: the future is the playing field." Peter L. Bernstein


Happy Investing,

Patrick & The Daily Peel Team

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Comments (1)

Nov 26, 2021 - 6:15am

Voluptatem illum dignissimos nulla. Laboriosam animi inventore sapiente ullam culpa.

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