The 20 Minutes Millionaires | The Daily Peel | 12/16/21

Silver Banana goes to...



Market Snapshot

JPow to the rescue, that was the catalyst du jour yesterday, turning markets from red to green. Markets whipsawed from opening lower to a positive day as soon as the Fed chair took the stage. Leading the gains, the Nasdaq rose 2.15% while the S&P added 1.63% and the Dow climbed 1.08%.

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Let's get into it.


Macro Monkey Says

He Speaks - The three little pigs, three french hens, three strikes and you're out - three really is the magic number. Add to that list three rate hikes in 2022, because that's what Mr. JPow himself has elucidated as the Fed's game plan going into the new year. 

U.S. markets broadly opened lower yesterday morning. JPow, a notorious bear hater, immediately turned things around once he took the stage. Prior to his press conference, the market was dying to be let in on what the economic gods see as risks and how they plan to combat those, if they do, going forward. Now, the smoke is at least partially cleared and investors seem pretty satisfied.

For starters, Powell addressed inflation head on. The Chairman said there was a risk that inflation may stay "persistently high", in other words, it's definitely not transitory. "We thought that was the appropriate way to go" was the super-scientific language used to described the Fed's thinking around doubling the speed of tapering, with Powell adding that "we are basically two meetings away now from finishing the taper."

In other developments, JPow said the Omicron variant is a risk that will continue to be monitored but isn't anything to stress too much about right now. In other words, the new variant isn't an input in the Central Bank's decision making just yet.

Lastly, the other hot topic of conversation was the labor market. The balancing act of maintaining appropriate levels of inflation and unemployment is a challenging endeavor, but right now, this challenge has escalated. The U.S. economy per the most recent data is seeing 6.8% annual inflation with 4.2% unemployment. While that unemployment figure is strong, labor force participation remains weak. On this subject, Powell spit game saying "It could well have been that this cycle was different because of the short nature of it, and a very strong number of job openings…we have to make policy now and inflation is well above target, so this is something we need to take into take into account." Fire.

All things considered, the market was friendly with the Fed yesterday.


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What's Ripe

Pfizer ($PFE) - Pfizer stock has been on a tear lately. Gaining over 14% in the past 5 days, the company is making moves and the market is loving it. Shares rose another 5.9% yesterday on increasing bullishness across Wall Street, bringing the stock to an all-time high. Basically, the company is making moves. Having the most popular COVID vaccine, an incoming COVID pill, and recent acquisitions are the primary drivers, and investors certainly are thankful. At least, they're more thankful than owners of Moderna, who's stock has basically remained unchanged over the past month.

Nvidia ($NVDA) - Sometimes all it takes is a little bit of faith, and boy did Nvidia get that yesterday. After falling for almost a month straight, shares popped 7.5% yesterday thanks to an analyst at KeyBanc enlightening investors on just how in demand the chip makers products are. Specifically, he highlighted the seemingly insatiable demand for cloud storage, and with that, the chips that power cloud technology. Nvidia is a pro in this arena, and shares were duly rewarded.


What's Rotten

Roblox ($RBLX) - Tough day in the metaverse yesterday, at least it was for Roblox. Shares sank 9.0% to their lowest in over a month, bringing the firm's fall from its peak to almost 28%. The videogame / digital universe maker, who is incredibly popular among young children, reported a decrease in daily-active users (DAUs) for the month of November. Still, DAUs are up ~27% since last year, so it's not all bad. To paraphrase Tom Hanks in A League of Their Own, there's no crying in the metaverse. 

Roku ($ROKU) - Losing a patent battle and getting one of your sell side ratings slashed isn't exactly a recipe for success. In fact, it's basically a recipe for failure, specifically, 7.9% failure for Roku. Analysts at Morgan Stanley cut their price target down to $190 for the streaming provider, marking a new low for Street price targets. Meanwhile, the firm lost its long standing patent battle to Universal Electronics. As a result, shares touched a low not seen in over a year.


Thought Banana:

The 20 Minutes Millionaires- The term "wild west" is often employed to describe the modern state of the crypto market. Based on developments this week, I think that "Mars" or "bottom of the Mariana's Trench" is more apt.

Pricing something is hard. Supply, demand, and all that jazz can get tricky fast, but that's why we have exchanges because that is literally their entire job. Unfortunately, sometimes those exchanges completely sh*t the bed. On Tuesday, Coinbase along with CoinMarket Cap, a data provider, pulled off maybe the best prank of 2021.

Although it wasn't intentional (allegedly), it was still pretty hilarious. The two companies and the prices of coins they display suddenly glitched and showed sky-high prices for certain crypto assets that were definitely not accurate. This led many users to think they had suddenly become millionaires, only to be slapped by the truth when the firm's clarified the glitch on social media a short time later.

Imagine that? You check your Coinbase account and see that all the sudden you're literally a millionaire just to have it wiped away moments later. Crypto is wild, but this is what we signed up for…right?

Wise Investor Says

"When an investor focuses on short-term investments, he or she is observing the variability of the portfolio, not the returns - in short, being fooled by randomness."

- Nassim Taleb 


Happy Investing,

Patrick & The Daily Peel Team

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Comments (1)

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