The Fight For Talent | The Daily Peel | 12/30/21

Silver Banana goes to...

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Market Snapshot

A weirdly quiet day for large cap names led to a mixed bag of results for the market. Big tech names barely moved, with Apple gaining just 0.05% while Google slid 0.02%. As a result, the Nasdaq slumped a mild 0.1% while the S&P eked out a gain of 0.14% and the Dow gained 0.25%. Let's get into it.

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Macro Monkey Says

Platinum Banana: Stirring the Pot - The digital asset community has come a long way since its (debatable) founding back on Halloween 2008. Countless coins launches, an infinite amount of projects in development, and the newfound ability to purchase virtual "land" in something called the Metaverse, to name a few. All these trends certainly stirred the hell out of every pot in America, but there's one area within digital assets, asset management, and business in general that really stuck out in 2021.

Today's Platinum Banana: Stirring the Pot goes to the person, invention, idea, technology, or literally anything that stirred the cultural pot most ferociously. Again, we have to exclude Elon Musk because the guy would take home every single Platinum Banana and that really just isn't fair to the business community. Okay, now that we're all the same page, let's get to it - the winner of the 2021 Platinum Banana Award for Stirring the Pot is: Non-fungible tokens (aka NFTs)!

NFTs, although first mined way back in the ancient times of 2014, really burst onto the broad cultural scene in 2021. Back in the beginning of the year, Dapper Labs lit the world on fire with their NBA-collab collection known as NBA Top Shot. From there, countless other projects came out of the woodworks and had everyone talking, laughing, and scratching their heads. 

Notable NFT champions of 2021 include Bored Ape Yacht Club, Pudgy Penguins, and the revival of CryptoPunks, all of which fall under the category of PFP NFTs. I know, these acronyms make me want to throw up too, but stay with me here. All a PFP NFT is is a collection of NFTs designed to be used as a profile picture (PFP) on social media.

Perhaps more notable was the toe-dipping of established companies into the world of NFTs. We've covered Pepsi and Nike getting into the game before, but companies like LVMH and Disney exploring the NFT world is arguably even more exciting. For example, LVMH claiming ownership of the secondary markets for its branded products would be an unspeakable game changer in the fashion industry.

So yes, there is certainly still a lot to come for NFTs, but I think we can look at 2021 as the year the technology went through puberty. It was a little awkward and funny, but you know that one day, something actually useful and important could come. Lastly, shoutout to some of the runner-ups, especially the Metaverse and Web 3.0 - we don't mean to underscore their importance, but non-financial civilians really only began hearing about them in the fourth quarter. Something tells me they'll be strong contenders for this award next year.

Congrats again, NFTs! Heres to another year of minting and making millionaires.

Drowning in Cash - $12.1tn is a big number. So big, in fact, that there are only a handful of things that such a high number could possibly even be relevant to. One of those things, in 2021 at least, is the amount of cash that companies around the world have raked in through a strong cocktail of equity offerings, bond offerings, and loans, soundly beating out 2020 for the all-time record according to the FT.

And this makes sense. Not only are investors, companies, and civilians alike flush with cash like never before, but financial conditions across the globe are almost as relaxed as Cheech & Chong. JPow and his colleagues at the ECB and BoE basically forced interest rates to the floor, making borrowing cheaper than ever. Meanwhile, a wild ride in equity markets that set 70 fresh all-time highs throughout the year made investors wealthier than ever and arguably more-risk on.

The highlight of the year across debt markets was the $41.5bn loan written to fund the merger between WarnerMedia and Discovery. For equity markets, Rivian's $13.7bn IPO raise takes the cake while SPACs collected over $162bn in funding throughout 2021. U.S. corporate debt markets surpassed $10tn with a lot of help from a 17% jump in junk bond sales. Sure this was great for investors, but the real winners were the banks facilitating all this capital movement. 

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What's Ripe

Victoria's Secret ($VSCO) - After splitting from former parent L Brands in August, Victoria's Secret has proven themselves a strong, independent player in the apparel business. Shares are up over 28.2% since August, getting a boost from yesterday's 12.2% pop. Shares saw that pop on account of the company's announcement of a $250mm share buy back program done in concert with Goldman Sachs. 

Biogen ($BIIB) - Why am I just learning that Samsung has a biotech arm called Samsung Bioepis? Can't believe no one told me, but I digress as resorts swirled yesterday around the Korean electronics giant potentially buying out beleaguered biotech firm Biogen. The two have been partners for over a decade (apparently) and reports suggest that it was Biogen who approached Samsung about potentially buying them out. In response, shares popped 9.5% approaching the suspected buyout price per share of $283.

 

What's Rotten

FuelCell Energy ($FCEL) - Absolutely hammered, and not in the good way. Those are the only word to describe FuelCell's performance yesterday and just about all year. Shares plummeted 12.95% on a truly awful fourth quarter and fiscal year earnings report, brining the stocks return since February down to a monstrous loss of 81.7%. The fuel cell company reported a horrendous 18% drop in revenue against an expected 28% increase, leading to a net loss of $25mm, much wider than anticipated. Shares hit a 13-month low, and understandably so with this absolute garbage.

Medallion Financial ($MFIN) - "Ya done f*cked up" said the SEC to Medallion Financial yesterday. The taxi medallion and other commercial business lender has been charged with the big F word by the nation's security regulator. The alleged fraud involves Medallion paying media strategists under the table to anonymously promote the firm as well as alleged artificial inflation of the firm's banking unit. As a result, shares are getting eviscerated, falling 21.1% yesterday.

Thought Banana:

War for Talent - The U.S. and China, Russia and Ukraine, North Korea and legit everyone, these are the potential wars that get all of our attention. But what if I told you there is another, unique kind of war going on inside our pockets - the war for talent in Silicon Valley. Now, this isn't anything new, but with market caps clearing $1tn, $2tn, and (soon) $3tn and all the new iterations within the technosphere in recent years, the stakes are higher than ever.

As Bloomberg reports, the main contenders and most heated rivals for talent right now are none other than Apple and Meta. It's a widely known fact that Tim Cook and Zuckerberg aren't exactly best friends, but now that these two are likely going to be the biggest early players in the world of AR/VR/Metaverse, the heat is rising faster and faster.

Apple has been observed giving utterly obscene bonuses to some of their most valuable engineers, sometimes hitting a range close to $200k just to keep them on board. Despite this, Meta has managed to poach over 100 employees from Apple in recent months. The war will be hard fought, expensive, and leave heavy casualties on both sides. Which team are you rockin' with?

Wise Investor Says

"The most dangerous people in the world are very smart traders who have never gotten their teeth kicked in." - F. Helmut Weymar

 

Happy Investing,

Patrick & The Daily Peel Team

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Comments (1)

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