Silver banana goes to…

In this issue of the peel:

• ⏪ Let’s take a walk down memory lane. Heading into 2025, there’s no better way to get ready than to recap what happened in 2024. We’ve got you covered below.

• ⚕️ Quantum King Rigetti Computing is closing on a strong note, while Amedisys looks like they’ll finally get acquired by UnitedHealth. Super Micro is barely keeping its YTD return above water, and traders aren’t excited for Tesla’s delivery numbers.

• 🏅 It’s finally here. The Platinum Banana Award for Company of the Year went to exactly who you’re probably guessing. Read below to find out if you’re right.

Market Snapshot

The Daily Poll

Previous Poll:

What do you think caused the drop in durable goods spending?

Economic uncertainty: 20.8% // High prices/inflation: 54.0% // People just aren’t buying big-ticket items: 17.2% // Lazy elves: 8.0%

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Macro Monkey Says

2024 Rewind

How much money would I have to pay you to re-live 2024?

I don’t mean to give Mr. Beast any more video ideas, but it’s an interesting question. Hopefully, it would cost less than reliving 2020, but I think I’d throw myself off the highest building in a 5-mile radius if I had to suffer through one more campaign ad.

Instead of reliving it, let’s just rewind. The economy’s been through a lot in 2024, so before we look at 2025, let’s recap the most important parts of the year. Think of it like those “YouTube Rewind” videos, but way less cringey.

Let’s get into it.

Entering 2024

At the end of 2023, media outlets were busy rejoicing the first anniversary of Bloomberg economist’s wildly wrong (who’s surprised?) assessment of the economy, calling for 100% odds of a recession in 2023.

Said recession never arrived, but that didn’t stop consumers and those same media outlets from continuing to go full Chicken Little, saying the sky is falling from a “looming recession” all year long.

But, during that slanderous period, the U.S. economy really started to make us wonder if it’s taking PEDs. Q1 GDP growth clocked in at 2.9%, a decline from Q3’23’s 3.1%, but not nearly the decline all those haters and losers called “economists” were projecting.

Spending Steroids

Much of Q1’s strength in GDP growth stemmed from consumer spending, which accounts for ~70% of total U.S. GDP. From Q4’23 to Q1’24, quarterly consumer spending growth accelerated from 1.27% to 1.33%, a slight increase but highly unusual to see between Q4 and Q1.

A resilient labor market mixed with waning inflation contributed greatly to that continued growth. 

Through the first half of the year, monthly nonfarm payrolls grew by an average of 207k while rolling annual wage growth oscillated from as high as 4.3% to as low as 3.8%.

Despite this strength in spending and the labor market, during that same period, annual inflation was declining, falling from a PCE print of 2.6% in January to 2.4% by June.

This was Fed Chair JPow’s magnum opus—the man walked the tightrope and, so far, has lived to see another day.

Rate Cut Retreat?

As growth continued healthily in all the right places through the first half of the year, JPow had an itch. Realizing that he hadn’t printed any money all year long, he realized he had to pump our portfolios somehow.

PCE inflation continued to decline after June… but only until September. Inflation bottomed that month at 2.1%, right as the Fed started to cut rates, and has been on the climb since then.

On September 18th, the Fed’s policy-setting arm, the FOMC, voted to cut the federal funds rate target range by 50bps—a huge cut that’s usually reserved for the eve of a recession.

As spending and the labor market maintained their strength, Q2 and Q3 GDP continued accelerating, growing 3% in Q2 and 3.1% in Q3.

So, in the face of inflation that was declining but still not yet at 2%, strong spending, wage growth, and GDP acceleration, the Fed felt the economy still needed some juice.

Following that 50bp cut in September, the Fed cut yet again in November—only by 25bps this time—followed by another 25bp cut a week prior to Christmas.

However, that December rate cut came with the defining mic drop of the latter half of 2024—a totally new rate and inflation forecast from the FOMC.

Compared to their forecasts in September, the FOMC’s expectations for the prevailing level of both inflation and interest rates at the end of 2025 and 2026 both jumped up by roughly 0.5%, implying 2 fewer rate cuts than expected next year.

So, What Now?

Considering the broad economic strength we’re seeing, this makes sense. However, ditching rate cuts pose a threat to the still-frozen housing market and to the skyrocketing costs of servicing the U.S. national debt.

As we close out Q4, the Atlanta Fed is estimating a quarterly GDP growth rate of 3.1%. That would imply a real GDP growth rate for 2024 of 3.03%, up from 2.9% in 2023 and 2.5% in 2022.

The Takeaway?

All eyes will, as usual, be on the Fed and the bond market heading into 2025.

Fixed-income traders seemed to smell the Fed’s bullsh*t back in September, saying there was no way the Fed would cut as much as it was planning at the time. 

They’re already doing so for 2025 now, too, so the only thing we can expect from the Fed is a change of plans, with the trillion-dollar question being what that change is. According to prediction market Kalshi, there’s already a 26% chance for a rate hike in 2025.

Stay tuned, stay on your toes, and we’ll see you tomorrow for our 2025 outlook.

Career Corner

Question

I have a question about networking and applying for positions on the website. Should I apply to a firm first and then connect with employees to set up calls, or should I reach out to employees at the firm, connect with them, and schedule a call before applying for a position?

What would be the best strategy? Could a mentor assist me with this?

Answer

It depends on specific roles and timelines. Ideally, it is great to network before applying, but if the application is open, you need to submit it.

You don’t want to be left out of the process just because you were too late! Most of these applications are rolling, so if you wait too long to apply, you could miss them entirely.

Head Mentor, WSO Academy

Check out WSO Academy

What's Ripe

Rigetti Computing (RGTI) 10.62%

• By November 18th, Rigetti Computing was having a pretty good year, up ~42% YTD. The cloud computing stock had no idea it was the next Nvidia.

• In the 23 trading days since Nov 18th—and without lifting a finger—Rigetti shares have ballistically mooned ~1,213%. Shoutout to Google and Amazon.

• Quantum-related announcements from these tech giants sent the industry soaring, causing Rigetti, which earned $12mn in sales in 2023, to trade at a Price-to-Sales multiple of ~350x at a market cap of ~$4.2bn.

Amedisys (AMED) 4.67%

• Bold move to join UnitedHealth these days, but Amedisys is apparently a bold company. The hospice provider is about to join the world’s largest healthcare provider.

• Shares gained to close last week as the acquisition, announced in 2023 and wrapped in antitrust battles since then, took a further step towards completion.

• Amedisys agreed to be acquired for $3.3bn last year, and now that they’ve waived their right to terminate the merger, TD Cowen analysts say the firms “will find a resolution and complete the merger.”

What's Rotten

Super Micro Computers (SMCI) 5.22%

• We don’t have a Platinum Banana for “most heart attack-inducing stock of the year”, but if we did, Super Micro would dominate like ‘91-’93 Michael Jordan.

• The most volatile stock in the S&P 500 in 2024, Super Micro shares tanked again on Friday as the company looks to still squeak out a gain for the calendar year.

• There was no major news, but heightened volatility last week due to lower trading volume. Unfortunately, the coin flip didn’t work out for Super Micro.

Tesla (TSLA) 4.95%

• Realizing that selling cars is almost as important to their business as the number of times their CEO and President-elect have kissed, Tesla investors are worried.

• While Elon is ready to drop on one knee, Q4 vehicle sales are expected to drop even lower. Analysts seem to have just remembered today that 2024’s deliveries have been weak.

• First and second-quarter deliveries declined from 2023—even with price reductions—while Q3 deliveries grew just 6.4% YoY to 462,890. 

• To match 2023’s total, Tesla needs to deliver 515k vehicles in Q4, which would be an all-time record and represent 11.3% QoQ delivery growth, another record.

Thought Banana

Platinum Banana Award: Company of the Year

Two trading days left in 2024 can only mean one thing—there are only two more chances to win Wall Street’s most enviable award, the Platinum Banana.

Everyone’s talking about them—as I’m sure you noticed on Twitter, around the Christmas dinner table, and everywhere else—but we always make sure to save our most prestigious awards for last.

Let’s dive in.

Company of the Year

Markets have been abuzz wondering when the “beautiful geniuses,”  to use their words, at The Daily Peel Global Headquarters would reveal the winner of the esteemed, highly sought-after Company of the Year award.

Well, wait no longer. Finally, the day Wall Street has been waiting for all year is here. Let’s get a drum roll going because it’s time to announce the winner of The Daily Peel Platinum Banana Award for 2024 Company of the Year…

Tesla, Inc.!

I know, I know—no one’s happy about this incredibly obvious winner. But c’mon, in 2024, how could it be anything else?

No stranger to headlines, Tesla was in a particularly hot seat all year. Waning consumer demand for high-priced EVs and an obscure interest rate environment led the firm to begin the year by slashing prices across the board.

Despite this, Tesla was unable to keep vehicle deliveries on the rise, declining 8.5% YoY in Q1 and 4.8% in Q2. Luckily, Q3 saw a slight turnaround, with deliveries up 6.4% vs Q3’23. We’ll get the Q4—and full-year—numbers later this week.

But even amid that unfavorable backdrop, the firm got sh*t done.

Most obviously, the oh-my-f*cking-god-finally launch of a “line-up” of autonomous vehicles was a moment Tesla investors—and haters—have been waiting much too long for. 

Although pretty mid and slightly disappointing, the rollout of the CyberCab and Robovan marks a shift in personal autonomous driving from “possible” to “soon.” That’s the kind of monumental milestone we love here at The Daily Peel.

In the latter half of the year, CEO Elon Muck became less Chief Executive and more Chief Lobbyist for his company(ies), but so far, it’s clearly working out quite well.

Shares are up >71% since the U.S. election was finalized on November 5th. Meanwhile, in that time, EV ETF $IDRV has been effectively flat, down 1.15%.

While unclear how involved Tesla was in the construction and will be in its utilization, Musk’s completion of the 1000,000 Nvidia H100-unit AI super-cluster called “Colossus” adds to the ridiculous innovation the team achieved amid an obfuscated macro backdrop.

Before Colossus was complete, no one thought it was possible to create a cluster with more than a few thousand H100s. xAI and Musk’s proof that that is, in fact, bullsh*t was just another feather in the cap of Musk’s empire.

The Takeaway?

Tesla wins our 2024 Company of the Year Platinum Banana Award for managing to somehow navigate this year’s macro environment without huge losses in market share, continuing to set the tone for global innovation in AI and autonomous driving, and doing the best job of cozying up to the coming Administration.

What more could you ask for? Plus, the stock’s 74% YTD rise ain’t bad either. Congrats Tesla and Elon, as I’m sure you’re reading this, and best of luck next year.

The Big Question: What other companies should have been in consideration? Who are your early guesses for the winner in 2025?

Banana Brain Teaser

Previous

In a certain fraction, the denominator is 16 greater than the numerator. If the fraction is equivalent to 80%, what is the denominator of the fraction?

Answer: 80

Today

Of the land owned by a farmer, 90% was cleared for planting. Of the cleared land, 40% was planted with soybeans and 50% of the cleared land was planted with wheat. If the remaining 720 acres of cleared land was planted with corn, how many acres did the farmer own?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
David, Vyom, Ankit & Patrick

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