In this issue of the peel:

• September’s CPI print just dropped and gave us a good reminder that we’re officially in spooky season. It wasn’t terrible, but there’s reason for concern. Find out why below.

• Trump Media shares continued to inexplicably storm higher, almost doubling in the last two weeks. Meanwhile, AMD hooked up Micron with a big green day. Tilray Brands proves why cannabis is the most overhyped sector on the market right now, and TD Bank has a big, new fine to pay.

• HBO just released a documentary claiming to have discovered BTC’s founder. They didn’t. But that got me thinking about what else is going on in the digital asset space, and it turns out that FTX investors are about to make a killing.

Market Snapshot

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Banana Bits

• Delta Air Lines reported a weird quarter, leading to a weird trading day. We wrote about it here.

• Conflicts in the Middle East are boiling with American allies in Iran’s scope.

• Ohhhh…. so this is why all those OpenAI employees are rushing for the exit.

• AMD tried to do something. The market immediately sent shares down 4%.

• Having private equity firms in your corner isn’t as helpful as many companies might think. 

• Jamie Dimon plays mom and dad to U.S. pension funds.

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Macro Monkey Says

Oh No

It just dawned on me that I’m gonna have to buy candy for the Trick-or-Treaters in my neighborhood in a few short weeks, which kinda sucks because candy is expensive.

But don’t worry, I got it figured out.

I’ll just dress up in the scariest costume possible to ward off as many sugar-addicted future Ozempic customers as I can—I’ll be inflation.

In case you needed a reminder that spooky szn is in full swing, yesterday’s CPI report will do the trick. Let’s get into it.

The Numbers

Movies are so much scarier when the villain is coming at you slowly, building up an unrelenting sense of dread, as opposed to a classic, full-on-sprint chase scene.

And that’s exactly what inflation is doing right now.

In September, the Consumer Price Index (CPI) increased 0.2% from August, the 3rd month in a row of 0.2% growth.

To achieve 2% annual inflation, the monthly prints need to average a 0.165% increase. Expanding the digits after the decimal, prices grew 0.17987% in September, just above the Holy Grail rate.

The biggest contributors to the monthly price increase included eggs, up 8.4% from August; admissions to sporting events, up 10.9%; and jewelry and watches, up 5.2%.

Not exactly economically critical spending categories, but the monthly increase was far from the spookiest aspect of the report.

On an annual basis, CPI increased 2.4%, down 0.1% from August’s 2.5% increase. However, core CPI—which excludes volatile food and energy prices—made Halloween come early. 

Choosing trick instead of treat, core inflation increased 3.3% last month, a 0.1% increase from the 3.2 % print in two months prior and right in line with June’s 3.3% rise. 

The increase in core CPI was the spookiest part of the report, giving justification to Michelle Bowman’s argument that the Fed and markets have gotten a little too cocky in the battle against inflation.

Kinda like sh*t talking your opponent in fantasy after your kicker put up a good Thursday night performance. The decline in yields seen in recent weeks may have been a bit premature.

However, looking under the surface, we can see that the increase in core CPI is mostly attributable to the usual suspects and their usual shenanigans.

Carrying annual inflation was, once again, housing. According to the CPI, shelter costs increased 4.9% from September 2023, accounting for nearly 75% of the headline, a 2.4% increase. Shelter costs also accounted for 67% of the increase in core CPI.

As we’ve said before, the way in which CPI calculates shelter costs is what a below-average, 4th-grade student would come up with. Using technology invented after the 19th century, we can see that this is simply not the case:

According to Redfin’s rental tracker, which uses real-time data, asking rents increased 0.6% annually in September, roughly 1/12th of the CPI’s reported increase.

But only about 34% of Americans rent. It’s more challenging to get data on home costs, so we’ll cut the CPI some slack. But still, with mortgage rates down from 6.35% coming into September to 6.12% at the end of the month, it’s hard to believe monthly housing costs increased by any substantial degree.

Energy prices once again had the hookup as the index for energy declined 1.9% monthly and a big-time 6.8% annually. In total, the index was responsible for pulling the headline CPI down 19.28%. Gasoline fell 4.3% for the month and 15.3% for the year.

Food prices, on the other hand, increased 2.3% from September 2023 and 0.4% from the month prior. Food away from home did most of the heavy lifting, along with eggs, increasing 3.9% for the year and 0.3% monthly.

However, prices of apples, potatoes, and whiskey at home all decreased by at least 2.7% for the year, so maybe that’s what I’ll give to the Trick-or-Treaters.

The Takeaway?

Although we’re getting some spooky numbers right as we enter spooky szn, there’s no ghost hiding in this report.

September’s inflation hardly changes the story. The uptick in core CPI could be seen as worrying, but once you turn your brain on and look at what’s driving this—such as braindead “owner’s equivalent rent” figures—those worries dissipate.

In fact, yesterday’s print only made markets more bullish on a 25bp rate cut at November’s meeting. 

Markets now peg (pause) the odds of a 25bp cut at 87%, edging (pause) higher than Thursday’s 80% likelihood.

We’ll find out soon. Stay tuned.

Career Corner

Question

I was wondering if, in interviews for IB internships, the interviewers ask questions about Excel. Do we need to know Excel well and how to build models or DCFs in Excel for interviews?

Answer

Unlikely, you'll get a question about Excel specifically. I would focus more on understanding the concepts behind modeling, DCFs, LBOs, etc. You may get a case study, in which case Excel work and speed will matter, but unlikely in a face-to-face interview.

Head Mentor, WSO Academy

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What's Ripe

Trump Media & Technology Group (DJT) 17.26%

• Wish I could tell you what’s going on here. It’s almost as if the return for Trump Media shares is directly correlated with increasing the federal deficit.

• The former President proposed more new tax policies on Thursday, including reducing the tax on Americans living abroad and making interest on car loans fully tax deductible.

• Shares are now up 98.5% in just over the last two weeks. Maybe the stock will rise when Trump’s odds of winning are high because then he’ll have to lock up shares. 

Micron Technology (MU) 3.92%

• Micron has apparently appointed a new CEO: AMD. And, on its first day in the C-Suite, AMD was already able to send shares roaring higher.

• Yesterday, AMD announced a slew of new products at its Advancing AI conference, including a competitor to Nvidia’s Blackwell. 

• The problem was that AMD kept emphasizing the importance of memory in the next leg of AI advancement, an industry in which Micron happens to lead.

What's Rotten

TD Bank (TD) 5.29%

• After the Celtics took home a championship in the TD Garden, the only championship TD is taking home is first place in money laundering.

• On Thursday, “people familiar with the matter” reported that TD would plead guilty to U.S. criminal charges for failure to prevent money laundering.

• The firm will pay $3-4bn in penalties. Even worse, regulators may impose an asset cap, freezing TD’s growth as the bank looks to expand in the U.S.

Tilray Brands (TLRY) 2.45%

• You can tell this firm is smoking something strong as Tilray just reported earnings for Q1 2025 in October of 2024. And it didn’t go well for the cannabis producer.

• Tilray reported a 13% drop in cannabis sales to $61.2mn, missing estimates by 17.8%. However, alcoholic beverage revenue shot up 131%, entirely thanks to acquisitions. 

• Earnings missed, EBITDA fell 18% annually and missed by ~$4mn, and the firm is still banking on federal decriminalization in the U.S. to grow sales again.

• Find out why cannabis is the most overhyped sector since NFTs in our Sell report on Tilray published back in July.

Thought Banana

Bankrupt With Billions

Did anyone watch that HBO Documentary that claims it discovered the founder of BTC?

Me neither. Long story short, the documentary makers identified Peter Todd as the elusive creator of BTC, “Satoshi Nakamoto.” 

After presumably years of work and millions of dollars spent, Peter shot that sh*t down within minutes of the release with this post on X.

But that made us want to check on the digital asset market and see if it still had a pulse. Turns out it's doing better than ever, especially if we look at FTX.

What Happened?

For those fortunate enough to have forgotten or missed it, the digital asset space had its Bernie Madoff moment in late 2022 when FTX and Alameda Research were discovered to be worth as much as their founder’s vapid platitudes about “effective altruism.”

That founder, Sam Bankman-Fried (a.k.a Scum Bag-Fraud), has been rotting in a New York City prison since then. Fun fact, SBF has a new cellmate you might be familiar with… anyone ever heard of P Diddy?

Anyway, when FTX went bankrupt, most assumed their investments in the firm and its partner hedge fund, Alameda Research, which was run by SBF’s ex-girlfriend who then testified against him only to get sentenced to two years in prison, was more gone than Aaron Hernandez.

Not so fast. As of this week, 98% of credit investors are expected to make a 119% return.

FTX just finalized its bankruptcy plan nearly two years after first going BK. On Monday, a judge in Delaware gave the plan a big, fat thumbs up.

New CEO John Ray, who also cleaned up the Enron disaster, described FTX’s plan as “the largest and most complex bankruptcy estate asset distribution in history.” 

Over the last two years, these corporate trashmen have devised a reimbursement plan by which 100% of nongovernmental creditors will receive 100% of their capital back plus interest.

FTX and Alameda had some assets worth something, including BTC holdings that have more than tripled since late 2022 and properties totaling $14.7-$16.5bn for redistribution. The firm also sold a $900mn stake in AI firm Anthropic earlier this year.

Originally, FTX had estimated that it owed creditors $11.2bn in total—if you’re one of ‘em, congratulations!

The Takeaway?

Once again, the digital asset space is proving its resilience.

As someone who’s price agnostic but cr*pto-curious, it’s moments like this that force me to realize that, if nothing else, digital assets aren’t going away.

If the “asset” class can survive the GFC, pandemic, NFT bubble, sh*tcoin craze, FTX blowup, and much more, I’m likely not privy too. It’s hard to argue there’s nothing there.

The Big Question: With FTX successfully finalizing its bankruptcy plan, could this mark a turning point in how crypto exchanges handle financial crises and investor trust moving forward?

Banana Brain Teaser

Previous

There are 5 sales agents in a certain real estate office. One month, Andy sold twice as many properties as Ellen, Bob sold 3 more than Ellen, Cary sold twice as many as Bob, and Dora sold as many as Bob and Ellen together. Who sold the most properties that month?

Answer: Cary

Today

David used part of $100,000 to purchase a house. Of the remaining portion, he invested 1/3 of it at 4% simple annual interest and 2/3 of it at 6% simple annual interest. Of after a year the income from the two investments totaled $320, what was the purchase price of the house?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
David, Vyom, Ankit & Patrick

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