In this issue of the peel:

•  🛬 September’s durable goods report shows a decline in purchases but a huge uptick in airplane safety. Find out why last month’s decline wasn’t bad below.

•  💰 Spirit Air Lines continues to rip, while the most profitable segment of the defense sector in Q3 was in finding out who to kill. CRE remains on the ropes.

• 🎲 The great American pastime of gambling can now be done on the great American tradition of violently heated elections. This is gonna be a fun week.

Market Snapshot

Banana Bits

• Boeing is reportedly considering selling its space unit after trapping astronauts at the ISS.

• Clearly, regulators read the previous day’s Peel as the Treasury Department is now investigating the world’s largest stablecoin, Tether.

• The NYSE is expanding after-hours trading hours, allowing certain investors to place orders 22hrs/day.

• Waymo just raised a $5.6bn war chest to go to battle against Tesla in vehicle automation.

• U.S. officials are investigating the incident that allowed the CCP to steal customer data from American telecom companies. Isn’t that what TikTok is for? 

• Former President Trump leaned into his argument for replacing income taxes with tariffs in the U.S. while on Joe Rogan’s podcast. Separately, the Harris campaign declined interviews with Rogan and the business-focused “All-In Podcast,” on which Trump has also appeared.

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Macro Monkey Says

It’s All Your Fault

Talking to you again, Boeing.

Making fun of Boeing isn’t even fun anymore—it just feels like bullying at this point.

So today, we’re actually giving the down bad aerospace manufacturer some credit. Last month, the company worked hard to keep our skies safe… by selling much fewer planes.

Although that caused September’s new orders of durable goods to fall faster than the doors on a Boeing plane, it might be worth the tradeoff to know that our flights will arrive in one piece.

Let’s find out & let’s get into it.

The Numbers

In September, new orders for manufactured durable goods declined by $2.2bn, or 0.8%, from the prior month, exactly in line with August’s 0.8% decline. 

Transportation equipment—and specifically Boeing’s coffins, I mean *planes—did most of the heavy declining, with the subindex down 3.1% for the month.

Excluding transportation equipment, new orders increased 0.4%.

We can thank our sweet, friendly defense industry for most of the month’s rise as, excluding this sector, new orders fell 1.1%.

Overall, September was a relatively muted month for new orders. The monthly change was pulled heavily in both directions by high-ticket items in transportation and defense that somewhat distorted our view of the underlying economy. 

Excluding both defense and transportation, we can see that new orders barely changed at all, falling from $169.445bn in August to $169.444bn in September.

The 23% decline in aircraft orders, coming on the heels of a 20% decline in August, speaks much more to difficulties at Boeing than the state of the economy. Machinists who (used to?) work for the company remain on strike after rejecting a new pay offer from Boeing management last week.

The good news, however, is that economists were anticipating a 1% decline, so the actual data wasn’t as bad as expected.

Meanwhile, the even better news was continued growth in what many call “core new orders,” rising 0.52% in September, doubling the prior month’s 0.26% growth.

Core new orders are comprised of nondefense capital goods, excluding aircraft. In English, that covers orders made by businesses to purchase items used to produce the goods/services they sell.

Basically, it includes things like machinery, computers, other electrical equipment, and all that nonsense you see at industrial sites that makes you think, “I wonder what that’s for.”

The continued rise here suggests that businesses have a positive outlook going into Q4 and 2025, increasing purchases of long-lasting production equipment to meet anticipated high demand from end consumers for their final products.

Looking at the Small Business Optimism Index, we can see that September data also reflected a slight uptick in their outlook.

At 91.3, Small Business Optimism is overall negative as it remains below 100. However, that reflects a slight increase from September’s decline after a huge spike in August.

4 subcomponents of the index declined in September, most notably in the “Expect Economy to Improve” category, with 13% fewer small businesses reporting they expect better conditions over the next year.

Paradoxically, more small businesses also reported an expected increase in real sales and earnings over the next year. So, what we’re seeing here is the business version of when consumers say, “I’m doing fine, but the economy and everyone else is f*cked.”

The Takeaway?

I’m starting to notice a trend—economic indicators across the board have, in recent months, been much less conclusive in their readings than over the past few years.

Now, most of our takeaways are, “This seems fine for now, but if it keeps up or changes slightly, we should be worried.”

It appears that everyone’s waiting for clarity from our Supreme Leader Jerome Powell to tell us what the f*ck is going on with rates. Until then, companies and consumers alike are holding off on making big changes, investments, and purchases.

The next rate cut is expected to come a week and a half from today, so stay tuned for the update then.

Career Corner

Question

Focusing on my TMAY + 7 stories over the weekend—given I have two different working experiences (3 years of experience), should my stories solely focus on my current job? Is it fair to bring up stories from school at this point?

Answer

I would focus just on work unless it’s really a lights-out/best-ever type of story.

Head Mentor, WSO Academy

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What's Ripe

Spirit Airlines (SAVE) 15.29%

• Hardly anything is more cringy than those people who applaud when a plane lands. But Spirit got tons of standing ovations last week, with another on Friday.

• After getting dumped by JetBlue and matching with Frontier on Hinge, it’s not clear what the company’s next chapter will be. 

• But, to make sure it will survive until that chapter, Spirit is selling 23 planes and plans to fire a ton of people, saving Spirit an estimated $599mn.

Booz Allen Hamilton (BAH) 9.23%

• It was a great quarter for Booz, but not the fun kind. This military contractor, specializing in finding who to kill, had a great quarter, and… that’s good news… right?

• Anyway, the firm grew revenue 18% YoY in Q2 to $3.1bn and earned $1.81/sh in EPS, both beating estimates. Operating income more than doubles to $549mn.

• To cap it off, Booz gave analysts a shot of tequila by increasing guidance across just about every metric headed into Q3, most excitingly raising sales growth estimates from 8-11% to 11-13%.

What's Rotten

Capri Holdings (CPRI) 48.89%

• “American luxury” sounds like getting a new mag for your AR-15 after eating a gold-encrusted cheeseburger in Trump Tower. Turns out that’s wrong, and two firms are trying to form a U.S. version of LVMH.

• Capri Holdings, owner of brands like Versace and Jimmy Choo, plummeted Friday as a federal judge granted the FTC permission to block their proposed merger with Tapestry.

• Tapestry owns Coach, Kate Spade, Stuart Weitzman, and more. The exact reasoning for blocking the deal wasn’t clear, but we’ll find out eventually, as this is gonna get appealed more than a banana fam.

New York Community Bancorp (NYCB) 8.26%

• I can’t tell what to be more afraid of—this looming commercial real estate crisis everyone’s been tweaking about for years or the damn boogeyman.

• However, NYCB knows what it’s more afraid of as shares plummet on Q3 numbers. The firm lost almost twice as much as expected and missed revenue estimates too.

• Recovering from their buyout of defunct Signature Bank has been more arduous than expected, given a weak CRE market to which NYCB is highly exposed.

Thought Banana

Podcasts, Polls, & Going Poly

I like both candidates, but I wish this election was a little more heated. At least we can still get excitement from the race, just not like Americans ever have before.

2024 is the first modern election in which U.S. citizens are allowed to bet on the outcome. It’s become a popular topic of discussion, so…

Let’s cash, I mean *dive in.

What Happened?

In recent weeks, our esteemed presidential candidates have made campaign stops at some of the most reputable journalistic institutions in the world, such as Call Her Daddy and The Joe Rogan Experience.

These platforms have taken the place of CNN and FOX News of the world as the new way to reach the largest possible audience. But that’s not the only thing that’s new this election cycle.

After a court ruling in September, Americans can now legally bet on the outcome of the presidential and other elections.

It’s a highly scrutinized space and only available on regulated exchanges such as Kalshi and Interactive Broker’s “ForecastX” platform. But, many Americans who aren’t politicians weren’t born yesterday and can spin up VPNs to access offshore sites, like Polymarket.

Many are concerned that allowing the public to gamble on elections could jeopardize the legitimacy of our elections. We’re not one of those people because we don’t care—what we care about is what these markets could tell us about the outcome.

On both Kalshi and Polymarket, Donald Trump is favored to win by 62% and 65%, respectively.

So, if you were gonna place a bet on Kalshi in favor of Harris winning, you’d pay $0.38/contract. If you were right and she won, you would get paid $1 per contract, a 163% return.

Not too shabby. But, the more interesting aspect is how these differ from polls.

A few weeks ago, Elon Musk tweeted that betting markets are more accurate because money is actually on the line. However, many argued against this, including myself, saying that those willing to place bets on the election would have a selection bias for the pro-Trump population.

But, based on data from Kalshi, it doesn’t seem that that’s the case. Kalshi has published data on its $2.2bn election market, indicating a normal distribution of demographics.

The Takeaway?

Betting markets are likely just as flawed as polls but for different reasons.

Whales have the potential to skew markets, younger people (especially men)n are overrepresented, and addictive behaviors could cause distortions.

But, in a sufficiently liquid market, all of those concerns should be balanced out.

We’re 8 days away from the big one, so we don’t have to wait too long to find out how right—or wrong—betting markets are. Stay tuned.

The Big Question: Are betting markets a more reliable forecaster of the winner of the election than traditional polls? 

Banana Brain Teaser

Previous

A certain work plan for September requires that a work team, working every day, produce an average of 200 items per day. For the first half of the month, the team produced an average of 150 items per day. How many items per day must the team average during the second half of the month if it is to attain the average daily production rate required by the work plan?

Answer: 250

Today

In a certain lottery, the probability of winning is 1/1000. If a player buys 10 tickets, what is the probability that they will win at least once?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
David, Vyom, Ankit & Patrick

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