Silver banana goes to…

In this issue of the peel:

• 🪙 Coinbase shares jumped 9%, fueled by its historic S&P 500 debut next week—cr*pto’s big step into the mainstream spotlight.

• 🚗 GM pushes back on California’s aggressive EV mandate, arguing for a slower transition despite hefty investments in electric vehicle innovation.

• 🏦 The U.S. lost its last AAA credit rating, sparking fresh concerns about borrowing costs and the future of fiscal policy.

Market Snapshot

Banana Bits

• Trump criticizes Walmart for price hikes linked to tariffs, accusing the retailer of passing costs to consumers.

• Stock valuations remain elevated, sparking debate on whether markets are in a bubble or reflecting robust economic fundamentals.

• U.S. loses its last AAA credit rating, raising questions about future borrowing costs and fiscal policy direction.

• Consumer sentiment plunges to its second-lowest level on record, signaling growing worries about inflation and economic stability.

• U.S. housing starts edge up in April, hinting at potential resilience amid rising mortgage rates and economic uncertainty.

• EU exports to the U.S. surge ahead of new Trump tariffs, as companies rush to beat trade barriers and secure market share.

The Daily Poll

Previous Poll:

Is Walmart's move a sign others will hike prices too?

For sure: 57.3% // Already happening: 27.3% // Depends on tariffs: 10.9% // Not convinced: 4.5%

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Macro Monkey Says

Tariff Twists: Allies on Hold

In a whirlwind of trade policy shifts, President Trump's administration recently struck a swift tariff rollback deal with China, easing tensions and signaling a potential thaw in the ongoing trade war. 

However, this rapid détente with Beijing has left key U.S. allies—such as Japan, South Korea, and the European Union—awaiting similar relief from the sweeping tariffs imposed on April 2, 2025. 

These "reciprocal" tariffs, affecting nearly all imports, have strained relationships with longstanding trade partners, many of whom are now pressing for exemptions and better terms. 

While the United Kingdom managed to secure a partial agreement, notably a limited reduction on car tariffs, other nations continue to grapple with levies as high as 25%. 

Japanese automakers, for instance, have reported weakened profits, contributing to Japan's economic contraction in the first quarter of 2025. Despite Japan's close ties with the U.S., officials remain cautious about making further concessions without strong assurances. 

Similarly, South Korea and the EU are advocating for broader exemptions. The U.S. has paused most tariffs for 90 days, offering a narrow window for negotiations, but concerns persist over the durability of any new agreements, given the administration's history of abrupt policy shifts. 

The initial "Liberation Day" tariffs, intended to assert U.S. trade power, triggered immediate economic turmoil, including plummeting stock markets and alarm among American businesses. 

Within a week, the administration paused the harsher tariffs, though some duties, particularly those targeting China, were escalated before being reduced in the recent agreement.

The Takeaway?

The U.S.'s rapid tariff rollback with China has left key allies feeling sidelined, prompting concerns about the consistency and reliability of American trade policy. As negotiations continue, the administration faces the challenge of balancing domestic economic interests with maintaining strong international relationships.

Career Corner

Question

I am applying for an Equity Research role (that I believe fits me well, despite focusing on IB). The position is 1 week old and has over 100 applicants; would I stand out if I wrote an interest statement as asked by LinkedIn?

Answer

I don’t have a strong view on these LinkedIn applications, but I assume marking as your top choice can’t hurt. But also, importantly, you should be networking! That will likely have a bigger impact than whether or not you check this box. And strong interview prep with a strong stock pitch will go a long way! (Also, as an aside, you can’t trust the number of applications on LinkedIn; some submissions are completely unqualified, and some are bots.)

Head Mentor, WSO Academy

Check out WSO Academy!

What's Ripe

Hims & Hers Health (HIMS) 10.4%

• Hims & Hers Health surged 10.4% on Friday, closing at $64.65. This rally is part of a broader trend, with the stock climbing 150% over the past month. A strong earnings report, with Q1 sales nearly doubling year-over-year, likely supported investor confidence. 

• Additionally, the recent gains may also be attributed to strategic executive appointments, including Mo Elshenawy as Chief Technology Officer and Nader Kabbani as Chief Operations Officer, signaling a strong push towards technological innovation and operational efficiency. 

• Investors are optimistic about the company's direction, especially as it continues to expand its digital health services.

Coinbase Global (COIN) 9.0%

• Coinbase Global's shares rose 9% on Friday, with the cr*pto economy enabler rallying 16% over the past five days as it gears up for its upcoming inclusion in the S&P 500 index, scheduled for next week. 

• Coinbase’s addition marks a historic milestone as the first cr*ptocurrency exchange to join the index, symbolizing a significant step toward mainstream acceptance of cr*pto. This move is expected to boost institutional interest and attract fresh capital, especially from passive index funds that will now be required to hold COIN. 

• Investors see this as a turning point that effectively makes Coinbase—and by extension, B*tcoin—a “must-own” investment.

What's Rotten

Applied Materials (AMAT) 5.3%

• Applied Materials fell 5.3% to $165.57 after reporting fiscal Q2 revenue of $7.1 billion, slightly below analyst expectations of $7.13 billion. While adjusted earnings per share beat estimates at $2.39, the company's guidance for the current quarter projected revenue just under Wall Street’s forecast, leading to investor concerns. 

• Additionally, ongoing trade tensions between the U.S. and China, a key market for the company, have added to the uncertainty.

First Solar (FSLR) 4.2%

• First Solar's stock declined 4.2% on Friday, but the dip comes after a remarkable run—shares have surged 55.9% over the past month. Earlier this week, the U.S. House Ways and Means Committee introduced a new tax and spending proposal that called for a gradual phase-out of tax incentives for low-carbon industries like solar. 

• While not exactly favorable to the clean energy sector, the bill was far less aggressive than analysts feared and avoided any immediate rollbacks, sparking a sharp rally in solar stocks, including First Solar. Today’s pullback appears to be a breather following that strong upside momentum, rather than a shift in investor conviction.

Thought Banana

GM’s EV Dilemma: Speed vs. Mandates

General Motors (GM) finds itself at a crossroads in the electric vehicle (EV) revolution. While the company has made significant strides toward electrification, it is now actively opposing California's aggressive EV mandate, which aims to ban the sale of new gasoline-powered vehicles by 2035. 

This mandate, adopted by several other states, requires that zero-emission vehicles make up 35% of auto sales next year, increasing to 100% by 2035. 

GM's resistance stems from concerns over the feasibility of meeting such stringent targets, citing challenges like inadequate charging infrastructure, raw material constraints, and the persistently high cost of EVs for the average consumer. The company argues that a more gradual transition would better accommodate technological advancements and evolving market dynamics. 

This stance has found support in Congress, where the U.S. House of Representatives recently voted to block California's plan, highlighting just how politically and economically charged the EV transition has become.

Despite these headwinds, GM is not slamming the brakes on innovation. The automaker has pledged billions toward EV development, with models like the Chevy Equinox EV and Silverado EV in the pipeline. It’s also ramping up battery partnerships and charging network investments. 

GM’s balancing act—between regulatory skepticism and forward-looking capital investment—reflects the broader tension facing legacy automakers under pressure to decarbonize without alienating their core customer base or burning cash too fast.

The Takeaway?

GM’s nuanced approach to the EV transition—advocating for a more measured rollout while continuing to innovate—reflects the complexities of balancing environmental goals with economic and technological realities. 

As the debate over EV mandates continues, GM’s strategy may serve as a blueprint for other automakers navigating the road to electrification. The race is on—but not everyone agrees on the speed limit. 

The Big Question: Can legacy automakers like GM lead the EV revolution while tapping the brakes on government mandates?

Banana Brain Teaser

Previous

If 65% of a certain firm’s employees are full-time and if there are 5,100 more full-time employees than part-time employees, how many employees does the firm have?

Answer: $17,000

Today

In a certain high school, 80% of the seniors are taking calculus, and 60% of the seniors who are taking calculus are also taking physics. If 10% of the seniors are taking neither calculus nor physics, what % of the seniors are taking physics?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
Chris, Vyom, Ankit, Mithun & Patrick

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