Silver banana goes to…

In this issue of the peel:

•  💸 Americans turned October from spooky szn to spending szn as a solid retail sales report gives confidence in consumers. Doesn’t get better than that.

• 💉 Palantir shares took off on heavy actual and anticipated institutional buying as Affirm ripped on hella upgrades and looser lending regulations. Applied Materials got slammed for a down bad outlook, and Moderna is scared of RFK.

• 🥊 I’ve had tougher fights opening Amazon packages than whatever that Tyson/Paul thing was on Friday. Find out how successful the night was below.

Market Snapshot

Banana Bits

• Amazon leans into the AI race as competing with the other Mag 7 members was too easy; now, they want to square up with Nvidia.

• Japan returns to positive GDP growth after back-to-back quarters of annual declines.

• President Biden bids farewell to Chinese President Xi Jinping at talks in Peru while the CCP leader signals he’s ready to continue talks with Trump.

• The fight to be the U.S.’s next Treasury Secretary is heating up.

• This European carbon copy of SpaceX just raised $160mn to build a reusable capsule, swaggerjackin’ Musk & Co’s style.

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Macro Monkey Says

Cracked Out Consumers

American consumers must be smoking something.

Much like German soldiers using meth during WWII to last longer and fight stronger, U.S. consumers simply cannot slow down their demand for goods and services.

Also, just like during WWII, the U.S. economy continues to carry the rest of the world on its back. That was clear—and shows no sign of stopping—with Friday’s October retail sales report release.

Let’s get into it.

The Numbers

Apparently, Americans have been slamming the shopping carts lately as October’s retail sales report came in strong on top of a huge revision higher for September.

According to the Census Bureau, U.S. retail sales grew 0.4% for the month to $718.9bn, a 2.3% jump from October 2023.

September’s retail sales report also originally pegged (pause) the month’s growth rate at 0.4%. However, Friday’s report revealed a doubling in that rate, getting revised up to 0.8%.

Economists were guesstimating a 0.3% growth rate for October, which is close enough for me not to bully them too hard today.

Anyway, much of the uptick in spending last month was attributable to an increase in vehicle purchases, up 1.5%, and likely driven by lower borrowing costs after the Fed’s first rate cut back in late September.

Unfortunately, the same couldn’t be said for housing-related purchases (yet). Furniture sales sank 3.9%, the biggest decline of any spending category, continuing to serve as evidence of the housing ice age. But, rate cuts take longer to hit the mortgage market.

October’s annual growth of 2.3% was the highest since July, which also happens to be the last time the annual growth rate increased on a month-to-month basis.

Nonstore retailers, which is just a confusing way to refer to online sales, posted a healthy month, up 7% from last year. Cyber Monday isn’t until December 2nd this year, so don’t be surprised when November’s increase isn’t as fast as usual.

Meanwhile, you apes did a good job following orders by going out and getting fat and drunk all month. Sales at “food service and drinking places” increased 4.3%, the fastest print since May.

When consumer spending holds up strong, it’s really, really hard to have a recession in the U.S.

So, the fact that October posted increases in the annual growth rate for total outlays and spending at bars & restaurants is a helluva strong sign that the American consumer is not only in a good position but an improving one.

Earlier this week, Bank of America reported a 1% increase in aggregated credit and debit card spending per household, which was also an improvement from the prior month.

Finally, we’ll have to wait until next Wednesday for October’s PCE report; September’s came in strong. Nominal spending grew 5.3%, while real personal outlays grew 3.1% for the year.

The Takeaway?

We might have to make this The Daily Peel’s official slogan, but we’ll say again for the people in the back: U.S. GDP is comprised of 66-70% consumer spending in any given period.

So, the fact that various measures of spending—using different methodologies, too—all point to a consumer more jacked than a young, pre-steroid Dwyane “The Rock” Johnson.

In the aftermath of the enormous disappointment that was the Tyson/Paul fight on Friday, it’s great to start the week with some good news.

Career Corner

Question

I have been talking with some upperclassmen at my school, BC, and many of them have told me that for the banks that target us, we should always email with our school email.

Is there any way I could get the right inbox for my school email and just separate everything into another folder? If not, is there any validity to what they're saying?

Their rationale, from interns, is that the banks auto-sort emails from certain domains.

Answer

Unless the school email is run through Gmail, I don't think the right inbox will work.

For alums, if upperclassmen are telling you that, I'd listen to them and use your Gmail and right inbox for the non-alums.

Head Mentor, WSO Academy

Check out WSO Academy

What's Ripe

Palantir (PLTR) 11.14%

• There’s a lot going on with this stock, and absolutely none of it has to do with fundamentals. But as long as there’s buying pressure, shareholders aren’t mad.

• First, Palantir just ditched the NYSE for the Nasdaq. The view here is that the stock will get added to the Nasdaq 100, forcing indexers to buy shares.

• Second, The State of Michigan Retirement Systems doubled their holdings, buying an additional 548.4k shares and bringing their stake to a total of 1.06mn.

Affirm Holdings (AFRM) 5.53%

• No one’s gonna profit off of a future collapse in consumer finances like buy-now, pay-later leader Affirm. Analysts are fired up on rising credit card balances and falling interest rates.

• Within the past few weeks, Wells Fargo, Morgan Stanley, JPMorgan, and others have upgraded shares on the view that lower rates will incentivize utilization.

• The transitional political backdrop is helping boost shares as well because the coming administration is seen as more dovish on lending regulations.

What's Rotten

Applied Materials (AMAT) 9.20%

• Not only did Applied Material’s better-than-expected Q3 earnings results disappoint its own investors, but it also took down the whole sector.

• The supplier of equipment used to make all kinds of semiconductors—from those found in your TV to the AI chips Nvidia makes—beat on sales and earnings in Q3.

• But, a depressed outlook stemming from weak demand in China in Q4 stole the limelight. Shares are down ~34% since July as analysts reprice their earnings outlook.

Moderna (MRNA) 7.34%

• Pharma companies feel the same way about the newly nominated Director of Health and Human Services, RFK Jr., as oil majors feel about Greta Thunberg. 

• Industry players plummeted on Friday after President-elect Trump formally nominated politician and lawyer Robert F. Kennedy Jr. to the top job in federal health regulation. 

• In case you haven’t heard, he’s not a fan of the pharmaceutical-industrial complex and has proposed regulatory changes that could devastate Moderna and others.

Thought Banana

Bite His Ear Off!

If you had the misfortune of tuning in to Netflix’s first-ever live sporting event this past Friday night, well, let me just apologize in advance. This might trigger your PTSD.

Let’s dive in.

What Happened?

Netflix hosted a boxing match between Mike Tyson, one of the hardest, scariest people alive and widely considered the second-best boxer ever, and his opponent, Jake Paul, some loser with a YouTube channel and as many brain cells as he has thumbs.

Anyone who’s graduated high school threw up watching the fight, probably a few times, as the 27-year-old Paul won by decision after 8 rounds against 58-year-old Tyson.

Although the results were disappointing, the event itself was undeniably huge.

According to early data, viewership peaked at 65mn concurrent viewers. The “fight” was also streamed at over 6,000 bars and restaurants from sea to shining sea, where I watched, and my night was utterly ruined.

It was by far the most widely distributed event in the history of the sport that’s usually reserved for pay-per-view.

However, Netflix has some trouble. Buffering, freezing, and outages plagued the event,  with as many as 95k viewers reporting issues to DownDetector right as the fight was bout began.

72,300 attendees filled up AT&T Stadium in Arlington, Texas—the home field of the Dallas Cowboys—for the event, raking in over $9mn in gate revenue and setting a new record for in-person ticket revenue for a boxing match outside of Las Vegas.

We’ll find out today if Netflix investors were as disappointed in the event as viewers, so it will be interesting to follow today’s share price moves.

The Takeaway?

Although shoddy, with more outages than Florida after a hurricane, Netflix’s foray into boxing appears to have been an overall success.

For the 6hrs before and after the fight, it was all anyone was talking about, dominating the trending lists on X and other social media platforms. 

If nothing else, it earned Netflix eyeballs. Roughly 1/5th of all accounts tuned in for the last part of the fight, but it’s unclear yet if the make-out match, I mean fight, moved the needle for total subscribers.

But I bet if Netflix put some barbecue sauce on Jake Paul’s ear, Tyson’s inevitable second career earbite would’ve easily given Netflix more users than TikTok.

The Big Question: Will Netflix do more live sporting events? Should they? What did you think of the fight and Netflix’s strategy in sports?

Banana Brain Teaser

Previous

The arithmetic mean is 4 for the list of numbers: 3, k, 2, 8, m, 3. If k and m are integers and k ≠ m, what is the median of the list?

Answer: 3

Today

Last year, $48,000 of a certain store's profit was shared by its 2 owners and their 10 employees. Each of the 2 owners received 3 times as much as each of their 10 employees. How much did each owner receive from the $48,000?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
David, Vyom, Ankit & Patrick

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