Silver banana goes to…

In this issue of the peel:

• 🧘 Markets are finding their inner zen and trading peacefully to start the week.

• 🎢Turns out that zero DTE options were a big culprit for the market’s volatility.

• 👔 Fed President Neel Kashkari thinks America has gotten a bit too big-headed.

Market Snapshot

Banana Bits

• The S&P and NASDAQ finished higher in one of the most peaceful trading days we’ve seen in a while.

• Learn about 0DTE options and how they can completely cook your portfolio in a matter of hours.

• Neel Kashkari, Minneapolis Fed President, is getting bold and calling out the big guys in charge.

• The automobile tariff rollercoaster has auto stocks back in the green today as Trump says he wants to help them.

• President Trump’s stock is down right now, along with the market, based on recent approval rating polls.

• Harvard rejects the Trump administration’s request for a policy change.

The Daily Poll

Previous Poll:

What do you think of Trump’s 90-day tariff pause?

Much needed breather: 22.7% // Just bluffing again: 25.6% // Too late, damage’s done: 35% // Still panicking ngl: 16.7%

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Macro Monkey Says

Too Big for Your Britches 

You know it’s weird out there when rising bond yields and a falling dollar are not signs of strength, but instead massive red flags. 

According to Minneapolis Fed President Neel Kashkari, that combo could mean investors are starting to look at the US like a washed-up rapper that still thinks he can sell out Madison Square Garden.

Normally, in times of chaos, investors run to US Treasuries. They’re a safe store of money. But this time? They’re hesitating—not just hesitating, but actively selling US Treasuries, making the Fed a little nervous. 

The yield on the 30-year Treasury just had its biggest weekly jump since 1987, shooting up over 48 basis points to 4.87%. Meanwhile, the US dollar is slouching in the corner, with the ICE Dollar Index dropping nearly 3% to a three-year low.

So, what’s scaring the money away? You guessed it: tariffs. Trump’s latest trade salvo has the markets playing hot potato with anything that says “Made in the USA.” Foreign buyers have been trimming their US Treasury holdings, which definitely isn’t helping the situation. Add in inflation concerns, and it’s starting to feel like the market's got commitment issues.

In fact, the primary reason why the administration softened its stance on tariffs was because of the rising bond yields. With almost $1 trillion in upcoming interest payments that the US is set to make this year, any slight increase in that interest rate makes a massive difference. 

The Takeaway?

Kashkari’s basically saying, “Look, guys, can we cool it on the trade drama? It’s not a good look.” 

He’s urging actual deals, not just threats, or else we could be stuck in this jittery market limbo for a while. When even your own bondholders start ghosting you, it might be time to look in the mirror. 

Career Corner

Question

I had a coffee chat with two people from the same firm at the same time today (met a person through a cold outreach, and he brought his buddy along for coffee).

Is it okay to send one email to both, or should I send two separate emails thanking them for their time? They both chimed in on all my questions, so it seems redundant to send two separate emails, but I thought I would ask.

Answer

I think it's fine to send to both of them, although when following up with them in the future, I'd start new chains in order to try and deepen the relationship with one or both of them.

Head Mentor, WSO Academy

Check out WSO Academy!

What's Ripe

Dell Technologies (DELL) 4.0% 

• Dell shares climbed following the US administration's decision to exclude certain electronics from new tariffs, benefiting companies reliant on Chinese imports.

Apple (AAPL) 2.2%

• Apple shares rose after the US government announced a temporary exemption of smartphones and computers from tariffs on Chinese imports, alleviating investor concerns over potential cost increases for consumer electronics.

What's Rotten

LVMH Moët Hennessy Louis Vuitton (LVMH) 6.2%

• Looks like the high-income luxury market is starting to show some cracks. LVMH's stock fell after reporting a 3% decline in first-quarter sales, missing expectations and signaling a slowdown in luxury items amid economic uncertainty and new tariffs on European goods.

Unity Software (U) 5.6%

• ​Unity shares slid because investors are worried about slowing game developer spending and broader tech selloff pressures. This follows recent news that the new Nintendo Switch would cost gamers significantly more this year due to uncertainty over tariffs.

Thought Banana

Wall Street’s Wild Card

We all know that one guy who’s got a bit of a gambling problem but has a good heart deep down. Well, let me introduce you to the world of zero-day-to-expiry (0DTE) options, which is the older, alcoholic, degenerate-gambler Uncle of that guy. 

Forget about analysis and strategy, and these options have invariably turned the stock market into a full-on casino. These contracts, which expire within the same trading day, have surged in popularity, now accounting for over half of S&P 500 options volume—a significant jump from just 17% in 2020.

The allure of 0DTE options lies in their potential for rapid, substantial gains. 

For instance, on April 10, traders purchased SPY call options that would only be profitable if the index rose above $509 from its then-price of about $501. Just minutes later, a tariff pause announcement sent the S&P 500 soaring, and those options' values skyrocketed more than tenfold.

But this is a double-edged sword. While it offers the thrill of quick profits, it also introduces significant volatility into the market. The sudden influx of 0DTE trades can amplify market swings, making the stock market more unpredictable and susceptible to sharp movements.​

The rise of 0DTE options reflects a broader shift in trading behavior, where both retail and institutional investors seek to capitalize on short-term market movements. Yet, this trend raises concerns about market stability, as the increased volatility can have far-reaching effects on investor confidence and financial markets at large.​

The Takeaway?

As the popularity of 0DTE options continues to grow, market participants and regulators alike must grapple with the implications of this high-risk, high-reward trading strategy. 

While it offers new opportunities for profit, it also challenges the traditional dynamics of market trading and risk management.

The Big Question: Should regulators step in before zero-day options blow up in everyone’s face?

Banana Brain Teaser

Previous

For the past n days, the average daily production at a company was 50 units. If today’s production of 90 units raises the average to 55 units per day, what is the value of n?

Answer: 7

Today

If a two-digit positive integer has its digits reversed, the resulting integer differs from the original by 27. By how much do the two digits differ?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
Chris, Vyom, Ankit & Patrick

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