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Trade Deficit Sheds Pounds—For Now

📉 America’s trade deficit goes on a diet—shedding $6.3B, but can it keep the weight off?

March 21, 2025

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In this issue of the peel:

  • 📉 America’s trade deficit goes on a diet—shedding $6.3B, but can it keep the weight off?

  • 🚀 Carvana and Cava heat up, while IonQ and ZTO Express hit speed bumps.

  • 🏀 Celtics get a private equity makeover—$6.1B says sports franchises are the new blue-chip stocks.

Market Snapshot

Banana Bits

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*The Deloitte rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.
*Please read the offering circular and related risks at invest.modemobile.com.

Macro Monkey Says

Deficit Diet: America's Trade Gap Trims Down!

In a plot twist worthy of a Hollywood makeover montage, the U.S. current account deficit decided to shed some pounds in the fourth quarter of 2024. 

According to the Commerce Department's Bureau of Economic Analysis, the deficit slimmed down by $6.3 billion, or 2.0%, landing at $303.9 billion. This marks an improvement from the previous quarter's record high of $310.3 billion.

For those keeping score, the current account deficit measures the flow of goods, services, and investments into and out of the country. Think of it as the nation's financial Fitbit, tracking how much we're importing versus exporting. 

In this quarter, the deficit represented 4.1% of the gross domestic product (GDP), a slight dip from 4.2% in the prior quarter. To put it in perspective, the deficit peaked at 6.3% of GDP back in the third quarter of 2006, when low-rise jeans were still a thing. ​

The primary income balance made a triumphant return to surplus territory, giving the current account gap a much-needed boost. However, before we pop the champagne, it's worth noting that this improvement might be fleeting. 

A record surge in goods imports in January, driven by businesses racing to stock up before potential tariffs hit, could mean the deficit is poised for a rebound. 

Imports of goods increased by $5.7 billion, with services imports not far behind, rising by $4.8 billion. On the flip side, exports of goods took a $10.8 billion tumble, leading to a goods trade deficit of $326.1 billion—the highest since early 2022. 

It's like we're on a shopping spree without the matching garage sale. ​

While the current account deficit might not be dethroning the dollar's status as the world's reserve currency anytime soon, economists warn that a ballooning federal budget deficit could pose a risk. 

So, as we toast to this slimmer deficit, let's keep an eye on those spending habits—after all, even economies need to watch their waistlines.

Career Corner

Question

I'm aiming to recruit IB San Francisco and am currently going to Berkeley. I've run out of Berkeley IB alumni in SF to connect with on LinkedIn; what should my next move be? Also how many calls should I be aiming to have over the next few months (I'm recruiting summer 2026). I've had 11 calls so far.

Answer

Some students are hitting 5-6 calls a week. It's about the depth of the connection and building a long-term relationship. Find warm connections: referrals, alums, interest clubs, common firms, etc.

Head Mentor, WSO Academy

What's Ripe

Carvana (CVNA) 5.3%

  • Carvana's stock revved up following an upgrade from Piper Sandler to "overweight," with a new price target of $225. Analysts believe the online used-car retailer is well-positioned for growth, potentially selling over 3 million units annually in the future. Looks like Carvana's engine is just warming up.

Cava (CAVA) 4.5%

  • Shares of Cava Group sizzled after JPMorgan upgraded the stock to "overweight," setting a price target of $110. The Mediterranean fast-casual chain is expected to expand significantly beyond its current 367 locations, with analysts suggesting it could surpass its goal of 1,000 locations by 2032. Investors are finding this growth potential quite appetizing.

What's Rotten

IonQ, Inc. (IONQ) 9.3%

  • Despite announcing a significant milestone in quantum computing with Ansys, IonQ's stock tumbled. It seems investors are still trying to compute the real-world applications of these quantum leaps.

ZTO Express (ZTO) 7.4%

  • Shares of ZTO Express declined amid concerns over slowing economic growth in China, affecting the logistics sector. Looks like their delivery route hit a few roadblocks.

Thought Banana

From Banners to Bankrolls: Private Equity Buys the Celtics

In a move that has the sports world buzzing louder than TD Garden, the Boston Celtics are trading in their green jerseys for greenbacks. 

Private equity mogul and lifelong Celtics fan Bill Chisholm has agreed to purchase the storied NBA franchise for a record-breaking $6.1 billion. This eye-popping figure not only sets a new benchmark in the sports industry but also showcases the escalating value of premier sports teams. 

Chisholm, co-founder of Symphony Technology Group, hails from Massachusetts and brings both business acumen and a deep-rooted passion for the Celtics to the table. 

His investment group isn't just any lineup; it features heavy hitters like Sixth Street Partners, known for their stakes in teams such as the San Antonio Spurs and European football clubs FC Barcelona and Real Madrid. ​

The Celtics, boasting 18 NBA championships—including their latest victory last season—are no strangers to success. Under the leadership of current owner Wyc Grousbeck, who purchased the team in 2002 for a mere $360 million, the franchise has flourished both on and off the court. 

Grousbeck will remain CEO for the next three seasons, ensuring a smooth transition as Chisholm and his team take the reins. ​

This sale not only surpasses the previous record of $6.05 billion paid for the NFL's Washington Commanders but also underscores the lucrative intersection of sports and private equity. 

With the Celtics' rich history and a roster featuring young stars like Jayson Tatum and Jaylen Brown, the new ownership is poised to continue the legacy while potentially exploring innovative business strategies.​

So, as the parquet floor prepares for this ownership crossover, Celtics fans can remain hopeful that the team's winning tradition will persist, perhaps with a few new plays from the private equity playbook.

The Big Question: How might this record-breaking sale impact the valuation of other NBA teams, and could we see a new wave of ownership shifts?

Banana Brain Teaser

Previous

In order to complete a reading assignment on time, Terry planned to read 90 pages per day. However, she read only 75 pages per day at first, leaving 690 pages to be read during the last 6 days before the assignment was to be completed. How many days in all did Terry have to complete the assignment on time?

Answer: 16

Today

If 3 < x < 100, for how many values of x is x/3 the square of a prime number?

Send your guesses to [email protected]

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Markets are never wrong, only opinions are.

Jesse Livermore

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Chris, Vyom, Ankit & Patrick