Silver banana goes to…

In this issue of the peel:

• 📈 Wells Fargo is levered to the tits for 2025, issuing its most bullish forecast for the S&P to date.

• ☁️ Palantir’s stock led the market to the promised land after gaining a higher government-secure cloud rating.

• 🏗️ U.S. Steel is having a tough time getting its deal with Japanese company Nippon Steel across the finish line as Trump’s “America First” promises take shape.

Market Snapshot

Banana Bits

• Campbell’s CEO is stepping down from the soup game and headed to Washington, not for politics but to become the next President of the NFL’s Commanders.

• Bank of America signs up to sponsor the FIFA World Cup in 2026.

• Hedge funds in the U.S. are benefitting from “Trump Trades” in various pockets of the market.

• Public Square’s stock jumps on news that Don Jr. is joining the self-proclaimed “woke free” marketplace.

• Is the era of the American-made car coming back? Based on tariff threats from the new administration, it might be.

The Daily Poll

Previous Poll:

How do you feel about AI assistants handling more of your work?

Love it, take over my tasks!: 24.4% // Cautious but open to it: 31.7% // Only for simple stuff, not anything complex: 36.6% // Not happening, I trust humans more: 7.3%

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Macro Monkey Says

Cyberspace Deals

For most of us, the period between Thanksgiving and New Year’s is a cloudy haze involving being filled with alcohol and cheese and never being 100% sure what day of the week it is. 

Perhaps that’s why corporations wisely chose that period of time to promote Black Friday and Cyber Monday deals. 

What Happened?

According to Adobe Analytics, Americans spent $10.8 billion on Black Friday this year, a 10.2% increase over last year. 

However, online shopping has taken the crown in recent years as Americans have become even lazier and more impatient. Why waste time showing up to a store in person just to have a WWE match with 10 other soccer moms trying to buy the same cleats and shin guards?

Indeed, online shopping handily outpaced in-store shopping by $3 billion in 2024. Despite how divided and polarized we might seem as a nation, we all joined hands in unison in the name of materialism. 

Americans banded together in the face of rising inflation and collectively spent $14 billion in just two days. There is an article in there somewhere about the dangers of consumerism, but that’s for someone else to write about at some other time. 

What’s interesting is that Cyber Monday, which was created and intended specifically for cyber deals, has actually waned in popularity over the years. 

The idea was that after stuffing ourselves with turkey and then spending the weekend trying to recover, we would all return to the office like drones logging into our computers to shop online. 

That turned out not to be the case, and while online still dominates in-store sales, the majority of purchases take place on the Friday before Cyber Monday.

Gen Z

Interestingly, Gen Z is more likely to succumb to these deals than other generations. The divide is especially stark between Gen Z and Baby Boomers, with only 35% of the latter making purchases versus 60% of the former. 

This is interesting, if not astonishing, for a generation that prides itself on value-driven purchasing decisions and a strong emphasis on sustainability, ethics, and social impact. 

The proliferation of “Buy Now Pay Later” services has surely had an impact on spending as inflation remains a challenge for consumers. 

These services allow customers to satiate their desires now and worry about funding those decisions later. The usage of apps like Afterpay and Klarna hit a record, accounting for $991 million in spending, up 5.5% versus last year. 

On top of this, National Retail Federation Chief Economist Jack Kleinhenz noted that falling gas prices “likely provided extra dollars for household spending on retail merchandise.” 

The Takeaway

As the haze of the holiday season blurs our schedules and fills our bellies, our wallets take the biggest hit. This year's staggering spending shows that no matter how much we claim to value sustainability or ethics, we can't resist the siren call of "deals." 

From soccer moms battling it out for cleats to Gen Z embracing "Buy Now, Pay Later" apps like Klarna, it seems our collective holiday tradition is less about togetherness and more about keeping the economy humming. 

Whether that's a testament to our resilience or a cautionary tale about consumerism is up for debate—but one thing's certain: we'll all be back next year for more of the same.

Career Corner

Question

How to be memorable at a networking event?

Answer

Try to find something personal to connect on. Networking does not equal just pitching yourself hard and only seeming to care about yourself.

Networking also means being with everyone; don’t ignore those whom you don’t find relevant. The industry is as you work into it over time, and skill sets mix and people end up in multiple places.

Head Mentor, WSO Academy

Check out WSO Academy

What's Ripe

Credo Technology Group (CRDO) 47.89% 

• Data center cable company Credo Technology rocketed today, getting a nice boost from strong earnings and blowout guidance. The company is starting to emerge as a real AI player.

• If the data center is the equivalent of the brain, CRDO is the spinal cord, connecting to the rest of the body. The company supplies a unique electrical cable that connects data center servers to networking switches, providing an invaluable product within the AI ecosystem. 

• CRDO posted record-setting revenue exceeding analysts’ expectations and guided for future revenue between $115mn-$125mn, way ahead of Wall Street’s expectations for $86 million.

• Since Nvidia’s uncanny surge, investors are looking for a new AI darling. Shareholders were particularly turned on by CEO Bill Brennan’s “inflection point” comments, signaling that CRDO may become the next big winner in the AI movement.

Core & Main, Inc. (CNM) 15.51%

• Whenever a water/sewage infrastructure provider gets the spotlight, you know it must be a slow day at the office. CNM has been on a wild acquisition spree, purchasing 5 companies in a quarter, and it’s starting to pay off.

• With these acquisitions, they’ve been able to expand not only into new product lines but also important geographies while picking up key talent. Revenue increased 11.5%, sending shares soaring over 15%. That might not be much for a tech company, but those are eye-watering returns in a day for sewage company investors.

• I’m personally interested in seeing where it goes from here. After having its day in the sun, don’t expect this stock to be making headlines again anytime soon.

What's Rotten

TransMedics (TMDX) 16.09%

• TransMedics hired a new CFO, who was welcomed to the office on his first day with a 16% stock plummet. Oof, that’s gotta be a hit to the pride. Investors don’t seem too thrilled about the initial announcement.

• To be fair, the stock reaction wasn’t totally in response to the CFO appointment. TMDX also released earnings that whiffed and tempered revenue guidance moving forward. Kind of a d**k move to issue weak guidance the same day you hire a new CFO so that they walk into a hot mess. Classy move.

• TMDX stock is now 60% down from its high and sits at its lowest price since going public in 2019. However, the company would argue that it is still a first mover and top dog in the organ transplant industry, poised for long-term disruption.

United States Steel Corporation (X) 8.01%

• Donald Trump tanked X’s stock with a single tweet after the market closed. The company has been involved in a never-ending M&A deal with Japanese steelmaker Nippon. Biden had previously criticized the deal on antitrust concerns. Investors were optimistic that the new administration’s generally business-friendly and pro-free-market stance would help get the deal done.

• “As President, I will block this deal from happening,” Trump promised—the final last words. While Republican policies tend to call for less government intervention, it makes sense, given Trump’s America First position as to why he would be against the sale of U.S. Steel to a Japanese competitor.

• On the bright side, U.S. Steel isn’t being left high and dry. Trump has promised a series of tax incentives and tariffs that will “make the company strong again.” The irony of the company that had been shielded from government intervention for so long now being blocked on this deal is too comical to be real.

Thought Banana

The Trump Bump  

Regardless of your political preferences or opinions, we all want to make more money, and hedge funds have been doing that better than all of us since November 5. 

Trump’s landslide victory, combined with a sweep in both the House and Senate, has sparked an almost 5% spike in the S&P, higher than the typical election bump. Based on historical data, this is a great sign. 

The market tends to have its weakest performance during a President’s first year in office while its second and third years surge, as seen below. 

Digging Into the Numbers

Recent market exuberance is the result of a combination of renewed investor interest in tech stocks (which make up an outsized weighting in the indexes) and expectations of pro-business policies under the new administration. 

There are several sectors where the so-called Trump trade can be seen taking effect, both positively and negatively.  Let’s dig in.

Energy (Oil, Gas & Coal) - Trump vowed to prioritize initiatives that would benefit the industry, including energy independence and rolling back environmental regulations to boost fossil fuels. 

This has led to a rise in the energy ETF, XLE, which holds big oil companies such as Exxon Mobil, Chevron, and ConocoPhillips.

Defense & Aerospace - The defense companies are on the other side of the coin. These stocks have been under pressure, primarily due to Elon and Vivek’s new Department of Government Efficiency (DOGE). 

They plan to cut the fat off wasteful government spending, which investors see as a major threat for companies like Northrop Grumman, Raytheon, and Lockheed Martin, and explain why all of those stocks took a hit.

Financials - Investors have poured into financial stocks, especially big banks like JP Morgan, Goldman Sachs, and Bank of America. 

Deregulation and speculation on tax cuts are the culprits here. To a lesser extent, Private Equity firms have seen a boost as a more favorable regulatory environment should theoretically lead to better deal flow. 

Manufacturing & Industrials - Trump has been continuing his trade war in the past and has already threatened tariffs on several countries. Investors believe that curbs on imports from foreign nations could strengthen domestic manufacturing, helping companies like 3M, Deere & Co, Honeywell, etc.

Safe Havens - Ironically, safe havens like Gold have actually decreased in value. Two election cycles ago, people were shaking in their boots and buying up safe investments in response to Trump. 

8 years later, the story has completely changed. Gold prices have declined as investors feel that Trump brings reduced economic uncertainty and a clear policy agenda.

The Takeaway

In 2016, markets initially reacted with volatility to Trump’s unexpected win. 

However, a lot can change over a few years. Upon his reelection, markets saw massive gains as political and economic uncertainty eased despite lingering inflation concerns and higher interest rates. 

Since the election, a broad swathe of sectors, from energy and tech to financials and industrials, have benefited so far.

The Big Question: Given the shift in safe-haven assets like gold, could we see increased volatility if political or economic uncertainties resurface under the new administration?

Banana Brain Teaser

Previous

During a certain time period, Car X traveled north along a straight road at a constant rate of 1 mile per minute and used fuel at a constant rate of 5 gallons every 2 hours. During this time period, if Car X used exactly 3.75 gallons of fuel, how many miles did Car X travel?

Answer: 90

Today

Cheryl purchased 5 identical hollow pine doors and 6 identical solid oak doors for the house she is building. The regular price of each solid oak door was twice the regular price of each hollow pine door. However, Cheryl was given a discount of 25% off the regular price of each solid oak door. If the regular price of each hollow pine door was $40, what was the total price of all 11 doors?

Send your guesses to [email protected]

How Would You Rate Today's Peel?

Happy Investing,
David, Vyom, Ankit & Patrick

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