Disney’s Earnings Comeback!

In this issue of the peel:

• ?? Disney’s earnings slapped, proving that persistence wins the race in the long run. The streaming division is finally popping off and holding its weight.
• ?? Trump is out here making dreams come true while killing others. Sending some stocks soaring while others come crashing down.
• ?? Headhunters are applying dating app strategies to the job market through a scheme known as “resume fishing.”

Banana Bits

• The Fed’s quick trigger may backfire as the recent PPI report reveals sticky inflation.?
• Trump’s move to scrap the $7,500 EV tax credit caused investors to scrap their Tesla and Rivian investments.
• Citadel’s Ken Griffin calls out headhunters for allegedly posting fake job listings.
• TikTok’s saving grace may be Trump, who is considering halting a ban on the controversial platform.
• Jamie Dimon didn’t play his cards right when endorsing Kamala Harris, as Trump declares there is no room for him in his administration.
• FBI crashes the party at Polymarket CEO’s house in election betting probe.
• After a nice pump the day after the election, the stock rally blew its gains while cr*pto continued to surge.
• NYC pulls the plug on tenants footing the bill for landlords’ overpriced broker fees.

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Macro Monkey Says

Emerging Markets, Re-emerging President

Uncle T is back in office, and markets responded with a big bang across multiple asset classes. The S&P, Nasdaq, and Bitcoin all saw massive gains after the election.?

But across the globe, it’s a mixed bag of sentiments.

Much has been said about Trump’s impact on emerging market economies, and, to be honest, your guess is as good as mine.

Let’s get into it.?

What’s Happening?

While the US dollar continues making gains, developing nation currencies and equities have been on the decline, as the market is still trying to figure out what a Trump presidency means.

Investor inflows into emerging markets showed signs of life, rebounding after a tough few years driven by the pandemic and global rate hikes, which kept investors sidelined in safer developed world assets.?

Since then, developing economies have seen inflows of $250 billion so far in 2024, a 41% increase from last year’s total of $177 billion, with still 1.5 months left in the year.

Source?

Prior to the election, there was tons of optimism around emerging markets, where growth in those regions outpaced even some developed nations.?

That optimism, however, could be stymied if the past is indicative of the future.?

Since the election, most emerging market currencies have weakened against the dollar, most notably the Chinese Yuan and the Mexican Peso.?

The declines, however, are much less pronounced than they were in 2016 when Trump first got elected.?

For example, the Mexican peso—which is seen as a bellwether for the broader EM space—dropped 3.6% for the week versus an 8% drop in 2016.?

Source

Still, some optimism remains. According to Head of Fixed Income at UBS, Shamaila Khan, “There are certain sectors and countries that could benefit from a Trump victory.”?

Take Ukrainian bonds, for example, which jumped on the news, lifted by a hope that the war with Russia could soon reach its conclusion.?

Or Argentinian stocks and bonds, which rallied as investors cheered closer ties between Trump and Argentina’s president Javier Milei.?

Source

Trade and Tariffs

During his first term, Trump’s “America First” policy and trade war with China created some volatility in international markets.?

His approach to trade deals, such as renegotiating NAFTA, influenced industries like automobiles, steel, and agriculture globally.

Tax Cuts and Deregulation

Trump’s tax cuts created some positive benefits for US companies with substantial international operations.?

The rollback of certain regulations also contributed to broad-based market optimism for US-based multinationals.?

The Takeaway?

It’s really a 50/50 coin toss on where EM ends up. Emerging markets have experienced a nice rebound as global growth expectations have improved.?

Trump’s presidency will certainly not lack in terms of news flow as potential trade wars, tariffs, deregulatory policies, and geopolitical tension are all on the menu.?

For investors, this underscores the importance of monitoring US policy decisions and their ripple effects on global markets.?

Career Corner

Question

I'm having trouble with accounting questions about non-cash expenses and adding them back to the cash flow statement.

For one question, I thought I had to add back interest expenses on the cash flow statement, but that was wrong, and for another question about writing down assets, I incorrectly didn't add back the write-down to the cash flow statement.

What exactly determines whether an expense should be added back to the cash flow statement?

Answer

What they’re looking for is your ability to tell something is non-cash.

Depreciation is non-cash because the cash went out the door when you bought the factory.

Asset write-down is non-cash because, again, the cash went out the door when that asset was bought—not in the current period. Writing it down is similar to depreciation… you’re not using cash to effect that write-down.

In your example, interest IS a cash expense in the current period. No need to add anything back—that cash is going out the door this period (and interest is captured in Net Income).

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What's Ripe

Walt Disney (DIS) 6.23%

• If at first you don’t succeed, try, try again. While the origins of this quote are unclear, what is clear is that Disney’s persistence in cracking the streaming world is paying off.
• Disney+ and Hulu have graduated from red-headed stepchildren to royalty, boasting a profitable quarter for the first time ever and 85 million subscribers across the two platforms.
• Disney posted a 39% increase in EPS, ahead of Wall Street’s expectations of 34%. Importantly, the company is guided for double-digit increases next year in its entertainment, sports, and experiences divisions.

Treasury Bonds (TLT) 0.58%

• Stubborn inflation? Who Cares! Investors are already dreaming of rate cuts, with bonds rallying like it’s 1999 on expectations that further Fed intervention is in the cards.
• Both the CPI and PPI reports made it clear that inflation is lingering like an uninvited house guest, while investors are the carefree hosts keeping the party going.?
• While investors seem pretty confident of a rate cut, December 18 will be the day of reckoning when all must give an account for their behavior.

What's Rotten

Rivian (RIVN) 14.30%

• What the hell happened? Rivian got smacked with a two-piece Tyson combo. After missing earnings like a drunk dude missing the toilet last week, Rivian received the news that Trump is planning to nix the EV tax credit.
• This $7,500 credit was introduced to make buying electric vehicles more affordable. Trust me, Rivian could use the help, as the company has yet to break even after several years in the business.??
• Rivian and Tesla got hit on the news. On the bright side, both of these stocks have been here before and always bounce back. However, in case it blows up in your face, I’m here with a friendly reminder that this is not investment advice. :)

Booz Allen Hamilton (BAH) 10.13%

• The newly created Department of Government Efficiency (DOGE), run by Elon Musk and Vivek Ramaswamy, has bureaucrats and government cronies shaking in their boots.
• These “warriors of efficiency” are gearing up to slash waste and trim the fat on government spending, with Defense spending of particular interest, considering it takes up a massive portion of the US budget.
• Investors hit the panic button on defense stocks along with a diverse basket of government contracting-related stocks. Let’s see how this all plays out!

Thought Banana

Resume Fishing

Forget about catfishing; these days, it’s all about resume fishing. The top headhunting firms do it best, creating fake job listings and fabricated profiles to lure in candidates for the sole purpose of collecting data.?

I’ve had a hunch that this shady practice existed, and I’m sure many of you have had the same gut feeling throughout your job search. It’s about time this scam gets called out by a heavyweight in the industry—better late than never, right??

Method to the Madness

Imagine a recruiter sliding into your DMs on LinkedIn asking you for your resume and salary info. (Which I’m 50% sure happens to some of you on the dating apps anyway).?

Now, picture that same recruiter ghosting you after getting what they wanted and deciding they’ve heard enough (Which I’m 100% sure happens to some of you on the dating apps).?

This is like the Tinder swipe of job hunting. Not the kind of ghosting you want to experience.?

King Ken—That is Ken Griffin from Citadel—called this bulls**t out, accusing firms of going as far as contacting Wall Street traders under false pretenses, offering lucrative positions with major banks.?

In many cases, these recruiters allegedly used fake names and identities to engage in conversations with raiders to gather data about their job performance, salaries, and other personal details.?

This data was then sold to clients.?

The Numbers

Don’t just take my word for it, the data speaks for itself. Analytics firm Revelio Labs found that since 2018, the number of hires has dropped significantly compared to the number of online job postings.?

This trend has particularly become more common since the pandemic, with a massive uptick in job applicants citing “ghosting” as a reason why they didn’t get a job offer, as seen in the chart below.

Source

The Takeaway?

For students and early professionals, this is a good reminder that your resume is valuable.?

For job seekers, this practice can be extremely frustrating and exhausting. Trust me, I’ve been where you are, and I know how you feel.?

You’ve probably spent years perfecting your profile—internships, side hustles, extracurriculars—and you shouldn’t be too hard on yourself. The job search process is grueling, but it always works out in the end.?

Banana Brain Teaser

Previous

If x is to be chosen at random from the set {1,2,3,4} and y is to be chosen at random from the set {5,6,7}, what is the probability that xy will be even?

Answer: 2/3

Today

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?

Send your guesses to [email protected]

?

If it trades like a bull market, it’s a bull market.

Colm O’Shea

How Would You Rate Today's Peel?

?? All the bananas

?? Meh

?? Rotten AF

Happy Investing,

David, Vyom, Ankit & Patrick