It's Shotime!

In this issue of the Peel:

• The U.S. economy added 199k jobs last month, while economists had estimates pegged at 190k.
• Paramount Global and Lululemon had a ripe day, while RH and CRISPR Therapeutics saw their share price decline.
• Shohei Ohtani just made worldwide sports history by signing the single largest contract of all time by signing a 10-year, $700mn deal.

Market Snapshot

Happy Monday, apes.

You might not have signed a $700mn contract this weekend, but we hope it was a good one for you anyway. Just not as good as it was for Shohei Ohtani (more below).

This kind of wage growth in the MLB and sports contracts will hopefully drive markets higher today in hopes of a nice continuation of Friday’s gains. The Russell 2k led with a 0.76% gain, while the Dow’s respectable 0.36% gain brought up the rear. Utilities, real estate, and staples were the only vibe killers on the day as well.

Unsurprisingly, to say the least, the room temps at WSO Alpha drastically underperformed with just a 0.17% gain on the day. I gotta run over to that part of the office to deliver them a knuckle sandwich, so if anyone else has any choice words they’d like me to pass along to them, feel free to let me know.

Treasury yields, in the meantime, spiked as well, largely in response to Friday’s stronger-than-expected jobs report. The 2-year spiked to ~4.75% while the 10-year moved higher towards 4.25%.

Let’s get into it.

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Banana Bits

• Macy’s is having a great week already with a $5.8bn rumored buyout offer, a 17.4% premium to Friday’s close.
• The U.S.’s weekly fundraising rounds are still making investors nervous.
• Ukrainian President Zelensky is once again on his way to DC in a fundraising campaign of his own.
• Check out the November jobs report from Friday here.

Macro Monkey Say

Jobs Day

Finally, the wait is over, and we have some actual economic releases that matter to talk about. Plus, it’s not like we’ve been hyping up Friday’s drop for literal weeks or anything…

Before rolling into this wonderful weekend, the Bureau of Labor Statistics (BLS) wanted to make sure we stayed entertained—I’m sure most of you set your alarms to make sure you were awake right on time for the release, but we finally got the nonfarm payrolls (a.k.a. jobs) report for November. Let’s check it out.

Turns out it was worth the wait, as hiring numbers came in better than expected. The U.S. economy added 199k jobs last month, while economists had estimates pegged at 190k.

Plus, that figure was well ahead of the 150k jobs added in October, but keep in mind both of those additions are still “unrevised.”

With the 199k fellow Americans who made their parents proud last month, the unemployment rate fell back down to 3.7%, with the labor force participation rate continuing its ever-so-gradual upward creep.

"The U.S. economy added 199k jobs last month ..."

But of course, this wasn’t all too impressive to markets or onlookers in general. The numbers were boosted heavily by government hiring along with the return of workers from labor strikes, primarily in the auto sector. Fortunately, shareholders won’t have to worry about that after those jobs get automated away, of course.

Anyway, the headline takeaway is that it wasn’t exactly a big surprise in either direction. But looking under the hood, it got even better for those of us on the 9-5 #grindset.

Wages continued to grow as well, and they even came in roughly in line with expectations. Earnings growth of 4% annually translated to a monthly jump of 0.4%, with each reading coming in line and slightly ahead of expectations respectively.

Using October’s CPI report as a reference, that’s 0.8% growth in real wages annually and pure 0.4% real growth on the monthly side. Not bad apes, we’re getting more jobs and paid more for doing them. If there was someone else in the room with me right now, I’d say that’s worth a celebratory dap.

"The man may actually be steering us right down the path of a soft landing ..."

We know one guy is dapping himself up for sure, however: JPow. The man may actually be steering us right down the path of a soft landing, as we’ve been crossing our fingers for over the past few weeks and months.

The updated CPI report for November will drop tomorrow (and hopefully, the numbers will, too), however, so don’t get too excited in case we get a spike and the inevitable tantrum thrown by traders and their HFT bots in the aftermath.

Strangely enough, department store retailers cut jobs at some of the highest rates among sectors. Look, I like myself a good challenge too, but cutting your workforce before the busy part of the season is a ballsy move, to say the least.

Can’t wait to see how that one works out once these Q1 earnings reports start to roll out early next year as well. After all, isn’t it our portfolios that matter way more than anything else anyway? Clearly, our ~5k worth of random “positions” and a few blue chips mixed in will get us to retirement much quicker than a 9-5 would. Just ask your local “self-help” scam artist.

But before you “escape the matrix,” keep in mind we also have the next FOMC meeting on Wednesday of this week. It’s gonna be a fun and packed one, apes, and I guess Vladimir Lenin was right when he said, “There are decades where nothing happens,” clearly speaking of the last few weeks, “and there are weeks where decades happen.”

Always a tough person to quote, but hey, game respect game.

What's Ripe

Paramount Global (PARA) $16.85 (↑ 12.11% ↑)

• Unhinged family drama behind the scenes of massive companies like that in Succession is some classic entertainment we can always get behind. Unfortunately, the family that controls this media empire seems way too stable.
• I mean, they’re so stable it seems like they might even eat dinners together… without any screens. Sounds wild, but with the passing of the man, myth, and legend Sumner Redstone (dope name) last Tuesday, control of the firm is up for grabs.
• And that’s because the would-be equivalent of Kendall Roy (if she was that crazy), Shari Redstone, has floated a sale of the firm, leading to the rip in share price seen on Friday as RedBird and Skydance are reportedly ready to spend way too much money in order to take control of this giant.
• With the stock down ~65% in the past 5 years, it’s like Sumner decided to peace out to make sure these acquirers get a sweet deal. RIP, though. We sure hope his passing was a lot better than (spoiler alert) Logan Roy’s.

Lululemon (LULU) $489.64 (↑ 5.37% ↑)

• It’s hard to miss on earnings when you wildly overcharge every customer for every product you sell, and Lulu proved that once again.
• But damn, outside the price tag, you can’t deny their clothes are sick. And obviously, so is their stock, especially on Friday, as the firm’s revenue just barely beat expectations at $2.2bn while EPS dominated at $2.53/sh vs $2.28/sh.
• It’s hard to imagine management wasn’t nervous going into this one, however, given the market’s cliff-dive-style response to any slip-ups in sales this quarter.
• Then, the party really got started with guidance as Lulu jacked up its full-year guidance to $9.55bn-$9.58bn while analysts had been expecting as low as $8.11bn.

What's Rotten

RH (RH) $242.01 (↓ 14.00% ↓)

• It is safe to say that the company formerly known as Restoration Hardware has a lot to restore after Friday.
• But, there’s really nothing they can do, at least according to the firm’s quarterly report, as they cite JPow’s rate hiking nuclear bombs for their problems. Blaming someone else is, of course, always the solution, but in this case, it might actually be true.
• The luxury, mostly furniture retailer that sells some other Pinterest board nonsense relies on new household formation to actually make money. Thanks to JPow destroying the housing market, they’re in a tough spot.
• Needless to say, third-quarter results saw a big swing and a miss. The firm reported a surprise loss of $0.42/sh vs the $0.91/sh in actual earnings that was expected. Sales didn’t miss by quite as much, but they sure didn’t hit either.

CRISPR Therapeutics (CRSP) $64.54 (↓ 8.08% ↓)

• Don’t worry, apes, we’re finally all saved—we’ll soon be able to edit those garbage genes our parents gave us. Our saving grace is here.
• The FDA has officially gone into future mode with the approval of the nation’s first gene-editing treatment. And for now, it’s only relevant to patients with sickle cell disease.
• The Switzerland-based company, whose tech is based on Nobel Prize-winning achievements, is partnering with Vertex Pharmaceuticals for the launch, and although the treatment takes months, it could be life-saving for 16k Americans, according to Vertex’s estimates.
• Shareholders and patients shook hands on this one, an all too rare sighting on Wall Street, but hey, we’ll take it.

Thought Banana

Shohei The Money

What would you do for $700mn? Or maybe a better question: what wouldn’t you do for $700mn? Something tells me that, for most of us, that list is pretty short…

If “play baseball for the Los Angeles Dodgers” was on your list of answering that first question, then you’re gonna pretty peanut-butter-and-jealous after this one.

"To be clear from the get-go, this is an absolutely ridiculous amount of money ..."

Shohei Ohtani, a 29-year-old MLB phenom, just made worldwide sports history by signing the single largest contract of all time by signing a 10-year, $700mn deal with the LA Dodgers.

To be clear from the get-go, this is an absolutely ridiculous amount of money, but compared to the other largest contracts of all time, this one averages out to a good bit less. For reference, here’s the size and average annual amount of the next five largest contracts in the history of global sports:

• Lionel Messi—$674mn for 4-year with FC Barcelona; Average = $168.5mn/yr
• Christiano Ronaldo—$536.3mn for 2.5-years with Al-Nassr; Average = $214.5mn/yr
• Pat Mahomes—$450mn for 10-years with the Kansas City Chiefs; Average = $45mn/yr
• Karim Benzema—$436.33mn for 2-years with Al-Ittihad Club; Average = $214.5mn/yr
• Mike Trout—$426.5mn for 12-years with the Los Angeles Angels; Average = $35.5mn/yr

Isn’t it crazy how a list like that makes $35mn/yr seem small? Shohei is gonna be pulling double that per year, before the IRS, of course, which, as this beautiful tweet points out, is also a $364mn 10-year deal for the tax authority.

Speaking of tweets (or posts?), other MLB players and athletes in general were trying to act non-jealous here, too.

I mean, if anyone in the NFL was gonna command that kind of cash, it’s Ohtani. There is no debate whether or not this guy is the greatest baseball player on Earth right now—he is—but he’s certainly making a case for all-time GOAT as well.

He will be, but then again, he’s only been in the league for 6-years. We gotta see if the longevity is there. Clearly, cigarette-addicted, fat alcoholics like Babe Ruth should still be considered some of the best athletes of all time, even today.

"... if anyone in the NFL was gonna command that kind of cash, it’s Ohtani."

Just to shoutout some of Ohtani’s absolute ridiculousness, this dude has:

• He’s all-time levels of exceptional on both sides of the plate, being selected as an all-star as both a pitcher and hitter (“position player”) in 2021.
• The first MLB player in history to have 10+ home runs and 100+ strikeouts in a season.
• First Japanese player to hit for the cycle in a game (2019), the fastest pitch ever by a Japanese player (101.1mph, 2021), and the most home runs in a season by a Japanese player (46, 2021)
• Needless to say, after the above, he was the AL MVP in 2021

And we could go on, but one of the most important stats to keep in mind is that he did hit a home run off of Trevor, too. Crazy, I know.

Sports are becoming an even bigger and bigger money business, but that probably goes without saying after reading the above. There are just 4 athlete billionaires in history (so far), too, including:

• Lebron James, at 37 years old in 2022, was the first active NBA player to become a billionaire
• Michael Jordan, at 53 years old in 2014, was the first-ever athlete billionaire
• Tiger Woods at 46 years old in 2022
• Magic Johnson at 64 years old just a few weeks ago

Yeah… something tells me Ohtani won’t be too long behind.

The Big Question: How much bigger can the sports business become? Is there any way for us apes to make money off this? Are there any stocks in this industry that are worth investing in?

Banana Brain Teaser

Friday —

If yesterday's tomorrow was Thursday, what day is the day after tomorrow's yesterday?

Answer

Friday

Today —

Each child in a family has at least 4 brothers and 4 sisters. What is the smallest number of children the family might have?

Shoot us your guesses at [email protected]

Wise Investor Says

“A great business at a fair price is superior to a fair business at a great price” — Charlie Munger

How would you rate today’s Peel?

All the bananas

Decent

Rotten AF

Happy Investing,

Patrick & The Daily Peel Team