The Las Vegas Consumer Electronics Show

In this issue of the Peel:

• Globally, meat prices have fallen 1.8% from their year-ago level in December. However, Americans are paying 3.6% more in November for their meat products than in 2022.
• CrowdStrike and Match Group had a ripe day, seeing their share price rise for the day. On the other hand, JetBlue and Hewlett Packard suffered share price declines.
• The Consumer Electronics Show held in Las Vegas this year has so far included exciting, brand-new products and technology.

Market Snapshot

Happy Wednesday, apes.

How could it not be a happy Wednesday when the team’s portfolio over at WSO Alpha has finally reached a positive return for the year? To quote one humble farmer: “It ain’t much, but it’s honest work.”

We’ll have to check in again on that whole “honest work” part, but it’s great to see the apes no longer setting my retirement money on fire in 2024.

Remember, you can follow along with all of our trades and developments within the portfolio too right here. Plus, we have some spicy, institutional-level equity research reports on both portfolio and non-portfolio companies coming soon, and I mean this time when I say STAY TUNED.

Let’s get into it.

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Banana Bits

• Exhibit Number 4,362,117 of why I’m never deleting this app—some legendary X user hacked the SEC’s account yesterday to fake-announce that the agency had approved spot BTC ETFs.
• Now, investments in other companies can be considered “antitrust” as the European Commission is potentially submitting Microsoft and their holdings in OpenAI to the dreaded probe.
• You either die a hero or live long enough to see yourself become a villain—the ESG story has officially come full circle.
• According to Bank of America research, the easing in financial conditions over the past 2-months was the fastest in history.

Macro Monkey Says

The Dollar Menu is (Not) Back

Just days before the official annual meeting of our Lizard-People overlords at the World Economic Forum in Davos, another (probable) Lizard-Person group dropped some data that should get us all good and fired up this Wednesday morning.

The United Nations, a global intergovernmental organization with the goal of promoting maximum peace around the world, tracks price data on important things like population, climate, and, of course, food prices.

Here in the U.S., we tend not to focus on food prices too much in a macroeconomic context as the Fed’s preferred Core PCE and Core CPI metrics strip out changes in that commodity along with energy prices. But, we all gotta eat. So, let’s see what’s going on with food prices and find out just how badly grocery stores are ripping us off.

The Food and Agriculture Organization’s price index (FAO) tracks the prices of the most traded global food commodities and their changes over time. It looks a little like this:

"... let's see what’s going on with food prices and find out just how badly grocery stores are ripping us off. "

Source

You’d think the UN would be able to create a non-blurry version of this graph, but I guess having the resources of every government in the entire world at your disposal is just simply not enough.

Anyway, that chart goes all the way back to the 1960s. The last few years are the important part, however, and show the unprecedented run-up in food prices that came alongside the pandemic.

Supply chains and inflation made eating a much more capitalistic endeavor, but since C-19 has chilled out in the past 2-3 years, food prices have fallen right alongside them.

"... the same can’t be said at grocery stores."

Unfortunately, the same can’t be said at grocery stores.

Take meat, for example. Globally, meat prices have fallen 1.8% from their year-ago level in December. Unfortunately, we don’t have December’s CPI data until tomorrow, but if we take a look at the prior month, we can see that Americans are, on average, paying 3.6% more in November for their meat products than in 2022.

The FAO’s dairy index makes it even more obvious. Dairy prices have fallen a massive 16.1% globally from December 2022 to last month, but in the U.S., we saw only a 1.4% decline in aggregate dairy prices from November 2022 to the same month last year.

The same trend exists when comparing the raw data within U.S. CPI reports compared to the same food indexes in the global FAO index.

Now, there are, of course, other factors to consider. But, given that the U.S. is the world’s 2nd-largest producer of meat and dairy products globally (behind China and India, respectively), we can’t blame global supply chains or even internationally influenced commodity price mechanisms like tariffs. We have the stuff here, and it appears like prices via the CPI should be on their way down, but that’s not what the data says.

The only people happy about this are grocery store owners, who have ostensibly been able to pass along pandemic-era food price hikes into late 2023 without much pushback. Usually, low-margin businesses like grocery stores are always looking to pad their profits while they can. Honestly, kinda gotta respect this level of scumbaggery.

What's Ripe

CrowdStrike (CRWD) $273.77 (↑ 4.78% ↑)

• We may have found 2024’s Nvidia. Morgan Stanley sure thinks so, at least, and CrowdStrike has already risen nearly 10% in 2024 alone, while the S&P is up just a few basis points.
• On Tuesday, the gains just kept coming as the Wall Street giant absolutely slammed their “Buy” button on CrowdStrike shares, bumping the stock to an overweight rating from the equal rate territory they had been living in.
• And, of course, MS’s primary reason for this upgrade is those two little letters you’re probably already thinking of—AI. This cyber stock has held AI near and dear to their hearts really since inception, and, according to MS, 2024 is the year that demand is gonna start showing up en masse.

Match Group (MTCH) $39.04 (↑ 3.04% ↑)

• Turns out it’s a lot easier for this online dating company to find a partner than it is for me to do so using any one of their apps. Elliott Management has officially swiped right on Tinder and Hinge owner Match Group.
• But although the two have matched, we’re still waiting to see if Elliott’s got the rizz required to turn this into a date. The activist investment firm has built a roughly $1bn stake in Match Group, but it’s not yet clear exactly what their intentions are.
• Elliott has a sterling reputation on Wall Street and a terrifying one in Silicon Valley. They’ve been known to push out CEOs and executives without lifting a finger, and for a company like Match that has had 7 CEOs in the past decade, this can’t be a very comfortable setting for their first date.
• Analysts expect Elliott to engage with management, but as any Tinder user knows, getting someone to agree to an engagement is a tall task. Stay tuned on this one.

What's Rotten

JetBlue (JBLU) $5.17 (↓ 10.24% ↓)

• Most of us are taught to never give up, even when times are tough. Unfortunately, JetBlue’s (former) CEO must’ve missed that day of school.
• First, the much larger American Airlines broke up with JetBlue after a yearslong corporate marriage, then regulators started a court battle to block the airline’s planned acquisition of Spirit Airlines, then operational issues for JetBlue’s damn engines arose. CEO Robin Hayes’ response? “Good luck guys, I’m out.”
• Thanks, Rob. Knew we could count on you. As a result of his surprise departure, markets sent shares into a nosedive, just like their planes will do to passengers if they don’t fix those damn engines.

Hewlett Packard (HPE) $16.14 (↓ 8.92% ↓)

• Grandpa’s version of Apple is making big moves to get the new year going, beginning with a sizable acquisition and, needless to say, markets aren’t too happy.
• On Tuesday, HP announced plans to acquire networking products maker Juniper Lab for a cool $14bn. Given that’s ~65% of HP’s market cap, this smells a little bit more like a merger, if anything.
• The old-school PC giant is reportedly looking to put up the dukes with the 10x larger Cisco Systems in the networking equipment market. And what better way to do so than to just buy one of the larger firm’s top competitors?
• Even after gaining 21.81% on the news, $14bn is still a hefty premium to Juniper’s current value at a ~119.2% premium. Shareholders desperately needed it, however, as shares missed out on the gains in 2023, managing to lose almost 8% for the year despite the S&P’s >24% gain.

Thought Banana

Shiny & New in 2024

Geekfest 2024 is officially underway in Las Vegas as all the nerds behind the products we use every day and the companies we invest in have gathered together to see whose tech can out-nerd all the rest.

The Consumer Electronics Show, or CES, is an annual event held in Las Vegas where leading (and lagging) tech companies come to showcase all of the—to use the technical term—cool new sh*t they’ve made in the past year.

"... as I’m sure you can imagine, it’s been equal parts exciting and terrifying ..."

In 2024, as I’m sure you can imagine, it’s been equal parts exciting and terrifying—and not just because it seems like a pair of glasses is required to attend the event.

And although it’s only been 1 day so far, some of the sickest new sh*t (sorry for using the technical terms again) includes:

• The world’s first-ever transparent Micro LED screen from Samsung
• A smart deadbolt lock that uses your palm as the key from Philips
• Round 2 of Samsung’s foray into at-home smart robots with the newest version of “Ballie,” an AI robot that’s designed to act as a movable, infinite screen… and probably kill you in your sleep at some point too
• AI-based holograms from Holoconnects
• Mental health smart mirrors that use AI to make us feel less like trash when we’re faced with the unfortunate reality of realizing what we look like (no pun intended)

And there are still 3 more days of this to look forward to.

As usual with CES, companies are reserved on all the details you’d actually want to know, like pricing, timetables, and, of course, if/when they’ll start to kill us in our sleep.

"... the conference this year has so far included exciting, brand new products ..."

Fortunately and unlike some years past, the conference this year has so far included exciting, brand new products and technology. In past events, updates and upgrades to tech products even my grandparents know how to use have stolen the limelight, so we can’t wait to see what the next few days bring… and, of course, to decide whether or not it’s time to head to our apocalypse bunker just yet.

The Big Question: What other products can we expect at CES 2024? Which companies and technologies will steal the show when all is said and done?

Banana Brain Teaser

Yesterday —

A rope 20.6 meters long is cut into two pieces. If the length of one piece of rope is 2.8 meters shorter than the length of the other, what is the length, in meters, of the longer piece of rope?

Answer

11.7 meters

Today —

On Monday, the opening price of a certain stock was $100 per share, and its closing price was $110 per share. On Tuesday, the closing price of the stock was 10 percent less than its closing price on Monday, and on Wednesday, the closing price of the stock was 4 percent greater than its closing price on Tuesday.

What was the approximate percent change in the price of the stock from its opening price on Monday to its closing price on Wednesday?

Shoot us your guesses at [email protected].

Wise Investor Says

“Almost every dot-com idea from 1999 that failed will succeed.” — Marc Andreesen

How would you rate today’s Peel?

All the bananas

Decent

Rotten AF

Happy Investing,

Patrick & The Daily Peel Team

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