?? Let's Ban Everything

In this issue of the Peel:

• ?? The “ban TikTok” bill is fast approaching… and Joey B is excited.
• ?? Nvidia dropped 10%—what the hell is going on?
• ?? Jontay Porter has received a lifetime ban from the NBA.

Market Snapshot ??

Banana Bits ??

• Turns out that “higher for longer” is more like “normal”
• Sony and Apollo team up in the war for Paramount Global
• Jane Street rakes in $4.4bn in trading revenue in Q1
• BTC miners are loading up for the halving

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Macro Monkey Says ??

At Least It’s Not Nuclear…

As much as we all love getting our data stolen, I’m sad to say that there may soon be one less thief of your personal information allowed on American soil.

TikTok—one of the fastest growing, most popular, and most advanced spyware (probably) apps in modern history has come under a lot of fire lately in both the political sphere and, of course, for ruining public spaces with cringe dances and interviews.

But, the boomers in Congress have officially begun shouting one of the loudest “get off my lawn!” of all time this weekend. Let’s get into it.?

What Happened?

On Saturday, members of the U.S. House of Representatives cast their votes on some of the most important legal matters of our age.

And, of course, they did so in their classic manner—by cramming a bunch of miscellaneous sh*t into the most random bill George Washington ever had the misfortune of rolling in his grave over.

The sweeping, 184-page legislation called “H.R. 8038 ” includes provisions from “fending off” fentanyl, anti-money laundering, the use of civilians as human shields, and, of course, TikTok.

I’d ask you to spot which one of these provisions is not like the others, but apparently ~0 of them have anything to do with each other anyway.

In addition to funding another $95bn to Ukraine, Israel, and Taiwan, the key aspect of this bill, however, is that it officially moves the “TikTok ban” bill to the floor of the Senate as early as next week. Big Daddy Joey B has already said he can’t wait to sign it.?

So, it’s clear that TikTok is, in the next 6-7 months or so, going to be banned from U.S. soil or sold to a “friendly” and totally not-spying-on-you U.S.-based company.

Source

Roughly 10% of TikTok’s users are based in the U.S., so it’s not a huge hit in terms of global users, but not all users are created equal.?

Those based in wealthier regions and nations tend to be much higher ROI consumers, so it’s a bigger blow to TikTok Shop and the value of ads sold on the platform.

But, more importantly, this move speaks to the further-growing division between the U.S. and TikTok-owner Bytedance’s home country—China.?

On Friday, just a day prior to the House vote, Chinese regulators forced Apple to fix loopholes that allowed apps like Instagram, YouTube, X, and others to be downloaded on Chinese phones, despite those services being banned over a decade ago.

The ongoing beef is primarily reserved for just the tech space, however. Looking at the volume of trade alone, you’d think the U.S. and China were besties on their way to get their nails done or something:

Source ?

So, what we’re seeing isn’t necessarily a lack of cooperation but deteriorating trust from both sides of the Pacific.

Back in 2019, the Trump Admin’s decision to effectively ban U.S. chip companies from supplying Chinese telecom giant Huawei caused chaos for the sector. Since then, a series of tit-for-tat bans and tariffs and threats (oh my!) have reigned supreme.?

This battle of tits for tats seems to be culminating this month, with the U.S. moving to ban TikTok while China—earlier in April—effectively banned homegrown countries from buying American-made chips, like those of Intel and AMD (thankfully not Frito-Lays).

The Takeaway?

Like Michael Jordan and Scottie Pippen, the U.S. and China might not be best buds, but they need each other to keep winning championships (a.k.a., growing GDP above inflation).

The trust is falling while trade ties continue to grow. And honestly, as long as we’re still trading with each other, concerns over all-out conflict remain subdued.

A full-scale ban of TikTok would take this tech-trade-war nuclear, but, at least it’s not actually nuclear… yet.

What's Ripe ??

American Express (AXP) ??6.2%

• Growth in the great American pastime of spending money we don’t have was booming last quarter, and American Express was loving it.
• It must be nice to count literally the richest people in the world as your clients, because as spending and delinquencies increased, AmEx did just fine.
• The firm reported $3.33/sh on $15.8bn vs the $2.95/sh on the same revenue as expected. Top-line growth slowed but was still solid according to analysts.

Fifth Third Bancorp (FITB) ??5.9%

• A year ago, Fifth Third was seen as potentially about as both solvent and legit as FTX. But, the regional bank managed to beat expectations in Q1.
• Despite their exposure to the “doomed” CRE market, Fifth Third reported EPS of $0.76/sh against the $0.71/sh expected and $0.78/sh in Q1’23.
• On the downside, net interest income fell by 9%, and return on common equity continued to fall to 17%, but somehow they managed to grow deposits 5%.

What's Rotten ??

Nvidia (NVDA) ??10.0%

• When I saw Nvidia down 10%, I thought I had accidentally draft-dodged World War 3. But no—this just shows how loose the AI Jenga tower was.
• AI darling Super Micro (SMCI, -23.14%) said they wouldn’t report preliminary earnings, as they had been prior, leading investors to lose confidence.
• This hammered other AI stocks. The fact that a firm like Nvidia can fall 10% on another company’s lack of preliminary earnings speaks to how brittle these valuations might be.

Netflix (NFLX) ??9.1%

• Like most Taylor Swift fans at the release of The Tortured Poets Department, Netflix shareholders are likely wildly overreacting to the firm’s Q1 numbers.
• The issues with this report stem from “weak guidance” and a move to pull focus from subscriber numbers going forward. I guess making money matters now?
• But, the streaming king smashed expectations in Q1, earning $5.28/sh vs. $4.52/sh expected, while sales beat as well on 16% subscriber growth.

Thought Banana ??

From Missouri to Misery

Everything that’s fun is either unhealthy, illegal or highly addictive.

And this past week, one NBA player learned this the hard way. Missouri-native Jontay Porter, a (former) power forward/center for the Toronto Raptors, is now as welcome in the NBA as I am in a sh*tty, rundown convenience store in Marshfield, Massachusetts.

That’s right—we’re talking lifetime bans. So, let’s find out what Jontay did, but I guess we’ll have to save the convenience store saga for another day.

What Happened?

Source

Although it’s a bit outdated, the above chart does a great job of summarizing essentially what went on for Jontay that got him a lifetime ban from playing in the NBA—sports bettors barely know what they’re doing, but the industry is booming.?

This lack of knowledge—as demonstrated in the above spread between green (knows how sportsbooks work) and blue (uses a sportsbook)—extends to players clearly lacking the knowledge of how these books work with their respective leagues.

Porter is kinda ass at basketball, so he sees about as much action on the court as I see at the bar on any given Friday night. So, he decided he might as well try to make as much money off the court as he could in the meantime.

Source

Recent betting activity caused the NBA to open an investigation into Porter’s behind-the-bench hijinks. An $80k bet on Porter’s unders (bets that he’d fall below a given line on stats like points, rebounds, etc.) was a dead giveaway.

This $80k bet was placed on a game played on March 20th, 2024. Porter left the game early, claiming to feel “sick”, making it much easier for those that bet the under to actually hit their bet. So, when the bets won, the NBA got suspicion.

Now, the reason these bets were sus is because nobody bets on no-name players. So, when there’s a bet in size on a player like Porter, this arouses suspicion similar to how fat bets on small cap stocks can trigger insider trading allegations.

That’s essentially what the NBA discovered in their investigation. Porter had removed himself from the game so Mr. $80k would hit his bet, presumably giving a cut to Porter for his troubles.

In the end, Porter was found to have:

• Disclosed confidential info to bettors,
• Limited his own play to help certain bettors, and
• Placed bets on NBA games himself

It’s about time the NBA had their own Shoeless Joe Jackson .

Who Cares?

Sports betting hasn’t been legal in the U.S. for long, but it has already changed the culture, experience, and in cases like this, integrity of certain sporting events.?

Leagues are making a killing off the introduction of legal sports betting, but situations like this cause them to reconsider the whole idea.

And while actually good players like LeBron, Giannis, or Jayson Tatum wouldn’t be dumb enough to do this, one bad apple can still ruin the bunch.

See, the thing that Porter was apparently unaware of is that these sportsbooks have agreements with leagues to give ‘em a heads up of any unusual or nefarious bets the second they occur. So, it wasn’t even remotely hard to uncover the scheme.

And this is exactly the problem. Sports betting is a ton of fun, as long as you know what you’re doing (or are winning). But because of this lack of knowledge leading to stupidly easy-to-catch violations, leagues are beginning to reconsider the whole thing.

We already saw the NCAA encourage states to ban prop bets. But aside from the bettors potentially losing access to this degeneracy, the real tragedy here is that Porter made it from Nowhere, Missouri to one of the ~500 best basketball players on Earth

And then, he literally gambled it all away. Now, instead of Missouri, it’s just plain misery. Hopefully, the $6.5mn he earned along the way can dry his tears.

?? The Big Question ??: How close are some leagues to pulling the plug on sports betting? Should investors in firms like DraftKings be concerned? Anyone got any insider tips they want to send my way? (just on sports, chill out SEC)

Banana Brain Teaser ??

Previous ??

City X has a population 4 times as great as the population of City Y, which has a population twice as great as the population of City Z. What is the ratio of the population of City X to the population of City Z?

Answer: 8:1

Today ??

The sum of the weekly salaries of 5 employees is $3,250. If each of the 5 salaries is to increase by 10 percent, then the average (arithmetic mean) weekly salary per employee will increase by what?

Send your guesses to [email protected]

Wise Investor Says ??

“An athlete cannot run with money in his pockets. He must run with hope in his heart and dreams in his head” — Emil Zatopek

How Would You Rate Today's Peel??

??All the bananas ? ? ? ? ? ? ? ? ? ? ? ? ???Meh ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ??Rotten AF

Happy Investing,

David, Vyom, Jasper & Patrick