Retail Ups and Downs: What’s in Store?
In this issue of the Peel:
Market Snapshot
Happy Wednesday, apes.
Are you ready for the big day? Nvidia, the undeniable stock of the year, drops its latest earning report later today, coincidentally right at that same 4 pm time when your portfolio finally stops falling for a few hours. We’ll see who fares better…
Speaking of falling, that just happens to be what equity markets did all day in the meantime. The Nasdaq was the only U.S. major to not paint itself red, eeking out a small, but still green, +0.06% day. Smaller caps and the (absurdly) price-weighted Dow felt the most heat, but Nvidia made a special appearance on the low list as well just a day prior to earnings and after a +8.5% day. Totally rational.
Treasuries had a weird day in the meantime, bouncing around all over the curve, with the 2-year note charging towards 5.1% by the international open. The dollar saw a late-day spike as well as the uncertainty trade—aka, buying the safest assets you can, like USD, long-dated bonds, blue chips stocks, etc., won the day.
Let’s get into it.
To Win the M&A Game, It Helps to Know the Terrain
Ah, the annual SRS Acquiom M&A Deal Terms Study. It’s back again already? You bet it is. And, as always, it’s bubbling over with the deal data and insights you need to be truly in the know.
You won’t get this intel from industry news sites, regulatory filings, or any other sources, by the way. Nope, only the SRS Acquiom Study provides analysis of more than 2,100 private-target acquisitions valued at more than $460 billion—most of which aren’t required to be publicly reported.
Why should you care? Think: better negotiating and smoother due diligence. Think: avoiding potential transaction issues. Think: competitive advantage for you and your clients, and all the good stuff that comes with it.
By the way, the Study is free. You have no excuse not to download it right now.
Macro Monkey Says
Existing Gets Hard
Sure, living with mom and dad can be rough, or your mice-infested apartment might have a landlord that’s less committed to it than Jada Pinkett Smith is to Will, but just about anything on Earth is better than a 7.5% 30-year mortgage.
At least, that’s what (would-be) American home buyers are saying lately.
According to data from the National Association of Realtors (NAR), existing home sales slumped even further in July than they did in June. We’re all too aware it’s about to be September, but cut ‘em some slack like you in AP calculus; the housing market is a little slow.
To quantify new home sales, the NAR bases its data on contracts rather than actual transactions. That means the data we’re seeing now can reflect the housing vibe from late spring / early summer and, more importantly, doesn’t include the impact of the 7.49% 30-year fixed rates we’re seeing today. I mean, just take a look:
Still, according to the NAR, existing home sales slumped 2.2% for the month in July and saw a 16.6% cliff dive from July of last year.
But wait, don’t start thinking (and trading) like your the next Michael Burry just yet. According to analysts, the drivers here are still much different than in the pre-GFC period.
In addition to mortgage rates that make (would-be) buyers want to gouge their eyes out, low inventory levels can imply that
Add into the mix the fact that everyone rushed to lock in a sub-3.5% rate while JPow was actively trying to take rates below negative infinity, and you get—once again—a housing market cold enough to be a friend of The Incredibles wondering “Where’s my Super Suit?”
"... a housing market cold enough to be a friend of The Incredibles wondering 'Where’s my Super Suit?'"
With only 3 months’ worth of existing home inventory on the market, compared to the 4 months seen for the same period in the pre-pandemic days of 2019, those same homes are still continuing to tick up in price as well. Existing homes averaged a price tag of $406k in July, a whole 2% jump higher than last year.
So, in summary, buyers are facing:
Good luck! Maybe mom, dad, the mice, and your landlord aren’t that bad after all.
What's Ripe
Medtronic (MDT) ↑ 2.79% ↑
领英推荐
Lowe’s (LOW) ↑ 3.75% ↑
What's Rotten
Dick’s Sporting Goods (DKS) ↓ 24.15% ↓
Macy’s (M) ↓ 14.05% ↓
Data Peel
Thought Banana
NATO Gets BRICS’ed Up
A love-hate story worthy of a futuristic rom-com version of Oppenheimer is unfolding right in front of our eyes. If we still have technology or civilization at all after these two get through with each other, it’s already a blockbuster.
The U.S. and China do not get along, and as of yesterday, that was changing. Or it wasn’t changing in the right direction, at least.
"Amid China’s worsening economy and economic outlook, the U.S. has called on its rival and key trading partner to dial up the transparency ..."
If any, the only change was souring tensions and a pot coming closer to a boil. Amid China’s worsening economy and economic outlook, the U.S. has called on its rival and key trading partner to dial up the transparency on data that has recently been covered up.
Some of the newly-cagey data include:
Publicly, the main concern seems to be the benefit gained by other countries and macro planners in knowing what’s going on in the world’s second-largest economy. With this gone, it certainly makes global and emerging market investment more challenging.
Also making this investment more challenging is Big Dawg Joey B, banning some forms of U.S. investment in the high end of the Chinese tech sector.
Meanwhile, China is rallying the global south around the BRICS alliance in, essentially, an all-out bid by the group to rival NATO and gain influence in the UN. Don’t hate the player, hate the game.
"China is rallying the global south around the BRICS alliance in ... an all-out bid ..."
Fun times, to say the least. Tensions are set to continue to simmer when U.S. Secretary of Commerce Gina Raimondo visits Beijing in less than a week.
Not a flight I’d want to be on, but best of luck!
The big question: How will the U.S. and China’s economic, geopolitical, and military relationship unfold in the short and long-term future? How can I make money, or at least not get eviscerated as tensions continue to rise?
Banana Brain Teaser
Yesterday — What phrase is hidden here?
Genie’s Gift Skydiving Elvis
“Wish upon a falling star.”
Today — It doesn't hurt to take a hard look at yourself from time to time. This little test should help you get started.
During a visit to a mental asylum, a visitor asked the Director what the criteria is that defines if a patient should be institutionalized.
"Well," said the Director, "we fill up a bathtub. Then we offer a teaspoon, a teacup, and a bucket to the patient and ask the patient to empty the bathtub." Okay, here's your test:
"Oh, I understand," said the visitor. "A normal person would choose the bucket, as it is larger than the spoon."
What was the Director's response?
Shoot us your guesses at [email protected].
Wise Investor Says
“The future is never clear; you pay a very high price in the stock market for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values” — Warren Buffett
How would you rate today’s Peel?
Happy Investing,
Patrick & The Daily Peel Team