🇮🇳 India's Election Rages On

2024 is the year of elections, and there’s one way bigger than the U.S. May 29, 2024 | Peel #719 Silver Banana goes to... [SRS Acquiom. ]( In this issue: - ✍ Ignorance is bliss, but is being wrong the new being right in macro? - 🎮 GameStop is back, Tesla is down, and it’s all for the wrong reasons - 🇮🇳 2024 is the year of elections, and there’s one way bigger than the U.S. Market Snapshot 📸 = Banana Bits 🍌 - Like me to my parents, the yield curve has proven [disappointing to investors](=) this time around - Hess shareholders agree to $53bn [deal with Chevron](=) - Holding cash in your portfolio is moving in the direction of words like “lit” and “rizz” as they all [fall out of style]( Call it a career booster. The SRS Acquiom 2024 M&A Deal Terms Study is here. As always, it’s got the exclusive deal data, analysis, and insights to help you do your best work even better. This isn’t a regurgitation of publicly available information or a lengthy list of things you and your boss(es) already know. No, every data point and insight comes from private-target deals that SRS Acquiom provided M&A services on—more than 2,100 private-target deals, valued at more than $475 billion, that closed between 2018 and 2023. Not the kind of intel you’ll find elsewhere. The latest trends in valuations? Deal structures? PPAs and RWI? Earnouts, escrows, and indemnifications? It’s all here, and only here. So if you’re looking for a ticket to smarter negotiations and deal terms, and better results all around—the kind of stuff that makes your clients and bosses take notice—this is the closest you’re going to get. [So get it while it’s hot]( >> Macro Monkey Says 🐒 Americonomists Having no clue what the hell is going on is a state that I—and, apparently, most Americans—are very used to being in. In those moments, we have no clue what’s going on. There’s gotta be something wrong either with us or with what is going on. For me, it goes without saying that I’m usually the problem, but when 340mn of us can’t figure it out, it’s time to take a step back. We’ve talked recently about the disconnect between actual, hard, data-driven economic performance vs how Americans feel about the economy. But the survey we’re talking about today might be the most egregious example yet. And this time, it gets to the point of posing serious questions about how we measure this beast we call the economy. So, let’s get into it. What Happened? We thought impressing markets with your earnings report was a tall task, but it turns out that it’s even harder to impress Americans with our economic performance. 2,119 Americans were asked a series of likely annoying and interruptive questions about their thoughts on the economy from pollsters at Harris on behalf of [The Guardian](): [Source]() More than half of Americans (very) wrongly think that the U.S. economy is actively shrinking. 58% of your fellow consumer workers agreed with the sentiment that “the economy is worsening due to mismanagement from the presidential administration.” As we can see above, even almost half (49%) of the members of our sitting President’s party think the U.S. is currently in an ongoing recession. While certainly incorrect—and unexpected—this tells us that it’s more than just a “f*ckin’ Joe Biden!” politically driven mentality that’s causing Americans to feel this way. Most of what we and financial media in general focus on is the macro side of the economy, assessing the U.S. as a whole. But we all operate our daily lives within personal microeconomics that vary for all 340mn of us. So, while the macroeconomy is dominating the Western world, it seems that, for more and more Americans, their personal microeconomics is not working for them. Just take a look at this: [Source](=) Looking at the data used to determine if the U.S. is in a recession, we can see the answer is a decided no, with almost every metric moving up and to the right. Q1 earnings szn told us corporate profits are mooning as well. However… That same prosperity is not reaching the wallets of American consumers, both from what they tell us and in certain hard data series, so we know it’s not only the usual complaining/economic illiteracy we’re used to For instance, there’s been more focus on alleged wage growth in the post-pandemic period than all those whistleblowers Boeing killed, yet when we look at the data, there’s not much to suggest that consumers are better off now than in early 2020. Real disposable personal income measures the amount of money you earn that the government so graciously allows you to keep, adjusting for both taxes and inflation. 2023 blessed us consumer-workers with solid growth, but that trend is turning lower. Per the latest data, annual real disposable personal incomes grew 0.01% in March. It’s better than the alternative, but I can’t imagine many of us would be happy if our boss said, “Okay, so your raise this year will be inflation + 0.01%. Sound good?” Cumulatively, our takeaway income has grown 12.64% since May 2018, or 2.013% on an annualized basis. Again, that’s not terrible, but nobody on Earth has ever felt good about a 2% raise. Given this flat real wage growth, then adding in a frozen housing market, a slowing hiring market, an enormous and growing fiscal deficit, increasing homelessness, and all the other sh*t they show on civilian news, it’s almost absurd to expect Americans to feel like the economy is performing well. So, it shouldn’t be as much of a surprise as it was to me that Americans are feeling this sh*tty. I guess that’s why most Americans gave even colder takes later on in the survey, saying inflation is rising and unemployment is at a 50-year high. Neither one of those things is true. Unemployment remains near a 50-year low, and, believe it or not, inflation is slowing, but slowly. Still, we can’t expect a population that can’t afford eggs or spell GDP to know that. The Takeaway? The American economy has simply become less American since C-19 showed up. For almost the entire post-WWII period, economic growth in the U.S. was focused on creating and expanding a solid middle class. But post-pandemic, it seems that the top 10% of us are killing it better than ever before while the other 90% are struggling to remain in that “middle” class. It’s a tale of two economies in more ways than one. The macroeconomy is strong, but our microeconomies are doing about as good as Drake’s reputation. Meanwhile, the top 10% is strong, but the bottom 90% haven’t enjoyed much of that growth. As always, and as Dickens said, it’s the best of times and the worst of times in the U.S. economy. The real takeaway here? Just listen to Paris Hilton’s financial advice from 2005 and “stop being poor.” And if anyone figures out how to stop, please let me know… What's Ripe 🤩 GameStop (GME) 📈25.2% - Nonsense, bullsh*ttery, and a distinct lack of IQ are mooning once again alongside shares in GameStop. The firm’s recent stock sale went well. - Gotta respect the management of these meme stock firms to take advantage of retail investors pumping shares by selling more equity in order to raise cash. - This time, GameStop pocketed $933.4mn from the sale of 45mn shares, doubling their cash balance for CEO Ryan Cohen to day trade. Nvidia (NVDA) 📈7.1% - Nvidia is both the bartender and the guy buying drinks for every hot, available “partnership” they see. But it’s working—only instead of drinks, it’s money. - Nvidia’s raked in so much cash from their chips that they’ve started venture investing, funding AI startups, who then buy more chips, giving Nvidia more cash, and… - You get the point. Nvidia’s venture arm, NVentures, allows the firm to NVent its own demand. This AI flywheel was a big help in their face-melting Q1 numbers. - And they didn’t even need to buy a drink for Elon Musk’s xAI to take him home. The firm secured $6bn in Series B funding, and we all know where much of that cash is headed next… What's Rotten 🤮 DraftKings (DKNG) 📉10.3% - The State of Illinois has named itself as the second biggest nerd in the U.S., looking to steal 40% of the hard-earned money from charities like sports books. - DraftKings and FanDuel-owner Flutter Entertainment will face up to a 40% tax on adjusted gross revenue in America’s 3rd largest online betting market. - Chicago’s home state now has the 2nd highest tax rate on sports books, behind only New York’s 51%, but the bigger problem for investors is the long-term implications of the potential for other states to follow suit. Tesla (TSLA) 📉1.4% - Tesla shareholders have been advised to vote against Tesla shareholders because non-Tesla shareholders disagree with past votes by Tesla shareholders. - That’s literally what happened yesterday as proxy advisory firm Glass Lewis told Tesla investors to vote against the CEO pay package they approved in 2018. - Valued now at ~$46bn, the pay package is an all-equity deal. Most firms would kill to have their CEO this invested, but Glass Lewis is more concerned with a couple cents of EPS at the next earnings report. Thought Banana 🤔 The Biggest Election Ever Shoutout to Athens for inventing democracy, as more than 2bn inhabitants of Earth are eligible to vote in national elections this year. That means 2024 is the biggest election year in human history. A lot of noise has been made about the U.S. election, and rightfully so, given that the U.S. accounts for >25% of the global economy. But, halfway across the world, a burgeoning global superpower is holding an even bigger election occurring as you read this. Let’s talk about India. What’s Happening? Two states in India alone—Uttar Pradesh and Maharashtra—have a larger population than the United States. In total, 970mn Indians are eligible to vote this year, nearly 4x as many as their 244mn counterparts in the U.S. India might still be just the 5th largest GDP in the world, accounting for less than 4% of total global output, but it’s far and away the fastest growing among economies that actually matter on the global stage. Expectations from forecasters like Nomura expect Indian GDP to grow over 7% annually through 2030, more than doubling the ~3% CAGR from the second-place winner among large economies, Brazil. [Source]( So, to summarize so far, we have the most populated country in the world with the 5th largest GDP and fastest-growing large economy conducting the largest election in human history this year. Sounds pretty important when you put it like that, huh? Unfortunately, we all know way too much about the U.S. election, but let’s see what’s going on in this budding global power. Prime Minister Narendra Modi, India’s leader since 2014, is seeking his third 5-year term at the helm of his country. Because India kicked Great Britain out in the 20th century, they do have a very parliamentary-style system, unlike the U.S. There are no term limits for an Indian Prime Minster as there isn’t actually a direct election for the spot. Indian voters elect reps for the Lok Sabha or their equivalent of the House of Representatives, and the leader of the winning party is invited to “form a government” by the Indian president, who acts in a similarly ceremonial role as the King of England. Modi is the leader of the Bharatiya Janata Party, or the “Indian People’s Party,” which tends to be more right-wing than left. He’s often called the Trump of India but likely has had fewer entanglements with porn stars (will check with my sources, though). In this election, Modi’s top competitor is Rahul Gandhi (no relation to Mahatma). Modi leans more right, is a fan of Hindu nationalism, and promotes welfare systems involving direct cash transfer and redistributions. On the other hand, Gandhi leaned more left as a leader of the Indian National Congress party. He’s in favor of religious pluralism and a more secular government, promoting welfare via minimum income laws. [Source]() The biggest issue for many Indians in this year’s election surrounds the nation’s unemployment rate, particularly among their youth population. Much of this is due to a growing skills mismatch in India. For the past couple of decades, the IT sector has seen the strongest hiring trends, but now, that’s shifting towards manufacturing, a sector that much less of the country is trained for. Corruption, religious issues, and regulations controlling prices of farmed goods are also hot-button issues this election cycle, and with India’s presence on the global stage growing, it’s important for investors to have a clue about what’s going on. We all know what an investor’s absolute favorite thing in the world is: stability. So, most of the time, capital allocators will prefer an incumbent to keep their seat, leading the global money flow to largely back Modi. But lately, many have made the case that Gandhi’s policies could be more supportive of accelerated growth, especially on the employment side. The Takeaway? I barely know how the U.S. election system works, so excuse the simplifications and generalizations above, but this is literally the biggest deal in human history that will be determined by one election, so it’s worth having some awareness. We won’t know who wins the Indian elections until June 6th, when President Droupadi Murmu invites the leader of the party that wins control of the Lok Sabha to form a government. Along with India and the U.S., countries like Mexico, Iran, and Romania have upcoming elections this year, while others like Russia, Taiwan, and Ukraine all held their own earlier this year. Now, the degree to which these elections were actually elections vs “elections” varies widely, but we got over a billion people left to vote this year, so I hope you’re not bored yet. That said, I’d be a lot less bored if I could throw money at these elections. Anyone got a bookie for Indian Lok Sabha seats? The Big Question: What political direction will the world largely vote for in 2024? Is the strength of democracy on the rise or the decline? Does any of this matter if China invades Taiwan or another massive geopolitical shake-up occurs? Banana Brain Teaser💡 Previous 📅 After driving to a riverfront parking lot, Bob plans to run south along the river, turn around, and return to the parking lot, running north along the same path. After running 3.25 miles south, he decides to run for only 50 minutes more. If Bob runs at a constant rate of 8 minutes per mile, how many miles farther south can he run and still be able to return to the parking lot in 50 minutes? Answer: 1.5 miles Today 🕐 What is the median of 10, 4, 26, 16? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says🤓 “If you don't make mistakes, you aren't really trying.” — Rakesh Jhunjhunwala Today's Peel? 😁[All the bananas]( 😐[Meh]( 😩[Rotten AF]( Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE](=) // [WSO ALPHA]() // [ACADEMY]( // [COURSES]( // [LEGAL](=) [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 14435 Big Basin Way PBN 444 Saratoga, California 95070 United States