Nvidia Vs The Supreme Court

Nvidia’s next challenge on its path to AI Supremacy? The Supreme Court June 20, 2024 | Peel #734 Silver Banana goes to... [CapLinked. ]() In this issue of the Peel: - 😡 Ungrateful consumers are pulling back on donations to the economy - 😪 Turns out laziness is a good strategy unless you’re Virgin Galactic - 👩‍⚖️ Nvidia’s next challenge on its path to AI Supremacy? The Supreme Court Market Snapshot 📸 Banana Bits 🍌 - Mark your calendars and welcome to history—Nvidia is the [most valuable company in the world](=) - CEO confidence rebounds while [everyone else wonders why]( - Boeing’s CEO got destroyed in Congress, [and it was hysterical]() - Markets are back to focusing on [growth, too, not](=)[only]([interest rates]( A better VDR and Team Dinner is on Caplinked! WHY are you still using the VDR the partners used twenty years ago? Switch to CapLinked and make those tedious VDR tasks a breeze. No more late nights or weekend grinds dealing with software that should be in The Smithsonian. With CapLinked, you’ll manage your data room faster than you can say “due diligence.” Secure, efficient, and so user-friendly, you might even get your weekends back. Join the ranks of young finance pros in investment banking and private equity who’ve discovered the secret to smooth sailing. CapLinked: Making your work life easier, one deal at a time. Caplinked - A Better Platform at a Better Price [Start with a quote to get Team Dinner on Caplinked]() Macro Monkey Says 🐒 Lack of Gratitude ASPCA, St. Judes, and the economy—three hardworking charitable organizations that rely on support from viewers like you. Fortunately, when you donate to one of those, you actually get something in return besides a harassment-level amount of “thank you” letters and emails topped off with the quasi-guilt of wondering if you only donated to create good karma for yourself. When you donate to the U.S. economy, you get sh*t like the [KFC Cheeto Sandwich](. Despite this clear incentive, donations in the form of consumer spending shriveled up last month, much like my blood vessels after a trip to KFC. Let’s get into it. The Numbers U.S. retail sales totaled a measly $703.1bn last month, growing just 0.1% monthly and 2.3% compared to May 2023. [Source]() That means real retail sales actually fell 1% for the year while the monthly growth rate remains at 0.1%, adjusting for May’s MoM and YoY CPIs of 0.0% and 3.3%. Excluding vehicle sales, it only gets worse. Total retail sales ex-auto fell 0.1% for the month. Some good news comes from the fact that the category posting the largest monthly decline was gas stations, falling 2.2%, probably due to the [national Zyn shortage](=). Other important categories still grew strongly, like nonstore retailers—which is just fancy talk for online shopping—with sales rising 6.8% for the year. Further, restaurant and drinking places saw a surge in degeneracy along with GameStop shares, growing sales by a healthy 3.8%. So, we were spending money in the right places, getting drunk, and on 2-day shipping, but the headlining numbers were ugly. According to Bank of America’s data published a week ago, May’s consumer spending was slightly healthier, growing 0.7%, as measured by credit and debit card spending by consumers of America’s 2nd largest bank. [Source]() BofA shows similar data on restaurant spending coming in strong and overall services spending carrying the team among ex-auto spending categories. Interestingly, Gen Z is working the hardest to keep donations to the economy elevated, growing spending the most for the month, while Gen X is apparently trying to destroy the economy: [Source]() Much of that can be attributed to relative vs absolute changes. Lower-income earners (a.k.a. young people like Gen Z) are still experiencing the greatest % wage growth among the generations, potentially driving this outsized spending growth. To much less surprise, another driver of Gen Z’s outsized economic donations comes from a refusal to pay off debt, ostensibly expecting BofA to pay off their debt like the Biden Admin wants to with their student debt: [Source]() The Takeaway? Consumer spending growth is slowing. At 70% of U.S. GDP in any given year, that’s a scary sign. Restaurants and other highly discretionary spending categories usually falter first in a slowdown. However, Gen Z spends the highest percentage of their budget at restaurants and is seeing the fastest wage growth, helping keep this line item elevated. Higher rates are likely impacting the ability to repay loans taken out in the last 2-years as well, especially among Gen Z consumers largely not exposed to fixed-income assets earning high APYs. This only adds to the argument for rates to go lower for sooner. Rate cut expectations were unchanged in response, but hopefully, these reports had more impact on JPow’s mind. Clearly, there is just no gratitude for the beautiful charity that is the U.S. economy, causing donations to slow dramatically. What's Ripe 🤩 La-Z-Boy (LZB) 📈19.4% - I always knew laziness was the path to victory, and finally, this company is proving me right. As the furniture industry suffers, La-Z-Boy remains on top. - With housing turnover at a 30-year low, furniture makers have struggled to drive sales, but La-Z-Boy’s record-high conversion rates made up for it. - The firm easily beat low quarterly expectations and raised guidance going forward. Chegg (CHGG) 📈3.5% - Like Kevin Durant going to Golden State, Chegg decided they couldn’t beat ‘em and announced plans to join ‘em. - The “‘em” in question here is, of course, AI. Chegg announced plans to lay off a ton of people and explore options for AI product offerings. - The threat of obsoletion has plagued Chegg’s cheating-based business model, but this announcement has so far soothed investors. What's Rotten 🤮 Virgin Galactic (SPCE) 📉13.4% - Shares in this space tourism stock continued crashing worse than the VSS Enterprise as Virgin Galactic is giving out shares like candy on Halloween. - The split has alerted investors to re-discover the issues with this “company.” Virgin Galactic recently retired its only spacefaring vehicle. - It’ll be at least 2-years before they go to almost space again. To keep employees, the firm is issuing tons of RSUs and diluting existing shareholders. Lennar (LEN) 📉5.0% - Rates are killing this company almost as badly as SVB, with Lennar’s guidance for home deliveries next quarter falling way short of expectations. - This comes despite recent strong mortgage application data, but Lennar’s quarterly numbers don’t cover this period. - Analysts are expecting continued slow growth, given rates remain at multidecade highs. But Lennar did beat on sales and EPS last quarter. Thought Banana 🤔 Nvidia’s Next Stop: The Supreme Court You would think that growing your company’s market cap by 10x in less than 2-years would be one way to keep shareholders happy. Nope. Not good enough. On its way to the singularity, Nvidia’s next stop is a place much more tried, true, and most of all, dusty—the U.S. Supreme Court. What Happened? No matter how successful your company is, you’re still not allowed to lie to shareholders. Personally, I advocate for lying every time a company has a bad earnings report—just make my stocks go up, right? But some people have morals, apparently, especially Swedish investment manager E. Ohman J:or Fonder AB. The firm is suing Nvidia and CEO/rockstar Jensen Huang for alleged securities fraud. It was not just that unpronounceable investment manager suing Nvidia, but a bunch of California shareholders hopped on board. Basically, the allegations are that in 2017 and 2018, Nvidia misled investors about how much of its revenue came from digital asset-linked purchases for things like BTC mining rigs. Nvidia has already agreed to pay $5.5mn to settle these omissions. In fact, the case was dismissed by a court in 2021, but another court smelled the potential bag and let the case go through on the grounds that the evidence was essentially good enough. The mind-numbing thing is that in U.S. securities fraud cases, harm has to be shown. In this case, it seems like the only thing Nvidia did was mint enough millionaires to fill up a small country. The Takeaway? Much like antitrust and every other pre-WW2 set of laws, the U.S. needs fresh legislation on securities fraud and overall securities regulation. It’s tough to imagine with a Congress full of people who were alive when the Securities Act of 1934 was signed and probably still think stocks trade in eighths, but one can dream. It’s not even like they have to be fully rewritten—just updated and adapted to a digital age where information access and subject matter considered “material” has changed drastically. I have no idea what the laws should be. I just work here. But maybe when I’m 87 and eligible to run for office, I’ll have it figured out. The Big Question: Does securities regulation need an update? What other laws and legal precedents are no longer as effective? Banana Brain Teaser 💡 Previous 🗓 Sixty percent of the members of a study group are women, and 45 percent of those women are lawyers. If one member of the study group is to be selected at random, what is the probability that the member selected is a woman lawyer? Answer: 27% or 0.27 Today 🕐 Each year for 4 years, a farmer increased the number of trees in a certain orchard by ¼ of the number of trees in the orchard the preceding year. If all of the trees thrived and there were 6,250 trees in the orchard at the end of the 4-year period, how many trees were in the orchard at the beginning of the 4-year period? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “I am not an advocate for frequent changes in laws and constitutions, but laws and institutions must go hand in hand with the progress of the human mind.” — Thomas Jefferson How Would You Rate 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. 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