Non-Target Returns

Market Snapshot Stocks opened lower yesterday morning, brought down by retail and some pessimistic guidance by retail giant Target. Oil traded above $120 and finished up 1.26% yesterday. At the bell, the Dow was up 0.80%, the S&P 0.95%, and the Nasdaq 0.94%. Interested in gleaning both the big picture & the finer technical details of leveraged buyouts? Our WSO LBO Modeling Course will teach you the fundamental theories of LBO, as well as the importance of cash flow, debt, taxes, and scheduling. [Check it out](=) Let’s get into it. Banana Bits - For those of you in the camp of “Crypto is a scam,” there’s a chance that [regulatory overhaul]( exposes some of the fraudulent activity in the space - More supply chain issues, you say? Yeah, high gas prices aren’t just an issue with oil supply; it’s [refinery capacity]() too - You tuning in? January 6 Commission aims to show off to the public all the good it has been up to in [primetime](=) on Thursday - Those crazy Europeans finally did it: Apple will be forced to use [USB-C]() chargers by 2024 - Sony & Honda in talks to partner to take a bite out of the [EV market](=) - If you’re looking to master LBOs, look no further than WSO's [LBO Modeling Course](=) Banana Brain Teaser The answer to yesterday’s brain teaser was “a keyboard.” For today’s BBT, we will knock 100 bananas off our [LBO modeling course]() for the first 20 correct respondents. Here we go: A Daily Peel subscriber was born in 2002 but today is his 23rd birthday. How? Shoot us your guesses at [vyomesh@wallstreetoasis.com](mailto:vyomesh@wallstreetoasis.com?subject=Banana%20Brain%20Teaser) with the subject line “Banana Brain Teaser” or simply [click here to reply!](mailto:vyomesh@wallstreetoasis.com?subject=Banana%20Brain%20Teaser) Macro Monkey Says Market Dislocation — The markets lately make me feel like Westley in The Princess Bride. While we have seen valuation compression, my brain is being stretched in all sorts of different directions, trying to figure the world out as market and economic conditions evolve over time. Some might call this a market dislocation. Both fiscal and monetary policymakers are poopooing the old and shepherding in a tighter central bank and less direct and indirect stimulus. Basically, both Daddy JPow et al. and the 535-member clown college recognize that the economy is en fuego, which is Spanish for $hit hot, and we can’t continue to be this effing reckless if we want to have a currency that is at least as stable as Zimbabwe. Another victim of this dislocation is the stay-at-home and WFH names. Not just the low revenue growth at all costs names, but actual businesses that do, er, business. We’ve seen guidance cuts on a lot of these names, but it makes me wonder: is this just a single-quarter drawback in some of these names, or is it a 6, 12, or 18-month component to the next business cycle? If you’re a Target or a Walmart, it’s time to take your medicine and strap it on. Inventory challenges are still there, but these cats have had more than two years to think about supply chain resiliency issues while hiring the best of the best data science pros and logisticians. I’m not sure that a single-day pullback in some of these names based on margin guidance is the full picture, nor is it the end of the story. As we progress deeper into Daddy JPow’s tightening cycle, all will be revealed. LBO Modeling [image]() If you’re looking to learn both the big picture and the finer details of LBOs, check out the WSO LBO Modeling Course. Our course will teach you both the fundamentals as well as the importance of cash flow, debt, taxes, and scheduling through refined learning modules and applied case studies. Our students have landed and thrived at the biggest firms on Wall Street after getting practical training from quality instructors with LBO experience. [Check it out]() What's Ripe APA Corp ($APA) — No, not the Apache Framework for software development. APA Corp, the hydrocarbon exploration company, had a stellar day yesterday, ripping higher by 5.85%. Indeed, $APA is raking in those short-term gains. In the last five trading days, $APA is up more than 8%. And why wouldn’t a hydrocarbon company soar higher? Gas is cresting $5 a gallon across the country, and WTI is around $120 a barrel. J.M. Smucker ($SJM) — Apparently, the PB&J is coming back in style, and last time I checked, making one without the Smucker’s is unAmerican. These cats had a great quarter, and the street gobbled that $hit up - licking the knife when they were done. My hypothesis is that these cats are going to continue to be successful. American consumers are going to trade in their homemade chicken paninis for homemade jelly sammies. But wtf do I know. On earnings news, $SJM was up 5.71%. What's Rotten Target ($TGT) — Today, Target is feeling the squeeze just like the rest of us. After announcing a slash to their current quarter’s guidance, the retailer wants to cut inventory through discounting and promotions. At the same time, Target wants to make sure the most in-demand products, including private-label goods, are on the shelves when consumers want them. After trading down around 10% early yesterday morning, $TGT closed down 2.41%. Etsy ($ETSY) — Etsy is a decent company. According to a clickbait survey that you don’t care about, it ranks higher than 93% of internet retailers on some non-dimensional metric. The only problem with this [report]( is that no one gives a shit about what Investors Observer says about Etsy, e-commerce, or internet retail. Another challenge is that even if Etsy is a great pick amongst e-commerce names, that relative comparison is like saying that your dog’s turd is the best smelling. Etsy is another name that is attempting to beef up margins through increased fees. We have seen how this goes. If you’re not creating additional value, it’s hard to justify these fees. Yesterday shares of $ETSY were down 2.80%. Thought Banana What’s the Opportunity Cost? — I have a good buddy who is a high-level executive at a major adult beverage producer in the United States. From time to time, we like to talk about the trade-offs that the average consumer makes with the money in their wallets. It’s an interesting debate because by no means is the scarcity that we typically discuss artificial. Our most recent conversation was about the impact of high gas prices on alcohol and cigarettes. The cash in the blue-collar, middle-class American’s pockets is being pulled away from leisure and consumption that was once viewed as a luxury and more so towards everyday necessities that we all need to survive. Hypothetically speaking, if you were spending 250 bucks a month on gas around Memorial Day Weekend in 2020, you’re spending closer to 550 or 600 bucks to fuel the same driving habit. That 300-dollar dip into your disposable income might not be a big deal, but for a middle-class family of four, particularly in the midwest, it’s a huge deal. If you make the average household income at around 87k, this almost 4k/year of after-tax money that’s no longer yours to spend is life-changing. Sometimes the decision is between filling your tank and buying a six-pack for the weekend. For other families, the decision is between driving less and switching private-label groceries so that they can take a vacation. There are always trade-offs. Interestingly, some demand is what we call sticky, meaning consumers still demand a certain good or service as they are squeezed by higher prices on everything. Things like Disney Plus and N-flix do not have this kind of sticky demand. On the other side of the same coin, OnlyFans does. OF leadership has noted that they are not going through a subscriber pullback like the other content streaming services. If you don’t know what OnlyFans is, you should google it for your own education (I don’t believe you anyway). While Netflix and Hulu, and HBO are competing in a saturated market where consumers are experiencing subscription fatigue, apparently, OnlyFans has a different business model. I won’t get into what that model is because this is a reputable newsletter, and I’m obviously a very serious writer. As we enter a new business cycle and this tightening cycle continues, it might be a good idea to find investments with OnlyFans-esque demand and an apparently robust and girthy customer base. Wise Investor Says “The main purpose of the stock market is to make fools of as many men as possible.” — Bernard Baruch Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? Sign up for the WSO Daily Peel [here](. [ADVERTISE](=) // [WSO ALPHA](=) // [COURSES](=) // [LEGAL](=) Don't want The Daily Peel? [Unsubscribe here](. Click to [Unsubscribe]( from ALL WSO content IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353