MCU's Horror Show

The MCU’s latest movie, The Marvels, brought in a measly $47mn in its opening weekend [The Daily Peel... ]() November 14, 2023 | Peel #585 Silver banana goes to... [SRS Acquiom. ]( In this issue of the Peel: - Moody’s came out on Friday with this change to its rating on the U.S. macro outlook that took an opposite view from Goldman Sachs. - Monday.com and Tesla had a ripe day, while Beyond Meat and Tyson Foods closed in the red. - The MCU’s latest movie, The Marvels, brought in a measly $47mn in its opening weekend, the single worst-performing debut of any MCU film ever. Market Snapshot Happy Tuesday, apes. I hope your bets hit during last night’s game between the Broncos and the Bills, as well as in the stock market. Personally, I wouldn’t know what that’s like at all, but I’m told it’s a good feeling. But “good feelings” were sorely lacking from yesterday’s equity market performance here in the States. Major U.S. indices were mixed, but all were near flat on the day, with the Dow’s 0.16% gain leading and the Nasdaq’s 0.22% fall bringing up the rear. Mixed emotions in response to divergent economic outlooks, along with a slowdown in earnings szn and a big wall of worry seemed to weigh heavily for the day. In treasury territory, however, yields largely moved higher as investors continued to sell their U.S. debt holdings. The 10-year yield nearly breached 4.7% once again, while the 2-year, which moved higher with a little more oomph, broke above the 5.05% level. Let’s get into it. Up Your M&A Game with Exclusive Deal Intel [image](=) Gordon Gekko said it right: “The most valuable commodity I know of is information.” By that measure, SRS Acquiom is loaded—and we’re always happy to share the wealth. Take our Private M&A Deal Terms Quick Reference Guide. 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[It’s all right here](=) >> Banana Bits - It was the first [good day for Boeing]( in what felt like 107 years since the company’s founding as a huge potential deal with Emirates was announced, along with China allegedly coming close to allowing companies to buy 737 MAX planes again. - Big Oil’s reaction to the EV transition has long been an open question on Wall Street, but according to [this report](, they’re starting to figure it out. - Even when they agree, Wall Street banks have differing opinions on how to agree, especially [when it comes to rate cuts.]( - Traders were full of trepidation to start this week as tomorrow’s release of the [October CPI](=) report weighs on our overall self-confidence. Macro Monkey Says The Economy is Gold, Man! Professional baseball player and American thought leader Yogi Berra once said, “When you come to a fork in the road, take it.” It is genius on its own, but this clear and actionable advice goes further and just about perfectly sums up the market’s outlook on the U.S. economy. Today’s quote of the day down below sums this up further, too, but rarely is there ever not a fork in the road when taking a macro view of markets and the economy. And now, that’s as true as it’s ever been. Over the past week, this became glaringly obvious as two hallmark institutions of the U.S. financial system (that totally didn’t play any role in causing the global financial crisis just over a decade ago) have emerged with exact opposite views of the economy’s outlook going into 2024. In one camp, we have Goldman Sachs telling us that the economy is “gold, man!” while Moody’s—the haters that they are—continue to spread FUD worse than Peter Schiff when he talks about BTC. Let’s dive into each and see how wrong we all are. For starters, Moody’s came out on Friday with [this change]() to its rating on the U.S. macro outlook. Notably, this is NOT the same as what the younger sibling credit rating agency, Fitch, did back in August, as Moody’s is also maintaining its Aaa rating on U.S. credit. "... two hallmark institutions ... have emerged with exact opposite views of the economy’s outlook going into 2024." However, they are not giving an Aaa rating on the U.S. outlook—in fact, that’s not even how they rate this. Moody’s moved their view on U.S. performance through 2024 from “stable” to “negative,” much like when analysts downgrade ratings on a stock. The primary factors driving this view include: - Spiking bond yields - Massive jumps in interest payments are set to come, bringing the interest-to-revenue ratio of the U.S. government to 26% by 2033 from 9.7% in 2022. - Wide and growing fiscal deficits are at 6% of GDP now and are projected to increase to 8% by 2033, driven by those interest payments and an aging population (the average deficit from 205-2019 was ~3.5%). - Political polarization makes it much harder to fix these deficits and other issues. Sounds not very fun, but there are, of course, two sides to every story. On Monday, Goldman Sachs released their Macro Outlook 2024 entitled “[The Hard Part is Over](=).” Not to be controversial, but as someone who prefers the easy part of most things, this sounds pretty sweet to me. "... as someone who prefers the easy part of most things, this sounds pretty sweet to me." Basically, Goldman is saying that—yes, things have been rough over the past year, but the fact that we haven’t collapsed yet suggests we won’t collapse going forward. To support this view, the world’s douchiest investment bank cites: - Continuation of disinflationary trends, bringing us back to 2%-2.5% in 2024 - Only a 15% chance of a recession in 2024, driven by “strong real household income growth, a smaller drag from monetary and fiscal tightening, a recovery in manufacturing activity, and an increased willingness of central banks to deliver insurance cuts if growth slows.” - Better expected returns on fixed-income assets and loans since rate hikes appear largely over - A strong labor market with global unemployment settling below pre-pandemic levels That, apes, is what we love to see. So, the most obvious difference between the two reports is timing. Moody’s takes a much longer view and is accounting for changes far into the future without giving an explicit timeline on this “negative” performance rating, while Goldman makes clear they are speaking only of 2024. It’s all too possible that 2024 will be a happy-go-lucky year and that we slowly fall apart by 2033, but neither firm made that exact call. The important thing to realize is that absolutely no one knows what to expect going forward. Like Matthew McConaughey says in his rousing and definitely family-friendly The Wolf of Wall Street, “I don’t care if you’re Warren Buffet or Jimmy Buffett—nobody knows if the [economy’s] going to go up, down, sideways, or in f*cking circles, least of all stockbrokers. It's all a Fugazzi.” What's Ripe Monday.com (MNDY) ↑ 10.50% ↑ - I wonder if this company reported earnings on Monday because of its name, but we certainly don’t have to wonder any longer how the firm performed last quarter. They killed it. - Project management firm Monday.com reported stellar numbers in its latest quarterly filing, delivering a massive $0.64/sh EPS on $189mn in sales vs expectations for a measly $0.21/sh on $182mn. - In addition to slamming the over-on expectations, Monday also posted a massive profit compared to last year’s loss of $0.51/sh in the same quarter. YTD sales compared to 2022 at this point have also surged almost 43%, while expense growth has been kept well under that level, leading to solid numbers. - I guess there is a Monday that some people like, after all. Tesla (TSLA) ↑ 4.22% ↑ - You’ve been hearing about this thing for years. This Tesla product has made international headlines multiple times over already without a single sale actually occurring so far. It’s time for the Cybertruck to shine. - Tesla’s Cybertruck is, in short, a monstrosity. If you already hate those unnecessarily large trucks taking up three parking spaces in your building’s garage just so the owner can compensate their Napoleon’s complex, you’re really gonna hate these. - But, it’s also one of the coolest and most innovative new cars the U.S. economy has seen since Henry Ford and his Model T. Tesla came out with some new rules for early buyers of the Cybertruck, including disallowing them from selling the car within a year of purchase so the truck can’t be flipped for a higher price. - And it’s Tesla, so there’s always a lot of news going on here. European gas station operators announced purchases of Superchargers, India is cutting tariffs on Tesla products, and a whole lot of other developments this “analyst” running [WSO Alpha]() clearly missed when closing out our Tesla position last month. What's Rotten Beyond Meat (BYND) ↓ 7.53% ↓ - Who knew that selling rancid, vegetable-tasting loaves of matter wouldn’t replace the love of meat dominating backyard and barbecue culture in the U.S.? Can’t imagine… - Beyond Meat can imagine this, however, as it seems to be what they’re currently working through. Maybe they can turn things around in the long term, but the selloff from last week’s earnings is only getting deeper. - On Wednesday of last week, Beyond Meat delivered a loss of $70.5mn, an improvement from last year’s $102mn loss in the same quarter and narrower than expected. But, the 8.7% decline in overall sales and 34% plunge in retail sales since the same period last year clearly took far too much of a toll for investors to care about anything else. Tyson Foods (TSN) ↓ 2.81% ↓ - Turns out it’s not just fake meat that was having a tough time last quarter. Tyson, the largest producer of chicken in the U.S., is losing sales. - The chicken daddy of the U.S. economy reported EPS of $0.37/sh, beating out the $0.33/sh expected, but revenue fell short of estimates at $13.3bn vs $13.7bn expected. - And it wasn’t just the fact that the firm was chickening out. Beef and pork sales fell, too, bringing the sales decline to 2.8% in total. The company did shut down a few factories throughout the year to cut costs, but demand weakness for their meat products has been a problem for a while. - Still, Tyson execs see a rebound in demand on the horizon. I’m not sure what exactly is driving that view, but it’s not like they’d get paid to hype up the firm even for no reason or anything… right? Thought Banana Marveling at Marvel In most Marvel movies, the main goal of the movie is—in some roundabout way—to save humanity. Now, fans can only quote the guy who filmed the Hindenburg disaster when watching these movies and say, “Oh, the humanity!” Technically founded in 1939, Marvel began as “Timely Comics” before becoming “Atlas Comics” in 1951 and transitioning to proper Marvel in 1961. Over time, this brand led to the culmination of the Marvel Cinematic Universe, something I’m sure most of you are all too familiar with now, releasing their first movie on May 2nd, 2008, titled “Iron Man.” The Marvel Cinematic Universe refers to the movie production studio of the Marvel brand and has cemented itself as far and away the most popular movie franchise and one of the most popular media franchises of all time. Since “Iron Man,” the MCU has gone on to create 32 more movies and grossed well over $25bn in box office revenue from these—handily beating 2nd, 3rd, and 4th place in Star Wars, Harry Potter, and James Bond. This averages out to ~$757mn in box office revenue per film, but lately, the franchise can only dream of numbers like that. "The film brought in a measly $47mn in its opening weekend, the single worst-performing debut ..." The MCU’s latest movie, The Marvels, is a sequel to the 2019 hit Captain Marvel, and seriously, this thing stank up movie theaters from sea to shining sea at the box office. The film brought in a measly $47mn in its opening weekend, the single worst-performing debut of any MCU film ever. What is going on? Nothing good, that’s clear, and CEO Bob Iger is fed up with it. On the firm’s latest earnings call last week, he identified the four building blocks of The Walt Disney Company, including: - Streaming - Parks & cruises - Studios - ESPN Since the launch of Disney+ in 2019, the company has seen nothing but challenges as it struggles to live up to expectations. For such an iconic media company that has directed a large part of American culture for the last century, this is unusual. "... it’s the firm’s best attempt to make their (largely former) fans hate them less in the future." But, as Iger put it during the firm’s conference call, Disney wants to “move beyond this period of fixing and begin building our businesses again.” He even promised to personally be involved in the reinvention of Disney’s studios business, with the MCU as the crowned jewel. The main focus will be a shift from the quantity of movies to actual quality. While making actual good, entertaining movies as opposed to sh*tting out some nonsense and slapping the Disney logo on it seems like a bold, innovative idea, it’s the firm’s best attempt to make their (largely former) fans hate them less in the future. Idk if Bobby I and the firm are looking for ideas or anything, but if they are, maybe throw the Incredible Hulk into Cinderella or some sh*t and see what happens. It can’t be worse than The Marvels, right? The big question: Is Disney losing its crown as the king of American cinematic culture? If so, who would/could replace them? Will Iger and the team be able to turn things around? Banana Brain Teaser Yesterday — A racing driver drove around a 6-mile track at 140 miles per hour for 3 miles, 168 miles per hour for 1.5 miles, and 210 miles per hour for 1.5 miles. What was his average speed for the entire 6 miles? Answer 160mph Today — There are two dogs, a black one and a white one. One of them is male. What is the probability they are both male? Shoot us your guesses at vyomesh@wallstreetoasis.com. Wise Investor Says “If you're not confused, you're not paying attention”—Tom Peters How would you rate today’s Peel? [All the bananas]( [Decent]( [Rotten AF](=) Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? [Be smart like your friend](. 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