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You Only Die Once As TINA Quietly Leaves The Building

You Only Die Once As TINA Quietly Leaves The Building

It was about a year ago when we first pointed out a remarkable divergence in this broken market: retail investors (as proxied by the 50 most popular retail-held stocks) were outperforming.

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2 years ago

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You Only Die Once As TINA Quietly Leaves The Building

It was about a year ago when we first pointed out a remarkable divergence in this broken market: retail investors (as proxied by the 50 most popular retail-held stocks) were outperforming the smart money by a factor of 10 to 1 (and blowing out the S&P500 in the process).

And while retail investors continued to dramatically outperform both the entire hedge fund universe (and to a lesser extent the broader market) for much of the following year, this unprecedented outperformance by stimmy-fueled apes almost came to a screeching halt last week when, as we noted, the universe of retail favorite stocks - mostly low liquidity, low float, high momentum small and mid-cap names as well as a couple of giga-caps such as Apple and Tesla - was on the verge of ending its remarkable streak of steamrolling the rest of the market:

A few days later, it got even uglier, as the "retail basket" of non-profitable, mostly tech, high momentum names continued to slide following Friday's rout, sending it to the lowest level since May, and back to levels first seen in Jan 2021. And while retail continue to outperform (modestly) the HFRX hedge fund universe, the 50 favorite retail stocks are now trailing the S&P500 by about 50% on a YTD basis.

Picking up on the recent stretch of miserable retail performance, Bloomberg this morning writes that individual investors "are facing a moment of reckoning" adding that "the obsession with risk-on assets - short-handed by the term YOLO for you only live once - was a blessing for amateur traders during the meme-stock craze." However, as we first showed last week, it has since turned "into a curse as the going got rough in every nook of the stock market last week." And when looking at our chart of (last) week, today Bloomberg points out that Goldman's basket of the 50 most-popular stocks among individual investors plunged 7.8% last week, trailing companies most-favored by mutual funds by 5.8 percentage points, the most ever.

Virtually no momentum name was spared: retail investors incurred several big losses last week, from Plug Power Inc., which plunged 17%, Beyond Meat, which lost 16%, and Tesla which shed 6.2%.

This is a problem because the retail crowd, which was among the first to scoop up shares during the 2020 pandemic rout, now appear to be leaving the YOLO mentality behind because, well, YODO.

As confirmation, Bloomberg notes that last week, the daily average premium that small-lot traders - those buying or selling 10 options contracts or less - shelled out for protection jumped to about $786 million, surpassing a January peak for the highest level in recent history, according to a Susquehanna analysis of the latest Options Clearing Corp data.

That premium spent on small-lot put buys is about twice as high as where it was two months ago.

“While the small-lot call premiums continue to outpace those put premiums in absolute terms, we can see that they are trending in different directions,” said Chris Jacobson, a strategist at Susquehanna. That’s “suggesting that retail activity on the put side is in fact ramping up alongside the market weakness.”

Of course, a different - and perhaps more correct - way of analyzing the data is that even retail investors are smart enough to hedge their positions during times of surging market vol... like right now. And if stocks tumble, retail investors will have puts to fall back on. As in, you know, hedging - something that hedge funds used to do once but then completely forgot how to do in centrally-planned markets.

Still, with stocks remaining in deep negative gamma territory and market pain showing no end to its weakness, retail traders whose willingness to stand firm amid prior turmoils, are showing little appetite for risk. Evidence is piling up quickly: SPACs are taking a drubbing. Until today, bitcoin was hovering steps away from a 30% correction from its peak. Off-exchange volume has dropped to near the lowest level since last year’s rout. A gauge of newly minted initial public offerings, measured by the Renaissance IPO exchange-traded fund, lost 11% last week.

A separate analysis from Goldman Sachs showed that last Wednesday some $2.2tn in option were traded in the US, with puts dominating amid a frenzy to hedge downside.

“There must be an issue with either 1) meme stocks losing interest, 2) general profit taking into year end,” said Ben Emons, global macro strategist with Medley Global Advisors LLC.”

To this all we can add say is that i) the data, when massaged enough, can show whatever one wants it to - after all, just last week we also showed that contrary to Bloomberg's, and Susquehana's analysis, retail investors were in fact buying the dip furiously and waving in everything that hedge funds had to sell. After all, according to Vanda Research, retail stock purchases rose to a new record on Tuesday of $2.2 billion, after reaching $2.1 billion during Friday’s rout.

That said, until we get evidence to the contrary, it's probably safe to say - as Bloomberg's Cormac Mullen did - that for U.S. stock investors TINA has left the building. His thoughts below:

It’s time to look for alternatives to America’s outperforming stock market, especially for global investors with a longer-term horizon.

As any good Irishman will tell you when you ask for directions, you shouldn’t really be starting from here. Anyone seeking to put fresh money into U.S. stocks right now will see them already at a record relative to the rest of the world, with margins at an all-time high, trading at their most expensive since the dotcom bubble.

But history shows the best returns for U.S. stock investors come when they buy at more sensible valuations and that they leave themselves open to losses when they pay up. Here’s a look at 10-year rolling returns for the S&P 500 superimposed with the starting P/E at the beginning of the investment period, which shows a strong inverse relationship since the 1960s.

The relative valuation gap between American shares and global peers is also at a record, with the MSCI AC World ex-U.S. Index on less than 14 times forward earnings compared to the MSCI USA Index on 21 times.

Forget TINA, that suggests there are plenty of opportunities in other markets for investors willing to take a chance: from bets on a rebound in China’s beleaguered shares (12 times earnings), to Japan’s economic reopening (14 times) to a contrarian wager on the U.K. (11 times). The French, Dutch, Austrian, Czech and Vietnamese benchmarks are already set to beat the S&P 500 this year -- at least in data through Friday -- along with over 20 others.

None are without risk, but U.S. stocks face their own country-specific headwinds from the withdrawal of stimulus to the potential for a policy error to the threat of increased regulation of tech firms to mean-reverting margins. All without a decent valuation buffer.

U.S. shares have been a fantastic investment, with a total return of almost 350% over the last decade compared with 100% for their international peers. But the risk/reward looks less favorable for the next 10 years, suggesting it’s time investors take a more serious look at alternatives.

In conclusion, it is safe to say that all bets are off: after all, this morning Gartman called for a bear market sparking a furious market rebound and short squeeze (just as Goldman predicted would happen as the lows for the year are now in)... 

... and should the extremely oversold rally continue tomorrow, wiping out the sour taste of the post Thanksgiving rout, then retail investors may be one surge higher away from taking the S&P to new all time highs.

Tyler Durden Mon, 12/06/2021 - 22:20

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Shipping company files surprise Chapter 7 bankruptcy, liquidation

While demand for trucking has increased, so have costs and competition, which have forced a number of players to close.

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March 8, 2024

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The U.S. economy is built on trucks.

As a nation we have relatively limited train assets, and while in recent years planes have played an expanded role in moving goods, trucks still represent the backbone of how everything — food, gasoline, commodities, and pretty much anything else — moves around the country.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

"Trucks moved 61.1% of the tonnage and 64.9% of the value of these shipments. The average shipment by truck was 63 miles compared to an average of 640 miles by rail," according to the U.S. Bureau of Transportation Statistics 2023 numbers.

But running a trucking company has been tricky because the largest players have economies of scale that smaller operators don't. That puts any trucking company that's not a massive player very sensitive to increases in gas prices or drops in freight rates.

And that in turn has led a number of trucking companies, including Yellow Freight, the third-largest less-than-truckload operator; J.J. & Sons Logistics, Meadow Lark, and Boateng Logistics, to close while freight brokerage Convoy shut down in October.

Aside from Convoy, none of these brands are household names. but with the demand for trucking increasing, every company that goes out of business puts more pressure on those that remain, which contributes to increased prices.

Demand for trucking has continued to increase.

Image source: Shutterstock

Another freight company closes and plans to liquidate

Not every bankruptcy filing explains why a company has gone out of business. In the trucking industry, multiple recent Chapter 7 bankruptcies have been tied to lawsuits that pushed otherwise successful companies into insolvency.

In the case of TBL Logistics, a Virginia-based national freight company, its Feb. 29 bankruptcy filing in U.S. Bankruptcy Court for the Western District of Virginia appears to be death by too much debt.

"In its filing, TBL Logistics listed its assets and liabilities as between $1 million and $10 million. The company stated that it has up to 49 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees," Freightwaves reported.

The company's owners, Christopher and Melinda Bradner, did not respond to the website's request for comment.

Before it closed, TBL Logistics specialized in refrigerated and oversized loads. The company described its business on its website.

"TBL Logistics is a non-asset-based third-party logistics freight broker company providing reliable and efficient transportation solutions, management, and storage for businesses of all sizes. With our extensive network of carriers and industry expertise, we streamline the shipping process, ensuring your goods reach their destination safely and on time."

The world has a truck-driver shortage

The covid pandemic forced companies to consider their supply chain in ways they never had to before. Increased demand showed the weakness in the trucking industry and drew attention to how difficult life for truck drivers can be.

That was an issue HBO's John Oliver highlighted on his "Last Week Tonight" show in October 2022. In the episode, the host suggested that the U.S. would basically start to starve if the trucking industry shut down for three days.

"Sorry, three days, every produce department in America would go from a fully stocked market to an all-you-can-eat raccoon buffet," he said. "So it’s no wonder trucking’s a huge industry, with more than 3.5 million people in America working as drivers, from port truckers who bring goods off ships to railyards and warehouses, to long-haul truckers who move them across the country, to 'last-mile' drivers, who take care of local delivery." 

The show highlighted how many truck drivers face low pay, difficult working conditions and, in many cases, crushing debt.

"Hundreds of thousands of people become truck drivers every year. But hundreds of thousands also quit. Job turnover for truckers averages over 100%, and at some companies it’s as high as 300%, meaning they’re hiring three people for a single job over the course of a year. And when a field this important has a level of job satisfaction that low, it sure seems like there’s a huge problem," Oliver shared.

The truck-driver shortage is not just a U.S. problem; it's a global issue, according to IRU.org.

"IRU’s 2023 driver shortage report has found that over three million truck driver jobs are unfilled, or 7% of total positions, in 36 countries studied," the global transportation trade association reported. 

"With the huge gap between young and old drivers growing, it will get much worse over the next five years without significant action."

Related: Veteran fund manager picks favorite stocks for 2024

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Wendy’s has a new deal for daylight savings time haters

The Daylight Savings Time promotion slashes prices on breakfast.

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March 8, 2024

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Daylight Savings Time, or the practice of advancing clocks an hour in the spring to maximize natural daylight, is a controversial practice because of the way it leaves many feeling off-sync and tired on the second Sunday in March when the change is made and one has one less hour to sleep in.

Despite annual "Abolish Daylight Savings Time" think pieces and online arguments that crop up with unwavering regularity, Daylight Savings in North America begins on March 10 this year.

Related: Coca-Cola has a new soda for Diet Coke fans

Tapping into some people's very vocal dislike of Daylight Savings Time, fast-food chain Wendy's  (WEN)  is launching a daylight savings promotion that is jokingly designed to make losing an hour of sleep less painful and encourage fans to order breakfast anyway.

Wendy's has recently made a big push to expand its breakfast menu.

Image source: Wendy's.

Promotion wants you to compensate for lost sleep with cheaper breakfast

As it is also meant to drive traffic to the Wendy's app, the promotion allows anyone who makes a purchase of $3 or more through the platform to get a free hot coffee, cold coffee or Frosty Cream Cold Brew.

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Available during the Wendy's breakfast hours of 6 a.m. and 10:30 a.m. (which, naturally, will feel even earlier due to Daylight Savings), the deal also allows customers to buy any of its breakfast sandwiches for $3. Items like the Sausage, Egg and Cheese Biscuit, Breakfast Baconator and Maple Bacon Chicken Croissant normally range in price between $4.50 and $7.

The choice of the latter is quite wide since, in the years following the pandemic, Wendy's has made a concerted effort to expand its breakfast menu with a range of new sandwiches with egg in them and sweet items such as the French Toast Sticks. The goal was both to stand out from competitors with a wider breakfast menu and increase traffic to its stores during early-morning hours.

Wendy's deal comes after controversy over 'dynamic pricing'

But last month, the chain known for the square shape of its burger patties ignited controversy after saying that it wanted to introduce "dynamic pricing" in which the cost of many of the items on its menu will vary depending on the time of day. In an earnings call, chief executive Kirk Tanner said that electronic billboards would allow restaurants to display various deals and promotions during slower times in the early morning and late at night.

Outcry was swift and Wendy's ended up walking back its plans with words that they were "misconstrued" as an intent to surge prices during its most popular periods.

While the company issued a statement saying that any changes were meant as "discounts and value offers" during quiet periods rather than raised prices during busy ones, the reputational damage was already done since many saw the clarification as another way to obfuscate its pricing model.

"We said these menuboards would give us more flexibility to change the display of featured items," Wendy's said in its statement. "This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants."

The Daylight Savings Time promotion, in turn, is also a way to demonstrate the kinds of deals Wendy's wants to promote in its stores without putting up full-sized advertising or posters for what is only relevant for a few days.

Related: Veteran fund manager picks favorite stocks for 2024

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International

United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

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2 hours ago

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March 8, 2024

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

Shutterstock

United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

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"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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