🍋 Bonus Szn That Keeps Giving

Author

Short Squeez
January 22, 2022

Together With

"EL SALVADOR DGAF"— Nayib Bukele (President of El Salvador upon finding out that Moody's downgraded El Salvador debt due to Bitcoin trades)

Good morning! Hope the hangovers are not as bad as the stock market in 2022. US stocks had another day to forget yesterday and Nasdaq had its worst week since 2020. Even House Speaker Nancy Pelosi is feeling the effects. In a change of stance, she's now open to banning stock trades by members of Congress. Nancy Pelosi is just like all of us after losing a s*** ton of money on any trade that was made since November. A private equity partner's viral LinkedIn picture has sparked a major debate. Instead of having to cover her tattoos, Jessica Leonard's Managing Partner gave her the OK to display her sleeve tattoos 'loud and proud.' M&Ms is also going woke and its characters are set for an 'inclusive' makeover.

1. Story of the Day: Bonus Szn That Keeps Giving

Bonus szn is not over at Goldman Sachs just yet. If you are an analyst, don’t get too excited, it is over for you. But not for the 1% or about 30 of the most senior leaders at Goldman Sachs.

New equity awards will be given to Goldman’s management committee, which is the top decision-making body. The packages are meant to keep the execs around for longer since the awards vest over time. The awards are on top of generous bonuses that were announced earlier this week. Pay for most top execs is expected to cross $30 million this year. (It ain’t much but it’s honest work)

Goldman and other banks are coming off a record year. Goldman’s revenue surged by a third and its net income was greater than the previous two years combined.  

Still, Goldman is being extra generous this year compared to its competitors. Why? CEO David Solomon (who also serves as a part-time DJ in the tri-state area) is sick of losing talent to other firms that have historically paid more than Goldman. Head of IB, Greg Lemkau, left for Michael Dell’s MSD Partners, Head of Asset Management, Eric Lane, left for Tiger Global and CFO, Stephen Sherr, left at the end of 2021, after nearly 3 decades at the firm.

Short Squeez Takeaway: Goldman stock was down 7% after the company missed earnings, largely due to the comp increase of 33%. On Q4 earnings call this week, Solomon said the comp increases were needed to maintain a winning team. The key question is if Goldman will be able to sustain the bonuses in the coming years? But for now, it doesn’t matter. Especially if you are a Goldman executive.

Source: Bloomberg

2. Markets Rundown

Tech stocks had another rough day. Nasdaq is down 11% in 2022, on track for its worst start to a year since 2008 when it tumbled 13.6% in the first 14 trading days.

Movers & Shakers

  • (+) Peloton ($PTON) +12% bouncing back after a major sell-off through the week.

  • (–) Intuitive Surgical ($ISRG) -8% after management said procedures using its DaVinci surgical system will be down significantly in the current quarter due to Covid surges.

  • (–) Netflix ($NFLX) -22% after admitting streaming competition was eating into its growth.

3. Top Reads

  • Jamie Dimon gets a $3 million raise (CNN)

  • US existing-home sales reached a 15-year high of 6.1 million last year (WSJ)

  • Netflix plunges most since 2014 in flurry of analyst downgrades (BB)

  • Real estate expert warns of commercial 'bloodbath' (Fox)

  • US soy meal exports soar as biofuel frenzy boosts bean crush (BB)

  • The huge tax bills that came out of nowhere at Vanguard (WSJ)

  • French power supplier bulb ceases trading on surging prices (BB)

  • Amazon is on pace for its worst week in six months (CNBC)

  • As Peloton sinks, Planet Fitness to borrow for big expansion (BB)

  • Taxes on stock trades may surprise new investors (CNBC)

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4. Book of the Day: Elastic: Unlocking Your Brain's Ability to Embrace Change

In this startling and provocative look at how the human mind deals with change, Leonard Mlodinow shows us to unleash the natural abilities we all possess so we can thrive in dynamic and troubled times. Truly original minds capitalize when everyone else struggles. And most of us assume that these abilities are innate, reserved for a select few. But Mlodinow reveals that we all possess them, that we all have encoded in our brains a skill he terms elastic thinking—and he guides us in how to harness it. 

Drawing on groundbreaking research, Mlodinow outlines how we can learn to let go of comfortable ideas and become accustomed to ambiguity and contradiction; how we can rise above conventional mindsets and reframe the questions we ask; and how we can improve our ability to solve problems and generate new ideas—critical skills for achieving professional and personal success in our quickly morphing world.

“I cannot say whether things will get better if we change; what I can say is they must change if they are to get better.”

5. Short Squeez Picks

6. Daily Visual: Influencer Marketing on the Rise

% of total marketers

Source: eMarketer

7. Daily Acumen: Tomorrow May Not Be Like Yesterday

A recent memo from Howard Marks in 2021 titled The Winds of Change contained this note on the current investment environment and changing nature of business –

“Today, unlike in the 1950s and ’60s, everything seems to change every day. It’s particularly hard to think of a company or industry that won’t either be a disrupter or be disrupted (or both) in the years ahead. Anyone who believes all the firms on today’s list of leading growth companies will still be there in five or ten years has a good chance of being proved wrong.

For investors, this means there’s a new world order. Words like “stable,” “defensive” and “moat” will be less relevant in the future. Much of investing will require more technological expertise than it did in the past. And investments made on the assumptions that tomorrow will look like yesterday must be subject to vastly increased scrutiny.”

8. Crypto Corner

9. Memes of the Day

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