🍋 Citadel's Secret Weapon

Citadel's staggering $16 billion revenue last year may seem like a feat in itself, but it turns out the hedge fund had a secret weapon. The hedge fund's success is at least partially because of an unlikely group of experts - a team of 20 meteorologists.

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“Nature is great at hedging investments. Nature doesn’t hedge by betting for and against the same things. Nature hedges by cultivating resilience.” — Hendrith Smith

Good Morning! Despite a push for bankers to return to the office, a recent Bloomberg study found that two-thirds of banks are offering some form of hybrid or flexible work arrangements. Hiring on Wall Street has slowed, but experts expect a boost in filling electronic trading roles.

A new study found that, compared to decades past, American customers are more likely to seek ‘revenge’ by either complaining to customer service or leaving scathing reviews than simply moving on. Elon Musk had an eventful day on Twitter yesterday and apologized after mocking disabled ex-Twitter employee.

Today's sponsor, InvestorPlace is giving out their much anticipated report: The Best 11 Stocks for 2023. Click here to claim your free copy.

1. Story of the Day: Citadel’s Secret Weapon

Citadel's staggering $16 billion revenue last year may seem like a feat in itself, but it turns out the hedge fund had a secret weapon. The hedge fund's success is at least partially because of an unlikely group of experts - a team of 20 meteorologists.

Citadel has invested heavily in natural gas and power for the past decade. Like most other hedge funds, Citadel forecasts supply and demand, taking calculated risks and holding onto big bets for months. But Citadel found that while they could forecast supply with ease, predicting demand was a whole new animal and heavily reliant on weather patterns.

Citadel hired a team of scientists and academics in 2018, and the fund used its weather team to study everything from thunderstorms and tropical cyclones to accurately forecast demand.

Last year, the fund’s strategic investment in weather paid off big time. With the lifting of Covid lockdowns and Russia's invasion of Ukraine, the gas market saw a massive surge in activity. Citadel was quick to seize this opportunity and capitalized on it like a pro. With the help of accurate weather forecasts, Citadel accurately predicted the exact amount of natural gas that Europeans would consume during colder months.

Takeaway: Whether it's analyzing meteorological data to predict commodity prices or using satellite imagery to monitor crop yields, hedge funds are always looking for innovative ways to stay ahead of the game. And in an ultra-competitive investing landscape, it looks like Citadel’s bet on meteorologists is paying off.

2. Markets Rundown

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Stocks closed lower after Jerome Powell said more rate hikes may be needed to quell inflation.

Movers & Shakers

  • (+) United Airlines ($UAL) +3% because airline stocks got a boost after the Justice Department will block the JetBlue-Spirit merger.

  • (–) Wells Fargo ($WFC) -5% after bank stocks fell over rate hike concerns.

  • (–) Rivian ($RIVN) -14% after the EV maker will sell $1.3 billion in bonds.

Private Dealmaking

  • Vistra will buy Energy Harvor, a nuclear power firm, for $3.43 billion

  • Character.ai, an alternative to ChatGPT, raised $200 million

  • BlocPower, a building decarbonization startup, raised $150 million

  • Palmetto, a solar energy company, raised $150 million

  • SOCI, a brand marketing platform, raised $120 million

  • Industrial Sun, a renewable energy developer, raised $90 million

A Message from InvestorPlace: Top 11 Stocks for 2023

Investing legend Louis Navellier is one of America's top Money Managers, with over $1 billion under management.

He found Apple at $1.49… Oracle at $0.51… Amazon at $46.

CNBC has called him the "earnings whisperer" and MarketWatch: "The Advisor Who Recommended Google Before Anyone Else."

Now, Mr. Navellier has just updated his most anticipated report of the year: The Best 11 Stocks for 2023.

In this report, he's naming his #1 stock pick for 2023, and also reveals his other top 10 picks.

3. Top Reads

  • Theories for why rate hikes pack less punch (Axios)

  • The two biggest things worrying JPMorgan Chase CEO Jamie Dimon (CNN)

  • SoFi says it lost $200 million on student loan freeze (BB)

  • Tech is allowing businesses to overcharge you in tips (NYT)

  • U.S. manufacturing growth outpaces the rest of the world (Axios)

  • How Google’s caution on AI gave Microsoft an opening (WSJ)

  • Used vehicle prices are rising at an unseasonably strong rate (CNBC)

  • Governments should compete for residents, not businesses (WP)

  • Forecasters expect meaningful slowdown in job market (Axios)

  • Rivian stock tanks as it announces $1.3 billion green bond offering (YF)

4. Book of the Day: Late Bloomers

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We live in a society where kids and parents are obsessed with early achievement, from getting perfect scores on SATs to getting into Ivy League colleges to landing an amazing job at Google or Facebook—or even better, creating a start-up with the potential to be the next Google, Facebook or Uber.

We see coders and entrepreneurs become millionaires or billionaires before age thirty, and feel we are failing if we are not one of them.

Late bloomers, on the other hand, are under-valued—in popular culture, by educators and employers, and even unwittingly by parents. Yet the fact is, a lot of us—most of us—do not explode out of the gates in life. We have to discover our passions and talents and gifts.

There is a scientific explanation for why so many of us bloom later in life. The executive function of our brains doesn’t mature until age twenty-five, and later for some. In fact, our brain’s capabilities peak at different ages.

We actually experience multiple periods of blooming in our lives. Moreover, late bloomers enjoy hidden strengths because they take their time to discover their way in life—strengths coveted by many employers and partners—including curiosity, insight, compassion, resilience, and wisdom.

Based on years of research, personal experience, interviews with neuroscientists, psychologists, and countless people at different stages of their careers, Late Bloomers reveals how and when we achieve our full potential.

“When we force ourselves to do things we’re not naturally inclined to do, or that don’t fit our passion or purpose in life, we pay for it with reduced motivation and drive.”

5. Short Squeez Picks

6. Daily Visual: What We Craved During the Pandemic

Most ordered items on Uber Eats

Source: Axios

7. Daily Acumen

"Many organizations are obsessed with efficiency.

They want to be sure every resource is utilized to its fullest capacity and everyone is sprinting around every minute of the day doing something.

They hire expert consultants to sniff out the faintest whiff of waste.

As individuals, many of us are also obsessed with the mirage of total efficiency.

We schedule every minute of our day, pride ourselves on forgoing breaks, and berate ourselves for the slightest moment of distraction.

We view sleep, sickness, and burnout as unwelcome weaknesses and idolize those who never seem to succumb to them.

This view, however, fails to recognize that efficiency and effectiveness are not the same things."

Source: Farnam Street

8. Memes of the Day

 

 

 

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