🍋 Running Low on Liquor

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Short Squeez
January 31, 2022

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"Wealth is not about having a lot of money; it’s about having a lot of options.” — Chris Rock

Good morning! Hope y'all had a wonderful weekend. Rent prices keep going up. The national median price of a 1-bedroom apartment in January was up 12% year-over-year, to $1,374 — an all-time high. In NYC, median price for a 1-bedroom was $3,260. (Miami was $2,340 in case anyone is looking to move down there). Retail investors are dumping meme stocks and going back to old (2020) habits: broad market funds and blue chip stocks. Rafael Nadal won a record breaking 21st Grand Slam after defeating Medvedev in one of the greatest tennis matches of all time (Djokovic posted a heartfelt congratulatory message, we all know how he really feels tho lmao) and Joe Burrow KO'd Mahomes to reach his first Superbowl.

If you are looking to put some money to work, check out today's sponsor, NowRx that is revolutionizing the $480B retail pharmacy industry. Here's your chance to invest in it.

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1. Story of the Day: Running Low on Liquor

Diageo, the world’s largest spirit maker is running low on booze. The reason? Everyone is drinking a lot more. "The constraint is simply on being able to meet very high demand," said CFO Lavanya Chandrashekar.

The depleting brands include Crown Royal whisky, Lagavulin Scotch, and Don Julio tequila, which can take months or years to age before they can be sold.

Barrel aging is a process used to mature spirits like whiskey and some types of tequila. It makes it hard to deal with sudden demand spikes like liquor makers have faced in the pandemic. Don Julio is aged for a minimum of 2.5 years and the Anejo line is aged for 18 months.

Consumer preferences also shifted during the pandemic. Home drinking increased and people headed to grocery and liquor stores, which were considered to be an essential service. Many drinkers also started consuming more expensive liquor since they couldn’t splurge on things such as travel or live sports.  Tequila has been a big winner with Americans getting creative with it; on the rocks, with soda, and in cocktails other than margaritas.

To deal with the problem, Diageo is raising prices in some markets and boosting ad spend for lines with no shortage like Johnnie Walker. Diageo is also increasing inventory of maturing alcohol to meet forecasts for future demand.

Short Squeez Takeaway: It’s not a bad time to be a liquor company and high demand is a great problem to have. Diageo is swimming in cash and announced a buyback program of around $6 billion of shares. Upcoming brands are crushing it as well. The Rock started his Teremana tequila brand in March 2020, sold 300k bottles in its first year and 600,000+ bottles in 2021. For reference, George Clooney sold his Casamigos tequila brand to Diageo for $1 billion with only 170,000 cases in sales.

Source: WSJ

2. Markets Rundown

  • Stocks swung from losses to gains on Friday, closing out a volatile trading week after another hot inflation reading didn’t dissuade investors from buying shares.

Movers & Shakers

  • (+) Visa ($V) +11% after beating earnings estimates.

  • (+) Apple ($AAPL) +7% after a strong quarterly report that showed its largest single quarter in terms of revenue ever.

  • (–) Western Digital ($WD) -7% after issuing a weaker-than-expected outlook. 

3. Top Reads

  • KKR buying cycling company for $1.8 billion (FOS)

  • States with the highest quit rates (RH)

  • Why Spotify can’t afford to lose Joe Rogan (Verge)

  • Why Agatha Christie could afford a maid and a nanny but not a car (FSE)

  • Men are getting left behind in the jobs boom (BB)

  • Athletic Greens is unicorn now (CB)

  • Physicists report first creation of self-heating plasma for nuclear fusion (Axios)

  • Where are banks finding borrowers? On the car lot (WSJ)

  • Is red wine really healthier than white? (WSJ)

  • Ford shuts off orders for new $20,000 maverick pickup (WSJ)

  • Maker’s Mark becomes largest distillery to gain B Corp certification (TDB)

A Message From NowRx: The Future of Pharmacy

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In 2021, the company achieved $26M in annualized revenue and this year they’ve already announced 3 new expansion locations in Denver, Las Vegas, and Seattle!

And it doesn’t stop there. Their newest telehealth product has grown its revenue 1200% since its launch in January ‘21. 

All this to say: NowRx’s potential for growth is massive. 

Join the 4,200+ investors who have already invested $13.5M+ and invest in NowRx today.

4. Book of the Day: The Lords of Easy Money: How the Federal Reserve Broke the American Economy

If you asked most people what forces led to today’s unprecedented income inequality and financial crashes, no one would say the Federal Reserve. For most of its history, the Fed has enjoyed the fawning adoration of the press. When the economy grew, it was credited to the Fed. When the economy imploded in 2008, the Fed got credit for rescuing us.

But the Fed also has a unique power to reshape the American economy for the worse, which it did, fatefully, on November 4, 2010 through a radical intervention called quantitative easing. In just a few short years, the Fed more than quadrupled the money supply with one goal: to encourage banks and other investors to extend more risky debt. Leaders at the Fed knew that they were undertaking a bold experiment that would produce few real jobs, with long-term risks that were hard to measure.

But the Fed proceeded anyway...and then found itself trapped. Once it printed all that money, there was no way to withdraw it from circulation. The Fed tried several times, only to see market start to crash, at which point the Fed turned the money spigot back on. That’s what it did when COVID hit, printing 300 years’ worth of money in two short months.

Which brings us to now: Ten years on, the gap between the rich and poor has grown dramatically, stock prices are trading far above what’s justified by actual corporate profits, corporate debt in America is at an all-time high, and this debt is being traded by big banks on Wall Street, leaving them vulnerable—just as they were during the mortgage boom. Middle-class wages have barely budged in a decade, and consumers are buried under credit card debt, car loan debt, and student debt.

The Lords of Easy Money tells the shocking, riveting tale of how quantitative easing is imperiling the American economy through the story of the one man who tried to warn us. This will be the first inside story of how we really got here—and why we face a frightening future.

"There is no entity in the world that controls our lives more than the Federal Reserve System.”

5. Short Squeez Picks

6. Daily Visual: Losses From Fraud Originating on Social Media

Source: Axios

7. Daily Acumen: 6 Rules

Know that your only competition is who you were yesterday.

Earn, save and invest before you spend. 

Avoid negative people, life is too short. 

If you don’t go after what you want, you will never get it. 

See failure as a beginning, not an end. 

Our habits decide our future.

8. Crypto Corner

9. Memes of the Day

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