#29 S2N: An Easter Surprise

micksonmatch
March 26, 2024

In today’s issue:

Cocoa an Easter Surprise
Trump now in world’s top 500 richest
Reddit jumps 38% on IPO
WeWork just doesn’t work.

Today’s Spotlight

The price movement in cocoa futures is certainly not normal, looking at nearly 50 years of data. I was surprised to see that open interest, which we learned about yesterday, has dropped from its all-time highs. If you look at the futures table below, you will see that cocoa is up 50% for the month and 130% year to date.

Let me introduce you to the futures curve and a fancy term called backwardation. The term means that prices in the future will be lower than they are currently. This means that either the supply of future cocoa will be abundant or the demand will be very low compared to today. In the case of cocoa, I believe the expectation is that supply will be abundant.

If ever there was a sell signal, then this is it. Looks like an easy treasure hunt.

S2N Insights

Donald Welcome to the Club

For those of you who missed it Trump joined the world’s 500 richest people for the first time this week. It was easy to miss amidst all the noise of him looking for money to put up a bond for his civil case appeal. For the Donald, the news got even better today as the judge halved the bond he has to put up.

Reddit IPO

Reddit made its IPO debut last week on Thursday, with a 38% jump from its listing price. The 19-year old company is now valued at over $9 billion. In case you were wondering, it has never made a full-year profit.

WeWork actually doesn’t work

While mentioning hopeful valuations. We have WeWork back in the headlines today. I was never a fan of Adam Neumann, who managed to convince the establishment that this time was different. He sold people on a flawed dream with even more shaky financial engineering, but credit to him, he took WeWork to a $47 billion valuation before being ousted by the company. Then more drama followed the company when it filed for bankruptcy. Neumann is reportedly offering $500 million to buy the company. These guys with massive ego’s just can’t seem to let go.