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Matt Davis — Need2Know Chedditor

Table of Contents

• Fro-Yo Is So Not Over, After All, Man

• How To Get the Best Deal Now That Used Cars Are $$ …

• Amazon Spreads Drone Delivery to 500 Cities

• Walmart Flags as Americans Tighten Wallets

• Poll of the Day: It’s World-Famous-575™ Time

• Poll of the Day: Breaking Hedge Fund News!

What’s the Stock Market Up To, Eh?

$SPX ( ▼ 0.87% )  $DJI ( ▼ 1.32% )  $NDX ( ▲ 1.59% )  

Companies Mentioned in Today’s Newsletter

$NFLX ( ▼ 0.1% )  $WMT ( ▼ 9.15% )  $BABA ( ▲ 1.27% )  $HMC ( ▲ 2.16% )  $TM ( ▲ 1.83% )  $HYMTF ( ▼ 7.44% )  $AMZN ( ▼ 2.16% )  $WMT ( ▼ 9.15% )  $TGT ( ▼ 0.47% )  

Fro-Yo Is So Not Over, After All, Man

One of my favorite Seinfeld episodes, now available on $NFLX ( ▼ 0.1% ) for at least the next five years, and for at least half a billion dollars, apparently, is the “Non-Fat Yogurt” episode, from Series 5, Episode 7. The manufacturers boldly claim that it’s “fat-free,” prompting predictable rounds of Seinfeld-ian drama and the ultimate involvement of none other than the town’s then aspiring mayor, Rudy Giuliani, who at the time was considered everything the town needed. Time really flew by since the ‘90s, huh?

Still, thanks to Gen Z, fro-yo is back, and according to 16 Handles CEO Neil Hirschman, it's because youth culture is collectively swapping out the "thousand calorie cookies" they binged during COVID's sad heights for a slightly…lighter…existential balm. As Hirschman puts it, “It’s still dessert, it’s not a salad, but if you’re going to get dessert anyway, why not get frozen yogurt?”

At last: A pragmatic philosophy for our times.

But this isn't Jerry and Elaine’s fro-yo. It's an "experience," of course. Gen Z doesn't just want a treat; they want to document their hyper-customized, gravity-defying, 60-topping monstrosities on things called “Instagram” and “Tik-Tok.” Honestly, this news really delights me. I can’t wait to see some of these posts. (Would never be a good time for you?)

To feed this insatiable appetite for digital validation, 16 Handles is leaning heavily into aggressive innovation, rolling out oat milk vegan bases and the world's first Kefir Soft Serve. Hirschman credits his own youth: “I’m obviously a younger CEO... I keep a small core team so that we can be adaptable,” he told us. He’s also rejecting the "get out of here" model of modern fast-casual dining. While other shops shrink their footprints to save on rent, 16 Handles guarantees at least 25 seats per store to foster a community vibe. Hirschman also dismisses the idea that fro-yo's decline was a natural cycle. Instead, he blames the “failure of large brands that just didn’t innovate and didn’t take action.”

Whatever you think of Gen Z, and let’s face it, most people hate them, 16 Handles is laughing all the way to the bank, selling over a million ounces of fro-yo per store, annually. It turns out that selling a “pink or a blue cup of happiness” is highly lucrative, provided you let people with arrested development decorate it all with gummy worms and stick it on the socials, first.

Quote of the Day

How To Get the Best Deal Now That Used Cars Are $$$

According to a soul-crushing report from Edmunds, the average price of a 3-year-old used vehicle is now $32,461. As Ivan Drury, Edmunds' director of insights, told the Washington Post, “Nothing that you know from before has stayed the same.”

In 2019, a budget of $10,000 to $15,000 got you a respectable 4.7-year-old car with 58,000 miles; today, that exact same money buys an 8.7-year-old relic with 98,000 miles. If you drop down to the $5,000-to-$10,000 range, you're looking at a 10.7-year-old veteran pushing past 120,000 miles. At that point, Drury warns, “You go from having transportation that would require minimal to no repair to now something that, honestly, you’re going to be worried about.”

So, how do you survive this retail hellscape?

First, abandon brand loyalty. Forget Honda $HMC ( ▲ 2.16% ) and Toyota $TM ( ▲ 1.83% ) unless you want to pay a premium for their mythical resale values. “You have to become very open-minded,” Drury advises, suggesting buyers look at alternative brands, like certain Korean automakers who make a far better product today than their old reputations suggest. Yes. I think he’s telling you to buy a Hyundai $HYMTF ( ▼ 7.44% ) .

Second, do your homework, prearrange financing, and prepare to pounce. Budget cars are disappearing in an average of just 25 days. If you find something that actually has four working wheels, don't wait for a discount, because the days of leisurely haggling are ancient history. Do your prep work, but don't panic.

Happy hunting!

Amazon Spreads Drone Delivery to 500 Cities

Amazon $AMZN ( ▼ 2.16% ) has announced an expansion of its Prime Air operation, planning to bring drone delivery to suburban areas in nearly 500 U.S. cities by the end of the year. The promise is to deliver your lightweight parcels in as fast as 30 minutes.

But let’s pause and breathe in the impending noise pollution. While Amazon CEO Andy Jassy boasts that “Prime Air now has a design that’ll scale,” with plans to deliver half a billion packages by the end of the decade, the reality on the ground is a little more… complicated. Drones can only carry up to five pounds. Even worse, they face countless challenges from tree cover, landscaping, and inflatable pools that make finding a drop zone incredibly difficult. Not to mention all those suddenly unemployed delivery drivers with their air rifles.

Sucharita Kodali, a retail analyst with Forrester, poured some cold water on the hype, telling the Associated Press, “It’s still an experiment. It’s still in test and learn mode.” As for those "500 cities," Kodali dryly points out that the expansion “does seem aggressive but remember that lots of the 500 may be small towns located close to one another... Also ‘launching’ in a town doesn’t mean they are getting any meaningful sales.”

It reminds me of Elon Musk promising to take his SpaceX $SPCX ( ▼ 4.05% ) staff to the moon, in fact. Like, whatever, dude. Call me when your rockets stop blowing up.

Amazon may have announced this move as part of a high-stakes race against Walmart $WMT ( ▼ 9.15% ) to see who can annoy suburban neighborhoods the fastest. It remains unclear if this is cheaper than trucks, especially since you need teams of licensed drone pilots who might actually earn more than…truck drivers. All of this, just to deliver a single bottle of shampoo, huh? Welcome to the future. Mind your head.

Song of the Day: Denise Julia, ‘Speechless’

Here’s a smooth, Y2K-inspired R&B track that serves as a standout single on Denise Julia’s EP LOVE AGAIN (all caps, no less!). Dubbed by fans as the "Patron Saint of Situationships," Julia delivers an infectious anthem exploring the heavy, addictive pull of hidden romances and modern relationship complexities. So, it’s just like this newsletter.

Walmart Flags as Americans Tighten Wallets

If you want to see a room full of millionaires completely lose their minds, tell them Walmart’s $WMT ( ▼ 9.15% ) quarterly U.S. sales only grew by 2.6 percent.

Yes. The world’s largest retailer just reported its slowest U.S. growth in over six years, and Wall Street reacted with the measured grace of a Victorian maiden in need of a fainting couch. The firm’s stock plummeted more than 9 percent (see the red bit on the graph, above), erasing tens of billions in market value in its steepest daily decline since 2022. Why? Because Americans are finally doing the unthinkable and looking at price tags, apparently.

The trigger for this retail apocalypse was July, when the national average price of gasoline surpassed $4 per gallon. Walmart’s CFO, John David Rainey, noted, “Perhaps there’s a psychological impact to that... There are choices that consumers are making.” 

"Choices" like choosing between driving to work or buying eggs. Economists Samuel Tombs and Oliver Allen clarified the situation, telling The New York Times that while general balance sheets look healthy, “elevated loan delinquencies suggest that a significant minority are struggling to make ends meet.”

To survive this frugality epidemic, Walmart is temporarily slashing prices on 11,000 items. As Walmart CEO John Furner put it, “We’re investing heavily in price because customers need us to.” Although maybe you could have done it earlier, John?

Meanwhile, Target $TGT ( ▼ 0.47% ) is also cutting prices on 10,000 items. It's a race to the discount bottom. Over at Lowe’s $LOW ( ▼ 1.21% ) , CEO Marvin Ellison summed up the national mood, blaming “fuel prices, geopolitical events, and other uncertain things” for why middle-income homeowners are avoiding big-ticket discretionary items.

Yes, "other uncertain things.” That could be the title of my memoir, actually.

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Bond Interventions Fail To Soothe Investors

There’s nothing like throwing a cup of water on a house fire and expecting the homeowners to applaud, is there? Yet, that’s possibly what the Treasury may have achieved this week with its unscheduled bond market intervention, according to investors.

Announced mid-week, the plan was for the Treasury to double long-term government bond buybacks to "at least" $4 billion. The market's reaction? Not, it turns out, so great. Yields on 30-year Treasuries fell ever so slightly, ever so briefly, but have now risen back up to 5.24 percent, proving that investors are not going to be easily soothed as the national debt hits $40 trillion.

As Eoin Walsh of TwentyFour Asset Management told the Financial Times, “We don’t think this [intervention] can succeed, in isolation... Interventions such as this look like a sticking plaster.” Keith Patton of Columbia Threadneedle agreed, calling the plan “minuscule.”

But Treasury Secretary Scott Bessent, the ultimate optimist on CNBC, insisted the market had simply “gotten a little ahead of itself.” Yet, Wall Street remains thoroughly unamused. Analysts at MUFG told the FT yesterday that there is a distinct feeling that the Treasury is “lacking a strategic plan.” 

Bessent emphasized he could spend more than $4 billion to try to tame the challenges, saying the government has “a big toolkit” to bring down yields, which he said don’t currently reflect economic fundamentals.

Buybacks, it turns out, are only temporary. But equities also fell yesterday as concern spread further on weak earnings reports from Walmar $WMT ( ▼ 9.15% ) and Alibaba $BABA ( ▲ 1.27% ) .

Should You Check Your 401(k) Today?

👎️ 

Nope.

Poll of the Day: It’s World-Famous-575™ Time

Poll of the Day: Breaking Hedge Fund News!

We asked: You’re a hedge fund guy (or…LOL…a hedge fund gal). What is your immediate damage-control strategy after shorting the company that just doubled its value on a skin cancer vaccine?

You answered:

⬜️⬜️⬜️⬜️⬜️⬜️ The Sunscreen Pivot. Immediately try to short-sell the sunscreen market on Kalshi, because humanity will now collectively throw away its SPF 50 and sunbathe with reckless abandon. (16)
🟨⬜️⬜️⬜️⬜️⬜️ The "Zoom Out" Coping Mechanism. Quietly remind your clients that even though shares doubled today, Moderna is still trading at less than a third of its 2021 peak. So, your multi-year short is still "winning." (27)
⬜️⬜️⬜️⬜️⬜️⬜️ Hate-Reading. Spend your afternoon perusing CEO Stéphane Bancel's triumphant blog posts about a "landmark moment" in cancer care. He’s ruined your life. The cow. (8)
⬜️⬜️⬜️⬜️⬜️⬜️ The "Creative Hedge" Rebrand. Try to explain to your furious clients that this was all a highly sophisticated, "creative hedge" designed to make sure they never have to pay capital gains taxes again. (15)
🟨⬜️⬜️⬜️⬜️⬜️ The Late-Night Regulatory Hail Mary. Call the FCC and desperately claim that the cancer trial news is a "disinformation campaign" in hopes that regulators will launch an emergency, painful audit of Moderna's labs just to halt the stock's upward zoom. (20)
🟨⬜️⬜️⬜️⬜️⬜️ Remember, There Are Other Kinds of Cancer. The good news, it turns out, is that there are so many other ways to die a painful death which modern drugmakers still haven’t prevented. Short those companies and sleep well. (31)
🟩🟩🟩🟩🟩🟩 Hedge Fund People Are Not Very Nice, Really, Are They? (132)
249 Votes via @beehiiv polls

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