Yo Pit Crazies,
Treasury Secretary Scott Bessent doubled the size of the government's long bond buyback operations last Wednesday.
Then, he went on CNBC the next day to say the number could go higher than that.
Yields dropped on the news.
The S&P 500 still hasn’t closed above the record it set on August 13th, which is something to keep in mind as we roll through the week.
The operations went from $2 billion to at least $4 billion apiece, aimed at the 10-year out through the 30-year, running September 9th into November 4th.
Both of the names I am looking at this week come back to that move one way or another.
One of the bigger advantages of Sibyl, my idea-flow tool that flags when a name inside one of my themes hits a good price, is the daily drumbeat. I keep the themes in my head and Sibyl tells me when a stock is finally worth acting on. Not everything on the list is ready to go, but I like to cue them up anyway.
The Vet Bill is Where People Stopped Spending
I have liked Chewy, Inc. (CHWY) for a while and I liked it a lot better when it was running from $17 up into the low $40s. It has given all of that back and changes hands in the mid $20s now. Pet spending itself has slowed down, and Chewy sits downstream of that.
Zoetis Inc. (ZTS) reported on August 6 and cut full year revenue guidance to a range of $9.12 billion to $9.32 billion, down from $9.68 billion to $9.96 billion. US companion animal sales fell 11 percent in the quarter. Management was pretty blunt about the reasons on the call.
1-Year ZTS chart
They pointed to fewer visits to the vet clinic, pet owners balking at clinic prices that have been running above inflation for several years now, and competitors coming after the dermatology and Simparica franchises. Key dermatology was down 16 percent globally. The pullback is showing up in clinic visits more than anywhere else.
Livestock sales were up 23 percent in the US and 11 percent globally over the same stretch, so the animal health business on the whole is doing fine. The damage is concentrated in the dog and cat side of the house.
The stock printed $71 on that report and sits around $77 now, so it has not managed a 10 percent bounce off the low and there is still some ground to gain. It goes for roughly 12 times trailing earnings against a five year average forward multiple north of 30. That is a cash generator trading at a multiple you would normally slap on a business in decline.
The dividend is $2.12 a share, about 2.9 percent at this price, and Zoetis has raised it every single year since the 2013 spinoff. Free cash flow runs somewhere around $2.2 billion a year and the dividend costs them roughly $880 million of it. Net debt is only about 1.4 times EBITDA and operating profit covers the interest bill 23 times over, so the payout stays comfortable even with rates where they are.
They also repurchased more than $550 million of stock last quarter and the share count is down 6.2 percent from a year ago. The FDA handed Simparica Trio an emergency use authorization for screwworm on August 16, which is a real catalyst almost nobody is discussing. Tim Colby will be going live on this one very soon. Tap here to find out ,more.
The street is against me here, for whatever that is worth. William Blair cut it to Market Perform, UBS took its price target down to $85, and the put flow has been heavy, which is generally around the point where I start getting interested in something.
I Watched this Story Get Written in 2013
Way back when I first joined Mark at Option Pit, my students here were mining Bitcoin when a coin was worth pocket change and almost nobody outside the building had heard of it. By March of 2013 a coin had gotten up into the $40s, which sounded like real money at the time and sounds like a rounding error now.
Then Cyprus froze its banks and went after deposits over 100,000 euros. Bitcoin went from $47 to $88 inside of twelve days and touched $255 by April. That is where the store of value story came from, and it has been treated as gospel ever since.
Now we are in 2026 and Bessent is essentially making a market in long paper because he does not want the rate any higher. He worked with Soros on the Bank of England trade, so he knows exactly what the stakes are on this kind of thing. Traders looked at the buyback, decided it was debasement, and went and bought Bitcoin with both hands.
The coin is near $78,900 and up almost 23 percent in seven sessions. iShares Bitcoin Trust (IBIT) went from $36.60 on August 18 to about $45 as I am writing this, and I have no interest in chasing it up here. Even after a run like that, Bitcoin is still sitting roughly 38 percent below the $126,000 print it made back in October of 2025.
A $78,000 coin needs more than a fable behind it, and a Treasury liquidity operation is a long way from a bank raid in Cyprus.
1 Year IBIT
I want to see IBIT back near $40 before I do anything with it. I still think the coin trades at $10,000 at some point, though I am not putting a date on that.
So which one does the crew pick for Monday's Ticker Highlight Show? Tap this link to join at whatever rate you want and get Monday's pick as soon as it hits.
Hopefully this was helpful,
Andrew Giovinazzi