MARKET MOVERS
- Delta Air Lines tested SpaceX’s Starlink internet for planes. The Atlanta-based airline has held talks with SpaceX’s broadband unit, called Starlink, and conducted exploratory tests of Starlink’s technology. Analysts forecast growing demand for Wi-Fi on jetliners. The number of connected aircraft could more than double to as many as 20,000 by the end of the decade. Read more here.
- Blackstone bets on campus housing with a $13 billion acquisition. The firm agreed to buy student-housing owner American Campus Communities Inc. in a deal valuing the company at about $12.8 billion, including debt, a bet that rents will continue to rise as more college students return to campus. ACC is the largest publicly traded owner and developer of student housing in the U.S.
- Subscription fatigue and inflation are leading to cancellations. 35% of Americans have canceled a monthly subscription in the past six months due to inflation, according to a recent CNBC survey. Plus, 36% of respondents will cancel a subscription if higher prices persist. The subscription era may be a tough spiral to escape, but as more companies introduce subscription options, more consumers are finding peace in cancellation.
- US housing starts at the fastest pace in 16 years. Privately-owned housing starts increased 0.3% from revised February figures to a seasonally adjusted annual rate of 1.79M, according to US Census Bureau data released Tuesday. Meanwhile, single-family housing starts in March dipped 1.7 percent from the previous month to a rate of 1.2 million, a figure that remains well-above pre-pandemic levels.
Read more here. - Fed policy tightening sends US ‘real yields’ to the brink of positive territory. It’ll be the first time since March 2020. This would be a pretty big moment and could ripple into other US financial markets. If real yields do break into this positive territory or go even higher, we could see investor demand pop up. As US Treasuries start to pay you a greater return, investors trying to avoid risk will find the 10-year treasury attractive. Source(1:40)
- Q1 US VC funds raised a combined $73.8B, more than half of 2021’s total of $131.5B. Seed and early-stage financings didn't dip as much as the later stage mega-rounds. The total amount of capital invested in angel and seed deals in Q1 was up 4% over Q4 to $5 billion. The total number of deals went down and total capital invested in early-stage was down but despite all of that, in Q1 US VC funds raised a combined $73.8 billion. Source(7:46)
WHAT TO WATCH
- IMF cuts global growth outlook. The 2022 and 2023 economic growth outlooks were cut to 3.6%. The estimates are down from its January expectation of 4.4% for this year and 3.8% next year. The ripples from the war in Ukraine are hitting a global economy still recovering from the pandemic. The war has only supercharged inflationary pressures, impinging on economic growth.
- Inflation won’t peak for some time and the Fed might be forced to raise its target, says El-Erian. The surging prices could force the Federal Reserve to raise its target. There’s another inflationary impulse in the system. It’s coming from a very tight labor market. We cannot declare inflation over, especially core inflation. We might have another leg up later in the year especially if the Fed doesn’t control inflation expectations.
Read more here. - Apollo is interested in financing a Twitter deal. Apollo would not be the buyer but has been talking to various parties who are interested in acquiring Twitter about financing the deal. Apollo could provide Musk or another suitor with the equity or debt to make an offer. Private equity firm Thoma Bravo LP and Morgan Stanley have also separately expressed interest in joining a deal to acquire Twitter. Read more here.
- A crash in U.S. housing prices is unlikely. Millennials are the biggest demographic in the country. Millennials accounted for more than half of all mortgage loan applications in 2021. There is also a housing shortage. There are now 330 million people, and last year there were less than 1.3 million houses completed. People are also staying in their homes longer and for good reason.
- A major change is inevitable for Twitter. If Musk were the only one to bid, the board could make the case that such a bid undervalues Twitter and its growth prospects. On the other hand, if the board starts soliciting other offers, it will be increasingly difficult to argue not to accept the highest offer which is Musk. In making a bid for Twitter, Musk has given them a chance to tighten their belt and perhaps new leadership.
Read more here.
- Mercedes-Benz unveils its new electric EQS SUV built in the U.S. The vehicle is the sibling of the EQS sedan, released last year, but with seating for up to seven people and a taller, bubblier stance. The SUV is expected to go into production at Mercedes-Benz’s plant in Tuscaloosa, Alabama, in the coming months and arrive in U.S. showrooms in late 2022, the company said.
