Everyone's Moving to Florida

MARKET MOVERS

• Sony and Honda partner on EVs. The pair announced a memorandum of understanding Friday about a strategic alliance. They will form a company to develop high-value battery electric vehicles and commercialize them in conjunction with providing mobility services. The goal is to have a Sony Honda EV on roads by 2025. The new Sony-Honda partnership demonstrates how tech entrants might get into the field.
  
  
• US economy added 678,000 jobs in February, cementing the case for rate rises. We’re seeing a stronger return to the workforce, some of which is a bounce-back from Omicron and bad weather. Friday’s report showed the labor force participation rate, which tracks the share of Americans employed or looking for a job, marginally improved to 62.3%. The strength of the labor market is attracting people back in.
  
  
• Multifamily demand rebounds in big cities. In the wake of the public health crisis, there is a pronounced return to higher density markets or geographies, particularly in the apartment and other multifamily residential construction. Overall, about 67% of multifamily development occurred within large metro areas; 27% in small metro areas; and 6.1% in rural areas and small towns. Read more here.
  
  
• Home lending activity drops at the fastest pace in 3 years. Loan activity dropped 11%, the fastest rate of decline since 2019. The drop in activity is likely due to a few trends happening at the same time, including homeowners refinancing before rates began to quickly rise from record lows. Lack of inventory for the past two years has also driven up prices and driven down purchases.
  
  
• Home prices reach a new record high. February saw the national median home list price climb to a new record high of $392,000, according to a Realtor.com® report. That hefty price tag is up an overall 12.9% compared with the previous year. In addition to struggling with high home prices and rising interest rates, today’s buyers are facing a market where home sales are happening at an alarmingly brisk pace already. Read more here.
  
• Everyone is moving to Florida. People from all over the world are looking to buy a piece of property in the Sunshine State. In just the past year alone, Florida’s gained more than 200,000 residents. It’s becoming an increasingly popular destination for younger residents. More and more millennials who can work remotely are deciding to do so by the beach. Its real estate is cheap compared with other parts of the country.
  

WHAT TO WATCH

• Russia’s Ukraine war could lead to the largest disruption ever in commodities supply, says Goldman. It’s affecting everything from oil to aluminum to coal. Gas prices are at a new record high. The more worrisome commodity to focus on is wheat. Wheat futures are up more than 30% this week and are on track for the biggest weekly surge on record. Russia and Ukraine are among the largest wheat exporters. Read more here.
  
  
• Microsoft vaults further into healthcare services with the closing of the Nuance deal. Microsoft completed its acquisition of Nuance Communications. The US$19.6 billion deal, announced last April, lets Microsoft add cloud-computing and AI offerings aimed at healthcare, finance, and customer-service clients. With Nuance, Microsoft also gets a wealth of data that will help it better train AI services.
  
  
• Dwindling Russian energy exports raise concerns of an energy crisis. Experts are warning that the escalating war in Ukraine could lead to an energy debacle the likes of which we haven’t seen in decades. Oil prices have skyrocketed to their highest levels in 10 years. EU relies on Russia for 40% of its gas consumption, which is used for heating homes and powering businesses. It can lead to soaring prices and stagflation.

• There's a possibility of further decline in VC valuations. As capital markets could see bigger drops. Expect valuations to decline by at least 50% for new IPOs getting closer to the historical norm of around 7x revenue versus 15x in 2021. There might even be pre-seed companies at single-digit valuations soon.  Source(59:51)