‘Growth scare’ strikes U.S. stocks as an estimated $5-$8 trillion of household wealth evaporates in five months. Household wealth falling is driven largely by falling equity prices. Now, we’re seeing a rally in bonds correspond to a selloff in equities. The subtle shift is that bonds are starting to act as safe haven, suggesting a growth scare and the potential for demand destruction that leads to lower growth.
The tech selloff is about to cause big problems for start-ups. Start-up valuations are getting slashed and VC firms are slowing their commitments to new deals. Barring any quick reversal in the market’s mood. Meanwhile, the market for IPOs has come to a halt, SPAC issuers are struggling to find merger partners for their deals, and regulatory scrutiny is making it all but impossible for well-capitalized companies to acquire. Read more here.
Automakers are jacking up prices on electric vehicles to bake in rising materials costs. Prices for battery-related commodities have surged in recent months, and analysts expect them to rise further over the next few years. Electric vehicle makers have already begun passing those higher costs on to their buyers. Automakers from Tesla to Rivian to Cadillac are hiking prices on their electric vehicles. Read more here.
Lagarde says crypto is ‘worth nothing’ and should be regulated. The comments come amid choppy times for crypto markets, with digital currencies Bitcoin and Ether down 50% from last year’s peak. At the same time, the asset class is facing tougher scrutiny from regulators worried about the dangers it may pose to the broader financial system. Read more here.
Investors see profits tighten on single-family rentals. Average gross rental yields before expenses on three-bedroom single-family homes purchased by property owners this year fell in 72% of the counties tracked recently by ATTOM Data Solutions, a real estate data firm. Most declines are less than one percentage point from the rental yields recorded in 2021. The decrease is due to property owners paying more for properties.
Communities nationwide are banning vacation rentals. More common consequences of vacation rentals gone bad include neighbors kept awake by the festivities or waking the next morning to find random cars parked in their driveway or party-related debris strewn across their lawns. Places like Sonoma County, California, Honolulu, Hawaii, Clatsop County, Oregon, and San Diego. Read more here.
There are signs of strength in the home improvement industry. Consumer demands are exceeding expectations. Home Depot raised guidance for the full fiscal year and despite some headwinds, Lowe's maintained their full-year guidance. It's been a resilient year in the home improvement space. People are starting to weigh moving versus staying put. A lot of people are choosing to stay put and remodel. Source(7:50)
WHAT TO WATCH
Buterin says the Ethereum merge should happen in August. Speaking at an ETH web developer summit in Shanghai, Buterin said, "If there are no problems, then the merge will happen in August." He then said it might also take place in September or October. Buterin's hopes were echoed by several Ethereum developers. The much-delayed merge was slated for June, but developers delayed it. Read more here.
Hyundai plans a $5.5 billion factory complex in Georgia for electric vehicles. The new Hyundai plant is expected to break ground early next year and open in the first half of 2025, making battery-powered models that will be revealed at a later date, the company said. When fully ramped up, the factory will be capable of churning out 300,000 vehicles a year.
A profit recession is brewing. As profit margins are squeezed, labor costs are certain to go under the microscope. We’re in the early innings of an unfolding profit recession. The Fed would likely welcome wage gains if the jobs market weakens. Meantime, with no more stimulus, consumers are resorting to credit cards to pay the soaring costs of incidental items, such as food, energy, and rent. Read more here.