MARKET MOVERS
- Bitcoin slumps below $20,000. The slide coincides with the Federal Reserve announcing, and then starting, its interest-rate hike campaign, with expectations the Fed funds rate, may reach 4%. Broader signs of trouble in crypto markets emerged with the May collapse of the Terra blockchain and got worse this week following crypto lender Celsius Network Ltd.’s decision to halt withdrawals. Read more here.
- U.S. industrial production show signs of economic slowdown. Industrial production grew at a slower pace in May and manufacturing output fell, the Federal Reserve said, adding to signs of slowing economic growth. It increased a seasonally adjusted 0.2%, down sharply from a revised 1.4% increase the prior month. Factories in the mid-Atlantic region saw diminished activity for the first time in two years this month.
- Retailers’ inventories pile up as lead times grow. Factory closures, shipping delays, port backlogs, and other supply-chain bottlenecks wrought by the Covid-19 pandemic are prompting chains from Target Corp. to Gap Inc. to start designing new products and placing orders with overseas factories further in advance, making it harder to match supply with demand.
- Fertilizer stockpiles swell as farmers shun high prices, easing harvest worries. Fertilizer supplies are piling up from Florida to South America. Ships are waiting to unload and companies are struggling to reduce stocks in ports and warehouses. Farmers are still awaiting lower prices as grains trend higher, expanding the arbitrage of delayed nutrient purchases. Read more here.
- Liquidity is vanishing in the government-backed housing bond market as the Fed steps back. The problem is that the massive $8.4 trillion agency mortgage-backed securities (MBS) market has begun showing signs of stress, even before the Fed begins to shrink, in earnest, its near 32% stake in the government-backed housing bond market. There have been three or four days of steady selling, ahead of the Fed decision. Read more here.
- Binance is looking to hire 2,000 employees amid the latest market decline. Binance CEO Changpeng Zhao said Binance plans to bring on more employees. Zhao's co-founder Yi stated that they currently have more than 2,000 roles open from engineers, product, marketing to business development. The company says they see the market decline as a great time to bring on top talent.
- Restaurants are on the rise. According to Yelp, the number of people going out to dinner is on the rise as we head into the prime summer months. Searches for reservations on Yelp rose 107% year-over-year. Motley Fool's Ron Gross thinks the obvious companies to be impacted are the delivery companies as the trend to eat out continues. Source(10:35)
WHAT TO WATCH
- Merck explores the purchase of biotech Seagen. Talks have been underway for a while, and a deal isn’t imminent, according to people familiar with the matter, cautioning that pulling one-off could be tricky given the heightened risk of a regulatory challenge. It is possible the companies could end up striking a marketing agreement instead. Other unnamed suitors are also eyeing Seagen. Read more here.
- Euro Coin is on its way. Circle Internet Financial Ltd. is launching a euro-based version of its popular USDC stablecoin, which has been gaining traction after its closest rival Tether has come under increased scrutiny. Euro Coin -- EUROC -- will be available June 30 to institutional customers as a regulated, euro-backed stablecoin, issued under the same full-reserve model as USDC.
- A recession will test the buy now, pay later model. The fear is that these companies cater to consumers with lower credit scores, which could put firms in danger of rising default rates, or at the very least, a pullback in demand if a recession comes. An April report from Experian said that 18% of consumers have used BNPL in the last six months and 80% of U.S. consumers use the service to avoid credit card debt. Read more here.
