MARKET MOVERS
- US manufacturing growth weakens to a two-year low as orders slump. The Institute for Supply Management’s gauge decreased to 53 last month from 56.1 in May, according to data released Friday. Readings above 50 indicate expansion. Shrinking orders come as consumer spending slows under the weight of inflation and inventories pile up.
- House-flipping profits are falling. Roughly one in 10 U.S. homes sold during the first quarter of 2022 was flipped, as investors responded to strong demand from buyers. But the profits on those deals fell to a 13-year low, a new report shows. 114,706 single-family houses and condos were flipped. Despite the increase in the flip rate, the ROI for these deals fell to 25.8 percent, its lowest level since the first quarter of 2009.
- Energy stocks are the best bet in the market right now, says JPMorgan. Energy is a deep value sector that is simultaneously improving on Quality, Growth, and Income factors which is a rare combination. Energy is still the only positive sector for the year — up 29% — meaning investors could also be selling a winning trade in order to cover losses faced elsewhere.
Read more here. - Elon Musk’s SpaceX Starlink scores with the FCC. The company won regulatory approval to provide motor vehicles, ships, and airplanes with broadband internet from satellites. The decision put an end to petitions by DISH Network and ViaSat to hold up or stop SpaceX’s plan. Growth like that is key to SpaceX’s private market valuation of about $100 billion, which makes it one of the most valuable aerospace franchises on the planet. Read more here.
- America’s real estate market may be finally recovering from the pandemic. In June, the number of real estate listings rose by 18.7% compared with a year earlier, according to a new report by Realtor.com®. That’s the second straight month of growth and the fastest rise on record since July 2017. All told, this amounts to 98,000 more homes for sale every day compared with the same time last year.
- There's a glut of tech hardware. Demand for computer memory has "weakened considerably in a very short period of time," warned Micron, as soaring inflation, a still partially shut-down Chinese economy, and waning demand from pandemic-era work-from-homers combine to sap demand for everything from PCs to tablets to smartphones. It may take as much as six months to burn off the excess inventory. Read more here.
- There are three things going on economically. Three underlying causes. One is the rate expectations have changed massively with interest rates rising and inflation. The second big issue is the economic slowdown. Companies are slamming on the brakes because they're seeing that capital availability is greatly reduced. The third part of this is the overhang of the war in Ukraine that threatens to become a multi-year war. Source(1:08:25)
WHAT TO WATCH
- Good news for Tesla in China. Chinese EV makers Nio, XPeng, and Li Auto reported their June delivery data this morning, showing they all recovered nicely from the headwinds. After analysts slashed expectations for Tesla's second-quarter deliveries, this may set the company up to outperform, if the impact of delays at the Shanghai plant is muted from a strong June recovery. Read more here.
- EU sets the first rules to regulate cryptocurrencies. Under the EU’s Markets in Crypto-Assets framework, or MiCA, agreed on late Thursday, investors will receive some protection. As a key feature, stablecoin issuers will have to maintain reserves that will cover mass withdrawals and be based in the EU. The agreement still needs to go through Brussels’ complex legal process and might not kick in until 2024. Read more here.
- Cooling consumer spending points to further economic slowdown. Consumer spending cooled to a 0.2% advance in May, the Commerce Department said. That was the smallest monthly gain this year, and down from the revised 0.6% increase in April. This solidifies evidence of a downward trend in consumer spending, which is the backbone of the economy. The slowdown in spending comes as average weekly jobless claims have ticked up.
