MARKET MOVERS
- Apple hit with EU antitrust complaint over Apple Pay. The European Union is alleging the tech giant’s dominance over the mobile wallet market has curbed competition. A statement of objection is a formal step in investigations of suspected antitrust violations. They said they have indications that Apple restricted third-party access to key technology necessary to develop rival mobile wallet solutions on Apple’s devices. Read more here.
- Warren Buffett bought another $600 million worth of Apple. There have been plenty of buying opportunities for Buffett this year as Apple shares came under pressure amid fears of rising rates and supply-chain constraints. Berkshire is now Apple’s largest shareholder and is the conglomerate’s single largest stock holding with a value of $159.1 billion at the end of March, taking up about 40% of its equity portfolio.
- Nikola gets $200 Million investment from Antara Capital. It was $200 million worth of convertible senior notes. Nikola intends to use the net proceeds to scale its truck manufacturing and tooling setup and accelerate the development of its hydrogen fuel-cell infrastructure. The notes will mature in May 2026 and carry an 8% annual cash interest and 11% in payment-in-kind interest.
- Spirit Airlines rejects JetBlue bid. They are sticking with plans to merge with rival budget carrier Frontier Group Holdings Inc. JetBlue’s offer for Spirit came with a higher price tag than Frontier’s cash-and-stock offer, which was originally valued at $2.9 billion but Spirit’s board said it believed there was too much risk that regulators would bar a merger with JetBlue.
- Biggest Treasury buyer outside U.S. is quietly selling billions. Japanese institutional managers, known for their legendary U.S. debt buying sprees in recent decades, are now fueling the great bond selloff just as the Federal Reserve pares its $9 trillion balance sheet. The latest data from BMO Capital Markets show the largest overseas holder of Treasuries has offloaded almost $60 billion over the past three months.
Read more here.
WHAT TO WATCH
- Federal Reserve won’t just cut rates by the end of the year, says Pomp. He predicts that they will have to admit defeat in the tightening efforts and re-engage their full QE toolbox. That is definitely not priced into the market at the moment. Hiking interest rates to 3% after an economy is already in a recession would be a financial Armageddon that we haven’t seen in decades. Read more here.
- A recession is likely considering how bad Q1 was, says BowTied Bull. The first 4 months have been brutal for all asset classes. 7%+ inflation, bonds yielding well below and mortgage rates on the rise. If rates really go up significantly the spicket turns off and you’re looking at another downturn. Only solution to this mess is to either print more money or go into a recession. Read more here.
- We might be in for a 30 year housing shortage, says Jason Hartman. People don't want to sell their homes and the inventory is so low. The artificially low interest rates we've had are going to cause people that refinanced or purchased homes to lock in those low rates. They are not going to relinquish those mortgages because they can't transfer that to a new home. Therein lies a housing shortage that could last for decades. Source(22:40)
- Beaten up fintech and homebuilders are rebound candidates, says Guggenheim’s Minerd. Financial tech stocks such as PayPal and Block are due for a rebound as demand for digital payments expands. Another sector where investors should take a look are homebuilders, some of which are trading at six times earnings. He says the demand for houses isn’t going away. The prices are up, lumber prices are coming down.
- EU prepares ban on Russian oil. The European Union is likely to propose ending purchases of Russian crude oil by the 27-country bloc before the end of 2022, and a ban on purchases of Russian refined-oil products by year-end, according to two senior diplomats. The proposals, set to be circulated on Tuesday to EU member states, would be the centerpiece of a sixth package of EU sanctions on Moscow.
- Germany can cut reliance on Russian crude oil by summer. The Economy and Climate Ministry said on Twitter that the goal was realistic while noting that the nation had already reduced its share of Russian energy imports to 12 percent for oil, 8 percent for coal, and 35 percent for natural gas since the beginning of the year. Germany has managed to shift to oil and coal procurement from other countries in a relatively short time.
