MARKET MOVERS
- Big banks are seeing deal-making income dry up. The global M&A announcements stand at $1.7 trillion year-to-date, a 33% drop in volume in the first half from a year earlier. Add in a more-stringent U.S. regulatory climate and rising geopolitical tensions, and even announced deals are having a tougher time closing. So far, that spells trouble for M&A and the banks that earn fees for advising on deals.
- Mortgage payment costs rise 45% this year, worsening home affordability. If the Fed keeps raising rates, mortgage payments for a typical home will be $800/month more, according to an estimate. In April, the average monthly mortgage payment for a single-family home increased to $1,900. This is a significant jump over last year’s average $1,300 mortgage payment. Read more here.
- Households boosted spending in April but drew heavily on savings. The savings rate fell to the lowest in 14 years, suggesting many Americans are tapping savings to offset cost increases from inflation. The savings rate fell to 4.4%, from a downwardly revised 5% the prior month. Higher-income consumers are likely healthy enough to continue funding their spending through savings for a while. Read more here.
- Condo construction ramps up. The first quarter proved to be the best quarter for condo construction since the third quarter of 2008—in about 14 years, according to the National Association of Home Builders. People are no longer afraid to live downtown, close to the crowds because they’re close to the office and all the amenities of the city. Rising prices are pushing single-family homes out of reach for a lot of buyers.
- PayPal has begun laying off some of its employees. These workers previously labored in the risk management and operations units of the company. The pink slips were distributed at PayPal facilities in Chicago, Omaha, and Chandler, Arizona. It's likely more are coming, as the company previously announced it would be cutting roughly 80 people in its Silicon Valley headquarters located in San Jose, California.
- Walmart is expanding deliveries w/DroneUp. The company is expanding drone deliveries across six states with operators using a company called DroneUp. Once it's established, this will be the first large-scale drone delivery operation in the United States. It’s been available in a few small towns so far. Jason Calacanis thinks the reason why Walmart is prioritizing this is that drone deliveries are less-accident-prone in rural areas in case the drone falls. Walmart has been big in rural areas whereas Amazon is for big cities. Source(17:03)
WHAT TO WATCH
- There are elements of a ‘deflating bubble’, says Citigroup. The global asset allocation team downgraded U.S. equities to neutral amid troubling signs — including disquieting signs in the stock market and hawkish guidance from the Federal Reserve chair. While typically equities only peak shortly before the start of a recession, this time it may happen earlier than expected, potentially because we have elements of a deflating bubble. Read more here.
- SEC confirms probe into Elon Musk’s disclosure of Twitter stake. The SEC, in a Friday filing, published a letter sent to Mr. Musk, dated April 4, asking why he didn’t make the required filing within 10 days of crossing the 5% threshold. Mr. Musk’s holdings topped 5% on March 14, securities filings show, and he announced the size of his stake in a filing on April 4, by which time it topped 9%. Read more here.
- Crypto giant FTX is ready with billions of dollars for acquisitions. Billionaire co-founder Sam Bankman-Fried said on Friday that recent rounds of fundraising by FTX and its US entity -- totaling more than US$2 billion -- could be used to bankroll the moves. The company is prepared to spend billions of dollars to buy stakes in other companies as it looks to grow the suite of products it offers customers.
- Redfin CEO sees market slowdown. Glenn Kelman said rising mortgage rates, softening home price growth, and changing buyer attitudes are all signs of an impending shift. He thinks rates are probably 6%, inventories are increasing, and sales volume will be somewhat fine, but prices are going to soften. Kelman said home sellers in secondary markets are likely “freaking out” the most since that’s where the price reductions are most common. Read more here.
