US factory production advances at a solid pace for the third month. The 0.8% increase followed a similar gain in March, Federal Reserve data showed Tuesday. Total industrial production, which also includes mining and utility output, climbed 1.1% during April. Another robust month of factory output illustrates how an easing of capacity constraints tied to labor and materials is providing producers greater wherewithal to meet resilient demand. Read more here.
U.S. retail sales rise in April despite persistent inflation. Data suggests that Americans are still spending, even amid persistently high levels of inflation. The Census Bureau reported that retail sales climbed 0.9% month on month in April, meeting the FactSet consensus of 0.9%. Sales excluding autos, gasoline, building materials, and food services rose 0.6%. Read more here.
Mastercard launches tech that lets you pay with your face or hand in stores. The program allows retailers to offer biometric payment methods, like facial recognition and fingerprint scanning. Users can authenticate a payment by showing their face or the palm of their hand instead of swiping their card. The technology could one day help develop payments infrastructure for the “metaverse,” an executive said.
Gerber owner Nestlé to fly extra baby formula to the U.S. The move comes after the FDA said it was encouraging overseas manufacturers to apply to ship their formula to the U.S., easing rules that had effectively prevented shipments from many such companies. The company will fly extra baby formula into the U.S. from Switzerland and the Netherlands to accelerate deliveries to alleviate a severe shortage across the U.S.
The low end of luxury is helping power Manhattan’s high-end home market. There were 39 contracts signed on homes asking $4 million or more in Manhattan in the week ending Sunday, four fewer than the prior week, according to Monday’s report from Olshan Realty. The prior week also marked the most number of contracts since December. 20 of the sales are at the lower end of the luxury market at under $5 million.
Building materials press even higher. Prices are up 19% over a year ago, according to the Bureau of Labor Statistics. Material costs have jumped by about 36% just since the pandemic began. Many builders are passing on those higher costs to home buyers. Costs of other products necessary to build a home continue to soar, such as steel mill products, ready-mix concrete, and gypsum products, which are used for drywall.
Rent keeps rising at a record pace of 13.6%, even in a shifting market. A shortage of single-family properties available for rent has plagued the market, pushing rents up at record-level rates. The number of single-family rental properties listed in early 2022 was well below pre-pandemic levels and still shrinking from one year ago. The country’s Sun Belt — particularly several markets in Florida — is seeing the fastest growth. Read more here.
WHAT TO WATCH
Twitter deal at a lower price is not out of the question, says Elon Musk. He went further at the All-In Summit, saying that it seems beyond unreasonable that Twitter's number of human accounts is at over 95%. Musk said that there is probably four to five times the number of bots compared to what Twitter said. He wants to verify the data Twitter provided and see how it's been calculated. Source(21:40)
Elon Musk says the U.S. is ‘probably’ in a recession that will last up to 18 months. He said that what tends to happen is, that if you have a boom that goes on for too long, you get a misallocation of capital. He added that the honest reason for inflation is that the government printed a zillion amount of more money than it had. Additionally, Musk noted that these things pass and then there will be boom times again. Source(1:08:29)
Saudi Aramco weighs IPO of trading unit amid oil boom. The state-controlled oil major is working with banks including Goldman Sachs Group Inc., JPMorgan Chase & Co., and Morgan Stanley as it studies a potential listing of Aramco Trading Co. The trading unit could fetch a valuation of tens of billions of dollars and could be potentially worth more than $30 billion. Read more here.
The housing market is now slowing. In a sign that the housing market is now slowing, builder confidence took a steep drop in May as growing affordability challenges in the form of rapidly rising interest rates, double-digit price increases for material costs, and ongoing home price appreciation are taking a toll on buyer demand. The NAHB reported the housing market index (HMI) was at 69, down from 77 in April. Read more here.
Biden Administration targets housing supply shortage with affordable housing plan. The plan includes expanding federally backed financing for affordable housing and directing grants toward localities that encourage construction. The changes include encouraging greater land-use improvements at the local level by favoring jurisdictions that promote “density and rural main street revitalization” for funding.
Builder contract cancellations are coming, says Jason Hartman. A lot of people purchased new homes. Because of construction delays like supply chain issues and labor shortages, it's taking a lot longer to finish these new homes. As these construction guidelines drag out, even without these delays, buyers will now not be able to lock in the low mortgage rates. Lenders will not honor rate locks for unfinished homes. Source(7:50)
There will be a big migration out of equities, says Eric Johnston. Right now, allocation to bonds is at a recent historic low and then equity allocations are pretty close to an all-time high. So one of the dynamics that might play out over the course of the next year is that the individual investor rotates out of equities and goes into bonds and other different fixed-income assets. Source(21:38)
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