MARKET MOVERS
- Square Enix is selling the Tomb Raider franchise to invest in blockchain tech. The Japanese video game publisher is selling the franchise to Sweden’s Embracer Group in a $300 million deal. Embracer will also acquire the intellectual property for three other game series, including Deux Ex, Thief, and Legacy of Kain. Square Enix said it is selling the assets to cut costs and invest in new technologies like the blockchain.
- U.S. job openings have remained high this spring. Jobs site ZipRecruiter said employers had about 11 million job openings last month. That would be down a little from a seasonally adjusted 11.3 million openings but still well above pre-pandemic levels. Employers have had difficulty hiring from the limited pool of available workers. Many people in the labor market also are finding they have gained leverage, making it easier to switch jobs.
- Food shortages hit a record high in April, according to an S&P survey. Food prices rose 13% over the month to 159.3 points, an all-time high. Manufacturers worldwide reported sustained price and supply pressures during the last month, while the Global Supply Shortages Index signaled that shortages were just under seven times higher than the normal level. The ongoing Russia–Ukraine conflict continues to impact worldwide food exports. Read more here.
- US 10-year Treasury yield reaches 3% for first time since 2018. Traders prepared for the Federal Reserve to raise interest rates again at a time of soaring inflation and slowing growth. It is now double its level at the start of the year and the highest since December 2018. It later dipped back to 2.99 per cent, up 0.05 percentage points on the day. Yields have risen this year as the Fed takes action to try to stem US inflation.
- Natural gas surges 9% to the highest level since 2008. The move was due to a flurry of tighter market conditions, including the European Union considering a sixth round of sanctions against Russia that could include the nation’s energy complex. Additionally, production is down in the U.S., and gas in storage is 21% lower than at this time last year. The swift upward price action is adding to inflationary pressures across the economy.
- House prices up a record 20.9% YoY in March. Buyers who closed on a property in March had a good chance of locking in mortgage rates around 4% or slightly lower. Annual home price gains are forecast to slow to 5.9% by March 2023, even with the past year’s streak of double-digit price increases. The forecasted drop is due in part to rising mortgage rates and higher home prices hampering affordability for some home shoppers.
- Vacation and retirement destinations are especially popular with homebuyers. Some shoppers were looking to relocate, especially those who can work remotely. Others were hoping to purchase a second home. Meanwhile, folks in the more expensive cities, colder parts of the country, and college and military towns seem to be looking for exit strategies. Read more here.
WHAT TO WATCH
- Housing affordability races toward levels not seen since 2006 bubble. If mortgage rates rise by another half a percentage point — or if home prices go up another 5% — affordability will hit the worst levels on record, Black Knight warned. About one-third of housing markets are already there. Black Knight data shows 37 markets that represent nearly a third of the country are now the least affordable they’ve ever been.
- Fed needs 4% inflation this year to avoid a recession. Citadel's Ken Griffin said the Fed will be able to ease off raising rates if inflation drops to 4% by year-end. But if it remains near or above the current 8.5%, the central bank “will have to the hit brakes pretty hard,” tipping the economy into recession.
- Tesla's 2022 annual meeting of stockholders will be held on Aug. 2, in Austin, Texas. This meeting will clear the way for another stock split. Investors like the idea of a stock split because of what happened last time. Tesla split its stock in August 2020 and shares rose more than 60% in the two and a half weeks between the announcement and the actual split.
- Invest in growth stocks before we enter a recession, says Raoul Pal. If we get into a recession, the Fed is going to print. Real rates will then fall and those stocks will explode higher. He believes that investors especially the aging population shouldn't bet against technology. We're living through a lifetime of technological advancement at the fastest rate we've ever seen and we just have to ride this logarithmic trend. Source(28:06)
- Morgan Stanley warns of gaming headwinds. The firm believes there will be a correction in the gaming sector in 2023. That should weigh on Nvidia, which makes many gaming products. The combination of very strong consumer discretionary spending in a work-from-home environment where that money had to be spent on goods rather than services creates a tough comparison, some slowing in gaming software and usage that may portend a deceleration in hardware sales. Read more here.
