MARKET MOVERS
- US inflation jumps to 8.6 percent, the highest in 40 years. As the May CPI report revealed, many other goods and services have continued to increase in cost, especially on the energy front. Energy increased 34.6 percent. The persistent jumps in a broad array of energy commodities, including crude oil, natural gas, gasoline, and diesel, could send the CPI higher in the coming months. Read more here.
- These stocks are winning the inflation battle and expanding margins, says CNBC Pro. Despite the pressures tech stocks felt from higher rates and inflation, many made the cut, including Nvidia, Micron, and Broadcom. Micron is well-liked on Wall Street with 78% of analysts having a buy rating. Visa and Synchrony Financial are among the financial stocks that made the list. ConocoPhillips, Diamondback Energy, and Pioneer Natural for energy. Read more here.
- Luxury brands start to take cryptocurrency payments. Online-luxury marketplace Farfetch Ltd. will start accepting cryptocurrency payments, following Gucci and other upmarket brands in a bid to attract younger shoppers. The company said that “VIP” customers will be able to start paying in Bitcoin, Ethereum, and Binance Coin, as well as four other cryptocurrencies, over the next few months.
- Microsoft to bring Xbox app to Samsung smart TVs. The move, announced Thursday, is part of an industrywide trend to put gaming on the cloud and lock in players to subscriptions. Microsoft’s subscription Game Pass service, launched in 2017, had 25 million subscribers as of January, up 39% from the year earlier. The Netflix-like app will allow users to play Xbox games without a console.
- Big landlords jump into the home building business as demand for single-family rentals surges. According to the National Association of Home Builders, there were 13,000 new single-family homes started as rentals in the first quarter of this year, up 63% from a year ago. Homes-built-for-rent still represents just 5% of the home building market, but that’s up from the 2.7% historical average.
- Gas prices hit $5 per gallon. A perfect storm of variables has aligned to drive gas prices higher this summer. On the demand side, Americans are ramping up travel during the first “reopened summer” since the pandemic began. But there’s not nearly enough supply to satisfy demand. The war in Ukraine has taken a lot of Russian oil off the market, while US refineries are basically at capacity. Read more here.
- The median rent in Manhattan reaches a new high. The median rent was $4,000 in May, a record attributed to people returning to the city in recent months, high mortgage rates, and remote work that justifies paying higher rents for some tenants who have put more value on their home spaces. At the same time, rising eviction rates in combination with the lack of affordable rents might further exacerbate dislocation.
- The energy bull market just started. Simon Lack thinks that despite all the advances in renewable technology like solar power or windmills, we can't run a country solely on those energy sources. The biggest thing countries can do is phase out coal and just use natural gas. That's one of the reasons why the energy bull market will continue amid the energy supply shortage because of geopolitical issues and protests. Source(53:10)
WHAT TO WATCH
- Apple and Google face new antitrust investigations in the U.K. The Competition and Markets Authority (CMA) said Friday that it was consulting on the launch of a market investigation into Apple and Google linked to their dominance in mobile browsers. Apple’s Safari and Google’s Chrome are the targets. The regulator also will look into Apple’s restrictions on cloud gaming and Google's payment practices on its app store. Read more here.
- Apple will handle lending internally for its new pay later service. The company has now decided to manage all of the aspects for buy now pay later. It's going to be its own underwriter. Meanwhile, the other major buy-now-pay-later player Affirm has had to partner with a crossover bank to underwrite loans on its platform. This means Apple is in this phenomenal position where it can be a bank. Source(17:43)
- Tesla has a China problem. The problem will show up in its earnings next month, and Barclays is the latest investment bank to try to estimate the damage from China’s Covid lockdowns. Barclays noted that deliveries of electric cars are likely to come in below expectations in the second quarter after its factory in China was hobbled by Covid lockdowns. Its China factory generates higher margins than its other plants. Read more here.
