MARKET MOVERS
- Homebuilders slow new construction as rising mortgage rates temper demand. Housing starts dipped 0.2 % to an annual pace of 1.72 million last month. That’s how many homes would be built in 2022 if construction took place at the same rate over the entire year as it did in April. There’s just not enough housing to go around. Rising mortgage rates and high prices are likely to reduce demand, but lots of people still want to buy their own homes. Read more here.
- Oil prices rise as lockdowns ease in China. Brent crude, the international benchmark, rose 1.4% to $113.48-a-barrel. West Texas Intermediate, the U.S. standard, climbed 1.8%. After three consecutive days of no new Covid-19 infections outside quarantine areas, Chinese authorities allowed more than 800 financial institutions in Shanghai to resume work.
- Saudi public fund takes a 5% stake in Nintendo. In a Japanese regulatory filing, the Public Investment Fund said it held just over 5% of Nintendo as of March 31. It said the stake was purely an investment, suggesting it didn’t intend to try to influence the company’s strategy. High oil prices mean Saudi Arabia is flush with cash this year. Much of the money is expected to be handed to the PIF to invest domestically and overseas.
- Investor bets against tech reach the highest point since 2006. Professional investors responding to Bank of America’s Global Fund Manager Survey indicated they had reduced technology to a net 12% underweight, a reduction of 23 percentage points on the month and the shortest position since August 2006. The moves come amid fears that the Fed will have to raise interest rates more to combat a 40-year high in inflation. Read more here.
- MiamiCoin has lost 95% of its peak value. Meanwhile, its younger sibling, NYCCoin, is down 80%. Miami’s and New York’s wallets held $25 million and $31 million, respectively, as of January, according to CityCoin. But proposed applications for using the funds—such as creating a universal basic income or supporting small businesses—haven’t materialized. Read more here.
- Households are now spending an estimated $5,000 a year on gasoline. That is up from about $2,800 a year ago, and $3,800 as recently as March. Yardeni Research said consumers’ inflation-adjusted incomes are barely growing, but they have accumulated a lot of savings, and they are charging more on credit cards.
- Second-home demand shows signs of slowing. Mortgage rate locks for second homes were still up 9.1% from pre-pandemic levels in April, but that marks a significant drop from the second half of 2020 and 2021. At that time, demand climbed as high as 88% above pre-pandemic levels. Prices for second homes have surged and mortgage rates have risen considerably. The federal government also increased loan fees for second homes on April 1.
- Homebuyer mortgage demand falls even as rates ease from 2022 highs. The MBA survey showed that demand for purchase loans was down 15 percent from a year ago. Economic uncertainty and stock market volatility may have helped drive a 12% decline in prospective homebuyers’ purchase mortgage applications, delaying home searches. Rising rates have largely gutted homeowners’ appetite for refinancing, with refi down 76 percent from a year ago. Read more here.
WHAT TO WATCH
- Twitter plans to enforce the agreement with Elon Musk. The social media company will hold Elon Musk to his offer to buy the company at $44 billion agreed last month, it said in a Securities and Exchange Commission filing. The company is responding to Musk’s pronouncement that the deal cannot go ahead until Twitter provides proof of how many of the accounts used in the daily activity are spam or bots. Read more here.
- Argo starts testing self-driving cars in Miami and Austin. The driverless startup backed by Ford Motor Co. and Volkswagen AG has started testing self-driving vehicles in Miami and Austin, Texas, without a human behind the wheel. While the cars aren’t the first fully driverless vehicles on the road, the company is the first to put cars on the road in major cities during rush hour with no safety driver inside. Read more here.
- EV battery costs could spike 22% by 2026. E Source estimates battery cell prices will surge 22% from 2023 through 2026, peaking at $138 per kilowatt-hour, before they resume a steady decline through 2031— possibly to as low as $90 per kilowatt-hour. The projected spike is the result of growing demand for key raw materials, like lithium, needed to make tens of millions of battery cells. The expected surge could drive the price of EVs.
- Disney to show very few commercials on Ad-supported Disney+. The platform will carry about four minutes of commercials every hour on the ad-supported version of the platform set to launch later this year. The company has also decided not to run any commercials during programming catering to preschool children. The planned four-minute-an-hour ad load is smaller than rivals and significantly smaller than on traditional TV.
- Roblox has recently looked to expand monetization opportunities. The metaverse pioneer is looking to monetize non-depositing players. One method that management is considering implementing is sponsored search results. Roblox believes developers would be highly interested in promoting their particular games on the platform and willing to pay to do so. Roblox also intends to add advertising opportunities in more areas on the platform.
- Target and Lowe's cast a shadow over the consumer economy. Target and Lowe's reported a big drop in earnings that spooked shareholders. A lot of the stock market's fortunes rest on consumers being able and willing to keep spending. If some of these disappointing numbers don't turn out to be one-time blips, then the retail industry could do real damage to the broader economy and the stock market in 2022. Read more here.
