MARKET MOVERS
- Gasoline prices top $5 a gallon nationally for the first time. According to AAA, the average national price reached $5.004 on Saturday. That’s up from about $3.07 a year ago and a record price not adjusted for inflation. At the end of the week, prices had already averaged $5 or more in about 20 states, with the highest prices on the West Coast.
- Luxury-home sales in the US plunge the most since the start of the pandemic. In the three months through April, sales of high-end homes in the US fell 17.8% from a year earlier, the biggest drop since the start of the coronavirus lockdowns, Redfin Corp. said Friday in a report that measured the top 5% of listings in each of 50 large metropolitan areas. Meanwhile, non-luxury transactions slipped just 5.4%. Read more here.
- U.S. budget deficit narrowed in May as pandemic spending eased. Federal outlays in May fell by 24% to $455 billion, not adjusting for calendar differences, the Treasury Department reported Friday. That reflected a reduction in spending on pandemic programs at the Treasury and Labor Departments and the Small Business Administration. The federal deficit is on track to fall to $1 trillion this fiscal year. Read more here.
- E-Commerce growth has slowed. The J.P. Morgan team wrote Friday that U.S. e-commerce sales made up 13.2% of U.S. retail sales in 2021, down from 13.6% in 2020. They note that e-commerce sales grew 15% in 2021, compared to growth north of 20% in 2020 amid lockdowns. Shoppers returned to stores in the past year as pandemic restrictions faded.
- Grayscale taps top Obama lawyer as it pushes for Bitcoin ETF. Donald B. Verrilli Jr., the former U.S. solicitor general between 2011 and 2016, has been retained by Grayscale as additional legal counsel. He will join the legal team pushing for the Securities and Exchange Commission to allow Grayscale’s $19.2 billion Bitcoin Trust fund to be converted into an ETF that would be listed on the NYSE.
- The Biden administration to pursue rules requiring less Nicotine in U.S. cigarettes. The policy, which the administration is expected to announce as early as next week, likely wouldn’t take effect for several years. The Food and Drug Administration first must publish a proposed rule, then invite public comments before publishing a final rule. Read more here.
- Consumer sentiment plunges to a record low in June. The University of Michigan’s gauge of consumer sentiment fell sharply to a record-low reading of 50.2, down from a May reading of 58.4. According to the Michigan report, a gauge of consumers’ views on current conditions tumbled to 55.4 in June from 63.3 in the prior month, while a barometer of expectations fell to 46.8 from 55.2. Higher gasoline prices and overall inflation are weighing on sentiment.
- Home buyers pause amid rising rates and prices. Buyers are backing away from the market, with a plan to wait six or even 12 months before they resume their search, according to a new survey of 900 real estate professionals conducted by HomeLight. About 35% of real estate professionals reported that they have seen buyers drop out of the market completely. Read more here.
WHAT TO WATCH
- Tesla files for a 3-for-1 stock split. The split isn't set in stone, for the record. Tesla's board of directors is simply requesting that shareholders authorize the issuance of another four million shares, up from the current cap of two million, only 1.04 million of which are currently outstanding. The matter will be put to a vote at the company's 2022 shareholder meeting scheduled for Aug. 4. Read more here.
- The U.S. housing market is at the beginning stages of the most significant contraction in activity since 2006. It hasn’t shown up in many data series yet, but mortgage applications are pointing to a large decline over summer. Home-purchase mortgage applications are down 40% from their most recent peak in 2021. If the volume of applications falls, mortgage originations of home closings will also decline.
- Markets expect the Fed will now be more willing to risk recession to fight hot inflation. The first implication is if the Fed’s going to be aggressive, then the possibility of a recession in 2023 rises. We're seeing the yield curve today flatten dramatically, and people are going to start looking for inversion. When shorter-duration Treasury yields rise above the longer duration yields, that is an inversion and is viewed as a recession warning. Read more here.
- Apple CEO Tim Cook pushes for privacy legislation ASAP after a visit to Congress. Cook said in a letter to Congress that lawmakers should advance privacy legislation that’s currently being debated “as soon as possible.” The bill would give consumers protections and rights dealing with how their data is used online and would require that companies minimize the amount of data they collect on their users. Read more here.
