Hey Snackers,
“Here goes somethin’!” — the last words of robot Spider-Man as he crashed into a building at Disneyland. The animatronic superhero was defeated while swinging midair during a show.
Markets had a similar experience: the S&P 500 sank 6% in its worst week since March 2020 (aka: when lockdowns hit) as investors moved into “safe haven” assets like US gov’t bonds.
For the first time, US markets were closed yesterday to honor Juneteenth, the new federal holiday commemorating the end of slavery in America.
The sun also rises... the stocks, not so much. The S&P 500 is down 23% this year after stocks slipped deeper into a bear market last week. ICYMI: the Fed went off script and hiked interest rates by three-quarters of a percentage point (higher than the half point originally expected). Fed Chair Powell (#JPow) said we could get another big hike in July.
The market looks forward... We know the economy isn't the stock market. Prime example: mid-2020, the market was sipping prosecco on a Hamptons yacht (records on records) while the economy was eating Safeway frozen peas in bed (record GDP shrinkage). Cue: trillions in stimmy $$, disappearing interest rates, and a big econ rebound. Now:
It’s the econ-flation paradox… Inflation hurts the economy, but so does fighting inflation. To tame enemy #1, central banks need to slow the economy (which is sinking stocks). The sweet spot: cooling the economy without causing a recession and igniting a market meltdown. The best news could be if prices (especially oil and gas) show significant signs of easing.
Falling far from the tree... Apple’s supply chain. The Fruit’s sleek gadgets are nearly all manufactured in China. But China's work-stopping zero-Covid policy could cost Apple $8B in sales this quarter. Now some businesses are fleeing the country: Foxconn, the company that assembles most iPhones, is moving more of its production to nearby Vietnam and Taiwan. A wider manufacturing exodus could hurt China’s economy, which is already on pace for its slowest annual growth in decades.
The biggest pro sports matchup… is happening off the field. Streamers are seeing live sports as a key to turn fickle viewers into loyal fans. Last week Apple signed an exclusive $2.5B deal to stream all Major League Soccer for 10 years, the first time a full US pro season will be streamable in one place (+ cable). This year Amazon and Apple will stream some NFL and MLB games. Disney and Sony fought to stream India’s pro cricket league (but lost their bids). And Netflix, which is losing subs, is racing Amazon and NBC for Formula One rights.
Movin’ back in with Mom… Millions of Americans raced to buy their dream homes last year — now that dream is impossible for many. Soaring mortgage rates, low inventory, and sky-high prices are finally cooling the hot housing market. Mortgage applications fell to a 22-year low last month, and online brokers Compass and Redfin did mass layoffs last week. Homebuilding giants Lennar and KB Home saw sales dip from records last quarter (we’ll get fresh earnings this week). Still, experts say it could take years for home prices to really cool.
Need Thrifty-er ice cream… Rite Aid’s losses deepened last quarter after it took on debt to build more pharmacies, while its drugstore rivals invested in profitable ventures (think: wellness clinics, insurance partnerships). Earnings jumped at CVS and Walgreens as Covid tests and vaxxes continued (though fewer), and Pfizer’s Covid pill boosted sales. While CVS and Walgreens boosted their earnings forecasts for this year, Rite Aid — which reports Thursday — expects sales to dip despite rising store visits as it cut costs.
Authors of this Snacks own: bitcoin and shares of Apple, Exxon, Uber, CVS, Amazon, Netflix, and Disney
ID: 2252433