Hey Snackers,
It’s been over 100 days since Russia invaded Ukraine. The war has killed thousands and displaced another 12M people. Experts say the outcome is unlikely to be clear even in the next 100 days.
In the markets, the bumpy ride continued. Stocks fell over June’s first trading week, but there’s been some green in between all the red: the major market indexes closed the week up 5% from their 52-week lows last month.
More hyped than “Stranger Things”... at least by economists. Friday's monthly jobs report, aka: America's “Labor 101” report card, came at a critical time for the economy. The results: the booming job market cooled slightly in May. Key word: slightly.
A tale of two markets... Unemployment stayed at a pandemic low of 3.6%, and rebounding sectors like hospitality can't hire fast enough. The paradox: sectors that thrived mid-pandemic are slowing hiring and cutting jobs to shave costs.
A slowdown could be good… if done right. While rising wage growth is usually positive, at the current pace it’s nearly impossible to tame inflation (aka: econ enemy #1). Wages and purchasing power are actually falling when adjusted for inflation — read: not keeping up with rising prices. The Fed’s big challenge: cool the labor market without undoing the progress made during the rebound. But it could be hard to distinguish between a healthy cooling and a recession — which experts see as increasingly likely.
Open for biz… China’s biggest city is opening back up after strict Covid lockdowns rattled residents and global supply chains. Last week Shanghai officials lifted restrictions for most people after two months of isolation. Now Shanghai's main port (aka the world's largest) is working through thousands of backlogged containers chock-full of everything from diapers to dishwashers. With 26M residents returning to daily routines, oil demand could spike, translating to even higher pump prices worldwide.
Tightening time… The Fed’s busting out a new-ish tool in the inflation fight. Early in the pandemic, the US’s central bank used quantitative easing (QE) — aka “printing money” — to stimulate the economy. Now it’s switching to quantitative tightening (QT), basically destroying the $$ it printed by letting bonds and other securities it purchased mature, which reduces its cash balance and the money supply. There’s a risk the Fed could tighten too quickly (it’s selling 10X faster than its last QT in 2017), which might mean more volatility for stocks.
Tim Cook’s cookin’ up… Apple’s version of VR. Apple’s annual developer conference kicks off today. Analysts expect a new iPhone OS and a MacBook Air refresh. We may also see a long-awaited mixed-reality headset. Apple reportedly showed its board a prototype last month, a sign it could soon launch its first new hardware since its 2015 Watch. But the Fruit’s entering a market with heavy hitters: Meta’s Quest 2 has 78% market share, and Sony and Microsoft are also players. One analyst thinks Apple could ship 3M headsets next year.
Weddings, prom, and a grad party… not enough closet space. A packed season of IRL events is fueling demand for formal fits. Last quarter, Rent the Runway’s revenue doubled from the start of the pandemic in 2020, thanks partly to its return-from-home option. It’s a different story for rival clothing service Stitch Fix, which is struggling to lure new customers as lax office dress codes (think: elastic waistbands) cut demand for everyday outfits. We'll find out whether the uptick in summer soirees has affected orders when both report Thursday.
Authors of this Snacks own shares of Apple, Tesla, Ford, Netflix, Twitter, Microsoft, Uber, and Snap
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