Hey Snackers,
What grows in Vegas doesn’t stay in Vegas: Sin City just outlawed grass — and not the kind you think. To save water after years of drought, Las Vegas is mandating the removal of lawns.
Stocks ticked down during a roller-coaster week, which included the market’s biggest one-day plunge since 2020. The tech-filled Nasdaq led the selloff, logging its first five-week losing streak in a decade. On the plus side, the US economy added a healthy 428K jobs in April, and the unemployment rate is almost back to pre-pandemic levels.
Q for you: We’re exploring the value of a college degree for an upcoming newsletter, and we'd love to hear from you. If you’re up for being included, fill out our quick poll!
Three weddings and a bar mitzvah... Dance floors and open bars have prevailed over Zoom ceremonies and seltzer cans. 2022 is shaping up to be the "catch-up year," as Americans spend big on experiences they missed over the pandemic. Inflation has been more persistent than Elon trying to buy Twitter, but consumers have shrugged off high prices, which hit a fresh 40-year high (again).
Salmon or short rib?... Too many RSVPs. The "catch up" craze means that all the nixed celebrations are roaring back:
Playing catch-up could fizzle out… The Fed’s betting it can slow inflation without causing a recession, but that’s TBD. If it tightens its belt too aggressively, Americans could tighten their wallets (recession wedding = not ideal). Meanwhile, consumer confidence dipped in April as Russia’s war, China’s Covid crackdown, and swinging oil prices all heightened econ worries. People have already started spending less on online shopping, appliances, furniture, and cars. If high inflation keeps up and savings run dry, they could cut back on experiences too.
Ripping the Band-Aid off… The EU’s preparing to ban Russian oil by year’s end to pressure President Putin — a shift from just weeks ago. The ban will test Europe’s reliance on Russia, which supplies a third of the EU’s oil. Hungary, Slovakia, and others already said they’d need more time to ditch Russian oil. The EU ban will take 2M barrels off the market daily, which could send global oil prices — up 40% this year already — even higher. Supply disruptions have also reduced US diesel inventory to a 30-year low, stressing diesel-guzzling industries (think: shipping, energy).
(Super) Bored Ape Yacht Club… Not even Snoop Dogg can keep NFT prices from dropping like they’re hot. Last year NFTs made a splash in the crypto-sphere, becoming a $17B market seemingly overnight. But global sales are down 92% from September as traders feel the weight of inflation and high interest rates. Last week Coinbase launched its first NFT marketplace, but saw less than $60K worth of trades on its debut. With markets going haywire, collectors are less likely to splurge on a digi-ape — some are selling for less than a third of the OG price.
Shifting gears... This week could be make or brake for Rivian, which reports Wednesday. The EV biz’s shares are down 75% from its November IPO after the truck maker fell short of production goals in 2021 and lowered production targets for this year. Rivian’s skid has hit its backers hard: Amazon (which owns 18%) and Ford (which owns 11%) both lost billions on their stakes last quarter, when Rivian’s losses jumped 7X from a year ago. Rivian’s IPO lockup also ends today, which gives early stockholders their first chance to sell — and could lead to a bigger selloff.
China’s retail retreat… Last week investors wiped $26B off Alibaba’s market cap on rumors that the founder of the “Amazon of China” was detained (the mix-up: same last name, different guy). The scare comes as China’s strict Covid lockdowns put pressure on the country’s economy and deter consumers from dropping cash on non-essentials (like: new clothes, vacays). Last quarter Baba posted its slowest sales growth since its 2014 IPO. China’s spending slowdown, and competition from e-comm rivals like JD.com, could deliver another blow to Baba’s profits when it reports Thursday.
Authors of this Snacks own: shares of Twitter, Uber, Shopify, Amazon, Disney, Tesla, and Ford
Correction: In the Snacks newsletter published May 6, 2022, we misstated that earnings were expected from Zillow and Berkshire Hathaway. They had already reported. Zillow reported on May 5 and Berkshire Hathaway on April 30. We’ve updated the online version of the newsletter, and we regret the error.
ID: 2191589