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Stock indexes are mixed to start the week with the Dow backpedaling a bit while the Nasdaq is at a new record high and the S&P 500 is within striking distance of its most recent record close.
Excitement about Nvidia’s earnings on Wednesday is providing some fuel for tech bulls which expect the company to beat Wall Street estimates by a wide margin, in turn providing a boost to the broader tech sector.
The focus today remains on retailer earnings with results due from AutoZone, Lowe’s, Macy’s, and Urban Outfitters. Bears expect these companies and others in the days ahead will continue to paint a more dire picture of US consumers who bears believe are starting to crack under the strain of unrelenting inflation.
Bears are also warning that renewed hopes for Federal Reserve interest rate cuts may once again be overly optimistic. Many are pointing to comments made by Fed speakers yesterday that cast doubt on whether inflation will come down fast enough to justify as many rate cuts as central bank officials have been forecasting.
Cleveland Fed President Loretta Mester outright said she was backing away from her expectation that the Fed would cut interest rates three times (-25 basis points each) in 2024.
Another slew of Fed speakers is on the calendar today, including Fed Governor Christopher Waller.
There is no economic data of note today.
More NEW Houses Being Put Up "For Rent" - Aiming to capitalize on the steep home prices and higher mortgage rates, developers are putting up new houses for rent as fast as they can. In 2023, 93,000 new single-family homes for rent were completed, according to estimates from housing consulting firm John Burns Research and Consulting. That was 39% more rental homes than in 2022, and the most in any year ever. The breakneck pace is poised to continue this year before easing by 2025. New rental homes come in all shapes and sizes, from one-bedroom cottages to five-bedroom spreads with big backyards. Some are townhomes, others are detached houses. They are sprouting up, especially in outer-ring suburbs of Arizona, Texas, and Florida cities, and in other places with fast population and job growth. While rent growth has slowed from its double-digit-percentage pandemic peaks, rents for houses are still trending higher than those for apartments, according to JBRC. Occupancy, which has been slipping in multifamily buildings, has also been more resilient in the rental-house sector, indicating more sustained demand. Rental builders are betting that the lowest level of home affordability since the 1980s means that even relatively affluent Americans will remain renters, squeezed by near-record home prices, mortgage rates above 7% and other rising home-related costs. A large number of people also simply prefer to rent a house, builders say. Source WSJ
What You Need to Know About the Newest "Biometric Payments" - To start with, Biometric payments rely on unique physical or behavioral traits such as fingerprints, facial recognition, iris scans, or voice recognition. Mastercard, which is working with PopID, launched a pilot for face-based payments in Brazil back in 2022 and it was recently deemed a success as 76% of participants said they would recommend the technology to a friend. A deal that PopID recently signed with JPMorgan is a sign of these types of things are coming to the U.S., said John Miller, PopID CEO, and what he thinks will be a breakthrough year for "pay-by-face" technology. Most quick-service restaurants require consumers to provide their loyalty information to earn rewards, which means pulling out a phone, opening an app, finding the link to the loyalty QR code, and then presenting the QR code to the cashier or reader. For payment, consumers typically choose between pulling out their wallet, selecting a credit card, and then dipping or tapping the card or pulling out their phone, opening it with Face ID, and then presenting it to the reader. Miller says PopID simplifies this process by requiring just touching an on-screen button and then looking briefly at a camera for both loyalty check-in and payment. Though consumers are getting more comfortable with biometric technology, the majority still prefer fingerprint scans to facial recognition, according to a 2023 survey from PYMENTS, but age is a factor. Gen Z consumers are more open to facial recognition than to fingerprint scans or entering a password. Juniper Research forecasts over +100% market growth for global biometric payments between 2024 and 2028, and by 2025, $3 trillion in mobile, biometric-secured payments. Source CNBC
Target Is Cutting Prices On 5,000 Popular Items: Target plans to reduce prices on about 5,000 “frequently shopped items” heading into the summer, the big-box retailer announced Monday, as it looks to attract inflation-wary shoppers who are more conscious of their spending and boost demand for essential products in a push to turnaround last year’s sales slowdown. The new price cuts on food, beverages and household essentials come amid the high cost of some popular items, causing Americans to rework their spending by seeking deals or cheaper alternatives—a trend that has created increased competition in the retail business. Target’s sales were down -1.6% to $107.4 billion in 2023, marking the first revenue decline in seven years. The weaker revenue was partly attributed to lower visitor numbers during the year, thanks to inflation and stiff competition from rival retail chains, including Walmart. The retailer has so far slashed prices on roughly 1,500 items, and hopes to introduce thousands more price cuts to sum up to 5,000 over the course of the summer. Target reports Q1 2024 earnings on Wednesday. Source Forbes
Florida’s +125% Surge in Property-Insurance Bills Sows Havoc: Two major generational forces are colliding in Florida: The toll of climate change, and the challenge of caring for an aging society. Drawn to the state’s warm weather and low taxes, baby boomers have been piling into the retirement haven for years, leaving it with one of the most elderly populations in the US. That’s turning it into a harbinger for other states as the consequences of rising temperatures ripple through the economy in ways few had envisioned. With Florida being threatened by more powerful hurricanes, commercial-property insurance costs last year surged at nearly five times the national pace, according to credit rating firm AM Best Co. Inc. In the five-year period ending 2023, costs surged 125%. Last year, annual premiums soared about 27% in the state — for the second year in a row — while nationwide the growth rate slowed to nearly 6% from about 15%. That’s slapping what care providers say is effectively a new — if little noticed — tax on an industry already contending with labor shortages, soaring wages and rising supply costs. The result? More and more nursing homes are closing down each year, while others are missing debt payments. At the same time, the costs for senior care – at all levels from independent living to around-the-clock nursing — are rising, threatening to become unaffordable for a growing number of retirees. Source Bloomberg
Carl’s Jr. and Del Taco Are Scaling Back Beyond Meat Products: Two of the earliest adopters of Beyond Meat Inc. — Carl’s Jr. and Del Taco Restaurants Inc. — are no longer serving the company’s plant-based beef at many of their restaurants as consumer enthusiasm for its meat substitutes fades. Most of Carl’s Jr.’s more than 1,000 locations have taken the Beyond Burger off the menu as of April 24, a restaurant spokesperson told Bloomberg. Mexican chain Del Taco also removed Beyond Meat from all of its nearly 600 locations last spring, a spokesperson told Bloomberg, citing “low sales.” However, it continues “to explore potential new and innovative plant-based menu items” with Beyond Meat. Source Bloomberg
The 49-Year Unicorn Backlog: If the current sluggish pace of IPOs and acquisitions continues, it would take more than 49 years for every U.S. unicorn to generate an exit. That was the finding from an analysis of recent exits for American companies on the Crunchbase Unicorn Board. Over the past 12 months, just 15 private, venture-backed companies valued at $1 billion more have gone public or gotten acquired. Meanwhile, another 741 U.S.-based private, venture-backed companies remain in existence that met or exceeded the $1 billion threshold at their last reported valuation. If the exit tempo of the past 12 months stays the same, it would take just over 49 years to get through that backlog. Even in 2021, the peak year on record, a total of 86 known unicorns carried out exits, per Crunchbase data. And that was pretty unusual. Typically, the annual crop of unicorn exits is far smaller. For the past five years, it’s averaged 38 per year. At that pace, it would still take nearly 20 years to get through the current unicorn supply. Of course, this is a theoretical exercise. No one expects every company once anointed with a coveted $1 billion-plus valuation will go on to exit. Source CrunchBase
How to Remove Your Personal Info From Google’s Search Results: It can be quite frightening to find personal information about yourself in a Google search, like a home address or phone number, but you can take proactive steps to protect your privacy. A couple of years ago, Google expanded the ways you can submit removal requests for search results containing personal info. While you previously had to meet a very high threshold for results containing sensitive data to be wiped, the process is now available for more people. In addition to the removal of personal information, Google considers removal requests for images of minors, as well as deepfake pornography and other explicit content. Although getting results scrubbed from Google Search won’t remove web pages from the internet, it will divert a huge driver of traffic. Source Wired
Giant Hail Storms Wreaking More Destruction: On May 9, hailstones the size of baseballs pummeled San Marcos and Johnson City, Texas, taking down power lines and cracking car windscreens. Only weeks before, hail pounded a solar farm in the state, damaging many panels. And in mid-March, grapefruit-sized hail pelted down from the skies over Kansas, Oklahoma and Missouri, leading to damages on the ground exceeding $4 billion. For insurers, the first half of 2024 has underscored the growing threat posed by hail, which accounts for more and more of the industry’s losses in the US and Europe. In the decade from 1980 to 1989, the US National Oceanic and Atmospheric Administration reported only eight severe storms in the US that each caused $1 billion (adjusted for inflation) or more in damage. There have been 67 such storms just since 2019. High winds and heavy rains both play their parts in severe storm damage, but hail is the biggest single component, accounting for 50% to 80% of the total annually, Swiss Re says. Setting aside the influence of climate change, hail damage is increasing because of what’s called the bull’s-eye effect: Humans are busy building in the very places that are known to get pummeled. And it’s not just residential property at risk — so are energy resources. Two US events in particular have made insurers nervous to touch big solar farms. Source Bloomberg
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