The U.S. jobs market edged closer to its pre-pandemic self last week as initial jobless claims totaled just 406,000 for the week ended May 22, according to the Labor Department.  While that level is still well above the pre-Covid norm, it is the closest to the previous trend and a decline from the previous week’s 444,000.

U.S. orders for big-ticket manufactured goods dropped unexpectedly in April for the first time in 11 months as a shortage of computer chips disrupted auto production.  The Commerce Department reported that orders for factory goods meant to last at least three years fell 1.3% in April after rising 1.3% in March.  Factories have been hamstrung by a shortage of supplies as the economy reopens from the pandemic and demand for goods and services rebounds rapidly.

Contracts to purchase previously owned U.S. homes declined in April following a record-low inventory of homes for sale in the first quarter of 2021.  The National Association of Realtors said their Pending Home Sales Index, based on contracts signed last month, fell 4.4.  Pending home contracts are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.  Compared to one year ago, pending sales were up 51.7%.

Sales of new homes fell a bigger-than-expected 5.9% in April, a drop that analysts blamed in part on rising home prices and lack of inventory.  Sales dropped to a seasonally adjusted annual rate of 863,000 last month. That followed a sales pace of 917,000 in March, which was revised down from an original estimate of 1.02 million.  The median price of a new home sold last month was $372,400, up 11.4% from March while the average price of a home sold in April was a record $435,400, up 8.7% from March.

It finally happened; a large technology company finally acquired a significant legacy media company.  Amazon has purchased MGM Studios for $8.45 billion.  Amazon needed more content for Prime Video to stay relevant against Netflix, Disney+, Hulu, HBO Max and the many other streaming services competing for eyeballs. Buying MGM not only gives it library favorites like “James Bond,” “Rocky,” “Real Housewives” and “Survivor.” It also improves its odds of making better originals with a full-fledged studio that has made recent hits such as “The Handmaid’s Tale” and “Fargo.”

Ford expects 40% of its global sales to be battery-electric vehicles by 2030 as it adds billions to what it’s spending to develop them.  The automaker says it will add about $8 billion to its electric vehicle development spending from this year to 2025.

Home prices in March were 13.2% higher, compared with March 2020, according to the S&P CoreLogic Case-Shiller National Home Price Index.  That’s up from the 12% annual gain in February, and it marks the 10th straight month of accelerating home prices.  The March gain is the largest since December 2005 and is one of the largest in the index’s 30-year history. Prices are being pushed higher by incredibly strong competition in the market. High demand is butting up against near record-low supply, resulting in bidding wars for the vast majority of listings.  Cities with the strongest price gains continue to be Phoenix, San Diego and Seattle.

U.S. consumer confidence was little changed in May as consumers’ short-term optimism of conditions retreated on expectations for decelerating growth and softening labor market conditions in the months ahead.  The Conference Board said on Tuesday its Consumer Confidence Index dipped to a reading of 117.2 this month, following a reading of 117.5 in April.

Oregonians receiving regular unemployment benefits must start looking for jobs by July 31 to keep receiving their weekly payments, reinstating a requirement that had been on hold during the pandemic.  With Oregon employers facing a labor shortage, the state announced last week that benefits recipients soon would have to show that they’re actively seeking work to keep getting their money.

U.S. stocks climbed yesterday as the technology sector and shares benefiting the most from the economic reopening led the advance.

The average interest rate on a 30-year fixed-rate mortgage — the nation’s most popular home loan — returned to an even 3% last week, according to mortgage giant Freddie Mac.  The 30-year rate jumped from a week earlier, when it averaged 2.94%. A year ago at this time, the average was 3.24%.  Mortgage rates had been hovering below 3% for weeks. They climbed last week due to signs of rising inflation, and to the release of notes from the last Federal Reserve meeting. The notes suggested the Fed may soon start unwinding policies that have helped keep interest rates low.

The Treasury Department detailed plans to have any cryptocurrency transfers of at least $10,000 to be reported to the Internal Revenue Service.  As with cash transactions, businesses that receive cryptoassets with a fair-market value of more than $10,000 would also be reported on. The report is part of the Biden administration's plans to beef up the IRS in hopes of collecting more tax revenue that otherwise goes unreported.  The IRS first began asking individuals if they bought or sold virtual currencies in 2020, and now requires individuals to report capital gains realized from any cryptocurrency transactions.

The cryptocurrency sell-off continued over the weekend following a roller-coaster week of trading, as authorities in China and the U.S. move to tighten regulation and tax compliance on all cryptocurrencies.  A JPMorgan report showed large institutional investors were dumping crypto’s in favor of Gold. The news raised questions about institutional support for cryptocurrencies.

The number of people traveling again is on the rise. So are prices.  Airfares and hotel rates are climbing as travelers return in the highest numbers since the pandemic began, hitting beaches, mountains and visiting friends and family after a year of being cooped up.  Even the cost of a road trip is climbing as gasoline prices reach the highest levels since 2014.  Domestic airline fares are up 9% since April 1 while international fares are up 17%, and they are continuing to rise.

Oregon hotels are reopening, restaurants are serving up meals again and workers are beginning to return to the office.  The state’s factories, though, may have suffered permanent damage.  Overall, Oregon has recovered 59% of jobs lost during the pandemic, and the state’s jobless rate has receded from 13.2% in April 2020 – the highest point on record -- to 6.0% last month.  The manufacturing sector isn’t showing a similar bounce. Oregon has recouped just a fifth of the factory jobs it lost a year ago.
 

The three-week-old antitrust trial between Apple and Epic Games will wrap up on Monday, but not before an appearance from a high-profile defendant. CEO Tim Cook will take the stand today before the companies make their closing arguments and Judge Yvonne Gonzalez Rogers issues a final ruling (neither side wanted a jury trial).  The legal fight started last year when Epic created its own direct payment method within popular game Fortnite, circumventing fees paid for App Store purchases. Apple then issued a warning to Epic regarding the workaround, but the latter refused to remove it, and Apple kicked the developer off its platform.

Things seem to be calming down in the crypto market following a serious plunge and some wild swings seen earlier in the week.  The U.S. Treasury is proposing a requirement that any crypto transfers over $10K be reported to the IRS, among other plans, given that crypto markets pose a "significant" tax-evasion risk. The news is part of a broader Biden plan to raise $700B in revenue over the coming decade by stepping up IRS scrutiny of Americans, including doubling the size of the IRS workforce by hiring 87K additional employees by 2031

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The Biden administration has signaled it will accept a 15 per cent global minimum tax on large multinational companies, in international talks aimed at increasing revenues from corporations that operate across borders.The US plans for a tax regime overhaul, set out in April, proposed applying a new tax based on sales in each country to the global profits of the very largest companies, including big US technology groups, regardless of their physical presence in a given country.
 

The selloff in high-flying assets has continued to extend to the broader market. While the major averages pared big early session losses yesterday, they still registered a third straight day of declines as cryptocurrency-linked shares plunged. In fact, the Nasdaq Composite Index is off by more than 5% over the last few weeks, on pace for its worst monthly performance since September 2020.  In a move that did not help sentiment, the Federal Reserve's minutes from April hinted at the possibility of slowing bond purchases in upcoming FOMC meetings.

Oatly priced its highly-anticipated IPO at a top-of-range $17/share late Wednesday, valuing the firm at more than $10B. The plan calls for the stock to begin trading this morning on the Nasdaq under ticker symbol "OTLY" .  The Swedish-based company produces a variety of vegan foods with oats, including milk, yogurts and spreadable cheeses, and its products are available in more than 20 countries. Revenue more than doubled last year to hit $421.4M, though its net losses widened to $60.4M as it spent heavily on product development, new factories and marketing. During 2020, oat milk sales in the U.S. also soared over 300% to $213M, becoming the second most consumed plant milk after almond milk.

The procession of Americans heading to the unemployment line fell last week, with jobless claims totaling a fresh pandemic-era low of 444,000, the Labor Department reported Thursday.  Economist surveyed by Dow Jones had been expecting 452,000 new claims as the jobs picture improves thanks to an accelerated economic reopening across the country.
 

Don't forget about earnings season! While we're on the tail end of Q1 quarterly results, this week is a big one for the retail sector. Walmart (WMT), Home Depot (HD), Macy's (M) already announced sets of impressive results on Tuesday, though their accompanying stock performances were varied (see Key Earnings section below). Retail earnings shift into high gear today, with reports from Lowe's (LOW), Target (TGT), TJX Companies (TJX) and L Brands (LB).

The crypto craze is no longer ablaze as the traders assess recent happenings in the volatile market. Over the last 24 hours, Bitcoin plunged another 12.6% to $39,407, and is now down 40% from its all-time high of $64,895.22 on April 14.  Besides environmental concerns sparked by Elon Musk - and Tesla stopping to take payment in Bitcoin - the People's Bank of China has banned financial institutions from facilitating cryptocurrency transactions. The statement was coupled with a warning to investors against "speculative crypto trading," which "seriously infringes on the safety of people's property and disrupts the normal economic and financial order."

Sky-high home prices mean demand for ever bigger mortgages, but those prices may also be causing a pullback in homebuying overall. Mortgage applications to purchase a home fell 4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was just 2% higher than the same week one year ago.  The extreme shortage has prices continuing to climb at the fastest pace in over 15 years, and as a result, average purchase loan balances are climbing in tandem. Last week, that average hit $411,400
 

U.S. stocks traded higher yesterday, rebounding from a three-day losing streak as investors made classic reopening trades including airlines after the CDC said fully vaccinated people no longer need to wear a face mask or stay six feet away from others in most settings.

Another inflation gauge came in hot with producer prices jumping 6.2% in April from a year ago.  Companies paid much higher prices to producers in April for everything from steel to meat in another sign of inflation in an economy rapidly recovering from the pandemic.  Year over year the PPI spike was the largest increase since they started tracking the data.

Disney reported mixed fiscal second-quarter results, with the entertainment giant missing Wall Street's revenue expectations as its streaming service added fewer new subscribers than expected. Disney's myriad businesses have been unevenly impacted by the pandemic and start of the reopening process in the U.S. The company's streaming platform, Disney+, has been viewed as a beneficiary of stay-in-place orders, which drove a surge in sign-ups for the service last year.  Shares are trading lower on the news. 
 

U.S. stocks declined sharply again yesterday as hotter-than-expected inflation data triggered massive selling, especially in technology shares.  US Stocks had their worst day in 4 months.

Inflation rose at its fastest pace since 2008 last month with the Consumer Price Index spiking 4.2% from a year ago, compared to the estimates for a 3.6% increase. The monthly gain was 0.8%, versus the expected 0.2%. Excluding volatile food and energy prices, the core CPI increased 3% from the same period in 2020 and 0.9% on a monthly basis.

At the end of April, a record number of jobs were open in the U.S..  The latest Job Openings and Labor Turnover Survey from the Bureau of Labor Statistics showed some 8.1 million jobs were available at the end of April. The prior high for this series, which dates back to 2001, came in November 2018.
 

The Dow climbed to another record high yesterday as investors dumped Big Tech stocks and bet on companies leveraged to a strong economic comeback. The divide between value stocks in the market and growth was significant with the tech-heavy Nasdaq Composite losing 2% as the Dow soared.

Bad news for house hunters: Hiring has slowed for construction workers.  Homebuilders have slowed their hiring pace, even as buyers are clamoring for properties to purchase.  Analysts and economists say the slowdown is a reflection of the exceptional challenge’s construction firms are facing in sourcing building materials.  Employment in the broader construction sector was flat in April, according to the Bureau of Labor Statistics.

Newly unemployed Oregonians will get 9% more from the state each week beginning in July, with weekly benefits rising to as much as $1,033 for some workers.  The higher benefits are the result of an annual adjustment to the size of state unemployment benefits tied to Oregonians’ average wages.  When pay goes up for working Oregonians, benefits go up for the unemployed.  The new payments kick in after July 4, according to the Oregon Employment Department, and only apply to new jobless claims. It won’t change the benefits for those who filed claims before then.

A ransomware attack forced the closure of the largest fuel pipeline here in the US over the weekend. Colonial Pipeline, which operates a 5,500-mile system, said they were forced to halt the transport of fuel from the Gulf Coast to the Northeast on Friday as they took certain systems offline to contain the threat.  US fuel prices are trading sharply higher on the news. 

Home prices are sharply accelerating in the U.S., with the average price of newly constructed homes hovering around $400,000. And thanks to skyrocketing lumber prices — which are up over 300% in the last year — prospective homebuyers want to know if they should prepare for even higher prices.  The National Association of Home Builders estimate’s that lumber prices are adding at least $36,000 to the average purchase price of a new home.

So far, US companies have been blowing past expectations this earnings season, with corporate profits easily exceeding estimates as demand rebounds from the worst points of the pandemic last year. According to FactSet data, nine in 10 S&P 500 companies have reported first-quarter results, and 86% of those companies have topped expectations. If that holds through the next couple weeks, it would mark the highest percentage of earnings beats since FactSet began tracking the metric in 2008. 

Hiring was a huge letdown in April, with nonfarm payrolls increasing by a much less than expected 266,000 and the unemployment rate rose to 6.1% amid an escalating shortage of available workers. Dow Jones estimates had been for 1 million new jobs and an unemployment rate of 5.8%.  Many economists had been expecting an even higher number amid signs that the U.S. economy was roaring back to life.  However, markets had only a mild reaction to the bad news, a sign that investors expect the Federal Reserve to keep its ultra-easy policies in place as well as belief that the big miss likely was a short-term phenomenon.

It's been a whirlwind week for Peloton and its investors. The company sells high-end exercise bikes and treadmills that are touted for their library of workouts and access to live classes. Things for the company really took off during the pandemic as consumers sought the convenience of at-home and on-demand workouts, sending shares of the company up 434% in 2020.  Shares are now more than 50% off their high after the company recalled its newest treadmill.  PTON still has a $26bn market cap, so we’ll revisit this one in the years to come.   

Copper prices hit a record high on Friday in the latest leg of a broad rally across commodity markets sparked by the reopening of major economies and booming demand for minerals needed for the green energy transition. Copper, used in everything from electric vehicles to washing machines, rose as much as 1.4 per cent to $10.361 a ton, surpassing its previous peak set in 2011 at the height of a previous commodities boom.  The price has more than doubled from its pandemic lows in March last year due to voracious demand from China, the biggest consumer of the metal, and also investors looking to bet on a big uptick in the global economy and protect their portfolios against potential for rising inflation.

Stocks of COVID-19 vaccine developers are trending lower after U.S. Trade Representative Katherine Tai announced support for a waiver of intellectual property protections.  A number of large pharma companies, including vaccine developers Pfizer, Johnson & Johnson, and AstraZeneca say waiving IP rights wouldn't solve supply problems in the short term because contract producers lack familiarity with the new technology behind the shots.

Risks of rising prices are intensifying across the economy as a growing number of companies warn that supply shortages and logjams will compel them to raise prices. In fact, tight inventories have seen prices surge for raw materials, ranging from semiconductors and steel to lumber and cotton.  As commodities and materials become more expensive, the bigger question at the table is whether faster inflation sticks around. Putting it in perspective, a sheet of 3/4" plywood at Home Depot is now selling for around $60 (depends on location), up from about $30 before the pandemic - that's a 100% increase. Investors and policymakers alike are hoping that the price hikes prove transitory.

The U.S. employment picture improved sharply last week, with first-time claims for unemployment insurance hitting a fresh pandemic-era low.Initial claims totaled 498,000 for the week ended March 1, against the Dow Jones estimate of 527,000. That was down from the previous week’s total of 590,000, which saw a substantial upward revision from the initially reported 553,000.

"It may be that interest rates will have to rise somewhat to make sure our economy doesn't overheat," Treasury Secretary Janet Yellen said on Tuesday, triggering a selloff in the tech sector which depends on low rates for its lofty valuations. The Nasdaq closed 2% lower on the news, before a correction was issued by the press office. "Let me be clear, it's not something I'm predicting or recommending," Yellen later explained.  The Fed Chair has previously insisted that he's "not even thinking about thinking about higher rates" until the labor market recovers from last year's economic downturn.

Another crypto craze is taking the market by the storm as a parabolic rally for altcoins (cryptos other than bitcoin) took the value of all digital tokens past $2.3T. Dogecoin a crypto that started as a joke, is now changing hands at 68 cents, up about 63% in the past 24 hours, 131% over the past week, and over 11,000% so far in 2021.

Private job growth accelerated in April but fell a bit short of Wall Street expectations, according to a report Wednesday from payroll processing firm ADP.  Companies added 742,000 workers for the month, a jump from March’s upwardly revised 565,000 but a bit shy of the 800,000 forecast from economists surveyed by Dow Jones.

Banks that are flush with cash is usually a good thing, as that generally means lots of lending, but something else is awry in the U.S. financial system. In recent quarters, big banks have detailed weaker-than-expected loan demand and have pushed out the timeline of when they predict it to bounce back. In the absence of lending, extra deposits can be costly for banks, putting pressure on their regulatory ratios and eventually requiring them to hold more capital.  The four largest U.S. banks - JPMorgan, Citi, Bank of America and Wells Fargo - amassed nearly $1T in additional deposits last year due to the scale of fiscal stimulus. Their latest earnings report also revealed that deposits collectively grew by 15% to $6.9T as of March 31, but their combined loan holdings fell 10%.

Hillsboro-based Parr Lumber is acquiring Deer Park, Washington-based Evergreen Truss & Supply.  Parr Lumber says it's expanding into the truss manufacturing market as part of its three-year plan to grow its business.  Evergreen Truss & Supply has been providing products to Eastern Washington and Northern Idaho since 1987.

Pfizer made $3.5bn from Covid-19 vaccine sales in the first quarter and boosted its full-year expectations for revenue from the jabs to $26bn from $15bn as it reported its quarterly earnings on Tuesday. The pharmaceutical company, which splits its Covid vaccine profits with its development partner BioNTech, raised its overall full-year revenue guidance to up to $72.5bn from $61.4bn, mainly due to contracts signed for the delivery of 1.6bn doses in 2021.

A barrage of earnings reports arrives this week. The Q1 earnings season so far has seen a record 87% of S&P 500 companies top estimates and earnings growth on average of 46%. Economic reports to watch include updates on ISM manufacturing, construction spending, factory spending and a the March jobs report at the end of the week. On the corporate calendar there are key events for Merck, Dell Technologies, CarMax, and Union Pacific. 

The Honest Company is looking to raise as much as $439M in an IPO next week that could give co-founder Jessica Alba a stake valued at about $96M. Honest Company sells baby products, cleaning supplies and cosmetics. The company plans to sell 6.5M shares and existing shareholders will sell 19.4M shares in an expected range of $14 to $17. At the top end of the range, Honest would have a market value of $1.54Bn.

Verizon is exploring a sale of assets including Yahoo and AOL, as the telecommunications giant looks to exit an expensive and unsuccessful bet on digital media.  The sales process, which includes private-equity firm Apollo, could lead to a deal worth $4 billion to $5 billion, a loss of about 50% based on the initial purchase price.