May 11, 2022
🙏 Welcome back.
Today's newsletter, edited by Pete Gannon, is 689 words, a 2½-minute read.
🚨 Situational awareness: Beyond Meat shares fell as much as 25% in extended trading after the company reported wider losses than expected.
🔔 The dashboard: The S&P 500 closed down 1.7%.
- Biggest gainer? Electronic Arts (+8%), after an analyst upgrade.
- Biggest decliner? Dish Network (-19.7%), after its first investor day in more than a decade disappointed analysts.
1 big thing: Dark days in crypto world
Crypto’s been more of an undercard to what ails the broader market, but it’s slowly moving to the main event, Axios' Javier E. David writes.
Why it matters: A lot of small investors piled into crypto as the market boomed — money they may not be able to recover if they’re not "hodl-ing" for the long term.
Zoom out: An alternative asset class once billed as an inflation hedge, crypto (in theory) should be thriving in an environment of high prices.
Instead, the sector is getting roiled by similar, if not identical, dynamics that are driving stocks lower and bond yields higher (i.e., tighter monetary policy, higher rates), with selling pressures intensifying.
- Bitcoin, once promoted as a safe haven from what ails fiat money, is lodged at its lowest levels in a year, at $30,000 — off more than 50% from its peak hit last fall.
- Shares of Coinbase, the crypto trading platform, dived by 25% intraday, and are down over 80% from the IPO price.
- Terra (UST), a stablecoin meant to trade at parity with the dollar, is now trading significantly below that level.
- Luna, caught in UST’s crossfire, is off a staggering 94% ... on the day.
The bottom line: Right now the sector is moving in near lockstep with risk-sensitive stocks and subjecting investors to the same speculative roller coaster.
2. Charted: Inflation shows no sign of fading
A key measure of consumer prices surged ahead in April, diminishing hopes that inflation will fade in the near future, Axios' Neil Irwin writes.
Driving the news: "Core inflation," which excludes volatile food and energy, surged ahead 0.6% in April. That number had risen only 0.3% in March, and investors and economists are watching it closely for signs of underlying inflation trends.
- The hot core inflation number was driven by a rise in services excluding energy, which was up 0.7%.
The bottom line: Inflation pressures spreading away from goods and into services is a worrying sign.
3. What's happening
4. FDA on defense over baby formula
The escalating baby formula shortage has now reached Washington, as the FDA defends its handling of the situation against Republican criticism, Nathan writes.
Why it matters: Parents are scrambling to find formula, with retailers reporting about 40% of their supplies out of stock and actively limiting purchases. About 3 in 4 parents of young babies rely on it.
Driving the news: Republicans are questioning the FDA's handling of an investigation centered on evidence of a foodborne pathogen at Abbott Nutrition's facility in Sturgis, Michigan, which led to a voluntary recall and essentially shut down the facility in February.
- The recall has exacerbated shortages that had already begun months earlier due to industrywide supply chain issues.
Abbott today said, pending a green light from the FDA, it could restart the site within two weeks. From then it will take six to eight more weeks before product is available on shelves.
The other side: The FDA said it had anticipated the supply chain implications but had taken a series of steps to bolster supplies.
- "They are working around the clock to address any possible shortage," the White House said Monday.
5. Axios reviews F-150 Lightning ⚡️
Axios' Joann Muller flew to Texas last week to be among the first to try Ford's new electric F-150 Lightning.
💭 Joann's thought bubble: It's more than just another pickup truck. It's poised to open the floodgates for EV adoption in the U.S. by showing how much they can do.
- Priced just under $40,000, the F-150 Lightning is a versatile and affordable gateway product that can (sometimes) be charged in under an hour.
Zoom in: The "mega power frunk" — or front trunk — could be the Lightning's biggest selling point. It has room for 400 pounds of cargo.
6. What they're saying
"The energy is coming back."— Life Time President Tom Bergmann tells Nathan, as the gym and its competitor chain Planet Fitness both reported sharp increases in revenue and users this week.
Thanks to Sheryl Miller for copy editing today's (and every day's) newsletter.