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Situational awareness:

  • The weight of evidence for a recession is mounting and the risks to second quarter earnings remain material, Morgan Stanley analysts said in a recent note.
  • OPEC agreed to extend its current production cuts by an additional 9 months. (CNN)
  • The Trump administration added more products from the EU to a list of goods it could hit with tariffs as the dispute between Airbus and Boeing continues. (Bloomberg)
  • Ahead of earnings season, 77% of companies issuing pre-announcements say their profits will miss Wall Street expectations. (CNBC)
  • Seats are empty and traders are at the bar at 1pm as Deutsche Bank is expected to cut the jobs of hundreds of U.S. equities and rates traders in the coming days. (Bloomberg)
1 big thing: College housing costs are out of control

Illustration: Sarah Grillo/Axios

The prices for U.S. student housing have never been higher, rising to an average of nearly $92,000 per bed, data shows.

How we got here: Previously a lightly invested subsection of the housing market, investment managers, REITs and cross-border investors jumped in with both feet and were behind 50% of all acquisitions in the sector by early 2018. That's up from just 30% a few years ago, new reporting from Real Capital Analytics finds.

  • Investors have saturated the space to the point that capitalization rates — the profitability potential on real estate investments over a one-year horizon — have fallen to a record low.
  • "Student housing was once a property sector ... not managed by professional investors," Jim Costello, senior vice president at Real Capital Analytics, writes. "Institutional investors have 'discovered' this sector in the current economic cycle and price performance has reached record highs as a result."

The big picture: Student housing prices are just the latest example of the ongoing doldrums in the U.S. housing market that has been driven largely by decreasing home affordability, even though price increases have slowed in 2019 and mortgage rates are near record lows.

The housing market is still out of reach for average Americans, according to the U.S. Home Affordability Report, released Wednesday by ATTOM Data Solutions. The report found that median selling prices were too high for average wage earners in three-fourths of U.S. real estate markets in Q2.

  • And while affordability is improving in four out of five markets compared with last year, the gap between home-price appreciation and wage growth has barely budged.

What to watch: "After robust gains over the past five years, the nationwide nominal house price index is now 40% above its 2012 low-point and 4% above the peak reached in 2006," analysts at JPMorgan cocluded in a recent study.

Bonus: The price of a bed
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Data: Real Capital Anlaytics; Chart: Axios Visuals

At more than $90,000 per bed and all-time low expected returns, student housing could be maxed out for investors, Costello says, but there's still room for prices to rise.

  • "There should be less upward price pressure from new entrants with professionally-managed capital. Still, less pressure upward is not the same thing as saying that price levels will retreat.
  • "The sector has ongoing organic demand from the demographic push of Gen Z, as well as the demand for the replacement of obsolete cinder block dormitories typical of on-campus housing."
2. Investors worry Hong Kong protests could hurt business

Protests against a proposed Chinese extradition bill in Hong Kong have continued as groups of protesters occupied and ransacked the city's legislative chamber Monday and were met with tear gas. The city's leader, Carrie Lam, condemned the "extreme violence and vandalism."

Why it matters to the market: The growing unrest could dampen the territory's prominent financial market, which saw a major boom in the first half of the year.

  • Nearly 70 firms went public on the Hong Kong stock exchange, according to financial consultancy KPMG, a 40% increase from the same period last year. It was the highest number of new public companies during the first half of the year since 2014.

Millions of residents have taken to the streets and the protests are already impacting business decisions. Real estate developer ESR Caymen canceled its $1.24 bullion listing in June because of the turmoil, according to Japan's Nikkei Asian Review.

The bottom line: Analysts say the financial market has yet to suffer any serious consequences, but if protests lead to regulatory changes, "then that's a whole other story," Yuguchi Yutaka, partner in the KPMG Asia listing advisory group, told Nikkei.

3. Manufacturing numbers keep getting worse
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Data: IHS Markit; Chart: Andrew Witherspoon/Axios

Global manufacturing numbers continued to weaken in June, with a worldwide gauge of factory activity rendering its weakest reading since October 2012 as the number of new orders contracted sharply.

The big picture: June's reading is the first time since November 2012 that the index has been in contraction for two consecutive months, with the fall in the manufacturing numbers seen in both developed and emerging countries. However, developed countries, particularly in the eurozone, have been hit the hardest.

  • "The decline might partly have reflected the impact of newly imposed tariffs on sentiment, suggesting that the PMI could recover some lost ground now that a truce has been reached," analysts at Capital Economics said in a recent research report

Be smart: Capital Economics further noted that manufacturing PMIs fell in all of the world's largest economies except the U.S. and Brazil in June.

  • "But the modest rise in the US PMI left it still at a low level and the alternative ISM manufacturing index fell to its lowest since October 2016," research analysts said. The firm is expecting U.S. GDP growth to slow from 3.2% in Q1 to around 1.7% in Q2.

Of note: IHS Markit's data also showed China's PMI fell to a five-month low of 49.4. U.K. manufacturing fell to 48, the lowest level since February 2013.

4. Goldman Sachs takes some air out of Zoom

Zoom's stock became a victim of its own success Monday as Goldman Sachs analyst Heather Bellini raised her price target to $66 from $53, but lowered her rating from Neutral to Sell, arguing that "market expectations from a valuation perspective have gotten ahead of themselves."

  • Zoom's stock price fell a little more than 2% on Friday to $86.93 a share. It's risen more than 130% from the company's IPO price of $36 in mid-April.

The big picture: Like Beyond Meat and other recent IPOs whose shares have jumped more than 100% in the months, and sometimes days, since their IPOs, many Wall Street analysts remain bullish on the overall company but are growing wary of the extreme price tags.

5. A look at global generational growth
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Data: Maddison Project Database via Our World In Data; Note: GDP per capita expressed in international U.S. dollars, adjusted for inflation and price differences between countries; Chart: Harry Stevens/Axios

Axios' Shane Savitsky writes: The average person on Earth is now 4.4 times richer than their ancestors were in 1950, according to an analysis by Max Roser, founder and editor of Our World in Data.

  • Why it matters: That's equivalent to the prosperity of a U.S. citizen in 1950 — when the U.S. was the world's richest country. In response, the world has seen a jump-start in education, an increase in life expectancy and lower child mortality rates.

The biggest winners have been smaller nations that have benefitted from the explosion of the global economy, usually via successes in technology or finance — places like South Korea (a 32.2x jump in per capita GDP since 1950), Taiwan (30.4x) and Singapore (27.5x).

Go deeper: Check out an interactive version of the graphic above, where you can view and compare each country's growth, created by Axios' Harry Stevens.