History means nothing

MARKETS

  • U.S. markets: We closed out last week ringing the bell with Pinterest and Zoom...and head into this week ready to face down the sluggers of corporate earnings, including Facebook, Amazon, and Microsoft.
  • Global markets: Some European and Asian exchanges are closed for Easter Monday.
  • Global elections: Have you heard the one about the comedian with no political experience and the Ukrainian presidential race? Well, now you have: Volodymyr Zelensky was victorious with more than 70% of the vote yesterday.

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REAL ESTATE

What Happens on Wall Street, Stays in San Francisco

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Question: What do Lyft, Pinterest, Airbnb, Instacart, Postmates, Slack, and Uber have in common?

If you answered, “they’re tech companies that’ve just IPO’d or are about to, c’mon I read the Brew”...you’re only half correct—they’re also all headquartered in San Francisco. And as it dawns on, say, an early Lyft employee that she’s got millions to drop on a house following the IPO, she and her coworkers are poised to shake up the city’s housing market.

Not to get too dramatic, but this weekend Alexis Madrigal at The Atlantic said it could amount to…

“Housing Armageddon”
Stepping in for Bruce Willis is Deniz Kahramaner, a data scientist affiliated with the startup Compass, who looked at who was buying houses in San Francisco in 2018.

  • His team found that 51% of home purchasers it could identify in 2018 worked in software.
  • Most of the buying was done by employees of established companies like Apple, Salesforce, and Google.

Which means a big crop of new home purchasers is about to hit the open house scene. Kahramaner calculated that this new wave of IPOs will put 5,000 new buyers on the market. And over 1,000 of them will be looking for homes worth at least $3 million.

Some real estate analysts think the hype is overblown

With the SF housing market in the middle of a cooldown, the IPO money might counteract the underlying market trend rather than set it on fire.

Plus, there’s a major study of the impact of IPOs on local housing prices in CA from 1993-2017. It found that prices within 10 miles of a company’s HQ jumped 1.8% after the firm filed for an IPO and issued shares...but didn’t change after the lockup period.

Bottom line: We’ve never seen a roster of big companies located in such a concentrated area IPO in such a narrow window of time. So...historic precedent is not much to go on.

SOCIAL MEDIA

Sri Lanka Quiets Social Media

Yesterday, at least 207 people were killed and hundreds more injured in a series of terrorist attacks in Sri Lanka. At least eight explosions appeared to target visitors and the minority Christian community on one of its holiest days, Easter.

Soon after, the country made the “unilateral decision” to block several social media networks—including Facebook, WhatsApp, YouTube, Instagram, and Snapchat.

  • The motive: to stop the spread of misinformation about the attacks and stymie hate speech that could provoke further violence.

But there could be unintended consequences. “These disruptions are extremely problematic as they limit the public’s ability to seek assistance and check up on friends and family in a time of crisis,” the director of a digital rights group told the WSJ.

FYI, Sri Lankan officials already have a rocky relationship with social media companies. Last year, the government briefly enacted a similar strategy after calls for anti-Muslim violence went viral.

Bottom line: Yesterday’s move is emblematic of growing mistrust of the social platforms that have become pervasive in our lives. Remarkably, in this time of crisis, they were considered to be a net negative.

ENVIRONMENT

Climate Change Could Do What?

We’re starting a new Earth Day tradition: recapping how central banks around the world describe the specific dangers of climate change for the global economy.

Bank of England Governor Mark Carney and Bank of France Governor François Villeroy de Galhau wrote an open letter last week co-signed by a coalition of 34 central banks. They said...

  • The effects of global climate change “damage infrastructure and private property, negatively affect health, decrease productivity and destroy wealth.”
  • “If some companies and industries fail to adjust to this new world, they will fail to exist.”

Let’s cross the Atlantic. The San Francisco Fed last month said global warming left unaddressed will have dire financial, economic, and monetary implications. That includes elevating credit spreads, breeding intense cautionary saving, and “in the extreme” brewing a financial crisis.

Bottom line: Even the straight-laced in monetary policy are penning official warnings about the threat of climate change for the business community. Our prediction? You’ll hear this refrain a lot more from central banks before Earth Day 2020.

PUBLISHING

The Hottest Book on Amazon...

...also happens to be a free PDF.
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Some publishers, like Simon & Schuster imprint Scribner, are offering context and analysis. Others, like Melville House, will give you the report au naturel to avoid bias.

One thing’s for sure...it was a mad rush to get it to print. Skyhorse told the WSJ it planned to have nine people pull an all-nighter following the release of the report Thursday.

This isn’t anything new. The Mueller report should fit comfortably on your bookshelf alongside other government documents turned book club favorites. NPR gave a quick rundown:

  • The Warren Commission’s report on the JFK assassination
  • The Starr report on President Clinton’s affair with Monica Lewinsky
  • The 9/11 Commission Report

CALENDAR

The Week Ahead

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We love the Earth...but apparently not enough to earn a cameo in Lil Dicky’s music video.

Monday: Earth Day; existing home sales; earnings (Kimberly-Clark, Halliburton); Tesla revealing autonomous tech

Tuesday: New home sales; earnings (P&G, Verizon, Coca-Cola, United Technologies, eBay, Twitter, Snap)

Wednesday: Earnings (Microsoft, Facebook, Visa, AT&T, Boeing, Caterpillar, PayPal, Tesla, Chipotle)

Thursday: Durable goods orders; earnings (Amazon, Intel, Comcast, 3M, Altria, UPS, Starbucks, Ford); NFL Draft starts

Friday: GDP; consumer sentiment; earnings (Exxon Mobil, Chevron, Sony); a few of you may see Avengers: Endgame

WHAT ELSE IS BREWING

  • Boeing’s got more bad news. An in-depth piece from the NYT suggests “shoddy” production of the 787 Dreamliner at its North Charleston plant.
  • Horror movie The Curse of La Llorona came out of nowhere to win the Easter box office with $26.5 million in North American ticket sales.
  • U.S. intelligence has reportedly alleged Chinese telecom Huawei is being funded by Chinese state security.
  • Tesla is thinning out its board of directors from 11 to seven to “operate more nimbly and efficiently.” Nothing cuts costs like ordering fewer blueberry muffins

BREAKROOM

Game Boy --> Game Man
Yesterday was the 30th anniversary of Nintendo’s launch of the Game Boy. And it’s a good reminder—if anyone tells you you’re addicted to Instagram, just reply, “I did not shower for 21 days while playing Pokémon Blue.” Here are two questions about the Game Boy:

  • How much did it cost when it was first released in the U.S.?
  • What was its “pack-in” game?

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Breakroom Answers


Game Boy --> Game Man
1. $89.99 2. Tetris

 

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