Good morning friends. I’m Phil Rosen. Do you use Robinhood for your stock portfolio? If so, you may have noticed some glitchiness earlier this week.
Monday afternoon, users posted screenshots across Twitter of their account balances reading $0 or less, with some saying the correct amount one minute and an incorrect figure the next.
This snafu comes just two weeks after the trading platform mistakenly listed meme-stock favorite AMC Entertainment as bankrupt. (AMC’s CEO had choice words in response).
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1. Inflation, commercial real estate woes, and stalled debt-ceiling talks have spooked investors and heightened recession fears, but a source of strength has been the resilience of the US consumer.
Americans have shown surprising ability to sidestep gloomy economic prognostications over the last year, but that could all fold once student loan repayments resume later in 2023, according to Bank of America strategists.
The strength we’ve seen in spending — cash going toward travel and restaurants have climbed in recent months — may not last much longer. More than 43 million Americans together owe $1.6 trillion in student loans.
That means about 17% of adult Americans have an outstanding debt to pay. That’s the second-largest consumer proportion of loans outside of mortgages.
The government had paused payments due to the pandemic, but they could start again as soon as September, and take shape at about $200-$400 a month.
That additional load could weigh on consumer spending, and eventually increase delinquencies on other payments like credit cards and personal loans, strategists said.
“We view the resumption of student loan debt payments as an incremental headwind for borrowers and consumer finance companies,” BofA said.
“Adding a monthly obligation for ~30 million people has the potential to cause volatility in consumer finances that are already pressured by inflation and could also be facing higher unemployment levels. This will likely pressure spending as borrowers manage their finances and could also lend to an increase in delinquencies.”
This, in other words, means the odds of the hotly-anticipated recession are about to go up as consumers divert cash back to student loan payments.
Do you have student loans? How do those impact your discretionary spending? Tweet me (@philrosenn) or email me (email@example.com) to let me know.
In other news:
2. US stock futures rise early Wednesday, as investors await an update on the progress of talks between congressional leaders and President Joe Biden on the US debt ceiling. Check out the latest market moves.
3. Earnings on deck: Cisco, Target, and Deutsche Bank, all reporting.
4. Alex Roepers has nearly doubled the S&P 500’s returns over 30 years by only holding a few stocks at a time. He broke down how he nails the right picks over and over again — and shared the four bets he’s making now.
5. Fewer Americans than ever before believe that it’s a good time to buy a house. A new Gallup poll found that 21% of Americans are confident in buying into the current market, reflecting pessimism over high mortgage rates and low inventory. Read more.
6. Central banks around the world are using a record amount of Chinese yuan. The de-dollarization push expanded through the end of March, with the yuan’s use in currency swaps climbing to $15.6 billion. That’s good for the second-largest quarterly surge.
7. Russia is exporting the most oil since invading Ukraine. Moscow hasn’t had an issue in finding willing buyers for its sanctioned barrels, according to the IEA. In April, the country’s crude exports hit a post-invasion high of 8.3 million barrels a day.
8. Homebuyers that have been priced out of expensive cities like New York and Boston should look in these suburban towns instead. Here’s a list of 69 affordable alternatives to pricey metropolitans — with some options selling for less than half the price of popular cities.
9. A real-estate agent explained how regular homebuyers can compete with all-cash buyers. It comes down to “pre-underwriting,” Dana Bull said. She shared the strategists her clients are using today that have secured them bids in a competitive market.
10. RH stock plunged after Warren Buffett’s Berkshire Hathaway dumped its entire stake in the company. The conglomerate had started building its holdings in 2019, and it was last worth about $575 million. Shares of the home furnishings store are down 67% from their post-pandemic high — but Buffett still made a profit on the investment.
Curated by Phil Rosen in New York. Feedback or tips? Tweet @philrosenn or email firstname.lastname@example.org.