| | | | | | | | | | | Axios Markets | | By Matt Phillips and Emily Peck · Apr 27, 2022 | | 👋 🐪 🙈 Hey, Matt here. Not to wake you with bad news, but let's just say you might want to leave those 401(k) statements unopened for a while, as the stock market has quietly piled up an astounding loss this month. More about that below. Also, Emily zooms in on some of the local markets where a slew of factors, including an influx of WFHers, seems to be driving housing costs higher. Today's newsletter, edited by Kate Marino, is 1,077 words, 4 minutes. | | | | | | 1 big thing: The stock market is sad |  | | | Illustration: Annelise Capossela/Axios | | | | Jeez, the stock market is in awful shape, Matt writes. - The S&P 500 is on track for its worst month since March 2020, when the COVID crisis exploded across the U.S.
Why it matters: With inflation already an uncomfortable fact, a market rout will add to the cranky mood of voters and consumers. By the numbers: Through the close of trading yesterday ... - The S&P 500 was down 7.8% in April, which would be the worst showing since March 2020. (It shed 2.8% yesterday alone.)
- The Nasdaq Composite was down 12.2%. That's on track to be the biggest monthly drop for the tech-heavy index since October 2008, during the financial crisis.
- The Russell 2000 index of smaller stocks — typically tied to the shorter-term outlook for the U.S. economy — is down 8.7%.
The big picture: There's not a lot of reason to feel bullish. - Inflation is high, which means the Fed seems likely to keep hiking interest rates over the next few months — typically a negative for stocks.
- Even if the rate of inflation may be peaking, there's no sign it'll slow that much. Housing prices will continue pushing the key shelter component up. Energy costs are still being driven by the war in Ukraine. And Asian supply chains also seem to be breaking again, as China locks down to fight another COVID outbreak.
- What's more, the lockdowns in the world's second-largest economy are themselves a growing risk for global growth, adding a new worry for investors.
China's government is showing no signs of backing down from its so-called zero COVID policy, which calls for sharp curtailments of economic activity in areas with outbreaks. - "The list of lockdown cities is still becoming longer," J.P.Morgan economists covering China wrote yesterday in a research note.
What they're saying: "Markets appear particularly focused on the risk of a growth shock, owing to [central bank] tightening, the Russia-Ukraine conflict, and China lockdowns," wrote analysts at BofA Securities. - Yes, but: Optimists can point out that U.S. corporations have been doing just fine. About 80% of those in the S&P 500 who reported first-quarter earnings — roughly 135 — beat analyst expectations, and commentary from executives has generally sounded upbeat.
The bottom line: Those profits, however, were likely priced in over the last year. Remember, markets are forward-looking and the S&P was up a sumptuous 27% in 2021. - From here, the outlooks for earnings and the economy are suddenly looking a lot cloudier. Investors are beating a hasty retreat in case it's about to get worse.
|     | | | | | | 2. Catch up quick | | 🏦 Lael Brainard confirmed by Senate as Federal Reserve vice chair. (CNBC) ❌ Russia says it's fully cut natural gas supplies to Poland and Bulgaria. (Axios) 📉 Robinhood Markets is laying off 9% of its full-time staff. (WSJ) ⬇️ Tesla dropped over 12% yesterday amid worries Elon Musk may sell shares to fund his Twitter takeover. (WSJ) | | | | | | | | 3. 💰🏡 Affordability takes a hit |  Data: Redfin; Note: Assumes 5% down and mortgage payments of 30% of income; Chart: Sara Wise/Axios Homebuyers in Tampa need to earn 48% more now than they did a year ago to afford the median-priced home, according to a Redfin analysis released this morning, Emily writes. Why it matters: This is an obvious hit to affordability for buyers. While wages are up in the U.S. since last year — around 6% higher — they're certainly not rising this fast. The intrigue: Many of the folks buying homes in these markets aren't necessarily getting big raises — they're pulling off a remote worker arbitrage. - Sun Belt cities like Tampa, Phoenix and Las Vegas are seeing a surge in home prices, in part because of an influx of remote workers moving in from pricier coastal cities.
- "They're coming in with cash from selling their home or just from higher incomes," said Taylor Marr, deputy chief economist at Redfin who did this analysis.
- Folks moving in from out of state have budgets that are 20%-30% higher than locals, he said, looking at the price range of what they're searching on the real estate site.
Plus: It's not just individual homeowners. Investors are also flocking to these metro areas, further driving up prices. | | | | | | | | A message from Axios | | Communication takes the front seat | | |  | | | | Leaders at every level are resetting their communications strategies to better support hybrid workforces. See how two orgs — Lyft and UPS — are reinvesting in their teams and sharpening their communication habits staff-wide. Tune in on 4/29 | | | | | | 4. Record job security, but... |  The Federal Reserve may be on a mission to cool the economy, but Americans are still feeling pretty good about their job prospects, Axios' Kate Marino writes. The big picture: The share of adults making less than $50,000 per year who are worried about losing income over the next month hit its lowest point (12.4%) since May 2020, when Morning Consult first began surveying Americans on the topic, according to the latest data out this morning. - Survey respondents making $50,000-$100,000, or over $100,000, are also near record lows for job security jitters.
Yes, but: The more vulnerable lower-income group is increasingly worried about covering expenses. - The share saying they can't cover a month's worth of basic costs went up in April, to 34.2%. That's lower than a few months ago but higher than it's been for most of the past two years.
The bottom line: "People, including low-income workers, are feeling very secure in their current jobs," but inflation is eating up a larger share of their paychecks, says Morning Consult economic analyst Jesse Wheeler. | | | | |  | | | | If you like this newsletter, your friends may, too! Refer your friends and get free Axios swag when they sign up. | | | | | | | | 5. Coal's staying power |  Reproduced from Global Energy Monitor, et al., 2022, "Boom and Bust Coal 2022"; Chart: Axios Visuals Coal-fired power rebounded last year to record levels amid high natural gas prices and the economic revival from the pandemic, per the International Energy Agency and data-tracking green group Ember, Axios' Ben Geman writes. The big picture: Fresh data and reporting offer a window into long-term global trends, as well as recent changes spurred by Russia's war on Ukraine and the energy security concerns that's creating. - The persistence of coal consumption is a thorn in the side of the global effort to meet climate goals like those in the Paris Agreement.
State of play: The amount of coal-fired power generating capacity brought online last year fell — but it still outpaced plant retirements, new data from Global Energy Monitor shows. - Over half of the newly added capacity was in China. The report also finds significant amounts of new coal generation capacity in the development and planning stages.
- Coal-fired power increased last year in China — the world's largest consumer of the carbon-heavy fuel — and among other large users like the U.S., India, the E.U., and elsewhere in Asia, Bloomberg reports.
- AP reports that China is "promoting coal-fired power as the ruling Communist Party tries to revive a sluggish economy."
What we're watching: "Russia's invasion ... turbocharged the coal market, setting off a domino effect that's leaving power producers scrambling for supply and pushing prices to record levels," Bloomberg notes. | | | | | | | | A message from Axios | | Communication takes the front seat | | | | | | | | Leaders at every level are resetting their communications strategies to better support hybrid workforces. See how two orgs — Lyft and UPS — are reinvesting in their teams and sharpening their communication habits staff-wide. Tune in on 4/29 | | |  | It's called Smart Brevity®. Over 200 orgs use it — in a tool called Axios HQ — to drive productivity with clearer workplace communications. | | | | | | Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here.
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