__Wedding tuxes and golf clubs…__ Americans are stocking up ahead of the first summer with (mostly) no Covid restrictions. Yesterday, shares of __[Nordstrom](https://robinhood.com/stocks/JWN)__ and __[Dick’s Sporting Goods](https://robinhood.com/stocks/DKS)__ jumped 10%+ as IRL and outdoor events pushed their sales above pre-pandemic levels. But both Nordie and Dick’s also reported higher inventories, a theme in recent retail earnings:

- __Stuffed stockrooms:__ Shares of __[Walmart](https://www.cnbc.com/2022/05/17/walmart-wmt-earnings-q1-2023.html)__ and __[Target](https://snacks.robinhood.com/newsletters/6ATVRl9b59JpFcHxnHzgSf/)__ tanked last week, partly because of their bloated inventories. Walmart's inventory was up 33% and Target’s was up 43% from a year earlier. 

__New luggage > 100-piece puzzles…__ When the first wave of the pandemic caused a collapse in demand for discretionary goods (think: TVs, appliances), retailers stopped taking new orders and factories halted production. But as demand quickly snapped back, stores rushed to stock up on those items. 

- __Problem 1:__ The global supply chain wasn't ready, which caused shipments to miss their window altogether (think: snowblower deliveries in April). 
- __Problem 2:__ Now stores are stocked to the brim, just as inflation-weary shoppers are shifting their spending habits toward lower-cost (and lower-margin) essentials like groceries.

Clear eyes, full aisles… (Joe Raedle/Getty Images)

Stocked

__It’s the “bullwhip effect” in action...__ aka: when distortions in demand cause companies to order too much too late. While retailers risk losing billions of dollars in sales from sitting on excess supply, widespread markdowns could cool inflation by making goods more affordable for price-sensitive shoppers. Now all eyes turn to __[Costco's](https://robinhood.com/stocks/COST)__ earnings today: the wholesaler keeps inventories slim on purpose, so any mention of a glut in supply could signal a wider problem for the retail industry.

Retailers have gone from having too little inventory to too much — that’s bad for profits, but good for consumers

__Can't do this one on [TurboTax](https://robinhood.com/stocks/INTU)...__ The median pay for CEOs of America's largest companies hit a record [$14.7M](https://www.wsj.com/articles/ceo-pay-packages-rose-to-median-14-7-million-in-2021-a-new-high-11652607000) last year (nine chief execs got packages worth *$50M+*). That was a year when the S&P 500 rose 27%, which translated to big shareholder returns. Now the S&P is down 18% for the year, and investors are protesting meaty exec-pay packages.

- __"Say on pay"__ votes are mandatory for large public US companies. But historically it's rare to get less than 90% support on exec-pay votes (which, BTW, are nonbinding).
- __This year__ investors have [said](https://www.wsj.com/articles/investors-protest-executive-pay-at-jpmorgan-intel-and-coca-cola-11652952601?mod=hp_lead_pos1) "nah" to pay packages at dozens of major US companies, including for __[JPMorgan](https://robinhood.com/stocks/JPM)__'s Jamie Dimon and __[Intel](https://robinhood.com/stocks/INTC)__'s Pat Gelsinger ([two-thirds](https://www.fastcompany.com/90754750/tech-ceo-pay-investor-backlash-stocks-down) of investors voted down his $178M comp package). __[Coke](https://robinhood.com/stocks/COKE)__ barely made it with 50.5% support.
- __[Amazon](https://robinhood.com/stocks/AMZN) and [Meta](https://robinhood.com/stocks/FB)__ held their annual "say on pay" votes yesterday. The results: Amazon shareholders [greenlighted](https://www.belfasttelegraph.co.uk/news/world-news/amazon-shareholders-vote-against-audit-of-warehouse-working-conditions-41689708.html) comp for six execs, including new CEO Andy Jassy. [Ditto](https://www.marketwatch.com/story/facebook-all-shareholder-resolutions-fail-11653503580) Meta. 

__Eyes on the price...__ While tech stocks are leading the market plunge, tech-exec comp has never been [higher](https://www.fastcompany.com/90754750/tech-ceo-pay-investor-backlash-stocks-down). But it's not all cash $$: about two-thirds of CEO comp is made up of stocks or equity awards, which usually vest over years. The idea: CEOs will work harder to boost shareholder value if their pay is directly tied to their company's stock price (but it [doesn’t](https://fortune.com/2016/07/25/ceo-pay-total-shareholder-return/) always work that way). 

- __For the 25 top-paid CEOs,__ cash [accounted](https://www.wsj.com/articles/ceo-pay-packages-rose-to-median-14-7-million-in-2021-a-new-high-11652607000) for just one-fifth of their comp. The median cash compensation (think: salary, bonuses) was "just" $4M.

Comp

__It's not just about falling stock prices...__ Exec-pay scrutiny is part of a wider movement where investors [seek](https://www.wsj.com/articles/investors-protest-executive-pay-at-jpmorgan-intel-and-coca-cola-11652952601?mod=hp_lead_pos1) progress from leaders on environmental, social, and governance issues. For example, Amazon investors [challenged](https://www.ft.com/content/12cbf9db-cfff-4593-82e0-4191436f3c2a) the company not only on exec pay but also on working conditions, climate impact, and tax transparency. But shareholders [rejected](https://www.theguardian.com/technology/2022/may/25/amazon-shareholder-proposal-worker-health-safety) all 15 proposals.

From Amazon to Coke, shareholders of America’s largest companies are seeing unprecedented backlash to exec-pay packages

Retailers have an inventory problem that’s hurting profits, but could be good for inflation

Dow Jones

S&P 500

Nasdaq

Bitcoin

This year Americans are spending an average of $825 to be in a wedding party

📦 Retail’s inventory glut

__Fall from grace…__ In the time it took you to lose your Snapstreak, __[Snap](https://robinhood.com/stocks/SNAP)__ lost $15B in market cap. Shares [plummeted](https://www.cnbc.com/2022/05/24/snaps-down-32percent-and-its-dragging-other-stocks-down-with-it.html) 43% yesterday — the worst day ever for the Snapchat parent. Driving the plunge: Snap warned investors that it expects growth to slow as macro conditions continue to “deteriorate” (CEO Evan Spiegel mentioned inflation and war… and even the supply chain).

- __Quick reversal:__ Just four weeks ago Snap gave a relatively upbeat forecast for the current quarter. But Spiegel said the economic environment has gotten worse than expected since then. 
- __Bumpy road ahead:__ As a result Snap pumped the brakes on revenue, earnings, and hiring expectations for the year. 

__Snap’s ghost casts a long shadow…__ Snap’s ominous update halted the tech industry’s fragile rebound attempt: social-media stocks alone lost about $165B in market value after the warning, as the Nasdaq fell 2%. But those that rely on digital ads got hit hardest:

- __Bad news for ad views:__ Shares of __[Twitter](https://robinhood.com/stocks/TWTR)__, __[Google](https://robinhood.com/stocks/GOOGL)__, and __[Meta](https://robinhood.com/stocks/FB)__ all fell by around 5% yesterday. Smaller platforms had it even worse: __[Pinterest](https://robinhood.com/stocks/PINS)__ plunged 24%.


Deteriorating 

__Advertisers are tightening their belts…__ just like everyone else. Snap’s ad business is relatively modest: Meta made 30X more $$ last year. But Snap’s surprise statement caused concern, partly because its ad biz has outperformed its larger rivals’ by adapting more quickly to Apple’s privacy updates and sustaining strong user growth. So if Snap’s struggling, other companies highly dependent on digital advertising might be on track to do worse. Cue: Meta’s market cap shed $53B yesterday — more than twice Snap’s entire valuation. 


Snap’s profit warning sends tech stocks tumbling on fears of an ad-market crash

__Checking in at the meta-lobby…__ don’t forget your crypto wallet. The hospitality industry is warming up to NFTs as a way to turn vacay cancellations into tradable tokens. Reservation “no-shows” and last-minute cancellations [account](https://www.belizebank.com/wp-content/uploads/2019/03/Prevent-and-Handle-No-Shows-A-guide-for-Hotel-Owners-and-Managers.pdf) for up to $100M in lost sales for US hotels every year. Now hotels are [turning](https://www.wsj.com/articles/hotels-using-nfts-to-create-a-stubhub-for-lodging-reservations-11653393601) to the blockchain to make up for it:

- __For hotels:__ __Pinktada__, a new booking platform, teams up with local resorts to take room reservations in hotspots like the Caribbean and Hawaii and turn them into NFTs.
- __For guests:__ They can reserve rooms by buying those NFTs from Pinktada at a lower rate than if they booked a refundable room from the hotel. If they need to cancel, there’s an option to gift or resell the rezzy on Pinktada's NFT marketplace (think: StubHub for hotels).

__Welcome to CaaE…__ or Crypto-as-an-Experience. NFT sales have plummeted as speculative investments get crushed by higher interest rates. But a growing variety of industries — from cattle [farming](https://snacks.robinhood.com/newsletters/1Uv97VkilQaTwKZQX7yIoq/articles/whaH4y4Zo4nSNHqfMs0lf/) to fine [dining](https://ny.eater.com/2022/1/13/22880787/worlds-first-nft-restaurant-flyfish-club-opening-nyc) — are turning to the blockchain for real-world applications. The hotel biz is just the latest:

- __Crypt-el:__ Last month NYC’s NoMo SoHo became one of the first US hotels to offer NFT-based packages with IRL perks like late checkout and free breakfast.


Rezzy

__Sounds like a travel dream…__ at least for hotels. While they get to offload extra inventory and keep the sales from last-minute cancellations, travelers take on the burden of reselling their room — or being stuck with it if they can’t. Plus bot-operated ticket resellers [could](https://www.mic.com/impact/hotels-nfts-rebooking) lock up blocks of rooms during popular travel periods, hoping to flip them at a profit. It's TBD how or if the trend will catch on as major hotel players like __[Hilton](https://robinhood.com/stocks/HLT)__ or __[Marriott](https://robinhood.com/stocks/MAR)__ sit on the sidelines. 

Hotels experiment with NFTs, trying to do for room reservations what StubHub did for concert tickets

Snap’s profit warning spreads through the tech sector and beyond

Empty ad space (Zoran Milich/Photodisc via GettyImages)

US births increased last year for the first time since 2014

Ads falter

__Two years behind schedule…__ Over the weekend, jet giant __[Boeing](https://robinhood.com/stocks/BA)__ finally [docked](https://www.theverge.com/2022/5/20/23132777/boeing-cst-100-starliner-nasa-iss-docking-success-oft-2) an uncrewed Starliner capsule full of cargo at the International Space Station. Refresher: in 2014, NASA [chose](https://www.google.com/url?q=https://www.wsj.com/articles/boeing-and-spacex-share-6-8-billion-in-nasa-space-taxi-contracts-1410904245?mod%3Darticle_inline&sa=D&source=docs&ust=1653357091852144&usg=AOvVaw3W3gvYrd9Nyq2IJfPchO3O) Boeing and __SpaceX__ as its two rocket partners after it stopped making its own shuttles. Since then Boeing has struggled while SpaceX has taken off:

- __Third time’s a charm:__ Boeing failed in its first two attempts to send Starliners to the ISS. While the latest docking was successful, it still needs to fix some glitches before NASA crews can hitch a ride.
- __(Space)X Factor:__ Meanwhile, privately owned SpaceX has flown five NASA missions, astronauts and all. SpaceX is [reportedly](https://www.cnbc.com/2022/05/22/elon-musks-spacex-looks-to-raise-1point7-billion-in-new-funding.html) raising new funding to keep its lead intact — at a valuation of $127B (twice publicly listed Boeing’s market cap). 

__From takeoff to liftoff…__ Boeing’s better known for planes of course: Boeing and __[Airbus](https://robinhood.com/stocks/EADSY)__ produce 90% of the world’s jetliners. But Boeing’s jet biz has struggled since 2019, when it grounded its 737 MAX aircraft after a pair of fatal crashes. While Boeing has been losing market share to Airbus, it’s also invested in new divisions like its space program.

- __Closer to mission control:__ Boeing’s moving its HQ from Chicago to the DC suburbs to be closer to regulators, lawmakers, and partners like NASA.


Boeing blasts off, again (Joel Kowsky/NASA via Getty Images)

Orbit

__Space taxis aren’t as sexy as Mars colonies…__ but they may still rake in astronomical piles of cash. Boeing got $4.2B from NASA to become one of its launch partners. Now it’s a step closer to commercial space trips and (potentially) more multibillion-dollar contracts. But Boeing’s still lightyears behind SpaceX, which has already launched NASA missions and private space flights. 


Boeing made it to space, taking one small step closer to SpaceX — and a new revenue stream

__Viral headlines...__ not corona. Monkeypox is spreading in developed countries — an unusual outbreak of a rare virus typically endemic to central and western Africa, where it's mainly spread by infection from animals. Some 200 cases have been [reported](https://www.google.com/url?q=https://www.cnbc.com/2022/05/23/monkeypox-outbreak-is-primarily-spreading-through-sex-who-officials-say.html&sa=D&source=docs&ust=1653357148078693&usg=AOvVaw0CRxT6J5h9CuYaTgSxN42d) across a dozen countries, including the US, Australia, and several European nations. 

- __What it is:__ Monkeypox belongs to the same family of viruses as smallpox, and causes similar fluid-filled skin lesions, but symptoms are typically milder.
- __Why it's spreading__ across continents: Health experts [say](https://apnews.com/article/health-world-organization-united-nations-animals-72a9efaaf5b55ace396398b839847505) the random outbreak could’ve spawned from sexual transmission at two recent raves in Europe.
- __How it's spreading:__ Through close contact with an infected person — so far, [primarily](https://www.cnbc.com/2022/05/23/monkeypox-outbreak-is-primarily-spreading-through-sex-who-officials-say.html) through sex. Health officials say it might also spread through infected clothes or sheets.

__Not new...__ Monkeypox is well known, having been first [detected](https://www.nytimes.com/2022/05/23/business/dealbook/monkeypox.html) in humans in the ’70s. President Biden [said](https://edition.cnn.com/2022/05/23/politics/biden-monkeypox-not-as-bad-as-covid-intl-hnk/index.html) on Monday that the outbreak isn’t as concerning as Covid, softening his comment from a day earlier that "everybody should be concerned." World Health Organization officials said it’s “containable.”

- __Cases have been mild so far__, with no deaths reported. Most people recover within weeks without hospitalization. 
- __Existing vaccines__ for smallpox have been shown to be effective against monkeypox. Cue: shares of __[Emergent BioSolutions](https://robinhood.com/stocks/EBS)__, which makes an approved smallpox vax, popped 9% yesterday.
- __Also:__ The FDA [approved](https://www.reuters.com/article/us-bavarian-nordic-monkeypox-idUSKBN1W92YE) a monkeypox-specific vax from Danish biotech __Bavarian Nordic__ in 2019. Bavarian already cranked out 1.4M doses for the US. 


__The world is now much warier...__ and with good reason. It took months for countries to take Covid seriously after it first appeared in Wuhan, China. Monkeypox isn’t considered as easily transmissible, and the CDC says it has enough smallpox vaccines to jab the entire US if it came to it. But after more than two long pandemic years, virus headlines get viral treatment. 

Monkeypox is spreading worldwide — and while it’s not as contagious as Covid, it’s getting the viral treatment

Boeing made it to space, one small step closer to SpaceX and a new rocket revenue stream 

NYC’s last public payphone was removed yesterday

🚀 Boeing goes to space

__Bingeing “Selling Sunset”...__ While scrolling __[Zillow](https://robinhood.com/stocks/Z)__ listings under $100K (spoiler: not many). The median price for a previously owned home sold in April hit a record [$391K](https://www.cnbc.com/2022/05/19/existing-home-sales-fell-in-april-to-lowest-level-since-start-of-pandemic.html), up 15% from a year ago. Despite soaring mortgage rates, low housing supply is keeping ownership out of reach for many Americans. Now some startups are offering a way to get in on the housing boom — minus the house.

- __You've heard of [fractional shares](https://robinhood.com/us/en/support/articles/fractional-shares/).__ New-ish thing: fractional *real estate*. You own a percentage of a property (think: a time-share where you never get to chill).
- __Split the bill(ding):__ Jeff Bezos-backed __Arrived__ just [raised](https://techcrunch.com/2022/05/17/backed-by-forerunner-and-bezos-back-arrived-a-startup-that-lets-you-buy-into-single-family-rentals-for-as-little-as-100/) $25M to let people buy shares in single-family rentals with “as little as $100.” Startups like __Fintor__, __Fractional__, and __Pacaso__ have also popped up to make real estate more accessible through co-ownership.

__Cry me a duplex...__ While still small, the rise of fractional home ownership underscores how many people are priced out. Over the past year, US home prices have risen 20%. But as the Fed raises rates, the situation may be shifting:

- __Interest up:__ The rate on a 30-year mortgage has jumped from 3.7% in February to nearly 5.5%, the [highest](https://edition.cnn.com/2022/05/05/homes/us-mortgage-rates-may-5/index.html#:~:text=The%2030%2Dyear%20fixed%2Drate,from%20this%20time%20last%20year.) level since ’09. Some homebuilders may be starting to [worry](https://www.axios.com/2022/05/18/homebuilders-higher-mortgage-rates) that would-be buyers are sitting out. 
- __Sales down:__ Existing-home sales fell for the third straight month in April, with more slowdowns expected. In their earnings forecasts this month, Zillow and __[Redfin](https://robinhood.com/stocks/RDFN)__ also [suggested](https://www.barrons.com/articles/housing-market-real-estate-earnings-51652827465) the market is cooling.  
- __Still:__ Pension funds are [increasingly](https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/pension-funds-boost-investments-in-multifamily-industrial-office-reits-70019051) investing in real estate investment trusts (REITs) — a vote of confidence in the sector.

A house divided… (Caspar Benson/Getty Images)

Wall

__Housing’s hitting a wall…__ There’s a reason higher borrowing costs aren’t sinking prices: brutally low inventory. There’re only 1M homes for sale in the US. Cue: the average home gets snatched up within 17 days. Some [fear](https://www.forbes.com/advisor/mortgages/will-housing-market-crash/) we may be heading into a housing bubble, though mortgage lenders now have [strict](https://fortune.com/2022/04/04/redfin-red-hot-housing-market-shows-first-signs-cooling-mortgage-rates/) debt-to-income ratios to protect against an ’08-style crash. As rates rise, fewer people will be eligible (or willing) to take out loans. Yet home prices [won’t](https://fortune.com/2022/04/04/redfin-red-hot-housing-market-shows-first-signs-cooling-mortgage-rates/) cool until supply improves, which could take a while.

The rise of “fractional real estate” spotlights the overpriced, under-supplied housing market — but will the boom bust?

__Better late than never…__ After decades of neutrality, Finland and Sweden last week [applied](https://www.vox.com/2022/5/13/23069341/finland-sweden-nato-membership-russia-ukraine-war) to join NATO (the transatlantic political and military alliance) to beef up security against Russia. Both countries were already tied to Europe’s economy via the EU. NATO’s [expected](https://www.aljazeera.com/news/2022/5/18/finland-and-swedens-fast-tracked-nato-membership) to welcome them with ([mostly](https://www.cnn.com/2022/05/18/europe/turkey-nato-finland-sweden-cmd-intl/index.html)) open arms within months, which will further [isolate](https://www.dw.com/en/nato-application-puts-finlands-russian-trade-on-thin-ice/a-61829860) Russia from Western markets willing to buy its gas. If trade relationships keep shifting, a “multipolar” world could emerge: one anchored by the US and the EU on the one side, and Russia and China on the other.

__Gelato-nomics…__ Last year a US dollar got you about 0.82 euro (not much gelato). Now the currencies are almost equal. The USD has [appreciated](https://snacks.robinhood.com/newsletters/1aPeIVnSAv0nbiyhbzDAM4/) this year as global investors parked more cash in USD than in other currencies, like the war-shaken euro. A strong dollar is good for American tourists, making summer trips to Rome less expensive. Bigger picture, it could cool soaring US inflation, since it makes imports (relatively) cheaper. On the flip side: a strong USD makes US exports pricier (think: fewer __[Ford](https://robinhood.com/stocks/F)__ EVs sold in Europe), which could check economic growth.

Zoom Out

Stories we’re watching...

__Inferiority complex...__ During a gold rush, sell shovels. During a downturn, sell McDoubles. In tough times, consumers trade down pricey products for budget alternatives (economists call these “[inferior goods](https://www.investopedia.com/terms/i/inferior-good.asp#:~:text=An%20inferior%20good%20is%20an,buying%20more%20costly%20substitutes%20instead.)”). Think: ditching Clif Bars from __Whole Foods__ for granola bars from __[Costco](https://robinhood.com/stocks/COST)__. Discount stores like __[Dollar Tree](https://robinhood.com/stocks/DLTR)__, __[Dollar General](https://robinhood.com/stocks/DG)__, and Costco, which all report this week, thrive when inflation spikes — *if* they can keep their own rising supply costs down. That’s easier said than done: last week other discounters, including Walmart and Target, dropped unexpectedly low quarterly profits.

__Mission possible?…__ “Top Gun: Maverick” opens Friday after *two years* of delays. The $170M sequel could answer Hollywood’s biggest question of the Covid era: will people go to theaters for something that *isn’t* a superhero flick? With “Top Gun,” __[Paramount](https://robinhood.com/stocks/PARA)__ is betting some films justify the big-screen experience. The summer will test that bet, with the major studios, from __Universal__ (“Jurassic World”) to __[Warner Bros.](https://robinhood.com/stocks/WBD)__ (“Elvis”), all releasing “event” movies. The pandemic-scarred industry needs some wins: total box office this year is still down 40% from 2019.

Events

Coming up this week...

- __[Down](https://snacks.robinhood.com/newsletters/3rDFQHAVhkLPecWpTqK1VB/articles/16p3aAY3ZteRSIiL83IOEd/):__ Swedish fintech __Klarna__ is reportedly raising new funding at a much lower valuation, a sign that the days of easy VC $$ for money-losing startups could be over. Even free-spending __[SoftBank](https://robinhood.com/stocks/SFTBY)__ is cutting back.
- __[Omen](https://snacks.robinhood.com/newsletters/6ATVRl9b59JpFcHxnHzgSf/articles/576CqDmQ7xmpN30fn19YAU/):__ It’s getting harder for retailers to pass on their rising costs to consumers. Case in point: Walmart’s and Target’s sour earnings last week, which showed inflation’s pinching profits.
- __[Oracle](https://snacks.robinhood.com/newsletters/1aPeIVnSAv0nbiyhbzDAM4/articles/5x4DI2GpIW4apUtIK4RtdC/):__ Warren Buffett’s on a stock-buying spree after pulling back last year. The investing guru is snagging stakes in companies like __[Chevron](https://robinhood.com/stocks/CVX)__ and __[Citi](https://robinhood.com/stocks/C)__, using his famous “value” playbook in the bear market.

ICYMI

Last week's highlights...

An owl’s eyes can account for 3% of its entire body weight, compared to .0003% for humans

🏠 Unreal estate

__Down and to the right…__ Booming buy now, pay later (BNPL) startup __Klarna__ reportedly [wants](https://www.wsj.com/articles/softbank-backed-fintech-giant-klarna-looks-for-new-funds-at-lower-valuation-11652951574?mod=hp_lead_pos5) to raise money at a valuation a full third lower than its last raise. Klarna became Europe’s most valuable fintech startup in June after it raised a chunk of change from __[SoftBank](https://robinhood.com/stocks/SFTBY)__ at a $46B valuation. But since then markets have plunged, forcing cash-strapped Klarna to fundraise at a reduced valuation — aka a “down round.” 

- __Quick rise, quick fall:__ Klarna’s valuation ballooned 13X between 2019 and last year as BNPL took off. But its losses also grew as it burned through venture-capital cash to expand.
- __Bad news for backers:__ Earlier this month, SoftBank posted its worst-ever annual loss of $13B+ as the value of its tech investments tanked.

__What goes up…__ sometimes comes down. It wasn’t just Klarna: startups raised a record $600B from VCs last year, twice as much as the year before. But as tech stocks have fallen to Earth, so has investor confidence: startups raised 26% less $$ last quarter than at the same time last year. 

- __That’s where down rounds come in:__ startups that’ve burned through their cash have little choice but to raise more, even if it’s at a reduced valuation.

The lights are looking a little dimmer lately (Georg Wendt/Picture Alliance via Getty Images)

CASCADE

__Corrections aren’t choosy…__ They devalue public *and* private companies alike. Experts say private startups usually lag behind public companies in seeing the effects of market slumps. Shares of __[Affirm](https://robinhood.com/stocks/AFRM)__, a publicly listed Klarna rival, are down a staggering 75% this year— and now Klarna’s hurting too. It could spell trouble for private tech companies as public tech giants lost $1.3T in the early months of this year.

Klarna’s valuation could fall by a third as the downturn catches up to private markets

__Bipartisanship lives…__ Democrats and Republicans agree on something: a bipartisan group of senators have [introduced](https://www.wsj.com/articles/gop-led-legislation-would-force-breakup-of-googles-ad-business-11652969185) a bill that would force __[Google](https://robinhood.com/stocks/GOOGL)__ to break up its hugely lucrative ad biz. It’s one of the toothier antitrust bills winding its way through Congress.

- __The issue:__ Google (in)famously has a stake in all aspects of the online ad marketplace: it owns the tools that companies use to buy and sell ads, plus the biggest exchange where the buying and selling happens.
- __The criticism:__ Critics say the dominant position makes Google a monopoly, allowing it to set the terms of the market as buyer, seller, and broker.
- __The bill:__ The Competition and Transparency in Digital Advertising Act (mouthful) would bar public companies that have $20B in annual ad sales from operating on more than one side of the ad ecosystem.  

__Antitrust cheat sheet…__ The bill is aimed directly at Google, which brought in a whopping $55B from ads last quarter alone. But it’s not the only regulation targeting Big Tech’s market power that has found bipartisan momentum in DC. Also in play:

- __Cracking open the app stores:__ One piece of legislation would force __[Apple](https://robinhood.com/stocks/AAPL)__ and Google to open their app stores to third-party competitors.
- __No more playing favorites:__ A similar bill would prevent platforms like __[Amazon](https://robinhood.com/stocks/AMZN)__ from favoring their own products and services over others.

Tick

__The window for lawmakers to make these laws is closing…__ Congress goes on recess in August, and then it’s election season (read: nothing gets done). In the likely event that Republicans win control of either the House or the Senate in November, antitrust legislation is unlikely to be a priority — especially now that [polls](https://www.pewresearch.org/fact-tank/2022/05/13/support-for-more-regulation-of-tech-companies-has-declined-in-u-s-especially-among-republicans/) show a shrinking number of Americans see it as one. That leaves the next two months as potentially do or die for any of these bills.

A bipartisan bill targets Google’s ad biz, while Congress faces crunch time to regulate Big Tech

The average building wastes 30% of the energy it consumes

↘️ The “down round” returns

__Clear aisles, full carts...__ *can* lose. Target stock plunged 27% yesterday in its worst day since Black Monday in 1987. Tarjay [missed](https://www.wsj.com/articles/target-earnings-squeezed-by-inflation-and-fuel-costs-11652869800) the profit bull’s-eye, taking home just $1.3B last quarter compared to $2.4B a year earlier. Despite high inflation, Target’s trying *not* to raise customer prices this year. Instead of charging you more for made-in-China floral dresses, it’s eating the extra costs.

- __Strategy:__ Target wants to keep prices affordable in hopes of stealing market share from __[Walmart](https://robinhood.com/stocks/WMT)__, __[Amazon](https://robinhood.com/stocks/AMZN)__, and other retailers.
- __Problem:__ Transportation costs this year will be $1B higher than Target had forecast, which means it's spending more to get __[Keurig](https://robinhood.com/stocks/KDP)__ cups and shower caddies on shelves.
- __Problem (cont.):__ Consumers are buying fewer high-margin goodies like bikes, flat screens, and air fryers, and more lower-margin basics like food.

__#Flation starts hitting…__ the bottom line. Shrinking earnings have emerged as a theme for the US’s largest retailers. On Tuesday, Walmart reported that its quarterly profit [shrank](https://www.wsj.com/articles/walmart-sales-rise-but-higher-costs-dent-profit-11652787631) 25% from last year. 

- __Like Target,__ Walmart tries to undercut competitors on price to gain market share (especially with grocery staples). 
- __Unlike Target,__ Walmart execs suggested they’d have to raise prices after this “disappointment” of a quarter. Its stock is down 18% since earnings. 
- __Unlike *both*:__ Discount retailer __[TJ Maxx](https://robinhood.com/stocks/TJX)__ [notched](https://www.barrons.com/articles/tjx-stock-price-earnings-sales-margins-51652874529?tesla=y) higher profits and fatter margins after raising prices for off-the-rack clothes. Shares popped 11% yesterday (#outlier).

Retail earnings this week (Jeffrey Coolidge/Getty Images)

Carted

__The bottom line matters more…__ For investors, profit is often more important than sales for established corporations (with young startups, growth is often the focus). While sales rose at Target, Walmart, *and* Amazon, the major profit hits they took overshadowed that growth — cue: the stocks got pummeled. Meanwhile, TJ Maxx missed sales expectations but surged on its profit win. We’ll see whether __[Ross](https://robinhood.com/stocks/ROST)__ and __[Kohl’s](https://robinhood.com/stocks/KSS)__ also put the bottom line first when they report today.

From Target to Walmart, America’s largest retailers are eating inflation costs to stay ahead — and their bummer earnings reflect it

__The Block Head has spoken…__ and he says crypto concert tix are the future. Jack Dorsey, “Block Head” at __[Block](https://robinhood.com/stocks/SQ)__ (translation: CEO at the biz formerly known as Square) just [outlined](https://www.cnbc.com/2022/05/18/jack-dorsey-outlines-blocks-bitcoin-centric-future-no-longer-just-a-payments-company.html) plans for the company’s future. Block’s changed a lot since its last investor day five years ago: it bought Jay-Z’s music streamer __Tidal__ for $300M last year and fintech __Afterpay__ for [$29B](https://snacks.robinhood.com/newsletters/68Ji759EUo3BnTZxw9mAj1/articles/4ged1i28lf9nr12iGW3oBC/) this year. Here’s what’s next:

- __Not your grandma’s card-reader biz:__ Dorsey said Block’s not a payment company but an “ecosystem” spanning fintech, music, and crypto. 
- __Bullish on BTC:__ Block’s building __[bitcoin](https://robinhood.com/crypto/BTC/)__ wallets, mining systems, and developer tools because Dorsey believes bitcoin will become the internet’s native currency.
- __Banking on Gen Z:__ Block wants to be a payment superapp for younger users. Think: buying Kendrick Lamar [tickets](https://qz.com/2165570/jack-dorsey-and-kendrick-lamar-make-block-the-ultimate-gen-z-bank/) *and* crypto, all inside the Cash App (Block’s Venmo rival).

__There are plenty of ways to pay…__ but Block’s superapp strategy could distinguish it from a crowded payments field. The company started in 2009 as a point-of-sale disruptor, selling those swipe-y consoles used by your local coffee shop. But since then, __[Toast](https://robinhood.com/stocks/TOST)__, __Clover__, and others have launched competitors, and now __[Apple’s](https://robinhood.com/stocks/AAPL)__ [reportedly](https://www.macrumors.com/2022/05/16/apple-tests-iphone-tap-to-pay-apple-park/) testing a tap-to-pay iPhone feature that could blow up the industry.

Cube

__It’s a tough time to be a tech biz…__ even a profitable one. Tech stocks have plunged in recent months as investors ditch “disruptive” but unprofitable tech giants (think: __[Uber](https://robinhood.com/stocks/UBER)__, __[Peloton](https://robinhood.com/stocks/PTON)__, and __[Airbnb](https://robinhood.com/stocks/ABNB)__) to invest in slow-and-steady companies with consistent cash flow (think: energy, utilities). Even though Block has been profitable for the past three years, its blockchain-powered ecosystem could scare off tech-phobic investors looking for stability.

Block’s making a crypto-music-payment “ecosystem,” but it may be too visionary for today’s market

Target and Walmart are eating inflation costs — and their bummer earnings reflect it that

There are reportedly more Airbnb listings in NYC than there are apartments for rent

🎯 Target’s anti-bull’s-eye

__Exchanging USDs for gelato…__ A year ago, one US dollar would get you 0.82 euro. Today, you can exchange $1 for about 0.95 euro — the currencies are almost equal. That's because the USD has "[appreciated](https://learn.robinhood.com/articles/3rN6OSsz8d3VA4wo3m41Li/what-is-appreciation/)," or gained in value, compared to the euro. In fact, the greenback has [gained](https://www.wsj.com/articles/the-dollar-is-winning-in-a-messy-global-economyand-that-matters-in-the-fight-against-inflation-11652617801) against many currencies (like the Japanese yen, the Chinese yuan, and the British pound). That's good for:

- __US imports:__ A strong dollar makes imported goods cheaper, which should help tamp down inflation (yay). The US = the world’s [largest](https://ustr.gov/countries-regions#:~:text=Goods%20Imports,percent%20of%20total%20goods%20imports.) goods importer. Instead of spending $100 to buy 90 euros’ worth of Italian leather, an importer would now spend about $90. 
- __American tourists:__ A stronger dollar means you get more foreign currency with fewer dollars. Paris trip = instantly cheaper.
- __Uncle Sam:__ A strong dollar is seen as a stable investment. That makes people more likely to lend money to the US gov't (think: buying Treasury bonds). No one wants to be paid back in a wobbly currency.

__Moment of appreciation...__ for the golden currency of nations. The USD's stable rep has long made it the world's reserve currency for international purchases. Think: countries [buy](https://www.investopedia.com/articles/forex/092415/oil-currencies-understanding-their-correlation.asp) crude oil in USDs. But what's behind the recent appreciation streak? It all comes down to the “d” word: demand for dollars is higher.

Browsing the dollar menu (RubberBall Productions/Getty Images)

Buck

__Everything’s relative…__ That’s literally true in the foreign-exchange world. USD demand has risen because (1) US interest rates are significantly higher than in other countries, which gives investors more reason to park their money in America, and (2) compared with other big economies, the US is looking peachy. Europe’s trade situation has been wrecked by Russia’s war on Ukraine, and China’s Covid crackdown has decimated chunks of its economy. The flip side: a strong dollar makes US exports pricier, which could check economic growth.

Stocks have been on a losing streak, but the dollar’s been winning — and that could help fight inflation

__Some people love a bargain…__ Warren Buffett’s holding company, __[Berkshire Hathaway](https://robinhood.com/stocks/BRK.A)__, has [invested](https://www.wsj.com/articles/warren-buffett-spends-big-as-stock-market-sells-off-11652589031?mod=business_trending_now_article_pos1) billions in battered stocks over the past few months, a recent filing showed. The Oracle of Omaha sat tight last year while stock prices soared, selling more than he bought. But now that markets have cooled, he’s buying again. Big time:

- __Spending spree:__ Berkshire [added](https://www.kiplinger.com/investing/stocks/604684/stocks-warren-buffett-is-buying-and-selling-in-q1-2022) $42B of stocks to its portfolio last quarter, its biggest splurge since 2008. Among them: Buffett classics like __[Apple](https://robinhood.com/stocks/AAPL)__, plus relative rookies __[Citigroup](https://robinhood.com/stocks/C)__, __[HP](https://robinhood.com/stocks/HPQ)__, __[Paramount](https://robinhood.com/stocks/PARA)__, __[Activision Blizzard](https://robinhood.com/stocks/ATVI)__, and __[Ally Bank](https://robinhood.com/stocks/ALLY)__.
- __The “Buffett Bump” is real:__ Shares of Paramount [jumped](https://www.cnbc.com/2022/05/17/paramount-shares-jump-10percent-after-buffetts-berkshire-reveals-new-stake.html) 15%, Ally rose 6%, and Citi [popped](https://ca.finance.yahoo.com/news/citi-shares-jump-berkshire-adds-132243748.html) 7% yesterday after Berkshire’s stakes were reported. __[Verizon](https://robinhood.com/stocks/VZ)__ and __[Kroger](https://robinhood.com/stocks/KR)__ fell on news that Berkshire sold their shares. 

__When the going gets tough…__ Buffett gets buying. The 91-year-old guru famously seeks stocks that are low priced relative to their potential long-term value. But those “value stocks” were hard to find last year since (according to Buffett) *everything* was overvalued. So Berkshire ended the year with a near-record cash pile. Now it’s trading time:

- __In…__ oil. Berkshire doubled down on inflation-friendly stocks like __[Chevron](https://robinhood.com/stocks/CVX)__ and __[Occidental](https://robinhood.com/stocks/OXY)__ (energy is the best-performing category in the S&P 500 this year). 
- __Out…__ pharma. Berkshire ditched stocks __[Bristol Myers Squibb](https://robinhood.com/stocks/BMY)__ and __[AbbVie](https://robinhood.com/stocks/ABBV)__, which spiked earlier in the pandemic.

Sage

__This is Warren-nomics 101…__ Thanks to Fed’s rate hikes, booming “growth” stocks have fallen back to Earth (#corrected). That’s created ideal conditions for Berkshire to shop for bargain-priced “value” stocks. Meanwhile, growth stocks — whose value often rests on distant returns — may keep struggling as the Fed keeps raising rates. To weather a downturn, even growth-hungry investors might jump on the Buffett wagon and invest in slow-and-steady stocks.

Buffett’s back, and he’s on a buying spree — since steep sell-offs have created a new class of value stocks

Stocks have been on a losing streak, but the dollar’s been winning — and that could help with inflation

1 million seconds is about 12 days, and 1 billion seconds is about 31 years

💵 The dominant dollar

__Like "Succession" in the sky…__ Spoiler alert: the latest episode of the __[Spirit Airlines](https://robinhood.com/stocks/SAVE)__ merger drama just dropped, and things are getting hostile. Yesterday __[JetBlue](https://robinhood.com/stocks/JBLU)__ [said](https://www.wsj.com/articles/jetblue-to-launch-tender-offer-for-spirit-urge-shareholders-to-vote-against-frontier-deal-sources-say-11652688356) it would try a hostile takeover of Spirit after its previous offer was rejected. Refresher:

- __Earlier this season:__ Spirit [accepted](https://snacks.robinhood.com/newsletters/1I3jIJQkqK0ygv51yekmCQ/articles/V8eaYxPExXyVEX2Vdr6Jz/) a $2.9B buyout offer from __[Frontier](https://robinhood.com/stocks/ULCC)__ in February. Then JB [made](https://snacks.robinhood.com/newsletters/22c5VDDeeLOi4iyaybumsG/articles/6v13W7lFCwtbaBJ73GcFzB/) a $3.6B bid in April, but Spirit’s board didn’t budge.
- __Plot twist:__ Now JB’s appealing directly to shareholders, asking them to ditch Frontier for a $3.3B deal (that’s lower than its first offer, but more than Frontier’s — and almost twice Spirit’s Friday price). JB said it would pony up more if Spirit’s board negotiates. 

__Only the big survive…__ __[American](https://robinhood.com/stocks/AAL)__, __[Delta](https://robinhood.com/stocks/DAL)__, __[Southwest](https://robinhood.com/stocks/LUV)__, and __[United](https://robinhood.com/stocks/UAL)__ take up lots of airspace: together they control 80% of US domestic flights. Meanwhile, an ongoing pilot shortage and rising fuel costs are making it hard for smaller airlines to compete. But buying Spirit could give JetBlue (or Frontier) more leverage: 

- __The Big 5:__ If either airline succeeds in taking over Spirit, they’ll become the fifth-largest US carrier with about 10% market share.
- __More control:__ Spirit’s buyer won’t just get market share: they’ll get more pilots, more pricing power (which helps offset rising fuel costs), and more routes (which are often reserved at major hubs).

If at first you don’t succeed… (Joe Raedle/Getty Images)

Hostile

__Downturns create buying opportunities…__ Spirit’s stock is down 46% over the past year, and JetBlue believes its latest offer will still be attractive to shareholders. Historically, hostile takeovers increase during downturns, when market caps slide (reminder: Belgian __[InBev](https://robinhood.com/stocks/BUD)__ [gulped](https://www.industryweek.com/leadership/companies-executives/article/21948686/the-battle-is-over-inbev-buys-anheuserbusch) down Bud-brewer Anheuser-Busch for $52B during the 2008 crisis). JetBlue probably won’t be the last buyer to shop for a downturn discount either: Elon Musk [hinted](https://www.bloomberg.com/news/articles/2022-05-16/musk-says-twitter-bots-likely-account-for-at-least-20-of-users) yesterday he might try to renegotiate his __[Twitter](https://robinhood.com/stocks/TWTR)__ deal at a lower price.

The Spirit saga continues: JetBlue moves to buy the budget airline at a "downturn discount"

__Turning on the bathroom TV...__ to an ad for premium shampoo. As travel demand rebounded last quarter, __[Marriott’s](https://robinhood.com/stocks/MAR)__ hotel occupancy [surged](https://marriott.gcs-web.com/static-files/24293aca-75a0-497f-ad51-29a5892ef957) to nearly pre-pandemic levels. Now the chain’s getting creative with ways to monetize its returning guests (beyond $10 minibar waters): Marriott is [rolling out](https://www.wsj.com/articles/marriott-rolls-out-media-network-that-lets-brands-reach-travelers-on-its-apps-and-tv-screens-11652698800?mod=hp_lista_pos4) a media network with __[Yahoo](https://robinhood.com/stocks/YAHOY)__ to let brands advertise on its digital and physical real estate.

- __Targeted stays:__ Marriott will use anonymized guest data to help brands target ads. Think: theme-park commercials for families vs. __[BMW](https://robinhood.com/stocks/BMWYY)__-rental ads for deep-pocketed businesspeople.
- __Inescapable ways:__ The ads will appear on Marriott's hotel websites (think: WiFi portal) and on hotel screens (think: lobbies, gyms, bars, room TVs).

__Prada blazer...__ for the forgetful biz traveler. Privacy developments like __[Apple's](https://robinhood.com/stocks/AAPL)__ iOS change ("ask app not to track") and __[Google's](https://robinhood.com/stocks/GOOGL)__ plan to block third-party tracking cookies on Chrome have made ad targeting much harder. Now brands are increasingly looking to "first-party data" (aka: info they collect directly from consumers) rather than "third-party data" (think: targeting offered by Insta and YouTube).

- __Marriott__ says it will use info from searches and bookings on its platforms to deliver relevant ads. It has 164M loyalty members and knows when and how they'll be traveling.
- __[Walmart](https://robinhood.com/stocks/WMT), [DoorDash](https://robinhood.com/stocks/DASH), and [CVS](https://robinhood.com/stocks/CVS)__ have also been leveraging customer data to offer marketers new ways to reach consumers (your 3 a.m. taco orders speak volumes).

AdFi

__If you have eyeballs, you have ad-tention...__ Companies that haven't traditionally sold ads are realizing that they can, whether it’s __[Kroger](https://robinhood.com/stocks/KR)__ and __[Walgreens](https://robinhood.com/stocks/WBA)__ [replacing](https://retailwire.com/discussion/will-customers-grow-to-love-walgreens-digital-cooler-doors/) fridge doors with digital screens or Marriott selling you rental cars in your hotel room. And while the $500B+ digital ad market is dominated by __[Facebook](https://robinhood.com/stocks/FB)__, Google, and __[Amazon](https://robinhood.com/stocks/AMZN)__, even a small slice of the pie can mean fresh billions — and fresh consumer-privacy concerns.

Marriott launches targeted ads on its hotel screens and sites, as privacy changes reveal the value of "first party" data

After a failed first offer, JetBlue wants to take over Spirit at a "downturn discount"

Because of Covid lockdowns, not a single car was sold in Shanghai last month

🛫 JetBlue goes hostile

__The status…__ is *pricey*. In two-thirds of developed countries, college is [free](https://educationdata.org/average-cost-of-college-by-country) or less than $2K a year. In the US, private college [costs](https://www.usnews.com/education/best-colleges/paying-for-college/articles/paying-for-college-infographic) $38K a year, on average, and public schools cost $23K out of state and $10K in state. The cost of college has [tripled](https://www.cnbc.com/2021/11/02/the-gap-in-college-costs-and-earnings-for-young-workers-since-1980.html) since 1980, while average pay for young workers is up just 20% since then. Still, many undergrads go into debt for degrees, since grads earn $1M more over their careers than non-grads. But students are reconsidering college’s value: in the past two years, US enrollment dipped 7% as more [choose](https://www.washingtonpost.com/education/2022/01/13/fall-college-enrollment/) to “earn over learn.” 

__Snackers say:__

- “Spending more money doesn’t always mean getting more in return… Going to college taught me that spending ‘the big bucks’ on something people traditionally value won’t always pay off.” —*Isabelle, 27*
- “My university BA in psychology was rewarding… and was very overpriced. My community-college AS in nursing was exponentially more financially valuable, but less fun.” —*Brad, 32*

3,500 Snackers told us how they see the value of a college degree

__The outlook…__ is shifting. President Biden [campaigned](https://www.cnbc.com/2019/08/27/biden-hints-at-his-plan-to-address-student-debt-and-college-costs.html) to make public college free in the US. Now that his Build Back Better bill is stalled that’s… not likely. Meanwhile, schools are making class less costly to woo students: Columbia University recently nixed tuition for kids whose families make less than $150K/year, and Utica College is one of several schools exploring cheaper three-year degrees. College alternatives like coding bootcamp __General Assembly__ also offer new ways to pay, like income-share agreements (ISAs) that charge a % of earnings once grads land jobs (alums work at __[Google](https://robinhood.com/stocks/GOOGL)__ and __[JPMorgan](https://robinhood.com/stocks/JPM)__).

The cost of admission: up and to the right

__The status…__ is green. On paper, it couldn't be a better time to land your first job. The US is experiencing basically full employment. Last month the US [added](https://www.cnn.com/2022/05/06/economy/april-jobs-report/index.html) 428K jobs, leaving a [record](https://www.bls.gov/news.release/jolts.nr0.htm) 12M “help wanted” signs unfilled. That’s good news for college seniors, since employers plan to hire over a [quarter](https://www.nbcdfw.com/news/local/data-shows-promising-job-outlook-for-recent-upcoming-college-grads/2840935/#:~:text=The%20National%20Association%20of%20Colleges,the%20class%20of%20May%202021.) more graduates this May compared with last year. They’ll be making an average starting salary of $55K, but the return on (degree) investment tends to vary (comp-sci majors are starting at $72K, English majors at $49K). 

Nearly two-thirds of all public bachelor's degree programs leave graduates able to earn enough to cover the cost of college within a decade. But for recent grads, a [survey](https://www.intelligent.com/1-in-7-college-grads-earn-less-than-the-poverty-threshold/) found more than half don’t end up working in their field of study — and nearly half live paycheck to paycheck.

__SnackStat:__ *78% of Snackers said they felt “fairly confident” or “very confident” about their job prospects as college students or recent grads.* 

__Snackers say:__

- “There are a lot of jobs you can’t even interview for unless you have a degree. Having it helps get your foot in the door.” —*Jennifer, 33*
- “Growing up, degrees were the key to getting a ‘good job.’ While I do think it is valuable, it’s not at the rate of what I am paying.” —*Thomas, 42*

Hired

__The outlook…__ is unclear. Even though companies like __[Starbucks](https://robinhood.com/stocks/SBUX)__ pay extra so that you'll make rush-hour lattes, overall wages aren't keeping up with inflation. Many students feel [that](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) tacking on two years (or more) for grad school is the cost of doing biz to land a competitive role in certain fields. The value of that extra degree is mixed: while master’s degree holders can [make](https://www.indeed.com/career-advice/pay-salary/how-much-does-degree-increase-earnings) 20% more than those with a bachelor’s, employability (aka: the odds of getting hired) [increases](https://www.educationdata.org/education-attainment-statistics) only by 3%. Plus, more school means more tuition: nearly half of federal student-loan debt comes from postgrad for master’s and Ph.D. programs.

The labor market: opportunity knocking

__The status…__ is spiraling. Colleges raise prices, lenders dole out aid, and colleges raise prices (again). For decades, tuition increases have [outpaced](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) household incomes, forcing families to rely on loans. Today, two-thirds of college students graduate with debt, which typically takes [17 years](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) to pay off. The average loan balance at graduation has tripled since the ’90s to more than [$30K](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) — and nearly a tenth of borrowers owe more than *$100K*. To help relieve the burden, Biden pledged to make at least some college free, and promised at least $10K in loan forgiveness for each borrower. So far, his admin has forgiven $17B worth of federal student debt for 675K borrowers — a fraction of the [$1.7T](https://www.cnbc.com/2022/02/08/what-it-would-take-for-the-government-to-cancel-student-loans-.html) in student loans Americans owe.

__SnackStat:__ *65% of Snackers said their college degree was “fairly valuable” or “very valuable” relative to their tuition investment. A quarter said it wasn’t “particularly valuable,” and 9% said it was “worthless.”* 

__Snackers say…__ 
- “I made six figures straight out of college. If you are going to college to be a librarian, the 100K in student loans are probably not worth it.” —*Zack, 37*
- “If I could go back, I wouldn’t do it. I would tell my children not to go to college, and get a technical job.” —*Mikayla, 28*

Interest

__The outlook…__ is mixed. This month, the Education Department said it’s forgiving loans of more than 110K government workers (think: teachers, firefighters). But the rest of debt holders aren’t so lucky, since Biden’s blanket loan-forgiveness promise isn’t panning out. Still, the pause on student loans has now been extended six times since March 2020, saving borrowers $1.5B a month in interest payments alone. Payments are set to resume in September, and if nothing changes, student debt could top [$3T](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) by 2035.

Student debt: forgive and forget?

- __[Contagion](https://snacks.robinhood.com/newsletters/4pRYwQp39631d0x5mo8zbx/articles/DdT30qWIQKQ8lB83AgCes/):__ Nearly $500B was wiped off the crypto market last week as volatility has investors turning risk-averse. Not even some so-called stablecoins appear safe.
- __[Bottle](https://snacks.robinhood.com/newsletters/4pRYwQp39631d0x5mo8zbx/articles/77nr1oiiC86WivHiIpYgzR/):__ A baby-formula shortage is forcing worried parents to ration supplies or drive hours in search of the powdered gold. The root cause: US import limits.
- __[Med](https://snacks.robinhood.com/newsletters/5xjp3PmErVX6calMlzNVjK/articles/T0hqswG18kk95NL2Buyig/):__ The feds subpoenaed mental-health startup __Cerebral__ over its prescription practices for pills like Adderall and Xanax, a sign regulators may rein in telemedicine.

As the class of 2022 graduates, the college-value prop is blurrier than ever

It takes college grads an average of three to six months to find a job after school

🎓 The graduation edition

__It could be contagious…__ Crypto markets have caught a cold — or worse. The crypto industry has lost nearly $500B this week after two top stablecoins were “[unpegged](https://snacks.robinhood.com/newsletters/CZLtSSO02dkWUNfYSsz7D/articles/40vJyepmLGsyVSkxrAJx2M/)” — and caused investors to panic-sell other coins. Refresher: stablecoins are cryptos whose value is (theoretically) pegged to other assets, like the USD. A recap:

- __First,__ stablecoin __TerraUSD__ (UST) [fell](https://snacks.robinhood.com/newsletters/CZLtSSO02dkWUNfYSsz7D/articles/40vJyepmLGsyVSkxrAJx2M/) to a third of its “fixed” value after its algorithm failed to rebalance its price (it’s still [down](https://coinmarketcap.com/currencies/terrausd/)).
- __Then__ the largest stablecoin, __Tether__, [slipped](https://fortune.com/2022/05/12/terrausd-ust-luna-contagion-tether-bitcoin-solana-ether-price-crypto/) from its $1 peg, falling to $0.95 before recovering. (Tether is backed by cash, not just an algorithm.) Skittish investors have been selling off the bigger coins this week too: __[bitcoin’s](https://robinhood.com/crypto/BTC)__ down 22%, __[ether](https://robinhood.com/crypto/ETH)__ 31%, and __[solana](https://robinhood.com/crypto/SOL)__ 49%.

__This could be a (decentralized) bubble…__ When an entire asset class (think: real estate, stocks) is overvalued, it’s often called a “bubble” — and if prices later crash, the bubble bursts. Some experts say crypto’s sell-off is starting to [resemble](https://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp) the dot-com bubble that led to the 2000 tech crash, or the housing bubble that led to the Great Recession (2007-09). In both cases, a sharp panic-fueled sell-off followed years of soaring speculative prices. (Worth noting: both those crashes wiped out trillions in wealth, much more than the crypto sell-off has.)

Chaos in cryptoland (Justin Tallis/AFP via Getty Images)

Untethered

__Bursting bubbles are destructive…__ but they can be beneficial. If a crypto bubble pops, coins could disappear, companies could go bankrupt, and investors could lose billions. Yet more consumer protections, stronger regulations, and leaner companies could also emerge (__[Google](https://robinhood.com/stocks/GOOGL)__ and __[Amazon](https://robinhood.com/stocks/AMZN)__ vaulted to global dominance after dot-com-era consolidation). That was what crypto-supporting Sen. Pat Toomey meant this week when he said that “failure should be an option” in the crypto space.

As crypto prices crash, the lawless market could be in for a regulatory reckoning

__Endless “sold out” shelves…__ not again. A baby-formula crisis is rippling through the US, forcing parents to [ration](https://www.nytimes.com/2022/05/10/us/baby-formula-shortage.html) supplies or drive hours in search of inventory. Over 40% of formula is out of stock nationwide, up 10% from a month ago. Now top formula supplier __[Abbott Labs](https://robinhood.com/stocks/ABT)__ says it could take until July to get the product back on shelves. How we got here:

- __In February:__ The FDA [recalled](https://www.nbcchicago.com/news/local/2nd-infant-dies-after-exposure-to-recalled-baby-formula-linked-to-bacterial-infections-fda-says/2771429/#:~:text=The%20child%20died%20after%20being,sakazakii%20infection%2C%20the%20FDA%20said.) formula brands made at Abbott's Michigan plant after reports that some babies had gotten sick — and even died — from bacterial illnesses traced to the facility. As a result the plant was shut down.
- __This week:__ Abbott got the OK to [resume](https://www.thedenverchannel.com/news/national/amid-shortages-fda-allows-abbott-to-release-baby-formula-from-facility-after-recall) production in that plant, but only on a case-by-case basis (think: specialty formulas for medical conditions).

__Pandemic stockpiles…__ The plant closure is just part of the story. Worried parents snatched up formula in droves in the early days of Covid. As they worked through their supplies, demand plummeted and formula makers slashed production. Inventory still hasn’t kept up with a resurgence in demand (#supplychain, #laborshortages). Now retailers [from](https://www.bloomberg.com/news/articles/2022-05-09/cvs-walgreens-target-ration-baby-formula-as-shortages-hit-50) __[Target](https://robinhood.com/stocks/TGT)__ to __[CVS](https://robinhood.com/stocks/CVS)__ are capping how much formula shoppers can buy. On top of that:

- __Regulators are *very* strict__ about what goes in formula, and often only US-based ingredients make the cut. Global suppliers that do qualify [face](https://www.theatlantic.com/ideas/archive/2022/05/baby-formula-shortage-abbott-recall/629828/) a nearly 20% tariff. 
- __The result__ is a tiny domestic industry of formula makers dominated by a handful of companies, like Abbott.

Bottle

__This isn’t just a production issue…__ it’s a policy issue. The pandemic caused both the Trump and the Biden administrations to emphasize domestic manufacturing (aka: on-shoring). But the worsening formula shortage illustrates the pitfalls of limiting imports of basic necessities. Washington appears to be listening: the White House [said](https://www.nbcnews.com/politics/white-house/biden-speak-retailers-manufacturers-baby-formula-shortage-rcna28538) yesterday it’s working to reduce red tape and make it easier to import formula.

America’s baby-formula shortage exposes the risks of US-first trade policies and strict regulation

The average American adult has a net worth of $79,952