📰 This Week…

• The Federal Reserve leaves interest rates unchanged

• Redfin expects single family home prices to fall 1% this year

• A giant international unicorn startup may now be worthless

• GM still believes in Cruise’s potential

• Is Spotify Hi-Fi finally coming?

And so much more!

📊 Markets

• Interest Rates, Federal Funds: 5.33% (unchanged)

  • Next FOMC meeting starts July 30

• 30 Year Mortgage Rates: 6.95%

  • (-0.6% WoW, -1% MoM, +4% YoY)

• Single Family Home Price Index: 423.4 

  • (+0.1% MoM, +6.7% YoY)

  • May report, data is through March

• Commercial Real Estate Index: 122.7 

  • (+0.7% MoM, -6.6% YoY)

💸 Economy

Bottom Line: Inflation may be starting to settle down. The Fed is in no rush to cut rates though. We might only see 0.25% removed from rates this year. Employees are disengaged while some employers admit return to office policies were an attempt to reduce headcount without layoffs.

• May inflation data came in slightly below expectations. CPI was up 3.3% yearly and “Core” CPI was up 3.4% yearly. The monthly change in inflation was 0%. That’s the first time there was no monthly increase in more than 2 years. (CNBC)

• As expected, the Fed left interest rates unchanged. The median member of the FOMC expects only one cut to interest rates this year. (The Washington Post)

• In a survey, 25% of VP and C-level executives admit their return to office policies were aimed at getting employees to quit. (Ars Technica)

• Not really feeling it for your job? You might be among the 77% of workers that are not engaged or actively disengaged at work. This is reportedly costing the global economy ~$9 trillion in GDP or ~9%. (Fortune)

🏠 Real Estate

Bottom Line: Single family home inventory is increasing. There are sellers that can’t keep waiting. This is predicted to drive the market to a moderate decline by year end. Some states are seeing a growing minority of people with mortgage balances higher than their home values. The impacts from office loan delinquencies are just starting to “hurt” the system, but the risk to banks may be overstated.

• The Midwest and Southern United States have the highest levels of “underwater mortgages.” Basically, people owe more in their mortgage loan than their home is estimated to be worth. Things are the worst in Louisiana with 11.3% of mortgages “underwater.” States like Oklahoma, Illinois, and Alabama are among states with at least 4.5% of mortgages in the same state. (Axios)

• Redfin expects housing prices to start falling this summer and end at -1% by year end. The problem is sellers who can’t wait until mortgage rates go down or markets improve. Florida and Texas are already seeing an impact. (Business Insider)

• That prediction tracks with other data from Redfin. In May the company estimates home sales were down 2.9% year-over-year and 1.7% compared to April. (Reuters)

• According to Pimco’s Head of Real Estate, banks are only in the beginning of pain from commercial real estate loans. He expects this will eventually lead to more bank failures and distress in the market. (Business Insider)

• But, not everyone is convinced a crisis is brewing. Analysis by Janney Montgomery Scott suggests most of the largest banks should be fine. Out of 16 banks, they only had concerns about one being able to cover expected losses through 2026 in a “worse” case scenario. (MarketWatch)

• SHVO’s CEO reports the company is seeing strong demand and record office rents - but at the very top of the market. (CNBC)

💡 Startups

Bottom Line: More big AI funding rounds. BigTech plans to keep making big investments in the space. GM hasn’t given up on Cruise and robotaxis yet. Legal tech and space tech are drawing interest. Some think that the worst is over for Fintech. India’s former largest startup is now considered to have no value. Social media company BeReal managed to land a nice acquisition before running out of steam. It might be too easy for long-shot companies to raise funds through equity crowdfunding.

• Social media app BeReal has been acquired for €500 million. The acquisition effectively saves the company. They reportedly only had around 6-7 months of funding remaining. (TechCrunch)

• Byju’s is now worthless, according to analysis from HSBC. The education technology company was once India’s largest startup valued at $22B. (TechCrunch)

• $3.3B has been given to space technology startups so far this year. That includes the $95M Apex just landed from their Series B. Apex wants to improve the efficiency of production for key components required for space satellites. (Crunchbase News)

• Black Semiconductor just raised $273M in new funding. They want to use graphene to create more efficient communications between computer chips. (TechCrunch)

• AlphaSense just raised $650M at a $4B valuation. That’s a 75% increase in valuation after only 9 months. They use AI to help companies leverage market intelligence. (Crunchbase News)

• Some within the industry are speculating the landscape for FinTech companies has stabilized. Lower valuations, reduced funding, and higher expectations are now the new normal. (CNBC)

• The Wall Street Journal has a fairly negative take on equity crowdfunding. The story focuses on two companies - Aptera and Boxabl. Both companies have raised huge sums through crowdfunding in support of very ambitious projects. Aptera is trying to launch a solar powered car. Despite raising almost $300M combined, neither company has delivered much. There’s still no solar powered cars and Boxabl has only delivered 223 “dwellings.”

  • In summary, there are two main concerns. First, it’s too easy for these companies to raise money with good social media and marketing. Second, investors aren’t really aware of how risky these investments are. (The Wall Street Journal)

• Robotaxi company Cruise landed another $850M in investment from General Motors. While it’s no longer as hot, clearly companies have not given up on the promise of self-driving technology yet. (Crunchbase News)

• BigTech is making big bets on AI. Amazon plans to invest $230M into AI startups. Microsoft is already investing billions, even beyond its splashy OpenAI investment. (TechCrunch, The Wall Street Journal)

• There are some signs that interest in AI and legal technology companies is growing. Harvey is reportedly working on landing the largest fundraising haul the space has seen. (Crunchbase News)

🎵 Music Royalties

Bottom Line: The music industry continues to fight with Spotify over their attempt to skimp on royalty payments to songwriters. Spotify is reportedly planning to launch their Hi-Fi subscription tier this year. The new subscription tier could make an impact in royalty payments.

• Spotify is finally planning to launch its high-quality steaming plan (Hi-Fi). This is reported to be $5/mo more for individuals and $3/mo for family plans. It’s unclear how this will affect royalty payments. Billboard speculates it might allow other services that already offer hi-fi streaming to raise prices. (Billboard)

• The CEO of the National Music Publishers Association believes “Spotify has declared war on songwriters.” They have also filed a complaint to the Federal Trade Commision. This is a continuation of the “bundled” subscription dispute. (Forbes)

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