📰 This Week…

• Gen Z is beating out Millennials in this unfortunate category

• April had weak jobs data

• Are cryptocurrency prices partially to blame for rising housing prices?

• OpenAI is going to announce something Monday (today)

• This company is set to raise $6B in funding… less than one year after being founded

• The bidding for the Hipgnosis Songs Fund has ended

And so much more!

📊 Markets

• Interest Rates, Federal Funds: 5.33% 

  • (+0% MoM, +10% YoY)

  • Next FOMC meeting starts June 11

• 30 Year Mortgage Rates: 7.09%

  • (-1.8% WoW, +3% MoM, +11.7% YoY)

• Single Family Home Price Index: 423 

  • (+1.2% MoM, +7% YoY)

  • April report, data is through February

• Commercial Real Estate Index: 121.8 

  • (+0% MoM, -17% YoY)

💸 Economy

• Consumer data is missing information about Buy Now, Pay Later (BNPL) debt. It’s estimated to be $334B in 2024. Low-income consumers may be increasingly reliant on these services. A U.K. study also found 21% of BNPL users missed or were late on payments. (Fortune)

• Gen Z is already struggling with debt. People aged 22-24 are carrying 26% more credit card debt and 44% more mortgage debt than 10 years ago. Since 2020, Gen Z has also opened credit card accounts more often than Millennials. (The Wall Street Journal)

• April’s jobs report disappointed. The Bureau of Labor Statistics reported that 175K new jobs were added in April. That was 27% below expectations. (CNBC)

• The unemployment rate increased slightly to 3.9%. Average hours worked per week declined. The rate of growth for average hourly earnings declined to the lowest level since June of 2021. (J.P. Morgan)

• Citi Bank’s Chief US Economist is forecasting a recession this year. He is mostly concerned about a weakening labor market amid inflation. (Fortune)

Bottom Line: A lack of Buy Now, Pay Later data may be making consumers look stronger than they are. Gen Z is already accumulating debt faster than Millennials. New economic data shows a weakening of the labor market.

🏠 Real Estate

• According to the CEO of Chubb “Climate change is sending price signals.” Climate change will continue to drive insurance costs higher across the country. States that try to limit price changes will only drive insurance options away. (The Wall Street Journal)

• Blackstone believes that real estate prices have reached the bottom. The private equity company has been spending billions to buy distressed assets. They’ve also been investing in datacenters. (Business Insider)

• A new study found links between crypto and the housing market. Greater wealth from cryptocurrencies resulted in faster home price increases. Prices rose 0.43% faster in crypto-heavy counties. (Fortune)

Bottom Line: Real estate prices may be bottoming (even in commercial). Home insurance rates will continue increasing and continue being a problem for homeowners and state governments. Investment gains can accelerate price increases in the housing market.

💡 Startups

• Global funding for startups in April was about flat, year-over-year. Despite the buzz about AI, biotech and healthcare companies raised the most funding. (Crunchbase)

• Shein still wants to go public. They’re now exploring listing in London. This is due to concerns over political tensions between the US and China. (The Times)

• OpenAI is going to announce something on Monday. Speculation has ranged from a search engine to a voice assistant. (Mashable, Barron’s)

• Other reporting suggests that OpenAI will not announce a search product anytime soon. However, they are working on it. They’re reportedly recruiting people from Google to support the project. Watch out Perplexity. (Ars Technica)

• Elon Musk’s xAI looks to close on $6B in funding at a $18B valuation. That valuation comes not even one year after the company was announced. (Quartz)

• Cohere has a new AI model and a different approach. The company is betting they can win with a cheaper, simpler, and “good enough” model for businesses. In some cases, Cohere’s model out-performs GPT-4 but for up to 93% lower cost. (Business Insider)

• Apple is in talks with both OpenAI and Google for integrations into iPhones. It seems like an OpenAI partnership is the closest to coming to fruition. (Mashable)

• Stack Overflow (a question-and-answer forum for coding) struck up a partnership with OpenAI. Some of their users hated the news and tried to delete their answers. However, the company owns all their posts, so the protest edits were quickly restored. (Ars Technica)

• New York City has quietly become a hotspot for AI companies. (The Wall Street Journal)

• Groww is now officially an Indian startup company. This is part of an emerging trend of companies starting in the US but moving to India. Fintech companies needing to follow local regulations is one driver of this trend. (TechCrunch)

Bottom Line: Year-over-year startup funding is about flat. Big companies are still eyeing making it to public markets. AI companies continue to grab the headlines. AI companies can still raise funds at lofty valuations and little or no revenue. Often it remains unclear how generative AI products transform into sustainable business models.

🎵 Music Royalties

• New estimates are out on the impact of Spotify’s upcoming subscription plan changes. The new “bundled” classification could cost rightsholders between $80M - $150M per year. (Billboard)

• Concord is officially done bidding on the Hipgnosis Songs Fund. This basically means the fund will go to Blackstone for $1.6B. (Billboard)

• Musi is a popular, free music app among younger listeners. It seems increasingly likely to face legal challenges from the music industry. The app “rips off” music from YouTube. The company argues that artists receive payment for a normal YouTube play. (Wired)

Bottom Line: Spotify is trying to skimp on royalty payments. The Hipgnosis Songs Fund saga looks headed to a clean end (acquisition). A popular free music app (Musi) may soon face legal challenges.

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