🍋 Are We in a Recession?

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Good Morning! Amazon has added a pre-Prime Day perk for members of premium subscription service: Prime members can get one year of Grubhub+ free! Apple also added a new feature — Lockdown Mode. The function is geared towards high-profile users (think politicians, not IB analysts) to help protect them from state-sponsored hackers. In crypto winter news, crypto broker, Voyager Digital (one of the firms to receive help from Sam Bankman-Fried) has filed for bankruptcy.

1. Story of the Day: Are We in a Recession?

People say life isn't about the destination, it's about the journey. Well, contemplating the big questions like that may not matter. Wall Street thinks we're on the journey towards a recession, but consumers feel we're already here.

While the technical definition of a recession is 2 consecutive quarters of GDP contraction, many consumers are already feeling the effects, and the current state of the economy feels and tastes like a recession.

Gina Palmer, who runs She Salon in Atlanta, saw an empty shop on a Friday morning that would normally be a bustling day. "When people look at their budgets, the first thing they cut is self-care, I’ve seen my clients go from having weekly appointments to bi-weekly, and my bi-weekly clients are now coming in every six weeks," said Palmer.

The triple whammy of 1) Sky-rocketing inflation (8.6%), 2) Increasing interest rates, 3) Markets crashing (S&P -20%, Nasdaq -29% YTD), has meant purchasing power for consumers has gone down, portfolios have shrunk and borrowing is becoming more expensive by the day.

More than 1 in 3 Americans believe the economy is in a recession and 70% believe we will be in a recession by year-end.

Goldman Sachs economists put the risk of a recession in the US at 30% for the next year. Bloomberg Economics' model sees a 38% chance in the same time frame. But do models really matter if we are already feeling all the symptoms?

Short Squeez Takeaway: We were all out here gearing up for the Roaring 20s but looks like what we are going to get is a brand new recession. The Misery Index (yes this is a real index), which combines unemployment and inflation rates, for the US is already at 12.2%. That's similar to levels at the start of the pandemic and in the aftermath of 2008. If consumers are already spending like we're in a recession though, the recession becomes a self-fulfilling prophecy, even if we're not technically in one yet.

2. Markets Rundown

Stocks were up, building upon yesterday's momentum, thanks to the Fed reiterating its view on fighting high inflation

Movers & Shakers

• (+) Rocket Companies ($RKT) +4% after Wells Fargo upgraded it to overweight, despite a "tough mortgage backdrop."

• (+) Rivian ($RIVN) +10% after the company said it's on track to deliver 25,000 vehicles this year.

• (–) DoorDash ($DASH) -7% after Amazon announced its Grubhub deal.

Private Dealmaking

• VulcanForms, a 3D printing startup, raised $250 million 

• Current Foods, a producer of plant-based salmon and tuna, raised $18 million in financing

• Providence Equity Partners committed $500 million in equity to help form a new global content studio

• FTV Capital invested $75 million for a minority stake in DataArt

• Quantum Source, a quantum computing company, raised $15 million in funding

3. Top Reads

• Investors take Bitcoin off exchanges as crypto winter settles in (BB)

• American Airlines pilots get triple pay for trips dropped in glitch (CNBC)

• Private equity firms poach talent to chase wealthy investors (WSJ)

• Why gasoline prices can stay up when oil goes down (BB)

• Merck in advance talks to buy Seagen (WSJ)

• How to suffocate your economy (Evonomics)

• Top investor warns deflating tech ‘bubble’ far from over (CNBC)

• Spirit expanding at Newark airport (Fox)

• Peloton sweetens employee incentives (CNBC)

A Message from Motley Fool

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4. Book of the Day: Misbehaving: The Making of Behavioral Economics

Nobel laureate Richard H. Thaler has spent his career studying the radical notion that the central agents in the economy are humans―predictable, error-prone individuals.

Misbehaving is his arresting, frequently hilarious account of the struggle to bring an academic discipline back down to earth―and change the way we think about economics, ourselves, and our world.

Traditional economics assumes rational actors. Early in his research, Thaler realized these Spock-like automatons were nothing like real people. Whether buying a clock radio, selling basketball tickets, or applying for a mortgage, we all succumb to biases and make decisions that deviate from the standards of rationality assumed by economists.

In other words, we misbehave. More importantly, our misbehavior has serious consequences. Dismissed at first by economists as an amusing sideshow, the study of human miscalculations and their effects on markets now drives efforts to make better decisions in our lives, our businesses, and our governments.

Coupling recent discoveries in human psychology with a practical understanding of incentives and market behavior, Thaler enlightens readers about how to make smarter decisions in an increasingly mystifying world. He reveals how behavioral economic analysis opens up new ways to look at everything from household finance to assigning faculty offices in a new building, to TV game shows, the NFL draft, and businesses like Uber.

Laced with antic stories of Thaler’s spirited battles with the bastions of traditional economic thinking, Misbehaving is a singular look into profound human foibles. When economics meets psychology, the implications for individuals, managers, and policy makers are both profound and entertaining.

“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

5. Short Squeez Picks

• Tired of having to use 5 different apps and 10 spreadsheets to monitor your investment portfolio? With Delta Investment Tracker, you can get a clear overview of everything that you own in one app. Check it out today!

• A Mexican mayor marries an alligator

• The 13 best hot dogs in America

• Proof that going through ups and downs in life will help you get farther

• Researchers are on a quest to make the most out of our body clocks

6. Daily Visual: Rents to the Moon

Source: Axios

7. Daily Acumen: Significant Hurdles

"If your plan, your idea or your art doesn’t involve any significant hurdles in moving forward, it’s probably not worth that much.

If it were easy, everyone would do it.

The tactic is to seek a path where you see and understand the significant hurdles that kept others away. And then dance with them.

They’re not a problem, they’re a feature."

Source: Seth Godin

8. Crypto Corner by Bonkalytics.com

• Billions of trapped Bitcoin may turn into tax writeoff

• Bitcoin is the 'Holy Grail' of accounting

• Ohio man rejoins DoorDash to buy more BTC

• Boom turns to bust: a summary of recent crypto layoffs

• A fake job offer took down the world’s most popular crypto game

For more crypto-focused content, sign-up here.

9. Memes of the Day

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*Stock Advisor returns of 375% as compared to S&P 500 returns of 121% as of 5/4/2022. Not all picks have performed as well. Past performance is not an indicator of future results. All investing involves a risk of loss.