🍋 Renting > Buying. Always Has Been.

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Good Morning! The European Central Bank raised interest rates for the first time in 11 years with a half-percentage point increase, as Europe navigates high inflation and slowing economic growth. Jobless claims hit an eight-month high in the United States as more companies announce job cuts as recession fears loom. And a heat wave in the United States sent natural-gas prices soaring as Americans crank the air conditioning and seek to keep themselves cool.

For those looking to trade on real-life events, check out Polymarket, where you can trade on Fed's upcoming rate hike in July.

1. Story of the Day: Renting > Buying. Always Has Been.

For those of you lamenting your landlord revoking your Covid deal and raising the price of your West Village flexed two-bedroom to the moon, there’s nevertheless a silver lining. An analysis released by Realtor.com found that renting is still more affordable than buying in three-quarters of American cities.

For most of contemporary American history, homeownership has become synonymous with the ‘American dream’. From a spacious backyard to a white picket fence, to even your MD’s four-car garage in Greenwich, homeownership is a subtle flex that one has ‘made it’ in America.

For most of the economic recovery post-Covid, buying a home trended towards becoming more affordable than renting, offering many Americans the chance at the so-called American dream. However, as American workers came to embrace hybrid work and tap into ultra-low interest rates, the average American home price soared. 

The Federal Reserve’s subsequent raising of interest rates to combat inflation caused mortgage rates to continue to rise in tandem. In a little under a year, renting has become far cheaper than owning. In addition to saving renters’ closing costs, taxes and maintenance fees, renting also provides flexibility for renters, particularly for those early on in their careers.

Short Squeez Takeaway: Some Americans continue to hold traditional views on the differences between renting and buying, and see rent as throwing money away compared to paying into an asset with a mortgage. That said, the rising costs of homeownership make renting cheaper – a renter is not responsible for the many expenses associated with home ownership, and could even invest the difference saved into a higher performing asset (equities, etc.) for a better return. The bottom line is where you choose to live is an investment – renting can be just as helpful as homeownership, if not more, in helping Americans reach their financial goals in times of rising interest rates and soaring home prices.

2. Markets Rundown

Stocks closed higher Thursday with all three benchmarks touching their highest levels in six weeks, as weak economic data was offset by healthy second-quarter earnings from Tesla and others.

Movers & Shakers

• (+) CSX Corporation ($CSX) +4% after reporting stronger-than-expected revenues for the second quarter.

• (+) Philip Morris International ($PM) +4% after the company reported quarterly earnings that beat analyst expectations.

• (–) United Airlines ($UAL) -12% after reporting disappointing quarterly results.

Private Dealmaking

• Amazon to buy One Medical, a primary-care practice, for $3.9 billion

• How Rogers’ $20 billion contested bid for Shaw will play out

• Contentsquare, a customer digital analytics startup, raised $600 million

• British retailer Marks and Spencer acquires logistic services provider Gist Ltd for $173 million

• Auron Therapeutics, a cancer therapies biotech company, raised $48 million

• Meati Foods, an alternative meats company, raised $150 million 

3. Top Reads

• 40% of workers are considering quitting – here’s where they’re going (CNBC)

• Tesla’s rally creates $1 billion headache for its army of shorts (BB)

• Why every CEO needs to be a communicator (Axios)

• A recession alarm is ringing on Wall Street (NYT)

• Airlines are making money again but can’t keep up with surging travel demand (WSJ)

• Loans could burn start-up workers in downturn (NYT)

• Amazon’s new electric Rivian delivery trucks hit the road (Axios)

• EU told to prepare for Russian gas shut-off (BBC)

• Hidden benefits of corporate finance come under spotlight (WSJ)

A Message from Polymarket: July Rate Hike

Federal Reserve officials have recently signaled that they will likely stick with a 75 basis point interest rate increase at their July 26-27 meeting.

However, another hot inflation reading of 9.1% in June has raised the possibility that the Fed may opt for a larger 1 percentage point rate hike at its next session.

"The Fed has to react ... charting out a course that is somewhat more aggressive over the second half of this year," said St. Louis Fed President James Bullard, among the chief advocates for quicker and larger rate increases.

Will the Fed set interest rates above 2.50% (100 bps or more) after their scheduled July meeting?*

Polymarket traders are currently predicting only a 12% probability that the Fed will increase rates by 100bps (or more). What do y’all think? Follow the odds now on Polymarket!

4. Book of the Day: Solving Modern Problems with a Stone-Age Brain

Sharing stories and advice rooted in the science of evolutionary psychology, father and son authors Doug Kenrick and David Lundberg-Kenrick pinpoint the dangers of stone-age problem solving for our lives today, and present a new, systematic way to survive and be happy in the modern world.

Over millennia, we humans have evolved a set of motivational systems to help us solve the seven basic problems of existence: surviving, protecting ourselves from dangerous others, forming friendships, winning respect, attracting mates, hanging onto mates, and caring for our families. We seek the same goals in the 21st century. 

However, the saber-tooth tigers and rival tribes that once threatened us have been replaced by marketers peddling sugar-laden foods, pundits fanning the culture war flames, and payday loan companies scamming those who can least afford it.

Through a series of engaging narratives and science-based life tips, this book helps us see past our electronics and lattes and gain helpful insights into achieving the life we want.

“The problem isn’t the problem. The problem is your attitude about the problem.”

5. Short Squeez Picks

• Can pickleball save America?

• How this 57-year-old earns $177,000 by renting his backyard pool to strangers

• To find your next job, ditch the online resume portal

• How much money is enough? Study shows not as much as you think

• David Brooks on why he was wrong about capitalism

6. Daily Visual: Tesla Profits

Quarterly Q1'19 to Q2'22

Source: Axios

7. Daily Acumen: Happiness

“Hordes of motivational speakers tell you how you can "win" the game of life: by expanding your network of friends, by earning the most money, by attracting lots of romantic partners, or by acquiring the most status. 

But pursuing those goals as ends in themselves may not solve your problems and might not make you very happy. Even trying too hard to be happy all the time may take you down the wrong path. 

Occasionally, you may want to do things that aren't immediately pleasurable, for example, you will often benefit by leaving the comfort of a nice, warm bed to help your friends, coworkers, or you can  family members with an unpleasant task.”

Source: Solving Modern Problems with a Stone-Age Brain

8. Crypto Corner by Bonkalytics.com

• Coinbase former manager charged in alleged first crypto insider-trading scheme

• Market rout shows dangers of margin lending, crypto style 

• Crypto lender Vauld files for protection against creditors

• Crypto startup Blockchain.com lays off 25% of staff as 3AC fallout spreads

• Coinbase jumps 14% after saying it has no exposure to bankrupt crypto firms

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

9. Memes of the Day

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*Trading is not available to people or companies who are residents of, or are located, incorporated or have a registered agent in, the United States or a restricted territory.