Trash talk

MARKETS

• Markets: With the U.S. stock market closed for the holiday, Germany seized the spotlight. European stocks gained after a survey of German businesses showed more optimism about future economic conditions.
• U.S. economy: It’s possible the worst is over. From restaurant bookings to travel to mortgage applications, business activity seems to be ticking up, the WSJ reports.
• Energy: Oil is on track for its best month ever.

REAL ESTATE

Rent Day Always Comes too Soon

In the next week, millions of households and businesses will face their third rent payment during the pandemic. But this one might be the most worrying yet as state bans on evictions start to lift.

Residential

After being halted for two months because of the coronavirus, evictions can resume in Texas. And while some cities have added extra protections for renters, a “tsunami of evictions” is still expected, NPR reports. A rental assistance program in Houston ran out of funding in 1.5 hours.

• Wisconsin’s evictions ban also expires today. The state is setting up a $25 million rent assistance program...but it’s not expected to be accessible until early June.

Zoom out: Evictions and damaged credit can turn into a vicious cycle of housing insecurity even during a strong economy. Tack on skyrocketing unemployment and a pent up wave of evictions could hammer working families further.

Commercial

Like humans, businesses have also withheld rent during the pandemic, especially in hard-hit sectors like retail and hospitality.

• Chipotle, Dunkin', and Shake Shack are among the chains lobbying property owners to defer rent payments or renegotiate leases.
• Starbucks told landlords it’ll “require concessions” for at least a 12-month period starting in June.

But many landlords are peeved that blue-chip companies worth billions⁠—who can raise money through a variety of sources⁠—are seeking concessions at their expense.

Big picture: Even in states where commercial evictions can technically proceed, closed and bottlenecked courts mean they’re unlikely to happen soon.

Landlords

Faced with empty storefronts, many landlords are being flexible with their tenants. Some are working on arrangements to extend leases in exchange for forgiven rent. Reduced rent agreements could hurt them in the long run by diminishing property values, per the WSJ.

Landlords also have mortgages, utility bills, and property taxes, and as their income dries up, failure to pay could have city-wide consequences. Commercial landlord Vornado Realty Trust said about 80% of NYC retail tenants missed payments at the beginning of April and May⁠. If building owners can’t scrounge up money for their next property tax bill in July, NYC will lose out on crucial revenue that funds public services.

GEOPOLITICS

U.S. and China Pick Up Where They Left Off

If there’s one thing you can count on even during a pandemic, it’s Phil Mickelson-level trash talk between the U.S. and China. The world’s two biggest economies ramped up their hostilities this weekend across really every issue you can imagine, from trade to telecommunications.

• The Chinese Foreign Minister said aggressive U.S. politicians are pushing the nations into a “new Cold War.”

Why the U.S. is angry with China: The Trump administration has faulted China for allowing the coronavirus to spread beyond the origin city of Wuhan. It’s also criticized a proposed law that would expand controls over Hong Kong.

Why China is angry with the U.S.: The U.S. recently tightened restrictions on supplies to Huawei (one of China’s most important tech companies), citing national security concerns. It also added 33 more Chinese entities to a trade blacklist.

Bottom line: When President Trump launched a trade war with China a few years ago, most experts suggested it was less about specific tariffs and more about larger geopolitical battles. We’re starting to see those in action.

INVESTING

The Stonk Exchange Is Back

Today, the New York Stock Exchange will reopen its iconic trading floor, giving bored traders a break from hawking Silly Bandz to their neighbors. The NYSE will cap the number of traders on the floor at a quarter of normal capacity, and those who do return will be asked to sign a liability waiver.

The backstory: The world’s largest stock exchange barred brokers from the trading floor in late March as the dangers of the coronavirus materialized.

The comeback story: In an opinion column for the WSJ, NYSE President Stacey Cunningham wrote, “Two months later, we’ve learned a lot.”

• New safety measures will require traders to wear masks and avoid public transportation, while plexiglass barriers have been erected to promote social distancing. That means no bear (or bull) hugs if the Dow hits 30k.

Bottom line: While electronic trading has reduced the significance of the physical NYSE to financial markets, its reopening is a symbol of Wall Street’s gradual return to business as usual.

SPACE

If You're Not Launching Rockets...

Are you even a polarizing, outspoken billionaire? Virgin Group founder Richard Branson watched on as his team tried to carry out the launch of the new Virgin Orbit spacecraft yesterday.

It didn't go as planned

The LauncherOne rocket dropped out from the bottom of a specially outfitted Boeing 747 jet...but moments later controllers had to abort the mission following an "anomaly."

• The ultimate goal for Virgin Orbit is to help deploy commercial and government satellites into orbit by offering more flexible launch locations, aka...anywhere. “We can fly to space from any place that can host a 747,” explained CEO Dan Hart.
• Obviously, that plan has a few more wrinkles to be ironed out.

But don’t forget about Elon: Tomorrow, SpaceX looks to redeem the week for rocketry with its first-ever crewed mission. When the two NASA astronauts take off from Florida, it will be the first manned launch from U.S. soil into Earth's orbit in nine years.

CALENDAR

The (Short) Week Ahead

So many epic quarantine hairdos will come to an end this week...don't forget to take pics so you can show your kids one day.

Monday: That was yesterday

Tuesday: Today

Wednesday: Fed beige book; HBO Max launch; earnings (HP, Toll Brothers, Royal Bank of Canada)

Thursday: Jobless claims; durable goods; second estimate of Q1 GDP; earnings (Costco, Dell, Nordstrom, Salesforce, Ulta Beauty, VMware, Dollar General)

Friday: Personal income and spending data; consumer sentiment; Steve Carell’s Space Force is released on Netflix; new Lady Gaga album

WHAT ELSE IS BREWING

• Americans hit the country's parks and beaches on Memorial Day weekend...some more socially distanced than others.
• The U.S. restricted travel from Brazil, which has one of the worst coronavirus outbreaks in the world.
  Lufthansa, Germany’s largest airline, received a $9.8 billion bailout package from the country's Economic Stabilization Fund.
• The NBA said it was in “exploratory conversations” with Disney about restarting the league in late July at Disney’s sports complex in FL.
• Stuff, one of New Zealand’s largest media companies, is being sold to its CEO for $1.

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