Shownotes Transcript
Welcome to Seeking Alpha's Wall Street Lunch, our afternoon update on today's market action, news, and analysis.
Good afternoon. Today is Thursday, May 22nd, and I'm your host, Kim Kahn. Our top story so far: 15 years ago today, 10,000 Bitcoins bought you two Papa John's pizzas. Now that could buy you Papa John's. Bitcoin is setting new highs on the 15th anniversary of the famous crypto pizza transaction that started it all. On May 22nd, 2010,
Early adopter and miner Laszlo Hanyac bought two large Papa John's pizzas for 10,000 bitcoins signaling the potential for real-world purchases and Bitcoin as a medium of exchange. At the time, Bitcoin was only a small development among technophiles and gamers. This morning, it rose to as high as $111,700.
So, those 10,000 Bitcoins that bought two pizzas would be worth more than $1.1 billion today, almost enough to buy the entire Papa John's company, whose market cap stands at $1.34 billion. On the economic front, U.S. existing home sales dipped 0.5% month-on-month to an annual rate of $4 million in April, compared to the $4.13 million consensus and $4.02 million previously.
The median existing home sales price increased 1.8% year-on-year to $414,000. The Northeast and Midwest saw price increases, while home prices fell in the South and West regions. Pantheon macroeconomist Samuel Toombs says, "...housing market activity remains lethargic, primarily due to the gulf between new mortgage rates, nearly 7% right now, and the average 4% rate on existing mortgages."
The tariff announcements and environment of heightened economic policy uncertainty have also made people less willing to make large financial commitments, he added. In the markets, Treasury yields are calling the shots as concerns about U.S. fiscal direction mount. The GOP budget bill passed the House by a narrow margin this morning and will go to the Senate. According to the Congressional Budget Office, the proposed tax changes would increase the federal deficit by an estimated $3.8 trillion over the next decade.
The 10-year yield is taking a breather, trading around 4.6%, following a spike in the previous session prompted by a weak 20-year auction. George Saravellos, head of FX research at Deutsche Bank, says, "...the most troubling part of the market reaction to the auction is the dollar is weakening at the same time. To us, this is a clear signal of a foreign buyer's strike on U.S. assets and the associated U.S. fiscal risks we have been warning for some time." "...it is hard for U.S. equities to stay resilient in this environment," he added.
The 2023-24 period saw a combined rise in U.S. yields and equities as the market was revising U.S. growth expectations higher. That was entirely reasonable. Today is very different. It is all a building fiscal risk premium into U.S. assets. It is hard to make the case that such a negative driver of the rising cost of capital is positive for risk assets.
Among active stocks, Snowflake is rallying as analysts praised its strong first quarter and increased guidance, which they say are evidence that its new products and changes the company made to its sales operations are resonating with customers. Jefferies analyst Brent Phil said the results were an all-around clean print and evidence that new product momentum is picking up, specifically citing Snowpark and Dynamic Tables.
Solar company shares including Sunrun, Interphase Energy, and SolarEdge Technologies are being taken to the woodshed, with the aforementioned tax and spending bill possibly ending numerous clean energy subsidies. Among the changes included in the bill were revised language that would end certain tax credits for solar and wind energy by 2028 instead of a slower phase-out through 2031.
In the new proposed timeline, solar or wind projects must begin construction within 60 days of the bill's enactment and finish construction by year-end 2028 to remain eligible for tax credits. The legislation also would remove the 30% federal tax credit for taxpayers who install solar rooftop systems.
And for the first time in three years, Urban Outfitters reported comparable sales growth in all three banners, including an inflection to positive growth in the Urban Outfitters brand. This contributed to consolidated same-store sales growth of 5% for the first quarter, beating expectations of 3.4% growth and contributing to a big rally in shares.
And in the Wall Street Research Corner, Morgan Stanley looked at the latest batch of 13F filings to determine the most crowded hedge fund longs. Those are the 25 Russell 1000 stocks with the highest percentage of public float owned by hedgies.
Todd Castagno, head of global valuation, accounting, and tax, says, Avis Budget tops the list with a little more than half of the float owned by hedge funds.
Rounding out the top 10 are Lore Holdings, Howard Hughes, Janus Henderson Group, Wendy's, Insight, Exelixis, Formula One Group, Quidel Ortho, and Lyft. See the rest of the 25 in our story on Seeking Alpha. That link will be in the top of show notes.
That's all for today's Wall Street Lunch. Look for links for stories in the show notes section. Don't forget, these episodes will be up with transcriptions at SeekingAlpha.com slash WSB. And join the elite community of real investors to unearth great investing ideas. Just head to SeekingAlpha.com slash subscriptions.