Monday's Scoop: Waiting🌤️

Hey friend - hope you had a great weekend. Did you catch the solar flares?

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Here’s what you need to know today to inform your work, spending, and investments…

1. Optimism about the economy has faded as living costs rise.

2. Manhattan rent prices keep climbing to new records.

3. Corporate sustainability strategies face uncertainty.

Global Energy Emissions: 37.4 billion tonnes of CO₂
^{An all-time high, up 1.1% from 2022. (IEA)}

Climate policymakers have thrown the future of carbon offsets into uncertainty. The Science-Based Targets initiative (SBTi) helps companies set and achieve goals to reduce their environmental impact, ensuring they aren't just making empty promises but are actually reducing their emissions. Recently, SBTi announced plans to allow companies to use carbon offsets - financial credits meant to fund emission-reduction projects like planting forests or developing new carbon capture technologies. This decision sparked controversy among SBTi staff and the climate community that doubts the widespread authenticity of carbon offset projects. This past week, SBTi revealed new research that carbon offsets often don't work as promised, undermining their controversial policy shift. This is a big deal because many companies, like Amazon and Microsoft, rely on offsets to claim they're reducing their climate impact. This could also lead to stricter rules on how offsets can be used in corporate climate plans.

Inflation Rate: +3.5% (YoY), +0.4% (MoM)
^{Policymakers aim for 2% YoY inflation (March CPI)}

Americans are worried about living costs getting worse. The University of Michigan Consumer Survey reported sentiment about the economy slumped to a six-month low in May. People think finding a job is more challenging, and they’re worried about living costs continuing to climb. According to the Federal Reserve Bank of New York survey, US consumer expectations for inflation over the next few years increased this month. Americans expect prices to rise by 3.3% over the next year and roughly 2.8% annually for the next five years. Both numbers increased from last month. Inflation expectations are important because they can be self-fulfilling. If consumers and businesses expect higher costs, they’ll buy more and raise prices in anticipation.

30yr Mortgage Rate: 7.2%
^{That’s up from 6.5% a year ago. (MBA)}
Median Existing Home Price: $393,500
^{That’s up from $375K a year ago. (NAR)}

America’s most expensive real estate market just broke new records. Manhattan rent prices reached a new all-time high in April, with the median one-bedroom apartment costing $4,250 per month, according to Miller Samuel and Douglas Elliman Real Estate. Vacancy rates sit near historic lows, so landlords have the upper hand to keep raising prices. The number of leases signed last month rose 42% from the month before. Rents fell in Queens but broke records in Brooklyn.

The Market: ⬇️ -0.02%
S&P 500: 5,221.42
1Mo: +3% | 1Yr: +26% | 5Yr: +83%

The market barely moved on Monday as investors waited for news about inflation. Whether living costs accelerated or slowed in April will determine how quickly policymakers decide to reduce borrowing costs. Wholesale inflation comes out on Tuesday before consumer prices on Wednesday.