Morning Brief: From Housing Inflation, Bitcoin Leaving to Supplies Disaster

The rent is too pricey. Rent growth, not just surging energy prices, is doing its share to push inflation to a 40-year high and there’s no indication of it stopping up. Rent inflation surged at a seasonally adjusted annual rate of 4.2 percent (highest since 2007) and an increase of 0.6 percent month-on-month (highest level since 1987), according to the Bureau of Labor Statistics' Consumer Price Index (CPI).

Much of the rise was generated by four Sun Belt cities — Miami, Dallas, Denver and Phoenix — that had a wave of inward migration during the COVID-19 epidemic as individuals who could work remotely sought more room in lower cost, less dense U.S. urban regions.

Single-family rent extended a record rise for the 10th straight month in January, jumping 12.6 percent from a year earlier, according to fresh statistics to be issued by CoreLogic this morning. Sun Belt cities, topped by Miami with a nearly 40 percent yearly rise, experienced the highest growth. Rapid rent increases will remain.
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While bitcoin's (BTC) four-month negative price action appears to have scared away ordinary leverage traders, institutions focused on longer-term horizons remain unperturbed. That's obvious from the recent huge outflow of coins from the U.S.-based crypto exchange Coinbase (COIN), according to blockchain analytics firm Glassnode. A total of 31,130 bitcoin departed Coinbase last week, the greatest single-week outflow since 2017, data recorded by Glassnode showed. Last week's outflow has brought the quantity of coins held on the Nasdaq-listed exchange to a four-year low of 649,500 BTC. The balance maintained across all centralized exchanges has fallen to 2,519,403 BTC, the lowest level since November 2018.

The diminishing exchange balance implies fewer coins are available for liquidations on the exchange. In other words, the sell-side liquidity is drying up, suggesting opportunity for a rapid rise, especially as the coins removed from Coinbase were relocated to a mainly inactive wallet. Bitcoin was last spotted trading at $38,600, reflecting a 2 percent decline on the day.
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Tesla Inc. hiked pricing on all its vehicles after Chief Executive Officer Elon Musk claimed expenses were growing at the firms he leads. The cheapest Model 3 in the U.S. is currently $46,990, according to Tesla’s website. The business hiked pricing by 3 percent to 5 percent in both the U.S. and China, Dan Levy, a Credit Suisse analyst, wrote in a letter to clients.

Musk tweeted earlier this week that both Tesla and Space Exploration Technologies Corp. were witnessing “significant” inflation in raw materials and logistics. The electric vehicle and rocket-making industries aren’t alone. The S&P GSCI Index - a commodities market benchmark - jumped 20 percent the first five days of the month, the greatest weekly rise going back to 1970.

This is Tesla’s second round of price hikes in the last week. The business increased the price of some variants of the Model 3 and Y on March 9 in the U.S., followed by an increase for China-built vehicles in that market on March 10. Tesla shares slid as much as 1.3 percent to $756.57 as of 9:50 a.m. Tuesday in New York. The stock has plummeted 28 percent this year.

Oil prices plummeted more than 5 percent on Monday to the lowest in almost two weeks on optimism for progress toward a diplomatic end to Russia's invasion of Ukraine - a scenario that would enhance global supply - while a pandemic-linked travel ban in China threw doubt on demand.

Brent futures declined $5.77, or 5.1 percent , to close at $106.90 a barrel, while U.S. West Texas Intermediate (WTI) oil slid $6.32, or 5.8 percent , to settle at $103.01. The United States has banned Russian oil imports and Britain stated it will phase them out by the end of 2022. Russia is the world's largest exporter of crude and oil products combined, shipping roughly 7 million bpd or 7 percent of global supply.

"Oil prices are reflecting a pessimistic attitude taken from expectations of favorable advances in the next round of Russia-Ukraine discussions," said Kaushal Ramesh, an analyst at energy research service Rystad Energy. Russian and Ukrainian delegates attended a fourth round of discussions on Monday - by video link rather than in person in neighboring Belarus as in the past - but no new progress was revealed.
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On Tuesday, China reported a dramatic increase in daily Covid-19 infections, the highest daily figure since the epidemic began more than two years ago, causing lockdowns and jeopardizing already-fragile global supply lines.

According to China's National Health Commission, 3,507 Covid instances were recorded across more than a dozen provinces and municipalities on Tuesday, up from 1,337 the following day. The worst-affected region was the north-eastern province of Jilin, which was placed on emergency lockdown, after the southern region of Shenzhen, where authorities banned public transit, including subways and buses, and ordered almost 17 million residents to remain at home.
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