Biden Proposes a 3-Month “Gas Tax Holiday”
But would the savings ever reach the pockets of consumers?
Last week’s market summary (June 20-24, 2022):
- S&P 500: +6.71%
- Dow: +5.31%
- Nasdaq: +8.51%
- Bitcoin: +3.04%
Gas prices are killer right now. You know, I know it, and so does President Biden which is why he just proposed pausing federal taxes on gas for the next 3 months. But some lawmakers worry that a gas tax holiday would benefit oil tycoons more than workers and families.
Would you consider Facebook and Netflix to be value stocks? Well, the Russell 1000 Value Index does after its latest annual rebalancing. And energy stocks now have a heavier weighting in their growth index.
Last week, Kellog revealed plans to split into three companies by the end of 2023 as it looks to double down on snacks. We also learned that multiple cash-strapped crypto companies are turning to billionaire Sam Bankman-Fried for help.
Keep reading to get the full details on these stories and to find out which economic events we’ll be monitoring this week.
What Everyone’s Been Buzzing About
Biden has asked Congress to pass a 3-month gas tax holiday. If acted upon, the pause on gas taxes would last until September. In theory, the move could save consumers 18 cents per gallon of gasoline and 24 cents for diesel. But representatives on both sides of the aisle worry that energy companies would pocket the majority of the savings themselves to boost their bottom lines rather than passing them along to consumers.
FTSE Russell rebalances its benchmark indexes. Speaking of energy companies, there’s now a heavier weighting of them in the Russell 1000 Growth Index (RLG) after the annual reconstitution which takes effect today. And a few tech companies have now been moved to the Russell 1000 Value Index (RLV) for the first time, including Netflix (NFLX), Meta (META), and PayPal (PYPL).
Kellogg is splitting into three separate companies. In a surprise move, Kellogg announced its plans to divide into three businesses with distinct focuses: snacks, cereal, and plant-based food. It’s been a decade since Kellogg’s first entered the snacks orbit by purchasing Pringles. Now, with cereal demand stalling, the company looks poised to lean even harder into the snack category.
Bitcoin billionaire is bailing out crypto companies. As many cryptocurrency businesses struggle to survive the latest price meltdown, a few of them have received lifelines from companies run by billionaire Sam Bankman-Fried. FTX, his crypto exchange, provided a $250 million credit line to BlockFi. And his quantitative research firm, Alameda research, offered $500 million in financing to Voyager. But even that might not be enough to keep some of these companies afloat if this latest downturn transitions into a longer-term crypto winter.
Powell says that the Fed’s dedication to lowering costs is “unconditional.” The Fed chair made that statement during his testimony to members of Congress last Wednesday. Powell and his team seem resolute in their fight against inflation, even if continued interest rate hikes put the economy at risk in other ways.
What To Keep Your Eye on This Week
May’s pending home sales index. The pending homes sales index for May will be released today at 10 am. The index has fallen for six months in a row, including a 3.9% decline in April. Analysts are predicting another 4.0% drop this month as the ongoing home affordability crisis continues to push down demand.
S&P Case-Shiller U.S. home price index (year-over-year). Sticking with the housing market, we’re also eager to see the S&P CoreLogic Case-Shiller Home Price Index for April. March’s update showed that prices had increased by a whopping 20.6% YoY. Potential homebuyers desperately need that rate of growth to decelerate to a more reasonable level.
Here are three stories from around the web that our team found interesting:
- Is Google Dying or Did the Web Grow Up? (The Atlantic)
- The Economics of Legal Weed Don’t Work (Time Magazine)
- Why Investors Suddenly Care About Saving the Environment (Vox)
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