Results from Airbnb disappointed investors with an outlook for subdued bookings in the second quarter. They also reveal something about consumers\u2019 state of mind.<\/p>\n
Revenge spending\u2014when shoppers spend more than they otherwise would after a shock like the Covid-19 pandemic lockdowns\u2014appears to be dying out. Airbnb CEO Brian Chesky said people are becoming more price sensitive, going for cheaper bookings, rather than splashing out.<\/p>\n
The spending splurge was especially strong for services after lockdowns were lifted. Having splashed out on durable goods such as computers and washing machines while stuck at home, people later rushed to eat out in restaurants, travel, and stay in hotels. That\u2019s one reason services inflation, a key metric for the Federal Reserve, has been so sticky.<\/p>\n
Wednesday\u2019s inflation data are a key indicator of how persistent that stickiness is. It stands to reason that, at some point, consumers will try harder to hang on to their money after experiencing the fastest inflation in 40 years.<\/p>\n
If that moment is now, it\u2019s good news for the Fed. It has raised interest rates by 5 percentage points in the space of about a year, which is another reason to make shoppers wary of spending too much. The odds of a Fed pause in June are very high. After that, things get trickier.<\/p>\n
An inflation rate that continues its downward trajectory, will mean the Fed will be able to pause for even longer. Chairman Jerome Powell says it\u2019s too soon to consider cutting rates. <\/p>\n
But markets disagree and anticipate some reversal of the past year\u2019s hikes later this year. The death of revenge spending will determine whether that becomes an option for Powell down the road.<\/p>\n
\u2014Brian Swint<\/em><\/p>\n *** Join MarketWatch\u2019s Beth Pinsker, financial planning columnist, today at noon when she talks with Beth V. Walker, author of \u201cNever Pay Retail for College\u201d about her formula to help families understand what it takes to afford college and find a practical way to pay for it. Sign up here.<\/em><\/p>\n Try your hand at this morning\u2019s Barron\u2019s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n \n Airbnb\u2019s<\/span> What\u2019s Next:<\/strong> The U.S. is ending Covid-19 vaccination requirements for inbound international air travelers as of Friday, when the federal government\u2019s official public-health emergency ends.<\/p>\n \u2014Liz Moyer<\/em><\/em><\/p>\n President Joe Biden called his Oval Office meeting with the \u201cBig Four\u201d congressional leaders \u201cproductive,\u201d but it ended without a deal to raise the debt limit. Biden, speaking to reporters later on Tuesday, said he wouldn\u2019t rule out a short-term extension. <\/p>\n What\u2019s Next:<\/strong> Biden said he is ruling out default and he wasn\u2019t going to pass a budget that has drastic cuts in spending, especially to the clean-energy programs passed last year. If it gets down to the wire with no deal, he wouldn\u2019t attend the G-7 meeting in Japan May 19-21.<\/p>\n <\/strong>\u2014Megan Cassella and Janet H. Cho<\/em><\/p>\n \n Wynn Resorts What\u2019s Next:<\/strong> The first quarter reveals a strong start to Macau\u2019s post-Covid recovery. Provided visitor numbers and travel to the region continue to grow, the coming quarters could be even better for the Macau casino operators.<\/p>\n \u2014Callum Keown<\/em><\/em><\/p>\n \n Rivian Automotive\u2019s<\/span> What\u2019s Next:<\/strong> Rivian told shareholders in a letter that its supply chain will continue being \u201cthe main limiting factor\u201d of its output, adding that it is introducing new engineering design changes and key technologies in the second half of 2023 to \u201chelp mitigate anticipated supply-chain constraints,\u201d MarketWatch reported.<\/p>\n \u2014Al Root<\/em><\/em><\/em> and Janet H. Cho<\/em><\/em><\/p>\n Mall-based retailers are increasingly using promotions to woo shoppers back to stores, as consumers focus more on value and reconsider nonnecessities as their discretionary budgets shrink. As average tax refunds declined this year, Urban Outfitters What\u2019s Next:<\/strong> Morgan Stanley analyst Simeon Gutman said price gains are moderating and promotions are trickling back in more durable goods and food retailers, with investors bracing for more bad news among more discretionary retailers such as Lowe\u2019s,<\/span> \u2014Teresa Rivas and <\/em><\/em>Janet <\/em>H. Cho<\/em><\/em><\/p>\n Dear Quentin,<\/p>\n I\u2019m afraid to bring this up with friends in case they call me a \u201cKaren\u201d or tell me I\u2019m being selfish or a skinflint. Over the last 12 months, I have seen my rent go up by 25%. I\u2019m paying $3,200 for a one-bedroom apartment. I will never be able to save for my own place. I struggle to pay off my credit cards every month. I wear dresses and, in some cases, shoes that I bought 10 years ago. I\u2019m lucky enough to fit into the dresses, and I can\u2019t afford to spend money on \u201cluxury items\u201d or \u201cwants\u201d anymore. My company is cutting back on staff, and I\u2019m waiting for the other shoe to fall. <\/p>\n I eat out twice a week, usually on weekends, and I am constantly put out by how much it costs for a glass of wine or a cocktail with dinner. As much as a starter, if you want to ask. I went to a famous pizza joint in my neighborhood last weekend, and we had two pizzas, a shared starter, a gin and tonic, and a Negroni, and a glass of wine each, and it cost us $208. That\u2019s $104. Plus, another $20 each for a tip. We started out going for pizza. How is this possible? My friend didn\u2019t even eat her pizza and I told her, \u201cYou just spent $124 on a cocktail and a glass of wine.\u201d<\/p>\n Given the increase in the cost of living, I\u2019m hung up on the 20% rule. I live in a big city, and everything is expensive. You can pay $7 for a coffee. A coffee! Not tipping 20% makes you look like some kind of fascist. I tipped 15% once on a date, and the guy made some smart comment, \u201cOh, you\u2019re only tipping 15%?\u201d and I never saw him again. Cabs now cost $30 for a three-mile ride. Is it ever OK to tip less than 20%? Soon we will be tipping 25% or 30%, or more. I\u2019m sorry for ranting, but I\u2019m sick and tired of being guilted into tipping everywhere I go.<\/p>\n Am I right? Or am I a skinflint? Please enlighten me.<\/p>\n***<\/h4>\n
Airbnb Warns Bookings Won\u2019t Compare Favorably With \u2018Revenge Travel\u2019<\/h2>\n
\n cautious outlook for the second quarter sent its shares down 10% in after-hours trading. It said bookings for nights out and experiences will compare unfavorably with last year\u2019s quarter, when so-called \u2018revenge travel\u2019 (making up for lost time) after the Covid-19 pandemic was in full force. The hosting and experiences site still expects a strong travel season.<\/p>\n\n
***<\/h4>\n
Biden, Congressional Leaders Meeting Again Friday on Debt Ceiling<\/h2>\n
\n
***<\/h4>\n
Wynn Earnings Show Fast Start to Macau Recovery<\/h2>\n
\n provided more evidence a strong Macau casino comeback lies ahead as the company beat earnings and revenue estimates in the first quarter.<\/p>\n\n
***<\/h4>\n
Rivian Reiterates 2023 Target of Making 50,000 Vehicles<\/h2>\n
\n first-quarter results were mixed, but it kept its full-year guidance. Investors sent shares up 6% in after-hours trading. More important than first-quarter numbers, the electric-truck start-up expects to produce 50,000 vehicles in 2023, the same as prior guidance.<\/p>\n\n
\n Lucid
\n and
\n Fisker
\n underwhelmed. Lucid spent about $1 billion of its cash during the quarter. Both Lucid and Fisker cut their production guidance<\/strong> for 2023 just as legacy auto makers ramp up their EV efforts.<\/p>\n<\/li>\n***<\/h4>\n
Retailers Ramp Up Discounts to Bring Back Shoppers<\/h2>\n
\n Walmart
\n and other retailers have warned that customers are feeling particularly pinched. <\/p>\n\n
\n Abercrombie & Fitch,<\/span><\/p>\n
\n \u2019 Anthropologie, and
\n Gap\u2019s<\/span>
\n namesake stores and Old Navy brand increased by about 2.75 percentage points<\/strong> on average from last year. <\/p>\n<\/li>\n
\n TJX Cos.,<\/span>
\n which caters to higher-income shoppers, will benefit from the trend. Barron\u2019s<\/em> has noted that TJX has been a long-term market-share gainer<\/strong> that has been scooping up customers as Bed Bath & Beyond closes locations.<\/p>\n<\/li>\n
\n Home Depot,<\/span><\/p>\n
\n and
\n Williams-Sonoma.<\/span>\n <\/p>\n***<\/h4>\n