— NYC Spending $8 Million a Day on Migrants; Occidental to Repurchase Buffett’s Preferred Shares; Retail Traders Flock to Risky Regional Bank Options; Goldman to Pay $215 Million to Settle Lawsuit; China Export Growth Slows; Palantir’s New AI Tools in High Demand; Bay Area Leads U.S. in Home Price Increases
1. NYC Spending $8 Million a Day on Migrants
On Monday, New York City officials revealed that the city is currently spending $8 million per day to provide shelter for 37,500 migrants, placing enormous pressure on the city’s budget.
Last Friday, Mayor Eric Adams announced plans to send hundreds of migrants by bus to hotels in Orange Lake and Orangeburg. Many of these migrants have arrived from Texas and other regions, a move that has drawn criticism from Adams.
Despite being a Democrat and a supporter of President Biden, Adams criticized the White House for failing to provide sufficient assistance to New York City.
In April, city officials requested $350 million in aid from FEMA but were only granted $30.5 million, far from enough to cover the costs of migrant housing.
Adams plans to relocate a portion of the migrants to Rockland County to alleviate the city’s burden.
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2. Occidental to Repurchase Buffett’s Preferred Shares
In March, Occidental Petroleum Corp. announced plans to repurchase $474 million worth of preferred stock held by Berkshire Hathaway Inc. at a redemption value of 110% plus dividends.
Berkshire, Occidental’s largest shareholder, still holds $9.5 billion in preferred shares and 24% of its common stock. At Berkshire’s shareholder meeting this month, Warren Buffett revealed he may increase holdings of Occidental’s common shares post-redemption, but will not acquire the company outright.
Occidental posted record earnings in 2022 and used the funds to pay down substantial debt. Since the preferred shares carry an 8% interest rate, converting to common stock helps reduce financing costs.
Occidental plans to restructure its capital to reduce funding expenses.
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3. Retail Traders Flock to Risky Regional Bank Options
Amid ongoing turmoil in the U.S. regional banking sector, high volatility in share prices has created an irresistible opportunity for risk-loving retail investors.
Last week, several small banks, including PacWest, saw their share prices plunge, only to rebound sharply on Friday. The KBW Regional Banking Index opened up 1.9% but ultimately closed down 2.8%.
Though regional banks are not exactly like the meme stocks of the pandemic era, retail investors—many of whom lost heavily in the 2022 bear market—are seizing this new opportunity.
Retail participation in U.S. equities remains lower than summer 2022 levels but is showing signs of recovery.
Tom Bruni, senior writer at StockTwits, said the high volatility has drawn in traders who are attempting to profit from both long and short bets.
Many retail traders are speculating through options on the SPDR S&P Regional Banking ETF to profit from swings.
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4. Goldman to Pay $215 Million to Settle Lawsuit
According to a joint statement from Goldman Sachs Group and lawyers representing 2,800 female employees, the firm has agreed to a $215 million settlement to resolve a lawsuit alleging it underpaid women.
The lawsuit was initiated by Cristina Oster, an MIT graduate who joined Goldman in 1997 and filed an EEOC complaint in 2005. Formal charges were brought in 2010.
The U.S. financial industry has long been male-dominated—five out of the six largest American banks have never had a female CEO.
The case garnered significant attention as many female employees felt that unfair treatment could derail their career trajectories.
Last year, 29% of Goldman partners were women—a small figure but the highest in the firm’s history.
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5. China Export Growth Slows
On Tuesday, China’s customs authority reported that the country’s total goods exports rose 8.5% year-on-year in April to $295 billion, beating economists’ forecasts. Demand from Southeast Asia remained strong.
However, total imports fell 7.9% to $205 billion, far below the expected median drop of 0.2%. The trade surplus for April stood at $90 billion.
At the same time last year, many of China’s major manufacturing hubs were still under lockdowns, delaying shipments to ports.
Economists believe that with global interest rates surging and inventory levels remaining high, China’s export growth momentum is likely to wane.
If consumer demand in the U.S. and Europe weakens this year, China’s export growth may become unsustainable.
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6. Palantir’s New AI Tools in High Demand
This week, Palantir delivered a surprisingly strong quarterly earnings report and projected it would remain profitable throughout 2023. Its stock surged 20% in after-hours trading.
Revenue for Q1 rose 18% year-on-year to $525 million, beating analysts’ expectations of $506 million.
During a video call with analysts, CEO Alex Karp emphasized the company’s focus on AI and stated that its newly launched AI tools are receiving strong feedback and are suitable for all types of clients.
Palantir mainly helps governments and enterprises analyze sensitive data—such as criminal records, DMV information, and call metadata—to aid decision-making.
Karp added that Palantir’s AI tools are designed with strict governance, with user privacy and safety as top priorities.
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7. Bay Area Leads U.S. in Home Price Increases
According to Zillow’s data on the 50 largest U.S. cities, the number of homes for sale in San Jose fell 31% year-over-year in April, with similar declines seen in San Francisco and Seattle, exceeding those in most U.S. regions.
Due to this inventory crunch, home prices in these cities have risen again. San Jose’s average home price rose 1.5% year-over-year in April, while prices in San Francisco and Seattle increased 1.3% and 1.2%, respectively—above the 1% national average.
Home price gains in the U.S. West Coast are being driven by rising mortgage costs, tech-sector layoffs, and regional bank instability.
With fewer new homes being built and homeowners reluctant to sell, Bay Area home inventory remains tight. Average home prices in the region hover around $1 million, resulting in high mortgage amounts and costs.
Given the current market uncertainty, homeowners are reluctant to sell, and limited supply is driving up Bay Area prices.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.