As Oil Briefly Dips Below $100, Russia and Europe Play a Game of Chicken

Biden intervened where the Organization of the Petroleum Exporting Countries and Russia didn’t, as the group of major oil producers stuck to its modest oil output increase for May on Thursday. If OPEC didn’t help at $110 a barrel last month, it’s safe to assume it isn’t going to help at all.

The group said, perhaps significantly, that “current volatility is not caused by fundamentals, but by ongoing geopolitical developments.”

That implies that the impact of Biden’s massive release of oil reserves could be overshadowed in a heartbeat.

The warning signs are certainly there. Russian President Vladimir Putin said on Thursday Russia will cut off gas supplies to “unfriendly” countries unless they start paying in rubles. That would spell trouble for Europe, as Russian natural gas accounted for close to 40% of the European Union’s total gas consumption last year.

European natural-gas prices rose as a result, although gas still flowed into Europe early Friday, according to reports. It’s a reminder of the delicate nature of energy markets and raises the prospect of Russia retaliating to sanctions.

While the U.S. isn’t directly affected by Russia’s threat, the nature of global commodities markets means one country’s issue is everyone’s issue. At a time of heightened inflation, the standoff is just one more worry.

—Callum Keown

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Biden Prods Oil Companies in Fight to Cut Fuel Prices

Biden criticized U.S. oil-and-gas companies for prioritizing shareholders over consumers, pointing to the industry’s nearly $80 billion in profit last year. He announced a “use-it-or-lose-it” policy that will make oil producers pay for sitting on unused wells.

• There are 9,000 approved-but-unused drilling permits on 12 million acres of federal lands, though some oil companies have announced plans to raise production. Charging for unused leases would increase costs on top of inflation, said Tyler Glover, CEO of Texas Pacific Land Corp.
• Biden confirmed he will release 180 million barrels of oil from the Strategic Petroleum Reserve—one million barrels a day for the next six months, starting in May. The U.S. is waiting to see how much oil other countries release.
• The price of regular unleaded gasoline averages $4.22 a gallon. Biden said prices could drop 10 cents to 35 cents a gallon in coming days. Andrew Lipow, president of Houston consulting firm Lipow Oil Associates, told MarketWatch the savings might be between 5 and 10 cents a gallon.
• The Organization of the Petroleum Exporting Countries and allies including Russia approved prior plans to increase oil output by 432,000 barrels a day in May. Biden has called on OPEC members to increase production, while banning Russian oil imports.

What’s Next: RBC Capital Markets found fuel demand isn’t waning, despite higher prices. California Gov. Gavin Newsom proposed $400 payments to all vehicle owners, regardless of income, for up to two cars, and Mayor Lori Lightfoot said Chicago will distribute $150 prepaid gas cards.

—Janet H. Cho

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What to Watch on Jobs Friday

Economists expect the U.S. economy to have added 477,500 jobs in March, as the labor market continued to tighten and employers competed for talent, bringing more workers in from the sidelines as the Covid-19 pandemic ebbs.

• The unemployment rate is expected to fall to 3.7%, down from 3.8% in February, and would leave the jobless rate only slightly above its prepandemic low of 3.5%, where it stood in February 2020.
• Hourly wages are expected to rise 0.4% in March from February, marking a sizable increase from the sluggish 0.03% growth the month before. That would put wage growth at a 5.5% annual pace, as employers hike pay to lure in workers and more employees demand raises to keep up with rising inflation.
• The jobs report will be closely monitored by the Federal Reserve, which is expected to boost interest rates many times in 2022 and 2023 to curb the steep increase in consumer prices.

What’s Next: The central bank will be keeping a close eye on the strength of the labor market as it prepares this monetary policy shift. A strong jobs report could strengthen the case for higher interest rates.

—Joe Woelfel and Megan Cassella

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Metaverse Could Become a $13 Trillion Market by 2030

The metaverse economy, encompassing virtual worlds such as gaming and virtual reality as well as smart manufacturing, online events, and digital currency, could become an $8 trillion to $13 trillion total market by 2030, Citi said in a research report. That would make it 1% of the $128 trillion global economy.

• Even though investments tied to the metaverse have been underperforming, Citi said the metaverse could see five billion unique internet visitors by the end of the decade, driving trillions of dollars in revenue.
• Metaverse gaming companies include Fortnite maker Epic Games, Roblox , Ubisoft Entertainment , and Microsoft , which owns Minecraft.
• Citi is the latest banking giant to call the metaverse and web 3.0 a multi-trillion-dollar opportunity. Goldman Sachs in December valued the metaverse at $12.5 trillion, an outlook that assumes one-third of the digital economy becomes virtual and then expands another 25%.
• Chip maker Nvidia ’s vision for the “omniverse,” including industrial applications and artificial-intelligence innovations, remains a key part of analysts’ optimism for its stock, which jumped 103% over the past year. Shares of Roblox, a platform for building and experiencing virtual worlds, have plummeted 31% over the past year.

What’s Next: MKM Partners analysts note Roblox’s more-than-50 million daily active users, largely in the 5-to-24 age group. They think the platform’s long-term total addressable market is one billion people, though their medium-term estimate is 180 million people.

—Jack Denton and Janet H. Cho

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New Series on Streaming Platforms in April

Streaming platforms Apple TV, HBO Max, Netflix , and Hulu are all launching new series and bringing back audience favorites for April ahead of the Emmys, MarketWatch reported. Five of the 10 films nominated for the best picture Oscar this year came from streaming services.

• Apple , whose CODA won the best picture Oscar, will show Slow Horses, a British spy series adapted from Mick Herron’s novels; Roar, a darkly comic anthology series starring Nicole Kidman; and Pachinko, a multigenerational miniseries based on Min Jin Lee’s novel.
• WarnerMedia’
  s HBO Max has Barry, starring Bill Hader as a hit man trying to become an actor; The Flight Attendant, about an alcoholic in a murder mystery; and Julia, a series about TV cook Julia Child. Netflix has Russian Doll, a comedy about time-loopers, and the fourth season of dark crime drama Ozark.
• Hulu, co-owned by Walt Disney and Comcast ’s NBCUniversal, has The Kardashians, a reality series that picks up where Keeping Up with the Kardashians left off, and Under the Banner of Heaven, a drama miniseries starring Andrew Garfield based on the Jon Krakauer book.
• Amazon.com ’s Prime Video has supernatural Wyoming Western series Outer Range, and A Very British Scandal, about the public divorce of the Duke and Duchess of Argyll. Disney has Moon Knight, a darker, scarier and stranger Marvel superhero series.

What’s Next: World Wrestling Entertainment is now producing fictional TV shows, including Spanish-language comedy Contra las cuerdas (Against the Ropes), about an aspiring female wrestler. Contra, which is currently in production, is slated to debut on Netflix in Mexico.

—Janet H. Cho

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These Tech Stocks Just Had Their Worst Quarter Ever

Investors punished tech stocks during the first three months of 2022, resulting in the worst quarter in history for a dozen S&P 500 stocks. The S&P 500 fell 4.9% over the past three months, snapping a seven-quarter winning streak. The Nasdaq is down 9.1%.

• Half the stocks that had their worst quarterly percentage declines as tracked by Dow Jones Market Data Group are tech companies: Etsy , PayPal , Facebook parent company Meta Platforms , Keysight Technologies , Match Group , and Charter Communications .
• The 12 stocks combined to lose $494.19 billion in market value. The bulk of that came from Facebook, which dropped more than $300 billion in valuation as investors chopped off roughly a third of its stock price, MarketWatch reported.
• A change to Apple’s mobile operating system slammed Facebook advertisers. Other social-media stocks also took a hit for the quarter, with Twitter dropping 10%, Snap falling more than 20% and Pinterest falling 30%.
• Other tech stocks had bad quarters but not record-setting ones. Netflix fell 37.8%, its worst quarterly performance since the second quarter of 2012, while Adobe fell 19.7%, its worst since the third quarter of 2011.

What’s Next: Charter benefited when people had to stay home during the pandemic, but now it’s seeing a slowdown in broadband subscriber growth and is looking to the wireless business for its next big opportunity.

—Liz Moyer

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Do you remember this week’s news? Take our quiz below about this week’s news. Tell us how you did in an email to [email protected].

1. Which streaming service became the first to win best picture, for the feel-good movie CODA, at this year’s Academy Awards?

a. Netflix
b. Apple+
c. Hulu
d. Paramount+

2. Which company indicated in a regulatory filing that it will seek to split its highly priced stock?

a. Tesla
b. Berkshire Hathaway
c. Chipotle Mexican Grill
d. AutoZone

3. What is included in Biden’s proposed $5.8 trillion budget?

a. An increase in military spending
b. An increase in funding for law enforcement
c. A 20% minimum tax on the wealthiest Americans
d. All of the above

4. Which insurer is spending about $5.4 billion to buy LHC Group, one of the country’s largest home-health companies?

a. CVS Health
b. Humana
c. UnitedHealth Group
d. Anthem

5. The Mortgage Bankers Association reported that credit availability rose to its highest level since last May. What steps are bankers taking to boost business?

a. Expanding product offerings
b. Relaxing some borrower eligibility requirements
c. A but not B
d. A and B

Answers: 1(b); 2(a); 3(d); 4(c); 5(d)

—Barron’s Staff

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—Newsletter edited by Liz Moyer, Camilla Imperiali, Steve Goldstein, Rupert Steiner