2023 Should be Interesting
Current situation:
1. Stocks down like the Fed pivot is cancelled
2. Bonds up like the Fed is cutting rates
3. Crude oil up like the recession is canceled
4. Gold up like the recession just started
5. $VIX is at 21 like absolutely nothing is happening
The market is broken.
— The Kobeissi Letter (@KobeissiLetter) January 19, 2023
US DEBT CEILING ACHIEVED AT $31.4T
— The_Real_Fly (@The_Real_Fly) January 19, 2023
Fed officials split over rate-rise pace
Bullard: "Why not get to the level that you want to be at [5%]? Why stall?"
Logan: "I don’t find it particularly helpful…to lock in on a peak rate"
Harker: "We are starting to see things work… Let this work" https://t.co/zeDVQbg3YE
— Nick Timiraos (@NickTimiraos) January 19, 2023
"Softer PPI and a likely 0.32%MoM core PCE inflation reading following softer wages and core CPI are likely enough to convince Fed officials to slow the pace of rate hikes to 25bp at the next meeting"
Citi drops its call for 50bp
— Jonathan Ferro (@FerroTV) January 19, 2023
European Central Bank member says market is mispricing rate hikes, expects more to come
– Recent data has shown a slowdown in headline inflation, even if it remains well above the ECB’s 2% target.
– December inflation came in at 9.2% in the euro zone, according to preliminary numbers. This was the second consecutive monthly drop in prices across the euro zone.
DAVOS, Switzerland — The European Central Bank will not stop with one single 50 basis point hike at its next rate-setting meetings, a board member told CNBC Thursday.
“It will not stop after a single 50 basis point hike, that’s for sure,” Klaas Knot, who serves as the governor of the Dutch central bank, said regarding the ECB’s upcoming moves.
Recent data has shown a slowdown in headline inflation, even if it remains well above the ECB’s 2% target.
December inflation came in at 9.2% in the euro zone, according to preliminary numbers. This was the second consecutive monthly drop in price rises across the euro zone. However, Knot doesn’t think all of the recent data is “encouraging.”
“What we have seen thus far is data that is not encouraging from our end,” he said at the World Economic Forum in Davos.
“We have seen one more inflation reading where there were no signs of abating of [the] underlying inflationary pressures. So we have to do what we’ll have to do, and core inflation has not yet turned the corner in the euro area and that means the market developments I have seen in, let’s say, last two weeks or so are not entirely welcomed from my perspective. I don’t think they are compatible actually with a timely return of inflation toward 2%,” Knot said.
“Most of the ground that we have to cover, we will cover at a constant pace of multiple 50 basis points hikes,” he said.
“Where that sort of pace of 50 basis points hikes is going to end I cannot say beforehand, but it is very clear that our president has used the plural in her wordings, I am using the plural here. So it will not stop after a single 50 bps hike, that’s for sure.”
Google, Microsoft, Amazon and other tech companies have laid off more than 70,000 employees in the last year
– The tech industry has seen a string of layoffs in the face of uncertain economic conditions.
– Microsoft and Amazon both announced fresh rounds of layoffs on Wednesday.
– Layoffs come as digital advertisers are cutting back on spending and rising inflation curbs consumer spending.
The job cuts in tech land are piling up, as companies that led the 10-year bull market adapt to a new reality.
Google announced plans to lay off 12,000 people from its workforce Friday, while Microsoft said Wednesday that it’s letting go of 10,000 employees. Amazon also began a fresh round of job cuts that are expected to eliminate more than 18,000 employees and become the largest workforce reduction in the e-retailer’s 28-year history.
The layoffs come in a period of slowing growth, higher interest rates to battle inflation, and fears of a possible recession next year.
Here are some of the major cuts in the tech industry so far. All numbers are approximations based on filings, public statements and media reports:
Alphabet: 12,000 jobs cut
Google, owned by parent company Alphabet, said Friday it will lay off 12,000 people from its workforce.
Sundar Pichai, Google’s CEO, said in an email sent to the company’s staff that the firm will begin making layoffs in the U.S. immediately. In other countries, the process “will take longer due to local laws and practices,” he said. CNBC reported in November that Google employees had been fearing layoffs as its counterparts made cuts and as employees saw changes to the company’s performance ratings system.
Alphabet had largely avoided layoffs until January, when it cut about 240 employees from Verily, its health sciences division.
Microsoft: 10,000 jobs cut
Microsoft is reducing 10,000 workers through March 31 as the software maker braces for slower revenue growth. The company also is taking a $1.2 billion charge.
“I’m confident that Microsoft will emerge from this stronger and more competitive,” CEO Satya Nadella announced in a memo to employees that was posted on the company website Wednesday. Some employees will find out this week if they’re losing their jobs, he wrote.
Amazon: 18,000 jobs cut
Earlier this month, Amazon CEO Andy Jassy said the company was planning to lay off more than 18,000 employees, primarily in its human resources and stores divisions. It came after Amazon said in November it was looking to cut staff, including in its devices and recruiting organizations. CNBC reported at the time that the company was looking to lay off about 10,000 employees.
Amazon went on a hiring spree during the Covid-19 pandemic. The company’s global workforce swelled to more than 1.6 million by the end of 2021, up from 798,000 in the fourth quarter of 2019.
Crypto.com: 500 jobs cut
Crypto.com announced plans to lay off 20% of its workforce Jan. 13. The company had 2,450 employees, according to PitchBook data, suggesting around 490 employees were laid off.
CEO Kris Marszalek said in a blog post that the crypto exchange grew “ambitiously” but was unable to weather the collapse of Sam Bankman-Fried’s crypto empire FTX without the further cuts.
“All impacted personnel have already been notified,” Marszalek said in a post.
Coinbase: 2,000 jobs cut
On Jan. 10, Coinbase announced plans to cut about a fifth of its workforce as it looks to preserve cash during the crypto market downturn.
The exchange plans to cut 950 jobs, according to a blog post. Coinbase, which had roughly 4,700 employees as of the end of September, had already slashed 18% of its workforce in June saying it needed to manage costs after growing “too quickly” during the bull market.
“With perfect hindsight, looking back, we should have done more,” CEO Brian Armstrong told CNBC in a phone interview at the time. “The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”
Salesforce: 7,000 jobs cut
Salesforce is cutting 10% of its personnel and reducing some office space as part of a restructuring plan, the company announced Jan. 4. It employed more than 79,000 workers as of December.
In a letter to employees, co-CEO Marc Benioff said customers have been more “measured” in their purchasing decisions given the challenging macroeconomic environment, which led Salesforce to make the “very difficult decision” to lay off workers.
Salesforce said it will record charges of $1 billion to $1.4 billion related to the headcount reductions, and $450 million to $650 million related to the office space reductions.
Meta: 11,000 jobs cut
Facebook parent Meta announced its most significant round of layoffs ever in November. The company said it plans to eliminate 13% of its staff, which amounts to more than 11,000 employees.
Meta’s disappointing guidance for the fourth quarter of 2022 wiped out one-fourth of the company’s market cap and pushed the stock to its lowest level since 2016.
The tech giant’s cuts come after it expanded headcount by about 60% during the pandemic. The business has been hurt by competition from rivals such as TikTok, a broad slowdown in online ad spending and challenges from Apple’s iOS changes.
Twitter: 3,700 jobs cut
Shortly after closing his $44 billion purchase of Twitter in late October, new owner Elon Musk cut around 3,700 Twitter employees, according to internal communications viewed by CNBC. That’s about half the staff. Since then, significantly more employees have quit after Musk changed some policies around working from home and wrote that he expected all employees to commit to a “hardcore” work environment.
In a tweet on Nov. 4, Musk said there was “no choice” but to lay off employees as the company was losing $4 million per day.
Lyft: 700 jobs cut
Lyft announced in November that it cut 13% of its staff, or about 700 jobs. In a letter to employees, CEO Logan Green and President John Zimmer pointed to “a probable recession sometime in the next year” and rising ride-share insurance costs.
For laid-off workers, the ride-hailing company promised 10 weeks of pay, health care coverage through the end of April, accelerated equity vesting for the Nov. 20 vesting date and recruiting assistance. Workers who had been at the company for more than four years will get an extra four weeks of pay, they added.
Stripe: 1,100 jobs cut
Online payments giant Stripe announced plans to lay off roughly 14% of its staff, which amounts to about 1,100 employees, in November.
CEO Patrick Collison wrote in a memo to staff that the cuts were necessary amid rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets and sparser startup funding. Taken together, these factors signal “that 2022 represents the beginning of a different economic climate,” he said.
Stripe was valued at $95 billion last year, and reportedly lowered its internal valuation to $74 billion in July.
Shopify: 1,000 jobs cut
In July, Shopify announced it laid off 1,000 employees, which equals 10% of its global workforce.
In a memo to staff, CEO Tobi Lutke acknowledged he had misjudged how long the pandemic-driven e-commerce boom would last, and said the company is being hit by a broader pullback in online spending. Its stock price is down 78% in 2022.
Netflix: 450 jobs cut
Netflix announced two rounds of layoffs. In May, the streaming service eliminated 150 jobs after the company reported its first subscriber loss in a decade. In late June, it announced another 300 layoffs.
In a statement to employees, Netflix said, “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth.”
Snap: 1,000 jobs cut
In late August, Snap announced it laid off 20% of its workforce, which equates to over 1,000 employees.
Snap CEO Evan Spiegel told employees in a memo that the company needs to restructure its business to deal with its financial challenges. He said the company’s quarterly year-over-year revenue growth rate of 8% “is well below what we were expecting earlier this year.”
Robinhood: 1,100 jobs cut
Retail brokerage firm Robinhood slashed 23% of its staff in August, after cutting 9% of its workforce in April. Based on public filings and reports, that amounts to more than 1,100 employees.
Robinhood CEO Vlad Tenev blamed “deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”
Tesla: 6,000 jobs cut
In June, Tesla CEO Elon Musk wrote in an email to all employees that the company was cutting 10% of salaried workers. The Wall Street Journal estimated the reductions would affect about 6,000 employees, based on public filings.
“Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas,” Musk wrote. “Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.”
Resources:
https://www.investmentwatchblog.com/2023-should-be-interesting/
https://www.cnbc.com/2023/01/19/european-central-bank-member-says-it-will-not-stop-at-one-single-50-basis-point-hike-thats-for-sure.html
https://www.cnbc.com/2023/01/18/tech-layoffs-microsoft-amazon-meta-others-have-cut-more-than-60000.html
