How is this going? (November 6-12)
The Lean Age of Technology
Last week, Meta’s hiring suspension escalated into mass layoffs, with company founder Mark Zuckerberg laying off more than 11,000 employees, or about 13 percent of the workforce. The company, the parent company of Facebook, Instagram and WhatsApp, has grown too fast during the pandemic, when a boom in online commerce boosted many tech companies, he said. The layoffs are the latest in a series of layoffs and hiring freezes across the industry. Twitter, Stripe and Lyft have collectively cut thousands of jobs in the past few weeks alone, and Amazon said it would suspend hiring for its corporate employees. Layoffs may tell a bigger story about the economic outlook. But in some cases, unique factors have contributed to the layoffs: Twitter, for example, is largely due to Elon Musk’s acquisitions, while at Meta, billions of dollars have been invested in Musk. Zuckerberg’s vision for a virtual world at a time when the company was already struggling financially.
Glimpses of Inflation Hope
After months of high inflation, consumer prices are finally showing some signs of easing. The consumer price index rose 7.7% in the year to October, below the 7.9% expected by economists ahead of new data on Thursday. The report is likely to cheer Fed officials, who have been raising interest rates rapidly this year to curb inflation and cool the economy. Past inflation reports and other indicators have shown that many areas of the economy remain relatively resilient in the face of the Fed’s continued efforts, leading to fears that the central bank’s aggressive path will lead to a recession. But stocks rose on Thursday, with investors taking the latest inflation data as a sign that the Federal Reserve may ease policy. The S&P 500 surged 5.5%, its best one-day performance in more than two years.
A painful week in the cryptocurrency world ended with one of the largest cryptocurrency exchanges, FTX, filing for bankruptcy and changing its leadership. The saga begins with a potential deal that promises to save FTX. The exchange has struggled after the CEO of bigger rival Binance, Changpeng Zhao, questioned the stability of the business, leading to withdrawals of the equivalent of billions of dollars from the platform. This appears to have created liquidity problems for FTX, which was previously run by Sam Bankman-Fried. gentlemen. Zhao then said he would buy FTX, a proposal that would have effectively rescued the company, but just a day later he called off the acquisition, citing regulatory investigations and reports of mishandling of funds.
What’s next? (November 13-19)
Retailer report card
A slew of retailers, including Target, Macy’s and Walmart, will release quarterly earnings ahead of Black Friday, one of the biggest shopping days in the U.S. Their most recent report paints a grim picture: Target’s profits have plummeted this year, and recent quarters have struggled with excess inventory as inflation-conscious customers stop spending so much on electronics and apparel. Macy’s was also challenged by excess inventory the last time it reported results. Walmart has also not been immune to high inflation, reporting that customers are spending more on basic, low-cost items but less on items they consider more discretionary. Investors and analysts will be watching closely to see if these retailers fix their inventory problems and to what extent inventory discounts may eat into profits.