My investing muse - Government, Layoffs & Recession (26 Feb 2024)

My investing muse - Government, Layoffs & Recession

Layoff news continues into the week

  • Google has initiated significant layoffs across its various teams as part of Google’s broader effort to streamline operations and align resources with its most significant product priorities. The total number is in the thousands. - Yahoo Finance

  • Social media giant TikTok has announced it will be laying off Irish staff as part of global restructuring plans. A few hundred Irish-based roles will be impacted but TikTok has not confirmed how many jobs will be lost. - Irish Examiner

  • Rivian is laying off 10% of its salaried workforce in a bid to cut costs in an increasingly tough market for electric vehicles. - Techcrunch

  • Vice plans to lay off hundreds of employees next week and stop publishing on, according to a memo sent to staffers by Bruce Dixon, the Vice Media chief.

The US is struggling in various functions like education, police, healthcare, firefighters, and infrastructure (including strategic chip production in USA). Here are some of the recent news:

  • Nearly 9 in 10 public school districts struggled to hire teachers heading into the school year, and many potential hires were deterred by low salaries. - USA Today

  • Economic Policy Institute (EPI) - the teacher shortage could reach 200,000 by 2025, up from 110,000 in 2018. This shortage of workers is due to pay, working conditions, lack of support, lack of autonomy, and the changing curriculum. - FEE Org

  • Agencies around the U.S. have experienced police shortages in recent years that many in law enforcement blame on a morale hit stemming from the coronavirus pandemic and criticism of police.

  • Volunteer firefighters do the work that paid, professional – "career" – firefighters do. They are essential to their US communities. Yet many of these volunteer departments, especially across rural and suburban areas, are struggling. - BBC

  • Our 617,000 bridges include not just those spanning mighty rivers but also every highway overpass and minor link across a stream—and close to one-tenth of them are significantly compromised. - National Geographic

  • Many of the country's roads, bridges, airports, dams, levees & water systems are aging and in poor condition. They're in need of a major federal investment to keep from getting worse and to withstand the harsh effects of a changing climate. - NPR

  • The report concludes that the CHIPS Act isn't enough to improve fab construction regarding cost and time, and suggests reform at all levels of government is necessary to get the U.S. on par with China, Europe, and Taiwan. - Toms Hardware

  • Loans outstanding as of Jan. 17 stood at $161.5 billion, according to Fed data, and the average weekly increase over the last six weeks of nearly $5.6 billion is the highest since early May. - Reuters

  • 18 healthcare companies had assets of $7bn against liabilities of $8.3bn. Healthcare was not the only sector with a high number of bankruptcies in 2023 — others included computer software, chemicals and agriculture. - FT

CBO signals a potential reversal from a US recession. However, recession threatens several countries.

  • The US LEI did not signal a recession in January as 6 out of 10 components contributed positively - CBO. The Conference Board on Tuesday abandoned a long-running call for the U.S. economy to fall into recession, although its Leading Economic Index still sees economic output flatlining in the months ahead.


UK, Japan only tip of iceberg, 18 other countries at risk of recession - India Today


With the S&P500 hitting an all-time high, it does not escape our eyes the news of layoffs, bankruptcy, and staff shortages. We are in a K-shaped economy where some sectors (like the Magnificent except for Tesla) are leading the charge while many other sectors are not doing as well.

This means that as the S&P500 looks bound to break 5100 and go higher, there are also sectors of weaknesses in the S&P500. In the previous articles, we have also established the fact that S&P500 no longer represents the US economy but a group of top USA MNCs who have much international exposure.

The PCE data could bring volatility and this should be something we should look out for. I recommend caution and hedging.


$S&P 500(.SPX)$

$Cboe Volatility Index(VIX)$

# Macro Trend

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