To The Moon

My Investing Muse (22Apr24)

Layoffs & Closure news

• Walgreens Boots Alliance is laying off another round of workers, marking the fourth time the struggling retailer has had to do corporate personnel cuts within a year. - Supermarket News

• Tesla is planning to lay off 300 temporary workers at its German plant near Berlin as part of plans to cut global staff, Business Insider reported on Wednesday, citing people familiar with the matter. - Reuters

• Citibank laid off 2,000 employees after a reorganization. Headcount at Bank of America, Wells Fargo, and PNC Financial, declined by about 2,000 jobs combined in the three months ended March 31. - Reuters

• Morgan Stanley Is Planning Biggest China Job Cuts in Years. About 50 investment bankers in APAC ex-Japan may lose jobs. China, HK bankers account for at least 80% of latest job cuts - Bloomberg

• Toshiba to cut 5,000 jobs in Japan, 10% of the workforce, to focus on core businesses. Facing financial difficulties, the company sold its memory chip unit. Job cuts are rare due to strong worker protection laws. - Times of India

• UBS Group AG is planning another round of job cuts as the firm continues to trim headcount following its rescue of Credit Suisse, according to people with knowledge of the matter. - Bloomberg

• Alphabet-owned Google is laying off an unspecified number of employees, a company spokesperson said on April 17, marking the latest cuts at the technology giant as it cracks down on costs. - Straits Times

• Rivian cuts roughly 1% of its workforce, following reduced demand for the company’s vehicles (and electronic vehicles in general) and a lower-than-expected production forecast for 2024. - Fast Company

• Tesla lays off ‘more than 10%’ of its global workforce - Electrek

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• A high-profile aerospace and defence contractor and a semiconductor company are among the latest tech firms to chop jobs in the Bay Area, cutbacks that will erase more than 200 positions.

Layoff news continued to hog the headlines in the past week. There seems to be more in the pipeline. All this will form an important reference for the Federal Reserve as it decides on the coming interest rate adjustments.

PCE

The PCE is the preferred data reference used by the Federal Reserve regarding inflation. Should the PCE data trend upwards, it would be more difficult for the Federal Reserve to implement interest rate cuts sooner. This should be bearish news for the market which has been anticipating multiple rate cuts since the beginning of 2024.

SPR

There were also concerns raised about the low level of SPR strategic petroleum reserves. Some reports have suggested that there are about 17 days of reserve left. The government has been releasing this stock to the market to lower gasoline prices. The current Persian Gulf tension could add to the energy crisis. Should there be any disruptions of oil supply, the US would only have stopped sufficient for 17 days based on SPR.

Earnings of Magnificent 7

The Magnificent 7 will release its earnings results in the coming days. With a heavy weightage in the NASDAQ and S&P 500, its earnings will definitely bring about volatility in the market indices. The last week was a bloodbath for the big tech. Companies with great growth are companies that are also capable of great declines. Such magnitudes do not work in a single direction but rather both when the market turns otherwise.

Personally, Microsoft and NVIDIA should continue to perform strongly. There are other players in the AI chips sector that include some of the magnificent 7. Though they are competition, it may take years before the rest can catch up with NVIDIA. We will know soon from the earnings and the outlook forecast provided. NVIDIA has reached bear territory having fallen more than 20% since its recent all-time high. Without strong competition in the near-term horizon, NVIDIA should have a comfortable lead. Its competition could also come from other non-public-listed players like Huawei.

Middle East tension

Iran seems to have officially downplayed the retaliation from Israel. This helps to bring down the tension that is in the Middle East. With Iran threatening to arrest vessels that use the Persian Gulf to service the state of Israel, we are expecting shipping companies to reroute some of the vessels and this would lead to an increase in supply chain lead time and logistic costs. Players have already complained about the disruption in the Persian Gulf. This implies that the price of crude oil could rise when things continue to heat up in the region.

My final thoughts

From the news and outlook, the market should prepare for volatility in the coming days. With the halving of Bitcoin completed, would it follow the previous history that saw a surge in Bitcoin prices? I recommend caution and hedging as they are set up for various Black Swan events in the coming days.

@TigerStars

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