To The Moon

My Investing Muse (07Oct24)

Layoffs & Closure news

• The Ministry of Manpower (MOM) has met with consumer electronics giant Dyson to work on an ‘amicable solution’, after the company gave a labour union just one-day’s notice of its retrenchment exercise. - Straits Times

• Dyson conducted a round of layoffs in Singapore on Tuesday (Oct 1) in a “surprise” move. This comes about three months after a global restructuring that involved about 1,000 job cuts in Britain. - ChannelnewsAsia

• Samsung axes thousands of jobs in global layoff round, including Singaporean ones. - Vulcan Post

• Amazon may eliminate approximately 14,000 manager positions by early 2025, potentially saving up to $3 billion per year, according to a recent Morgan Stanley analysis - Times of India

• Flexport cut about 2% of its U.S. staff this week as the freight forwarder looks to reduce costs and turn around a money-losing business targeting e-commerce. - WSJ

• 73% OF AMAZON EMPLOYEES CONSIDER QUITTING OVER RETURN-TO-OFFICE MANDATE A recent survey reveals that 73% of Amazon employees are considering leaving due to CEO Andy Jassy's decision to enforce a full-time return-to-office policy by 2025. The move has particularly affected morale, especially among working parents. Employees are pushing back, hoping for reconsideration, as inconsistencies across Amazon subsidiaries add to the discontent. Source: CEO World

• GM to begin laying off about 1,700 workers at Kansas plant, WARN notice shows - CNN.

• Not all layoffs are translated into unemployment.

• US job cut announcements are rising: US employers announced 72,821 job cuts in September posting a 53% year-over-year increase, according to Challenger, Gray and Christmas data. The number of layoffs last month marked the third-largest September since the 2008 Financial Crisis. In Q3 2024 alone, companies announced 174,597 job cuts, 19% higher than 146,305 seen in Q3 2023. Year-to-date announced layoffs are now at a massive 609,242, nearly TRIPLE the 2022 number. Cost-cutting has been the major reason for corporate layoffs. Is the labor market really that strong? - X user The Kobeissi Letter

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The number of new hires as a % of total employment dropped to 3.3% in August, the lowest since 2013 excluding the 2020 pandemic. Since November 2021, the hiring rate has fallen by 1.3 percentage points, a comparable decline to the one seen in the 2008 Financial Crisis. The hiring rate has been now below the 2015-2019 average of 3.8% for 14 consecutive months. At the same time, the share of workers voluntarily quitting their jobs is down to 1.9%, the lowest since 2020. In other words, the Americans' confidence that they can find a new position has dropped to recessionary levels. The labor market is weakening.

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Is unemployment set to spike further? Last week, the Fed began another rate cut cycle with a 50-basis points reduction, similar to 2001 and 2007. During those two previous cycles, the unemployment rate jumped by 1.5 and 1.4 percentage points within a year from the first cut. At the same time, job openings dropped by ~29% and ~31%, or 1.5 million and 1.4 million. Falling rates initially did not work to prop up the economy as it takes 6 to 24 months for the effects to be felt. Is the Fed behind the curve again?

Layoff & closure news continued into the week.

Global Manufacturing

GLOBAL MANUFACTURING IS IN A RECESSION - Global manufacturing PMI has contracted for the 3rd straight month in September. New export orders dropped globally at fastest rate in 11 months. Data points to global trade volumes falling 3-4% year-over-year, the most since COVID.

Is this the result of a weakening demand or supply?

My final thoughts

Timing Market and Economic Cycle Phases ...

In a typical market cycle, market peaks and troughs are typical. The market will remove weakness in the market.

A fertility rate below 1.6 means 50% less new people after three generations, say 100 years. Below 1.2 means an 80% drop. The U.S. is at 1.64. China, Japan, Poland, Spain all below 1.2. South Korea is at 0.7—96% drop. Mass extinction numbers. - X user Marko Jukic

For years, most of us are drawn to the crisis of “climate change”. With the recent fertility news, a “population crisis” is creeping up on several of the developed economies. Countries like Japan and China are expecting a significant drop in their population based on current fertility data. Is this one of the “curses” that plagued developed countries where kids are seen as “falling” priority?

The Middle East tension together with that in Russia and Ukraine is bringing much tension to the world market. With the recent conflicts involving Israel and the nearby countries, the market is fearing that this will spill over leading to a bigger war. Some have called this the beginning of a third World War.

I hope that the countries can exercise restraint and seek resolution away from bullets and bombs. With the US presidential election happening in less than one month, we can expect the market to experience volatility.

Warren Buffett and Berkshire Hathaway just cant stop selling Bank of America $BAC shares recently.

Berkshire is sitting on cash pile of over $200 billion. From the above Yahoo Finance news article, Elon Musk has suggested a market correction.

The market has hit recent highs and the S&P500 is inching closer to the 6,000 market. The market looks rosy. Let us consider the risk of debt.

I recommend for us to consider some hedging in lieu of the recent developments.

@TigerStars

$S&P 500(.SPX)$