Where are we? (July 31 – August 6)
A surprise for the working day
Analysts had forecast an increase of 250,000 jobs in July. And so it was a shock when the Labor Department report showed that more than double that number — 528,000 — were added last month. The brisk pace of growth returned total employment to pre-pandemic levels, a puzzling benchmark considering other recent signs of a slowing economy, including a decline in gross domestic product and a quieter housing market. Indeed, this latest jobs report offers more questions than answers about the state of the US economy: What is the cause of employer confidence in hiring if many fear a recession? Why is the labor market so resilient if the economy appears to be more depressed? These are glaring contradictions that Federal Reserve officials will weigh as they consider which path to take.
More Crypto Friend Waves
Citing the cryptocurrency market crash along with inflation and a worsening economic outlook, trading app Robinhood announced the layoffs of 23 percent of its staff on Tuesday, the second round of job cuts in just a few months. It is still dealing with the fallout from last year’s “meme stock” frenzy, when investors conspired to inflate the shares of struggling companies like GameStop and AMC, ultimately resulting in lawsuits, a Securities and Exchange Commission report and the congressional hearing on Robinhood, which became a key player in the trade. But also disastrous for the company has been its exposure to the crypto market, which analysts said led many companies, such as cryptocurrency exchange Coinbase, to over-hire when the market was booming and then lay off staff as it it sank. Vlad Tenev, chief executive of Robinhood, said the company misjudged the economy and trading activity. “As CEO, I approved and took responsibility for our ambitious staffing trajectory — that’s for me,” he wrote in a blog post.
Elon Musk counters
In his first wide-ranging response to Twitter’s lawsuit against him, Elon Musk accused the social media company of fraud, repeating arguments that it hides the true number of spam and bot accounts on its platform. In a legal filing made public on Thursday, Mr. Musk’s lawyers claimed the percentage of those accounts was closer to 10 percent, while Twitter has maintained it was less than 5 percent. His lawyers also accused Twitter of hiding the number of its users who see ads. Twitter continues to say its numbers are accurate. The two sides are still scheduled to settle their dispute in Delaware’s Court of Chancery in October, when a judge will decide whether Mr. Musk’s claims that Twitter has withheld information about unwanted accounts on the site are legitimate or whether he should still complete the $44 billion deal. .
What is expected next? (August 7-13)
Disney’s ambitious subscriber goal
The Walt Disney Company’s bold subscriber ambitions may take a hit in its quarterly earnings report on Wednesday. The company has beaten analysts’ expectations for its Disney+ streaming platform so far this year, announcing in February that it had added 11.8 million subscribers and then in May that another 7.9 million had joined for a total of 138 million. But it has an aggressive goal of reaching 230 million to 260 million Disney+ subscribers worldwide by 2024, and analysts said that guidance was likely to be lowered on Wednesday. They predict that Disney will instead want to focus on making the streaming site profitable. Those aren’t the only challenges facing Disney: Its stock price has slumped this year, the company fired its top TV content executive, and although its theme parks in the United States have rebounded, they have struggled in China due to pandemic restrictions.
The latest on inflation
The Consumer Price Index this week may bring a somewhat confusing message. Analysts expect year-over-year and month-over-month inflation to slow, but “core” inflation — the measure that excludes volatile gas and food costs — to accelerate on an annual basis. Gas prices, which have fallen sharply from recent highs, would be the likely cause of a slowdown in headline inflation. However, policymakers are concerned about how much and how quickly overall price gains will cool. Officials at the Federal Reserve are planning another big rate hike in September, but are watching for signs of moderation across the economy as they determine the pace of growth. In the White House, President Biden is pushing the Inflation Reduction Act as the administration’s tool to lower prices, although it is uncertain how effective the legislation will be in this task.
A possible salvation for the chaos of travel
In April, the New York Times transportation reporter asked, “Air travel is back. Can the industry continue?” The answer lately seems to be: No. To address the increase in delays and cancellations this year — especially acute during peak travel holiday weekends this summer — the Department of Transportation has proposed a rule that would provide more resources to passengers who experience significant disruptions to their travel plans. travel, including major changes to the schedule, route or seat of a flight. Airlines that received pandemic aid from the government will also be required to issue full refunds to passengers who change their mind about travel for Covid-related reasons. If it goes into effect, though, it won’t be in time for your August trip to Italy — the agency has opened a 90-day period for public comment and will make a decision after that.
What else?
Stephen King testified in the Justice Department antitrust case to block Penguin Random House from buying Simon & Schuster. Walmart is laying off 200 corporate workers. OPEC Plus approved a small increase in oil production.
