Last week’s news was dominated by the Twitter acquisition by Elon Musk. And the story continued into this week too. With a Twitter following of over 95 million, some might say that Musk already influences the share price of the social media platform. Trump did. Others have chosen to disagree with Musk though, especially as inflation has hit the share prices of so many companies in the U.S.
Are companies downsizing because of Inflation?
Inflation has undoubtedly hit consumer confidence further this week. Just this morning Samsung has joined its rival Apple, in adjusting down output for this year. So far by 10%. Another company that has been affected by consumer confidence is Klarna. On Monday, Sebastian Siemiatkowski, Klarna’s CEO and co-founder, shared a message on the company’s website:
“Together we have re-evaluated our organizational setup,” Sebastian shared in the message, continuing by explaining how, “it saddens me to say that as a result of this, approximately 10% of our colleagues and friends across all domains the company will be impacted.”
Elsewhere companies like Uber and Lyft are also being impacted. Lyft, for instance, has shed over 60% in value this year. With tech investment cooling in general:
Perhaps the word ‘downsizing’ hasn’t cropped up much, yet. However, in the weeks to come, with inflation and the cost of living continuing to dominate consumer confidence, there may be more news stories like Klarna and Samsung emerging.
JP Morgan hints at optimism
Considered by some as one of the ‘safe-haven’ shares, JP Morgan is both a sought-after investment as well as a leading investment bank. This week shares in the bank have continued to bounce back. JP Morgan shares hit rock-bottom on the 20th of May but have shown significant signs of recovery this week. Part of the reason is that the bank believes it could hit its 17% target this year after all.
With interest rates rising, banks like JP Morgan and others will be able to finally make a larger return on their loans. But even the leading U.S. investment bank is worried about inflation.
Takeaways from the World Economic Forum
The first physical meeting of the World Economic Forum in Davos for 2 years was opened by a protest. But not by trade unions or extinction rebellion. No, this time the millionaires took to the streets of Davos to make their voices heard:
The main topics that the Forum focussed on included: The War in Ukraine, The economy, The future of globalization, Two crises: Food & Energy, Climate change and the environment, and many others.
Each year (even when the Forum was ‘virtual’) the top business leaders and politicians attending the event was impressive. This year was no different, with John Kerry, Bill Gates, Ray Dalio and a host of others speaking at the Forum.
One of the most interesting takeaways was the topic of ‘The future of work’. Due to a digital skills shortage the green transition may take longer. We seemingly won’t all be able to work in the metaverse. And we might have to get rid of managers as a job function too.
How did FAANG stocks perform?
This week things have dramatically improved for the FAANGs. The slide that markets were showing over the last few weeks appears to have ended, at least in the case of Apple, Amazon and Netflix. Meta and Alphabet are still sliding this week though. But on an average FAANGs are finally showing some growth after weeks of uncertainty. For a quick overview into the FAANGs you can follow them on TradingView’s Sparks.
Even Tesla’s share price rebounded.
In summary, there is some hope for optimism, especially if you are a bank. Potentially we are also witnessing the first reaction of the market to over-priced tech firms as well. Leading some of them to lower their ambitious targets and return to planet Earth. Perhaps a correction was needed?
Finally, billionaires and politicians and whether we trust them was a question that Elon Musk asked this week:
The poll has had over 2 million votes. And Politicians are losing… by a long way.
Author: Andy Samu
#Tesla #FAANG #WorldEconomicForum #Davos #Klarna #Lyft #JPMorgan #Billionaires #Politicians
Disclaimer:
This Article is most definitely not Financial Advice.
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