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Saturday, February 11, 2023
today’s newsletter is by miles udland, Head of News at Yahoo Finance. follow him on twitter @MylesUdland and on LinkedIn, Read this and more market news on the go yahoo finance app,
After a busy two weeks, corporate earnings season is coming up on the other side of the mountain.
But even in the absence of a Fed meeting, or a jobs report, or an earnings report from the market’s biggest companies, the past week gave investors plenty to do on the biggest topics in the markets and the corporate world so far in 2023. has been displayed.
Fed bump fade
This past week, the stock market saw the major indexes cap their worst week of 2023.
All three major indexes started 2023 on a positive note, with the Nasdaq enjoying its best January since 2001 after gaining more than 11% in the first month of the year.
The early year’s rally was halted on Wednesday, February 1, after Fed Chair Jerome Powell said “disengagement” had become a feature of the US economy in a press conference, after which the Nasdaq rose some 2%. In an interview with financier David Rubenstein this week, Powell reiterated his view that deflationary pressures are reaching the US economy – primarily in the goods sector.
The second time around, Powell’s words didn’t excite investors much.
And as economic data suggested the economy gained momentum in January, hopes of an imminent Fed pivot appear to be fading among some investors.
Outside of any Fed-related impact on the day-to-day market action, the volatility we are seeing is not a sign of a healthy market. Even with a rally to start the year that smacked of 2022 losses for some investors.
“Volatility is generally a characteristic of a weaker stock market rather than a stronger one,” strategists at Bespoke Investment Group wrote in a note to clients on Friday. And this year’s market has been particularly volatile.
the story continues
During the first 27 trading days of 2023 — or the trading year through Thursday — the Nasdaq has risen 1% in either direction 15 times, according to Bespoke’s data. In the nine earlier instances this volatility was seen, the market was down six times and the biggest rally was 7.2%, which is lower than the ~12% gain in the index this year.
Perhaps more troubling for bulls yet are the other three years the Nasdaq saw this level of volatility through the first six weeks of the year – 1999, 2000, and 2001. The heart of the bursting of the tech bubble.
US Federal Reserve Chairman Jerome Powell answers a question from David Rubenstein (not pictured) during a discussion on the dais at a meeting of The Economic Club of Washington in Washington, DC, US, February 7, 2023. Reuters / Amanda Andrade-Rhodes
In the corporate world, the dominant theme of the past few months has been a flurry of companies announcing job cuts. This week was no exception.
Cuts were the headliner at Disney (DIS), with the company announcing Wednesday that it will slash 7,000 jobs as newly returned CEO Bob Iger looks to cut $5.5 billion from the business.
In addition to these cutbacks, Iger also announced a further restructuring of the company’s business lines, calling these moves on the company’s earnings call to investors, “which will result in a more cost-effective coordinated and streamlined approach to our operations, And we remain committed to operating our business more efficiently, especially in a challenging economic environment.”
Along with these cost cuts, Iger also said he would restore Disney’s dividend. His reward for this latest act of corporate wizardry? End of proxy battle with activist investor Nelson Peltz.
And while job cuts have spread outside the tech sector to the world of media, conglomerates and beyond, the tech sector remains a hotbed of pressure for the white-collar workforce right now.
Zoom (ZM), one of the stock market’s first and biggest pandemic-related winners, announced this week that it would cut 15% of its workforce, or about 1,300 employees. CEO Eric Yuan will also take a 98% cut in base salary for this year, while the salary of the company’s executive staff will be cut by 20%.
Yuan said the company’s trajectory was “forever changed” during the pandemic, but added that Zoom “also made mistakes” as it prepared to meet these challenges.
“It hasn’t taken us that long to fully analyze our teams or assess whether we are sustainably moving toward top priorities,” Yuan wrote in an email to employees. ,[The] The uncertainty of the global economy, and its impact on our customers, means we need to take a difficult—yet vital—inward look at repositioning ourselves so that we can cope with the economic environment, our deliver to customers and achieve Zoom’s long-term vision.
Dell (DEL), eBay (EBAY), and JPMorgan (JPM) were also among the major public companies that saw some staff reductions last week.
SHANGHAI, CHINA – FEBRUARY 27, 2022 – (FILE) Customers shop at China’s first Disney flagship store in Shanghai, China February 27, 2022. February 9, 2023 – Disney CEO Bob Iger says the company will cut 7,000 jobs to make the cut. $5.5 billion in cost. This is about 3 percent of the global workforce. (Future Publishing via cfoto/Getty Images)
crypto pressure mounts
As the market started the year, crypto was in front and with bitcoin enjoying its best January performance since 2013, gaining nearly 40% in the first month of the year.
But the early part of February has served as yet another reminder to the industry that crypto winter is here, even though some blue chip crypto assets have rallied in price as of late.
BNPL giant Affirm – which also announced 19% cut to its employees – said this week it will shut down its Affirm Crypto initiative. Like most companies, Affirm said in a shareholder letter because of the economic uncertainty, “we are doubling down on our core businesses.”
Obviously buying stuff now and paying later with cryptocurrency was not important to the business.
Elsewhere in corporate crypto maneuvering, Robinhood said it would take a $12 million charge and had pulled out of a deal to buy crypto company Ziglu, a deal expected to start in April 2022.
On the regulatory side, a busy year capped off with the SEC announcing a settlement with exchange Kraken on Thursday over its staking business. As part of the settlement, Kraken agreed to pay a $30 million fine and cease offering its cryptocurrency to US users.
Ahead of Thursday’s Announcement, Coinbase (COIN) Shares Plunged 13% After CEO Brian Armstrong secretly tweeted Regarding talk of the SEC trying to close all holdings for US retail investors. The stock fell another 4% on Friday.
Whether or not Armstrong’s fears are proven, the SEC’s Thursday action against Kraken was the agency’s fourth against crypto firms this year as the regulator continues to tighten its control over the industry.
As SEC Chairman Gensler told Yahoo Finance in December: “We’re implementing [existing securities laws], We are publicly asking these crypto intermediaries… to come into compliance with the law.
Gensler told Yahoo Finance that he had one goal for regulating crypto in 2023: to bring crypto exchanges and lending platforms into compliance.
“They can work with the SEC as appropriate, or we can continue on a course with more enforcement actions, and I must say the runway is getting shorter,” he said.
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