The Chicago Journal

Bank stocks become priority after fears of recession

Bank Analysts predict that major economies would either stagnate or enter a recession.

As a result, in 2023, investors will defy conventions by flocking to huge bank equities.


The Stoxx Europe 600 Banks index, which includes 42 major European banks, increased by 21% between January and late February.

It exceeded the Euro Stoxx 600, its larger benchmark index, to hit a five-year high.

Yet, the KBW Bank, which tracks 24 of the largest American banks, increased by 4% in 2023, well surpassing the S&P 500.

The two bank-specific indices have risen since their lows in October.

The economy

So far, the economic situation is less favorable.

The biggest economies in the United States and the European Union are expected to increase somewhat more than last year.

In the United Kingdom, however, output is anticipated to fall.

Former Treasury Secretary Lawrence Summers believes that a rapid recession poses a risk to the United States at some time.

But, central banks were obliged to hike interest rates as a result of widespread economic weakness and unsustainable inflation.

In any case, it has aided banks by allowing them to earn higher profits on consumer and commercial loans as more money is deposited into savings accounts.

Although interest rate increases have kept big bank stocks stable, fund managers and analysts believe investor and analyst confidence in their capacity to weather economic storms because the 2008 financial crisis has also contributed to the situation.

“Banks are, generally speaking, much stronger, more resilient, more capable to [withstand] a recession than in the past,” said Roberto Frazzitta, the global head of banking at Bain & Company.

Interest rate increases

As major countries’ interest rates rose last year, governments took efforts to contain rising inflation.

The huge increases came after a period of cheap borrowing prices, which began in 2008.

The financial crisis devastated the economy, causing central banks to cut interest rates to historic lows in an attempt to stimulate consumption and investment.

Central banks have done nothing for more than a decade.

Investors seldom gamble on banks in an environment where lower interest rates imply reduced lender profitability.

Thomas Matthews, senior markets economist at Capital Economics:

“[The] post-crisis period of very low interest rates was seen as very bad for bank profitability, it squeezed their margins.”

But, the rate-hike cycle beginning in 2022, as well as a few indicators of weakness, have changed investors’ views.

Fed Chair Jerome Powell cautioned on Tuesday that interest rates may grow faster than expected.

Read also: Mary Daly thinks more hikes would be beneficial

Returning investors

The increased prospect of shareholder gains has converted investors.

According to Ciaran Callaghan, Amundi’s director of European market research, the average dividend yield for European bank shares is now 7%.

The S&P 500 dividend yield is 2.1%, while the Euro Stoxx 600 yield is 3.3%, according to Refinitiv data.

Also, European bank stocks have risen in the last six months.

According to Thomas Matthews, Capital Economics beat its American rivals because interest rates in nations that use euros are closer to zero than in the US, implying that investors have more to gain from rising rates.

He also said it may be attributed to Europe’s unexpected turn of events.

Wholesale natural gas prices in the region reached a new high in August of last year, but have since fallen down to pre-Ukraine conflict levels.

“Only a few months ago, people were talking about a very deep recession in Europe compared to the US,” said Matthrew.

“As those worries have unwound, European banks have done particularly well.”

Structural changes

At the present, the European economy is still struggling.

As the economy slows, bank stocks take a blow since bank profits are linked to borrowers’ capacity to repay loans and satisfy consumers’ and companies’ need for further credit.

Banks, on the other hand, are better positioned to sustain loan defaults than they were in 2008.

Authorities proactively enacted legislation mandating institutions to have a significant capital buffer in the event of a loss during the global financial crisis.

Lenders must also have sufficient cash (or fast convertible assets) to repay depositors and other creditors.

According to Luc Plouvier, senior portfolio manager at Dutch asset management firm Van Lanschot Kempen, banks have undergone structural changes in the last decade.

“A lot of the regulation that’s been put in place [has] forced these banks to be more liquid, to have much more [of a] capital buffer, to take less risk,” he noted.

Trees: the importance of planting trees at home

Trees: Having trees all around a neighborhood gives it a more livelier appearance, but trees can also be useful in other ways.

Here are a few reasons why you ought to plant a tree at home.

Climate system

Regardless of where you reside, some trees can aid in heating or cooling.

Trees are also known to produce oxygen.

They complete the subsequent tasks, which considerably cut down on the electricity bill:

  • Effective wind blocks
  • Reduce sunlight hitting home and cooling equipment
  • Strategically letting light in during fall and winter.

The University of Minnesota Landscape Arboretum’s director, Peter Moe, said:

“Planting trees can save homeowners money on utilities when they’re planted correctly.”

“Deciduous trees are a great fit for homeowners because they shade homes during the summer, but allow sunlight to reach the home after the leaves drop in the fall.”

“Evergreen trees planted on the northwest side of a home can block cold winter winds.”

The idea of tree-based energy efficiency is also covered in a study that was conducted this year and published in the Energy and Building magazine.

According to the author, two well-placed trees during heat waves can reduce the need for cooling and heating by up to 18% and 40%, respectively.

Wildlife shelter

Trees not only enhance the beauty of the surroundings but also draw a variety of animals.

Interior designer and certified naturalist from California, Sarah Barnard, said:

“Increased wildlife can offer the joys of birdwatching, which can be a pleasurable daily experience,” said Barnard.

“Some trees can attract butterflies, like oak trees, which draw California sister, dusky wing, and hairstreak butterflies, among others.”

Animals can seek safer locations to raise their young and go on food hunts by growing trees.

“Homeowners who want to support wildlife should try to plant a diverse mix of trees because many birds, animals, and insects have specific and preferred host plants,” said Moe.

“If you’re just getting started, oaks are good host plants as they provide food, shelter, and nesting spaces for more species of birds, animals, and insects than any other group of trees.”

Read also: Covid-19 surges among senior citizens or ‘senior waves’

Impact on flood damage

The propensity of trees to keep lawns from being washed away during severe storms is one of the most significant advantages of putting trees in your yard.

Trees absorb water at an incredibly fast rate.

Solar Panels Network USA’s founder, Alan Duncan, frequently incorporates trees into plans for home energy efficiency.

“Trees can help regulate water flow by allowing rainwater to be absorbed into the ground instead of flowing away with runoff,” said Duncan.

“This helps to recharge our groundwater supplies, reduce flooding and soil erosion, and can even improve water quality.”

Planting a tree

Digging a hole and sticking a stick in it might seem simple, but planting a tree is far more complex.

When planting, you must take into account the tree you choose and the planting location.

Evergreen Hardscaping & Tree Care’s president in Delaware, Scott Berry, stated:

“The best placement for a tree depends on the specimen and its growth rate and growing habits.”

“You wouldn’t want to plant a white oak five feet from your foundation wall,” he added.

“Plant larger trees further from the structure – at least 20 to 30 feet if possible – and smaller ornamental trees much closer to the home.”

The position of the roots and branches should also be taken into consideration.

There is a possibility that the tree’s growth will affect the pipes and lines if utilities are built above ground or underground in a particular yard area, for instance.

“When choosing a planting location, homeowners have to consider the mature size of the tree as well as below-ground and overhead utilities,” said Moe.

“You also want your trees to fit into your home landscape design and you’ll have to consider where shade is desired at specific times of the day.”

“For example, would you like a shady patio in the late afternoon or a sunny one?”

Trees need space to grow when they are planted.

Although topping—a traditional fix for poor planting—involves significantly chopping off the tree’s top—experts don’t advise it.

“When maintaining trees after planting, one thing to keep in mind is to avoid topping them,” offered Sarah Barnard.

“It may irrevocably damage or harm trees, as the reduced leaf surface area makes it harder for the tree to produce food, creates more areas of direct sun exposure, and offers openings for diseases and infestations.”

Read also: Mental health becomes concern following studies

Tree selection

When selecting a tree, there are many factors to take into account, such as:

  • How much space is there for growth
  • What problems to solve
  • Wildlife housing
  • Improving indoor climate efficiency
  • Where it can put down roots without causing a power outage

There are numerous trees that could be planted, but only about few of them stand out in the landscape.

“Oak trees tend to be great for this, but they can grow quite large,” said Berry.

“Tulip poplars are also good selections, as well as certain species of maples.”

“There are a lot of options, but keep in mind they will all have their own special challenges when it comes to how and when they shed leaves and seeds.”


5 benefits of planting trees in your yard

Jobs see a new horizon in 2023, more available now

Jobs The American labor market once again demonstrated its tenacity and surpassed expectations on Friday.

Forecasts for market growth were more than three times overshot, making them nonsensical.

What happened

In a combined estimate released last week, analysts predicted that the US economy likely created 185,000 jobs in January.

The fact that the quantity would have exceeded the pre-pandemic average makes the news encouraging.

However, it turned out that the economy was volatile, creating over 500,000 new employment in its wake.

The report

On Friday morning, reports that the US added 517,000 jobs in January surprised American economists.

The jobless rate was expected to rise moderately, according to experts.

In fact, it dipped from 3.5% to 3.4%.

Furthermore, despite prominent layoffs in the media and technology sector, the economy as a whole is still doing well.

Other significant changes include:

  • A rise in employment total, primarily in the hotel and leisure industries.
  • After the adjustments, the US added 4.8 million new jobs in 2022, which was 300,000 more than expected.
  • The 4.4% increase in earnings from a year ago was higher than expected.

A weakening recession forecast

Everyone in 2022 was fazed by recessionary anxieties the whole year since it appeared as though the economy was moving in that way.

Experts and economists of today say that the projections were overplayed.

Moody’s Analytics’ chief economist, Mark Zandi, said:

“Any concern the economy is in recession or close to a recession should be completely dashed by these numbers.”

Read also: Prices of 2022: the highs and lows

The Federal Reserve’s efforts to control inflation by limiting the supply of money in circulation raised concerns for many individuals.

Regulations typically increase the likelihood of a recession by restricting business expansion (or, in some circumstances, stopping it altogether).

The labor market has not buckled as a result of the Fed’s activities, despite the growing inflation.

“Last year involved the biggest mis-reading [SIC] of the economy in the labor market,” Justin Wolfers, an economist, tweeted on Friday.

“The recession talk spiked to new highs, even as the economy recorded a rate of job growth that any real economist will tell you spelled ‘BOOM.'”

Although in the past they have relied on a variety of models to create their projections, the pandemic has forced economists to diverge from the conventional.

“My meta-theory of why so many people have been wrong about the economy for so long is that many economists (and econ journos) are incapable of acknowledging that sometimes, good things happen,” said Wolfers.

The Feds and hiking rates

The workers will benefit from the news, but Wall Street isn’t as impressed.

Stocks dropped early on Friday as a result of investors’ surprise at the jobs data, which gave some hint that high interest rates, which reduce corporate profitability, aren’t likely to fall any time soon.

The Fed made it clear that it will keep raising rates in an effort to bring inflation down to its target of about 2% and remove excess liquidity from the economy.

Since it peaked at 9.1% in the summer of last year, inflation has been declining.

In December, the PCE index—the Fed’s favored measure for gauging price hikes from last year.

The labor market’s high tolerance of the Fed’s most aggressive policy in recent memory demonstrates that the organization is free to keep high interest rates without driving unemployment and huge job cuts.

The economy is not fully secure, nevertheless.

People find it challenging to obtain loans due to the growing interest rate, which is bad news for anybody looking to fund a business, buy a home, or take out student loans.

Professor of finance and economics at Loyola Marymount University and head of SS Economics Sung Won Sohn said in a statement on Friday:

“A rolling recession – where various sectors of the economy take turns contracting rather than simultaneously – is in progress.”

Workers market

The most recent employment data reveal that there are still plenty of available jobs.

According to the Job Openings and Labor Turnover Survey (JOLTS), which was released on Wednesday, there were 11 million more job openings in December than was predicted and since July.

Office occupancy had been declining during the preceding three years as a result of the epidemic, but it has just begun to increase.

According to security-card swap data from Kastle Systems, office occupancy rates in 10 major US cities have hit 50% for the first time since March 2020.

The Federal Reserve influences 2022 stock market, Thursday market movement

The Federal Reserve: After more than a century, the Federal Reserve has long been recognized as a significant player in the stock market.

Through the 2000s, the central bank adopted unconventional policy measures, such as large-scale asset purchases and forward guidance, which boosted the institution’s reputation.

The policy tools

The Federal Reserve makes large-scale asset acquisitions due to emergency government debt and mortgage-backed securities purchases.

On the other hand, forward guidance refers to the Federal Reserve’s public statements on the direction its monetary policies will take.

The guideline includes the expected federal funds’ interest rate target before a policy change.

Inflation and economic landscape

Central bankers advised the populace to prepare for more difficult economic times as they faced inflation in 2022.

The attempts, according to experts, contributed to the decrease in the price of the S&P 500.

Professor of economics at Notre Dame University and former Federal Reserve economist Jeffrey Campbell said the following:

“I think they know they gambled and lost, and that they have to do something serious in order to get inflation back under control.”

“I fear that they took a gamble that inflation wasn’t too real a thing at the beginning of 2021.”

In 2022, the Federal Reserve raised interest rates seven times in response to inflation that was stronger than predicted.

The effects of higher rates may be felt by publicly traded companies, especially growth shares in the technology industry.

Cautious warnings

Since April 2022, the Federal Reserve’s asset portfolio has decreased by more than $336 billion.

According to experts, the cumulative effect of economic tightening is still unknown.

On Wall Street, there is a lot of hope that the central bank would change its mind and decrease interest rates.

At the same time, many financial gurus are advising caution.

Victoria Green, founding partner and chief investment officer of G Squared Wealth Management, stated the following:

“If you have somebody that has a thumb on the scale or has a decided advantage about what’s going to happen, whether we think good things or bad things are going to happen, it’s best not to fight that policy.”

Experts claim that central bank policy is just one piece of the puzzle.

Investor sentiment and “black swan” events have a significant impact on the direction of the market.

John Weinberg, a former policy adviser for the research department of the Federal Reserve Bank of Richmond, stated:

“Sure, don’t fight the Fed, but… don’t believe too much that the Fed is all powerful.”

Stock movement

Numerous businesses produced headlines on Thursday with their stock movement during the trading session around lunch.


Airline shares fell due to the Thursday announcement of multiple flight cancellations.

Due to a harsh winter storm, the US American and United stocks fell 3.6% and 1.9%, respectively.

Both Delta and Southwest saw drops of 2% and 3%.

AMC Entertainment

The company’s shares dropped 7.4% after it proposed a reverse stock split to lower its debt and announced a new $110 million capital raise.

Its preferred stock shares increased by more than 75%.

Read also: Solar power found to have two benefits for users


Following the most recent quarter’s earnings, the auto retailer’s stock value decreased by 3.7%, and revenue fell short of Wall Street projections.

CarMax generated 24 cents per share on $6.51 billion in sales instead of the analysts’ forecast of 70 cents per share on $7.29 billion in sales.

Micron Technology

Due to the dismal earnings and revenue for the quarter, the company’s shares decreased by 3.4%.

The revenue was attributed to a drop in demand, which is expected to last until 2023.

Additionally, Micron announced a 10% staff decrease for the future year.

Advanced Micro Devices and Nvidia’s respective other semiconductor stocks declined by 7% and 5.6%, respectively.

Marvell Technology lost more than 4%.


After reporting earnings and revenue for the second quarter of fiscal 2023 that beat forecasts, MillerKnoll saw a jump of more than 14%.

The corporation claims it reduced annualized costs by $30 to $35 million.

Even if just somewhat in the third quarter, these savings would be realized in the fourth.

Mirati Therapeutics

Shares of the pharmaceutical company increased by more than 5% after the Food and Drug Administration named its colorectal cancer treatment a “breakthrough therapy.”


On Thursday, the company’s stock fell by roughly 9%.

The Tesla website claims that a $7,500 discount was offered on the Model 3 and Model Y automobiles that will be sent to the US before the end of the year.

The cars also include a free supercharge that is good for 10,000 miles.


After the stock lost more than 11% of its value, TuSimple announced it would remove 25% of its workforce.

The announcement would impact over 350 employees at the self-driving truck startup.

Tyson Foods

The manufacturer of meat and poultry closed the day with unchanged stock prices after The Wall Street Journal reported that the company intended to lay off hundreds of employees in 2019.

Tyson Foods’ corporate offices will consolidate in 2023.

Read also: Elon Musk sells giant chunk of Tesla shares again

Under Armour

On Thursday, the athlete wear company’s share price dropped by more than 2.3%.

Additionally, the business revealed that Stephanie Linnartz of Marriott International would become CEO next year.


How the Federal Reserve affected 2022’s stock market

Stocks making the biggest moves midday: AMC Entertainment, Tesla, Micron, Under Armour and more

The Federal Reserve resort to smaller hikes

The Federal Reserve recently said it may slow the pace of aggressive rate hikes sooner than expected.

The announcement came on Wednesday as Fed Chairman Jerome Powell spoke at an economic forum.

The announcement

Federal Reserve Chairman Jerome Powell delivered fiscal and monetary policy remarks at the Hutchins Center.

It was his last public appearance before the central bank entered a blackout period at its December 13-14 policy meeting.

“The time for moderating the pace of rate increases may come as soon as the December meeting,” said Powell.

“Despite some promising developments, we have a long way to go.”

The Federal Reserve chairman also noted that they had not seen any noticeable progress in the decades-high inflation dragging the economy down.

Rate increases

Meanwhile, investors are looking for signs that the Fed is slowing or halting its aggressive rate hikes.

Recently, the Federal Reserve has increased its rhetoric to spread the message that more needs to be done.

Additionally, officials will continue to raise interest rates until inflation shows signs of slowing.

This time, however, the rate increases will be lower than before.

Stock market

James Bullard, president of the St. Louis Federal Reserve, warned this week that the stock market underestimates the risk of an aggressive Fed.

Meanwhile, John Williams, president of the New York Federal Reserve, said inflation remains the foremost economic concern worldwide.

Williams called underlying inflation in the services sector the most challenging aspect of the battle.

Read also: Federal Reserve continues with another rate hike


The Fed raised interest rates six times in 2022 for the following reasons:

  • Discouraging borrowing
  • Cooling the economy
  • Bringing down the high inflation that peaked at 9.1% over the summer

Since then, the latest consumer price index showed a drop in inflation to 7.7%.


Despite aggressive measures, the labor landscape has proven to be sustainable.

The economy has regained the jobs lost after millions were out of work at the start of the pandemic.

In recent months, hundreds of thousands of jobs have been added to the labor market.

Moreover, the market has maintained a low unemployment rate at nearly half a century.

While workers may have good news, the labor market puts the Fed in a difficult position.

A staff shortage means employees can charge their prices, adding to inflationary pressures.

A recent Job Vacancies and Labor Turnover survey showed on Wednesday that nearly 1.7 vacancies were available to job seekers in October.

According to Powell, the decline in job postings is a positive sign.

However, he noted that although the relationship between job vacancies and unemployment is strained, he and other Fed officials believe the labor market could regain equilibrium as job vacancies decline.

“We’ve seen that so far, but it’s way too early,” said Powell.


The Federal Reserve is tackling a supply-side inflation problem with blunt tools.

Demand for goods in the United States soared last summer as consumers emerged from days of shutdowns and layoffs.

However, the recovery of the global supply chain is taking longer, leading to bottlenecks, goods shortages, and price hikes.

The Federal Reserve has resisted calls to deal with runaway inflation, calling them “transitory.”

Moreover, the Fed kept interest rates at historically low levels because it did not want to risk a resumption of economic growth.

As demand rises, inflation has become the central bank’s primary concern.

In March, the Federal Reserve launched a rapid corrective course with the following actions:

  • Hiking its benchmark lending rate by a quarter of a point
  • Hiking lending rate by half a point
  • Rolling out four consecutive massive three-quarter-point hikes

However, the measures have not yet succeeded in curbing inflation in the United States.

Instead, rate hikes could possibly do more harm than good.

Read also: Signs of inflation collapse could prompt Federal Reserve to cease interest rate hike

New approach

The Federal Reserve currently employs a new model of sustained, smaller rate hikes over an extended period.

They believe the approach will result in a soft landing that will keep inflation in check while avoiding a recession or major layoffs.

“I do continue to believe that there’s a path to a soft or softish landing,” said Jerome Powell.

“I think it’s still achievable.”

“It is likely that restoring price stability will require holding policy at a restrictive level for some time.”

“History cautions strongly against prematurely loosening policy,” he added.

“We will stay the course until the job is done.”


Small rate hikes are likely coming in December, says Fed Chair Powell

Lyft announce plans of workforce layoff

Lyft joins a host of companies making tough decisions amid rising inflation by informing employees about layoff plans.

The announcement

The transport company’s announcement came on Thursday after Lyft executives reconsidered staffing in light of the economic situation.

Lyft sent a letter to its employees on Thursday regarding the company’s difficult decision.

Logan Green and John Zimmer, the company’s co-founders, said the layoffs would affect all parts of Lyft’s business.

They also pointed to the broader macroeconomic challenges that led to the tough cuts.

Read also: Elon Musk will take more action on Twitter


The memo from Lyft’s founders expressed regret over the decision, writing:

“We know today will be hard. We’re facing a probable recession sometime in the next year, and rideshare insurance costs are going up.”

“We worked to bring down the costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives.”

“Still, Lyft has to become leaner, which requires us to part with incredible team members.”

Slow growth

The tech industry saw a surge during the pandemic as consumers became more dependent on the digital world.

However, technology companies experienced slow growth in the September quarter as customers and advertisers reconsidered spending.

Most of the tech industry is now rethinking its investment and workforce needs.

Amazon also shared plans to suspend hiring corporate positions for months on Thursday, citing the economic climate.

Additionally, Stripe, a payment processing company and one of the most valuable startups, also announced it will lay off 14% of its staff.

Stripe CEO Patrick Collison wrote to his employees and said:

“We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.” 

Read also: Federal Reserve continues with another rate hike


The ride company’s move comes as Lyft rival Uber saw strong sales growth, fueled by demand for rides and food delivery.

Lyft will announce its financial results on Monday.

“We are not immune to the realities of inflation and a slowing economy,” the memo states.

The company, on Thursday, confirmed its intention to lay off more than 683 employees.

Lyft also said it would incur more than $27 million to $32 million in restructuring and related costs due to severance and employee benefits.

So far, in 2022, the company’s shares are down nearly 70%.


Lyft to lay off 13% of staff

Federal Reserve continues with another rate hike

The Federal Reserve on Wednesday approved another consecutive rate hike, one of the most recent and serious moves to fight inflation.

The hike

The Federal Reserve approved a fourth consecutive rate hike of three-quarters of a percentage point.

The hike takes the average central bank lending rate to a new range of 3.75% to 4%.

This is the highest interest rate in more than a decade since January 2008.

The Fed’s rate hike is the latest aggressive attempt to rein in the inflation plaguing the US economy.

The decision

Wednesday’s decision comes after the Federal Open Market Committee’s two-day policy meeting.

It also marks the Federal Reserve’s most challenging policy move since the 1980s.

The decision threatens to increase the economic pain for millions of US businesses and households by increasing the cost of borrowing.

It can potentially trigger a recession.

Read also: Stock market movement largely positive in October this year

Soft landing

At a press conference after the meeting, Federal Reserve Chairman Jerome Powell acknowledged that the road to a soft landing was narrowing.

Despite the narrowing lane, he assures people that it is still possible.

Soft landings are a process to cool the economy while avoiding a recession.

“The inflation picture has become more and more challenging over the course of this year,” said Powell.

“That means we have to have policy be more restrictive, and that narrows the path to a soft landing.”

Jerome Powell reiterated his commitment to reducing inflation.

Furthermore, he asserted that continued inflation would cause more economic suffering compared to a recession.

New language

The Fed’s November statement included a new section added by officials, which came as a surprise.

The Federal Reserve generally repeats the same language on every release.

In its latest statement, the Federal Open Market Committee assumes that further increases in the target range are needed to adopt a monetary policy stance.

Monetary policy is tight in an attempt to bring inflation back to 2%.

Fed watchers might speculate that adding “over time” to their inflation target would have fewer negative consequences.

Further, it could mean the Fed would revert from aggressive rate hikes to lower rate hikes over the longer term.

The statement further stated:

“In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments.”

Cooling economy

The new language also paves the way for lowering interest rates, recognizing that monetary policy can cool the economy.

Despite the economic data showing strong growth, the cooling economy appears to be working.

Wall Street may also see the new language as a response to the criticism regarding the Fed over-correcting with high rate hikes that could harm the economy.

Read also: Huge rally in the stock market a good sign in October


Recent data shows that mortgage rates are reaching levels not seen in 20 years and are starting to weigh on the housing market.

New home sales in September were down 10.9% from August.

They are also down 17.6% compared to 2021.

However, inflationary pressures are also easing.

Wages and salaries increased by 1.2% in the third quarter after 1.6% in the second quarter.

However, despite the changes, the labor market remained tense.

The number of vacancies increased in September to 1.9 vacancies per available employee.

Friday’s job report is expected to show the economy will add 200,000 jobs in October.

While it is lower than last month, the number remains at an all-time high.


The Fed makes history with a fourth straight three-quarter-point rate hike

Meta to make changes after stocks fall 17%

Meta announced its second-quarter results on Wednesday, revealing that the company had declined since its IPO.

The social media giant warns of sweeping changes ahead of 2023, starting with cost cutting.

The decision was taken to deal with the economic crisis which hit Meta’s main online advertising business.


Meta posted revenue of $27.7 billion for the three months ending September.

Revenues are down 4% year-over-year but still above Wall Street analysts’ expectations.

The company posted its first quarterly decline in the June quarter.

The company also reported a net income of nearly $4.4 billion, less than half the same period last year.

Meta revenues are below analyst forecasts.

Founder and CEO of Meta, Mark Zuckerberg, released a statement:

“We’re approaching 2023 with a focus on prioritization and efficiency that will help us navigate the current environment and emerge an even stronger company.”

Meta stocks

Shares of the company fell nearly 17% in after-hours trading on Wednesday after the earnings announcement.

Demand for online advertising has recently declined because of the rising inflation and recession fears.

Google and Snap have also seen their ad revenue decline.

Meanwhile, Meta CFO David Wehner said the average price per ad across the company’s platforms fell 18% in the quarter.

Read also: Stock market movement largely positive in October this year

App users

The growth of Meta users is slowing due to competitors like TikTok.

The company had 2.96 billion monthly active users on the Facebook app at the end of the quarter, up 2% year-over-year.

However, it declined from last year’s 6% growth in the same quarter.

Meta app’s daily active users grew 4% to 2.93 billion, compared to an 11% increase in 2021.

Zuckerberg noted that Instagram has more than 2 billion monthly active users, while WhatsApp has more than 2 billion.

The metaverse

The core challenges emerge when Meta invests billions of dollars in an ambitious effort to build the metaverse.

However, the metaverse is probably years away from perfection.

Wehner said the operational losses associated with the metaverse in 2023 would continue to increase year-after-year.

The Reality Labs unit lost nearly $3.7 billion in the September quarter.

So far this year, it has already cost Meta $9.4 billion.

Additionally, Reality Labs unit sales were down nearly 50% year-over-year in the September quarter.

Changes and reduction

Altimeter Capital last week wrote an open letter to make changes such as:

  • Reduce headcount expenses by at least 20%
  • Reduce annual expenditure by at least $5 billion
  • Limit investment in the metaverse to $5 billion per year

David Wehner said the company is making significant changes across the board for efficient operation.

Meanwhile, executives said Meta expects the headcount to be around 87,314 or less by the end of 2023, as reported in late September.

“We are holding some teams in terms of headcount, shrinking others, and investing headcount growth only in our highest priorities,” said Wehner.

Additionally, Wehner hinted that Meta might downsize its physical office footprint.

Read also: UK gives breakup order, Meta to comply and sell Giphy

Key investments

On the analyst call, Zuckerberg focused on three key investment areas for the coming years:

  • Meta’s AI discovery engine, which powers Reels and other recommendations
  • Ads and business messaging
  • Meta’s future vision for the metaverse

Earlier this month, Meta introduced its new virtual reality headset, the Meta Quest Pro.

The social media giant made its potential known to professional customers.

Meta expects quarterly revenue of between $30 billion and $32.5 billion for the last three months of 2022.

The forecast expects a decrease of 3.5% compared to the previous year.


Meta stock falls 17% as its quarterly profit is cut in half

E-rupees set to enter trials in India to boost economy

The Reserve Bank of India recently announced plans to test e-rupees, a national cryptocurrency, with the support of the Central Bank of India.

A paper released by the Reserve Bank of India claims they have developed a phased test of their version of the central bank’s digital currency.

The proposal

The Central Bank of India outlined its vision for the e-rupee, a digital version of the country’s official currency.

The proposal, or concept note, explains the rationale for launching a central bank digital currency, or CBDC.

The concept note also shed light on how it would be tested in various stages.

Central banks around the world have shown a growing interest in CBDC as it can serve as an alternative to physical cash.

The RBI alluded to China, which has been testing its own version of a CBDC alongside 16 other countries, as the driving force behind its decision to try digital currencies.

The paper reads:

“Currently, we are at the forefront of a watershed movement in the evolution of currency that will decisively change the very nature of money and its functions.”

“CBDCs are being seen as a promising invention and as the next step in the evolutionary progression of sovereign currency.”

Co-existing with paper money

In limited trials, the RBI will introduce the e-rupee.

They plan to set it up as another form of currency while continuing to produce fiat currency.

According to the document, e-rupees will also be an alternative to cryptocurrencies.

However, the central bank said the unrestrained use of cryptocurrency poses a risk to India’s financial and macroeconomic stability.

The widespread use will reduce the government’s ability to set and regulate monetary policy, making the CBDC a necessity.

“CBDCs will provide the public with [the] benefits of virtual currencies while ensuring consumer protection by avoiding the damaging social and economic consequences of private virtual currencies,” said the RBI.


The Central Bank of India also plans to release two versions of the CBDC.

One of the CBDCs would be used for in-person payments, while the other would be used to process bank wire transfers and bulk transactions.

According to the RBI, a CBDC could make payments more efficient, robust, and reliable.

The RBI recognized that a CBDC would be desirable so that small transactions can be anonymous like with cash.

However, he also said that securing confidentiality is a challenge.

The central bank wrote:

“The potential for [an] anonymous digital currency to facilitate [a] shadow-economy and illegal transactions makes it highly unlikely that any CBDC would be designed to fully match the levels of anonymity and privacy currently available with physical cash.”

Rollout and debates

In February, the Indian government announced plans to launch a CBDC, saying the technology will help boost the country’s economy significantly.

The country is likely feeling the pressure of China’s growing adoption of CBDCs.

Currently, the Chinese CBDC has sparked a debate among US lawmakers over the supremacy of the dollar as the world’s reserve currency.

In June, Federal Reserve Chairman Jerome Powell said Congress would eventually receive guidance from the Federal Reserve on issuing a CBDC.

The Fed struggled with the prospect of a digital dollar in 2017.

“I think it’s something we really need to explore as a country,” said Powell.

“It’s a very important potential financial innovation that will affect all Americans.”


India will soon test ‘e-rupee’ digital currency

Snap’s struggle continue as shares take a 25% dip

Amid a growing number of companies struggling, Snapchat’s parent company Snap continues to endure a challenging year of slow revenue growth.

Revenue growth

Snap reported a revenue of $1.13 billion on Thursday for the three months ending September.

The report shows a modest 6% year-over-year increase, less than what Wall Street was expecting.

The company is currently facing shrinking advertising budgets in an uncertain economic environment.

The company released a letter saying several factors had slowed sales growth.

They listed factors that include growing competition and fear of advertisers, which is Snap’s core business.

“We are finding that our advertising partners across many industries are decreasing their marketing budgets,” the company said in its letter.

“Especially in the face of operating environment headwinds, inflation-driven cost pressures, and rising costs.”

Snap shares and report

Snap shares fell nearly 25% in after-hours trading after the earnings report, 

The company’s report reads what should be a period of sobering technology gains.

Announcements of layoffs, staff freezes and cost-cutting measures have become increasingly common in the industry amid persistent fears of a recession.

The company sparked a wave of concern in May when it warned tech investors that the economy was deteriorating faster than expected.

The deterioration in economic conditions affected sales and earnings expectations for the quarter.

In late August, Snap announced plans to lay off 20% of its more than 6,400 employees worldwide.

Economic headwinds and competition

The company faced headwinds from rising inflation, a stronger dollar, and broader economic concerns.

The economic climate caused advertisers and consumers to rethink their spending in the United States and abroad.

Snap also faces growing competition from TikTok, one of its fastest-growing rivals.

The company continues to navigate its digital advertising business after Apple’s privacy changes made it harder for marketers to target users with ads.

Positive notes

Despite the report, Snap had a glimmer of hope as the number of daily active users increased by 19% year-over-year to 363 million in the third quarter.

The company’s net loss was also lower than Wall Street was anticipating.

However, Snap still lost $360 million in the quarter, compared to a loss of $72 million a year earlier.

Most of the $155 million loss comes from restructuring costs related to layoffs.

The company refused to share its financial outlook for the last three months of 2022.

In the letter, the company wrote:

“We expect that the operating environment will continue to be challenging in the months ahead and believe the actions we are taking provide a clear path forward for Snap.”


Snap stock falls nearly 25% after revenue hit by shrinking advertiser budgets