🐇🧧 CNY Edition Sunday Primer

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Jan 22, 2023

Happy Chinese New Year!

It’s the year of the Rabbit. A tradition that you may want to partake in today is eating some fish! It symbolizes abundance and sounds like ‘surplus’ in Chinese. Check out the graphic with all the foods and what they represent. Personally, I think me and my mom are getting some fish later today.

I hope you have a wonderful Sunday, this Primer will get you for the week in finance!

— Humphrey, Tim & Rickie

Market Report

Goldman’s Big Miss!

On Tuesday, Goldman Sachs posted its largest earnings miss in a decade as revenue fell and expenses were higher than expected.
- Earnings: $3.32 per share vs. $5.48 analyst estimates
- Revenue: $10.59 billion vs. $10.83 billion
The biggest hits in revenue came from equity and debt underwriting, which declined 82% and 72% over the past year. With the markets in turmoil and the economic outlook so uncertain, no one wanted to raise capital. Meanwhile, a bright spot comes from Goldman’s sales & trading unit, which increased revenues by 44% over the past year.
The news of substantially weaker earnings comes just a week after the bank laid off 3,200 employees (6.5% of the 49,100 employees Goldman has). According to Goldman’s CEO, David Solomon, “We tried to do too much too quickly. I think we probably in some places haven’t had all the talent that we needed to execute the way we wanted.”

Update on the Debt Ceiling Crisis

The Treasury Department is using special measures to avoid a U.S. payments default after the federal debt limit was reached on Thursday. The department is using the financial resources of two government-run funds for retirees, which will allow the Treasury to keep making federal payments while it is unable to increase the overall level of debt.
The specific funds affected by the Treasury's move are the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. These funds invest in special-issue Treasury securities that count under the debt limit. Once the debt limit is increased, the funds will be "made whole" and participants will be unaffected.
This is not the first time the Treasury has used these measures, as they have been used more than a dozen times since 1985.

Tech Layoffs Continue.

Microsoft and Amazon have announced that they will be cutting a total of 28,000 jobs as a result of slowing sales and the possibility of a recession. Microsoft will be cutting 10,000 jobs this quarter, while Amazon will be cutting 18,000 jobs in the US, Canada, and Costa Rica.
The companies state that these cuts are necessary to offset the slowing sales and possible recession that has made customers more cautious with spending. This is no surprise, but a part of a trend in the tech industry, as Salesforce has announced that it will be cutting about 10% of its workforce, and Meta has also announced job cuts.
Microsoft and Amazon have stated that they will continue to invest in growth areas such as artificial intelligence, groceries, and healthcare.

Forecast Ahead

According to layoffs.fyi, a live tracker created by a startup founder that has been tracking tech layoffs since the beginning of COVID-19. This comes as Google was the latest to lay off 12,000 employees. Interestingly enough, the job market still seems to be strong according to a report by ZipRecruiter that shows 79% of those recently laid off from their tech company find new jobs within three months of starting their search.