Good Morning!

Happy Tuesday 😎

As you may have noticed, The Market Byte issues have been slightly less frequent over the last week. I am still writing, but am also working behind the scenes to change my content style and delivery cadence.

The future is bright. More to come soon. 🌞 

Today’s article is brought to you by: 100% human and 0% AI 

Market Update

📈 Stock rose Monday as the stress in the banking sector remains mostly contained and government measures limit impact.

🟢 NRG Energy Rose 6.8% after Bank of America analysts shared bullish commentary on the company.

🔴 First Republic Bank fell 47% as rumors of a rescue deal from potential buyers continue to circulate.

Banger Tweet of the Day

AI is gonna bring jobs full circle 🧑‍🌾 🚂 

Round Two of Cuts for Amazon

Amazon is set to lay off roughly 9,000 more workers, CEO Andy Jassy wrote in a staff memo on Monday morning.

In the Cloud: The cuts are set to take place across the company’s advertising, HR, Twitch, and cloud computing units. Areas (aside from HR) that were less impacted during the first round.

Round Two: The company also laid off 18,000 employees only a couple months ago - the retail, devices, and HR units were most impacted from this first round.

Year of Efficiency: “The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole.” - Andy Jassy

Meeting demand: In retrospect, Amazon had no choice but to over-invest throughout the pandemic.

• Online shopping boomed at the onset of the pandemic and Amazon was best positioned to meet the demand.

• As eCommerce has returned to its normal anticipated growth, the company is finding themselves over-staffed to current levels.

Employee headcount grew from ~800k at the end of 2019 to over 1.6 million by the end of 2021.

“The layoffs will continue until morale improves.”

Business Bytes

🏦 US Studies Ways to Guarantee All Bank Deposits If Crisis Expands (Bloomberg)

• This would be a big step toward stopping the potential for a full-blown financial crisis.

• Critics are concerned about the moral hazard this creates where banks don’t bear the risk of their decision-making.

💰️ JP Morgan advising First Republic on Strategic Alternatives (CNBC)

• Strategic Alternative options include a sale of the bank or a capital raise (which would be heavily dilutive to current shareholders)

🏢 USAA is Slowly Shuttering Remote Work (WSJ)

• Under the company’s new policy, employees are required to start showing up 3 days/week. For employees hired to work remote, if they live within 60 miles of an office they are now considered hybrid.

• This is also probably somewhat of a “quiet layoff” for USAA, knowing many will resign over the new rule.

🎵 Duolingo is working on a music app (Techcrunch)

• The app will reportedly “teach basic concepts in music theory using popular songs & teachers.”

• The company also introduced Duolingo Math last October as it aims to expand outside its core language offering.

📱 TikTok hits 150 million US Monthly Active Users (Reuters)

• Good luck banning this thing.

Ackman Calls for Fed to Pause Rate Hikes

In an extra-long tweet, famous investor Bill Ackman called on the Federal Reserve to press pause on rate hikes while they work to solve the banking crisis.

The Fed is set to announce any changes to interest rates on Wednesday; current consensus is for a 0.25% rate increase.

Ackman’s suggestions:

• Pause rate hikes - 3 bank failures in a week wipes out a lot of investment money, and puts depositors on edge.

• Full FDIC deposit guarantee - the FDIC should guarantee all deposit dollars until a new/modern insurance policy is implemented. Markets will continue to sniff out weak banks otherwise.

But What about Inflation: Inflation is, of course, still a very real problem. Ackman suggests that chairman Jerome Powell make it very clear that this is a temporary pause, and that hikes will continue when the banking system is solved.

It is also possible that the banking failures can be enough on their own to slow the economy and cool inflation.

• Banks, especially smaller ones, aren’t going to be in the business of lending (increasing money!!) in the current environment. As Ackman puts it, “What regional bank is going to commit meaningful capital to new construction or business loans in this context?”

Elon responded to the tweet saying the Fed should drop rates by .5% on Wednesday. Of course, lower rates means higher stock prices, good for his companies, his margin loans etc. etc.

Today’s Challenge: Start building something new or make progress on your side project.

Thanks for reading, go out and make today a great one! 🫡 

Much Love,

Andrew