—— 421a condo residents are mostly high-paying families; Meta reduces hiring by 30% of engineers; Kohl’s abandons sale plan; Klarna’s new financing round valuation plummets; JPMorgan Chase cuts US GDP forecast; US manufacturing index falls to a two-year low; “Stranger Things” cause Netflix to crash.
1. 421a condo residents are mostly high-income families
According to a new report by the New York City Independent Budget Office, 61% of residents in apartment buildings that have been developed in the past five years and enjoy 421a tax abatement benefits earn between 125% and 165% of the local median annual salary. %, or $138,000 to $176,000; only 30% of households earn between $53,000 and $85,000.
The Affordable New York Act has driven 4,766 condo developments, with 7,142 units under construction. On June 15 this year, the 421a tax preferential policy officially expired and has not been extended for the time being.
In fiscal 2022, 421a remains the city’s largest tax expense at $1.8 billion.
In order to encourage developers to build more housing, the New York City government has repeatedly introduced 421a tax incentive
Source: Commercial Observer – Majority of Housing Produced by 421a Served Higher Incomes, Report Finds
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2. Meta reduces recruiting engineers by 30%
Reuters reported that Meta Platform CEO Mark Zuckerberg told employees on Thursday that the company was likely to experience one of the worst economic downturns in history.
In May, Meta warned that it would slow hiring for mid-level and senior-level roles. On Thursday, Zuckerberg revealed more details and said the company would limit its hiring of engineers to 6,000 to 7,000, down from 10,000 previously.
By the end of March, Meta had more than 77,800 employees. The company plans to use a more stringent performance review system to “kick out” employees who do not perform well. In Zuckerberg’s words, the company has many “incompetent” employees.
Many tech companies have announced a slowdown in hiring, underscoring the wider impact of the economic crisis
Source: Bloomberg – Meta Slashes Plans to Hire Engineers by at least 30% Amid Downturn, Reuters Says
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3. Kohl’s abandons plans to sell
Kohl’s, a well-known US department store, said today that due to rising interest rates and the overall poor economic environment, the company will temporarily abandon its plan to be acquired by Franchise Group Inc. and choose to adjust its operating strategy to get through this special period.
Peter Boneparth, chairman of Kohl’s, said in an interview that the current environment in capital markets and the retail industry is so bad that it does not make sense to trade now. In addition, the company’s board of directors has the confidence to implement the new operating plan, and most shareholders agree with the company’s decision.
To give back to shareholders, Kohl’s may sell a portion of the company’s real estate and use the proceeds to buy back stock.
In addition to Kohl’s, Panera Brands Inc., a well-known bakery chain (Panera Bakery), also announced today that due to the adverse capital market environment, the company temporarily shelved its listing plan for a SPAC reverse merger.
The current stock price is generally low, and selling the company may not maximize the interests of shareholders
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4. Klarna’s new funding round plummets
Buy now, pay later company Klarna Bank AB is in the midst of a new funding round, according to people familiar with the matter. The valuation of the company in this round, however, could plummet to $6.5 billion from $45.6 billion last summer.
Klarna employees are likely to receive brand new stock options in the new round of financing, as previous stock options have all lost their value after the value of the company’s stock plummeted.
Today The Wall Street Journal reported that Sequoia Capital could lead the round, which could total $650 million.
Currently, Klarna has 147 million users worldwide. In the first quarter of this year, Klarna’s losses hit $245 million. The company’s official website claims that the company has 400,000 retail customers, including Nike, Ikea, Sephora, and Expedia.
Reduced consumer spending demand, rising interest rates, and less attractive buy-now-pay business
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5. JPMorgan cuts U.S. GDP forecast
Economists at JPMorgan Chase & Co. lowered their second-half U.S. growth forecasts after a raft of worrying macroeconomic data this week, with the biggest reason for lowering consumer spending.
Economists cut their second-quarter GDP growth forecast to 1 percent on an annualized basis and raised their forecast for the final quarter to 1.5 percent.
Michael Feroli, an economist at JPMorgan, said that while the bank’s forecast is very close to a recession, they believe that if inflation eases in the fourth quarter and auto sales pick up, then The economy is likely to continue to grow.
Declining consumer spending is one of the biggest reasons for slower GDP growth
Source: Bloomberg – JPMorgan Cuts US Economic Growth Forecasts ‘Perilously Close’ to Recession
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6. U.S. manufacturing index falls to a two-year low
An index of U.S. manufacturing activity created by The Institute for Supply Management (ISM), which tracks U.S. manufacturing activity, fell to 53 from 56.1 in May and hit its lowest level in nearly two years, according to the latest data released today. The median estimate of economists interviewed by Bloomberg was 54.5.
The ISM index tracking new factory orders also fell 6 points to 49.2, the lowest since May 2020. The sharp drop in factory orders was mainly due to the serious inventory backlog of merchants and the decline in consumer purchasing power.
The ISM’s producer inventories index rose to 56, the highest reading since 2010.
Timothy Fiorce, chairman of the ISM survey department, said many respondents to the survey believed that the slowdown in manufacturing growth was mainly caused by bottlenecks in the supply chain, and production costs were also one of their biggest concerns.
Retailers are overstocked, consumer buying demand dwindles, and new orders from producers slump
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7. Stranger Things crashes Netflix
The much-anticipated finale of “Stranger Things 4” officially landed on Netflix on Friday. However, due to too many users logging on to the platform at the same time, Netflix’s server crashed temporarily. Stranger Things viewers were quick to tweet their dissatisfaction.
According to Downdetector website statistics, there are 14,000 website crash reports worldwide.
In the three weeks after its release, “Stranger Things 4” has accumulated more than 781 million hours of viewing and has become Netflix’s most popular English-language series.
Typically, Netflix releases all episodes of a TV show at once. However, in order to prolong the interaction time and subscription cycle of users, Netflix began to try to release episodes in batches.
“Stranger Things” is one of the important IPs independently produced by Netflix and is highly sought after by the audience
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The content of this article comes from various financial news media such as The Wall Street Journal, Financial Times, and Bloomberg.