—— U.S. Job Openings Unexpectedly Surge; Twitter Subscription Model Fails; Debt Ceiling Deal Makes Key Progress; Goldman Plans Third Round of Layoffs; Falling Commodity Prices Bring Disinflation; Google to Sublease Silicon Valley Offices; Musk Visits China to Meet Officials
1. U.S. Job Openings Unexpectedly Surge
The U.S. Department of Labor’s latest Job Openings and Labor Turnover Survey (JOLTS) showed that in April, the number of job openings unexpectedly rose to 10.1 million, up from 9.75 million in March and exceeding economists’ forecast of 9.4 million.
Following the report, market expectations for a June Fed rate hike jumped back to 70%. The 2-year Treasury yield surged, and the S&P 500 index dropped sharply.
Among all industries, job openings increased the most in retail, healthcare, transportation, and manufacturing. Openings in hospitality, video services, business services, and manufacturing decreased.
Although recent layoffs in the tech and finance sectors have begun to spread to other industries, employers are still struggling to find workers, with demand far exceeding supply.
The Fed believes supply and demand need to be more balanced in order to ease wage inflation.
Job openings surged, indicating employers are having difficulty filling roles and may need to offer higher wages or additional benefits
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2. Twitter Subscription Model Fails
Elon Musk acquired the social media platform Twitter for $44 billion, including $33.5 billion in equity.
But according to Fidelity’s analysis, Twitter is now valued at only 33% of Musk’s purchase price.
Musk has admitted he overpaid. He recently stated that Twitter is worth less than half of what he paid. Fidelity has not disclosed the methodology or basis for its valuation, though it may have access to internal Twitter information.
In March, Musk revealed that Twitter’s ad revenue had plunged 50%, and the Twitter Blue subscription service had not performed well—fewer than 1% of users had subscribed by the end of March.
Since its acquisition, Twitter has failed to improve profitability, with legacy advertisers leaving and new subscriptions performing poorly.
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3. Debt Ceiling Deal Makes Key Progress
On Sunday, U.S. President Joe Biden and Republican House Speaker Kevin McCarthy reached an agreement on the U.S. debt ceiling. The House will vote on their joint proposal today.
The compromise bill raises the U.S. debt ceiling for two years while capping government spending during that period.
The U.S. Treasury had previously warned it was nearly out of funds to pay bills. If the bill fails to pass by June 5, the U.S. could default, severely impacting its credit rating and the global economy.
Congress is scheduled to vote on the bill in the House on Wednesday.
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4. Goldman Plans Third Round of Layoffs
Sources say Goldman Sachs is planning its third round of layoffs in less than a year. The bank cut hundreds of jobs last September and carried out a larger round earlier this year.
The upcoming layoffs are expected to affect fewer than 250 people but will include more senior-level employees.
In February, Goldman announced a new $1 billion cost-cutting plan. CFO Denis Coleman said the layoffs and hiring freeze earlier this year would save about $600 million, with the remaining $400 million in savings coming from non-compensation costs.
The third round of layoffs will impact more senior staff.
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5. Falling Commodity Prices Bring Disinflation
This year, prices for many commodities—including copper, wheat, and natural gas—have plunged, reversing last year’s spike and giving consumers a rare reprieve.
The Bloomberg Commodity Index is down 10% year-to-date, reaching its lowest level since 2021. Key causes of commodity disinflation include the global economic slowdown, Europe’s industrial slump, and China’s weaker-than-expected recovery.
Households and businesses worldwide have begun to benefit from disinflation, and the Federal Reserve faces less pressure.
However, many commodity prices remain sticky, and it’s unclear how long disinflation will last.
This year, European energy prices have seen particularly steep declines, with natural gas futures plunging by roughly two-thirds. Oil and oil product prices have also fallen.
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6. Google to Sublease Silicon Valley Offices
Amid the rise of hybrid work, Google plans to sublease 1.4 million square feet of office space across seven locations in Silicon Valley.
Office space demand has been falling in recent years, and Google’s move may exacerbate the trend.
Google also plans to adjust its overall footprint based on employee count and work patterns, opting not to renew most leases.
Still, Google said it remains committed to real estate in the Bay Area and will continue investing locally.
Without the backing of major employers, the future of office real estate becomes increasingly uncertain.
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7. Musk Visits China to Meet Officials
On Wednesday, Tesla CEO Elon Musk met with Chinese government officials and emphasized his strong desire to maintain ties with China.
The two sides discussed developments in electric vehicles and smart connected cars. Musk expressed his gratitude for the Chinese government’s support for Tesla’s Shanghai factory during the pandemic. He said that the interests of China and the U.S. are closely linked, and Tesla opposes any decoupling from China while aiming to continue expanding locally.
On Tuesday, Musk also met with CATL Chairman Robin Zeng. The two companies hope to jointly build a battery plant in the U.S.
Musk also plans to visit Tesla’s Shanghai factory.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.