—— Salesforce to Lay Off 700 Employees; Core Inflation Data Slows Sharply; Tesla Stock Drops with No Bottom in Sight; IT Consultant Profits $1 Million from Insider Trading; Musk’s AI Company May Raise $6 Billion; U.S. Pending Home Sales Index Soars; LVMH to Acquire Fifth Avenue Department Store
1. Salesforce to Lay Off 700 Employees
Sources revealed that enterprise software giant Salesforce will lay off 700 employees. A year ago, Salesforce had already cut 10% of its workforce, and as of the end of October, the company employed 70,843 people.
This new round of layoffs highlights the industry’s growing focus on cost-cutting, with companies like Google, Microsoft, and Amazon also announcing layoffs this month.
Last year, under pressure from activist shareholders such as Elliott Investment Management, Salesforce began using various methods to improve profitability.
In 2023, Salesforce primarily recruited employees with AI and engineering backgrounds.
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2. Core Inflation Data Slows Sharply
The U.S. Bureau of Economic Analysis (BEA) released new data showing that the core CPI (excluding food and energy) increased by 2.9% year-over-year in December, with a 0.2% month-over-month increase.
Consumer spending, adjusted for inflation, increased by 0.5% in December, marking the largest two-month gain in over a year, primarily driven by wage growth.
This data suggests that inflation is easing faster than Wall Street economists had expected, and both the job market and consumer spending remain healthy. Increasingly, people believe that the U.S. economy can avoid a recession.
Despite this, the Federal Reserve remains cautious and wants to see more signs of economic cooling before considering rate cuts.
The Fed is expected to maintain its current benchmark rate at next week’s meeting.
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3. Tesla Stock Drops with No Bottom in Sight
Since the beginning of the month, Tesla’s stock has fallen 26%, with investors losing $205 billion. The stock may continue to decline for the sixth consecutive week, marking its longest losing streak since 2016, when Tesla hadn’t yet launched the Model 3.
Adam Sarhan, CEO of 50 Park Investments, stated that there seems to be no bottom in sight for Tesla’s stock price, as the company has lowered its forecasts for the year and lacks strong confidence in the short-term future.
Well-known Tesla bull analyst Daniel Ives has also removed Tesla from his list of recommended stocks due to concerns about electric vehicle demand and the company’s future outlook.
The EV industry may face a tough year, and Tesla is reluctant to provide revenue forecasts.
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4. IT Consultant Profits $1 Million from Insider Trading
In 2021, Brandon Wong used confidential information stolen by his friend Seth Markin to purchase shares of Pandion Therapeutics, which was set to be acquired by Merck, making a profit of $1 million.
In April of last year, Brandon pleaded guilty in court. Today, U.S. District Judge Edgardo Ramos in Manhattan sentenced him to five months in prison.
Initially, prosecutors had sought a 30-month prison sentence due to the significant profits. Brandon used the illegal gains to purchase a Rolex watch, vacation in Hawaii, pay off a $100,000 mortgage in Florida, and lease a McLaren sports car.
In court, Brandon apologized to his friend and parents, stating that he was blinded by the lure of wealth and freedom.
Brandon was an IT consultant and started trading stocks during the pandemic.
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5. Musk’s AI Company May Raise $6 Billion
Sources revealed that Elon Musk and family offices from Hong Kong and the Middle East are in talks to raise $6 billion for his AI startup xAI, which is valued at around $20 billion.
Three sources also mentioned that Musk has met with investors from Japan and South Korea.
Due to growing geopolitical tensions, raising AI-related funds in Hong Kong has become increasingly difficult.
In December, xAI launched its first robot, Grok, which can learn from tweets on X, providing faster responses than other competing robots.
Morgan Stanley is working with Musk to raise funds for xAI, a company that previously helped Musk acquire X.
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6. U.S. Pending Home Sales Index Soars
In December, the National Association of Realtors (NAR) reported that the pending home sales index soared by 8.3% to 77.3, reaching a five-month high, indicating that the drop in mortgage rates has provided significant support to the housing market.
NAR Chief Economist Lawrence Yun stated that the housing market has had a strong start this year, benefiting from stable home prices and falling mortgage rates. As supply gradually increases, more buyers are able to find homes they desire.
NAR forecasts that the pending home sales index will rise by 13% this year, after a 18.7% decline in 2023.
The U.S. housing market is showing signs of recovery, although commercial real estate, such as office buildings, is still struggling.
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7. LVMH to Acquire Fifth Avenue Department Store
Sources revealed that luxury goods giant LVMH is considering purchasing the building that houses the Bergdorf Goodman men’s department store on Manhattan’s Fifth Avenue. The property is located at 745 Fifth Avenue and is owned by Paramount Group. LVMH, Paramount, and Neiman Marcus, the parent company of Bergdorf, declined to comment.
This week, LVMH’s competitor Kering purchased 715 Fifth Avenue for $963 million. In December 2022, Prada also purchased 720 and 724 Fifth Avenue for $835 million.
LVMH CEO Bernard Arnault stated that the company is looking for the best locations for its brands.
In 2022, LVMH acquired its current headquarters at 22 Avenue Montaigne.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.