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  • Thursday's Scoop: Coasting☀️

Thursday's Scoop: Coasting☀️

Walmart boosts pay & Robinhood buys crypto

 
Hey friends - almost Friday.
Insiders, look out for the Weekly Scoop tomorrow.
Here’s what you need to know today to inform your work, spending, and investments…

 

🌎 Big picture

  1. Layoffs crept higher last week.

  2. American workers started earning more for their productivity this year.

  3. International policymakers have started lowering borrowing costs.

How are you feeling about the economy?

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 💼 Work trends

Unemployment Rate: 3.9%
Still near the lowest rate in 50+ years

Layoffs crept higher last week but are still very low. The Labor Department reported initial jobless claims rose slightly last week to 229,000 but remained fairly low relative to history. The number of people receiving unemployment benefits for consecutive weeks also rose slightly, indicating that finding a job has grown more challenging. Another report from placement firm Challenger, Gray & Christmas said planned corporate layoffs dropped 1.5% from April. So far this year, layoff announcements from big firms are 7.6% lower than last year. 

American workers started getting paid for their increased productivity this year. The Labor Department reported hourly compensation rose at a 4.2% annualized rate in the first three months of the year, or 0.4% when adjusting for inflation. Worker productivity, measured by economic output per hour, rose more slowly, at a 0.2% rate. Productivity has significantly outpaced real hourly earnings over the past year, as workers increased productivity by 2.9% but only earned 0.6% more when adjusting for inflation. Wages haven’t kept up with productivity over the last several decades.

 

 👜 Cost of living trends

Inflation Rate: +3.4% (YoY), +0.3% (MoM)
Policymakers aim for 2% YoY inflation. (April CPI)

European policymakers have started reducing borrowing costs, signaling confidence that inflation is under control. The European Central Bank cut its key interest rate to 3.75%, down from a record high, marking the first reduction since 2019. This move reflects a strategic shift away from peak restrictive policy aimed at slowing borrowing and spending as the euro zone's cost of living stabilizes. US policymakers are expected to follow suit later this year, potentially lowering interest rates as they grow more confident that prices have stopped climbing faster than usual. This trend of lowering rates is gaining momentum globally, with Canada, Sweden, and Switzerland also making similar moves to stimulate their economies. Savings accounts will pay less interest, but borrowing on credit cards, mortgages, and auto loans will get a little cheaper.

 

 📈 Investment trends

The Market: ⬇️ -0.02%
S&P 500: 5,352.96
1Mo: +3% | 1Yr: +25% | 5Yr: +86%

The market drifted lower from its new record high on Thursday as investors processed more signs of a slowing economy. With more data indicating that the economy is no longer overheating and accelerating the rising cost of living, investors expect US policymakers to follow international central banks in easing their restrictive policies and lowering the cost of borrowing.

 

 🤓 Inside Scoop: How do Big Tech companies influence the market?

The performance of Big Tech companies is critical to overall sentiment in the stock market. The Big Six —Apple, Microsoft, Amazon, Alphabet (Google), Meta and Nvidia—are so enormous compared to every other company that their fluctuations in value drive the changes in The Market as a whole.

The S&P 500 index is the primary way people track whether The Market is rising or falling. It’s a number that follows the value of the biggest 500 public companies in the US. As with most indexes, the actual number isn’t as significant as the direction it moves. It helps us understand whether America’s biggest corporations are growing. Daily fluctuations are very normal.

Because the S&P 500 Index is weighted by company size, the Big Six alone account for more than a quarter of the total size of The Market. The other ~494 companies make up the additional ~70%. So, any changes in the prices of those Big Tech companies’ stocks disproportionately affect the perception of how the whole market is doing.

🏭 Companies worth watching

👍👎 APPROVAL RATINGS

Join the board at America’s biggest companies. Vote and judge their decisions. (+2 pts)

Walmart

Improving Compensation

Walmart introduced a bonus plan providing up to $1,000 for 700,000 front-line hourly store employees based on store performance targets and customer feedback.

America's largest employer is under pressure from investors to improve its pay policies and ensure workers can cover basic living expenses.

Tell Walmart's CEO how you feel

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 💭 Broader perspectives… (+2 pts)

Who’s more responsible for making sure employees earn a fair wage?

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Nio

Gearing Up

Chinese electric vehicle maker Nio anticipates that its strategic move toward offering cheaper models and a battery rental program will double its sales this quarter.

Nio won approval to build a new factory to expand annual production to nearly 1 million cars.

Tell Nio's CEO how you feel

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Microsoft

Trouble Brewing

US regulators have opened antitrust investigations into Microsoft, OpenAI, and Nvidia, focusing on their dominant roles and market power in the artificial intelligence industry.

Microsoft faces scrutiny over its $13B investment in 49% of OpenAI and its $650M deal with AI startup Inflection AI that skirted merger disclosure requirements.

Tell Microsoft's CEO how you feel

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Robinhood

Crypto Expansion

Robinhood accelerated its push into digital assets with the $200M acquisition of crypto exchange Bitstamp.

Crypto trading commissions helped fuel Robinhood's growth last quarter, but its crypto business has also attracted regulatory scrutiny.

Tell Robinhood's CEO how you feel

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Boeing

Space Station Success

Boeing's Starliner space capsule, crewed by NASA astronauts, successfully docked at the International Space Station, boosting competition with SpaceX.

The planemaker struggled with technical problems for years, including multiple abandoned launches.

Tell Boeing's CEO how you feel

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