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Wall Street Layoffs Thousand’s as Biden’s Economy Tanks

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Wall Street Layoffs Thousand's as Biden's Economy Tanks

President Joe Biden is facing criticism for his leadership as the economy deteriorates and Wall Street’s Goldman Sachs Group announces layoffs of thousands of employees to navigate a difficult economic environment.

The layoffs are the latest indication that layoffs are spreading across Wall Street as dealmaking slows. Investment banking revenues had fallen this year due to a slowdown in mergers and stock offerings, a sharp contrast to the blockbuster 2021 when bankers received large pay raises.

Goldman Sachs had 49,100 employees at the end of the third quarter after hiring heavily during the pandemic. According to the source, its headcount will remain above pre-pandemic levels. According to a filing, the workforce stood at 38,300 at the end of 2019.

The number of employees affected by the layoffs is still being discussed, and the details are expected to be finalized early next year, according to the source.

According to a separate source familiar with the situation, the bank is considering a significant reduction in the annual bonus pool this year. According to Reuters, this compares to increases of 40% to 50% for top-performing investment bankers in 2021, citing people with direct knowledge of the situation.

“GS needs to demonstrate that its costs are as volatile as its revenues, especially after a year in which it provided special rewards to top managers during the boom times,” wrote Mike Mayo, a Wells Fargo banking analyst.

“Goldman Sachs must now demonstrate that it can do the same when business is not as good and that they live up to the old Wall Street adage that they ‘eat what they kill,'” he wrote in a note.

In afternoon trading, JPMorgan & Chase Co (JPM.N) fell 1.3%, while shares of Morgan Stanley (MS.N) fell 0.6% and 1.3%, respectively.

This year, Goldman’s stock has dropped nearly 10%. They have, however, outperformed the S&P 500 bank index (.SPXBK), which is down 24% year to date.

According to a source, the latest plan would result in the layoff of hundreds of employees from Goldman’s consumer business.

In October, the bank signaled that it was scaling back its plans for Marcus, its loss-making consumer unit. Goldman also intends to discontinue the origination of unsecured consumer loans, a source familiar with the matter told Reuters earlier this week, indicating yet another exit from the industry.

With Marcus, Chief Executive Officer David Solomon took over in 2018 and attempted to diversify the company’s operations. In October, it was merged with the wealth business as part of a management reshuffle that included trading and investment banking units.

Trading and investment banking accounted for nearly 65% of Goldman’s revenue at the end of the third quarter, compared to 59% in the third quarter of 2018, when Solomon took over as CEO.

According to people familiar with the situation, Semafor reported on Friday that Goldman would lay off up to 4,000 employees as the bank struggles to meet profit targets.

Goldman cut about 500 employees in September after pausing the annual practice for two years due to the pandemic, according to a source familiar with the matter at the time.

In July, the investment bank warned it might slow hiring and cut costs.

Global banks, including Morgan Stanley (MS.N) and Citigroup Inc (C.N), have reduced their workforces in recent months as a dealmaking boom on Wall Street has cooled due to high-interest rates, tensions between the US and China, the Russia-Ukraine war, and soaring inflation.

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Wall Street Loses Ground as Fed Raises Rates to Fight Biden Inflation

Wall Street lost more ground on Friday as concerns mounted that the Federal Reserve and other central banks are willing to instigate a recession to combat Biden inflation.

The S&P 500 fell 1.1% for the third time in a row. The Dow Jones Industrial Average fell 0.8%, while the Nasdaq Composite fell 1%. The major indices fell for the second week in a row.

The pullback was substantial. More than 80% of the stocks in the S&P 500 index fell. Stocks in technology and health care were among the market’s heavyweights. Microsoft fell 1.7%, while Pfizer fell 4.1%.

The Fed raised its forecast for how high-interest rates will eventually go this week, snuffing out some investors’ hopes for rate cuts next year. In Europe, the central bank came across as even more aggressive in the eyes of many investors.

“Inflation remains the monster in the room,” said Liz Young, SoFi’s head of investment strategy.

Inflation has slowed from the highest levels in decades, but it remains excruciatingly high. As a result, the Fed has maintained its aggressive price-cutting strategy by raising interest rates to slow economic growth. The strategy increasingly risks slamming on the brakes too hard and sending an already slowing economy into a recession.

“It’s still unclear whether we’re in a mild, medium, or deep recession,” Young said.

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Wall Street S&P 500 Down

S&P Global released a mixed report on Friday, emphasizing the recession risk. This month’s business activity slowed more than expected due to rising inflation. It also stated that the drop was the sharpest since May 2020, but inflationary pressures have been easing.

“In short, the survey data suggest that Fed rate hikes are having the desired effect on inflation,” Chris Williamson, a chief business economist at S&P Global Market Intelligence, said.

The S&P 500 dropped 43.39 points to 3,852.36. This year, it is down about 19%. The Dow finished the day down 281.76 points at 32,920.46. The Nasdaq index fell 105.11 points to 10,705.41.

Small-company stocks suffered less severe losses than the broader market. The Russell 2000 index dropped 11.19 points, or 0.6%, to 1,763.42.

Bond yields were volatile. The 10-year Treasury yield, which influences mortgage rates, increased to 3.49% from 3.45% late Thursday. The two-year Treasury yield, which closely tracks Fed expectations, fell to 4.21% from 4.24% late Thursday.

The Fed ended its final meeting on Wednesday by raising its short-term interest rate by half a percentage point, the seventh increase this year. Wall Street had hoped the Fed would signal a slowing of rate hikes in the run-up to 2023, but the Fed did the opposite.

The federal funds rate is at its highest in 15 years, ranging from 4.25% to 4.5%. Fed policymakers predict that the central bank’s rate will be in the 5% to 5.25% range by the end of 2023. Rate cuts are not expected before 2024, according to their forecast.

Several companies outperformed the market on Friday, reporting strong financial results and forecasts. Adobe rose 3% after exceeding Wall Street’s fiscal fourth-quarter earnings forecast. United States Steel rose 5.8% after providing investors with a positive earnings forecast.

Source: Reuters, AP, PBS

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2024: Starbucks And Workers United, Long At Odds, Say They’ll Restart Labor Talks

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Starbucks and the union representing its employees in the United States said Tuesday that they have agreed to begin negotiations to achieve a labour agreement.

The announcement was a watershed moment for the two parties, who had been at odds since Workers United initially organised baristas at a Starbucks location in Buffalo, New York, in late 2021.

“Starbucks and Workers United have a shared commitment to establishing a positive relationship in the interests of Starbucks partners,” the company stated. Workers United reiterated these remarks in a similar statement.

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Starbucks And Workers United, Long At Odds, Say They’ll Restart Labor Talks

Workers in more than 370 company-owned Starbucks stores in the United States have voted to unionise but have yet to reach a labour agreement with Starbucks.

The process has been cruel. Federal courts have sometimes ordered Starbucks to restore employees fired after leading unionisation efforts at their locations. The National Labour Relations Board’s regional offices have also filed at least 120 complaints against Starbucks for unfair labour practices, including refusing to bargain and reserving wage hikes and other benefits for non-union employees.

Starbucks stated Tuesday that, as a gesture of goodwill, it will provide workers in unionised locations the benefits promised in May 2022, including the option for customers to tip their credit card purchases.

Starbucks was the first to say it desired a better relationship with the union. In December, the corporation stated it intended to reopen labour negotiations to ratify contract agreements by 2024. Before that, the two parties had not spoken in seven months.

During last week’s conversations, the two sides agreed there was “a constructive path forward on the broader issue of the future of organising and collective bargaining at Starbucks.”

starbucks

Starbucks And Workers United, Long At Odds, Say They’ll Restart Labor Talks

On Tuesday, Starbucks and Workers United announced that they will also consider ending their case. Starbucks sued Workers United in October, alleging that a pro-Palestinian social media post from a union account early in the Israel-Hamas conflict enraged hundreds of customers and harmed the company’s brand.

The corporation insisted that the union not use its name or likeness. Workers United countersued, claiming Starbucks defamed the union and indicated it backed terrorism.

starbucks

Starbucks And Workers United, Long At Odds, Say They’ll Restart Labor Talks

“While there is plenty of work ahead, coming together to develop this framework is a significant step forward and a clear demonstration of a shared commitment to working collaboratively and with mutual respect,” the organisation said. Starbucks repeated the comments.

SOURCE – (AP)

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FAA Gives Boeing 90 Days To Come Up With A Plan To Address Quality Issues

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The Federal Aviation Administration imposed a 90-day deadline for Boeing to address quality and safety issues.

According to the agency, FAA Administrator Mike Whitaker and Boeing CEO Dave Calhoun met for a full day on Tuesday, during which Whitaker made the demand.

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FAA Gives Boeing 90 Days To Come Up With A Plan To Address Quality Issues

That discussion occurred the day after a year-long FAA-commissioned investigation discovered a “disconnect” between Boeing executives and employees about safety, with employees fearing transfer or stopped career progression for reporting safety issues.

The discussion came ahead of the expected release of a six-week FAA investigation of Boeing’s production line, which was prompted by investigators discovering that key bolts were not put on a Boeing 737 Max 9 door plug that burst open during flight.

The FAA stated that the Boeing plan must address shortcomings in the company’s Safety Management System, or SMS, and integrate the SMS programme with another quality programme. SMS is a guidebook designed to guide staff through the procedures necessary to ensure the safety of flights.

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FAA Gives Boeing 90 Days To Come Up With A Plan To Address Quality Issues

However, despite a comprehensive rewrite of the handbook in recent years, the panel discovered that “many Boeing employees did not demonstrate knowledge of Boeing’s SMS efforts, nor its purpose and procedures.”

The group that reported on Boeing’s safety inadequacies on Monday suggested that the firm resolve those flaws within six months; the FAA’s new directive sets a shorter deadline.

faa

FAA Gives Boeing 90 Days To Come Up With A Plan To Address Quality Issues

Boeing’s proposal must result in a “measurable, systemic shift in manufacturing quality control,” according to the FAA.

Boeing has a history of safety breaches. The January 5 blowout incident resulted in a 19-day emergency grounding of all Max 9s and renewed scrutiny of Boeing following the tragic Max 8 disasters in 2018 and 2019.

SOURCE – (CNN)

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Jacob Rothschild, Financier From A Family Banking Dynasty, Dies At 87

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LONDON ROTHSCHILD — his family announced that Jacob Rothschild, 87, a financier and philanthropist from the legendary Rothschild banking line, died on Monday.

Jacob began his career in 1963 at the family bank, NM Rothschild & Sons, before branching out to develop enterprises and charity organisations. His family paid tribute to him in a statement.

“Our father Jacob was a towering presence in many people’s lives, a superbly accomplished financier, a champion of the arts and culture, a devoted public servant, a passionate supporter of charitable causes in Israel and Jewish culture, a keen environmentalist and much-loved friend, father and grandfather,” a statement from his family stated.

rothschild

Jacob Rothschild, Financier From A Family Banking Dynasty, Dies At 87

“He will be buried in accordance with Jewish custom in a small family ceremony, and there will be a memorial at a later date to celebrate his life,” they continued, without revealing any other information.

According to last year’s Sunday Times Rich List, the Rothschild family is worth approximately 825 million pounds ($1 billion). It donates millions of pounds to Jewish interests, education, and art.

Former British Prime Minister Tony Blair was one of the political and cultural heavyweights who paid tribute to Rothschild. Blair lauded him as a “towering figure in Britain’s Jewish community” and praised his efforts to promote Middle East peace.

Jacob was born in Berkshire, west of London. He attended Eton College and studied history at Christ Church College, Oxford University.

rothschild

Jacob Rothschild, Financier From A Family Banking Dynasty, Dies At 87

After leaving the Rothschild Bank, he took over Rothschild Investment Trust, now RIT Capital Partners. He served as chairman of the business, one of the largest investment trusts on the London Stock Exchange, until 2019.

He also co-founded the then-J Rothschild Assurance Group, now St James’s Place, with Mark Weinberg in 1980 and served as deputy chairman of what was then BSkyB Television, among other duties.

In the cultural sector, he served as chairman of the National Gallery of London’s board of trustees and the National Lottery Heritage Fund.

rothschild

Jacob Rothschild, Financier From A Family Banking Dynasty, Dies At 87

The Rothschild Foundation, which manages the family’s former home, the country house Waddesdon Manor, announced that Jacob Rothschild’s daughter Hannah will follow him as chair.

Jacob was married to Serena for over 50 years until she died in 2019. They have four children (Hannah, Beth, Emily, and Nat) and several grandchildren.

SOURCE – (AP)

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