Posted on 06/03/2022 6:16:24 AM PDT by blam
Since mid-May, real-time indicators warned the labor market had hit a brick wall. Piper Sandler predicted last week that up to a million layoffs or more were ahead as the US economy is on the verge of recession.
The latest sign of an impending job market shock is an email seen by Reuters from the world’s richest man, Tesla CEO Elon Musk, who told executives the electric carmaker needs to cut staff by 10% because he has a “super bad feeling” about where the economy was headed.
The email, titled “pause all hiring worldwide,” was sent to executives on Thursday and is the latest sign of mounting macroeconomic headwinds as lower-than-expected US new car sales in May could be a harbinger of a recession.
In an another email Tuesday, Musk told employees:
“Everyone at Tesla is required to spend a minimum of 40 hours in the office per week … If you don’t show up, we will assume you have resigned.”
On Wednesday, Musk tweeted: “Recessions serve a vital economic cleansing function.”
Tesla, which has EV factories worldwide, including ones in the US, Berlin, and China, employs about 100k staff, so reducing 10% of jobs could equate to 10k people.
Musk’s stark warning of impending economic doom and the need for job cuts sent Tesla shares down nearly 4% in premarket, dragging down Nasdaq 100 futures about half a percentage point and other electric carmakers.
“I think it’s very prudent by Tesla to reduce the staff … This market is not rewarding high revenue growth at all costs. You’re being rewarded from improvement in return on investor capital and free cash flow generation,” Peter Garnry, head of the equity strategy at Saxo Bank A/S, told Bloomberg Television.
Garnry is right. Piper Sandler recently compiled a list and showed the recent company mass layoff announcements are mostly with tech unicorns.
Meanwhile, the Federal Reserve shows no signs of letting up on its most aggressive monetary tightening program in decades with nearly three 50bps hikes through the summer, an attempt to tame inflation at 40-year highs. Besides rate hikes, the Fed has begun to unwind its monstrous balance, adding to even more liquidity draining from markets. And this is all happening as the Citi US Eco surprise index is already crashing …
Days ago, JPMorgan Chase CEO Jamie Dimon warned: A “hurricane is right out there down the road coming our way.”
Biden about to find out what polls worse: recession and bear market or runaway inflation.
— zerohedge (@zerohedge) May 20, 2022
Musk’s warning of Tesla job cuts is a sign of the coming mass layoff tsunami and economic downturn.
Musk is just using the economic uncertainty to do what a lot of tech companies have done in the past. Staffing levels generally rise at big companies so periodic layoffs are necessary to clear the dead wood that always accumulate at all companies. I don’t remember who it was, but one CEO was famous for laying off 5% annually, based on performance review “grades”. The bottom 5% of employees were let go with no warning or appeal. I think it was Siebel, before Oracle bought them.
I think there’s a storm coming. I’ve always thought Larry Kudlow seemed to have a pretty good read on the economy. He says we’re probably headed for a recession. We’ll see. Some could argue we’re already there.
RE: FORD
Shoring up the union vote for 2022 and 2024.
Maybe after the 2022 and 2024 elections, we’ll be able to buy our old fashioned gas cars. They’ve served us faithfully for 100 years.....and so has gas.
If you’re not panicking you haven’t been paying attention.
Or else you’re waiting for Jesus.
So Elon is making people come back to the office . . . so he can give them their pink slips.
I had that feeling starting on 11/3/2020. Sadly my gut was a little short of the actual abomination we’ve been hit with.
Jack Welch at GE cut the bottom 10% every year...
Musk is having a $ problem.
This isn’t a bad feeling about the economy.
The economy was in the crapper when he agreed to purchase twitter.
I think he had buyers remorse because he immediately started finding flaws to get the price down.
AFTER the public announcement of purchase.
The diff between he and Trump.. Trump does his negotions before agreeing to anything.
Elon got himself in a fix. Tried to use angry letter about remote work to cut down his workforce so it wouldn’t be seen as layoffs or company doing poorly.
He panicking. He known for that.
But it isnt because of the economy.
It’s his poor choices.
He’s a billionaire but it’s not because he’s good or wise with money. It’s because he has made good bets.
Fords E Truck for moving parts bin fleet duty has good reviews and demand and hits a price point where the white truck demand is highest. Extending the technology to box truck is the win, those trucks have abhortant operating costs.
With a 4-6 year lifespan and 12k / year depreciation + fuel is about the same as the gas or D models.
Most of the white trucks that never leave blacktop are 100 miles a day and returning to somewhere they can be charged, either the business owners home or the shop. Finally EVs hit a place where the utility of having 6500 Watts of outlets and ton of locking storage available is more upside than the 4 hour of charging downside.
I am not a fan of 200 mile EVs but the 400 mile EVs are to the point where they are worth consideration for fleet service within city limits. Let the average consumer middle class fred not be the one risking their once a decade purchase on unproven batteries.
No, Elon is going to use this to get rid of the slackers who were only working 20 hours a week at home.
We went through the same thing at our office six months ago. The boss told all the employees that he wanted them to come back into the office unless you had some specific reason why you needed to continue working at home. Two that did not want to come back in, no longer work here.
My local Walmart is undergoing a huge retrofit. Taking all the old shelves and rotating them 90 degrees and getting rid of at least one of the WIDE main “price leader aisles” where they cram all the special stuff they want to move.
At first I thought they were only rotating the shelves but then I noticed they were REPLACING them. Replacing them with ones that are almost 2 feet higher where they can store more product on top to restock lower shelves. I also started looking hard at their aisle spacing. It’s narrower by a bit - enough to squeeze in another row or two.
I think they’re doing it to take advantage of any larger, unanticipated shipments they get and accommodate fluction....a sign of an unsure distribution system. I haven’t seen any numbers yet, but my guess is that those extra shelf heights and added rows will give them at least a 25% higher ‘warehouse’ capacity. On that note, the person responsible for the plan earned his/her pay, IMO.
STAGFLATION anyone - let the good times roll.
Welch also destroyed GE for that. Cuts become personal politics as performance was never measured, and rarely can be.
Jack Welch at GE did similar. Bottom 10%.
And being in the top 10% was no guarantee either. All steely-eyed bottom line calculus, heartless. Just like law and politics.
The economy is going to get much worse, count on it. The very high energy prices still have not filtered their way into pricing, that’s going to be another significant wake up call.
It’s possible that even Brandon knows this. In case you haven’t heard a while back he asked the Saudis to pump more oil. The gave him the middle finger because he went overboard to condemn them after the (not a journalist) Khassoggi was killed.
Now he’s planning a trip, they told him to come kiss the ring if they wat more output. Brandon knows we’re in for an energy crisis of epic proportions if he doesn’t kiss and make up.
He refuses to increase domestic supply for one reason, politics.
GE did well under Welch. It was his successor that killed it.
Granted the work environment was toxic, but that’s pretty much normal in industry.
My opinion is that the country's leadership, Biden included, want to drag the US down to third world status, but in a way where they aren't personally blamed. It's necessary to globalization.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.