Big tech is getting clobbered on Wall Street. It’s a good time for them.
Apple, Amazon, Microsoft and the parent companies of Facebook and Google have lost $2.7 trillion in value this year. So how have the companies responded? Microsoft has doubled its employees’ bonus pool, Google has committed to hiring more engineers and Apple has showered its top hardware talent with $200,000 bonuses. The bullishness about their prospects reflects an understanding that the companies have tight control of some of the world’s most lucrative businesses: social media, premium smartphones, e-commerce and cloud computing. Their dominance in those arenas and toeholds elsewhere should blunt the pains of inflation, even as those challenges hammer big companies and the stock market nears bear market territory.
Baby formula shortage has an aggravating factor: few producers
In the early 1990s, the nation’s biggest makers of baby formula were under fire. The three largest manufacturers, which controlled 90% of the U.S. market at the time, were hit with waves of state, federal and corporate lawsuits, accusing them of attempting to limit competition in the space and using their control of the industry to fix prices. Most of the lawsuits were settled or, in some cases, won by the companies. Three decades later, the $2.1 billion industry is still controlled by a small number of manufacturers, which are again in the crosshairs over their outsized market share.
Even among corporate raiders, Elon Musk is a pirate
In the weeks since Elon Musk, the world’s richest man, struck a $44 billion agreement to buy social media service Twitter, he has upended the deals landscape. In essence, Musk, 50, has turned what was largely a friendly deal into a hostile takeover after the fact. His actions have left Twitter, regulators, bankers and lawyers flummoxed over what he might do next and whether the blockbuster deal will be completed. Musk has made past corporate raiders look positively quaint by comparison. “Elon Musk plays in his own gray area — you could almost say in his own rules,” said Robert Wolf, former chair of the Americas for Swiss bank UBS.
A weak Euro heads to an uncomfortable milestone: parity with the dollar
The ailments troubling the eurozone economy were already stark: the highest inflation rate on record, energy insecurity and increasing whispers about a recession. This month, another threat emerged. The weakening euro has raised expectations that it could reach parity with the U.S. dollar. Europe is facing “a steady stream of bad news,” said Valentin Marinov, a currency strategist. “The euro is a pressure valve for all these concerns, all these fears.” The currency, shared by 19 countries, hasn’t fallen to or below a one-to-one exchange rate with the dollar in two decades.
A ‘glitch’ in federal health insurance may soon be fixed
Federal rules make it hard for relatives of people with job-based coverage to qualify for financial help in buying Obamacare insurance. The Biden administration wants to change that. The costly loophole refers to federal rules that make it hard for relatives of people with job-based health insurance to qualify for financial help in buying more affordable coverage on government marketplaces. The Biden administration has proposed fixing the problem with a regulation that revises an interpretation of the rules for tax credits under the Affordable Care Act. If the change is finalized, hundreds of thousands of people — mostly children of lower-income families and women — could become eligible for cheaper coverage.
Twitter expands content moderation rules to crises like war and disasters
Twitter said Thursday that it was adding new policies aimed at combating misinformation about the war in Ukraine and other crises like natural disasters, an expansion of its rules against misleading content. The company announced the new policy even as it is in the process of being acquired by Elon Musk, the billionaire CEO of Tesla and SpaceX, who has said he intends to do away with Twitter’s content moderation policies. Under its new rule, Twitter will downplay tweets that spread misinformation about crises like natural disasters and wars that could spread rapidly across the platform without intervention.
Target’s Shares plunge after inflation takes big bite out of profits
Target’s shares dropped more than 25% in trading Wednesday after it reported quarterly profits that fell far short of analysts’ expectations, hit by inflation, supply issues and changing consumer habits. The retailer reported a profit of $1 billion in the three months through April, roughly half of what it generated in the same period a year earlier. The company’s revenue, however, increased 4% in the quarter, to $24.8 billion. Target said it expected sales to continue growing at a similar rate this year but lowered its forecast for profitability, spooking investors.
By wire sources