Big Tech and the Fed

admin July 27, 2022

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What Technology Revenues Say About The Economy

The long-lived revenues of big tech companies are suddenly lower than expected. That may be a good thing. Big Tech overcame the pandemic with little loss of profit. The fact that the results of some companies are currently flagging could be a positive sign that the Federal Reserve is trying to design a slowdown as it fights the worst inflation in the country in 40 years.

The big question for investors, and perhaps the Federal Reserve Board, is whether the profits of Apple, Alphabet, Amazon, and other big tech companies, and American companies in general, have fallen enough.

Microsoft and Google’s parent company Alphabet has launched something that looks like a disappointing round In the quarterly report Yesterday for the largest tech company in the United States. Meta will announce the results this afternoon, and Apple and Amazon will conclude Big Tech’s earnings announcement tomorrow.

Microsoft’s profits were lower than expected, but still rising. Sales of signature software products such as Office increased 13%. That cloud service has increased by 40%. In addition, LinkedIn, a professional social network purchased by Microsoft in 2016, has grown 26% from a year ago and continues to benefit from the toughest employment market in decades.
Alphabet sales increased 13%. As another good sign of the economy, the surge was driven by higher-than-expected sales in the core Google search engine business, but results were mixed elsewhere. Profit fell 14% due to a surge in expenses and withdrawal from Russian-related businesses.

The results were positive enough for investors. Alphabet’s share price rose nearly 5% to $ 110 in earnings news. Microsoft’s share price rose $ 10 (nearly 4%) to $ 262. Executives from both companies said they saw evidence of a downturn. “We can’t escape what’s happening in the macro,” Microsoft CEO Satya Nadella said in a phone call with analysts. Alphabet Chief Financial Officer Ruth Porat told analysts that the recession in spending by some advertisers reflects “uncertainty about many factors.”

Few people are betting that revenue reporting will change the Fed’s approach. The policy makers are meeting this week and they are widely expected to continue raising benchmark rates. David Kelley, chief global strategist at JP Morgan Assets, said the central bank “will acknowledge the recent weakening of the economy, but the Fed will feel the need to tackle inflation decisively. “. Management, notes to clients earlier this week.

What’s happening here

Kraken, a cryptocurrency exchange, is investigating possible sanctions violations. The Treasury is investigating whether Kraken has illegally allowed users in Iran and elsewhere to buy and sell digital tokens.Shares in Coinbase, the larger cryptocurrency exchange, plummeted yesterday following reports such as: SEC was investigating Whether you have allowed trading of unregistered securities.Cathie Wood’s Ark reportedly funded Dumped Coinbase stock Yesterday is the first time this year.

Antitrust laws targeting Big Tech may be off the table for now. Senate majority leader Chuck Schumer told Capitol Hill fundraiser and donor yesterday about American innovation and online methods of choice that promised to vote this summer. Lack of necessary support Bloomberg reported to deliver it to the Senate floor.Bipartisan supporters of the bill Put pressure on the shooter Act swiftly before midterm elections that could change the balance of power in Congress.

Once a trusted Trump promoter, One America News is struggling to survive. The network has been removed by major carriers and is facing a wave of defamation proceedings due to quirky stories about the 2020 elections. OAN’s latest blow is due to Verizon, which shuts down network transmissions on Fios TV services this week. Currently only available to thousands of local cable providers.

Florida’s largest utility secretly funded websites that attack critics. Florida Power & Light has funded and managed Capitalist, a news site for Florida lawmakers, through mediation from an Alabama consulting firm. Findings by Miami Herald Found.. The site claimed to be independent, but claimed rate hikes and legislative support in an initiative directed by utility executives.

BlackRock downshift on ESG

BlackRock, the world’s largest asset manager, has significantly reduced its support for shareholder proposals on environmental and social issues this year, supporting only 24% of the resolutions of the surrogate season that ended in June, 43 in the previous quarter. Decreased from%. The company, which has long been a leader in conscious investment movements, This year’s proposal New quote as “less support” Regulatory guidance This opened the door to a wide range of policy-related proposals.

The company overly criticizes the “normative” resolution. In a May memo, BlackRock showed that Russia’s war in Ukraine is straining the world’s energy supply and shifting its calculations. “Many climate-related shareholder proposals aimed to determine the pace of a company’s energy transition plans, despite continued consumer demand,” said the company’s global head of investment stewardship. One Sandy Boss writes. She said shareholders generally favored less environmental and social proposals this year, voting 27% of the resolution, down from 36% of the previous proxy period.

Opposition to ESG is growing. Promoting investment in the environment, society and governance has been labeled by critics as “awakened capitalism” and is being attacked by executives like Tesla’s Elon Musk. Major investors With Bill Ackman Republican politician.. In yesterday’s speech, former Vice President Mike Pence, who had the potential for 2024, said that big government and big companies would join together.Harmful awakening agenda.. “

ESG supporters say critics may make sense. Andrew Behar, CEO of shareholder advocacy group AsYouSow, agrees that many ESG investments do not reflect true sustainability. Behar argued that more corporate disclosures opposed by anti-ESG groups would help ensure that green investment actually works. He argues that critics also ignore important financial incentives that drive investor interest. Cost of environmental problems The entire operation of the company, including the risks of changing weather and shifting to a more sustainable model. “There are no ESG issues,” Behar told DealBook. “There is a name problem.”

“I quit Starbucks. I had to do that. I didn’t feel it was justified. It’s like paying for a small car.”

— Fontane Wayman, a 43-year-old songwriter from Charleston, South Carolina, has changed her coffee habits.Many Americans deal with it The fastest inflation in their adult life Over a wide range of products and services.

Instagram tries to explain itself

Instagram responded yesterday to criticisms from the most popular users, including Kylie Jenner, about new features like TikTok, a fast-growing video app owned by Chinese company ByteDance.

Adam Mosseri, head of Instagram, said he was experimenting with some changes., And he knew that the user was unhappy. “It’s not good yet,” he said about some tweaks. In a video post.. He emphasized Instagram’s commitment to photography, which is the original focus of the app, but said, “To be honest, I believe that much of Instagram will become video over time.”

Lille, a short video product, is one of Meta’s six major investment priorities.Owns Facebook and Instagram, According to last month’s internal note from Chris Cox, Chief Product Officer of the company. Users will spend twice as much time on reels year-on-year, and Meta will prioritize boosting ads on reels “as soon as possible,” Cox said. Last week, Instagram announced that almost every video in the app will be posted as a reel.

Changes will be made as the meta moves into a new phase. Founder and CEO Mark Zuckerberg has revealed that he will cut costs, reorganize his leadership team and dismiss poorly performing employees, Times Mike Isaac wrote. .. “In reality, there are a lot of people in the company who shouldn’t be here,” Zuckerberg said on a phone call at the end of last month. Revenues have slowed in recent months as Meta’s profits have declined, the company has been generous with augmented reality and virtual reality projects, and the economic slowdown has hit the advertising business.

Attention complaints about Instagram renewal have recently begunBeauty mogul Kylie Jenner with 361 million Instagram followers I shared the image “Remake Instagram Instagram. (I just want to stop trying to be tiktok and see cute pictures of my friends.) Thank you.”

“PRETTY PLEASE”, Jenner’s sister and seventh-followed Instagram user Kim Kardashian, echoed in a later post. Yesterday, model and writer Chrissy Teigen, who has 39 million followers, responded to her Moselli: Tweet“We don’t want to make a video Adam lol”.

Companies have a reason to listen when social media stars speak, writes Kalley Huang of the Times. Jenner after Snapchat overhauled the interface in 2018 Tweet: “Why isn’t someone else opening Snapchat anymore? Or is it just me …” The app’s parent company, Snap, lost $ 1.3 billion in market value within a week.