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Good Morning!
Happy Thursday! Let’s see what is moving markets:
👉 Federal Reserve meeting
👉 Peloton CEO is gone
👉Alphabet lays off core employees
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FED: Rates Unchanged
Federal Reserve Chair Jerome Powell indicated the possibility of a rate cut later this year, despite recent inflation increases making it less certain that inflationary pressures are subsiding. Interest rates remain unchanged at 5.25%-5.5%.
Source: Yahoo
Powell set a high standard for any further rate increases, noting that a rate hike would only be considered if there's clear evidence that current policies are too lenient to bring inflation down to the 2% target. The Fed also plans to slow down the shrinking of its balance sheet in June. The cap for Treasury securities will drop to $25 billion monthly from $60 billion, while the cap for mortgage-backed securities will stay at $35 billion. The total monthly reduction of the Fed's portfolio will be about $40 billion.
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PELOTON: CEO Stepping Down
Peloton announced on Thursday that CEO Barry McCarthy is stepping down, and the company is cutting 15% of its workforce to align expenses with revenue. McCarthy will transition to a strategic advisor role through the end of the year while Karen Boone and Chris Bruzzo serve as interim co-CEOs.
Source: CNBC
The company also revealed plans to close retail showrooms, and adjust its international sales strategy as part of a broad restructuring effort. These changes aim to decrease annual expenses by more than $200 million by fiscal 2025. Since taking over in February 2022, McCarthy has been restructuring the company to stimulate growth, shifting focus to Peloton's app to attract users beyond those buying its equipment. Despite these efforts, Peloton has struggled with profitability and sales growth, prompting a need to manage over $1 billion in debt and refine its business strategies. The company is also working with lenders on a refinancing strategy as it continues to adjust to market demands.
ALPHABET: Tough Decisions
Just before its strong first-quarter earnings on April 25, Google laid off over 200 employees from its "Core" teams, relocating some roles to India and Mexico as part of a restructuring effort. This unit, responsible for Google’s main products and user safety, saw 50 engineering jobs cut in Sunnyvale, California.
Source: Reuters
Google's parent company, Alphabet, has been reducing its workforce due to a downturn in online advertising, continuing to cut jobs even as the market recovers. The company also plans to build teams closer to emerging markets like India and Brazil to reduce costs. These changes align with Google's recent growth, including a 15% increase in revenue from last year, its first-ever dividend, and a $70 billion buyback. The restructuring also supports the integration of more artificial intelligence into Google’s products.
Headlines You Need To Know: 🎙
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Source: CNBC
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