how are you? (October 16-22)
UK uncertainty
Investors did not react strongly to the announcement of Liz Truss’ resignation as UK Prime Minister on Thursday. The pound rose only marginally while bond yields dipped briefly before reversing. This was perhaps the unexpected end to Truss’ six-week tenure. It was marked by big market swings in response to Truss’ proposed corporate tax cut. But her exit doesn’t necessarily mean the ruckus is over. Bank of England Governor Andrew Bailey has warned that the central bank will continue to raise interest rates to keep inflation in check despite brief intervention to calm markets. He said he would release the government’s fiscal report, which would include “difficult” spending cuts. And before that, the Conservative Party will appoint a new prime minister, who may have different ideas about taxes and government spending.
Inflation tightens its grip
Two of the world’s largest consumer companies are seeing signs that Americans may be tightening their purse strings. Last week, Nestlé and Procter & Gamble reported third-quarter sales growth despite raising the cost of their products by more than 9% to accommodate more expensive raw materials, labor and shipping. . However, the two consumer goods giants said their sales fell as customers cut back on cereals, yogurt, detergents and other items. Other companies are observing similar trends. Earlier this month, PepsiCo said its third-quarter revenue was up 9% from a year earlier, with profits up more than 20% as consumers followed the company’s “higher price point.” However, its sales volume also decreased. Expected earnings reports from Coca-Cola and Chipotle give an idea of how widespread the trend is.
desire for air travel
Eager to escape after delaying vacations early in the pandemic, Americans are taking advantage of the flexibility of remote work and combining business and leisure travel.High inflation and volatile markets threaten business It boosts airline profits even though Customer appetite for air travel after Labor Day has nearly caught up to the summer boom, and executives at the country’s major airlines were optimistic last week when they discussed their third-quarter earnings reports.American Aviation CEO Robert Isom said the company feels “very bullish on overall demand, even in an uncertain economic environment.” But while high demand is good for airlines’ bottom line, it can lead to higher fares for travelers, which can come as a shock when booking vacation flights.
what’s next? (October 23-29)
technology slowdown
The nation’s biggest tech company is expected to give a disheartening story about the direction of the economy in its third-quarter earnings call this week. Last month, Mark Zuckerberg announced that Meta would freeze most hiring and cut budgets. Shortly after, Amazon announced it would freeze corporate hiring in its retail operations for the rest of the year, and last week Snap reported its lowest quarterly growth rate on record, highlighting a “volatile macroeconomic environment.” did. Once relatively resilient to economic volatility, tech companies are increasingly feeling the pinch of inflation and cooling demand. (Apple may be one notable exception, with Wall Street analysts forecasting higher earnings than at the same time last year.) Those factors are hurting some companies’ international operations. It exacerbates other challenges, such as the strong dollar that is giving people money and changes to privacy policies. Influenced ads.