Why Companies Do Layoffs Before the Holidays & Disney's Board Battle

The economic climate is leading to widespread layoffs in various industries, with companies like Cruise, GM's self-driving car subsidiary, and others announcing significant reductions in their workforce. The reasons for these cuts range from safety concerns to the need to adapt to the post-COVID economic environment. Meanwhile, the sighting of a rogue bull at a train station in Newark, New Jersey, sparked excitement on social media about the potential start of a bull market, despite some skepticism towards such signs. It's a challenging time for workers, with many facing unemployment just before the holidays. Despite the uncertainty, it's essential to stay informed about market trends and economic news, which can be easily done by visiting finance.yahoo.com or downloading the Yahoo Finance mobile app.

Companies often make job cuts during December to improve their financial appearance before reporting end-of-year numbers to shareholders. This practice, while seemingly cruel, allows them to save cash and avoid paying end-of-year bonuses. However, these companies may be facing a serious cash crunch and are using the challenging macroeconomic environment as an excuse for the layoffs. However, as the economy starts to improve, this may no longer be a viable excuse. For instance, Etsy is laying off 11% of its workforce due to stagnated sales, while Hasbro is cutting 20% of its workforce because toy sales are down 8% through September, despite making half of their sales during the holiday season. Another significant development is the influence of activist investor Dan Loeb, who is pushing for changes at Disney due to its underperformance in the media industry.

Activist investor Nelson Peltz of Trean Hedge Fund is pushing for a seat on Disney's board to have more influence on the company's direction. Disney has faced significant challenges, including box office flops, declining linear TV viewership, and mounting losses from the streaming business, Disney Plus. Peltz believes the current board is too connected to CEO Bob Iger and disconnected from shareholders' wants. With Disney's cable business in decline and streaming unit not yet profitable, Peltz sees an opportunity to make changes. He's gathered support from former executives Ike Perlmutter and Jay Rasulo, both of whom have been spurned by the current management regime. Peltz's goal isn't a hostile takeover but to exert influence and make money from his $3 billion stake in Disney. Whether he succeeds remains to be seen, but his past successes at Heinz and P&G suggest he's a formidable force. Disney, as a storytelling company, needs to bring its best to compete against streaming giants. Recent movies and TV shows haven't lived up to expectations, contributing to Disney's struggles.

China has surpassed the US as the largest branded coffee shop market in the world, with over 49,000 branded coffee shops compared to the US's 40,000. This marks a significant shift in the global coffee industry, as the US has held the top spot since the concept of branded coffee shops began with Starbucks in Seattle in 1971. The rise of Chinese coffee consumption is driven by the growing popularity of coffee among Chinese consumers, with 90% of consumers ordering from a coffee shop at least once a week. Companies like Luckin and Coddy have capitalized on this trend by opening thousands of locations and offering discounts and quick delivery to gain market share. Starbucks, the long-time leader in the Chinese market, is also expanding rapidly to keep pace, opening one location every 12 hours over the last year. However, Luckin's success comes despite a scandal involving fabricated sales numbers, highlighting the importance of understanding Chinese consumers and their preferences. While Starbucks has had success overseas, particularly in Italy, it may struggle to compete with Chinese upstarts like Luckin and Coddy, which seem to have a better grasp of Chinese consumer tastes. For instance, Luckin's cheese-flavored latte has been a hit, even if it's not actually cheese-flavored. Overall, the Chinese coffee market is a space to watch as it continues to grow and evolve.

The market in China for hot coffee, specifically in the form of lattes, is heating up with Starbucks targeting 9,000 stores by 2025. Meanwhile, Carvana, an American online used car retailer, has experienced a massive surge in its stock price, up 993% year to date, despite still being down 85% from its pandemic high. The rally can be attributed to Carvana's successful resolution of its debt issue, but the market's overall positive performance and the pandemic era have also played a role. The stock's recovery shows the significant gains needed to return to former heights after the euphoria of the pandemic era. The debate remains open on whether this surge is a sustainable trend or just a blip.

Argentina's new president Javier Mille is implementing drastic measures, referred to as "shock therapy," to repair the country's broken economy, resulting in a surge in the value of Argentina's bonds. However, Argentina still faces significant challenges, including high inflation, poverty, and a large amount of international debt. Meanwhile, in the housing market, mortgage rates have continued to decline, reaching an average of below 7%, and rents are also falling. These developments are linked as the Federal Reserve's expected interest rate cuts influence both mortgage rates and the 10-year treasury yield. Overall, while these changes are seen as positive steps, Argentina and the housing market still face significant economic challenges.

While housing and rental costs have plateaued after a pandemic-induced surge in demand, the supply of new housing is being constrained by low mortgage rates and the unwillingness of homeowners to sell due to high borrowing costs. This discrepancy between demand and supply is leading to a lag in the official government data on rents falling, despite anecdotal evidence of decreases in certain areas. The housing market is complex, with various factors influencing its dynamics, and it will be important to monitor these trends closely. Furthermore, the fictional Wonka business from the Willy Wonka movie provides an interesting analogy to the real-world housing market. Wonka's chocolate factory is a monopoly with a massive capacity, strong brand awareness, and significant investment in research and development. Similarly, the housing market is dominated by a few large players, and the high barriers to entry make it difficult for new competitors to emerge. The Oompa Loompas in the movie can be seen as the labor force that keeps the factory running smoothly, while in the real world, it is the construction workers and builders who are responsible for meeting the demand for new housing. Understanding these parallels can help us gain a deeper appreciation of the complexities of the housing market.

Willy Wonka's chocolate factory serves as a unique business model, emphasizing the importance of building a strong brand, constant innovation, and creating a sense of mystery and mystique. Wonka's brand represents imagination, and his dedication to research and development sets him apart. Apple is an example of a modern company that also masterfully fuels rumors and maintains a mysterious persona. The Golden Ticket promotion, with its viral marketing strategy, drove significant business results, making it one of the most successful campaigns in modern culture. However, it's important to note that Wonka's entrepreneurial style, such as his handling of the Oompa Loompas and lack of succession planning, may not be ideal for all businesses.

During the interview, it was clear that the candidate, Toby, possesses a strong moral compass and aligns with the values of the company, Wonka. His humility, modesty, and lack of temptation were highlighted. Despite his lack of experience in the consumer packaged goods industry, Toby was a top contender due to his values. The interviewer, Neil, expressed his optimism for Wonka's future, as long as there are no potential issues with the Oompa Loompa union. Overall, the interview emphasized the importance of values alignment in the hiring process. Toby was encouraged to get his Christmas presents the next day, and listeners were invited to hold him accountable. The show was produced by Morning Brew, with various team members contributing. The interview was well-received, and Neil wished Toby the best.