Economic chickens: Meta (Facebook) & Tyson Foods layoffs, Apple delaying bonuses, banking sector downgrade by Moody's

Hotair ^ | 03/14/2023 | Beege Welborn

[SeekAndFind]

That’s a whale of an economy you’ve got there, Brandon. The good news is swirling like…well…Ty*D*Bol. It sure seems you and your team are the only ones missing the picture.

None of this is news to any of us, no matter how you insist it’s not happening or better than it was.

Beef prices were holding food down a little (it was because ranchers couldn't afford to feed their herd) That may have worked it's way through..
YoY food prices.. ouch.


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— Frog Capital (@FrogNews) March 14, 2023

You’d think chicken would be one of the bright spots as inflation roars its way through family budgets, and especially a brand-name affordable poultry producer. But it’s not.

Tyson Foods will close two chicken plants in May, affecting nearly 1,700 employees.

“While the decision was not easy, it reflects our broader strategy to strengthen our poultry business by optimizing operations and utilizing full available capacity at each plant,” Tyson said in a statement to CNBC.

In its latest quarter, Tyson’s chicken business underperformed expectations as its operating income was halved compared with the year-ago period.

They did HALF the chicken business they did a year ago? [Correction: their operating income was halved and, while chicken sales increased, the number didn’t meet the projected target]

UPDATE: Building on that correction, Tyson’s recent Q1 2023 earnings report was abysmal and considered a “wide miss”:

Springdale, Ark., meat processor Tyson Foods reported net income of $316 million, or 88 cents a share, for the first quarter of fiscal 2023 — missing consensus estimates by nearly 50 cents a share and coming in significantly lower than last year’s Q1 results.

…This year’s results represented a 68% decline off last year’s Q1 results of $1.12 billion — which were nearly three times higher than 2021 Q1 results, driven predominantly by higher prices and consistently high demand for meat and poultry products.

If you ignore the fact the regional banking system is collapsing.. there is no reason for the idiots at the Fed to stop hiking here.


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— Frog Capital (@FrogNews) March 14, 2023

Then again, there could be some other expenses they’re dumping in connection with the one plant they plan to shutter just northwest of Richmond, VA. Makes you wonder if, in hard times, this sort of legal action is going to have significant repercussions.

…The Glen Allen announcement came the same day 34 Tyson Foods employees, former employees and family members filed a lawsuit against the company, saying it failed to take appropriate precautions at its meat-packing plants during the early days of the COVID pandemic.

In expected, but surprisingly deeper than anticipated job cuts, Facebook parent Meta is taking a knife to its operations yet again.

10,000 job cuts, with an additional 5000 open job positions being closed. This is after the 11,000 they let go in November and Zuckerberg wasn’t saying that was the end of it.

…“Here’s the timeline you should expect: over the next couple of months, org leaders will announce restructuring plans focused on flattening our orgs, canceling lower priority projects, and reducing our hiring rates,” Zuckerberg said in a message to employees, which was also posted to the technology company’s blog.

He added that the Facebook parent plans to close 5,000 additional open roles that it hasn’t yet filled. In a nod to continued economic uncertainty, Zuckerberg noted that the company should prepare for “the possibility that this new economic reality will continue for many years.”

Apple has its share of tech industry pain this year, too – don’t think it doesn’t. While they haven’t laid anyone off, there’s a hiring freeze on, and now the brakes have come on for what used to be twice-yearly employee bonuses.

…In addition to slowing hiring, Apple is planning to reduce the frequency of bonuses for some of its corporate workforce. Apple normally provides bonuses and promotions once or twice per year depending on division, with the extra money paid out in April and October, but the company is shifting entirely to a once-per-year bonus schedule. Bonus payments will be provided in October for all teams, and employees are still set to receive their full bonuses.

Unlike many of the other companies, being the touchy-feely emotive bunch they are, Apple CEO Tim Cook is suffering a salary cut-back right along with the hired help.

…Apple CEO Tim Cook is also being paid less this year, and he is set to receive $49 million in salary, bonuses, and stock awards, down approximately 50 percent from the $99 million he was paid in 2022.

He’s right down there in the trenches with the knuckledraggers. Tough times call for tough leadership.

…“Well, we invest for the long term, and we run the company for the long term. And so if you look at what we’re doing, we’re also recognizing the environment that we’re in is tough. And so we’re cutting costs. We’re cutting hiring. We are being very prudent and deliberate on people that we hire. And so a number of areas in the company are not hiring at all,” Cook told CNBC in February.

…Last month, Apple announced December quarter earnings which were about 5% lower than they were in 2021, its first year-over-year revenue decline since 2019.

As for declines, that’s exactly what the entire U.S. banking sector was doing today on Moody’s index. Everyone had been watching, because Moody’s had put 5 or 6 of the regionals most at risk on a review watchlist, and when the announcement came?

Oh, it was like being on Oprah – EVERYBODY GETS A PRESENT!

Moody’s went and downgraded the whole dang thing.

Moody's downgrades U.S. banking system's outlook to negative citing bank runshttps://t.co/8SuoPlkWZk

— FOX Business (@FoxBusiness) March 14, 2023

Moody’s Investor Service cited more than the bank runs, in point of fact. The entire inflationary cycle got a big finger pointed right at it and it’s not going to get better any time soon. Their prediction for later this year is bald-faced dismal.

…Moody’s analysts said although the Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation (FDIC) developed a plan to make SVB depositors whole in an effort to bolster confidence in the banking system, other institutions remain vulnerable to the same problems that sank SVB as they expect the central bank to continue raising interest rates.

The report explained the U.S. banking sector experienced “significant excess deposit creation” thanks to a combination of pandemic related stimulus after more than a decade of ultralow interest rates and quantitative easing by the Federal Reserve.

As monetary tightening continues, the analysts believe, asset risk metrics will rise over the next 12 to 18 months from historic lows as rising rates continue to reduce debt affordability and threaten financial conditions.

…”We expect banks will need to increase reserves as the economy worsens later in the year,” the report states.

“Banking sector stresses could, in turn, be detrimental to the broader economy, worsening banks’ asset risk.”

I love to cook, so I love to shop. I go into Publix now and I hate it. I made a quick casserole last night and had most of the ingredients and still spend 20 bucks.

The economy is a freaking disaster.

— Maze (@pordadow) March 9, 2023

Yes, it is.

“AS THE ECONOMY WORSENS LATER IN THE YEAR”

Don’t anybody tell The Big Guy. His babysitters will jack it up worse if they possibly can.

[dennisw]

These prestige tech companies are like an Eskimo family, asleep in their cramped igloo. When one Eskimo rolls over, the others have to

[frank ballenger]

the media and the stock markets say all is well.

If the perception of the economy is favorable next year then the Dems will win this last ever election in this country.

If has to go down, down, down and people suffer with it.
No happy days are here again or LBJ’s stern look into the camera saying “you never had it so good.”

Down.🎲🎲

[ConservativeInPA]

These two guys will be visiting a lot of businesses this year.

[dfwgator]

[logi_cal869]

The wife works remotely for a tech outfit out of state. The amount of pressure they’re leveraging is incredible, but nonsensical when the reality from insider/friendlies expose the truth: They’re panicking due to lousy worker ethics. In short, many of the younger workers just don’t show up for work, calling in sick, missing quotas, etc. They are balancing a hiring freeze with an asinine call-center approach to managing time which is alienating their mature, productive workforce.

Musk started the tech layoffs, and I believe that there’s more to this than meets the eye because the larger corporations are ‘fat’ with excess, lazy, overpaid workers while small companies struggle to find BOTH remote & onsite workers who can meet the most basic metrics for any job.

Despite the gaslighting, Friday was the hard evidence that the ship is definitely going down.

[MadMax, the Grinning Reaper]

Screw Tim Cook. He earns too much in the first place.

Does anyone blame Biden for this or did they totally miss the last two years of his quasi-MARXIST economic policies?

[Greg123456]

Almost every single Springdale Tyson worker is from Honduras or El Salvador. Are they going to send them back?

[Rockingham]

Classical economics attributes most recessions to poorly chosen investments, with job losses reflecting the liquidation of such malinvestment. As the worst offender with excessive hiring based on hype and unrealistic projections instead of actual business needs, the tech industry is now suffering the most dramatic job losses, but worse will come before the bottom will be reached.

[Soul of the South]

Is the tech industry the worst offender with excessive hiring or is it the entrenched government bureaucracy which never downsizes no matter the state of the economy or its own poor performance?

[Rockingham]

You have a point, but my comment was directed toward the business sector and investment (and malinvestment) in it. With exceptions, the worst effects of government come from taxes and regulation, not from over-hiring.

[personalaccts]

There’s a Tyson’s plant in wilkesboro nc I go to the on-site store and purchase my chicken at a discount

[bert]

OK, so you’ve got an extra $50 billion laying around. What do you do with it?

The safest place is government bonds.

Oops....... Interest rates shoot up. The bonds are devalued.

[Rockingham]

The term is "interest rate risk" and it is a well known problem for investment managers. For banks, the issue can also be thought of as an excessive concentration of lending to a single borrower -- the US government -- and a financially improvident borrower at that.

More broadly, banks are always at risk in that commercial deposits are (mostly) subject to withdrawal on demand, while loans and investments are usually for term. Nowadays, with deposits earning interest, the spread between the interest paid on demand deposits and the interest earned on loans and investments can become painfully thin with little room for hedging interest rate risk on fixed rate bonds.

In addition to closely watching the financial news and public disclosures, bank examiners, customers, and credit analysts traditionally look for other signs of bad management. Bankers having flashy cars, lavish houses and lifestyles, immodest or irregular behavior, or excessive community activities tend to suggest excessive compensation and inattention to the dull routines of business. Yet this can be at odds with the deeper human impulse to see these as signs of success, not warnings of danger.

In retrospect, the Silicon Valley Bank was also flashing another kind of warning sign in that its devotion to wokeness that indicated a disabling absence of discipline and sound bank management. Just like overly big houses, new sports cars, trophy wives, and long European vacations, bankers pushing wokeness and moral preening should be seen as indicating risky management practices.

[bert]

In short, conclusion, SVB was Californian

Thanks for your words

[Greg123456]

I didn’t know they had on-site stores.