Finimize - 🔍 Microsoft just got smaller

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Today's big stories

Microsoft announced plans to cut 10,000 employees from its roster
Here's how to spot the diamonds in crypto's rough – Read Now
The UK’s inflation rate slowed in December, but it might prove to be sticky

Microsoft Gets Micro-er

What’s Going On Here?

Microsoft’s the latest tech giant to announce layoffs, shedding 10,000 employees according to news out on Wednesday.

What Does This Mean?

First things first, let’s get the numbers straight: it might sound like there are going to be tumbleweeds blowing around Microsoft HQ, but with a whopping 220,000 folk on the books, the company’s only saying goodbye to around 5% of its workforce. Of course, that’s not nothing – and it’s probably a sign that the world’s biggest software company’s growth is slowing. In fact, the firm’s chief Satya Nadella said as much recently, confessing that the next couple of years are going to be rough for Microsoft. The emerging playbook: trim the fat for today’s leaner times, while making multi-billion-dollar deals with ChatGPT-owner OpenAI.

Why Should I Care?

Zooming in: Gimme growth.
The revenue that Microsoft brings in from cloud-based services started taking off around 2016, and – surprise, surprise – the firm’s stock price followed suit. But now that particular golden era might be fading, so investors will be getting restless, worrying where on earth tomorrow’s momentum is going to come from. The answer could well be artificial intelligence, but investors will be hoping it makes strides soon, before Microsoft has to downsize even further.

The bigger picture: Not a needle mover.
Job losses are the last green light that the Federal Reserve (Fed) is looking for before it takes its foot off the rate-hiking pedal – but it won’t be getting too psyched about these headline-grabbing tech layoffs. After all, the entire US tech industry employs between 8 and 10% of the total workforce, so even if Big Tech cuts a fraction of that fraction – well, the effect’s not going to be earth-shattering. That’s why the Fed’s watching the real big dogs instead: sectors like hospitality, healthcare, and retail, which employ Americans in droves.

You might also like: Here’s why you should pay close attention to ChatGPT.

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Analyst Take

How To Size Up A Crypto Investment In Four Easy Steps

By Jonathan Hobbs, Analyst

The crypto market looks to be in better shape so far this year (knock on wood).

And if you think it’s a sign of better days to come, you might be wondering which projects to invest in.

So that’s today’s Insight: four simple steps that’ll help you separate the crypto diamonds from the dust.

Read or listen to the Insight here

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Baby Steps

What’s Going On Here?

The Office of National Statistics reported that UK inflation eased a smidgen in December, with prices climbing 10.5% versus the same time last year.

What Does This Mean?

Anyone searching for silver linings in the UK’s recent economic headlines has probably developed a squint by now – but this time, there really could be a glimmer in the cloud. Sure, inflation still stung Brits last month: food was 17% more expensive, and even “core inflation” – that strips out volatile food and energy prices – was a biting 6.3%. But let’s focus on the positives: December’s inflation was slightly kinder than November’s, and the Bank of England believes that trend might be here to stay (tweet this). The central bank even signaled that last year’s galloping, inflation-busting rate hikes could soon slow down to a leisurely trot.

Why Should I Care?

Zooming out: Wage worries.
It seems Brits drove a hard bargain in their annual performance reviews last month, given that December’s wages were over 6% higher than the same time the year before. And while that means inflation’s still overshadowing wage growth for now, that could soon change: plenty of experts predict that food and energy prices will lose their sizzle over the next few months, which would take the wind out of inflation's sails. If that happens, folk will find themselves with some extra cash in their pockets – problem is, any extra consumer spending could stop inflation from falling any further.

The bigger picture: Everything happens to me.
Compared to the US and the EU, the UK has the worst of both worlds: a tight labor market like the US, and super-pricey imported energy like the EU. See, while the Americans and Europeans have got one hand tied behind their backs, they still have another fist to swing with: the US has enough domestic energy to keep prices low, and the European jobs market isn’t as hot-to-touch as the UK’s, which stops wages swelling. That means poor old Britannia might wind up being the last one to cut inflation down to size.

You might also like: Morgan Stanley says the UK could deliver a huge surprise in 2023.

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💬 Quote of the day

“The higher the buildings, the lower the morals.”

– Noel Coward (an English playwright, actor, and composer)

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