To The Moon

My Investing Muse (19May25)

Layoffs & Closure news

• HSBC targets 10% workforce cut in global restructuring strategy - People Matters

• Luxury is on life support. Burberry is cutting 1,700 jobs. They showed Akeroyd the door last summer, and begged Schulman to hawk trench coats & scarves again, But who’s really splurging on scarves? Affirm wants to know - X user Amanda Goodall

• MICROSOFT TO LAYOFF ~7,000 EMPLOYEES. Microsoft is cutting 3% of its workforce. - X user Gurgavin

• Japanese carmaker Nissan has said it will cut another 11,000 jobs globally and shut seven factories as it shakes up the business in the face of weak sales. Falling sales in China and heavy discounting in the US have taken a heavy toll on earnings, while a proposed merger with Honda and Mitsubishi collapsed in February. - BBC

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246 US large companies have gone bankrupt year-to-date, the most in 15 years. This is up from 206 recorded last year and more than DOUBLE during the same period in 2022. In April alone, the US saw 59 bankruptcy filings as tariffs ramped up. So far this year, the industrials sector has seen 41 bankruptcies, followed by 31 in consumer discretionary, and 17 in healthcare. According to S&P Global, consumer discretionary companies have been hit the hardest due to market volatility, tariffs, and inflation uncertainty. We expect a surge in bankruptcies in 2025. - X user The Kobeissi Letter

Downgrade of the USA

Here is some news about Moody’s downgrade of the US credit rating:

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Moody's just downgraded the United States' credit rating for the FIRST time in history. The reason: An unsustainable path for US federal debt and its resulting interest burden. Moody's notes that the US Debt-to-GDP ratio is on track to hit 134% by 2035. Federal interest payments are set to equal ~30% of revenue by 2035, up from ~18% in 2024 and ~9% in 2021. Furthermore, deficit spending is now at World War 2 levels as a percentage of GDP. The US debt crisis is our biggest issue, with the least attention. - X user The Kobeissi Letter

Moody's downgrade US credit rating from AAA to AA1. Institutions rushed to sell $SPY a couple minutes before the downgrade. $2b sold at highs before news came out.This is a huge deal. Investment funds have minimum ratings they have to keep to to maintain their risk profile. pensions for example often have to keep to AAA rated bonds for say 85% of their investments. this will trigger a huge sell off and will result in less future investment, hence higher yields and higher borrowing costs.

Will there be a selling off of US assets following this credit downgrade? We know more when the market opens in the coming week.

My final thoughts

The US/China tariff has reached a temporary status. While it is inflationary in outcome, there is at least stability in this 90-day window. We are expecting more deals to be announced in the coming days. This will bring some stability to the market.

There are good developments as Trump secured huge investments from the Middle East. This has sparked a rally in the stock market as optimism returned. Technical indicators are pointing to a continuous rally in the coming days. In the mix of good and bad news, will the bulls emerge victorious?

Let us review our expenditures, income, and savings. Let us spend within our means, invest with what we can afford to lose, and avoid leverage. I am reviewing my holdings and plan to cut losses with businesses losing their competitive advantages. I would also consider hedging and adding some defensive positions.

Let us do our due diligence before we take up any positions. Let us have a successful week ahead.

@TigerStars

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