To The Moon

My Investing Muse (26May25)

Layoffs & Closure news

• Walmart is slashing about 1,500 US jobs as part of a restructuring plan to cut expenses and simplify operations following its recent price hikes. - Daily Mail UK

• Booz Allen will cut 7% of its workforce, 2,500 employees, per Bloomberg

• Walgreens, which operates about 8,600 stores, in 2024 said it would close 1,200 underperforming stores over a three-year period, with 500 closings planned in fiscal year 2025, as part of its out-of-court restructuring plan. - The Street

The above are some news items about layoffs and closures. As tariffs negotiation drags on, the collateral to businesses (especially smaller ones) can compound.

Okun's Law: This empirical relationship suggests an inverse correlation between unemployment and GDP. When GDP grows, unemployment tends to fall as businesses hire more workers to meet increased demand. Conversely, when GDP declines, unemployment rises due to reduced economic activity and layoffs. Specifically, a 1% decrease in unemployment is typically associated with about a 2-3% increase in GDP, though the exact ratio varies by economy and time period.

Is population the next immediate crisis?

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Population collapse is a massive crisis - Elon Musk

Some have argued that the population is a closer and more urgent crisis than climate change. The drop in population puts more financial pressure on the working class to fund the country’s growth and development. With fewer working citizens, there could be less spending power, affecting GDP and the overall quality of life.

My final thoughts

International relationships continue to strain under the banner of tariffs. Europe and Apple have been hit by tariffs that attempt to “drive” manufacturing back to America.

Once we can navigate through the challenges in the supply chain, resources, equipment maintenance, infrastructure, policy, skilled labour, energy and more, we can consider relocating the business to America. How long will it take to build? What policy may change when President Trump’s term ends in 3.5 years? Without certainty and reliability, this can add to the complexity of setting new manufacturing capacity.

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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