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| Happy Monday, Insiders!! Today’s business newsletter covers: - Federal Reserve raises rates to a 22-Year high
- Analysis of why Trucking giant Yellow closing operations
- P&G sales up on price hikes
Also, tell us how businesses can adapt to changing consumer behaviors and preferences here! If you find this newsletter helpful, please share it with your friends and colleagues. Shriram
p/Shriram | |
| 1 | | The Federal Reserve has increased interest rates by 0.25%, reaching the highest level in 22 years. This decision, the 11th rate hike since Mar. 2022, when rates were raised from near zero, reflects ongoing concerns about inflation despite its recent decrease from a 40-year high. More: - According to Fed Chair Jerome Powell, it's too early to say if this move would end a string of increases intended to slow the economy and lower inflation.
- Fed representatives will meet three more times this year, with the next in September.
- The Federal Reserve aims to maintain inflation at around 2%, while the Commerce Department released June's personal consumption expenditures price index.
- U.S. inflation measures eased in June while consumer spending increased, providing further momentum to the economy going into the third quarter, according to the Commerce Department's data revealing a 0.2% rise in the personal consumption expenditures price index.
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What the numbers say: U.S. trucking firm Yellow, in operation for nearly a century, has halted its services, leaving 22,000 employees without jobs and over 12,000 trucks unused. Yellow's annual revenues have been about $5B since 2009, but the business has never made more than $25M in profits and has consistently reported losses. After receiving a $700M COVID-19 relief loan, the U.S. Treasury holds about 30% of Yellow's shares. Relevance: Nearly 30,000 jobs, including 22,000 Teamsters members, are in jeopardy due to Yellow's closure. For the American trucking industry, it is the most significant decline in terms of earnings and employment. More data: Yellow's financial troubles worsened due to debt from mergers, integration challenges, and prior union concessions, while clashes with the Teamsters over operational changes further strained their finances, leading to a significant drop in cash holdings from $235M in Dec. 2022 to ~$100M in Jun. 2023. The business was granted a 30-day grace period to pay arrears on pension and benefit funds. | | | |
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| 3 | | Procter & Gamble (P&G) exceeded analyst predictions with its quarterly earnings and revenue, as net income for the fourth quarter rose to $3.38B, or $1.37 per share, compared to $3.05B, or $1.21 per share, in the previous year. P&G's net sales increased 5% to $20.55B, driven by an 8% growth in organic revenue, but volume declined for the fifth consecutive quarter, dropping by 1%. More: - In its fiscal 2024 outlook, P&G predicted revenue growth of 3% and 4%, below Wall Street's forecast of 4.5% sales growth.
- Shares of P&G increased by more than 2% after the announcement.
- The firm also anticipated profit per share growth of 6% to 9%, below analysts' expectations of 8.8%.
- P&G's healthcare division reported a 3% global volume decline, while its fabric and home-care businesses experienced a 2% decline.
- While the infant, feminine, family care, and beauty categories reported stable volumes for the quarter, the grooming segment's volume decreased by 1%.
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| 4 | | Amazon Web Services (AWS) is expanding its portfolio of AI products to include HealthScribe, a tool for summarizing doctor visits, and chatbot tools for creating customized chatbots. HealthScribe has already garnered attention from 3M Health Information Systems Inc., Babylon Health, and ScribeEMR, as AWS aims to compete with Microsoft and Google by integrating generative AI into enterprises. More: - Microsoft and Google (Med-PaLM) use generative AI to transform the healthcare sector by offering services like transcribing and summarizing medical information for professionals and providing real-time access to medical knowledge for clinical decision support.
- AWS QuickSight, a business intelligence tool, will get new features that simplify preparing data dashboards and let you use plain language commands to build slideshows or data tales.
- Customers can choose large language models to teach chatbots and customer service agents' AI algorithms.
- Additionally, AWS provides a service that enables users to train AI models using Nvidia's most recent hardware, the H100.
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| 5 | | Reata Pharmaceuticals Inc. will be purchased by Biogen Inc. for $7.3B, including debt, allowing it to increase the number of rare disease therapies it offers. The transaction, which is anticipated to be completed in the fourth quarter, subject to Reata shareholders' approval, will be funded by Biogen's combination of cash and debt issuance. More: - Skyclarys, the first approved treatment for Friedreich's ataxia, a rare genetic illness with a $1.5B peak sales potential, was licensed by the FDA in February for Reata.
- Biogen will acquire each Reata share for $172.50 in cash, a 59% premium over the stock's Thursday closing price.
- Biogen's CEO, Christopher Viehbacher, believes this deal will contribute to the company's growth, emphasizing the significant overlap in doctors treating Friedreich's ataxia and spinal muscular atrophy, where Biogen already has a leading drug.
- Shares of Reata surged over 52% while Biogen's stock remained unchanged, following news of their acquisition, which is anticipated to contribute to Biogen's earnings by 2025.
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| 6 | | NASA to introduce NASA+ as its ad-free streaming service, accessible to users at no charge. The platform will provide viewers with live coverage of upcoming launches, exclusive original series, and various documentaries. More: - The NASA app for iOS and Android devices and streaming media players like Roku, Apple TV, and Fire TV will all provide access to the service.
- It will also be accessible online via the organization's brand-new beta website, providing details on missions, research, climatic data, and Artemis updates.
- According to NASA CIO Jeff Seaton, the objective is to increase access to, discovery of, and security of NASA information.
- Although the streaming service's user interface is unknown, it is anticipated to resemble other contemporary streaming services.
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- Qatar Airways credited December's FIFA World Cup for its $1.2B profit last fiscal year.
- Despite a recent engine mishap, ULA aims to launch the Vulcan rocket by late 2023 while the U.S. Space Force considers expanding its launch provider options. ULA CEO Tory Bruno hints at collaborations with smaller players to safeguard military payloads.
- WhatsApp has introduced a feature that allows users to record and send end-to-end encrypted video messages of up to 60 seconds directly within the app.
- Bob Sternfels, the CEO of McKinsey, intends to seek re-election for a second term as the firm recovers from reputational issues and contends with increasing economic and geopolitical obstacles.
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INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Vibha Chapparike | |
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