Layoffs are up nearly fivefold so far this year with tech companies leading

 Companies announced nearly 90,000 layoffs in March, a sharp step up from the previous month and a giant acceleration from a year ago, outplacement firm Challenger, Gray & Christmas reported Thursday.

Planned layoffs totaled 89,703 for the period, an increase of 15% from February. Year to date, job cuts have soared to 270,416, an increase of 396% from the same period a year ago.

The damage was especially bad in tech, which has announced 102,391 cuts so far in 2023. That’s a staggering increase of 38,487% from a year ago and good for 38% of all staff reductions. Tech already has cut 5% more than for all of 2022, according to the report, and is on pace to eclipse 2001, the worst year ever amid the dot-com bust.

“We know companies are approaching 2023 with caution, though the economy is still creating jobs,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas. “With rate hikes continuing and companies’ reigning in costs, the large-scale layoffs we are seeing will likely continue.”

In other jobs news Thursday, weekly jobless claims totaled 228,000 for the week ended April 1, above the 200,000 Dow Jones estimate, the Labor Department reported. Continuing claims nudged higher to 1.823 million, the highest since December 2021.

Benchmark revisions from the department indicate that claims have been above 200,000 for virtually the entire period going back to late October 2022.

Financial companies have announced the second-highest rate of job cuts this year, with the 30,635 layoffs representing a 419% increase from the first quarter in 2022. Health care and retail are the next highest.

At the same time, planned hiring waned in March, totaling just 9,044, or the worst for the month since 2015. On a year-to-date basis, planned additions are at the lowest quarterly total since 2016.

The main reason cited for job cuts has been market and economic conditions, with cost-cutting the next most often mentioned factor.

The Challenger report comes a day ahead of the Labor Department’s nonfarm payrolls count. Economists surveyed by Dow Jones expect job growth of 238,000 for March, which would be the smallest increase since January 2020.

Along with the high level of layoffs, job openings have begun to fall.

Available positions in February declined below 10 million for the first time since May 2021, indicating at least some loosening in the employment market, according to Labor Department data released Tuesday. The pace of hiring edged lower by 164,000, though layoffs and discharges were down by 215,000.

In all, there were still nearly 1.7 job openings per available workers.

The Federal Reserve has been targeting what had been an ultra-tight labor market as it battles inflation still running near 40-year highs. The Fed has increased its benchmark borrowing rate by 4.75 percentage points over the past year or so as it seeks to soften the demand that has propelled rising prices.

Markets currently are expecting that the Fed is done raising rates and is likely to start cutting later this year, according to the CME Group’s FedWatch tool, which tracks pricing in the futures market.

https://www.cnbc.com/2023/04/06/layoffs-are-up-nearly-fivefold-so-far-this-year-with-tech-companies-leading-the-way.html

Then There Were Three: India Is Latest Central Bank To Pause Rate Hikes

 First it was the Bank of Canada which in January announced it would pause its rate hike campaign; then earlier this week the RBA became the second bank to join the bandwagon when it put its year-long hiking campaign on pause after leaving the cash rate unchanged at 3.6% at April's Board meeting, marking the first pause since the RBA starting raising rates in May 2022, and disappointing a majority of economists who expected at least a 25bps hike.

So fast forward to today, when the Reserve Bank of India became the third (but certainly not last) central bank to surprise markets by pausing its tightening campaign when it held its key repo rate steady on Thursday (consensus was for another 25bps) after six consecutive hikes, saying it was closely monitoring the impact of recent global financial turbulence on the economy and wants to see the impact of the 250 basis points of hikes it has delivered so far.

The monetary policy committee (MPC), comprising three members from the central bank and three external members, retained the key lending rate or the repo rate at 6.50%.

The decision to hold interest rates steady was unanimous in contrast to the last decision when four members had voted for a hike in rates. Five of the six committee voted in favour of continuing with the stance of "withdrawal of accommodation", while one member dissented.

The central bank said the policy stance remains focused on "withdrawal of accommodation" with central bank governor Das emphasizing today’s decision was “a pause, not a pivot” and signalling it could consider further rate hikes if necessary, but economists now expect the central bank to remain on hold.

"We have to be extremely prudent in our actions," Das said in his statement.

"With unyielding core inflation, we remain firm and resolute in our pursuit of price stability which is the best guarantee for sustainable growth," said the committee in its statement. "The impact of our actions over the past 12 months is still playing out and would increasingly weigh on the future inflation trajectory."

While the central bank has taken the decision to pause rate hikes in light of global macroeconomic and financial conditions, "our job is not yet finished and the war against inflation has to continue" Das said, reiterating the resolve to bring inflation back within the central bank's target band of 2%-6%, which is rather wide.

India's retail inflation rose 6.44% year-on-year in February, easing from 6.52% in January but has remained above the central bank's mandated target range for 10 out of the last 12 readings. The central bank sees inflation at 5.2% in 2023-24, and GDP growth is seen at 6.5% in the financial year beginning April 1.

Predictably, government bond yields fell sharply after the surprise RBI decision. The 10-year benchmark 7.26% 2032 bond yield dropped to 7.1469%, the lowest level since Sept. 15 immediately after the policy announcement, against 7.2857% before the decision. The yield was at 7.21% as of 1.20 p.m. IST. The rupee initially pared its gains on the rate pause, before recovering as Das stressed the RBI will continue to fight inflation

Financial stability concerns appear to have prompted the pause in rate hikes, said Aditi Nayar, chief economist at rating agency ICRA, adding that another hike was possible if inflation does not fall.

"Retaining the stance at removal-of-accommodation also signals a continued focus on steadily guiding inflation down towards the 4% target," said Saugata Bhattacharya, chief economist at Axis Bank.

"We expect the RBI to maintain an extended pause and evaluate the lagged impact of previous rate hikes and global uncertainties on growth-inflation dynamics," said Upasna Bhardwaj, chief economist at Kotak Mahindra Bank.

The hiking cycle could resume if the data warrants it, said Shilan Shah, deputy chief emerging markets economist at Capital Economics. "But given the subdued growth outlook and the likelihood that inflation falls back to within the RBI’s target range before long, our view is that the tightening cycle is at an end."

Barclays does not expect any further rate hikes in the cycle. "We think only a material upside surprise keeping CPI inflation above 6% for a long period would warrant another rate action by the MPC," said Rahul Bajoria, chief India economist at Barclays.

With an increasing number of central banks pushing the pause button, the question is which of the big three - the Federal Reserve, the Bank of England and the European Central Bank - will be the next to capitulate on tightening and pull an Arthur Burns, a pivot which will not only send risk assets higher but also unleash an inflationary shock wave around the globe that forces central banks to hike much higher during the next inflationary surge.

https://www.zerohedge.com/markets/and-then-there-were-three-india-latest-central-bank-pause-rate-hikes

China catching up with US on AI, may nationalize development: Harvard

 Artificial intelligence programs in authoritarian countries are catching up to development in the U.S., a new report claims.

The report — published Tuesday in the Harvard International Review — warns that Chinese development of AI technology poses "uncertain risks" to Western powers.

"This rapid progress in AI technology has sparked concerns about the world’s readiness to handle its development and use in safe and ethical ways, such as the possibility of dangerous applications in authoritarian settings, most relevantly China, as well as the uncertain risks posed by future AI technologies."

The U.S. is currently producing the most advanced AI technology in the world. The report warns that future development of the field under the conditions of alternative political structures could threaten the ethics of its application.

"China’s AI development is highly concerning to the United States; some in the United States view the countries’ competition as a contest between democracy and authoritarianism—a sentiment highly reminiscent of the Cold War—in which Chinese dominance could pose a challenge to U.S. prominence on the world stage and even to the liberal international order with its associated rights and priorities," the report states.

It continues, "Artificial intelligence can greatly bolster economic and military power and, thereby, political ascendancy; AI is expected to contribute US$17.5 trillion to the global economy by 2030. Therefore, military advances driven by AI would be invaluable in out-matching rivals."

Development of AI technology is hindered in China due to factors such as language — the Chinese language is less conducive to training artificial intelligence than English.

U.S. embargoes on shipping key materials for that could aid AI development is also an obstacle, the report claims.

"AI-driven data collection could greatly contribute to China’s nascent social credit system, which was published in November 2022 as a draft law but remains stagnant on a large scale," the report warns.

It continues, "Additionally, the use of AI to further increase monitoring of the internet and public areas would lend the Chinese government significant insight into individual patterns and information, furthering censorship, data collection, and control."

The Chinese Communist Party (CCP) currently maintains a national "firewall" on internet use within its borders. Politically inconvenient searches, information critical of the CCP and content deemed "vulgar" or "bad culture" are censored from Chinese access.

Elon Musk, Steve Wozniak and a host of other tech leaders and artificial intelligence experts last month urged AI labs to pause development of powerful new AI systems in an open letter citing potential risks to society.

The letter asks AI developers to "immediately pause for at least 6 months the training of AI systems more powerful than GPT-4." It was issued by the Future of Life Institute and signed by more than 1,000 people, including Musk, who argued that safety protocols need to be developed by independent overseers to guide the future of AI systems. 

GPT-4 is the latest deep learning model from OpenAI, which "exhibits human-level performance on various professional and academic benchmarks," according to the lab. 

https://www.foxbusiness.com/technology/china-catching-up-us-ai-may-nationalize-development-harvard-report-warns

Jobless Claims Explode Higher After BLS 'Revisions'; Tech Layoffs On '2001' Pace

 After ugly ISM employment data, dismal JOLTS, soaring WARN notices, and a weaker than expected ADP print, this morning's Challenger, Gray & Christmas report announced a bigger than expected 89,703 job cuts in March (270,416 year-to-date), up 319.4% YoY. The West dominated the cuts (East 13,638; Midwest 21,764; West 48,123; South 6,178), with technology-sector companies have announced 102,391 cuts so far this year, "on pace to surpass the highest annual total for the sector announced in 2001," the report notes.

Source: Bloomberg

"We know companies are approaching 2023 with caution, though the economy is still creating jobs," Andrew Challenger, firm’s senior vice president, said in statement.

"With rate hikes continuing and companies’ reigning in costs, the large-scale layoffs we are seeing will likely continue."

As we detailed overnight, this morning's jobless claims data comes with a giant caveat as BLS is about to drop the 'revised' series of data.

With the BLS lies finally over, initial jobless claims soared to 228k - This is the 9th straight week with initial claims above 200k... post revision of course.

Continuing claims surged above 1.8mm, its highest since Dec 2021...

Source: Bloomberg

The so-called 'adjustment' is shown below - just as we have suggested, the last 3 months have seen dramatic upward revisions...

Below we zoom in on just 2023: note the staggering divergence between the previously reported "data" and the latest "post-revision" numbers:

Some context for the recent adjustments

• last week claims came in at 246K, revised massively from 198K
• the week before that was 247K revised from 191K
• the week before that was 230K revised from 192K

...all of which might well have had a significant impact on The Fed's recent decisions.

None of this should come as a surprise as we have been mocking the claims data's "seasonal adjustments" for months...

• Something Snaps In The US Labor Market: Full, Part-Time Workers Plunge As Multiple Jobholders Soar - July '22
• Something Is Rigged: Unexplained, Record 2.7 Million Jobs Gap Emerges In Broken Payrolls Report - Dec '22
• Here Comes The Job Shock: Philadelphia Fed Admits US Jobs "Overstated" By At Least 1.1 Million - Dec '22
• US Layoffs Far Higher Than Suggested By Initial Jobless Claims, JOLTS - Jan '23
• US Job Openings Far Lower Than Reported By Department Of Labor, UBS Finds - Jan '23
• Even JPMorgan Is Lashing Out At Ridiculous Seasonal Adjustments In Key US Data - Feb '23
• Goldman Expects Nearly 1 Million Drop In Tomorrow's Job Openings - Mar '23

Under the hood, Michigan, Massachusetts and California saw the biggest jump in jobless claims while Indiana and Tennessee saw the biggest drop in claims...

Finally, we note that having decoupled from 'reality' for six months, the labor market is now rapidly catching down to 'soft' survey's sad reflection of the state of the economy...

Source: Bloomberg

Will this be the trigger for Powell and his pals to 'pause'?

https://www.zerohedge.com/personal-finance/jobless-claims-explode-higher-after-bls-revisions-tech-layoffs-2001-pace

CNS gets Euro go-ahead on glioblastoma treatment

  CNS Pharmaceuticals, Inc. (NASDAQ:CNSP) ("CNS" or the "Company"), a biopharmaceutical company specializing in the development of novel treatments for primary and metastatic cancers in the brain and central nervous system, today announced it has received approval from the Italian Medicines Agency ("AIFA") Competent Authority and the A.O.U. Policlinico di Bari Ethics Committee for its ongoing potentially pivotal global trial evaluating Berubicin for the treatment of recurrent glioblastoma multiforme (GBM), an aggressive and incurable form of brain cancer.

The Company plans to open its clinical sites in Italy imminently in addition to the previously opened 41 clinical trial sites of the 60 sites selected across the U.S., France, Spain, and Switzerland. A pre-planned, non-binding futility analysis will be conducted by an independent Data Safety Monitoring Board (DSMB) to recommend whether this study should continue as planned based on Berubicin showing value as a second-line treatment for patients with glioblastoma compared with Lomustine. The Company will conduct this analysis after at least 50% of the patients in the population to be analyzed for the interim analysis (30-50% of the total number of patients for this trial) can be evaluated as having failed the primary efficacy endpoint (death). The DSMB will review the number of deaths on each arm to ensure that the overall survival of patients receiving Berubicin shows at least a statistically significant comparability to those receiving Lomustine. Additional analyses that will be provided based on this data will be comparisons of secondary endpoints, including progression-free survival (PFS), response rates, and safety assessments. Enrollment will not be paused during this interim analysis.

https://finance.yahoo.com/news/cns-pharmaceuticals-receives-approval-competent-130500295.html

Haleon upped to Buy from Hold by Argus

 Target $10

https://finviz.com/quote.ashx?t=HLN&p=d

Small Businesses File For Bankruptcy At Record Pace, Surpassing COVID Crash

 by Liam Cosgrove via The Epoch Times (emphasis ours),

Small businesses across the United States are experiencing a surge in bankruptcies, surpassing levels not seen since 2020. According to a UBS note reviewed by The Epoch Times, conditions could become worse as the knock-on effects from the recent banking crises begin to manifest.

The note from UBS Evidence Lab shows private bankruptcy filings in 2023 have exceeded the highest point recorded during the early stages of the COVID pandemic by a considerable amount. The four-week moving average for private filings in late February was 73 percent higher than in June 2020.

“[We] believe one of the more underappreciated signs of distress in U.S. corporate credit is already emanating from the small- and mid-size enterprises sector,” Matthew Mish, head of credit strategy at UBS, wrote in a recently published research note. “[The] smallest of firms [are] facing the most severe pressure from rising rates, persistent inflation and slowing growth.”

Industries hit hardest by the wave of bankruptcies include real estate, health care, chemicals, and retail outlets, according to the Swiss Bank’s report.

The Federal Reserve’s monetary tightening to combat inflationary pressures has been largely behind the uptick in bankruptcies. UBS indicated that the fear of a credit crunch has further worsened the rise in defaults.

Credit conditions are tightening across the spectrum. Large businesses and individual borrowers are feeling the heat as well.

As of February 2023, the monthly bankruptcy filings exceeded 31,000, an 18 percent rise from the 25,564 bankruptcy filings reported in February 2022, according to data provided by the American Bankruptcy Institute. The increase in Chapter 11 bankruptcies—typically used by larger businesses—rose by 83 percent over the same period, with 373 total filings in February of this year.

The White House has downplayed the current economic challenges and their impact on small businesses. Last week, for example, President Joe Biden cited higher rates of new business formation over the past three years—without acknowledging the issues entrepreneurs face. 

“When I came into office, this economy was reeling. Small businesses were hurting. Literally hundreds of thousands of small businesses had closed across the country. Millions of Americans, many of whom worked in small businesses, lost their jobs through no fault of their own,” he said. “To jumpstart American economic recovery, we needed to help the small businesses, and we needed to help them fast. So we got to work.”

The president claimed that the American Rescue Plan Act of 2021 helped the economy by providing emergency loans to millions of businesses. 

Still, the administration is set to raise the corporate income tax to 28 percent sometime in the coming months. The tax hike will affect small businesses at a time when credit conditions continue to tighten.

https://www.zerohedge.com/economics/small-businesses-file-bankruptcy-record-pace-surpassing-covid-crash