US workers down with the sickness
Going back to work after a holiday is hard. All those ‘next year’ problems we put off until 2022? Yeah, they’re here now. But spare a thought for workers in the US who are doing it tough in the face of the Omicron outbreak. 🦠 Unlike the lockdowns of yesteryear, businesses are open, but many just can’t get the workers. With as many as 1.3 million cases of Omicron per day in the US - the entire population of Mauritius - hundreds of thousands of workers have been required to stay home and isolate after testing positive, creating a wave of labour shortages.
Supermarket workers have self-checked out and there aren’t enough people to stock the shelves. Office workers are back to WFH, and big box retailers are just big empty boxes. Last week Lululemon (LULU) announced that limited staff availability and reduced operating hours in certain locations had created a drag on earnings. It’s a rubbish situation for many, and fast food faces a serious slowdown. Maccas has cut operating hours by 10% in some places to ease the pressure on remaining staff. These sound like little things, but it all adds up, with US retail and food services sales falling by 1.9% in December.
Airlines in the US have also been brought back to earth by Omicron. Around 20,000 flights across the US have been cancelled because airlines can’t get enough crew to fly and service the aircraft. Delta Airlines (DAL) says that 8,000 of its 75,000 employees have tested positive for Covid in the last four weeks, while United (UAL) says that nearly one-third of the workforce in one day alone at the airline’s Newark hub called off sick and was grounded. 🤯 The good news? There are signs that new cases may have passed their peak and could start to fall as quickly as they rose.
No crowd, no problem for electronics showcase
While Omicron plagued the annual Las Vegas Consumer Electronics CES 2022 showcase - sending 70 South Koreans home with ills ‘n’ chills and others choosing to dial in rather than getting ringside - the January hot ticket event still packed a colourful punch. 🥊 Especially BMW. While Tesla may have kicked Beamers to the curb to secure the top spot as status symbol du jour, the German legacy cars, for reasons no one knows, may soon come with tri-colour options black, white and shades of grey at the flick of a switch. Ooo-er.
But there’s no time for Tesla to raise the roof; a new solar shingle kid’s hit town threatening to take down what they’ve built. GAF Energy’s new Timberline Solar replaces a costly solar specialist team with just a single roofer and a nail gun, making it the stuff of DIY dreams. Pew pew.
Meanwhile, Nvidia one-upped the global chip shortage (as did AMD’s Lisa Su in her virtual keynote from the comfort of Austin, Texas), announcing their ‘budget-friendly’ grunty gaming graphics cards, out this month. The multinational tech company also announced they’re partnering with Samsung to expand the platform’s game streaming service, now to be built into Samsung TVs, along with LG. A doorway opened thanks to Samsung’s switch to QD-OLED technology - the ‘holy grail’ of the TV display. One journo queried the ‘cloak and dagger’ announcement by the electronics-maker (unlike Sony, who came out of the gates strong and promises a fresh colour pop with their new QD-OLED hybrid technology). Speaking of Sony, their next-gen virtual reality headset comes with a side of vibration and eye-tracking. 👀 Vibes.
People with diabetes sick of pricks got good news, too. AI company Scanbo hopes to end daily finger jabs with their electrode technology, and companies like Samsung, LG and Medtronics are poking around. Expecting a growth spurt? Perhaps. More than 10% of the US population is afflicted with the disease, with type 2 diabetes numbers at 4% in 2000, expected to surge to 7.2% by 2050.
Tech stocks’ New Year hangover
While Kiwis were off beaching, eating and toasting the new year in with a crisp, non-alcoholic bevvy, certain US tech stocks have been suffering through a New Year’s hangover not even a Big Mac 🍔 and a shake can, well, shake (Hatchlings over 30 can probably relate!). Among those hardest hit have been fast-growing ‘spec-tech’ companies, which saw share prices party their way through the second half of 2021. Cloud computing companies Cloudflare (NET), Datadog (DDOG) and Snowflake (SNOW) are suffering thumping headaches in January from double-digit share price falls, as have EV darlings Tesla (TSLA) and Rivian (RIVN), which have dipped 13% and 22% respectively in 2022.
Share prices started falling late last year but have been tripped up again by red hot inflation. 🔥 In December, US inflation jumped by 7% year-on-year, leading some analysts to increase their expectations for how much the Federal Reserve may raise interest rates this year. Rising interest rates can be bad news for highly valued growth companies with low current earnings. That’s because all the money investors hope the company will make in the future gets discounted by a larger number, reducing what investors are willing to pay for shares today.
Waking up to share price falls is a miserable start to the new year. No one likes seeing the value of their investments flip flop. But even the biggest investors go through it and learn to develop resilience to endure the ups and downs of the share markets. How do they keep it from ruining their summer? Warren Buffett’s tip is to remember that you’re buying part of a business, not a stock symbol, when investing. Short term share price movements are less important than the value a business can create for decades to come. And if you’re still feeling down? You could always consider switching off and going surfing. 🏄♀️