Trail 144 — Lord Vol
Markets Update by Aashish Singh
Business Update by Sylvia Lo
Financial markets are fascinating. They are constantly evolving, they follow no predetermined path and much like humans, their behaviour at times is completely irrational. Every day their movements are thoroughly analysed, yet their next steps are a complete mystery. They follow a random walk and therein lies their beauty. Each week I briefly recap a few stories that captured my interest.
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The week saw very limited movement in terms of price action across asset classes, despite being the last week before quarter end. Options implied volatility has been very subdued for much of this year. Realised volatility mirrored its forward-looking cousin.
Dollar Index (Dollar vs G10 peers) continued to test the 106 level multiple times, ultimately settling slightly below. The yen weakened past the key 160 level, that hasn’t been seen in 38 years. The S&P 500 was flat consolidating just under 5,500. Gold remained range bound within 2,300 and 2,350. 10-year US treasury yields were largely unchanged while 2 year yields rose slightly. It feels like Mr. Market was taking a breather after the recent run up. Even Bitcoin is trading more like a traditional asset class these days.
Meanwhile, US politics took centre stage with the first of the Presidential debate taking place in which President Biden came out worse off with questions emerging on his mental acuity. There is a long time between now and the elections for Biden to make ground, but Trump is now the favourite to return to the White House. His return should bring back volatility that has been subdued. With his unpredictable nature and isolationist policies, this should keep investors on edge.
‘Boring’ Bitcoin
The proportion of Bitcoin traded over weekends has declined to an all-time low of 16% this year, according to cryptocurrency research firm Kaiko. The drop comes in the wake of the launch of spot Bitcoin exchange-traded-funds, which appears to have shifted the periods when Bitcoin is traded to be more in line with the schedule of traditional equity exchanges and has lowered its price volatility.
Employment Moderating
US employers probably tempered their hiring while wage growth moderated in June, another favourable development for Jerome Powell and his Federal Reserve colleagues seeking more confirmation that inflation is slowing.
Payrolls in the world’s largest economy are projected to have increased by about 190,000, according to a Bloomberg survey of economists ahead of Friday’s report. That’s a step down from the surprisingly robust 272,000 gain in May. The jobless rate probably held at 4%.
Running Out of Things to Buy
The $1.3 trillion collateralised loan market is about to become a victim of its own success because managers can’t create the bonds fast enough to meet demand and are running out of things to buy.
A slowdown in mergers and acquisitions after borrowing costs have risen is continuing to deprive the lenders of the leveraged loans that the industry was built on. About $311 billion of M&A deals have been announced and completed so far this year, roughly $1 trillion below the same level two years ago when interest rates began to rise, according to data compiled by Bloomberg.
In The World of Business
This week, Despite Dell’s strict RTO policy barring fully remote employees from promotions, nearly half of its U.S. workforce continues to work remotely.
The increasing practice of companies posting fake job listings to gauge the job market, signal internal changes, and build candidate pools is seen as unethical and harmful, wasting job seekers’ time and potentially damaging employer reputations.
Netflix’s updated culture strategy reaffirms its unique policies, emphasising the “keeper test” for employee evaluation, prioritising performance and maintaining a hands-off approach that fosters individual autonomy and responsibility.
Remote Work Rebellion
Despite Dell’s strict return-to-office (RTO) policy, many of its employees are resisting, with nearly 50% of U.S. staff and one-third of international workers continuing to work remotely. Dell has made it clear that promotions are off-limits for those who don’t comply, yet employees find the benefits of remote work, such as increased personal time and reduced commute costs, outweigh the advantages of being in the office.
To enforce the RTO policy, Dell has implemented measures like tracking electronic key cards and VPN usage to monitor office attendance. Despite these measures, Dell workers remain steadfast in their preference for remote work, mirroring broader trends in the industry. An October 2023 FlexJobs survey highlighted that 17% of U.S. workers would sacrifice up to 20% of their pay to work remotely, and more than half knew someone planning to quit over RTO mandates.
Fake Jobs
The practice of posting fake job listings is becoming increasingly common, with a recent Resume Builder survey revealing that 40% of companies have posted non-existent jobs in the past year, and 30% still have them listed. While job seekers find this deceptive, 70% of hiring managers see it as morally acceptable. Employers have various reasons for posting fake jobs, such as signalling potential help to overworked employees, testing the job market, bench marking salaries, appearing proactive about diversity initiatives, and building a pool of potential candidates for future openings. Alarmingly, some companies also use these postings as a scare tactic to make current employees feel replaceable.
Developing these listings consumes valuable time and resources, and candidates invest considerable effort into applying for them. The Resume Builder survey also found that 85% of companies engaging in this practice go as far as interviewing candidates for fake positions, exacerbating the waste of time and adding unnecessary stress for job seekers. Such practices can damage the employer’s brand, degrade employee morale, and erode trust in the company’s integrity.
To avoid falling victim to fake job postings, experts advise job seekers to verify listings on the company’s official website, look for vague descriptions or unusually high salaries as red flags, and directly contact employers for more information about the roles.
A Real Keeper
Netflix is renowned for its unconventional company policies, such as the absence of formal expense and holiday policies, and its “keeper test” for evaluating employees. This keeper test encourages managers to consider whether they would fight to retain an employee or hire them again, emphasising a swift parting if the answer is negative. However, Netflix reassures employees that their job security isn’t jeopardised by occasional mistakes, as managers evaluate overall performance rather than isolated failures.
Netflix views itself as a professional sports team focused on performance and optimal role fit, even if it means replacing a beloved team member. This high-performance culture is designed for those who thrive on experimentation, risk-taking, and resilience, and may not suit individuals seeking a more stable, less challenging work environment. Moreover, Netflix underscores the importance of supporting the company’s diverse content, even when it conflicts with personal values.
Netflix’s hands-off approach extends to minimal rules for staff, allowing employees significant autonomy. Prospective employees are expected to be exceptionally responsible, self-motivated, and proactive, embodying the company’s culture of personal accountability and initiative.
Until next week.
