4 ms·

We'll see many more layoffs like this in the coming weeks / months as the Fed tapers off. This is macro related.

by jjoe 13y ago

jlillyreed 13y ago
I am not seeing anywhere that this is due to a lack of demand, but rather due to re-structuring the company.
winslow 13y ago
Can you possibly explain a little more? From my research [1] the fed tapering off looks good for business as stocks skyrocketed according to the article [1]. Personally I think it is good the Fed is tapering off and starting a slow transition (note: I have libertarian views hence less gov't involvement the better). Obviously, I am no expert, maybe someone can explain why it's bad other than the market might not being ready? [1] - http://www.cnbc.com/id/101282912 http://www.cnbc.com/id/101282912
- fragsworth 13y ago
  I don't think he can explain more. He's basically predicting the stock market without any insider information.
  - Tloewald 13y ago
    And he's basing it on macro which is even more random.
- jjoe 13y ago
  Fed tapering means there's less liquidity in the markets. That's because they're buying up less risky assets off the financial institutions. Less money in the market means less "free" cash available to be loaned up for risky investments. I wrote a little about this in this submission: https://news.ycombinator.com/item?id=7172139 https://news.ycombinator.com/item?id=7172139 Of course I can't predict what will happen but it's very clear that less money always means less money. A lot of businesses rely on bank loans to make ends meet with regards to payroll. This might not apply to Dell but it applies to a lot of small business owners who need the extra help until they get paid by their clients and then pay off the short term loan. Stricter payroll loan policies (when money is scarce = bank reaching low levels of liquidity) puts businesses in tough situations leading to sudden layoffs. The Fed's goal is to try and regain control of the system (they lost control last summer). So by tapering they're shaking the tree. Just like you'd put an electrical signal through a black box and study the output in an attempt to understand how it works, the Fed is gradually cutting its $85bn per month supply of "cash." That's what the Fed (Yellen) is doing right now. I'm sure they'll react if things degenerate too much. FYI, it's a carnage in the financial markets right now. Dow was down several hundred points in Jan. Several hundred points just today.
  - jonknee 13y ago
    ... Except the Fed is mainly buying Treasury debt. It actually encouraged loaning out for "risky" investment by pushing down interest rates. That's why there's the fear in emerging markets as the program winds up.
astrodust 13y ago
I think it's related to the recent crappy weather. Correlation and causation and all.
- thecage411 13y ago
  Well, the weather is good in some places. It's because of the recent good weather! No, it's because of the simultaneous good and bad weather in different parts of the country!
  - jonknee 13y ago
    The weather has been pretty bad in the parts of the country where most people live.
inthewoods 13y ago
I don't know how you conclude that - evidence please. Seems more likely that these are cost cutting measures taken to trim costs as part of the private equity restructuring, and the fact that their products are not being exactly welcomed in the marketplace.
- deleted 13y ago
  [deleted]
justincormack 13y ago
They just did a leveraged buyout. This is not macro related.
- AJ007 13y ago
  Emphasis on the leverage part. Interest rates matter, a lot.
  - justincormack 13y ago
    Probably all swapped or funded at fixed rates. You don't do an LBO and then go bust when rates rise. You still need to refinance but the assumption is you have made cost savings, sold stuff and reduced leverage by then.
jjoe 13y ago
Unfairly down voted. Although I understand no one wants to hear bad news. Let's do this: meet me here in May/June and we'll see if my "prediction" of the effect of continued tapering is somewhat accurate. Here's the crux of it: 1) More layoffs in different sectors of the economy 2) Less VC funds to go around 3) Main street feeling the brunt of it

We'll see many more layoffs like this in the coming weeks / months as the Fed tapers off. This is macro related.

by jjoe 13y ago

We'll see many more layoffs like this in the coming weeks / months as the Fed tapers off. This is macro related.

jlillyreed 13y ago

I am not seeing anywhere that this is due to a lack of demand, but rather due to re-structuring the company.

winslow 13y ago

Can you possibly explain a little more? From my research [1] the fed tapering off looks good for business as stocks skyrocketed according to the article [1]. Personally I think it is good the Fed is tapering off and starting a slow transition (note: I have libertarian views hence less gov't involvement the better). Obviously, I am no expert, maybe someone can explain why it's bad other than the market might not being ready? [1] - http://www.cnbc.com/id/101282912 http://www.cnbc.com/id/101282912

fragsworth 13y ago
I don't think he can explain more. He's basically predicting the stock market without any insider information.
- Tloewald 13y ago
  And he's basing it on macro which is even more random.
jjoe 13y ago
Fed tapering means there's less liquidity in the markets. That's because they're buying up less risky assets off the financial institutions. Less money in the market means less "free" cash available to be loaned up for risky investments. I wrote a little about this in this submission: https://news.ycombinator.com/item?id=7172139 https://news.ycombinator.com/item?id=7172139 Of course I can't predict what will happen but it's very clear that less money always means less money. A lot of businesses rely on bank loans to make ends meet with regards to payroll. This might not apply to Dell but it applies to a lot of small business owners who need the extra help until they get paid by their clients and then pay off the short term loan. Stricter payroll loan policies (when money is scarce = bank reaching low levels of liquidity) puts businesses in tough situations leading to sudden layoffs. The Fed's goal is to try and regain control of the system (they lost control last summer). So by tapering they're shaking the tree. Just like you'd put an electrical signal through a black box and study the output in an attempt to understand how it works, the Fed is gradually cutting its $85bn per month supply of "cash." That's what the Fed (Yellen) is doing right now. I'm sure they'll react if things degenerate too much. FYI, it's a carnage in the financial markets right now. Dow was down several hundred points in Jan. Several hundred points just today.
- jonknee 13y ago
  ... Except the Fed is mainly buying Treasury debt. It actually encouraged loaning out for "risky" investment by pushing down interest rates. That's why there's the fear in emerging markets as the program winds up.

astrodust 13y ago

I think it's related to the recent crappy weather. Correlation and causation and all.

thecage411 13y ago
Well, the weather is good in some places. It's because of the recent good weather! No, it's because of the simultaneous good and bad weather in different parts of the country!
- jonknee 13y ago
  The weather has been pretty bad in the parts of the country where most people live.

inthewoods 13y ago

I don't know how you conclude that - evidence please. Seems more likely that these are cost cutting measures taken to trim costs as part of the private equity restructuring, and the fact that their products are not being exactly welcomed in the marketplace.

deleted 13y ago
[deleted]

justincormack 13y ago

They just did a leveraged buyout. This is not macro related.

AJ007 13y ago
Emphasis on the leverage part. Interest rates matter, a lot.
- justincormack 13y ago
  Probably all swapped or funded at fixed rates. You don't do an LBO and then go bust when rates rise. You still need to refinance but the assumption is you have made cost savings, sold stuff and reduced leverage by then.

jjoe 13y ago

Unfairly down voted. Although I understand no one wants to hear bad news. Let's do this: meet me here in May/June and we'll see if my "prediction" of the effect of continued tapering is somewhat accurate. Here's the crux of it: 1) More layoffs in different sectors of the economy 2) Less VC funds to go around 3) Main street feeling the brunt of it