What’s Going On Here?

Elon Musk reportedly laid out plans this week to cut half of Twitter’s workforce.

What Does This Mean?

It was back in the heady days of early spring that Elon Musk first offered to buy Twitter, and it’s taken him till past spooky season to make good on his offer. The interim’s been pretty chaotic, but a whirlwind of back-and-forths, legal challenges and defenses ultimately forced the deal through – and now the world’s richest man is on a cost-cutting crusade. Little wonder, either: markets have tumbled drastically since April, meaning it’s likely Musk seriously overpaid for the big blue bird. That’s probably only strengthening his resolve to bid adieu to 3,700 employees, half Twitter’s entire workforce.

Why Should I Care?

Zooming in: Free speech, empty pockets.
Cutting costs is just one side of the equation: Twitter needs to start bringing in more dough too, and that could prove trickier. See, Musk’s vision of Twitter as a bastion of free speech has got businesses clutching their pearls (tweet this), halting ad spending left, right, and center. Interpublic – one of the world’s biggest ad groups – told its clients to postpone Twitter ads for at least a week, and companies like Carlsberg and General Motors are taking the same tack.

The bigger picture: Born to be blue.
One bright money-raising idea of Musk’s is to charge $8 a month for perks like fewer ads, boosted tweets, and the little blue verification tick that appears next to users’ handles – a badge of honor that used to be the preserve of high-falutin’ celebs, politicians, and journalists. But the plan’s not without issues: for one, it could ironically make it easier to impersonate people, with any paying, fake account suddenly rubber-stamped in blue. And for another, it could create a potentially ugly divide between those who can and can’t afford the fee, amplifying paying users’ voices over everyone else’s.

Learning By Doing

What’s Going On Here?

Data out on Thursday showed that Turkey’s inflation hit a 24-year high last month, which will hardly vindicate the country’s unconventional approach.

What Does This Mean?

Looks like Turkey skipped Econ 101: the country’s government still believes that cutting interest rates will help bring inflation down, despite the rest of the world – and the world’s textbooks – proclaiming the opposite. But Turkey’s central bank has cut rates by a chunky 3.5% over the last three months alone, and it’s yet to prove traditionalists wrong. In fact, the prices of food and non-alcoholic drinks – which make up a quarter of the country’s total inflation – essentially doubled last month from the same time last year, while transport costs puffed up nearly 120%. And sure, overall inflation came in lower than economists expected, but that’s hardly a victory when it’s 85.5% – seventeen times the central bank’s target and the seventeenth monthly spike in a row.

Why Should I Care?

For markets: Bigger things are coming.
Turkey’s inflation makes rising western prices rises look positively puny, and it's only outpaced by the likes of Zimbabwe, Venezuela, Syria, Lebanon, and Sudan. And while Turkey’s knee-shaking increases should slim down as numbers start to be compared to the sharp price rises of late last year, things will still probably get worse. See, the government’s hoping to entice voters with a higher minimum wage and cheaper loans ahead of next year’s elections, which – along with continued rate cuts – will only weaken the lira more and fire up inflation further.

Zooming out: Let’s get conventional.
The UK’s gone the textbook route, announcing a 0.75-percentage-point interest rate hike on Thursday – its biggest in 33 years. And while the central bank stressed that rates will peak lower than markets expect, that doesn’t mean the UK isn’t up against it. In fact, its forecast suggests the UK’s already in a recession, and that the economy will shrink for eight-straight quarters – until the middle of 2024.

You might also like: It’s been a dark time for UK investors, but some green shoots are popping up.

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