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Jun 6, 2022

The Weekly Scan June 6, 2022

By Stash Team

Find out what’s happening in the world of business this week.

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Welcome to the Weekly Scan. Here’s what we’re following for the week of June 6, 2022.

Barreling forward. In response to requests from the U.S., the U.K., and other Western nations, Organization of the Oil Producing Countries (OPEC) said that it will up its oil production by 648,000 barrels a day in July and August, a sharper increase than expected. OPEC had already intended to ramp up production during those months, but will take it a step further in the face of rising oil prices. At the beginning of the pandemic, in April 2020, OPEC reduced the oil supply by 10 million barrels. Over time, OPEC has been reviving production as demand for gas and oil ticks back up. Inflation has contributed to surging oil prices, as well as the war in Ukraine. OPEC has struggled to maintain a balance between escalating production and maintaining its relationship with member country Russia, which is facing sanctions for its invasion of Ukraine. The latest agreement reportedly allows OPEC to do both. 

  • The takeaway: On June 2, 2022, gas prices reached the latest record high, an national average of $4.71 per gallon. The Biden administration has said that the latest development from OPEC should lessen pain at the gas pump, where prices have risen. But while oil prices initially fell in reaction to the OPEC news, the West Texas Intermediate crude futures, a U.S. oil benchmark, corrected to nearly $117, about the same as the day before the deal was made. 

Wall Street Journal and Washington Post

Leaning out. Meta’s Chief Operating Officer (COO), Sheryl Sandberg, announced that she will step down from the position, but will remain on the company’s board of directors. Sandberg has been with Meta (formerly Facebook) since 2008 and helped turn the company into what it is today, a big platform for advertisers that once reached a $1 trillion market capitalization. Meta’s current chief growth officer Javier Olivan will take over as COO in the fall, and the entire company  will undergo a reorganization, according to CEO Mark Zuckerberg. While at Facebook, in 2013, Sandberg released a book called “Lean In: Women, Work, and the Will to Lead,” which discussed the realities of the workplace for women, and how they can best further their careers. Before joining Facebook, Sandberg worked at Google and in the Treasury Department during the Clinton administration. 

  • The takeaway: Sandberg said that she is leaving her position at Meta to focus more on philanthropy. But the departure follows several problems at the tech company, which has been accused of contributing to the spread of misinformation on the platform and of having too much influence. Meta has also faced criticism for potential monopolization, after acquiring both Whatsapp and Instagram. While some executives for the company have had to testify before Congress, Sandberg has mostly avoided that. 

CNBC

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Pedal to the metal. Ford said it will spending $3.7 billion to increase output at three car factories in the Midwest. The funding will go to the manufacturing of both electric and gas-powered cars, and will create 6,200 union jobs across five different Ford plants. Those new workers will all be part of the United Automobile Workers (UAW) union. Ford also intends to convert 3.000 of its temporary workers at plants in the Midwest into full-time employees. The investment is also part of Ford’s larger initiative to make two million electric vehicles by 2026. Last year, Ford had made 27,140 electric cars. The news comes as Ford reported a 222% increase in electric vehicle sales to 6,254 units in May. Also in May, Ford began rolling out the electric version of customer-favorite the F-150 known as the F-150 Lightning. 

  • The takeaway: Ford’s timing for this announcement came as a surprise since the carmaker is set to negotiate with UAW over four-year contracts in a little more than a year. Typically, Ford would hold on to those new jobs to sweeten the deal with the union. But Ford is also facing a difficult job market, where the number of jobs outweighs the number of available workers. Ford’s decision to expand in the Midwest was also met with praise by President Biden, who called it “great news for American workers.” 

Bloomberg

Blank slate.The Department of Education announced it will cancel $5.8 billion in student loan debt held by 560,000 people who attended Corinthian Colleges, one of the largest chains of for-profit universities that folded in 2015. The franchise of colleges existed for about 20 years. Those who have debt from Corinthian will automatically see their debt forgiven and won’t need to apply through the Education Department. The Department’s Secretary Miguel Cardona said that Corinthian had exploited and misled its students by making promises it could not keep. 

  • The takeaway: The Biden administration has already canceled $17 billion in student debt, more than any other president. His administration recently made it easier for low-income borrowers to apply for student debt forgiveness through income-based repayment plans.  In 2021, the administration also ushered in several student forgiveness plans, including $500 million in student loan forgiveness for former students of ITT Technical Institute, a private chain of colleges that was shut down in 2016 for misrepresentation. Biden is also reportedly exploring more widespread student loan forgiveness for those who have federal student loans. While the president has yet to outline a plan, he reportedly signaled to House Democrats that he might use an executive action to wipe out $10,000 in student loan debt per borrower. 

New York Times

Other stories we’re following:

Pay day. Health insurers are expected to pay out $1 billion in rebates to consumers in the fall, due to a provision in the Affordable Care Act (ACA). 

Another one. Microsoft became the latest company to cut its predictions for earnings. The tech company estimated that its fourth-quarter revenue will fall between $51.94 billion and $52.74 billion, rather than between $52.4 billion to $53.2 billion. 

 Here’s what we covered last week in the Scan: 

  • Broadcom is purchasing cloud-computing business VMware for $61 billion, making it the biggest acquisition by a chipmaker.
  • Both Dollar Tree and Dollar General delivered better-than-predicted earnings.
  • Jobless claims fell by 8,000 to 210,000 for the week ending May 21, 2022.
  • Justin Timberlake sold the rights to his entire catalog of songs in a deal estimated to be worth more than $100 million.

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