What’s going on here?

Corporate America is handing pink slips to office workers – and blaming AI, not the economy.

What does this mean?

Big firms have been cutting office jobs at the fastest pace since the pandemic, and not because business is slow. Companies like Walmart, Amazon, and Bank of America have been stripping out layers of office workers and middle managers, assigning their work to AI instead. The new motto is “do more with less” – and that means fewer human workers with broader job scopes. Case in point: Microsoft axed 6,000 roles in May, and the firm plans to chop its workforce further next month by letting thousands more go – all while investing $80 billion in data centers and AI projects.

Why should I care?

For markets: Welcome, to the machines.

Fewer salaries can mean fatter profit margins, which is generally good for stock prices. That’s why revenue per employee has become a key stat for investors. But there’s a catch: go too lean and things can break. Overworked teams, creative slowdowns, and unhappy employees can all drag on long-term growth. Once upon a time, hiring more staff was a show of upward momentum. Now, the same thing might raise eyebrows and prompt questions around efficiency. But that could be short-sighted: as companies chase slimmer, AI-heavy operations, investors will need to track just how sustainably the profit they earn is made.

Zooming out: AI boom, consumer… bust?

The more jobs AI replaces, the fewer paychecks will go out. And that’s bound to hit the economy where it hurts: consumer spending. The Federal Reserve’s already prepping for slower growth and sticky inflation, especially with new tariffs likely to pile on. And if the layoff trend continues, the central bank might need to trim interest rates sooner to keep things from falling apart.

What’s going on here?

Switzerland’s central bank cut interest rates again on Thursday, determined to give the country’s troublesome currency a stern talking to.

What does this mean?

The Swiss National Bank (SNB) just made its sixth cut in a row, bringing the benchmark interest rate all the way down to 0%. This latest trim – 0.25 percentage points worth – came after data showed that prices in the country were 0.1% lower this May than last. That means Switzerland’s economy has fallen into dreaded deflation. Most of the blame lies with the Swiss franc: it’s up almost 10% against the dollar this year. See, a stronger currency means that people and businesses in the country get more bang for their – er, franc – on imports. And those cheaper goods then bring prices down overall.

Why should I care?

The bigger picture: This cost isn’t so effective.

⏰ So far, the SNB has stopped short of directly intervening in the currency market, wary of the US accusing it of manipulation. Instead, it’s been cutting rates to make the franc look less attractive, hoping that’ll weaken the currency.

➡️ Problem is, negative interest rates would hurt savers and banks – they could even be charged to hold cash. The SNB, then, won’t pull rates any lower unless absolutely necessary. But with inflation forecast to hit just 0.2% this year and 0.5% next, that might be the case.

✂️ It wouldn’t be the first time: Switzerland’s benchmark rate reached minus 0.75% back in the 2010s.

Zooming out: A tale of two economies.

Switzerland might be worried about deflation, but the US is still stuck with inflation. That’s why the Federal Reserve decided to keep its interest rate above 4% on Wednesday.

🇺🇸 Higher-for-longer rates would usually bolster the US dollar – but not this time. Worried about tariffs and changeable political policies, investors have sought shelter in safe-haven assets like… the Swiss franc (to the SNB’s dismay). That’s left the greenback down nearly 9% against a basket of currencies this year.