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Exxon Prepares to Make Job Cuts Across Oil Giant’s U.S. Offices
Exxon Mobil Corp. is preparing to cut jobs in the U.S. as the oil giant focuses on a slimmed-down and more efficient organizational structure, according to people familiar with the matter. Between 5% and 10% of U.S.-based employees who are subject to performance evaluations could end up leaving this year after their assessments, said the people, who asked not to be identified because they weren’t authorized to speak publicly. The cuts are expected to be performance-based and not characterized as layoffs – and not all workers are subject to such evaluations, which typically apply to white-collar jobs such as engineering, finance and project management.
Exxon said in a statement there’s no specific target to reduce headcount. “We have a rigorous talent management process which routinely assesses employee performance,” the company said.
Chief Executive Officer Darren Woods told Exxon’s annual shareholders meeting last month that while there are no layoffs planned, the company is reducing its number of contractors and is trying to become leaner. The latest round of annual reviews comes a full year after Exxon reorganized its upstream division to better integrate it with other parts of the business and increase accountability for decision-making.
A huge drop-off in demand for crude spurred Exxon to roll back on some of its growth plans and slash global capital spending by a third, or $10 billion, earlier this year. It’s hardly alone. Chevron Corp. and BP Plc are cutting about 16,000 workers between them, while it’s estimated that tens of thousands of jobs have disappeared across the U.S. shale patch.
“There’s work ongoing to continue to look to optimize those organizations in the work processes underlying those, and that would lead to longer term efficiencies,” Woods said at the meeting.
Exxon employed about 74,900 people globally at the end of 2019, up from 69,600 two years prior.
https://www.bloomberg.com/news/articles/2020-06-26/exxon-prepares-to-make-job-cuts-across-oil-giant-s-u-s-offices
Fed’s Stress Tests Results Based on GDP Decline of 8.5 Percent; Atlanta Fed’s GDPNow Forecast Says GDP Will Decline by 46.6 Percent
Yesterday the Federal Reserve released its highly awaited stress tests on the biggest and most dangerous banks in America. The stress test results fill an 83-page document with dozens of charts showing what would happen to the banks under a hypothetical “severely adverse scenario.”
This scenario, unfortunately, was previously prepared and pales in comparison to the actual economic damage rendered by the COVID-19 pandemic. For example, the severely adverse scenario for this year’s stress tests imagined the U.S. unemployment rate climbing to a peak of 10 percent in the third quarter of 2021. The unemployment rate is currently 13.3 percent. But far more frightening, the Fed’s severely adverse scenario for GDP imagined a decline of “8½ percent from its pre-recession peak, reaching a trough in the third quarter of 2021.”
As of yesterday, June 25, the Atlanta Fed’s GDPNow estimate was for U.S. GDP to decline by a staggering 46.6 percent in the second quarter. In a feeble attempt to compensate for the fact that its “severely adverse scenario” now looks like a cake walk compared to the reality on the ground in the U.S., the Fed added what it calls a “sensitivity analysis.” That analysis assessed how the big banks would perform under three downside scenarios resulting from the coronavirus pandemic: a V-shaped recession; a slower, U-shaped recession; and a more severe W-shaped, double-dip recession.
The Fed summarized those three scenarios as follows: “Under the U- and W-shaped scenarios, most firms remain well capitalized but several would approach minimum capital levels.”
The Fed, however, did not provide individual bank results for those scenarios. It provided individual bank results only for its previously announced criteria for the “severely adverse scenario” that imagined unemployment at 10 percent and a GDP decline of 8.5 percent. Under that scenario, the Fed projected $552 billion in losses in the aggregate for the 33 banks it reviewed, over nine quarters.
We looked at where those projected losses were concentrated and, sure enough, they were concentrated at the biggest Wall Street banks. The breakdown was as follows: JPMorgan Chase, hypothetical losses of $64.4 billion; Citigroup, $47.7 billion; Wells Fargo, $47.4 billion; and Bank of America, $47.2 billion. In other words, the tally for just those four banks comes to $206.7 billion or 37 percent of the losses for all 33 banks.
The Fed really lost credibility, however, with these loss estimates for Goldman Sachs and Morgan Stanley, showing hypothetical losses of $9.8 billion and $5.3 billion, respectively, in the hypothetical “severely adverse scenario.” During the last financial crisis, one trader alone at Morgan Stanley, Howie Hubler, racked up $9 billion in losses.
The Fed’s Vice Chair for Supervision, Randal Quarles, released this statement along with the stress test results: “The banking system has been a source of strength during this crisis and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks.”
But the trading patterns of these bank stocks tell a very different story. The chart above shows how two of the biggest bank stocks, Citigroup and Bank of America, have fared since February 15 versus the Standard and Poor’s 500 broader market average. The losses on the share prices of the bank stocks have dramatically outpaced the broader market.
Then there is the fact that when the stock market experiences a sharp selloff, all of the biggest Wall Street bank stocks sell off far in excess of the broader market. That’s decidedly not how these bank stocks should be behaving if they are indeed a “source of strength.” Take June 11 of this year for example, as shown in the chart below. The S&P 500 experienced a decline of 5.89 percent while Citigroup lost 13.37 percent. Bank of America tanked by 10.04 percent while the largest bank in the country, JPMorgan Chase, which is under a criminal probe for allowing its precious metals desk to be reengineered into a racketeering enterprise, according to the U.S. Department of Justice, fell by 8.34 percent.
We are simply not persuaded that the biggest banks on Wall Street, which account for the bulk of the $202 trillion notional in derivatives, are going to provide the strength the U.S. needs to weather this unprecedented storm.
moar here
https://wallstreetonparade.com/2020/06/feds-stress-tests-results-based-on-gdp-decline-of-8-5-percent-atlanta-feds-gdpnow-forecast-says-gdp-will-decline-by-46-6-percent/
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