🎙️ The Big Review

[5 minutes to read] Plus: Why investors are wrong about the Fed

By Matthew Gutierrez and Shawn O’Malley

🚗 Over the past two years, Uber has soared. Lyft? Not so much.

Shares in Uber, the ride-sharing and food delivery service, have nearly doubled, while Lyft shares are down about 67% over the past 24 months.

Millions of people worldwide have come to rely on Uber, which has a rare distinction in the business world: Its brand name is often used as a verb.

Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the three biggest stories in markets:

  • McKinsey’s big review as consultancies reevaluate themselves

  • Disney shares spike 12% after earnings beat

  • Why investors are almost always wrong about the Fed

All this, and more, in just 5 minutes to read.


In the past five years, young Americans have seen their net worth skyrocket. How have wealth gains for those under 40 compared to older demographics? (The answer is at the bottom of this newsletter!)

Chart of the Day

In The News

🧐 McKinsey Places 3,000 Staffers on Review Amid Slowdown

Tough Love Friendship GIF by Kim's Convenience

Gif by kimsconvenience on Giphy

Usually, McKinsey is the one reviewing companies for inefficiencies. But now, the consultancy is examining itself. 

  • McKinsey has warned about 3,000 of its consultants that their performance was “unsatisfactory” and must improve. Otherwise, they could be removed from the company.

  • Consultants received a “concerns” rating amid their performance reviews, with a (roughly) three-month window to improve performance. 

The news reflects an uncertain outlook for consultancies after years of growth, hiring, and big bonuses. McKinsey’s headcount has swelled to about 45,000 employees, up 60% from the 28,000 it had in 2018. 

  • It’s reminiscent of tech companies over-hiring during the pandemic and cutting jobs to streamline costs in a higher-rate environment, as we discussed Wednesday with the likes of Meta, Snap, and Google.

  • Last year, McKinsey eliminated 1,400 jobs, mostly in support departments, not client-facing, despite a record $16 billion in revenue. It also shrunk its new partner class by 35%.

Terminology: Technically, consultancies like McKinsey make workers “counseled to leave” — fancy language meaning they recommend employees try to find a new job elsewhere.

Why it matters:

Overall, the consulting industry has slowed over the past several months. The largest firms in the industry say more clients are shelving longer-term investments and cutting back where they can, including spending on things like consultants. So, there’s simply less work for consultants to advise them on.

  • Take Accenture, which slashed 19,000 jobs last year.

  • That safe, cushiony job at Ernst & Young? Not necessarily, as the firm said it’s cutting jobs and delaying start dates for new hires. PricewaterhouseCoopers announced cuts last fall, mostly in the advisory division. 

McKinsey, which turns 100 in 2026, has roughly 30,000 consultancies globally, including 2,900 partners. It has offices in 60 countries and roughly 3,000-plus ongoing clients. Nearly half of its revenues come from the U.S. The degree to which artificial intelligence “consultants” can replace or enhance consultancies remains to be seen. 

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🎮 Disney to Invest $1.5 Billion in Epic Games, Shares Rise

Walt Disney is busy. The iconic brand knows the formula to reach Americans, too: Theme parks and streaming, yes, but also video games, sports, and Taylor Swift. 

Video games: Disney is acquiring a $1.5 billion equity stake in Fortnite maker Epic Games, part of a collaboration involving Disney properties like Star Wars, Marvel, and Avatar. 

Sports: Disney also announced that it’s teaming up with Fox and Warner Bros. Discovery to create a sports-streaming service, which could revolutionize how we watch sports. 

Taylor Swift: Disney will stream a cut of the star’s Eras Tour concert movie on Disney+ starting March 15, including footage of five songs not included anywhere else. 

Yes, Disney is still a big business trying to bounce back from several rocky years. Its share price is flat over the past five years, but it’s already up over 20% in 2024. 

That’s thanks to an improving bottom line under CEO Bob Iger, with shares jumping 14% Thursday after the entertainment giant posted solid quarterly results. 

The numbers: 

  • Adjusted earnings of $1.22 per share versus estimate of 99 cents per share

  • Revenue $23.5 billion versus estimate of $23.7 billion

  • Key to the upbeat tone: a solid base of Disney+ subscribers

Why it matters:

Iger is trying to invigorate a brand during his second stint as CEO. He’s grappling with cable’s decline, a costly pivot to streaming, and lousy earnings growth in recent years.

Disney+ subscriber growth remains a key component of its growth strategy. The number of domestic subscribers fell to 46.1 million after rolling out price increases. Global subscribers fell to 149.6 million from 150.2 million a year ago. 

  • Yet, in a rare move, Disney issued an upbeat forecast on subscriber growth, saying it expects to add up to 6 million Disney+ subscribers in the current quarter that ends March 31.

  • One analyst said the expected subscription growth, plus the Epic Games investment, could help offset “ongoing challenges in the Parks business and a continued decline in linear television.”

More Headlines

🇲🇽 For the first time in decades, the U.S. bought more stuff from Mexico than China

🏈 Brands think 30-second Super Bowl ads are worth $7 million

🫠 Alibaba shares sink after it shelves IPO plans for two of its units

📈 Shares in the computer chip designer, Arm, soared over 60% on Thursday

💳 Average credit card balances jump 10% to new record

❤️ Why America loves the NFL

💬 Investors Are Almost Always Wrong About The Fed

The free market has its limits, and one of them is anticipating the Federal Reserve’s interest rate decisions.

In theory, markets are a “weighing machine” over time, sorting through the masses’ wide-ranging opinions on corporate earnings, inflation, the job market, and much more, striking a balance that reflects all relevant information and perspectives.

  • It’s not that financial markets are infallible and should always accurately predict future developments, but they should account for the most likely outcomes, twisting and turning as new events unfold and new information is made available.

Yet, investors have been particularly bad at projecting the Fed’s moves. In recent years, few thought the Federal Reserve would get close to hiking rates to nearly 5% after a pandemic-era inflation spike.

  • That outlook was wrong.

  • In the last few weeks, traders have significantly revised their bets on the Fed to cut rates this year after aggressive rate cuts became the consensus view in late 2023.

Why it matters:

Shifting outlook: In January, if you believed that there would be no rate cuts in 2024, you’d be an outcast on Wall Street. “Now, it’s a real possibility,” according to one bond fund manager.

  • But expectations for future interest rates are critical in markets, driving returns on stocks, bonds, real estate, borrowing rates nationwide, and business owners’ decisions.

  • They also shape the U.S. dollar’s foreign exchange value, as well as trends in inflation.

The emotional investor: When considering the limits to markets’ ability to anticipate the future, human psychology is one of the biggest factors.

The same events can be interpreted negatively or positively, depending on investors’ collective mood.

  • As Eric Wallerstein of the WSJ adds, “investors’ expectations tend to be anchored to their recent memory. For nearly a decade after the 2008-09 financial crisis, for example, investors repeatedly (and wrongly) bet that interest rates would soon return to pre-crisis levels.”

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The combined wealth of adults younger than 40 has jumped 80% since 2019, boosted by stimulus checks and a higher concentration of stock ownership, which have done quite well over that period. 40-54 gained 10%, and those over 55 saw their combined wealth rise by 30%.

See you next time!

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