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Not even a day after reports swirled that Microsoft was preparing to cut thousands of employees, and as the broader tech sector continues to hemorrhage white-collar workers replaced by chatbots, the latest AI-related job-displacement news is coming from Europe's largest software company.

Bloomberg reports that German enterprise software giant SAP, best known for software that supports large corporations running core business operations, is preparing to slow hiring and cut travel costs as it diverts more capital toward developing AI tools.

More color from the report:

Going forward, SAP will "exclusively focus new hiring on selected profiles only, mainly core Al roles, that are critical for our long-term success," the executive board said in an email to staff on Wednesday evening that Bloomberg reviewed.

Internal travel unrelated to AI development will be paused, and the company will look for ways to cut spending with suppliers.

"As Al reshapes the future of our industry, we are making significant investments in the products and Al capabilities we build, complemented by strategic acquisitions in data and Al where we need additional expertise and technology," the managers said in the memo.

"By balancing where we invest and where we save, we ensure that SAP remains strong, competitive, and well- positioned for the long term."

SAP has also been pursuing acquisitions to bolster its AI offerings and reportedly lost out on a deal to purchase industrial AI and data firm Cognite, which instead agreed to a $3.1 billion deal with Schneider Electric.

The move comes as CEO Christian Klein reorganizes SAP around AI innovation, taking on a larger role in overseeing product development. It also comes as legacy software names have been battered this year on fears that AI rivals such as Anthropic and OpenAI could disrupt their core businesses.

According to Bloomberg data, SAP had around 110,000 employees as of the first quarter of this year. While the report made no mention of future layoffs, the company's workforce appears to have already peaked in the third quarter of 2022, suggesting the latest "efficiency" push could further unwind years of overhiring.

New report: 

• AI Adoption Rate Across Corporate America Accelerates

SAP shares in Frankfurt were down around 2% on Thursday and about 33% on the year.

The selloff mirrors declines of Salesforce, Workday, and Microsoft, which have cut thousands of jobs while investing heavily in AI. The latest from The Market Ear suggests that, after months of declines, software could be set for a squeeze (read report). 

After a catastrophic Q1 for private credit BDCs, Q2 is proceeding just as many had expected: just as bad.

After alternative asset manager titans such as Apollo, Blackrock, Blackstone and Cliffwater all gated their investors for a second straight quarter following a surge in redemption requests that easily surpassed what took place in Q1, earlier today we learned that the ground zero of the private credit implosion - Blue Owl Capital - was also slammed with redemption requests in the second quarter. Sure enough, it also gated its investors.

As Bloomberg reports, for the second straight quarter, two Blue Owl Capital private credit funds were hit with the industry’s largest redemption requests, forcing the manager to again cap withdrawals.

Investors in the roughly $34 billion Blue Owl Credit Income Corp., one of the largest in the industry, asked to pull 18.8% of shares, or $3.6 billion in the second quarter, according to an investor letter Thursday. That’s down fractionally less than the $4.2 billion requested in the prior period from the fund known as OCIC. 

The smaller Blue Owl Technology Income Corp. saw shareholders request 38.1%, or $1.1 billion, compared with $1.2 billion in the first quarter. 

The good news: the total redemptions were modestly below last quarter's record; the bad news: the redemptions persisted almost entirely despite the market staging a historic, remarkable rebound and as fears about software disruption supposedly eased. Turns out they did not.

Blue Owl, which as we have thoroughly documents, has been at the heart of the storm roiling the $1.8 trillion private credit market due to its massive exposure to software-linked loans, joins industry peers including Apollo, Ares, BlackRock and Blackstone in imposing a 5% redemption limit as investors accelerate out of the funds.

Blue Owl told investors it was “encouraged to see OCIC’s modestly lower quarter-over-quarter tender requests broadly across channels and geographies.” Let's see what the company will tell investors next quarter if we see a powerful drawdown in stocks which sparks a new selling panic across the private credit space. 

According to Bloomberg, the firm said it has satisfied more than 43% of the original demand from shareholders with repeat withdrawal requests. It said second quarter requests were largely from those investors, and included “limited new participation.”

Realizing the existential threat they were in, Blue Owl executives - who in a bizarre act of "diversification" decided to buy a stake in the Cleveland Cavaliers - stepped up efforts to engage with clients over the past three months, flying around the world on a roadshow trying to educate investors, according to a person with knowledge of the matter. They emphasized the message that private credit is a performing asset and that their funds had delivered positive returns, the person said, requesting anonymity to discuss private meetings.

In the shareholder letter Thursday, the firm highlighted that about 90% of investors remain in the larger fund, which has posted approximately $1.2 billion of inflows this year.

“OCIC does not need to sell a single private loan to satisfy the tender offer,” Craig Packer, Blue Owl’s co-president, and Logan Nicholson, OCIC president, said in the letter to shareholders.

And in case that investors decided they don't want to be in the fund much longer, the firm said that both Blue Owl funds have “ample dry powder” to capitalize on better lending conditions in the market, with wider spreads and improved protections.

OCIC and OTIC had $11.6 billion and $1.3 billion in liquidity respectively, including cash and available borrowings assets as of May 31, according to the letters. OTIC oversees about $5 billion in assets.

Authored by Tom Ozimek via The Epoch Times,

A federal judge on Wednesday blocked the U.S. Postal Service from implementing a Trump administration proposal to boost election integrity by enhancing ballot tracking and verification, finding it conflicted with a 2021 settlement requiring the agency to prioritize the timely delivery of election mail.

U.S. District Judge Emmet Sullivan ruled on July 1 that USPS could not move forward with the proposed rule, which would have required states using the mail for federal absentee and mail-in voting to adopt standardized ballot envelopes with trackable barcodes and provide USPS with voter participation lists to make ballot verification easier. Ballot mailings that failed to comply would have been rejected.

One day after the proposed rule was published in early June, the National Association for the Advancement of Colored People (NAACP) returned to court in a long-running lawsuit originally filed during the 2020 election, asking Sullivan to enforce a 2021 settlement that requires USPS to prioritize the monitoring and timely delivery of election mail through the 2028 election cycle.

The proposed rule stems from President Donald Trump’s March executive order directing USPS to develop new standards for handling federal ballot mail as part of a broader thrust to bolster election integrity.

The Justice Department, which represented USPS in the case, did not respond to a request for comment before publication.

Rule Boosts Election Integrity, DOJ Says

In opposing the NAACP’s motion, the Department of Justice (DOJ) argued in a court brief that the proposed rule was designed to improve—not hinder—the handling of election mail.

Attorneys representing the Trump administration wrote that requiring standardized Election Mail logos and Intelligent Mail barcodes would make ballots easier to identify throughout the postal network. They argued this would allow USPS to better monitor the movement of mail-in ballots and help implement the “extraordinary measures” USPS has traditionally used to expedite election mail before federal elections.

“Such requirements promote the ’monitoring and timely delivery of Election Mail'; they do not frustrate it,” they wrote in the brief. “And while the Postal Service has proposed requiring state and local election officials to identify the names and addresses of the persons to whom they send ballots and to provide the barcodes for the ballot envelopes, requiring this information—which officials already, by definition, have—would not compromise the lawful delivery of any mail.”

The administration stated in the proposal that the new rule would strengthen election integrity by creating a uniform ballot-tracking system while leaving decisions about voter eligibility entirely to the states.

Election officials—not USPS—would determine who is eligible to vote by mail and would submit lists of voters receiving mail ballots, together with unique barcode information, through a federal portal. The Postal Service would use that information only to verify ballot mailings and improve tracking, not to decide who could vote.

“State and local election officials would maintain full control over who they send ballots to,” government attorneys said in the brief.

“There are no plausible concerns, certainly at this stage, that the Proposed Rule would negatively impact USPS’s ability to timely and reliably deliver Election Mail. Rather, this provision would, again, assist USPS in better being able to track (and thus deliver) such important mail.”

Plaintiffs Claim ‘Confusion and Uncertainty’

The NAACP argued in its motion that the new requirements would violate the 2021 settlement and could prevent eligible voters from receiving mail ballots.

“Implementation of the Proposed Rule would threaten to prevent millions of eligible voters from receiving mail-in ballots to which they are entitled,” attorneys representing the plaintiffs wrote.

They also argued that, even while the rule remains in proposed form, it already caused confusion within USPS, and among election officials and voters, about what procedures will be in place for mail-in ballots in the November 2026 election cycle.

“The pendency of the Proposed Rule ... creates confusion and uncertainty,” they wrote. “USPS, for example, cannot conduct internal or external trainings to plan for a rule that is not yet finalized. Nor can it provide answers or guidance to election officials and voters to mitigate confusion or uncertainty.”

The case traces back to August 2020, when the NAACP sued USPS over operational changes introduced around that time that plaintiffs said caused widespread mail delays during the COVID-19 pandemic and threatened the timely delivery of absentee ballots.

The parties settled the case in December 2021. Under the agreement, USPS committed through 2028 to issue nationwide election-mail guidance, organize regular “outreach meetings” with the NAACP before federal elections, provide performance reports, and make good-faith efforts to prioritize the monitoring and timely delivery of election mail.

Trump’s March executive order directed USPS to develop new standards to strengthen election security, prompting USPS to publish the proposed rule, which the NAACP challenged.

The judge sided with the plaintiffs, concluding that the proposed procedures conflicted with USPS’s commitment to prioritize the timely delivery of election mail.

Allison Zieve, director of Public Citizen Litigation Group, which represented the NAACP in the case, praised the ruling.

“The court today correctly recognized that USPS’s plan to create roadblocks to mail-in voting was inconsistent with its commitment to timely deliver election mail,” she said in a statement. “USPS’s plan was unwise, unlawful, and a threat to the millions of voters who rely on mailed ballots to participate in our democracy.”

By Michael Every of Rabobank

Sin(a)tra

Let’s be Frank: the central banker pow-wow at Sintra had a touch of Sinatra. Fed Chair Warsh belted out “I’ll do it MYYYYYY way,” and everyone else chimed in that they’d had a few regrets about how they’ve run monetary policy and were coincidentally now mentioning them.

Markets swooned when Warsh stated the case for Fed independence and that anyone expecting tolerance for inflation above 2% “would be disappointed.”

Yet he also sang with an AI autotune. While the current “AI shock” is driving a boom in capex, i.e., the inflation he said he will fight, this will eventually expand the supply side through higher productivity, a shift with “huge implications for monetary policy.” In other words, “we’ve all looked around, and we’ve seen that prices are too high,” but he can fight it by saying it will eventually become deflation. (That would logically hold true for tariffs; and wars in the Middle East – if you win them.)

Warsh really will do things his way. He said central banking needs structural adaptation and must move away from forward guidance towards “framework guidance,” with “contemporaneous real-time” big data/AI monitoring to capture what’s going on --not backwards-looking, inaccurate analogue surveys the equivalent of vinyl-- within 9–12 months. This will also include new measures of inflation: are they going to be lower or higher than the current ones based on the heuristic in how they have always been changed so far?

He also wants central bankers to go on tour less. He rejected heavy reliance on “conventional wisdom” or detailed predictive guidance, i.e., a data calendar filled with central bankers talking.

This implies the Wall Street-analyst Brat Pack may soon be out of the picture. What’s a generation of macro-commentary scribblers pushing “X said Y”, or “Survey X was up Z vs consensus of Y, and we guess next month will be A” going to do with nothing to report on? Indeed, if we have omerta and a (transparent?) set of accurate real-time economic indicators, what role is there for macrostrategy? More chatter to fill the space? A meta-approach, i.e., seeing differences between a Kalecki or Minsky view of political economy vs. the neoclassical, as such fundamental questions re-emerge; or, given other economies won’t have the same data quality or timeliness, linking up with what’s going on abroad?

It may also imply that Wall Street itself will not be a Warsh fan. He is no fan of QE and the Fed’s large balance sheet: what if we see deregulation aimed at incentivizing banks to lend into productive capital like factories or infrastructure rather than holding financial assets?

Warsh is perhaps already getting others to do it his way. The ECB’s Lagarde spoke of going “back to basics,” abandoning heavy reliance on unconventional tools and complex forward guidance in favour of simpler frameworks. The BoE’s Bailey voiced regret over past forward guidance practices and aligned with the broader retreat from detailed predictive signalling. The BoC’s Macklem didn’t push back either, and multiple reports note a widespread “open-mindedness” among Sintra attendees on AI and productivity too.

Let me say this not in a shy way, things are changing far more than a “Warsh wants inflation back below 2%” headline captures.

Meanwhile, the brief US Operation Freedom to get Hormuz oil flowing before the US-Iran MoU was reportedly shot down by Saudi Arabia: Riyadh refused to allow the US to use its bases or airspace, to which the US threatened to not shoot down incoming drones or missiles – and is reportedly considering moving bases elsewhere in the region – like Israel(?) Which Iran is again threatening today in tit-for-tat rhetoric.

We had more ‘positive’ talks in Qatar. Both sides reportedly still want the ‘peacefire’ to hold for now, as we expected, as the US tries to convince Iran to look at the ‘bigger picture’ and not insist on control of Hormuz or tolls. However, the US also said Iran will not get any frozen assets until it fulfils the MoU, which Iran puts the other way round, as Tehran claims it will use that cash in Qatar to buy “required goods” while the US says it will be held in escrow and used to buy US products. Meanwhile, VP Vance made clear the MoU is an opportunity to refuel, then see if more war is required (our base case), as Lebanon and Syria, a former Iranian proxy now flipped, joined a CENTCOM-led Middle East security dialogue for first time, and Iraq’s PM gave pro-Iranian militias a 30 September deadline to disarm.

Ukraine will allow weapons exports for first time since start of the war; Germany charged a Ukrainian suspect in the Nord Stream sabotage case; Russia and Crimea are grappling with fuel shortages and blackouts as Zelenskyy warned of further massive Russian strikes planned for Ukraine; the US NATO envoy has warned some allies are ‘lagging’ on their spending; the UK’s defence black hole just tripled to £15bn; Germany is proposing to make US weapons; and US defence startups are raiding the auto and fracking sectors for parts to speed weapons output.

In frenetic geoeconomics, the US opted not to renew the USMCA, so it rolls annually towards a 10-year death unless reworked into Fortress Americas; Canada joined Europe – its song contest that is, alongside Australia; Politico says ‘Europe wants to save its industry. It still can’t agree how’, as the EU imposed a €3 fee on small packages from abroad and reduced steel quotas while raising tariffs; the Supreme Court ruling on independent agencies and regulators is reportedly seeing Europe think again about the €1.7 trillion data deal it signed with the US; the White House is accelerating its plans for AI model standards; the US nuclear power regulator is proposing changing rules that protect people from radiation, as Brussels will bend its budget rules to allow countries to borrow more for EVs, bike lanes, and train stations; and the EU-Mercosur trade deal is sparking a quota tug-of-war as LatAm countries can't agree on how to divide it up.

In equally frenetic politics, democratic socialists continue to win US electoral primaries, seeing Trump warn about the return of communism: while hyperbole to European ears, that’s easily matched by many statements made by new figures on the US far left (and right). It also underlines that there’s no longer a US Overton Window - indeed, following the Supreme Court ruling on birthright citizenship, the Trump plan B is reportedly ‘No expectant moms at the border’; November’s midterms could be wild, and November 2028’s election’s far more so - and Europe and Australia are far from immune.

As such, central banks need to get things right – or talk about ‘revolution’ may not be hyperbole. As the tears subside, there isn’t a lot to find amusing in all this; or bemusing - we are being told by the Establishment that things need to, and will be, done differently ahead, like it or not. And that includes central banking and how one analyses what they are doing and why.

Let the record show I took the blows in trying to flag this well in advance, and I did it my way.