Coinbase up 12% because the company is cutting staff? They can’t cut quick enough as crypto trading falls off. ChatGPT at 145x revenue? There are plenty of Technology companies that continue to trade at 20x revenue. Despite the pronounced pullback in Tech valuations over the course of 2022, there is further room for valuations to fall.
The Fed will go higher and hold rates for longer than the Fed Put / Fed Pivot crowd believes.
2023 Revenue and EPS guidance is going to be weak for many Technology companies and will not support today’s rich valuations (yes, Technology stocks are not cheap). Technology stocks are going lower before they head higher in sustained fashion.
Thursday’s CPI release won’t give the Fed reason to rethink its stance. The Fed will continue to tighten monetary policy through QT and rate hikes for some time. Recall that the Fed is still in an accommodative stance given that the Fed Funds rate is below CPI.