History rhymes. Today feels a lot like 2008 when many investors expected an economic rebound in the back half of 2008. When that did not happen, 2009 was to be the rebound year. 2010 then became the year when the economy would normalize after 2009 proved to be worse than 2008. 2010 presented only a modest recovery for many of the Software companies I used to cover. Those were primarily small and mid-cap Software companies. All were profitable with revenues ranging from approximately $200 million – $1 billion. This downturn will hit every company.
I’m not buying Friday’s job number. 517,000 jobs added in January on a seasonally-adjusted basis? The unadjusted jobs number was a loss of 2.5 million jobs in January (Table B-1). What are the Government statisticians doing to the numbers? They handed a positive jobs number to Biden ahead of Tuesday’s State of The Union Address is what they did. I don’t pay attention to these buffoons and prefer to watch what companies are doing.
More layoffs are coming around the time of March quarter EPS calls. We will see more sizable headcount reductions between now and the March quarter earnings calls. The month of April will have its fair share of earnings pre-announcements and RIFs.
Companies can only cut so much. At some point the METAs of the world will have to grow Revenues (and figure out a strategy for offsetting unit pricing declines in META’s case), as the EPS protection game will be played out.
The Fed can’t afford to keep playing the white knight. Perpetual money printing will drive CPI past July’s 9.1% high and push the public debt back over 130% of GDP. This easy monetary policy will destroy real economic growth, not help it.