Operating at the Intersection of Technology and the Capital Markets
Tag: economy
Layoffs are ticking up now (Google, Cisco, Roku, Evolve, Drift to name a few) as companies work through 2024 operating budgets. As interest rates and the cost of capital remain elevated in Q4, I suspect that companies - especially those with elevated Debt/EBITDA ratios - will announce further layoffs in October and November. However, I … Continue reading When Will The Next Big Round Of Layoffs Occur?
Some of the hyperbole that I hear around AI - Generative AI in particular - simply does not make any sense. For example, one of the things I hear from the Financial Media is that AI will help facilitate a soft landing. How so? AI can't create demand out of thin air. Reducing the cost … Continue reading AI Can’t Create Demand Out of Thin Air
The "no landing" nonsense is in fact nonsense. Going out of business is a hard landing for the people that have to live through it. Commercial Chapter 11 filings were up 105% year-over-year in May to 680 versus 332 in the previous year and are up 68% year-over-year for 1H 2023. Tell those folks that … Continue reading No Landing? No Way.
I'll put a negative spin on the Labor Force Participation Rate inching up by one-tenth of one percent: it did so as many who were collecting now expired COVID benefits can no longer afford to sit on the couch. This also explains why personal credit card debt has moved markedly higher over the past year … Continue reading Labor Force Participation Inches Up
Regardless of where CPI lands tomorrow, my view is that the Fed will hold rates higher for longer than the market believes. Higher interest rates combined with a shrinking money supply (QT), translates to: tighter monetary conditions, a higher cost of capital, less revenue visibility for companies, more employee layoffs and a deeper recession. The … Continue reading Tomorrow’s CPI = Noise
The S&P 500 is approximately at its long-term average P/E multiple of 20x (if one looks back to 1964). However, that multiple could go lower should the Fed hold rates higher for a longer period than what many investors expect. Further, markets tend not to bottom until after the Fed begins to cut rates (we … Continue reading How Low Will Valuations Go?
Headline CPI came in at 6.5% year-over-year and down -0.1% for the month of December. Core CPI was up 5.7% year-over-year and up 0.3% for December, up from 0.2% in November. Readers know how we feel about price inflation - it is higher than what the government reports. Take "eggs" for example which we recently … Continue reading CPI: A Long Way To Go To 2%
Despite today's uptick in Consumer Confidence, I suspect the measure will turn on a dime (negative sentiment), early next year as job losses mount, as rates remain elevated, as the market rolls over and as the housing market collapses. I expect forced selling in the housing market whether it be of primary homes, secondary homes … Continue reading Consumer Confidence Will Turn On A Dime
The Fed's current projections are more realistic than those made in September but continue to reflect a degree of wishful thinking. Unemployment Rate & Real GDP. It is difficult for me to believe that Real GDP Growth will be flat in 2023 at 0.5% as the Unemployment Rate increases from 3.7% to 4.6% over the … Continue reading Fed Projections: Too Optimistic
More Technology-related layoffs have occured in Q4 2022 than at the COVID economic trough in Q2 2020 (51,048 employees in the month of November 2022). Technology layoffs continue to mount as: interest rates climb; inflation remains elevated; global demand sputters and; as macro-economic uncertainty remains high. Check out Layoffs.fyi (created by Roger Lee), to track … Continue reading Technology Layoffs Continue To Climb
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