Operating at the Intersection of Technology and the Capital Markets
Tag: recession
We have a growing demand problem as a result of millions of jobs lost to the COVID pandemic (Personal Consumption -13.6% March to April 2020). Many of these jobs are not coming back as companies close permanently, realize they can do more with less and lose market share to competitors. Charts, video and podcasts at … Continue reading Houston, We Have A Demand ProblemPremium
Step 1.) Close down a country: What's done is done. However, one of the consequences of shutting down the United States is that the speculative grade default rate is expected to almost triple - 4.7% to 14.4% - within the next year. Not to speak of the millions of non-public businesses that have suffered revenue … Continue reading How to Destroy Productivity & Thwart Innovation: A 4-Step ProcessPremium
The depression will be deep and broad. Yes, even the beloved Enterprise Software sector will be impacted despite investors who believe the sector is impervious to negative inputs. The bullet points below are not hypothetical puts to the economy. They are real and are happening now. Banks are tightening credit. Commercial bankers are tightening now. … Continue reading The Pain Is Coming & The Recovery Will Be Uneven
We have charted a number of economic data sets. Each chart - some more so than others - speaks to the current weakened economy and/or illustrates the inflated equity valuations we are experiencing. The latter in our view is not related to fundamentals but to the enormous liquidity the Fed has pumped into the economy. … Continue reading TEK2day Weekend: Economic ChartsPremium
Headcount reductions continue. We have updated our list of recent Tech company layoffs. Access the Excel version HERE. The PDF version may be accessed HERE. It is difficult to imagine a snap economic recovery as companies continue to shed talented people. The mythical "V" recovery would require all components of the global economy to recover … Continue reading Tech Layoffs & The Mythical “V” Recovery
Earnings calls thus far have struck a similar tone XYZ CEO: "Let me begin by saying our thoughts are with..."XYZ CEO: "We are grateful for the opportunity to delight our customers during this difficult time. We got off to a good start in the months of January and February as we experienced healthy year-over-year growth. … Continue reading Earnings Season Thus Far: Lack of Color & Backbone
Congress will vote on a $484 Billion stimulus plan later this week which includes $250 Billion for the Paycheck Protection Program ("PPP") and $60 Billion for the SBA's Disaster Relief Fund. Congress and the Trump administration are racing to approve this stimulus package. The speed to execute this stimulus is driven by the fact that … Continue reading Expect More SMB Failures Despite Latest $310B SBA Relief
We are due for an equity market shakeout. The NASDAQ is up 450% since January 2009. The 26% spike in the NASDAQ from October 2019 to February 2020 on a lack of supporting fundamentals is like nothing I've ever seen. By late March we had traded down 30% from February's high yet we have gained … Continue reading The Market Is Upside Down
Time for VC's to write down their portfolios. The same holds true for Private Equity portfolios. We led with VC's in the title because venture-backed valuations bear little resemblance to any economic reality whereas private equity valuations are largely grounded in reality. Public company valuations are not going to snap back to normal. The U.S. … Continue reading Public Service Message to VC’s: Time to Write Down Your Portfolios
A recession is defined as an economic period where GDP declines for two consecutive quarters. We believe the next recessionary period will be different as a result of artificially low interest rates. The United States' proclivity to print money and maintain artificially low interest rates makes it difficult for institutional investors to find yield. Gone … Continue reading The Next Recession Will Prove Different for U.S. Equity Markets
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