> I’m becoming more and more convinced that they’re preparing for a global recession.
Large publicly traded companies don't really prepare for large recessions. They are fickle beasts. They mostly react to the market feelings and are in a lot of way quaterly focused. What we are seeing now is the combination of WallStreet feeling gloomy after the rate hikes and tech companies 2022 results being under target. They are taking actions to try to protect their stock price.
From my point of view, the issue tech companies are facing right now is not so much the possibility of an upcoming recession than them having finally reached the point where their impressive growth is slowing down with little chance of ever coming back to the insane rate of the 2000s and 2010s. It means their P/E ratio which has always been extremely high might slowly come back down to the economy average. That would be a very significant share price drop.
If you look at the economy as a whole, signs of a major recession are not there yet. SMEs are still the heart of the economy and the bankruptcies rate remains historically low. Unemployement is also really low. Manufacturing is doing great. Energy prices are far from bad in the USA. Inflation is high but rate hikes seem to be working.
I'm not an oracle. I can't predict the future. I won't tell you there won't be a recession especially in a particularly volatile international context. What I can tell you is that currently the signs don't point to us being doomed.
> From my point of view, the issue tech companies are facing right now is not so much the possibility of an upcoming recession than them having finally reached the point where their impressive growth is slowing down with little chance of ever coming back to the insane rate of the 2000s and 2010s. It means their P/E ratio which has always been extremely high might slowly come back down to the economy average. That would be a very significant share price drop.
I'd also add that all of the bets made to expand their TAM's haven't paid off.....
Amazon - Brick and Mortar Retail
Google - Everything other than search
Tesla - Self Driving
Facebook - VR/Metaverse
At some point, investor expectations will tell you to stop investing in future ideas
The PMI is not a manufacturing indicator. It’s a diffusion index on the value of stocks. What you are saying is that the stock market is contracting after seeing a rise at the beginning of the year (also zerohedge, come on, I thought we were having a serious discussion here).
Large publicly traded companies don't really prepare for large recessions. They are fickle beasts. They mostly react to the market feelings and are in a lot of way quaterly focused. What we are seeing now is the combination of WallStreet feeling gloomy after the rate hikes and tech companies 2022 results being under target. They are taking actions to try to protect their stock price.
From my point of view, the issue tech companies are facing right now is not so much the possibility of an upcoming recession than them having finally reached the point where their impressive growth is slowing down with little chance of ever coming back to the insane rate of the 2000s and 2010s. It means their P/E ratio which has always been extremely high might slowly come back down to the economy average. That would be a very significant share price drop.
If you look at the economy as a whole, signs of a major recession are not there yet. SMEs are still the heart of the economy and the bankruptcies rate remains historically low. Unemployement is also really low. Manufacturing is doing great. Energy prices are far from bad in the USA. Inflation is high but rate hikes seem to be working.
I'm not an oracle. I can't predict the future. I won't tell you there won't be a recession especially in a particularly volatile international context. What I can tell you is that currently the signs don't point to us being doomed.