Comment by legitster
4 months ago
Anecdotally, our company's next couple quarters are projected to be a bloodbath. Spending is down everywhere, nearly all of our customers are pushing for huge cuts to their contracts, and in turn literally any costs we can jettison to keep jobs is being pushed through. We're hearing the same from our customers.
AI has been the only new investment our company has made (half hearted at that). I definitely get the sense that everyone pretending things are fine to investors, meanwhile they are playing musical chairs.
Back in my economics classes at college, a professor pointed out that a stock market can go up for two reasons: On one hand, the economy is legitimately growing and shares are becoming more valuable. But on the other hand, people and corporations could be cutting spending en masse so there's extra cash to flood the stock markets and drive up prices regardless of future earnings.
I work for one of the largest packaging companies in the world. Customers across the board in the US are cutting back on how much packaging they need due to presumably lower sales volume. Make of that information what you will.
My eBay sales have been way down this year too and so far q4 is not looking good at all. People are cutting back across the board and it’s going to be very ugly once wall street stops plugging their ears and covering their eyes.
> My eBay sales have been way down this year too and so far q4 is not looking good at all.
I had half the mind to start up an old project I abandoned after losing my job. I opened eBay and was floored to see how much costs have increased in my little niche.
This is an indicator that is very close to the sale time. If you can share and don't mind sharing, how did whatever you saw during 2020/2021 corelate with retail sales?
tariffs could be an explanation.
sometimes volume and total $ are not the same.
car manufacturers, right at the beginning of covid, started cutting orders of components from their suppliers, thinking that demand is going to drop due to covid induced recession.
Guess what happened next?
Covid was a black swan event. Unless we see something like the MBS collapse, the underlying economic weakness isn’t due to a such an acute root cause.
Not sure how comparable they are.
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> Guess what happened next?
Stimulus and zero interest rate followed by 10% inflation.
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A gigantic contracyclic fiscal policy was adopted to sustain demand.
Do you think Trump and the GOP will do that anytime soon?
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Short the stock market then if you feel a recession is coming
> Back in my economics classes at college, a professor pointed out that a stock market can go up for two reasons
Reason #1 is lower interest rates, which increase the present value of future cash flows in DCF models. A professor who does not mention that does not know what they are talking about.
That's a subset of "shares becoming more valuable"
Not in the way legitser wrote:
>On one hand, the economy is legitimately growing and shares are becoming more valuable
The implication here is that output and productivity is growing. Not that money is becoming less valuable. A more precise term than “valuable” is purchasing power.
Are Americans gaining purchasing power? Not really, because equity gains are being cancelled out by currency losses, if you’re an American that is lucky enough to even own significant equity.
Likewise on all downward business signals at my employer. I was thankfully in school during 09, but this easily feels like the biggest house of cards I have ever experienced as an adult.
Econ professor espousing on the stock market lol. As someone with a couple dumb fancy Econ degrees and whose career has been quite good in the stock market, this comment made me laugh.
Why? Everyone knows the stock market can be irrational and disconnected from the economy.