Comment by legitster
9 hours 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.
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.
> 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.