My Investing Muse (26Aug24) - layoffs, Private Equity & outlook
My Investing Muse (26Aug24)
Layoffs & Closure news
GM lays off over 1,000 salaried software, services employees - Reuters
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People may prefer delayed data over wrong data. Are we in a worse situation?
Layoff & closure news continued into the week.
Is trouble brewing in the Private Equity (PE) businesses?
The financial sector could take the first hit. If the sentiments tilt towards fear, a sell-off happens, & companies with PE exposure may go under a quick spiral. How many of the businesses PE bought can bring a return of over 19%?
What is my outlook and strategy?
The LMI has been on a bullish run for the last few months. Workers at some of the ports are poised for strike - retailers have stocked up early in place of this. The latest LEI seems to suggest no recession. I am hedging with some inverse ETFs. This is not against indices or stocks. Both LEI and LMI remain my main references for macro outlook. Debts, CMBS, CRE, bankruptcy, and PE may see some issues soon. They may be saved by the Fed pivot, and the coming strikes (rail & port) could add complications.
The shipping industry is tanked by the Red Sea crisis. Watch out for the strikes in both Canada and the USA - from ports to rail. More trucking companies are closing. China had a record export recently, but it is partly due to early order placements.
The increase in bankruptcy, debts, & CRE vacancies is concerning. If we look at the average like $SPY, it looks like we are doing great. If we look into the different income brackets, it tells us more. When mortgage & auto loans default, the households are in serious trouble.
My final thoughts
The biggest news was Powell signalling the reduction of interest rates. This brought the market into a rally.
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The S&P 500 rises 1.5% after Fed Chair Powell says "the time has come" for Fed rate cuts. Now, the S&P 500 is officially up more than 10% from its August 5th low. In other words, the index has added back over $4.5 TRILLION of market cap in just 3 weeks. The Fed pivot is here. - X user The Kobeissi Letter.
The market has ended on a high with Powell speaking of a coming interest rate cut. The market has breathed a sigh of relief. If the coming PCE data confirms a downward trend for inflation, this would set the market at ease.
Let us do our due diligence to identify great companies. When the time comes, let us invest boldly.
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- zingie·08-27The market seems to be on the upswing after Powell's remarks on interest rate cuts.LikeReport