To The Moon

My Investing Muse (21Oct24)

Layoffs & Closure news

• Tech Layoffs: Amazon To Cut 14,000 Jobs In Managerial Positions - MSN

• EY slims workforce for first time in 14 years Slowdown in demand for consulting services leads Big Four accounting firm to post weakest revenue growth since 2010 - FT

• If laid off today, 40% of workers said they would run out of money within one month based on their current spending. 24% said they would run out within two weeks. - Market Watch

Layoff & closure news continued into the week.

Cost of living

(taken from tweets of X user The Kobeissi Letter)

The average cost of a family’s annual health insurance premium is up 7% over the last 12 months to a record $25,572. This is the second consecutive year with a 7%+ increase, pushing premiums higher by $3,109 in just 2 years. Since 2000, the average health insurance premium has QUADRUPLED. To put this into perspective, CPI inflation has risen by 78% over the same period. Strangely, the cost of health insurance as measured in the CPI report has fallen 31% over the last 2 years, according to the BLS.

US consumers' inflation expectations for the next 5-10 years skyrocketed to 7.1% in October, the highest in over 40 years. This metric has DOUBLED in just several months, according to the University of Michigan Consumer Survey. To put this into perspective, median inflation expectations have been at ~3% for the last 3 years. Consumer sentiment has been severely damaged by rising prices of necessities, and expectations are getting worse. This comes as core CPI inflation has been above 3% for 41 months, the longest streak since the early 1990s. Inflation is still a major concern for Americans.

Health insurance premiums have surged recently. For those who suffered natural disasters like fire, hurricane and floods, they faced the challenges of recovery. How would these add to the burden? With an expectation of more inflation to come, how would this change the spending habits of the citizens?

Is the banking sector doing well?

Auto loan serious delinquencies of 90+ days spiked to 2.88%, the most since 2Q 2010. They are rising at a similar pace to the one seen in the 2008 Financial Crisis. Meanwhile, Auto loan debt hit a record $1.6 trillion. - X user Global Markets Investor

JPMorgan Chase, Bank of America, Wells Fargo and Citi recorded $6.9 billion in net charge-offs in Q3 of this year, primarily driven by credit card delinquencies and soured consumer loans. How about the regional banks? - DailyHodl

UNREALISED LOSSES BY U.S. BANKS 7x HIGHER THAN 2008 FINANCIAL CRISIS

With the above, should we be concerned about the banking sector?

My final thoughts

Q3/2024 earnings season has started and it is looking good thus far. The climb in the S&P500 index is encouraging and this represents the global footprint of some of the top businesses in the world (and not just America).

With the above considerations, I recommend some caution. Following every peak is a retracement. Following every dip, there is a recovery. What we need to ascertain are the magnitude of these and the fundamentals supporting these.

If we deep dive into the data, would we gather more confident or concern? With the coming USA presidential election, it is likely to add volatility in the market. With Warren Buffett selling the shares of Bank of America, my suspicion of “a shrinking moat” compounds. This should trigger the start of due diligence looking into the company. To blindly follow is not wise but to turn a deaf ear to this loud gesture is folly too.

Let us consider some profit taking. Personally, I have taken profits from some of my Palantir holdings and I could be wrong. Let us invest wise and may we take advantage of the various opportunities presented by the market.

@TigerStars

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