Amazon Is Pausing Hiring for Corporate Workforce
wsj.com
wsj.com
Is the root cause of this really just overhiring during the pandemic? Or is there something else at play here?
source?
This is speculation, so would love any corrections or counter points.
read enough doomsday social media material and you'll be convinced you should lock your money into treasuries at 4% instead of equities all together (any stock, including index/mutual funds)
The stock market is a secondary market. You or me buying shares doesn't effect Amazon at all. They don't get a penny of your money when you buy shares
Look at the chart you linked to - the fed raised rates from effectively 0 to ~2.4% over 3+ years from 2016-2019. That has absolutely nothing in common with what's happening right now, where the fed went from 0.3 in April to ~3% today.
It’s actually the fastest fed tightening ever, from a percentage change perspective.
Weren’t many 100x sales companies in 2015. Even after the recent carnage there are still many 10-40x sales companies, which is pretty much unjustifiable with a 4.5% risk free rate
so you are saying from a valuation perspective, we have more room to fall?
Things like DASH which have high sales multiples relative to what a realistic margin is for them long term. Or software stocks like NET that are still over 10x sales, without a sufficiently commensurate growth rate to justify it.
A company with a 20x PE implies a 5% yield this year. I can get 5% on a AAA bond effectively risk free, or 4.5% on a treasury absolutely risk free. There is close to 0 fundamental justification for a lot of tech stocks still.
CMG with 50 PE implies a 2% yield. Why? What logic is there to justify this? You can invent some story about 20 years from now, or I can take a guaranteed return that’s many times higher today.
Some stocks are very fairly valued though, valuations are all over the place right now and not consistent within sectors. Should Apple really have twice the valuation multiple as Google? Not in my opinion
Isn't this kind of a useless stat?
https://www.slickcharts.com/sp500/returns
https://www.multpl.com/s-p-500-pe-ratio
the market typically doesn't follow this "this P/E must yield this much return" rule from what I can tell. We've had many many many 8-10%+ ROI years despite whatever the "this P/E implies this much yield/return" rule dictates.
If tech companies miss earnings again when they report for Q4, do they have another 10-20% drop left in them again?
Pretty realistic if the recession gets bad.
Current estimates for the S&P predict earnings growth even though there’s a very clear recession on the horizon, likely deep.
Anyway, lots of cheap stocks out there now if you avoid the index. Still too many absurdly overvalued constituents like Chipotle and Costco (40-50x trailing PE, just why)
My biggest concern is, while I agree with you that S&P 2023 EPS TTM could end up being $200, because we have not yet seen this reflected in estimates (Yardeni earnings forecasts shows $235 as an estimate), we have more room to fall before the expectation (let alone the reality) of that is priced in.
$235 Yarendi expectation -> $200 your expectation is a 15% difference. That means analysts (and consequentially the market pricing in those analysts expectations) are "incorrectly" estimating earnings 15% higher than they might be in your opinion.
Scary times.
Analysts by and large just extrapolate the trend. If there’s a severe recession, actual earnings could be 190 or even less.
That being said, buying around 3500 or below seems a decent value long term. But I don’t think this is a market where you should wait, instead pick individual companies that are already too cheap and hold them.
I bought a bunch of REITs with 6-8x ffo multiples, low debt, and double digit growth rates. Why bother with the 20x+ PE companies?
There are also many small cap growth companies at 1-2x sales and 30%+ growth rates. Why buy one at 10x sales?
IG bonds yielding 8% close to risk free?
You’d think this would all be obvious, yet major imbalances in valuations exist and is there for the taking.
i'm counting for at least another 20% across the board when earnings miss everywhere.
Interesting prediction.
Wrong angle.
The profits that companies make in 2025 were compared against 0% interest rate. We are now looking at a 4.5% interest rate environment.
So a company that offered 0% profits in 2023, 0% profits in 2024, and 10% profits in 2025 (ie: geometric average 3.2% profits each year from 2023 through 2025) now *loses* money to a savings account that's now expected to earn 4.5% through 2023, 2024, and 2025.
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Companies that offer very little profits with "promise of future profits" are now losing out to savings accounts and other safe investments. Its not that the company has changed, its that savings accounts / safe investments / bonds have changed.
Furthermore, if that company was relying upon debt to generate that profit, their cost has gone from near 0% on that debt, to -4% per year. So they're not looking at 0% profits in 2023, but closer to -4% profits in 2023, -4% profits in 2024, and 6% profits in 2025.
Obviously, this hypothetical depends on how much debt and how much "future profits" a company is expected to have. But growth/tech companies are well known for borrowing tons of money and promising future growth.
how many investors actively manage their portfolios and do so with their emotions (despite statistical evidence saying you should do neither if you want the best returns)? enough to actually move the markets?
what does that look like in a more zoomed in view? 1,000,000 americans logging in every day/week/month/quarter and rebalancing their 401k/IRA/brokerage accounts? realizing losses by selling?
But if you object to the term "emotion" when describing active investors then let's just say that the stock price is often set by changes in the price to earnings multiple, which usually has nothing to do with the actual value of a company and is inexplicable outside hand wavy appeals to social psychology.
How many "total investors" are there making trades in the average month?
Even passive investors can panic sell when they see their 401k balance shrinking fast.
Even passive investors can turn into active intestors and panic sell when they see their 401k balance shrinking fast.
Here's an example of someone trying hard to stay passive during the 2008 downturn: https://www.bogleheads.org/forum/viewtopic.php?t=25126
like i totally agree, i can understand the basic math between
"equities are worth more when corporations can finance their projects/growth cheaper (0-2%) than at 4-6%"
the less money corporations stand to make, the less profitable they are, they less they are worth, the less premium investors want to pay for exposure to their hypothetical earnings yields, etc. etc.
but some stat somewhere said "it's not as simple as exiting the market and waiting for the fed to do QE again" (don't fight the fed)
equities can still "price in", digest, and "go up" during fed monetary policy tightening cycle. i think i read it's happened 9 out of 14 times previously. not sure the truth behind it/wish i could remember the source.
I'll miss responding to those for a while.
> We still intend to hire a meaningful number of people in 2023
Am I missing something, or are these contradictory?
Who knows? It's HR PR, it means whatever they want it to mean.
You never have a job until you're in the chair, sitting down coding... or at least that's my bar lol.