Doom and gloom
Good afternoon everyone. I hope you’ve all been enjoying the extended bank holiday weekend thanks to our Queen’s Platinum Jubilee, big up Queen Elizabeth.
Since finishing my degree last week, I’ve been dunking my head back into my favourite subject which means I’ve had an uptick in the number of newsletters and other literature I read in a week.
A great newsletter on substack I’ve been following recently is Behind the Balance Sheet where Steve Clapham, one of the analysts who uncovered the Patisserie Valerie fraud, writes about everything from tips in assessing financial statements to views on company valuations. He also has a website with lots of resources to learn about investment, check it out here. The Fund Letters section is the one I visit most.
Right, onto what has interested me this week.
More doom and gloom
Last week I spoke a bit about market bubbles and where the worst place to (possibly) be in the stock market is, I figured that it could be Klarna.
I highlighted that Klarna made the news last week as it was cutting 10% of its workforce to save on costs as it points its strategic direction away from growth towards short term profitability.
10% seems to be that magic number. Moving away from Fintech towards car manufacturing/battery tech/energy/(whatever it is), Musk has ordered to cut 10% of its workforce and told his executives to pause all hiring globally in emails seen by Reuters.
Musk has joined the bandwagon of top executives expressing fears about the future of the US’s economy saying that he has a “super bad feeling” about the economy. Jamie Dimon has been taking the majority of the limelight for issuing warnings about the future of the economy through the medium of pathetic fallacy, telling us to brace ourselves for an economic hurricane at a financial conference in New York.
Dimon mentioned that JP Morgan, the biggest investment bank in the world by employees, is becoming more conservative with its balance sheet. The two main concerns for Dimon are quantitative tightening (QT) and the war in Ukraine increasing the prices of food and oil. The CEO expressed his concern that the price of oil could still rise to between $150-$175 a barrel, one of my other favourite writers Mr. Kuppy even argues that oil could reach $200 a barrel.
Other executives from the big banks such as Goldman Sach’s COO Waldron warned yesterday that they’re expecting big shocks to the economy. Again, he attributed his concerns to similar themes of QT and commodity shocks/prices.
Let’s face it, there’s no news here. Is it a full-on buy signal yet? Maybe. I finished Peter Lynch’s book “One up on Wallstreet” and he said the best buy signal is when you can’t avoid the doom and gloom - your friends, granny, and neighbours are all asking the same thing “Should I sell my stocks?”. When this happens, you say think “Absolutely. Sell them to me…”
Sorry, it’s an especially short one this weekend. My battery is running low on my laptop and I’ve got to bolt back to uni to say ‘by for now’ to a friend. Bittersweet times indeed.