By Peter Tchir of Academy Securities
Someone’s Expense is Someone Else’s Revenue
That is really all I want to say as we start digesting earnings reports, and far more importantly, earnings calls.
It is such a simple and obvious statement, I feel I should apologize for using it, not only as the title of a T-Report, but as the entire message in this T-Report. But, there has been so much pushback on my recession view, on the vision of a “pendulum swinging” right through “soft landing” zone into recession zone, that I felt compelled to come up with my “best” argument.
Someone’s expense is someone else’s revenue.
Every expense cut, every wage cut, every layoff, takes someone else’ revenue away.
Ultimately, given the circular nature of the economy, that probably circles around to someone else cutting their expense that was at one time your revenue.
We hit on “circularity” In our 2023 Outlook – PAIN and it remains no less important today, than it was then.
Positioning has reverted to being too bullish again (breaking the 200 DMA on the S&P 500 (around 4,000) pulled in a lot of technical traders) and sets us up for more downside.
If the Fed wasn’t battling its own demons, we would have seen policy being developed to catch the economy they pushed over the edge, rather than them jumping up and down on it a few more times like some UFC fighter in a violent rage.
All that and I’m not even yet “max” bearish as I too am afraid of the power of the “soft landing” narrative, which so many are grabbing hold of.
Apologies for such a simplistic T-report, but sometime KISS applies, at least in my own mind.