February 9, 2023
Since late December, investors have been receiving bad news about the economic outlook as major companies continue to cut staff in “restructuring” moves as they foresee a difficult 2023.
Yet, January has turned out to be a very positive month for most investors particularly in a number of stocks with heavy short interest positions. That is stocks like AMC ($5) and BBBY ($3) where speculators have sold shares they do not own, with the hope they can repurchase these stocks at lower prices.
Just yesterday, DIS (117) jumped almost 7 points in late night trading after announcing that they were laying off 5,000 workers immediately, and projecting these moves would reduce costs by Billions of Dollars.
Workers in some of the largest technology firms, like META Platforms, who were in such high demand last year, are receiving “pink slips” via emails without any warnings. Many of the people being laid off have been with these companies for years.
Aren’t these lost jobs going to cause payment problems for these workers and their families that have been paying big mortgages and buying upscale cars and vacations?
Although fast food chains, like Chipotle, CMG indicate that they are hiring additional staff and able to maintain profitable operations by raising prices to offset raising costs, will these minimum wage jobs, offset high wage tech job losses?
Markets seem to look past the cautionary words of Fed Chairman Powell who thinks they will have to maintain a gradual increase in interest rates thru the balance of 2023, to keep inflation in check.
Well, January was a great month for the Wall Street Bulls. What will February bring?
Treasury Secretary Janet Yellen has warned that the Country will not be able to pay its bills unless the 31.2 Trillion Dollar Debt limit is increased before June. With a very defiant right wing of the Republican party flexing its control of Speaker McCarthy’s room to negotiate, we are in for a bumpy ride.
The recently floated idea that the Administration could get around this possible debt limit grid lock by “minting” a Trillion Dollar platnium coin, shows that some smart investors still can be taken in by fast talking con men.
I could be very wrong, but I remain very cautious, about the hope that the Fed will be able to engineer a “soft” landing for the economy in 2023.