Inflation / CPI numbers roaring this quarter - do you think we gonna see a big uptake in jobs and hiring spree? Stock market is up big time so it’s only matter of time before everything goes back to bull market real soon
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No lol
You'd need to see medium-to-long term trends in inflation, job market strength etc. before corporates feel comfortable leaving their bunkers. We're not even through the current cycle of layoffs, everybody is still fearful of what the economy will do over the next 18-24 months, especially considering rates haven't been high enough to trigger punitive renewals on the majority of debt (expect to see that in 2024 and 2025 as FOMO buyers from 2019-2022 start to see mortgage renewals at rates that are multiples of what they signed for initially).
Monthly numbers don't mean much when you need years to see the result of policy changes. I'd personally be surprised if deal activity picks up any time soon.
How does that work in general? With the first rate cut anticipated sometime in Q2, wouldn't you expect firms in general to be interested in doing some sort of business?
>with the first rate cut anticipated sometime in Q2
Let's stop right there. Nobody knows what the Fed will do except the Fed. They've made it clear over their last communications that they are in no rush to cut rates, and why should they? The amount of free money printed during COVID was astronomical and inflation is still above target in just about every developed country, despite a precipitous fall in the US.
Let's assume you're right, rates are cut in Q2. Okay, so they go from 550 bps to 525 bps? That's still multiples of what businesses experienced for the last 10 years. For most businesses that haven't been around for decades, this is the highest cost of capital environment they have experienced and it's not going away any time soon.
You should understand that this is not an "abnormal" rate environment. Near-zero rates are very much not the norm and only really came into effect in the 2000s-now. Even if inflation suddenly drops to target, job market stabilizes, the Fed isn't going to suddenly say "Fuck it, money printer's back on boys!" and cut rates to 0 to accelerate growth. That's not their mandate.
Some deal activity has already begun to pick up slightly at least compared to 2H 22 and 1H 23. Have seen a number of investors and PE Firms recognizing the "higher for longer" mantra and they seem to have come to terms with the fact that this will be the macro environment moving forward and they will need to adjust expectations. Gaps between buyer and seller bids/asks for companies have begun to reconcile, as well, in light of this.
Completely agreed that we may see some more activity from well capitalized firms that have cash to deploy without needing to tap financing in significant ways. You're right, the sobering thought that this is the norm for the near future is starting to sink in.
But I think the days of 2018-2022 (and the massive hiring spree that led to the recent mass layoffs), where any eccentric businessman could mandate a Bulge Bracket to explore an IPO based on 2027E revenue multiples, are not coming back any time soon.
Unfortunately, no
Agree with our InverseETF friend. Still too much uncertainty and firing cycle is not over yet. I personally do not expect any meaningful improvement to start until at least 2Q24 and most importantly, maybe unlike others, I don't see a catalyst for the market to bounce back aggressively like it did post-COVID. Improvement will most likely come in slow pace and will take longer
Outside of client services jobs, the white collar job market in general has improved vs. YTD Q2. This is based on my own experience applying now vs. March to June. Are we back to the recent pre-rate hike environment? No but it’s not a good measure of normal expectations as the job market was peaking. Maybe LinkedIn has published this data but a forward looking indicator on future openings would be amount of recruiter job postings.
Unemployment didn't peak out until October 2009, 1 year after Lehman. Sorry guys but we've got a lot more downside ahead. I don't say that joyfully since it could potentially affect my own career as well but it just is what it is.
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