We’re heading into Wildcard Weekend as the NFL playoffs get started, and the last thing you think they would be planning for is a recession... but they are.
NBC Sports reported that the NFL is offering buyout packages to around 200 employees. Of course, these aren’t going out to players, the NFL is trying to reduce the cost of their operations by getting rid of around 18% of their workforce.
This is part of a trend that is reemerging in the new year. Just yesterday, Amazon announced the layoffs of around 35% of the company’s “Twitch” employees. Unity Software just made large cuts. Blackrock just announced another 3% reduction to its workforce.
We’re only two weeks into the New Year and management is still prepping for a recession. What’s the deal?
First, the inverted Yield Curve. This indictor has been perfect in timing recessions in the U.S. It became inverted in July 2022 and is still today. It normally takes around 7-12 months for a recession to begin after the initial inversion, but the Fed has been doing a lot more work behind the scenes to avoid a recession this time around.
We’re getting a look at inflation data today and tomorrow in the form of CPI and PPI, any sign that inflation is not declining rapidly will erase a large part of the 14% rally we’ve seen over the last two months as rumors of a recession will start to circulate again.
Bottom Line – Listen to Leadership
I once had the opportunity to sit at a breakfast table with Steve Forbes. During our conversation he instilled the following wisdom on me….
“CFO’s take control of a company when they are preparing for a storm because the CEO’s vision for the company takes a backseat to its survival.”
It’s clear that the CFOs are still in control, which means the economic storm hasn’t passed. I continue to look for ways to protect my portfolio as we head into the upcoming earnings season, and you should, too.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.