Gone very quiet

[skwdenyer]

jammy-git said:

Traffic said:

Was out in our local town here on the west coast of Sweden today so (EU) but it struck me how busy everything was, everyone out, all the shopping places full and car parks full.

Maybe we didn't screw things up thanks to no lock-downs? or Sweden is yet to witness the ststorm.

We are highly dependent on imports and have high unemployment. but it's also impossible to hire here right now so it's plain weird

We're in a similar position in the UK. Towns are still busy - Canterbury was pretty packed today, plenty of people shopping. I know companies that are still hiring. Some who were hiring aren't any more. Not many I know of that are letting people go. Technically unemployment in the UK is low. But taking to other businesses, there's a lot of concern about what is coming. It just doesn't seem to have filtered down to consumers too much yet.

Are people actually shopping (as in spending)? Or just browsing. What I heard from my local town was the latter - lots of people out, very little spending.

[gotoPzero]

Its half term round here, so I think you have to be a bit cautious how busy it is just now.
Its a 4 day weekend so thats going to have an impact.

I think we will get the true picture into the second week of June.

[skwdenyer]

JCKST1 said:

I think one of the main problems for businesses is a lot of them (in my opinion, stupidly) thought that the COVID boom would last for ever, I know plenty of companies who moved to units 2-3 times bigger, stocked them selves up to the eye balls, took on new products & brands, new company vans etc etc and now things have reverted back to what they were or even worse there stuck with these huge overheads plus BBL's and god knows what else.

We could have quite easily done the same but I intentionally held back, we sold what we had and didn't go over the top in projections/ordering so although sales are down we can manage it, if we had double/trebled our rent, plus all the other luxuries people took on we would be under now.

I hope as many companies as possible can come out of it but I think the next 12-24 months will be rough for most trades and in some cases people have set themselves up to fail!

In the clothing game, a number of etailers conned themselves into believing that they'd unlocked some magic - higher orders, lower returns. Once the shops re-opened, many were found out - it cost the previously-sainted CEO of ASOS his job, BooHoo have posted a profit warning, and so on. The post hoc ergo proctor hoc fallacy was fully on display in some boardrooms.

And, as you suggest, many increased their buys believing this was the "new normal" - the aforementioned ASOS filled every square inch of warehouse space they could get a hold of with not only new stock, but also all the remaining Top Shop inventory.

[jammy-git]

skwdenyer said:

Are people actually shopping (as in spending)? Or just browsing. What I heard from my local town was the latter - lots of people out, very little spending.

Good point. I'm not sure. Quite a few people with shopping bags, but I'm not sure how that compares to normal levels.



I'm curious - does anyone think we'll see a stock market crash? As in a defining week of the recession? Or just a huge slump in the economy over a period of months?

[Traffic]

Sheepshanks said:

Traffic said:

Was out in our local town here on the west coast of Sweden today so (EU) but it struck me how busy everything was, everyone out, all the shopping places full and car parks full.

Maybe we didn't screw things up thanks to no lock-downs? or Sweden is yet to witness the ststorm.

We are highly dependent on imports and have high unemployment. but it's also impossible to hire here right now so it's plain weird

Has Sweden been suffering soaring fuel - petrol / diesel, gas and electricity costs?

Very much so!

[C722]

JCKST1 said:

I think one of the main problems for businesses is a lot of them (in my opinion, stupidly) thought that the COVID boom would last for ever, I know plenty of companies who moved to units 2-3 times bigger, stocked them selves up to the eye balls, took on new products & brands, new company vans etc etc and now things have reverted back to what they were or even worse there stuck with these huge overheads plus BBL's and god knows what else.

We could have quite easily done the same but I intentionally held back, we sold what we had and didn't go over the top in projections/ordering so although sales are down we can manage it, if we had double/trebled our rent, plus all the other luxuries people took on we would be under now.

I hope as many companies as possible can come out of it but I think the next 12-24 months will be rough for most trades and in some cases people have set themselves up to fail!

Agree with that, in my sector (construction) I think there will be lots of plant coming up cheap soon, lots of people trying to double in size over night when a bit of work came in, and paying over the odds for plant, now its going back to normal it will be sat there redundant.

[M1AGM]

jammy-git said:

Good point. I'm not sure. Quite a few people with shopping bags, but I'm not sure how that compares to normal levels.



I'm curious - does anyone think we'll see a stock market crash? As in a defining week of the recession? Or just a huge slump in the economy over a period of months?

Crashes occur when panic sets in. If we get a stream of profit warnings then it could trigger a sell-off. I have started reading The Changing World Order by Ray Dalio, if he’s right it could get pretty grim for a long long time, much worse than any of us have seen in our lifetimes. I think there’s still life in the old dog but it’s running out.

[jammy-git]

I'll have a read of that - should I assume he's predicting the end of capitalism?

It seems like every week I hear of another company revising financials down.

[M1AGM]

jammy-git said:

I'll have a read of that - should I assume he's predicting the end of capitalism?

It seems like every week I hear of another company revising financials down.

No I wouldn’t say that, he’s a historian who has done a lot of work around big historical economic events through the ages, mapping these ‘big’ economic cycles that last longer than a human lifespan (hence we forget and repeat). Big depressions are a fairly regular occurrence in history, that lead to societal changes/war etc. He thinks we are due one and so far (into the book) he makes a good case for it. The simplistic summary is that the ‘tools’ used by governments to manage economic activity become less effective as the cycle progresses, ending in a collapse they cannot stop. Certainly interesting and he has a significant number of high profile academics having contributed to his work.

Anyway, sorry for the thread derail.

[skwdenyer]

jammy-git said:

skwdenyer said:

Are people actually shopping (as in spending)? Or just browsing. What I heard from my local town was the latter - lots of people out, very little spending.

Good point. I'm not sure. Quite a few people with shopping bags, but I'm not sure how that compares to normal levels.



I'm curious - does anyone think we'll see a stock market crash? As in a defining week of the recession? Or just a huge slump in the economy over a period of months?

The problem is that spending overall isn't going down. There will be losers - especially in retail - but that's because other bills are going up. Are FTSE constituent companies going to suffer overall? I very much doubt it.

[105.4]

M1AGM said:

Anyway, sorry for the thread derail.

Don’t be. There’s quite a few others that have been saying the same thing since for the last two years. I’ll certainly be having a look to see if I can find that book.

[jammy-git]

skwdenyer said:

The problem is that spending overall isn't going down. There will be losers - especially in retail - but that's because other bills are going up. Are FTSE constituent companies going to suffer overall? I very much doubt it.

Is that not just because we're at the beginning of the downturn? Not many have been made redundant yet, businesses only just beginning to feel the pain? Give it a few more months, or when winter comes and energy bills step up another notch, and there will be less retail spend, more people getting behind on their bills, more companies laying people off...

My thoughts are that we're effectively at the "2007" part of the GFC.

[loafer123]

2007 was a very different debt fuelled crash.

I observed it from very close to the epicentre, and it didn’t feel anything like this.

There are macro changes going on, as globalisation unwinds and the power balances and influences around the world change, but (famous last words) it doesn’t feel like the start of a depression.

Bringing it back to trading, it remains subdued in the online retailer I am involved in, completely driven by consumer spending being subdued by fears over energy costs in my view.

We will see quite a few failures in the retail and construction sectors in particular, but there are lots of job vacancies, which will help cushion the blow for many.

[r3g]

jammy-git said:

Is that not just because we're at the beginning of the downturn? Not many have been made redundant yet, businesses only just beginning to feel the pain? Give it a few more months, or when winter comes and energy bills step up another notch, and there will be less retail spend, more people getting behind on their bills, more companies laying people off...

My thoughts are that we're effectively at the "2007" part of the GFC.

I'm surprised that nearly everybody I see on the motorways in cars and vans are still driving at 80+ with the fuel prices as they are! I'm in the fortunate position of being relatively comfy financially on a day-to-day living basis, but even I have adjusted my cruising speed to a more leisurely pace as the price for a full tank is eyewatering. Most diesel cars of a 'family' size won't be doing much more than 40mpg at 80mph, and about 25% less for an equivalent size petrol. They're either all loaded or haven't reached their credit limit yet! Maybe the "squeeze" isn't as bad as the media would like us to believe?

[jammy-git]

loafer123 said:

2007 was a very different debt fuelled crash.

I observed it from very close to the epicentre, and it didn’t feel anything like this.

There are macro changes going on, as globalisation unwinds and the power balances and influences around the world change, but (famous last words) it doesn’t feel like the start of a depression.

One of my fears is that the problems caused by the pandemic and then the Russian Ukraine war, eventually give way to similar problems caused by climate change; famine, unstable energy supplies, and incredible migration. That there will be no return to what we'd become accustomed to as normal before the pandemic.

[Dr Interceptor]

Looking at our weekends orders, people seem to be ordering only what they need, rather than buying in quantity.

Lots of small orders for one off of an item, whereas people recently have been buying five or ten of things to get up to our free delivery threshold and stockpiling.

[Frimley111R]

A friend works for a major clothing retail chain and says that there are 20% fewer shops in the High Street post COVID and with people coming back to town centres they are seeing very high sales. The only issue is higher costs for stuff. I can't remember exactly but I think he said that a shipping container from China used to cost them £3,000 empty and now costs £20,000!

[LooneyTunes]

C722 said:

Agree with that, in my sector (construction) I think there will be lots of plant coming up cheap soon, lots of people trying to double in size over night when a bit of work came in, and paying over the odds for plant, now its going back to normal it will be sat there redundant.

What’s interesting to me about construction is that people seem to be seeing/planning for the future quite differently.

Went out to tender recently on a refurb project (£250-500k) as a precursor to a much larger project, for which whoever does the first clearly has an advantage if they don’t mess up.

Called five recommended main contractors all of whom have undertaken projects often same sort of sizes:

1. 1 to his credit, said they weren’t the sorts of projects that fitted in with what he can deliver well (contemporary new builds).
2. 2 clearly wants the work for 3 months time (2x site visits in a week) and has put together a professional bid.
3. 3 also wants the work but 5-6 months lead time. Again quick turnaround on site visit and a good bid.
4. 4 was the one I thought would end up doing both jobs but have heard nothing from them since they received the specs/drawings.
5. 5 I thought would be very interested in the first project, but perhaps less so in the second, hasn’t even had the decency to respond to a polite chase sent a couple of weeks after sending the drawings over to see if they had queries/were indeed interested.

Surprised by the different levels of responsiveness but more surprised, given the way the economy is looking, that #4/5 haven’t even bothered to send a generic “thanks for your interest but we’re too busy/not into that sort of project” type note. Probably rules them out of the bigger one, which will get done irrespective of the overall state of the economy next year and might well be one that really helps keep a firm afloat.

[C722]

LooneyTunes said:

What’s interesting to me about construction is that people seem to be seeing/planning for the future quite differently.

Went out to tender recently on a refurb project (£250-500k) as a precursor to a much larger project, for which whoever does the first clearly has an advantage if they don’t mess up.

Called five recommended main contractors all of whom have undertaken projects often same sort of sizes:

1. 1 to his credit, said they weren’t the sorts of projects that fitted in with what he can deliver well (contemporary new builds).
2. 2 clearly wants the work for 3 months time (2x site visits in a week) and has put together a professional bid.
3. 3 also wants the work but 5-6 months lead time. Again quick turnaround on site visit and a good bid.
4. 4 was the one I thought would end up doing both jobs but have heard nothing from them since they received the specs/drawings.
5. 5 I thought would be very interested in the first project, but perhaps less so in the second, hasn’t even had the decency to respond to a polite chase sent a couple of weeks after sending the drawings over to see if they had queries/were indeed interested.

Surprised by the different levels of responsiveness but more surprised, given the way the economy is looking, that #4/5 haven’t even bothered to send a generic “thanks for your interest but we’re too busy/not into that sort of project” type note. Probably rules them out of the bigger one, which will get done irrespective of the overall state of the economy next year and might well be one that really helps keep a firm afloat.

Lots of my customers are saying similar, people not getting back to them, and showing little interest. I guess schedules are still healthy at the moment, but with all thats going on it would be prudent to secure as much work as possible !

[cluckcluck]

Just like covid, seems people are winning or losing, not much in the middle.

I work in IT and the market is bonkers this year. Wages are rising seemingly every month and there is a lack of developers for the jobs on offer.

We’re I work we have 6 vacancies and for 6 months unable to fill them. Applicants are applying already having 2+ offers already. Some underwhelming candidates are asking a lot and seemingly getting it.


Juniors are easily getting 45k+, mids 65K+ and seniors hitting 100k+

However.. I see some cracks in that this can’t continue and investors and pension funds are apparently withdrawing from tech stocks.

I’m genuinely bemused by the IT sector over the last few years, particularly this year and am at a loss to what it’ll do. I do think if it declines, it could be fairly rapid.