Morgan Stanley Says Firms Are Focused on Costs Like Never Before (bloomberg.com) 40
US companies are discussing cost control on earnings calls at a record rate, amid a push to reallocate funds and invest in new technologies, according to an analysis by Morgan Stanley strategists. From a report: Transcript mentions of "operational efficiency" are at the highest ever in the US during this earnings season as companies focus on expense discipline, but also invest in technologies "that can drive future productivity like AI," a team led by Michael Wilson wrote in a note.
There is a notable overlap among the industries discussing operational efficiency most prevalently and those that are discussing AI, the strategists said. These groups include software, professional services, health care services, and financial services. Pfizer, BlackRock, and Lam Research were among S&P 500 companies touting operational efficiency in their earnings calls this season, according to data compiled by Bloomberg. The rising focus on cost control comes as firms position to protect margins amid hopes for a soft economic landing. Investors have looked for signs of cooling in the jobs market to gauge when the Federal Reserve will lower borrowing costs, although recent hot data has signaled the Fed won't be easing anytime soon.
There is a notable overlap among the industries discussing operational efficiency most prevalently and those that are discussing AI, the strategists said. These groups include software, professional services, health care services, and financial services. Pfizer, BlackRock, and Lam Research were among S&P 500 companies touting operational efficiency in their earnings calls this season, according to data compiled by Bloomberg. The rising focus on cost control comes as firms position to protect margins amid hopes for a soft economic landing. Investors have looked for signs of cooling in the jobs market to gauge when the Federal Reserve will lower borrowing costs, although recent hot data has signaled the Fed won't be easing anytime soon.
It isn't rocket science (Score:2)
Cost of money (i.e. interest rates) are up, controlling spending becomes more important.
As for overlap between AI and efficiency, doesn't seem very significant... if both are in fashion at the moment (and they are), there will be overlap.
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Exactly - all this really indicates is the interest rates have gone form
way to frigging low - Rampit speculation because dude money is free!
to low - money is to cheap to worry about efficiencies, pure growth focus. This has inflationary consequences if left to long
about right - careful evaluation as to if investment makes sense; stability over all.
slightly to high - focus on cost control because there is more gain their than pursuit of other activity even it is useful activity. Probably good for the econo
Re:It isn't rocket science (Score:4, Informative)
Let us not forget this famous speech:" Let every nation know. . .whether it wishes us well or ill. . . that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe, to assure the survival and the success of liberty. This much we pledge. . .and more"
Re:It isn't rocket science (Score:4, Insightful)
The standard thinking from economists and central banks is deflation is worse than inflation, that's why the Fed's general goal is to keep inflation around 1-3% because the risk of deflation is worse than a little bit of inflation. Deflation means people and business hold onto money since it could be worth more in the future so spending goes down which can have feedback effects and lead to recession.
Now there are certainly arguments against this but can you blame politicians when people are going to blame them if a recession happens even if prices go down.
What's "supposed" to happen is wages are supposed to rise to match or exceed the inflation rate but of course that isn't really enforceable from a legal perspective but the record low unemployment rate means people should be moving up in positions and wages.
This is complex but this is one of the reasons I put some blame our awful healthcare system as it has a distortionary effect on labor movement that other nations do not have as health insurance is not tied to ones employer.
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The standard thinking from economists and central banks is deflation is worse than inflation
Yes, but it is also easier to fix.
Just flood the economy with new money.
This is called "Quantitative Easing", and it works, although overshoot is a problem.
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Well most debt spending is not QE, I believe there have only been like 4 QE events since 2008? It's a marginal line between QE and debt monetization since they are both just buying bonds (?) but they are considered different.
If we actually Keynesian theory though the government is supposed to spend in downturns and cut back in upturns. Of course this doesn't really happen as we had Obama and Trump both debt spending though record economic high points.
And of course if you are into MMT all that debt doesn't
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Cost, but they still use Windows (Score:2)
instead of Linux
MS Office instead of Libreoffice.
Man stop trowing your cash out of the windows,
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Bought and Ruined E*Trade (Score:2)
True story, paraphrased.
Me: "I can't log in from my browser on PC, but I can on Android Device."
Sympathetic Rep (computer guy) after 5 minute hold after running out of script: "We don't support Linux."
I closed my positions on my FUCKING PHONE (goddamn children) and closed the cash account. Fuckers.
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I could see return to office reducing efficiency.
I currently WFH. Most of the people I work with aren't local. RTO would mean I get to go into a noisy, distracting place to do my work, and that's going to lower productivity. In addition, when WFH, I'm prone to working a little later than usual to finish up a project - I don't have a commute, I don't have to beat traffic, and I don't have to rush home to let the dogs out.
A return to office is going to reduce my efficiency. YMMV.
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That's a common speculation. The data suggests it's spectacularly wrong:
United States Nonfarm Labor Productivity
https://tradingeconomics.com/u... [tradingeconomics.com]
the new joint employer rules are going up the cost (Score:2)
the new joint employer rules are going up the cost of staff!
Corporate jargon (Score:2)
Easy (Score:1)
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Re: Easy (Score:2)
I call bullshit (Score:5, Interesting)
As long as the dead weight at the top isn't cut, they don't care about cost at all.
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Indeed. But they need to create the appearance they care, so like the psychopaths they are, they squeeze the workers more and throw them out.
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I wouldn't mind squeezing some CEOs.
I mean, since we're now so big into recycling, the whole car presses are woefully underutilized. I always wondered whether a square could be pressed into a cube.
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While I understand the sentiment, I am against all forms of capital "punishment". I would simply remove their fortune and prevent them from ever getting any type of "leadership" positions or relevant advisory roles ever again.
They've learned nothing (Score:4, Insightful)
The supply chain issues and personnel issues from Covid taught the MBAs nothing. They will insist on running their communication, personnel, supply, etc. systems to brittle efficiency so the least disruption will cause them to crash and burn. With no hysteresis in their systems, they will have absolutely no slack when shit happens.
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The typical MBA is an extreme Dunning-Kruger case. They are incapable of understanding that their approach is unsuitable to running a business and only can ruin it longer-term. Detail-optimization without understanding the whole cannot work.
Re: They've learned nothing (Score:2)
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Profits (Score:4, Interesting)
Corporate profits vs. wages are at an all-time high, with no end in sight. If that's what they mean by "focused on costs" then that's nothing new, since things have been basically the same since ~2003:
https://fred.stlouisfed.org/gr... [stlouisfed.org]
Unless what they really mean is that they're tightening the screws even harder? That I can believe.
The top is taking more and more from the bottom and putting less and less back in. in other words: end-stage trickle-down (neoliberal) economics. Torches and pitchforks in 5..4..3...
Penny wise, pound foolish (Score:3)
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Indeed. And they are doing so at a time when profits are good. What do they think they can do when that is not the case? Burn it all to the ground?
Flag words (Score:2)