Time for Adjustments in the Economy and Greater Care in the Portfolio

Dear reader,

Recently released news and data serve as a point of attention for what we can experience in the coming months, perhaps years.

There were not a few CEOs of large multinationals who raised the idea that the American economy would be in trouble, which would lead to an adjustment in their operations.

If before many companies focused on the concept of “just in time” for their operations, the speech of these executives made me think that we are experiencing the “adjusting time”. Anyone who wants to survive will have to review tasks and processes, with a direct impact on consumer behavior, the job market, supply chains and much more.

Elon Musk, the owner of Tesla (NASDAQ:) (SA:) and SpaceX – and who is wondering if it’s still worth fixing one more “problem” with the acquisition of Twitter – recently punctuated his concern about the state of the global economy. and requested a pause in hiring new employees for its automaker.

In addition, he also spoke of the possibility of reducing the company’s current workforce by up to 10%. Just to give you an idea of ​​the magnitude of this decision, at the end of 2021 Tesla had about 100 thousand employees on its payroll.

Not to mention the possible “hurricane” that the world economy may have to go through, in the words of Jamie Dimon, CEO of JPMorgan Chase (NYSE:) (SA:), the largest bank in US assets. So much so that the executive reinforced that the institution will be very conservative in managing its balance sheet to get through this moment.

And one of the reasons that have supported this concern is the strong in the United States, which has already returned to close to 3%. Many companies that were viable in a low cost of capital world are no longer such obvious bets.

And this is not restricted to the world of companies seen as disruptors in the recent past – which, in some cases, already see their share prices at lower levels than at the height of the crisis caused by the pandemic in 2020, when uncertainty reigned and circuit breakers were commonplace.

The real estate market is another one in which the rise in interest rates is increasingly evident, making life difficult for those who were thinking about purchasing a property: the cost of a mortgage in the US was 67% more expensive for the same property compared to six months ago .

In this way, the feasibility of acquiring a home in the Land of Uncle Sam is at levels close to those observed at the height of the subprime crisis, one of the reasons for the 2008 financial crisis.

And economic indicators already point to the possibility of a recession in the coming quarters.

According to GDPNow, a tool developed by the Federal Reserve of Atlanta that seeks to make a real-time estimate of the American GDP – since the quarterly number is released only one month after the end of the period -, the expectation is that the economy will grow by only 0 .9% in 2Q22. A week ago, the expected growth was 1.3%.

Not forgetting that in the first quarter, the economy already showed a retraction of 1.5% (although the number was due to an issue related to inventories). But this already demonstrates that the present day calls for a little more caution.

And this must be taken into account when it comes to investments.

At times like this, greater care with the wallet is extremely necessary. Reviewing risk positions that make you uncomfortable and having a robust volume of cash are essential for you to be able to go through these periods, if not with peace of mind, with a lower level of concern.

A hug

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