[yuan43]

> “I had hoped the economy would have more clearly stabilized by now, but from what we're seeing it doesn't yet seem like it has, so we want to plan somewhat conservatively,” Zuckerberg said. A Meta spokesperson declined to comment.

The economy is stabilizing. It's being weaned off of ultra-loose money for the first time in years. The stock market is starting to behave more rationally, demanding that a company whose earnings potential is sinking and which offers no dividend be valued accordingly.

> ... Meta had more than 83,500 employees as of June 30, and added 5,700 new hires in the second quarter. ...

FWIW, 28 % annualized hiring growth for a company the size and age of Meta is not normal. It's a sign of mismanagement and especially loss of focus.

[beambot]

A little dated [2018], but still rings true: The average tenure for engineers at many major tech companies is ~3 years. Thus, you'd expect new hires at a rate of 30% annually just to maintain staffing levels. To determine headcount growth you, should look at year-over-year changes in total employee count, not just the number of new hires. TLDR: Meta's new-hire rate is not atypical.

https://www.businessinsider.com/average-employee-tenure-rete...

[brilee]

3 years is deceptive - in an exponentially growing company, the majority of employees are fresh, pushing the average tenure low. The relevant number is "length of tenure at time of severance", which I believe skews much higher. Any company seeing 30% churn is having a bad, bad time.

[dadoge]

“Length of tenure at time of severance”

That is such a better metric, why is this not used more often

[naniwaduni]

It has its own almost-opposite problem in only counting employees who did leave.

[jrumbut]

Then you get into the field of survival analysis, where you get methods that can handle this problem (called right censoring IIRC).

https://en.m.wikipedia.org/wiki/Kaplan%E2%80%93Meier_estimat...

[matt-attack]

Exactly. If half your workforce is happy and has been there 20 years, that’s entirely non reflected in such a figure. There must be a better metric.

[askafriend]

Well you can also just count current employees' tenure. That fixes the problem and is qualitatively consistent IMO.

[ivalm]

That’s how you get 3 years because everyone is new.

[neves]

I thinkit is impossible to get this number

[piva00]

What do you mean? Every employer I've worked for had data for the starting date of their employees, when someone leaves you have an end date of employment. It's a pretty simple metric to calculate.

[michaelcampbell]

I think by "this number" they mean "a better metric", maybe?

[dougmwne]

In fact, the overall head count has been rising rapidly.

https://www.statista.com/statistics/273563/number-of-faceboo...

[tclancy]

Based on my limited observations having been in a similar situation for a year, I would guess the average tenure is Equity Award Years less percentage of people who get fired in less than the value of Equity Award Years.

It’s a good way to keep reinventing wheels.

[Cthulhu_]

And this 3 years is kept up artificially - companes like Meta or, as a colleague of mine who works there now, Github / Microsoft, offer stock packages that they can only use after four years. It's a pair of golden handcuffs; they would move on a lot faster I'm sure if it wasn't for that + the wages offered.

Having Microsoft or Google or Meta on your CV is a very valuable thing to have, regardless of what you actually did there, because they're still perceived as having high standards.

[BurningFrog]

> The economy is stabilizing.

The economy is in the early phases of the biggest Fed tightening since at least the 1980s.

If you know where that will end up, congrats. For the rest of us, it's very much uncharted waters.

[dragontamer]

> The economy is in the early phases of the biggest Fed tightening since at least the 1980s.

But the 2010s through 2020s period is a myth, a figment of cheap money. This money was made cheap to help us get out of the 2007/2008 recession, but the cheap money clearly went on too long.

Its warped all of our thinking. We should have been raising rates and paying down the Fed's balance sheet a long, long time ago. To be fair, we began the process in 2019, but COVID19 wrecked us in 2020.

Now its 2022 and inflation is growing out of control. We have no choice but to raise rates now.

[scottLobster]

Plus we pretty much lowered rates to 0. Europe's experimentation with negative interest rates yielded... well it's debatable whether it yielded anything of substance (pun intended).

So there's pretty much nowhere else to go, and if we want to have the option to lowering rates to combat future crises... well it looks like we'll have to pay for the option.

Human complacency never ceases to fuck things up. Those who seriously plan ahead are a minority, and don't control the ballot box.

[dragontamer]

On the contrary. We're not complacent. The Fed is raising rates, like it should be.

Its a known fact that the Fed Rate takes months, maybe years, before its effects propagate through the economy. The 2.25% raise in just a few months is the steepest increase in decades, one of the most proactive moves ever done.

--------

But we as a society need to also be proactive and understand what this means. It means higher mortgage rates, higher rates for car loans, more difficult student loans, more expensive debt.

There are a couple of... other state banks... who are ignoring the issue and are dropping rates right now, despite the current state of the economy. Those are the ones who seem to have a short-sighted view on the world.

USA is actually leading the charge and is more proactive than most other countries on this matter. Furthermore, our political system is talking about it, and we're right now talking about it here on news.ycombinator.com.

We're all being proactive and forward looking right now. And even back in 2020, the political system had the debates and forward looking statements about inflation risk vs COVID19 recession risks. No one ever stopped looking forward.

Was it perfect? No. But no one's perfect when looking into the future. But the political system absolutely discussed and decided upon what we should do. I don't think anybody was short-term thinking at any of these points, we were just trapped between bad choices.

--------

For the most part, the super-low rates from 2010 through 2019 have been confirmed to be a good idea, as it kept inflation at the 2% for the duration. We were roughly on target. But we also were in a mystical time, of warped thinking of cheap money for the duration.

[scottLobster]

I'm referring to the complacency of the last 10 years, when every time the fed even muttered about raising rates they caved to Wall St panics and politics. Those super low rates are primarily responsible for everything from the insane wealth inequality we've developed over the last 10 years to housing becoming largely unaffordable to people losing their shirts gambling on bitcoin.

What kept inflation at 2% was a perfect historical moment in global growth/globalization that will not come again in our lifetimes. Now when we need to borrow and invest in our economies the most, the cheap money is nowhere to be found up because we spent it all.

It was a big party, and instead of having a few drinks and going home slightly buzzed we binged out, threw up in the toilet and are now waking up in a puddle of our own making with a raging hangover. And now all of a sudden we're being proactive because we've decided drinking a glass of water might be a good idea? Yeah, it was a good idea last night. It's the only idea left now.

[dragontamer]

> What kept inflation at 2% was a perfect historical moment in global growth/globalization that will not come again in our lifetimes.

If that "perfectly balanced 2% inflation" was pushed away with say, the central bank raising interest rates, what do you think would have happened?

We would have had deflation. Which is incredibly dangerous. Its not even a question, all of that inflationary pressure (low rates, QE1, QE2, QE3, etc. etc.) the central bank pushed from 2010 through 2019 was just barely able to sustain 2% inflation... the target.

-----

We probably could have afforded to rock the boat a bit more than we did those 10 years though.

[Wowfunhappy]

How do low rates lead to wealth inequality?

[dhruval]

“ Those who seriously plan ahead are a minority, and don't control the ballot box.”

Sadly true.

And sometimes this reduces the benefits of planning ahead.

If the fed money printer will bail is out every time then it makes financial sense to splurge.

[DebtDeflation]

>Its warped all of our thinking.

Sort of. People who entered the workforce after around 2015 have no idea what is coming. Those of us who entered the workforce in the mid to late 1990s have already seen the movie a couple of times and know exactly what is coming. For those that don't know, the real economic pain typically comes during the 2-4 year period after the recession has technically ended. When you're actually in the recession it doesn't feel like it and people debate whether we really are in one, as they are doing today. It becomes apparent a little later.

[behaveEc0n00]

I maintain that this Fed tightening is manufactured consent to be ruled by an aristocratic class in charge of government. Rent seekers in their twilight years convinced future agency must directly build upon their efforts by propping up their wealth working in the industries they own all the valuable real land and infra capital.

A minority has monopolized agency and insulated themselves from real work using a historical basis that there’s always been bean counters who divvy up public production, take 5 for themselves and give 1 to the next person in the public line. It’s a hard job being stingy, after all.

It’s government quota on free trade abstracted into technical jargon and made unfalsifiable.

[AnotherGoodName]

I think another factor is the rise of china, which ramped up massively in that time, hid inflation.

We thought the near 0% rates had no consequences except for housing and a few other non china influenced products. It turns out the inflation was there but china's ramp up hid it. In fact, in hindsight we saw inflation everywhere except in china's manufacturing (and perhaps an oil sands boom helped too). But china manufactured so much of what we consume we didn't notice the consequences.

[dragontamer]

Inflation everywhere? Like in car prices? Food costs? Eggs? Milk? Butter? Paper? Wood? Lumber? Orange Juice?

These things aren't made in China (or at least, the USA largely eats milk-and-eggs from USA and/or Canada), and for the 2010 through 2019 period, their prices were incredibly stable.

What American manufactured product (or agricultural product) inflated from 2010 through 2019 to a degree beyond which was reasonable?

--------

The main issue with the Fed, was that they made the wrong call on Inflation in 2021, thinking it was "transitory". Now that we've had a year, I can agree with the inflation doomers that the inflation was in fact sticking this time around.

However, the inflation doomers were wrong from 2010 through 2019, so you'll have to forgive me for not listening to the boys who cried wolf.

[Aunche]

>The main issue with the Fed, was that they made the wrong call on Inflation in 2021, thinking it was "transitory".

They made the wrong prediction, but the Fed isn't in the business of making predictions. It makes sense that they didn't want to crash the economy while people were still largely intent on staying at home. The Fed's mistake was caving into Trump's pressure to reverse quantitative tightening when the economy was healthy in 2019. When an unexpected disaster inevitably struck, they little headroom to lower interest rates, so they had no choice but to ramp up quantitative easing.

[fspeech]

Real yields on treasuries have surpassed the average GDP growth rate of the 21st century. That’s restrictive by any measure.

[eftychis]

Yeah and if he does know please share that with everyone else (people ok with terrifying news at least).

We are not stabilizing. There are serious supply issues, staffing issues, wild currency fluctuations, and fear -- including of nuclear conflict.

I am not sure in what world this is stabilization. It is easy to hit on the "mule" i.e. the average Joe and say "I gave you too much money, that you never saw, thus why Yada Yada, so learn not to eat and that will work fine." This is the naive explanation offered to the public masses to make them feel bad and that they deserve the recession. Aka anything to avoid political suicide. Other countries don't go out saying this fyi-- because e.g. they have a freaking war in the doorsteps during a pandemic and can't produce goods, because no natural gas. Because of sabotage.

Only stabilization is to the bottom.

[michaelcampbell]

> Only stabilization is to the bottom.

If that's where the economy should be (I don't know), then moving towards it is stabilizing, no?

[Rapzid]

That's what I'm hearing; we didn't dodge a recession it just hasn't started yet.

In TX energy prices are already up a lot this year. We generate a substantial percentage of electricity from natural gas, and exports are up for obvious reasons.

Winter is coming.

[scottLobster]

Thanks to the shale boom natural gas has been effectively free in the US (as a byproduct of shale oil production) for the last few years. For various reasons the boom has reverted to the mean (although shale is still very much around), and as a result natural gas in the US has gone from "free" to "not free". Prices will go up, but we'll be fine. We still literally have more gas than we know what to do with.

It's the Europeans and East Asians who are being royally screwed by gas prices at the moment, and that pressure isn't likely to cease anytime soon, particularly with the destruction of Nordstream.

[Rapzid]

I'm not sure historical natural gas prices support this idea of "free". Would need to crunch the numbers but at a glance the price came down about 50% in the 2010s from the aughts. It's had a few big, temporary dips most recently during the start of the pandemic in 2020.

It certainly wasn't "free" in Feb 2021. We have about a 3% hike on our bills now to pay down the record profits gas producers received.

My bill last cycle was 20% higher than last year with near identical usage. UK has already seen incredible energy cost increases. European winter is going to drive energy prices even higher.

Yeah, "we" will be fine because computers. But lower income families are getting hit hard with this and inflation.

Even still there is the Applebee's effect; people with money are paying more attention to those commercials because a lunch for two is pushing past 50$ dollars these days! That's gonna dry up investment even more. In the UK Liz Truss comes in and immediately commits political suicide with these tax cuts. Putting aside critiques aimed at trickle down economics, the timing is TERRIBLE. Startups are laying off because investment is drying up; tax cuts on high earners are going into savings and low-risk market investments.

All this combined is, IMHO, going to lead to a massive global recession.

[scottLobster]

"Free" in the sense of free extraction. Obviously you still need to pay for distribution, but the shale fields to this day are flaring off natural gas that they otherwise have no way to sell. That 50% drop in the 2010s is the shale boom.

Now that shale has calmed down and global demand has spiked, there's now a cost for the actual natural gas itself. A doubling of prices may seem like a lot, but historically the price is still well below average. Much like we've gotten used to free money over the last ten years, we've also gotten used to free gas.

That's not to say it isn't a problem, but we aren't in danger of running out of gas or any runaway price spikes.

[tjr225]

NASDAQ is UP 20 or so % from just before the pandemic. That’s how inflated things got in the last two years. The person you’re responding to is right on the money.

[majormajor]

"uncharted waters" is so tired.

When's the last time they were "charted" economically? Things have been changing constantly for a century, basically.

[mbesto]

> For the rest of us, it's very much uncharted waters.

Aren't economies all uncharted waters until they aren't (e.g. hindsight)? 2 years ago we hit a global pandemic and tech stocks were trading at absurd PE levels 6 months later. So, no one really knows "where this will end up".

[gwbas1c]

> The economy is stabilizing. It's being weaned off of ultra-loose money for the first time in years.

You might enjoy reading "Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail", https://www.amazon.com/Changing-World-Order-Nations-Succeed-... (The author is Ray Dalio, one of the US's best institutional investors.)

The big question is, when are we going to hit bottom? We need to make it through the Ukraine and Taiwan situations before things really bounce back.

[UncleOxidant]

> and Taiwan situations

Let's hope we don't get a Taiwan situation on top of all of the other stuff that's going on. That way lies WWIII.

[ethbr0]

I expect that's the real reason for the US and Europe's "all-in" hardline over Ukraine: signalling to China about Taiwan.

Because pursuing a similar strategy with China would be substantially more expensive, in terms of treasure and blood, for both sides.

But the critical date there seems to be 2030-2035 based on military preparations.

[dougmwne]

Absolutely. The entire thing is absolutely about China. Russia is a broken country that would have no significance beyond its hydrocarbons and nukes. China is an economic superpower and growing world power. Very soon it could replace the US as the primary driver of globalism. If the west had shown itself as disunited, it would have been time for China to take center stage in world affairs for the next hundred years. Instead it will wait for another generation.

[eloff]

China doesn't have another generation. They'll be going into a very stark population collapse that's worse than what Japan is experiencing now, where adult diapers outsell baby diapers. I expect that China's economy and influence will take the shape of an upside-down U, with the peak in the next decade. If they're going to move on Taiwan, they cannot wait forever. They came close to catching up the US, but I don't think they will achieve it.

[ChuckNorris89]

>They'll be going into a very stark population collapse that's worse than what Japan is experiencing now, where adult diapers outsell baby diapers.

As opposed to most of Europe ...

Also, the quality of your human capital is more important than just having a large unsustainable population growth without much marketable skills or know-how on the international scale. Otherwise parts of Africa and Asia would be economic super powers by now.

[mvuksano]

Is there any other country that ever showed anything other then upside-down U in terms of economy strength and influence. To best of my knowledge every country, empire or society rises and eventually falls. Probably the best known example is Roman empire but every other society I can think of exhibits same pattern.

[dirtyid]

China has multiple generations. Even "stark" demographic collapse at PRC scale is generating millions of new births per year (several times greater than US even with immigration), there will never be shortage of bodies to fill the military, especially increasingly small force structure of modern militaries that's shifting towards autonomous platforms. As for economy, expect PRC to continue growing, more importantly, move up tech/value chain and build comprehensive national power, just like Japan did while her demographic was absolutely in the shits because JP managed to massively improve human capita via education to create the skilled workers for high value economy (also SKR, TW). For reference PRC is now outputting as much STEM talent as all OECD combined.

Like other the Asian Tigers with death spiral demographics still grew significantly simply because cohort of skilled workers increased massively even though demographics broadly declined. There's a reason PRC is rapidly moving up science and innovation indexes (controlled for quality, not just citations). The reality is, PRC demographics has never been MORE competitive, and will increasingly be, because advanced economic development phase is just getting started. Quantity of quality is in human capital is increasing at stupendous pace. Now add in PRC is adopting as much industrial robots / automation than the next 15 countries combined and that overall demographic decline (as in net population decline) only improves PRC strategic position by reducing import dependence. And that the massive regional income disparity + huge home ownership + enviable house hold savings rate = PRC elderly simply don't have significant expection (or need) for old age social support. In many ways, PRC is almost optimized for weathering demographic bomb with less social cost relative to properly developed countries that are seeing comparable demographic decline.

[caskstrength]

> US and Europe's "all-in" hardline over Ukraine

If you look past their big talks of outrage in news media and critically asses the actual amount of military equipment given to Ukraine, you will see that it is nowhere close to any kind of "all-in", hardline or not. They are still refusing to provide even modern main battle tanks FFS.

[ethbr0]

They wouldn't receive offensive arms, until they did. They wouldn't receive HIMARS, until they did. They wouldn't receive fighter aircraft, until they did.

The only red lines on material escalation seem to be around ATACMS.

I'd expect MBTs and A-10s by next spring, with training over winter.

[caskstrength]

So you are saying that they are not even close to being all-in but may still do it some time in the future? Okay then.

[dirtyid]

That may very well be the intent, but it seems to be backfiring. Go look at this very recent German Marshal Fund survey polling atlanticist countries with section on PRC invasion of TW.

https://www.gmfus.org/news/transatlantic-trends-2022

TLDR: negligible (average 4%) consider sending arms and even less (average 2%) consider sending troops. As if delivering either is possible to an island within overwhelming PRC military advantage. US highest at 8%, which is hilariously low given White House deterrence efforts. 32% considers joint sanctions. 35% only diplomatic efforts to end conflict. 12% do nothing. PRC is looking at these numbers and rubbing hands with glee.

Also consider UKR/RU conflict is already putting EU competitiveness into the shits with trend likely to continue. Pre-war PRC was worried about EU acting as potential spoiler via US coordination, but now EU is so weak that they're even more geopolitically irrelevant. Meanwhile PRC gets dependable energy partner in RU and increased influence in central Asia / MENA / global south who sees the hypocrisy in western response when a western country is attacked. India is even more reticent about militarizing QUAD. JP economy is going to shits, even if they wanted to increase military spending, they likely can not afford to.

Also notice youth are substantially less PRC. In 2030+ time frame, we're like to going to see extremely war wearing societies with polity shifting less anti-PRC at all cost, digging out of economic cesspit who will have even less appetite to sanction a much larger trading partner like PRC. These signalling are having less and less impact coming as EU weakens. As for US, PRC factored in US intervention in TW scenario anyway. It's not deterred but building up massive nuclear arsenal to follow RU's nuclear coercion strategy.

[Bombthecat]

It already looks like we are heading into ww3 with the destruction of NS pipes...

[thecoppinger]

Seconding this, I’m reading the book at the moment and it’s an exceptional insight into the near and long term future. It’s also terrifying.

[itsoktocry]

>*The economy is stabilizing.*

The economy is never "stable". It is constantly in a cycle of ups and downs, over-investment and under-investment, easy money and tight money...

The current state is no more "normal" than any other period.

[mym1990]

The economy most definitely experiences stability when people and business are able to have a reasonable amount of confidence that things don't hit the fan at any second now. This stability allows people to invest with more freedom, take more risk, and grow at a stable rate.

Of course this behavior eventually overheats...but in terms of expectations there is definitely a stable state to an economy, even if it only last a few years.

[SantalBlush]

>The economy is never "stable". It is constantly in a cycle of ups and downs, over-investment and under-investment, easy money and tight money...

That's pedantic and beside the point. The question is whether the economy experiences periods of relative stability. The answer is yes.

[hn_go_brrrrr]

What's the difference between stability and growth? If the economy isn't growing, people consider it "stagnant". Shrinking is "a recession".

[rightbyte]

Zero is a special value you know, since zero times anything is zero.

Edit: Except infinity ...

[bjornsing]

In the limit 0*x tends to zero as x tends to infinity.

[lavp]

An infinite amount of nothing is still nothing.

[rightbyte]

According to my limited understanding it is NaN.

[colinmhayes]

> which offers no dividend be valued accordingly.

FWIW Meta has apparently done $15 billion in buybacks this year which gives them a 4% yield at current cap. Investors generally prefer buybacks to dividends because of tax advantages, so this should actually have helped their stock more than a 4% div yield would.

[adam_arthur]

A 4% yield is not very good when you can buy risk free treasuries yielding more.

Meta's shares outstanding have barely changed over time. Issuing equity to employees dilutes share count, buybacks counter this somewhat.

https://www.macrotrends.net/stocks/charts/META/meta-platform...

At current valuation multiples buybacks are pretty smart for Meta, but many of these companies were doing buybacks at 3% yield valuations

[colinmhayes]

Very few s&p companies are hitting 4% yields on their dividends/buybacks. Meta shares outstanding are down more than 3% since last year.

[adam_arthur]

Dividend is different than a buyback. Buying back at a 3% earnings multiple is not equivalent to a 3% dividend.

It's much worse for shareholders. The company is investing in something that yields below the risk free rate of return.

Put another way, if they gave that same money back to shareholders via a distribution, the shareholders could earn more buying US treasuries with that distribution.

Buybacks are largely motivated by execs using company funds to increase their compensation, even if ROI is poor on the buyback. Otherwise they would never buyback at such low yields. Dividends don't go to option/RSU holders.

But anyway, a buyback at 10% earnings yield like Meta has, roughly, is a good use of funds

[colinmhayes]

Buybacks have a lot of motivations. Execs trying to boost stock is certainly one. But shareholders do prefer buybacks. Claiming otherwise is just wrong. If a shareholder wants to get out of the equity and into bonds since rates are high they can cash out through the buyback.

> Put another way, if they gave that same money back to shareholders via a distribution

They literally are. Buybacks are just as much shareholder distributions as dividends.

[adam_arthur]

Buybacks are not distributions. A company can buyback 99% of it's shares and if the stock goes to 0, the shareholder never got anything. Buybacks increase ownership percentage, and only if they outpace dilution via other means.

The airlines did a ton of buybacks over the years, and their stocks are down. Owning a larger percentage of a stock that's losing value doesn't do you much good.

To say blanket that shareholders prefer buybacks is just wrong. Ignorant shareholders may prefer buybacks at 3% ROI, smart shareholders will prefer activities that yield far higher.

If I can buy an IG bond that yields 6%, why would I want my company to use their cash to buy a 3% yielding asset? Just bubble era mentality fostered by a market that was distorted to the upside via ZIRP.

[motbus3]

I agree with you. But I also think this companies have potential for earning money. Real money. FB has incredible aí models and platforms as well as interesting hw products. But they keep pushing publicity for creepy projects such as their second life version.

So what happens is that they have tons of fantastic things they do not properly use.

I also think that media has chosen Zuckerberg to hit. Yeah. Lots of contradictions etc, but if anything, he is not stupid.

[tsimionescu]

> Lots of contradictions etc, but if anything, he is not stupid.

What makes you think that? Especially after just pointing out that the strategy he himself has put front and center as the present and future of Facebook (Meta) is "creepy", when you think they have other things that could generate money?

[foobarian]

And they don't even create (and then quickly retire) random new product. Do they? What would be Meta's equivalent of Stadia?

[cl0ckt0wer]

IGTV

https://www.theverge.com/2021/10/5/22710638/instagram-tv-igt...

[typeofhuman]

Oculus

[polyomino]

Oculus is a much bigger investment than Stadia

[wlesieutre]

And Facebook didn't create it either

[arbitrary_name]

Nor did they retire it, they rebranded it.

[notacoward]

I get 37% based on what it was when I started in 2017, and that's net over attrition during the same time. Absolutely crazy. They need to not only clear out some deadwood but also change their engineering/evaluation practices so they don't have 10K engineers working on projects that only exist because of NIH syndrome and/or impact whoring.

[thr0wawayf00]

> It's a sign of mismanagement and especially loss of focus.

I think it's a natural symptom of running a company built on exploiting people's desire to craft and control their own image. It's corporate narcissism. Zuckerberg has been invincible for so long, how could he not be consumed by the reality distortion field himself?

[defterGoose]

Ooh, careful saying anything negative about social media or tech companies here. /s

[int_19h]

That's one of the easiest way to get upvoted here, especially wrt Meta.

[shubb]

Remember that buybacks are another way of returning money to shareholders, and Meta bought 10% of it's shares this year. A 10% yield is pretty significant and reflects its high PE ratio.

However, they took on 10bn in debt this summer, joining Apple and the other FANGS. These companies claim to have high margins.

For me, if Apple claims to make a 20% margin, but then spends all that money and needs to borrow more, and its revenues are shrinking - that's not a growth stock and that's not an honest earnings. If you need to spend the money to continue to make sales, it's part of your operating costs. If you need to borrow money to continue to operate, you don't have a margin.

At least Meta is genuinely spending its borrowed money on future growth (trying to build this VR thing) and is continuing to grow revenue in local currency terms . We might not believe it would work, but it's honest margin. Not a zero profit growth stock - yet.

I think we are in a wierd situation where some companies are being more honest than others, and the honest ones will be punished until the pendulum swings in the next 2 quaters.

[gwd]

> For me, if Apple claims to make a 20% margin, but then spends all that money and needs to borrow more...

NB that having a large cash reserve and borrowing more money are not mutually exclusive. From a large company's perspective, borrowing money when times are good and money is easy to get are low gives the company a "war chest" to either be able to suddenly invest money quickly should the need arise, or to weather long drawn-out storms, when times are bad and money is hard to get.

EDIT: Apple has around $100B in debt, and around $202 billion in cash reserves; it could pay off its debt tomorrow if it wanted to; but then it would have "only" $100B in cash.

[shubb]

Good point

[galaxyLogic]

See also: https://www.militarytimes.com/news/2022/09/28/meta-ordered-t...

[deepGem]

Going by the current inflation and unemployment trends, the economy won't stabilize for a year at the very least. We have a very difficult situation. Inflation is high, unemployment is low. In 2008, we had low inflation and high unemployment, but not this time. So, with the tightening of interest rates, unemployment has to go high. With unemployment increasing, prices of goods will fall due to decrease in demand. At that time, hopefully inflation will go on a downward trend.

The expected inflation in US is around 2-3% and until we see inflation heading towards those numbers it's hard to say economy is stabilizing.

For comparison, the expected inflation in India is around 8-10% and that's why you don't see the pinch in the Indian economy right now even with the tightening of rates.

I am no predictor of the future, but more likely the US interest rates will hit the range of 10% before we start seeing any easing in inflation. Once we see unemployment numbers going up consistently for a couple of quarters that will be the sign of economic stabilization I think.

[adam_arthur]

The low inflation and high unemployment in 2008 came after Fed tightening took effect and the recession was in full force.

We'll almost certainly see the same thing this time within the next year.

The Fed let employment velocity and unemployment go far too low to avoid a severe recession. They should have started tightening far earlier

[tsimionescu]

Why are you speaking as if high unemployment is better than high inflation?

[deepGem]

Am not saying it's better, am saying it's inevitable.

[UncleOxidant]

> The economy is stabilizing. It's being weaned off of ultra-loose money for the first time in years. The stock market is starting to behave more rationally, demanding that a company whose earnings potential is sinking and which offers no dividend be valued accordingly.

Agree with the latter part of your statement, but no way have we hit "stability". Yes, taking away the ultra-loose money policy had to happen, but doing so has perturbed the system and it's going to take a while to stabilize.