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‘Be Careful What You Wish For,’ Mike Wilson Warns. Again.
"Be careful what you wish for," Morgan Stanley's Mike Wilson warned, "way" back in August. He reiter
Mike Wilson, one of the few who understands the power of operating leverage. Thanks for this great post.
With all the high fixed cost industries in our economy, including all hospitality, health care, utilities, manufacturing and more, small changes in volume/revenue will result in large changes in profits. Downward is magnified with operating leverage. Doesn’t seem all the rose-colored glasses forecasters get that problem.
Good point by Wilson.
Could offset some of this by tilting toward US companies w/ FX exposure.
Thanks for highlighting this Walt!
The cure? Higher labor and capital productivity. That translates to fading employment, lower capital spending and lower interest rates. It’s coming, but not right away.
With regard to “higher labor productivity”, all “at home” workers should be prepared for the call to return to the office!