Layoffs have exploded to the highest point in 15 years. Cisco is said to be going through another round of layoffs. Intel, one of the biggest employers in the East Valley, announced that they’re laying off 15% of their workforce. Amazon is cutting hundreds of jobs from its cloud computing division. UPS, the company, said it plans to cut thousands of jobs in a bid to save $1 billion. The job market? Finding a job is the hardest it’s been in 19 years, according to Challenger, Gray, and Christmas.
This job market is like the craziest I have ever seen. Unemployed full-time workers apply to an average of 30 jobs, only to receive an average of four callbacks or responses. This post just came out about an hour or two ago. It had 247,000 views, and now it’s at 269,000 views. Everyone is talking about what’s happening right now with the job market. This is a brutal layoff, but what people don’t realize is what’s scheduled around the corner over the next 12 months, according to Goldman Sachs. If you have a job or if you’re a business owner, you have to pay very, very close attention to the chain of events that are already solidified. This is going to happen—there’s no way around it. You need to get ready for this because everything is about to change.
I mean, look at bankruptcies, for example. Bankruptcy filings rose by eight last week, the second-highest week in 2024. Companies are filing for bankruptcy now at the fastest rate since 2020. Beyond Meat filed this year, Party City filed, Vice Media, Instant Pot, and Pyrex. By comparison, in Q1 2022, bankruptcies were 60% lower, at 980. Higher interest rates, rising prices, and declining consumer spending are all behind the surge in bankruptcies. I’m going to show you what Goldman Sachs says comes next and why I think we’re going to see a scenario unfold where assets are going to hit the market—homes, duplexes, triplexes, and fourplexes. We’re going to see people letting go of their cars at record levels. They’re going to have no choice because people aren’t going to have the cash. But during those panic periods, there are going to be massive investing opportunities for those that are prepared.
Take a look at this: even Nicki Minaj is joking about it. This came out today—Nicki Minaj makes jokes about Atlantic Records’ massive layoffs. I mean, everybody’s talking about this. Cisco, for example, announced more layoffs two hours ago. GM, 20 hours ago, is issuing layoffs. Even John Deere is laying off 300 workers. IBM, Warner Music, and UnitedHealth are laying off 160 employees. All this happened in the last 24 hours! Paramount is laying off workers—that was two days ago.
So as this unfolds, let’s look at the Magnificent Seven. You know, the seven stocks that are essentially holding up the entire stock market. Six of the seven are laying off employees like there’s no tomorrow. The only exception presently is NVIDIA—that’s the only one. Tesla, as of December 31st, had 140,000 employees and is letting go of 14% of its workforce, bringing it down to 121,000, basically slashing 20,000 jobs. Microsoft is laying off employees as well, and the layoffs are expected to continue over the coming weeks. Amazon is telling workers that they need to come back into the office. Some people might see this as a good thing or a bad thing. Regardless, Amazon’s goal is to remove as many workers that they don’t need as possible, without paying severance. Severance without paying, you know,
employees to leave. If employees just decide to leave, then that’s a great thing for Amazon. In January 2023, he said the number of layoffs would amount to more than 18,000, right? So, they’re calling it silent sacking. This is apparently what Amazon is doing. So, you look at everything happening at Amazon, you look at what Meta is doing. Meta layoffs continue to impact advertisers as that company replaces account team members with AI. Apple, same exact thing. I mean, you have mass layoffs hitting tech: 27,000 jobs at Intel, Cisco, IBM, and Apple.
Apple — I personally believe Apple’s iPhone, the new iPhone, their sales are going to fall in a big way. I mean, how many people are going out there looking to spend 1,500 bucks on a cell phone right now? You look at Warren Buffett; he unloaded so much Apple stock. I think it’s because he knows that things are not going to be looking good for Apple, right? He’s also unloading a lot of other stock: Bank of America and different companies. I think he realizes things are about to really flip in this economy.
Intel is slashing 15,000 jobs and suspending its dividend to better compete with chip rivals Nvidia and AMD. But, Jamie Dimon came out three hours ago, saying that he’s skeptical of a soft landing after rate cuts. You know, who is he? Just the CEO of the biggest bank in America. They move $10 trillion a day, they fund 30 countries, the IMF, the United States government. I think he would know if we’re going to be hitting a soft landing. And I think when he’s selling $140 million worth of his own company’s stock, that’s signaling that we’re likely walking into a problem.
But this is the big crisis that’s coming. They say that the future of salary increases is bleak, and why next year might see a decline. Employees might create half as many jobs by March 2025, and here’s why: corporate debt. What is corporate debt? Corporate debt is the amount of money that a company borrows from different sources to finance its operations and growth. And why is that important? Well, because during 2021, and during that era with basically 0% interest rates, a booming stock market, and a very strong consumer market with stimulus checks going out everywhere, these companies had so much money. What were they doing? They were investing in their infrastructure, investing in their people. That was during the Great Resignation. During this period, they were paying employees 10, 15, 20% more, offering sign-on bonuses, letting people work remotely, do whatever they wanted. That was what was happening during that period. These companies took on $2 trillion worth of this cheap debt.
Well, this debt is getting ready to reset at a much higher interest rate, and so these companies are saying, ‘What do we do? We have these huge payments coming, and we’re looking at all this talent that we’re overpaying for. Let’s get rid of them. Let’s move into AI. Let’s outsource talent, close down offices, and find ways to batten down the hatches and get ready for a storm.’ And that’s exactly what’s happening. This is according to Goldman Sachs, by the way, and they said the US faces a $2 trillion corporate debt wall, warns Goldman.I think some industries are going to explode over the coming couple of years and become extremely profitable, but I think other industries are going to get hit like there’s no tomorrow. Since the major stock market indices bottomed in October of 2022, they absolutely surged higher. When I looked at what happened on Wednesday of last week, when Jerome Powell slashed interest rates for the first time in 4 and 1/2 years, I’ve been doing a lot of thinking. The NASDAQ 100, the S&P 500, and the Dow Jones are all priced to perfection, and opportunities are scarce because markets are trading at rich multiples and high valuations. The NASDAQ is up 82% in the past 2 years — it’s crazy. In 2024 alone, the NASDAQ is up more than 20%. So, I had to think like a contrarian, like a value investor.
Therefore, what I did was look at which sectors were most badly impacted by the Biden-Harris administration and by Powell’s restrictive monetary policies, because both are in the midst of historic turnarounds, and that’s where we’ll find real gems. I believe Powell has begun his pivot, and very soon we might see Donald Trump back in office with a pledge to double America’s electrical production to win the AI race of global supremacy in the 21st century.
Therefore, I looked through and through and found a profitable, growing, and successful company actually trading at an all-time low as we speak, trading at $3.50 per share with an analyst price target of $10 per share. The company I’m highlighting to you today is SolarBank, our sponsor, trading on the NASDAQ under stock ticker SUUN, and it presents what could be an incredible opportunity. Pay close attention because I feel like this is a defining moment in our lives. SolarBank’s underlying business has flourished in the last few years, even as the stock price is down more than 50% from its 2023 peak — a bargain for a rapidly growing company in my view. This stock could be a top pick for a Trump era. Trump’s plan to double US electricity production and boost energy independence aligns perfectly with SolarBank’s model.
SolarBank’s financials look solid as a rock, as far as I’m concerned. In 2021, revenues hit $7.3 million. In 2022, they grew 39% to $10.2 million. And in 2023, revenues soared 82% to $18.6 million. From 2023 to 2024, revenues surged 268% to $50 million in just the first 9 months, driving net incomes to new heights. Clients like Honeywell, Panasonic, and PNC trust them to build and manage projects end-to-end. As interest rates drop, probable deregulation under Trump, and with an energy renaissance unfolding, SolarBank is poised for growth on steroids. I couldn’t find a single thing I didn’t like about SolarBank. Analysts have set a $10 price target, triple its current price. Solar stock, ticker SUUN, is a rare opportunity at all-time lows with clear growth potential. If I could pick one stock — only one — this would be it, without a doubt.
So, he says an impending corporate debt wall of more than $2 trillion is about to impact the US economy over the next two years. When did this come out? One year ago, August 8th, 2023. And so, when you look here, they’re saying layoffs soared in August, hitting the highest in 15 years, while year-to-date hiring hit the lowest in 19 years. So, just imagine — if they’re saying this is going to happen in the next two years, well, we’re one year in. Next year, things are probably going to hit the fan.
It says the bank warned in a note that hiring, interest rate expenses, and the refinancing of corporate debt will lead to a reduction in capital expenditures and the loss of about 5,000 jobs a month in 2024. That figure could double in 2025 to 10,000 jobs per month, should interest rates remain elevated at the current level. Now, they decreased interest rates 50 basis points, but that doesn’t move the needle, considering where a lot of this debt was locked in during 2021 and early 2022. I mean, rates have essentially doubled, right? So, if interest rates remain high, companies will need to devour or devote a greater share of their revenue to cover high interest rate expenses as they’ve refinanced their debt at higher interest rates,” said Goldman Sachs’ chief economist. “We find that for each additional dollar of interest expense, firms lower their capital expenditures by 10 cents and labor costs by 20 cents.” This all started when the Federal Reserve began hiking interest rates in early 2022. U.S. companies benefited immensely from the period of low rates. According to Bank of America, the debt composition of Standard & Poor’s 500 companies included as much as 76% in long-term fixed debt, much of which was secured at low single-digit rates. But with U.S. interest rates now at 5 to 5.5%, and potentially set to go higher still as the Federal Reserve continues to combat inflation, refinancing risk will grow more pronounced, especially over the next two years. Goldman Sachs predicts that corporate debt maturities will be $230 billion for the rest of 2023, $790 billion in 2024, and $1 trillion by next year, representing a combined 16% of all corporate debt. A further $4 trillion in corporate debt is set to mature from 2026 to 2030.
So, think about this — the job market is about to get absolutely flipped on its head. You have consumers that have record-high credit card debt, $1.14 trillion in credit card debt, over $1.6 trillion in student loans, and $1.7 trillion in auto loans. This disaster is going to ripple through every industry — every industry. And so, he or she who has the cash is going to make the rules. The next five years, the companies that’ll be hit the hardest by refinancing debt at higher rates are the less profitable ones, which typically rely more heavily on borrowing to balance costs. Our estimates suggest that about half of the reduction in labor costs comes from reduced hiring and half from lower wage growth, implying a 5,000-drag on monthly payroll growth in 2024, rising to 10,000 in 2025.
So, if they’re saying 10,000 in 2025, and they’re also saying it’s going to hit $1 trillion next year, and a further $4 trillion in corporate debt from 2026 to 2030, just imagine the advancements coming with AI. With all this new talent that’s going to be available to work, it’s going to lead to a race to the bottom in wages. I think with all of this happening at the same time, consumers’ spending is going to be greatly reduced. This is just going to force companies to get very, very, very conservative with income in the future. They’re going to slash, slash, and slash jobs just to offset the uncertainty. They don’t know what’s going to happen — they don’t know where consumers will be a year from now. So, they’re going to continue to get more aggressive just to play it safe.
The debt refinancing wall indicates that it could take years for the Fed’s aggressive interest rate hikes to fully work their way through the economy and impact businesses. This might also help explain why the U.S. has so far avoided a recession. The limited refinancing needs since the start of the Fed’s tightening cycle suggest that the impact of higher interest rates on growth is more delayed than the average historical trend.
