Every week I’ll provide updates on the latest trends in cloud software companies. Follow along to stay up to date! Inflation…Rate Hikes…Recession? What Does It Mean For Cloud Software? Another very interesting week for cloud software companies. Many people are wondering if we’ve hit the bottom of the cloud software drawdown. It’s a very hard question to answer, but we may have gotten a clue this week. As I’ve talked about before, valuations and multiples of risk assets like cloud software stocks are tied to interest rates. During Covid, we saw the government pump trillions of dollars into the economy and take rates to zero. This drove unprecedented levels of capital flows into cloud software stocks, driving multiples up. There was also an element of cloud penetration accelerating, but the bulk of the move was driven by the Fed and macro policy. Recently, the Fed has signaled a number of rate hikes for this year. The market
I'm a big fan of your writing so don't take this the wrong way. You're not an expert on commodities right? High interest rates are not going to magically make oil and gas appear out of nowhere and drive prices down. The only way that higher interest rates can help is by slowing down the economy and creating demand destruction.
How much demand must be destroyed to bring down commodity prices? Nobody knows. But I do know that it cannot be done without slowing down the economy. And slowing down the economy is what will make multiple of high flying cloud stock contract.
Hi JB, Great work you are doing. Your comments and data organization simplifies investment decisions for me.
Is there a way to get downloadable or at least sortable versions of your spread sheets.
Thanks, John
Hi! What do you think about Livechat Software (from Central Europe)?
I'm a big fan of your writing so don't take this the wrong way. You're not an expert on commodities right? High interest rates are not going to magically make oil and gas appear out of nowhere and drive prices down. The only way that higher interest rates can help is by slowing down the economy and creating demand destruction.
How much demand must be destroyed to bring down commodity prices? Nobody knows. But I do know that it cannot be done without slowing down the economy. And slowing down the economy is what will make multiple of high flying cloud stock contract.