Today’s disappointing jobs number reminds us of how weak the consumer continues to be.
However, the same story isn’t shared by corporations.
“The corporate recovery has far exceeded the consumer recovery since the 2008-to-2009 financial crisis. Profit margins are at record highs and corporate balance sheets are flush with nearly $2 trillion in cash, while consumer-oriented metrics such as personal income growth are still anemic,” says Daniel Skelly, equity strategist at Morgan Stanley Smith Barney.
The strategy corporations are taking, Skelly says, is the “more with less” strategy in which technology is used to sales patterns and hours worked to identify efficiencies throughout the company.
It has been understood for a long time that companies are using technology in place of human capital, but this is a bit different. Companies now have a much better understanding of their traffic patterns and supply chains thanks to technology, making them become extremely efficient in many regards.
The below chart details the accelerating use of data, much of which is coming from corporations.
Photo: Morgan Stanley Smith Barney
Morgan Stanley Smith Barney does not see this trend stopping anytime soon, and they think it’s a great area to invest in.
We see opportunities in technology companies that can integrate enterprise-wide data from various sources and provide analytical capabilities to help customers make better business decisions, as well as software providers that can help companies manage data across server networks.