“Observation of history also supports the notion that the saving rate is unlikely to sharply undershoot its pre-pandemic value. Consider the experience around World War II. During the war, the saving rate spiked as production and purchases of consumer goods and spending on leisure services were curtailed. At the conclusion of the war, despite the release of pent-up demand as returning service members married and started families, the saving rate declined to a level above its pre-war average and then trended higher for several years. Our forecast features a broadly similar result. The return of the normal relationship between spending, income, and wealth does not imply an undershoot of the saving rate. Without such an undershoot, the path of consumer spending, while strong, does not launch the economy into an inflationary boom.“
Seemingly in the face of this and this, venture has quietly been funding semiconductor start-ups since 2017.
Partly this is an explosion of AI (especially edge AI), and new use cases (biology, quantum computing) but also the interest of big tech firms in acquiring semiconductor startups.
A really brilliant interview with Enrico Moretti, a researcher in labour and urban economics.
He makes two points on the future of post-pandemic cities, which, due to agglomeration effects he sees as bright.
There will be two forces – the first as employers accept some working from home, workers will accept a longer commute if it is less frequent, thereby growing the size of cities and hence the amenities they support.
This process will also lighten the load on the urban core – thereby making it more attractive.
A nice article showing that holding winners is a trying experience.
For example Amazon – “The near-95% crash following the tech bust is the one most people point to. The stock was underwater from 1999 to 2009! But there was a 54% crash from 2005-2006, a 58% dive in 2008 and 5 separate losses of 25% or worse since 2009.“
Why is it so hard – “Since 1980, more than 40% of all companies in the U.S. stock market have experienced a decline of 70% or worse without recovering.“
This link has a full analysis of the business “failures” 2017-2020 which is worth reading.
Interesting measure from Bridgewater – it shows the number of years it would take for US companies to repay all their corporate debt and equity capitalisation via internal cash flow.
The measure reflects leverage and market cap to cashflow equity valuation.
