This is uncharacteristically poor journalism from the Economist. The graph shows excepting 2009 and 2016 there has been effectively no significant downturn, whereas the title suggests an order of magnitude change in the last two years.
Sorry, I'm not following your complaint -- the article leads with:
> When the pandemic hit in March, initial public offerings, particularly those by technology startups, were predicted to be among the early victims. After all, who wants to go public in a once-in-a-century crisis? Quite a few people, it turns out. In the past couple of months ipos, which all but dried up until late May, have come back with a vengeance in America
And then presents a graph comparing YTD with previous years, showing more IPOs in 2020 YTD than any point in the last 15 years, with tech company IPOs in (eyeballed) the top quartile of the last 15 years.
I read this article as claiming:
1) The prediction was that IPOs would go down; they are not (any more).
2) IPO volume for YTD is historically strong, though not at '90s dot-com boom levels. (I'd have preferred their IPO volume chart to go back 25 years so that it showed the build-up to 1999, but that's a different complaint I think.)
Where are you getting the suggestion of an order of magnitude change?
Agreed, the Economist's habit of laying out a few kindergarten-level facts and then extrapolating to what the world should do is pretty irritating. Enough that after one subscription I swore off reading them generally.
Can you provide some examples? I think this would only apply to the Leaders sections, but the point of it is to serve as introductions for later articles. The rest I've found to be thorough, especially the Briefing section and Technology Quarterly. It's definitely full of "shoulds" from a classical liberal perspective.
The stock market is living in a dream land where it doesn't matter that the real economy is doing badly, they can count on nearly unstoppable supply of money flowing from the Fed. In this situation it is obvious that all stock prices will skyrocket, but the most probable outcome is a crash in 1929's style.
And Tesla just surpassed Walmart in market cap even though their total quarterly deliveries have been relatively flat around 80-90k per quarter for almost 2 years.
Part of me is kicking myself for selling back in like March, but there is no version of me that would have made it past the first of the month without profit taking. I'll just have to console myself with the 200% profits I made instead of the 900% I could have made.
The market is rational, the monetary system is what's insane. If the Fed doesn't start raising interest rates, this insanity will only continue and intensify. Buying cryptocurrency is the purest, most direct, most effective way to benefit from the current madness.
The Fed is just going to keep printing as much money as is necessary to meet its full employment mandate (which is physically impossible at this stage due to automation). Employees all over the world are currently going round in circles and digging holes and filling them back up. Any white collar worker who takes their job seriously at this stage needs to wake up... What's going on is so obvious.
Just bring in UBI and abolish the Fed. Better have idle people getting paid to do nothing than busy people getting paid to pretend to do something and engaging in self-deception... And let's not forget all the people who can't get a job because their useless skills are not useless in exactly the right way as demanded by their equally useless employers.
I've seen many people get rich who have about the intelligence of a wild macaque and I've also seen very smart people struggling to make ends meet.
I know the above is not a popular opinion and grating to many, but I have to agree. My job as a SWE is just reinventing wheels and tackling problems that are not worth solving. I’m paid 7 figures (thanks to stock appreciation) to invent more efficient ways to shovel ads and infiltrate users’ privacy.
Meanwhile basic science researchers languish as impecunious precariat. Even a humdrum poet devoid of creativity working a dead end service job is more meritorious than I.
5,000 massive scale physical retail buildings (at a time when other physical retail is being mauled), a brand with buyer loyalty that took half a century to create, operating on a 3% profit margin in a hyper low margin business, and excellent real-estate locations across most of the US.
Be sure to wave to Kmart, Penneys, FW Woolworth, JG McCrory's and Sears on the way to having what Walmart has.
No, you can't have what Walmart has.
Nobody can afford to replicate what Walmart has built up over time. And if you try to compete with them via ecommerce instead of physical retail (thinking that will somehow be cheaper), you'll need to spend tens of billions of dollars on distribution to do it (and good luck competing with Amazon).
If you had to choose who to compete with, Walmart & Amazon or Tesla, that's a comically easy choice. That's why companies like Nikola or Rivian exist (and 37 Chinese Tesla clones), and absolutely nobody is eager to build a thousand new giant physical retail stores to go after Walmart (besides, you can't get the money to do it, there are no funding sources for that financially suicidal move).
I understand your point for the most part, but the argument isn't that you have to build exactly what Walmart has (hundreds of buildings with mass distribution). Any Joe can setup a grocery/goods store tomorrow. Will they crush Walmart any time soon? Nope. Good luck trying to build what Tesla has. Call me a fanboy, but there is some amazing technology in those cars, and while strapping a battery on a frame with a electric motor looks easy, doing it at scale and as efficiently as they do is definitely not. Many of those 37 or whatever Chinese knock-offs have failed already. I would never buy a knock-off electric car, but I would definitely shop at Joe's convenience store to pick up some bananas, I do it daily actually.
Isn't VW now producing 2 fully electric cars at scale based on their new electric platform? I think the ID3 is shipping to customers in Europe already or in the near future.
Yes, but while those are somewhat cheaper than the Model 3, they don't match it on range, power and efficiency.
Also they are somewhat delayed because someone figured that it would be a good idea to create a lot of new software(a whole new OS?) specifically for this car.
I'd actually buy a cheap Chinese electric car. I wouldn't consider a Tesla. It lacks the range I need in my primary vehicle and is too expensive for a second commuter car. Tesla's are amazing and good for them but it's not what I need or want. People are valuing Tesla like there will be one in every garage, but I just don't see it happening.
No you wouldn't, just buy a Chinese scooter (sub $1500) and see how much of a headache their electronics are on something you need for transportation. They make EV ones, too, which would probably be the best gauge with its limited range.
Its a horrible experience, they honestly have no QA/QC to speak of in their vehicle division(s) they just build and ship them like that in masse, its so wasteful as they will most likely end up in a landfill when problems arise as they're priced at near disposable level.
They may have processors and subsequently phone's down, but the amount of errors on an EV would make me want to drive the thing into a wall.
As for the Tesla stock price, I think its pretty high given where they are in terms of CURRENT scale. I put a deposit down for a Cybertruck knowing full well its QA-QC won't be sorted until 1-3 years after the release as its an entire new chassis, but those funds help make that happens and even in the interim they're pretty good about repairs/returns provided they can get the parts for them.
Its stock price is am indication of just another way to park hot money in the economy, at least its going into something of actual value and helping the environment rather than inflating another commodities bubbles that fomented war and revolution all of the World, as we saw in 2008.
It may not be rationale given the constraints of their CURRENT production capacity, but their Manufacturing presence in 3 different continents and their supercharger network alone didn't seemed priced in with its stock at below $500 in my opinion.
I told people to buy more during the 'Bankwupt' joke at mid 200s, Elon is a total troll Online/Twitter but I've been in the Auto Industry for quite some time and went to Interview several times at the factory in Fremont and they are not a car company, they seem more like an Electrical/Battery manufacturer that uses cars to sell its core product(s). The guys I met with in the Supply Chain are the real deal, once the constraints of Model 3 lines and ramp up happened what they undertook was nothing short of immense.
I hope the guys at the factory are slowly cashing out some of their positions as the Manufacturing guys are not paid very well and this money after the shut down is probably needed.
The 'Chinese junk' meme is pretty tired at this point. I've bought plenty of stuff from China that worked just fine. An electric car without self-driving or pointless infotainment isn't all that hard to make. It's some basic car components, some motors and a battery, more or less. I've got an EE background and I don't see anything that would keep them from making a cheap car with short range. If it passes safety testing and is approved for sale in the US then I'm all in.
> The 'Chinese junk' meme is pretty tired at this point.
Buy the EV scooter, and put your money where your mouth is and post your progress as you use it (and only it) as a daily then. I'll gladly take back my words if you make it work. It may work temporarily and intermittently, but it's unreliability is what underscores that 'meme' to me.
> It's some basic car components, some motors and a battery, more or less.
Yes, but the notion of making it reliable is something that is simply not in the Chinese DNA of Manufacturing. Cutting corners everywhere and mass producing and saturating the Market with an inferior, albeit low priced, compromised product is what takes precedence and stealing the IP to mass produce an imitation isn't the same as developing something with your own in-house RD department and then refining and iterating as you ID problems and address them as you scale up production. Because with Chinese products once its shipped, its 'out of sight, out of mind.'
But, I don't have an EE degree so I'd like to see this challenge be met. I was however a privateer driver and mechanic in Motorsports since I was 16 until my mid 20s and spent quite a bit of my Auto career in 2 of 3 of Germany's Big 3 Manufactures in various roles onward after that--VW and BMW which are also known to be plagued with unreliable electronics. And then went to Nissan (which his what I drove/worked on all along) after that, so I know how to diagnose and wrench. A trend you should notice is how I followed the EV program development/transition of each manufacturer.
And those 'basic components' like batteries are something even Nissan Japan couldn't get right for nearly the first decade of the Leaf program and have only recently been able to achieve better reliability due to the arduous, and tireless refinement process as they were the first mover in the Industry.
I doubt anything with 4 wheels, EV and Made in China is going to make it to the US right now, and rightly so, given the current stance (which is still incredibly weak in my opinion) on the CCP.
So 2 wheels will have to do.
Clarity: I'm not a protectionist and I'm actually a staunch proponent of Free Markets, what I'm not in favour of is the CCP which is anything but Free Market.
Yeah, I'm not blowing $1k+ on something I don't need. I also don't expect the same quality to be found in a $1.5k scooter as a $15k vehicle which needs to meet a different set of testing requirements. I don't know if you've noticed, but most modern goods are engineered to be exactly as good as they need to be and no better. I don't expect I would want to keep a 1st gen EV from China or Tesla beyond the initial life of the battery pack anyway.
Aren't batteries mostly purchased from large battery mfgs now? Tesla doesn't quite make their own batteries, they partner with battery manufacturers. Because the battery pack is a major safety item, there's only so low China can go before they make something that won't get to market.
You like top quality stuff and that's great. I don't care. I'm happy to save money and buy something that is as good as I need it to be.
Full self driving with a robo taxi network promised to make your car appreciate in value 7 fold. They couldn't just pump the stock, they also pump the car itself as a rocketing investment. It is supposed to launch by the end of 2020.
Pricing is whatever people are willing to pay. The market value is not inherently tied to assets intrinsic value. Markets are clearly pricing in growth perhaps irrationally
So if you want to bet either way you can. That’s the beauty of it all. Put your money where your thoughts are, and if they pan out then awesome.
But, pricing is not what “people” are willing to say since the biggest funds really dictate the valuation of equities. They tend to try to have a long outlook, so they are betting that covid is short-term, the recovery will be quick, and Trump will be re-elected. Most people don’t believe these things, but most money is betting on those things.
quite funny that you are downvoted. you are totally right
tesla is a forward looking company that will continue to surprise while walmarts whole business will suffer due to the implications of the corona crisis.
The interesting game people will get to play is if Biden wins and Democrats control at least the House, do you hold onto your shares and hope the Democrats bring back the SALT deduction.
They won’t bring it back. They don’t want the SALT deduction either. They just didn’t want to piss off their voters.
To be fair, getting rid of SALT was a good move. It makes the tax code more fair. There is no reason for the federal government to subsidize someone who lives in California or New York.
I think you might be thinking of the hyperinflation of 1923? That's when Germany printed money to pay off war debts. But the hyperinflation was over long before 1929.
"[Brüning] enacted a draconian policy of deflation and drastically cutting state expenditure.[5] Among other measures, he completely halted all public grants to the obligatory unemployment insurance introduced in 1927, resulting in workers making higher contributions and fewer benefits for the unemployed. Benefits for the sick, invalid and pensioners were also reduced sharply.[52] Additional difficulties were caused by the different deflationary policies pursued by Brüning and the Reichsbank, Germany's central bank.[...]Brüning triggered a deflationary internal devaluation by forcing the economy to reduce prices, rents, salaries and wages by 20%."
This made unemployment skyrocket and arguably caused the rise of Hitler.
EDIT: I'm not sure why all the downvotes, maybe because it looks like I Godwin-ed the thread? I was just paraphrasing the rest of the wikipedia section:
"In 1933, the American economist Irving Fisher developed the theory of debt deflation. He explained that a deflation causes a decline of profits, asset prices and a still greater decline in the net worth of businesses. Even healthy companies, therefore, may appear over-indebted and facing bankruptcy.[57] The consensus today is that Brüning's policies exacerbated the German economic crisis and the population's growing frustration with democracy, contributing enormously to the increase in support for Hitler's National Socialist German Workers' Party"
> EDIT: I'm not sure why all the downvotes, maybe because it looks like I Godwin-ed the thread? I was just paraphrasing the rest of the wikipedia section:
Well in a thread about the re-emerging dominance of idiocy in silicon valley, consider it more supporting evidence.
> A loaf of bread in Berlin that cost around 160 Marks at the end of 1922 cost 200,000,000,000 Marks by late 1923.
I was not previously familiar with the events you referenced. It sure seems like the Chancellor made very poor choices when the Great Depression began, perhaps because he was terrified of inflation happening again.
Wait, hold up. Are we talking about a policy of deflation (decreasing government spending), or deflation of the currency (contraction of the monetary supply and an ongoing increase of value of the currency)?
I thought we were talking about the latter.
I could still be wrong, and if you have any data on the value of the mark used at the time, I'd be willing to move on my position.
Ultimately what I'm asking here I guess, is do we have any evidence that what Brüning was trying to do worked?
That can change, and quickly. It isn't really plausible at this point that the US is, under any voluntary circumstances, going to attempt to pay its debts down unless the financial system completely collapses. Debt to GDP has been in a pretty solid uptrend for 40 years now. US economists are starting to lay a theoretical groundwork for why the government can just create money at will too.
At some point something will give. It is frankly stunning to me that merchants accept ongoing crisis level debts from the US as part of the normal order of things. Someone thinks they are owed something and in real terms they aren't going to get it.
Sure we do, it's called AB2088 and it means private equity as we know it is going away in California.
There is also the not insignificant risk that we may also face lightweight socialism at the national level in January. Who knows what the Fed will do under pressure from a Left leaning administration in the White House?
It's actually the opposite that will need to be dealt with.
How much of the recent stock market gains are due to a hidden inflation thanks to the trillions of dollars being borrowed (or printed) by all the governments around the world?
Get ready for 2 dollar eggs and 20 dollar loaves of bread!
That doesn't seem to be what happens when the interest rate for full employment is below zero. I do think it has some other effects, like hedgefunds can easily leverage themselves to buy up assets that normal people want, like houses.
Speaking of houses, I've heard from some local agents that the housing market in my part of Utah is currently dominated by cash offers. They didn't say where the cash was coming from.
"Cash" might mean someone with several properties with Equity Lines of Credit on them that they can draw on immediately.
E.g. own 5 properties, each 50% mortgage, 50% equity, and 30% of equity immediately available keeping max LTV under 80%.
They could immediately buy 1.5 equivalent properties and work out the financing later.
They might even get better financing terms because they negotiate without the pressure of "I need you to give me a mortgage, otherwise I can't buy this hot property".
If you received two identical offers, 1 contingent on financing, the other cash, you'd take the cash offer.
We just put in a cash offer on a house, but we fully intend to put a mortgage the property. But we didn’t make the bid contingent on financing going through. We can cover the cost in cash if we have to, but we would rather not.
We've now been through 4.5 US presidential terms where the US administration does not want to turn the dial back. If anything, the dial is turned further and further to ensure housing prices remain artificially inflated with easy credit and low rates.
However much sense stable, realistic home prices make in the long term, it makes sense in the short term for each president to continue propping up the market -- which president wants to inflict wide-scale harm on 2/3 of the households in the US?
It’s possible it doesn’t result in inflation if the general public doesn’t benefit from the stock market appreciation. Worse, it might make them poorer if they buy the top.
But it probably means hot markets like nyc, sf, la will remain very expensive.
I am most sure if NYC and SF are too hot at the moment.
It really is hard to say what will happen as the banking system is so different today than in the past. I do think we will see continued leaking of all the new money that is being printed out into hard assets, but beyond that I have no idea.
To the GP's comment, this could be an artifact of a slow-leak inflation. If inflation leaks in some markets faster than others you would see those markets increase in cost and income faster than the average. Boston area condo prices rose 32% from April 2019 to April 2020, at best income increases are keeping pace.
It's not like the $700B they inject is instantly accounted for. They bought $500B in bonds, which means that bonds have to be sold off again for that money to appear in the economy. They also bought $200B in mortgages, which means those need to be resold and cashed out of before that money shows up in the market.
QE basically artificially raises the value of assets, but those assets still need to be sold/traded for it to have an effect on the economy.
Your comment is technically correct, but misleading.
In fact California specifically does not tax ex-residents for income arising from the disposition of stock acquired with ISOs, which is usually the way pre-IPO employees acquire shares. This is true even if the ISOs were granted for work performed in California.
The Silicon Valley company I worked at for a long time started out with ISOs, then as the company grew scrapped ISOs in favor of NSQ (nonqualifed options) and then later scrapped those and just gave RSUs.
The move from ISO->NSQ had some tax advantage to the company even though it is obviously worse for the employees.
You should look into the recent proposed bills that target exactly this. The provision that made headlines was a wealth tax on $30MM personal wealth, however it also includes enormous income tax hikes on anything above $1MM and explicitly targets capital gains.
I live and work in NYC but the company I'm employed by is based in CA. How fucked am I if I'm ever able to cash out my equity. Note, technically I'm a resident of NYC. If I don't have an office by next year, I've decided to move back to TX, or pick a spot in New Hampshire or Vermont.
I think you're just NYC-fucked. Just because the company is based there doesn't give CA any claim to income from your options. That's if the company is even based in CA. There's a good chance it's based in Delaware.
