In Silicon Valley, there is a palpable sense of gloom, a fear that the good times are not only over, but that there is no sign when they will return.

We decided to gather the brightest minds to find a glimmer of hope. We hosted The Most Interesting Dinner in The World at Protégé, an upscale casual setting in Palo Alto. It was a fantastic evening with thoughtfully paired food and wine.

As is customary at our dinners, each participant was asked to bring a chart to discuss with the group. Please find a summary of the charts and discussion below. 

Chart 1: Long Doom “We have been so accustomed to this extraordinary liquidity environment that no one knows what will happen when global QE goes in reverse.”

Chart 2: Long Boom Households are wealthy, flush with cash, and ready to spend—setting the stage for a self-reinforcing demand explosion.  

Chart 3: Short Dreams “The only way to reduce inequality is to make poor people richer or rich people poorer.”

Chart 4: Short History What can the seventies tell us about how we should be thinking now?

Chart 5: Long Vultures “What happens when a $1.5 trillion asset class is tested?”

Chart 6: Short Widgets “I remember learning about the bullwhip effect in college. It was all theory. Now I see it all around me.”  

Chart 7: Short Death “Denial of death” is the defining feature of the post-enlightenment West and it must be “cured.”

Chart 8: Long Rembrandt “Leave your preconceived notions at the door. Don’t start with what you think will happen, look at what could happen.”

Chart 9: Short Status Pre-owned Rolex watches have nearly tripled in value over the past decade.

Chart 10: Short Anxiety “Trading is the loneliest job in the world.”

Short Doom

Source: Bloomberg, The Daily Shot, University of Michigan, Bernstein Research, Factset

“The macro backdrop is the worst I’ve seen in my career,” said the speaker. Growth is slowing, inflation is rising, and consumer sentiment is near record lows. “While everyone is focused on multiples, it’s the earnings side that now concerns me.” 

Analysts estimate earnings growth of 10 percent and 13 percent year-over-year for the third and fourth quarters, respectively. “Those numbers have to come down,” he said. The directions of earnings revisions have turned negative. 

“What consumers are doing is contradicting what consumers are saying,” said a participant. “Personal consumption expenditures (or consumer spending) increased by 0.9 percent in April from the prior month. This is on top of March’s 1.4 percent growth rate. “Earnings commentary actually paints a rosy outlook for the US consumer.” 

“The tape looks horrible,” said another participant. “Apple and Microsoft are the last men standing.” While the Nasdaq is down 23 percent, Morgan Stanley’s unprofitable tech index is down 64 percent. More than 60 percent of all software, internet and fintech companies are trading below pre-pandemic levels (and a third are trading below March 2020 lows), despite many of these companies more than doubling both revenue and profitability.

One of the participants called it “the great convexity crash.” The 60/40 portfolio, down 10 percent, is off to its worst start of the year in the past two decades. Bond market losses this past year are comparable to the global stock market capitalization wiped out in the first eight months of 2008. 

“Markets have never experienced a sustained contraction in global liquidity since the 2008 crisis,” shared another participant. Global QE has averaged $160 billion a month for the past 15 years and an incredible $458 billion a month since January 2020. 

“We have been so accustomed to this extraordinary liquidity environment that no one knows what will happen when global QE goes in reverse,” he warned.  

The speaker was asked, “What will make you bullish?” He replied, “China loosening, inflation rolling over, and stocks not going down on earnings misses.”

When they heard the last point, everyone burst out laughing, letting go of some of the sorrow they’d been carrying. In the current environment, underwhelming earnings are being slammed with massive stock selloffs.

Long Boom


Source: Bloomberg

The speakers’ chart offers a fresh take on the secular stagnation that has plagued America since the 2008 financial crisis. His work shows that the share of peak spenders (those aged 35 to 54) has been declining over the past decade. It’s only now turning up and expected to remain strong in the coming years. This is good for growth, but it also raises issues.

A material underinvestment in capex has built up in recent years. Looking at the pent-up spending power on the horizon, there needs to be significant investment in productive capacity. The alternative is to continue to live in a supply-constrained world. There are not enough raw materials, energy, inventories, housing, or workers.

While the headlines tend to focus on the pandemic-related supply problems, t

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