Not All Bad – 7 Rays Of Sunshine

The writing juices struggled to flow this week. Dreadful news on all levels but we battle on and look for the light. No sun yet, but there’s a few hopeful twists on lots of negative headlines. In fact, if we look more closely at the data there is a real possibility that the headlines are looking at the wrong things. Here are my top 7 twists on the gloomy consensus out there….

Torn in the USA: One of the few consensus views among Americans is that the country is floundering. Just 18% of US citizens think the nation is heading in the right direction. And yet, they seem to have more jobs than ever before. The US unemployment rate is at historic lows with a whopping 479,000 new jobs added to the private sector in just the month of June. That was double analyst expectations this week but for those watching Bidenomics there is actually an industrial revolution happening. An enormous $500 billion of private and public investment in US manufacturing over the last 12 months is not just good for America but, for giggles, it seems Republican states are getting the majority share. Deliciously awks for the Trump-first GOP cult when a real President puts America first and says “Well, that’s okay with me because we are all Americans.”

Tax Or Deliver: There’s a poll-topping view closer to home that more taxes on the wealthy will make everyone much happier. The awkward truth is that Ireland already has a very progressive(top heavy) tax system, has full employment and at the half-year stage the government tax take is billions of euro in surplus. Now, for the contrarian twist. The brain-melting dysfunction in smaller semi-state organisations like RTE and Inland Fisheries Ireland should actually be the start of a closer examination of all uses of taxpayer monies. And, that’s a positive thing. Anybody want to think about the €26 billion spend in Health or €9 billion in Education? I’m thinking this could be the early days of a “Tax And Deliver” commitment winning votes. Would Marty say Car(pe) diem?

London Losing: It’s only a matter of time before the government of Rishi Sunak throws up its hands and claims its ‘five pledges, promises, priorities” were all the work of a rogue hallucinaTory chatbot (not Rishbot) in Conservative Party HQ. However, political chaos aside, don’t write London off. The Smart Centre Index compiled by Zen/Y Group has named London as “tech capital of the world” ahead of New York, San Francisco and Zurich. Furthermore, a thousand pubs and businesses across the City Square Mile have seen Tuesday to Thursday footfall get back to 80% of pre-Covid activity levels, and actually exceed pre-pandemic levels at weekends (Source: City of London Corporation’s Licensing Committee).

Oil Oligarchy: We continue to read about crippling energy prices but if you think about oil as a tax on the global economy then things are looking good for business. Production cuts by the Arab and Kremlin oligarchs have failed to halt the decline of oil prices. Even better, the Russian Ruble has quietly fallen by 30% in recent months. Coup, or no coup, it may not be just the Wagner “chef “ that Putin can’t afford to pay any more. Bad news for oligarchs, good news for global business.

Europe Inflation War: Europe defies the doomsters as war in Ukraine grinds on and generates headlines warning of a tough winter ahead with sticky inflation. Except the numbers are not playing ball with the commentariat consensus. Recall, oil prices as a “global tax on business” and then consider that the Eurozone Producer Price Index (PPI) which measures prices paid by businesses has just gone into negative territory on a year-over-year basis. Of course, this signals a cooling economy too but maybe a bit of cooling off is needed generally. Try social media..

Twitter or Tobacco: It looks like Zuckerberg and Musk are not going to do the cage fight but the slow motion $44 billion incineration of Twitter value has just gone nuclear. The Zuck has launched a rival messaging platform, Threads, on his Instagram platform. Thirty million sign-ups in a few days spells trouble in the headlines but there’s a far bigger development which never got enough headlines. On Tuesday 22nd May the Surgeon General of the United States effectively told the world social media was killing American teenagers with a “profound risk of harm”. To this writer, it’s a “tobacco” moment for Twitter and social media. My upbeat take must be for further social media fragmentation like Twitter/Threads and ultimately a more healthy use of technology by teens.

Fear of AI: There’s a lot of fear out there about AI. That’s not a surprise when one considers the eyeball-catching potential bad uses and accidental threats to life as we know it. However, stick with the life bit and know AI is already massively advancing medical research. From protein modelling to prototyping to clinical testing things are moving at warp speed. So, expect more and more medical research to avail of AI tools. Training those tools/models needs a platform and if you were looking for evidence of training demand check out the recent acquisition of such a training platform, MosaicML. It was just bought for $1.3 billion which equates to 65x its current annual recurring revenue (ARR), or 29x its seed round valuation in late 2020. Nice to have that in your portfolio.

Portfolio Pitch: I can’t tell you how enthused I get when I consider start-up investing right now. I’m wondering has there ever been a better time in history to put circa 10% of your investment firepower into a portfolio of start-ups. Consider the following:


  • Start-ups in a tighter funding environment are raising money at 30-50% discounts to valuations achieved 18 months ago.


  • In UK and Ireland tax rebates of up to 40% (EIIS) lock in a further discount.


  • Businesses today in many cases are asset-light. Even if growth or profitability is a struggle, the founder team experience, customers acquired and proprietary databases have real “value” to bigger businesses.


  • Asset light businesses scale-up way faster than companies 20 years ago. That means valuations ratchet up earlier and with bigger multiples.


As an extreme example, one “Mosaic” in a 100-company portfolio could generate a positive return for the overall portfolio even if the other 99 returned zero. Start-ups involve lots of risk, but we sometimes lose sight of the opportunity. Like the consensus headlines challenged above, a portfolio approach is worth a closer examination. As for the other twists, they might seem hopeful but might make you smile. That will do this week. Real joy, like investment, will take a bit longer to return…


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