All-In E28: Current state of public & private markets, Archegos debacle, US debt issues, wealth tax & more
Episode 28 • 4/1/2021
Markets and SPACs
- Chamath discussed how Q1 2021 saw 245-250 SPACs raised, more capital than 2018-2020 combined
- Deals are getting retraded and discounted 20-30% to get done
- Only about 5 out of 50 recent PIPE deals are expected to close, compared to 80-100% previously
- Private market seed valuations are at all-time highs, with hot pre-revenue deals getting $27-30M valuations
Archegos Collapse
- Discussed how Bill Hwang, former Tiger Management executive, built up $5-10B that grew to $50B in notional exposure through leveraged swap positions
- Multiple banks (Morgan Stanley, Goldman Sachs, Nomura, Credit Suisse) gave him 5-10x leverage without realizing others were doing the same
- When positions started falling, forced liquidations led to massive losses for banks and 30-40% drops in stocks like Viacom and Discovery
Infrastructure Bill & Government Spending
- Analyzed Biden's proposed $2T infrastructure bill and additional spending plans
- Critics argued timing is poor since economy is already rebounding strongly
- Debate over whether this level of spending is necessary or represents wasteful pork barrel spending
- Discussed how US debt-to-GDP ratio has crossed 130%, putting US in company with heavily indebted nations
Wealth Tax Discussion
- Analyzed proposed California wealth tax of 1% on wealth over $50M and 1.5% over $1B
- David Sacks argued this would drive wealthy residents and businesses out of state
- Debated philosophical tensions between economic freedom/progress and equality
- Discussed how wealth taxes could discourage innovation and entrepreneurship
Vaccines & COVID
- New data shows vaccines prevent transmission in addition to preventing illness
- Group criticized overly cautious messaging from public health officials
- Discussed how first vaccine dose provides 80% efficacy and longer spacing between doses may be optimal