US tech outperformance is an energy symptom
The guest argued that the massive outperformance of US mega-cap tech stocks is a secondary symptom of the domestic shale energy boom rather than isolated technological superiority.
The argument
The guest explained that the US shale boom collapsed domestic energy costs, which suppressed inflation and kept interest rates lower for longer. This excess liquidity ultimately flowed into technology, allowing companies like Apple and Microsoft to dramatically re-rate their earnings multiples.
The thesis, stress-tested
✓ What validates it
- ✓A contraction in tech multiples if US energy costs rise relative to the rest of the world
▸ Risks discussed
- ▸Tech sector earnings growth could prove entirely independent of macro liquidity and energy costs
Hear it yourself
"This allowed the Fed to keep interest rates lower for much longer, created excess liquidity that ended up going into technology and allowed Apple to re rate from 10 times earnings to 35 times earnings and allowed Microsoft to re rate from 20 times earnings to 38 times earnings."
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