Higher rates drive real-world innovation boom
The discussion outlined how the transition to a higher interest rate environment is correcting the capital misallocations of the 2010s, shifting investment from financial engineering back to productive, real-world innovation.
The argument
Referencing Edward Chancellor's 'The Price of Time,' the speakers argued that near-zero rates paradoxically stagnated true innovation by encouraging stock buybacks and housing bubbles. Under higher rates, capital is rotating into highly productive sectors like small modular nuclear reactors (SMRs) and advanced biotechnology.
The thesis, stress-tested
✓ What validates it
- ✓Biotech indices breaking out to new multi-year highs
- ✓Increased capital expenditure announcements in SMR nuclear and healthcare sectors
▸ Risks discussed
- ▸A return to zero-interest-rate policy (ZIRP) that revives financial engineering
- ▸High cost of capital choking off early-stage biotech and nuclear projects
Hear it yourself
"I wanna start with just a follow-up on what we're talking about last week around peacockishness, which has become a a bit of a saying for us the last few weeks. But last week, obviously, we had the worst thing. We had a pretty significant sell off in in rates. And I mean, so far, it's that that was the the low in bonds or the or the high in yields if you look at the two years, something like that. Curious if it's, tracking how you guys expected. I know, Tyler, you you've posted a couple follow ups on your Twitter since then. What are you thinking? Yeah. I mean, we were a little early on on the peacockishness narrative, but I think people are starting to get it, which is, the market was pricing in."
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