A bout of global stock-market turmoil and an outbreak of UK street violence as adjacent news items gave an apocalyptic feel to the start of the week. But as rioting continued, markets appeared to steady, led by Tokyo with a 10 per cent Tuesday rebound. We know the ugly sentiments that animate the thugs – but do we understand the sudden nerviness of investors?
Once media clamour about 1,000-point falls subsided, two strands emerged, both American. First, fear – driven by bad employment figures – that the US economy is weaker than previously thought, fuelling a conviction that the Federal Reserve should have cut interest rates at its late-July meeting rather than waiting for the next in mid-September.
Secondly – and here let me quote the catchphrase of that wily 1950s schoolboy Nigel Molesworth, ‘any fule kno…’ – a belated inkling that US tech stocks to which so much AI-related hype has been attached had become wildly overpriced. The so-called ‘Magnificent Seven’ of Alphabet (parent of Google), Amazon, Apple, Meta (parent of Facebook), Microsoft, Nvidia and Tesla, collectively 50 per cent up this year before their first wobble last month, have shed $3 trillion in value from their peak. But to put it another way, they’re back where they stood in May, hardly the end of the world.
What, if anything, does this tell us for the UK economy – and for the London stock market, so far showing more moderate falls in thin holiday-season trading? If the US goes into recession (Goldman Sachs just raised its estimated chance of that happening from 15 to 25 per cent) it will be bad for the world, though not so bad for the UK as in a former era when transatlantic trade was more significant: Labour’s brakes on business, a topic for another day, will matter much more. And if you’re an optimist, the silver lining is that a serious correction in hot-air-driven US Nasdaq-listed tech stocks might provoke a reappraisal by international investors of undervalued London shares in many other sectors. Here’s hoping.
Mighty fall
How telling to observe Intel’s decline. Founded in 1968, this Californian tech giant, currently in a tailspin, was once the undisputed leader of the global semiconductor industry. Its founders – scientists Gordon Moore and Robert Noyce and the venture capitalist Arthur Rock – acquired legendary status in Silicon Valley, as did its first employee and later hard-driving chairman, Andy Grove, who decreed that in an era of fast-changing technology, companies must constantly innovate and renew themselves to survive.
Intel did just that, a generation ago, as the pioneer of microprocessors for personal computers: do you remember the ‘Intel Inside’ logo on every device? But Grove’s successors forgot his advice and let themselves be overtaken by the Taiwan Semiconductor Manufacturing Company and Samsung of South Korea. Now also well behind the game on AI chip development – in which Nvidia shot to fame as the frontrunner – Intel lost $1.6 billion in its last quarter and is laying off 15,000 staff. Battered in this week’s tech-stock rout, its share price has fallen 60 per cent since January
And as if to emphasise what begins to look like a transition to has-been status (despite its chief executive Pat Gelsinger’s declared ambition to climb back ahead of Samsung by 2030), Intel was promised an $8.5 billion federal subsidy to expand factories and create jobs in Ohio and Arizona – by President Joe Biden. The caption for that photo-op can only be ‘mighty fallen’.
Smart architecture
The Stirling Prize for architecture doesn’t always attune with public taste or useful function — the horrendous Scottish parliament building was the 2005 winner, for example – and its judges are not primarily concerned with wider economic impacts. But this year’s shortlist includes three projects which make a real difference.
The Elizabeth Line, over budget and delayed though it was (largely due to train software trouble), is not a thing of beauty but it is monumental in scale, a booster for business across London and a triumph of collaborative engineering. So I hope it shares the prize with the King’s Cross Masterplan, which has transformed a district of desolation and sin into a buzzing campus of good new buildings (including Google’s) and repurposed old ones.
And I’d give a special commendation to Chowdhury Walk, a stylish row of council houses in Hackney. If Angela Rayner has the slightest chance of building 1.5 million new homes in five years, she needs smart infill schemes like this one in every town and city, not overblown blueprints – like the one for the middle-of-nowhere Bedfordshire village of Tempsford, reportedly ‘eyed by Labour as site for city larger than Oxford’ – that will surely never defeat the green-belt nimbyists.
French delivery
I’m in deep France, a long way from the bulging pole-vaulters of Paris. So I can’t report on Olympic triumphs or scandals, but I can compliment the French on another well-achieved project – which I’ll approach, literally, by a roundabout route.
Earlier this year I was invited to lunch by American friends across the district who gave me directions to (let’s say) ‘1961 Route de Quelque-chose’. How very American, I thought: there can’t possibly be that many houses in their rural hamlet. But then I found a letter from the local mairie telling me my own house, the only one on a previously unnamed back lane, is now (let’s say) ‘146 Route de l’Autre-chose’. How so? Because under a law passed last year to assist delivery drivers and emergency services, every street, however small, must have a name and every house must be numbered according to how many metres it is from the nearest main road.
It’s perfectly logical, it must be generating an uptick in productivity and a saving in diesel consumption – and I hope Amazon has been made to pay for it.
Comments