Welcome back to Axios Edge, which you can always sign up for at edge.axios.com. In this week's 1,823-word issue (< 7 minutes): private markets, the Economist, Elizabeth Warren's fiscal debates, Ken Fisher, Brexit, Alipay, and more.
Yes, it's a tech conference. Photo: Pedro Fiúza/NurPhoto via Getty Images
The public stock market is doing pretty well, on the face of things. The S&P 500 is at record highs, European stocks are surging, and a slew of multibillion-dollar companies have IPO'ed this year, raising billions of dollars in fresh capital. But private markets still seem to be much more alluring.
What we’re seeing: I'm in Lisbon this week, attending the Web Summit for the first time. The clear message being sent: Private markets are more attractive than ever.
By the numbers: Venture capitalists have a record $118 billion of cash on hand, ready to invest in private companies, per PitchBook. That's up 20% from 2018. (Still, to put that number in perspective, it's roughly the amount of cash that's just sitting on Apple's balance sheet alone.)
What we’re hearing: One pension plan administrator gleefully told me that the IPO market is now dead and they hope to see companies remain private in perpetuity. Meanwhile, a big-name U.S. venture capitalist said that 75% of their liquidity over the past 12 months had come from selling private stakes to other investors on the secondary market.
The other side: Public markets aren't serving early private investors particularly well. Uber, for instance, fetched $45 per share when it went public in May— but private investors have only been allowed to start selling their shares since yesterday.
The bottom line: The tens of thousands of people at Web Summit, not to mention the even larger private-market ecosystem in the U.S., owe their well-padded livelihoods to private finance.
Illustration: Sarah Grillo/Axios
The Economist is by a large margin the most valuable magazine on the planet. It's still going strong in the digital age, with a 50% non-controlling stake changing hands in 2015 for £469 million ($731 million) in cash. (In comparison, Marc and Lynne Benioff spent $190 million for 100% of Time in 2018.)
The big picture: Every so often, a talented essayist attempts to identify the source of the Economist's appeal, and invariably finds that its actual quality falls far short of its reputation.
Both pieces are good, but neither aspires to being a comprehensive historical survey, going back to the Economist's founding in 1843. Now, that survey has finally arrived, in the form of "Liberalism at Large: The World According to the Economist," a new book by Alexander Zevin.
Required reading: Pankaj Mishra's magisterial review-essay of Zevin's book has appeared in the New Yorker, and it is likely to change the way you view not only the Economist but the entire edifice of liberalism. When all 175 years of the magazine's history are viewed as a whole, the reek of colonial hypocrisy becomes impossible to ignore.
Illustration: Eniola Odetunde/Axios. Photo via Sean Rayford/Getty Images
The Economist came down hard on Sen. Elizabeth Warren last month, describing her regulatory proposals as "jaw-dropping" and warning of "a severe shock" were her plans to be enacted.
Reality check: All of Warren's critics, just like Warren herself, know full well that her plan would never get enacted. The barrage of anti-Warren criticism is mostly just a function of her status as a front-runner in the Democratic primary.
My thought bubble: The consensus here is noteworthy all the same. For all that there are wonkish reasons why it makes sense for Warren to release this plan even if she knows it is doomed, we're seeing the practical effect of her "I've got a plan for that" refrain. Every plan she announces will be immediately and broadly criticized on the grounds that it raises taxes too much.
Illustration: Sarah Grillo/Axios
Public markets can feel simultaneously old-fashioned and incomprehensibly ultra-sophisticated when compared with the private-market world of pitches and storytelling.
Driving the news: The biggest surprise in the latest raft of headlines about sexist comments by 68-year-old billionaire fund manager Ken Fisher is the list of "smart money" institutions that invested hundreds of millions of dollars with him.
Flashback: When we last checked in on Fisher in February, the old lion was roaring. He was managing $100 billion of other people's money, he was bringing in $1 billion a year, and he was defiantly refusing to be disrupted by glossy startups.
Why it matters: All fund managers invest in marketing. What distinguishes Fisher, and what made him so successful, was the amount of effort he put into direct sales. It wasn't always pleasant being on the receiving end of those sales pitches, but they clearly worked. Fisher managed to reel in not only befuddled retirees, but monster pension funds.
China has rapidly become one of the most cashless countries in the world. That's a big problem for foreigners who don't have a Chinese bank account, because outside the major tourist hubs few merchants accept credit cards.
What's new: Alipay has now managed to find a way of allowing foreigners to use its service. It's a bit convoluted, and essentially involves using your passport and visa to open a new prepaid account at the Bank of Shanghai, but it's one step toward bringing the world's major payment systems a bit closer together.
Illustration: Sarah Grillo/Axios
The U.K. is now in election mode, with Parliament having been dissolved and the U.K. press running banner headlines about, um, kulaks.
Britain is due to leave the EU on Jan. 31. If it does so on Prime Minister Boris Johnson's terms, it will then enter a transitional period, during which it will have to negotiate a trade agreement with the rest of Europe. That's a lot easier said than done.
One possible result is so-called Brino:
"When Brexiter trade fantasies crash into reality, expect a new scenario to emerge: Brino (Brexit in name only) for now. Brino entails the U.K. leaving the EU but staying in the single market and customs union, and paying into the European budget, until it can devise a beneficial Brexit. Since there isn’t one, Brino could stick for years."— Simon Kuper, writing in the Financial Times
The Brino scenario is the closest thing that Britain can get to "Remain" while still technically leaving the EU. Johnson is adamant that he won't let that happen, but it's not clear that he'll be able to command enough of a majority to get what he wants.
The bottom line: No one particularly expects Johnson to stick to his promises, especially if he remains prime minister of a minority government. An exit fudge whereby Britain leaves in name only, with constant extensions for further trade negotiations, would be a very European solution to the Brexit conundrum.
Illustration: Aïda Amer/Axios
The Federal Reserve will host its inaugural climate change research conference in San Francisco tomorrow, writes Axios' Courtenay Brown.
Photo: Massachusetts Institute of Technology, photograph by G. E. Kidder Smith
Paul Rudolph's Government Service Center, in Boston, also known as the State Services Center, is a group of Brutalist buildings built between 1962 and 1971. Rudolph also designed a tower for the site, but it never got realized.