Good morning. The yield on the one-year Treasury bill has broken decisively above 4 per cent. We are tempted. Let us know if you are, too: [email protected] and [email protected].

Fangs, still sharp

The long-term case for owning the very big tech companies (Facebook, Amazon, Microsoft, Apple and Google) is that you get a lot of upside and a just a little downside. In an expansion, the monster techs use cheap capital to scale like mad. In a contraction, the boatloads of cash these companies spit out, a reflection of their strong competitive positions, provide a safe haven.

Can this happy story survive rising interest rates? The tech bull run began in a zero-rates world. Many pundits argue that higher rates make future cash flows less desirable and should be most painful for growth stocks. We’ve been sceptical about this argument, but lately the sceptics have looked prescient. As rate expectations rose, Big Tech fell 27 per cent from the peak to today, against 19 per cent for the S&P.