Why Are Toys Such a Bad Business?

This is the once-a-week free edition of The Diff, the newsletter about inflections in finance and technology. The free edition goes out to 8,221 subscribers, up 211 week-over-week. This week’s subscribers-only posts:

• The UK as a Science Hub is an update on Boris Johnson’s plan (or, if you prefer, Dominic Cumming’s scheme) to make Britain a scientific powerhouse. The outlines of the plan aren’t new, but the opportunity is.
• The Equity Risk Premium at 0% Interest looks at the implications of low real rates for tech companies. In equilibrium, low rates are good for equities because they raise the present value of future cash flows. But another way of saying this is that, in financial terms, low rates mean the future happens all at once.
• Globalization: A Toy Story) is a prequel to today’s note, discussing the history of Hong Kong’s toy industry. Hong Kong’s toy industry was basically nonexistent in 1945, the biggest in the world by 1972, and consistently lost share to China from the 80s onward. It’s a case study in how globalization works.
• The Depressing Bull Thesis for Rocket Mortgage is a writeup of Rocket, the largest mortgage originator in the US, which recently filed to go public. Fewer red flags than expected, but it’s partly driven by a dire financial bet.

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In this issue:

• Why Are Toys Such a Bad Business?
• V-Shaped Recovery is here… just…