Weekend Reading #140

Photo by Elsa Tonkinwise on Unsplash

This is the hundred-and-fortieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 16th October 2021.

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What we're thinking.

What markets dislike is uncertainty – “to taper or not to taper” was the question du jour, but now it’s been answered, the market can move on to examine the question of “how much” and whether it’s enough.

Taking a glance at the S&P and NASDAQ one could be forgiven for thinking that there are two parallel worlds in existence. Taper tantrum? What tantrum? The S&P and NASDAQ have both seemingly shrugged off fears of impending doom as recently as last week. Will these now tech-heavy indices go on to make new highs, notwithstanding worries about a global credit event driven by China (which seems to be equally irrelevant for the commodities, at least at this time) and completely in the face of the theory that higher rates (which we are getting) are “bad” for tech? Only time will tell, but it does seem like the pain trade is upwards.

And why not? As we have written ad nauseum, we continue to watch the dynamics of passive flows, including a potential rotation of assets out of a credit (it’s been a multi-decade bond bull market with falling rates!) and money markets into equities, specifically PASSIVE equities (which was the subject of our note a couple of weeks back here). The resulting disconnect between “the real world” and “the market” should no longer be unexpected, especially given how markets hit new highs post-covid while the world was ravaged by COVID over the past year. Passive buyers don’t mind, they just copy the instruction and action the order.

When we wrote our piece about video games and their brave new world, we saw the open worlds of NFT games as a direct threat to the traditional, incumbent pay to play model, and argued that the way forward for incumbents was to embrace these new business models. Unfortunately, it seems like they have chosen the opposite, with Steam choosing to remove all blockchain games (including those that allow exchange of cryptocurrencies or NFTs) from their platform. According to Age of Rust, one of the blockchain games that has been removed, they believe that from their understanding, “Steam’s point of view is that (NFT) items have value, and they don’t allow items that can real-world value on their platform.”

Let the REAL games begin.

As a follow up to our main piece this week, one can only wonder if Game Theorists will become the next “in-demand” profession, as crypto projects increasingly compete to have the best token economic design for their protocol, of equal importance to the underlying technological prowess of the development team. But before anyone who still has a choice of course of study decides to dive head-first into Game Theory specialisation, be warned: for most people, it’ll entail some pretty serious mental gymnastics. EL

With the novelty of homeworking having firmly rubbed off, the below cartoon from this week’s New Yorker perfectly sums up what my wife now feels when I work at home on Tuesdays and Thursdays.... EJP

What we're reading.

The myth of Xi Jinping has been superbly crafted but as always behind the man are many other people. Wang Huning has been around a long time and is credited with sowing the ideological roots for much of the policy behaviour we see today. This deep dive in Palladium Magazine is titled, “The Triumph and Terror of Wang Huning” and if you thought you knew a lot about China ( I did until I read this) think again.  

A favourite of mine is the balanced political commentary of Bruno Maçães, who in this short blogpost asks the question we all want to know. With an actual election 3 years away it seems like Donald Trump is going to run again and  Maçães wonders how, having effectively cancelled Trump, the social media juggernauts are going to navigate a potential political campaign. He uses the analogy of a fictional Central Asian country to get his point across. Whatever you may think of President Trump, Maçães hits the nail on the head by articulating something that surely, we all think about. Another illustration of a country in decline?

And finally, this week I stumped up the obscenely low subscription fee for Dominic Cummings’ newsletter. Cummings has been a divisive figure in the UK, but he sure as heck doesn’t care. Its almost as if he enjoys it judging by his gunslinging on Twitter.  His musings are world class and his intellect unparalleled. The insights from his newsletter are worth hundreds of times what it costs to subscribe. Highly recommend. (This is a massive alpha leak). DC
 
This Thursday, John le Carre's posthumous release, Silverview, hit the shelves. Writing this on Friday morning, I'm pleased to say that I just finished it on the bus on the way into the office and I'm even more pleased to report that it's fantastic and everything a le Carre fan would want, made even more special and poignant by the fact that this is (unless there's another one stuffed in a drawer somewhere) his last book. I've bored everyone in this newsletter about my love for le Carre, the master of spy fiction, to my mind, and so to enjoy his final work so immensely was a great joy and no little relief. The hero in this work is Julian Lawndsley, a young man who now owns a bookshop in a sleepy East Anglian town following a successful career in the City. As he builds his new life, Julian encounters Edward Avon, a man “as mad as a flute”, whose wife, Deborah, used to be a big cheese in the British intelligence service... and there’s the link to the world of spies, as our story unwinds and comes together again from that starting point. It's a le Carre that ticks all the boxes and, I'd contend, is a good one for anyone who has never read any of his books to date and fancies dipping a toe into his world. The story is great. The dialogue - as always - sublime. And the length of this one, a mere 200 odd pages. So, if you're a fan like me and it hooks you in, it should take no more than one evening and one bus ride to navigate. EJP

Off the back of a summer of overindulgence, I thought it was time to hit the health train in the lead up to Christmas festivities. I came across The Plant Paradox by Steven Grundy. This is a fascinating read for anyone interested in being as healthy as nature has designed them to be. The book explains how eating the wrong food at the wrong times immeasurably hurts our health and reveals that gluten is just one variety of a common, and highly toxic, plant-based protein called lectin. Lectins are found not only in grains like wheat but also in the gluten-free foods most of us commonly regard as healthy, including many fruits, vegetables, nuts, beans, and conventional dairy products. People spend billions of dollars on gluten-free diets in an effort to protect their health, so the book illustrates where most people are going wrong when it comes to detoxing or eating healthy. DK

What we're watching.

Shows adapted from books can often go either way. Your feelings towards a book either be exceeded or disappointed when you watch an adaptation. Normal People and The Night Manager being two examples that I believe were excellent and clever adaptations. Little Fires Everywhere being one that I think fell short of the mark. Maid is a new Netflix series inspired by Stephanie Land's memoir Maid: Hard Work, Low Pay, and a Mother's Will to Survive. The book was a tough read and not my usual fare, but I was glad I finished it. It was rewarding and important and it made me thankful for everything I’m lucky enough to have, which is a pretty good feeling to come away from a book with. The television adaptation (what I’ve watched of it thus far) goes further, improving the book, to my mind, and bringing a harsh, bleak story to life. It stars the excellent Margaret Qualley as single mother Alex, who leaves her partner Sean and finds work as a maid in order to make a better life for her daughter, Maddy. It’s a depressingly real but truly hopeful piece of television, far from the jolliest (although I haven’t got to the conclusion yet!) but it watchable and gripping. The fact it is based on a real-life experience adds a depth that some works of straight fiction miss. I’d highly recommend it, especially if you’re a parent. EJP

2021’s ‘The Dig’ starring Ralph Fiennes isn’t particularly the sort of film I expected to find myself watching. A historic drama set in pre-second world war Britain, the film tells the real-life story of Basil Brown, an excavator who is commissioned to investigate and dig out a set of mysterious mounds in the Suffolk countryside. As far as films about digging go, it somehow manages to remain entertaining throughout with deeply touching and well-developed character arcs. It is a perfect film, relaxing and enjoyable. Well worth a watch! HS

Squid Game seems to be the flavour of the week/month according to Netflix and was brought to my attention through the school newsletter where they were warning parents around its content. This is a result of children coming across the topic via games like Roblox etc... My kids have asked if they can watch it and after indulging in several episodes, the answer is a hard no. Definitely not suitable for younger children (and even mildly squeamish adults). The series revolves around a contest in which 456 players, all drawn from different walks of life but each deeply in debt, play a series of children's games with deadly penalties if they lose for the chance to win a ₩45.6 billion prize. Worth a look. DK

What we're doing.
As I’ve written about several times over the summer, since it’s reopening, I’ve become somewhat of a regular visitor to North Greenwich’s driving range. With stunning views overlooking Canary Wharf and the River Thames, it’s a great little spot for dates or even an evening out with a small group of mates. It’s by no means the cheapest driving range around…but a friend of mine from Sweden was quick to cheer at how significantly cheaper it was than his local range back home in Stockholm. I’d personally recommend it on an evening given the great views you get of the skyscrapers lit up at night, or alternatively on a Sunday afternoon as a nice relaxing unwind. There’s something incredibly therapeutic about the driving range, pelting balls as far as you can although understandably some frustration can arise when the machines tend not to track left handers’ shots with as much accuracy. Nevertheless, I’m sure I’ll be back again soon, or perhaps even on the fairway elsewhere in hopes of one last game before Winter arrives. HS

What we're listening to.

If you like the movie Heat as I do, and I’ve declared in this newsletter before that I think it’s the best movie of all time, then this podcast episode is for you. The Supercontext podcast is where hosts, Chris and Charlie, choose a different media artifact each week from the fields of comics, music, movies, books, or television, and investigate how it was made, how it was consumed, and what it seems to say about our culture, both then and now. This is for those who really want to geek out on a particular piece of content and so, for me, the Heat episode that was recommended to me via the Spotify algorithm was the perfect place to begin. The guys look at Mann's attention to detail and his attempt at authenticity in light of the movie's influence on audiences, filmmakers, and real-life criminals. If you liked the movie, this will really add to the context around what makes it so great and shines a light on the genius of Michael Mann. Other cool Supercontext episodes I've enjoyed include one about The Goldfinch, a great novel by the sensational Donna Tartt, and a couple of episodes they did looking at the music of Nick Cave. As said, they go deep on this show, so if you find an episode where you've already got a passing interest, this show will surely teach you something new. EJP

One of my constant curiosities is the nature of consciousness. I just don't get how we go from having all the physical infrastructure we have to actually having the omnipotent “I”. I mean come on, where does it come from? I’ve read a few books and as ever listened to lots of podcasts. This one was particularly good. It features theoretical physicist, Sean Carroll, in his Mindscape podcast. This episode is with a chap named Anil Seth, a professor of cognitive and computational neuroscience at Sussex, as well as co-director of the Sackler Centre for Consciousness Science. Anil has a special interest in the neuroscience of consciousness and has recently written a paper (with Lionel Barnett) about something called “emergence”. This was exactly what I was looking for! The topic of emergence looks at how consciousness comes about. What makes us conscious? Is there a leap from the physical parts of our body and in particular our brain and its neurons to creating consciousness? Or is it even the other way around? I can’t say that Seth has all the answers (neither does he!) but he has thought about it a lot and done lots of interesting work. For the more curious, it's worth an hour of your time (or 30 mins on 2X speed). DC