Weekend Reading #122

Photo by Andrew Draper on Unsplash

This is the hundred-and-twenty-second weekly edition of our newsletter, Weekend Reading, sent out on Saturday 12th June 2021.

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What we're doing.

We went office shopping this week to no great avail. Turns out that despite the pandemic, decent offices are still no cheaper. Apart from that as things pick up, we are having more meetings in person rather than Zoom which is really cool. The rest has been business as usual. 

Whilst it doesn't exactly pertain to work, we’ve written in the past about the sneaker reselling market and the incredible returns that it can yield for prospective buyers. So much so that it has continued in full effect and almost become a key part of youth culture in UK and US urban centres. we couldn’t help but have a go again this week (not for resell but for ourselves), although unfortunately was unsuccessful. In the past, I’ve made some great purchases, copping original Yeezy 350s retail and reselling with a 640% ROI. This week I attempted to pick up the latest drop of the Nike Dunks but supplies were highly limited and the stores and sites I scoured sold out in seconds. The market has evolved significantly in the past few years, automated bots are now rampant and make online purchases next to impossible, and stores are littered with resellers camped out before dawn just to cop. This is so clearly evident when we see the highly anticipated drops like the Travis Scott Jordan 1’s, notable for their reverse Nike swoosh. In this example, the shoe retailed for $175, but current market value is estimated to be more than $2,000. HS

What we're thinking.

The news this week about El Salvador adopting bitcoin as legal tender cannot be understated in terms of significance. Whatever the challenges of El Salvador as country, a sovereign nation has adopted bitcoin as its currency. Let's be brutally honest, the odds are very much stacked against it succeeding. With the caveat that we know next to nothing about the country nor its political system, our reading leads us to understand El Salvador is already not one of the US government’s favoured regimes. If I was the US government, I would be doing everything I could to make sure this experiment fails.  But make no mistake, what we now have is a LIVE experiment. It’s always worth remembering that bitcoin is a BELIEF SYSTEM and there are a LOT of believers. If it succeeds even just somewhat in El Salvador, then it is a tremendous advert for other countries to adopt. We genuinely have no idea what will happen. DC

US inflation numbers came out this week to not much fanfare.  So far, we’ve seen 10-year yields have actually gone down, contrary to what a basic economic textbook might say. We would be reticent to draw conclusions from single day moves and narratives drive markets but to imagine a scenario where despite rising inflation, we see falling yields, is deeply symptomatic of how the Fed is dominating the market.  For now, anyway. 

This from the New Yorker humorously summed up what it sometimes feels like to work on a young, fast-growing business and, perhaps, reminded us that we are all in need of a good holiday... EJP

What we're playing.
This week the trailer for the latest instalment of the Battlefield franchise was released, Battlefield 2042. Whilst little is still known about the game, it will be set in near future and will feature almost to scale maps in a whole host of different locations including, Singapore, South Korea, Qatar as well as French Guiana and more. As the competition from other games like Call of Duty and Fortnite have pushed the bounds of the typical player count, Battlefield has been forced to up its player count in order to remain on top. It is believed that each of the maps can hold up to 128 players meaning teams of 64 players. In the  coming weeks, we should see a steady trickle of content relating to the upcoming game as popular twitch streamers and YouTubers gain insight from the developers. For now, it is clear to see that if we want to make the most of this game, we’ll need to upgrade to a PS5 come late October. HS

What we're reading.

In my opinion, anything by Michael Lewis is worth reading. If he decided to rewrite the phone book, I’d buy it. So, when I saw that he was putting together a book about the pandemic, I was all-in and having whipped through The Premonition: A Pandemic Story this week, I’m delighted to say that, yet again, Lewis has delivered a brilliant read. The subject matter of the book is a follow up to Lewis’ 2018 release, The Fifth Risk, which illustrated the damage that the Trump administration did upon entering office, especially with respect to the Department of Energy, the Department of Agriculture, and the Department of Commerce. Lewis was scathing about the way that the Trump transition team either pulled apart or mothballed a tonne of US government institutions that had been years in the making. Theirs actions left the American economy, infrastructure and population exposed to the very risks that these institutions were designed to protect them from. Lewis wrote in that book, pre-COVID, how he feared that this incompetence and malpractice would be truly exposed if something catastrophic hit the US. In late 2019, COVID happened, and The Premonition is a book about a small group of medical visionaries who had to do all that they could to fight back against the inertia and blockheaded-ness of the official response of the Trump administration to the outbreak. In typical Lewis-fashion, this is a gripping, thriller-like read. It’ll make you thankful for scientists and, perhaps, even more distrustful of politicians. EJP

Boris Johnson divides opinion and this is a superb profile in The Atlantic (thanks to Gavin Brock for the link). Having previously covered Tony Blair, David Cameron, Gordon Brown and Theresa May, Tom McTague describes Johnson as being “nothing like the prime ministers I’ve ever covered”. This profile seeks to uncover what really drives Boris and unpacks whether he really believes in anything at all. The most fascinating part as McTague writes is that after each “gaffe” he is perceived to make, Boris’s popularity seems to be even higher. I often like to think how current events will be written about in future history books. Because we are in the moment, our assessment of most current events tends to be grossly overstated in a historical context. And timelines don’t get stretched out as much when looking backwards. What will the history books write about how Boris Johnson handled the pandemic? To most of us living in the UK we recall with sadness how terribly it was managed at the start. But will history remember how many lives were lost from that or will Boris be remembered as the “war time” prime minister who ingeniously handed the vaccination effort to someone completely outside the political system, succeeding in saving thousands of lives and getting the economy back on track before almost every other country. My suspicion is the latter. Although I’m pretty sure there will be more events to unfold before our prime minister is quite done with history. DC

This piece was recommended by our friend Chris – a comprehensive study of strategies and asset classes that perform (or not) through the long history of inflationary cycles, published by the multi-asset portfolio team at Man Group led by Teun Draaisma. For starters, the traditional 60-40 portfolio doesn’t seem to do well (bad news for most textbook-hugging advisors...), especially with bonds getting their notional eroded by inflation. Interestingly, on the other end, commodities and momentum-driven strategies come up on top, along with collectibles like wine and art. Bitcoin gets a mention too, although the caveat is that its volatility and occasional correlation to global macro precludes a conclusive outcome for analysis – perhaps over a much longer time period we will know.

And if there’s any doubt at all that inflation is very much the state of play right now, this article in the Washington Post continues to echo the reality that businesses on the ground face: that wages need to rise A LOT in order to get people back to work. We’re talking almost 100% increases in hourly wages, not a token nudge up – and the impact is material, with some of the individual interviewed in the article pointing to total pay increases of $1,000 per month as a result. The shift of returns from capital to labour as a factor of production has begun, and it’s likely to be the defining characteristic of the next couple of years.

On the flipside, this article in the Wall Street Journal tells of a worrying development, of institutional investors buying up large swathes of residential property at above market prices. As institutions become the largest landlords of residential property, some are looking upon this as a generational transfer of wealth, with individual households potentially having to resign themselves to a lifetime of renting. Great for investors, especially those in search of real, inflation-resilient returns. But markets do get zero-sum to some extent, and this might be one of those times.  EL

What we're watching.

The ballet, The Firebird, was the first commission the impresario Sergei Diaghilev gave to a then 28-year-old unknown composer named Igor Stravinsky for his Ballets Russes. This collaboration lasted for the rest of Diaghilev’s life and led to the creation of Petrushka, The Rite of Spring, Pulcinella, and Les Noces, as well as a number of other ballets. Both as the full ballet and the only somewhat shorter suite, it’s an amazing, radical and inventive work, and it’s worthwhile watching and listening to to the different recordings by conductors including the composer and Leonard Bernstein. It’s also great to watch the original Fokine choreography production and then to look at other takes on this amazing score. LM

In a big weekend of sport coming up there is a lot to watch. The French Open is one of the great tennis events (Wimbledon being the other) and as I’ve been home, I’ve caught quite a bit of the tournament so far. After being thoroughly entertained by the exceptional quality of the womens’ semi-finals, the mens’ semis (at time of writing) are next. In a fantastic illustration of tennis’ eventual generational handover, one finalist will be from the old guard (Nadal and Djokovic) and one from the new (Zverev and Tsitsipas). I’ll be setting aside my Sunday afternoon for sure to catch what either way will be an epic final.

This weekend also sees the beginning of Euro 2020. Why on earth they didn’t just call it Euro 2021 we will never know but I’ve never been less excited for a major football competition before. I’m hoping this is just a result of watching football in empty stadiums for the past year or so and that I’ll be pleasantly surprised! Moving to the UK as an immigrant, my initial feelings were always that I wanted England to perform poorly due to a history of my home country, South Africa, playing against them in all sports. But now that I have English children who watch sport too, I find myself wanting England to succeed. So, for once I will be sitting with my English friends and rooting for the same team. DC

What we're listening to.

Diving deep into some deep, deep work this week took a helping hand from a recent musical find, namely Hammock, an American two-member ambient rock band from Nashville, Tennessee. Marc Byrd and Andrew Thompson create massively atmospheric music by combining orchestral arrangements with electronic beats, piano and guitar and you can take my word for it that they can transport you from a loft office in north London to somewhere near outer space. Start with their 2008 release, Maybe They Will Sing For Us Tomorrow, and go from there. EJP

This week I fired up a musician I haven’t listened to in a while. Stromae or Paul van den Heever (his real name) is one of the most mercurial artists around. The music is French and a mish mash of everything. Its fast and slow and brilliantly lyrical. Disappointingly he hasn’t released a new album in nearly a decade but his breakout album, Racine Carrée, is still just a pleasure to listen to. The videos for two tracks, Formidable (My favourite song) and Carmen (Favourite video), are just so good. I keep checking my Spotify every so often for new music, but he is on an extended break. When asked why he hasn’t released anything he quipped “Even if I had been on an artist contract, I couldn’t have been forced. Either I would have found a subterfuge, or I would have released a rotten album, without giving a shit … A lot of artists do that.” So, in that case I’m happy to wait. DC

Another great, great release we spent a lot of time plugged into this week was from legendary odd-ball, Moby. We wrote about a previous live album of his, Innocents: Live, a couple of weeks ago in the newsletter and we were delighted to receive the Spotify notification that he’d put out a new album just in time for an intense week of desk-based work and canal-side running. Reprise is his 19th studio album and it contains all the hits you’ll have heard before, but they’ve all been given a new lease of life with orchestral and acoustic arrangements performed by the Budapest Art Orchestra, a string quartet, and a slew of guest artists. Personally, I love it when artists do this, take their work and remix it in a way that you wouldn’t expect. It’s bold and it takes a certain amount of humility (not always found in rock stars) to take what you have created and put it into the hands of others who will produce something completely different. This is especially true in music, where an electronic sound will be completely transformed by a classical orchestra even if the melody remains note-perfectly the same. Moby explained a little about why he chose to put this album out and I love his sentiment: Every indie rocker wants to be perceived as being cooler than they are. Every hip-hop artist wants to appear tougher and more disaffected than they are. Every pop musician wants to be sexier than they are. Sometimes you just want direct, honest communication. Using acoustic and classical instruments allows you to increase the chances that direct vulnerable communication will be there. I don't know if I achieved that with Reprise, but that was the goal.” This is bold, original music, using awesome source material, and we’ve a feeling it might be the soundtrack to the fast-approaching UK high-summer, especially the newly created versions of Porcelain and Almost Home. He may be a unique, slightly strange fellow but, boy, is Moby awesome. EJP

Finally, this recording of Vivaldi’s Four Seasons, by the Israel Philharmonic and Itzhak Perlman on violin, came up on Spotify this week. It’s certainly not the first time the Four Seasons have showed up on a random playlist – however, this recording was an eye-opener (or an ear-opener) as the harpsichordist took his/her lines to a much higher degree of creativity in this recording. Harpsichords were a common feature in Basso Continuo, or the “continuous bass” of many baroque and even early classical pieces, providing the underlying harmonic framework for the rest of the music. However, where Vivaldi is perhaps often credited for being the first to elevate the violin to its place of solo virtuosity, it sounds like the harpsichordist in this recording needs to be credited for some pretty fantastic harpsichord lines. A quick look at the orchestral scores on IMSLP suggests that some artistic license was taken – to excellent effect. Case in point: the first movement of “Winter”, an excerpt of which features in the opening titles to Netflix’s Chef’s Table (albeit with some modification), is very commonly played. But you probably didn’t hear any harpsichord lines in most of those recordings. This just shows how important the “guys in the background” are and how much a difference they can make. EL