Weekend Reading #123
Photo by CHUTTERSNAP on Unsplash
This is the hundred-and-twenty-third weekly edition of our newsletter, Weekend Reading, sent out on Saturday 19th June 2021.
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What we're thinking.
This week was all about the Fed. We have written before about how the fed faces a choice between the dollar and the markets. By ever so slightly opening the door to it’s view of inflation being more than just transient and shifting the rate hike trajectory, the fed has ignited hopes of higher real rates.
This has seen commodity prices collapse further after they had already been under some recent pressure from Chinese authorities clamping down on rampant speculation. Higher real rates are bad for gold and the like. It also raises hopes that the Fed is taking potentially sticky inflation seriously after seeming to flippantly dismiss what we have been seeing as transient.
As ever we don’t really know what will unfold but by now the playbook for each outcome should be fairly clear.
On that note, Peter Schiff gets a hard time (especially on Twitter!) and often for good reason, but this is a very good statement and encapsulates exactly what's going on:
"As the #Fed can't actually raise interest rates or taper its asset purchase program without crashing the economy & financial markets, all it can do to "tighten" policy is talk about doing it, such as going from not even thinking about raising interest rates to thinking about it." - @PeterSchiff
Elsewhere the crypto markets continued to take a beating. One thing that has always been front of mind for us in the Ethereum run up in transactions, active addresses and indeed gas fees, has been the question of how much of this activity is related to speculation. If it's all just speculation, then when the speculation ends these should all drop quite quickly. We have now started to see the first signs of rollover, and this doesn’t bode well short term for the price. Longer term as we have written before we are structural bulls on Ether and better use cases will emerge to take up the slack. The market opportunity is very sizeable (refer this piece). But we are hedge fund managers and in the long term, well you know how it goes...
What we're reading.
I recently read Michio Kaku’s “The God Equation”. For those that don’t know, Kaku is professor of physics at the City University of New York, co-founder of string theory and has written many popular books before. In this one, he takes us on a whistle-stop tour of the history of physics including all the most important discoveries and key personalities. But that’s just the intro. The main event is something called string theory which he believes is the key to unlocking the secrets of the universe. I’m not going to try explain it as truthfully a lot of it went miles above my head but rather suggest you read for yourself.
But one cool nugget from the book is this. If you’ve ever wondered why the night sky is black, then you’ll be surprised to learn it was not one of science’s famous minds but rather writer and poet, Edgar Allan Poe who figured it out in 1848. Considering there are an infinite number of stars in the universe, the night sky should be white not black as result of an infinite amount of light hitting from all directions. The fact that it is black and not white is something known as Olbers paradox. According to Kaku, some of the greatest minds in history failed to successfully tackle this problem. But no one figured it out until Poe, an amateur astronomer said that it is black because the universe doesn’t have an infinite past. Ie: the universe has a finite age! Obvious right? This means that telescopes looking at the stars furthest away will eventually reach the blackness of the Big Bang. And best of all he reached this answer without a single experiment – just pure thought. DC
Ok, so I haven’t finished it yet, but I've been so looking forward to reading Alwyn Turner’s, All In It Together: England in the Early 21st Century, and it arrived this week and I’m motoring through it and so I couldn’t wait to share its recommendation! Turner is a historian and a smart writer who likes to tell the story of the strange little country that we here at TBC call home. This is his most recent book, and it focuses on the politics and popular culture of the years when we had prime ministers Blair, Brown and Cameron, beginning with 9/11, moving through 7/7 and the GFC, the Cameron/Clegg years, and the long and winding road to Brexit. Spoiler alert: in the 200-ish pages I’ve read thus far, this has not been a hugely positive or optimistic read but, thus far, it is fascinating, sometimes hilarious, and a great reminder of the extraordinary few decades through which we’ve just lived. EJP
John Maynard Keynes’ 1919 The economic consequences of peace is a beautifully written, historically fascinating and tragically insightful book on the treaty of Versailles.While the idea that Germany was treated unfairly contributed the mindset of appeasement in 30s Britain, Keynes was a proponent of rearmament to counter Germany. For him, it was about Economics, and the dangerous instability the treaty created the heart of Europe. The Marshall plan in the aftermath of World War II was an attempt to learn from the lessons of the aftermath of Versailles. In our unstable and seemingly random world, it is helpful to see that there is a place where intellect (admittedly an extraordinary one) and knowledge applied can create insight on what’s happening and what should be happening. It tragically wasn’t able to influence the outcome in 1919 but it should encourage us to think hard and try to understand. LM
On a lighter note, everyone knows the biblical story of Jonah and the whale, but I stumbled across this article this week in which a lobster diver found himself in a place where the sun don’t shine! All’s well that ends well so I can safely say it made me smile. DC
Vladislav Surkov is often referred to as Vladimir Putin’s chief strategy officer. He has been by Putin’s side ever since he came into power. In this “Lunch with the FT” interview, he opens up somewhat surprisingly about the Ukraine “invasion” and many other aspects of life. Highlights from his quote list include:
“There are two options. First is Anglo-Saxon: you choose what you want “Second is Russian. There is no choice. The chef chooses for you, because he knows better what you want”
“An overdose of freedom is lethal to a state,”
“Anything that is medicine can be poison. It is all about the dosage.”
This interview is just the tip of the iceberg. Well worth a read for anyone who wants to understand more about Russian politics and desires. DC
What we're watching.
Sean Bean is a fantastic actor. Always has been and, like a brewing cup of Yorkshire tea, is only getting stronger with age. Bean stars in a new BBC drama, Time, as Mark Cobden who’s serving a 4-year jail sentence for causing death by dangerous driving. Cobden was a teacher and the last place he ever expected to end up was prison. We're introduced to Cobden as he arrives for processing at prison, day one of a long stretch, and we stick with Cobden as he tries to fit in on the inside in a world that is a thousand miles away from his previous life. When I first read about the show, I thought it sounded a bit like a cliched prison drama, and there are more than a few of those. But this 3-part series, written by Jimmy McGovern (he who created the legendary, Cracker), doesn't sugar-coat or glamourise any aspect of prison life, and the show ends up being about so much more than a voyeur's look at what really goes on inside a British prison. It is a wonderful drama, gritty and harsh, almost unbearable in parts. But, like all great drama, it’s warm and moving, with the prison community full of characters who, for the most part, need help, support and, dare I say it, love. The last thing many of them need is to be locked up in a windowless box. Bean stars opposite Stephen Graham (famous for Line of Duty), playing the veteran prison guard who does what he can to help those he has to keep locked up. It is so powerful when these two giants of the screen are in dialogue. But the real star of the show is McGovern’s genius and the script and story he’s created that is, to an extent, about man's many, many failings but rather more so about the shortcomings of the system we have created to punish men when they, inevitably, often accidentally, fall. EJP
For getting into the mindset of the 1950s and sheer fun it’s worth watching Malcom Arnold’s 1956 A grand grand overture premiered at the new Royal Festival Hall for the Hoffnung festival. With a massive orchestra, floor polishers and vacuum cleaners, as well as guns, it is an interesting mirror of a world at an inflection point. LM
What we're listening to.
The Butterfly Lovers’ Violin Concerto, composed in 1959 by two Chinese composers, He Zhanhao and Chen Gang, while they were students at the Shanghai Conservatory of Music, is arguably one of the most prominent orchestral pieces written for a western-style orchestra and solo violin, but in a traditional Chinese pentatonic scale. While its popularity was suppressed during the Cultural Revolution, it became the embodiment of China in transition after being released from censorship, gaining widespread popularity in the late 1970s. This recording featuring Lu Siqing on solo violin is an absolute joy to listen to - not to mention the other traditional Chinese pieces played by the Shanghai Symphony Orchestra on the same album. EL
BBC Radio 4’s famous radio show, Desert Island Discs, is near 80 years old and, in our opinion, still worth a listen most weeks. This is especially true when musicians are choosing the music. Of course, even those of us who aren’t paid to play or perform music for a living have a valid opinion about what music we would take with us to a desert island. But there is something intriguing about learning what music musicians choose to be included in their never-to-be-forgotten top 8. This week’s edition of DIDs felt extra special and was especially good because the American cellist, Yo-Yo Ma, was the guest. There are few finer musicians on the planet and, from listening to Ma’s interview, it sounds like there are few nicer, more humble people. His life story is fascinating, too, and, as you might expect, the music he chooses is stunning and included a couple of selections that I would consider stuffing into my island-bound record bag. EJP
Talking of great American musicians, there was an awesome surprise this week when two of my absolute favourites – Bruce Springsteen and The Killers – dropped a surprise duet, putting out a version of The Killers’ 2008 hit, Dustland. For years, The Killers have professed their admiration for The Boss, citing him as one of their key influences both when they were growing up and when they write music today. You can often hear his spirit in their music, especially in the albums Day & Age and Sam’s Town, where the heavy undertow of Springsteen’s unique brand of down-and-out small-town Americana storytelling is married with the The Killers’ big-stadium, electronica sound. The story of the how the collaboration came to be is also a great one and told in this tweet from Brandon Flowers, The Killers’ killer frontman. Turns out that even if you front one of the 21st century’s biggest bands, you still get starstruck when Bruce drops you a note. It's amazing when collaborations like this happen and reminds us of a great duet The Killers did with Lou Reed in 2007 on the haunting track, Tranquilize. But as a long time Bruce and The Killers fan, I always wanted to hear what would happen if Bruce leant his gravelled voice to The Killers soaring soundscapes. Now I know. And it’s stupendously good. EJP