Weekend Reading #183

This is the hundred-and-eighty-third weekly edition of our newsletter, Weekend Reading, sent out on Saturday 27th August 2022.

To receive a copy each week directly into your inbox, sign up here.

*****

What we're thinking.

How can we not comment on Fed chairman, Jay Powell’s, fire and brimstone speech at Jackson Hole. He finally figured out how to use the right words and laid out the Fed’s position. It seems the market got the message too. Is this the beginning of the next leg down in markets? Who knows? But for the sake of the American economy’s long term prospects, the Fed very belatedly seems to be focused on the right thing. Lets just hope its not too late.

We are by no means experts on Europe but it seems that recently that European governments are using a playbook from 80 years ago in beseeching their people to make sacrifices with respect to high energy costs. The problem is that today’s society is far more individualistic than ever before. The largest unit of people that anyone really cares about is their family. Gone are the days where western politicians can rely on the population to act in the name of their nation. In Asian cultures this works given a community mentality that has stood the test of time. Its similar to covid. When a western government asked the people to comply, the people simply only listened if it benefited them and their families. In the East there is large scale compliance because of a different culture and most people TRUST their governments. Today’s energy crisis is most certainly not going to be solved by German (or French or British) leaders lecturing people to use less electricity and ask for a sacrifice in the name of Ukraine. It isn’t 1940 (yet). When one thinks it through one of two things has to happen to stop the pain. Either massive subsidies at the expense of spiralling inflation (Euro money printer go brrr) or higher taxes for the higher brackets. Either way, it doesn’t look great.

As a footnote, if a picture paints a thousand words, then one can only wonder what words this picture of German baseload electricity forward pricing for 1Q 2023 is painting (shared by @COdendahl):

The UK too has now raised the cap on domestic energy prices, potentially putting the average household’s energy bill on an annualised basis at £3,549, almost triple what the number was last winter. Across the board, politicians are pointing the finger at Russia, and sure there is a case to be made that Russia pulled the trigger. But as we argued before, these commodity shortages have been years in the making, so the real question is who loaded the gun, and for many in the virtue-signalling class of politicians (who virtue-signalled their way to making policies that effectively decried investments in energy security in the name of the “green” narrative), they may find the answer in their mirrors.

What we're doing.

Writing last week’s piece on DeSci was a process that led to coming across a budding DeSci community right here in London. Attending the meetup was quite an eye opener for various reasons: for one, unlike most other crypto-related meetups, this wasn’t a group dominated by “crypto bros”. Instead, around the room were scientists, academics, Postgrad students looking for a community of scientists and science enthusiasts to hang out with, individuals who were actually seeking treatments for chronic disease (predominantly diabetes) and “DeSci-curious” individuals of all walks of life and generally normal people who didn’t speak in Crypto Twitter parlance. Sure, there were a handful who had prior experience in DeFi but for once, the “crypto bro” crowd was the minority. More importantly, the fact that the nature of the people attending these meetups is so diverse is an encouraging sight. Not only are we “early”, to the point where some of the pioneers in the space like VitaDAO are themselves still relatively unknown, the fact that the community gathering around this interest group is so diverse in nature and reflective of the actual composition of the communities DeSci purports to form, i.e. researchers and patients, is a testament to how this could potentially be another segment of the market that could have long-ossified business models upended by a new technology for organising patients (and their data) and the intellectual capacity which could potentially cure them of their ailments. EL

This week, we were also pleased to join our friends at ‘Ctrl Alt’, a start-up looking to bring alternatives investment to the masses through the use of blockchain technology, as they hosted their first informal drinks get-together. Along with friends in banking, fellow start-ups as well as others from the VC community, we all got to see first-hand their upcoming product and get a glimpse into the ongoings of another exciting start-up. We look forward to seeing what they bring out in the coming months; there’s so much they can do and only time will tell what eventually ends up on their blockchain. HS

What we're listening to.

In recent times, the rise of generative art has taken the crypto world by storm. Some of the most valuable NFTs are those that were initially minted on the Artblocks platform. Artblocks has garnered a reputation as a high quality platform to discover the best artists that crypto generative art has to offer. This chat on Adam Levy’s Minted podcast with Artblocks founder, Erick Calderon, is really good. Calderon is a highly unusual tech founder. He had a tile business (as in ceramic and porcelain) for 19 years before creating Artblocks on his own, while still running his business. He has subsequently handed over the day-to-day of his tile business to a new CEO but still works out of the offices! It’s a pretty fantastic tale of how he somehow transplanted his taste and style from choosing tiles to generative art. In the conversation, apart from talking about his history, he chats about curating vs not curating and the development and principles behind Artblocks. He talks of the many times he had opportunity and pressure to stray from the core idea of what it was and how he resisted that. This one I super highly recommend.

I also listened to this superb chat between host, Steven Bartlett and former Manchester United footballer and current Sky Sports pundit, Gary Neville. Neville has become rather successful in business too since retiring as a player and this chat focuses on balance. There are some great anecdotes on Sir Alex Ferguson and stories from Neville’s playing days but also about his business exploits and the similarities with the mentality needed to be a successful footballer and manager. They talk about culture and upbringing and so many other things. It was something a bit different to what I usually consume but it did make me think a bit. DC

What we're reading.

This thoughtful piece I stumbled across on the Luke Gromen Twitter feed. It is a piece penned by none other than Howard Buffet, congressman from Nebraska and father of the more famous Warren. The piece is entitled “Human Freedom Rests on Gold Redeemable Money” and it was written in 1948. He spoke of the perils of the money printer and how the gold backed system helped keep government spending in check creating a positive feedback look of accountability and more thoughtful spending. One could be reading the same things today and once again we are reminded that history sometimes rhymes so much that it nearly repeats. DC

Earlier this week, another piece from Credit Suisse’s Zoltan Poszar landed and once more gave everyone much to think about. It was titled “War and Industrial Policy” and starts with an emphatic opening: “War means industry. Wars cannot be fought with supply chains that crisscross a globalized world.” He goes on to argue that “global supply chains work only in peacetime”, and that the growing conflicts around the world mean that the trust and comfort in receiving the long-term economic benefits of peace, especially globalisation, on the part of the world’s superpowers are quickly receding. The result: the military complex is rising, and the four themes he flags up of re-arm, re-shore, re-stock and re-wire the electric grid are likely to become the defining aims of industrial policy over the next five years. The narrative is being crafted before our very eyes, and while this brings much more uncertainty into all our decision making, it is increasingly certain that the de-globalisation that got put into motion over the past few years has only just begun. Military industrialisation is also a primarily fiscal endeavour, rather than one of top-down monetary policymaking. With the steering wheel of the economic machine being handed over from monetary to fiscal policy, we are most certainly entering into a market paradigm that no one in this generation of traders (not even ourselves) has lived through. Our best guide: history, and we’re going to have to go quite some way back. EL

What we're watching.

Some time ago, when I read about HBO’s development of a Game of Thrones prequel series called House of the Dragon, I was excited. In the time that has passed I lost my zeal for it after a huge and pretty kitsch promotional campaign on Sky. There is even a show about the show now being hosted, which is rather ridiculous. So, when I switched on episode one, my expectations for the show as a spectacle had been somewhat tempered. Well, I can just say it was magnificent. It’s only one episode and after the colossal mess they made of the last season of Game of Thrones, they have a lot of redeeming to do, but wow this was perfect. The show is set 200 years before Game of Thrones and covers the battle for the iron throne in the House Targaryen. I just pray they don’t stuff it up from here. DC

Amongst the everyday ongoings of running a start-up, it can be tricky to make time to relax and unwind; and its sometimes easy to forget to stop for even just a little while at the end of a busy day to sit back and watch something. Whilst admitting to this is no discredit to the film I watched, it took me several evenings to finally watch ‘American Made’ this week. It’s a fantastic film starring Tom Cruise as he plays the role of an airline pilot who quits his job to fly between the US and various South American countries during the early 1980s on behalf of the CIA and a whole host of other nefarious characters. What makes it more interesting is that it’s based on a true story, involving the history around the drug trade, the cold war and associated insurgencies around Nicaragua at that time. HS

Edward PlayfairAugust 29, 2022