Weekend Reading #199

Photo by Ben Mullins on Unsplash

This is the hundred-and-ninety-ninth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 17th December 2022.

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What we’re thinking

What a week it's been. We had the Fed, once again with chairman Powell playing the stern headmaster. We had Elon dividing opinion once again and driving everyone crazy on Twitter. We’ve had the announcement of some amazing scientific discoveries. We’ve had the arrest of Sam Bankman-Fried, which is great news for anyone on the side of justice (and who was sick of hearing him mutter endlessly). We also had the testimony of the wolf, AKA John Ray III, current custodian of FTX. And finally, we had the new target in town taking centre stage – CZ of Binance. This eye roll from Becky Quick of CNBC, the same crew who feted Sam Bankman-Fried, in response to CZ palming off the question of facing a potential clawback of the US$2.1bn proceeds from Binance’s FTX stake sale with “we’ll let the lawyers handle it”, was particularly amusing.

This will be the last newsletter for 2022 as we take a bit of a breather after a wild year both in markets and in business. When it comes to markets, for some reason there exists a pervasive belief that once the calendar ticks over into the new year, it is a chance for new themes and ideas to take root. What usually happens is that the same themes generally continue. We expect more of the same as the year rolls into the next. Calendars don’t change reality, only the passage of time sometimes does.

We wish all our readers a restful holiday season. Merry Christmas and Channukah Sameach. Thank you for your readership and in particular the incredibly high level of engagement. We are closing off our 4th year in business and here we are still happily writing away week after week. We love hearing from you and discussing the most interesting things in the world together.

What we’re doing

As the year draws towards a close, this week marked a major milestone for our tech business, Nachas Networks as we officially launched our connection into Goldman Sachs into live trading. Just over two years ago, we began building the foundations of a mobile trading system, and now it’s starting to bear the fruits of our labour as we increasingly begin to use Nachas to trade for our fund. This is a major achievement for us as the connection represents the largest of the brokers we have onboarded so far. If there are any traders (be it fund managers, family office or even HNW traders) that read our blog and are looking for an easier way to access your brokers trading pipes, be sure to get in touch and we can see if we can get you on. Alternatively, if there are any brokers in our newsletter that are looking to reduce order routing and connectivity costs, also feel free to drop us a line and we can have a chat.

What we are reading.

We have written quite a bit about gene editing in the past and make no secret of our enthusiasm for this potentially world-changing technology. This story hit the news earlier this week, involving a 13-year-old British girl with Leukaemia who received an experimental base-editing treatment. 6 months later she is cancer free. This is a wonderful outcome and shows the power of what this technology can offer. The group of stocks which have the rights to the commercialisation of this technology have collapsed this year in line with many long-duration type assets. These are very early-stage companies and they are a long way from commercialisation, not helped much by the fact that much of the research being performed happens by necessity outside of the US. Base editing is the commercial domain of Beam Therapeutics, which has collapsed this year to a market cap of around $3 billion. While Beam is a business whose revenue model is not even clear yet, whose revenues are likely many years into the future and subject to enormous regulatory and technological risk, real examples like this one show what its potential can be.

Elsewhere some mini drama once again from our favourite gaming company, CD Projekt. The company released this week a next-gen version of its blockbuster game, The Witcher 3. The game was free to download simply by upgrading one’s existing version. Unfortunately for CD Projekt, the nightmare of the Cyberpunk launch seemed to return as complaints about bugs in the PC version began to roll in. The stock took a bath on the day down 9% but by the end of the week it was at the same price as it was last Friday. No big deal but after working so hard to successfully rebuild their reputation in the years since Cyberpunk launched, this cannot afford to snowball. A swift resolution is much needed.

In two countries close to my heart a LOT has been happening this week. In South Africa the climax of recent political events comes to a head at the ANC’s party conference where president Ramaphosa is still expected to secure his party’s nomination for president at the next general election. After his antics with the cash under his mattress, he is under huge pressure. It's amazing what people will rationalise. In a country where corruption is at nosebleed levels, the number of people willing to turn a blind eye because the alternative is worse is sadly rather elevated.

In Turkey, with elections approaching and almost everything going wrong, President Erdogan decided to order the arrest of his main opponent (in the hearts and minds of the people), Istanbul mayor, Ekrem İmamoğlu on frivolous charges. We’ve seen this playbook before all over the world but what Erdogan somehow seems to be forgetting is how his own imprisonment in the late 90’s made him into a hero with the people and sowed the seeds for his ensuing rise to power. Seems like a major error here in the long run. The only problem for those hoping for a result against Erdogan is the long-time leader of İmamoğlu’s CCP party, Kemal Kılıçdaroğlu. He has his own ideas on who his party’s candidate should be. Kılıçdaroğlu is known in Turkish politics as a serial failure, having failed multiple times to even get close to a strong showing in any election. It's obvious what the opposition needs to do here. Its hotting up, the endgame is nigh but as we know, it can be so for a long time. 2023 is a huge landmark year for Erdogan. It is Turkey’s 100th year as a Republic and Erdogan wishes to supersede founder, Mustapha Kemal Attaturk, by showing his strength in this year. He will fight tooth and nail to do so. We just hope it is a peaceful process, whichever way it heads next. DC

As far as scientific advances go, there is nothing that previously belonged in the realm of science fiction more than the idea of Nuclear Fusion. As opposed to Nuclear Fission, which is what is currently used to power nuclear power plants (and bombs), and generates energy through splitting atoms of radioactive isotopes, Fusion as its name suggests involves the combination of lighter elements into heavier ones, releasing energy in the process. The lightest element of all is Hydrogen, which also happens to be abundant, so one can imagine the prospects of infinite energy being infinitely exciting (think starships and colonising outer space, like in the Three Body Problem novels). This article that landed in the FT this week created a huge wave of excitement about the prospects of Nuclear Fusion, especially poignant in our current global state of energy shortage and growing despondency with the notion of clean energy. We’re no experts in particle and nuclear physics, but we do think that while a momentous occasion of great success is to be celebrated, this experiment is only the beginning – a “proof of concept” more so than an imminent advent of infinite resources. Nevertheless, the potential to literally change the world is huge – a long time away, but huge. EL

What we’re listening to.

As Christmas rolls around, Spotify very expectedly starts tossing out suggestions for Christmas songs. Aside from the usual suspects, they’ve also trotted out an album featuring none other than Andrea Bocelli and his two children, entitled A Family Christmas with the Bocellis. It’s one of those albums that classical music snobs would probably not appreciate that much, but for everyone else, this could well be the textbook definition of “heartwarming”. We’re not expecting a full-blown “Nessun Dorma” here, that would certainly be a bit too sombre for Christmas!

While on the topic of operas, this lesser-known piano piece by Franz Liszt showed up on Spotify when it inadvertently went to radio mode: Paraphrase de concert sur Rigoletto. When one thinks of Rigoletto, the aria that comes to mind is the Aria of Il Duca di Mantova, La Donna E Mobile – most memorably portrayed by Pavarotti himself.  Franz Liszt, in typical Lisztian fashion, goes for an equally musical though perhaps less iconic aria, Bella Figlia Dell’Amore and embellishes it in his signature style, transforming it into a technical masterpiece. In fact, as far as it is possible to describe music in words, this blog post we came across does it impeccably. EL

What we’re watching.

The Patient is a show on Disney with Steve Carell as a psychiatrist who gets kidnapped by his serial killer patient and forced as prisoner to counsel him and help him stop killing people. It’s a real weird one and at times a little slow given that most of the series is a handful of people but it speeds up as it goes on. I do recommend it but it's not a flashy scare fest- the characters are pretty well developed and its much deeper than just pure entertainment. DC