Weekend Reading #249
This is the two-hundred-and-forty-ninth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 23rd December 2023
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What we’re thinking.
This will be our last newsletter for 2023 as we also take a break from the barrage of information thrown at us every day. We will resume on Saturday 6th January. We deeply appreciate all the feedback, opinion and most importantly the honest and robust discussions in the search for truth that this newsletter stimulates. We write it because we love engaging with you, our readers. It’s one of the highlights of what we do. May you all have a restful break whatever it is you get up to and we look forward to starting all over again in the new year.
Apart from one dodgy day when the newfound retail toy, 0DTE options or zero-day to expiry options reared their heads on the put side for a change, markets have marched straight to Santa’s door. And how can we end the year without talking about crypto? And more directly about Solana? Incredible performance from a token that had been written off as just another of Sam Bankman-Fried's tainted endeavours. Well, it has led the crypto rally in earnest. How far can it go? In markets and in life, run your winners!
In the end, in all markets, very few predicted the monumental rally we’ve seen this year so when you read predictions for 2024, bear that in mind too. Markets are path dependent and there is no better way of mapping the outlook than observing the stock market’s behaviour.
What we’re doing.
At the end of last week, I arrived back in London after a great first trip to South Africa. To add to the disappointment of the cold and dark the UK has to offer this time of year, I even ended up a bit sick, presumably from something I’d eaten on the flight back. Nevertheless, I was straight back in the swing of things for one last week of work before everyone heads off for Christmas break. On the software front, I managed to roll-out a regulatory reporting tool so that we can generate MiFIR reports for our fund on-the-fly and automatically drop them into Unavista, one of the reporting mechanisms appointed by the FCA. It doesn’t sound like a lot, but it certainly will keep EL happy with c. 45 mins saved each trading day.
We also had our team Christmas meal this week too, enjoying a delicious steak at the The Bountiful Cow in Holborn. This restaurant has become a staple for team lunches and dinner. So much so that they now recognise EL’s consistent burger and egg order and DC’s love of chimichurri. Despite the modest appearance from the exterior, this unassuming pub is home to some of the best steak in London and is famous for hosting the annual Christmas dinner of some of the butchers from the Farringdon wholesale meat market. HS
What we’re reading
I have no idea who Nathan Fischer is, but he did write a really interesting blogpost on Vladimir Putin. The focus of the blog is the interviews that Oliver Stone had with Putin between 2015 and 2017. Fischer provides his view and commentary on these interviews and what he believes they indicate about what Putin’s true objectives are. He believes they offer a true reflection of Putin’s opinions and desires. He also mentions a Swiss military intelligence officer named Jacques Baud. The reason this piece and those by Baud as well (just google him) are interesting is that they are at complete odds with the narrative we see in the West. Now I don’t know whether it's true but in every aspect of analysis it pays to hold more than one path or explanation in one’s mind as it leaves one far more open to what may unfold in a number of different directions. It's a post which is 2 years old, but it's even more relevant today. DC
Speaking of market behaviour, the Chinese government appears to have brought forward the sale from Boxing Day to the last trading day before Christmas, with the release of a new set of draft regulations on computer gaming, aimed at curbing excessive in-game spending and reducing time spent in video games. Common tactics like giving players rewards for logging in every day (great for habit forming) or offering incentives for the first real-money spend (making the first time easier) appear to now be off the table. Importantly, while previous restrictions and regulations applied mainly to minors, these new rules are much broader based, even including clauses suggesting a cap on user spend which affects developer profitability. As pointed out by one of our friends on the sell-side, this also comes (strangely) in the context of the Chinese government stressing the importance of policy coordination across different ministries and departments. Was today’s release on the last trading day of the year part of that “coordination”? And if so, was the reaction anticipated? With today’s move wiping out US$80bn of market cap in the sell-off, that corresponds to US$7.1m per character for the 11,250-character draft ruling. If this was unintentional, then the coordination needs some work. But if it was intentional, then one would shudder to think what else could be coming down the pipeline. Ultimately, it just goes to show how a system that is efficient by decree on the way up can be equally brutal (and still efficient) in whatever form the powers that be see fit. EL
What we’re listening to
I listened to an absolutely excellent Invest Like the Best interview between Patrick O’Shaughnessy and his guest, a 21 year old genius named Gavin Uberti. Uberti is founder and CEO of a new chip business named Etched.AI. His business is founded upon the idea of building a purpose-built AI chip. Etched chips are “transformers etched onto Silicon” and according to Uberti are around 150 times faster than Nvidia’s GPUs. It will take time to scale of course, but the startup is backed by the best and listening to this young fellow, you can understand why. He goes into a detailed explanation of how he believes hardware will unfold in the space and why he thinks his company’s design will win. After listening to this, I realised how little I know. And I realised how much I don’t even know I don’t know. An excellent education and flipping hell this kid is 21 years old. Incredible. DC