Weekend Reading #247

This is the two-hundred-and-forty-seventh weekly edition of our newsletter, Weekend Reading, sent out on Saturday 9th December 2023

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

*****

What we’re thinking. 

Despite all the worries about being overextended, about the Mag7 being sold off, about falling jobs number and geopolitical trouble, the market marches on. Year-end flows, followed by opex, followed by start of year flows, followed by opex again means that it's all about the flow in the short term. And most notably this week retail returned in size for the first time since March 2022. It is suggestive of a looming blow off top. We love bubbles here and we rush to buy them, always with a plan B for what we do if we are wrong. But for now, it's all windows facing the sea. Crypto is flying too, on the back of improved liquidity and the fact that still no one believes it can go up more. I still haven’t had anyone get in touch to ask me if they should buy Bitcoin, never mind Solana or some others further along the risk spectrum. The calm before the storm? Who knows. All we know is enjoy the sun while its shining.

What we’re doing. 

I’ve been in Cape Town this week still and can safely say that I’ll be coming back (especially this time of the year while London remains cold and gloomy). I’ve checked out some fantastic spots including Sotano in Mouille Point for fish and chips as well as Chinchillas in Camps Bay to enjoy some fantastic beach bites. Whilst DC’s recommendations led me to some great spots for food, I had to discover the nightlife for myself, with an evening at Cabo Beach Club where I got to see Black Coffee performing live.

Aside from eating and drinking, I’ve gotten to take in some of South Africa’s world-famous wildlife going on safari at Aquila Lodge where I got to see most of the big 5, including a pack of elephants and a family of lions up close! HS

I was also recently in Zurich for some meetings and was reminded of exactly how expensive “cost of living” can be – to the extent that London can even be made to look cheap in comparison. The old city of Zurich is home to many of the great Swiss banks, with a waterfront around the lake adorned by beautiful buildings dating back centuries and mountains in the background. Down the main street from the main train station, Bahnhofstrasse is home to almost every luxury brand imaginable. There is good food around, but it doesn’t come cheap – only a choice between really expensive and not-too-expensive: on one end, the likes of a steak dinner we had at Simon’s Steakhouse which served up delicious cuts of beef cooked to perfection, accompanied by an equally respectable wine list; on the other, a homely meal of traditional Swiss classics at Alter Tobelhof, located just on the outskirts of Zurich in a building that is almost 500 years old. Perhaps the alternative is to cook instead of eating out – the plethora of Migros supermarkets purported to offer relief from the onerous prices, but looking at their price tags still makes prices at Waitrose (incidentally also a cooperative like Migros) look like a bargain. The question is of course how one could afford to live with costs that are this high, all the time. As an aside, it turns out that fresh produce here in the UK is relatively very affordable by global standards. Fortunately, for the Swiss, the answer is simple: much higher wages. And of course, the other part of the answer is “don’t live in Zurich city centre”. But for everyone else, Switzerland is very much a place to be visited rather than lived in, not because of anything bad – the mountains and lakes are beautiful - but just because for most of “everyone else”, it’s simply not financially tenable. EL 

What we’re reading 

I have been thinking for some time now that US tertiary education was a bubble. A number of things had led me down this path. First the pricing is just insane and coinciding with the emergence of the luxury belief system (if you want to read more about luxury beliefs read more from Rob Henderson here) also called wokeness which seemed to reach its anti-semitic climax (or nadir) this week. For me the congressional testimony this week of the three leaders of Harvard, MIT and UPenn, is the straw that breaks the camel’s back. Even after everything I have witnessed over the past couple of months, this somehow still had the capacity to shock me. It really shouldn’t be hard to say that calls for the genocide of Jews are bad. On the one hand it’s a Jew issue but on the other as Bari Weiss and many more have been warning, antisemitism is the canary in the coal mine. Of course, every parent sends their kid to university to get the necessary education but at least as important is for them to emerge from university with a strong moral compass and a value system that one can be proud of. Which self-respecting parent will send their kids to these once-venerated institutions, which today are led by leaders who duck and dive while smirking through their botched responses in front of a global audience. As the saying goes: the fish rots from the head. This short and eloquent piece in The Telegraph from Douglas Murray spells it out well.

To emphasize my point about this being an already in-progress decline, this chart popped up too showing that across all political persuasions, confidence in higher education in the US has been declining for some time.

If you haven’t seen the testimonies, here’s the link. You really have to see it to believe it.

I read a lot. And I read everything but much of what I subscribe to on Substack or similar platforms is investment or global affairs related. And that is why Ali Montag’s writing is such a breath of fresh air for me. I was introduced to her writing by Jawad Mian of Stray Reflections and have been a subscriber to her blog ever since. She doesn’t write too frequently but when she does its gold. This week she wrote more of the challenges of new motherhood and how she handles it and is beginning to thrive. As ever it's not so much what she writes about that is unique, but rather the beautiful way she writes. Early December’s musings are about happiness. It's about happy families and what makes happy people. It's about seeing the bright side of life and understanding that happiness is a state of being rather than a singular event or the milestones that punctuate one’s life. This one once again is so uplifting to read.

Elsewhere, Venezuelan dictator, Nicholas Maduro, has decided that the adjoining oil-rich territory belonging to Guyana should probably belong to Venezuela. He has even called a referendum which funnily enough verified this view. Will they invade? You may not have noticed this being strewn across the front (or middle) pages of the papers or the news because it doesn’t fit the narrative of white oppression. Will be fascinating to watch this tale evolve. The Americans seem to be fumbling around this, given that they recently took down sanctions against Maduro for some reason thinking he will hold free and fair elections. The good news is that Guyana is appealing to the United Nations for help. Good luck with that. This FT (one of the last bastions of decent reporting) article is pretty good.

As it becomes clearer that apart from Tesla and in terms of sheer numbers, China is going to lead the electric vehicle revolution (and already is), it turns out even the Chinese underestimated how fast their own country’s transformation to EV would happen. So, despite the gargantuan numbers of students graduating from school and university and struggling to find jobs, there is a skills mismatch and a shortage of skills for EV producers. A rare example of a failure of long term planning in China’s very planned economy. The truth is that they are going to lead globally anyway. The only thing it will hurt is likely margins, unless the companies can automate fast enough and widely enough which is doubtful. Then again, China doesn’t really care about the companies’ margins. Just ask investors in Nio. DC

What we’re watching

This interview, where Jason Choi of Blockcrunch chats with Aleksander Larsen of Sky Mavis was earlier this year but sets out the vision for their gaming blockchain, Ronin. Ronin came about due to the success of Axie Infinity, Sky Mavis’s first success. They are pursuing a different strategy to the other gaming chains by focusing on mobile and on Asia in particular. Many other chains are focused on AAA-style games, of which there are many coming, but Larsen talks about how Asia is more open to Web3 and as we know from our links to the Philippines, when things happen, they happen fast. Ronin’s token has tripled in the past few months but still trades at a far smaller market cap to many of the other chains.

In a very uncharacteristic bit of viewing, I caught a snippet of Celebrity Get Me Out of Here, a UK reality show where contestants, usually B-grade or has been celebs looking for a boost in popularity, are dropped into the Aussie “jungle” and do perform the usual roster of ridiculous tasks for food and rewards. What fascinated me, apart from the disgusting things these people are forced to eat, was that on the show appeared none other than Nigel Farage. Last year, former Health Secretary, Matt Hancock, was on the show and it did boost his popularity somewhat so clearly Farage is aiming for the same result. My only conclusion is that the man is definitely not normal. He wolfed down such delectables as sheep’s penis to camel’s anus and everything in between. He didn’t flinch, zero reaction. Just calmly slotted it down his throat and moved on. Absolute psychopath. DC