Weekend Reading #223

This is the two-hundred-and-twenty-third weekly edition of our newsletter, Weekend Reading, sent out on Saturday 24th June 2023.

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What we’re thinking

The big news this week was of Blackrock filing for a Bitcoin spot ETF. This saw Invesco, Fidelity and Wisdomtree following with ETF filings of their own, leading to an expectation of a new wave of spot buying - “REAL” buying rather than levered, speculative buys on leverage. This has catalysed an impossibly coincidental series of headlines all week of establishment players entering or considering entry to crypto. As we’ve written before, this is very much in line with the playbook of “burn it all down and build it back up again – our way”.

This has resulted in a huge move in Bitcoin itself to yearly highs. A key point to consider here is that there is always a reason for a move but in reality, crypto has been bogged down by regulatory struggles while stocks have surged for months. There is a reason for the rally (positioning) but conspicuous by its absence is the breadth of the rally. Ethereum has lagged and the rest of the coins/tokens, with a few notable exceptions, have also lagged. This makes sense given the regulatory onslaught and the state of flux of moving from crypto native platform liquidity to established system counterparties. We expect this to endure so long as the uncertainty prevails. Bitcoin is where it's at. Furthermore, there is nothing that draws market attention more than price movement. If we were the US govt our next target would be Tether. For all the worry about Tether at the end of the day, backed or not, it is a version of the US Dollar not under the thumb of the US itself. And what better way to put a nail into Binance’s coffin that blow up Tether for whatever reason and incinerate the collateral base for Binance’s perpetual futures platform. All in one go. While this would prove disastrous for most coins/tokens, it probably would be VERY good for Bitcoin as the only liquid game left in zombie town. Plausible?

Elsewhere it is becoming increasingly clear that China’s economy is not rebounding the way we would have expected. Tales of rising unemployment certainly don’t help the picture. China’s economy and politics are so complex and large that it's impossible to form a major view for us for any period of time but price doesn’t lie. Chinese stocks and also commodity names have been conspicuously week. One wonders what a US recession would mean for commodity names coming at the same time as a weak Chinese economy. That is something we haven’t seen for some time. Once again, price doesn’t lie.

What we’re doing

As last week drew to a close and I was due to fly back from Hong Kong to Singapore, I ended up taking a layover in Ho Chi Minh City in Vietnam. It was a rather unexpected trip but as opposed to stressing around a tight sub-1hr connection or paying the premium of a direct flight back during the last week of Singaporean school holidays, I decided to take my weekend to extend the layover and explore the city. Many will still know it as Saigon; this city has a fascinating history through the Vietnam war that raged on from late 1955 to as long as 1975. While in town, I managed to grab plenty of local bites like the famous beef noodle pho and a banh mi baguette or two. Aside from having a bit of time spent relaxing around the hotel’s pool, I went out and visited the War Remnants Museum in District 3 where you can see leftover American weaponry from the war. It was quite an impressive collection that included helicopters, jets, tanks and artillery; as well as a vast assortment of different weapons used by the infantrymen. Overall, I think it was a pretty cool place to visit but in general it seems like you need to get out of the city to really see the best parts; sadly, that wasn’t all too possible in just one weekend having never been before, but that’s the challenge for next time! Above is an aerial photo I took from the hotel. As you can see, there’s motorbikes everywhere, and the flow of traffic and life is constant... perhaps New York isn’t the city that never sleeps anymore but instead its Ho Chi Minh? HS

This weekend I’m with family in Penang, the island located in the north west of Peninsular Malaysia, and one of the region’s greatest gastronomic capitals, home of Penang Char Kuay Teow (one of which required a 1hr+ queue in the heat) and Penang Laksa – variations of dishes that are distinctive to the island. Today, Penang state includes part of the mainland across the straits from the island, connected by two road bridges connected to the Malaysia’s main North-South highway. The capital city of Penang, George Town, continues to retain to this day much of the country’s colonial architectural heritage. Historically, George Town was a one point the capital of the British Straits Settlements, of which the trading ports of Malacca and Singapore formed a part. In fact, walking down the streets of George Town felt very much like walking through the parts of Singapore around Tanjong Pagar marked out for conservation: old colonial shophouses converted into restaurants, cafes and bookstores.

The last time I was in Penang was in 2016, and for a very different reason: corporate meetings. It’s easy to forget that aside from the food, culture and history, Penang also has a huge high-tech manufacturing ecosystem. Set up in response to the revocation of Penang’s free port status in 1969, the Bayan Lepas Free Industrial Zone is home to manufacturing facilities of the likes of Broadcom, Osram and Agilent, supported by a plethora of Malaysian home-grown businesses that collectively form an ecosystem that leads some to call Penang the Silicon Valley of the East. EL

This past week my folks were in town and I joined them at the Gagosian Gallery in Mayfair one fine summer morning. There is an exhibition running called To Bend the Ear of the Outer World: Conversations on Contemporary Abstract Painting curated by Gary Garrels. We had the good fortune of stumbling across a guided tour being held by a gentleman, who as I ascertained after is named Roger Bevan, a veteran art historian and critic and quite honestly like a character from a movie. In fact, he is the embodiment of Daniel Silva’s Julian Isherwood from his superb Garbriel Allon spy thrillers. I am definitely no art connoisseur but this was the type of experience that really expands boundaries. This man had so much knowledge of each and every artist and placed each piece in its historical context so perfectly that I was blown away. I would imagine the gallery without the context of a guide for someone like me would have been far less enriching but I definitely recommend a look if you are in London. DC

What we’re reading

Last year I read the Poppy War trilogy by RF Kuang, which contained some epic and imaginative what I’d call historical fantasy based on a hybrid of imperial and modern China but involving some really crazy things. So, when the same author’s Babel came out to much critical acclaim, I was excited to get stuck in. Babel: Or the Necessity of Violence: An Arcane History of the Oxford Translators' Revolution is a historical fantasy (more historical and less fantasy to be honest) set mainly in the 1830s and is based on Britain’s relationship with its empire. The story centres around Oxford University and its “translation” department known appropriately as Babel. Students are recruited (or rather taken) from across the Empire to help “translate” from their local languages to English. The key to it all is silver bars, which in the book have magical properties and once instructed through a translation from source language to English can pretty much do anything. This technology is mostly dominated and controlled by Britain. This book is very deeply thought out and very dark. There is not much room for laughter but it most certainly reels you right in. It lacks the pure exhilaration or the rawness of the Poppy War trilogy but then again not every read is about frenzied pace and action. Halfway through it I discovered that it had been awarded the Nebula Award for Best Novel for 2022, which is one helluva achievement. This places Kuang alongside the likes of Frank Herbert, Arthur C Clarke, Kim Stanley Robinson and many illustrious writers. Highly recommend. DC

I came across this thread on my feed by someone called Steve Loftus – no idea who he is, but the line that caught my attention was “How many times have you seen on TV or read on Twitter that wind power is cheap and that's where the Government should focus its efforts?”. I need to look no further than my monthly electricity bill, from a supplier that claims to be feeding in almost 100% renewable energy with a nice wind turbine logo (so presumably offshore wind), which has more than doubled over the past few years and STAYED high, to be reminded of the incoherence between claims of falling wind energy generation costs and my persistently high post-ukraine-invasion utility bill. The author of this thread puts together a compilation of data (and some history) arguing how the entire offshore wind programme required more than its fair share of political manoeuvring to get to its current state – and cost to maintain.

Perhaps the 100% renewable supply is the exact reason why my bills haven’t gone back to previous levels – especially when both US and European natural gas prices are back to 2021 levels. EL

What we’re listening to

I use Wikipedia pretty much every day and I had absolutely no idea how its run. Simon Sinek had Jimmy Wales, the founder, on his podcast and it was a good listen. The two discussed trust in the media and its obvious decay. I didn’t realise how few people are employed at Wikipedia and how much they realise on community goodwill. There is zero censorship and the system of allowing the public to update the information has stood the test of time. The conversation went into the heart of censorship and the media but from a slightly different angle.

After the Gagosian Gallery, I started researching a few of the artists I liked and stumbled across this podcast called A Brush With. The artist featured is Jacqueline Humphries, who happened to be on the podcast last week. Humphries is a much-venerated American abstract artist from New Orleans based in NYC whose speciality is painting with different layers. The podcast I found interesting because it’s the same as any actor, musician, astronomer, investor or anyone else for that matter that I want to learn about. It talks about her history, growing up, interests and most importantly her process. Does she listen to music while painting? What kind of music? Talented people do all sorts of different things and what makes them interesting apart from doing great work and providing inspiration is their story. This podcast was a pleasure to listen to for a relative newbie like me. I googled around for a while too and came across this article on Humphries in the FT from earlier in the year. DC