Weekend Reading #220

This is the two-hundred-and-twentieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 3rd June 2023.

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What we’re thinking

Sell in May and go away, right? Um, no. A great month for markets despite the lack of breadth. A month where the AI trade blossomed into reality. A month where Turkey’s Erdogan cemented his position alongside Ataturk for the upcoming 100th year celebration of the Republic (health permitting). Markets wise, contrary to perception that a lack of breadth is historically a precursor to weakness, it is also possible that the breadth widens for a while. The recession cat and mouse game that has seen emotional shifts from doom to resilience and back again now seems to be shifting back to resilience just at the time where it seems to us that recession is all but certain. Markets as we have said many times before are a function of the human collective imagination. Numbers are but one ingredient. There is a reasonable chance that we are in a mini sweet spot for now. We don’t judge and pre-empt much here; we trade what we see and what we see is melt up. Until we don’t.

What we’re doing

While Dave’s back in London and Harry’s on holiday in Australia, I had the opportunity to string together a good series of meetings and catch ups here in Singapore – a good mix of old friends, business, food and drinks. As far as “first world problems” go, one could argue that there’s a lot of those here in Singapore, mostly evidenced by the unending complaints about the prices of housing and cars relentlessly heading upwards.

For context, here’s an example: buying a car in Singapore (any car) minimally sets you back by S$120k (c. £71.2k) just for the certificate of entitlement that, as its name suggests, entitles you to own the car. Add to it a 100% excise tax on car sales on the actual cost of the car and it’s no surprise that I used to think anyone who owned a BMW or a Mercedes Benz (or any car at all for that matter) in London was rich. The certificates of entitlement are issued on a quota basis via auction – so while they are the largest component of the cost of a car, they are also demand-driven. No bids and there won’t be a high price, right?

The same can be said for housing (and any other market, in general) – without an ever-present bid, prices will eventually crater under their own weight. Singapore’s exorbitant housing and car prices are in reality a function of its own success: inflows of capital from all around the region, thanks to freedom of capital flows, stability and solid governance, including outflows from Hong Kong, accompanied by the owners of said capital and their families, all contribute to the standing bid for real estate and cars, arguably a luxury item more than a necessity given the significantly increased density of the public transport network here.

As we noted before, notwithstanding the complaints (mostly valid), on balance the net benefit of business being much easier to do here, against a backdrop of security and stability (as long as any trouble up north doesn’t make it down here), it isn’t hard to understand how this sunny island set in the sea (oh yes, the humidity and the heat is a real thing) continues to thrive.

Unfortunately, a packed schedule leaves little time for another round of live music, although on the to-visit list (hopefully possible this coming week) is a new live music location called The Blackbird. Friends tell me that this is slated to be the next live music hotspot in Singapore – the only problem is the location. Located in Gillman Barracks, named after General Sir Webb Gillman, the former barracks housed Britain’s 1st Battalion before WW2, and after independence was used by the Singapore Armed Forces as a training site. Now it’s a contemporary art and music hotbed, whose only drawback is the lack of an MRT station walking distance away. Wouldn’t be Singaporean if the good points weren’t promptly accompanied by a dash of complaining criticism. EL

What we’re reading

Death is not something I’m used to writing about but this week Eusebius McKaiser, a prominent South African media personality, passed away suddenly from an epileptic seizure at age 45. I regularly read his articles and listened to his podcast. He was one of the few sources of truth I found in SA, who genuinely didn’t give a shit and spoke his mind. He was a brilliant mind. Apparently, he went to Oxford and was a global debating champion there, which I didn’t know until I read a couple of obituaries. This obituary from his friend and journalist, Rebecca Davis, in The Daily Maverick, was a window for me into his life. It’s weird how one builds these one-way relationships with people on social media and despite have zero interaction with him in my life, news of his death affected me on some level. South Africa needs people like him and it’s sad that the country has lost him so young.

I’ve followed a guy named Raf Grassetti for a while on Twitter, originally when he created some NFT art, which was really cool. It turned out at the time that he was a studio art director at Sony, responsible for the God of War game’s artwork. An amazingly talented chap all round. So this week it caught my attention that he had left Sony and then a few days later announced he has joined Netflix of all places to develop a new original AAA game. Some time ago we wrote a blogpost about Netflix and gaming and this to me is the first major shot across the bow that Netflix are taking this very seriously. I look forward to seeing what the game looks like. DC

What we’re watching

Possibly the greatest show of the past decade came to a close as Succession had its finale. And it was sensational. I felt well and truly sated. What a show. Pure unadulterated entertainment. Witty dialogue and just incredible characters. Each one a case study in character building. I decided to do some reading on the writers and the actors and here are two great articles. First an interview in Vanity Fair with Jeremy Strong who plays the emotionally intense, “eldest boy”, Kendall Roy. In this interview he shows how deep he went into his role and how serious he was about getting into character. I always find it a bit weird when actors refer to the characters they play in the 3rd person and in this case because Strong’s association with Kendall is so “strong” (sorry) it felt extremely odd. Nevertheless, a really cool interview. And secondly an article written in the Guardian of all places by the show’s creator and writer, Jesse Armstrong, about how he came up with the idea for the show, how he got it signed on by HBO and the influences for the family and the characters. This was particularly enjoyable and gave a window into the kind of things I had no idea about. I’m genuinely sad it’s over.

In this spirit of the Nvidia frenzy all about us, founder and CEO, Jensen Huang, gave the commencement speech at National Taiwan University this week. As Kevin Xu says in this tweet with the link, he chose not to do it in America and didn’t talk about success but rather the avoidance of failure. He did so through 3 stories in which he illustrated how close Nvidia came to failing a number of times and without generosity on the part of others and pure luck, the hard work and creativity in the early years would have been for nothing. Of course, he speaks about AI and how this class’s graduation is perfectly timed for the very beginning of a brand-new technological age. Highly recommend. DC

What we’re listening to

For the first time in a long time CZ of Binance appeared on the Bankless podcast this week. In light of all the regulatory troubles of Binance, mainly in the US, I was looking forward to hearing more from him. It was a very good interview about all things crypto and about Binance but it was all rather generic. Well worth a listen but if you, like me, hoped for some insights into the regulatory troubles, you will be disappointed. DC