Weekend Reading #260

This is the two-hundred-and-sixtieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 23th March 2024

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What we're thinking.

This week, official election results from the world’s third-largest democracy, Indonesia, were announced, with 58.6% of the vote going for Prabowo, with a margin of 20%+ and 40%+ over his two other candidates. Naturally, the usual post election jostling has begun, with the almost obligatory posturing and assertion of “irregularities” by the losing parties. It’s of course hard to see how 2 (or even 1) out of every 5 votes was miscounted or rigged, but politics is politics. 
 
Nonetheless, such political showmanship isn’t uncommon - the Jan 6th storming of the capitol being the most recent major example of things going a bit too far. But disagreement and competition, and ultimately cooperation and coordination, are the seeds of a functioning democracy and Indonesia should be recognised for being one of the best functioning ones. 

Underneath the headline numbers which give the impression of a 3 way battle is the fact that each bloc is in itself a coalition, and at the legislative level the highest share of the legislative (ie MPs) vote goes to the PDI-P (who fielded the presidential candidate with the lowest share of the presidential vote) with 16.7% of the legislative vote. In short, the party with the highest number of seats in parliament has poorest showing for the presidency, but the party with the winning presidential candidate (Gerindra) is #3 in the legislative vote. So while the president has the ability to push through an agenda with emergency powers, they are ideally only used sparingly - or in outgoing president Jokowi’s case, are unnecessary thanks to his parliamentary supermajority. 
 
The game is on, and while the pieces are in flux, the opportunities to get involved in one of the most promising economies of the next few decades are also showing themselves.  
So yes, it’s easy to think of democracy and think of the US, and even be depressed by it’s dysfunction. But democracy doesn’t exist only in the West - Indonesia is a fine example of how if done well, democracy can unlock so much for everyone in just under a generation. 

Elsewhere there wasn’t that much going on this week on the markets. The only real event was the Fed’s meeting and Chairman Jay Powell seemingly continued his great Arthur Burns, impression by pretending that the resurgence in inflation is still not an issue. During the ebb and flow of this fed cycle there have been many times where chairman Powell has come out strongly against inflation, creating the impression that he was willing to go all the way, but it seems that in an election year, he has decided to procede with more caution when it comes to rocking the boat. Even though the trajectory of rate cuts has fallen over the past few months, the messaging from the Fed seems to be that they are still on course to cut rates three times as it stands even before inflation has dropped into their predefined range.   

As the value of the dollar continues to debase (not against other currencies, but rather against real stores of values, such as gold, and maybe even bitcoin), there has been a run in commodities led my gold stocks and copper stocks.   

The Japanese entered the fray this week by having their first rate hike in goodness knows how long. This didn’t stop the yen from collapsing anew against the dollar. 

What we're reading.

Rob Henderson’s Substack is filled with insight that is impossible to find anywhere else. His take on lots of things is extremely unique - probably a function of his upbringing which he writes liberally about. This week he wrote a blog post about a book that he read. The book is called The Weirdest People in the World and it’s written by a guy called Joseph Henrich. According to Henderson, this book provides excellent insight as to why western civilisation is particularly individualistic. It all goes back to Christianity and the way that the church looked to separate the family unit in order to create more control over and command more loyalty from its individual members. Contrast this with the cultures in many eastern countries where you have a more community-centric culture and more focus on a larger family unit. 

This paragraph particularly stuck out. “Henrich shows that the percentage of cousin marriages across countries predicts levels of individualism. The US is famously individualistic, and indeed it scores the highest on the individualism scale and among the lowest prevalence of cousin marriage. In contrast countries with a higher prevalence of cousin marriage, such as Malaysia and Indonesia score lower on individualism. Prevalence of cousin marriage is also associated with lower rates of trust for strangers, higher willingness to lie for a friend and lower rate of blood donations.” 

South Africa has an election coming up in May, which could prove a pivotal one for the ruling party, the ANC.  What makes it even more interesting this time round is that former president, Jacob Zuma, has started his own party. This will almost certainly take votes away from the ANC and put South Africa into the unique position in its history of having to resort to coalition politics. That opens up all sorts of different permutations, most of which are not very appealing. But there is hope too of change. This article in the Daily Maverick outlines the various permutations with the MK quite well. 

Giancarlo Esposito is someone who you will probably recognise, but maybe you don’t know his name. He is one of my favourite actors. He was Gus Fring in Breaking Bad, he was in The Mandalorian, and now he’s in The Gentlemen.  He tends to play the bad guy, but wow, does he do it well. This is an excellent article about him. I really enjoyed it.   

Most people think that when a rocket blows up, it tends to be negative, but the reality is that SpaceX has had lots of blowups in its history, some of them very recent, especially the launch of the starship. Each time this happens more information is learnt, things are tweaked and it gives a better chance of success in the future but if you had to read the news from the mainstream media you would believe that SpaceX is failing. This article in The Free Press does an excellent job of explaining why SpaceX’s achievements are so remarkable and why they are not only on track, but they are also thriving. DC

What we're watching.

Late this week, we finally saw the release of 3 Body Problem. Netflix’s take on Cixin Liu’s classic upon which we based the name of our business.  It’s one of those where I’m torn between rushing through it and going slowly and one episode at a time, so to make sure that it’s not over too quickly.  The first two episodes are not disappointing and full of action and entertainment but it does feel rather rushed and a bit shallow. The storyline is similar, but the adaptation in the series is completely different to the book. It is not China-centric and the main characters are mostly based in London. It will be interesting to see how the series fares with people who had no prior knowledge of the books.  DC