Weekend Reading #275
This is the two-hundred-and-seventy-fifth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 6th July 2024
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What we're thinking.
A pop for so called “emerging markets” and commodities this week. Stocks are surging to new highs in the US once again led by megacap tech. But its elsewhere where the real action has been this week with commodities and associated equities bouncing hard. South African stocks have held their gains, Turkey is back on the march and even Brazil went up for a few days. Are we seeing the seeds of our much anticipated shift away from the US towards the traditional emerging world? After a decade of outflows could we see a rebalance towards these places once again. Our view has been that this may happen but not in the uniform way of times gone by. China is not emerging anymore whatever one may think and India is a bucket now unto itself. But for EM’s where things are looking better, and there are far more now than a year ago, any capital that is attracted will go in off a low base and into markets which are not prepared for a liquidity injection. There is potential! As ever we wait for major price action to show its hand but the signs are there. History however shows that leadership doesn’t change without having to endure trauma first. Let’s be patient and see what comes.
Away from equities, crypto has collapsed as it does from time to time. The weakest have folded the most and so called shitcoins have lived up to their name. It’s pretty hard to be negative here given we just saw the biggest liquidation event since FTX and with so many positive triggers ahead. But then again that argument could have been made last week. Buy low, sell high right?
What we're watching.
The recent canon of Wall Street classics from Hollywood is probably topped off by two seminal productions: the first is Margin Call, what I’d call the “sell-side” perspective on 2008, featuring that famous boardroom scene with Jeremy Irons as John Tuld. The other, much lighter hearted film, though equally instructive is The Big Short, arguably the “buy-side” perspective on the same story, which I managed to re-watch recently. Of course, it packs a few chuckle-inducing moments (“That’s my quant!”), but given those events were from almost 16 years ago, and COVID doesn’t really count as a financial meltdown caused by too-clever-by-half financial engineering, one can’t help but wonder what the next incarnation of that Big Short will be - and we’re not talking about a pullback in the stock markets, that’s par for the course. The big trade, whatever it may be, is the one that comes once or twice every generation, and we don’t want to miss the opportunity to make generational returns when it comes. EL
Also on the theme of money is a fantastic show I've started rewatching, Ozark. Arguably one of Jason Bateman’s best works, and also a show that he co-produced; it tells the story of a Chicago family who relocates to a sleepy town near Lake Ozark in order to secretly launder money for a Mexican drug cartel through a series of cash-generating fronts along with a complex web of shell companies and offshore accounts. There are several seasons of the show, and whilst from memory I recall the latter being pretty good, nothing compares to the first season where the story, settings and characters are perfect. HS
What we're reading.
This is an astonishing piece I came across which upends pretty much everything you think about ants. We’ve known for a long time that ants are highly cooperative with each other and coordinate extremely well. We’ve also know they communicate with each other. But this piece highlighting some recent research details how “ants carry out surgeries and amputate injured legs of fellow nest mates”. Mind blown. What makes it so much more extraordinary to me is that this is literally the script from a fantastic science fiction book I read by Adrian Tchaikovsky called Children of Time. In the book, which I’ve written about here before, spiders and ants form the basis of civilisation on a newly terraformed planet, complete with incredible amounts of highly imaginative detail. It turns out it wasn’t so far from reality. Every once in a while, you come across something that makes you really go wow. This is one such thing.
If you are following Wimbledon this week and watching the random names who pop up in the early rounds, then this is a read for you. It’s a piece written by Conor Niland, a former Irish tennis pro. It brings to life something which never gets written about or spoken about much. When we watch tennis on TV, or any elite sport for that matter, we see the best. But under that there are thousands of pros who grind hard week in and week out just for a shot to get the next level. For those that don’t succeed it is a torturous path. Well worth reading, especially if you are considering a career for your kid in professional sport. The title is “I’m good. I promise”. And it sums it all up. DC
What we're listening to.
Having had my monthly audiobook quota on Spotify premium reset, I went straight back to the Halo series, this time onto the next book in the series, Contact Harvest. The storyline traces the backstory of SSG Avery Johnson who features in the original Halo canon as the only known survivor of a Flood infestation, in short because he was terminally ill from radiation exposure and “uninteresting” as a Flood host. The timeline flicks back to the days before the Covenant’s offensive, before the happenings in the main Halo game. Aside from the appeal of interplanetary travel and aliens as a sci fi plot line, the true draw of these audiobooks is very simple: tales of heroism, honour, determination and bravery in the face of insurmountable difficulty, to the point of existential risk, probably have some degree of universal appeal. We could definitely do with more of this in the real world, preferably without a genocidal alien race as the catalyst. EL