Weekend Reading #276
This is the two-hundred-and-seventy-sixth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 13th July 2024
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What we're thinking.
We finally got the crack in the megacap tech space and ironically it came with a goldilocks inflation print. We remind everyone that while rate cut expectations may be good for stocks historically, actual rate cuts tend to be less so. Then again we havent had one yet! After Thursday’s print, we saw a huge rotation on the day. Is this the end for the megacap tech rally? Is it the beginning of a broader summer melt up? Who knows. It’s just one day after all. With so many moving parts contributing to the mix it’s difficult to guess where the next short-term move is. Options activity and associated gamma have been pointed to as a driver but also the dominance of passive money and herding of active money into megacap tech is not to be diminished. A time for pause and a nice summer holiday. The market will tell us where it wants to go when its ready. It always does.
Please note there will be no newsletter for the next 2 weeks as we take some time out to breathe before we get back on the hamster wheel. The next newsletter will be on 3 August. We wish all readers a restful summer. We will all need it in preparation for what's likely to be a very bust second part of the year.
What we're watching.
Wimbledon is imperious and the tennis and drama has been fantastic. Everyone seems to dislike the greatest player ever, Novak Djokovic. I hope he puts everyone in their place and beats all the youngsters. But what's most noticeable to me over the tournament has been the injuries. I can’t remember ever seeing so many top players pull out mid tournament with injuries. Why? No idea but its rather odd. And of course, to many in England, this weekend’s Euro 2024 final against Spain is the stuff of self-actualisation. That’s tongue in cheek of course. As a non-native but nevertheless a great lover of football, I love watching but don’t have the same obsession with the national team. What I find curious is that English fans are usually convinced they will win everything, and historically the team disappoints every time. This time around, fans all over have been vocal in the criticism of the team and the manager but the team is in the final and has a great chance to win! Funny how things work. I don’t think anyone will care how badly the team played if they win it.
On a related note, there was a press conference this week given by Uruguayan coach, Marcelo Bielsa, who is known as a true football purist. In the presser he lamented the state of football today saying that it is boring and mechanical with no room for individuality or flair and creativity. He believes that big business has taken over the game and it will never be the same. To be honest I agree with him. The joy of football is seeping away for me in recent times. There is too much of it and its too sensationalized. There isn’t as much anticipation as there used to be going into a tournament or a season as one just fades into another in a never-ending cascade of matches. Maybe its just getting older. Maybe it's just part of the perennial search for higher highs. But for sure this Euro 2024 has been the most boring and unimaginative tournament I’ve ever seen.
What we're reading.
Over the past few days, a slew of pretty disturbing headlines hit the newswires. The first was this: “NATO vows ‘irreversible’ path to Ukraine membership”. The second was this: “’China is a threat to our security', NATO deputy chief tells Euronews”. As always, shock aside, the question to ask is always “why am I reading this now?” These headlines come a rather pivotal time for NATO – coinciding with Biden being pressured to pull out of the presidential contest (and with the unspoken third alternative of RFK barely picking up a mention in mainstream news), and the growing probability of a Trump presidency, such actions are perhaps NATO efforts to maintain some relevance. But the more worrying effect than this – intentional or otherwise – is that it starts the conversation going on the wrong note, introducing an Us vs Them mentality in a way that, if backed by public support, sets out a justification (of self-defence) for all out military escalation. I’m no geopolitical expert, but it does feel like some words have been written that were better left unuttered. EL
What we're listening to.
An anonymous investor named Modest Proposal appeared on Invest Like the Best last week with Patrick O’Shaughnessy. It is a broad markets conversation, but a lot of time was spent on AI with some fresh perspectives on whether the sheer size of the investment by the world’s largest companies will bear fruit or not. A lot of the outcome will be determined by whether the AI tools developed will commoditized (ie: AI agents or chatbots) or whether one of these companies hits AGI first. It's hardly a recipe for slowing down in the race to achieve AGI. But this is one race to rule them all.