Weekend Reading #278
This is the two-hundred-and-seventy-eighth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 10th August 2024
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What we're thinking.
As far as market moves go, this week was probably the highlight of the year, with some pretty dramatic moves to start the week. Yet what started as a series of record-breaking index-level moves in Asia on Monday ended up being relatively tame by the end of the week, as the dip was promptly bought and the panic seemingly abated as the week went by. This flush would likely have cleaned out a good amount of upside positioning, and as always, while the story written after the fact points to the unwinding of the JPY carry trade as the trigger, the stretch in the market was always there – it was only ever a question of what eventually tips the trade over the edge.
Are we in the clear now? The weakness in the economy in general has been building and the market has now got wind of it – recession risk is no longer a good excuse for rate cuts and the return to the low-rates bonanza of 2021, and bad news is now bad news. We’ve had a flush out, but to call this a resolution would likely be premature. This isn’t a time for us to take big risks, and as always price action will be our guide as to our next trades.
What we're doing.
Spending last weekend in Paris was surprisingly pleasant. Where we had expected a complete transportation meltdown and chaos with road closures, strikes and other disturbances, things were in truth very well run. There was a very apparent increase in police presence on the Parisian streets, though it was clear that the police were enjoying themselves too – many of them had never been to Paris despite being French, and being assigned to Paris for the security of the Olympics was quite the enjoyable assignment. One can only wonder what law enforcement is like in the rest of the country though!
We were also fortunate enough to be given tickets to the team Judo finals – the only event with two bronze medals up for grabs (taken by Brazil and South Korea). The highlight was of course the final between France and Japan – a close fight which ended up with a victorious French team, in a decider won by French Judo champion Teddy Riner. Admittedly, we had no idea how big Judo had become as a sport in France – one certainly wouldn’t have imagined the French public being such big Judo fans, though with hindsight given Teddy Riner was given the honour of lighting the Olympic torch at the opening ceremony, he was very much the top pick.
Ultimately, the magic of spectator sports comes in its ability to unite people around a common cause. The Paris Olympics, while no doubt a nightmare logistically for Parisians, have undoubtedly rehabilitated the image of France as a country and Paris as its capital city as a place where things actually can be well-run and organised, but more importantly also given the French people an achievement to be proud of, both in sporting performance and logistical execution.
What we're reading.
As far as counterfactuals go, this paper on forced entrepreneurship most surely benefits from natural counterfactuals, and is a fascinating read. It also underscores how there’s a huge missed opportunity from entrepreneurship as a result of none other than extremely appealing job offers. The authors point out that “Specifically, compared to voluntary entrepreneurs, firms founded by forced entrepreneurs are equally likely to grow in terms of employment, and are more likely to survive, innovate, receive venture capital (VC) financing, and be acquired.” And it is precisely in recessions when their previously high-flying jobs, typically in financial, professional, business and technical services put the option of entrepreneurship before them, to the benefit (on average of course) of those who take up that mantle. It turns out that recessions and lost jobs, unpleasant as they are, sometimes turn into good things after all.
Giles Kirstian writes spectacular historical fiction and the 3rd book in his Arthurian series, aptly named Arthur, is wonderful to read. It continues on from Lancelot and Camelot, the previous two, and delivers with aplomb. I couldn’t put it down. Very few authors I’ve read have the ability to successfully transport the reader to a different time and with this series I was in the battlefield. There is also a softness to his writing which makes it way more than an epic action historical thriller. Love, loss and much more are just more vivid in his books. I’ll have to wait a while for the next one now. I’m intrigued to find out what the next series will be about.
Not much has been made of the fact that 2 astronauts have been marooned in space at the International Soace Station since June. The initial trip was meant to last eight days but the et are stuck thanks to more problems at Boeing - this time with its Starliner space vehicle. Now Spacex will need to come to the rescue only in February 2025 unless Boeing can get its act together. Surely a movie gets made of this.