Weekend Reading #281
This is the two-hundred-and-eigthy-first weekly edition of our newsletter, Weekend Reading, sent out on Saturday 31st August 2024
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What we're thinking.
The momentum certainly seems to have stalled and the reaction to Nvidia’s results were telling indeed. Despite decent results, sellers queued up to sell the stock as the day after results progressed as opposed to the recent buy the dip mentality that was in evident in the name for a while. Lots of single stock option activity may blur the outcome but for now unless it retakes highs it’s a dead zone. SMCI, one of our favourite AI names to short had a really bad week. First the subject of a short selling report from Hindenburg and then delaying its annual report filing citing a need to assess "its internal controls over financial reporting,". Not a good sign. It's quite incredible how many companies pretended to be AI and got away with it for some time.
Our thoughts have been dominated this week by the clear contrast between the main prevailing schools of thought in the market. One says inflation was indeed transitory and is dead and deflation is a concern with recession looming. One says that inflation is merely pausing and making a higher low before we go off to the races again due higher freight costs, more likely higher fiscal spending ahead etc. They are so polarly opposite in their implications it’s quite hard to guess which one or even any of the many outcomes in between will unfold. We have no idea. How can anyone be so sure?
What we're reading.
I regularly look at Susie Dent’s word of the day. This one from earlier this week is “kuchisabishii”. It’s apparently Japanese. And it's something I do every single day from around 2pm. The act of making frequent visits to the fridge in the hope of finding something new to munch on.
This is a story this week which arose after Klarna, a buy-now-pay-later company, announced it could cut 50% of its staff in coming years and replace them with AI bots. This could be just the beginning. A company, seemingly struggling gets superpowers and becomes profitable.
This tweet from Simon Sebag Montefiore really summed up quite a bit when it comes to one aspect of how Western governments interact with authoritarians, totalitarians or Islamic terrorists. It boils down to this attempt to find the elusive voice of reason as he calls it and the damage that stems from this naive hope. DC
No one really thinks too much about taking a car out of a parking lot, or even a plane taking off, but if we are to start heading into space on large rockets, then the detonations from SpaceX’s Starship launch last year suggest that there is much more we need to think about when operating in the Earth’s atmosphere at scale. This article in Nature tells of how a hole was blown in the Earth’s ionosphere thousands of kilometres wide and persisted for nearly an hour, with such disruptions having the potential to interfere with satellite and other wireless communications. It turns out it’s not “just air” up there, and certainly gives much more to think about if rocket launches are going to be more common in the future – especially if we are to be a space-faring race. EL
What we're watching.
My focus is generally driven by 2 main forces. First is my curiosity which attracts me to all sorts of weird and wonderful stuff. My net is cast far and wide and I get through a lot of seemingly unrelated stuff. My second force is inevitably how do I make money out of this in the markets. Sometimes there is a clear way to make money from something I find. Mostly thought it's not clear at all in any way but it's just too much fun to learn new things. Anyone who reads my brain dumps here will know that in recent years I have had a few pet subjects – consciousness, aliens, space and its economy, geopolitics, AI, mysticism etc. These are all one way or another related to each other but other than the immediate theme of AI, there hasn’t been any clear way to make money out of all of this stuff. So, when I see something that brings it all together so seamlessly, I acknowledge that the universe is telling me to concentrate and I zone in and I focus. This talk from Pippa Malmgren is 40 minutes (or 30 mins on 1.5 speed) of non-stop interconnectivity. It brings all my recent areas of interest together so perfectly. To me its brilliant. To you I don’t know. If you don’t have an open mind, you will likely dismiss a lot of things in life. But this is one thing you really should not. DC
What we're listening to.
I had to listen to the Invest Like the Best with Gavin Baker this week as it was simply too titillating to miss. This gut is seriously knowledgeable on semis and his views on the evolution of the AI value chain are real black belt stuff. It is a superb education and very timely. Bottom line – we have a long way to go here but maybe not quite in the places you think.
Nate Silver is mostly known as a pollster – someone who got famous from trying to predict the outcome of elections. This podcast appearance with Tyler Cowen was a mine of information. He also has a background in poker and sports betting, which was covered in great detail. Highly recommend this listen, which was much more interesting that I first thought it would be! DC