Weekend Reading #254
This is the two-hundred-and-fifty-fourth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 10th February 2024
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What we are thinking
As markets continue to surge, the risks of a near term pullback rise. But that's obvious and self reinforcing. The bull trend is very much intact and we are in bubble territory. How far into it? No idea. What we are paying attention to the ongoing strife in the US commercial real estate sector and also the renewed concerns in the banking system. The CRE space and the private credit space are two places we have been monitoring for some time now and in our view, this is where the trouble can come from. In the meantime, megacap tech is a place of safety until it isn’t. If we are looking at bubbles, this one is not particularly long in the tooth. Valuations of 25 times earnings are high for something like Nvidia but it is by no means a bubble valuation. But even though the move has happened in a straight line, the bubbles of history do not.
What we are doing
This week was a bit of a quiet week as the dreary winter weather continued, hampering any efforts to go out and do much. That being said, I went running for the first time in a while and there is something quite peaceful about running when it’s raining out as you certainly speed up to race back home and be done with it. I’ve also been making a conscious to eat a lot cleaner recently, ditching many of the greasy lunches I’d often have in favour of proper whole foods. In an act of self-rationalisation, I persisted on going out for food one evening earlier this week but went for a healthier option of Mexican food at a quaint restaurant near London Bridge, Santo Remedio, that I only realised after was a Michelin star experience, and yet priced reasonably. I went for the soft-shell crab tacos followed by the barbacoa lamb shank to share as a main. It was delicious and I’ll be going back again (hopefully soon). HS
Our trip this week took to the seas, aboard a cruise ship bound for Antarctica. Unfortunately, landing on Antarctica isn't going to be possible this time given restrictions on how many people are allowed to be on the continent at any given time - 100 is the limit if I'm not mistaken. Isolated from the rest of the world by the Southern Ocean that surrounds it, temperatures range from -30 degrees celsius in summer to -96 degrees in the winter, with the continent doubling in size every winter vs summer as more sea water freezes around the existing ice shelf. It is so cold that it doesn't even rain or snow - total snowfall over a year is approx. 2cm according to the lecture given to us on the ship, which effectively makes Antarctica a desert. It's a fascinating place, and arguably the last true wilderness on the planet.
For now, we've made our way from Buenos Aires to Montevideo in Uruguay, and then to Puerto Madryn on the eastern edge of Argentinian Patagonia, before now heading as I write this towards Punta Arenas, located on the southern tip of Chile, a city which for many hikers will sound familiar as a checkpoint on the way to Torres del Paine in Patagonia, which we visited many years back to hike the W-trek. Puerto Madryn is an interesting place worth mentioning, because when we had a few hours on shore there, we spotted flying alongside the Argentinian flag a Welsh flag. And if "Madryn" doesn't sound Argentinian, it's because it isn't - the city was first named "Porth Madryn" by Welsh settlers who left Wales in 1865 seeking to protect their Welsh heritage which they believed under threat. And as it happens, Patagonia also hosts the largest Welsh population outside of wales. Patagonian Welsh even has its own wikipedia page.
On the flip side, while the cruise experience is now much improved compared to what it used to be with tiny cabins, the problem of connectivity (or rather, lack thereof) remains. While I'd hoped that the satellite internet service here might turn out to be at the same high standard I'd heard Starlink operates at, it is absolutely not the case. It isn't Starlink internet, unfortunately. Latency on a single trunk satellite connection from a ship in the middle of the Southern Atlantic Ocean shared across more than 2,000 people clocks in at almost 3600ms pinging google.com - to put that in context, latency on radio communications to the moon clocks in at around 2400ms. The problem is there isn't really any alternative. And that makes trying to get anything done which requires an internet connection (i.e. almost everything) close to impossible, beyond queueing emails and messages, and hoping that they send overnight or whenever there is a lull in usage that might provide a window of productivity. So the next time anyone suggests that working on a cruise ship is possible, I'd STRONGLY disagree. EL
What we are watching
The very first thing I did on Friday morning was sit down to watch Tucker Carlson’s interview with Vladimir Putin. Forget the theatrics and accusations of Carlson and his critics. He has every right to interview Putin and credit to him that Putin agreed. Today, the public, for good or for bad, needs to be able to make their own opinions and I for one could not wait to watch this. It is a slightly unusual interview in that the variety of topics covered is very vast. It gave Putin a chance to show off his virility, which I’m sure was no coincidence. When compared to the fragile appearance of Joe Biden, Putin is sharp and lively. It’s almost as if he’s on stimulants (maybe he was). His sharpness extended to his impressive command of statistics which seemed to be at his fingertips (though he did have a “translation” earpiece). The interview covered pretty much everything. Obviously a lot of time was spent on Ukraine and NATO but the conversation extended to AI, genetics and included a long lecture at the start about the history of Russia and Ukraine going all the way back. He also touched on the Roman Empire and even Genghis Khan. Putin claims he is ready to negotiate if the negotiations are in good faith. He has mentioned many times before and here again, that the Americans have not been honest in his view when it comes to promises made going all the way back to the fall of the USSR, NATO’s eastward expansion and more. Nothing new here.
To many people who have not really followed Putin before and for whom this will be a first viewing, its easy to see how they would be impressed by Putin as he is very impressive. I guess that’s what he is hoping. But even to someone like me who has watched closely for many years, this was a supreme performance (as that's what it was). Whatever one may think of his views or even his actions, you don’t get to be in charge of the one of the most difficult nations to govern on earth for 24 years without being some kind of polymath. He was in complete control. In fairness to Tucker, he did little speaking and probed where he should have. But make no mistake. This was the Putin show and he loved it.
The other winner from this is Elon Musk. The fact that it was made available first on Tucker’s Twitter is a major victory for Elon too.
In a completely different note, Larry David is back with his final season of Curb Your Enthusiasm and the first episode did not disappoint. Small undercurrents of laughter throughout punctuated with loud burst is what I expect from this show. This one even featured a South Africa, which was the cherry on top. So few shows on TV today actually produce genuine laughter, the final season of this one is to be cherished.
Tennis is not known for its humour but this promo video shot by the ATP is just brilliant. It features all the top players in a spoof reality type show that pretends to be the tennis circuit. Really good form!
And finally this monologue from Palantir CEO, Alex Karp is worth watching. It’s an extremely compelling pitch for his products and delivered with such aplomb. “They might not like my jokes or my habits. Doesn’t matter. It will protect your life.” His prognosis is not for world peace either sadly. DC
What we are reading
Lucian Grainge is the chairman of Universal Music Group and boy does he have a story behind him. A long and glittering career which is profiled in this New Yorker piece, as does his bet on AI influencing the music game. Having correctly bet on streaming as a platform earlier in his career, he has garnered a reputation amongst other things, of being an early encourager of new technologies. He, himself says he doesn’t know where AI is going to take the industry but wherever that is, he wants to be part of it and be there to make the decisions that need to be taken. This is a very long article, so pour yourself a beverage and enjoy the mine of information in here on a really interesting character as well as the industry he is in.
Walter Russell Mead’s take on where we are in the Middle East is worth reading. He believes the Biden administration has let Iran take control with its lack of action. The key to strength is deterrence and the US has lost that in recent years. Mead’s takes are to be respected.
A really cool story broke this week in which involves something called the Vesuvius Challenge, which aims to solve the problem of translating some ancient scrolls from Herculaneum. The key here is the use of machine learning and computer vision to translate these scrolls, something apparently no one has been able to do for 2000 years! The winners won a prize of $700,000. Its actually worth reading the link properly as its quite remarkable how they actually did it. They did it without opening the scrolls!
On the theme of Curb Your Enthusiasm, one of Larry David’s friends is an old comedian named Richard Lewis who stars as himself in the show. This is a rather poignant article interviewing him in the Spectator. Richard and Larry met when they were 12. And Richard never recovered. He suffers from Parkinson's in his later years and generally isn’t happy getting old. Some nice anecdotes in here and also the story of another (less) famous comedian.
And last up is this epic blogpost from Kevin Xu on his Interconnected blog, in which he writes a great piece about Wang Chuanfu, founder of BYD. I’ve written quite a bit recently on Chinese electric vehicles and this puts it all into great context. This company is about to go global and Wang is about to become global. Excellent piece. DC