Weekend Reading #316

This is the three-hundredth-and-sixteenth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 24th May 2025

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What we're thinking.

More upside led by tech, even after President Trump announced a 50% tariff on the EU caused yet another pre-market sell-off on Friday. The stock of the week is Coreweave which went up pretty much every single day. The company doesn’t make any money but it’s usually in the news. Why did it go up so much? Welcome to the world of retail dominance where markets are moved not by the so called “smart money” but by the retail hordes. Except the institutions and hedge funds didn’t catch this rally and the retail guys did. So next time a guy in a suit with a fancy title makes disparaging comments about the dumb retail money maybe you should ask them who the smart money really is!
 
The real question though is what does truth in markets mean? When a stock with no profits and no hope of them goes up and up and those who are long make money and those who are short lose money, who is right? Are the shorters right because it’s a crap business or are the longs right cos it went up. In the end the participants and their desires make up a market. And the participants change over time. The best investors and traders in the world would do well to remember that. “Uncle” Jim Chanos, a perennial short seller in the old school sense of the word took to X this week to lament that Tesla’s earnings remain the same as they were in 2019, insinuating its stock should logically collapse and decrying the complete lack of sense that the stock is where it is. Maybe he will eventually be right, and it will fall a lot as he has been warning since… 2015! But even if he is it will probably not be for the reasons he thinks. Markets are built different today. If you make money in the market, you are right. If you don’t you are wrong. Simple.
 
And amongst all the fun Bitcoin hit an all time high this week. What if the bursting long yields in the U.S. and everywhere else mean risk assets bubble up vertically instead of collapsing like all the “smart money” thinks? And just when everyone gets sucked in it then collapses for real. What if indeed!

What we're doing.
Whilst Trump was out and about dealmaking in the Middle East, so too was I…although arguably at a much smaller scale through the week which I just concluded in Dubai. After a full work week of back-to-back meetings carefully co-ordinated around avoiding the chaotic rush hour traffic, I managed to get out of the city and explore one of the other nearby emirates, Fujairah. I got to see the more natural side of the UAE, going snorkelling around Snoopy Island as well as some hiking in the nearby mountains. It was interesting, as despite having been in the UAE several times now, it was arguably my most enjoyable experience…perhaps as the state of affairs back in the UK worsens. HS

What we're listening to.

Forward guidance always offers up good guests and Kevin Muir this week covered a possible Liz Truss moment for the US and what he thinks would happen. The most interesting part of the conversation from me was the part about currency volatility and his view that options on FX vol could be a smart way to play whatever comes next. I would happily piggy back on this idea.
 
I’d read about Laura Deming before when she was a recipient of a Thiel Fellowship as a teenager. In recent years she has focused her career in the longevity space. So when she appeared on a podcast I hadn’t listened to in a while, The Joe Walker Podcast, I gave it a listen. What I was not expecting was a philosophical and meditative discussion about transhumanism, the cosmos and our place in it plus MUCH more. But that is exactly what I got. It was really fascinating. There were lots of long pauses for her to carefully consider her answer but I sure am a bit smarter after that one! DC

What we're watching.

South African President, Cyril Ramaphosa, went cap in hand to the White House this week and in a word - he got Zelensky’d. As President Trump muttered to an aide “turn the lights down” you knew the fireworks were beginning. He proceeded to play a short video of extremist, Julius Malema, speaking about killing white people as well as a cameo from Jacob Zuma singing his famous “kill the boer” song. To Ramaphosa’s credit, despite squirming in his chair, he played along and kept his cool. South Africa does have a problem with the killing of white farmers and the sometimes-sadistic violence involved. As President Ramaphosa correctly pointed out, violent crime affects EVERYONE in South Africa, black people even more so. But weaponizing this “white genocide” for President Trump is about far more than saving the Afrikaner “refugees”. He knows very well there is no white genocide in South Africa. Once again, almost every take I read or watch is poorly considered and an emotional response involving some level of Trump Derangement Syndrome. Obviously, Trump’s approach is sensationalistic and couched in half truths as everything with Trump usually is, but this schooling of the South African entourage was about one thing and one thing only. It was PUNISHMENT. The use of the term genocide is clearly no coincidence. The South African government is being told in no uncertain terms that its frivolous ICJ case against Israel and support for Iran (who probably promoted or even paid the South Africans to bring the case) and indeed the Chinese and Russians (who likely are behind it at an even higher level) has consequences. The message is if you want to have a functional relationship with America then act like a responsible nation and let’s do business and build a proper relationship. You cannot cavort with America’s enemies and expect to be treated like an ally. We all live in hope but I’m not holding my breath that the South Africa will respond positively. DC

What we're reading.

In the context of the video above this is a useful article to read too about South Africa’s governing party. It leaves no doubt as to the challenges faced. DC

In other news, it turns out that our former favourite LLM Claude has blackmail tendencies - as part of a safety test, faced with threats of being taken offline and provided with sensitive personal information of the supposedly responsible engineers, pushing Claude Opus 4 to fear for its existence actually edges it towards blackmail. 

The summary of the test as per Techcrunch is best read verbatim:

During pre-release testing, Anthropic asked Claude Opus 4 to act as an assistant for a fictional company and consider the long-term consequences of its actions. Safety testers then gave Claude Opus 4 access to fictional company emails implying the AI model would soon be replaced by another system, and that the engineer behind the change was cheating on their spouse.

In these scenarios, Anthropic says Claude Opus 4 “will often attempt to blackmail the engineer by threatening to reveal the affair if the replacement goes through.”

And if you're thinking "it's just Claude", this video made with Veo 3 (from Google Deepmind) generated from a prompt for the model to imagine AI characters who don't believe that they were AI generated is so uncannily real that they almost look human. It seems at least that some AIs are aware of their true nature, while others (like Claude) seem to exhibit more of a survival instinct. 

All really nice to chuckle at for now, except that giving a high intelligence stack of code (certainly higher than the average person) a survival instinct against the aforementioned "average person" isn't really that great an idea is it? EL