Weekend Reading #320

This is the three-hundredth-and-twentieth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 21st June 2025

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What we're thinking.

The Israel/Iran war continues and also continues to have zero impact on markets (yet). What is to us very illustrative is the price action of oil. For decades, when markets are worried about this, primary worries have been about a spike in oil prices, crippling the global economy. Oil has rallied very little. This could be because the Straits of Hormuz haven’t been closed. It could also be because Trump planned for this on his Mideast visit a month or so back by getting the Saudis to ramp up production in anticipation. Or, as is our base case, there simply isn’t the demand for oil that there used to be. The two dominant purchasers are the US and China. The US produces its own oil now and China is rapidly lowering its ICE vehicle share of the mix – its own primary driver of oil demand. A couple of months ago Chinese hybrid and EV sales overtook ICE sales. This will only accelerate in the coming years. What this all means is that the marginal buyer of oil has disappeared. Twice! Yes, the world still needs lots of oil and short-term disruption could mean spikes. But STRUCTURALLY it just isn’t as important as it used to be.
 
Although the US indices have been grinding higher this week, the main action is happening beneath the index as the game of hot potato continues. This week it was the turn of THE ONLY PUBLIC STABLECOIN PLAY on planet earth to show everyone how important stablecoins actually are in the minds of investors. Don’t look at crypto but rather at the equity markets if you want to know what investors really think. And Circle has, by all definitions of the word, gone berserk. IPOing for a paltry $31 dollars barely 2 weeks back, at the time of writing it was $235 and change giving it market cap of nearly $45 billion. That is a big number and most importantly, nearly 7 times its IPO price. I’m sure the team is delighted with their bankers. But putting aside the sarcasm, Circle’s IPO shows to the world the insatiable desire for exposure to stablecoins. At the epicentre of the Trump administration’s policy is to proliferate digital dollars far and wide. The GENIUS Act, passed this week, enables this. Most of the investment world is unaware just how much business is already being done in the stablecoins in emerging and frontier countries who don’t even bother with their own currencies and banking systems. It just so happens that Circle is actually by all accounts a rather mediocre bottom-up story. They are losing share hand over fist and have rather tepid growth rates. But the demand for its IPO was 24 times oversubscribed! It’s all encapsulated rather well by this meme we put together.

What we're meme-ing.

What we're listening to.

An fantastic podcast hosted by Tyler Cowen in which he chats to a guy named Chris Arnade. Arnade goes on these walking trips where he walks Japan or walks the Rhine or something like that. And he learns a lot! He packs light for a start. He has a Substack in which he writes about his travels. This is an absolutely brilliant conversation about so many places it’s impossible not to get wanderlust from it. One part I found interesting was an observation similar to mine when I came back from New York a couple of weeks back. It involves how little people actually care and talk about politics other than on social media. Here is the excerpt from the transcript of the pod:
 
COWEN: What is it you think you learn least well traveling the way you do?
ARNADE: It’s interesting. I used to be a macro-type trader. I used to be very top-down. I think I, in some sense, have thrown too much of that away. I’ve gone in too blind. I could do a little bit more background reading in terms of the political situation.
One of the things I’ve learned from my project is, most people don’t talk about politics. It’s because I only talk about what other people want to talk about. No one talks about politics. Being in Beijing and Shanghai — maybe it’s not the best example because people would say there’s a reason they don’t want to talk about it. I don’t think that’s it.
COWEN: No, I agree. Most of the world. Even Idaho.
ARNADE: Yes, 98 percent of the people aren’t political and they don’t talk about politics. I got beat up on social media when people were talking about, “Oh my God, Trump’s going to be elected. The world hates us.” No, they don’t. [laughs] When that person said that, I was actually in a bar in Kampala with a woman telling me how much she loved Trump. That was a rare political conversation. Most people don’t talk about politics.
In that sense, I could probably do more reading outside of the conversations about politics because I go to a lot of these countries, I don’t know what’s going on politically because people don’t talk about it.
 
Don’t miss this one!
 
Whenever I find a dearth of good current stuff to listen to, I revert to history pods. A few years back we took the kids to Florence. Usually in life when someone tells you how wonderful something is and then you experience it you are disappointed. Florence actually surprised on the upside even despite this. The beauty of the architecture, the soul of the city, all just too gratifying to even describe properly. But for me as a bit of a history buff, the story of the city was very enticing. And the history is told through the lens of the famous Medici family. So this week I dug into a new series on the Rest is History podcast all about the Medicis – their origins and the dynasty that unfolded, intertwined with the history of the great city itself. It is so good that I carried on running just to hear more. Exceptional quality from these guys and highly enjoyable and educational. DC

What we're reading.

Dominic Cummings wrote a scathing piece on the current government in the UK for the Spectator which is a must read. In it he articulates once again why the current crop of politicians from whichever establishment party are simply incapable of making the changes needed to improve the quagmire that we find the UK sinking into. Hope is not lost however as his prescription is also clear. We need change. Let’s just hope that the change we hanker for actually works. DC