Weekend Reading #385

This is the three-hundredth-and-eighty-fifth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 10th October 2026.

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*****

What we're thinking.

It’s getting choppier and narrower, but the indices grind higher. Well not all of them. The S&P500 grinds higher and the Nasdaq a little more aggressively but there is only really one game in town at present and that is largely the hyperscalers. As oil prices move higher and yields remain elevated, the dollar rallies and everywhere outside of the US is going down. Could this be representative of what the US regime wants? Squeeze the rest of the world and force cooperation? What is capturing our attention this week is the weakness in commodities and traditional emerging markets. FX is very weak, precious metals are falling properly now with it becoming much clearer that the peak was in January already for some time. Industrial metals are also weakening with copper teetering and aluminium coming down sharply. There have been many analogies to the year 2022 but in our view, we are possibly in an environment where apart from the US, we may be in 2011 - the building blocks of a traditional emerging markets crisis are brewing, though this time with Europe classified as re-emerging. Something could possibly break. And we think it could happen in Europe, or most likely in our opinion, the UK, which we have warned about for some time. The traditional EM bandwagon is being led by South Africa. After being the strongest performing currency in the world in recent times, the Rand is looking vulnerable, and the local Top 40 Index is sending price action warning signs. So many variables as ever but so little certainty. It's been a tricky few months on the markets but there is always a bull market somewhere - even if it is in shorts!

What we're watching.

I got through quite a bit this week worth mentioning.
 
The first theme to discuss is AI video and its impact on the entertainment industry. I watched three interviews, all part of some kind of Bloomberg summit. First up was Netflix CEO, Ted Sarandos, talking about where his business is headed. I found him to be very lethargic in his body language and his thinking which disappointed me. Not one mention of the word, "AI" in the entire interview. Weird. Netflix has the distribution and in theory should be able to capitalise on the cost savings AND quality improvements that AI tools bring. They did buy Ben Affleck's business (refer below) but it was just a weird interview. Maybe his share price was on his mind as it continues to fall. Who knows. Next was Casey Bloys of HBO, and just off the newly minted Warner Brothers, Paramount deal. A similar type of conversation to be honest. Again no mention of "AI". There seems to be a significant amount of complacency here from the big boys. Either they are going to get dramatically disintermediated, or they are playing it quiet and investing behind the scenes, which is what I would expect. Next up and finally was Affleck, who is seriously impressive with his business hat on. He speaks in detail about the benefits of AI tools which in his case are used for post production. This one is worth a watch but even still there isn't enough juice in here for me.
 
Much more interesting was Scott Bessent's interview with Axios in which he speaks once again quite clearly about the administration's plans with regards to many things. I can only say once again that it is simply compulsory to watch every single interview with this guy who is architecting the biggest change to the global financial system we've seen in my lifetime.
 
Logan Wright is a pretty good China watcher and this interview explains his view into why China is broken. It's rather simple. There was a deleveraging and there hasnt been a return of broad based growth. The tech boom hasn't touched enough lives and he believes growth this year could be a zero or even worse. His views make sense when one looks at the performance of Chinese stocks. Every time they threaten to go up, they fall anew. No secular bull market for many many years now. Something must change this dynamic to reverse.
 
And finally, I sat down with my daughter this week to watch the new Novak Djokovic documentary called The Wolf in Winter. It is less heavy on tennis action than many other documentaries of this kind and focuses on his life, his motivation and why he continues to grind away at nearly 40 years of age. In the documentary, he says that there are three reasons why a great player would ever stop playing. 1. They want to quit at the top. 2. Their body is breaking down and 3. They start losing and realise they cannot continue. He believes even at nearly 40 that he is still elite. And he is. Despite not winning a major since 2024, he has competed in semis and finals regularly although this year he has only won 1 title (In Beijing last weekend). A fantastic insight into the mind of the greatest tennis player in history. DC

US Secretary of State Marco Rubio’s speech in Athens with the Acropolis in the background was quite the spectacle, if not one full of very quotable quotes. At the very least, it should make every Greek proud (in my opinion at least), for it is pretty much an exhortation to Europe and the rest of the western world to look back at the founding principles of democracy, with Athens perhaps one of the greatest early democracies in history. He draws attention to the core tenets of the pursuit of greatness: “to be the best, the strongest, the most beautiful, straining to inch ever closer to perfection.”
 
He goes on to point out perhaps one of what I’d call the heresies of the status quo, and I quote verbatim:
 
“Now I know that to modern ears, what I just described, this way of life, may sound odd; it may even sound cruel. The ideal of many ideologies in our time has, frankly, become a world of perfect safety, devoid of risk or failure, with neither the glory of victory nor the shame of defeat. Too often these days, we build downwards. We design our standards to ensure no one will lose; we preoccupy ourselves more with the comfort of the worst than the potential of the best. We hold the most exceptional things among us hostage to the average, the ordinary, the mediocre.”
 
It is an indictment of the ideology that has taken over much of the west, but it’s pretty a hard truth for many to face up to. Only time will tell, but I’d dare say this speech could possibly make it into the pantheon of great speeches, pretty much like our much-replayed JFK’s moon speech, and the best line of it all:
 
“We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.”

Across the pond, Tucker Carlson decided to pop by and have a shot at Jacob Rees-Mogg, in response to his view that the UK should prepare for war, along the doctrine of deterrence - that the more prepared for war a nation is, the less likely it is that a war happens. To quote the multitude of punny comments, Carlson got “mogged”, at one point being labelled as seemingly being "devoid of nuance". Regardless of your individual view on things, it’s actually quite hilarious how Tucker’s usually pugnacious style rolls up against Rees-Mogg’s impressively calm demeanour. As a former debater, watching Rees-Mogg dismantle Carlson was deeply satisfying, and a (rather sad) reminder of what used to make Great Britain great. To Carlson's credit, good on him for posting the interview in its entirety! EL

What we're reading.

Another GOAT is Sir Alex Ferguson who is now well into his 80s. He sat down for a great interview with Paul Hayward. In a week where it became obvious to those that didn't already know that Pep Guardiola benefited from industrial scale cheating in his Man City era, we realise once again that there is nobody close to Sir Alex as the greatest manager of all time. And this comes from a Liverpool supporter. 
 
This week saw the simultaneous release from OpenAI of a number of solutions to age-old math problems. It was a moment when mathematicians around the world round realized that their next few decades of opportunity just disappeared. Now mathematicians are not really very well paid so this isn't about financial need (although it is that too). It is about meaning. Is this the first sign of what happens when your life's work which you dedicate yourself to and derive meaning from disappears in front of you? When will it come for the fund managers? I think about this every single day. What I will not do if/when that happens is write a letter saying that the AI should not be allowed to discover solutions and stop the world from progressing like these mathematicians. They have a point that the brute force solutions to the problems come without context but that is semantics. Solving these problems will lead to incredible progress in physics and many other fields which will have real life improvements for billions of people. Alternatively, maybe the mathematicians can be hired by the frontier labs to oversee the work themselves! DC

As the debate around what happens when a superintelligence starts to run the world rages on, this tweet perhaps sums it up as something we already know. As we always say, the market is smarter than any one of us individually – the stock market IS the pre-eminent superintelligence of our day. And it has done some very wonderful things in the name of efficiency, but that same optimisation also has made it simultaneously indispensable and misaligned, optimising as one may point out for the “wrong” things. Something to really think about! EL