Where finance and media intersect with reality


Spot Markets Live, 01/11/23 (Artificial Intelligence, Aston Martin, Mortgage Rates)

(Comments in bold directed towards audience members)
Julian Rimmer 11:30

Good morning, Aloha and greetings fellow market wizards

Welcome to November as we bid good riddance to October which was a painful month for markets.

Unfortunately, after hosting friends for dinner last night, November is off to a painful start from a personal perspective

Dario – I hope you are feeling more sprightly than me

Dario Garcia Giner 11:31

Absolutely. I celebrated yesterday by finally managing to get rid of my good friend who was staying over. Feeling very sprightly

The blissfulness of solitude

Julian Rimmer 11:31

Are you celebrating All Saints Day? or All Hallows Day?

It’s big in Europe, I’m told

Dario Garcia Giner 11:31

Yes – with a friendly barbeque

Lots of chorizos

Julian Rimmer 11:32

Was there a St Darius?

Dario Garcia Giner 11:32


But I’m named after the Emperor. My parents were heretics

Julian Rimmer 11:32

Julian is the patron saint of innkeepers, and ferrymen and would you believe it…

Circus performers!

Dario Garcia Giner 11:33

(Sorry to hear, John, lmao)

Julian Rimmer11:33

Lion tamer or clown? The website I consulted did not specify.

Do you know where financial Svengali, Izzy is this morning?

Dario Garcia Giner 11:34

The Izabella had a delightful anecdote this morning

She apparently met a fields medal winner yesterday, but being a classicist (not to be confused with classist) she didn’t know what that was and asked if it was “some sort of track and field accomplishment”

Now apparently her husband, who has a chemistry degree, wants to disown her

Julian Rimmer 11:34

That would have been my gambit too

Dario Garcia Giner 11:34

(And yes she’s seen Good Will Hunting but that was 25 years ago)

I’ve heard you also have something to give us Julian. A haiku?

Julian Rimmer 11:35

Yes, I was inspired yesterday by the Japanese maple outside my window as we were typing


Japanese maple

blaze of beauty burning out

you’ve not long left.

3 lines, 5, 7, 5 beat scheme and a forlorn ending. That’s a haiku

Dario Garcia Giner 11:37

Well, it’s a lot better than Bard’s attempts at the Haiku. I tried to do the same with the Snapchat AI today. But we have a little SNAFU

Julian Rimmer 11:38

So this morning, Dario I will be leaning very heavily on you.

(no change there then).

Dario Garcia Giner 11:38

Well we can start off with an easy meme

The wonders of AI image generation

(John: It’s actually not bad!)

So the Biden White House just dropped a new AI rule this Monday

It didn’t seem to make HUGE waves in the news cycle

This Executive Order signed to:
“seeks to balance the needs of cutting-edge technology companies with national security and consumer rights, creating an early set of guardrails that could be fortified by legislation and global agreements.”

In short, the Biden White House claims to want to make sure the AI is gonna be saying his “please and thank you’s”


The wording of the legislation underlined the very much work-in-progress nature of the regulation

executive order* not legislation

“any model trained with ~28M H100 hours, which is around $50M USD or – any cluster with 10^20 FLOPs, which is around 50,000 H100s, which only two companies currently have “

For those like me, who don’t know what this means, H100 is a graphics card or GPU from Nvidia

For context: Meta’s large language model, Llama 2, required 1.7 million GPU hours on A100s. And H100 is far more powerful than the A100. So, in short, one of the world’s most powerful open-source models is still miles away from this benchmark.

Julian Rimmer 11:41

Meta is +141% YTD

I presume there aren’t many ways to play AI that are listed so by default people end up buying META?

Dario Garcia Giner 11:42

I’d actually warn everyone to stay well away from AI – it makes logical sense that we’re far too early in the adoption curve, hype is everywhere, and investors/VC’s, even most tech people, have no clue what they’re developing or investing in

As the White House admits:

“The Secretary of Commerce, in consultation with the Secretary of State, the Secretary of Defense, the Secretary of Energy, and the Director of National Intelligence, shall define, and thereafter update as needed on a regular basis”

Julian Rimmer 11:43

It’s going to be very difficult for Congress to legislate on AI if most members of Congress don’t know what it is

Dario Garcia Giner 11:43

The way things are going, my pet theory is that soon even the AI developers won’t know what AI is

Now, what does the online crowd think about this?

Here’s one interesting summary

Alright, let’s break it down, Reddit-style:

Biden: “I’m making rules about AI before Congress gets their act together.”

Rules include:

  1. Keep AI safe.
  2. Protect our private info.
  3. Make sure AI doesn’t have a bias problem.
  4. Help folks who might lose jobs because of robots.
  5. Keep America on the AI leaderboard.
  6. Big AI names like OpenAI? Show us your safety homework.
  7. No sneaky AI stuff in government.
  8. Privacy rules? Congress, get on that.

But hold up: executive orders are like Snapchat stories. They don’t last forever. So Congress still needs to make some long-term rules. Meanwhile, AI peeps are like, “Nice move, Joe. At least you’re doing something.”

So, in a nutshell? Biden’s trying to make sure our robot overlords are nice and don’t spill our secrets. Progress? Yes. Perfect? No. But hey, at least someone’s steering the ship. ????????”

What’s the problem with that, Julian?

It was written by an AI

Julian Rimmer 11:44

I saw no problem

Dario Garcia Giner 11:44

So this EO was written with the largest tech companies – OpenAI, Anthropic, Google, and Microsoft, having already signed off

Neil Collins 11:44

Good morning AIs

Julian Rimmer 11:45

Good morning, Neil and welcome

Neil Collins 11:45

I hope you’re not shareholders in Aston Martin

The company announced yesterday that it intends to launch a “fulsome refinancing exercise”

Fulsome, in my book, means gushing.

Julian Rimmer 11:46


Julian Rimmer 11:46

Share price looks a bit like this.

Neil Collins 11:46

Insincere etc

Julian Rimmer 11:47

Speed does not appear to have been a factor. It was a slow-motion car crash. Down 98% in the five years since it floated

Neil Collins 11:47

Thanks. I’d lost track of the number of share consolidations, write-offs and promises of new dawns since the disastrous float.

Dario Garcia Giner 11:47

Speaking of car crashes and failing cars

California has ordered the General Motors Cruise unit, its autonomous cars division, to remove its driverless cars from state roads

California’s Department of Motor Vehicles suspended GM’s license, calling their vehicles a “risk to the public” and stating the company “misrepresented” the tech’s safety.

Julian Rimmer 11:48

Don’t you need a driverless car, Dario, not being able to drive yourself?

Dario Garcia Giner 11:48

Well, I was trying to hide that from our readers who may still think something of me.

That is after GM admitted on Tuesday the company lost roughly $1.9bn on Cruise vehicles from January to September 2023, including more than $732mn in Q3.

Neil Collins 11:49

You’re saving the planet, obv

Dario Garcia Giner 11:49

Billion with a B!

Julian Rimmer 11:49

The number is huge

Dario Garcia Giner 11:49

The suspension follows a series of accidents involving Cruise vehicles in the state. One egregious example had the self-driving vehicle which braked but didn’t avoid striking a pedestrian which had previously been struck by a hit-and-run driver, pulling the pedestrian along the road.

This is a Cruise traffic jam, for example, in San Fran

And: a Glasgow man was forced to ring 999 after his Tesla took control of the vehicle and started to dodge red lights and roundabouts. The Tesla also decided to deactivate the brakes. The situation only stopped when a police vehicle rammed the Tesla off the road.

So what I thought, Neil and Julian

Julian Rimmer 11:50

a likely story

Dario Garcia Giner 11:50

What if the autonomous cars story will be like the self-checkout machines

A promise for automation comes at a hidden cost: with higher maintenance fees, poor customer service, and significant anomalous downsides (higher theft / quirky automation glitches).

DING “Unexpected person under driving area. Please remove this person to continue.”

Julian Rimmer 11:51

A friend came round for a drink last evening. From the expression on his face, I knew immediately something was very wrong.

It wasn’t difficult to guess: he’d just been on the receiving end of a new mortgage offer

and it was apparent that his fortunes had taken on the trajectory of Icarus’ last flight.

Neil Collins 11:52

But hey! House prices are rising again! It’s official, from Nationwide, so it must be right

Julian Rimmer 11:52

I think his payments were rising from £350 pcm to £1950 or something)

Dario Garcia Giner 11:52

That is NUTS

Julian Rimmer 11:52

Disposable income as he knew it was now suddenly a thing of the past. New mortgages are now well in excess of 5% and the average burden, as old deals fall off, is above 3% and set to rise towards 4% over the next year.

Unsurprisingly, therefore, UK mortgage approvals have slumped accordingly and dipped to ~40k per month versus a run rate of 60-70k for the previous decade.

I’m not sure about Nationwide’s numbers, Neil

Neil Collins 11:53

Did your friend really think that the rate would stay at 3 per cent indefinitely?

Not many marks for financial planning

Julian Rimmer 11:54

I don’t think he’d prepared for it, put it that way. He’s a journalist

Neil Collins 11:54

Oh. That explains it. Probably writes the money advice pages

Dario Garcia Giner 11:55


Julian Rimmer 11:55

Zoopla reckons house prices falling in 80% of postcodes, among them Colchester is suffering the worst. One pocket of strength is Motherwell in Scotland.  I’ve visited both and see no reason to favour either.

Dario Garcia Giner 11:55

I remember my first and only visit to Scotland our train stopped in Motherwell. My ex’s uncle picked us up in a Range Rover. The first car that went by was a bunch of bald lads speeding in a BMW who flipped us off and shouted ” c*nts!”

Julian Rimmer 11:56

That’s a friendly greeting in Motherwell.

Dario Garcia Giner 11:57

Speaking of calamitous falls in personal income, there’s some interesting stuff coming from the Dallas Fed’s manufacturing survey

They’re a far cry from what you’d expect for a nation growing at 4%.

Neil Collins 11:57

I gotta go, guys, but can’t resist another poke at BP. They are lucky that Exxon is distracted, otherwise, they would be sitting duck now, especially after the latest figures. Still, the buyback programme will go a bit further now the shares have fallen.

Julian Rimmer 11:58

2% of next year’s FTSE return will come from share buybacks I think I read

Neil Collins 11:58

Buy-back: a process where you give your brokers a shedload of money and tell them to keep buying until it’s all gone, regardless of the price

Execs should read Simon Wolfson on this subject:

He applies logic.

But since the execs just want the share price to go up to help their options, I doubt whether they would follow his lead.

Julian Rimmer 11:59

That sounds unusual

(The application of logic, I mean)

Dario Garcia Giner 12:00

Coming back to Texas factories, here’s some of the anecdotes

“In a consumer business, we are hearing a lot more “I can’t afford this” than we ever have before.”

“Six months from now is actually quite scary. The economy is uncertain, and customers cannot predict with any certainty what they see. Political pressure and the wars are now forcing customers to reevaluate their business activities and reduce their outlook. It’s very uncertain.”

“We are seeing a pronounced slowdown in owners going forward with new projects. There is too much uncertainty in the economy and globally.”

Now, a lot of survey respondents are reporting factories, orders, and profits going strong. the key drag seems to be consumer sentiment and future orders

Julian Rimmer 12:01

I’m familiar with this phenomenon

Dario Garcia Giner 12:01

Things in China aren’t better either – a long-awaited report on Chinese industrial activity for October was just released

“China’s official purchasing managers index for the manufacturing sector fell to 49.5 in October from 50.2 in September, the National Bureau of Statistics said Tuesday. A reading above 50 indicates an expansion in activity while a reading below 50 signals a contraction.”

“Gauges of activity in China’s services and construction sectors also weakened, pushing a composite gauge of economywide activity to 50.7—its lowest reading this year.

The weak results contrasted with economists’ more upbeat forecasts after an improvement in growth in the third quarter. Manufacturing activity recorded its first expansion in September after five months of contraction, according to the index.

The readings were “a slight shock,” said Robert Carnell, head of research for Asia Pacific at ING. “This suggests that the economy is still struggling,” he said.”


The lower confidence trend worldwide goes further than just manufacturing. A recent report showed that American consumer confidence was dropping at increasing amounts

““consumers continued to be preoccupied with rising prices in general, and for grocery and gasoline prices in particular,” Dana Peterson, chief economist at the Conference Board, said in a statement on Tuesday. “Consumers also expressed concerns about the political situation and higher interest rates.”

But there are nuances

Meanwhile, consumers with a household income between $25,000 to $35,000 saw the biggest decline in confidence about the economy over the past month. In contrast, consumers with a household income between $100,000 to $125,000 saw the biggest jump in confidence over the past month.

How can we make ourselves feel better about any of this, Julian?

Julian Rimmer 12:03

Well, I turn the consolations of the bottle

That was last night, he writes, by way of justifying his poor contributions this morning:

A friend came round who’s a recovering alcoholic which explains the solitary bottle of de-alcoholised lager. The 1967 port was the highlight but, of course, it’s the worst for a hangover.

Anyway, so this made me feel better but then worse.

Dario Garcia Giner 12:04

Well, speaking of hangovers, we may be in for a big one

I dno about you, but I had (and still have) little idea about what an ETF is:

All I know is it’s a place on a trading app where you can click “buy” and “sell” and the button clicks don’t mean your portfolio immediately turns very red or very green

It’s a relaxing “buy” button, one I can press and feel chill.

So it turns out that this little relaxing habit may be more problematic than I knew.

Julian Rimmer 12:05

I’m not sure this is what the designers had in mind

or maybe it was…

Dario Garcia Giner 12:06

A Redditor uploaded a brilliant little analysis that compiled all of Michael Burry’s old thoughts on the problematic nature of ETFs:

Julian Rimmer 12:06

Is he the Big Short guy?

Dario Garcia Giner 12:06

The very same – the glassy-eyed one

“Passive investments such as index funds and exchange-traded funds are inflating stock and bond prices in a similar way that collateralized debt obligations did for subprime mortgages more than 10 years ago, Burry told Bloomberg News in an email. When the massive inflows into passive vehicles reverse, “it will be ugly,” he said.

“Trillions of dollars in assets globally are indexed to these stocks,” Burry said. “The theater keeps getting more crowded, but the exit door is the same as it always was. All this gets worse as you get into even less liquid equity and bond markets globally.”

The Redditor also included his perspective on the formerly serious stock market transforming into a market where “regards” like myself meander about

“The conventional wisdom, embodied in the efficient-market hypothesis, holds that market prices reflect the fundamental value of the underlying asset. But increasingly, research is identifying another force as being important: investor demand that may or may not be informed.

At the heart of their argument is a new description of the stock market, which has been transformed over the past few decades by the rise of index funds and other large, slow-moving investors.

In the inelastic markets hypothesis, money that flows into the stock market leads to stronger price effects because there are essentially a set number of available shares, and many of those are not being actively traded. Pairing their theory with an empirical analysis, the researchers estimate that every $1 put into the market pushes up aggregate prices by $5.

The inelastic markets hypothesis raises questions, one of which is: If flows have a larger impact on prices than standard theories allow, how many of those flows are still made on the basis of fundamentals?”

Uninformed investor demand? I and my deeply red Trading 212 account feel personally attacked.

Here’s the thread if anyone’s interested:

Do you have any money in an ETF?

Julian Rimmer 12:08

No. No, 31 years as a trader and salesman convinced me not to make any investments myself. It was too hard to make money working and then too easy to lose it.

I was not a good advertisement for the stockbroking industry. I prefer to leave it to my pension manager so I can blame someone else for my failings.

Dario Garcia Giner 12:09

(You’re far from the only rabble on here today John. And remember, John Snow is also lurking in the comments – but he knows nothing)

Well, that seems wise Julian.

And I’m glad (I don’t either) – it turns out a generation we can both safely hate is responsible for whatever upcoming calamity may befall us – at least as far as Bond ETFs go.

“45% of millennial ETF portfolios dedicated to bonds: Schwab Asset Management”

Julian Rimmer 12:10

That is a staggering number

Dario Garcia Giner 12:10

Between you and me, I fucking hate millennials. They’re the worst

They’re the reason John Oliver is popular, they really like Save the Children and whales

They also invented political correctness in its modern form

Julian Rimmer 12:10

Don’t let me stop you,

Dario Garcia Giner 12:10

I say we do a Boomer-Zoomer alliance to wipe this miscreant generation from the face of the earth

Julian Rimmer 12:11

@johndc77 – I always like those disclaimers that say ‘Share prices can go down as well as up’

which was news to me who did not know they could go up

Dario Garcia Giner 12:12

Julian Rimmer 12:12

Very good.

Dario Garcia Giner 12:12

Speaking of problematic news regarding ETFs, there was an interesting article in the cointelegraph.

Bloomberg ETF analysts have claimed SEC Chair Gary Gensler could pull an “amazingly sadistic” move and pull the plug on spot Bitcoin

“In an Oct. 31 tweet directed at senior Bloomberg ETF analysts James Seyffart and Eric Balchunas, ETF commentator Dave Nadig posed whether Gensler may be allowing for spot Bitcoin ETF applications to pile up just to deny them all at once in a “semi-comedic rug-pull.”

“I’m sure it will be much more boring than this — but sometimes it does feel like this is all a setup for a giant Gensler semi-comedic rug-pull,” said Nadig.”

Julian Rimmer 12:13

‘A semi-comedic rug-pull’ is a beautiful locution.

Dario Garcia Giner 12:14

The scenario is listed as unlikely by the analysts – their major point is to underline that there’s still a lot going on behind the SEC-scenes and that a last-minute denial cannot be off the cards

To remind u all: SEC has been denying Bticoin ETCs since 2017

In 2022 Grayscale, a crypto asset manager sued the SEC

Julian Rimmer 12:14

Millennials would be most irate

Dario Garcia Giner 12:14

The court found the SEC’s decision “arbitrary and capricious”, a decision not appealed by the SEC

It’s unclear if their original reasoning, that crypto spot products don’t have sufficient safeguards to protect investors from market manipulation, continues to be at the forefront of their decisionmaking.

Julian Rimmer 12:15

Back to real markets…

Eurozone CPI yesterday would have brought a sigh of relief to the ECB with Oct’s 2.9% reading the lowest in 2 yrs.

Do you know who would appreciate a datum point like that?


Dario Garcia Giner 12:16

What’s he dealing with atm?

Julian Rimmer 12:17

Probably counting his money in his 600-room mansion above Istanbul but inflation in Turkey is still comically high. On Friday a figure of 4.1% mom (yes, month on month) is expected, taking the annual rate to 62.5%.

Dario Garcia Giner 12:17

That’s actually insane

Julian Rimmer 12:17

Erdogan’s attempts to restore economic credibility are doomed to failure, even with his ex-Merrill finance minister Simsek talking a good game.

Dario Garcia Giner 12:17

How do they even survive?!

Julian Rimmer12:17

With difficulty

most Turks keep most of their savings in hard currency – and estimates of wealth in Turkey are always conservative because gold or hoarded cash always accounts for more than economists can measure accurately.

But clearly it’s not enough to protect everyone.

Dario Garcia Giner 12:21

What do you think the Fed will do about their own inflation?

Julian Rimmer12:21

Well, I reckon The Fed will observe ‘a hawkish pause’ today, allowing themselves the possibility of another hike in Dec if data demands it.

I saw a Stanley Druckenmiller interview in which he announced a big bet he’s made on 2yr notes. He forecasts a bear-steepening of the curve and criticised Jerome Powell because

“When rates were practically zero, every Tom, Dick, Harry, and Mary in the United States refinanced their mortgage,” Druckenmiller said. “Unfortunately, we had one entity that did not, and that was the US Treasury.”

(I can also add my journalist friend to that list)

Dario Garcia Giner 12:23


Julian Rimmer 12:23

He’s nervous about swelling govt debt issuance

with good reason, remember that 1.7 plus a lot of zero numbers from last week?

Dario Garcia Giner 12:23

I do

Julian Rimmer 12:24

Before the Fed announces its decision, the treasury will publish its borrowing schedule for the next quarter detailing the size of Treasury auctions as well as the duration mix of the debt

The treasury offered a preview on  Monday, when the department promised/ threatened to auction off $776 billion of debt 4Q23

Dario Garcia Giner 12:25

I have a mini question for you Julian

What is this picture

Julian Rimmer 12:25

It looks very much like the stilton which accompanied my 1967 Taylors port last night

Dario Garcia Giner 12:25

Wrong. Everyone loves it or hates it, it appears everywhere around the world, and it’s relatively smooth except for the bits that aren’t rotten

It’s France’s foreign policy

Look at the smiling chaps

Julian Rimmer 12:26

So that Kazakh leader is a short-arse too

Dario Garcia Giner 12:26

Macron made a little pit stop in Kazakhstan today – just before his ongoing trip through the Central Asian nations, as he’s about to go to Uzbekistan afterwards

Mind you this visit came while the Central Asian giant is now two years into being the West’s replacement supplier of crude oil

But Kazakhstan’s large uranium exports – as we overviewed yesterday – are likely another big reason for Macron’s visit

Julian Rimmer 12:27

Uranium!? again!

Dario Garcia Giner 12:27

France’s Orano (its uranium miner) is already operating a joint venture with Kazatomprom

And that’s not all, of course

“Since gaining its independence in 1991, the former Soviet Union country has boasted of having “all the ores and elements on Mendeleev’s table” in its subsoil. According to the United States Geological Survey, it is the world’s leading producer of uranium (with 40% of global production), the second largest producer of chromite (13%) and the fifth largest producer of cadmium (5.9%). It is also reported to have abundant rhenium, zinc and manganese mines.”

The meeting unveiled that mutual trade between France and Kazakhstan grew 30% to over $4bn last year, with France investing nearly $18.7bn in the country

Julian Rimmer 12:28

@johnk – I think it was purely a generational, internal power struggle

Dario Garcia Giner 12:29

Funny you should mention that John Kingston. I don’t know. But an investigation Izabella led at the FT and that I aided with once I joined the Blind Spot had us speaking to a fascinating and well-connected man, who was accused online of being behind Qanon. We don’t think he was, but he was certainly connected in close circles

Anyways, funnily enough when the coup attempt or protests or what may have you was happening, he called me to tell me that Kazakhstan had already swapped its geopolitical masters from Russia to the West (mind you, this was just a few months after the Russian invasion – and way before we had official media pieces suggesting that Kazakhstan was considering switching sides – which only happened this summer.)

And that only time was needed for the rulers or what may have you of Kazakhstan to slowly make this move towards the West

Julian Rimmer 12:30

I wrote on this too

Dario Garcia Giner 12:31

The last thing about France and Kazakhstan

Notably, the meeting unveiled that Paris is in line to participate in the construction of Kazakhstan’s first nuclear plant.

(John – sounds like it could’ve been a good time to double down. But don’t listen to my advice. Please)

Julian Rimmer 12:31

And with that last bit of frog-bashing, it’s time to bring this episode to a close. Have a wonderful November everyone. Come on in. The water’s lovely!

Dario Garcia Giner 12:32

Au revoir!

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