Where finance and media intersect with reality


Spot Markets Live, 04/12/23 (Tether, Oil and Saudi Arabia, Cybersecurity)


Comments in bold addressed to audience members

JR = Julian Rimmer (Resident Boomer and former EM markets pro turned writer.)

DGG = Dario Garcia Giner (Resident Zoomer and former corporate investigations pro turned meme stock watcher and in-house drone expert.)

TLDR: ChatGPT summary:

  • Bitcoin and Crypto:
    • Dario mentioned a 1.2% gain in Bitcoin but contemplated selling.
    • Highlighted US Treasury’s warning on Stablecoins like Tether.
  • Crypto Developments:
    • Exposé on Christopher Harborne’s role in Tether.
    • Coinbase’s rally after Binance CEO’s detention discussed.
  • Gold and Bitcoin Comparison:
    • Julian raised questions about the simultaneous rise of gold and Bitcoin.
  • Global Insights:
    • Discussed central banks driving gold strength.
    • Mentioned Lukashenko’s China visit and Russia’s mandatory health checks.
  • Cybersecurity:
    • Noted cyber attacks on British academic institutions.
  • Miscellaneous:
    • Introduced the “Albanian Disease” and Saudi Arabia’s economic challenges.
    • Discussion on living in Saudi Arabia, potential growth, and alcohol legalization.
  • Top Villains and Heroes:
    • Dario’s villain: Bob Iger, Disney CEO.
    • Julian’s hero: Vladimir Kara Murza, a Russian political prisoner.
  • Wine Recommendation:
    • Julian recommended a Greek rosé as a top wine for 2023.

10:30 JR: Good morning, Aloha and greetings fellow market wizards

Welcome to December. Come on in, the water’s lovely

So, today for a treat we have Dario and I actually i the same city

Good morning, Dario and welcome to the Big Smoke

10:32 DGG: Good morning Julian!

Not so happy to be back in the big misty grey.

10:33 JR: we had a working lunch yesterday.
10:33 DGG:
10:33 JR: For clarification, the Boomer is on the right

So today is a big day for Spaniards Dario

10:34 DGG: Is it?
10:34 JR: Birthday of general Franco in 1892
10:34 DGG: Oh geez

Meme of the day

10:35 JR: It’s a very good question.

.So the big news is Bitcoin

10:36 DGG: In this piece of fantastic news, my incredibly ill-timed buy into bitcoin has finally paid off

I’m up 1.2%! But being ITM feels off.

10:36 JR: 2% now? 3% now?
10:36 DGG: I think I ought to sell and make a loss otherwise it’s going to feel too alien

In other crypto news

Top US Treasury officials warned that Stablecoins like Tether could be in the sights of US regulators

‘to prevent abuse by terrorists’

While the official, Adeyemo, didn’t name tether specifically:

““We cannot allow dollar-backed stablecoin providers outside the United States to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform,”

And speaking of dodgy individuals and Tether – we highlighted an excellent and intriguing story on this week’s Blind Spot Newsletter:

“TETHER’S SECRET AGENT. Who exactly is Christopher Harborne? Dirty Bubble Media ran an exposé on the intriguing figure behind Tether’s success. According to the investigation, Harborne may be a far more important figure in Tether’s operations than previously thought.”

“The man’s shady past includes a shareholding in CIA-connected QinetiQ. He is also the sole owner of a British fintech company that specialised in moving large sums of money around the world.”

QinetiQ doesn’t exactly make weapons, but they make everything but.

Robots, armoured protection, etc. All very innovative stuff

And lastly, Coinbase has rallied almost 60 percent in November after Binance CEO’s wilfully detention.

The company has emerged as the sole well-regulated (seemingly) crypto exchange, pooling together the funds from crypto hodlers who don’t want their crypto disappearing into shady schemes and private villas in the Bahamas

10:39 JR: I suppose the issue here is why gold is approaching all-time highs at the same time as Bitcoin?

Is it because the latter is now considered digital gold?

Or is it merely a function of the ‘everything rallly?

I suspect some of the former

10:40 DGG: I’m sure other well regulated exchanges are in the works Mark

Well. I’m not sure. But I can imagine they are

10:41 JR: The reason behind gold strength s clear:

Central bank buying

In 3Q23 they doubled their purchases from 175 tonnes to 337t

10:41 DGG: Damn!
10:42 JR: And most of that took place while the dollar was strong

Now of course, USD is weakening and lighting a fire under cmdty complex

@marks – I dont mind Saylor, he’s very articulate

Just to highlight while we are talking about cdty

Don’t forget uranium

(see URA ETF performance ytd)

UST1YR now down at 4.25%

VIX becalmed <13, VVIX – 35 points from yr’s high at 120 and yen has bottomed if rate differentials with the dollar have peaked?

Japan’s buoyant stock mkt owes much to a depreciating currency so this could become a headwind, esp for auto exporters if the US economy is slowing/ in recession

But some of the move is undoubtedly a consequence of Japan’s changing corporate landscape.

A couple of salient points…

Lukashenko has arrived in China and met with Xi Jinping.

10:47 DGG:
10:47 JR: Xi was very flattering about old potato face: “Under strong leadership of Mr. President, your country has been able to overcome the impact of various negative factors, maintain social harmony and stability, and realize economic recovery and growth…”

Beyond parody

And another bizarre note….

Mandatory annual health checks for all Russians must include an assessment of the reproductive abilities of men and women

10:49 DGG: That reminds me of Dr Strangelove’s doomsday bunker.
10:49 JR: The most Orwellian thing I’ve seen this year

Nov witnessed the biggest-ever easing in financial conditions…

According to GS.

The rally driven by rate relief, seasonality/ technicals/ buybacks/ exodus from money mkt funds into equities

The systematic community biggest buyer of stocks, record short to net long, next exposure still only in 32nd percentile of last 3 yrs

Even if you think the mkt has a bit more juice left in Dec, given vol is so cheap, perhaps starting to take out put protection is advised.

Come January, US political risk is firmly on the agenda again

Iowa caucus Jan 15, New Hampshire primary Jan 23

10:53 DGG: Trump President, Haley VP. Those are my picks

Guesses rather than picks… lol

10:54 JR: I still think mkts are complacent about the very real possibility of a severely disfunctional US election – and aftermath – next year

This is especially relet when hedge fund crowding is as pronounced as it is now

10:54 DGG: Interesting chart.
10:55 JR: Something for you, Dario…

The Meme ETF is closing down this month

Is the era of meme stocks over?

10:56 DGG: I think it may only be beginning, Julian. This meme ETF reads like it was compiled by a Boomer. A true meme ETF would only hold 1 stock – gamestop
10:56 JR: Valid point
10:56 DGG: Speaking of Gamestop – after a mediocre end of the week, the GME rally is back.

Alongside a really mysterious Ryan Cohen tweet that GME hodlers are claiming means GME made a profit this Q3, we will only know by December 6 – when GME announces quarterly earnings

10:57 JR: @marks – that’s a function of that crowding, I think

And now for something totally different.

Let me introduce you then to the Albanian Disease.

Something which I was prompted by when i visited Albania in Sept and then reminded of by Savvas Savouri from Tosca Fund Mgmt

Who sent me back down the albanian wormhole.

Now, on paper, this particular coastline hugging the Balkan economy records a remarkably low Misery index.

11:00 DGG: What’s the misery index?
11:00 JR: add UNR to CPI

was introduced by some economist or other a few decades back

Albania’s latest inflation (3.8%) & interest rate (3.25%), are comparatively low, & even its jobless rate (10.7%), is modest by regional & wider Euro standards (Spain at 11.8%).

11:01 DGG: Just a little pointer that I am always skeptical of unemployment figures that rely on Spanish statistics.

Very very common in Spain to register as unemployed and get a real job that pays under the table.

I suspect Spanish unemployment figures in real terms are rather healthy. The whole country seems to be working these days.

11:02 JR: I can believe that

For Albania, though, the standout numbers are the USDALL EURALL exchange rates.

It’s going up

Given relatively low yields, this isn’t the attraction. What is it? The export of its prime-age workers.

(ALL 6th best performing fx ytd)

Albania’s demographics provide stark proof of an exodus; a population decline of about 15% in the last two decades.

A clear consequence of so many overseas workers sending home remittances, has been upward pressure on the lek;

Albania’s comparatively low jobless rate is also informed by emigration.

The remittance capital flooding into Albania is funding a property boom; fostered by low interest rates.

It’s been suggested that surging housing construction will act to keep Albanians working at ‘home’, and attract workers from its near abroad

But since most Albanians in London I know are builders, I’d say scant chance of this.

11:05 DGG: All sorts of remittances …
Albanian mafia manages to carve out a prominent place in the UK criminal landscape in the supply of cocaine to other crime syndicates in the country
11:06 JR: Yes, the Albanians i know are builders but the ones I don’t know are dealers

(although the ad sommelier in 67 pall mall is an Albaian called Elton)

Head sommelier.

A surge in tourism revenues is also a major contributor.

I saw evidence of this at first hand when I visited the Accursed Mountains in Albania back in September.

Good food, friendly people, astonishing scenery. I think it is the most beautiful place I’ve ever visited.

11:07 DGG: Their names is Accursed? Lmao
11:08 JR: yes, it was a very popular region to visit in the Ottoman era

Lord Byron for example loved it

The remedy for the Albanian Disease? A Euro peg.

11:08 DGG: Sounds like a great travel hack – beautiful country, nice people, good food. Why not

And speaking of hacks

Understated news item for this year has been the number of high-profile cyber attacks on British academic infrastructure

11:09 JR: @marks – yeah, that Ponzi thing in the 90s was nuts. Thousands killed because of it.
11:09 DGG: For instance – Manchester Uni was attacked this June – whereas the British Library was attacked on 31 October, an attack which is still affecting its onsite and website services

“The Rhysida ransomware group claim to be behind the attack, have said they will auction off the stolen data.

The cyber gang said last week that the price for data, that includes passport scans, was set at 20 Bitcoin (£596,459).”

I hope you don’t have a BL account, Julian.

11:09 JR: I do not.
11:10 DGG: We have a little scoopette for our SML watchers

It turns out that ████  █████ University, particularly ███████ hospital, has been under a total ransomware attack for the last few weeks

The attack is so thorough that ███ engineers don’t expect IT services to be available properly until next year

It’s so bad that researchers at █ █████ can’t even plug in their USB sticks to their machines to download the data from their experiments

What’s curious is also that there’s literally no online coverage of it – other than SML.

Ransomware attacks are something that just keep going on and on.

“As of 2023, the global average cost per data breach amounted to 4.45 million U.S. dollars, an increase from 4.35 million U.S. dollars in the previous year.”

And keep increasing in price and effectiveness.

Cybersecurity is one of those weird industries where you meet everyone but cyber people. I feel like every other girl on raya works at sales there

Have you heard of raya?

11:12 JR: I interrupt this broadcast to inform you I have just smashed my keyboard in two

And feel better for it

Substitute keyboard.

No, I have not heard of raya.

11:13 DGG: It’s a dating app that you have to apply for before you get in. It’s basically a dating app full of people pretending to be self employed, CEOs, or Directors at the ripe ages of 22-28

Anyways – speaking of cybersec

What about some ETFs?

11:13 JR: Go for it
11:13 DGG: But you know what the best cybersecurity will be?
11:13 JR: Being offline?
11:13 DGG: Picture this: paper files (passports etc) in an automated tray and storage system that is taken a picture of for on-demand verification that is then immediately deleted

You heard it here first people – the future of cybersecurity is a digital-analogue hybrid

11:15 JR: One thing IO overlooked earlier was the gold vs oil ratio

apols, I meant to discuss when I referred to central banks buying

11:15 DGG: Peter – yep, they got a huge attack this May, which targeted 595 NHS GP practices and disrupted one third of hospital trusts in England
11:16 JR: It seems like the Saudis are desperately trying to get oil back to $100 so they can fund all their crazy scheme in the desert
11:16 DGG: That’s right – and may be witnessing the start of a price war with the US.
11:16 JR: This is all very reminiscent of 1973 and the aftermath of Yom Kippur war

11:16 DGG:

“OPEC+ is increasingly struggling to coordinate large reductions given the size of cuts already in place and the limited impact they are having on prices, JPMorgan analyst Natasha Kaneva wrote in a note Friday. In the end, Saudi Arabia may have only one option — launch a supply war by flooding the market with oil. “They could just add two and a half million barrels into the market for six months and just flush it,” Paul Sankey, a top oil market analyst and president at Sankey Research, said on CNBC’s ” Fast Money ” Thursday.”

Except I’d say Saudi is in an even tighter place this time. It’s not out of strength, but out of weakness.

Issue for Saudis is that nonOPEC oil producers are producing at record levels that can now cover global demand, which forces the Saudi-led alliance to cut to keep market balanced in their favour

“Goldman still expects OPEC to keep Brent in a range of $80 to $100 a barrel in 2024. But compliance with voluntary cuts is a “stress test” of whether Brent will maintain an $80 floor, analyst Daan Struyven wrote. A slowdown in U.S. supply growth in 2024 is another major assumption supporting that price floor. One downside risk to the $80 floor would be persistent upside surprises in crude inventories particularly in the U.S., according to Goldman. Global inventories rose by 300,000 bpd on average in October and November, while Goldman had forecast a decline of 700,000 bpd. And then there is the problem of OPEC unity — or lack thereof. “The further rise in spare capacity and the voluntary nature of today’s cut imply that additional large OPEC+ cuts in response to any additional inventory beats become increasingly difficult to implement,” Struyven wrote.”

In a strategic move to address their growing budget deficit, SA has secured its largest loan yet – $11bn, involving at least 15 banks like ICBC, Citi, First Abu Dhabi and HSBC

“Notably, the interest rate on the loan is set at 100 basis points + SOFR overnight rate, as reported by Bloomberg. The kingdom’s public debt, which stood at $265 billion at the end of September, underscores the financial complexities it faces in executing its ambitious economic transformation plan.”

One could argue Vision2030 is coming at just the right time

In related news – that you may be interested in

Saudi talk of alcohol legalisation has been rumoured since 2019

I spoke to a real estate and hotel developer in Saudi who claimed MBS has signed several hundred alcohol licenses which are ready to be granted in Riyadh but particularly the seaside developments of the NEOM project, and he’s just waiting on the death of his father, King Salman, to approve it

I think once alcohol is legalised you’re gonna really see Saudi growth at the expense of the other oil rich kingdoms. Ultimately, these small minnows relied on Saudi government contracts for so much of their expat presence.

11:20 JR: Alcohol legalisation would change the whole mindset; it’s not just about the boozing
11:20 DGG: You’re already seeing expats move in droves to Saudi. And plus, it’s an actual country – with a vibrant culture, several cities, real nationals that arent all billionaires

I would much rather live in Saudi than the UAE

If alcohol were legal

John – what the hell, that is hilarious

11:22 JR: Right, given we are now entering the final month of the year and we have just ten broadcasts of Spot Mkts Live Remaining, Dario, and I thought it might be interesting to list our Top Ten Heroes and Villains for the year, while I will add my Top Ten wines

So, on this prompt…

Dario, who is your first villain of 2023?

11:23 DGG: My first villain is Bob Iger.
11:23 JR: Booo

(who is he?)

11:23 DGG: Despite his virtuous move against Elon, I don’t have much love for people who make publicly virtuous moves that are just PR wins

CEO of Disney

He made no similar show of Twitter’s former leadership’s widespread censuring of state-backed misinformation on Covid-19… not a fan

But the gripes go further

Disney has been one of wokeisms greatest victims

From producing outstanding family friendly flicks to diversity first tales oriented at young wokesters who were never Disney’s client base to begin with, it’s no wonder the company is going pear shaped

But some critics argue that Disney’s woes go much further than this typical right wing talking point

11:24 JR: @peterd – I’m with you
11:25 DGG: After all, anti-wokesters are made up of the same tosh as left wing wokesters and aren’t Disney clients either

Disney’s recent movie Wish was widely panned by critics and only generated half of expected ticket sales

Its crime? It was simply a bad movie

11:25 JR: @johndc77 – it can be great, it can be terrible!
11:25 DGG: We’re a long ways away from the legendary movies of Sleeping Beauty, Pinocchio and other Disney Classics

I think it’s because the real crime of political correctness has been erasing the original darkness of the Grimm brother tales – rather than skin colours

11:26 JR: My first hero of 2023, a very worthy entry…

Vladimir Kara Murza

A political prisoner in Russia, who has been target of at least two poisonings which almost killed him

11:27 DGG: Peter – horseshoe theory!
11:27 JR: He was then arrested for being outspoken about the Ukr war

Found guilty of treason and sentenced to 25 years in a Russian prison. This is the longest current term for any political prisoner in Russia, and is longer than the maximum sentences for rape that results in death (20 years); kidnapping (12 years); terrorism (15 years); and aggravated assault and robbery (15 years)

Portrait here by Bill Browder in Time magazine:

Bill Browder on his friendship with Vladimir Kara-Murza, why he returned to Russia, and their last dinner together

The first of my top ten wines for 2023….

A value play here

News Image

Apostolos Thymiopoulos likes to do things differently. His rosé is unashamedly eccentric, aged in oak for three months, then bottled in dark glass expressly so it can be aged further in bottle. When first released, it is a round, fruity rosé. After a few years, it’s deep and rich with flavours of tomato and cherry.

Most astonishing wine I had in 2023 was a rosé. I never used to drink it before but this hot summer (if you can remember that far back) I became a devotee of rosé. It was a random recommendation from the sommelier in 67 Pall Mall and I was agog at the bags or rich fruit a wine could contain while still maintaining freshness.

It’s the most unprepossessing bottle of wine I’ve seen but don’t judge this bottle by its label. Aged in oak for three months, this is a serious wine.

11:30 DGG: Well, if I ever try a rosé, I’ll go for that one
11:30 JR: It then became incredibly hard to get hold of but now that summer’s over, it seems like it’s back in stock in a few places

God gave us a memory so we would have roses in December? Well, I think God gave us a memory so we would have rosés in December.

11:30 DGG: Incredible.
11:30 JR: Nunc tempus taciendi

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