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.)
ChatGPT Provided TLDR:
- Spotify’s Sour Sounds and NFT Clowns: JR & DGG riff on Spotify’s low payouts and NFT confusion, a market’s fusion of jitters and musings.
- EM Debt’s Bet and AI’s Fret: Markets swing with EM debt and staged AI demos, a market waltz with tech’s pulse and fiscal whims.
- Russia-China Trade: A Muddle, a Struggle: A tango of trade between lands, balancing on geopolitical sands, a narrative of economic hands.
- Shapiro’s Show: Debate of Fate: DGG jabs at Shapiro’s debates, while JR lauds a fallen Ukrainian soldier.
- Egly-Ouriet’s Wine Delight: JR savors the Egly-Ouriet’s wine flight, a taste of elegance, a cellar’s delight.
welcome to the second week of December but the final week of SML as drive relentlessly towards year-end culminating in an orgiastic frenzy on Friday morning
Good morning, Dario, welcome geopolitical zoomer sine qua non
Keith Chegwin dies at the age of 60 and the world was a poorer place for it, especially those Brits of a certain age
is
who is he
Have you done your 2023 Spotify Wrapped, Julian?
Its thing where subscribers to SPotify can see their most listened tunes and genres of the year
Do you listen to music on spotify julian?
and only downloaded spotify at the end of November. I’m still on the free trial
10:35 JR: I suspect my wrapped – if that’s the correct terminology; grammatically it sounds as unnatural as saying ‘windows is closing – would show a good deal of Schubert, Wagner, George Melly and Gregory Porter. A psychologist would have a field day.
( I dont know why my Spotify is French.)
I would recommend Yann Tiersen’s playlist EUSA as the perfect listen for working on a rainy day.
Hes known for making the Amelie soundtrack
Here are Spotify’s top3 favourite artists for 2023
never heard of them
1 – Mass Layoffs are a’Comin
because Spotify’s first 2023 sound comes with a layoff of 1,500 employees or 17% of its workforce
2 – My Debt’s Eatin Me
3 – Aint Growin Like I Used To
Despite claiming that Spotify’s investments since 2020 ‘generally worked’ the streamer admitted its room for growth has diminished
But we’re bringing these news to SML not for Spotify per see – but to how artists have been reacting to news of Snoop Dogg’s recent disclosure
The artist announced that for one billion unique Spotify listens
he’s netted a grand total of
$45,000 dollars
In the days of apple music or casettes at a few dollars an album, this is obviously a bit of a climb down
Is it any good?
+140% ytd
Which – by the way – are kinda back
Sales value jumped by 32% in October and by 50.7% in November – even if these are mostly driven by the increased value of the tokens used to price NFTs.
Nobody is performing well on face value of these NFTS
Because – again – we expect the value of NFTs is not the glitzy stuff like above
The true value of NFTs is structural – it can incentivise creators to put their work on the open marketplace by promising to reward them with royalty payments on sales in secondary markets
When the main market mover – OpenSea – announced it would not enforce royalty payments this summer, it caused a rout from the platform
Instead, NFT creators have joined in the launching of a marketplace that enforces high royalties
“Magic Eden Ethereum will become the first major Ethereum-based NFT marketplace that is contractually obligated to honor creator royalties”
But this is about the ned of the short term good news for NFTs. Key indicators – unique users – are still dropping like flies
-12.9%
Did your son ever bother u with nft’s julian?
The end of last week saw a trailer drop for DeepMind’s latest AI ‘Gemini’
did you see the trailer?
Yes IT WAS FAKE
Well, staged is the better word
10:47 DGG:
“Instead, the actual demo was made by “using still image frames from the footage, and prompting via text,” rather than having Gemini respond to — or even predict — a drawing or change of objects on the table in real time. This is far less impressive than the video wants to mislead us into thinking, and worse yet, the lack of disclaimer about the actual input method makes Gemini’s readiness rather questionable.”
Another notch to DeepMind’s annus horribilis, who no doubt have brilliant tech that got shafted by a google exec who wanted video proof their tech was better than ChatGPT
Last in markets miscellany, we have an anonymous reddit user who claimed to be a former employee of Lumen Tech, and claimed that Miscrosoft may be preparing an acquisition
“Lumen Technologies, Inc. (formerly CenturyLink) is an American telecommunications company headquartered in Monroe, Louisiana, that offers communications, network services, security, cloud solutions, voice, and managed services.”
In short, the CEO of Lumen is one Ex Microsoft VP, who has aggressively restructured Lumen to make it a better sales provider to the American government
“My hypothesis is Microsoft wants to further their hold in the defense sectors and plans to do so by acquiring Lumen. Lumen is a consortium member of every large undersea cable and provides most of the layer 1 transport to the government. Having Microsoft purchase Lumen immediately puts them in a position to win massive multi-billion dollar contracts, and overlay their technology as a value add. This then provides the government with an easy button to not only purchase their data infrastructure but to have all the bells and whistles Microsoft provides included seamlessly. If there is one thing I learned working Fed, is that the government loves an easy button.”
Undersea cables are a fascinating thing
“Lumen is capable of pivoting and creating dense datasets due to the fact they have direct access to 70% of all global internet traffic, and have vision into another 10% through peering agreements. This gives them access to 80% of all global internet traffic. This would dramatically increase Microsofts AI offerings, and could make all their selling efforts more effective.
By Microsoft purchasing Lumen, their security, AI, government, enterprise, and all data transfer offerings would be dramatically improved based off the information they could feed into it.”
Fascinating speculaiton
And looks like if it did go ahead, MSFT would be able to cinch the acquisition for potentially pennies on the $
clinch*
let’s start with the obvious
NFP was pretty darned Goldilocks
reading GS strategy this weekend, the leading market forecaster, Pasquariello was at pains to point out just how the US economy was very resilient in 2023.
Fed shrank B/S by $800bn and it raised rates four times yet GDP was still a very respectable 2.5% & 2.7mill jobs were added.
10:53 JR: it’s amazing to think a year ago headline inflation was 9.1% and Fed Funds were 1.5%
Whereas economists had expected them to only rise by 0.3% and rise 4% for the year
10:54 JR: G7 economies now have base effects helping inflation, there’s a background decline in energy/ gas prices, core good normalisation/ relief of supply bottlenecks etc etc.
Stocks troughed Oct 22, eps growth bottomed 2Q23.
The S&P started 2023 on 17x, index now +22% ytd, starts 2024 on 19x
4Q GDP is tracking 1.4%, and FY 24 estimates are 2.1%.
I suspect the big rally in the bond mkt is behind us, removing one tailwind for equities.
and buyers of the mkt at present seem to be household and corporate
HFs have sold for 3 straight weeks though so the pain trade remains upward
into year-end
The Big Seven + 74% ytd and the S&P 493 +8%!
Huge discrepancy!
GS (e) $80 Brent in 2024, so much OPEC spare capacity, so upside risk to crude is limited.
So on Friday I had intended to write about the milestone of Sino-Russian trade exceeding $200bn
$218bn to be precise
but we had some technical issues, of which I’m still not cognisant, and everything I wrote seemed to have dematerialised in a dog-ate-my-homework kinda way.
I’m going to ignore my grandad’s advice
(‘if at first you don’t succeed, f*** it, just give up’)
11:00 JR: and try again. I’ve already given the headline away.
The trade is split quite evenly and denotes the huge shift in Russia’s trading priorities and its pivot to the east.
more than 100%*
China’s deflation dropped to -0.5% yoy last week so there are benefits to be derived from screwing cheap gas out of Russia, the forced seller
now that Europe is out of bounds, of course.
Hopefully, Putin is having second thoughts about his pivot east because as of Weds, China’s weighting in the MSCI has slumped to 25% from 40% barely three years ago. Illustrated here in a chart from Gavekal.
That’s $1.8trn of mkt cap eradicated by the CCP crackdown on capitalism.
a whole lot of mkt cap
The upper class will choose to fly
did you catch the NapolElon Musk Twitter Spaces ‘conversation’, Dario? A quintet of the most appalling specimens of humanity..,. ?
Now I gotta say
Don’t care much for the members of that quintet
Bar Alex Jones. Sigh. He’s become SO BORING
I loved my vintage alex jones – he was a true hero
An anti-everything
literally
not much value added there, though
DeepMind still hasn’t provided anything beyond their enzyme/cell simulator
Well, in 2023, EM debt didnt do much as a whole but divergence was pronounced with latam benefiting to the tune of 24% with MXP and COP the two-best performing EMs ytd
EMFXs I mean
EMEA was flat, dragged down by Russia, Turkey, South Africa (RATS)
(glad to get my RATS asset class promo in)
does that even work as an acronym
Asia returned about 2.4%.
but he’s allowing a credible team to restore central banking credibility and economic orthodoxy.
There may be a lot more issuance in 2024 (2023’s $1.5trn was +4% yoy) but the expected G7 rate- cutting cycle should favour EM. EM debt is a derivative bet on EM and a way to play the Nov moves in G7 rate expectations.
which are demonstrated here
In Oct, Euro mkts expected 2024 cuts: 75bp and a terminal rate: 2.85%. In Dec 2024, cuts: 135bp and a terminal rate: 2.19%
Final central bank meetings of the year this week from BoE, Fed, ECB and the BoJ.
The danger to rate expectations at this stage, after they have been brought forward several quarters in the space of a few weeks, surely has to be slip back
China growth data due Friday will be pretty instructive here.
@izzyk – i guess they would do since he was first mover and made all the money
Rate cuts expected in Brazil and Peru this month, Mexico on hold and Russia, the bastards, hiking 100bp.
Inflation in Russia hit 11.66% in Nov
Pretty clear what the triggers have been for Russia’s inflation spikes – its congenital malefaction.
A shortage in USD saw the naira fall 23% on Friday, a fairly major deterioration in a trend that began last summer when the govt eased currency controls.
Inflation is a problem, surprise, surprise, oil price weakness hurts and the confusion caused by parallel/ black markets versus the official rates (at times inflated by 25%)
USDNGN chart
That’s what easing fx control brought about. That’ll learn yer.
11:18 DGG:
There are many times when it’s enviable to be coming second, Julian.
as my ex always reminded me
The easing of currency controls, however, was a necessary medicine and was praised by Moodys Friday as they upgraded the sovereign outlook to positive, although this is of marginal benefit to a credit 7 notches into junk at Caa1.
The CB governor is pledging to curb inflation but the currency move makes this difficult and the growth dividend is not yet apparent.
let’s move onto more enjoyable markets
Last week saw the Hospices de Beaune annual wine auction, selling 750 barrels of Burgundy’s most prestigious wines.
It was the second highest auction total on record, $27.4 mill but still down 15% on last year which is worse than major fine wine indices’ performance ytd
Burgundy -5% ytd, top claret the same, champagne, Rhone and cult US wines -4%
Chart courtesy of Cult Wines.
That’s not so bad given the runaway success of previous years and that if you’re a private investor it’s tax free and a lot nicer to look at in your cellar than share certificates
but the five-year record is a trifle underwhelming unless you were exploiting the scarcity value and the influx of Asian buyers into the Burgundy grand crus in that specific, rarefied world
Wine investment, it transpires, is also a function of low interest rates and disposable income with two crucial qualifications: it’s perishable but in the absolute worst-case scenario, you can always drink it.
The best performing wine of 2023 is Egly-Ouriet Brut Millesime Grand Cru
but I doubt I will ever get to drink it unless there’s someone present in The Rabble who owns a bottle and invites me to share it
this brings me onto the latest in my top wines of 2023
Abelard & Heloise by Chene Bleu
these two beauties, satnding side-by-side, like the star-crossed lovers of the same name
I first visited this vineyard, owned by Xavier Rolet, the bloke who used to be chairman or CEO of the LSE and run by his ensorcelling wife, Nicole on 1st Oct 2017.
i remember the date because it had a profound effect on me
i was profoundly jealous
you start with a billion
by the sunlight-buttered walls of the winery,
by the churchy, high windows of the tasting room,
and by the fragrance and the radiance of Mrs Rolet who let us explore her range from entry-level all the way top the top-end cuvees.
Abelard, a grenache-dominated super Rhone and Heloise, a syrah-dominated super-Rhone in that they have been taken out of the local classification so they can be more creative with their wine-making.
Perfume, structure, body, dark berry flavours and an endless finish are what Mrs Rolet’s best pair offer
I’ve waited about six years since getting my hands on them and plan to enjoy them this Christmas. You should too.
@izzyk – some people think the petrol smell is a fault in the wine but it’s very distinctive and it makes it easy to spot in a blind tasting
i prefer the sweet rieslings myself
last 2 mins, Dario, we have one minute each for a hero and a villain. you’re picking a villain today?
A mediocre one but well worthy of the title
Ben Shapiro
The one time Shapiro debated an actual professional in 2019 – Andrew Neil – he was roundly humiliated
later admitting he was ‘destroyed’ by Neil
murdered in cold blood by Russians in Bakhmut, ‘Slava Ukraini’
they have now erected a statue of him in kiev
and I thought this image of his mother coming face to face with her son
was incredibly moving and summed up the barbarity of this pointless conflict
slava ukraini
nunc tempus taciendi