A Few Things: Economist on Heatwaves and Geopolitical Shifts, Marko Papic on Markets, Energy Transition & Commodity Cycle, Working Without Working, Your Employer Isn't Ready for AI, Thrive Capital....
afewthings.substack.com
Discover more from A Few Things....
A Few Things discovers, curates and synthesises the big ideas across markets, technology and the good life.
A Few Things: Economist on Heatwaves and Geopolitical Shifts, Marko Papic on Markets, Energy Transition & Commodity Cycle, Working Without Working, Your Employer Isn't Ready for AI, Thrive Capital....
A Few Things: Economist on Heatwaves and Geopolitical Shifts, Marko Papic on Markets, Energy Transition & Commodity Cycle, Working Without Working, Your Employer Isn't Ready for AI, Thrive Capital....
A special hello to all the new friends from Latin America who joined since last week’s Clocktower event.
Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If you enjoyed this, don’t be shy.
Quotes I Am Thinking About:
"Most of the time you don't need more information, you need more courage."
- James Clear
"Beware of looking for goals: look for a way of life. Decide how you want to live and then see what you can do to make a living within that way of life."
- Journalist and author Hunter S Thompson on designing your life:
"It is not that we have a short space of time, but that we waste much of it. Life is long enough, and it has been given in sufficiently generous measure to allow the accomplishment of the very greatest things if the whole of it is well invested."
- Seneca, On the Shortness of Life, Chapter 1
“What the wise man does in the beginning, the fool does in the end.”
In 2023, the Earth's average temperature has set new records, surpassing the previous ones from the previous year. The occurrence of very hot days in July is not unexpected, especially in the northern hemisphere, where land warms up faster than water, making northern summers the hottest times globally. However, this year's temperatures have been unprecedented, starting early, reaching extremely high levels, and lasting for an extended period.
The rise in global temperatures is attributed to the accumulation of greenhouse gases in the atmosphere, resulting in more of the sun's warmth being trapped and absorbed by the oceans. Carbon dioxide levels, the most significant greenhouse gas, have reached the highest point in over 3 million years. Methane and nitrous oxide, two other long-lived greenhouse gases, have also reached unprecedented levels.
Key bits:
Several things could be speeding up warming. One is the change to the stratosphere brought about by the eruption of Hunga Tonga–Hunga Ha’apai, a submarine Pacific volcano, in January 2022. This was the largest eruption on Earth since Mount Pinatubo, in the Philippines. In 1991 Pinatubo injected tens of millions of tonnes of sulphur-dioxide gas into the stratosphere, where it reflected some of the sun’s light. The result was a worldwide cooling of about 0.5°C that lasted about a year.
Other possible influences are waxing. When ice ages end, methane levels in the atmosphere shoot up, ushering in the warmer climate of the “interglacial” to come. Some scientists cite recent increases in methane levels as evidence that something similar may be afoot today. Methane levels rose throughout the 20th century, mainly because of the rising use of fossil fuels and agriculture. They flattened off at the beginning of the 21st century, but are now growing faster than ever.
If 2023 is not an aberration, though, and the world really is moving into an accelerated phase of warming, that reluctance might be reassessed. Emissions reduction should be able to slow the warming of the Earth within a few decades. Pursued with real zeal, it might bring it to an end this century. But it provides no cooling in the meantime. If that proves to be what the world wants, solar geoengineering is the only thing which looks able to provide it.
France has undergone a significant geopolitical shift, marked by a double inflection point. Firstly, it has become an advocate for Ukraine's membership in NATO, setting itself apart from Germany and the US. Secondly, it has shifted its stance on EU enlargement, now supporting the idea and actively working towards opening membership negotiations with Ukraine and Moldova.
Key bits:
Many observers remain sceptical. “It was a free lunch for Macron to back Ukraine’s NATO membership,” argues a European diplomat, noting that France knew full well that the Americans would put on the brakes. The tactical interest for Mr Macron in standing up for central and eastern Europe is plain, after the credibility he lost last year over his outreach to Vladimir Putin. France’s line on nato was partly tactical too: a robust message to Russia, it argued, would strengthen Kyiv’s hand in any future peace negotiations.
Yet there are reasons to think that this double French shift reflects a geopolitical reassessment. Mr Macron, pro-European to the core, has long been preoccupied by the need to fortify what he calls “European sovereignty”: the continent’s capacity to determine its future amidst great-power rivalry. This concern is accentuated both by the existential threat to Europe of an expansionist Russia, and by the possibility that an America led by Donald Trump, should he win next year’s election, would be less committed to European security.
France’s conclusion is that Europe “can no longer accept ‘grey zones’ between the EU and Russia”, says an official. Unless countries on the fringes are anchored inside the EU or NATO, they will be vulnerable to autocratic powers. The last phase of enlargement happened “when we thought that liberal democracy would spread and become the dominant model”, says Laurence Boone, France’s Europe minister: “Today that’s not the case. So we need to move to a geopolitical construction.” Enlargement becomes a tool for consolidating European sovereignty. And a wider EU is not an alternative to a deeper political project, but a means of achieving it. “This really is a structural shift,” argues Benjamin Haddad, one of Mr Macron’s deputies.
He suggests keeping an eye on economies with favourable prospects, such as Indonesia's control of the Nickel market, Vietnam's vital role in global trade, and Mexico's refrain from fiscal stimulus packages.
If you’d prefer to read, he was interviewed by themarket.ch in an interview titled: “Everything Is in Place for a Capex-Driven Commodity Super-Cycle”.
He suggests a global asset allocation strategy, resembling the 2001-2007 period, involving being short on the US dollar, investing in European and Japanese equities, and focusing on industrials and materials relative to tech. Emerging markets, excluding China, are also seen as potential beneficiaries of a capex-driven commodity super-cycle.
Mr. Sanger has a ton of experience and is a wealth of knowledge. He is the founder of Geosphere Capital, a global long-short fund manager currently investing in natural resources, new energy and Indian equities. Prior to that, between 2002 and 2007, Mr. Sanger was a Portfolio Manager at SAC Capital (his portfolio grew very quickly), running one of the largest equity portfolios and managing a global team based in New York and Singapore. Prior to his tenure at SAC, Mr. Sanger had a 15-year career as a top-ranked sell-side oil services & equipment analyst at a number of firms, including Deutsche Bank, DLJ and Kidder Peabody among others.
Good tour of the commodity and energy transition opportunity set.
He discusses the importance of creating space for creativity and problem-solving by engaging in activities that allow the unconscious mind to work. He emphasises the significance of practices like walking without distractions and incorporating moments of relaxation and rest.
Speculation about the consequences of AI—for jobs, productivity and quality of life—is at fever pitch. The technology is awe-inspiring. And yet AI’s economic impact will be muted unless millions of firms beyond tech centres like Silicon Valley adopt it. That would mean far more than using the occasional chatbot. Instead, it would involve the full-scale reorganisation of businesses, as well as their in-house data. “The diffusion of technological improvements”, argues Nancy Stokey of the University of Chicago, “is arguably as critical as innovation for long-run growth.”
The importance of diffusion is illustrated by Japan and France. Japan is unusually innovative, producing on a per-person basis more patents a year than any country bar South Korea. Japanese researchers can take credit for the invention of the QR code, the lithium-ion battery and 3D printing. But the country does a poor job of spreading new tech across its economy. Tokyo is far more productive than the rest of the country. Cash still dominates. In the late 2010s only 47% of large firms used computers to manage supply chains, compared with 95% in New Zealand. According to our analysis, Japan is roughly 40% poorer than would be expected based on its innovation.
France is the opposite. Although its record on innovation is average, it is excellent at spreading knowledge. In the 18th century French spies stole engineering secrets from Britain’s navy. In the early 20th century Louis Renault visited Henry Ford in America, learning the secrets of the car industry. More recently, former AI experts at Google and Meta founded Mistral ai in Paris. France also tends to do a good job of spreading new tech from the capital to its periphery. Today the productivity gap in France between a top and a middling firm is less than half as big as in Britain.
During the 19th and 20th centuries businesses around the world became more French, with new technologies diffusing ever faster. Diego Comin and Martí Mestieri, two economists, find evidence that “cross-country differences in adoption lags have narrowed over the last 200 years.” Electricity swept across the economy faster than tractors. It took just a couple of decades for personal computing in the office to cross the 50% adoption threshold. The internet spread even faster. Overall, the diffusion of technology helped propel productivity growth during the 20th century.
Since the mid-2000s, however, the world has been turning Japanese. True, consumers adopt tech faster than ever. According to one estimate TikTok, a social-media app, went from zero to 100m users in a year. Chatgpt was the fastest-growing app in history until Threads, a rival to Twitter, launched this month. But firms are increasingly cautious. In the past two decades all sorts of mind-blowing innovations have come to market. Even so, according to the latest official estimates, in 2020 just 1.6% of American firms employed machine learning. In America’s manufacturing sector just 6.7% of companies use 3d printing. Only 25% of business workflows are on the cloud, a number that has not budged in half a decade.
Three possibilities explain lower diffusion: the nature of new technology, sluggish competition, and growing regulation. Robert Gordon of Northwestern University has argued that the “great inventions” of the 19th and 20th centuries had a far bigger impact on productivity than more recent ones. The problem is that as technological progress becomes more incremental, diffusion also slows, since companies have less incentive and face less competitive pressure to upgrade. Electricity provided light and energy to power machines. Cloud computing, by contrast, is needed only for the most intensive operations. Newer innovations, like machine learning, may be trickier to use, requiring more skilled workers and better management.
Thrive now manages $15 billion with a small team of 9 investors. Their portfolio is stage agnostic and their track record includes many of the best known businesses from the past decade, including Slack, Spotify, Unity, Stripe, and Twitch among many more.
Key bits are at: (00:23:18) - Learning to identify good problems and creating a business to solve it; (00:33:35) - Industry wide competition today and models for building a firm in general; (00:57:52) - Giving AI companies computing power instead of money; (01:10:33) - Thoughts about the opportunity set in FinTech today writ large; (01:32:19) - His view of the investment industry in the world today writ large; (01:40:19) - Other investment firms he would invest in.
Believe it or not, that “♡ Like” button is a big deal – it serves as a proxy to new visitors of this publication’s value. If you enjoyed this, don’t be shy.
If you are looking for good TV while everyone is out watching Barbie or Oppenheimer, check out White Lotus. Simply amazing writing and acting.
