A Few Things: Understanding the History & Future of the Middle East, Inflation Reduction Act Explained, Will US Outperformance Continue, Michael Lewis on FTX, Managing Stress, Understanding Art....
November 3, 2023
I am sharing this weekly email with you because I count you in the group of people I learn from and enjoy being around.
You can check out last week’s edition here: Listening w/Galloway, Making Sense of Markets w/Damodaran, Understanding the Disorder, Macro Investing w/Scott Bessent, The Big Fail, Hidden Potential w/Adam Grant, Gold w/Idris Elba....
Believe it or not, that “♡ Like” button is a big deal, because it helps new readers understand if this is valuable and keeps me motivated.
Quotes I Am Thinking About:
"What worries you, masters you."
- John Locke
“I count him braver who overcomes his desires than him who conquers his enemies; for the hardest victory is over self.”
“A lie told often enough becomes the truth.”
“Beware of false knowledge; it is more dangerous than ignorance.”
- George Bernard Shaw
“Mistakes are always forgivable, if one has the courage to admit them.”
- Bruce Lee
"By failing to prepare, you are preparing to fail.”
- Benjamin Franklin
A. A Few Things Worth Checking Out:
Professor Mead is a Distinguished Fellow in Strategy and Statesmanship at the Hudson Institute, the Global View Columnist at The Wall Street Journal, and the James Clarke Chace Professor of Foreign Affairs and Humanities at Bard College in New York.
He most recently wrote: The Arc of a Covenant.
Big ideas from the podcast:
Both internal politics and international politics are becoming unstable at the same time. American thought it had won when Cold War ended and we took our eye of the ball for decades and didn’t set up what comes next.
Israel deep part of the American psyche. Big part of Protestant Christianity. The country of Israel must exist.
For the left, Israel was a great socialist experiment and the oppressed people. But over time they have become to be seen as the powerful capitalist oppressor. Today, the more someone likes capitalism and America, the more they like Israel and the more they hate capitalism and America, the more they feel that way about Israel.
Palestine end goal is resistance, that is the source of their meaning. It’s about the struggle, they will not admit defeat. Doing a deal isn’t part of it, only struggle is. Plus, who would Israel negotiate with and know that a deal was good and certain.
Weakness of US position on Israel - should have supported and told then to go after Iran not dealing with small issues in Gaza. Biden administration gave very limited scope for Israel to act. One of the big issues is that Biden administration just isn’t strong enough to deter. Example: Russia in Ukraine, Iran in Israel.
Iran also motivated to act to stop us and Saudi and Israel all being friends and Saudi getting US tech and nuclear.
The group of “others” - N. Korea, Russian, China, Iran all having different interests and timelines for what they want.
2. If you are a history buff like me, then you will enjoy this beautiful podcast conversation on Plain English with Derek Thompson: Two Israel-Palestine Historians Explain: How Did We Get Here? And What Happens Next?
The eminent Israeli historian Benny Morris walks us through the origins of the Israeli-Palestinian conflict, from antiquity to October 7. And the excellent historian of Palestine, Zachary Foster, digs into the often misunderstood history of the rise of Hamas.
Finally, both share their thoughts on Israel's military response, the future of the conflict, and the "missing moderate middle" on both sides.
3. ClockTower Group published a report Unpacking the Inflation Reduction Act. The Inflation Reduction Act (IRA) allocates $369 billion towards climate provisions through 2032.
This is the most significant climate legislation passed in the US to date. The IRA aims to advance clean energy technologies, protect communities from pollution, make buildings more efficient, invest in sustainable infrastructure, support climate-smart agriculture, and more.
The report highlights 5 macro and investment implications of the IRA:
It will spur domestic manufacturing and investment in the US, evidenced by over 200 major clean energy projects announced since its passage, representing $86B in investment.
It helps correct market failures by pricing climate externalities through tax credits rather than just carbon pricing. This facilitates knowledge sharing and reduces financing friction.
It has gained bipartisan support, with Republican states poised to benefit more in terms of investment per capita. This entrenches the legislation.
The IRA disproportionately benefits climate mitigation technologies but also creates a flywheel for enabling technologies in areas like software. It helps de-risk companies by bridging "valleys of death".
There are significant private market investment opportunities in climate-tech ventures, growth equity, and infrastructure as a result of the IRA's provisions.
4. Goldman Sachs Research published a Top of Mind piece titled: US Outperformance at a turning point?
The big ideas:
The US has experienced exceptional economic and asset outperformance over the past decade, with higher GDP growth, equity returns and dollar strength compared to other major economies and markets. However, views are mixed on whether this outperformance can continue over the next decade.
Rebecca Patterson (Bridgewater Associates) believes US equities can continue outperforming, driven by tech and AI advances boosting productivity and growth. The US is well-positioned in tech and has a critical mass of leading AI companies.
David Kostin (GS US Strategist) also sees potential for continued US equity outperformance due to corporate focus on shareholder returns, tech exposure and index dynamism, although high valuations could constrain near-term returns.
Jan Hatzius (Chief Global Economist) is optimistic on US growth due to AI boosting productivity and more favorable demographics than other major economies. However, deteriorating fiscal situation and dysfunctional politics pose risks.
Jean Boivin and Peter Oppenheimer (Market Strategists) are more skeptical on continued US exceptionalism. Shifting "mega forces" beyond just cyclical factors will drive asset returns, not all of which favor the US. Market concentration, high valuations and equity ownership also limit upside.
On the dollar, most see it remaining resilient and defying expectations of sharp falls, although unlikely to appreciate much further. No major alternatives to displace its global dominance yet.
Overall, while near-term US cyclical outperformance may continue, structural forces suggest next decade more mixed and US exceptionalism difficult to repeat at same magnitude. Favours diversification over reliance on continued US outperformance.
5. Stanley Druckenmiller 4-mins on market from CNBC.
6. Author Michael Lewis was on Bloomberg’s Masters of Business podcast discussing his book: Going Infinite, which is the story of Sam Bankman-Fried, former CEO, founder of Crypto exchange FTX.
It’s a good discussion since it gives you a great perspective on why Michael wrote the book, what he discovered and his views on SBF.
7. A few months ago, we discussed Richard Reeves book, of Boys and Men. Richard Reeves, the president of the American Institute for Boys and Men and a non-resident senior fellow in Governance Studies at the Brookings Institution.
He joined Scott Galloway to discuss the concept of relational masculinity, the decline of male connection, and the concentric circles of masculinity. They also get into the topics of parenting and the impact of p@rn on young men, specifically how it’s a place that young men retreat to.
8. This speech is 2 days old and already has 500k views on YouTube. Konstantin Kisin: The Speech The World NEEDS To Hear.
Captured at Jordan Peterson’s ARC 2023, Konstantin Kisin gives a powerful synopsis on the state of the world and pushes a POSITIVE vision of the future. “
B. How To Handle Stress Better
Dr Robert Sapolsky is a Professor at Stanford University, a world-leading researcher, and an author of big books, his 2017 book Behave, was 800 pages and integrated insights from neuroscience, endocrinology, and evolutionary biology to offer a holistic view of why we behave the way we do. I still need to read it!
I did read his 1994 book titled: Why Zebras Don’t Get Ulcers, which explains how prolonged stress causes or intensifies a range of physical and mental afflictions, including depression, ulcers, colitis, heart disease, and more.
The book is a deep dive into stress, why we feel it and how to make sure it doesn’t kill you.
The big ideas in the book:
Acute vs. Chronic Stress: Sapolsky explains that the stress response, which includes the release of hormones like adrenaline and cortisol, is adaptive in short-term, life-threatening situations (like those faced by a zebra). However, humans often activate this stress response for non-life-threatening reasons, leading to chronic stress.
Health Consequences: The book outlines how chronic stress can contribute to a range of health issues including heart disease, digestive problems, sleep disorders, and a weakened immune system. Sapolsky also discusses how chronic stress can impact the brain, leading to issues like anxiety, depression, and memory problems.
Coping Mechanisms: The book explores various coping mechanisms and strategies to mitigate the effects of stress, emphasizing the importance of social support, predictability, and perception of control.
With the weather getting colder and days getting darker, the world feeling more uncertain, I found the parts of how to cope with stress most interesting.
Here are some science based ideas:
Social Support: One of the most powerful stress-reducers is the presence of social support. Having strong social ties, whether with family, friends, or a larger community, can significantly buffer the negative effects of stress.
Predictability and Perception of Control: Having a sense of control over one's environment or situation can be a significant stress reducer. Even if the control is minimal or symbolic, it can have positive effects. Having routines can offer a sense of predictability and stability in an otherwise chaotic environment.
Outlet for Frustration: Physical activity, like exercise, can be a productive way to manage stress, serving both as a distraction and a means of burning off stress hormones.
Reappraisal: Changing one's perspective on a stressor, reframing it, or looking for a silver lining can help in reducing the stress it causes. Cognitive-behavioral therapy often employs this technique.
Down Time: Ensuring one has time to relax, whether it's through meditation, reading, listening to music, or simply doing nothing for a while, can be rejuvenating.
Avoiding Harmful Coping Mechanisms: Sapolsky emphasizes the importance of avoiding unhelpful strategies like excessive alcohol consumption, overeating, or drug abuse, which may seem to provide short-term relief but can exacerbate stress in the long run.
The book underscores the idea that while stress is an inevitable part of life, how we perceive and respond to it plays a crucial role in its impact on our health and well-being.
It's worth noting that what works as a coping mechanism for one person might not work for another; it's essential to find what's personally effective.
He was on the Modern Wisdom podcast recently discussing: The Shocking New Science Of How To Manage Your Stress, it’s a deep 90 mins but well spent if you want to understand and manage stress better.
This is a 5-min overview of the book:
C. Understanding Modern Art
I’ve been spending time over the last few months learning about Art. Regular readers would have seen references to various books and courses.
Why learn more about Art?
A few reasons:
I think artists can see, understand, some of the zeitgeists of society earlier or better. Art is therefore an interesting way to understand society and culture.
Art, politics and history are closely aligned and looking at art and culture of specific periods allows you to understand history better.
It offers a new perspectives and approaches to the world.
One of the books that has been helpful to understand the last 150 years is Will Gompertz: What Are You Looking At?
It is not just a book; it's a journey. Charting the course of modern art from Impressionism to the present day, Gompertz provides readers with an accessible and enlightening guide to understanding the often perplexing world of contemporary art.
Art Movements Explored:
Impressionism: Often considered the start of modern art, this movement marked a significant departure from traditional painting techniques and subjects. Artists like Claude Monet and Pierre-Auguste Renoir began to capture the transient effects of light and atmosphere.
Cubism: Pioneered by the legendary Pablo Picasso and Georges Braque, this movement fragmented objects and scenes into multiple perspectives, challenging our perception of form and space.
Dada & Surrealism: Movements that defied logic and embraced the irrational. Salvador Dali's melting clocks and Marcel Duchamp's readymades are iconic representatives.
Abstract Expressionism: Think Jackson Pollock's drip paintings or Mark Rothko's color fields. This movement was about raw emotion and expressivity, often characterized by bold gestures and a lack of representational imagery.
Pop Art: This movement brought the mundane and commercial into the art world. Andy Warhol's soup cans and Roy Lichtenstein's comic-inspired works exemplify how Pop artists challenged the boundaries between high art and popular culture.
Minimalism: A stark departure from the emotive qualities of Abstract Expressionism, Minimalism, with artists like Donald Judd and Dan Flavin, reduced art to its essential forms and concepts, often utilizing geometric shapes and industrial materials.
Conceptual Art: Here, the idea behind the work became more important than the physical artwork itself. Sol LeWitt and Joseph Kosuth are notable figures, emphasizing art's intellectual aspect.
Postmodernism: A reaction against modernist principles, postmodernism is characterized by its critique of grand narratives, embracing instead pastiche, irony, and a questioning of objective truths. Artists like Jeff Koons and Cindy Sherman exemplify this era, blending high and low culture and playing with notions of identity.
What sets the book apart is his engaging storytelling style. He demystifies complex artistic movements, presenting them in a relatable and often humorous manner. By weaving in anecdotes, historical context, and personal insights, he makes the world of modern art approachable.
You are invited to look beyond the canvas, to understand the broader cultural and historical contexts, and ultimately, to ask themselves not just "what" they are looking at, but "why."
Here’s a 3-min introduction to Will Gompertz:
And here’s a MOMA video on Marcel Duchamp’s Readymades, which was one of the founding ideas of Modern Art:
This week’s guilty pleasure:
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 got value out of reading, please let others know!
"In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists."
- Philosopher Eric Hoffer
Have a great weekend.