Here’s a selection of what I found most interesting recently. I started experimenting with some design changes in recent editions of Tidbits…the design changes don’t come through all that well via WordPress’ default email feature, and I’m not confident I will figure out a better alternative to the default email feature soon. May be better to read directly in the browser while I continue to experiment.
Biden has been declared the winner. While Trump continues to challenge the results at the margin and question the validity of the process, the results are more or less probably set in stone at this point. And approximately half of the US is unhappy one way or another.
While the political situation is starting to fall into place, the economic and pandemic situations remain in flux. Good vaccine news from Pfizer / BioNTech brings us closer to the finish line…at the very same time that cases are careening out of control across the western world. Are we closer or further from where we thought the finish line was?
Only 1.5 months left until 2021.
#1 Pfizer / BioNTech Vaccine Shows 90% Efficacy
Vaccine candidate was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis
The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at 7 days after the second dose. This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a 2-dose schedule. As the study continues, the final vaccine efficacy percentage may vary. The DMC has not reported any serious safety concerns and recommends that the study continue to collect additional safety and efficacy data as planned. The data will be discussed with regulatory authorities worldwide.Source: Pfizer
Given the poor handling of the pandemic situation across western countries, the successful trial of Pfizer / BioNTech’s vaccine candidate is heartening news. This solves two problems with one stone:
1/ Finally, potentially putting a cap on infections and deaths, and
2/ Putting western countries closer to economic normalization.
While many blame “lockdowns” for poor economic performance, the reality is that true “lockdowns” only affected a small portion of businesses, largely those that require the mouth to be uncovered (e.g. food and drink) and congregations of large amounts of people in cramped spaces (e.g. concerts, theaters, etc). The vast majority of economic impact occurred largely because of individual actions irrespective of government mandated lockdowns. The sooner people are comfortable with the pandemic situation, the sooner we can return to normality.
And as Capital Flywheels wrote back in April, this recession is a recession of a different kind. Once people can spend, spending will come back with a vengeance. Maybe not in the same way or at the same places and the same businesses, but when people can go out again, people will live and thrive again long, long into the nights.
Capital Flywheels still anticipates that the vaccine will not be broadly available until spring / summer 2021 and hence “normalization” is likely a 2H21 event, but when it happens, western economies will likely see an economic recovery unlike anything the world has witnessed since the end of World War II.
The trauma of COVID-19 will likely induce two different types of responses. Those that have lived through trauma and will see risks everywhere. These people will become risk-averse and save, even more than before.
Then there are those (and many more of those) people that realize life is short and uncontrollable and the moments to live life at and of their choosing is fleeting. These people will spend, and the economy will respond in kind.
#2 US COVID-19 New Cases Reach 180k in a Single Day
Source: NYT via Google
However, against the vaccine backdrop, US (and many European / Latin American / South Asian countries) COVID-19 cases are spiraling out of control.
Capital Flywheels believes the parabolic nature of these statistics are lost on the average person because many people do not spend a lot of time looking at things that compound. The steepness / shape of the recent acceleration is very concerning. At 180k daily cases, we may only be halfway up the slope of this hill…
And the math is not good. Assuming we average 200k cases per day over the next month (but, again, we might only be halfway up this daily case curve…and could see 250-300k daily cases soon), that will be 6 million more cases. If we average 200k through the end of the year, that will be 9 million more cases, or almost double the cumulative cases we have racked up in the last 8 months.
Yes, mortality rates have improved a lot, but does that make the absolute deaths any more comforting if the total number of cases is now very likely to breach 20 million by the end of the year and hit essentially what experts assumed would have been a worse case 6 months ago?
Which one of these narratives will exert control over the market and in what sequence?
#3 Election Day 2020: René Girard, Part 2
Alex Danco wrote a deeply insightful essay about Trump, Trumpism, and the election. I won’t spoil it for you, but it’s worth reading.
Here’s an excerpt:
The common thread of the Trump appeal is that it is a complete and total counter-reaction to undifferentiation. Trumpism rejects the last couple decades of policy and rhetoric that have advanced, more or less, the agenda that “everybody is equal and the government is going to actively make sure that everyone is treated the same.” Trumpism is a rejection of the ideal that we are and ought to be undifferentiated.Source: Alex Danco
Alex Danco is currently on the Shopify Money team. Even more reason for me to be bullish on Shopify as they clearly have someone on the team that understands human psychology and Mimesis.
#4 Why the Mid-West is Culturally Different
The last 4 years and COVID-19 has undoubtedly been a surprise to coastal elites. Many coastal elites do not understand why and how the core of the US can possibly think so differently.
However, as Capital Flywheels highlighted in A Physical World Under Siege, a lot of how societies and countries operate is directly a function of our geography.
This nifty diagram showing the topography of the US brings this point home. The US West and East coasts are almost entirely physically separated from the interior. In a way, the West coast is almost more connected to Asia, while the East coast is more connected to Europe than either coasts are connected to the interior.
Can this gap be bridged? What can bring the coasts and the interior together?
Capital Flywheels firmly believes that one of the most underrated ideas is that “no one bites the hands that feed them”, and therefore the most direct way to bring people together is to economically tie the coasts and the interior more tightly. Until that happens, we are two nations other than on paper.
I came across this chart from the excellent “Liberty’s Highlights” newsletter / substack, which I highly encourage you to subscribe to.
#5 Progress, stagnation, and flying cars
One of the clearest indications of stagnation is the flatlining of energy usage. Because the growth in this metric was mentioned in the autobiography of Henry Adams (grandson of John Quincy Adams), Hall calls the long-term trend of about 7% annual growth in energy usage per capita the “Henry Adams Curve”. In the late 20th century, we fell off of it:
Some techno-optimists, such as Andy McAfee, celebrate the flatlining and even peaking of resource usage curves, saying that we are getting “more from less”. Hall reminds us that more is more. All else being equal, energy efficiency is great. But there’s no reason to believe that flatlining or declining resource usage is optimal for progress. A large part of progress is harnessing ever-more resources and putting them to productive use. And indeed, we’re going to need lots more energy if we’re ever going to get nanotech manufacturing, regular space travel, and of course flying cars. In fact, a good explanation for technological stagnation is that the only technological revolution of the last 50 years, computing, was the only one that didn’t need more power than could be provided by the technology of the 1970s.Source: Roots of Progress
This piece and the chart hits the nail on the head. Energy and computation are two of the most important drivers of human societies. And energy growth has stagnated for a very, very long time. The essay’s point is spot-on – Since energy growth has stagnated, the only technological revolution in the last 50 years was computing because it didn’t need more power. It’s shocking to me how much society has advanced in the last 50 years without commensurate growth in energy consumption per capita.
My conclusion – Bet on computation, especially in the players that can drive computation growth in an energy efficient manner. Like Nvidia. And see Apple below.
I would love for society to get more rational about nuclear energy. It’s the only way for us to keep ramping energy consumption in a sustainable manner without destroying our air. Yes it produces some nuclear waste, but nuclear waste and nuclear bombs have killed less people than the number of people that die from pollution every 3 months.
#6 Jesse Livermore – Upside Down Markets – Understanding Fiscal and Monetary Policy
One of my favorite podcasts, Invest Like the Best, recently did a show with Jesse Livermore. He has some very interesting things to say about monetary and fiscal policies in the world we live in today.
My guest today is Jesse Livermore. I’ve worked with Jesse as part of our research partners program at O’Shaughnessy Asset Management for years now. Whenever there is a huge, important, and complex issue to be studied, I believe he’s among the best minds in the world to tackle it. He did that recently on the topic of what he calls “upside down markets,” which is the topic of this conversation. We seek to answer the simple question: against a horrible economic backdrop, how can the stock market be near all-time highs? Jesse explains in detail the impact that fiscal policy has had on the market and may have in the future. Please enjoy this master class in upside down markets.Source: Invest Like the Best
#7 Apple M1
The M1 chip, which belongs to a MacBook Air with 8GB RAM, features a single-core score of 1687 and a multi-core score of 7433. According to the benchmark, the M1 has a 3.2GHz base frequency.
In comparison to Macs, the single-core performance is better than any other available Mac, and the multi-core performance beats out all of the 2019 16-inch MacBook Pro models, including the 10th-generation high-end 2.4GHz Intel Core i9 model. That high-end 16-inch MacBook Pro earned a single-core score of 1096 and a multi-core score of 6870.Source: MacRumors
Remember how impressive the A14 (in the new iPhone) is? The M1 takes it even further. Apple was not kidding when they said 6 months ago that the reason they are moving to their own silicon is to be both faster and lower-power than x86.
While Apple tends to underpromise and overdeliver, it was hard to truly believe what they were saying. But indeed, that is what they appear to be delivering.
A chip that consumes less power, yet is comparable or better than Intel and AMD’s chips. And it’s not even close.
However, this advantage is currently clearest for single-core performance. For multi-core performance, it is less clear cut, but it almost seems inevitable that Apple’s chips would outperform x86. Not by a little, but by a lot. Question is when.
Old-timers remember that Apple lost the PC wars because it lost the performance game. What does this mean now that the Mac regains the performance crown in the next 5 years? While Apple drifted between 1984-1995, Microsoft also solidified its gains through Office, which brought along very powerful network effects. However, Office is fully fungible now across the platforms.
#8 Apple Announces the Apple Silicon M1: Ditching x86 – What to Expect, Based on A14
The always insightful work over at Anandtech when it comes to this sort of topic is worth a read. The piece below came out before the M1 Macs were released and tried to triangulate M1 performance based on the known performance of Apple’s A14 chips in the latest iPhones. Also includes direct comparisons with Intel and AMD chips.
The performance numbers of the A14 on this chart is relatively mind-boggling. If I were to release this data with the label of the A14 hidden, one would guess that the data-points came from some other x86 SKU from either AMD or Intel. The fact that the A14 currently competes with the very best top-performance designs that the x86 vendors have on the market today is just an astonishing feat.
Even in SPECfp which is even more dominated by memory heavy workloads, the A14 not only keeps up, but generally beats the Intel CPU design more often than not. AMD also wouldn’t be looking good if not for the recently released Zen3 design.
During the release of the A7, people were pretty dismissive of the fact that Apple had called their microarchitecture a desktop-class design. People were also very dismissive of us calling the A11 and A12 reaching near desktop level performance figures a few years back, and today marks an important moment in time for the industry as Apple’s A14 now clearly is able to showcase performance that’s beyond the best that Intel can offer. It’s been a performance trajectory that’s been steadily executing and progressing for years:
The difference in trajectory between what Apple is accomplishing vs Intel is very bad news for anyone not making their own silicon. Apple at this point is almost guaranteed to dominate whatever computing devices come next if it is portable and does not have a power source connected to a wall and requires a lot of computation. For everyone else, pray that the 5G pipe is wide enough to shuttle all the computation needs back to the datacenter for crunching because catching up to Apple in localized computation is going to be a challenge. Or…you double down on services for Apple’s ecosystem and let Apple’s hardware do the hard work. Microsoft seems to be moving in this direction. Google seems to be still making up its mind.
#9 Shopee Sets New Record With 200 Million Items Sold on Single’s Day
Shopee has set a new record on this year’s 11/11 shopping festival with 200 million items sold, the firm announced on Thursday. It is a significant increase from last year’s big sale where it reached 70 million products in 24 hours.
On Wednesday, first-time sellers saw a tenfold increase in orders compared to an average day. The platform also witnessed meaningful engagement as over 20 million hours of livestreams were watched on Shopee Live, while in-app games were played more than 2.5 billion times in Southeast Asia and Taiwan since it launched 11.11 Big Sale three weeks ago.Source: KR Asia
Shopee was created just 5 years ago, yet, seems to have learned all the best tricks from everyone that has come before them including Alibaba, Tencent, and Amazon. Single’s Day is a direct “borrow” from Alibaba as is live streaming social e-commerce. In-app games leverages their own gaming expertise, but is sort of a “borrow” from Pinduoduo (PDD).
Amazon should learn to borrow, too. Before someone else does it, like…Facebook.
#10 e-Conomy SEA 2020
Google / Bain / Temasek’s annual report on Southeast Asia’s digital economy came out recently. Fun deck to flip through. Covers trends in e-commerce, transportation / food tech, online travel, online media, and financial services.
Lots of nice charts, like this one, lots of new people trying digital services for the first time because of COVID-19:
And many people that tried e-commerce have been permanently converted to online shopping:
Source: Google / Bain / Temasek
#11 WhatsApp Adds Shopping Button to Streamline eCommerce Within Chats
Recently, Instagram officially rolled out Shop and Reels tabs within Instagram. And now, they continue to push forward with e-commerce upgrades in WhatsApp. While WhatsApp is not particularly popular in the US, it dominates in many, many geographies, especially in the emerging markets ex-China.
WhatsApp has taken another small step towards maximizing its eCommerce potential with the addition of a new shopping button in business chats to streamline purchases and transactions.
Source: Social Media Today
Social e-commerce is fundamentally different from e-commerce. If Facebook is successful in shifting consumer preferences toward this and away from utilitarian e-commerce dominated by Amazon, it will be very hard to undo because social e-commerce is a 3-sided market.
E-commerce is generally a two-sided business involving consumers and merchants. The network effects that arise from the interplay of these two sides is hard enough to break. New e-commerce businesses need to convince both consumers and merchants to leave. Convincing just one side is not enough. This is fundamentally what makes internet businesses hard to break. Many of them are multi-sided platforms.
Social e-commerce is three sided. Consumers, merchants, and streamers / influencers / social tastemakers. WhatsApp doesn’t involve the 3rd bucket, but it does integrate with your own messaging network and hence indirectly adds an albeit weak third side that will be hard to break once habits form.
#12 Activate Technology and Media Outlook 2021
Another interesting deck. Covers the broad spectrum but skews a bit on the media side.
Lots of really interesting charts, but I found these particularly interesting on people who engaged with VR during the pandemic. Stereotypically, people seem to assume that VR is squarely a thing for nerds that never go out. But it turns out that those that were most social before the pandemic were the most enthusiastic about VR as well.
Source: Activate Consulting
The section on games is also highly fascinating.
#13 Riot Games’ Worlds 2020
Mind-blowing showcase of augmented reality. Incredible blending of digital and the physical world. This was (likely?) only possible in a closely controlled environment, but one day experiences like this can be experienced anywhere with AR glasses.
#14 China Clampdown on Big Tech Puts More Billionaires on Notice
Beijing on Tuesday unveiled regulations to root out monopolistic practices in the internet industry, seeking to curtail the growing influence of corporations like Alibaba Group Holding Ltd. and Tencent Holdings Ltd.The rules, which sent both stocks tumbling over two frenetic days and sparked a wider selloff in Chinese equities, landed about a week after new restrictions on the finance sector triggered the shock suspension of Ant Group Co.’s $35 billion initial public offering.
Beijing is increasingly seeking to diminish the influence that a handful of its tech corporations wield over vast swathes of the economy. It investigated Tencent’s music arm’s exclusive agreements with publishers last year and, most recently, modified regulations to rein in risk at fast-growing micro-lending entities such as Ant Group. The latter step derailed Ant’s planned IPO last week, before it was to complete what would have been the world’s largest such offering on record.Source: Bloomberg
You have likely heard about Ant Group’s recently pulled IPO. The IPO was on track to be the world’ largest, eclipsing even Saudi Aramco despite Saudi Aramco’s $1.5 trillion market cap.
There are a lot of ways to look at this. Maybe this is in response to a particularly pointed speech by Jack Ma just before the IPO, or maybe China is on the same page as Capital Flywheels…the geopolitical competitions of the future will not be so much as empire vs empire but rather the empires of Earth vs the digital empires in the cloud.