Proxima Weekly Curation | 12β18/6
A digest of the most interesting content we came across last week π
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[Summary]
This edition covers a wide range of topics, including the Federal Reserve's interest rate decision, the US attracting more global investment, geopolitical developments such as the G7 lending to Ukraine and increased EU tariffs on Chinese EVs, the IEA's controversial oil surplus forecast, advancements in nuclear power and the DRC's dominance in cobalt production, challenges in the US office CRE market and rising homeownership costs, the launch of Apple's AI system and the Pope's warnings about AI dangers, the conviction of Hunter Biden on gun-related charges, and the environmental problem of single-use plastic waste.
[Expanded Summary]
The Federal Reserve kept interest rates steady and projected only one potential cut this year, despite a slight easing in inflation. The US has seen an increase in its share of global investment inflows, now accounting for one-third of all investments, while emerging markets like China are experiencing a decline. Geopolitically, the G7 leaders agreed to lend $50 billion to Ukraine using interest from frozen Russian assets, and President Biden signed a 10-year security agreement with Ukraine. The EU increased tariffs on Chinese EVs to protect European carmakers, while Chinese stocks may present a contrarian investment opportunity despite historical underperformance.
In the energy and commodities sector, the IEA's oil surplus forecast for 2030 has been met with skepticism due to the agency's declining reputation and overlooked factors. Bill Gates' TerraPower is constructing an innovative nuclear power facility in Wyoming, and the DRC continues to dominate global cobalt production, a critical mineral for EVs and electronics. California's strict environmental regulations, including a proposed ban on diesel locomotives, have a significant impact on the US economy. The US real estate market faces challenges, with office CRE delinquencies expected to rise beyond Financial Crisis levels and the average annual cost of homeownership increasing by 26% since 2020.
Other notable developments include Apple's launch of its AI system, Apple Intelligence, while the Pope warned about the dangers of AI at the G7 summit, and OpenAI appointed former NSA head Paul Nakasone to its board. Hunter Biden was convicted on felony charges related to a gun purchase form, and there are calls for a reclamation of the increasingly fatigued and soulless modern web, focusing on stability and quality. The ongoing environmental problem of single-use plastic waste was highlighted, with a ranking of top countries by per capita waste generation. Additionally, an author recounted their experiences with economic instability in Argentina and the subversive nature of Bitcoin, while Simon Sinek discussed the importance of an infinite mindset in leadership and business, emphasizing purpose beyond competition.
[Economics]
https://finimize.com/content/smoke-signals
The Federal Reserve kept interest rates at their current high level and suggested only one rate cut this year, despite a calmer-than-expected inflation report. May's inflation data showed prices staying flat month-over-month and the annual inflation rate falling to 3.3%, but the Fed maintained rates between 5.25% and 5.5%.
https://wolfstreet.com/2024/06/13/fed-liabilities-under-qt-1-71-trillion-from-peak-to-7-22-trillion-update-on-reserves-on-rrps-currency-the-tga-and-foreign-official-rrps/
The Federal Reserve's total liabilities have dropped by $1.71 trillion since the end of Quantitative Easing (QE) in April 2022, to $7.22 trillion, the lowest since December 2020. This decrease is a result of Quantitative Tightening (QT), which has drained liquidity from the financial system, primarily through Overnight Reverse Repurchase Agreements (ON RRPs) and, to a lesser extent, bank reserves.
[Finance]
https://app.finimize.com/content/world-domination
The US is attracting an increasing share of global investment, with one in three dollars now flowing into the country, up from just 18% before the pandemic. This shift has occurred despite the freezing of Russian assets in 2022, which dampened international capital movements. Consequently, emerging markets are receiving less investment, with China's share falling from 7% to 3%.
Haymaker Webinar w/ Jesse Felder (June 2024)
In the June 2024 Haymaker Webinar, financial expert Jesse Felder discussed various concerning signs in the stock market, such as the bull market's narrowness, insider selling, and the "Titanic Syndrome" in the NASDAQ. He also highlighted the increasing importance of gold as a reserve asset for central banks, the potential for rising inflation and commodity prices, and the underperformance of gold and silver miners.
[Geopolitcs]
Friday Haymaker | Evaluating China's Strengths
The article explores the potential investment opportunity in Chinese stocks, which have performed poorly since early 2021 and have lagged significantly behind the S&P 500 and gold over the past three decades. Despite this, the author suggests that the current valuations of Chinese companies, coupled with the country's economic strengths, may present a multi-generational buying opportunity for contrarian investors.
https://www.visualcapitalist.com/the-worlds-oldest-and-youngest-countries-median-age/
The map displays the median ages of countries around the world, highlighting the oldest and youngest nations based on 2024 estimates from the CIA World Factbook. Monaco tops the list of oldest countries with a median age of 57, followed closely by Saint Pierre & Miquelon and Japan at 51 and 50 years, respectively. European countries feature prominently among the oldest nations, reflecting the continent's aging population.
https://finimize.com/content/multiply-and-conquer
The European Union announced increased tariffs on Chinese electric vehicles (EVs) to support the region's carmakers against competition. The new tariffs, effective from July 4th unless negotiations occur, will range from 17% to 38% on top of the existing 10% levy on all Chinese EVs. The EU is concerned about cheap, Chinese government-subsidized cars undercutting European carmakers.
https://www.nytimes.com/live/2024/06/13/world/g7-summit-italy
The G7 leaders have agreed to lend Ukraine $50 billion, using the interest on $300 billion in frozen Russian assets. The decision was made during the first day of their three-day summit in Fasano, Italy. Additionally, President Biden signed a 10-year security agreement with Ukraine, which could be scrapped if Donald Trump wins the upcoming November election.
https://apnews.com/article/israel-palestinians-gaza-hamas-war-cabinet-netanyahu-76b4e165609bb3f0716c8599a83efa99
The Associated Press reports that Israeli Prime Minister Benjamin Netanyahu has dissolved the influential war Cabinet overseeing the Gaza conflict, following the departure of centrist former military chief Benny Gantz from the government. Gantz's exit increases Netanyahu's dependence on his ultra-nationalist allies who oppose a cease-fire and support reoccupying Gaza, potentially complicating the fragile negotiations to end the eight-month war.
[Energy]
Doomberg | Wishcasting
The IEA's recent oil forecast, which predicts a significant oil surplus by 2030 due to decreased demand, has been met with skepticism. The IEA's reputation for impartiality and data quality has declined under the leadership of Fatih Birol, who has been criticized for his overt support of renewable energy and advocacy for halting investment in fossil fuels.
https://www.morningbrew.com/daily/stories/2024/06/12/he-brought-us-microsoft-now-he-brings-us-nuclear-energy
Bill Gates, co-founder of Microsoft and a proponent of clean energy, has begun construction on an innovative nuclear power facility in Wyoming through his company TerraPower. The project aims to introduce a new era of scalable clean energy with a first-of-its-kind reactor design that is smaller and potentially more cost-effective than traditional reactors.
https://doomberg.com/
California's Democratic Party, despite representing only 12% of the US population, wields disproportionate power over the nation's economy through strict environmental regulations. The California Air Resources Board (CARB) is attempting to ban diesel locomotives by 2035, which would severely impact the US rail industry and interstate commerce.
[Commodities]
In this interview, Jeff Currie discusses the current state of various commodity markets, including gold, copper, oil, and uranium. He also shares his views on the ongoing commodity supercycle and its drivers. Currie explains his recent move from Goldman Sachs to Carlyle, where he now serves as the Chief Strategy Officer of Energy Pathways, focusing on the energy transition and the role of policy in driving decarbonization.
https://www.visualcapitalist.com/visualizing-cobalt-production-by-country-in-2023/
The Democratic Republic of Congo (DRC) accounts for 74% of the world's cobalt production in 2023, according to the U.S. Geological Survey. Cobalt is a critical mineral used in various applications, including batteries for cell phones, laptops, and electric vehicles (EVs). The DRC holds the largest reserves of cobalt, estimated at 6,000,000 metric tons out of the global total of 11,000,000 metric tons.
[Real Estate | USA]
Fitch Ratings maintains a "deteriorating" outlook for the U.S. office CRE market through 2024 and 2025, despite recent claims by some fund managers that the sector has bottomed out or is close to it. Fitch cites sustained high interest rates, slower economic growth, tighter lending conditions, and a secular decline in office demand as factors that will continue to weaken office loan performance and lead to rising delinquencies.
https://www.bankrate.com/mortgages/hidden-costs-of-homeownership-study/#costs-by-state
The average annual cost of owning and maintaining a single-family home in the U.S. has risen to $18,118, a 26% increase from four years ago. States like Hawaii, California, Massachusetts, New Jersey, and Connecticut have the highest costs, while Kentucky, Arkansas, Mississippi, Alabama, and Indiana have the lowest. Factors contributing to the increase include a 40% rise in home prices since the pandemic's start, 21% inflation from March 2020 to March 2024, and rising insurance premiums.
[AI]
https://www.morningbrew.com/daily/stories/pope-involved-in-artificial-intelligence-talks
The Pope warned about the dangers of AI at the G7 summit, urging world leaders to establish safeguards and ensure that humans do not become dependent on machine decisions. He called for a ban on lethal autonomous weapons and has been a vocal critic of AI, previously seeking an international treaty on ethical AI development.1
https://finimize.com/content/apple-bites-back
Apple has launched its own AI system, Apple Intelligence, to compete with rivals like Google, Microsoft, and Amazon. The system will utilize on-device processing, Apple data centers, and third-party models like OpenAI's ChatGPT to offer a wide range of capabilities. However, outsourcing information requests may allow competitors to copy Apple's strategies.
https://www.theverge.com/2024/6/13/24178079/openai-board-paul-nakasone-nsa-safety
OpenAI has appointed Paul M. Nakasone, a retired US Army general and former head of the National Security Agency (NSA), to its board of directors. Nakasone, who led the NSA from 2018 until February 2023, will join OpenAI's Safety and Security Committee and contribute to the company's efforts in using AI to enhance cybersecurity.
[Crypto]
https://maraoz.com/2024/06/10/bitcoin/
The author recounts his personal experiences with economic instability in Argentina and his journey into the world of Bitcoin. He highlights the subversive nature of Bitcoin, which allows individuals to transact freely without the interference of governments or corporations, and emphasizes the importance of this financial freedom for people in countries with unstable economies.
[Management]
Simon Sinek, an optimist and author, discusses the concept of infinite mindset and how it applies to leadership, business, and life. He emphasizes the importance of having a purpose beyond mere competition or finite goals, arguing that true success comes from playing the "infinite game" - focusing on a just cause, building trusting teams, and being willing to existentially flex to stay in the game. Sinek also shares his thoughts on ethical fading in business, the role of worthy rivals, and finding one's "why." Throughout the conversation, he stresses the value of an infinite mindset in fostering innovation, ethical behavior, and long-term sustainability both for individuals and organizations.
The Tyranny of the Marginal User
The author laments the deterioration of popular consumer software, such as OKCupid and Google Search, despite billions of dollars in R&D and rapid progress in technology. He attributes this decline to the "Tyranny of the Marginal User," a force he observed during his six years at Google, which relentlessly kills features users love and erodes creativity and agency from products.
https://www.profgalloway.com/second-mouse-ai/
In his thought-provoking piece, Scott Galloway argues that Apple's approach to AI, dubbed "Apple Intelligence," is a strategic move that leverages the company's strengths in consumer-friendly design, ecosystem integration, and brand equity. By being a "second mouse" and letting others pioneer disruptive innovations, Apple positions itself to refine and monetize these technologies more effectively than the original innovators.
The author argues against the notion that success is achieved through rigid daily routines and "hustle culture." Instead, they propose that careers are defined by the highest moments of their biggest upside swings, which they call "10x work." The author suggests that to maximize opportunities for 10x work, one should reject core loops, checklists, and endless emails, and instead embrace serendipity.
[Miscellaneous]
https://www.visualcapitalist.com/charted-how-many-data-centers-do-major-big-tech-companies-have/
According to third-party estimates, the number of data centers owned by major Big Tech companies varies widely, with Microsoft leading at over 300, followed by AWS at 215, Google at 25, Meta at 24, and Apple at around 10. However, the number of data centers does not necessarily equate to greater capacity, as the size of these facilities can vary.
https://sherwood.news/tech/social-media-should-get-warning-labels-for-teens-per-surgeon-general/
The image shows that US teens spend an average of 4.8 hours per day on social media, with girls spending 5.3 hours and boys 4.4 hours. TikTok is the most popular platform, followed by YouTube, Instagram, Twitter, and Facebook. In light of this data and the youth mental health crisis, US Surgeon General Dr. Vivek Murthy has proposed implementing a surgeon general's warning label on social media platforms to warn parents and adolescent users of the potential damage these platforms can cause to young people's mental health.
https://apnews.com/article/hunter-biden-gun-trial-federal-charges-delaware-5dd8a9380235c6360a1ddb691ef24a06
Hunter Biden, President Joe Biden's son, has been convicted on all three felony charges related to lying on a mandatory gun-purchase form in 2018 about his drug use and illegally possessing the firearm for 11 days. The verdict comes weeks after Donald Trump's conviction on felony charges stemming from hush money payments.
https://maraoz.com/2024/06/05/in-search-of-the-lost-web/
The author argues that the web today has become fatiguing and soulless, with content websites becoming unusable due to ads, pop-ups, and the consolidation of online experiences into a few huge websites. The article explores ways to reclaim the web and build digital tools that can last for centuries, focusing on stability and quality rather than short-term growth.
https://www.reuters.com/legal/kansas-accuses-pfizer-misleading-public-about-covid-vaccine-lawsuit-2024-06-17/
The state of Kansas has filed a lawsuit against pharmaceutical company Pfizer, alleging that the company misled the public about its COVID-19 vaccine by concealing risks and making false claims about its effectiveness. The lawsuit, filed in the District Court of Thomas County, claims that Pfizer's alleged false statements violated the Kansas Consumer Protection Act, and the state is seeking unspecified damages.
https://www.visualcapitalist.com/ranked-top-20-countries-by-plastic-waste-per-capita/
The article highlights the issue of single-use plastic waste, which is one of the biggest environmental problems faced today. Millions of tons of plastic end up in oceans and landfills each year, harming wildlife and ecosystems. The article presents a ranking of the top 20 countries that generated the most single-use plastic waste per capita in 2019, measured in kilograms per person.