Two Trillion Dollars
when the market-cap moons before the rocket
Flows follow performance. And if the asset is illiquid enough, performance will then overshoot flows to form a spiral: Performance & Flows.
Speaking of stories and flows, SpaceX IPO’d this week - becoming a $2T market-cap company and making Elon Musk world’s first and only trillionaire.
In a move that could bring the AI trade to a grinding halt, the U.S. government banned the use of Anthropic’s latest models - Fable and Mythos - by foreign nationals, citing national security concerns (nbcnews, anthropic). The entire AI bull thesis was predicated on models getting powerful on an exponential scale and being able to fix the mistakes that today’s models make. If capabilities get neutered and the TAM constrained, then the whole trade needs to be reevaluated.
Markets this Week
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
Wagering the Bread Money: Sports Betting Legalization and Food Sufficiency (NBER)
Interest in sports gambling increases sharply following legalization. Legalized sports gambling reduces household food sufficiency by 2.1% among working-age adults without a college degree, which translates to a 10.5% decline among active bettors.
Is the iPhone Birth Control? (NBER)
The U.S. general fertility rate has fallen by 22% since 2007, a sustained decline not readily explained by economic conditions, contraceptive use, housing or childcare costs, or other commonly cited factors. We assess the potential role of a different shock: the diffusion of the smartphone. Access to the iPhone reduced births by 4.5–8.0% at ages 15–19 and 3.2–6.6% at ages 20–24, with statistically significant but smaller declines among older cohorts.
India
Retail inflation rose to 3.93% in May, driven by higher food and fuel costs (reuters).
Bond-tax moves to catalyse foreign debt inflows, bolster bid for global index inclusion (reuters).
RBI’s FCNR move opens door to equity-like dollar returns for NRIs (livemint).
China is increasingly alarmed by how India has, in recent years, leveraged policy, capital, and geopolitics to cultivate its industries and is gradually demonstrating its ability to absorb entire supply chain shifts from China (orfonline).
R&D underspending in India (indianexpress)
A large captive market insulates producers from the bracing pressure of export competition.
Indian commercial communities have historically been trading rather than manufacturing communities.
India’s corporate sector underwent a degree of financialisation — a shift in priorities from productive investment to financial return — somewhat earlier than its level of industrial development warranted.
Competitive popular democracy in a large developing economy generates its own structural uncertainty about the long-term future. The greater the uncertainty about the conditions under which a long-horizon investment must eventually pay off, the higher the discount rate applied to it.
Indian defence procurement may not quite qualify as enemy action, but when the same pattern keeps repeating, it begins to look less like an isolated error and more like a bad and recurring compulsion (thewire).
The US and India Have Become Regional Rivals (project-syndicate).
Karnataka's fertility rate falls 21% in decade; steeper in villages (deccanherald).
row
How China’s Currency Manipulation Is Warping the World Economy (foreignaffairs).
The infatuation with winning the tech race is like a spell America has unwittingly cast on Chinese leaders. The contest has warped their priorities and prompted them to focus a lot—maybe too much—on cutting-edge technology while doing too little to fix China’s persistent economic problems (economist).
Britain: The past 18 years, enough time for a whole lost generation to be born and brought up, have yielded nothing but stagnation and mass disillusionment (theatlantic).
The world stock market is now as wild as it was during the tech-stock bubble (acadian-asset).
A.I.
Nvidia has told Chinese clients that its new "Vera" central processors for AI data centres could be available as soon as August and that they can begin placing orders (reuters).
KPMG report contained AI hallucinations on benefits of . . . AI (swissinfo).
How companies are gaming the chatbot internet (theatlantic).
We will end up economically and politically sidelined, with values we cannot defend, social welfare systems we can no longer fund, risks we cannot address, and a Union that cannot hold.
What getting AI wrong means for us (europe2031)
Meme of the Week
the new world order
