Capital Flows and Asset Markets

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Before I talk about market action being straight from the “pro-labour” handbook, a bit of housekeeping. First, I have revamped the Brumby Capital website - go take a look. Secondly, I am now on Slice, where I do quick posts on markets every day. This is aimed more at the “trading community” - and I am offering a 6 month 50% discount - use code Rusty50. As an example, I suggested shorting ZROZ has an alternative to TLT a few days ago. Good trade! I am wearing my trading hat as I type!

At the core of what I am doing with Brumby Capital (and what I used to do back in Horseman and RCIM days) is look at where the market is mispricing risk, and build a strategy that benefits from the recognition of that risk. The strategy at its core is saying that markets are radically mispricing inflation risks, and that we are moving to era with a dearth of capital, and that the cost of capital will rise. The implication is that we have days like today.

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However you cut it, the S&P 500 is an expensive market these days. The entire market trades at 3.4. times sales.

And on a Net Worth to GDP, we are also pushing back at peak levels.

A lot of this rerating has been driven by the tech sector. Nvidia which traded at 1 times EV/Sales as recently as 2014, now remain above 20 times EV/sales. When I started at the peak of the dot com market, 7 or 10 times EV/Sales was considered mad - but you have wanted to buy Nvidia on such a multiple.

Buying very expensive assets has normally been a problem for investors - but as we have seen in markets in recent years, expensive assets have been in fact reassuringly expensive. The problem I had was typically this expensiveness was only seen in the AI space, which is tricky to analyse, but recently markets have offered very expensive industries which we can use as a roadmap to understanding what is priced into AI stocks.

When I was younger, I used to do a lot more “trading”. Trading for me is when you have no particular long term view, but you have a conviction that its going to have a big move in the short term. 90 to 95% of what you read on Substack or Twitter would fall into the trading perspective in my view. If you are using technical analysis, you are a trader. If you are thematic investor, you are trader. Trading tends to work best in a bull market, which is what we are most definitely in at the moment.

Like most managers, eventually you move away from trading. Brumby Capital and this substack are a “macro product”, which is in its simplest form says that politics is leading to dearth of capital, and the cost of capital is going to rise. Brumby benefits from this rising cost of capital. What I like about Substack, is that it allows me to produce notes explaining this in detail. The problem is that Substack USED to do a good job in distributing this message, but I think Substack have made a strategic move to be closer to Twitter, with a greater emphasis on the notes function and using the App. Personally, I don’t think the world needs another Twitter - but the move has seen Substack valuation rise again, and in a capitalist world, that’s all that counts.

I have been approached by a website called Slice. Their interface is much more finance orientated, allowing me to upload trades. It also has features for direct one to one mentoring. One big upside for me, is that they restrict who can publish on their website, so its a different model to Twitter and Substack. It also means I have direct access to the founders, so can ask for the app to be tweaked as needed. One other benefit from my perspective is that it gives me leverage with Substack if they ever a foolish enough to try and raise the take rate. These are the benefits to me. But what can Slice do for you?

If you are happy with my macro thoughts, and how I then turn that into an investible product that is Brumby Capital, then Slice is not for you. However, if you want even MORE Russell and my thoughts, then Slice could be for you. I have been using it for a bit in testing mode, and what I like about it is that I can use it to just upload what is more a “steam of consciousness” about what I am seeing while I work - and yes, some “trading ideas”.

I am very happy with the Substack community that I have built, and so there should be no change to what I publish or what I do here. But if you are interested in having a look at Slice, then have a look here. Slice is more expensive at USD99 a month, but for Substack readers I am offering a 50% discount - use the code RUSTY50 when signing up. This discount will be for the first 100 subs, or first month, whichever comes first.

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As mentioned in a previous post, one analyst I always make time to read, and generally want to be positioned the same way as is Chris Woods. A subscriber helpfully pointed out that he does indeed publish on Substack - and he has just written a piece entitled, “The US is Now One Big Bet on AI”. Most of the charts in his note should be familiar to people of a bearish disposition, but I had missed the surge in margin debt that has happened recently.

I know a lot of people that are bearish on AI, but for me I struggle to get that bearish. Somewhat unusually for me, I have invested in to two tech start up in recent years, and both are now moving down the AI agent route. I typically do not like start ups, but I tend to invest in people, and both these start ups are run by people I trust. The first one I am invested in called Stardrift, and it is run by niece out of San Francisco (the one that recently got married). My niece, Leila Clark, is brilliant - but there are a lot of brilliant people out there - but she is also trustworthy - which is a far rarer quality. Stardrift is an travel app that plans trips for you. I have played around with it, and it is very good. It remember previous preferences and can plan an entire trip around a budget. Below is a screenshot.

I have a friend and neighbour, Tony Lynch, who has worked in the automotive industry, and he came to me with an idea for a car finance company that pre-approves finance before people look at cars. Typically financing is done at the end, and then the deal often fails, so I liked the idea of this. There was already a company doing this, but his idea was to use AI to reduce the call centre costs. Tony is passionate and driven, and a natural salesman which made me think this had a chance at being something very big, and he was also able to set up the investment using the UK, SEIS structure which is VERY generous to start up investors. If you are not familiar, half your investment can be used against tax payable immediately, and all capital gains are tax free (for UK investors). Once they started the business, they found that the AI call centre they built was very scalable, and extremely versatile. Tony called it “low cost outbound AI”

I am invested in these AI plays, mainly from relationship perspective, not from any strong view on AI. But what I do get from both Leila and Tony is that customer acceptance of AI is very high. People are very willing to try these products, and when they do, they are finding them useful. In recent month I have seen a lot of publicity about studies finding companies struggling to work out how to use AI. Below is from Chris Woods.

For me, I look at this, and think this is not what I am hearing from Leila and Tony who are working at the coalface. The other thing I have noticed is how much AI has improved in video making. Every now and then I make AI videos about finance for Tiktok. This is just for my own amusement - but the improvement in this area is phenomenal. The last video I made was in the change in tech investing over the decades.

The improvement from a video I made 6 months earlier was phenomenal. A video about an apparently true story of a fund manager in Korea in the early 1990s.

For me, I don’t think AI is a bubble, but I can see it becoming dangerous for markets in a different way. The AI boom has cause memory prices to skyrocket

According to the Economist, this is going to cause the price of PCs to rise by 15-20% and smartphones to see a similar increase. For me, nothing says inflation like old technology rising in value (this is a depreciating asset - it should never rise). If we look at used car CPI in the US, when this was rising, we had an inflation problem, that is the 1970s and 2022.

Similarly, PC prices also broke trend and rose in the inflation period of 2021 and 2022.

I think Chris Woods is right, AI is the economy now. And the problem with AI is not that its a bubble, but that loose fiscal and monetary policy is stoking demand when we are running against hard physical constraints. I think AI is likely to drive the next leg higher in US treasury yields.

If the Fed wants lower long end bond yields, it will have to break the AI story by causing a recession. I think more likely is that higher bond yields need to create a crisis first.

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I love currencies - they (used to) have a purity that was unsullied by the capriciousness of CEOs and/or Presidents. They used to act in predictable ways, and given the two sided nature of currencies, you did not need to take a view on whether something would be “good” or “bad”, it just needed to be “better” or “worse” than the other side of the currency pair. A good example was the Korean Won/Japanese Yen currency pair. Both countries are major exporters of tech to China and the US, but Korea tended to have more inflation than Japan, so every now and then you should expect a reset in the Korean won lower versus the Yen. 1998 and 2008 were big resets, and 2015 was a minor one. But since then, nothing really seems to move this currency pair.

Even more surprising has been Yen weakness despite rising JGB yields. The differential between US 2 year and Japanese 2 year bonds has fallen substantially over the last 12 months, and Yen remains weak.

You could normally rely on the Australian dollar to move with commodities. It remains a large gold mining nation to this day - and yet the Australian dollar and gold price no long move together in any meaningful way.

Even historically reliable trades like long Canadian Dollar short Mexican Peso has broken down. Both Canada and Mexico do the majority of their trade with the US and have a commodity tilt to the economies, but better management saw the Canadian Dollar preserve value. However, this cross rate has now gone nowhere for 10 years.

Of all the currency relationships, only one continues to hold, and that is the Swiss Franc tends to appreciate when uncertainty rises.

Switzerland is a tell on what has changed. In the globalization period of free capital movement, yields between industrialised nations tended to follow each other. But in the new world of industrial policy, yields and currencies are a political choice. The US has chosen fiscally driven growth, and now has higher interest rates and a weaker currency than Switzerland, who remains relatively more committed to preserving the value of its currency. The market recognises that Swiss policies are more likely to preserve the value of its currency, which explains why its bond yields are diverging from the US, just as it did in the 1970s and 1980s.

This would seem to imply that currencies move according to the expectations of government policy, rather than moving due to free market principles. So Yen weakens now, because policy expectations are that the government will continue fiscal expansion. Likewise with Korea, and given the US is threatening both with tariffs and abandoning the military alliance, this seems like a reasonable bet. But what about Canadian dollar and Mexican peso cross? Well Mexico almost always ran its government with a strong industrial policy component, and dubious fiscal constraints. The flatlining of CAD/MXN seems to imply that the market thinks Canada will follow Mexico with these policies. As this was already priced into Mexico, its has led to the relative outperformance of the Peso versus the Canadian dollar. All of this basically says that no currency seems safe anymore, as every one is forced to adopt fiscal expansion and industry policy. It also explains why precious metals are surging.

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I try not to listen too much to President Trump because he clearly changes his message depending on who he is talking to. Plainly his objective is always to win over who ever he is talking to rather than present a coherent message to everyone. I think a better way of working out his game plan is too look at what he does, and then try and piece together some logic from that to help guide future forecasts.

President Trump came to power promising to keep the US out of foreign entanglements - a policy very popular with his base, and was seen a driver of pushing Ukraine to do deal with Russia. But then this year, we have seen the US capture Venezuelan President Maduro, and claim the US will run Venezuela for the foreseeable future. Intellectually, this seems very inconsistent. But what we see in Venezuela is that Trump is not really concerned with restoring democracy, but in getting access to Venezuela oil. But why? The US in a energy exporter now, why should it worry about Venezuelan oil? And why is Trump doing this in his second term and not his first term?

My best guess is that the Trump plan is about stopping or slowing China, the only nation with the economic, military and technological muscle to compete with the US. I am sure Team Trump assumed export controls and tariffs would reverse Chinese exports. They have been proven wrong. Chinese exports have remained strong.

This is despite Chinese exports to the US falling but nearly a third. I suspect Team Trump assumed tariffs would give them leverage over the Chinese, but this has not proven to be the case.

On the contrary, China has proven it has leverage over the US with its rare earth exports. China has dominant market share in this product and has proven effective in controlling supply.

Trump seems to have leverage over Europe, Japan, Latin America and the rest of Asia, either through trade or defence policies, but China remains outside of his control. If anything the rare earth trade seems to give China the leverage it needs. So what can President Trump do? Well China is the largest crude oil importer.

Sanctions on oil exporters like Venezuela, Iran, and Russia have actually benefitted China as they have been able to negotiate discounts on pricing in buying oil from these sanctioned nations. So if sanctions don’t benefit the US, what can be done? Gaining (political) control over the oil output could give the US the leverage it needs with China (just as OPEC had leverage over the US in the 1970s). This would make the political logic of trying to deal with Russia, while arresting Maduro make sense. All about securing control over China’s access to oil. If the current protests in Iran can lead to regime change, and US political control of Iranian oil, then Trump will have succeeded in gaining leverage over China. Looking at 2024 data, if Venezuelan, Russian and Iran exports were subject to US influence, it it hard to see where China could make up the short fall.

If the US can offer a deal on Ukraine that gets Russia to limit oil supply to China, then the US will have leverage to offset China’s rare earth control. It also explains the idea of annexing Canada. Its a Big Bold Play. Lets see if it works.

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I met my wife in Japan over 30 years ago. We were both exchange students to Kansai University in Osaka in the 1990s. We were only ever friends in Japan, but when I moved to London in 2002, we met up again, and started dating in 2003 and have been together ever since. This year will be 20 years since we married. We had always talked about taking our two boys to Japan to see where we met, and with our oldest being 15, and our youngest at 12, this Christmas and New Years seemed like a good time to go. As the picture above shows, its hard not to like a country that likes the irony of using Tokyo building as a backdrop to a Godzilla movie where Tokyo buildings are about to get destroyed.

As both my wife and I had lived in Japan, we had a slightly unusual itinerary. We flew into Tokyo as that is the only airport you can fly directly to from the UK, and spent the night there. The next day on Christmas eve we got a Shinkansen to Kobe. My 12 year old had read that Japanese people eat KFC for Christmas, so I prebooked some KFC. One thing I found interesting was that I could only pay for it with Apple Pay. In fact, everything is easier in Japan with an iPhone - including paying for train tickets - which probably explains its 50% market share in Japan, higher than anywhere else. KFC for Christmas in Japan is pretty popular. I booked a month in advance, and could not get my first choice venue.

We spent a two more days in Kobe catching up with my old host family and my brother and his family who own a flat in Kobe. Kobe has a few tourist destinations, but generally speaking this was a tourist free zone. I think this made it even more affordable than other cities in Japan. After Kobe we spent a day in Awaji Island, going to Nijigen no Mori.

This is well off the beaten track, but there were a surprising number of foreign tourists here - mainly for the Naruto theme park. Naruto is a manga/anime series I am not familiar with, but my 12 year old loves. My wife and I were more excited by the Godzilla themed rides. After Awaji, we returned to a more usual Japan itinerary of staying in Osaka, Kyoto and Tokyo although we did take a day to go see the Toyota Commemorative Museum of Industry and Technology in Nagoya. While you think this would be about the development of the Japanese car industry, its most interesting part is the development of the loom industry. Toyota was a loom and textile company well before it was an automotive company. To see the development of looms through this room is to see the development of the industrial age. Highly recommended.

One of the more arresting looms was one that was developed in 1955 in Yugoslavia. It was the first loom to use a water jet - a huge technological breakthrough. I have become used to the idea that the Soviet Union and its client states were always followers in technology, but these seems to imply that in the 1960s, they were innovators. My brother’s view was that in 1950s you still had a properly educated workforce, and it is only once they started to leave that the rot set in.

Overall, it was a fun an interesting trip. The boys loved it, as we allowed them to run around in downtown Osaka (Namba) by themselves for a couple of days (the grid system makes it almost impossible to get lost). And my wife and I were able to do some side missions. One side mission was to visit our old university and dorm. The amount of construction that has happened in that area was extraordinary, and we barely recognised the area. There was also plenty of infill development, where a few parks turned into apartments. This seems at odds with the declining population of Japan - but the Japanese love building things, and are very good at it. The commitment to building has probably helped keep Japanese property prices reasonable.

I first went to Japan in 1991, so I have a 35 year time frame to compare changes. The first and most obvious one is that there are far more foreigners in Japan than ever before. First of all tourist arrivals are up nearly 10 fold from 2011.

This has been coupled with a near doubling in the number of foreign residents in Japan since 2010.

Back in 1990s, outside of the tourist areas of Tokyo and Kyoto, you did not see that many foreigners. These days they are everywhere. This has caused three big changes in Japan. First, this has also meant that the English ability of the average Japanese person is now much better than it was. This also makes Japan much more accessible to non-Japanese speakers. Secondly, the boom in tourism has meant you now have the rise of tourist traps. Whereas in the 1990s, it was hard to have a bad meal, now it is very possible. Red flags are a preponderance of foreigners eating somewhere, and a bigger red flag is having a foreign chef. If its popular with social media influencers, the chances of it being average and bad value for money skyrocket. And thirdly, where as Japanese treated foreigners with some deference in the 1990s, this is largely eroded. In fact, the rise of tourism has probably turned Japanese suspicions of their own superiority into a firm belief.

Getting to Japan was expensive, and hotels were also not that cheap, but eating in Japan is cheap. I think this has caused one of the more striking features of Japanese tourism boom, which is the rise of Asian middle class tourists. Getting to Japan from other parts of Asia is much cheaper than from Europe. Certainly I was struck by the number of Indian and Filipino tourists we saw. The idea of Japan as a holiday destination for middle class Asians would have been preposterous in the 1990s, but it is a reality today. But the fact of the matter, is that Japan is cheap place at the moment. GBP/JPY is the exchange rate that I think in which is currently at 210 - which is a level we saw back in the 1990s and a few times since.

In the 1990s in Japan, beer cost around 500 to 700 Yen (sometimes more). Prices today are a bit higher, but cheap beer can be found. In the UK however, beer inflation (beerflation) has been steep - with beer prices up 300% from the early 1990s.

Japanese beerflation has been flat since the 1990s.

What that means in practical terms is that if you are not too fussy about where you eat, you can get a bowl of ramen, with gyoza and a beer for 1,900 Yen, or £9.50. In the UK, you would probably need to pay £25 at least for a beer, gyoza, ramen combo. If beer conversion rates were guides to exchange rates then GBPJPY would need to move from 210 to something closer to 80.

Japan is cheap for foreigners that is for sure. But one thing I heard regularly on the trip, from taxi drivers, to chefs and from friends is that Japanese wages are too low. Much like the rest of the world, Japan is suffering from a cost of living crisis. Generally speaking, I struggle to see how the price of goods can fall in Japan with the tourist boom providing support to prices. This means that wages will have to rise at some point, which is why I think JGB yield continue to rise. Rising wages will drive inflation higher.

So what is my advice on Japan? For tourists, go now, while prices are cheap, particularly if you can find cheap flights. Avoid eating anywhere with too many foreigners as customers, and anywhere with foreign chefs. For investors, I think the Japan boom will continue. Policy seems set to get prices to rise, and wages and land prices have room to move. Generally speaking I dislike investing in countries that seem expensive - which in this case would be the UK and the US.

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December was one of those weird months, where my individual stock positions suggested wild markets, but the MSCI World only rose 0.73%. Long book did okay, and the short book okay, meaning we made money for the month, despite still running a net flat book.

For decades, the road map to economic success was pretty clear. Reduce tariffs, allow the free movement of capital, enforce the rule of law, and have governments run balanced budgets to get inflation and interest rates down. The pinnacle of this type of economic management was the EU and its enlargement process - where it would allow European nations to join the EU if they met all of these requirements. At least in the early stages, these economic policies were a stunning success. First with nations like Spain and then central European nations like Czech Republic and Poland seeing there GDP per capita rising rapidly in the 2000s.

Argentina did try and follow Washington consensus in the 1990s, which saw its GDP per capita rise, but from 2000 onwards, it has been run very differently. Over that period, Poland has seen its GDP per capita overtake Argentina.

The Washington consensus policies worked so well, it became almost axiomatic that they were needed to prosper. Nations like Argentina, that went down a more populist route from 2000 onwards saw the economies weaken, and most clearly saw their currencies weaken dramatically. The Argentine peso is below - shown in log scale.

For macro economist observers like myself, the Trump administration economic policies seem closer to Argentinian in the 2000s than Washington consensus. First of all is the love of tariffs. Tariffs naturally lend to inefficient and allocation of assets and inflation.

An inability to balance budgets is also very Argentinian. We also see much larger fiscal deficits, but this is not confined to the US. A good Doubleline chart shows the change.

The question then is why does the US not suffer from leaving the Washington consensus? Can the US just do whatever it wants? I think to answer this question, we have to ask why did the Washington Consensus policies worked in the first place? One clear outcome from adopting these policies is lower interest rates. Before Poland joined the EU, its government bonds use to yield 12%, and then fell to 6%.

So Washington Consensus policies drove lower interest rates, which then drove credit expansion. Looking at BIS data, we can see that the credit expansion nature of growth seemingly ended with the GFC, but has rebounded somewhat since 2016.

What I am arguing is that we should see the cost of credit in the US rise, as it moves away from the Washington consensus. There are some signs of this. Switzerland runs a balanced budget, and has generally refrained from tariffs. We can see just like in the 1970s, the cost of borrowing between US and Switzerland is beginning to widen.

We have also seen gold outperform treasuries by the most significant amount since the 1970s.

Despite these signs of weakness, the general theme remains one of American dominance. What could change that? Well US dollar weakness would definitely begin to cause some angst in my view. And politically speaking (and we live in a political world), US dollar weakness against the Chinese Yuan would be the most likely event to cause political change.

With the current surge in Chinese trade balance, a Chinese Yuan appreciation cannot be ruled out.

If this is the case, then President Trump will become the latest politician to achieve the exact opposite of his stated aims. Time will tell.

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One of the recurring themes from armchair macro strategists (armchair in this case means they just comment - they don’t actually do anything) is that the current rise of populist right has everything to do with income inequality. Its a powerful argument, and one I am sympathetic to. When we look back at the rise of socialism and fascism in the 1930s, we see these too were born in era of high income inequality.

But much of income inequality came from unequal access to technology. Both within societies and between societies. Socialism and communism were both committed to breaking down the barriers of access to technology. The old feudal, agricultural societies of Russia and China were remade by the technological change that socialism and communism did so much to foster. It must be remembered that colonialism often sought to keep colonies from industrialising - that is to keep technology at home. Communism (and todays China) put great store in industrial production and technological transfer - and were (are) profoundly anti-colonial and anti-imperialism.

In a way I am arguing that the political process responds to technological/industrial advances. The industrial revolution and the French revolution did not occur at the roughly the same time randomly. Likewise the Meiji Restoration in Japan also was driven by technological change. At the heart of the Meiji Restoration was the realisation that a samurai led feudal society needed to be replaced by an industrialist led society, but industrialists had traditionally been well below the rank of samurai. A new social order was needed for Japan to progress technologically.

Using this logic, can we look at the rise of “right wing populism” as a response to technological changes? It is impossible not to notice that “populists” either left or right wing tend to do better. And that populists tend to better on social media. Any political party that still worries about newspaper editors seems destined for the scrap heap. So what technological change has cause such fundamental change in politics? For me, it is the “deinstitutionalisation” of society. Previously mass organisation required the organising power of government, and the centralising nature of government meant that controlling government allowed you to control the message. Now almost anyone can connect with massive number of people in a direct and personal way. Clearly this is most visible in politics, where President Trump has converted his mass following on social media to political power. When Meta has 4bn monthly users, more than any single government, we can see that power has been transformed.

For me, the political change we are witnessing is very similar to the industrial change. When I started my financial career, if you wanted to be a fund manager, you needed to join a large firm. This firm would lend you both institutional credibility, and just as importantly, a sales distribution network. Fund management institutions would also help you gain access to corporates, and crucially to investment bank research. That is you needed an institution to handle a number of relationships for you to be a fund manager.

By mid 2000s, this was already breaking down, with the rise of hedge funds. Many hedge funds set up with “two guys and Bloomberg terminal”, and investment banks became increasing comfortable dealing with start up funds. Research essentially became free, and Bloomberg, and its research function Bloomberg Industries replaced the need for almost all junior analysts (a process that ChatGPT is accelerating).

On the sales side, social media and video conferencing technology has made it much easier for managers to connect directly with investors, reducing the need for a dedicated sales force. Even with Brumby Capital, I ask myself constantly is this still the right way to do things? Do I still need this institution to do this for me?

This deinstitutionalisation takes on many forms. Do I really need to listen to health authorities? I can use the internet or AI to diagnose myself. Do I really need to use a government backed financial system? I can use crypto to trade with whoever I want whenever I want. Do I need the brand loyalty of a political party? I will just vote with the candidate that I connect best with.

Credibility is not given through your attachment to an institution, but more from your presence on social media and the authenticity that people feel. Technology has made many of the old institutions unnecessary, which is creating a political void into which “populists” are filling.

The extreme end game of deinstitutionalisation would be the end of government as we know it. All functions of government would be subsumed by the private sector, and run on capitalist lines. I think this unlikely, as ultimately at the ballot box, the majority would eventually turn on 1%, as they did in the 1930s and 40s. Also Russia’s war with Ukraine has made clear, is that the institution of an army is still necessary. Although Russia has made extensive use of mercenaries, the potential Wagner led coup highlights the limit of capitalism and defence.

What I do see happening is that government and tech are indeed merging. In China, the government has enforced strict control on the tech sector, but has protected it from outside competition. In the US, the tech sector in some ways have taken over the government, with a social media driven President largely moving policy to favour tech. The short lived DOGE was a further attempt to deinstitutionalise government.

Away from politics, when I look at sport, which I love, I cannot help notice how technology has changed sport over the years. When I was younger in Australia, rugby union and rugby league were on an equal footing. While league was played by more people, rugby union had more cache, and in particular had the pulling power of internationals against the All Blacks. However in recent years, the greater marketability of rugby league has meant that salaries have increased greatly for league players, and now Australian rugby union seems to have entered a doom loop. With the best prospects been lured to league, Australian rugby union can no longer compete with nations that only or mainly play rugby union. Why has league dominated in Australia? My best guess is that rugby league is much more watchable than rugby union, which is a theme that is visible in global sports.

Away from Australia, when I look at the most valuable sports leagues, NFL, MLB, NBA and IPL - they share one thing in common. The ability to advertise.

They all share a very high advertisement to actual action ratio. For my European and American readers, cricket has copious opportunity for advertisements - ever 6 balls, we see a change in bowler which takes at least a minute. Every wicket (change of batter) gives a chance for an ad break and takes at least minute, and the IPL also added in time outs as well to offer more chances for commercial breaks. The NFL is the most valuable league not because it is the most popular, but because it can sell the most commercials.

The NFL probably benefits from the lack of actually playing time in its games. It is noteworthy that very few NFL players have high number of Instagram followers. The problem for NFL players is that wearing a helmet all the time means the average punter in the street (or on Instagram) does not recognise them. This probably adds to the value of the NFL league, as players have less negotiating power. Football, basketball and cricket seems to allow its players greater connection to fans.

Dining experience has also changed with technology. With the rise of social media, it is not hard to notice that restaurants often do their best to make the food or venue LOOK good, even at the expense of taste. Certainly in London you have had the rise of restaurants that LOOK good, but taste average. Nusr-Et, Sexy Fish, Bacchanalia are just a few that come to mind. But as 51 year old, I grew up in an era before social media, so how a place looks is less important to me than how it tastes. But this is not true for the new generation - not because they are fundamentally different, but new technology has made looking good more important.

What does this all mean? Well in many ways “deinstitutionalisation” is extremely democratic. Whatever captures the attention of the most people is going to be the winning choice. It means all institutions, sporting, political, academic, financial, need to ask themselves, do we work in a “deinstitutionalised” world. Restaurants need to cater to instagrammers rather than Michelin guide reviewers. Meme stocks and meme investing have already changed finance. Sports needs to focus on watchability rather than playability (see rugby league v rugby union), and politicians needs to be popular not institutionalised. Its a new world, but not with new people, just new technology. Also it explains the constant lament of older people saying that things were better when they were younger. When in fact, they are lamenting the demise of old technologies and institutions that they themselves were helping to set up. Technology changes, but people never do.

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