By Eric Peters, CIO of One River Asset Management
Concentration:
“Don’t get distracted by an iPhone 17 with ChatGPT functions,” said the British CIO,his long career spent in Asia. “It’s a distraction in the grand scheme of things,” he continued. “All that matters is that you understand we’re in a massive arms race; our ability to win comes down to compute, power, AI.” We were discussing highest conviction themes, where you’d concentrate your capital if you could make only one bet. It’s a good thought experiment. Because real wealth is not generated by diversification, it is built through concentration.
“The buckets are defense, AI, the infrastructure to support it, and the commodities required for it all,” explained the same CIO. “They’re each part of a piece, the same theme.” One big trade. “The driver of AI is not improved productivity, it’s defense. And defense gets kind of lost in the debate.” No one really wants to talk about it. “But that’s why this drive to push AI to the extremes is being pushed and will continue,” he said. “So that’s long Nvidia, ARM, TSMC, Taiwanese peripherals, the major armaments companies too.”
“Trying to find the US companies that are investable with good beta to the defense theme has been difficult,” he said. “The best opportunities have come from Europe.” They’re the ones who need to spend most. Our Asian allies too. “Mitsubishi Heavy, NEC, the Koreans. Then you have copper, but you need to invest in the entrepreneurial miners. Big names, like BHP, Vale, Glencore, they’re megaliths, bureaucracies, more focused on avoiding risks than taking them,” he said. “So that’s my thematic bet right now, and for the foreseeable future.”
Zero:
Israel sent 100 aircraft for a 2000km flight to attack Tehran. Zero were shot down. First, the IDF took out Iran’s air defenses. Those Russian S-300 anti-aircraft systems can now be found disassembled in large craters through the region (Russia’s newer S-400 system underperformed expectations in Ukraine and the S-500 is in test phase). With Iran’s air defenses offline, Israeli aircraft had their way with whatever targets they chose in Tehran. They skipped over the mullahs this time. Next time who knows. Such is the nature of warfare for those with superior tech.
Hypersonic:
“This precisely demonstrates that the US military is using the so-called threat of China’s missile development as an excuse to continuously enhance its missile strike capabilities across land, sea, and air, seeking absolute military superiority,” said Zhang Junshe in the Global Times, a Chinese propaganda sort of online publication. The US Navy is reportedly moving to arm our ships with Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) interceptors to counter the growing threat from Chinese hypersonic weaponry.
Hyperconnected:
America’s SpaceX launched its 201st mission to expand the Starlink network, with a goal of bringing high speed, low latency internet access to the globe. The Falcon 9 delivered another 23 satellites, 573 lbs each, into low-earth orbit on Wed, bringing the total to 6,504. SpaceX plans to launch 12 Falcon 9 rockets every month. The pace of Starlink satellite deployment is mind-blowing and can be seen.
Starlink is the largest-ever satellite constellation.
Across its 10,000 lasers, it can transmit 5.6 terabytes per second and more than 42 petabytes in a single day: the equivalent of 28 million hours of 1080p HD video.
[🎞️ Starwalkapp]pic.twitter.com/REcLJ7cUtR
— Massimo (@Rainmaker1973) April 16, 2024
In Ukraine, we glimpsed the power of this system. Imagine it when paired with AI. There is no prize for second place in this race.
Tyler Durden
Mon, 11/04/2024 – 05:00
