Catch of the Week #6
Kweichow Moutai's Impossible Trinity, Zuckerberg's Neural Wristbands & Smart Glasses, Streaming Wars Consolidation, Gen AI Patent Race and Ants' Pets & Amputation
Kweichow Moutai's Impossible Trinity - Moatless Capital
Moatless Capital is here to postulate the Impossible Trinity with Moutai Characteristics- that is, Kweichow Moutai cannot satisfy all three of: 1) Meeting earnings growth target set by Guizhou SASAC2, 2) Sustainable distribution dynamics, 3) Stable/healthy stock price.
What do I mean by these three things?
1. Meeting earnings growth target set by Guizhou SASAC.
…However, the trump card that Guizhou has up its sleeve is that it owns a 54% stake in Kweichow Moutai - that’s right, the most indebted province in China also owns a controlling stake in one of the most valuable companies in China…
The important point here is that the Provincial government knows fully that they’ve been bestowed a proverbial golden goose (unlike some China Pundits), and the Province needs Moutai to pay out its earnings to help the Province pay interest on its debt.
…Therefore Guizhou SASAC would like Moutai to grow its earnings every year. In 2024 the target has been set at ~15%...
2. Stable Distribution Dynamics. As you may have read in my original thread, Moutai’s retail price has been quite stable as a % of Monthly disposable income in China (~40%). In other words, investing in Moutai and storing it has been a sure thing in growing wealth. This has attracted many investors - the question here is how much Moutai purchased in the past years has been consumed vs. hoarded by speculators betting on prices to increase. This historically wasn’t an issue because Moutai has been a great way of storing wealth. Aged liquor is also quite irreplaceable for special occasions so ‘carrying some working capital’ is not a terrible thing.
…The general feedback from distributors is that approximately 50% of Moutai sold are opened and consumed. Assuming this only started after the last time Moutai prices went through a real cycle (In 2013 when anti-corruption campaign kicked off in full gear). It works out to be some 4 years of Moutai sales (or ~8 years of consumption) in inventory sitting out there (either in the hands of families, or in warehouses of financial speculators). As you cannot short Moutai wholesale prices, speculators are only storing Moutai with the hope that wholesale prices continue to go up. As wholesale prices start falling, they are no longer going to buy more Moutai, and instead they are likely to unwind their positions.
…Presumably, Moutai raise prices and cut volumes (like all the other luxury companies) to achieve its targets, but in context of common prosperity, it seems more like political suicide by any management team in charge of Moutai. Additionally, it would attract even more speculators into the fray and not help the company’s problem of ex-factory prices significantly below retail prices. If that happened, at the 21st Party Congress in 2027 we might be talking about 3 Red Lines for Moutai hoarders as opposed to real estate developers…
3. Stable/Healthy Stock Price.
…To have a stable stock price, the wholesale price cannot keep going down. However, to have a stable wholesale price, Moutai cannot keep pushing 15% volume growth (to the extent price is not a viable lever). To the extent Moutai cannot cut volumes to drive a bigger speculative bubble, the stock price is likely stuck unless the inventory pressures alleviate.
Paramount is hunting for a streaming partner, could kick off a wave of deals – Alex Sherman
Since late 2019, traditional media companies including Paramount Global, Disney, NBCUniversal and Warner Bros. Discovery have all launched streaming services that have hemorrhaged billions of dollars in losses.
There’s long been consensus in the industry that there are too many streaming services relative to the number of total paying customers. Many executives have speculated that just four or five global services can likely survive and flourish. The others would need to be consolidated or folded into existing platforms.
…Media companies are now focused on better monetizing streaming content through bundles and partnerships. Disney and Warner Bros. Discovery have recently become more willing to license some of their content to rival streaming services, such as Netflix, to better monetize shows that aren’t adding a lot of new subscribers to their streaming services.
…Another hot topic of current discussions revolve around windowing movies and TV series through different streaming services at different price points.
…For example, Paramount’s Showtime library could be combined with another company’s prestige dramas to create a stand-alone ad-free service.
A different ad-supported service could then contain live sports and windowed prestige originals, which could appear on the second service after a certain amount of time. The services could be bundled together, such as how Disney bundles Disney+, Hulu and ESPN+.
China leads the patents race for generative AI, with Tencent and Baidu topping the list – Sheila Chiang
Geographically, China leads with 38,210 inventions, far surpassing the U.S. (6,276), Republic of Korea (4,155), Japan (3,409) and India (1,350).
…“The sharp rise in patenting activity reflects the recent technological advances and the potential within GenAI,” the report said.
… In a bid to cement its presence in the global tech race, China launched a three-year “action plan” in May to strengthen standards in AI chips, generative AI and build up national computing power, aimed at driving technological and economic development.
Japan breaks Internet speed record by hitting 402 Tbps, so fast you could download Elden Ring in a millisecond – Alex Wawro
They also developed new technologies to do it, including "the world's first O to U-band transmission system capable of DWDM transmission in a commercially available standard optical fiber achieved with custom designed amplifier technology," according to a press release.
Carpenter ants amputate the legs of their nestmates to save their lives, study says – Ashley Strickland
These amputations are considered altruistic behavior because the ants have to expend time and energy to help others, Keller said.
“The fact that the ants are able to diagnose a wound, see if it’s infected or sterile, and treat it accordingly over long periods of time by other individuals — the only medical system that can rival that would be the human one,” Frank said.
[PODCAST/VIDEO] Mark Zuckerberg on Creators, AI Studio, Neural Wristbands, Holographic Smart Glasses, Picasso & More - Kallaway
AI should enable more creators
If you look at the kind of broader arc of human history, more people are just getting the chance to pursue their own creativity and their own interests and, you know, not having to do as many jobs that they might find mundane or just doing it to work, but basically are getting to do things that they really enjoy and I think a lot of the arc of technology is enabling that both by increasing productivity for the other tasks and just giving people all kinds of new tools.
So this is definitely going to be part of what happens here, is basically we want to build more tools that just enable more people, including people who don't consider themselves creators today, because I think you know everyone is creative in some way. And just look at my kids, you know, they're not creators but I mean they're definitely playing with their Legos creating all kinds of different stuff. It's the old Picasso quote, “All children are artists, the challenge is how to remain one when you grow up” and I think part of what we want to do is build the tools that allow everyone to do that.
Evolution of AI with Meta Smart Glasses: display-less, small heads-up, and holographic
It's a pretty exciting evolution. I think that there are basically going to be three different products. There's going to be kind of the display-less glasses that just do AI and can capture content and you can you know listen to audiobooks and music and take phone calls and all that.
Then I think that there's going to be another step up, where it may not be, it's not going to be full holographic display in the sense that it's not going to be like your full field of view as a hologram, but I think you'll get maybe like a little bit of a heads-up display. And I that that's going to create a bunch of interesting use cases too. You'll be able to get notifications, you'll be able to message with people, you'll be able to message with AI, answer any questions and not just have it speak to you, but also be able to kind of see which is higher bandwidth so that's going to be exciting. A lot of uses for a small screen even if it's just a kind of a small heads-up display.
And then I think there's going to be the most premium version which is kind of the full field of view, which is you know we're having this conversation in the future and like I'm a hologram sitting on your living room couch or you're here with me and it's not just a video call, it's not just like there's a screen and you're there as a hologram. I mean, we'd be able to interact right? So, like you want to play cards, it's like okay, “here, we got a deck of cards”. It's a hologram, we're interacting, we can kind of mess around with the same thing. You know, you want to create art together, create content together, or like you draw on a whiteboard, you can just do all that stuff. I think that's going to be pretty wild, and that that still is where I think it's all going, but I'm just more optimistic now that it's actually going to be a big thing even before we get there.
Neural interface wristband
You know, when people hear neural interface, I think that the first instinct is like, “oh it must be wired into your brain or something”. But I think most people are not going to want something wired into their brain. But your brain sends signals to your body through your nervous system, right? That's like how you fire all your muscles and it turns out that there's a lot of different pathways that aren't used in normal operation of your body. So you can have a wristband that basically gets trained to pick up different signals and pathways of your brain communicating to move your hand in different ways than you would normally do and eventually you get to the point where you can basically communicate with this neural interface without even really moving your hand very much in a visible way to other people. So, it'll start off with kind of some simpler motions but you know, over the coming years you're going to be able to type with it, do all kinds of stuff, you know, control a cursor, I think it's that's going to be wild.
Future use cases combining Meta Smart Glasses and Neural Interface Wristbands
So, I think that coupled with the glasses is going to enable a bunch of pretty amazing use cases. I mean you're going to be able, even with the heads-up display version, or even without a display, you'll basically be able to sit there and no matter where you are, you'll be able to send a message to a person or to an AI. And again, I mean this won't just work with Meta AI, it'll work over time with all of the different AIs, all the Creator AIs, whoever you want to interact with, you can just sit there and like silently and discreetly send a message to someone. And then they either have it, you know, answer it in your ear or kind of pop up if you have the display version like the little text there. I think it's going to be wild.
[VIDEO] A Chinese Maglev Revolution is Coming... - Megaprojects
…In 2016, everything changed as the China Railway Rolling Stock Corporation or CRRC, a state-owned rolling stock company suddenly announced that it begun work on a new maglev train, one that they hoped would reach a top speed of 373 miles per hour, or 600km/h which would make it the single fastest thing on earth period.
[VIDEO] True Facts: Ant Mutualism - Ze Frank
Did you know that ants have pets? They’re called aphids! Aphids eat plants. Ants take care of them by protecting them from predators and even carrying them to new plants. In turn, ants consume "honeydew" excreted by aphids (essentially their poop)Just like milking a cow, ants pat the aphids’ butt to stimulate the excretion of “honeydew”. Some aphids have lost their ability to excrete "honeydew" on their own and rely entirely on the ant farmers to milk them!
Thanks for reading TMC’s Catch of the Week! We’ll share interesting finds with you every Sunday.
Disclaimer: Please note that none of the information provided constitutes financial, investment, or other professional advice. It is only intended for educational purposes.