What I read this week

8 stories I read this week and what I took from them.

German far right defeated in regional election (ft.com)
Opinion | Germany Has Finally Woken Up - The New York Times (nytimes.com)
Europeans often talk about Trump’s rise in the US with disbelief, but it’s no different at home. For example, Germany’s AfD has been polling solidly in second place nationally for the past six months.
There are three regional elections in Germany this year and as the polls currently stand, the base case is for the AfD to win all of them.
I have written about the rise of populism in Europe before.
But here is some tentative good news; the immunities are kicking in.
Over a million people have taken to streets across Germany to protest against the far-right like the AfD.
And the public reaction to the rise of the far-right seems to be having an effect on voter behaviour.
In a run-off of a local election in Thuringia the CDU candidate came from behind to narrowly beat the AfD candidate. Not a ‘big election’, but high profile in the current environment.
The start of the protests has coincided with a dip in polls for the AfD.
Bottom line: small but noteworthy changes. But the 2024 election year is still likely to deliver more success for the populists than defeats. From a market perspective that means some uncertainty, but also a bias towards more rather than less fiscal spending.

Does Working from Home Boost Productivity Growth? | San Francisco Fed (frbsf.org)
There is lots of anecdotal evidence of working from home having boosted or harmed productivity. It seems to be job, team, or sector dependant.
But this paper finds that at the overall economy level, there is no evidence that it has made a significant difference to productivity.
Industries that are more adaptable to remote work did not experience a bigger decline or boost in productivity growth since 2020 than less adaptable industries.
“Teleworking most likely has neither substantially held back nor boosted productivity growth.”
Bottom line: Much ado about nothing. Feels to me like AI will be much more important to productivity growth than what kind of hybrid work mix emerges as the new normal.

How China Censors Critics of the Economy - The New York Times (nytimes.com)
Increasing government control over culture, economy and society is not new in China, especially in the last few years of Xi’s tightening grip on the levers of power.
But efforts to clamp down on criticism of the economy appear to be stepping up even more.
You know it’s bad when the government must resort to intimidating economists.
Bottom line: The lack of transparency and the concentration of power and decision-making is getting worse. These are not hallmarks of a healthy and resilient economy and do not make for good policymaking. They make observing the economy and even more so forecasting policies and ultimately asset prices almost impossible. A structural reason for caution on Chinese assets.

2024 Edelman Trust Barometer Global Report
Distrust in institutions is predominately a developed market problem.
The UK is in last place…the least-trusting country. Surprise or in line with expectations?
Different perspective: China may have lost trust in the West, but has gained trust in South East Asia
Climate change still the biggest existential fear, but only slightly ahead of other risks
The political right is most resistant to innovation, but this is only the case in DMs, not in Ems
Tech (ex social media) is the most trusted sector…not a recipe for tougher regulation

Can This A.I.-Powered Search Engine Replace Google? It Has for Me. - The New York Times (nytimes.com)
Perplexity
A great new AI search tool. Definitely worth checking out if you haven’t already.
I still use Google as well, but Perplexity has taken over about half of my search activity.
It’s also quite impressive at investment-related searches on companies.
The NYT article gives a good summary of its strengths and weaknesses.
It does still hallucinate at times, but is pretty good at admitting when it doesn’t have an answer.

Energy Monitor: The most important data on energy supply – updated daily | ZEIT ONLINE
Loads of charts on energy production and consumption…turn on Google translate for the website!
Gas storage is still at 75%, significantly above the historical average for late January and despite several cold spells. But we’re already about halfway through winter.
Gas demand has normalised a bit. While for much of the energy crisis period German gas demand was tracking ~40% below pre-crisis levels, the reduction has been ‘only’ around -10% in the past few months, adjusting for temperatures.
Bottom line: no sign of a re-emerging crisis

Blockchain takes on deepfakes: ushering in an era of digital veracity (incyber.org)
Deepfakes everywhere, from pictures of Taylor Swift to Joe Biden robocalling voters telling them not to vote.
Blockchains could be a useful tool in the fight against deepfakes.
Their immutability means they could be used to certify the authenticity of video, photos and any digital content.
Bottom line: AI hype replaced Web3. Maybe Web3 can now help solve some of AI’s problems.

The Arctic sea ice shell game - by Zeke Hausfather (theclimatebrink.com)
“Arctic Sea Ice Soars to Highest Level for 21 Years” is good news, but not as good as it sounds.
Summer has mattered more than winter. The decline in sea ice over the past few decades has been mostly in the summer, not so much in winter.
But there’s some encouraging news on that front a well. The downward trend of earlier decades has moderated a lot in recent years. The ‘annual minimum arctic sea ice extent’ has moved roughly sideways since 2007.

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What I Read This Week