We don't need money

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We don’t need money

What do you do if your last CEO got thrown in jail by the Americans and you need a bit of top cover? What you do is, you take money you don't really need from people that have influence. Not surprising then that one of the most cash generative businesses in the world (Binance) has accepted $2 billion in investment from MGX. Effectively, a state investment firm from the UAE. As we can see, its Chairman is a rather influential fellow and doesn’t look like the sort of person one would wish to enter a dispute with. 

From the perspective of the UAE, they are now home to the biggest exchange in the world and quite honestly they are home to our industry. The EU had the chance, they blew it quite quickly. China and Korea also had a chance, but they aren’t that friendly to foreigners so that didn’t happen either. America is also now trying hard, but again, only if you are American. Indeed, they still hold a grudge against Binance for precipitating the collapse of FTX (which I wrote about at the time).

Indeed if you want a license for cryptocurrency operations in UAE, you can apply here. US$30k for licence, US$60k/ year ongoing. They didn’t just talk. They actually built a structure. It isn’t perfect, but it’s workable. 

After CZ’s arrest and imprisonment in the US, Binance appointed Richard Teng as CEO. He was previously CEO of the Abu Dhabi Financial Services Authority. In fact he is the person that wrote the licensing regime. It wasn’t exactly subtle and would have cost a fortune, but it has worked. If the Sheikh calls Washington, the phone gets answered. 

So how do we feel about the UAE being our North Star? Well, there is a long laundry list of criticisms I’m aware of, we are all aware of them. I could rehearse them here but perhaps better to speak directly from experience. I have been there many times now. The airport is sparkling and excellent, the hotels are amazing and to my surprise so is the food. You can open a company and get a bank account in no time. You can get a visa in no time. In the evening, when it's cooler, the waterfront is packed with families. You have to work hard because nothing is free. That’s basically it. 

Then, they get out of your way and let you work. 

Binance could have pulled the same trick in London I suppose, which would have suited me. For some reason it didn’t suit them though. 

It’s surprising that this isn’t a bigger story. It is the biggest investment in the sector this year. It is the biggest investment ever made via stablecoins (they paid in USDt). Why? Because it’s a total embarrassment to the West, whose noises about “investment and growth” look nothing but fake.  

Currency wars

I was watching the Aussie dollar sink below 60 cents on Monday. On Bloomberg, the screens were flashing red and the headline was “China threatens Yuan devaluation”. 

Not just the Aussie though. The Japanese Yen has been in meltdown for some time. The Euro’s travails are well documented in this corner of the internet too. It is striking that governments can, and do, talk up or down their own currencies. 

It’s as though national currencies are simply a tool for manipulation. Get caught on the wrong side at the wrong moment and your overseas trip is going to get 15% more expensive, sorry. How could anybody reasonably attempt to save in a currency that at any moment the government can take an axe too? 

Yet still, overwhelmingly, investors think Bitcoin is a fringe investment. Frankly a bit of a joke. In currency terms it sits at #13 in the global ranks. It cannot itself be impacted by devaluations or revaluations or IMF interventions. It can of course benefit on the other side of what other currencies do. Every other currency will go forth and multiply. They will all expand their circulation at rapid rates. They will all try to technically devalue versus the other because that is the least “vote losey” way to stay competitive.  

Even the White House this week was out blaming the dollar for American woes in what was a telling signal.  

There aren’t many ways to get on the other side of every fiat currency in that list.

We’re missing the point

I searched for pictures on “manufacturing education”. What are people taught in school about making things? You get this kind of response. Lines of people in Asian countries making stuff. 

In fact manufacturing is not much like that at all. These days it really is machines that do most of the work. A new manufacturing line is going to look a lot like this. No people. Anyone who has done anything with people realises it's not actually an optimal scenario. They get sick, need to eat, need to take breaks. It’s really expensive to run. The simple truth is, if you can remove the people, you are going to go a lot better. 

Post-tariff reshoring of manufacturing is being hailed as a ‘great new era for employment’. I suspect that is highly unlikely. It will be a very great era for Amazon Web Services though. Artificial intelligence driving the machines that make the products will whiz and whirr across the globe. 

The tariffs are a mirage. The new global intelligence systems are going to be doing the work. They will do the manufacturing. The price of things could very well come down sharply. It has not been a good week numerically but things are going to get a lot better and perhaps much more quickly than people think. A case in point, Hyundai who last week committed to buy “tens of thousands of robots” from Boston Dynamics.

Hyundai Motor Group announced it will invest $21 billion in the U.S., including a $6 billion investment to drive innovation and expand strategic partnerships with U.S. companies. As part of this new investment, the Group will purchase tens of thousands of robots in the next few years. It will further enable Boston Dynamics’ growth by integrating its manufacturing capabilities to help make the company the world’s leading manufacturer of advanced mobile robots. Hyundai Motor Group is already deploying Spot robots for industrial inspection and predictive maintenance at its facilities, and will also deploy Atlas across its factories in the future.

If you read that slowly enough…..they are deploying robots to build more…..robots.

My advice, get good with the tech toys. Get very good. If you have a business, adopt them in all places. Replace everything, supplement everyone with AI. Do it now. 

Meme of Week

Even knowing that……this is still quite funny. 

Euro-Trash

It was awards night in Europe. Christine was honoured with the Sutherland Leadership Award in a “special gala ceremony”. It sounded like a lot of fun. 600 Black Tied Grandees attended.

“Tonight, I am delighted we continue that legacy in recognising one of the most formative and outstanding leaders of any generation, Christine Lagarde.”

I find it strange. Ms Lagarde has delivered 22% inflation during her tenure, that's against a target of 10% (2% per annum). Apart from that, growth in Europe has been nowhere for the entirety of her term. On her own bank's projections it will also be totally absent for the three years that remain of it. I find it to be a rather large miss, in principle because difficult decisions have not been taken as they should have been. Yet somehow, she is one of the outstanding leaders of any generation. Really?

On the very same day in Paris, one of Christine’s colleagues was giving a rather more frank appraisal “Reviving growth in the euro area”. 

Some of these slides were absolutely brutal. The EU’s share of global GDP has gone from 19% at the launch of the Euro to 12% now. Clearly smaller economies will grow faster and some fall would be natural, but this is a relative collapse in European wealth. 

If you have any interest in Europe at all, the slides are worth reading. 

I’ll give the ECB some credit. They are actually highlighting the real issues in their communications. They do know what is wrong. The fact is they lack the leadership to deal with it. They need massive investment in energy, robotics and artificial intelligence to make sure they can power a robot workforce to look after their elderly. It’s their only way out.  

It will not happen though. Lagarde is in legacy protection mode. I expect her to take zero personal risk now for the next three years. She will glide along on a sea of prize-winnings and honorary degrees.  

Europe will be a mess. It is a mess. 

Further information

Our March 2025 report to investors can be found here.