What we're reading #1
This will include articles and even books that really gave us food for thought.
Hi folks, hope you’ve had a great week!
Our team at Markets is always reading, often much more than what might be considered healthy. So, we thought it would be nice to have an outlet to put out what we’re reading that isn’t part of our normal cycle of content.
So we’re kickstarting “What We’re Reading”, where every weekend, our team outlines the interesting things we’ve read in the past week. This will include articles and even books that really gave us food for thought.
We’d also love to know what has piqued your interest, too! Please feel free to let us know in the comments.
What Pranav is reading
India’s AI Wedding Buffet: Generous Portions, Political Economy Heartburn (link)
At least if social media is anything to go by, for better or for worse, the recently concluded AI summit made quite a mark. It’s easy to laugh at the Galgotia dog, or at awkward handshakes shared between rival AI CEOs. But if you see it solely as a cringe-fest, without noticing the tremendous ambition on display, you’re missing something important about how India sees this moment.
If you, like us, prefer nuance to hot takes, you’re going to enjoy Shruti’s writing.
Her latest essay is an incredible, sweeping look at everything India and AI. It is neither a glass-half-full take, nor a glass-half-empty one; it is a thorough examination of the nature of the glass and of the liquid, how light refracts between the two, where the bottle of liquid is, and how to pour from it, and more. It’s full of the sort of little details we at Markets live for, like how the soil of Dholera is too clay-heavy for a chip manufacturing facility.
A must-read!
Statement from Dario Amodei on our discussions with the Department of War (link)
Sorry, but we seemingly can’t stop recommending AI.
We aren’t recommending this one because the article itself is interesting, but because of the wider story it is part of. The last week saw an ugly divorce between the US Department of Defence and Anthropic — as the former tried to pressure the Claude-maker into relaxing its guardrails.
What guardrails? One, Claude doesn’t want to help the government surveil its own citizens. And that… makes sense? You probably already know that there’s a massive digital trail you’ve left all over the internet. If you have any privacy left, it is because all that data is a fragmented mess. Now, though, if the Department of Defence has its way, Claude can basically put it all together into a single coherent profile. Of you. More accurately, the internet version of you. Ugh.
The government also wants fully autonomous weapons. If not Claude, someone else will help it make them. The Terminator’s here, folks. It’s all over.
What Bhuvan is reading
AI Hurtles Ahead (link)
Another AI read.
Howard Marks was one of the first celebrity investors I learnt of when I joined Zerodha. He was one of the few voices from the finance world that had the floor’s universal respect. That’s partly because of his outsized success; but it is also because, simply put, of how sensible he is.
You see just that in his memo. To F. Scott Fitzgerald, a first-rate intellect was one that could hold two contradictory thoughts at the same time. Marks certainly qualifies. He writes, simultaneously, that AI has tremendous potential, that we’re probably underestimating the impact it has, that a lot of the money being spent on AI infrastructure could turn out to be for nothing, and that the valuations of today’s AI companies could be terribly overpriced.
It’s the kind of thing that strikes us as likely: that everyone is correct in their own, limited domain, and yet are all missing the woods for the trees in some unique manner. Just as they always do.
Aswath Damodaran: “World Order is Coming Apart” (link)
As always, I’m a huge fan of Professor Damodaran, and this is another insightful conversation. The two big themes that stood out — the big-ticket items that are on a lot of investors’ minds — were, namely, the unraveling of the global order and AI’s impact on software businesses.
On the first theme, Professor Damodaran’s take is that the dollar is coming undone and we are seeing all the signs around us. Markets are underpricing catastrophic risk and are pretty much sanguine. Trust in the dollar is eroding, but at the same time, there is nothing really to replace the dollar-based order. So the so-called post-World War II international order is all but done, according to his model.
The second interesting theme was around AI’s impact on software businesses. The one point he makes that I found particularly interesting is that the first place where AI’s impact will show up on software companies is in reduced margins, not necessarily in reduced profits outright. And one way to track these disruptions is to watch out for reductions in headcount — I thought that was a really insightful indicator.
Finally, his thoughts on the wisdom of crowds — aggregating multiple data points to get a sense of where things are headed — being better than relying on expert judgment was a compelling argument.
But perhaps the thing that always stands out to me whenever I listen to Professor Damodaran is his clarity of thought, and I think that is the big takeaway from this conversation once again. If you just pay attention to how he thinks about different issues — the logical sequencing, starting with a broader macro thesis and then drilling into the micro — you can see the amount of thinking and work he has done before he speaks, unlike a lot of other market participants. More often than not, he is willing to admit his own ignorance and acknowledge the odds of being wrong, but the fact that he still puts his neck out and articulates his view after having done the intellectual heavy lifting is admirable. The clarity with which he explains his ideas is always really something special.
My Synthesis: Citadel Securities on the AI Labor Displacement Debate (link)
The team at Citrini published what will likely go down as one of the most famous Substack pieces in history, predicting a “Global Intelligence Crisis.” It was dramatic enough to contribute to a bout of negative market sentiment, and sparked a wave of counter-takes and reactions from virtually every major name in economics and markets.
The latest response comes from Citadel Securities, and they paint a much more sanguine post-AI future. A few key points:
Adoption isn’t accelerating as feared. Real-time data shows AI use for work remains surprisingly stable. Ironically, even in software — the field where AI first proved itself genuinely useful — job postings for engineers are actually rising.
Recursive improvement ≠ recursive adoption. Even if AI keeps improving itself, that doesn’t mean deployment in the economy will be equally aggressive. Technology always diffuses slowly, following an S-curve: slow start, acceleration, then plateau. Citadel expects AI to follow the same pattern.
Physical limits are a real constraint. Replacing all white-collar labor would require orders of magnitude more compute and infrastructure than currently exists. The key tipping point: AI only substitutes for human labor if the marginal cost of compute falls below the marginal cost of that labor. Otherwise, substitution simply doesn’t happen.
A demand collapse requires everything to go wrong at once. For AI to trigger a macroeconomic depression, labor income would have to fall without any concurrent rise in investment, fiscal stimulus, or consumption. That’s an extremely high bar.
AI as complement, not substitute. Drawing on historical precedent — from electrification to the PC — Citadel argues AI will more likely augment human labor than replace it wholesale.
What Krishna is reading
Why Regulators Fail in India (link)
What’s the job of a regulator? To regulate, right — making sure every stakeholder follows the rules, ensuring fair practice, and stepping in when someone finds a loophole or does something wrong. Every sector has one: SEBI for capital markets, RBI for banking, and so on. But how well do these regulators actually work in practice?
XKDR recently hosted Dr. Sudha Mahalingam, a former full-time member of India’s Petroleum and Natural Gas Regulatory Board, to answer exactly that. And her answer is... not great. Drawing from decades of experience inside India’s regulatory machinery, she laid out a pretty uncomfortable picture: regulators in India are structurally set up to fail. They lack public legitimacy, get starved of funds, are staffed by retired bureaucrats instead of actual experts, and are caught in the middle of a tug-of-war between the government and the private sector. The problem, she argues, isn’t just poor execution — it’s that Western regulatory theory was never designed for a hybrid economy like India’s, where the government is simultaneously the regulator, the owner, and the player.
What Manie is reading
Monetizing Primacy by Karthik Sankaran, Phenomenal World (link)
Karthik Sankaran is one of my favorite economic analysts on Twitter/X, and not least because of his dad jokes and terrible puns. His perspective on globalization and trade is very refreshing and a cut above the rest, and he never shies away from speaking his opinion, either.
I’m re-reading his essay on Phenomenal World, Monetizing Primacy, which is about.the dollar’s centrality in the world, and how the Trump administration views it today. For one, Stephen Miran, Trump’s economic right-hand, now says that dollar dominance, while extremely useful, comes at a cost. Because it’s one of the reasons why the US bears trade deficits with China and other East Asian countries. And in Miran’s words, that kind of deficit is responsible for American deindustrialization.
Sankaran, of course, is quick to point out the contradictions. He writes: “
It [the US] wants a weak dollar to spur reindustrialization in the US and a strong dollar to offset any inflationary pass-through from tariffs. It certainly does not want a combination of dollar weakness and higher bond yields, which is generally interpreted as a crisis of confidence in the currency.”
The US, Sankaran says, still wants to be the world’s premier military power and dominant reserve currency issuer. But it also wants the contradictions that come with it. This is framed by Miran as: “the world should pay its fair share for using the dollar”, whatever that means. That, it seems, has taken the form of all these rent-seeking tariff announcements to reindustrialize and reduce trade deficits with the rest of the world.
More importantly, however, Sankaran asks, what if the functions of a reserve currency were not handled by a single country? What if they were instead distributed among other economically-powerful nations? These are all questions Sankaran asks and wades through with skilful ease, despite them not having any easy answers. But, if anything, it provides an important lens into where the economic and geopolitical sides of the dollar sync and contradict each other - and what the US forcing those functions together means for the rest of the world.