Category: personal_noteS

How much should ByteDance spend on data centers?

ByteDance has deep wallet: in 2023, it generated $40bn+ EBITDA.

To compare, Meta had over $60bn in EBITDA during the same period.

Meta will grow to $80bn ebitda in 2024, while capex guidance is as much as $40bn – half of its EBITDA.

Assuming half of Meta’s capex goes to data centers -> $20bn. And half of that goes to GPUs > $10bn; building out those data centers etc. will be $5-10bn for Meta.

ByteDance is also growing, say at a similar rate as Meta, so $50bn+ EBITDA in 2024. And assume ByteDance invests at a similar ratio as Meta, then it needs to spend ~$25bn in capex, or ~$12bn (or 60% of $20bn) for data centers – $6bn  for GPUs, and $3-6bn to build out data centers etc.

USDJPY

Just using interest rate parity.

Before the interest hike cycle, in early 2022, 1 dollar = 115 yen.

To make it simple, assuming USD interest rate is 5% and JPY is 0%.

If you exchanged 115 Yen [$1 worth of JPY] for USD and held USD for for 3 years, you should get $1.05^3.

If you hold Yen for 3 years, you shall have 115 Yen. So 115 Yen = 1.05^3 USD

1 USD = 99 Yen…

Real life is not like that.

In the real world, people exchange JPY for USD to earn higher yield, which created demand in the short-term.

That portion of USD can be deployed in the equity market, buying S&P 500 for example.

In this case, if you borrow Yen, you pay very little cost of capital (near zero), and you earned S&P 500 return.

Meanwhile, as everyone wants to do this kind of trade, and due to this imbalanced demand in the short term, USD will appreciate against JPY << this means you earn extra return when exchanging USD back to JPY (1USD = ~160JPY a few weeks ago, vs the 115 exchange rate 3 years ago).

In sum, you get S&P 500 return, you get USD appreciation return (~40% in 3 years), and you pay only JPY interest rate.

This is crazy.

Why would this happen? against the interest rate parity?

The other side of the trade seems to be those who are bearing the low rate of return on JPY… The savers in Japan I shall say.

this is also happening again in China?

The victims are obvious.. savers who are only paid 2-3% in China.

An underrated growth driver for Spotify

Not sure if it’s been widely seen as a growth driver, but Spotify is actually not blocked in China!

Yes, you can use Spotify w/o VPN in China, including podcasts.

If you are on a short trip to China, you can use Spotify for 14 days (no payment needed, just regular account). This corresponds to the visa-free 15 day stay in China for several countries – that list is expanding.

If you are staying in mainland China longer, you need a premium account. With Spotify Premium in mainland China, you don’t need VPN.

This is rare – for any “foreign” internet service provider to provide service in its original format.

Democratic calculation

With Kamala Harris the potential nominee, here are the calculations.

Harris vs. Trump: Harris will be linked with Biden policies, which won’t have enough “fresh start” effect.

If Harris wins in 2024, she will be nominated in 2028, which means other Democratic candidates will wait until 2032.

Meanwhile, if Trump momentum is unstoppable, should Democratic supporters “save” some energy and wait for 2028?

Even Trump wins, he will only do one term, so in 2028 Republican also needs a new face.

Trump is still very ahead according to betting.

China delaying retirement age

China is about to delay retirement age from 5-10 years to age 65.

Currently, men retired at 60 and women at 55.

It’s a big change, although details are not set yet, and gov vows a “gradual” rollout, it would still be a big change for many in the coming decades.

 

Looking at France, pushing 2 years up drew protest last year. And the previous change was in 2010 and was also 2 years.

So about 2 years change in 12 years for French people.

 

How women in China can adjust to 10 years of delay? How long it’s gonna take? If like France, it should be 60 years..

Sadly, don’t think China will wait until 2084..

And executing drastic measures is where China outperforms.

 

Another thing is the need for longer life expectancy.

China still has lots of room to improve in terms of healthcare and drugs, which should raise life expectancy. However, some may also argue that the work life balance, food safety, and in general environment all need to improve. To some extent, these things may have worsened vs decades ago.

How will Elon Musk do? (Trump trade)

While EV is not popular, Musk did pivot to Republican by moving headquarters of Tesla, and more recently, SpaceX and X.com.

Musk also donates to Trump.

But problem is that his companies are not something Trump likes.

Besides electric vehicles, Optimum, which can replace factory workers in the future, is probably not what Trump wants. Trump wants blue-collar jobs in the US.

Plus, although Musk bought Twitter and lifted the ban on Trump’s account, Trump hasn’t been active on X.com besides a post in Aug 2023.

On top of these, Musk might be too close to China, which would be frowned upon.

Why overcapacity is prevalent in China

Thinking about this question, here are five potential answers.

1/ For the older generations, shortages are deeply rooted in their memory, so they dislike the idea that anything might be in short supply.

2/ The required return is too low. Many experienced poverty in their youth, therefore lots of effort for little money is still attractive.

3/ The local governments want to create local jobs and boast about industrial upgrades, with banks being the main enablers. When every local government invest in a similar direction at the same time, it’s hard to control and estimate the entire capacity.

4/ For top party members, abundance of all sorts of goods is a sign of victory for socialism and communism.

5/ China is preparing for war. Many capacity will shut down if at war.