Big Picture Changing Fast

Whisper it carefully but I’m getting quite excited. My recent change of day-to-day role to overseeing risk should surely temper this giddiness, but no. The clue is in the word ‘change’. It just feels like the pace of change has picked up again across many parts of our lives, and in a good way. Believe it or not, if you think the last few years have been racy get ready for lots more. In fact, American economist, Tyler Cowen, thinks we are only just emerging from a 50 year slowdown in innovation and productivity which he has called “The Great Stagnation”. Let’s start at the top, or at leadership level.

Amazingly, the famous mobile phone slogan “The Future’s Bright, the Future’s Orange” is coming up for its 30th anniversary next year but, despite the wildfires, the future is definitely not orange. As the Trumpolini crime gang awaits its third criminal arraignment proceedings this week there’s emerging chatter of an incarceration reality or a highly restrictive plea bargain to take agent Orange off the presidential stage. Closer to home, UK prime minister, Rishi Sunak, is staging his very own political extinction event by gaslighting the entire planet with an extra 100 North Sea oil drilling licences which won’t produce anything until well(!) after 2050 and its net-zero commitments. One could be depressed by this delusional Tory government death rattle but, like Brexit, the wider world will move on and expose the nonsense with reality-based fact. However, we are not just talking about a political power shift. Power itself could be about to change dramatically with three recent developments…

  • The US nuclear industry has just seen the Plant Vogtle (Unit 3 ) delivering commercial electricity to the Georgia state power grid. This is a watershed moment as it is the first nuclear reactor built from scratch in more than three decades to be approved for commercial service. The mind-set shift is important as smaller modular reactors are about to change the investment proposition for the nuclear industry. And yet, there’s more…
  • The blockbuster movie Oppenheimer reminds us that we are still dealing with the risk-reward of harnessing nuclear fission, but the ultimate clean renewable energy source would, in fact, be nuclear fusion. The source of nuclei would be seawater and because the process combines(not splits) nuclei there is no long-term radioactive waste. Also, fusion produces far more energy than fission. More excitingly, a big US breakthrough in fusion technology in 2022 has prompted the UK Atomic Energy Authority to plan for its first compact fusion reactor by 2040.
  • That 2040 timeline might need updating. This week the scientific community is racing to verify a Korean discovery of a super conducting substance, currently known as ‘LK-99’. This superconductor material can apparently conduct electricity at room temperature and pressure WITHOUT resistance, or energy loss as heat. The possibilities of this breakthrough for the transport of power, magnetic levitation and computing power are enormous and can accelerate the development of other technologies.


So, that’s the power bit, but an individual with even a cursory knowledge of today’s technology hot topic, AI, knows that computing power and cost improvements have accelerated the development of these large language models(LLM) and generative pre-training (GPT) platforms. Indeed, we have often referred to the powerful theses in “The Future Is Faster Than You Think” written by Diamandis and Kotler. In particular, this writer has been struck by their description of the “compounding effect” of a variety of new technologies arriving at the same time. Clearly, the development of superior energy delivery would accelerate AI development and I’m thinking more than just generating chat and creative content.

How about healthcare? Already this week, we have read that AI use in breast cancer screening can match the efforts of two radiologists. In fact, the Lancet Oncology journal cites Swedish studies showing AI improving detection by 20%. Now, think about the “compounding” effect of quantum computing combining with AI models and room-temperature superconductors. Typically, quantum computing needs extremely low temperatures and huge amounts of expensive energy. Harnessing advanced energy and computing power sounds like very good news for new medical research processes and healthcare systems under strain. For illustration, the Swedish analysis above shows human workloads could be halved.

Time is money we are often told. Actually, time also moves money. So, if the previous developments in power and technology still feel a little bit “out there” in terms of actual arrival, it’s worth thinking about the change in pace I’m seeing. In commercial terms, the threshold for an innovative product achieving “adoption” used to be 25% market ‘take up’. For electricity it was 46 years from invention to adoption; 26 years for TVs; 16 years for PCs; 13 years for mobile phones, 7 years for the internet; 4 years for smartphones. We know ChatGPT racked up 100 million users in 2 months but what about Threads/Meta taking 100 million Twitter users in 4 days! My point is that all adoption cycles are being compressed. That can be scary for business but the always-interesting blogger, Noah Smith, flagged another cycle compression which we have been banging on about for a while.

Smith points out that the “vibe-cession” and gloomy headlines are struggling to keep up with the reality of the US economy. He quite rightly asks that “if this is a bad economy, please tell me what a good economy looks like?” The current economic data frames that question beautifully – full employment, inflation halving, real wages rising, a huge manufacturing boom and real disposable income rising in 11 of the last 12 months. Of course, full employment is a weird one when all the financial headlines, and admittedly activity, have retreated from post-Covid frenzy levels. However, Smith intriguingly asks the same question I have been hinting at for a few months.

Are businesses learning that economic slowdowns are opportunities to keep staff, and invest in people and franchises? The more interesting consequence of less emotional behaviour and more strategic risk thinking from business leaders is that slowdown cycles could be shallower in the future. That is a game-changer for equity and investment risk; and leaves open the possibility that technology advances and improved business cycles could prompt a money stampede into a market which has been “hated” for a long time. Sure enough, Morgan Stanley’s market analysts have confessed error in recent days and Bank of America have gone full reverse-ferret on their recession scenario.

If Tyler Cowen is correct about a ‘Great Stagnation’ being behind us, then we really haven’t seen anything yet. However, the problem with just seeing change is that when the big picture presents itself clearly it will be too late to move your business or your money. The future’s bright, the future’s yours.





Stay Connected
Latest News