Also in today’s edition: Merger meh-hem; Covid in uncharted waters; Morbid millennials; Hardballing for software
Good morning! In a case of life imitating art—think the Black Mirror episode ‘Be Right Back’—a growing number of bereaved people in China are communicating with AI-generated avatars of their deceased loved ones. AFP reports that Chinese AI company Super Brain is charging the equivalent of $1,400-2,800 for basic avatars generated in 20 days; as its founder says, China has “an advantage when it comes to market demand." And that’s just one option. Sometimes, AI likenesses of the deceased are overlaid on staff members who engage in video calls with the grief-stricken. To each their own etc., but we aren’t sure how to feel about the last bit.
Venkat Ananth and Roshni Nair also contributed to today’s edition.
A quick programming note: We are off on December 24 and 25 on account of Christmas. There will be no editions of The Signal and The Signal Daily podcast on December 25 and 26.
The Market Signal
Stocks & Economy: Global markets appear to have regained their Christmas cheer. US stocks bounced back after a sudden slump on Wednesday. So have Asian equities. They began Friday marching to an upbeat tune.
US shares could react to data on personal consumption expenditure due before the market opens. It is a metric that has considerable sway over the Federal Reserve’s rate decisions.
The GIFT Nifty is indicating that the mood when the market opens is likely to be subdued, but that could change as the day progresses. Equity analysts are bullish about 2024. Morgan Stanley is expecting the Sensex to grow 14% in the new year. Other broking firms are also upbeat about India’s prospects.
Frayed unity: Angola has left the oil producers’ grouping OPEC+. Not that it will matter too much, but it reveals increasing resentment over the disproportionate influence wielded by the biggies in the cartel.
Tag, You’re Not It
What links a painting, a cup of tea, and a finely stitched kurta? They’re all unique Indian products whose producers are struggling. India has long fought for geographical indication or GI tags for local products from Darjeeling tea to basmati rice (nearly patented by the US). Yet, getting the GI tag has barely affected the lives of its producers, Mint reports.
Fakes and fizzle-outs: Alphonso mango sellers allege farmers pass off other varieties as the real deal, while Thanjavur painters say even government shops sell fakes. GI tags don’t always equal big business: traditional feni makers say the GI-tagged process can’t be replicated at scale.
So what? GI tags are useful in building a brand. Unfortunately, the government has been slow on the uptake. Consider millets: India is the largest producer and is celebrating 2023 as the International Year of Millets. Yet, Uttarakhand is the only state with GI-tagged millets.
A Hard Sell
Strap in: next year may be replete with media mega-mergers. And mergers that couldn’t be. Nearly a year since its original deadline, Zee Entertainment and Sony India have agreed to a 30-day extension to try and close their $10 billion merger deal. Most deals in these circumstances usually die, Mint reported.
Seeking value: Being a media empire was once a strength in merger negotiations; now it’s a weakness. Just ask Paramount.
The debt-laden company has discussed a sale with Skydance Media, RedBird Capital, and more recently with Warner Brothers Discovery. But WBD has little interest in the bleeding Paramount+ streaming service as it tries to turn its own offering profitable. It may also have little interest in the company’s cable networks.
The Covid-19 virus may be finding places to infect beyond the respiratory system in the human body. Mutant variants have new ways to infect cells more efficiently, Australian virologist Stuart Turville told Bloomberg.
Unique: Heavy loads of the new Covid-19 variant JN.1 are being found in wastewater, suggesting that it could be infecting tissues in the stomach. Austria, Germany, Netherlands, Switzerland and Singapore are reporting a spike in the variant detected in wastewater. JN.1 is a mutation of BA.2.86, also known as Pirola. Scientists say that it is so distinctly “infectious and immune evasive” that it should get its own Greek name like Omicron.
The World Health Organization has designated JN.1 a variant of interest because of its fast infection rate. All the samples received at India’s Covid-19 genomic sequencing consortium INSACOG in the past two weeks turned out to be JN.1.
Another round of restrictions on people and organisations would be debilitating for several economies. The severe blow the pandemic dealt China even triggered a reordering of global supply chains turning that country’s misfortune into an opportunity for others, including India. The virus is not known to spread through water but the risk increases if there are more of them in wastewater and aerosols are generated. High loads of infectious viruses in wastewater is alarming news for a country like India, which has open drains and poor sanitation and hygiene practices.
Might As Will
Sorrynotsorry for beginning on a morbid note, but millennials’ higher mortality rate (especially women in the US) and predisposition to fatal strokes may have something to do with it: an increasing number of Indians in their late 30s and early 40s are writing wills.
Wut: The Economic Times reports that middle-class and upwardly-mobile Indians—especially those who’ve acquired wealth from new-age businesses and have a family, home, and/or car—are inclined to begin estate planning earlier than previous generations. Blame the Covid-19 pandemic for this cautionary approach. As a result, virtual will writing advisory startups such as WillJini and QuickDox are servicing more millennial clients. The former says four out of 10 queries are from this cohort. QuickDox founder Shiv Goyal goes as far as to claim that mortality in people aged 25-44 years has increased by 30%, compared to 17% in other age groups.
Lesson: avoid a Koo Bon-moo situation.
🎧 A growing number of Indian millennials are drafting their last wills and testaments. Also in today’s edition: talking to the dead with AI. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
Software 🤝 Dry Powder
Earlier this month, we told you about a Canadian company gobbling up software firms in contrast to the private equity (PE) model. Cut to 2024, private equities could well be in business, as software deal flow this year has surged back to pre-pandemic levels, per PitchBook.
PEs❤️software: Software business models are typically considered recession-proof, with predictable revenue (recurring or long-term licensing), capital efficiency, and growth potential.
Now: After a pandemic-era surge in valuations, course correction has happened because of interest rates and other headwinds—ideal conditions for PEs to swoop in. Also, public companies tend to shy away from such acquisitions because of regulatory scrutiny.
What’s next?: More deals, which an investment banker quoted by PitchBook estimates to be around 1,500, with 80% of those accounting for “add-ons”. That could come from the whopping $163.8 billion worth of dry powder available to tech-focused PEs, per Vista Equity Partners.
War chest: OpenAI rival Anthropic is looking to raise $750 million (₹6,245 crore) in a round that could value the two-year-old startup at $18 billion. The round, The Information reported, could be led by Menlo Ventures.
Nordic trouble: Danish labour union 3F will join an ongoing strike by Swedish mechanics against Tesla, over the latter’s demand for collective bargaining rights. Tesla also faces an investigation by the Norwegian Public Roads Administration, which could result in recalls.
Eyes shut: Worldcoin, the Sam Altman-backed cryptocurrency project, quietly discontinued its Orb-based verification in India, Moneycontrol reported. TechCrunch added that Worldcoin’s discontinuation of the Orb extended to Brazil and France.
‘Tough on China’: The Biden administration is weighing a further increase of duties on Chinese goods, including electric vehicles, solar products and EV batteries. This follows a Treasury announcement blocking subsidies to US EVs with China-made battery components.
Fresh dough: Indian warehouse automation company GreyOrange raised $135 million (₹1,124 crore) in fresh funding as part of a Series D round led by Anthelion Capital. EV ride-hailing company BluSmart too bagged $24 million (₹200 crore) in a new round.
Add to cart?: Food delivery company Zomato has reportedly made a $2 billion offer to acquire e-commerce logistics aggregator Shiprocket, Bloomberg reported. Both Zomato and its founder Deepinder Goyal are investors in Shiprocket.
💰💰💰: Indian e-commerce company Flipkart is seeking to raise $1 billion (₹8,325 crore) in fresh funding, of which ~$600 million could come from its parent Walmart, per The Economic Times. The infusion could see Flipkart’s valuation increase from $33 billion.
THE DAILY DIGIT
The number of PlayStation PS5 devices sold by Sony since its launch in November 2020, “almost as quickly” as the PS4. PlayStation also outsold Microsoft’s Xbox by a 3:1 ratio in 2023. (The Financial Times)
That shrinking feeling: Shrinkflation—that FMCG practice of maintaining sticker prices while reducing item size or volume—is everywhere. South Korea is grappling with it too, but unlike other countries, it’s doing something about it. Come 2024, companies that slim down offerings at the same price will have to disclose the same on product packages. If they don’t, Korean authorities will levy fines. Customers are glad. It’s a win in a country where everything from flavoured almonds and cubed white radish to sausages and beer have gotten smaller, but more so for President Yoon Suk Yeol, whose approval ratings aren’t great shakes.
Scavenger hunt: FTX is dead, long live FTX. That’s the mantra of the cottage industry of claims traders profiting off of the remains of the collapsed crypto exchange. You see, there’s a long line of customers and investors laying claim to the holdings they once held on FTX. The problem is, any substantial chunk of the ~$8 billion (which FTX chief Sam Bankman-Fried was accused of stealing) that’s recovered may go towards legal fees and taxes. Enter brokers like Thomas Braziel, who match claims ‘buyers’ with folks hoping to earn fast cash rather than wait for any rightful dues, if at all. And earn plum commissions in the process.
‘Tis the season…: …for, er, penile fractures. A study published in the British Journal of Urology International reveals that Christmas is a less merry time of year for men in Germany who want to make the most of the festive season. A team of urologists at the Ludwig Maximilian University of Munich analysed penile fracture data from 2005 to 2021 and found that “if every day was like Christmas, 43% more penile fractures would have occurred in Germany from 2005 onwards." In case you’re wondering what’s causing this, the researchers cited “unusual sexual positions” as a prime culprit.