00:00:00
Jason do you want to go up to the bedroom knock on the door and wake jamat up where is he you're in his house go
00:00:05
get him let's go he's at the office he went to the office he's not here oh you went to the office we're trying to find
00:00:10
jamath at the moment oh here's jamat okay are you wearing my goddamn sweater what is what is is that my you're in my
00:00:17
house is that my no I am so tilted where is my wife what the what don't worry about your wife no oh my
00:00:25
God this port is great where is hold on I'm calling take off my okay don't touch my wife oh
00:00:35
my Lord oh my Lord Sheed so tilted tted don't you worry am you know your cashmir
00:00:43
sweater it's so so soft is so tiled get out of my house but we'll be done at 1 o' so I'll see you
00:00:52
then please let me know you have lunch in the garden yes please lunch in the garden wear's something simple don't
00:00:58
don't get something simp great is that the cashmere sweater with the Rhino horn buttons it is you know what though I did
00:01:06
some shopping while I was here I did a little shopping so I just I filled up you know I just these uh these asops are
00:01:15
great because I don't have these at my house I have Ivory soap so I got a couple of these
00:01:20
froming but you know what I agree this sweater is not so great I think I'm going to Swit don't touch that sweater
00:01:25
Jason this one's incred I cannot him J don't put it on I won't put it I won't put it on but you know what this port
00:01:35
I'm not so sure Sean Sean yes um's great but um any other options we do have a delicious ice wine for you
00:01:47
come around here let's present let's present you're not on my chef Sean um SE so this is it looks like
00:01:58
a deep pull 19 86 Chateau CET uh BAC what I mean this looks like it's worth opening I mean it it's it was in the
00:02:07
rack that said don't open right Sean yes sir all right so and yeah let's just but you know what
00:02:13
pour half out because I like the bottom half the texture so just pour half into the garden here the um the spinach and
00:02:19
then I'll take the bottom half thank you please take off my sweater oh my God this is so
00:02:26
brutal let your winners ride Rainman David and instead we open source it to the fans and they've just gone crazy
00:02:37
with [Music] it did you have a good night's sleep at chim's house how did you sleep last
00:02:45
night I slept so good let me tell you something I'm I will compare I sleep here tonight the lady of uh sax Manor
00:02:52
just texted me and she would like me to stay there tonight so you know when I'm in the valley I get a lot of different
00:02:56
invites I have to spread the wealth so I'll be dining with with the saxes tonight and I may be staying at saxes so
00:03:02
that willare away sax hide the asop soap from the bathroom I'm hoping he doesn't
00:03:08
have ASAP I'm hoping this is like when he stole the papy vanwinkle from my plane remember that that was good yeah I
00:03:16
mean it was it was three qus of a bottle it's just sitting there I mean when are
00:03:20
you gonna drink it SX how do you prepare for jcal coming over to your house to visit and spend the night I mean what do
00:03:26
you do think anything that's not bolted down is basically it's like a a gift it's like a
00:03:33
freebie how do you think I got that love seat in my kitchen I got that love seat
00:03:38
off the kitchen that came from Sax's designer yeah yeah I just had two guys my brother Josh came we took it out the
00:03:44
back it was fun we took it out the back if I'm a guest I'm leaving with something why don't you want to moderate
00:03:50
today you're on fire just moderate the show well no I was just I was going to be traveling and I wanted to do a good
00:03:55
job and I you know I thought maybe you you would love to get your chance at moderation so lead us off here Fearless
00:04:02
uh J freeberg so that is the announcement to start the show Jason taking a week off for moderating yes
00:04:10
gonna be a besti guesty gonna be a participant on the panel this week and we took this off so I'll be moderating
00:04:16
this week we're going to do a couple housekeeping points first off very excited to announce that we are doing
00:04:24
another live event after the success of the summit during September we had great
00:04:29
content we had great parties everyone had a great time but a lot of people said They wish they could have been a
00:04:34
part of it so we are going to try and do more Live Events so we have pulled one together very last minute but we are
00:04:39
going to make it incredible Saturday December 7th in San Francisco around 5:00 pm we
00:04:46
are going to do the all-in Holiday Spectacular at the Palace of Fine Arts in San Francisco it's going to be
00:04:52
incredible tickets are going on sale today at allin.com events not going to want to miss it
00:04:58
there's going to be a really fun show on stage with us and some guests followed by open bar food trucks DJ Casino party
00:05:07
it should be a really great time a real fun Winter Wonderland after party after the stage show and so we're really
00:05:12
excited to have folks come and join us um at the Palace of Fine Arts on December 7th it's gonna be awesome you
00:05:17
guys excited yeah excited yeah all right so I have a question yeah is our attendance required at this thing I knew
00:05:26
that was coming I have no desire to this you don't want to be called a party everybody in the world wants to do
00:05:34
something except SX I thought I was signing up for a podcast I don't know why I need to do all these events this
00:05:41
is literally a two-minute drive from your house in San Francisco we are going to load you in a van Jal and his
00:05:47
brothers are gonna come and grab you throw you in the back drag you down there we're gonna prop you up on stage
00:05:53
for a couple hours and then we'll put you back in the van and you can go home the good news is we might uh drink some
00:05:58
Tequila sex we might have something to kill us so we got something to look forward to and you get to see your
00:06:04
friends you get to see your friends that's worth it right say yes David now this is where you say yes no comment he
00:06:11
says no com for those of you listening I'm happy seeing you guys through Zoom you know we don't we we can minimize the
00:06:19
pic was his favorite holiday of all time what's your favorite holiday SX pandemic
00:06:25
can we have that back pandemic he celebrates the pandemic for six months every year it's part of his new ritual to not
00:06:34
see anybody for six months bring back the pandemic Sox are you serving Wu tonight I mean that's possible I'm gonna
00:06:42
tell him not do anything that nice though for jcal keep it simple burgers and dogs you put your order J J what did
00:06:51
you put your order in well you know I talked to that I talked to Chef and um he said morel's not in season but we we
00:06:57
are on the tail end of black ruffle so we have that locked in but we're too early for Morales obviously that's a
00:07:03
spring let let's give feedback about last night's dinner Sean's I mean let's be honest a picana is an underrated cut
00:07:12
of meat it's a very people say it's like a serviceable meat but when cooked properly with proper technique it will
00:07:19
stand right up there with a riye or a New York strip it's the best but people don't P never even heard of
00:07:26
that but it's like it's like it's the Brazilian word for it but it's like a specific cut of meat Sean did it last
00:07:32
night honestly David I'm telling you it's better than any other cut of meat you could get if it's properly made Sean
00:07:38
crushed it yesterday but it is bananas it's so good steak than ribey I like it more
00:07:49
than ribey 100% I like it more than the New York strip that's terrible filet terrible no fat it's it's um it's got a
00:07:59
a a fat cap on it which you know sometimes be a little overwhelming for people but Sean did a great job of kind
00:08:05
of meeting us halfway so it wasn't so fatty just a nice layer of fat crisped perfectly cooked to Perfection carrots
00:08:13
were great um was great I could I had no notes you know I talked to Sean after I
00:08:18
had no notes so okay what the app part was ridiculous too oh my burn sugar apple burnt sugar apple tart what you're
00:08:27
a New York state guy I'm a New York state guy well done yeah what oh oh oh that's dis are
00:08:35
savages I think you just lost like I think you just left three swing States you want if you're gonna do something I
00:08:43
would go to the New York I'm fine to deal with the New York in and opava but well done David SS that is unacceptable
00:08:50
shout out to Raul's and uh balazar two best steo pavs in Manhattan in my estimation let's get started welcome to
00:09:01
why don't we call an audible tonight and go for Ste oav yeah just throw out the uh the misot and the wagu and let's just
00:09:07
redo it boys welcome to the all-in Pod this is episode 201 and we're gonna kick it off by
00:09:14
talking about what's going on in markets which is one of the kind of most interesting challenging enigmas of the
00:09:22
day or or maybe it's not maybe it's pretty simple but there seems to be a diversion in assets that is pretty un
00:09:29
ual that hasn't been seen in in some time and a lot of Market commentators analysts economists are kind of trying
00:09:36
to figure out what's going on and why the first is that bonds are falling so US Treasury
00:09:41
yields as a result of bonds declining in price have spiked up we nearly hit the 10year yield dropping as low as
00:09:50
3.5 in September obviously leading up to the the the big 50 bit rate cut and as of this morning we're seeing the 10year
00:10:00
yield over 4 and a quarter at the same time we're seeing gold prices Spike so gold is typically a safe asset and gold
00:10:09
has moved considerably as you all can see here from the start of the Year where was around 2,000 an ounce up to
00:10:13
2750 an ounce an incredible runup one of the best performing assets of the year and then finally in a market like this
00:10:22
you would typically see pain in equities but we've seen the opposite the S&P 500
00:10:28
is up considerably has been been on this endless runup alltime highing at alltime
00:10:32
high where's Bitcoin buddy and let's pull up Bitcoin nobody cares about gold show
00:10:38
Bitcoin well there's a lot more assets that have moved into gold than Bitcoin but here's Bitcoin
00:10:44
at today this morning who picked that at the beginning of the year was it hold on one
00:10:53
second up give us your read on what's going on there's a there's another couple of nuances here that I think are
00:11:01
important the US dollar complex is thriving which means like the US dollar is strong backend yields are
00:11:13
rising and then another thing that I look at is this thing called put call skew so basically like on balance how
00:11:19
are people hedging in the short term and in the bond market they own a lot more puts than they do
00:11:27
calls I think that this is the entire Financial infrastructure of the world repositioning itself from what was
00:11:37
a tossup election to a trump win and when you look at why it's because when you forget the
00:11:46
candidates themselves for a second but if you think about the actual policies and where the spending will
00:11:52
occur I think that there has been a very clear decision that the Trump economic plan
00:11:59
will drive better growth than the Harris plan and if you think that there is more
00:12:04
growth coming typically what will come with that is a little bit more inflation the risk premium that you're
00:12:14
going to need in a high growth environment is higher what is risk premium that is how much do I want to invest for a
00:12:22
risky asset vers as a safe asset and so all of these things are coalescing so so
00:12:29
I think that the shortterm takeaway that I have just looking at all of this data
00:12:35
is that in the economic distribution of outcomes this is now tilted overwhelmingly to a
00:12:43
trump win and this is not an emotional statement or what I want to happen but this is just an observation how how tens
00:12:50
of trillions of dollars of self-interested financial actors have now repositioned their risk and if Trump
00:13:00
wins which it looks like he's increasingly going to do and if he wins by the margins that it looks like it's
00:13:07
going to do you're going to see a lot of these things exacerbate Gold's going to
00:13:12
go up more probably Bitcoin will probably go up the short-term economic upside for the economy will probably get
00:13:20
reflected in higher Equity prices but it'll also push out long-term rates the inflation picture becomes a
00:13:27
little bit murkier but I think that that's what's happening I think that the the financial markets
00:13:33
are pricing in a trump wi sorry just to understand better why is gold go up and a trump win I think in the short term
00:13:40
what happens is that you see more economic growth but in the medium- term inflation goes up and so you want a
00:13:45
hedge right so it's it's more about a durational balance of assets so in the short term you'll be long the things
00:13:51
that will generate earnings but in the medium to long term you want to head yourself so Bitcoin and gold I think
00:13:57
will trade that way well let's up the video clip from Paul Tor Jones Nick given all the things you're saying are
00:14:03
you off buying gold and Bitcoin and and I think all roads lead to inflation we're going to end up if you so but does
00:14:12
all roads lead to inflation therefore gold is a good investment is Bitcoin a good investment to you I I I'm long gold
00:14:16
I'm long Bitcoin I think Commodities are so ridiculously under owned so I'm long
00:14:22
Commodities I think most young people find their inflation Hedges via the NASDAQ that's also been great it's
00:14:28
probably some combination I probably have some basket of gold Bitcoin Commodities and NASDAQ something like
00:14:35
that and i' would own zero fixed income if I had my cash it'd be very short term
00:14:40
SX well I think as you heard right there the key line that Paul tutor Jones said
00:14:45
was all rad lead to inflation I mean that that's what's basically happening right now is that the market is afraid
00:14:51
that inflation is not whipped and it's going to resurface and the FED may have to Pivot from the pivot and raise
00:14:59
interest rates that's why he doesn't want to own any treasuries separately another Financial
00:15:05
Legend Stan drucken Miller gave an interview where he has something like a 20% short position meaning 20% of his
00:15:15
Holdings are short us treasuries right now so he's betting that there are long-term inflation pressures and that
00:15:22
rates are going to have to rise and and you're seeing again that since the FED cut rates on September 18th by 50 basis
00:15:29
points that the 10e T bills yield has risen by 60 basis points so I I think my interpretation is that this is less
00:15:39
about the election and more about the markets not liking the fed's ray cut on September 18th I think that in hindsight
00:15:49
it was too big we discussed it on the show and I pointed out that the 50 base point cut was contradictory in the sense
00:15:56
that the only two times in recent history where the FED began a rate cutting cycle with a 50 basis point cut
00:16:06
was in 2001 and 2008 which were on the verge of pretty big recessions and so the FED felt like it needed to cut
00:16:15
dramatically in order to help Stave off those recessions but that was not Pal's rhetoric what pal said is the economy
00:16:23
was doing very well so what I said a month ago was with the economy is doing really well why w't you just tiptoe into
00:16:29
the rate cutting cycle with say a 25 base point cut and then see how the market absorbs it and get another
00:16:35
month's inflation data well we've gotten another month of inflation data and it's
00:16:40
showing that these are not huge moves but it's showing that inflation in uh was a core CPI was just a little bit
00:16:47
higher than expected so again the market is concerned that inflation is not whipped that the FED may have been
00:16:53
overly precipitous and how it cut cut rates and then the other thing is they just not like the long-term fiscal
00:17:00
picture of the US one other chart we should bring up is interest on the national debt what you can see here is
00:17:06
that it has gone absolutely parabolic in the last couple of years our interest on
00:17:11
the debt what like 1.3 1.4 trillion a year 1.35 trillion run rate yeah $3,500 per
00:17:19
American pre and it's something like 20 to 25% of federal revenue now is going to Debt Service and this continues to
00:17:26
increase now I think there was an expect that we'd be able to get this line to go
00:17:31
back down once we had rate Cuts right because if inflation's licked and the FED can lower interest rates again and
00:17:38
we can get back to a 2% 10year bond which is where we were a few years ago then all of a sudden that National Debt
00:17:46
Service becomes a little bit more reasonable right I mean you can you could service that debt at half the cost
00:17:52
but now it looks like that may not happen so just to to wrap this up I just think that the market doesn't like these
00:18:00
fundamentals of the US fiscal picture you've got rapidly increasing debt service costs you've got an inflation
00:18:07
picture that is murky and may not be going away and the bond markets are starting to price in higher interest
00:18:14
rates for longer and this is why Paul tutor Jones is saying all Rose lead to inflation and this is why Dr Miller is
00:18:22
shorting us treasuries jcal do you think either party uh or either candidate in this
00:18:29
presidential election is going to drive a different outcome in terms of federal spending and the long-term impact on
00:18:36
deficit and as a result rates well if we look at previous performance as an indicator of future
00:18:44
success the answer is no they're not going to cut spending most of the reports out say they're going to spend
00:18:52
another 10 trillion in the next Administration independent of who you vote for and I think that's actually
00:18:57
what you have to think about here is where does all that money wind up right it it's certainly not going to trickle
00:19:02
down and what's probably going to happen is it's going to find its way into equities and that's why these equities
00:19:08
are so high is because people are recognizing correctly that if we do spend another 10 trillion and go another
00:19:16
10 trillion into debt that money winds up somewhere where does it wind up government salaries contracts and if
00:19:24
we get a tax cut as well that's going to Goose and I think one party will do do a
00:19:29
tax cut and spend 8 n 10 trillion the other party will spend 10 trillion and maybe raise taxes a little bit it's
00:19:34
going to net net into the same place and then I think what we'll see on top of that is what I think could be
00:19:44
cataclysmic contraction in White Collar employment in the United States over the
00:19:49
next four to 10 years next two administrations and that's going to exacerbate this problem and create I
00:19:55
think some social tension because we've had record low unemployment and so even though people feel bad about the economy
00:20:02
generally and and some of that is related to which parties you know which party you're part of and how you
00:20:08
perceive the economy and all this data but just brass tax you know we had the lowest unemployment of our lifetime for
00:20:14
the past five 10 years and it's been absolutely fabulous and salaries have gone up and this is going to result in I
00:20:22
think a little bit of austerity measures coming at some point probably won't come
00:20:27
in this next Administration but certainly the one after that is going to have to do some bell tightening and
00:20:31
we're going to have to address this issue because spending you know everybody in America having to pay their
00:20:37
share of that interest alone is $3500 I mean let that sink in you're going to spend for every member of your
00:20:44
family $3,500 a year in interest that's your part of it take the 1.3 trillion it's just a lot of money and um if that
00:20:52
is the case uh it's going to create a massive bubble in equities again and then if you look inside of the big
00:21:00
companies three or four years ago Uber Airbnb Google and Facebook had more employees or the same number of
00:21:08
employees they have now while growing those companies are all growing 20% year-over-year
00:21:12
so the earnings and the Topline of these companies continue to grow while they have a static team size this is like an
00:21:19
extraordinary thing we haven't seen so the two pieces here that we haven't seen before is what happens when you put
00:21:25
another I don't know 20 trillion dollar of debt into the US economy and what happens when companies the big ones stop
00:21:33
hiring and they just become wildly efficient and become wildly profitable and this will be a
00:21:40
renters renters you know story where people who have equities and people who own property are
00:21:47
going to do fabulous over the next 5 to 10 years and then the 40% 50% of people who don't are going to really be feeling
00:21:54
a pinch well it does depend also on how lever they are so just to give you a sense total us household corporate and
00:22:01
government debt which include state and local and federal so household debt in the US about 18 trillion corporate debts
00:22:08
about 11 trillion state and local government debts 3 trillion obviously the federal debt 36 trillion that adds
00:22:14
up to a whopping $68 trillion of total debt across um the US which if you assume a 6% average interest rate you
00:22:23
know you got corporate debt and household debt so it's a little more risky so it carries a higher rate that
00:22:28
means we're spending about $4 trillion a year of an economy that's only 29 trillion a year to service the debt just
00:22:36
to pay the interest on the debt so 15% of every dollar that trades hands is going towards interest payments on
00:22:43
existing leverage on existing debt it's a highly leverage system and if you look
00:22:47
around the world this problem is not just a US challenge Global Leverage is a problem that's now becoming a crisis for
00:22:54
uh countries everywhere the UK is waiting on a big budget proposal this week higher taxes is going to be in
00:22:59
there to make up for a budget deficit which is currently 4.4% of GDP the UK economy is only
00:23:05
growing at 0.9% a year France has a major budget crisis underway right now they're struggling to reduce their
00:23:11
deficit from 6% down to 5% of GDP and they've got skyrocketing bankruptcies 74% of people that can work in that
00:23:18
country are working and they have and that's because of large social programs that support the balance 7.3% technical
00:23:25
unemployment and uh they're raising tax on 440 firms 440 companies in the country that make a billion or more in
00:23:32
Revenue with a quote temporary tax there's a 4% searge on income over 500k that's going into effect second home
00:23:39
real estate taxes and so on France is struggling to figure out a way to generate Revenue to make up for the
00:23:44
shortfall in Brazil there's a major budget crisis States owe $130 billion to the federal government there inflation
00:23:51
is accelerating at 4.6% rates are going to go higher and longer complicating other economic
00:23:57
growth opportunities in the country so um this is becoming kind of a global leverage problem which might explain the
00:24:04
flight to Safety in assets like gold and Bitcoin and um is going to present a lot
00:24:09
of real struggles for every global economy now the question is does the US dollar maintain its Reserve status
00:24:16
because ultimately I think it is inevitable that the Federal Reserve in the United States is going to need to
00:24:22
buy the debt they're going to need to monetize the debt which means printing money there is no one else to buy the
00:24:28
debt so pull up the China chart Nick China's historically been the biggest buyer and owner of us treasuries but
00:24:33
here's what's happened in the last couple of years it peaked at about $ 1.3 trillion about 10 years ago and then
00:24:39
recently particularly starting around Co they began selling down and have been selling down at an accelerated Pace
00:24:46
today China is back to the level they were at nearly 15 years ago in terms of their treasury Holdings and they have
00:24:52
publicly declared that they are selling off us treasuries and buying gold instead so the big buyer of us
00:24:59
treasuries has kind of left the market or is leaving the market who does that leave well at the end of the day the
00:25:05
Federal Reserve has been the kind of buyer of Last Resort and if they end up buying treasuries that's where we have a
00:25:12
problem with too many dollars and inflation kicking up and so it feels like a lot of the trades in assets are
00:25:18
what's going to benefit from the inflation and it's going to be gold it's going to be Bitcoin and in some cases
00:25:25
because you're pumping more money in the system it's going to be equities and uh
00:25:29
that might explain why equities are moving up as well where do you guys invest here I mean chamat like do you
00:25:36
care about how the Market's position or how you're positioned in this election right now and based on how we're seeing
00:25:42
markets trade and what these kind of macro indicators are telling us or you just business as usual heads down invest
00:25:48
and build as you always have yeah I I think that you can't trade these things and any attempt to do it is
00:25:57
probably a level of false decision where you're going to lose more money and there's a lot of slippage and even just
00:26:02
trying to execute it I mean at the beginning of the year I said the breakout asset was going to be
00:26:09
Bitcoin I think it looks like it's going to be the resounding inflation hedge asset for the next 50 or 100
00:26:16
years so that die has been cast I think you're seeing the last vestages of people using gold as a rational
00:26:25
economic insurance policy but I think the future is specifically Bitcoin on that
00:26:33
Dimension so I guess you could trade that you could speculate on that I think the question that I've been grappling
00:26:39
with is in my scenarios what happens if K Harris wins what the markets do and I actually think it would reverse a lot of
00:26:48
these Trends over like the last month and a half like I said I really do think that there's a repositioning rebalance
00:26:52
component to everything that's happening right now so I don't think there's much
00:26:56
to do unless you have a very specific specific bet that you want to make I would just keep my head down and
00:27:03
keep building are you the same place are you are you Jake K are you guys trading
00:27:07
at all and I mean I I think trading is a mistake time in Market is better than trying to time the market and as I said
00:27:13
before where is all this money gonna flow all this spending ass class right I mean that's that's the key question
00:27:18
right like do you change what assets you own I don't think so and I I I do think
00:27:24
there's another thing that's worth sort of unpacking here because when you do see people feel like the economy is
00:27:31
working against them all kinds of interesting movements start cultural movements Etc and I think that's what
00:27:38
we're seeing in this election is people who believe in capitalism and free markets and people who don't people who
00:27:42
believe in free speech people who don't people who see themselves as victims victims and then other people
00:27:48
who see them as creators and I really study a lot of like what young people are doing and I don't know
00:27:55
if you guys are watching sort of the anti-war movement or the fire movement which is financial Independence retire
00:28:02
early a lot of young people now are looking at financial markets whether it's Robin Hood or coinbase or prize
00:28:11
picks whatever Market it is young men especially and they're saying I need to control my destiny I need to this
00:28:17
capitalism is not working for me I need to own equities I need to make trades and I need to retire early and have
00:28:25
experiences because the capitalist system is broken to some extent and then then there's another group of people who
00:28:29
are just anti-work and there was this term back in the day called neat not employed not being educated and not in
00:28:37
training basically the people who are called the patient and we're 10% off that maybe
00:29:00
more maybe we're at 61 or 62 I think a lot of people are going to give up because the debt is going to be so
00:29:05
crushing that the logical thing to do if you don't think you can get out from under it might be to move in with your
00:29:10
parents or two or three other people tighten your belts and enjoy life and go skiing and and and go have experiences
00:29:16
and a lot of young people are electing to do that in other words they're oping out the American dream sorry to your
00:29:21
point the one thing the one thing that I realized with a lot of young men that Jason I think you're you're really
00:29:27
hitting the nail on the head is a lot of them now do not view the job that they do as their only path to economic
00:29:36
independence and if anything they may do a job but then they're actively trading
00:29:42
on the side something crypto options whatever they're on Robin Hood they're using
00:29:48
coinbase because it's almost like they've separated in their mind that the job they do will never give them the
00:29:54
financial Independence they want and so instead they're going to do that job because they like it hopefully they love
00:30:00
it but then separately they're going to go and speculate to try to make money it's a really interesting thing because
00:30:05
I had always been taught you earn your wealth through the job you have and so if you wanted to make more money you
00:30:10
have to ladder up and do something different yeah so that that's not true that that idea has been sort of
00:30:16
decoupled now that's a really interesting change in how people approach work I call them gen bet like
00:30:22
they're the generation that believes on there's just like subset of them it's not all of them a number of them are
00:30:26
just quiet quitting and they just don't believe in capitalism and then there's this other group which are like trying
00:30:31
to get control I call them gen bet because they just want to bet on themselves and you know and if they
00:30:37
don't get wrecked by the financial markets CH trading options you know and and doing PR sorry the other the other
00:30:43
thing I'll say just in recruiting a bunch of people at 8090 over the last three or four months is there is an
00:30:50
enormous difference that I have seen psychologically in the people that are 25 and older versus the people that are
00:30:58
25 and under and I'm calling 25 as a rough number but there are kids that are 18 19 20 21 years old that are off the
00:31:08
charts good they're motivated they're hungry they're like let's get after it and they are honestly different in the
00:31:15
way they approach their job than folks that are in their late 20s and early 30s these folks I think they're the first
00:31:20
generation who didn't go into debt in college and didn't buy into that like so they might the the Millennials ahead of
00:31:27
them might might have like taken the bullets you know yeah the folks that are in their late 20s early 30s and I'm not
00:31:32
trying to generalize or disparage but they lack a level of motivation again generally speaking that the youngest
00:31:39
folks in the workforce have and that also that people in our generation sort of have so they're sort of sandwiched in
00:31:46
between a very different way of approaching work and as a result they stand out and I don't think they're
00:31:52
standing out for all the right reasons well the majority now of young people the number I believe and Nick if
00:32:01
you could pull this up 57% of Jen's years want to be influencers as their primary career now that the idea of
00:32:10
working a job is almost like a secondary option the primary option that everyone
00:32:16
would thri strive for is to be an influencer and this number has grown considerably continues to grow and in
00:32:25
fact if you look at the the rest of this report this was out of a did you say 50%
00:32:30
of gen zers aspire to be influencers correct okay 57% as their career or just they want to be influential and build a
00:32:40
brand around themselves I wonder that's what they want to do for a living that's
00:32:44
what they would like that's what they want their paycheck to be interesting they want to be independent
00:32:49
and I don't think they believe this they believe the system's rigged against them
00:32:52
and why wouldn't you think the system's rigged against you if you went 150 or 250k in debt and you couldn't get a good
00:32:57
job job sax as a successful influencer how would you advise the youth on their career
00:33:03
choices well played yeah look I think that believing you're going to be an influencer is like believing that you're
00:33:09
going to be like a rock star or movie actor something like that pro aete pro athlete yeah it's like a one in a
00:33:16
million shot it's just not a great thing to want to design your career around because
00:33:24
it's just very unlikely to happen so I think you're better off finding a career that you're passionate
00:33:30
about but where you're actually adding value the world doesn't need 50 something per of the population become
00:33:36
influencers that's kind of crazy it it reminds me of a line from Fight Club where Tyler Duran says we've all been
00:33:43
raised on television to believe that one day we'd all be millionaires and movie gods and rock stars but we won't and
00:33:49
we're slowly learning that fact and we're very very pissed off and that was Gen X that was J X yeah so that was us
00:33:56
they headed they're headed for a uh a fight club like realization about this SX how do you advise a young person on
00:34:05
there there's this temptation to go and spend all this time making content and pursue that as your career and that's a
00:34:10
life opportunity for you now it's more free and open they would think than perhaps being a movie star or a
00:34:16
basketball player used to be so I think it's it's just uh important to recognize
00:34:21
that if we ourselves are influencers the the reason why we're not being hypocritical is that none of us here
00:34:28
with the possible exception of JAL ever set out to be influencers right we did something different we actually had a
00:34:33
career and we did something interesting and then as a result of that maybe people want to listen to our pod the
00:34:39
idea that you can just go be an influencer without having actually done anything interesting what's your
00:34:45
credential for that so what I would advise is just people should go do something productive and then you know
00:34:52
if it leads to other people wanting to hear from them then that that's good but out to be someone that other people
00:34:59
should listen to without having any experience or having done anything productive in your life it's like why
00:35:04
should we listen to you yeah one thing I I did build and sell two out of my three
00:35:08
businesses over the years but there are tens of millions of people making money in the long taale as
00:35:14
a content creator and it's low thousands of dollars in some cases per month but if you combine that with people who are
00:35:20
gig economy workers and they don't believe in the system because they worked really hard they got this job at
00:35:26
Google they went to the office then they got laid off and nobody cares about them
00:35:30
now they're getting dragged back into the office they still have these payments and then they look at this
00:35:34
other system where hey they started to get 10,000 followers they started to make $11,000 a month then $3,000 a month
00:35:41
they actually see a path to being independent of a system that has no loyalty to me and that's what I hear
00:35:48
from folks and I think it's great if we're not going to be loyal as like corporations to individuals those
00:35:54
individuals are now responding and the anti anote to that poison of just being laid off randomly or being dragged back
00:36:01
to the office after you told you could work from home all that stuff they now believe hey I can be independent and
00:36:08
then you have to fight to get my services and I think that's what this is about if and and well we're g to talk
00:36:14
about Starbucks later and I think that's a big part of the Starbucks problem having a side hustle makes you
00:36:19
antifragile you you have other sources of income and you can tell your boss to f off and that's what young people are
00:36:26
doing I've seen it seen people just quit jobs and just say you know what I've got
00:36:30
other ways to make money and I don't have a big burn rate and so that's smart for young people to do that and I think
00:36:35
my advice would be to build your brand be as independent as possible and to make things in the world and show people
00:36:41
what you made that's the best thing you can do can I can I give you the other side of this before we go back to macro
00:36:47
yeah imagine that Tom Brady who really respected bill bellich but I wouldn't say is super fond of him they're not
00:36:55
super close but imagine that Tom Brady had a side hustle and let's just say he drove an
00:37:01
Uber and he made enough money where when things got hard and he didn't get enough
00:37:05
playing time he opted out would that have made Brady the person he was I think the answer is
00:37:11
no I think there are a lot of people who started companies after being in very difficult and challenging environments
00:37:19
that stretched and pushed them beyond their comfort zone and they lived in that world for years before they started
00:37:25
something if all of a sudden the answer is let me have an escape hatch so that I can
00:37:33
egress off whenever things get hard I don't think you're going to accomplish much of anything because I'm not sure
00:37:39
that that is the kind of boundary conditions that push greatness upon people so I would just keep that in mind
00:37:46
as well I'm not sure the side hustle solves anything it may actually allow you to quit before you actually get to
00:37:52
the other side of something and realize what you're capable of yeah I think that's a great point you
00:37:57
kind of have to mentally burn the boats when you do a startup it's Cortez you got to burn the boats yeah I agree with
00:38:03
that your life your life needs to be like Cortez you got to burn the boats if you keep the safety net with you as you
00:38:11
move through life all the time and you never put yourself at risk you're never going to figure out what you're capable
00:38:17
of and then you're going to look back at some point and the odds that you're going to be disappointed are higher than
00:38:23
if you actually just tried and lived it it and just said okay you know what I'm really glad I'm on myself here to wrap
00:38:29
up the the conversation about where markets are headed SX I think we were going to just do a quick round the horn
00:38:34
anything that you've repositioned in your portfolio around investing or asset classes that you shift as we Face kind
00:38:41
of looming budget crises the election cycle I'm trying to sell every single SAS startup I have in secondary markets
00:38:51
and you know how many bids there are for these SAS companies negative one bid H that's interesting I had a couple of my
00:38:58
startups get get offers I've had three or four secondary offers in the last two weeks
00:39:03
I've had to like deeply consider and they weren't like 75 what kind of companies let's see two were SAS and
00:39:10
then one I can't say because it' be too easy to guess but the Bottom Feeders went from offering like an 80% discount
00:39:16
to now a 25% discount so you know you're not allowed to sell your your shares and
00:39:20
all in right I'm trying I'm trying Brad G's bought 7% so far so I'm I'm I'm quickly offloading to G much as I you
00:39:28
just you just super tilted freeberg there looking he's laughing but inside just the s% he gets 16 minutes per you
00:39:37
know what if he if he'll moderate I'll have him I mean this is moderation going okay or should I jump in and save the
00:39:43
show he should write all in a get fit memo just on the question of you know how do you reposition so first of all
00:39:49
the easy one to avoid is is treasuries right I mean do you really want to accept a 4.2% yield for 10 years to own
00:39:58
a US Bond and with the looming inflation that is still out there or the looming de crisis that might be out there so
00:40:07
that's probably the easy one I think the hard one is around equities because equities are at an all-time high part of
00:40:13
the reason why they're an all-time high is because the FED telegraphed that we'd
00:40:18
have big rate Cuts this year remember at the beginning of this year they said there'd be seven rate
00:40:23
Cuts those expectations have kept coming down I think we had one I guess we had a
00:40:28
double rate cut last month and we were supposed to have one more 50 bit rate cut this year I have to wonder if that's
00:40:33
still going to happen and more to the point if you believe Dr and Miller and Paul tutor Jones we might be in for a
00:40:41
extended period of higher interest rates for longer and that will be bad for equities equities normally are inflation
00:40:50
protected in the sense that those companies can just raise prices over time to keep up with inflation and so
00:40:55
equities are generally a pretty good thing to own in the face of inflation but if we're in for a period of high
00:41:02
interest rates longer than anyone thinks that's going to be bad for equities well
00:41:06
I would just argue one thing which is except in the scenario where you believe the only inevitable path is for the
00:41:13
central banks to monetize the debt meaning the central banks step in to buy the outstanding treasuries that need to
00:41:20
be issued which both supports inflation but also introduces Capital into the system and that's where both equities
00:41:27
that that's where you could see a scenario where equities and gold go up while fixed income goes down to to have
00:41:32
higher rates so it's effectively a money printing indicator or signal now my personal position on this going into
00:41:39
this new era if it manifests as the markets are telling us it will is kind of where Paul tutor Jones is I think
00:41:46
that Commodities have and you know gold is a commodity everyone talks about it as being the safe haven asset but there
00:41:52
are other Commodities out there that are much more fungible and used in in production Cycles to make food to make
00:41:59
energy to make goods and a commodity linked businesses meaning businesses whose revenue or profit grows with the
00:42:07
underlying commodity price growing will outperform other businesses they're going to struggle to raise prices or
00:42:11
struggle to pay higher labor costs or struggle to in to deal with higher cogs whereas commodity link businesses that
00:42:18
effectively just make a margin on the Comm example a mining business so businesses that do mining of of Natural
00:42:26
Resources um businesses that trade agricultural Commodities so those businesses usually
00:42:32
make kind of a fixed margin on the underlying commodity price and they do they do well in these Cycles so anyway I
00:42:37
think that Paul tutor Jones rather because if you own a commodity it's not a productive asset it's not generating
00:42:41
yield for you but if you own a business that's making a profit and just seems like it's easier to own Bitcoin that's
00:42:48
one asset but the Bitcoin isn't a productive asset right I mean so that's one one way to kind of build a portfolio
00:42:53
but I I personally like owning businesses where they're doing something and making value and in the process they
00:42:58
earn a profit especially if the profit grows with an underlying inflationary pressure on Sak's point about the equity
00:43:05
markets there is this thing that people look at called the buffet indicator which is the total value of the Wilshire
00:43:10
5000 divided by GDP he mentioned it in 2000 and said it's probably the most reliable measure of where equities are
00:43:20
and where they're about to go and there is this long run mean when you calculated going back back you know 50
00:43:28
60 years and every time it's had a short-term High there's been a pretty meaningful retrade so in 2000 in the
00:43:35
Doom bubble in 2007 during the great financial crisis during covid and now we've
00:43:42
actually set an absolute new high in this thing which again to the extent that you believe in indicators like this
00:43:49
would kind of tell you that at some point here equities are probably going to be cheaper before
00:43:56
they're going to get more expensive this is definitely the high end of normal Nick if you pull up the PE chart this is
00:44:03
the obvious one to look at is you know not just the how dramatic the stock market Peaks are but you know the the
00:44:10
price earnings ratio and it's uh at the high end of normal at like I don't know if we're at
00:44:15
25 um PE ratio on average David's right how can you get 4.25% when you have all of these risks
00:44:24
looming over the next 10 years because you know Howard marks his letter uh he he had an investment
00:44:29
letter that he published this week and it was so great because it was so elegant in its Simplicity which is
00:44:37
investing in an equity and investing in a bond are just completely opposite to each other even though they're treated
00:44:43
and spoken as if they're the same thing and his concept is like people need to understand exactly what the terms fixed
00:44:51
income means it means that you will get something reliably over a long period of
00:44:56
time time and so the question is whether is that fair knowing everything you know
00:45:01
today and I mean all of you guys have said this now for feels like years and when you show these charts of like
00:45:10
ballooning debts and deficits is it reasonable that the market clearing price for government
00:45:17
issue debt over the next decade is 4% I mean my gosh it could easily be 6% it could easily be seven or 8% that is very
00:45:26
scary totally the big difference between a bond and a stock is that the bond provides you with like you said fixed
00:45:31
income payments and those would be horribly debased if you have high inflation a stock gives you earnings and
00:45:39
a company can always raise its prices and so in theory it should be hedged against inflation but both a stock and a
00:45:46
bond are similar in the sense that they're both hurt badly by Rising interest rates right because the
00:45:53
discount rate is higher so this is where I'm just not sure about equities if we do head into a new regime of higher
00:46:00
rates longer does that hurt equities even though equities normally are pretty good inflation hedge so I just don't
00:46:07
know the answer to that I do think we're headed for a period of constraints I think that since 2008 we basically were
00:46:16
living in a sort of a consequence-free environment where the FED could keep interest rates at or near zero the
00:46:24
federal government could spend as much as it wanted we we you know we sort of normalized emergency conditions first we
00:46:30
had trillion dollar deficits as a result of the 2008 GFC and then those got normalized then we had2 trillion doll
00:46:38
deficits as a result of covid and those got normalized and then the Fed was also
00:46:43
doing QE which means that it's buying the US government's own bonds thereby propping up us bonds and the bond market
00:46:53
so now that's normalized that's normalized yeah keeping interest rates lower than otherwise would need to be to
00:46:58
attract those Bond holders so for about 15 years we kind of normalized emergency
00:47:05
conditions and consequence-free spending by the US government I think now we're we may be entering an era of
00:47:11
consequences and what that means is that you can't push on one aspect of the federal government's balance sheet
00:47:18
without giving up on something else so in other words if you're going to allow higher inflation basically monetizing
00:47:25
the debt the bond markets are going to make the government pay higher interest rates on its debt right because they not
00:47:30
dumb so we're going to be in a world of higher interest rates which means that equities get clobbered real estate gets
00:47:36
clobbered the value of people's homes gets clobbered so there's real consequences from that or you can tackle
00:47:43
inflation you know which means that the fed's going to have to tighten but then I think what that means is the federal
00:47:49
government's going to have to get religion around spending they're not just going to be able to spend all of
00:47:54
this money we've seen this austerity measur in Europe right were pretty hard for people in Greece and Spain and to
00:48:01
get their heads around and I think Americans are going to have to get used to we can't just spend and give handouts
00:48:06
constantly on the equity side though there's also the concept sacks that you can cut spending and increase earnings
00:48:13
and that that's well within your control as a CEO and board and that's exactly what we've seen coming out of Co and I
00:48:19
said it here a couple years ago I think the earnings are going to do well because people have this other lever and
00:48:25
they can just turn the dial and reduce spending and increase earnings and it's like oh that's painful but it's not so
00:48:32
painful that it's not worth doing and so corporations have gotten religion around
00:48:37
cost cutting and austerity and increasing earnings the question is and individuals have to so they're pushing
00:48:44
out buying new cars and uh spending on travel so then what happens when does the government get that austerity that
00:48:51
companies and individuals are forced to do and that's the problem you keep talking about freeberg is you know this
00:48:58
entire election cycle is about who can give more free enough with the free like somebody's got to be an adult in the
00:49:03
room and say we don't have any more free left I think this is what the market is
00:49:08
saying is that regardless of who gets elected here they've both kind of shown that the deficit will increase not
00:49:14
decrease uh under their presidency and look maybe that is positioning to get elected and maybe there is a kind of
00:49:21
more rational underlying economic Advisory Group that is counseling a different path than what they are
00:49:27
presenting and I I hope to whoever is listening that that is the case for both candidates uh very deeply hope if you
00:49:37
look at what happened in Argentina so we've talked a lot about Javier mle he came in as president and um his
00:49:43
austerity measures by absolutely slashing government spending has reduced monthly inflation from 25% to around you
00:49:51
know three and a half percent so he's really kind of brought inflation under control but the consequence of that is
00:49:56
that the economy has now shrunk because the government is spending less that means there's less revenue for certain
00:50:01
businesses there's less income for individuals so they spend less so the economy has shrunk by 1.7% in the last
00:50:08
quarter and um unemployment has spiked so now unemployment is at 8% in Argentina and it's rising fast so for
00:50:15
the US to actually execute this policy when we have a fundamental mandate for the Federal Reserve to keep unemployment
00:50:24
low means that something is going to have to break you can't keep unemployment low and inflation low if
00:50:31
federal spending gets too high and federal debt gets too high so we are in a condition now where federal debt is
00:50:37
too high and if we cut federal spending too fast we end up seeing unemployment Spike and if we don't we're going to
00:50:43
have inflation those those are the two paths we could walk just one thing to challenge what you say because I
00:50:51
actually I disagree with it is that I don't think that people view the spending package of both candidates the
00:50:57
same because the dollar is not created equal so there are certain programs that the Republicans have proposed that are
00:51:06
markedly different than the programs that the Democrats have proposed even if the numbers look the same and so this is
00:51:13
why I think you have to look at how the short-term markets when they thought Kamala was winning behaved versus now
00:51:19
the short-term markets short-term mean how do you hedge this risk and that is completely changed and this is why I
00:51:25
mean over the last 30 days you've had a complete and absolute repositioning of the front end of the yield curve in
00:51:33
terms of risk and who's making the bets and I think why is because the the Trump
00:51:40
package whether we agree with him or not is viewed as more stimulative to long-term economic growth which is why
00:51:47
the inflation risk is being hedged out versus The Comma risk which is they're just going to spend money now on top of
00:51:54
that what I would say is this may be where Elon Musk being able to streamline the government could be an
00:52:07
incredible gift for us as well as our children and our children's children and why is that it's because if there's this
00:52:14
sort of Damocles hanging over us constantly of billions and trillions of dollars of wasteful
00:52:21
spending he is probably in a position to show us that we have spent decades spending more and getting
00:52:30
less and now we can run the ab test where we spend meaningfully meaningfully less cut regulation and if we actually
00:52:40
get more you will have the proof and That Could set us on a long-term path of being more judicious in how we spend
00:52:48
money and I think that we deserve to run that experiment somehow to just go back
00:52:53
to your your definition of GDP it's true that if you cut government that might cut GDP because GDP includes government
00:53:00
spending however one could argue that although technically that is how the definitions work that by cutting
00:53:09
government you actually unlock resources that could be used by the private sector
00:53:13
and that ultimately it would lead to more efficiency but also stimulate the private sector and I think that argument
00:53:20
is particularly true when you've got an economy running of Full Employment so you know if we had lots of unemployment
00:53:26
then cutting all these government workers would be very painful but if you've got an economy that's doing quite
00:53:32
well and there's a lot of job creation going on then it's a good time to actually cut government because the
00:53:37
private sector can reabsorb these people we should use the fact that we still have that we have a good employment
00:53:43
picture to make these painful Cuts now as opposed to waiting until it would be far more difficult best point I've heard
00:53:50
in a long time that's a great Point sex give us the election update what's going
00:53:53
on are we going to get your guy in office is it going to be uh vice president Harris what's the
00:54:00
sense of what the polls are telling you of what the markets are telling us what's your read on where we're at all
00:54:06
the data is basically pointing One Direction which is a trump Victory and by data I mean the polling I mean the
00:54:12
prediction markets and then the early voting numbers so if you look at the the polls there were two new polls by
00:54:19
mainstream Media One The Wall Street Journal yesterday said that Trump was up three nationally
00:54:27
and I think CNBC had a poll this morning saying that Trump was up two nationally
00:54:32
that's very good because that's the popular vote that's a popular vote so if Trump is winning the popular vote it's
00:54:37
Landslide most prognosticators say that because the Republicans have a slight Electoral College advantage that Harris
00:54:45
would need to win the popular vote by more than 2% to have a chance at winning the Electoral College so if Trump is
00:54:52
winning the popular vote then it's a landslide second area is if you look at the
00:54:58
state-by-state polling Trump has been advancing pretty much in every Battleground State for the last couple
00:55:05
of weeks if you use RCP Trump is now ahead slightly in every Battleground State and the momentum is all towards
00:55:11
Trump and then the final data point is around early voting in states where they have this early voting and put out the
00:55:18
numbers the Republicans are tracking well ahead of where they were in 2020 now there's still a question of you know
00:55:25
do this mean that Republicans are just shifting their votes to voting earlier and then they'll do less well on
00:55:31
Election Day there's always that chance but right now if you're a republican it's what you want to see and if you're
00:55:38
a Democrat it's definitely not what you you want to see yeah and the essay that Nate silver wrote that was published by
00:55:44
the New York Times yesterday said it's a 5050 tossup either candidate could win but my gut tells me it's going to be
00:55:50
Trump he's kind of indicated that's where you know as a guy who's obviously been a big prognosticator says the
00:55:56
Market's headed jel you think saaks is is right on this anything for to mention prediction markets prediction markets
00:56:03
have moved very very sharply in favor of trump it's almost two3 oneir now in favor of trump so there's been a huge
00:56:10
move among betters that Trump is gonna win on poly Market yeah poly market and then Ki as well do you think it's over
00:56:17
jcal I'll go with Nate I mean I think Nate's probably the best thinker on this who I
00:56:25
think puts a lot of into it if he says it's 50/50 with a slight advantage to Trump I think I would go with his gut
00:56:32
but he's saying don't trust anybody I don't trust the prediction markets and I think the prediction
00:56:38
markets are closing that Gap as we get closer because they are easily manipulated poly Market is only offshore
00:56:44
right the US market is not allowed to participate in poly market so it's all foreign investors now of course
00:56:50
Americans could be putting money overseas somehow and and using foreign accounts to to place these bets I'm
00:56:56
guessing if you were a sharp and you really want to make money that's what you would do so I don't know what
00:57:01
percentage of it it was it was reported this morning that a French Trader has bet $45 million on Trump on poly Market
00:57:10
that he is the whale he's a French national with quote extensive trading experience he's not quote manipulating
00:57:15
the market he just really is trying to build a big position so he sounds like he's a pretty active Trader that uh made
00:57:20
the big move but it's a crypto-based site so you you get the benefit of like you can track some amount of this on
00:57:26
blockchains and then eventually find the person but because it's crypto as well you can also hide yourself pretty well
00:57:32
with tumblers and other systems so I I would discount poly Market uh a bit it's probably not as Extreme as it seems but
00:57:40
it does seem like kamla has not helped herself with the interviews they haven't been great
00:57:47
and um you know it it is a tossup and so it's any surprise any October surprise come in I mean there have been a few
00:57:57
attempts the last couple days I mean it seems like the rhetoric for 24 hours there have been some really gnarly ones
00:58:01
that we shouldn't give it I don't think we should give any freedance too but some Republicans have been coming out
00:58:08
talking about like a really gnarly one about the Republican side and I mean it's not much more gnarly than other
00:58:15
things that have been said about Trump already and judgments that Trump is against him already for $100 million so
00:58:21
it's in that vein but I do think that that looks to me like it's cap and I think there's going to be a lot of fake
00:58:28
news maybe even deep fakes that come out you know in the last week or two so I I
00:58:32
think people should not trust anything they see on social media be very careful with that information I'll tell you guys
00:58:39
my kind of view is like things seem to be getting more inflammatory leading up to the election here it's like we've got
00:58:46
12 days left or or whatever it is and the the rhetoric and the tonality of the stuff that's being said is getting so
00:58:54
nasty on both sides and um I just worry more about the reconciliation reconstruction phase that
00:59:03
needs to happen in America see it on both sides is it equal on both sides you think that's your
00:59:10
observation um I like I you know I think like Trump leaning out the window of McDonald's and
00:59:17
it was I I mean I laugh pretty hard when he was like someone said to him when they interviewed Trump when he was
00:59:21
serving french fries and he said something like I've now worked in McDonald's 15 minutes longer than kamla
00:59:27
has and then they one of the reporters said well why do you think she would lie about that and he leans out the window
00:59:31
he says because she's lying kamla and you know it's a funny joke that's his quip he makes fun of everyone but I
00:59:37
think the whole thing about making fun of everyone it's such a different tone and a different rhetoric then I think
00:59:42
what's going to be needed because imagine if she wins and you know he's painted her as being you know a liar and
00:59:49
crooked and deep State I mean look I'm you can possibly compare that to what the Democrats are saying right now which
00:59:54
is that Trump is literally hit call him a fist she called him a fist she said it's democracies on the line
01:00:01
and obviously when you say something like that when you say that the fundamental system of the electoral
01:00:07
process is on the line it implies that if he wins We've Ended democracy that will inevitably lead people to feel like
01:00:16
we are in a place of civil chaos and I don't think that anyone's going to feel good coming out
01:00:22
of this how do you guys think we kind of deal with a like the election outcome here one side or the other I mean half
01:00:30
the country's gonna hate the president and half the country is gonna hate where where we are and how we sit as a country
01:00:35
and half the country is going to think that democracy is over I mean one half is going to feel like this is the end
01:00:41
and it's it just a temporary thing and everyone reconciles and we all like get back to work and the election's over and
01:00:46
whoever wins wins I think unfortunately the mainstream media is responsible for giving roughly half the country a
01:00:53
psychosis about Trump because they are pushing out this rhetoric non-stop that he's a fascist that he's Hitler they
01:00:59
keep putting out all these fake stories and they are basically training people or indoctrinating them that he's just
01:01:06
like threat to democracy I was having dinner last night with someone who's a Democrat who pretty much gets all their
01:01:10
information from mainstream media and she's like terrified of this it's just not who Donald Trump is it's a it's
01:01:16
ridiculous hyperbole but if you're locked in that media ecosystem and that's all you hear you really are
01:01:22
frightened by this so I think that the media the media's irresponsibility the way that they don't report honestly and
01:01:30
that they Jin up these threats has really terrified half the country do you think that the Trump trump is Hitler
01:01:36
rhetoric indicates that the Democrats feel they're lying I mean that's like pretty par for the course what's so
01:01:43
horrible about that I mean you could make the argument that she's lied about a lot of things as Anderson Cooper
01:01:49
interrogated her quite well just yesterday on that town hall he pointed out that she had said 50 times that
01:01:55
Trump's was a stupid idea and now she appears to be in favor of it so I think that accusing your opponent of lying is
01:02:01
pretty par for the course for a politician what's not part for the course is saying that your opponent is
01:02:06
literally Hitler and a fascist that's just going to a whole different level of rhetoric okay jamat do you think we're
01:02:15
in a nasty State and we're going to be able to get out of it after the election and I think we're going to be fine okay
01:02:21
I'm actually pretty optimistic because I actually don't think it's going to be that close I mean right now it's looking
01:02:26
like maybe Landslide is too strong a word but a solid victory for for Trump that's what the polls are showing that's
01:02:32
the prediction markets are showing that's what the early voting is showing and if you look at all the other data
01:02:37
points right now it's showing Trump winning pretty handily the other data point that we haven't talked about is
01:02:43
just how these campaigns are acting in the final stretch if you look at the Trump campaign is pretty much Steady As
01:02:49
She Goes you look at the comma campaign and they're in this throwing spaghetti against the wall mode they're back to to
01:02:56
kind of the dark Brandon type messaging where the reason to vote for us is Trump's a fascist this is very different
01:03:03
than their messaging when they made the switcheroo from Biden to Kamala right when they first made that switch they
01:03:09
said okay let's get away from this dark Brandon threat to democracy type messaging it doesn't seem to be working
01:03:15
let's emphasize KLA Harris as a change agent as a transformational candidate as a candidate of joy and positive vibes
01:03:24
and they did get a big bounce in the PS because of that the problem is that over
01:03:29
the last couple of months that sort of Bounce in the polls has worn off as Harris has not been able to explain what
01:03:36
she would change she keeps getting asked in all these interviews what would you do differently than Joe
01:03:41
Biden Anderson Cooper just asked her that yesterday for like the 19th time and she still does not have an answer to
01:03:47
that question and so the problem she has is that the sort of veneer they gave her
01:03:52
as this change agent has kind of worn off and she seen as a continuation of Biden and the public does not want a
01:04:00
continuation of Biden and so now it feels like they're frantically trying to figure out how to reposition they're
01:04:06
back to the to the the anti-trump sort of hysterical messaging which didn't work it wasn't working three months ago
01:04:13
when they made the the switcheroo so I tend to think that if you look at the behavior of this these campaigns it's
01:04:18
pretty easy to see which one feels confident and uh and which one is in a panic okay Jal if you could go back in
01:04:25
time and you were kamla's adviser when she became the nominee what would you have advised her
01:04:32
to do differently than she has done in this campaign today I would have had a speedrun primary and I would have let
01:04:38
democracy play out that was the big mistake when when the Democrat if the Democrats lose I think they'll look back
01:04:44
yeah 100% but and and then in terms of thinking about why people believe that Trump is an existential threat to
01:04:53
democracy I encourage everybody who's a fan of this podcast to go back to episode 16 of the all-in podcast and
01:05:00
that's the episode where we all reacted the week of January 6th and we all had great consensus amongst us that we
01:05:10
thought this was one of the most disgusting horrific days in the history of the country and that
01:05:15
Trump was trying to overthrow the election results and that he was doing so in a non-democratic fashion now I
01:05:23
know some people have re underr it or changed their positions but encourage you all to pause this episode and go
01:05:28
back and listen to our very thoughtful discussion on episode 16 of the Allin podcast because we were scared as well I
01:05:35
think that things happen in a moment and you have to have enough compassion to say you react in a moment but then you
01:05:42
also have to have the intellect to separate yourself from the things that happened learn more and possibly and
01:05:47
potentially change your mind I don't want to be defined by a thing that I said in a moment and I won't do that to
01:05:54
other people in that moment I thought what happened was really terrible and then since then
01:06:00
I've got to know the person and I don't think that he actually incited much of anything that's my belief yeah and
01:06:06
that's fine that's your belief but I do think there's another group of people agree with your original assessment yeah
01:06:12
well I think that those people need to also rewrite the way I did because I'm not really want to flip for random
01:06:18
reasons but that's not the point the point is I think that if you still believe what you believe then then you
01:06:24
should tell people to listen to you said yeah okay but there are L listen to what
01:06:29
sa said and listen to what free said I thought we had a very productive discussion when it happened I think
01:06:33
people have memory hold it what you're trying to say which I I partially disagree with is those beliefs have
01:06:40
changed over time and I think it's it's more balanced for you to say that that's
01:06:44
a point in time and if you believe that that point in time still exists that's fine for you to say that but I think
01:06:51
that's the way that you should say it the other thing that I would like to say about this election which I find really
01:06:56
interesting is we are in the part of the cycle now where the side that's losing is going to
01:07:05
panic and I think it's happened a couple times but I would just remind everybody
01:07:09
we have run the ab test we know what the presidency is going to look like under Trump except
01:07:16
you get a real vice president plus RFK plus Elon Musk whether you like them or not but my point is I think you need to
01:07:23
consider that you're getting four for the price of one and if the other side if Harris wins you mostly
01:07:32
know what the trend will be because you've seen the trend under four years of Biden the second thing is I think it's
01:07:42
interesting to see that when you get into the home stretch the losing side tends to turn on itself because they
01:07:49
start to play protectionism for their own careers and there's a lot of stuff that
01:07:54
I think you can consume that starts to show that and I think that's just an interesting observation a
01:08:00
lot of the tried and true most reliable media sources that I think were trying to
01:08:06
navigate as much as possible for a pro Harris presidency are starting to push back in
01:08:12
a way that I find a little surprising I think the CNN town hall yesterday was one of those moments for me where even
01:08:20
people like David Axelrod a little bit throwing kamla Harris under the bus I didn't expect that at all
01:08:26
so I think it's just important to observe that these things are happening I would agree with that we're going to
01:08:31
make it through whatever hold on let me just give one thing to to your point jamat since you know I am challenging
01:08:36
you with that episode 16 call out I do hope that whoever wins we all support that person to do the best they
01:08:44
can for all Americans and that's always been my commitment and I did it the last
01:08:48
two times and I we will survive this one I don't think we'll survive two or three
01:08:52
of these Cycles if we spend 10 trillion each time just you know since um Jak you're referencing
01:08:58
an episode that I participated in said said things I mean look I think that the goal of the mainstream media has been to
01:09:05
try and keep us in the heat of that moment for four years I mean if you've watched MSNBC for the last four years
01:09:13
it's like j6 is occurring every single day I mean this is all that they talk about but I think like jamas said we
01:09:19
have learned a lot of things since that day I didn't know for example that Twitter had censored president Trump's
01:09:26
tweets telling all of these people to go home that basically he said to protest peacefully and then when they rioted
01:09:34
that he actually published tweets to try and tell them to go home so that was new
01:09:38
information and that what that came out remember at the beginning of the whole primary cycle Trump did that town hall
01:09:45
on CNN with Caitlyn Collins where he dramatically pulled the piece of paper out of his pocket with the tweets and
01:09:51
started reading them that was a lot of new information for people and I think that gave him a different picture and
01:09:56
then I think one other point that I think is important is that imagine if the Press had tried to keep us in the
01:10:00
Heat of the Moment of the summer of 20120 riots the George Floyd Floyd riots then we'd have a very different
01:10:08
perception of which party was in favor of riots because Tim Waltz was the governor of Minnesota when those riots
01:10:14
occurred he did not want to send in the National Guard Trump did and then K haris tried to raise money for bail for
01:10:22
an organization that was bailing out some of these protest ters and riers out of prison so if the media was so
01:10:28
inclined they could portray KLA Harris and Tim Waltz as the party of the Riots of the summer of 2020 I think at the end
01:10:36
of the day that both those takes are propagandistic and they happened four years ago and it's certainly a piece of
01:10:44
information that voters can take into account but it's only one piece of information and there's a whole lot of
01:10:50
other issues and policies in this election and I think at this point everything that happened four years ago
01:10:56
is kind of priced into the stock and what voters want to know about now is what would you do on the issues what
01:11:02
would you do about immigration what would you do about inflation what would you do about the economy and when you
01:11:08
look at the polling on those issues that voters say matter to them Trump has a decisive advantage and KLA Harris cannot
01:11:14
explain what she would do differently than Joe Biden David Axelrod word solid City that's what he said last night
01:11:19
which was very shocking that he would say that totally that is throwing her under the bus but it's also just
01:11:25
preserving his own credibility because it's hard to look but this is my point Anderson Cooper now has to preserve his
01:11:30
own credibility you can only prop up a candidate so long and then at some point you have to prioritize your own media
01:11:36
career and I think Anderson Cooper last night had to start to push back that's what when everyone turned on Biden yeah
01:11:43
when that one night when everyone turned on Biden after the debate all the journalists who had been covering Biden
01:11:49
for so long that it was obvious in their face the whole time they suddenly had to
01:11:53
be like okay I guess we got to admit now now he's not really there I think I think in one important
01:11:59
way KLA Harris has been set up to fail here because on the one hand she wants to distance herself from Joe Biden's
01:12:06
record but on the other hand she won't say what she would do differently so she's in this kind of like never
01:12:11
Neverland this this limbo yeah that's right but that's also not her fault that's the position the Democratic party
01:12:16
put her in and this goes back to what jcal said we should have run a primary they should have run a primary for sure
01:12:22
I think they could have had a better candidate but also I think to go back to fre B's question this is a little bit of
01:12:26
a premortem what should they have done differently I think you either defend Joe Biden's record or say what you would
01:12:32
do differently you can't be in this limbo State and you know Joe Biden's got to be in the white house there and
01:12:39
gritting his teeth like wanting to get out on the campaign Trail and defending his record because I think Joe Biden
01:12:45
thinks he has a good record and there are things you could say in favor of that record I mean I personally don't
01:12:50
think it's great but you could talk about the Full Employment picture you could talk about the fact that yes we
01:12:55
have had 9% inflation but now it's down to 3% I mean there are things you could say I mean he Market Equity markets are
01:13:02
an all-time high I mean he signed a lot of legislation that he obviously believed in so the Democrats do have a
01:13:08
record to run on it's not a record that I personally believe in but it's certainly one that I think you could
01:13:13
make an effort to defend and I think Biden if he was the candidate would be defending that record and it's very
01:13:19
awkward to have a candidate who was part of this Administration who will not defend that record who distance herself
01:13:26
from that record but won't really say with any detail or conviction what she would do differently that is just a
01:13:32
losing proposition and I think Anderson Cooper exposed it more than Brett Bearer
01:13:36
last night because Anderson Cooper had the time Brett Bearer only had 26 minutes and Brett Bear was seen as
01:13:41
adversarial whereas Anderson Cooper is fundamentally a friendly interviewer and when she can't answer those questions
01:13:48
for Anderson Cooper that's when you know you're done by the way we've said this now
01:13:53
consistently almost monotonously now for about two or three months she has to go into these swing
01:14:00
States and answer about four or five critical questions and and I would just say this is still the problem so if she
01:14:10
wants to try to close this Gap in the next 12 days and have a legitimate chance of winning she I think there's
01:14:17
still 12 days I mean it's a very simple way to do it number one the Border got out of
01:14:23
control we've shut it down already and we're going to tighten it even more number two the stock market's at a
01:14:28
record for a reason number three the employment is at the lowest it's ever been in our lifetimes this is the As
01:14:36
Good As It Gets folks and if you go with the other guy honestly look what did on
01:14:41
manager well you're a better campaign manager than the person that's running the campaign right now they're not look
01:14:46
they're not doing a good job and I think that saak is right they're afraid of their own shadow and they're going to
01:14:52
walk into a a meaningful reset of the democratic party of let me let me even finish it number four this person
01:15:00
overturned roie Wade that's what they're doing and his VP candidate has said he wanted a national ban they walked that
01:15:05
back but if you're a woman you shouldn't trust them and number five obviously you
01:15:09
saw what happened on January 6 he'll do it again and they just said that over and over and listen I'm not Biden Biden
01:15:15
obviously needs to retire he was a great president he was a great Vice President
01:15:18
we thank him for a service I'm completely different I have a different approach to all of this and Trump is a
01:15:23
wild card that this country doesn't need it the Sun the end and they would win but I don't know who's advising her it's
01:15:31
the same thing with Trump I think Trump could have just gone right to the middle
01:15:34
and when he was Trump 2.0 he should be up 20 points on her the fact that he's not up 20 points or 15 points on KLA and
01:15:40
that this is a dead heat I think is crazy Trump's the easiest candidate to beat Kamala is the easiest candidate to
01:15:46
beat I I wonder who's running both of these campaigns well it's it's hard to be up 20 points when the entire
01:15:50
mainstream media is against you that is only reporting positive things about the
01:15:55
other candidates only reporting negative things about you and you have a 3 to one
01:15:58
money disadvantage one thing you could say for KLA Harris is she has been a good fundraiser there's plenty of
01:16:04
billionaires who are funding her campaign they literally have three times more money than the Trump campaign and
01:16:10
even in California which is a safe state for them you're seeing comma campaign ads everywhere that just tells you
01:16:16
they're so flush with cash that they can afford to spread the money around even in California so look the reality is
01:16:22
that Trump has the entire establishment against against him and I think for him to be ahead in the in the polls and the
01:16:28
prediction markets and the early voting fairly decisively is an extraordinary achievement I think he's probably the
01:16:35
only candidate who could have done that in any event and and I do think jcal that kamla has tried to make some
01:16:43
of the arguments that you just said not very crisply but she's trying to walk back on the border the problem is they
01:16:49
have no credibility on that because the Democrats for the last eight years have fought Trump on the border wall it's his
01:16:55
signature issue and if you don't think Republicans should be believed on abortion there's absolutely no reason to
01:17:00
believe Democrats On the Border they fought Trump's wall yeah I think that's fair I thinkir they sold parts of it off
01:17:07
for scrap metal she was supposed to be the Border Asar didn't even visit the border which shows that she never
01:17:11
thought it was important now she wants to pretend that she's Trump On the Border Public's not buying it to handle
01:17:16
the border is just so simple she could just say what work then is not going to work now we we've we've we've filled up
01:17:21
and we just Trudeau just did a tweet hey we're taking a pause for two years that's all she's got to do we're taking
01:17:26
a pause for two years on the border we obviously it got out of control the end move on to the next issue all right if
01:17:33
the Harris campaign is listening J Cal's advice is out there you you may come on
01:17:37
the Pod you're always welcome everyone that's running for president is well did you guys hear this rumor that bar she's
01:17:44
not my candidate by the way she's not my candidate did you guys hear this rumor that bartool
01:17:48
Sports was asked if they would interview her and they turned her down is that is
01:17:53
this rumor true apparently I don't know why wouldn't they take it though they would take the interview so poroy claims
01:17:59
that the that the Harris campaign reached out and asked to be on two or three of their shows and bartool
01:18:05
declined having her on which is pretty unbelievable well they just waited way too late I mean there's no question the
01:18:12
last month they radically pivoted their media strategy she became the candidate roughly three months ago for the first
01:18:17
two months they didn't let her do any press interviews then they realized that their internals were bad they're behind
01:18:22
in the polls so now they're having her go out and do a lot of media and like I said a couple weeks ago that started to
01:18:28
create a doom Loop because she is not a great media performer so her polls started getting even worse so then they
01:18:34
got to put her out on more media to try and you know rebut that your doom Loop was a good call I I'll give you credit
01:18:41
if the Comm campaign were started we'd be saying it's in a death spiral right now okay got it you got your
01:18:47
line it's a dead heat we got it let's go so we're gonna wrap up with stares what
01:18:53
I think's a pretty yeah starb super interesting topic because it's a real question around traditional shifting to
01:19:00
digital is that why Starbucks is having challenges or is it just maturity or is it what happens when a brand that's
01:19:07
successful as a luxury brand gets too big and the kind of you know premium experience commoditized so as you guys
01:19:15
know we covered the Starbucks CEO Brian nickel joining a few months ago this was
01:19:21
after the prior CEO had been in the office for just 16 months and there were a lot of problems that were plaguing
01:19:29
Starbucks but just this Tuesday Brian niichel came on and said that we're suspending guidance for
01:19:35
2025 after reporting preliminary earnings that showed another drop in sales at Starbucks same store sales
01:19:43
which is the key metric in the qsr or um or food and beverage retail business uh
01:19:50
it tracks what your revenue is year-over-year same Source sales declined 7% year-over-year uh earnings
01:19:57
per share dropped 25% uh year-over-year so Nicholl said we're getting the bad news out of the way now we're going to
01:20:03
this back to Starbucks Plan Focus On Experience improve the throughput experience and quality make Barista
01:20:09
choose Starbucks as a career and then he went through a whole plan he put out a six seven minute video on this whole
01:20:14
thing so clearly customers are frustrated with the Starbucks product the Starbucks experience the employees
01:20:21
are frustrated working there and a lot of the system seem to be breaking down I guess I wanted to kind of talk about
01:20:28
what is the core driver and is there a business lesson in all of this about premium brands or about scale and
01:20:34
maturity and markets to be learned from the Starbucks story so I don't know if any of you guys have gone through this
01:20:39
earnings report or looked at the um I I go to Starbucks on the regular and I think this really is just
01:20:46
a case of founder versus bean counter it's reminds me of Boeing or you know even apple with their inability to
01:20:52
produce new products post the the Steve Jobs pipeline of products and if you anybody read pour your heart into it
01:21:00
Schultz's biography it's absolutely fantastic and he really had an obsession with user experience like writing
01:21:07
people's names on the cups was a Starbucks Innovation remembering people's names empowering the green
01:21:13
aprons was like a big part of this and then once he was out of the bean counters came in and they just got all
01:21:19
about efficiency the a much smaller number of Baristas at the store ordering your drink through the app and just
01:21:26
trying to make these grinded efficiency decisions as opposed to the experienced ones and I think the Starbucks
01:21:34
experience starts and begins with the Baristas and that's the main problem if you've gone to a Starbucks over the last
01:21:38
couple years sometimes you go in and there are literally 50 drinks from the like I'm not kidding like 50 drinks on
01:21:46
the pickup counter and then this huge wine if you come in person and it's the most impersonal thing and the the stores
01:21:53
are a wreck they're disgusting they look like a truck stop and the whole point of
01:21:57
Starbucks was to create this third space this beautiful place that was welcoming
01:22:01
with Gorgeous lighting and the Baristas was supposed to make you hang out and enjoy yourself there and they lost that
01:22:08
and all you have to do is read Schultz's book and do exactly what he did now there are a lot of other issues there
01:22:14
around the competition for Starbucks employees that I think are super important do you think that's really
01:22:20
true jcal because like nickel came on and he said we're going back to the core FL whites espressos nice nice espressos
01:22:27
delicious coffee but the reality is in order for them to have grown Revenue over the last 20 years Starbucks has
01:22:33
expanded their menu as chamath has pointed out to becoming a seller of sugar they've become a seller of
01:22:39
milkshakes and flavored Beverages and high sugar cocktails mocktails that people you know run into the store to
01:22:45
buy two three times a day that's how they were able to get the pickup not selling what they started out doing
01:22:50
which was fine italian roast at espresso it's now become a very different product
01:22:55
and a very different experience and so can you really go back to the core and not lose all the customers that I would
01:23:01
say aren't looking for a flat white and an espresso they're looking for a milkshake in the middle of day I think
01:23:05
you want to maintain the core is the key you don't want to give up the core and the core was having a great inore
01:23:10
experience and I think that is not what you get when you go there putting the sugar aside it is I think like going for
01:23:18
ice cream for kids so my kids will pick if they want to go for ice cream or Starbucks and to your point about the
01:23:24
sugar Mo it's basically the same profile and it's a great place to get breakfast I'll tell you that you know
01:23:30
the egg bites and the scum let's watch Nichols let's watch Nichol's clip and then shth you can give us your take on
01:23:35
this this is a 30 second clip from nichel six minutes that he put out on Twitter to succeed we need to address
01:23:41
Staffing in our stores remove bottlenecks and simplify things for our Baristas we need to refine mobile order
01:23:48
and pay so it doesn't overwhelm the cafe experience we're fundamentally changing
01:23:52
our marketing we've been focusing on Starbucks rewards customers rather than talking to all our customers and we're
01:23:58
changing that quickly we will simplify our overly complex menu fix our pricing architecture and ensure that every
01:24:04
customer feels Starbucks is worth it every single time they visit we must reestablish ourselves as the Community
01:24:11
Coffee House by the way this is one of the things that Nichols did at Taco Bell when he was the CEO there you guys
01:24:17
remember the Taco Bell menu there was always like really interesting hidden things on that menu he simplified the
01:24:22
menu made it very small did the same at Chipotle he takes this approach of finding the best product simplifying The
01:24:28
Experience simplifying the operations and giving the customers fewer choices that ultimately leads to faster
01:24:35
turnaround better experience but the trade-off is you have less variety that people have come to
01:24:43
know and love and at Starbucks in particular where there is just so much variety to choose from now if your
01:24:48
favorite beverage got pulled off the menu are you going to start to go there less frequently you know Jam I don't
01:24:54
know if you a take on what's going on at Starbucks and whether it tells you something about the maturity about one
01:24:58
of the most iconic consumer brands in America this business is in trouble Nick please show the chart this
01:25:06
is Eli Lily versus Starbucks if you look at it over a year you could look at it over the year to date you could look at
01:25:13
it over two years five years five years look at that but what does this show this
01:25:20
shows sugar versus anti-sugar and anti-sugar is winning say it differently gp1s versus things that cause you to
01:25:33
need gp1s gp1s are winning and so I think this existential issue for Starbucks is about resetting
01:25:42
to a much smaller footprint and a different product portfolio that tries to see where the
01:25:49
puck is going where the puck is going is where a large percentage of the people that probably were buying Starbucks
01:25:59
products and were very loyal Starbucks customers will have very different consumption habits as they
01:26:06
more pervasively use these gp1s and this in a nutshell is not something that Starbucks can fix with
01:26:13
their current product mix and so I think that they're fighting into a headwind and these other companies are deeply
01:26:23
incentivized to get American taste buds to be different and so Jason the things that
01:26:31
you talked about are exactly the things that I think start to fall off the menu or just don't sell as much because
01:26:36
whatever the population of Americans are that are on gp1s let's say it's single digits the real question is what
01:26:42
percentage of Starbucks customers are on these things and I think it's probably much more than single digits and this is
01:26:47
why I think you see the continuous decline in same store sales and I think if you start to graph
01:26:54
the adoption of gp1s pervasively in America to the drop in same store sales I think as gp1 adoption goes up same
01:27:02
store sales will continue to go down but it doesn't it argue towards the original
01:27:06
business freeberg that going there and having a cup of coffee and hanging out leisurely with your friends and having a
01:27:12
conversation and it being a third space is the core value prop and maybe the sugary drinks maybe will fall out of
01:27:18
fashion so it may be true but I think that the the core objective of any Corporation is to
01:27:27
maximize shareholder value driven by growing profits over time so growing profits over time requires increasing
01:27:34
your your revenue and I there are three levers for doing this maximize brand which is to get more
01:27:40
customers and I don't know if you can get the brand to be any more maximal than Starbucks maximize coverage which
01:27:47
is how many products can you get those customers to buy whether it's on a daily basis weekly basis or monthly basis how
01:27:52
much of their and wallet share you getting and I don't know how many more times you can get people to go back into
01:27:58
Starbucks each week than they've done with their Rewards program with their digital with their High throughput tools
01:28:02
that they've built over the last decade and so on and then finally maximize price there's a limit to how much you
01:28:06
can charge people when you put those three together you got more customers you're selling them more stuff at the
01:28:11
highest price possible at some point you reach a revenue maximum that has happened also at Apple I think that
01:28:18
Apple has faced a similar dilemma in the last couple of years which is how do we
01:28:21
get more customers it's the most recognized brand on Earth you can only buy so many Apple products
01:28:26
now you know they tried to launch The Vision Pro it didn't go well today they announced that their this week they
01:28:30
announced their discontinuing production or reducing production on the Vision Pro
01:28:35
and you can only charge so much for these products and I I would argue that Starbucks is a victim of the same
01:28:40
maximization effect that at some point you get all the customers you get them to come in and spend and buy as many
01:28:46
products from you as they can and you charge them the highest price possible and then you reach this kind of Maximum
01:28:51
point on the the business and I think Starbucks has just reach that point of maturity so to your point it doesn't
01:28:57
mean that it's a bad business at all it could be a great business a nicely profitable business but the growth ahead
01:29:03
of it is limited it cannot keep growing same store sales as it has historically because they've maximized all three of
01:29:09
those levers so fewer costs might be a way to drive more profits you know more efficient operations I think that's the
01:29:15
natural next state for nickel to tackle at this company the sad thing for Starbucks is that the only road that
01:29:21
they have is to actually double down on sugar and the reason is because the arpus are
01:29:26
meaningfully higher than traditional coffee and so the the economic pressure that shareholders will put on it is to
01:29:32
actually stay in the business that they're in and try to do it as long as possible as you say freeberg and just
01:29:38
strip out as much cash as possible and then you just you grow profit by reducing cost and getting more efficient
01:29:43
versus yeah trying to add more product to get more customers which degrades the experience but the structural problem is
01:29:49
Starbucks should be probably a 20 billion asset yeah and so what happens when a company gets to this level of
01:29:54
maturity much like has happened with apple is the multiples compressed no the difference is though that Apple has not
01:29:59
had the competitive pressure that Starbucks has because Starbucks competes on a Level Playing Field with the Dunkin
01:30:04
Donuts of the world or the Pete's coffees of the world but they compete in an completely orthogonal plane with
01:30:11
gp1s and I think that is not something that Apple deals with so Apple can still be at the point that you described
01:30:17
earlier which is let me just maximize free Clash flow generation which is what they do and then let me allocate that
01:30:22
back to shareholders via bu back which is also what they do so there could be another decade or so where Apple can
01:30:28
continue to run this play with very little impact to them or to the company now I'll say something else about Apple
01:30:35
though which is I actually upgraded my phone I think this was three years in and I finally did it my gosh this phone
01:30:42
is sucks iOS 18 software is janky iOS 18 is just terrible I'll show you one example
01:30:51
of just like terrible design where if an if a designer that work on my team showed me this I would have fired them
01:30:55
look at this can you see this is it possible to understand why you have two images for the Do Not Disturb thing one
01:31:03
above the other I no but it's a level of sloppiness and not taking care which which just shows
01:31:12
you that it's like we make so much money it just doesn't matter anymore that's what I feel like they're telling me and
01:31:17
then I'm like well wait a minute why did I just spend $1,200 of my hard-earned money to upgrade to this thing if if you
01:31:24
don't care how much was it upgrade I think it was like 1,200 bucks for this new phone the other thing is
01:31:30
that the actual upgrade itself and I'm not exactly sure why because I didn't take the time to unpack it it took four
01:31:37
hours the actual migration of like from an old phone to a new phone and and I thought my gosh this is such
01:31:44
monopolistic Behavior right so if it takes you an entire day to basically upgrade your phone at
01:31:52
some point you're just going to stay with the platform you're on and never upgrade or you're just going to stay on
01:31:58
the exact same device because it's just too complicated imagine going from an Apple to an Android it's some ways both
01:32:05
of these businesses are victims of their own success they reach like Market Market saturation they reached their
01:32:11
natural audience and then some and they've just got to figure out what to do next and the adjacencies are hard to
01:32:16
find vision are hard adj also photos terrible it's terrible stop changing the interface this is basically
01:32:25
a camera and you made it terrible it was good why did you do that I think they're
01:32:31
trying to change things for change sake one of the things Amazon's gotten correct and and other services like eBay
01:32:37
and Craigslist is when you have an interface that works and and billions of people rely on it you have to be very
01:32:44
very subtle in making changes to it and they made a wholesale change to the photos app and it did not work it
01:32:50
garbage how do I get rid of the second silent thing on my thing how how can I just go back to the old thing yeah
01:32:58
totally that's when you know you failed as a product manager when people want the old thing but isn't this just so
01:33:05
lazy something's not right yeah I I know there's a lot of Apple people this is come on guys can you just take the
01:33:11
control center is what he's showing and the control center is massively confusing it's like changing where the
01:33:17
lights are in your bedroom and like okay yeah all right troubleshooting um part of the all-in podcast is over I really
01:33:25
want to say thanks to saaks for participating headily in our Starbucks discussion saaks anything you want to
01:33:30
say on the maturity of Starbucks or other mature Tech businesses or value luxury businesses as they get big too
01:33:37
big too big to keep growing anything else I mean yeah I'm just not an expert on Starbucks I me I do like their
01:33:44
product but what do you get what's your order tell us your order yeah what's your order I just get an Americano with
01:33:50
a splash of oat milk oh it's like my order that's a great order what you you're yeah that's great good for you how about
01:33:59
I just send you some Specialty Chemicals so you can just pour it down your throat
01:34:02
some Zan milk bad some carigan again and say you put in heavy cream you're gonna get kicked out of
01:34:09
Maga cannot be ordering o milk and be Maga they don't have nut milks at Mara Lago I'm gonna find out in a couple
01:34:17
weeks I'll let you know don't put that stuff in your body dude I bet they do you should take that sweater that you
01:34:22
just took from chamath and wear that marago when you go it's like a perfect sweater for your marago visit oh yeah
01:34:28
don't touch it stop I'm still mad at n I'm going to talk to her about this I'll talk to her at lunch I'll talk to her at
01:34:34
lunch she's putting a sundress on before you came on zo she was she was actually
01:34:38
she was just sitting on his lap and they were just chatting and I'm like what is
01:34:41
going on here outrageous what do you want for lunch I said what do I want for lunch your
01:34:46
company that's what I told her oh sweetheart that's what I said she said oh you're
01:34:53
like you you speak to me so much more kindly than Jam does God my God all right this has been another amazing
01:35:00
episode of the all in pod as a team player I have been here to pinch hit for jcal he did not want to moderate this
01:35:05
week so I stepped in to fill the the shoes J solid job solid job one of this Show's greatest
01:35:14
moderators for your Sultan of science for the Rainman for the chairman dictator and for the world's most abs te
01:35:25
moderator um I want to thank you all and a great life right now time he's stealing anything that's not nailed down
01:35:33
I'm the world's greatest house guest he's putting together his own gift bag love you besties love you boys bye-bye
01:35:39
byebye I'll be there in a couple of hours s let your winners ride Rainman David and instead we open source it to
01:35:53
the fans and they've just gone crazy with it love queen [Music] of [Music] Besties my dog taking
01:36:10
driveway man oh man my will meet me we should all just get a room and just have one big huge ory cuz they're all this
01:36:18
useless it's like this like sexual tension that they just need to release somehow what
01:36:26
[Music] we need to get [Music] mer I'm going all in