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Okay, welcome back to the All-In podcast. JCAL is not here this week. He is off in Detroit at the Knicks game.
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Congrats to the Knicks. Here's a photo of our boy JCAL hanging out with Who's that? Ben Stiller. Man, what happened to
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Ben Stiller? That looks like Shalamé right next to him. Timothy Shalam. Is that Shalom? You know, Ben Stiller was
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once referred to as the Jewish Tom Cruz, but he he has not held up like Tom Cruz.
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I gotta say that he should have joined theology. Keep it up. You got to represent for us
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a little better. [Music] Let your winners ride. [Music] Rainman said, "We open sourced it to the
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fans and they've just gone crazy with it." Love you. We can all sitting in this week is our boy
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Andrew Ross Sorcin, journalist, author, extraordininaire. Andrew, welcome to the
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show. Long time listener, first time caller. Thank you for having me. Andrew, I'm going to do just a couple of quick
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plugs and I'm going to give it over to the pro to do his work, take us through the docket today. I think this is going
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to be really fun. The world's greatest moderator. The world's greatest moderator is here today. That's fighting
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words. Shots fired. We'll see. We'll see. Hold your tongue. You can tell me when it's over. Before we kick it off, I
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just want to give a quick plug. The All-In Summit, if you haven't seen the video, check it out on YouTube and
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Twitter going into our fourth year, the 2024 recap. We'll kind of give you a high set of highlights from last year.
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It's September 7th through 9th in LA. Trying to have the world's most important conversations. Andrew, I know
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it probably competes with one or two of your conferences, but let me just tell you, this one's way better. We're going
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to be blowing it out this year with parties. Allin.com/summit to apply to join us at
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the summit this year. Awesome. Andrew, thanks for being here. We're excited to have you. Okay, boys. Here we
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go. I'm curious. I want to get your take on all this stuff because I'm fascinated
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by what's going on in these markets this week. Let's start on the markets because
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we got a rally. The question, I think, behind the rally is, is this a Bessant put? Is this a J Pal's in the job? He's
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got a put on this thing. I don't know what you think is going on. We're uh up three to 7% for the week. There's been a
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she loves me, she loves me not situation with what Trump's been saying about China and whether there's a deal or not
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a deal. China's saying nobody's talking. He says everybody's talking. What do you
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guys think is really happening? And then we got to get into Alphabet. We got Tesla got a lot of earnings here that's
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also moving this around. I think that the most important piece of financial logic that we have to break is this idea
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that there is always a put. The put is this weird thing just for the folks that don't understand it is that when the
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market goes down, somebody can belly ache and cry and somebody in the government will say, "Okay, we'll buy
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your shitty securities at your bad prices." So that's what the put is. So typically what's happened is you can cry
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to the White House and they'll call the Federal Reserve and they will buy it. That's the Fed put. And in some very
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rare cases when things get really calamitous like in 2008, Treasury will set up a program and start to buy
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things. That's what was called TARP back in the GFC. So the question is, is there
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a put here? I mean, my honest answer is no. And the simple reason is if you look
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at where we are, the stock market's back to where we were in like May or August of last year. And if you had said that
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we would have upended 50 years of economic policy and the markets would only be off five or
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six hundred basis points, I would have been shocked. So there's no reason for a put. Maybe the more interesting question
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is who's asking for the put? The ones that have suffered from the volatility and a lot of those are the active market
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traders. So if you trace the feedback, who has been the most negative? Aman's been
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negative. Ken Griffin recently turned negative. And that's probably comes from the fact that they're not monetizing the
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V the way that they used to monetize the V more than the market has speared down
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to such a degree that the world is coming to an end because it isn't. Okay, Zach, can I build on that? So,
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there was a tweet two weeks ago when all this started by Nick Carter that I retweeted cuz I thought it was really
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interesting, which was if you think a market selloff delegitimizes Trump's presidency, you're going to give him
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unconditional credit when it rallies, right? Cuz those are the rules now. And that's exactly what's happened is that
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the market has rallied. Like you said, it's up 7% this week, but the media doesn't want to give Trump any credit
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for it. So, it's kind of created this narrative of a Bess and put. In other words, Besson is entirely responsible
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for it. Look, Scott is a very smart man. He understands markets. He understands the bond markets and he is a sure
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reassuring voice to those markets and I think he's doing a great job. But I think part of what's going on with this
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bestinput narrative is that no one ever wants to give Trump or his administration as a whole credit. So
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what they do on any particular week is valorize a particular member of the administration that they can then say,
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"Well, this is the person who's really responsible for this, not Trump, because they don't want to give Trump that
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credit." Next week, they'll be tearing Scott down and there'll be some other member of the administration they'll be
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trying to valorize to basically prevent the administration as a whole from getting credit for doing something good.
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So again, I think Scott's doing a great job. I think he's doing a great job making these deals and he's saying a lot
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of correct and reassuring things to the markets. But I think if the media is going to tear Trump down every time the
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market goes down, you have to give him credit when the market goes back up. And I think there's just a general
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reluctance to do that. Where do you land, Dave? I think that there's is he crazy enough to let it all
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fall apart signal that kind of got wiped out this week. That's really what it was. It
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was the fact that everyone realized that Bessant Trump are not going to let trade
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come to a standstill. They're not going to let the whole global economy grind to
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a halt. That they're going to have to do something. And I think that the read is
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that they're making the indications that they're going to get deals done, which means that their intention is to make
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sure that the market doesn't tank. That the most roughly three weeks ago when we
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started talking about this, I think I made the point, Shimoth made the point that part of the art of the deal here,
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so to speak, is an opening salvo, right? which is bold and some people would say
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maybe it's too extreme, but it's it's basically an opening bid to shift the conversation completely. Yeah. And that
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that would create tremendous leverage to get deals done. And isn't that exactly what's happened? Isn't that the way it's
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played out? Yeah. I remember there was a guy from Harvard who used to teach a class in negotiation. He put out all
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these videos and what he always said is like set your anchor point as far away as you possibly can if you want to get
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maximum leverage in a negotiation. I don't know what's farther away than 145% tariff. So, it's clearly, you know, a
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point for, as Sach said, for negotiating to a deal that seems like one that would
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have been impossible or implausible if you started from a 0% tariff beginning point in negotiating. And there was some
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percentage of the market or some probability that people were assigning to the fact that this administration
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could be crazy enough to tank the global economy by leaving tariffs really high and letting this kind of run. And I
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think that that's kind of being taken out of the market, right? But now that it's out of the market, that means that
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the leverage there's less leverage. There's less leverage in the conversation. And if the goal is to No,
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that's not true. That you're saying a critical thing and that is not true. Well, hold on. I if if if the goal is to
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effectively pressure China, which I think is the ultimate goal, I think as the bond market has spoken and as Trump
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and Besson administration has said, okay, we understand where the where the floor is here and what we got to what we
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got to do. I assume if you're Mark Carney, if you're the EU, name your place, India, Japan, you say, I'll make
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a deal with you. But you know, if you thought you were if you thought I was giving you the world before, no, no, no,
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no, no. You need me as much as I need you and you sat you seemingly need me even more now. So the part where I agree
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with you is that last part. Like I think too many times you look at the stock market and think that that's reflective
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of what's actually happening and it's not. The stock market I think the best way to think about it is it's an
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estimation of what the future would look like at a rate of return. You're superimposing a view on reality. So what
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is actual reality right now is if the United States was running negative2 billion dollar a day of trade deficits,
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right? If our current account balance was minus2 billion on March 31st, the day before liberation day, the real
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question is what is that number mathematically after April 1st, right? Because you're ratcheting it up tariffs,
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okay? and you're implementing a scheme that should take that negative2 billion that's going out the door out of America
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shores, it would have flipped it positive. How positive? We don't know. But I'm sure that the government knows
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and I'm sure the White House knows what that number is. That's that's important fact number one. And then
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separately, the country that matters the most on the other side of that who was very positive, right? Let's say China
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was plus three or four billion a day. where did they go to? And I suspect that it's probably break even or possibly
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even negative. So if you think about what the new reality is today, April 25th, as we tape the show, we've gone
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from minus2 to maybe plus one. And China's gone from plus4 billion a day to maybe zero or minus
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one. And I think that's what instills the leverage that is required to get the deal done. Then then we can all debate
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whether the forward PE of the S&P should be 16 times or 22 times. I don't think that that matters, but the actual cash
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flows have materially changed. By the way, I I think long term the America's got leverage here. Everybody wants to in
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is ultimately going to want to invest in America, including China. There's no question that we we have the advantage
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on a long-term basis. The question is, do we have the patience? Well, if you go from -2 to plus given our democracy,
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given our bond market, given everything that goes on, we're such an add society.
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Okay. Then you're then what I would say, Andrew, I think that that's a very good
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point. What I would say to that is then we need to communicate better. It needs to be a single point that's repeated by
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everybody in the cabinet. And what they should probably focus on is, hey guys, we just flipped cash flow. We went from
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negative cash flow to positive cash flow. Here are the actual numbers and don't deviate from that because then I
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think Americans would say, "Hey, this thing is working. Let's let it play out." To your point, hey Sax, here's my
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question for you. So, we hear, you know, the president say he's talking to President Xi. We hear Scott Besson say
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that he's in talks with China or that talks are going to begin. And then you hear China say, "No, no, no. We're not
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talking. There's no talks happening. We don't know what you're talking about. Stop saying these things." What are we
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all supposed to believe? Well, look, first of all, let me just say that when I'm on this show and I'm not talking
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about AI or crypto, I'm just a civilian, right? So, I'm not a spokesman for the administration on anything but the two
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issues that I work on. So, I don't want to come across as someone who has special knowledge cuz I'm just I'm not
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part of the trade conversation. So, I can't answer your question directly. But what I would say is that with respect to
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the China relationship, I think what's happened over the past few weeks has been a very important stress test and
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it's basically flagged some serious weaknesses or dependencies that have evolved in this relationship over the
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past few decades. You know, I flagged this in a previous episode that we did with Larry Summers where I said that 25
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years ago was a huge mistake to walk China into the WTO. And I think that just to build on on that thought, one of
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the problems with walking them into the WTO is that they got what's called developing nation status. Yeah. So, you
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know, you can either be a developing nation or a developed nation in the framework of the WTO. And maybe there
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was something legitimate to that in 1978, you know, when Deng Xiaoping began his reforms, the average Chinese person
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was making $2 a day. By the year 2000, it was much more questionable and it certainly makes no sense in the year
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2025. And still to this day, China gets developing nation status. Now, what is the benefit to China of that? Well, they
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have a whole different set of rules. They're allowed to have tariffs. They're allowed to subsidize their industries.
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They have all sorts of different timets for doing things. They're allowed to do things that the US simply can't do. Now,
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how have they leveraged that? They have identified strategically certain industries that are choke points in the
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global supply chain and they have taken them over and the best example of this is rare earth. So there was some good
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stories in the New York Times about this over the past couple of weeks which I think were largely
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accurate. China identified this as an as a critical industry and the rare earth the ore itself is distributed all over
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the world. I mean China has some advantages there but they're not huge. It's the processing of the rare earth
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that's very expensive, very complicated, and they decide to dominate that industry. And they're responsible today
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for over 90% of the processing of rare earths. And then the next step in the supply chain is that those rare earths
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get cast into rare earth magnets, which are a critical component in pretty much every electric motor. And so they're a
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critical component of the automotive industry, but not just cars, lots of different products. And I think China
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makes something like over 90% of the cast rare earth magnets. Well, by the way, this issue still has not been
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resolved. China has now cut off the United States. And so, as part of this trade negotiation, we're going to have
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to, you know, resolve that issue. And I trust that it will be. I mean, what you've heard from the president and the
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Treasury sector over the past week is that they're they've indicated a desire to engage in bilateral negotiations with
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China and to essentially deescalate this trade war. But I think it's been very useful again as a stress test to reveal
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our critical dependencies on China that we've exposed. We never should have let this
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happen. Just from a national security standpoint, we worshiped at the altar of this like free trade god to the point
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where we became dependent on China for these critical components in our supply chain. I think that was a catastrophic
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mistake and I think that it's exposed these dependencies we've created on a nation that is not our ally and that we
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can't count on them. It's a country of concern. So I ultimately think that we're going to need to learn from this
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experience and very rapidly make some major corrections here. Andrew, let me just highlight what I think is one of
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not talked about point about the discussions that are underway. There's a lot of conversations about tariffs and
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about trade deficits, but very little about regulatory par. And I think that this is really critical for these trade
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negotiations to actually resolve to a positive outcome for American businesses and American enterprises because there
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is not par and how American businesses can do their work overseas relative to how foreign companies can do work in the
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US. So if you're a Indian company and you want to sell something in the US, you set up an LLC, you set up a bank
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account, you set up a store, you take a lease, and you sell your product. There is not a lot of hoops and challenges to
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that business operating in the United States. I'll tell you a story. in uh 2005 2006 Monsanto which was a seed
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company that doesn't exist anymore launched in India cotton seed seed for cotton farmers that basically had a
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trait in it that would prevent worms from eating the cotton and so Indian farmers were paying 450 rupees an acre
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for cotton seed before Monsanto basically put this cotton seed the yields went through the roof the farmers
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made 5,000 rupees per acre of incremental profit and they charged 1,500 00 or400 rupees per acre for this
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seed. So, it was more expensive seed, but it had a 5,000 profit improvement. And it took off. Took the whole market.
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90% of farmers bought the seed, not because they had to, but because it was better. And what ended up happening was
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the Indian government stepped in and said, "You got to lower prices. You got to go back to the price of 450 because
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that's what's fair for farmers." And the farmers were like, "We we're doing great. We don't need to have this kind
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of price control." But the government put it price control in and ultimately sued the company, went to court and
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stole their IP and they left the country. And this was a company that had invested, you know, well over a billion
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dollars in developing and launching this product. The same is true, by the way, in pharmaceutical companies, in software
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companies, in hardware companies. If you want to go do business in China today, you have to set up a 51% JV where some
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local company owns 51% of your equity and your IP. The stories around the world I think start to paint a picture
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of why American businesses find it so hard to develop international markets and sell into those countries when in
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the US we make it so easy for companies based in foreign countries to come and sell in America. And that's a big part
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of where the trade imbalances arise from. It's not just because Vietnamese people can't afford expensive American
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goods. It's because it's so much more regulatory difficult to do work in these countries. they can come in and take
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your IP. And so I think that this is like a really important part of the trade discussions and negotiations that
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a lot of people miss that American businesses will see massive revenue growth and massive market adoption if we
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can get regulatory par in some of these uh key key trade. Okay, let me ask you a
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different question. Chimath raised uh the issue of Ken Griffin who made some comments this week about the brand that
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is America and effectively said there was sort of a sell America situation going on. And my question about the
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brand that is America is whether you think after these tariffs, whatever deals get done, that you can put the
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toothpaste back in the tube, that you can get the trust back, that there's not going to still be some kind of
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toothpaste on the rim of the tube, that you that you can't stick back, it gets all nasty and crusty, right? That to me
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is a fundamental question. I want to read to you what Ken had to say. I think Ken was probably a bit of a reluctant uh
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Trumper the second term, but nonetheless, he's been outspoken on a couple things. He says, "If you think of
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your behavior as a consumer, how many times do you buy a product with a brand on it because you trust that brand?" In
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the financial markets, no brand compares to the brand of US treasuries, the strength of the US dollar, the strength
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of creditworthiness of US treasuries. No brand comes close. We put that brand at
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risk. What say you? Well, look, I I think there's a fundamental question here about whether you think there's a
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problem with the status quo or not. Ken Griffin is one of the biggest winners in
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our economy under the current status quo, and I don't think he sees a big problem that needs to get fixed. But I
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think like we just talked about, I think there are some big problems. I mean, Freeberg just laid out the way in which
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trade with China is non-rescrocal. Like our companies cannot participate in their markets the same way that they can
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participate in ours. But it's worse than that. Like I talked about, these WTO rules gave China the opportunity to
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strategically annihilate our core industries that are critical in the supply chain. And there's one other
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piece of this which I think is really important, which is the race to the bottom. I mean, if you're an American
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company and you are still producing in America and your competitor is able to go to China and undercut you, obviously
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you have to do the same thing because I mean those are just the rules of the game. And so we've had this race to the
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bottom where if you're an American company operating under these rules, you have no choice. It's worse but to export
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your manufacturing, your supply chains. So, you know, we've had these rules that
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again under the status quo, I I would say they're not free trade. It's unfair trade. It has all these perverse
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consequences. It's bad for middle America and this manufacturing belt of the country and it's created massive
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strategic dependencies on an American adversary. I'll say I'll say three things. Let me just say three things
00:20:33
quickly. Number one, I think Ken is massively long Pax America. I mean, he's built a $42 billion empire. He owns a
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billion dollars of American real estate. So, I don't see him investing in Ecuador
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anytime soon relative to the opportunity set in the United States. And I think that's what speaks to the second point,
00:20:51
which is investing is always a relative exercise. On Wednesday, I had a meeting with a
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Brazilian multi-deioner, very, very, very successful guy, and we were talking about the tariffs and the investing
00:21:04
posture, and he's like, there's still no other country other than America that I
00:21:08
can really put my money to work in that makes any sense. And I kind of pushed him, what about China? What about India?
00:21:13
And in all of these markets, there are, as Freeberg mentioned, vagaries in China. There's different problems in
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India. There's different problems in these other markets. Europe is roughly uninvestable.
00:21:25
So the more generalized answer is is on a relative basis the United States is still the shining beacon on a hill.
00:21:33
There is no investable alternative for scaled capital except the US. The the last thing I want to say is just to
00:21:41
build on what Sax said, Andrew, the the thing that we keep forgetting is when economic leverage spills over to
00:21:49
political leverage, what happens to the United States? And specifically, what happened this week was on the rare earth
00:21:56
side, not only did China constrain rare earths into the supply chain, what they then did was tell South Korea what they
00:22:03
could do with the rare earths that they gave them. And now all of a sudden you have this geopolitical spillover where
00:22:09
it's not just a country constraining supply. It's a country now dictating the political and trade practices of another
00:22:16
country. So let me ask you a question. How do you think America is in the best position to make its own decisions? For
00:22:24
example, let's say that there's a China Taiwan situation and we need to decide one way or the other. And I'm not saying
00:22:30
which way is right or wrong, but for the purposes of this, the thought exercise is China and Taiwan get into some spat.
00:22:37
We have to take a side. And China says, "We're going to constrain all the pharmaceutical APIs into the supply
00:22:44
chain. We're going to constrain all the battery cathode into the supply chain. And we're going to constrain all of the
00:22:50
rare earths to anyone who doesn't take our side." Now, how is America in a position to actually decide for
00:22:57
ourselves what is in our best interests if that's looming over us? And I think that this is the big problem that this
00:23:04
has exposed. This rush to globalism, the race to the bottom has actually created
00:23:10
a level of dependence that doesn't allow you to do what's in your best interest.
00:23:16
So, real quick, I agree with you in so many ways. I think the question that I have is not in what the ultimate goal
00:23:24
is. It's how you get there. And is there a way to do this with a a velvet glove,
00:23:30
if you will. And maybe there's no way to do it in a in a in a better way. What is
00:23:35
to say? No, but what is to say this isn't the velvet glove. This could be it's that the stock market is down 6%.
00:23:41
Like it's not down 60%. But this this what I think is so interesting, Andrew, is is the way that Trump has already
00:23:46
shifted the conversation. Because the truth of the matter is that before Liberation Day on April 2nd, which is 3
00:23:51
weeks ago, no one was talking about the unfair trade practices. No one was talking about the dependencies on rare
00:23:58
earth. No one was talking about the race to the bottom. And Trump has shifted the
00:24:01
conversation 100%. When Jared Kushner was on the show, he talked about how the Trumpian approach is controversy
00:24:07
elevates message. And we said at the beginning that by having this liberation day, by planting this flag in the
00:24:14
ground, Trump was creating leverage to then have these negotiations and he completely shifted the conversation.
00:24:21
Now, where I will agree with you is that the administration has to stick the landing here, right? Besson and it's not
00:24:27
just Besson, also Lutnik, these are all smart, talented people. They do have to then negotiate these deals and we have
00:24:34
to basically stick the landing. But I think the fact that you're saying that you don't disagree with where Trump is
00:24:40
trying to get to, but it's mostly just tactical is a huge shift in the conversation. It may it may raise the
00:24:47
issue the way you're describing, but at some level it's also undermining a semblance of trust. I just want to relay
00:24:53
two stories. One is, you know, I've been talking to a whole number of of multinational CEOs who do business in
00:24:58
China. I'm talking about the McDonald's of the world, the Starbucks of the world, the Nikes of the world. And so
00:25:04
many of them now talk about not just how consumers aren't going necessarily in their stores the way they used to, but
00:25:12
are really about the American dream, the American brand. And they talk about the
00:25:16
idea that, you know, if you were a young kid and you got a job at Starbucks, you
00:25:19
used to go home to your family in China and say, and your family go, "Wow, that's
00:25:23
amazing." They're not doing that right now. So many of these companies are even trying to reestablish how they market
00:25:29
and advertise their companies almost as if they're a local business, not an American brand. And I don't know what
00:25:36
that ultimately means. But I also was talking to a a Chinese CEO who made a I thought just a fascinating comment to
00:25:43
me, which was, you know, we're cool with the US being the leader. We were always
00:25:48
cool with that. We're okay with that. We don't love it, but we're okay with it. It gets a lot more complicated when you
00:25:54
have to be the winner. And I think that's an interesting sort of construct, this idea that we're first and we have
00:25:59
to win. And I know we're telling it's, you know, Trump is telling, you know, citizens in the US that we're going to
00:26:05
win. But he's also telling the world that. And I think that's a I think that Chinese CEO should have written that
00:26:10
memo to Xiinping and seeing if he agreed because I think he would say, "No, we are the winner." Look, you got to
00:26:17
remember in 2003, three years after China was admitted to the WTO, Huin Tao became premier. He had this incredible
00:26:25
speech and in it what he said is there are these 10 boxes and I've written inside these 10 boxes all the critical
00:26:34
industries that in 25 to 30 years from now will dictate supremacy in the world. We are going to create national
00:26:41
champions he said in those 10 areas and what's interesting about Xi despite the ideological differences to who he
00:26:51
followed through with it. This is a group of people. So we can say what the CEOs are going to say but
00:26:58
at the end of the day the CEO of China Inc. is one man and he and his seauite have been pretty resolute which is even
00:27:07
when he inherited a political ideology that he didn't completely agree with he followed through with it which is these
00:27:12
guys in these 10 areas now own the critical inputs that make the world go around and I think it's pretty
00:27:22
reasonable to do a risk assessment to say well how do you stand up to that and actually have your own point of you if
00:27:30
you don't have your own method of having access to those things. I think that is
00:27:35
the most important question. Everything else about you know brand and all of this other stuff I think comes after
00:27:40
this question. This is the critical question because if they can tell you what to think that is not winning. Yeah.
00:27:48
I would just add to that that you hear this criticism of Trump a lot which is that okay he's right on the issue or his
00:27:55
instincts are correct but there should be a nicer way of doing it. And I guess I would give that story more credence if
00:28:03
the people making that criticism had actually been advocating for a change in the status quo prior to Trump. And they
00:28:10
weren't. I mean, we had this bipartisan globalist consensus that pretty much all
00:28:14
trade practices with China, no matter how unfair they got, was basically good for the United States. And no one was
00:28:21
really doing anything about it until President Trump made it this issue and made the unfair trade practice
00:28:26
conspicuous. So, if somebody else had been willing to take that on, then I maybe would give credence to this idea
00:28:33
that there's some non-Trumpian way of doing this. But I just don't think that's the way our political system
00:28:37
works. I think that the way our political system works is that you have to completely shift the conversation
00:28:43
first to create a new consensus and then you work out the deals. And that process
00:28:48
can be a little bit disruptive. Okay, one tiny follow-up. So, I don't know if you guys saw the news this morning, a
00:28:55
report out that Apple is going to move its manufacturing of iPhones that are exported to the US or imported here in
00:29:05
the US, but they're going to manufacture all that stuff in India, not in China anymore. So, they're going to move all
00:29:12
the manufacturing to India. See you in 20 See you in 2035. They say they can do it supposedly in 18
00:29:20
months by the end of 26. Bet. You say no way. Bet. Well, I think if this is geopolitically smart. Yeah, they
00:29:29
should do it. But I'm just saying that's a it's very smart. It's not going to get
00:29:34
done in 18 months. I don't know how long it's going to take. But look, I think one of the big
00:29:38
lessons here over the past 25 years is that you have security first. Security has to be worked out first, then you
00:29:46
have trade. If you build your whole um supply chain and all your trading relationships with countries that are
00:29:53
fundamentally adversarial to your interests, and we can get into that part of the the USChina relationship, but I
00:29:59
think most people would say that we're in some version of a new cold war with with China. Obviously, you're going to
00:30:04
have to revise your trade relationships because again, we can't be dependent on an adversary for core components that
00:30:12
then go into our military, for example. So security always has to come first then you work out trade and I think that
00:30:19
India is fundamentally extremely aligned with us on security because they view their biggest potential threat and
00:30:26
adversary as being China and that is basically that the way that the US sees the world as well. And so I do think
00:30:34
that the US India relationship is just very aligned and I think therefore the investments that get made and the trade
00:30:42
relationships that get forged will be very stable over the next couple of decades. Whereas you know if you make a
00:30:49
big investment in a country that could be your adversary you should expect that that relationship could get disrupted. I
00:30:53
don't think the Apple deal is from a standstill. My understanding is Foxcon and others have been working with Apple
00:31:01
to actually stand up manufacturing capacity in India for some time now and I do believe that they probably have one
00:31:09
or two model runs already active in the country. So I don't think that this is necessarily from a standstill. let's go
00:31:16
recruit the people, figure out the processes, find the builders, stand up the facilities that there's probably a
00:31:22
model system already running that's now about replication and scale up, which is
00:31:25
why they have confidence in the state stated goal. It's not often that Tim Ko will stand up and say, I'm going to do
00:31:30
something in 18 months and then be delayed by yours. He's not Elon. He's going to come out. He's going to be very
00:31:35
clear. He's he's always been very clear. So, and my understanding is this has been thought about for some time.
00:31:41
Andrew, I think you've been to a lot of conferences where for three years now, you've been hearing people banging the
00:31:46
table saying, "Get everything out of China as quickly as you can." Yeah. Tim Cooks heard that message. He's been
00:31:51
thoughtful about it. He's been planning for this day. I don't think he wanted to
00:31:54
be declarative about this until the day came. Well, the day is here. And how do we feel that it's gone to India? It's
00:32:00
not coming to America. I think we knew it wasn't coming to America. Well, India has one massive advantage over China,
00:32:06
which is that it has 1/5if the labor cost of China, which has 1/5if the labor cost of America. So, India is a natural
00:32:12
place for a lot of this next generation labor to end up. Plus, they have a very educated
00:32:19
workforce. Plus, they have a young workforce. In many ways, you could say that it's it's China circa 2003. I mean,
00:32:25
you have to remember, right? Like China from 2006 I think to like 2012 their GDP
00:32:31
grew at like 10% a year. I mean can you imagine what that must have been like when a country that big is growing that
00:32:37
fast. So India is going to have that moment over the next 20 or 30 years. I I the only reason I scoffed at what you
00:32:44
said you invest in in in India would you? I have a large rare earth mine in India. Yeah. It's one of the largest
00:32:50
supplies of rare earths outside the United States. We negotiated that deal with the PMO and they gave us a great
00:32:56
deal to compete with the Chinese. A specialty chemicals processing is on the ground there. And then the idea is then
00:33:03
to import all of that specialty chemical into the United States and then do all the I like the macro. I just there's
00:33:10
something about China where there's a lot of accounting fraud still and you can't really trust a lot of the numbers.
00:33:15
But if that all gets cleaned up, the macro is all right. It's exactly where it should be for You mean India? India.
00:33:20
Yeah. Yeah. I mean I I just think the structure the the structural realities just make it a good place to invest
00:33:28
because I just think that India and the US are going to be very aligned for for a long time. Agreed. Again, their main
00:33:36
security threat is China and our main security threat is China and that's just not going to change for probably the
00:33:42
entire 21st century. A couple weeks ago, Sax and I sat down with the Indian ambassador and it's very clear they're
00:33:50
fundamentally aligned with the United States and I think exactly what Sax said is true. Everybody knows who needs to
00:33:56
cooperate in order to have a reset of global trade policy and political leverage. So I don't know I'm pretty
00:34:02
pro- India. It's a very difficult place to invest. I agree with you Sorcin. I've
00:34:05
never made money there. I tried my hand at tech investing over a decade. I maybe
00:34:11
have returned 50 cents on the dollar. Why? So then so then what went wrong? Like what's the macro reason? The market
00:34:18
was far too immature. My mental model was about how American success looked like and when I tried to impose that on
00:34:25
the Indian market, it all just blew up. So a lot of the Indian entrepreneurs, how they raised money was not from
00:34:32
Indian VCs, it was from American VCs. And you can't tell an American VC an idea that just makes no sense to you
00:34:39
because your frame of reference is the United States. So what turned out to work was a couple of very large bets
00:34:48
that were copies of American businesses. So like the Indian Amazon worked, the Indian PayPal kind of worked, the Indian
00:34:56
Door Dash kind of worked, but everything else didn't work. So then why because is it the consumer
00:35:02
market's not there or the No, because markets aren't there. No, because we have these mental biases that that will
00:35:09
never allow us to believe the way that they would construct the business would work. So, for example, they're like,
00:35:14
"Hey, here's a business where we're going to buy food from the local farmer, then we're going to put it in a
00:35:20
warehouse, then we're going to drive it around on rick shaws and deliver it to people." And you think, well, this
00:35:24
business can never work. Well, actually, that business turned out to be a ginormous success. Nobody in the United
00:35:29
States would have ever funded that. Now what happened four years ago though was after a bunch of meetings I pivoted to
00:35:36
these other areas because when you talk to the Amanis and when you talk to the Adanis they're like dude stop beating
00:35:43
your head against this wall like build infrastructure it just works and uh it was true they've been right okay one
00:35:51
geopolitical question how do you feel about India buying as much oil as they do from Russia I know we'll get into the
00:35:58
whole Ukraine thing later Smart. Smart. Look, India is a country that has two great powers in its neighborhood. China
00:36:06
and Russia. It has a contested border with China. They've had border skirmishes. When you have a country that
00:36:14
is much more powerful, that's actually a security threat to you. You then seek good relations, even possibly an
00:36:20
alliance with the other great power in the neighborhood. That has been India's philosophy. They've had good relations
00:36:25
with Russia for a long time, even going back to the Cold War. That is what makes
00:36:29
sense for their security standpoint. By the way, the exact same thing is true of
00:36:33
the United States. We just haven't realized the strategic reality. China is the pure competitor. I mean, Mir Sh made
00:36:40
this point at our all-in summit. China is the pure competitor. It's the only country in the world that is a peer of
00:36:47
the United States. It's the only country that's really capable of threatening our
00:36:51
security. Russia is a distant number three in terms of the great power rankings. What
00:36:56
you want to do if you're in a sort of heads up competition where there's two superpowers is you want to make an
00:37:03
alliance with that number three. And what we've done is we've pushed Russia into the arms of China. What we ought to
00:37:10
have been doing is a reverse Kissinger. We did this during the Cold War by the way. We had the Soviet Union and we had
00:37:15
China. And in that case, the Soviet Union was the big threat to American security. So what did we do? We had
00:37:21
Nixon and Kissinger go to China and make a deal with Mao. China was just as communist as the Soviet Union. Mao had
00:37:30
blood on his hands to a degree that is much greater than someone like Putin has. And yet we were willing to shake
00:37:37
hands with him and make an alliance because that was real politique. And I think in a similar way, this is what our
00:37:43
strategy should have been with Russia for the last two decades. And instead, we've been foolishly pushing them into
00:37:48
the arms of China. Well, Sorcin, what's your read? I mean, what's your opinion on the I think India is a tough look,
00:37:54
India's India is a tough place to invest. Every everybody I know who's been talking India for the last, I don't
00:38:00
know, 15, 20 years has been talking it up as the next great utopia. And it may very well be. It probably will be. It's
00:38:06
just a question of when. I think you have to and you have to be specific about the end market. You know, like
00:38:11
there are people that have made a ton of money there, but it's not the way classical western economics has played
00:38:17
out by any means. Andrew, I mean, what do you think about this sort of what I would call balance of of powers logic
00:38:23
101? I get I get the idea that you you go to your, you know, least uh I don't know uh your least enemies your friend's
00:38:34
friend your enemy's enemy is your friend. No, the enemy of your enemy is your friend or whatever it is. Yeah. No,
00:38:39
the power logic. I I get I get where you're going with this. I just think that Russia given all that they have
00:38:46
done I'm not it's hard it's hard to look at Russia and China and maybe Russia on
00:38:53
the margins on a relative basis in life is better than China in certain ways but
00:38:58
in other ways it's not and so it's very complicated to sort of for me to look at
00:39:01
it and go okay um it's actually interesting who I mean there's a I was going to use a real loaded word who's
00:39:08
more evil right is China more evil or is Russia more evil I mean, I think I think there'd be a big
00:39:15
debate about that in the world. Well, I think it's it's unnecessarily judgmental. Yeah. Right. I think it's
00:39:21
dangerous to look at foreign policy from a position of extreme moralism because ultimately the purpose of our foreign
00:39:28
policy is to ensure American security and we can't rectify every injustice in the world. And over the past 25 years,
00:39:35
we've become hyperinterventionist, you know, in an attempt. So, we've claimed to do that,
00:39:41
right? We keep saying that we we've gotten involved in all these places because we want to promote our values
00:39:45
and spread democracy. And by the way, we did the opposite. I mean, you look at the forever wars in the Middle East. We
00:39:50
had interventions and occupations in Iraq, Afghanistan, Libya, Syria. How did all those things work out? They did not
00:39:58
promote our values or spread democracy. So, my point is just I don't think we should look at foreign policy from an a
00:40:03
position of extreme moralism. I prefer to think of neither of those countries as as quote unquote evil and I
00:40:12
would prefer to think of them as countries which have their own interests. I think that with respect to
00:40:16
China, the real issue is that it is a revisionist great power. It has made clear that it wants to basically annex
00:40:23
Taiwan. It wants to turn the South China Sea into effectively a Chinese lake. It
00:40:29
does not respect international waters. It has territorial disputes with Japan. And if we don't play a role in
00:40:36
containing China, then China will revise the balance of power in East Asia in a major way. And I think that would
00:40:44
have I think profound consequence for the United States. I just don't throw you off a roof and one day and you won't
00:40:51
even know it. I mean, that's the difference. And I don't know if that's a moral argument. I'm not worried about
00:40:55
the United States is not going to be thrown off a roof by by Russia. And that's the level at which we should
00:41:00
think about these things. If you look at Russia's behavior, Russia actually is not a revisionist great power. What it
00:41:06
wants is just security on its borders. The revisionist power actually in Europe over the past 25 years was the United
00:41:13
States because we pushed NATO right up to Russia's borders despite the promises that were made to Gorbachoff in the
00:41:19
'90s. So, we're the ones who've revised the balance of power in a way that was profoundly threatening to the Russians.
00:41:24
And I think it would be far better from the American standpoint to just work out
00:41:29
a security architecture for Europe with Russia that gives the Russians the security they crave on the Western
00:41:36
border and gives Europe the security it craves. And I think if we had had that mentality as opposed to this highly
00:41:42
moralistic mentality where we basically want to spread American style democracy everywhere. You don't think that
00:41:47
American style democracy though has helped the world in some way? I'm not saying we did it right everywhere. I
00:41:52
think we've lost a lot of lot of wars that we should not have attempted. But if it could be done, you're right. But
00:41:57
the problem is, Andrew, the failure rate is too high. Look at what happened in Afghanistan, in Syria, in Iraq. As we've
00:42:04
gone in to make, you know, regime change, we actually put those people in a worse condition than they were before.
00:42:11
They don't end up with American democracy. After a trillion dollars in Afghanistan, the Taliban is back in
00:42:16
charge doing awful, brutal things, right? Two trillion. And and I would be I would be a proponent of and by the way
00:42:22
this was also part of the promise of the open internet and I think from a fundamental point of view the regulatory
00:42:27
regime we had in the United States with the internet was driven by this notion that the freedom of information would
00:42:32
actually allow democratic proliferation. You know we were talking about the Arab
00:42:35
Spring as you'll you know recall like that was going to be this big moment but at the end of the day it turned out that
00:42:41
didn't work either. that there's something much more complex in the history of a people in a geography, the
00:42:46
deep ties that those people have, that this idea that turning on a screen or showing up with a tank is going to flip
00:42:51
the switch to democracy turns out not to be true. And look, just to be clear, I mean, I think my lucky star is that I'm
00:42:57
an American and we do have the type of government we have here. And my parents immigrated to the United States in 1977
00:43:03
for political reasons because we have the type of government we have here. So, look, I'm a strong believer in American
00:43:08
style democracy. The problem is our efforts to promote it or impose that style of government through regime
00:43:16
change operations simply has not worked. I mean this is should be one of the big
00:43:20
learnings of American foreign policy over the past 30 years. It's better to model it right. It's better to Yeah. So
00:43:25
how do you model it? I think you model it by being the shining city on the hill by setting a good example by focusing on
00:43:30
our own country and making America the best it can be so that people all over the world look to us and say oh we want
00:43:36
to do that. And I actually think that what I'm describing is an American soft power. If you go back to the 1980s, we
00:43:42
had that soft power. I mean, the people of places like in Russia, they love buying American blue jeans and American
00:43:49
music. And we had that soft power. We were inspiring to the world. But it all changed say starting in the '90s, but
00:43:56
then really in the 2000s when we started going into these countries with our militaries and occupying all these
00:44:01
countries, we soured them on America. We made them hate us. And this is the problem with this hyperinterventionism
00:44:08
is what we should be doing is setting an example, not trying to occupy these countries. Let me read something to you.
00:44:16
This is this week. This is Trump condemning the strikes going on in Kiev. This is I'm not happy with
00:44:25
the Russian strikes in Kiev. Not necessary. Very bad timing. Vladimir, stop. 5,000 soldiers a week are dying. Let's
00:44:36
get the peace deal done. How is this deal going to get done? I should also say Secretary of State Marco Rubio
00:44:42
reportedly skipping a meeting on a ceasefire talk on Wednesday after Ukraine refused to recognize Russia's
00:44:48
annexation of Crimea. Well, the reason why Rubio canceled that meeting is because the Americans put forward a
00:44:55
peace proposal and Zalinsky dismissed out of hand. Before the Russians could do anything, Zilinsky dismissed it. And
00:45:03
recognizing Russian ownership of Crimea, if you will, should be the easiest point
00:45:08
for Zillinsky to concede. And he dismissed it out of hand. Now, why do I say that? The Russians annex Crimea in
00:45:15
2014. So, this was not something that happened in 2022. It happened over 10 years ago. And if you look at what the
00:45:23
people of Crimea want, and there's been a lot of Western polling on this, there's been man on the street
00:45:27
interviews by NBC. The people of Crimea by something like over 80% say they want
00:45:32
to be part of Russia. They're ethnic Russians. And I'd say the the final point on this is that Zalinsky and
00:45:37
Ukraine tried to get Crimea back in the summer of 2023 with a summer counteroffensive. Remember the whole
00:45:42
point of that summer counter offensive was to sever the land bridge to Crimea, destroy the Kirch Bridge, isolate Crimea
00:45:48
and essentially lay siege to it. This was the whole point of that and they got nowhere with that. They didn't even
00:45:52
break through the first Servican line. So my point is that it's militarily impossible to retake Crimea. The people
00:46:00
of Crimea don't want Ukraine to retake it. They want to be part of Russia. And yet Zalinsky cannot give this up. Okay.
00:46:08
So how do we get to yes? How do we get to yes? This was supposed to be done on day one and here we are. The basic
00:46:14
problem is that Zalinski doesn't want to make a deal. I mean, he he has rebuffed
00:46:18
the Americans on Crimea, which should be the easiest point to give on. He's been
00:46:24
completely unrealistic about their prospects on the battlefield. He was insulting to the White House when he
00:46:31
visited the White House in his t-shirt or whatever. He was dressed inappropriately. And then one of the wor
00:46:35
tests for America, I think that meeting was. Well, I mean, he was insulting to the president and especially to the vice
00:46:42
president. He he murmured under his breath a curse word to the vice president. You remember that? I mean, it
00:46:48
was really quite something. And remember, he's biting the hand that feeds them. I mean, he has an
00:46:54
obligation, I think, to be respectful to his patrons in a way that his patrons may not
00:47:01
in a way that they we may not to him. and he has demonstrated, I think, that he's unrealistic in every possible way.
00:47:08
He's unrealistic about Ukrainian prospects on the battlefield, about retaking Crimea, and about who the the
00:47:13
hand is that feeds him. So, my view on this is quite simple, which is if Zalinsky won't see reality, let him go
00:47:21
find new patrons. Let Starmer and Mcronone support him. They say they will. They say they have the ability to
00:47:27
do this, but they can't. And, you know, they can't enough. Well, they appear to.
00:47:31
My point is Zillinsky has made his bed. Let him sleep in it. This is my point of
00:47:36
view on it. He refuses to listen to the Americans. He refuses to recognize that this administration even has leverage
00:47:44
over him. And you don't think that ultimately if Putin takes Crimea plus whatever that he's going after Poland
00:47:52
next or I mean that's it's the domino theory that becomes the complicated part. No, I don't think so. I don't
00:47:58
think there's any evidence that he wants Poland. I don't even think he wants the
00:48:01
part of Ukraine that is chalk full of Ukrainian ultraists because you would have a massive insurgency there. He
00:48:08
doesn't want a Gaza type situation. And by the way, just another point on Crimea. Where is the insurgency? If
00:48:14
Crimea really wanted to go with Ukraine as opposed to Russia, why has there been
00:48:17
no uprising there over the past 10 years? So, in any event, my point is there's no evidence that that Putin
00:48:23
wants Poland. Poland's part of NATO that would start World War II. I I think Putin has shown that he's a calm,
00:48:31
rational decision maker and I don't think he wants World War II. Now, the Russians have said what their terms are.
00:48:37
They said it last year. They said they basically in in this root cause speech they gave in I think June of last year
00:48:43
and basically what it comes down to is they want Istanbul plus there was a deal to end this war in the in the first
00:48:50
month the Istanbul deal and it required Ukraine to basically sever its security relationship with the west and to
00:48:58
recognize that it would not become part of NATO and they had to give up Crimea basically that was the deal back then
00:49:04
what Russia has said is that's still the deal plus realities on the ground so in
00:49:08
other The Russians have lost I don't know 100 thousand plus hundreds of thousands of
00:49:13
soldiers now taking this territory in the east and obviously they're not going to give it up. So I think that the
00:49:20
Ukrainians could have had a better deal in the first month of the war. The Biden
00:49:22
administration rejected that. Now there's a different deal. It's Istanbul plus and I I think that the American
00:49:29
proposal is pretty close to that. So I think this administration recognizes the wisdom and just reality
00:49:35
of that deal but the Ukrainians aren't. So look, my view is simple. If the Ukrainians are unwilling to take the
00:49:41
deal that's on the table and they want to find new backers with the Europeans, let them. But why should we continue to
00:49:48
support this? Okay, let's pivot. Let's talk markets and let's specifically talk a couple stocks because there's Andrew,
00:49:54
you disagree cuz I want to hear your disagree. No, no, I I I could, but we're going to I think we're going to run out
00:49:58
of time. Okay. I want to talk Alphabet. So everybody thought the Blue Link economy was dead. Open AI, Perplexity,
00:50:06
all of it was, you know, going to take the search market. They come out with earnings. Sundar
00:50:12
uh does way better than everybody expected. Revenue up $90.2 billion is up 12%. Net income was up up almost 50%
00:50:20
year-over-year. You got the cloud still ripping. You got a big buyback program. He starts talking about Whimo on the
00:50:27
call for the first time in a long time, if ever. Uh stocks up about 5% on the news. What do we think? What an
00:50:35
incredible business. My gosh, there's there's a lot of resiliency in Alphabet that I don't think people have given the
00:50:42
company credit for. First of all, I'll just highlight with the dividends they're paying plus the share buyback,
00:50:47
you're basically getting a four, five% yield on the stock. So, the dividends are like 10 billion a year and they're
00:50:53
announcing 70 billion back on two trillion in market cap. So you're making 4% a year just by owning the stock in the
00:51:01
dividends and the buybacks. Then if you look at the revenue 90 billion, 77 in services, 12 in cloud. So the 90
00:51:10
billion about half of it was ads on search and a lot of people have been talking about the decline in search due
00:51:16
to AI. That's the end of of Alphabet. Here you can kind of see the breakdown. What this shows is that there's such
00:51:24
significant growth. 9 billion in YouTube, 7.5 billion in non- Googlele ads, 10 billion in subscriptions with
00:51:32
270 million subscribers across subscription businesses, 12 billion in cloud revenue, which is growing 30%
00:51:39
year-over-year. There's a lot of resiliency even if you take out search. And so the question is, what's the
00:51:46
downside? What's the upside? Well, the downside is what's the worst that could happen to search? what they lose half of
00:51:51
the market to uh to chat GPT. If they lost half the market to chat GPT and the rest of the business
00:51:57
keeps growing the way it is, you get back to parody pretty quick. What's the upside? Well, the
00:52:03
upside is they're able to use AI to actually reinvent search, retain the audience, and create an entirely new
00:52:09
search experience that's chatbased or has some chat integration into search. So, it seems to me trading at 18 times
00:52:16
free cash flow, which is where this thing's at right now, plus the 4% yield on dividends and buybacks, plus the kind
00:52:23
of seemingly pretty significant gap between the downside and the upside here. It's just such a powerful
00:52:28
business. It just seems like it highlighted that this is not a business that's in decline and is about to die as
00:52:33
everyone's been kind of proclaiming. There's enough growth engines here and there's enough resilience and the price
00:52:37
is so good. I don't I feel quite good about the I think there's hundred billion dollars of hidden value called
00:52:42
Whimo in this business $250,000 rides a week now growing like crazy and they're only like four cities. It's crazy. And I
00:52:49
think I think the market's giving them zero for that right now. Zero. I think the most interesting stat that I saw and
00:52:56
they own% of SpaceX by the way which is crazy. The most interesting stat in the earnings was that I think they said that
00:53:04
they had 270 million total paid subscriptions across YouTube and Google one. And my
00:53:12
initial thought was, well, when are you just going to stick Gemini as the most obvious interface in front of it? Like I
00:53:20
think that these companies now need to confront that this open AI behemoth is growing at a rate that was probably
00:53:30
a hindrance before and now is a real strategic risk. And so if you have 270 million paid subs, come on guys, stuff
00:53:38
Gemini right in front of these guys. That's that's that was my first takeaway. But it's again, they're doing
00:53:42
it from a position of strength, but they need to get going because they're they're probably himing and hying and
00:53:47
there's probably all kinds of people, all kinds of cooks in that kitchen. But I've heard a lot of stories about this
00:53:52
question. I think Sundar, Larry, and Sergey just need to take the equity and the political capital they have as a CEO
00:53:58
and the two largest shareholders and just stuff the decision down people's throats. So that's that that's number
00:54:03
one. The other thing that I think about actually relates to what I spoke about last week about Nvidia. So, just to give
00:54:12
you guys a little bit of a cleanup, you know, after we spoke about Nvidia, the Nvidia team reached out to me and they
00:54:20
were like, "Hey, Hmoth, here's a bunch of stuff that will help you unpack what you spoke about in a
00:54:28
little bit more detail. So, let me tell you what Nvidia told me and then I think
00:54:31
it relates to GCP. So, what they told me when you look at the SEC filings for Nvidia and you add up all the revenue,
00:54:40
it says that about 47% of the revenue goes to China, Singapore, Taiwan, I think it was. And what these guys
00:54:48
educated me on is that they've been trying to refine how this is described, but it's not what it seems. meaning they
00:54:57
report revenue on what's called the billing or the invoicing address. So meaning you are an entity, you'll buy a
00:55:08
huge amount of chips or compute power and you issue the invoice out of Taiwan or Singapore or China. That's what
00:55:18
represents 47% of Nvidia's reported revenue. So it turns out that that's actually not
00:55:25
where the silicon gets shipped. So there's a Singaporean office that handles the invoicing. So then I said,
00:55:31
well, who are these companies that are using these these places? And it turns out that it's a bunch of major US
00:55:37
companies, including US OEMs and clouds that use Singapore for invoicing their suppliers.
00:55:46
But that the you know what industry sources have told us is that all of these products are almost always shipped
00:55:53
elsewhere including US, Mexico, Taiwan etc all over the place. So why is this interesting? There
00:56:00
was a study by artificial analysis Nick I will send you the link but basically what it showed was that the clouds were
00:56:08
not doing any real form of KYC on who is using their stuff. So now I think we get to this next place
00:56:18
which is like I think the Google business is profoundly amazing. I think they need to do something with the
00:56:23
subscriptions that they have and put Gemini right in front and really do a head-on attack against Chat GPT. Those
00:56:29
are the pluses. the minuses or the risks that I think now will get uncovered is are the clouds doing enough to make sure
00:56:38
that China and other folks aren't getting access to compute that they should not get access to and that could
00:56:46
have an impact on some of their revenue. So that's a GCP problem. I think it's an
00:56:51
Azure problem. It's a AWS problem and that's going to need to get sorted out in the next couple of quarters because
00:56:57
if western governments basically say to the clouds, hey, you need to KYC your customers so that it's not somebody
00:57:04
distilling the best of our models into a place we don't agree with. I think there
00:57:08
could be some blowback. All these numbers obviously backward looking. Do we think, and I would be talking too
00:57:13
much about tariffs, but do we think that the tariff story is going to impact a Google next quarter? Do we think it's
00:57:20
going to impact a meta next quarter? And to the extent that Google is saying, look, we're going to keep our big
00:57:26
infrastructure spend $75 billion, you know, full steam ahead, which is great for the ecosystem, great
00:57:32
for Nvidia, great for great for everybody in that world. Do we think that holds up if we think there's a
00:57:37
hiccup between now and whenever all this tariff stuff gets sorted? If it does, I
00:57:42
think it's going to hold up. I mean, look, I just think that this investment in in capex and the data center
00:57:48
buildouts is so strategic right now. I mean, I think that the hyperscalers, it's only good for their their
00:57:53
businesses, but I think they see it as so strategic to their survival that they just have to do it no matter what. In
00:57:58
other words, I think they're totally inelastic on this. But let me just go back to Google. Nick, can you throw up
00:58:03
this chart? I mean I think the problem that Google has with respect to chat GPT is that Gemini is just not getting the
00:58:10
usage and chat GPT is just growing like crazy. If you look at how these models perform according to the benchmarks,
00:58:18
Gemini is actually really good. I mean Gemini has made substantial progress catching up to chat GPT but they have
00:58:25
not caught up on the usage side. Now, to Jamal's point, you could just make Gemini the default interface
00:58:31
in Google search, but that is true innovator's dilemma because if you do that, you could be giving up more than
00:58:36
half the search revenue. So, I do think Google is is in a really tough spot. And
00:58:41
the longer they wait to make Gemini front and center, the worse this usage problem gets. I mean, what's basically
00:58:47
happening right now is users are learning a new habit. I mean, they they're learning to go to chat GBT to
00:58:54
get their questions answered or just their searches answered in a completely different way. And let's be honest, they
00:59:00
make using Gemini impossible. And they can do just a much better job. At a minimum, give the best leading edge
00:59:07
Gemini model to the 270 million people that are already paying you for a subscription. Just do that. Do something
00:59:13
so that you can start to blunt the growth of of Open AI. Otherwise, you're going to look back in four years and
00:59:18
regret him and hying today. So, Chimoth, you're the CEO of Google. You've got a $200 billion run
00:59:27
rate ad search ad business. What's the right kind of integration of Gemini such that you don't massively disrupt the
00:59:35
search ad business overnight? Or do you not care and you're just going to do it?
00:59:39
I think that's the conundrum they're dealing with. That's not a conundrum. If you don't understand how to value a
00:59:44
dollar today versus a dollar tomorrow and a discount rate to disambiguate the emotionalness of that decision, it's not
00:59:51
a hard decision to make. I think the the the more difficult question is what is the integration look like? And if you
00:59:58
are already paying for a YouTube subscription or a Google one subscription, what should your
01:00:02
experience be? That's a key question. The second question is today they're already inserting Gemini in all kinds of
01:00:09
uncomfortable ways. So, for example, if you use Gmail or if you use Google Workspace, what happens today is all
01:00:16
these random Gemini pop-ups come up all over the place, that is an implementation that happened at way too
01:00:22
junior a level by people that have no product taste. So, if you just stop that, it's not hard. But right now, you
01:00:30
have a bunch of, you know, honestly, people that don't have taste and are a little too junior creating a very
01:00:36
cluttered experience. And if you use the products every day, it would be hard for
01:00:40
you to disagree with me. They have infinite capital and infinite access to talent.
01:00:46
Capital doesn't buy taste, right? So, what do you think's wrong? I agree that the Google interface trying to
01:00:51
incorporate Gemini into the 20 blue links or whatever is very cluji, but I don't know how you fix that without just
01:00:58
getting rid of the blue links. I mean, I guess you can do a hybrid experience, but it doesn't compare to chat GPT,
01:01:03
which is all in on the AI experience. So, I think it's a real innovator's dilemma for them. And look, the truth is
01:01:08
the market was killing them already because people thought that that first little AI summary thing was actually
01:01:13
going to kill the blue link economy, right? Like that was that was their worry. And so, it's this ter I mean, I
01:01:19
it is a terrible conundrum if if if you're Sundar, how how do you how do you do how do you do both things at the same
01:01:24
time? Jim, I think you're right. There's a design way to do it, but they're not doing it. This comes down to taste. And
01:01:30
I think you can't have group think drive creativity and taste. You either have it
01:01:35
or you don't. And you need to find the one or two people. And then you need to use the strength of your leverage as a
01:01:43
CEO and the ownership that Larry and Sergey have to impose one person's taste on the decision. Well, let me ask you a
01:01:52
question. when the Google homepage where they just have the search bar and the you know you can basically submit your
01:01:58
search or I feel lucky or whatever. Would you replace that with that search bar with an AI chatbot? No. Here's what
01:02:05
I would do. I would first go to the critical other points that are around that today do not cannibalize the blue
01:02:13
links. So the obvious insight should be if you look at the traffic patterns almost as a Sanki diagram, right? Yeah,
01:02:19
we just show we just had one up. Show a Sanki. Okay, who cares about revenue? What the real thing you should be
01:02:25
looking at here is where are the entry points into Google that then result in a clickable link and
01:02:33
what you would have is a very different sanki and what it would show you is that
01:02:37
there are certain places that are highly deoptimized today for revenue generating
01:02:42
events. They happen as a byproduct but they don't happen as the use case. So in that example, you would put Gmail as a
01:02:50
critical place, the YouTube one, the Google one subscription, and there's like five or six other places. That's
01:02:56
where I would put Gemini as the front door and start to habituate 300 to 500 million people a
01:03:03
week in using that. I think then you can figure out over time how much money you
01:03:09
can make from all of that or how it directs derivative revenue and figure out what to do with google.com last. But
01:03:17
my point is the experience in Gmail should be done today. The experience in YouTube should be done today. The
01:03:23
experience in Google one should be done today. Would you Okay, Nick, can you put
01:03:26
up this? Here's their homepage. Right. This is the famous shot. I just checked in hasn't changed in 25 years or
01:03:33
whatever. I would leave I would leave it alone because I think it's too disruptive and it's it's too politically
01:03:38
fraught. I mean you could do something. What if they replaced I'm feeling lucky which is kind of antiquated now with AI.
01:03:44
I mean Gemini basically. I I mean you you I would need to look at the Sanki to understand how many people are actually
01:03:51
generating monetizable events or behavior from I'm feeling lucky in 2025. I'm not sure the novelty it was in you
01:03:58
know it is the novelty. I don't I think it's there as like a whimsical thing. I don't know if it drives revenue for them
01:04:03
or not. If it takes the user off site, I don't see how it drives revenue for them. Here's a I'll tell you a great
01:04:09
Facebook story just to explain this and why I get so animated about this. I was telling this to my 8090 team yesterday
01:04:17
because we're dealing with this one product implementation issue and engineers always end up fighting about
01:04:24
whether things should be optin or opt out. Okay. And it's it's almost like this religion where people feel like,
01:04:31
oh, you cannot force people to do something. You you should always make things optional. And I remember at
01:04:37
Facebook, we bought this little company for a few million dollars that made contact importers, which essentially
01:04:42
means if you're using any other email service to sign up for Facebook other than like Hotmail back in the, you know,
01:04:50
early 2000s, we could import your address book. Anyways, long story short, I remember getting into a huge fight
01:04:57
about whether that thing should be opt-in or opt out. And I remember telling the guy, and I'm not going to
01:05:01
say who it is because you guys all know him. And and I was literally like, honestly, just shut up and enjoy the
01:05:06
success that will come from keeping this as an opt out. And it just reminds me that at some point, somebody needs to
01:05:13
impose their will to make very difficult product decisions. And if you leave it to a team, you'll end up with, by the
01:05:22
way, go to Gmail today with 95 Gemini pop-ups. It's not what will allow them to win with what they have, which is a
01:05:29
better product, which I will agree it is a meaningfully better model on multiple
01:05:34
dimensions than anything else. Okay, I know Sax has to go. Before you go, David, I just want to hit Tesla for half
01:05:40
a second. Tesla's out with earnings this week. Stock is up 8% on the back of that
01:05:45
back of that news. 23% up in the last 5 days in large part because Elon basically said, "I'm getting out of Doge
01:05:52
and I'm going back into Tesla." So, the question is, what can he actually do to fix Tesla at this point? What does he
01:05:59
have to do? And is he really out of Doge? No, I don't I don't think he's out of Doge. He didn't say he was out of
01:06:04
Doge. It was just a matter of how much time he could allocate to each thing. I mean, look, I saw this before when I was
01:06:10
part of the Twitter transition is that for the first 3 months or so, he was basically full-time at Twitter HQ
01:06:16
learning the business down to the database level. I mean, every nook and cranny of that business he learned
01:06:22
about. Once he felt like he had a mental model and he had the people in place that he trusted, he can move to more of
01:06:28
a maintenance mode. And I think that's the only way he can manage five companies is that he has these intense
01:06:34
bursts where he focuses on something, gets the right people and structure in place, feels like he understands it, and
01:06:39
then he can delegate more. And I think that he has reached that point with Doge. But he was also clear that he's
01:06:45
going to keep doing it because if he doesn't, there's going to be a huge backsliding where, you know, all the
01:06:50
corrupt interests will basically put back all this corrupt spending. So he's going to stay involved, but as an SGE,
01:06:56
he's limited to 130 days a year anyway. And so it makes sense for him to kind of
01:07:01
now ration his days a little more closely. But he's got the people in place. Remember Doge, it wasn't just
01:07:08
him. It was also the US digital service which is basically the IT branch of the executive branch which got put under
01:07:15
Doge. So my sense is that Doge is going to continue. It's just that Elon is shifting to a mode where he can manage
01:07:21
it one day a week or two days a week as opposed to being there 5 days a week. Steve Bannon says he wants the receipts.
01:07:27
He says there are no receipts. We don't have the receipts. He says we need itemized receipts to see what has
01:07:32
actually happened. What do you think? Why wouldn't we want to cut as much of this corruption as possible? Well, I
01:07:38
think we have to. We have to. The question is, should the public get to see exactly what's been cut and what
01:07:43
hasn't? Why wouldn't they? Of course. And what we really need is for Congress to now embrace all the corruption that
01:07:50
Elon has found and eliminate it from the budget. Because at the end of the day, in order to capture the savings here, we
01:07:55
do need those appropriations eliminated from the budget. And my biggest concern is not something that that Doge is going
01:08:03
to do or not. It's not up to Doge to do that. It's up to frankly these old bulls
01:08:08
in Congress who control the appropriations process. Are they going to basically backslide and just put the
01:08:13
spending back in because it's easier to just do that to engage in this log rolling or do we take advantage of this
01:08:21
I think incredible sacrifice that Elon has made. I mean look this has cost him enormously. One of the reasons why Tesla
01:08:28
is down is because you've had crazy leftists engaging in terrorism firebombing Tesla dealerships. In any
01:08:34
event, he's made this enormous sacrifice in order to expose the corruption. And look at what we've learned. We've
01:08:39
basically learned that this whole NGO thing is a giant scam where, you know, the people in government give enormous
01:08:46
amounts of money to their friends, probably with the expectation that when they leave government, they're going to
01:08:51
be next in line at the trough. And I think Elon's done an enormous service exposing this. But, you know, it's not
01:08:58
entirely up to him. In order for us to realize the benefit, we need Congress now to act on that. And I'm just afraid
01:09:05
that's not going to happen. What kind of total number you think we get? I always
01:09:08
say a dollar saved is a dollar made and we should we should say amen to that. The question is what do you think the
01:09:12
total number is ultimately going to be? Well, he says they're at 160 billion right now. I think that's by the way
01:09:17
that's an annual number as far as I understand it. So, you know what I always hear with spending is they always
01:09:23
multiply everything by 10 because they assume it's going to be 10 years. So, if it is 160 billion a year, that would be
01:09:29
1.6 trillion over 10 years, probably more because the spending always grows. And look, that's 160 billion that we
01:09:35
weren't planning on saving before Elon got involved in the government. So, if that's all it is, that would be great. I
01:09:40
think there could be more. And it really comes down to whether Doge continues to be
01:09:46
supported by the political process. And um look, Elon can't he can't force that,
01:09:52
right? I mean, ultimately, it's up to legislators to take advantage of the work that he did. And ultimately it's up
01:09:59
to the people to put pressure on those legislators to embrace what he did. He's done an enormous amount, you know, but
01:10:07
there's an old saying that you can bring a horse to water, but you can't make it
01:10:09
drink. If the entrenched political interests at the end of the day aren't, you know, if they're not going to
01:10:16
embrace the the savings that Elon has found, I you know, I don't know what we can do about that. I mean, there's
01:10:20
there's the administrative and discretionary aspect, but you know, I've said for a while it's going to be
01:10:27
necessary to have statutory resolve to actually fix the deficit problem in the United States. And that means getting
01:10:33
Congress to act. And Congress has not shown a willingness to act. And every time I go to DC, I come back more
01:10:39
disappointed. I share the stories on this show and I talk about the fact that there are very few members of Congress
01:10:44
that are staying up and saying at the end of the day the first thing we need to solve is how do we reduce the
01:10:50
deficit? Then we can address all of the policy issues that we want to talk about. But if we don't solve the deficit
01:10:56
problem, there is no policy. There is nothing we're going to be able to do because the Treasury rates are going to
01:11:01
spike. There's going to be no capital. There's going to be no funding. We're going to go through a debt death spiral.
01:11:07
So, at the end of the day, we really do need Congress to stand up and lead here.
01:11:11
It is not on one man's shoulders. There's only so much Elon can do without statutory authority from Congress. And I
01:11:18
think that's really important in this in this budget reconciliation process. And
01:11:22
it's really important for the president to also help lead Congress to where we need to go on this. Members of Congress
01:11:28
are elected because they get stuff for their constituents. The more they get, the more likely they are to get elected.
01:11:34
and next cycle they got to get their constituents more stuff. So it creates an escalating spiral staircase. It's a
01:11:39
problem in how democracy operates. It creates a tragedy of the commons. There's a collective action problem
01:11:44
because like you said, each individual congressman or senator primarily wants to get stuff for
01:11:52
their district or their state, for their special interests. And there's no one really looking out for the public
01:11:59
interest, the overall common good. And these appropriators are basically engaged in log rolling where they're
01:12:06
willing to give, you know, their their colleagues their pork if they get their pork. And this is why we have a $2
01:12:11
trillion deficit. It's a really hard thing to fix. I mean, it's really hard. This is the
01:12:16
problem. I mean, people realize you realize you can vote yourself all the money and that's what you do. I I think,
01:12:22
you know, this has been something that I remember uh Bush 41 in his State of the
01:12:27
Union called for a line item veto. This was like 30 years ago and we still need that, you know, because I do think that
01:12:34
if the president had more authority over this process, it'd be less of a tragedy
01:12:38
of the commons. In my naive youth, I was very against that and I felt like it was
01:12:43
giving too much power to the president and I never really understood the wisdom of it until we find ourselves at the end
01:12:48
of the cycle, which is where we are here. That's Yeah. And unfortunately, Congress will never, I think, change its
01:12:54
ways until they're forced to by some sort of crisis, which Freeberg, I think, is your point about eventually we'll be
01:13:00
in a debt crisis. And then Congress will finally see the wisdom and they'll finally appreciate what Elon did. You
01:13:06
know, there's all these entrenched political interests complaining about Elon. I mean, again, he undertook an
01:13:11
enormous sacrifice to try and fix our fiscal situation, which is unsustainable before there's a crisis. One day
01:13:17
there'll be a crisis. Everyone will see that he's right. But to answer your question, Andrew, Nick, you want to pull
01:13:22
up this poly market. So this is the poly market on how much spending will unfort.
01:13:27
Yeah, we'll see you later. Bye. Love you, Dave. That was great. Thank you. Yeah, thank you. Poly market showing an
01:13:32
84% chance of less than 50 billion being cut in 2025 and only 10% chance. Isn't the
01:13:40
number on doge.gov right now like 160? That's what they're saying. They've cut in contracts. So that means the
01:13:47
annualized run rate of savings from cutting contracts. But what Poly Market's showing is what's the actual
01:13:53
savings in 2025 from Doge action. Oh, because these are multi-year contracts. Multi-year contracts. But then there's
01:14:00
also reporting that like $92 billion of it, I think, isn't actually itemized. So
01:14:04
it's hard to understand what's actually, you know, on the list. And they haven't
01:14:08
they haven't done anything yet in defense, right? So that's a big honeypot, I guess, if you want to
01:14:15
use that word, potentially that system. Do you think he's going to go there? Well, I mean, there are people there are
01:14:22
people at at DoD and at HHS, but I don't think we've had a readout from any of those people yet, right? I mean, all of
01:14:28
this other stuff has HHS is huge. It's the number If you look at their list on the go the Doge tracker on the website,
01:14:34
HHS is the number one department of savings right now. And they've got the contracts. Yeah, defense is on. Okay.
01:14:39
Okay. So they are so they are finding remember what they're doing is they're just cutting wasteful contracts. So
01:14:43
they're cutting stupid stuff that aren't used all the discretionary stuff. All the that's not used or not
01:14:48
needed. No, no, but my point is like all of these things are still these are not
01:14:53
line item appropriations, right? Because you can't cut those. Well, here you can
01:14:56
see the Department of the Interior had a $3 billion contract for refugee resettlement with a company called
01:15:03
Family Endeavors, Inc. And so they put that as the number one contract they cut on the website. saves 2.9 billion total.
01:15:11
Treasury, they cut a deal with a company called Centennial Technologies, which it
01:15:15
is an enterprise software company saves $1.9 billion. What is the Department of Defense technologies? Mike, I mean,
01:15:22
that's the thing. Go into this stuff. You can in that are all like small. You can click
01:15:27
on it. It shows you the contract. Here it is. Well, no. I'm going to go and try to find the Centennial Technologies. Who
01:15:32
are these guys? You're going to invest. Yeah. Okay. Should we talk? You want to still talk a little Tesla or you think
01:15:38
we should move to the science corner? What I would say quickly on Tesla is I would encourage all of you guys to try
01:15:44
FSD. It's a new thing you've discovered. This is the reason I bought my Tesla. I've
01:15:50
been using it for the quality. The quality of FSD is just so good. Yeah, but you never turn it on. You just set
01:15:55
it in the pre-thinking. No, I use it all the time. It is just an incredible thing. I I
01:16:01
don't I think like there was like a rev of it probably in like the last month or
01:16:04
two that I think took it from like a 908 to like 99.5 or something. It's just like there's just very few
01:16:13
disengagements. Okay. So, are you a believer that we that Tesla's doing real robo taxis in
01:16:19
two years? Oh, I Yeah. Yeah. I mean, like right now my car is effectively a robo taxi. The
01:16:25
shittiest part about my Tesla experience is I have to hold the freaking steering
01:16:29
wheel and look ahead because this camera is always looking at me. My wife, it's so funny. She'll come home and she'll be
01:16:36
like angry because she like got suspended because she was like looking away and looking on her phone. And they
01:16:41
turn it off. They punish you. Tesla punishes you if you look away too often. They put you in like, you know, timeout
01:16:47
for like I don't know how many days or whatever. It's that's the worst part about the experience cuz it is so good.
01:16:54
you're just like, "Gh, can I just take my hands off the wheel and just do something else?" Well, there's a lot of
01:16:59
videos getting posted on Twitter of FSD being on and then the car drives into the sunlight and at a certain angle when
01:17:05
the sun hits the cameras, the car goes into an emergency disconnect on FSD. And I've had that happen. So, I know it's
01:17:11
true. I know it's real. So, it is a bit of a risk with the camera only mode on how Tesla operates FSD if they can
01:17:19
actually run a full, you know, never to disengage robo taxi service like Whimo does. still pushing LAR on them. Is that
01:17:25
what you're doing? I don't That's the That's the word on Twitter, which is watch out because without lidar, you're
01:17:31
going to have a lot of disengagement. El Elon Elon's never doing LAR. Never doing
01:17:35
LAR. Here's an interesting factoid. I've been working with somebody here on trying to figure out what does next
01:17:41
generation AI data centers look like? And do you build like inference pops all over the all over the country? And I
01:17:49
talked to some folks at Whimo. I talked to Teedra. And what's interesting is the
01:17:53
Whimo approach is they don't need POPs anywhere because all of the models are on board. Yeah. So these things go fully
01:18:01
autonomous units out into the wild. They can make every decision themselves. They
01:18:05
have the liar and then they come back to the fleet and then they can reync the models. Whereas everything else,
01:18:11
particularly if you have human intervention, well, if you have human intervention, so all of the food
01:18:18
delivery folks that have like central knocks of people that can engage and intervene, they need all these all this
01:18:24
real time ability so that things are multi-milly maximum. Awesome. Should we should we go to the science corner, my
01:18:32
friend? Yeah, if you're ready for it. I'm ready. Today's science corner is on a discovery of a massive thorium reserve
01:18:40
in China and a disclosed molten salt reactor in China that's been running for some time.
01:18:49
So at a private before you let me do the tea for this Freeberg tell us about these thorium reactors.
01:18:58
I think the the most important thing that everybody should know before I tee this up for Freeberg is that what he's
01:19:04
going to talk about is a material called thorium which doesn't split. It doesn't
01:19:10
release energy unless it absorbs a neutron and then it transmutes to uranium 233. And
01:19:18
by this what I mean is this is a trans that everybody should be able to get behind. Over to you. Hey, he got it. He
01:19:24
got it. You get it, Andrew? I got it. It's a beautiful thing. I don't think we brought it up in Science Corner before,
01:19:30
but apparently there was a giant thorium deposit discovered in Inner Mongolia that has enough thorium to effectively
01:19:38
power the entirety of China for 60,000 years. It was made by the Bayion Obo mining complex. It's a million ton
01:19:47
reserve in Inner Mongolia. And so thorium is much more abundant in the Earth's crust than uranium, which is
01:19:56
what we've historically used for fision reactors and what we use today for all of the even new generation nuclear
01:20:02
fision reactors. And for a long time, folks have talked about building a thorium reactor. There's a lot of
01:20:06
challenges with building a thorium reactor. It's a new set of systems. But if you build a molten salt thorium
01:20:12
reactor, you can ultimately produce energy in a way that doesn't actually have the risk of a meltdown. It can
01:20:21
passively shut itself down. It's not high pressure, so it can't explode. So, it's technically a much safer, much more
01:20:27
reliable way of producing power with a much more abundant fuel source. And people in the US have been talking about
01:20:33
building these thorium molten salt reactors for decades. In fact, in 2009, the US Geological Survey in the United
01:20:40
States went out and did a study to identify how much thorium existed just in the continental North American
01:20:46
region. Turns out the US has about 64,000 tons. Canada has 172,000 tons of thorium reserves. And China just
01:20:55
discovered a million tons in this in this one region. But the amount of thorium that we have in the United
01:20:59
States is enough to power our country for centuries. So in China, turns out they built a molten salt reactor. This
01:21:07
was another secret. They've been operating it now for some time. Last June, while the reactor was running,
01:21:15
they replaced the fuel. So it basically showed continuous use of the reactor without needing to do a shutdown and
01:21:21
refueling cycle. It's a 2 megawatt experimental unit, and they're actually building and planning to take live a 10
01:21:28
megawatt unit by 2030. So this was all shared in a private meeting. It got out. The discovery in Inner Mongolia was also
01:21:36
kept confidential for I think nearly two years and then it got reported out and after it got reported out it was
01:21:42
confirmed ultimately in a government meeting and that that's how we know about it now. But I think this just is
01:21:49
this another kind of critical point about this. Once China gets this 2 and 10 megawatt system running, this allows
01:21:55
for very small, very modular nuclear reactors using a very abundant fuel source that can be quickly built, stood
01:22:02
up, and safely operated in a distributed way. You don't need to have one gigawatt, which is a thousand megawatt
01:22:08
station running centrally, and then you've got to have a big, you know, construction project invested in to
01:22:13
build and operate this thing. You can have many small reactors split around neighborhoods, split around cities and
01:22:19
so on. This is not built into China's energy projection. So they actually have an electricity forecast that over the
01:22:26
next 15 years gets them from 3 terowatts of electricity production to eight. And
01:22:31
that's through a combination of solar, hydroelect electric, and then the Gen 3 and Gen 4 traditional uranium nuclear
01:22:38
reactors that they're building out. So if you add this in, it provides even more or perhaps lower cost or more
01:22:43
distributed energy production capacity than is even provided in the forecasts today. Again, this is I think one of the
01:22:50
base drivers that is part of the compounding effect of China's economic advantage for this century is energy
01:22:58
energy production. The cost of building new energy production systems and the cost to operate those energy production
01:23:03
systems. Can I say something about the huena conversation about picking national champions and getting focused?
01:23:10
This was an area that China chose and now you know the US finds itself years behind on a technology that we invented.
01:23:19
Right. So this was research that happened at Oakidge National Lab. That's right. We pioneered this decades ago and
01:23:25
then we sheld it. And then the person in China that led it gave credit to the United States and basically said, you
01:23:34
know, Americans let the research wait for the right successor. We were that successor. That's what he said in
01:23:40
quotes. So, you know, here we are. We invent this cutting edge technology. It's a huge leap in innovation. But
01:23:48
they put a regulatory fence around it and we blocked it from getting organiz and they're like, you know what, we can
01:23:54
we can just do this and we'll figure this out. Yeah, it's really it's really self goal
01:24:00
here. They have infinite thorium reserve. They don't need to refine it. One of the key advantages of thorium is
01:24:05
you don't need to go through a refining process. In uranium, you have a very expensive, very difficult kind of
01:24:12
refinement process where you end up, I think, getting less than 1% of that uranium that you pull out can actually
01:24:19
be used as file and you and you have to enrich down to the uranium to find the file material. With thorium, 100% of it
01:24:26
can be used as fuel. So it's a very lowcost, very easy kind of fuel source that can be very quickly kind of put
01:24:32
into production if we actually build out the supply chain and build out the energy systems to utilize it. So it's a
01:24:40
real kind of reinvention of nuclear energy technology and this will take off. I mean once this experimental
01:24:47
reactor is working quad reactor going boom. Imagine how much fundamental leaps in science that we have funded that are
01:24:55
just basically gathering dust or falling through the cracks that other countries are using right now and
01:25:03
probably a little bit snickering behind our backs about the fact that, you know,
01:25:07
we did all of this work and then they were able to take advantage of it. Well, here I'll show you. Here's another um
01:25:14
let me put this in the group chat real quick. But how much of this stuff do we this I mean what what's our ability to
01:25:20
actually do this? We have invented it. We invented we invented it. Well, the big problem has been the regulatory uh
01:25:28
fencing we put around it. Andrew, so there's a bunch of administr there's forms. Yeah, there's pronouns. There's
01:25:35
all kinds of stuff. And just speaking to this point, so we've talked in the past
01:25:38
about nuclear fusion. So Andrew, this is I don't know how familiar you are, but fusion is different than fision. Fision
01:25:43
is where you take a heavy element like uranium or thorium and it breaks and you release energy. Fusion is where you take
01:25:49
a light element like you know hydrogen you accelerate it you make it really dense and you jam the protons together
01:25:55
and when you jam those protons together they fuse. So hydrogen turns into helium. This is what goes on in the sun
01:26:01
and energy is released in a different form through you know accelerated neutrons. We capture that energy we make
01:26:06
electricity. So fusion is this nextgen technology where we could theoretically just use water from the ocean to create
01:26:12
all the electricity we need on planet earth. 10 m by 10 meter by 10 meter of water makes all the power the entire
01:26:18
planet uses every year. That's what you could ultimately do with fusion technology. So it turns out this is a
01:26:23
satellite photo that discovered a very large scale fusion research center in Myyang, China, which we did not know
01:26:31
about that was just kind of stumbled upon. And it turns out it's the largest fusion reactor experimental facility in
01:26:38
the world now. 50% larger than the national ignition facility run in the United States. Not only is China getting
01:26:44
this new energy infrastructure built with all of the stuff that was discovered last century, but they are
01:26:49
now getting ahead of us on the new discoveries to be made in the next gen of energy systems, which is fusion,
01:26:55
which at some point this century will work and we'll end up having this ability to unlock effectively unlimited
01:27:00
free energy. And these are compounding value creators. China ultimately if they can make new energy systems cheaper than
01:27:07
the United States, scale them faster, they will ultimately have much cheaper much higher volumes of electricity which
01:27:14
gives them the advantage of manufacturing and production and transportation and everything. And
01:27:19
that's where the economic advantage will will ultimately acrue to them. So this is I think key to the strategic puzzle
01:27:26
on what's going to happen in the great race with China this century is the buildout of electricity and the cost of
01:27:31
that buildout. So the regulatory constraints need to be addressed first and foremost. That's in my opinion the
01:27:38
number one mission critical strategic imperative for the United States right now.
01:27:43
Awesome. Yeah. Anyway, that's just a red flag on China science corner for the day.
01:27:51
Thorium is real. Dorian Man. So, how was it, Andrew? How do you like hanging out
01:27:55
with the best I loved it? I you know, I I still getting used to it. I'm still getting used to the whole flow, trying
01:28:00
to figure out how you guys all roll. But it's good. It's good. It was a lot of fun. Do the Do the outro. You got to do
01:28:05
your out. You got to do the outro. Oh, yeah. I got to do the outro. You guys do the outro. Come on. It's your show. Do
01:28:10
the outro. Coming at you. KGB. What is Well, okay. I'll do I'll do I've never done an outro on you. Do the
01:28:19
outro. on behalf of our cryptozar David Saxs um our prince of panic attacks and sultan of science David Freeberg our new
01:28:30
bestie guesty Andrew Ross Sorcin thank you I am your chairman dictator Pauly Hatia thank you
01:28:38
for listening to the all-in podcast we'll see you next time love you thanks guys that was a lot of fun
01:28:45
awesome let your winners Rainman David and it said we open sourced it to the fans and they've just gone crazy with
01:28:58
it. [Music] Besties [Music] are my dog taking your driveway. Oh man, my habitasher will meet up. We
01:29:18
should all just get a room and just have one big huge orgy cuz they're all just useless. It's like this like sexual
01:29:23
tension that we just need to release somehow. Your feet. We need to get Mercury's going all
01:29:34
in. [Music] I'm going all in.