00:00:01
let me get everything queued up here
00:00:04
how does jaycal open the show what does
00:00:06
he say
00:00:08
hey everybody yeah do it
00:00:11
hey everybody hey everybody I'm Jason
00:00:13
kalkanis I am the grifter with the
00:00:16
mostest the mostest that's the shortest
00:00:17
the shortest that's the baddest and the
00:00:19
baddest that's the dumbest
00:00:24
he's not even here you can't do that
00:00:26
that's
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just bullying
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we'll let your winners ride
00:00:38
[Music]
00:00:51
he wanted the week off and anytime any
00:00:54
of us take the week off Jay Cal says the
00:00:57
show must go on and he Rings up Brad
00:00:59
gerstner and says hey we need a sub come
00:01:02
on in this week this week when jaycal
00:01:04
wanted the week off he said guys we're
00:01:06
all taking the week off and Sack said
00:01:09
The Show Must Go On jaycal refused to
00:01:13
show up his producer editor refused to
00:01:15
show up so we are here solo hacking our
00:01:18
way to all in Pod episode 136 as your
00:01:22
moderator today Dave Friedberg I am
00:01:26
extraordinarily joyous and happy to
00:01:28
bring you the first episode of the
00:01:30
all-in podcast without the hostess with
00:01:33
the most is Jason callicanus joining me
00:01:35
today IL Duce from Elba Island to mount
00:01:38
palihapatia to moth firing up tweet
00:01:41
storms lately taking over the Twitter
00:01:43
soon to take the threads by storm I'm
00:01:45
sure Rain Man David Sachs joining us
00:01:49
from a Curtin showroom in the south of
00:01:52
wherever and from an attic in an old
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house the man who manages 10 billion
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dollars to generate 50 plus returns year
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to date
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the one and only Brad gerstner Brad
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welcome to the show great to have you
00:02:06
good to be here
00:02:08
appreciate the call half hour ago yeah
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great thank you are we even gonna be
00:02:12
able to drop this episode how are we
00:02:13
gonna actually upload it to Apple
00:02:16
podcasts and all the rest so here's the
00:02:18
deal I have the email login I think I
00:02:21
can get into the accounts
00:02:23
I I have I'm gonna I'm gonna like do the
00:02:27
request for password reset on all the
00:02:29
accounts I I also have I have iMovie on
00:02:33
my computer so I'm gonna use iMovie to
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edit it it's gonna be fantastic
00:02:37
I'll send you guys a little link before
00:02:39
I'm going to create a descript account
00:02:41
so we can edit our show and comment on
00:02:43
it I'll see how that works so it shows
00:02:44
is magically gonna appear on YouTube and
00:02:46
apple podcast and jcal's gonna be like
00:02:48
what happened exactly so let's not do
00:02:51
that free bird Freeburg is Bernard
00:02:54
Bernardo during the Takeover of lvmh
00:02:56
which is a great story if you've never
00:02:58
heard about it I'd love to hear it he he
00:03:00
basically is like he says he's gonna
00:03:02
partner with this Irish entrepreneur to
00:03:05
basically buy lvm Edge and you know
00:03:07
they're going through and at the 11th
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hour he pulls the rug out from him stabs
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him in the back and basically does the
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deal himself gets to own lvmh and the
00:03:15
rest is history but this is you Freeburg
00:03:17
you're pulling a Bernard or no at the
00:03:19
last minute no no I would never stab
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Jake hell in the back I would just put
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him in the front
00:03:24
and tell him you should show up to work
00:03:27
in the front and steal the passwords
00:03:29
it's not it's not stabbing in the front
00:03:31
we showed up he didn't yeah he's trying
00:03:33
to exercise passive aggressive control
00:03:35
over the Pod he's been outvoted he does
00:03:37
not control the Pod we've done 135
00:03:40
episodes and every time we've suggested
00:03:43
taking a week off as a group and he
00:03:44
doesn't want to he says the show must go
00:03:46
on and he calls up a guest and he keeps
00:03:49
the show going at his whim and his uh
00:03:52
discretion so this week we are doing the
00:03:54
same The Show Must Go On Jake owl is
00:03:56
enjoying a summer break wherever he is
00:03:58
maybe I think we're all on vacation this
00:04:00
week right
00:04:01
um I know he why he didn't want the show
00:04:03
to go on is he has a deep insecurity
00:04:05
that he might get replaced at some point
00:04:07
yeah by someone smarter than him so oh
00:04:14
gerstner you were supposed to replace me
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but you might end up replacing Jake
00:04:18
house
00:04:20
the truth is
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the truth is last year remember the
00:04:25
Fateful morning when I get a call from
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Chama
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and he said hey
00:04:30
we need you to come in Jay calz out we
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got
00:04:35
and we need you in is the fourth and
00:04:37
talking to chamat
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my my phone rings
00:04:41
and it's Jay cow
00:04:43
and he said friedberg's out
00:04:46
I need you to replace him I had both
00:04:49
guys going at the same time and it's
00:04:51
been that way for the last 12 months so
00:04:53
okay I was in yeah I was in Vegas with
00:04:59
when I had to sort this out it burned an
00:05:01
entire day
00:05:03
a year ago it was a year ago that's
00:05:05
right well at least at least we got our
00:05:07
LLC doc sorry that's that's what came
00:05:08
out of it
00:05:10
it's literally like the show billions
00:05:12
you know
00:05:14
yeah all the Intrigue or whatever but
00:05:16
that's why jaycal wanted to sabotage the
00:05:19
show rather than have it go on without
00:05:21
him because he's afraid that the
00:05:23
audience might like the show better
00:05:24
without him
00:05:26
there's certainly been a lot of
00:05:27
commenters saying that sort of thing oh
00:05:29
so I guess we're gonna find out the
00:05:31
famous need to let us know what they
00:05:32
think of this episode all right well
00:05:34
let's kick it off um first
00:05:36
uh topic on the docket today which I
00:05:38
think is a great one and tomorrow if
00:05:40
you've been tweeting a lot lately as we
00:05:41
just talked about I think that'll end up
00:05:43
probably being our cold open
00:05:45
um but
00:05:46
uh Zuck announced and Facebook meta
00:05:49
announced the launch of threads uh
00:05:51
gerstner big shareholder of meta I think
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right reasonable reasonably side
00:05:55
shareholder uh this uh Zuck this morning
00:05:58
announced 30 million downloads of the
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app overnight the Reds is Instagram
00:06:03
slash facebook slash metas
00:06:05
competitor to Twitter looks almost like
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a clone I mean it is so similar in
00:06:11
features in interaction in Everything
00:06:13
Brad maybe you can kick us off and talk
00:06:16
a little bit about the importance of
00:06:17
threads and how this is important to
00:06:20
meta and we can talk a little bit about
00:06:21
the app itself
00:06:23
well I mean the the first thing is if
00:06:25
rumors are true they developed this over
00:06:28
a period of six to nine months with 20
00:06:30
people
00:06:31
okay and so the extraordinary Pace
00:06:35
that's now occurring with inside uh or
00:06:38
inside metal we've heard from several
00:06:40
people inside that said people are
00:06:42
pumped they're actually updating real
00:06:44
time uh user accounts they're over 30
00:06:47
million users already on Instagram and
00:06:50
it just gets back to this culture of
00:06:52
flattening the organization speeding up
00:06:55
the organization I think everybody's
00:06:57
excited you know the best engineers in
00:06:59
the world want to see their products set
00:07:01
free and so you know I think threads is
00:07:04
really interesting for a couple reasons
00:07:05
number one if we flash back to what went
00:07:08
on in China with totio and doyon
00:07:10
remember that text-based social networks
00:07:12
were where kind of it started there
00:07:16
and so it's a bit anomalous doyon which
00:07:19
is the tick tock equivalent in China was
00:07:21
started based on totiao which was a
00:07:23
text-based news feed and so it doesn't
00:07:26
surprise me to see the social graph
00:07:28
being leveraged into a text-based uh
00:07:32
feed I think initially they're seeding
00:07:34
it obviously with all your friends so
00:07:36
it's it's uh it looks more like celebs
00:07:39
and entertainment and it's my team is
00:07:42
like it's easier to use it's faster it
00:07:45
feels more free
00:07:47
um I think you know Adam massari he
00:07:49
posted on threads that he stayed up all
00:07:51
night last night
00:07:53
um so excited with a product launch he
00:07:55
and Zucker responding to people actually
00:07:57
live on threads
00:07:59
um and so I part of this just goes to
00:08:01
the pulse of the company over the next
00:08:03
four to six weeks they're gonna have
00:08:05
massive launches out of uh the AI side
00:08:07
of the business I expect a lot more
00:08:09
support for the open AI model or for
00:08:12
their open uh llm I also think they're
00:08:15
going to launch a bunch of age on
00:08:16
WhatsApp and Instagram so what I see is
00:08:18
just velocity and cycle time within the
00:08:20
business improving and then one final
00:08:22
thing
00:08:24
in the age of AI
00:08:26
right you want to collect as much data
00:08:29
as you can from your users
00:08:31
and we know that Facebook is very heavy
00:08:34
on video and pictures but what they're
00:08:38
light on is text
00:08:40
and so in a world where the most
00:08:42
important thing on the internet to train
00:08:44
your model is this is the word right now
00:08:48
they're going to collect a lot of words
00:08:49
a lot of conversations a lot of
00:08:51
sentiment among the users
00:08:54
um and you know maybe we'll come back to
00:08:56
this you know I just want to kick it
00:08:57
back and get people's thoughts on the
00:08:58
product but
00:08:59
um already by my estimate these guys get
00:09:02
to 100 million which it looks like they
00:09:03
may be able to get to tonight based upon
00:09:06
the monetization that Twitter has that's
00:09:09
already a business that's doing
00:09:11
something like two and a half billion
00:09:12
dollars in Revenue if they chose to
00:09:14
monetize it 1.2 or 1.5 billion in ebit
00:09:18
apply their current multiple to that
00:09:20
that's about a 20 billion dollar
00:09:22
increase in Enterprise Value built by if
00:09:26
rumors are true 20 people over a course
00:09:28
of six months yeah it's pretty
00:09:30
impressive I remember in the early days
00:09:31
of Friendster and Myspace and then even
00:09:35
Facebook
00:09:36
these social networks launched and
00:09:38
everyone thought it was going to be a
00:09:39
conversational system and so much of the
00:09:42
usage and the page views and the minutes
00:09:44
spent ultimately accrued to photos an
00:09:47
overtime video
00:09:49
um and now it's almost like this
00:09:50
interesting reversion back to the origin
00:09:52
that it's back to this conversational
00:09:53
system but these systems always seem to
00:09:56
kind of evolve to hey just images or
00:09:58
what when and what uh kind of gather up
00:10:00
all the Mind space I mean shamop having
00:10:02
worked at Facebook maybe you can share a
00:10:04
little bit about your point of view on
00:10:06
threads as a product and
00:10:08
um as an evolution away from social
00:10:10
network on Facebook to Instagram and now
00:10:13
to threads I I think what people don't
00:10:16
understand is that
00:10:17
the successful category winner in each
00:10:20
of these categories needed to invent
00:10:23
something de novo that nobody else had
00:10:25
in the case of Facebook we invented
00:10:27
photo tagging when it didn't exist and
00:10:29
then we invented the news feed when it
00:10:31
didn't exist and then there was a bunch
00:10:33
of people that copied it but it didn't
00:10:35
matter because we had refined and owned
00:10:37
that use case already
00:10:40
so I think the real challenge for
00:10:42
Facebook isn't can 20 people copy
00:10:44
Twitter
00:10:45
I mean you know Mastodon is a copy of
00:10:48
Twitter there's a bunch of parlors a
00:10:50
copy of Twitter truth social is a copy
00:10:52
of Twitter
00:10:54
the challenge is going to be can you
00:10:56
invent some de novo feature that makes
00:10:58
people actually want to use this and you
00:11:02
know rage quitting Twitter because
00:11:04
you're not a fan of the product right
00:11:06
now or Elon isn't a successful
00:11:09
long-term use case because all those
00:11:12
people will eventually come back
00:11:14
so I don't know I'm a little bit more
00:11:16
skeptical of the whole thing I think
00:11:18
that right now what you see is not even
00:11:21
a full copy of the system it's you know
00:11:23
a 50 60 copy with a lot less usage and
00:11:26
so as a result a lot less traffic
00:11:29
um but I think you need something new
00:11:31
you know Tick Tock the reason why I
00:11:33
became successful
00:11:34
was it was a fundamentally new use case
00:11:37
relative to the Alternatives and I think
00:11:40
that that captures people's imagination
00:11:42
and mindshare so this is not what
00:11:44
threads does and so in as much as it's a
00:11:48
copy of something that is already an
00:11:50
established Behavior I don't think it
00:11:52
has very high chances of success but
00:11:54
don't stories and and and reels
00:11:56
undermine that argument I mean reels was
00:11:58
a copy of tick tock and stories was a
00:12:01
copy of Snapchat and they're both giant
00:12:03
products today
00:12:05
um I think that you can definitely copy
00:12:07
features into an existing product with
00:12:10
new distribution but to invent a new
00:12:11
product wholly from scratch that's a
00:12:14
carbon copy of something but again reels
00:12:16
attaches onto Instagram which is a
00:12:19
unique use case right and so I think
00:12:22
that again it goes back to you have
00:12:24
these five or six established modes of
00:12:28
social media that essentially are from
00:12:30
large pieces of content to small pieces
00:12:33
that's probably the best organizing
00:12:34
principle that we have and then that's
00:12:36
one axis and the other axis is text
00:12:38
video audio
00:12:39
and along that Spectrum you can
00:12:41
basically compartmentalize all these
00:12:43
things and then there are about four of
00:12:44
them
00:12:45
that have real scale
00:12:47
and and so in as much as you have
00:12:50
established distribution yes you can
00:12:52
copy a feature from somebody else and it
00:12:53
will get used but that's not what this
00:12:55
is so if this instead gets integrated
00:12:58
into Instagram
00:13:00
I think it's much more dangerous to
00:13:02
Twitter
00:13:03
than as a standalone product as a
00:13:05
standalone product I tend to think it's
00:13:06
DOA for the most part unless again it
00:13:10
invents something totally new that we're
00:13:13
missing
00:13:14
sex you're an advisor to Twitter what do
00:13:16
you advise Elon and you know how do you
00:13:18
think about this as a competitive threat
00:13:20
yeah I'm not I'm not a formal advisor to
00:13:22
Twitter I was just a guy hanging around
00:13:24
during the transition no look I mean I
00:13:26
tend to agree with with chamoth the
00:13:28
thing that Facebook did really well here
00:13:31
is there's a one clicks sign up flow
00:13:33
from Instagram where you just click to
00:13:37
download threads and then you can log in
00:13:39
with your Instagram account and Port
00:13:41
over your bio and all of your data and
00:13:43
your social graph so it's super easy to
00:13:46
get set up but by the same token you
00:13:49
know if they have 10 million or even 30
00:13:52
million sign ups that's really just a
00:13:54
three percent conversion rate on the
00:13:56
billion you know users that Instagram
00:13:58
has so a lot of people are just going to
00:14:01
make that a click because they're
00:14:03
curious they want to find out what
00:14:05
threads is I wouldn't be surprised I got
00:14:06
100 million users or 200 million users
00:14:09
that way just people you know clicking
00:14:12
over from Instagram to see what this new
00:14:14
thing is the question is what's gonna be
00:14:17
the habit forming Behavior here and the
00:14:20
people who use Twitter are really
00:14:21
addicted to using Twitter it's where the
00:14:23
conversation is there is a strong
00:14:25
Network effect there not just around the
00:14:28
users and the social graph but like the
00:14:31
habit of daily usage so you know how
00:14:34
many of these people who are signing up
00:14:35
are actually going to go use it every
00:14:37
day are they going to take the time to
00:14:40
copy over to kind of copy paste all
00:14:42
their Twitter posts over to this new
00:14:45
medium and then what about all the
00:14:46
comments or applies so I wouldn't just
00:14:48
look at the signups here I think you
00:14:50
have to look at like the amount of
00:14:52
posting and the actual usage before you
00:14:55
know that Twitter has a threat
00:14:57
right did uh did any of you guys use it
00:15:00
this morning or last night
00:15:02
yes
00:15:06
you know we had we had our team playing
00:15:08
with it you know all morning and I
00:15:10
started sharing with you
00:15:13
um you know there it it feels to our
00:15:15
team like common words being used we're
00:15:17
snappier faster lower hurdle like it
00:15:20
felt more fun and social therefore you
00:15:23
it wasn't as uh considered a post right
00:15:26
because most of the posts at least uh
00:15:29
you know that our team engages in on
00:15:32
Twitter are for mostly business purposes
00:15:34
right and so there's politics and
00:15:37
business and more serious topics right
00:15:39
Instagram's the home for fun it's for
00:15:42
frivolity it's showing pictures of your
00:15:44
friends and so I think it's going to
00:15:46
orient more in that direction and again
00:15:48
there's probably room in the world for a
00:15:51
text-based social network around
00:15:53
entertainment and culture and food and
00:15:55
and the fun stuff and there's probably
00:15:57
room for one that's more about politics
00:15:59
and business and you know more serious
00:16:01
topics and perhaps they'll converge more
00:16:03
over time I you know I think it's an
00:16:05
interesting thing yes it's one click but
00:16:08
you have to download a new app I mean
00:16:10
this isn't you know just open up your
00:16:12
Instagram and all of a sudden click on a
00:16:14
new tab right and by my account I think
00:16:17
it's just in the US that they launch it
00:16:19
so their conversion rates probably over
00:16:20
10 percent already in 24 hours and you
00:16:24
got to download an app to get there
00:16:26
um you know that feels to me like a
00:16:28
little bit more of a hurdle but I agree
00:16:29
with both of you at the end of the day
00:16:31
it's going to be about engagement not
00:16:32
about how many people you got to
00:16:33
download the app and if they get high
00:16:35
engagement
00:16:36
um you know and I think there's plenty
00:16:38
of surface area for these guys to
00:16:39
monetize that combined with you know
00:16:43
chamat pointed out you know as much as
00:16:45
we love Elon certainly there are people
00:16:47
chimath you brought up with respect to
00:16:49
Tesla that are orienting away because of
00:16:51
the brand right like it may make sense
00:16:54
or not but we know it's happening and so
00:16:57
I do think that there's a natural
00:16:58
momentum I think this was you know like
00:17:01
if this was the cage match right if this
00:17:04
was the MMA between the two of them this
00:17:06
is certainly you know an offensive blow
00:17:08
that that you know meta just landed here
00:17:11
and I expected you know it's going to
00:17:13
amp up the heat
00:17:15
so it's interesting because at the same
00:17:19
time as threads is launching to compete
00:17:22
with Twitter
00:17:23
there's some really interesting data
00:17:26
coming out showing declining usage of
00:17:28
chat GPT and interest level and Bard so
00:17:32
both if you look at Google Trends as
00:17:34
well as data coming out of similar web
00:17:36
which attracts usage across sites
00:17:39
um chat GPT usage seems to be falling
00:17:43
from a Peak in May and it had a modest
00:17:48
increase from March to April and then an
00:17:50
even less modest increase from April to
00:17:52
May and may to June we're actually
00:17:53
seeing a decline in usage the question
00:17:56
is is this driven by educational usage
00:17:58
so a lot of kids were using chat GPT to
00:18:00
write essays and to use it in school and
00:18:02
that seems to be a primary use case or
00:18:04
does it speak to a more broad kind of
00:18:06
challenge with chat GPT really
00:18:09
disrupting search and disrupting
00:18:11
other ways that people are kind of
00:18:13
accessing and and browsing the internet
00:18:15
uh that it that as an interface uh maybe
00:18:18
it's a little bit too challenged and it
00:18:20
doesn't replace the the simple two-word
00:18:22
keyword click and click on the result uh
00:18:25
I'd love your guys point of view on the
00:18:26
product and the experience as well as
00:18:28
why do we think that there's declining
00:18:29
usage uh in chat well you had these
00:18:33
products launch in a in a moment where
00:18:35
there was in in many ways a usage vacuum
00:18:39
what I mean by that is if you look back
00:18:41
over like the last 15 or 20 years
00:18:44
there were these waves that would create
00:18:47
these layers of innovation that
00:18:48
consumers would infatuate it with and
00:18:50
try
00:18:57
it actually came right it came right on
00:19:00
the heels of a pretty massive head fake
00:19:02
which was around VR
00:19:04
and that was supposed to be this next
00:19:06
big tidal wave of consumer Innovation
00:19:08
which turned out to be just a total fart
00:19:11
in the wind and so I think that there
00:19:14
was a setup here
00:19:16
where consumers were you know hankering
00:19:19
for something really interesting and
00:19:20
unique and new and novel
00:19:23
a lot of people wrap those labels around
00:19:26
the chat versions of these llms
00:19:30
and so you had again this explosion of
00:19:33
usage but I think what we're going to
00:19:35
find there
00:19:37
is that there's some pretty useful use
00:19:39
cases but narrow
00:19:42
where these chat interfaces are very
00:19:44
useful
00:19:46
and the usage will Decay to that number
00:19:49
and that number is probably a fraction
00:19:51
of what the peak was
00:19:54
mean so then people will get
00:19:56
disillusioned and the Press will say
00:19:57
this was you know another fad from
00:19:59
Silicon Valley
00:20:01
but then I think the reality is that the
00:20:03
real stuff which is around enterprise
00:20:04
software
00:20:05
Healthcare
00:20:07
uh the physical sciences
00:20:10
that's where the real AI leaps I think
00:20:12
will have really momentous value those
00:20:15
are still 18 to 24 to 36 months away
00:20:17
from seeing the light of day in in terms
00:20:20
of real products that that actually work
00:20:21
so
00:20:23
um yeah again you know it's part of the
00:20:25
hype cycle and we all kind of fell for
00:20:27
it the only winner here is NVIDIA I
00:20:29
think the loser here here are most of
00:20:31
the VCS who pumped in hundreds of
00:20:33
millions to billions of dollars in Rando
00:20:34
stuff too early
00:20:37
um and the consumers they tried it they
00:20:39
didn't like it they moved on they're
00:20:41
waiting for the next thing
00:20:43
Zach's agree disagree
00:20:45
well I think that's that's going a
00:20:47
little bit too far I mean I I think that
00:20:49
there may be a couple of things going on
00:20:51
here one is that the Curiosity Factor
00:20:53
may have been played out I mean the
00:20:56
novelty has worn off a little bit I
00:20:57
think there was a lot of people using it
00:21:00
initially just to see what it could do
00:21:01
and hearing about it and wanting to test
00:21:03
it out so I think people have sort of
00:21:06
scratched that itch also school is now
00:21:08
out of session so for all the people who
00:21:10
are using it to do some kind of academic
00:21:13
research there's not a need to do that
00:21:15
right now
00:21:16
um I I do agree that the use cases that
00:21:19
are most exciting to me are are
00:21:21
Enterprise uses and I agree with tremoth
00:21:23
about that and I think that is all still
00:21:25
to come I think in terms of the consumer
00:21:28
um I I don't think it's going away but I
00:21:31
think that they're going to have to
00:21:33
improve the the accuracy they're going
00:21:35
to improve the performance the speed of
00:21:37
it maybe improve the interface add some
00:21:39
more features if they want to get to the
00:21:42
next level of usage I mean think about
00:21:44
think about the product today you know
00:21:46
100 million downloads the whole
00:21:48
the whole downtick here is explained by
00:21:50
kids being out of school I mean it's
00:21:52
down 10 percent
00:21:53
and like kids have to be more than 20 of
00:21:56
the usage of this thing yeah um so I
00:21:59
think you set that aside but just think
00:22:00
about how hard it is to use this product
00:22:02
right if you most people you have four
00:22:05
million people paying 20 bucks a month
00:22:07
could you imagine people paying 20 bucks
00:22:08
a month to use Google then on top of
00:22:11
that try downloading plugins it's still
00:22:13
a pain in the ass and if you don't have
00:22:15
a plug-in I think they're only 500 000
00:22:17
people using plug-in if you don't have a
00:22:19
plug-in you have no new data past 2021
00:22:22
which makes it Dead on Arrival as a
00:22:24
product so I don't even think I think
00:22:26
we're so early in this that to judge the
00:22:29
chat interface based upon the product
00:22:31
that exists today I think is a huge
00:22:32
mistake
00:22:34
um I think that what we're going to see
00:22:36
is kids come back to school you're going
00:22:38
to see the normal uptick in traffic it
00:22:41
probably hangs out around this hundred
00:22:42
million 150 million level in terms of
00:22:45
usage I think the next 10x for a
00:22:48
chat-based interface at least is it in
00:22:51
so far as it concerns the consumer is
00:22:53
when we move to from information
00:22:55
retrieval to action
00:22:58
and you've heard Zuckerberg talk about
00:23:01
this on the Lex Friedman podcast you've
00:23:03
heard uh uh uh
00:23:06
you've heard meta talk about you know
00:23:09
this outside of that context and then
00:23:11
you've heard Mustafa talk about it from
00:23:13
pie which is this idea that I say hey
00:23:15
show me the five best hotels in Milan
00:23:18
um it shows you five hotels and then you
00:23:21
say book me uh the Cipriani for these
00:23:24
dates and it actually will book it
00:23:26
directly with the hotel engaging with an
00:23:28
agent there now Mustafa from PI says
00:23:30
this is months away Zuckerberg alludes
00:23:33
to the fact that they're going to have
00:23:34
Action Bots on WhatsApp and Instagram in
00:23:37
the not too distant future
00:23:40
um I think all of the you know all the
00:23:42
links exist in the world to do this
00:23:44
today so I would say look for that as
00:23:46
the next 10x feature for Consumer facing
00:23:49
chat Bots and then finally I just say I
00:23:51
was at the snowflake Summit last week
00:23:53
there were 600 applications so new
00:23:56
startups that applied uh for their
00:23:59
startup contest they were each using an
00:24:02
application of chat GPT built on top of
00:24:05
snowflake data 600 new companies and
00:24:08
there's a you know they just they just
00:24:10
launched their application layer so
00:24:12
there's a tremendous appetite for people
00:24:14
to help Enterprises right access that
00:24:16
information and build much more seamless
00:24:19
less discovery on top of it I I try to
00:24:22
use chat gbt the mobile app on July 4th
00:24:25
I was just trying to find a good quote
00:24:28
to use in a you know by like an American
00:24:29
Patriot or founder or framer of the
00:24:32
Constitution something like that to use
00:24:34
to tweet out for July 4th and it just
00:24:36
aired out on me and it was like one of
00:24:38
these error messages that you can tell
00:24:39
in engineer wrote it's totally not
00:24:41
anticipated error and I tried it like
00:24:44
two or three different ways a couple of
00:24:46
different chat threads uh just didn't
00:24:48
work it's completely inexplicable so
00:24:49
when you have those kinds of experiences
00:24:51
it makes you just want to go to Google
00:24:53
which is what I did you know I actually
00:24:55
went to Google to find what I was
00:24:56
looking for
00:24:58
um I thought chat GPT could do a better
00:25:00
job because I thought it could help me
00:25:02
think find things that would be
00:25:03
specifically appropriate for July 4th so
00:25:06
as Christy what opinion it might have
00:25:09
um but Google is just much more
00:25:11
performant
00:25:12
so they have to like work out those
00:25:14
Kinks I mean that's that's pretty clear
00:25:16
I think like natural language prediction
00:25:19
as a capability is certainly here to say
00:25:22
to stay along with the agents in the
00:25:25
action box that can integrate behind the
00:25:26
scenes to do things for you
00:25:29
the real question for me is is this a
00:25:31
winner interface if I think back to you
00:25:34
user interfaces user experience in the
00:25:37
history of computing we can kind of go
00:25:39
back to the original terminal interface
00:25:40
on dos and you would you know have like
00:25:42
lines that you would type and you know
00:25:44
you would kind of program the computer
00:25:45
to do stuff that was almost like the
00:25:47
first real Computing interface that
00:25:49
people could use and then there was
00:25:51
Windows and when Windows came along it
00:25:53
was a new type of interface a new type
00:25:55
of interaction model
00:25:57
um and then we had the icons that arose
00:25:59
with the iPad iPhone Revolution
00:26:02
and obviously the internet the browser
00:26:04
was a was a new ux and the browser
00:26:07
provided hyperlinks and in one window
00:26:08
you would click through and go to lots
00:26:10
of different things and then that
00:26:11
browser interface eventually integrated
00:26:13
images and video and then the interface
00:26:15
that that we're almost used to lately
00:26:17
that we all probably spend most of our
00:26:19
time on is the scrolling interface where
00:26:21
there's infinite personalized content
00:26:23
created for you and you just keep
00:26:24
scrolling whether that's on Facebook or
00:26:26
Twitter or Instagram or what have you
00:26:28
and that's where we spend a lot of our
00:26:29
time now
00:26:30
and if you think about the transition
00:26:32
you're getting more for Less meaning
00:26:34
you're getting more content you're
00:26:36
getting more output with less input the
00:26:38
challenge with the chat interface is
00:26:40
that you're getting almost today in its
00:26:42
current iteration a little bit less
00:26:44
output because it's mostly textual and
00:26:46
it's requiring more input you're having
00:26:48
to write sentences and ask it stuff
00:26:51
um and so I think if you think about the
00:26:52
evolution of user interfaces in
00:26:55
Computing chat as an interface faces
00:26:57
quite a bit of friction the output of it
00:26:59
however is so compelling in certain use
00:27:02
cases that Shabbat points out that
00:27:03
there's certainly going to be places
00:27:04
where it's absolutely going to replace
00:27:05
the current modality
00:27:08
um and then the back end of it can do
00:27:10
incredible things that no other
00:27:11
Computing interface can do but it needs
00:27:13
to have you know kind of a revision or
00:27:15
rebuild on the front end for it to
00:27:17
really work that's my point of view and
00:27:19
how I think about kind of the long
00:27:20
trajectory of where we've all been
00:27:21
trained
00:27:23
um mentally with respect to Computing
00:27:25
interfaces and and how this might kind
00:27:26
of be challenged I think that's the key
00:27:29
how you you know four older guys have
00:27:32
been trained watch how kids interact
00:27:34
with their their phones first they're
00:27:35
never on a computer they're always on
00:27:37
their phones and they're always talking
00:27:38
to their phones and it's always chat
00:27:40
based and so I think we have a whole new
00:27:42
generation that like it's so native to
00:27:46
the way that they interact with the
00:27:47
world and you know to be honest I was
00:27:49
sitting there this morning prepping for
00:27:51
the for the Pod and I had a brilliant
00:27:53
conversation with chat GPT about what
00:27:56
happened with rates and inflation Etc in
00:27:58
2000 2001 2002 it was interactive I was
00:28:01
using my voice I wasn't typing anything
00:28:03
I thought it was terrific way better
00:28:05
than the experience I would have on
00:28:06
Google so again I think we're early in
00:28:08
the evolution of this
00:28:10
um but you know I think that you know
00:28:13
for my kids this is completely native
00:28:15
yeah I mean I think for kids it's
00:28:17
amazing I just don't think kids will
00:28:19
have 20 30 40 bucks a month to spend on
00:28:21
this I mean they some kids will but that
00:28:24
that'll just further exacerbate The
00:28:26
Divide of the kids that can versus the
00:28:27
kids that can't but I don't think that
00:28:29
that's what's going to create
00:28:31
evaluation framework for a multi-deca
00:28:34
billion dollar company if you want to
00:28:36
see a well-used education product you
00:28:38
know chegg's got something probably not
00:28:41
near you know that's probably as good
00:28:43
and that's a three or four billion
00:28:45
dollar market cap company last time I
00:28:46
checked so yeah well Brad you mentioned
00:28:49
that you were doing a little research
00:28:51
for the Pod talking about rates
00:28:53
obviously that was in anticipation of
00:28:56
the discussion
00:28:57
on uh the Federal Reserve meeting
00:29:00
minutes that came out a couple days ago
00:29:03
I'll read a few excerpts uh from the
00:29:07
published minutes uh where obviously the
00:29:09
the Federal Reserve meets to discuss
00:29:11
overnight rates whether to raise rates
00:29:13
and their outlook for rates
00:29:16
um driven in part by current economic
00:29:18
data including their view on inflation
00:29:20
their view on economic activity
00:29:23
Etc reading from the notes directly
00:29:26
um participants agreed that inflation
00:29:28
was unacceptably high and noted that the
00:29:29
data including the CPI for May indicated
00:29:32
that declines in inflation had been
00:29:34
slower than they had expected
00:29:36
participants observed that although core
00:29:38
Goods inflation had moderated since the
00:29:40
middle of last year it had slowed less
00:29:41
rapidly than expected in recent months
00:29:43
despite data and reports from business
00:29:46
contacts indicating that supply chain
00:29:48
constraints had continued to ease in
00:29:50
their discussion on the household sector
00:29:52
they noted that consumer spending so far
00:29:54
this year has been stronger than
00:29:56
expected and that aggregate household
00:29:58
wealth remained high as equity in home
00:30:00
prices had not declined much from the
00:30:02
recent highs and a few participants
00:30:04
mentioned that while overall the
00:30:05
household sector
00:30:07
still retain much of the excess savings
00:30:09
it had accumulated during the pandemic
00:30:10
there were signs that consumers were
00:30:12
facing increasingly tighter budgets
00:30:14
given High inflation especially for
00:30:15
low-income households despite savings
00:30:18
um so Brad maybe you can give us your
00:30:19
quick read on the minutes and they did
00:30:20
say that they're not raising rates but
00:30:22
they do expect two more 25 basis point
00:30:25
rate hikes later this year maybe you can
00:30:27
tell us what Market data is indicating
00:30:28
is that actually the case and is the Fed
00:30:31
not giving a a clean reading on economic
00:30:34
activity and inflation as it's being
00:30:36
published in other places than what the
00:30:38
FED is currently reading
00:30:39
well I'm I mean I think the most
00:30:42
interesting thing here and perhaps the
00:30:44
most non-consensus thing here is the Fed
00:30:47
kind of seems to be orchestrating a
00:30:49
pretty soft Landing right nobody wants
00:30:52
to hear it the market fought it for the
00:30:53
first half of the year the NASDAQ was
00:30:55
just up 39 in the first half and most
00:30:58
people didn't participate so everybody
00:31:00
wants to talk this down and say that
00:31:02
inflation's still out of control
00:31:03
chamat's been talking about inflation
00:31:05
higher for longer but notice he doesn't
00:31:07
say that's a problem or the economy
00:31:09
therefore is going to crash it's just
00:31:11
like inflation's going to be a little
00:31:13
stickier on the way down rates are going
00:31:15
to be a little bit higher for longer I
00:31:18
think when you look at this in totality
00:31:19
the reason they hit pause is because
00:31:22
they've come a long way quickly they
00:31:25
know that things are starting to Trend
00:31:27
in the right direction so their own
00:31:29
forecast for CPI is that it comes down a
00:31:32
lot by the end of the year Goldman Sachs
00:31:34
is now at 3.3 percent and I know we have
00:31:36
readings like true inflation that say
00:31:38
the inflation today is actually lower
00:31:40
than that but you don't even need to get
00:31:42
to the debate between true inflation and
00:31:44
CPI they're both trending a lot lower
00:31:47
but we got a really interesting reading
00:31:49
this morning because like why do we want
00:31:51
to you know raise rates well we want to
00:31:53
cool off the economy and so everybody's
00:31:55
looking for that indication that the
00:31:57
economy is cooling the leading indicator
00:31:59
for this is jobs
00:32:01
so we had a really hot ADP jobs report
00:32:04
this morning right over 450 000 new jobs
00:32:08
created and everybody got nervous the
00:32:11
10-year shot up to over four percent the
00:32:13
market turned down at the start of the
00:32:15
day
00:32:16
and then we got the jolts report now
00:32:18
Larry Summers has described joltz as a
00:32:21
much more that's job openings okay so
00:32:23
this is more of a leading indicator like
00:32:25
how many of the job openings are we
00:32:27
consuming and that actually came in
00:32:29
better than expected so what it
00:32:31
suggested is that more people took jobs
00:32:34
than we had anticipated and remember
00:32:37
jolts peaked closer to 12 million and
00:32:41
now we're at about 9.8 million and so
00:32:44
when I look at that you know and then
00:32:46
look at the jobs report ADP jobs report
00:32:49
over half of the new jobs created were
00:32:52
in hospitality and Leisure so think
00:32:54
about what was happening a year ago
00:32:55
Airlines were trying to hire people
00:32:57
restaurants were trying to hire people
00:32:59
hotels were trying to hire people and
00:33:01
nobody took the job for two reasons
00:33:03
number one they were afraid of covid but
00:33:05
number two they were getting stimmy
00:33:07
checks from the government they didn't
00:33:08
need to work
00:33:10
now what we see is people are starting
00:33:12
to take jobs those show up as higher
00:33:14
employment numbers in ADP but in lower
00:33:17
jolts right so fewer job openings to me
00:33:21
again that probably speaks to a you know
00:33:24
healthy Trend uh in the economy
00:33:27
um but clearly the economy is not
00:33:29
crashing we had a lot of people who said
00:33:30
that the economy was going to hit the
00:33:32
skids in q1 or Q2 of this year due to
00:33:35
these higher rates the economy is
00:33:37
incredibly resilient but if I had to
00:33:39
describe you know the rate trajectory
00:33:42
the FED has said listen we may have two
00:33:44
more rate hikes that's basically priced
00:33:46
in and if you look at real rates so this
00:33:49
is the the interest rate that really
00:33:52
acts as the break on the economy so this
00:33:55
is effectively the 10-year versus future
00:33:58
expected inflation it's now at one of
00:34:00
the highest levels we've had since 2008
00:34:03
2009 back closing in on two percent so
00:34:07
you know it seems to me that the feds
00:34:09
got its but pretty strong on the break
00:34:11
it's Jawbone in the economy Sam will do
00:34:14
more if we have to but the things that
00:34:16
they're looking at job openings are
00:34:18
coming down inflation is coming down so
00:34:21
I don't know I think you have to leave
00:34:22
open the possibility that the fat part
00:34:24
of the distribution curve looks like a
00:34:27
softer Landing than most people want to
00:34:28
want to admit yeah so chimat gerstner is
00:34:31
predicting a soft Landing do you agree I
00:34:33
mean you've said we're gonna see rates
00:34:34
stay high for a very long period of time
00:34:36
yeah I mean I think I've said this for
00:34:38
the last few weeks so I'll just say it
00:34:40
again but I think that it's um there's
00:34:42
no hard Landing right that's the hard
00:34:45
Landing was sort of the drucken Miller
00:34:46
thing that that I think that you know I
00:34:49
said I think it was a few weeks ago it's
00:34:50
very difficult to see a hard Landing
00:34:54
when China stimulates
00:34:56
um just because of their natural
00:34:58
gravitational pull
00:35:00
um in the world economy and you know we
00:35:02
can talk about that again because it
00:35:05
just looks like China is in super super
00:35:07
trouble meanwhile I I sent this little
00:35:10
image to you in Freeburg you may just
00:35:12
want to throw it up here just to look at
00:35:13
but you know when you look at inflation
00:35:15
we've done the best job of the developed
00:35:18
Nations and getting this thing under
00:35:19
control and so
00:35:22
um I think now it's just about making
00:35:25
sure that we adequately contract the
00:35:27
money supply and making sure that we
00:35:29
have bullets in the chamber in case
00:35:33
things get bad what do I mean when you
00:35:35
look at this chart the thing that I
00:35:37
think about is I'm glad rates are almost
00:35:39
at six percent why
00:35:41
because when you look at the UK Italy
00:35:44
Germany most of the Euro area France
00:35:46
Japan and then you know China it's
00:35:49
non-existent but China has a different
00:35:50
issue
00:35:52
the reality is that you know a
00:35:56
pretty bad set of economic circumstances
00:35:58
could actually touch the Western
00:36:00
developed Nations if you start to see
00:36:03
some of these countries rip rates higher
00:36:05
to like seven eight nine percent the UK
00:36:07
it seems like I don't know what you guys
00:36:09
think it's definitely going to seven and
00:36:12
it could go to eight I mean it could be
00:36:13
a very bad situation for the UK they're
00:36:16
in a lot of trouble
00:36:17
and so I think it's important that the
00:36:19
Federal Reserve
00:36:21
have tools
00:36:22
so by continuing to constrict the money
00:36:25
supply have rates that are relatively
00:36:27
elevated maybe a quarter or two longer
00:36:29
than they need to it gives them a lot of
00:36:31
positive optionality if they need to
00:36:33
step in if something bad really happens
00:36:35
and so I generally think they've done a
00:36:38
very good job
00:36:39
and I think
00:36:41
not to interrupt to your point what's
00:36:43
really interesting is the Symmetry with
00:36:46
what happened in 2000 so I think I think
00:36:48
we had all agreed that the last time we
00:36:50
saw the zaniness that we saw in 2021 in
00:36:55
the zerp environment was probably like
00:36:57
1999 2000 era well in 2000 remember we
00:37:01
had this huge asset bubble and the FED
00:37:03
raised rates from five and a half to six
00:37:05
percent in two thousand okay in the
00:37:08
first half of two thousand and they were
00:37:10
saying that they're going to stay high
00:37:11
for long and remember in 2001 we entered
00:37:14
a recession and we ended 2001 with rates
00:37:18
all the way down at 1.75 percent those
00:37:22
are the bullets in the chamber that
00:37:23
you're talking about that then pulled us
00:37:25
out of the recession
00:37:27
um you know and some people blame them
00:37:28
that they caused that reception
00:37:30
recession but you know when you look
00:37:32
back from it so in this case it looks
00:37:34
like yeah in this case it looks like the
00:37:36
recession is really not of our making
00:37:37
but you know we may actually have a soft
00:37:39
Landing but the economy could actually
00:37:41
contract because when you look at these
00:37:43
Western economies turning over it's it's
00:37:45
not a good situation I think the
00:37:47
Eurozone quite honestly is probably a
00:37:51
quarter into a recession already
00:37:53
so you know we have
00:37:56
six or seven of the really important
00:37:58
countries probably in a recession the UK
00:38:01
in really big trouble the U.S relatively
00:38:05
keeping things you know in a pretty good
00:38:07
place China economically I don't know
00:38:10
where the demand is going to come from
00:38:12
you know on the same time that they're
00:38:14
that their internal demand is imploding
00:38:16
they're uh creating all these export
00:38:18
controls that I think guys are not going
00:38:21
to actually help them solve the problem
00:38:22
because it just accelerates
00:38:24
Western economies desire to delever from
00:38:27
China
00:38:28
so the whole setup I think is very
00:38:30
complicated one but the US looks really
00:38:32
good frankly
00:38:34
yeah look I don't think we're out of the
00:38:37
woods quite yet um so so druckenmiller
00:38:39
by the way said that
00:38:41
he was predicting a hard Landing in the
00:38:42
second half of the Year we're just
00:38:44
starting the second half of the year so
00:38:45
he's still got six months to be proven
00:38:47
correct
00:38:48
um I find his analysis compelling or I
00:38:50
did at the time I heard it uh but think
00:38:53
about our situation we still have an
00:38:54
inverted yield curve it's the most
00:38:56
inverted it's been I think this is the
00:38:58
longest it's been inverted now the FED
00:39:01
is signaling that we're going to get two
00:39:02
or three more quarter point raid hikes
00:39:05
so it's about to become even more
00:39:07
inverted and what that does is it puts
00:39:10
incredible pressure on the banking
00:39:11
system because the whole banking
00:39:12
business model is to borrow short which
00:39:15
is uh from depositors and Len long
00:39:19
and if short rates are higher than long
00:39:20
rates that whole business model doesn't
00:39:21
work so either they can't engage in
00:39:24
lending activities meaning there's a
00:39:26
credit crunch or uh deposits to leave
00:39:29
the system and then that's happening too
00:39:31
so any business out there that's
00:39:34
dependent on credit the real estate
00:39:35
industry or Auto industry I mean any
00:39:39
industry that depends on loans and
00:39:41
credit they're going to continue to be
00:39:43
hammered by this so I mean to your point
00:39:47
Stacks I'll just read the minute
00:39:48
commentary on this the meeting did
00:39:50
include a discussion on the stress on
00:39:52
the banking sector and economic activity
00:39:56
in general because of decreased lending
00:39:57
participants generally noted that
00:39:59
banking stresses had receded and
00:40:01
conditions in the banking sector were
00:40:02
much improved since March participants
00:40:04
generally continue to judge that a
00:40:06
tightening in credit conditions spurred
00:40:08
by banking sector stress earlier in the
00:40:10
year would likely weigh further on
00:40:12
economic activity but the extent
00:40:14
remained uncertain so obviously a wait
00:40:16
and see and that they mentioned that
00:40:18
credit conditions did not appear have
00:40:19
Titans significantly beyond what would
00:40:21
be expected in response to the monetary
00:40:23
policy actions taken since early last
00:40:24
year so at this point saying it's a wait
00:40:27
and see does not seem to have
00:40:29
overstretched in terms of credit
00:40:30
tightening at this stage but well yeah I
00:40:33
mean so here's the thing is that the FED
00:40:37
engaged in an extraordinary intervention
00:40:40
a few months ago to save the banking
00:40:43
system with the bank term funding
00:40:45
program right where they basically said
00:40:47
to all the banks that if you have U.S
00:40:50
treasuries and I think it also applied
00:40:52
to mortgage-backed Securities as well we
00:40:54
will we will basically take all of those
00:40:57
assets and give you par value we'll give
00:40:59
you 100 cents on the dollar yeah in
00:41:02
exchange for I guess you have to pay you
00:41:04
the bank would have to pay the um the
00:41:07
one year
00:41:08
uh uh I think it was the one the
00:41:12
12-month interest rate with like 10 10
00:41:14
base points or something like that so if
00:41:16
you're sitting on bonds that have gone
00:41:18
down 20 or 30 percent in value you can
00:41:21
go get all that money back by you know
00:41:24
presenting them to the fed and then you
00:41:26
just have to you know you have to then
00:41:28
take the 100 cents on the dollar you get
00:41:30
and make sure you loan it out and higher
00:41:33
than the one year
00:41:35
interest rate which is around I guess
00:41:36
five percent right which you can still
00:41:38
do in residential right because uh
00:41:40
mortgages are still something like
00:41:42
they're over seven percent so the FED
00:41:45
has provided a lot of liquidity to the
00:41:48
banks through this uh
00:41:50
btfp it hasn't helped the commercial
00:41:54
real estate guys I don't think that's
00:41:56
why they're they're still I think huge
00:41:58
problems in the commercial real estate
00:42:00
sector but the FED did engage in a huge
00:42:03
intervention to save the banking system
00:42:05
and they may not be done with that yet
00:42:07
you guys so I just wonder you know I
00:42:10
just wonder if the if you didn't have
00:42:11
all these distortions what would the
00:42:14
real shape of the economy be you know
00:42:15
another one on the fiscal side on this
00:42:17
on the fiscal side was the whole um
00:42:19
binds Energy bill which is supposed to
00:42:22
be 350 billion but as our energy
00:42:25
investor friends are saying it's
00:42:26
probably gonna be more like a trillion
00:42:27
when they add it all up no but that's
00:42:29
honestly hold on those guys are being
00:42:30
hyperbolic and they're just stupid and
00:42:33
wrong because I know which friends they
00:42:34
are and I know them to be mostly stupid
00:42:37
and mostly wrong most of the time look
00:42:39
the the good thing to know about oh my
00:42:41
God I'm gonna get a text after this well
00:42:44
yeah you should because he doesn't know
00:42:45
what the [ __ ] he's talking about and he
00:42:46
keeps saying there's a lot of stimulus
00:42:47
is the point whether it's half a billion
00:42:49
sorry a half a trillion or a trillion
00:42:52
just talk he's just talking his book but
00:42:54
where can I just go back to where you're
00:42:56
fundamentally right and where I think
00:42:58
both of us can can be in unison on this
00:43:01
which is there is a looming credit
00:43:03
crisis in the United States and you know
00:43:06
we we've talked about this before
00:43:08
um I tweeted something a few weeks ago
00:43:10
but the the the debt wall that Corporate
00:43:14
America is about to hit is pretty
00:43:17
meaningful and to your point David A lot
00:43:20
of these companies will have to thread a
00:43:21
needle because if rates don't go down
00:43:23
materially in the next 18 to 24 months
00:43:27
these folks are going to be paying rates
00:43:29
that they cannot bear and they'll
00:43:32
probably go in to still breach a
00:43:34
covenant of some of the debt so you know
00:43:36
one thing that's important here is that
00:43:38
there's some very strict guidelines and
00:43:41
Covenants that debt issuers sign up for
00:43:44
and one of them is you know how much
00:43:45
debt can I have as a percentage and or
00:43:48
as a multiple of my ebitda and so that's
00:43:50
the way that bondholders govern the risk
00:43:53
that you don't over borrow now the
00:43:55
problem is if you have a ratings you
00:43:56
know an earnings recession and or rates
00:43:59
go up you can get one of these two
00:44:00
things to go wrong and all of a sudden
00:44:02
now you have seven or eight times your
00:44:04
ebitda and you're in a very very bad
00:44:07
state so I do think that that that's
00:44:09
possible but at the same time I don't
00:44:11
think that that's a Calamity that
00:44:13
touches the entire economy I think there
00:44:14
are a whole portfolio of over levered
00:44:17
companies and real estate
00:44:18
and there's a whole portfolio of
00:44:20
overloaded companies in private equity
00:44:22
those folks will have to get recapped
00:44:25
and that will probably cost trillions of
00:44:27
dollars of capital impairment but I do
00:44:30
think that that can relatively be done
00:44:31
without impairing the the economy at
00:44:33
large I'll make a prediction right now
00:44:35
my prediction is the federal government
00:44:37
is going to help to monetize that debt
00:44:39
and they're going to help to support
00:44:40
that commercial real estate sector
00:44:42
through some sort of structured lending
00:44:44
program I don't see why do you think
00:44:46
that why do you think it's because of
00:44:48
the donors because I think that there's
00:44:49
a significant amount of capital that
00:44:51
gets donated to so you think there's
00:44:53
going to be a comfort like program for
00:44:56
Real Estate private Equity a real estate
00:44:57
privacy no you think there's going to be
00:45:00
a tarp-like program for Real Estate
00:45:02
assets and for private I'll take the
00:45:04
other side of that yeah I'll say real
00:45:05
estate assets I don't know about the
00:45:06
private Equity assets but I think for
00:45:07
the real estate assets just because so
00:45:09
much of it is
00:45:10
a thousand to the SPCA yeah I'll do that
00:45:14
oh wait what's the time frame maybe uh
00:45:16
well you you tell me you want infinite
00:45:18
uh no we'll do it until the FED starts
00:45:20
no until the FED starts reducing rights
00:45:23
so once the FED does their first rate
00:45:24
cut that's the end of our best oh wow
00:45:26
that's an easy one uh I'm in I'm in for
00:45:28
25. no you can take five I take a
00:45:31
hundred okay for myself
00:45:35
can I just take the action for myself
00:45:41
you know Friedberg on that I'm sorry let
00:45:44
me just let me just tell you why sorry
00:45:45
in addition to the significant donor
00:45:48
dollars that come from Real Estate uh to
00:45:51
politicians uh campaigns
00:45:53
um but so much of those assets so many
00:45:55
of those assets are held in life
00:45:57
insurance companies on banks balance
00:46:00
sheets I mean you guys may have seen
00:46:01
this report this week that because of
00:46:03
the rise in interest rates there are
00:46:04
several insurance companies that now be
00:46:06
Tech may be technically insolvent
00:46:08
according to DOI Department of Insurance
00:46:10
regs in their respective States because
00:46:12
the impairment on the bond portfolio has
00:46:15
declined has caused them to now not have
00:46:17
enough Capital reserves to pay out the
00:46:19
claims they have so the same I think
00:46:21
ultimately will come true once you have
00:46:23
to do a mark to Market on all these real
00:46:25
estate assets
00:46:27
um that there's a significant number of
00:46:28
those real estate assets that are held
00:46:29
in Pension funds that are held in life
00:46:31
insurance companies that are held as
00:46:33
Securities in large pools of capital
00:46:34
that are meant to support people's
00:46:36
long-term needs
00:46:38
and the government isn't going to let
00:46:39
the federal government isn't going to
00:46:40
let that
00:46:41
um you know just get written down and
00:46:43
have people's future pensions or
00:46:45
insurance claims
00:46:47
um you know get hampered so that's why I
00:46:49
think there's going to be a moment or
00:46:50
two where there's going to be some step
00:46:51
in and some structured program to
00:46:53
support this uh this day I just don't
00:46:55
think it's that Draconian rates are not
00:46:56
that high you know we're still talking
00:46:58
about a 10-year that's flirting with
00:47:00
four percent and the fact I'm just
00:47:03
talking about commercial real estate
00:47:04
because there's also a demand problem
00:47:05
right yeah I I know but the the other
00:47:07
side of this is the trend again there is
00:47:12
no doubt oversupply and a problem
00:47:14
particularly in a place like San
00:47:16
Francisco where we're going to see some
00:47:17
blow-ups because nobody wants to you
00:47:20
know to to enter a long-term lease in a
00:47:23
city that's under siege I understand
00:47:25
that but the fact is that the market is
00:47:29
telling you that rates are going to
00:47:31
start going down right that the the
00:47:34
fed's going to come in battle until the
00:47:36
edge right and then they're going you
00:47:37
know feds are going to come rates are
00:47:39
going to come down a little bit why is
00:47:40
that because if they have two more
00:47:42
quarter point rate increases now you
00:47:44
have restrictive rates at something like
00:47:46
200 basis points that's higher than the
00:47:48
FED ones that's the foot really hard on
00:47:51
the brake so it's not like the Market's
00:47:53
crazy and thinking that we're going to
00:47:55
have a couple rate Cuts next year I just
00:47:57
told you in 2000 we went from six
00:47:59
percent to 2001 ending the year at 1.75
00:48:02
and the Fed was doing the exact same jaw
00:48:05
boning in the summer of 2000 okay so
00:48:08
they they do evolve rate policy based
00:48:12
upon what's happening in the economy all
00:48:14
of the things are rolling over CPI is
00:48:16
rolling over jolts is rolling over Etc
00:48:19
so again I just don't see the heightened
00:48:22
concern I think to the bank issue sex to
00:48:25
me that was you know that was the much
00:48:28
scarier concern drucken Miller actually
00:48:31
pulled forward his hard Landing
00:48:33
expectation to Q2 of this year as a
00:48:36
result of the bank crisis and now has
00:48:38
pushed it back out to Q4 of this year I
00:48:41
think if we have another you know Black
00:48:44
Swan like Banks or something that I
00:48:46
can't foresee today
00:48:48
um then you know that could certainly be
00:48:50
the thing that would be the Catalyst to
00:48:52
toss us into a hard Landing barring that
00:48:55
I think that by the way you know the
00:48:57
distribution of probabilities the fat
00:48:59
part of the curve is that we have a
00:49:01
softish medium you know sort of Landing
00:49:03
here and I think you're right I think
00:49:05
you're right and by the way like if if
00:49:06
if the UK had not
00:49:09
left Europe
00:49:12
then the whole contagion of Europe
00:49:15
could be one of those Black Swan events
00:49:17
that we would all be talking about as
00:49:19
theoretically possible
00:49:21
um but it looks like the UK is probably
00:49:25
gonna
00:49:26
it's it's really bad I think Britain is
00:49:29
now the only major economy where
00:49:31
inflation is still Rising the the oecd
00:49:33
said Tuesday that you're in your
00:49:34
inflation and the G7 fell to 4.6 in May
00:49:37
down from you know five percent in April
00:49:39
so inflation is is tempering a bit but
00:49:43
UK consumer Prices rose to 7.9 in May
00:49:47
um which is up from 7.8 in April so an
00:49:50
acceleration uh in the UK it seems like
00:49:53
it's a pretty nasty spiral problem this
00:49:56
is where you know the benefit of being
00:49:57
part of a larger economy really pays
00:50:00
dividends right obviously there's a lot
00:50:02
to do with you know language and
00:50:04
currency and there's a whole bunch of
00:50:05
issues rolled up into why the UK left
00:50:08
the European Union but my gosh one of
00:50:10
the real obvious advantages is you know
00:50:13
you're smoothing out the variants
00:50:15
right and smoothing out variants is
00:50:18
really valuable so if you think about
00:50:20
like all of these economies in Europe
00:50:23
um you know like PMS in a hedge fund
00:50:27
right Brad you can you know you you know
00:50:29
this it's like you you sometimes some
00:50:31
guy crushes it you know look how
00:50:33
Millennium or Sac or Citadel makes the
00:50:37
real money it's by smoothing out
00:50:39
variants and that's a great thing about
00:50:42
being part of an economic Union like the
00:50:45
EU offers and in the absence of that in
00:50:47
times like this is it really exposes the
00:50:50
weaknesses of a small sub-scale economic
00:50:53
system which unfortunately the UK has
00:50:56
Europe Europe is going into recession
00:50:58
too I mean Germany has huge problems
00:51:00
that again it stems from the cutoff of
00:51:04
cheap Russian gas economies in the EU
00:51:06
they're going into recession as well so
00:51:08
it's not it's not it's not with the same
00:51:10
levels of inflation my point is like you
00:51:13
know it's one thing for an economy to
00:51:14
start to recede but here it's you don't
00:51:18
have the benefit of balance sheet
00:51:20
borrowing of the scale of the EU nor do
00:51:23
you have the disinflation of the EU and
00:51:26
I think that's problematic much more for
00:51:28
the UK than it is for any individual
00:51:29
country in Europe that's just my point
00:51:31
that's all can they can they you know
00:51:33
one just philosophical thought you know
00:51:35
because if we rewind the clock to the
00:51:37
beginning of the year
00:51:39
you know there was absolute consensus in
00:51:41
the markets right and you can go back
00:51:43
and look at all the headlines Mike
00:51:45
Wilson's consensus was that we were
00:51:48
going to have a hard Landing in q1 hedge
00:51:50
funds long only funds had their exposure
00:51:53
super low everybody had post-traumatic
00:51:56
stress from last year
00:51:57
it is a sure strategy to lose a lot of
00:52:01
money or not make money if you're trying
00:52:04
to always call the Market as though you
00:52:06
know you have no idea right q1 and Q2
00:52:10
sure there was a possibility we could
00:52:12
have a hard Landing right and the bank
00:52:14
crisis made that look as though as a
00:52:16
possibility what we try to do is look at
00:52:19
that distribution of pro of
00:52:21
possibilities right it's a distribution
00:52:23
curve and so I put up on the on the
00:52:25
screen here what the markets implied fed
00:52:29
fund rate changes are from today so what
00:52:32
the market is betting on which from my
00:52:34
perspective is better than any one of us
00:52:36
trying to forecast right what's going to
00:52:39
happen with future rate increases it's
00:52:41
saying yeah we're going to go from 5.08
00:52:44
today to something like peaking at 5.45
00:52:48
November of this year and then at some
00:52:51
point Beyond November could be December
00:52:54
could be q1 of next year right we'll see
00:52:56
enough turning over over of CPI enough
00:52:59
turning over of jobs that now will say
00:53:02
the balance of risk has shifted to being
00:53:05
too punitive on the economy so we're
00:53:07
going to reel back in one of those rate
00:53:09
increases okay and I think that you know
00:53:13
so Friedberg just to to clarify on the
00:53:15
bet we just made which I'm excited about
00:53:17
you have to have this tarp you know
00:53:19
commercial real estate rescue program
00:53:21
before they reel back one of those rate
00:53:23
increases which the Market's telling you
00:53:25
could be as early as December yeah um
00:53:28
but I I encourage everybody who listens
00:53:30
you know like don't listen you know it's
00:53:32
not like go all in because drunken
00:53:34
Miller says hard Landing or don't go all
00:53:36
in soft Landing because we say soft
00:53:38
Landing our our net exposure has come
00:53:41
down over the course of the year at
00:53:43
altimeter because we've moved the
00:53:45
markets have moved up a lot they're
00:53:47
pricing in more of a soft Landing today
00:53:49
so the idea is to have high exposures
00:53:52
when the world's panicked and then to
00:53:54
reel in your exposures a little bit but
00:53:56
never be all or none I mean the the
00:53:58
fascination with calling The Big Short
00:53:59
the big hard Landing soft Landing it's
00:54:02
just a sure way not to make much money
00:54:05
um today there was a red hot
00:54:09
U.S jobs report Brad U.S job openings
00:54:12
dropped below 10 million in May but the
00:54:15
labor market remains piping hot like I
00:54:18
said you know the market I think is you
00:54:20
know it's reading way too much I mean
00:54:22
this wasn't even a a I mean we'll get
00:54:24
the official uh jobs numbers out of the
00:54:26
out of the federal government tomorrow
00:54:28
this was an ADP report
00:54:30
um which are have been not particularly
00:54:32
good but I already explained there's a
00:54:35
rationale look peel behind the G the ADP
00:54:39
report 250
00:54:41
000 of the 400 and you know thousand odd
00:54:44
jobs that were created we're in
00:54:45
hospitality and Leisure I mean these
00:54:47
were desperately needed because we have
00:54:49
a peak summer travel season going on so
00:54:51
you have hotels that hire a bunch of
00:54:53
people those show up in the ADP job
00:54:55
numbers right but the great news is the
00:54:57
jolt's job openings goes go down and you
00:55:00
know Summers was complaining last year
00:55:02
that joltz wasn't going down fast enough
00:55:04
he also said something that was really
00:55:06
interesting
00:55:08
when joltz when he said when joltz goes
00:55:12
down by over 10 percent so think we've
00:55:14
had to move from 12 million to 9.8
00:55:16
million he said when Joe goes down by
00:55:19
over 10 percent
00:55:20
we have a reduction or an increase in
00:55:23
the unemployment rate by two and a half
00:55:25
percent in the subsequent 12 months so
00:55:28
joltz is a leading indicator you got to
00:55:31
reel in those job openings and then you
00:55:33
start seeing unemployment bump up so
00:55:35
with a tight economy you know the foot
00:55:37
on the the fed's foot on on rates some
00:55:40
of the contraction that that sax has
00:55:42
been pointing out
00:55:43
um and then we start to see these early
00:55:45
indicators in jolts I mean people need
00:55:47
the job clearly or they wouldn't have
00:55:48
taken them their stimi is run out
00:55:51
um all of these things are are what the
00:55:53
FED is trying to manufacture right so I
00:55:55
don't look at that jobs number in fact
00:55:57
we were doing just the opposite uh you
00:56:00
know in the market this morning uh to
00:56:02
you know what the market was giving us I
00:56:04
don't I don't think that was a a very
00:56:05
good read through at all okay I want to
00:56:07
talk a little bit about jobs uh the
00:56:10
Florida State uh Senate bill 1718.
00:56:14
went into effect on July 1st this bill
00:56:17
now requires that any company with more
00:56:20
than 25 employees use the e-verify
00:56:23
system to verify the legal immigration
00:56:26
status of their workers of their
00:56:28
employees and this will create
00:56:31
um a real impact on businesses that
00:56:36
employ more than eight hundred thousand
00:56:38
illegal immigrants in the State of
00:56:40
Florida to do a lot of work and a lot of
00:56:42
Labor it's unclear how many of those 800
00:56:46
000 illegal immigrants that are working
00:56:47
in Florida today are working at a firm
00:56:50
with more than 25 employees but the
00:56:52
impact is going to range from the
00:56:54
construction industry to farm labor and
00:56:58
a lot of other manual labor sectors
00:57:01
in a state that has 2.3 percent
00:57:04
Unemployment uh DeSantis has made this
00:57:07
um you know an important speaking topic
00:57:09
when he spoke in publicly he did quite a
00:57:12
bit of press around the passage of this
00:57:14
bill as a way to counter Biden's quote
00:57:17
open immigration policy sex um I know
00:57:19
that you've talked about DeSantis in the
00:57:21
past do you have a read on the impact
00:57:23
that this immigration policy will have
00:57:25
do you agree with it would love your
00:57:27
thoughts
00:57:28
I mean I don't think this is a jobs bill
00:57:32
this is a immigration bill or it's an
00:57:35
immigration issue and
00:57:37
look I don't know what the impact on
00:57:39
Florida is going to be from this I don't
00:57:41
trust a single
00:57:43
story that's out I guess there's just a
00:57:45
story in the Wall Street Journal about
00:57:46
it I mean this feels like a campaign
00:57:48
story so
00:57:50
um I want to see more stories before I
00:57:52
reach determination on what the impact's
00:57:53
going to be but politically do I think
00:57:56
this is smart yeah because the border is
00:58:00
the number one issue in the country
00:58:01
right now I don't think you guys are as
00:58:04
clued in to like how on fire the country
00:58:08
is about what's going on at the border
00:58:10
and our fundraiser RFK talked about the
00:58:13
the Border because he went there there's
00:58:15
a bunch of really good Clips online
00:58:18
I don't care who you are you can't
00:58:21
listen to that accounting it's just an
00:58:23
accounting right so anybody could do it
00:58:25
so it doesn't matter what your political
00:58:28
um perspective is on RFK anybody who
00:58:31
listens to that accounting
00:58:33
can't be anything but shocked
00:58:37
what he described it as what what rfk's
00:58:39
described as he went to the the border
00:58:41
at Yuma and there are literally holes in
00:58:43
the wall
00:58:44
uh you know from Trump's wall and
00:58:47
literally the building materials to
00:58:49
finish the wall and plug those holes are
00:58:51
sitting there on the ground and the bind
00:58:53
Administration refuses to use them and
00:58:56
plug the hole because they don't want to
00:58:58
give any credit to Trump presumably
00:59:00
um I mean literally that's how Petty it
00:59:02
is or it's actually their policy they
00:59:04
actually like having an open border so
00:59:06
something like seven million illegals
00:59:08
have come in through the southern border
00:59:10
since mine's been in office and they're
00:59:13
not and they're not they're not from
00:59:14
Central America it turns out these folks
00:59:17
are from uh Eastern Europe
00:59:20
um and Africa predominantly many men of
00:59:22
military age and it's an entire business
00:59:25
that's run by the cartels
00:59:27
and as he describes it it's it's really
00:59:30
just
00:59:31
plainly shocking can I ask you guys if
00:59:34
one of our if one of our enemies wanted
00:59:35
to get thousands of sleeper agents into
00:59:38
the country
00:59:40
it would have been very easy for them to
00:59:41
do this okay can I can I just think
00:59:43
about that um yeah I get it yeah can I
00:59:45
pivot away from the border policy
00:59:47
question to one of Labor we obviously as
00:59:50
evidenced by the jobs report from ADP
00:59:53
this morning
00:59:54
remain in a very tight labor market in
00:59:56
the U.S and we as a group often talk
00:59:58
about h-1bs and the importance of
01:00:00
um allowing educated immigrants into
01:00:02
this country uh to meet our our
01:00:05
knowledge Workforce needs but there
01:00:07
obviously is a pretty sizable manual
01:00:09
labor workforce need in this country and
01:00:11
a very tight labor market to fulfill
01:00:13
that need ranging from construction
01:00:15
where we have you know deep
01:00:17
um and significant aspirations as a
01:00:19
country to improve infrastructure to
01:00:21
farm labor where we have you know the
01:00:23
largest agricultural export Market in
01:00:25
the world and many of these industries
01:00:27
rely on low-cost labor for those
01:00:30
businesses to meet their economic
01:00:31
objective to be able to be profitable
01:00:33
and we simply may not have enough of a
01:00:36
labor force of legal immigrants or legal
01:00:39
citizens or residents of the U.S to meet
01:00:42
those obligations what is the answer sax
01:00:44
is it that we are supposed to take
01:00:46
anyone that's illegal in the country and
01:00:48
make it impossible for them to work here
01:00:50
and is that not going to have a very
01:00:52
adverse effect on these important
01:00:54
segments of our economy that today rely
01:00:57
on
01:00:58
um that labor force that is here
01:01:00
illegally
01:01:01
and I'm not listening I think I'm not
01:01:03
stating an opinion I'm asking the like
01:01:05
the importance I get what you're saying
01:01:06
I think we can start to resolve that
01:01:08
issue when you solve the Border crisis
01:01:10
the problem is the average American
01:01:11
doesn't want to hear anything about you
01:01:14
know quote-unquote comprehensive
01:01:15
solutions to the Border crisis or
01:01:18
immigration or what do you want I'm not
01:01:21
talking about politics I'm just talking
01:01:22
about your personal point of view
01:01:24
my personal point of view is we need to
01:01:27
seal the borders so we stop having this
01:01:28
problem okay but what about to work what
01:01:30
about the labor yeah yeah let me uh I'll
01:01:33
take a crack at it's very bird okay I'm
01:01:35
just trying to I'm trying to diagnose
01:01:36
the difference between the the Border
01:01:39
policy question and the real economic
01:01:41
question I know at the California AG
01:01:42
sector very well there's an important
01:01:44
migrant Visa
01:01:46
um that the entire farming economy
01:01:48
depends on in the California and um
01:01:50
these are illegal immigrants that are
01:01:52
legally allowed to work in the farming
01:01:54
sector and it allows Farms to be able to
01:01:56
do the work they need to do because
01:01:57
there is absolutely no labor to do that
01:02:00
work without this immigrant population
01:02:02
and there there's other elements of this
01:02:04
that are critical across the economy
01:02:06
Sorry Brad go ahead no so why why can't
01:02:08
we have a common sense migrant you know
01:02:10
worker program worker visa you know
01:02:13
predicated on that right the problem is
01:02:15
I think where you know most people are
01:02:18
in agreement that if you have a
01:02:20
relatively secure border right then you
01:02:23
design good policies we should have a
01:02:26
policy for people who want to come and
01:02:27
work and earn some money and you know we
01:02:30
we have job openings in this country and
01:02:32
then return home right or go through a
01:02:36
normal process right to get in line to
01:02:38
citizenship but the problem is people
01:02:41
cutting the line you know skipping the
01:02:44
system and given the social safety nets
01:02:47
that states on the border have lined up
01:02:49
and we as a you know a nation have lined
01:02:52
up that's just unsustainable in a world
01:02:54
where we're already whatever 35 trillion
01:02:56
dollars in debt so I think these things
01:02:58
can coexist you can treat labor humanely
01:03:02
you can create a safe harbor for labor
01:03:05
to come to the country but that doesn't
01:03:07
mean that you should just have holes in
01:03:09
the wall and anybody who wants to come
01:03:10
here can come here in whatever capacity
01:03:12
they want
01:03:14
assuming that the border is closed and
01:03:17
we fix that problem what do you think
01:03:19
the right solution is to the millions of
01:03:21
illegal immigrants that are residing
01:03:22
I'll answer that but let me let me ask
01:03:25
you a question do you think we should
01:03:26
seal the Border yeah for sure and why do
01:03:29
you think we should seal the Border so
01:03:31
that we have a system that we can use to
01:03:33
manage the flow of Labor and decide
01:03:35
what's appropriate for our country and
01:03:36
we can actually have a conversation
01:03:38
about what qualifies someone to come
01:03:41
across the border and to immigrate into
01:03:43
the U.S I totally agree with you yeah I
01:03:45
agree I think that looks like but so
01:03:48
saying that you assume that the Border
01:03:50
was sealed what would you do about you
01:03:52
know low-skill immigration that's kind
01:03:55
of like asking other than that how is
01:03:57
the play Mrs Lincoln I mean this is the
01:03:59
hair on fire political issue is that we
01:04:01
can't get the Border sealed that you've
01:04:04
had seven million plus illegals come
01:04:07
across it
01:04:08
during the bind Administration
01:04:10
and the administration obviously doesn't
01:04:12
have the will to do anything about it
01:04:14
so you're kind of assuming away the
01:04:17
central issue
01:04:19
this is the issue one of the main main
01:04:21
issues that got Trump elect in 2016 was
01:04:23
building the wall no but I think wait I
01:04:24
think we're all saying this it hasn't
01:04:26
gone away we need to seal the Border
01:04:28
we're all saying that right does anybody
01:04:30
think we shouldn't seal the Border no I
01:04:31
agree yeah
01:04:33
why isn't the analysis on why that
01:04:35
doesn't happen when everyone in the
01:04:36
country agrees that [ __ ] happened or
01:04:38
just about everybody but I do think that
01:04:39
there's a that there's a low-scale labor
01:04:41
market need that's not met in this
01:04:42
country there isn't a public restaurant
01:04:45
um company that doesn't talk about the
01:04:47
challenges that they're having with
01:04:49
labor they cannot fill the jobs that
01:04:51
they all right well let me all right if
01:04:52
you want to talk about that issue I want
01:04:53
to flag a report that was presented to
01:04:56
Congress and this is about 15 years old
01:04:58
it's back in 2007 by Heritage but I
01:05:01
don't think the numbers have changed
01:05:02
much in the interim in fact they've
01:05:03
probably gotten worse
01:05:04
um the point that this researcher made
01:05:07
is that if you look at the cost of law
01:05:10
school immigration
01:05:12
the average low-skill immigrant
01:05:14
household receives approximately thirty
01:05:17
thousand dollars in direct benefits from
01:05:20
the government by contrast these
01:05:22
households only pay about ten thousand
01:05:23
dollars in taxes so even though those
01:05:28
low-skill immigrant households let's
01:05:30
assume that they're working and do
01:05:31
contribute to the economy in the way
01:05:33
that you're saying there's still
01:05:36
a twenty thousand dollar gap between uh
01:05:41
what they contribute and what they
01:05:42
receive from the government and that is
01:05:45
a big problem for the country my guess
01:05:48
is that the counter argument would be
01:05:50
that more than twenty thousand dollars
01:05:52
of economic benefit accrues to the
01:05:54
businesses that employ that labor
01:05:56
because they can now be profitable they
01:05:58
can now get the work done that they need
01:06:00
to do they can grow their revenue they
01:06:01
can expand their footprint they can
01:06:03
service their customers all the things
01:06:04
that otherwise they might not be able to
01:06:06
do without having access to that I think
01:06:08
that's a big assumption I think that's a
01:06:10
big assumption one of the problems with
01:06:12
the system that we have is that there's
01:06:15
a lot of government benefits and it and
01:06:18
so if you want to have a more open
01:06:21
immigration policy that's sort of
01:06:23
inconsistent with the idea of having a
01:06:25
super generous no I think I think yeah I
01:06:27
think there are three distinct things
01:06:29
one is is it open or closed and you know
01:06:31
second if it's closed what are the
01:06:32
qualification criteria and how many and
01:06:35
I think that's totally reasonable the
01:06:36
third is about benefit what government
01:06:37
benefits are provided and you could
01:06:39
reduce the government benefits if it's
01:06:40
too costly you could improve the
01:06:42
qualification criteria and increase the
01:06:44
number of of um I know this may sound
01:06:48
crazy but I think that tying together
01:06:50
immigration and jobs
01:06:53
um is like the best way to ensure that
01:06:56
nothing actually happens on immigration
01:06:58
right and what I mean by that is that
01:07:00
when you go to a restaurant for example
01:07:02
and the service has decayed because they
01:07:06
can't they can't get enough staff
01:07:08
right
01:07:10
um you don't walk out of that restaurant
01:07:12
thinking well wow we need comprehensive
01:07:14
integration reform
01:07:15
you say thumbs down on Yelp I'm never
01:07:18
going back here again
01:07:20
and so unfortunately if it's that if
01:07:24
it's service sector jobs in particular
01:07:25
by the way
01:07:27
um there is no closed loop way where you
01:07:29
actually tie these two issues together
01:07:32
and so
01:07:34
the issue becomes stranded which is what
01:07:36
it has which is why I think what Brad
01:07:38
said in Sac said Is Right which is
01:07:40
there's an order of operations here
01:07:42
where the American people
01:07:44
probably want
01:07:45
an immigration system that says
01:07:47
something like
01:07:49
here's some you know a point-based
01:07:51
approach right where we try to attract
01:07:53
the world's best think about it like a
01:07:55
draft right and we want to attract the
01:07:58
world's best athletes to come play on
01:07:59
our team team America Team USA
01:08:02
we have all of the capabilities to do
01:08:05
that but before we do that we have to
01:08:07
kind of close the border and I think
01:08:08
that that's the only way it's ever going
01:08:10
to get done meanwhile the problem with
01:08:12
the jobs thing is a bit of red herring
01:08:14
towards immigration because people just
01:08:15
don't tie the two things together
01:08:17
practically speaking well I was going to
01:08:19
say one final point on this is that when
01:08:21
you admit lots of low-skill immigration
01:08:23
or labor into the country you're
01:08:25
creating wage pressure for Americans at
01:08:28
the lowest end of the totem pole and
01:08:31
that is why they are so resistant to it
01:08:33
this is why average working-class
01:08:35
Americans are
01:08:37
very upset about the Border it's also a
01:08:40
security issue and there's drugs pouring
01:08:42
across as well you know the fentanyl
01:08:44
crisis that we see but it creates a lot
01:08:46
of wage pressure for Americans who are
01:08:48
at the lowest end of the the latter
01:08:51
yeah I mean what's wrong with just
01:08:52
paying them a little bit more you know
01:08:54
so so here's some statistics for you
01:08:56
guys
01:08:57
um the total population of unauthorized
01:08:59
immigrants
01:09:00
um in the U.S peaked in in 2007 has
01:09:02
declined slightly since California felt
01:09:05
it first from 2010 to 2018 the
01:09:07
unauthorized immigrant population in the
01:09:08
state declined by 10 to 2.6 million
01:09:11
mostly impacting the farm economy
01:09:14
um so the state California state reports
01:09:17
that from 2010 to 2020 the average
01:09:19
number of workers hired by California
01:09:21
farms for Crop Production declined to
01:09:23
150 000 from 170 000. I talk with a lot
01:09:27
of people in the farm economy as you
01:09:28
guys know and this is an endemic problem
01:09:30
in California Agriculture is that the
01:09:33
lack of a labor force that allows the
01:09:36
Farms to be profitable is really
01:09:38
impacting folks ability to operate and
01:09:40
to grow and you know that ultimately
01:09:42
translates into consumer prices and so
01:09:44
on so there are huge consequences as to
01:09:46
having effectively an open border policy
01:09:48
that go beyond just you know arms or you
01:09:52
know Vineyards not being able to hire
01:09:54
enough cheap labor I mean look at what's
01:09:56
going on in France right now yeah you've
01:09:58
basically got riots you've got a civil
01:10:01
war going on there's a large
01:10:03
unassimilated poor immigrant population
01:10:05
in that country
01:10:06
that's where open borders gets you
01:10:08
that's the end result so there are huge
01:10:11
consequences to allowing in huge numbers
01:10:13
of low-skilled immigrants yeah
01:10:15
especially illegal ones I don't think
01:10:18
there's a lot this is where we get to
01:10:20
you know last week we had the Canada
01:10:22
H-1B and announcement about their
01:10:25
technomatic visa program and I sent it
01:10:27
to two members of Congress I sent a
01:10:29
tweet sorry just just recap for us what
01:10:31
happened Brett okay so in Canada last
01:10:34
week
01:10:35
um you know the government announced an
01:10:37
aggressive push to recruit uh technology
01:10:40
workers from around the world to Canada
01:10:42
so they made it easier for uh Tech
01:10:45
workers to get what they are calling a
01:10:48
digital Nomad Visa so you can now go and
01:10:53
work uh you know in Canada uh if you
01:10:56
have a job offer and then they also in
01:10:58
in kind of a gangster move
01:11:01
um said if you already have an H-1B visa
01:11:03
in the United States and it's starting
01:11:04
to run out just bring you and your
01:11:06
family to Canada and work from here
01:11:08
right so it was like we've been talking
01:11:11
about we need H1B Visa reform we need to
01:11:14
recruit the world's best and brightest
01:11:16
and artificial intelligence Etc to the
01:11:17
United States and they were you know
01:11:19
they were doing it quite aggressively
01:11:21
now the point is I sent that to two
01:11:23
members of Congress a Democrat member of
01:11:26
the House a Republican member of the
01:11:28
Senate and I got back nearly identical
01:11:30
answers from both of them they said no
01:11:32
chance that happens here Dead on Arrival
01:11:34
because nothing's going to move until we
01:11:37
have a comprehensive immigration uh
01:11:39
policy in this country and then I said
01:11:42
well why hasn't that happening they said
01:11:44
elections right show me the incentives
01:11:46
and I'll show you the outcome the
01:11:48
problem is all four of us agreed we
01:11:51
should have
01:11:52
you know we should have sealed borders
01:11:53
but at the same time immigration is what
01:11:56
makes this country great we want to
01:11:58
treat people humanely we need migrant
01:12:00
workers like this is not that hard a
01:12:02
problem uh to solve in this country but
01:12:05
there's not even a conversation the
01:12:07
farce that is Washington DC on this
01:12:09
topic is there's not even an honest
01:12:12
conversation or attempt to get to an us
01:12:15
to to get to a solution here so with a
01:12:18
presidential election You Know lesson
01:12:20
you know uh a year and a half away we're
01:12:23
just back to the same old tribal war
01:12:25
that we've had before now I understand
01:12:27
sac's point is like listen nothing
01:12:29
happens until we have closed borders and
01:12:32
maybe sequentially that's what we have
01:12:34
to do but it doesn't stop there I think
01:12:37
we all agree that what makes this
01:12:39
country special is that we you know
01:12:42
Fourth of July you know we throw open
01:12:44
the doors and we welcome uh you know
01:12:48
folks from around the world to
01:12:49
contribute to this great experiment some
01:12:51
of them are on path to citizenship and
01:12:53
some of them are not what doesn't sit
01:12:56
right with anybody is breaking the rules
01:12:58
and skipping the line I understand the
01:13:00
desperation and the motivation of some
01:13:02
people to do that but that is not ever
01:13:05
going to be a system that works for the
01:13:07
majority so it sounds like what's that
01:13:09
happening
01:13:12
right right
01:13:14
the way I interpret listen when you say
01:13:17
that we can't do anything until we have
01:13:19
comprehensive immigration reform by the
01:13:21
way I heard future Democratic nominee
01:13:24
Gavin Newsom say the same thing on
01:13:26
Hannity what the party in power is doing
01:13:29
is holding the country hostage and
01:13:32
saying that we're not going to close the
01:13:33
border we're going to use the the Border
01:13:36
as a bargaining chip
01:13:37
until you give us the immigration
01:13:39
package that we want but that really
01:13:42
shouldn't be allowed because really it's
01:13:43
the obligation of the federal government
01:13:45
to have a secure border that's not
01:13:46
something you trade that's something
01:13:48
that we should already have well it's
01:13:50
what we pay for that's what we pay for
01:13:52
so that when they talk about conference
01:13:54
of immigration reform that's basically
01:13:55
what they're saying is we're not going
01:13:57
to give you a secure border until you
01:13:59
give us enough policies that we want
01:14:01
just to give you guys the and and
01:14:04
Freeburg and sax are immigrants but you
01:14:07
guys
01:14:07
got your citizenship through your
01:14:09
parents
01:14:11
um I actually did the process myself as
01:14:13
an a TN Visa holder who then went to an
01:14:16
H-1B
01:14:18
um who I didn't I think went to eb1 so
01:14:21
you know I've had to go through this
01:14:24
and I've literally had to wait in line
01:14:26
and you you can't I can't describe to
01:14:29
you the anxiety you have
01:14:32
when you know you know your Visa is
01:14:34
running out
01:14:35
you're waiting for customs and
01:14:38
integration to basically give you the
01:14:40
meeting so that they can actually
01:14:41
approve or tell you that your H1B is
01:14:44
approved or your eb1 is approved and you
01:14:46
go to this website it's Arcane you
01:14:49
refresh it every day you do it for six
01:14:51
months straight every day a few times a
01:14:53
day
01:14:54
you go into the forums where all these
01:14:56
other immigrants are talking about how
01:14:57
frustrated they are and how scared they
01:14:59
are but we all stood in line
01:15:03
and I think what people don't understand
01:15:05
who think that the southern border
01:15:07
should be totally open is is the anxiety
01:15:10
that those of us who actually played by
01:15:12
the rules went through
01:15:14
for months and in some cases if you come
01:15:16
from countries like India and China
01:15:18
years right but by the way that's not
01:15:21
fair what you're saying is exactly why
01:15:24
the Hispanic population the Hispanic
01:15:27
citizens of the United States are
01:15:29
increasingly voting Republican because
01:15:31
they have gone through the process they
01:15:33
have suffered the the rigmarole and they
01:15:36
don't want to see an open border policy
01:15:38
that
01:15:39
um you know isn't fair and doesn't feel
01:15:41
right you know we're first generation
01:15:42
Americans and I remember when my parents
01:15:45
went through the process but I think my
01:15:47
dad got a green card based on being a
01:15:49
doctor before we came here and then
01:15:51
after five five years we became citizens
01:15:52
it seemed a lot more orderly back then
01:15:54
by the way totally the process just
01:15:56
seemed to work now I've seen all the
01:15:57
statistics showing the insane percentage
01:16:00
of Silicon Valley startups that had at
01:16:02
least one immigrant co-founder it's
01:16:05
something like 40 to 50 percent of
01:16:08
unicorn of unicorn companies in Silicon
01:16:10
Valley have at least one co-founder
01:16:12
who's first generation American or or an
01:16:15
immigrant so I understand full well the
01:16:18
benefits to the country and our economy
01:16:20
by being able to have immigrants come to
01:16:24
America but generally speaking those are
01:16:26
high skill immigrants and we should be
01:16:29
able to have that as a feature of our
01:16:31
system without having an open border
01:16:33
and the problem is all these things get
01:16:35
conflated right now and I think what's
01:16:36
happening is it shouldn't be so hard to
01:16:38
get extensions to h1bs it is really
01:16:41
crazy that we're giving Canada this
01:16:43
opportunity and that we're potentially
01:16:44
driving out really talented High School
01:16:46
workers but the problem right now now is
01:16:49
that the southern border is such a mess
01:16:50
that the average American doesn't want
01:16:52
to hear anything about h-1bs or anything
01:16:55
they don't hear about any of it they're
01:16:58
just like I would encourage people to to
01:17:00
listen to that RFK clip where he
01:17:02
describes you know and he's one of the
01:17:04
rare
01:17:06
presidential candidates that has taken
01:17:08
the time and gone down there and he just
01:17:10
describes it very plainly so
01:17:12
irrespective of what you think of him uh
01:17:14
listen to it because it's pretty factual
01:17:16
and it's very scary
01:17:18
it seems to me to be of such significant
01:17:21
strategic national interests similar to
01:17:24
the national debt
01:17:27
um that there really should be a
01:17:29
commission of Centrist folks uh you know
01:17:32
appointed by whatever president this
01:17:34
President the next president
01:17:37
um that tries to craft something we can
01:17:39
pass break it down into two or three
01:17:41
bills
01:17:42
um but it you know this is really
01:17:44
undermining our ability to compete in
01:17:47
the world and we need to solve this
01:17:49
problem and I think we've been
01:17:51
discussing this you know for as long as
01:17:54
uh you know we've been in Silicon Valley
01:17:56
but certainly it's become an incredible
01:17:58
problem in the age of AI Etc and you
01:18:02
know
01:18:03
um you know having the Tit for Tat of
01:18:05
what's going on these news articles
01:18:07
shipping off you know illegal immigrants
01:18:10
to uh to Martha's Vineyard you know I
01:18:13
happen to be on Martha's Vineyard right
01:18:14
now I think they set 49 you know folks
01:18:18
here uh Venezuelan most of them Central
01:18:20
American and I'll tell you this island
01:18:22
is made better because of you know it
01:18:24
has a tremendous number of portrait
01:18:26
degrees and Central American workers
01:18:29
um you know who are active members of
01:18:30
the community go to the school here Etc
01:18:32
um so maybe that is part of the solution
01:18:34
sax that you know when we do have uh you
01:18:37
know people who want immigrant you know
01:18:40
immigrate to this company country the
01:18:42
burden is not just on the border states
01:18:44
but the you know folks uh have an
01:18:47
opportunity to locate anywhere in the in
01:18:49
the country
01:18:50
well yeah and what happened with the
01:18:52
Martha's Vineyard thing is I have seen
01:18:54
some um articles like the New York Times
01:18:56
articles saying how wonderfully it's all
01:18:57
worked out but when it first happened
01:18:59
the people living in Martha's Vineyard
01:19:01
were up in arms and there were a bunch
01:19:03
of angry press conferences and they were
01:19:05
you know almost hysterical that the
01:19:08
Sanchez had sent them there but what
01:19:09
that did is it exposed the hypocrisy
01:19:11
because there's a lot of people in the
01:19:13
country who are just fine with having an
01:19:15
open border when they don't think it
01:19:16
affects them totally but when it does
01:19:19
affect them then all of a sudden they're
01:19:20
holding press conferences denouncing it
01:19:21
so I think it never works Tit for Tat
01:19:24
never works you can have me a tit you
01:19:26
don't need
01:19:32
who left the cocaine in the White House
01:19:35
what's the answer
01:19:37
uh I I actually don't think it was
01:19:38
Hunter button I think it was probably
01:19:40
like some young kid who was working like
01:19:42
long hours and was like I need a little
01:19:45
upper here to stay up and was like I
01:19:46
need a bump and so the kid brought some
01:19:48
nose candy I mean well how stupid is
01:19:51
this kid and by the way they said that
01:19:54
there's no security footage it was in a
01:19:56
cubby it was in a cubby he put it in the
01:19:57
cubby whoever did it which is so stupid
01:20:00
why would you take it off your off your
01:20:02
person
01:20:03
yeah I mean it's clearly he's clearly a
01:20:07
conservative reporter who snuck in there
01:20:09
to frame Hunter and by the way it was in
01:20:11
the cubby where you're supposed to put
01:20:12
your cell phone
01:20:14
when you go into classified meetings sax
01:20:16
have you been to the White House lately
01:20:18
no have you any of you guys been in the
01:20:21
Oval Office I have yeah I'll tell you a
01:20:23
very funny story about my my meeting in
01:20:26
the in the it was in the Roosevelt room
01:20:28
I had a fighting meeting where it was
01:20:31
like me Andreessen
01:20:34
me and reason I can't remember who else
01:20:37
was this was like years ago a decade ago
01:20:39
this is during Obama's administration
01:20:41
and
01:20:43
something like we're meeting with like I
01:20:46
don't know the the chairman of the Joint
01:20:48
Chiefs and all these big monkey bucks
01:20:50
and I remember the military guys because
01:20:51
there was four of them and at the time
01:20:54
it was there was like oh my God no this
01:20:56
is right when the first Ukraine thing
01:20:58
was going on okay so what was that sax
01:21:00
2014 Maybe
01:21:02
2013 2014 the first UK the Ukraine
01:21:07
think of magic anyways oh yeah 2014 yeah
01:21:09
2014 okay so we're we're there and
01:21:12
they're talking about we're talking
01:21:13
about new technologies whatever and I
01:21:15
said guys I mean this is insane like why
01:21:18
are you not are you guys not dropping
01:21:21
you know small SATs so that you can get
01:21:25
internet service into places like the
01:21:27
Ukraine so that people can get the
01:21:28
message up whatever's happening
01:21:30
and I said these things are really small
01:21:32
like you can bring them anywhere and I
01:21:34
said you know I could have smuggled one
01:21:36
in here right now one of the guy says no
01:21:39
we've been watching you since you got it
01:21:42
oh wow
01:21:44
this was so very funny I thought it was
01:21:47
hilarious yeah well speak speaking of
01:21:50
political forces here we go and uh no
01:21:54
it's not red meat I mean I want to do a
01:21:57
just do a quick recap on the whole
01:21:58
Chinese spy balloon thing I actually
01:22:00
think there's a serious statement here
01:22:02
about how our political system works
01:22:05
but do you want to tee the sub free
01:22:07
burger or do you want me no go for it
01:22:09
yeah lead in yeah go for it all right so
01:22:11
basically you guys remember a few months
01:22:13
ago that we had this whole Chinese spy
01:22:15
balloon thing that went on for a week I
01:22:17
mean we had 24 7 wall-to-wall cable and
01:22:20
use coverage of this thing and the
01:22:23
administration was accused of being soft
01:22:27
on China and allowing the Spy balloon to
01:22:30
Traverse across the United States and
01:22:32
people are posting
01:22:34
online
01:22:36
yeah then finally the the White House
01:22:38
deployed some f-16s to shoot down some
01:22:42
16 hobbyist balloons with 400 000
01:22:45
Sidewinder missiles to show that they
01:22:46
were really tough anyway it was this
01:22:48
whole farce now it turns out that the
01:22:50
Pentagon just released a statement so
01:22:52
Pentagon press Victory Brigadier General
01:22:54
Pat Ryder said the balloon not only did
01:22:57
not transmit data back to China and
01:22:59
never collected any
01:23:01
and he said we're aware that it had an
01:23:04
intelligence collection capabilities but
01:23:07
it has been our assessment now that it
01:23:09
did not collect while it was transiting
01:23:12
the United States so if it wasn't
01:23:15
collecting any data it wasn't
01:23:16
transmitting back to China and then I've
01:23:19
also heard that it didn't contain any
01:23:21
special equipment at all it just I've
01:23:23
read articles saying that was just
01:23:24
standard equipment that you could buy
01:23:26
how is it still a spy balloon yeah and I
01:23:30
remember they got worked up about this
01:23:32
thing that turned out to be but is it
01:23:34
Chinese was it actually Chinese I think
01:23:36
it was Chinese with American Technology
01:23:39
so so now
01:23:40
yeah like now all the reporting's
01:23:42
covering the fact that it had quote
01:23:44
American Technology on it like Sax's
01:23:48
point is you could just buy the stuff
01:23:49
off the shelf and if you guys remember
01:23:51
around the time that it was discovered
01:23:54
we talked about this but it wasn't
01:23:56
widely covered in the media that there
01:23:58
was an upgrade to the um domestic radar
01:24:01
system where they increased the
01:24:03
resolution and the frequency of capture
01:24:05
of these radar images so they were
01:24:07
starting to pick up more fine-tunes
01:24:09
smaller objects that were otherwise
01:24:10
being missed including things like
01:24:12
little you know weather balloons or you
01:24:14
know stuff that that otherwise wasn't
01:24:16
getting paid attention to and that this
01:24:18
you know balloon may have been the sort
01:24:20
of thing that could have been a blip and
01:24:21
ignored uh in the prior system but then
01:24:24
when they upgraded the system it became
01:24:25
a thing and to Sax's Point what's
01:24:27
interesting is how it got spun into a
01:24:30
you know domestic threat uh by the
01:24:32
Chinese well we had this debate on the
01:24:34
Pod months ago where I was like look
01:24:36
this is just this cannot be true it's
01:24:38
just it makes no sense I mean the
01:24:40
Chinese have spy satellites so if they
01:24:42
wanted to spy on us they would just
01:24:44
receive Imaging from space so then
01:24:46
people started speculating well this is
01:24:48
this by balloon must have new kinds of
01:24:52
equipment you know new sensors or sound
01:24:55
maybe they're trying to collect sound
01:24:57
patterns make recordings so in other
01:25:00
words over Farmland over Northern Canada
01:25:02
and then farmland and yeah like there's
01:25:05
a lot of interesting stuff to pick up
01:25:06
there instead of recognizing that the
01:25:08
story was completely far-fetched they
01:25:10
had to invent a narrative about why it
01:25:13
made sense
01:25:14
and then you know if you basically raise
01:25:16
any questions whatsoever about this
01:25:18
narrative they you were looked on as if
01:25:21
you were like Chinese spokesman like a
01:25:23
spy or something in fact this this
01:25:24
Pentagon statement came right after Tony
01:25:28
blinken's visit to China right he just
01:25:30
got back from China and there was a lot
01:25:32
of closed door meetings and then they
01:25:34
gave the usual hoopla about what was
01:25:35
discussed and there was nothing new that
01:25:37
was introduced in the public statement
01:25:39
about what was discussed behind the
01:25:41
closed doors but do you think that maybe
01:25:43
there was something that was negotiated
01:25:45
behind closed doors where they said our
01:25:47
this balloon was not a domestic threat
01:25:50
you guys made it out to be you need to
01:25:51
make a statement to correct the record
01:25:52
yes I actually think that's exactly what
01:25:54
happened is we know blinken went to
01:25:56
China he had seven hours of meeting
01:25:57
meetings the the uh read out from those
01:26:00
meetings said that they were a very
01:26:02
candid conversations that's usually
01:26:04
diplomatic code for uh
01:26:07
yes exactly exactly and I think I think
01:26:10
the Chinese were very upset that the
01:26:12
story was relentlessly pumped for day
01:26:14
and days that they were spying on
01:26:16
America and I think they demanded a
01:26:18
correction and I think that that is
01:26:20
exactly what the Pentagon did is they
01:26:22
put out this press release they put out
01:26:23
the statement but the way that the media
01:26:25
covered it it's like the back page
01:26:26
correction of a front page Story I mean
01:26:29
this Chinese spy balloon story went on
01:26:31
for days and days and days and the
01:26:33
correction gets no coverage now look
01:26:36
it's also possible that
01:26:38
that somehow the statement is not true
01:26:40
now I mean look either they were hoaxing
01:26:42
us to then or they're hoaxing us now
01:26:44
because the statement they're saying now
01:26:46
is incompatible with what they were
01:26:48
saying three months ago but I believe
01:26:49
the statement now and not what they were
01:26:52
saying three months ago because it just
01:26:53
makes a lot more sense
01:26:55
um but you know remember a few months
01:26:57
ago uh we had you know mids on Twitter
01:27:00
here let's just become a thing
01:27:06
remember remember when mid's on Twitter
01:27:08
you know when I invented that I came up
01:27:11
with that my take was Aaron balloon
01:27:13
major provocation could incite War blown
01:27:15
up pipeline referring to Nordstrom which
01:27:17
also got blown up around in that time
01:27:19
not a provocation can never Insight or
01:27:20
get it straight and then the mids on
01:27:23
Twitter were you know
01:27:28
laughs
01:27:30
and you learn a new vocabulary word but
01:27:33
in his view Aaron was not a strong
01:27:36
enough word to describe this
01:27:38
unprecedented national security threat
01:27:40
by the way for those of you listening uh
01:27:43
the the mid that responded to sex was
01:27:45
Jason callicanis formerly of the
01:27:47
all-in-pod yeah oh my God it's so funny
01:27:50
it shows how farcical our political
01:27:52
system is because you know I here's
01:27:54
where I think actually happened is that
01:27:56
you the story just picked up steam
01:27:58
because it just it was it's too good not
01:28:00
to right so Cable News starts picking it
01:28:01
up and everyone's always trying to pump
01:28:05
up the threat that China represents
01:28:06
because there are Central Global
01:28:08
competitor now
01:28:10
and the White House I think very early
01:28:12
on had a decision to make which is do
01:28:15
you try and fight the story or do you
01:28:17
just roll with it
01:28:18
and I think they just decided to roll
01:28:20
with it because they would be seen as
01:28:22
being soft on China if they try to fight
01:28:25
it and say it wasn't true
01:28:27
and so then you had this whole farce of
01:28:29
them shooting down all these balloons
01:28:30
and so forth um this is the whole course
01:28:32
and trajectory right now of the United
01:28:35
States Democrats and Republicans both
01:28:38
sides of the aisle have this vested
01:28:41
belief that we are on a collision course
01:28:43
with China and you know whoever kind of
01:28:45
steps it up first ends up having uh the
01:28:48
better footing and so every opportunity
01:28:50
that exists whether it's on chips or
01:28:53
Taiwan or human rights or the the Spy
01:28:56
balloon is going to be levered and
01:28:59
Amplified in some way to paint China as
01:29:02
this conflicting Force against the
01:29:05
United States in some way
01:29:07
um and it's not going to get toned down
01:29:09
anytime soon clearly this is part of a a
01:29:12
continuous escalation cycle that may
01:29:14
take years may take a decade or two but
01:29:18
ultimately uh there's going to be a
01:29:19
point where this all comes to a head and
01:29:22
it's really unfortunate to see that
01:29:23
rather than have this you know deeply
01:29:25
Cooperative relationship
01:29:27
uh and so are you think you think
01:29:28
distinguished China is going to come to
01:29:29
a head
01:29:31
at some point I think we're just going
01:29:32
to continue to escalate potential I'll
01:29:33
take the other side of that too
01:29:37
and prosperity forever no I mean I I
01:29:40
think I've talked about this a little
01:29:41
bit but I think China has just got so
01:29:43
many internal issues they're not going
01:29:44
to be fighting Wars they're not gonna no
01:29:46
look
01:29:47
sorry hold on my point is more around
01:29:50
the orientation of the the um
01:29:53
politicians and the orientation is we
01:29:56
have this escalating force in China and
01:29:58
we need to kind of be ahead of the game
01:30:00
well
01:30:04
well I think the point fever is making
01:30:06
is that the domestic Politics the
01:30:10
politics inside the United States
01:30:12
um leads to a a cycle of Republicans
01:30:16
Democrats constantly trying to one-up
01:30:18
each other in terms of who's more
01:30:20
hawkish towards China right exactly that
01:30:23
that's what I think is going on
01:30:24
regardless of what happens on the
01:30:25
Chinese side and by the way I mean their
01:30:27
domestic politics probably have the same
01:30:29
Tendencies I'm sure that she's got
01:30:32
hardliners and Hawks around him who
01:30:35
don't want to back down
01:30:36
and so I think I think in a few years
01:30:38
from now we won't be talking about this
01:30:40
we talked about Japan for eight nine
01:30:43
years we were worried they were the
01:30:44
boogeyman they turned out not to be in
01:30:46
we all moved on yeah it's a good data
01:30:48
point so yeah I mean you're referring to
01:30:51
a period I think it was like the 1980s
01:30:53
where Japan was seen as a giant yeah
01:30:56
yeah but it was never seen as a security
01:30:59
threat to the United States
01:31:01
and China is a different kind of
01:31:04
geopolitical competitor right there's a
01:31:06
very vigorous security competition
01:31:09
they have more people we have military
01:31:12
bases in Japan it was it's it's a client
01:31:14
in the United States it was never a
01:31:15
security threat to the United States
01:31:16
that was resolved no I don't think
01:31:18
that's fair I just think that uh dollars
01:31:20
tend to lead these things and I think
01:31:22
that in
01:31:23
uh the next five to six years five to
01:31:26
ten years we're not going to be talking
01:31:27
about China the same way we are today
01:31:29
okay prediction made we'll come back
01:31:31
episode 8 uh
01:31:34
1247. uh Brad do our outdoor activities
01:31:39
Brad's gonna do a really quick I gotta
01:31:42
go fun um have a great time Brad's gonna
01:31:44
do a quick science corner for us and
01:31:46
then we're gonna wrap Brad go ahead
01:31:48
well you know one of the things I love
01:31:50
about this pod is we cover everything
01:31:52
from science to politics and and chamoth
01:31:55
last year
01:31:56
um you know in his biohacking series
01:31:58
told us all to get pre-nuvo scans which
01:32:00
I did which is interesting and I think I
01:32:02
don't know maybe 10 people have have
01:32:05
sent you notes and said hey you helped
01:32:07
me discover a tumor you know really
01:32:09
amazing well so this year and I did that
01:32:12
um you know this year you've been
01:32:13
talking a lot about heart flow so I said
01:32:15
to my general practitioner at my annual
01:32:17
checkup hey I want to do this heart flow
01:32:19
and she said oh you don't need to do a
01:32:21
heart flow your ldls all your stuff
01:32:23
looks real wait wait wait wait wait wait
01:32:24
wait wait you have a female GP
01:32:27
uh she's fantastic fantastic Stanford
01:32:30
educated really terrific I don't care
01:32:32
where she went who does the prostate
01:32:34
test he does Hey listen it's it you know
01:32:38
the perks that come check in the PSAs I
01:32:42
mean no but seriously you have it really
01:32:43
I do I do that's a level of intimacy I
01:32:46
didn't expect from you wow and so you
01:32:49
know but what I found interesting is
01:32:51
when I suggested I get the heart flow
01:32:53
she said oh you don't need it Etc your
01:32:56
ldls are low you're very fit and she
01:32:59
said but on second you know maybe you
01:33:01
could go get this calcium score test
01:33:03
right
01:33:04
um I didn't know anything about this but
01:33:06
you know I did a little quick research
01:33:08
and it turns out a big Jam of study in
01:33:10
2017 over 50 percent of men and women
01:33:14
over the age of 40 Carrie plaque
01:33:16
plaque's the number one killer it's a
01:33:18
source of heart uh disease and and heart
01:33:20
attacks and as Chamas been talking about
01:33:23
there's you know a a prophylactic called
01:33:26
Statin which is basically like a
01:33:27
supplement very little downside no
01:33:30
long-term downside effects but it
01:33:32
immediately starts cutting down the
01:33:34
amount of fatty cells and and and plaque
01:33:36
that's carried in your blood so I
01:33:38
thought it was interesting I went and I
01:33:39
had chemath uh as you know the core the
01:33:42
coronary calcium scan it takes five
01:33:44
minutes it costs between a hundred and
01:33:46
four hundred dollars the fact that we
01:33:47
don't have every person taking this over
01:33:49
40 is crazy and Frontline doctors should
01:33:52
all be prescribed in it but it
01:33:53
particularly if there's family history
01:33:55
sorry but did you also do a contrast CT
01:33:57
with heart flow yeah so I started with
01:33:59
the calcium score 150 bucks over at
01:34:01
Stanford took five minutes and you know
01:34:04
it told me uh you know which wasn't
01:34:06
terribly surprising I was one of the 50
01:34:08
percent that did carry some level of
01:34:11
calcium so it was called a non-zero
01:34:13
score
01:34:14
and then what they suggest is because
01:34:16
you have a non-zero score you get this
01:34:19
you know chamoth you told me go do the
01:34:21
contrast CT which then will image what
01:34:25
this looks like actually in your artery
01:34:27
so this past week in Boston I did the
01:34:30
contrast CT again this took 10 minutes
01:34:32
non-invasive like you know it just they
01:34:35
run you into it invasive because you
01:34:37
have to put the dye so they put yes so
01:34:41
so a tiny bit I I suppose they shoot a
01:34:43
little die into you but you know
01:34:46
um uh it didn't feel like anything
01:34:48
I was in and out of the of the place in
01:34:51
40 minutes and what it found is you know
01:34:54
fortunately that very little of this
01:34:57
calcium had turned into what they call
01:34:59
stenosis any narrowing of of the
01:35:01
arteries okay but then it gave you just
01:35:04
a very clear picture that if you are one
01:35:07
of the 50 who carry plaque over the age
01:35:11
of 40 you should be on a prophylactic
01:35:13
Statin so it's chamat knows I signed up
01:35:15
to 10 milligrams of crestar which I'm
01:35:18
taking daily has had zero you know zero
01:35:20
adverse consequences and in two or three
01:35:23
months they'll test the amount of you
01:35:25
know we'll revisit this calcium score
01:35:28
um but when I talked to the head of
01:35:30
Cardiology what was so interesting he
01:35:31
said every one of his friends over the
01:35:34
age of 40 he has them do this calcium
01:35:36
coronary scan it's so cheap and if
01:35:39
they're zero on their calcium reading
01:35:42
that that's the end of the line but if
01:35:43
they have a non-zero reading then he'll
01:35:45
do the the CT coronary scan which is
01:35:48
again very cheap more expensive than the
01:35:51
calcium test but very cheap and when you
01:35:53
think about the cost of the patients in
01:35:56
this country right in our health care
01:35:58
System due to heart disease and when you
01:36:01
think about the needless lives cut short
01:36:03
I was shocked how easy all of this was
01:36:07
and how empowered I feel by the data and
01:36:10
how fortunate I feel that I'm actually
01:36:12
taking a supplement I call it a
01:36:13
supplement instead of statins because I
01:36:15
think Statin has some spooky name it
01:36:17
sounds to me like a better supplement
01:36:19
than any vitamins I can take and you
01:36:22
know it's reducing the ldls or these
01:36:24
fatties in your you know in your blood
01:36:26
and I'll keep you posted but I was very
01:36:28
grateful and you know as you know I
01:36:29
posted it in our thread and I think all
01:36:32
the besties you know we saw responses
01:36:34
out of a bunch of folks in the thread
01:36:35
this week are going to go get their
01:36:37
calcium uh you know coronary scan and I
01:36:41
I think it should be Common Sense on the
01:36:43
front lines for people over 40
01:36:45
particularly if there's any family
01:36:46
history go get this calcium test done
01:36:49
this summer while you have a little
01:36:50
extra time there you have it folks
01:36:53
100 to 400 could save your life calcium
01:36:55
coronary scan Brad gerstner thanks so
01:36:57
much for science Corner this week
01:37:00
um
01:37:01
this has been great how did you guys
01:37:03
enjoy the show with our new foursome
01:37:07
exactly love it love it
01:37:10
I gotta go boys I really love you guys
01:37:12
uh okay go to Vegas stuff your face with
01:37:14
some truffles no no truffles until the
01:37:16
fall all right bye bye
01:37:18
love you guys
01:37:20
[Music]
01:37:22
we'll let your winners ride
01:37:25
Rain Man David
01:37:28
said
01:37:30
we open source it to the fans and
01:37:32
they've just gone crazy
01:37:33
[Music]
01:37:38
release
01:37:45
[Music]
01:38:09
[Music]
01:38:15
I'm going all in
01:38:18
[Music]
