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sorry everybody I wasn't here last week so what's your bit J jump jump into your
00:00:04
bit no there's no bit I'm just I'm H you know triple vax I took the pack low it and I'm back everybody I know everybody
00:00:12
was very concerned about me thank you to everybody but I can take my mask off right freberg do I need a mask in 2024
00:00:18
you're good you're clear okay so let me take one of these off get that okay was getting uncomfortable
00:00:27
you're in the clear for one okay you know what I'll take the Third mask totally free no mask free I hope I don't
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get you guys says we can treat Co like the flu now I mean you see that they finally admitted after two years of
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shutting down schools the economy everything like oh it's just a flu you treat like a flu well it's interesting
00:00:44
you know I got the co just to explain to everybody I went to Billy Joel's final concert with my daughter she we had a
00:00:50
great time it was his final MSG Nick time stamp the end of this so everybody can just skip to the end of go sorry go
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ahead Jason there's no bit here I'm just saying I I'm letting people know that's
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I think got Co at the last Billy Joel show it was a great show um Shout Out Billy Joel but it was 48 hours that were
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very intense and then I took that pack slov and I came right out of it but so apologies to everybody but man it was no
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joke great story great story great story great story I mean listen there's a lot
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has happened since I've G sneezed earlier today did you guys sne oh my God yeah the Olympics happened I you guys
00:01:23
taken the Olympics at all freeberg you seem like a guy who would watch obscure Olympic sports I think there's a lot of
00:01:29
sports that should be regular it's like the pistol shooting guy anyway it's all moot because um you know the paparazzi
00:01:35
were there and they took poke pictures chamal do you know this big Paparazzi in Paris this year because of all the
00:01:40
celebrities there yeah the pops are all over the place in Europe they're everywhere they're everywhere I'm sure
00:01:44
you saw them in Italy it's it's getting crazy but um they got you when you were getting your gold medal Nick pull it up
00:01:51
this is this was I think in US Weekly here it is here's chamath getting his gold medal okay
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oops whoa now this this is in the uh category of uh being the biggest prick now just let people know chamat has
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there he is the biggest prick other people were there too by the way it wasn't it wasn't just Cham
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freeberg was also there here's here freeberg yeah most likely to fight a girl yeah there it is he was in the am I
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the Syrian uh yes that's you in the that's you in the women's category of boxing the women's boxing right thank
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you J thank you job saak was there too though by the way here he is he uh he won silver for
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the at the very least the otic and wovi you lost the weight but you didn't add any muscle definition that's a known
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that's known right freeberg it's known you lose the muscle right that's right fat and the muscle um I was there too by
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the way and I'm very very proud to say in a photo finish you can see me there you guys know this one right this
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is the 100 meter virtue signal so you see there just edged me out and I'm right ahead of Paul Graham so we
00:03:07
signaling 100 meter dash it was pretty great it's pretty great but congrats to Reed Hoffman also coming on the Pod to
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debate you sex hard to beat them in vir signaling I know I felt like hard I felt
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like silver in this case was a gold you know given the competition right you just if you medal in that group of virt
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signs you're good let your winners ride Rainman David and in said we open source it to
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the fans and they've just gone [Music] crazy all right everybody welcome back to the Allin podcast of course the
00:03:47
number one podcast in the world and I'm back Daddy's home and we've got a very full docket sax will
00:03:55
get his red meat at the end for all the Maga lunatics in the comments don't worry he's going to get his red meat but
00:04:00
we got bigger fish to fry in the markets markets were down big on Monday due to something called the Yen carry trade uh
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the Dow was down 700 points NASDAQ was down like 6% it was unsettling social media went crazy on Sunday night that it
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was going to be the end of the world the beginning of a recession maybe a depression and this all happened because
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Japan Central Bank raised their interest rates by a whopping 15 to 25 basis points uh and we'll explain why that's
00:04:28
important in just moment we'll get chamat to give us a little overview here of the Yen carry trade but this is a big
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deal because Japan has had its interest rates at near zero even negative since 1999 so this little blip on the chart is
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uh you know the interest rate going up uh yeah there in Japan so quick explainer and then shabath will have you
00:04:48
go deeper the Y carry trade is a pretty basic concept investors borrow at 0% interest or close to it due to this 0%
00:04:57
interest rate uh and then you convert your into another currency or perhaps a stock like Nvidia and you take the
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spread so um you know the goal is obviously to return a higher rate than the cost of borrowing the Yen and so
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here's an example of it um if you just want to look at the flow you borrow some Yen at 0% you invest it in stocks
00:05:18
whatever you get some appreciation and then you liquidate the stocks and you pay back your bill of course this can
00:05:24
all go yeah but a safer way to do this is just to invest in a US t bill that's paying 5% you don't have to take R yeah
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people doing going down yeah so you have you borrow you borrow Yen at zero% invest in t- bills at 5% and you pocket
00:05:40
the difference yeah you just have to pay back the loan of course chamat this can
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all go very wrong if a number of things happen so maybe you could give us an overview of this kind of trade have you
00:05:52
ever done something like this what do you think of these type of Trades these quote unquote free money trades you know
00:05:58
picking up free money off the ground trades I mean I think these kinds of so I've never done them and part of the
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reason wise I think these things look genius and they work until One Moment In Time where they stop working and it
00:06:16
stops working so severely that it becomes almost impossible to unwind yourself and so you unwinding yeah yeah
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yeah so I I think typically in these situations the thing you have to remember is you don't really make a lot
00:06:29
of money in this trade the way you make a lot of money is by leveraging this trade up so
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meaning it's not like borrowing a million dollars in Yen and then swapping it to US Dollars and then putting it in
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t- bills is a real money maker you're talking about 50k that's not really going to move the needle so what people
00:06:49
try to do in these situations is do it on a billion dollar and then lever it up five or
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10x the problem with that is that you're posting all kinds of collateral as margin to these Banks to give you that
00:07:04
leverage because then all of a sudden capturing 150 basis points on 10 billion or 15 billion now we're talking about
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real money and so when these things go wrong and they happen very suddenly what it
00:07:20
does is it puts pressure on all other asset classes because people are scrambling to make sure that they don't
00:07:26
get margined out and what you saw over the weekend was that mostly a lot of that happening which was a lot of these
00:07:35
folks were putting this trade on to the tune of tens or probably even a hundred billion plus dollars wow of which they
00:07:44
had maybe five or 10 billion of equity and 80 to 90 billion dollar of just margin and that's what caused this very
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quick cycle then it looked like it unraveled it and so people thought oh we're probably mostly past this I actually
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think we're not I've said this before I think one of the most interesting things I've learned in the
00:08:09
last few years about the stock market is the stock market is owned by and large by these alos right meaning there's
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these large kind of murky grayish hedge funds that have these computer trading algorithms that are allowed to be
00:08:27
levered to the tune of you know 13 15 20 times about $50 billion so these folks are swinging around a trillion dollars
00:08:37
each okay and we all just live in their world because when these algorithms make a
00:08:44
decision and they react to these kinds of events that's when the real volatility starts so I think the most
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important thing was summarized by friends of ours from Goldman Sachs I just want to
00:08:58
Nick if you want to just throw up the picture that they sent me so they they sent they sent some really good Market
00:09:04
insights whenever these things kind of happen to a bunch of their clients and one of the interesting things that they
00:09:11
observed is a couple of facts the first is the algorithms in the middle of all of this chaos sold about $41 billion of
00:09:19
global equities okay no big deal except that it actually causes everybody else to have to react and then they sell
00:09:26
billions and billions more the other thing that they noticed though is that they're we're in a moment in time where
00:09:33
you can see how these algorithms will behave over the next month and right now if there's relatively minimal volatility
00:09:42
and not much changes the algorithms will have to sell another 160 odd billion dollars of
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equity and that'll pull through many hundred billions more from everybody else so I think we're in a little bit of
00:09:57
a delicate moment where the preponderance of the market action will be to continue to sell and I think
00:10:05
it's just going to be when we look back in hindsight another reason why getting levered on these things is very
00:10:10
dangerous there's no free money basically yeah there is no free money in this free money trade and just to
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translate a little bit of this on the margins for the audience who's not familiar with it margin is a loan fancy
00:10:21
way of saying a loone margin call you have some asset that backs it up you know in your case it might be uh you
00:10:27
know a civilian it might be your house whatever your bank account in these cases these big companies uh these hedge
00:10:33
funds might have cash or equities and if they come down and they have to pay the
00:10:39
loan they are forced to liquidate it and in some cases those assets are controlled by the person giving the loan
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and they will just start programmatically selling your shares in whatever Apple Google whatever Nvidia
00:10:52
you own whatever you own to pay down that margin and this is called a margin call thus the name of the uh movie and
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so it's incredibly dangerous and The Leverage is you and I can or like any civilian could borrow you know $500,000
00:11:06
against their $2 million house in home equity rich people and these big Banks they can borrow 10 or 20 times the value
00:11:13
of the assets which then could lead to Absolute chaos freeberg let's go to you next and just talk a little bit about
00:11:20
what's going on in Japan because they have had a rush people buying their stocks uh the population declining it's
00:11:29
a very unique economy maybe you could talk a little bit about it one of the biggest challenges facing Japan is the
00:11:37
level of debt that they've recruit their debt to GDP ratio is currently 263 per.
00:11:43
they have about 1.3 quadrillion Yen of public debt on an annual GDP of about 591 trillion yen they're currently at
00:11:55
the federal level spending about 20% of GDP per year 5% of GDP is being spent per year just
00:12:04
on servicing the existing debt and that's at interest rates set by the Central Bank of roughly
00:12:11
0% so you know or whatever the market is trading it at so slightly above 0 per. but if the central bank had to start to
00:12:18
raise rates because inflation started to run away because there's so much yen in
00:12:23
circulation there's so much debt outstanding the federal government would not be able to actually service this
00:12:28
debt so as of March of 2024 the bank of Japan the Central Bank actually holds 53% of Japan's outstanding government
00:12:37
bonds which is equal to about 100% of Japan's GDP so their Central Bank has bought the debt that's being issued by
00:12:46
the federal government to fund their budget a large chunk of which right now is being spent just on paying the
00:12:52
interest on the debt while interest rates are close to 0% so imagine if interest rates bumped up to 1 2 3 4 5%
00:12:59
as we're seeing with us treasuries we were recently at a nearly 5% handle on the on the 10e treasury it would become
00:13:06
an unsustainable debt burden for the Japanese government to be able to handle that and a large part of this is being
00:13:12
driven by a number of crises that Japan has faced since the early 90s so there was the financial crisis in 08 there was
00:13:20
the nuclear uh meltdown there was a couple of earthquakes tsunamis and a lot of debt has been taken on to support the
00:13:28
country after those crises but really importantly and Nick if you could just pull up this age chart is the Aging of
00:13:34
the Japanese population so this chart shows that and you can kind of see back to 1950 when the average age in Japan
00:13:41
was 21 years old and today the average age in Japan is around 48 you know in the next decade it'll be 50 then it'll
00:13:48
be 52 so that means more and more people are relying on public pension today 33%
00:13:55
of their government spending goes towards their social Security Programs in the US for comparison Social Security
00:14:01
is about 20% of federal spending so that number is only getting bigger and bigger
00:14:05
as the population ages the Japanese government has to continue to service their older population and they've had
00:14:11
to face several crises their debt has ballooned to a level that is well beyond any other industrialized nation and the
00:14:18
only way to continue to service that debt economically is to keep interest rates low and the problem with keeping
00:14:23
interest rate low inflation and that's the big driver that caused them to say let's uptake the interest by 15 bips or
00:14:30
25 bips is to try and tackle the inflation problem they're facing just like our Central Bank recently tried to
00:14:36
do the same but clearly the market can't have it so Japan isn't a real pickle and
00:14:41
I think that it shows how much having a large amount of federal debt can impact the ability for a nation to maneuver
00:14:47
itself during difficult times and ultimately debt payments come due they come to either in the form of economic
00:14:56
contraction or massive taxes or inflation and currently Japan is paying for it in terms of inflation sorry
00:15:03
you're saying Japan has inflation Japan has no inflation the government raised rates to tackle
00:15:08
inflation I'll pull up the inflation chart Japan's inflation hit a 40-year high and this just shot up in the last
00:15:15
18 months inflation is running at uh close to 4% a year and so they're setting freedberg the interest rate in the
00:15:24
country and they own the debt so they are basically in control of or they're manipulating the economy and trying to
00:15:32
control it correct freedberg well their Central Bank has to buy most of the debt
00:15:37
and their Central Bank sets the rates so they have a large amount you know 53% of
00:15:42
their feder of their public debt is held by their Central Bank and if they don't
00:15:46
pay a high interest rate then people don't buy future bonds if they do raise it they have to pay that rate so this is
00:15:52
the conundrum freedberg if I were to summarize it well yeah while rates are low you see this you know particularly
00:15:57
in a market like we're facing today where there's Global inflation they need to raise rates in order to reduce
00:16:04
inflation the problem with raising rates is this this you know this currency problem but also buying the debt chamoff
00:16:10
is you know who's buying debt if you're not getting anything on the coupon correct that's another challenge they
00:16:16
face in Japan is that there's a famous quote from an economist Simon KET who said there's four kinds of countries in
00:16:22
the world there's developed countries undeveloped countries Japan and Argentina [Laughter]
00:16:29
and I think the reason he said that is that J Japan has been in the state since the 90s so they had a massive property
00:16:36
and Equity bubble collapse and they've not had to deal with anything that looked like typical economic issues
00:16:44
since then and part of it is because the government plays a very big hand in the
00:16:47
Japanese economy there's a lot of price controls there so I don't know I'm not sure what it is that we can learn there
00:16:54
that you can extrapolate to the rest of the world yeah it is a very unique Sachs
00:17:00
geography and economy so Sachs your thoughts on this overall and what we can expect maybe you could take the future
00:17:06
looking forward looking and prediction crystal ball go ahead so I think freeberg is right that the reason why
00:17:12
the Japanese Central Bank tried to raise rates I mean just by a tiny amount was because they are dealing with inflation
00:17:18
if you look at that inflation chart and you go back to when their inflation was Zero roughly in 20120 the exchange ratio
00:17:25
between the US dollar and the Yen was about to one meaning one1 US dollar could buy 100 yen now it's at roughly
00:17:32
150 Yen to the dollar so their currency has massively depreciated over the last several years and a big part of the
00:17:40
reason why is because again their Central Bank is offering roughly zero and you can earn 5% in US bills so
00:17:49
people are basically moving their money to countries that pay a lot more on their bonds and they're even borrowing
00:17:56
Yen like we talked about selling the yen to then buy Australian dollars or US dollars to invest the money there so
00:18:04
there's huge downward pressure on the value of the Yen and the the way this creates inflation is
00:18:11
that Japan is a is obviously an island that has very few natural resources and it has to import all of its oil so it
00:18:20
has an advanced economy but it needs to import a lot of resources and so as its currency depreciates the price of all
00:18:26
those Commodities goes up and this is why you're seeing inflation in Japan now when the Central Bank tried to solve
00:18:33
this it created huge Jitters in the financial Market because it was starting to unwind the whole Yen carry trade
00:18:39
which is something like 20 trillion so the the bank of Japan backed off and you heard the the Japanese
00:18:46
Central Bankers said we can't raise rates while it would create instability in the global markets we have to wait
00:18:52
until it's stable but the problem is that raising the rates and unwinding the Yen carry trade creates the instability
00:19:00
so what they're saying is we're never going to be able to raise rates and the result of this is going to be more
00:19:05
inflation in Japan their currency is going to continue to depreciate you know they've been unable to defend it and so
00:19:12
what I would expect is that the US dollar is going to keep buying more Yen it's going to go from I don't know 147
00:19:20
150 some bigger some bigger number it's one huge upside to this Sachs and who's going to pay the price here is the
00:19:27
Japanese consumer because because everything's going to cost a lot more yeah and that was you know obviously
00:19:32
when the when you get 158 Yen to the dollar this is extraordinary I was talking with Tucker
00:19:39
and we just took our NCO ski trip this year from four days to seven because it is just such a great deal so it'll be
00:19:46
good for tourism because yeah you'll be able to travel to Japan much more cheaply but if you're if you're actually
00:19:52
Japanese and you live in that country you're going to see your purchasing power continue to erode so I would
00:19:56
expect big domestic problems in Japan and eventually they may conclude that this system does not benefit them now
00:20:04
who does it benefit you could argue that it benefits the United States because it
00:20:08
has subsidized the purchase of our debt right because again so so you have this Yen carry trade of 20 trillion and a lot
00:20:18
of that has gone into US bonds or us T bills right and so it basically is a huge subsidy to the US treasuries need
00:20:29
to continuously issue more and more debt we're issuing what a trillion dollars of
00:20:34
net new debt every 100 days so having the Japanese consumer subsidize all of this by taking it on the chin you know
00:20:42
in terms of inflation in order to provide this Yen carry trade you could argue has been very beneficial to the US
00:20:47
Treasury and chamath at some point the you know the percentage of your debt to GDP you know we've talked about it so
00:20:57
much on this show you've said pre iously hey you know we can have a little bit of
00:21:00
this uh because we're a very strong dollar so when you look at Japan is there some lesson here for the US or you
00:21:07
know maybe some uh warning here that we we shouldn't necessarily follow them too
00:21:11
far down this road nope okay keep printing money got it okay well I don't know I mean I I I tend
00:21:19
to agree with freeberg here that when you have massive amounts of debt it definitely limits your flexibility it's
00:21:25
just arithmetic you're going to pay for it with either economic contraction higher taxes or inflation those are the
00:21:30
three places it goes yeah and they and they did test it they've stress tested now yeah one of the reasons why Japan
00:21:38
can't raise rates is because their debt will become even more expensive right I mean freeberg isn't
00:21:44
that part of the problem yeah that's exactly right and then their federal spending gets compressed because now
00:21:51
they have to service that debt again they're already spending 25% of their federal budget on servicing existing
00:21:57
debt with the low interest rate and they've got to support an aging population okay so so to analogize this
00:22:02
the us our our debt service costs are what what are they at now like well over a trillion we're about a trillion a year
00:22:08
with a proposed 7.3 trillion budget so we're at 13.6% and Japan over the next 10 years isn't our
00:22:17
debt service supposed to rise to yeah as all of the as all of the low interest Bonds mature and we issue new debt at a
00:22:25
higher interest rate our debt service cost is going to continue a climb it's already higher than discretionary
00:22:30
military spending at over a trillion a year well just buy Bitcoin and when it goes to a million dollars a coin we can
00:22:36
just pay it all down so problem solved just one other point is I think it shows the fragility of the Global
00:22:42
Financial system I mean the market snap back as soon as the the bank of Japan backed off basically capitulated said
00:22:50
okay fine we can't we can't defend our currency we're just going to let it keep depreciating we're going to let
00:22:55
inflation keep raging as soon as they declared that then the market snap back but it just showed in that 24 hours
00:23:02
putting aside like all the Panic porn that was on social media because I think that was overdone it still showed how
00:23:07
fragile the global economy is the the Yen carry trade has injected roughly 20 trillion dollar of liquidity into the
00:23:15
global economy and that is propping up all sorts of things right and that is subsidizing US Government debt and you
00:23:22
just wonder if the Yen carry trade were to end because let's say for example the
00:23:28
Japanese people don't want to experience hyperinflation then what would that do to the global economy it just showed how
00:23:34
rickety the whole system is I think it shows how much leverage there is in the system totally that's what it is it's
00:23:40
all about leverage okay let's talk about leverage for a section shamal leverage on Leverage on Leverage so for example
00:23:46
like if you take something like Citadel runs about $50 billion and they have extremely precise Risk Management
00:23:56
Systems they're the best in the business but as a result of that they are so systematically important to make the
00:24:03
financial Machinery run properly that as they're inspected and as they prove that
00:24:08
they have very good risk management they're allowed to lever up to incredible levels you know 15 16 17
00:24:15
times so I think that Citadel with the 50 billion of capital that an investors have given them is probably running a
00:24:22
trillion dollars on a daily basis in the markets Renaissance Technologies same situation
00:24:28
Millennium same situation a bunch of these funds that sit inside of the large Banks same situation so when you add it
00:24:36
all up you're probably talking about a few hundred billion dollars of notional Capital that's enormously lever that's
00:24:45
what causes the that sensation as sack said that things are rig so should we have more increased regulation or
00:24:52
increased scrutiny on this chat you've talked about it before when we had some of these hedge funds flip and we talked
00:24:56
about maybe some regulation yeah we have a lot of regulation on banks essentially
00:25:02
what happened is after all of the chaos of the great financial crisis the thing that we don't talk about is what we
00:25:09
really did was keep running the same if not more risk we just took it off balance sheet so the banks were able to
00:25:16
structure business lines to work with these hedge funds and these hedge funds in turn were able to show overtime that
00:25:24
they're so tightly managed that there are no Black Swan events that could happen
00:25:28
that they can run highly leverage so I think we are in this moment where there'll be these fissures from
00:25:38
time to time so here's this bill hang that's an example the carry trade is another example there there have been
00:25:45
examples a couple times a year but at some point these folks will have taken too
00:25:51
much risk and we'll look back on it and we'll think that hedge funds should probably have been more regulated than
00:25:58
they are with respect to their leverage ratios not with respect to their strategies with this particular trade JP
00:26:05
Morgan yesterday or a few hours ago said that they think about 75% of the Yen carry trades have now been Unwound and
00:26:12
it was at 50% a little over a day ago so the market has moved to kind of unwind these trades it seems and we're pretty
00:26:19
much at the end of The levered Fallout of this particular activity so I put the link and so people at home understand
00:26:30
why we move on to the to the to the next phase of the financial markets all of those people had to cover those trades
00:26:36
which means they all have to sell assets at the same time as buying in or covering the n and that's what causes
00:26:42
this acute chaos in the markets where you saw the NASDAQ go down 6% or in some cases maybe people wanted to take some
00:26:47
chips off the table since things were high yeah they going to put that trade back on in fact now is even better time
00:26:53
to put that trade on because the bank of Japan's basically just capitulated and said that they can't raise interest
00:26:59
rates while things are so unstable so we know they're just going to keep rates where they are so if I was one of these
00:27:05
Traders I put the trade back on now right so let's talk about the landing here in the US let's get us
00:27:12
Centric now and it looks like maybe it's going to be a bumpy Landing rather than
00:27:17
a soft Landing as one might suspect and as we talked about here that we think this could be bumpy to soft July's job
00:27:25
reports was pretty bad which is good some ways when you're thinking about inflation so the new jobs added were way
00:27:32
down growing 114,000 here in July and a bunch of these estimates have been reported downward uh over the past year
00:27:41
just so we make a note of that and this was below the Dow Jones estimate of 185,000 there's her chart it just keeps
00:27:48
ticking down you know since the FED started hiking rates and you hear anecdotally
00:27:54
about all of your friends 88% of Millennials right now are actually preparing to be laid off according to a
00:28:01
recent survey unemployment is way up in the short term here we're at 4.3% in July that's the highest since October
00:28:10
of 2021 up from 4.1% last month and 3.5% in July so you take that July number to now it's pretty
00:28:18
significant here's your chart on the jobs obviously historically it's low but it's ticking up pretty quickly which is
00:28:25
what you would expect with the rate hikes and we had this great moment of hourly
00:28:30
earnings growth going up so how much people make on average per hour was going up and and I think that was
00:28:36
causing a decent amount of the consumer enthusiasm in the economy here it is it's coming way down from almost 6% down
00:28:45
to three and a half and so that means Fed rate cuts are coming here's your chart uh from
00:28:53
prediction Market of the chances of how much the Fed Cuts rates this year looks like 75 to 100 basis points is the
00:29:02
majority about 60% of people believe will be one of those two numbers I'll stop there there's a lot more to talk
00:29:09
about here and we'll get into specific companies and the NASDAQ yeah let me pull up this last chart before I go to
00:29:13
eachof it's been a strong year for the market uh S&P and NASDAQ both up 11% year to date as of Thursday morning but
00:29:21
obviously a massive I guess do we call it a correction when it's yeah 20% is correction territory chamal
00:29:28
so your thoughts on The Wider US market and the selloff I think we're in a low-key recession so I think that we're
00:29:37
going to probably go through a couple of very difficult revisions of old data the
00:29:43
thing to remember about non-farm payrolls isn't as much what the number is but if you actually look to the
00:29:49
number of times it then gets revised the reality is that these things get revised
00:29:54
constantly and right now we're in this trend Where We Are overestimating and revising down Saks mentioned this that
00:30:01
that was the same with GDP so we are I think in a tough situation and then what you're seeing is folks that run very
00:30:11
cyclical businesses are telling us in very plain spoken English that demand isn't there so the one that was
00:30:18
interesting this past week Jason you mentioned Millennials but like Airbnb where you think all these young people
00:30:24
are running around yoloing what whatever cash have Airbnb had a massive warning on
00:30:31
demand so when I think the excess Capital whether it's the steamy check or what have you has been exhausted you're
00:30:39
now starting to see a bear out in these cyclical businesses I don't think the demand is there I think we're in a
00:30:47
recession it probably becomes more obvious in Q3 and Q4 and so Powell's going to have to cut the question is
00:30:56
will he overreact the pressure and cut 75 to 100 versus 25 and take it slow okay freeberg technical
00:31:06
definition of a recession is two quarters in a row of negative GDP we haven't had that but we're sort of
00:31:12
bouncing along that possibility is the recession baked in or if they cut rates at the extent the prediction markets are
00:31:21
predicting and they're signaling do you think we have a nice rebound how do you feel about the overall US economy
00:31:28
obviously you have to account for inflation and government spending how much of government spending is driving
00:31:36
economic growth today the US is proposing to spend $7.3 trillion next year out of $25 trillion
00:31:47
GDP so the US federal government is roughly 30% of GDP and we obviously still are tackling
00:31:56
inflation the real question is how much of the economy is growing because of productivity gains in the sector of the
00:32:06
economy where people are making things and doing things versus the government using its ability to tax and borrow to
00:32:14
drive growth in the economy by inflating numbers by pushing Revenue onto businesses by pushing Capital into the
00:32:20
markets by creating levered trades in the markets using their um borrowing capacity and their taxing capacity so
00:32:28
that's the thing I remain concerned about I I mentioned this last week I remain highly concerned about many
00:32:33
sectors of the economy that are deeply challenged right now particularly the industrial sectors manufacturing sectors
00:32:40
the agricultural sectors but um services and software sectors where you can raise
00:32:44
prices and you have a nice high margin business you can continue to to grow and and look good but there are many parts
00:32:51
of the the global economy and the US economy that are pretty challenged right now saak let's talk about uh uh this
00:32:58
soft to bumpy Landing consumers are definitely weaking on the low end Airbnb and Amazon are
00:33:04
example of bargain hunting people who are looking for discounts who want to save money with those Services
00:33:10
higher-end services that have a bigger price tag like uber and some of the high-end retailers are showing actual
00:33:17
growth and they're saying the consumer strong so it was A Tale of Two Cities during this earning season with a bunch
00:33:24
of the high-end folks saying strong consumers on the high-end weak consumers on the low end
00:33:28
what are the chances we go into a recession and you know second question for you Elon was recently on Lex Freeman for
00:33:36
I think eight days or something it was like a record podcast of how long he was on but one of the things he talked about
00:33:41
was that he had discussed with Trump and VC has been very strong about this on our podcast and other places and he was
00:33:48
a leading VP candidate of making the government more efficient and radically cutting the amount of spending but there
00:33:55
would be a reaction so does the potential GOP Administration have a platform to cut costs massively or not
00:34:02
and do you think that you know that would have been maybe too unpopular to to sort of unveil
00:34:08
that plan now as a as a presidential candidate in either party I don't think they have that plan specifically because
00:34:15
I just think that you would need you would need a super majority in Congress to do something like that and I just
00:34:20
think that this election is going to be too close regardless of who wins to provide that kind of mandate I mean
00:34:25
sadly I think we do need to get government spending under control but I think it's a long-term political problem
00:34:30
and I just think our political system doesn't have the will to fix it I I do believe Republicans would be better than
00:34:35
Democrats on that but I think that's the truth of it to go back to your first question on the state of the economy I
00:34:42
had lunch with a very prominent investor yesterday who's very plugged in with the
00:34:47
hedge fund community and he said that the sentiment shift you know I'd say again within
00:34:53
hedge funds professional investors Public Market investors had been very sudden that people were now very worried
00:35:00
about the risk of a recession and and I do think that the Airbnb Revenue that Shas cited is a big
00:35:08
factor airbnb's stock went down 15% in in one day on soft demand and what's driving all of this is is consumer
00:35:15
weakness or at least fear of consumer weakness you mentioned the rise in unemployment it went from 4.1 to
00:35:23
4.3% month over month so 4.3 is still a pretty low number by historical terms but to jump so much in one month that's
00:35:32
a pretty big increase and then of course it's up from 3.5% a year ago so we're seeing pretty big increases in 10% year
00:35:41
over year 5% month over month is very significant you yeah so these are big changes There's real evidence of of
00:35:47
consumer weakness and I think professional investors are are getting quite worried about uh the risk of a
00:35:53
recession and I guess just one last point on this is that if you were to remove the impact of
00:36:00
government spending it's pretty clear the private sector is in a recession I mean like we've been talking about
00:36:06
government's been going hog wild with spending we have the government is running 6% of GDP deficits uh the the
00:36:14
latest Q2 growth number was something like 2% so if you force government to live within its means and to cut its way
00:36:21
back to balance we would definitely be in a recession we' have a negative growth rate uh so I do think that the
00:36:27
econ is looking pretty shaky all of a sudden uh whether we actually tip over into recession in the next few months
00:36:33
I'm not sure all right well listen I want to Corner everybody here with a question you got to answer the question
00:36:37
you you can't uh avoid the hard questions here on the Allin podcast chamath sitting here a year from now
00:36:43
market up or we experience a recession defined as two quarters of negative GDP which one is the more likely scenario
00:36:51
market up or a recession give it a percentage or just which is more likely fre your next those those are those are
00:37:00
not opposing things so you're saying a year from now I don't I don't honestly know okay but I do think that we'll
00:37:08
probably be in a technical recession okay so you lean towards I'll just go recession no recession in the next year
00:37:15
but I also think that there's a pretty decent chance the market will be up ah got it okay so we could have a recession
00:37:21
but the market goes up so to unpack that I am with you on that same prediction because I do think people are addicted
00:37:27
to to efficiency they're going to lay people off and earnings are going to keep ripping as these companies become
00:37:32
managed so well that's a small percentage of the economy Jal that's a few tech companies but much of the
00:37:38
manufacturing sector the industrial sector the a markets like there's a lot of markets where you don't have this
00:37:42
option to just cut knowledge workers the knowledge worker economy the software economy has the ability to do that the
00:37:48
tech economy can do that but much of the rest of the economy doesn't have a lot of maneuverability like we do in this in
00:37:55
this fast growth high margin kind of industry we work in I think it's a good point but I do see McDonald Starbucks
00:38:01
and some of those consumer retailers are taking steps right now to rightsize their businesses and offer $5 meals or
00:38:08
$3 coffee so I do think there's a shi in management and how they run these companies that's about reduced forecast
00:38:15
right so when their revenue decline when their revenue forecasts have to be cut they have to cut headcount that's
00:38:20
different than creating more efficiency well they're also cutting stores and they're cutting things and projects that
00:38:26
are inefficient I just think there's going to be massive efficiency in all sectors that's going to be the theme for
00:38:30
the next year but I mean it's obviously that's a loss of jobs and a loss of growth right so just to be clear when
00:38:35
you cut stores you have less growth when you cut jobs that's because you don't have as much revenue growth so those are
00:38:40
about earning can go up right they can be supported but you're still facing contraction and you know one of the
00:38:47
challenges right now a lot of food companies a lot of retail companies have been raising prices to try and keep
00:38:52
earnings going up but there's hitting this natural inflection point where consumers no longer Buy where you find
00:38:58
this Tipping Point I don't know if you guys have been to the supermarket lately but man it is crazy expensive how like
00:39:05
prices have gone up like 50 to 100% un like everything at the supermarket and this is like it's
00:39:11
basically imposs we can deal with it but like a large percentage of people this is a big deal in terms of like now you
00:39:17
have to budget your life and you spend less Nat and I when we're here in Portofino we go in the morning to the
00:39:24
fish monger and we'll buy you know fish with the family it is unbelievably expensive and you know we always think
00:39:31
to ourselves how is it possible that folks can actually choose to eat healthy and local if they want to it's waso What
00:39:39
was a whole fish tell us you know like you want to have like locally caught Soul it's like 48 a
00:39:48
kilogram wow okay and like it's expensive and W it's more than a restaurant so to feed a family
00:39:57
seven which is what we are you'll have to spend you know $150 $200 it's not sustainable it's
00:40:05
not something that can that makes sense for enough people anymore because that probably used to be 40 bucks or 30
00:40:13
bucks but freeberg is right like we're in a real serious problem because it's it's like these systems have remained
00:40:21
the way that they have been for a very long time and while other Industries like the tech industry have captured all
00:40:29
these incredible efficiencies but the problem is that then these other Industries are what supports everyday
00:40:34
people's everyday lives and in the absence of a way to actually reduce cost and improve quality you end up where we
00:40:42
are today and I don't think that that's sustainable freberg greater chance of a recession in the next year or not a
00:40:48
recession you have to give an answer yeah I think there's a great chance of a recession okay majority chance of
00:40:53
recession got it but I do think that there's going to be a government program to mitigate the effects meaning you
00:40:59
could see the markets the equity markets continue to Rally okay on some of the government programs and government
00:41:05
activity which has become kind of like the learned behavior it's like pavlovian it's like we we have a we have an
00:41:12
economic problem the government step the government steps in and spends money let
00:41:15
me get an answer from saaks the reason why the markets could rally in the midst of a recession is because interest rates
00:41:20
get cut we've already seen that the expectations of rate Cuts have now grown substantially the markets are starting
00:41:27
to price in 100 to 150 basis points of rate Cuts this year where before it was more like 25 to 50 basis points so
00:41:36
obviously lower interest rates make stocks go up so I think that's the the main driver of the rally you're seeing
00:41:42
right now jcal not the prospects for increased efficiency because I think you know those prospects were already there
00:41:48
so are you majority case recession or majority case not recession in the next year I've been predicting recession for
00:41:54
like three years now because I just think when you jack up interest rates so suddenly so violently you get recession
00:41:59
so I guess I if I had if you put me down I'd say I recession and I'll tell you one of the reasons one of the reasons
00:42:06
why interestingly I've just checked the notes saaks you predicted five of the uh
00:42:11
nine of the last five recessions I know I know look it's the same recession that
00:42:15
I've been predicting it's very simple when you jack up interest rates from near zero to five and a half percent
00:42:21
that makes everything much more expensive unless unless the government spends money which is the counterbalance
00:42:28
right and that's a lot of why governments and and by the way I have a theory on this I think this is also why
00:42:32
we have an open border policy or why um the current Administration has pushed an
00:42:36
open border policy because that can also be deflationary to counteract the effects of the interest rate acrel
00:42:42
because of lowers wages overall and fills jow wages it increases the workforce Etc creates more competitive
00:42:48
Workforce but no one's allowed to publicly say that and I do think that that's one of the primary motivating
00:42:53
factors of having an open border policy well people have been saying it I think you just did it's well said if you look
00:42:59
at job creation over the last four years there's been no net new job creation for
00:43:05
native born Americans all the job creation has been foreign born or because native born Americans have too
00:43:11
high of a wage expectation that's the fundamental problem right too affluent I agree I don't think it's too high right
00:43:16
and I'm not making an argument one way or the other I'm just highlighting I think that this is one of the motivators
00:43:20
for the policy I think it'd be a lot better to let their wages rise but in any event let's not get political on it
00:43:25
just to the point about recession Jason yeah look I've been predicting the same recession but I think one of the reasons
00:43:32
why it might finally come now first of all you've got a lot of investors are suddenly worried about it there's been a
00:43:37
big sentiment shift I think the other thing is I don't think we know all the bad news yet unknown unknowns yeah well
00:43:45
none of us were tracking the Y carry trade like very I mean it was something we may have heard of but it's not like
00:43:50
we were actively thinking about it until this past week and the question is how many more things are out there like that
00:43:56
and I also think that the pattern with this Administration has been to hide the ball they hid B cility for years not to
00:44:04
get political though SX you just said not to get political not to get political b b by say yeah not to get
00:44:11
political but B this is just a fact look it's not political I was about to give him an award for saying not to get
00:44:17
political moving on I'm making an economic Point here actually and you guys can decide if I'm
00:44:23
just being partisan or whether I have a good point here which is look I think Theo of this Administration has been to
00:44:29
hide the ball and any good news they would have reported do you think that they were reporting all the bad news I
00:44:35
don't I think there's more bad news that's going to come out after the election because there's too many
00:44:39
incentives for people to to hide it and for people who don't know we're talking about the concept of black swans in
00:44:44
order to have a Black Swan it has to be something you're not aware of and it has
00:44:48
to be have a dramatic impact the Yen trade would not fall into this because people were well aware of it even if it
00:44:54
wasn't front page news and it didn't have a dramatic impact but there could be Black Swan sitting there obviously
00:45:00
the Black Swan that you can think of recently would be in the great financial crisis the subprime mortgage that truly
00:45:08
was massively impactful and it was not known do was known and was massively impacted you need both of those
00:45:15
categories to define a Black Swan and there could be black swans right sax is what you're saying when you said that
00:45:20
the Yen carry trade didn't have a big impact that's because the bank of Japan backed off so if they kept going with it
00:45:26
we don't know what the impact would have been correct but it didn't so just so people who are tracking the Black Swan
00:45:32
tracker just the more you know let's talk about Apple chath I'll give you your flowers right now uh they're coming
00:45:38
to you just look to your left here comes a huge bouquet because you predicted I didn't actually send you flowers he
00:45:44
looked to his left but uh here's your virtual flowers you predicted I think absolutely correctly that the less
00:45:54
Berkshire Hathaway and Buffett talk in their documents and their letters and at their uh events about a trade the more
00:46:04
they're falling out of love with it and I understand birkshire Hathaway has sold
00:46:09
half of their largest position which is Apple some people are saying because they don't have faith in the company
00:46:14
some people are saying because they're overweighted other people saying because they freeberg want to get more cash on
00:46:21
the books to make other Acquisitions so chamat your maybe just take your Victory
00:46:26
lap and then we'll I think freeberg double clicked on this and did a deep dive I don't have much to say I mean I
00:46:31
think it's been a trend in their letters when he stops mentioning a company in his letter it's because he's selling
00:46:40
it's a great uh great ra there it is yeah and that's what happened here okay so freeberg take us through this well so
00:46:47
it looks like since the start of the year they've sold 55% of their Holdings in apple and if you look at the end of
00:46:54
the year Nick if you could pull up this image with the pie chart this is what berkshire's stockh Holdings were in
00:47:00
their non-majority owned uh businesses so businesses that they don't own the business outright and 50% of their
00:47:07
portfolio was in Apple at $174 billion we obviously saw Apple's uh stock price Peak highest level ever just a few days
00:47:17
ago but it has since come down as it was reported that since the start of the year now Berkshire sold 55% of this
00:47:25
position so some people are arguing that they've got a point of view on the company strategy and compet competitive
00:47:32
kind of landscape some folks have argue that the valuation multiple has gotten too high trading at nearly 30 times
00:47:38
earnings the stock has risen 900% since Berkshire bought the stock in 2016 nine bagger nicely done yeah and some people
00:47:46
would argue that the percent of the portfolio is too high at over 50% as you can see here at the start of the year
00:47:54
but you know I'll kind of provide some of the counterarguments you know Warren Buffett does not do much analysis on
00:47:59
corporate strategy when he provides reviews of the stocks that he's picked he often finds and talks a lot about
00:48:05
great managers that generate great returns and he sticks with them and he sticks with them sometimes for many many
00:48:11
decades the management in this company has not changed the return profile on cash invested and cash returned has only
00:48:17
improved since he put money in they're generating more cash flow they're offering more dividends they're doing
00:48:21
more stock BuyBacks and he's happy to be concentrated over the years he's made large bets on single companies to the
00:48:28
point that sometimes he just outright buys the entire company like he did with Geico in 1996 he always talks a lot
00:48:34
about finding a company that is run by great managers that has a premium product with a nice high margin and a
00:48:39
durable moat strong brand value as I look at kind of what's really gone on here it feels to me like the difference
00:48:47
between Apple and some of the other big Holdings in his portfolio is that many of those other businesses are regulated
00:48:53
monopolies so BNSF Railway is regulated by the Federal Railroad Administration Berkshire energy which owns MidAmerican
00:49:00
is a regulated utility the prices that they charge consumers are set by the government so they have a market that's
00:49:05
locked in the prices are set they have locked in distribution they have locked in utility value and the same is true in
00:49:11
the insurance business Geico's rates are approved and set effectively by state Regulators Berkshire has a moat because
00:49:18
they've got the largest Capital base and they've got this machine that just keeps
00:49:21
generating cash and the rates are publicly set by government Apple however is not regulated and it is very clear
00:49:29
that apple is facing very deep and severe Financial impact from the regulatory authorities that are
00:49:34
overseeing the business so if you look at the Google antitrust we're get into the Google deal in a second yeah there's
00:49:39
a real regulatory risk there because Google's paying Apple 20 billion dollars a year to be the default search engine
00:49:45
Apple also has a very deep relationship with China they have a lot of manufacturing being done in China and
00:49:50
they sell a lot of product into China so as Regulators start to take a harder look as they've said they're going to at
00:49:56
company's relationships with China that's a real risk to Apple advertising tracking users and then the subscription
00:50:02
fees that are charged to Consumers and most importantly we've talked a lot about the 30% Vig that Apple takes on
00:50:08
their App Store and how Regulators are now stepping in and take a look at this so because this business is not yet a
00:50:14
regulated Monopoly it may be a monopoly in many senses of the word it's not regulated yet and that transition could
00:50:20
be financially painful for Apple once they get to the other side it starts to look a lot more like a large scale
00:50:25
Burkshire type business so that that's my kind of summary take on what's going on with apple I don't know if you guys
00:50:31
agree I don't know I think it's pretty deaf uh Sak your thoughts on this massive increase in cash and what
00:50:36
Berkshire hathway is thinking what is Warren Buffett thinking here is it this became he became overweight apple or
00:50:43
that he's building up cash because the recession's coming he wants to buy things on the cheap well or regulation
00:50:48
to free BG's point when we had this Global selloff on Sunday Monday a lot of people were sharing this chart online
00:50:55
and pointing out that buff it was sitting on this gigantic cash pile by far the biggest cash pile that he's ever
00:51:00
sat on we then had a market recovery so people aren't really talking about this but it does stand to reason that Buffett
00:51:07
is building up a a war chest here and he's somewhat defensively positioned you can see that you know was it like 2021
00:51:15
22 the cash pile went down because he started making a bunch of Investments now the cash pile is really high so it
00:51:23
seems logical to infer that he thinks thinks that the risk reward right now is is not great on public equities and he
00:51:32
is um again he's just a little bit more risk off what do you think of the regulatory risk argument freeberg is
00:51:39
floating here chamama I think that David is right that freeberg is right that the
00:51:44
China thing could have impacted it but because he also sold a lot of byd which they've owned since 2008 I
00:51:54
think so you know that's a Chinese company and so it could be just that that could have played a part to be
00:52:02
honest I don't know so wait you're saying China dependency both of those have a China dependency so he maybe felt
00:52:07
the overall portfolio had too much China dependency maybe yeah I could buy that that seems like reasonably logical I
00:52:13
think the thing to remember though is that these decisions I think have been stewing for at least a couple quarters
00:52:22
remember like you know that letter that he writes was not written yes yesterday right that was being drafted months and
00:52:29
months ago so these decisions were made or even longer so I think these decisions were made a while back another
00:52:38
reason if we're going to play kind of conspiracy theorist is like you know after the death of Charlie Munger maybe
00:52:46
what he's starting to do is consolidate the book so that it can transition elegantly to Greg AEL when Buffett
00:52:55
passes away and so that could be another let for a second So when you say that you're
00:53:01
saying he wants to hand it off with less risk in it so a dependency on one stock
00:53:06
would be risk a dependency on China would be risk he wants to make it really clean so the handoff is smoother he
00:53:11
wants to handoff a very organized book or maybe he and Abel he and Greg Abel have already talked about the kind of
00:53:18
risk book that they want over these next 5 to 10 years and it reflects a discussion about what the incoming CEO
00:53:27
wants it could so there could be all kinds of reasons why I don't I don't really know I just think that Apple just
00:53:36
back to free Berg's core thesis I agree with many of his General points I'm not sure that they affected the Brookshire
00:53:43
strategy but apple is sort of a little bit Wayward it is a company with an effective and unregulated Monopoly or
00:53:52
duopoly that doesn't really know what to do and I think that that's the biggest problem with that company and that's
00:54:00
independent of Buffett selling now or selling a year from now or having not sold the year before once you're
00:54:07
regulated you know what the prices are you know what you can do you know where you can go and all that risk is off the
00:54:13
table that's what is a feature of all of those other monopolies he owns is that the government has a role in it highly
00:54:20
predictable business by the way and you mentioned the Google thing but this clearly was not part of his calculus I
00:54:28
think he just got very lucky but if you're holding Apple today I think you have to take the20 billion that Google
00:54:37
pays you every year which comes in at 99% margin and you should probably sensitize the value of Apple for not
00:54:46
having that 20 billion if this antitrust ruling against Google stance yeah that alone could be worth upwards of half a
00:54:54
trillion to a trillion dollars to depending on what multiple you want to put on that 20 well I mean what's crazy
00:55:00
is the Apple Apple still still up to 214 which is 11 12% higher than it was at the start of this year at 185 the
00:55:10
stock is just coming off of its all-time Highs at 230 a share so it's just barely
00:55:15
off the all-time highs I mean this is just an extraordinary amount of cash to be held by both Apple Apple's you know
00:55:21
also has over a 100 billion in cash now Warren Buffett has close to three 100 billion allocators want to make trades
00:55:29
and they got a better obviously he's got a better trade I think he can make on this whether that's the 5% he's going to
00:55:34
get on the 300 billion or maybe there's something he wants to buy that's another
00:55:38
possibility so uh great job wrapping this all up and let's pivot to the federal judge that ruled that Google has
00:55:46
legal Monopoly in Search and advertising this is huge news perhaps this is the biggest news in the tech industry for a
00:55:53
couple years on Monday a judge ruled that Google had acted illegally to maintain its Monopoly in online search
00:56:01
if you remember this was filed under the Trump Administration in 2020 uh by the do the 277 page ruling agrees that
00:56:10
Google abused its search business Monopoly by paying billions of dollars to third party platforms like Apple and
00:56:15
Samsung in order to be their default search engine so it's not just that you have the Monopoly it's how you maintain
00:56:23
the Monopoly uh this is called Tac traffic acquisition cost we've talked about it here many times according to
00:56:29
the suit Google conducts around 90% of web searches I think we all know that companies disputing that
00:56:35
claim the ruling doesn't contain remedies yet for Google's Behavior they're going to decide that in a
00:56:42
subsequent ruling obviously Google is going to fight this it could result in a change in business practices I.E they
00:56:49
cannot pay fire fox Samsung Apple to be the default search engine anymore that will lead to many interesting
00:56:56
possibilities uh jamat and I were discussing them on X and so this is huge news uh this is going to be great I
00:57:05
think for the search engine Market I know Apple from my time doing Maha Mahalo a human power search engine over
00:57:12
10 years ago when I sent it to Steve Jobs he opened it up in the middle of the night and started playing with it
00:57:17
and there were many reiews of or many rumors of Apple wanting to be in the search business because they had
00:57:24
a contentious relationship with Google obviously when Google competed with Android that upset Steve Jobs greatly
00:57:32
and also Google created Chrome which also Safari and chrome competing with each other it's not out of the question
00:57:40
I think chth that you could see apple when they lose this 2030 billion doll deal for TAC to start their own search
00:57:49
engine buy duck ducko Brave has an amazing search engine and a search API and they've obviously they've got a
00:57:56
crawler so people don't know this but apple has a crawler my prediction is Apple buys a search engine and they go
00:58:02
it alone and expand their advertising Network like Amazon Uber and other companies have what's your take on this
00:58:07
and what we're going to see in the future will this ruling stand up and then what are the downt market
00:58:12
impacts I think that this Google thing is the most important thing that's happened in Tech since the Microsoft doj
00:58:25
decision in 20 000 Internet Explorer yeah yeah because if you if you go back to that consent decree in 2000 it
00:58:32
essentially handcuffed this incredibly for boing company for more than a decade while all kinds of
00:58:40
Innovations happened so they missed out on two huge waves right Microsoft essentially missed out on social and
00:58:47
then they missed out on mobile largely as a result of that consent degree and then they were able to catch up and
00:58:53
embrace SAS and the clouding amazing but there is this small o outcome here which is
00:59:02
essentially a consentire where Google gets handcuffed for some number of years and it creates
00:59:10
a couple of big waves of innovation of new companies that can succeed that may not have otherwise been able to
00:59:19
succeed in the absence of such a consent agreement and a good example of this would be the AI power search experiences
00:59:27
that you're starting to see whether it's from open AI or perplexity or a few of these other folks the Big O outcome
00:59:36
though is more if you go back to the Mel kind of thing where the company gets broken
00:59:43
up I think that the odds of that are extremely unlikely so I think the Big O outcome is probably something that you
00:59:51
can pretty safely take off the table I think it's going to be a little low outcome
00:59:56
but the point is that there's a distribution here between these two things that this judge will be in
01:00:01
control of and I think that again again I'm just guessing I think both the Democrats and the Republicans will
01:00:10
really support whatever happens here and that's not necessarily because I don't think that's necessarily because
01:00:18
they have a bone to pick with Google I think that you know they have bones to pick with other companies more than
01:00:24
Google but I think that it it starts to set the tone for being able to check big Tech in a
01:00:32
very meaningful and productive way and I think that that has important ramifications for
01:00:38
Washington okay saaks uh not to make it political but this is the government stopping Corporate America so it can't
01:00:45
not be political what's your take here and what will we see in the future more regulation more rulings like this slap
01:00:51
on the wrist break up is this more to come or this is peak regulation in your mind of big
01:00:58
Tech well I I think this is a good decision I mean Google clearly is a monopoly in fact it's at least two or
01:01:04
three monopolies they have Monopoly in search they have Monopoly in advertising and they at least have a dominant
01:01:08
position in video with YouTube and I think that it would be great if the government broke up this
01:01:15
company uh I mean it should be it should be at least three or four companies I mean there should be search should be
01:01:20
its own company advertising should be its own company YouTube should be spun out and then I don't know if G should be
01:01:25
a separate company or should get lumped in with search I I I don't know but I think this should be at least three or
01:01:31
four companies and I think Republicans will be on board with that because frankly Google's a threat to democracy
01:01:38
if you go to Google and search for search results of anything relate to the election it is clearly so biased explain
01:01:45
that yeah give an example if you want to get the latest info on kamla Harris just
01:01:49
search for Donald Trump I mean compare the search results and I've done this and I've posted the results online
01:01:56
you search for Trump you'll get a bunch of negative articles on Trump and you'll
01:01:58
get positive articles about Harris and then conversely if you search for kamla Harris you'll get positive articles
01:02:04
about her and it's like Trump doesn't exist it's clearly they have put their thumb on the scale here in favor of the
01:02:11
candidate they prefer as 90 something per of their donations indicate here's a real time search I just did Donald Trump
01:02:16
as you can see the first one that came up was a Harris story about Trump and Harris uh Google has actually addressed
01:02:22
this issue the issue is actually I think I'll take a little bit the other side of
01:02:26
it not bias in the algorithm but bias in media the overwhelming majority of media
01:02:31
is left leaning and uh there's a very small amount of Republican right-leaning media when compared to the left
01:02:40
obviously and so when you do a search for Donald Trump you know you've got the first three choices New York Times left
01:02:45
leaning Washington Post left leaning Newsweek left leaning CNN left leaning Delhi be super left leaning five of five
01:02:51
are left leaning that really is the issue is that there isn't enough GOP right leaning media to actually make uh
01:02:58
this work that's at least my take on it what your take that's their explanation yeah okay
01:03:03
fine but the problem I believe yeah yeah they're waiting the Publications they want to wait why is Daily Beast like
01:03:09
some Authority on the election they're the most partisan ridiculous untrustworthy publication when it comes
01:03:14
to the election so why should they be top four I mean why isn't Fox News in there why isn't New York Post in there
01:03:20
why isn't substack in there there's a lot of great Publications on substack so they are very selectively choosing the
01:03:26
Publications who you're right are in the tank for the Democrats so that they are
01:03:30
reflecting the bias of the mainstream media but they are being very selective about what media they show and even so
01:03:40
Harris and let me just give statistics here here hold on Cal Harris uh I just did a search first five New York Times
01:03:48
NBC the hill CNN is the hill right or left I don't know they're left would you say sex it's left yeah and then Forbes
01:03:56
which I think would be considered right and then Fox obviously right so I mean it's just the
01:04:02
percentage Yeah the Guardians often ranked right so there's another two be like three of eight I want you to
01:04:10
I want you to put on the screen this yeah go ahead you can do it I I tweeted some receipts please click on the
01:04:15
screenshot so I can show you the side by side and you'll see what I'm talking about okay I search for Donald Trump
01:04:20
what do I get news about Harris the first I this on my phone so this is mobile the articles are all basically
01:04:27
about Harris criticizing Trump okay then the second Carousel is about the project
01:04:33
2025 director stepping down which is pretty tangential of trump but is a major Democratic line of attack on Trump
01:04:41
so this whole thing seems rigged to support the DNC point of view on Trump same thing you search Donald Trump
01:04:48
latest news same thing there's some weird story about Donald Trump's nephew I didn't even know he about this person
01:04:54
but somehow they're elev it to be a major story and again the first Carousel is all about Harris now keep going
01:05:00
please yes ma'am okay now we look at KLA Harris top stories just Harris no news about Trump got it next
01:05:09
one same thing okay so the point is that when you search for Trump you get news about Harris and criticism of trump when
01:05:17
you search for Harris you get positive news about Harris there's no way you can tell me that this is fair or this is the
01:05:25
result of an algorithm that hasn't been tampered with this is very clearly programmed I mean you get cells
01:05:32
depending on which candidate you search for I'm going to take the complete other
01:05:34
side of this but freeberg I want to give you a chance because you worked at Google I think you know a lot about the
01:05:39
algorithm what is there an explanation for this that makes technical logical sense given what you know about the
01:05:46
algorithm then I'll give my position then chath you yeah there's very little kind of editorialization going on with
01:05:53
respect to showing the rankings of the the new sources the ranking of the new sources is typically set by some ranking
01:05:59
algorithm the algorithm is usually around click-throughs views popularity of the sites how many visitors there are
01:06:07
so there are other metrics that drive the order so for example if NBC CNN Fox News all have kind of higher rankings
01:06:15
than some smaller publication they're going to end up hiring the the ranking out there in because they have a higher
01:06:21
call it quality score there's also measures on how often people click through and come back the bounceback
01:06:26
rate so if they click through an article and then come back that can actually reduce the ranking versus if they click
01:06:33
through and stay on the site so there's a lot of factors that go into the ranking algorithm the thing that
01:06:37
probably upsets people is that there isn't any transparency into this so there's no understanding on how these
01:06:42
things are ranked how they're set and it's probably very good guidance and feedback that there should be more
01:06:46
transparency and openness and I'm not necessarily trying to defend anyone's product or behavior I'm just saying that
01:06:52
there's a certainly a lack of understanding on why one thing is being shown versus
01:06:56
I'll also say Sach this probably the case or there might be the case that there's many more sites potentially
01:07:01
putting out Pro haris articles and there are putting out prot Trump articles which can start to overweight the the
01:07:08
algorithm as you know or overweight the rankings that are showing up so that might also be feeding into this that
01:07:13
that the general news media bias is what you're actually seeing versus a Google bias correct I I don't believe let me
01:07:21
get sham hold on let me get shth involved here on this issue and and then I'll give my come gener speak I do want
01:07:29
to come back to the anti trust reallying in a minute okay absolutely saak thinks
01:07:34
the the fix is in freberg thinks this is explained algorith me but that Google could do a better job explaining and
01:07:41
being more transparent about the algorithm I agree with that 100% always considered a black
01:07:48
looke as yeah the number of independent journalists in left leaning Publications
01:07:55
is like 30 to one at places like Fox News which is lar about there need to be investment in
01:08:04
journalists by Republicans there are so many more liberal journalists and there's so many more liberal media
01:08:10
Outlets out there 20 that is a big it's probably 20 to one yeah yeah of course I
01:08:14
understand that the mainstream media is hopelessly biased please remember you said that when we discuss it hly out he
01:08:22
say he didn't say sax I got to stop you there he didn't say what we said was it's 20 or 30 to1 it's
01:08:28
outnumbering so if the pool of things the search can come up with is 30 to1 it's of course going to appear bias
01:08:34
which is what they need to do is they need to show who's in the ranking what percentage are left what percentage are
01:08:40
right what percentage are canit a middle of the road show that at the top the mainstream media is biased we all know
01:08:45
that you can defend it however you want to defend it you can nobody okay fine so we agree on that I
01:08:51
don't know why you're making picking you a points okay my point about Google is they're reinforcing the bias because
01:08:58
they UPR rank the mainstream media sources and they downrank the sources that provided distant opinion or an
01:09:04
alternative opinion again why is Vanity Fair up ranked above the New York Post is that because is that because of their
01:09:10
journalistic quality I don't think so one way hold on why is it that that K Harris search
01:09:16
result does not say anything about Trump but the Trump search result has a carousel on KLA Harris that looksam to
01:09:24
me yeah answer that looks I'll I'll tell you the also answer um this was the week Kamala or
01:09:31
this the last 10 days or so of Kamala taking the position raising tons of money hiring her VP and Trump
01:09:38
disappearing from public life for 10 days so there's also a on top of the 30 to1 ratio of let's say left leaning
01:09:45
journalist to right you also have this was kamala's coronation week so therefore it's going to be I don't think
01:09:52
Google is in the bag with our algorithm anyway I think it's the source return they're indexing trath what are your
01:09:58
thoughts one of the things that I like to do when I'm in Pino is when you see these huge yachts in the bay I I like to
01:10:07
figure out what they are okay and so I use Google for like a vessel finder and two of the top three
01:10:18
links send me the spyware and I think to myself every time every year this happens how is it that
01:10:28
in 2024 Google hasn't figured out how to click these links in a sandbox isolate the ones that
01:10:37
send you to spyware and just take them out of the index and of course they can do it they
01:10:43
have you know 100,000 people and two trillion in market cap so I think that there's like just a
01:10:52
level of technical naal gazing at some level that I think besets every big company and so there are other examples
01:11:01
here that you can look at that are a lot less charged than politics I think freeberg is right that it's largely
01:11:07
algorithmic but I think David is right in that there is a quality problem I think the solution here is that for
01:11:14
certain extremely important moments there needs to be a little bit more intervention and there needs to be a
01:11:22
little bit more curation so that it passes this test I mean the the version of this that I that I also experimented
01:11:30
with and Nick you can find the tweet that I had was when I was searching for the assassination of Donald Trump on
01:11:36
Google it just it didn't show up it does show up now so I think they got the message and they fixed it so clearly
01:11:44
somebody's listening and I think clearly then the index changes so I think that both things are
01:11:54
possible which is the algorithm can improve and also that certain things before people start
01:12:03
to complain loudly about this perceived bias there should be enough intervention
01:12:09
to make sure that the algorithmic results pass a smell test and if they're not to add some amount of reinforcement
01:12:17
learning or something else some human feedback that allows that that allows you to get to a good answer that's
01:12:24
unbiased before we leave this topic can I can I just show this chart okay look this is
01:12:30
a tech all of Tech is deeply biased towards the democat in the audience may not know okay okay employee donations to
01:12:38
to party are again it's well over 90% of Democrats this basically represents the
01:12:43
constituency of Silicon Valley okay inside these companies we also know that Google search results use more and more
01:12:50
manual interventions freeberg you agree with that right that over time definitely again there's there's meant
01:12:57
to not be an editorial process but there certainly is tweaking of rankings okay so all the people doing this stuff are
01:13:03
Democrats they're liberal and you're telling me that this does not have an influence it does not create bias come
01:13:09
on you can see the bias in a common sense search for Trump versus Harris I'm just saying like you've you've we've all
01:13:15
made a huge leap in this conversation from talking about an antitrust ruling which I will speak to very specifically
01:13:21
in a minute to oh my God Tech is biased that's what's driving the you know the the the sense of the nation I don't know
01:13:27
if you've noticed saaks but more than half the nation is going to vote for Donald Trump more than half like nearly
01:13:32
60% I think it would be like I think it would be like 70 or 80% if it weren't for the bias of the mainstream media
01:13:38
being boosted by big Tech well call it balance in the force then I guess but like hold on a second maybe maybe not
01:13:43
maybe not quite that percentage but if you look if you look at if you look at issues polling on issues the Republican
01:13:50
position on most issues is like a 60 to 70% winner and yet the are a nailbiter and I think a lot of it has to do with
01:13:57
the influence of the mainstream media and big Tech okay well let's come back so I think that everyone has what sax is
01:14:02
speaking to is a deeply rooted feeling held by politicians held by Regulators on one side of the aisle or the other
01:14:12
when Democrats feel shunned by the search engine or by Twitter or by Facebook they raise their hand and they
01:14:18
say let's regulate these guys when Republicans feel shunned because they're not showing up in the news rankings or
01:14:23
the algorithms they feel let's Reg these guys when it actually comes down to the
01:14:27
court case here is what is being described when you go to Apple and you type in a couple of words in the URL bar
01:14:36
that you want to search for because we've all gotten used to this you guys may not remember this but nearly 20
01:14:41
years ago when browsers first came out on desktops and on mobile phones you would not be able to just search by
01:14:49
typing into the URL bar you would have to type in a web search engine in the URL bar hit go and then you go to their
01:14:55
search box and you type in your result what happened around the mid 2000s 2004 2005 is you suddenly were able to type
01:15:03
in a couple of words into the URL bar of her browser and hit go and it would give
01:15:08
you search results the question is what search engine did it give you those results from and that's what this
01:15:14
lawsuit is about Google started to pay companies like apple to make Google the default search engine when you would
01:15:23
type in a couple of words and hit go into the URL bar because search became the primary way of surfing the internet
01:15:29
not typing in a URL and going to it and then when they started doing that they started to see more search traffic now
01:15:35
the real question from an antitrust perspective is did Google leverage its Monopoly to pay to
01:15:42
continue to be the default search engine to lock in the search market and prevent
01:15:46
competition by doing this well the judge the judge already said yes the judge said yes Google is
01:15:51
monopolizing search because they're paying to lock in the ability to type in to get the default on the search bar by
01:15:58
the way you can go into the settings and change it but what would the other default be so now if Apple cre David I
01:16:05
think you're being you're being too narrow hold on one second you're being too narrow the initial complaint in the
01:16:10
Microsoft Internet Explorer thing that kicked off the whole doj thing versus the consent decree were two totally
01:16:17
different things I think that you're underestimating the scope of the remedy I get it let me finish so like if they
01:16:24
were to say like let's get let's make sure Google can't do that again what's the search engine is it bing is it Apple
01:16:32
search engine because then there would be an antitrust claim to say that if there is a default search engine without
01:16:37
the consumer having to actively choose what their search engine is someone is monopolizing the uh the install base
01:16:43
that Apple has or the install base that whomever has where they are becoming the
01:16:47
default search engine now to your point like the ability for the judge to then say you know what this is one action of
01:16:53
many that you are taking to monopolize search let's go ahead and figure out how we can prevent you from monopolizing
01:16:59
search and this is really focused on search it becomes a very hard leap to say let's break up the company there's
01:17:05
bias in the news feed that you guys are ranking this has nothing to do with search engine rankings it has nothing to
01:17:11
with owning YouTube it has nothing to do with like owning Cloud it has everything
01:17:15
to do with Google monopolizing the search business which is the biggest business on the internet I that's where
01:17:21
that conent gets narrowed Toth and where there's a lot of path but I question what path is there going to be it's not
01:17:27
going to be anti-rust triggering no no I don't think that's a narrowing again the
01:17:31
Big O outcome of breaking up the company like what happened in Mel I don't think
01:17:34
that's going to happen here a little o outcome that is a consent decree similar to the one that Microsoft had to sign is
01:17:41
very likely but what I want you to understand is the way that that started which was literally around Internet
01:17:47
Explorer and bundling versus the consent decree was meaningful orders of magnitude broader
01:17:55
so what I'm saying is this little o outcome is going to be much bigger than the scope of this
01:18:00
lawsuit and if they don't man they have dodged an enormous bullet and all I'm saying is the I
01:18:09
think if you had to be a betting person they settled on that right like with with Microsoft if I remember right it
01:18:15
was an agreed settlement like ultimately they signed there was it was a consent degree basically what happened is for 10
01:18:21
years the doj became the became the product managers of critical projects inside of Microsoft right the point is
01:18:28
this which is that when Microsoft went through this the government and they had broad
01:18:34
support Ed that consent degree as a way to essentially hobble this company so that other competition could come in
01:18:42
competition I don't it wasn't just it wasn't just in the narrow scope of where that initial Focus started I hear you
01:18:50
and what I'm saying is this judge will read that for sure and I would and if and if Google gets away with just having
01:18:58
to do something around Tack and search yeah it they have dodged an enormous bullet no I think you're look I think
01:19:06
you're right and I think the reason you're right is because of how inflamed sax is because the way that saak feels I
01:19:12
think is the way that every politi no I think if I think if saaks gets his way it'll be a big O outcome and they're
01:19:18
going to break I know I think that's where everyone wants it to go what what I'm what I'm saying is the
01:19:24
little o outcome is meaningfully worse than where this lawsuit is I'm going to make my final statement there's a strong
01:19:30
I agree with you and I'm not trying to defend Google and I'm not trying to defend some outcome here I think you
01:19:35
guys are correct I think that because of how inflamed people are at the influence
01:19:40
that these companies have meta and Twitter and Google there is going to be a strong push to do a lot more than what
01:19:48
the narrow focus of the ruling in this particular case to do something much more significant to hurt these companies
01:19:54
and make them less influential and less powerful sax anything to add I'm not inflamed I
01:20:01
have a point of view that I think is informed by facts and evidence the fact the matter is the vast vast majority
01:20:08
well over 90% of the employees at Google are liberal Democrats and Google search
01:20:14
does rely on manual actions and the people performing those actions are again overwhelmingly from one side of
01:20:22
the political aisle furthermore we can see in the search results that they do appear to be hopelessly biased in favor
01:20:28
of one candidate at the expense of another I mean you're asking me to deny the evidence my own eyes and ears I can
01:20:34
see what's happening I think most people can see what's happening I do not think
01:20:39
that Google should be putting its thumb on the scale on one side of the election
01:20:43
here and Jason you may have a point that it's reflecting the bias of the mainstream media I don't think that
01:20:49
makes it okay I think that Google should have to work a little harder to be neutral and they could do that use they
01:20:54
could do that easily by balancing their new sources okay I feel like saxs and I got to uh the perfect place I agree
01:21:02
Google's filled with obviously left leaning don't deny that I agree that the left the my the media is biased they all
01:21:09
picked a side and then I just want to show you one chart because it's super important for you to understand the
01:21:13
number of people in journalism this is from 1971 to 2022 who say they are identifying Republican has just
01:21:23
absolutely plummeted I know and this is what I'm trying to explain to you Saks is a incredible opportunity for your
01:21:29
party since you know you're passionate about this is to invest in more journalism invest in more journalists
01:21:35
because I don't buy this Independence the fact that they're claiming they're independent in journalism I believe
01:21:40
that's cap I believe they say that uh but the Gap is 33% now between people who say they're Democrats and people who
01:21:47
say they're Republican in journalism that is a key piece to this problem and layered on top of it I agree with you
01:21:53
that Google is filled with liberal people and I agree with you shamat that they need to intervene and put at the
01:21:58
top of the search results in news these are the you know this is what we're indexing this is the percentage that's
01:22:03
left leaning this is the percentage that's right leaning and there are a lot of organizations that examine and rate
01:22:09
Publications on their bias left and right and that's something that Google could do that's very unique and that
01:22:15
could move the whole show that you're saying which is they could showcase that up top so to my friends at Google who
01:22:20
are listening do a better job of just being more transparent so we don't have this ition in society okay it's time for
01:22:27
Sax's red meat sax we have a VP candidate you have been absolutely waiting for this moment the race is a
01:22:36
dead heat here's your second course of red beat I brought you that giant this you know what this is this is the St for
01:22:43
two no this is the steak for two for one you order the steak for two for one sacks get in there medium rare you got
01:22:52
your cowboy cut what did you think when you saw Camala Harris enter VP pick uh move ahead in almost
01:23:03
universally all uh polls and prediction markets to the lead over your boys Trump
01:23:09
and Vance what did you think of the pick go ahead enjoy your Sak well I was very
01:23:13
happy I was very happy with the pick I mean so first of all I think I said last week or two weeks ago that I thought the
01:23:19
pick was would be Shapiro Jos Shapiro the governor of Pennsylvania it was such an obvious choice for a Harris because
01:23:26
this whole election could easily come down to 10,000 votes in Pennsylvania it is the Tipping Point State and Harris
01:23:34
probably has to win that state in order to win the election and you have a very popular governor of that state he's got
01:23:40
something like 63% popularity in that state he's also perceived as a moderate so he would have helped Harris position
01:23:49
the ticket more towards the center which apparently is her goal since she's repudiated all of her far-left positions
01:23:56
so it just seemed teed up to be so perfect and then what happened is there was a smear campaign by the progressive
01:24:02
left against Shapiro he was the only one of the VP shortless candidates that seemed to get all this Oppo dumped on
01:24:08
him before the pick and that campaign against Shapiro seems to have spooked Harris who seems to be fairly risk
01:24:15
averse and she went with this guy Tim Waltz from Minnesota who is a darling of the radical left and I think that he's
01:24:26
already presented many opportunities for attack by the right there's three big issues that I think Waltz is going to
01:24:32
have to address because Republicans are already Landing uh blows on him number one Stolen Valor he has clearly and on
01:24:40
several occasions overstated the extent of his military record look obviously I've never served but I know that among
01:24:47
people who have this is a very big deal campaigns have big issue campaigns have imploded over this so that's number one
01:24:55
he's got the stolen valid problem number two on trans he seems to have bought into every aspect of the trans agenda
01:25:03
and uh he's made Minnesota Sanctuary state for minors who want to come there for puberty blockers and sex
01:25:10
reassignment surgeries even without parental consent uh the law that Gavin Nome just passed or or signed that drove
01:25:17
Elon out of the state uh Tim walz got there first in Minnesota so he is he is not not a Centrist he's very far on the
01:25:26
cultural left and then I'd say like a third issue that I don't even know if people have really gotten to yet but I
01:25:32
think it will eventually come up is that Waltz was was insanely authoritarian on
01:25:39
covid I mean this is the guy who told us that minnesotans live by a motto of mind
01:25:44
your own damn business but he set up a covid snitch hotline so people could rat out their neighbors for leaving the
01:25:51
house or having dinner parties or walking their dog without a mask and it was it was real I mean violators could
01:25:56
be punished by 90 days in jail so again this guy has been to the left of Gavin Nome on cultural issues and I think
01:26:04
that's going to be a big problem for the Harris campaign and I don't really understand why she went with him when
01:26:10
there was such an obvious alternative who was available who could have given her a swing state who could have
01:26:16
positioned her as moderate what are your thoughts and SCH you want to speculate chance to bash uh the Democrats and
01:26:26
speculate Goa no I have no bashing to do I will say two things one is that I think
01:26:35
his stance on this trans stuff is a little problematic in these swing States I say a little only because I think it
01:26:45
matters more what comma stance on all these topics are but I do think that where there's going to be a a big
01:26:53
judgment issue around her selecting him is if there is veracity to The Stolen Valor claims and so when Shawn
01:27:05
Ryan as an example incredible podcast if you guys don't listen to it there it's great but like you know when he gets to
01:27:12
the bottom of this and he will Tim Waltz better hope that he told the entire truth okay freeberg your thoughts we're
01:27:21
dancing around the issue here you had talk a couple of weeks ago about an organization that didn't want to put a
01:27:28
Jewish person in the top position or in a top position do you think that this is
01:27:34
or there are any concerns of Shapiro being Jewish that caused him not to be selected or do you think maybe he bowed
01:27:42
out because he wants to run for president as some people are saying and maybe he his star shines a little too
01:27:47
bright for the second position what are your thoughts let's go right to the anti-Semitism claims I'm not going to
01:27:53
make that Proclamation I don't know what vice president Harris's decision making
01:28:00
process was I don't know who she talk to what she cared about if she cared if she
01:28:03
was even in charge I have no idea all I know is that there have been other conversations I've been privy to
01:28:09
Behind Closed Doors where senior people have been passed over because they are Jewish and because of the concerns of
01:28:15
someone Jewish being viewed to be in a leadership position in an organization and the impact that that might have that
01:28:21
there is a brewing distrust as a result of the conflict in Gaza let me say something about this issue frankly in
01:28:27
defense of kamla Harris I I don't think she's anti-semitic and I I don't think that accusation should ever be made
01:28:34
without real evidence okay that being said van Jones who is in a position to know because he's an important political
01:28:42
pundit in the Democrat Party said that one of the reasons why Shapiro was passed over is because of this issue and
01:28:50
he said that anti-Semitism had become marbled into the Democrat Party I don't know exactly what he meant by that I saw
01:28:57
I saw that quote that was really jarring actually marble is an interesting term yeah that means it's like absolutely in
01:29:04
the fabric of the yeah yeah so I don't now I I don't think Harris is I think she's just risk averse and didn't want
01:29:11
to alienate certain factions within the Democrat Party I agree with that statement you're right but too in the
01:29:17
process of being risk averse she chose this guy Waltz who I think has got much bigger vulnerability
01:29:24
than Shapiro does and I think the question now is whether Waltz is even going to make it to the convention I
01:29:30
think he might have to drop out I don't understand by the way I saw the dating process that Donald Trump had with his
01:29:37
VP candidates right sax and I saw some of it really up close yeah explain it well well I can only speak to what I
01:29:46
saw but it just seemed to me that there was this monthlong audition where I think they
01:29:52
were just trying to figure out I'm guessing here completely guessing where these folks stood on things but also he
01:29:59
was trying to get a sense of the person and whether they got along and whatnot but what I also suspected is that this
01:30:06
person was being highly highly scrutinized behind the scenes on everything that they've said or done
01:30:14
where the person who's going to make the pick in that case Donald Trump was deciding can I live with these issues or
01:30:20
not what the articles about the VP process on the Democrat side was more painted along the lines of there was a
01:30:31
meeting and she kind of liked him and so she went with him and I agree I don't think there's an
01:30:39
anti-semitic bone in her body to be totally honest with you I don't get that sense at all yeah no no I yeah that's
01:30:45
not the issue but the calculus right but what I would say is this is the number two person I mean maybe you should spend
01:30:52
more than a day and then maybe people should be really vetting this person behind closed doors on all of the
01:31:01
things that could go wrong and I mean you have to assume that that happened yeah let me make a couple of points
01:31:07
there so so number one is Trump had a lot more time to vet and get comfortable with his VP candidate because he's been
01:31:15
the presumptive nominee for many months whereas Harris inherited the the nominee
01:31:20
Ship Without a primary battle right Biden just AB ated less than three weeks ago so that's the reason why she didn't
01:31:27
really have time to go through a courtship process for her VP now as to the vetting process I agree with you I
01:31:33
think it's somewhat inexplicable because these stolen Val claims have been out there for a long time when Waltz ran for
01:31:39
governor there were former soldiers who came forward and said yeah he was supposed to be the commander of Our
01:31:47
National Guard unit he was supposed to go with us and he quit right before we got deployed to Iraq and so these
01:31:54
complaints have been out there for a while moreover he has many public statements saying that he was um
01:32:01
deployed to operation enduring Freedom which I think was Afghanistan and he simply wasn't I mean at least that's
01:32:08
what I understand to be the case so or he was deployed during that time I I think this sounds like a lot of cap he
01:32:13
was deployed during that time but he wasn't in combat right is that he never saw combat and he said that he carried a
01:32:21
weapon in combat in war so so this isn't like a use of sloppy language once or twice this has been around circling him
01:32:29
for many years now and there's been many examples of him saying these things on video so my point is can I think the
01:32:36
vetting was very poor I think the vetting was very this is what I was gonna say so there's there was a there
01:32:40
was a great quote and I don't know if this ever made the light of day but there was a moment
01:32:48
where was thought of as a potential VP nomination he was like a real big Democrat stal and I don't exactly know
01:32:57
the claims so and but I'm not going to go there but the phrase that I was told is doesn't
01:33:07
vet and what it was was a way of saying look we take our time we understand everybody's background we know what
01:33:15
skeletons are in folks's closets and in that example whatever was going on was sufficient enough where he would
01:33:24
never really get nominated for something very very big and I think that's sort of
01:33:30
what comes up here which is that in this impassion desire to make a decision quickly I still think the
01:33:38
Democratic party had an extra two or three weeks to make sure Tim Waltz really vets now I don't know if whether
01:33:47
these claims are true or not again somebody will get to the bottom of it but it creates a over this campaign too
01:33:56
early and where I think kamla probably wants all of that noise away so that she can Define what she stands for sort of
01:34:02
what we said last time go after these five big issues that people care about go into the five states on these five
01:34:09
issues and try to win this election she can't do that if this is like oh what is
01:34:15
your decision making like why did you pick this person why did this person lie so they have to nip this in the bud very
01:34:21
quickly look in my view this was Easy Choice even if she didn't like Shapiro she could have gone with Basher or she
01:34:27
could have gone with Mark Kelly remember the astronaut Mark Kelly was one of the
01:34:31
top two contenders pres you know at least that was what was reported in other words she could have gone with a
01:34:36
moderate CNN CNN reported that comma thought that Shapiro was too ambitious so okay so why not Mark Kelly he would
01:34:43
have outshined her for sure Shapiro is really good at speaking and eloquent and she's not Shapiro Shapiro is really
01:34:49
sharp I mean that guy unbelievable okay on the B I'm not saying it has to be Shapiro but the the remit here was
01:34:57
really clear to strategically you want to choose a moderate from a swing state that's it because this whole election
01:35:02
could come down to one state and you want to basically portray yourself as a moderate so this is a very easy
01:35:08
assignment find me a moderate from a swing state and what do they do they choose a radical from a safe State saf
01:35:15
for Democrats they got Minnesota locked up why do they need to take on this baggage there's no reason for it and
01:35:21
chamath I do think they rushed the vetting but I think it wasn't because of passion or something like that I think
01:35:27
they're running out of time because remember Biden was supposed to be the nominee Harris was supposed to be on the
01:35:32
ticket as VP they weren't supposed to do this process and then all of a sudden it
01:35:36
happened three weeks ago because Biden abdicated look I think I think that a vice presidential
01:35:42
pick matters but only so much and I think more than helping I think what VPS do unbalanced is if you pick the wrong
01:35:53
person person it can meaningfully hurt a campaign I think the you know Dan Quail
01:35:59
potato thing comes to mind you can become a little bit of a laughing stock which just becomes baggage that you have
01:36:05
to overcome and so this is again where it's a little bit of a head scratcher I would
01:36:12
just have thought that this would have been a little bit more buttoned up totally and let me tell you if if if
01:36:17
Waltz doesn't drop the from the ticket I predict there'll be gold star families protesting all of their events and
01:36:24
that's going to be a real headache from now till the election here is the quote in question uh Harris campaign and this
01:36:30
is from The New York Times uh had promoted this on social media just so we're clear when we're making all these
01:36:35
claims that he did uh steal Valor that he has not been convicted of stealing Valor which is an actual crime uh just
01:36:42
so we get things right here on the Pod here's the quote that he said we can make sure that
01:36:47
those weapons of war that I carried in war is the only place where those weapons are at
01:36:54
and so Mr wals never served in combat and that quote uh that he made I guess people are now weaponizing
01:37:02
to say that he's saying those here's a quote those weapons of war that I carried in war is the only place where
01:37:08
those weapons are so he was not in war technically he was a reserve uh and his is Battalion was going to be uh called
01:37:18
he claims so that's I guess what we are questioning and Vance said I'd be ashamed if I was him and I lied
01:37:26
about my military service like he did this I could see where people might be a little bit I can see both sides of this
01:37:31
issue s you want to dunk on him or yeah I'm not going to dunk because this is still an unfolding story and it's going
01:37:37
to play out over the next couple weeks and we'll see where it lands but it's pretty clear that he at a minimum
01:37:44
exaggerated his service and he exaggerated his rank I would like to thank both JD Vance and Waltz for their
01:37:51
service I appreciate both of their service I'll leave it at that from my perspective listen whenever I meet a vet
01:37:57
I always thank them for their service but those vets will tell you you can never exaggerate what you did course not
01:38:03
you can't say you were in war when you were not in War of course yeah so I guess we'll we'll see how this plays out
01:38:08
all right everybody this has been another amazing episode of the Allin podcast to recap Google's big news the
01:38:17
markets are in flux the ENT trade is off and KLA Harris leads the race we've got
01:38:24
eight weeks left we'll be here for you every single week and we will be seeing some of you at the I believe sold out
01:38:31
all in Summit are we sold out right now freedberg Master of Ceremonies freedberg
01:38:36
executive producer we are sold out we might do a little overflow just because we know people
01:38:41
don't show up so we might do a little bit of a last minute kind of overflow ticket sale but um we are sold out what
01:38:48
do people need to know about their party outfits everybody's asking me what party
01:38:51
outfits do I need the first night's party we're going to have Top Gun beach volleyball and we're going to have Back
01:38:57
to the Future all the scenes from Back to the Future for the second party I can't wait to see what I'm gonna work on
01:39:04
my Biff get your damn hands offer Biff you should go McFly mfly all I know is chat's
01:39:16
wearing home fly anybody home any home FFF get your damn hands off I love you guys I gotta go love you okay
01:39:25
enjoy Italy uh we'll see you on the lake everybody for the Sultan of science the
01:39:31
architect the dictator I am the executive producer and world's greatest moderator executive producer for Life
01:39:37
we'll see you next week byebye love you boys byebye let your winners ride and instead we open source it to
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the fans and they've just gone crazy with it queen [Music] of Besties are this my dog taking your
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driveways oh man myit will meet me we should all just get a room and just have one big huge orgy cuz they're all this
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useless it's like this like sexual tension that they just need to release Som [Music]
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we need to get merch [Music] our and now the plugs the all in Summit is taking place in Los Angeles September
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learning we'll see you all next time byebye pull up this clip of hel youth because he loves when we talk about him
01:42:16
on the show even though he's banned from the show by jth for live he took Sachs the the battery pack of the
01:42:24
he got this guy had pcket Jacks to his Ace Queen I think he hits his queen or his Ace and he loses his mind but he's
01:42:32
in good spirits for the first half of this play this clip Jack has 38 outs six what's the odds on that well huh River
01:42:40
card oh he's a Jack look out 100% start the car start the car baby look here we go start the
01:42:50
car one time oh my God come on yes does he have covered buddy I told you all right you
01:42:58
want me to quit I'm going to qu I can't right now I don't mind losing the flip I really don't but come on I asked
01:43:06
you not to do that you have been more out of line to me than any other person no you've been
01:43:13
more out of line to me than person has been out of line to me in a year and a talk I don't know who you are I'm never
01:43:22
you just lost a big thought so let's just like you know no I don't give a jrb just he just AP I'm Ser I don't give no
01:43:29
I asked you not to do it you've been I had a guy who was all day yesterday let's play
01:43:37
oh the wrong with this guy not I wasn't talking about what you think at the game jrb's at the game I
01:43:46
get to play I'm saying I have chips with a group of people and Palo elto who I love and I have fun with that's who I
01:43:54
play he called that's that's play with people in Al one of them is his net worth is 1.2
01:44:04
billion one of them is David Sachs the gay code to his house is 1234 pound I mean it is Phil I want to thank Phil for
01:44:12
the shout out