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just a couple questions before we kick off okay look it's what I told you before it's bad [ __ ] o'clock okay it's
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thick 30. I've been through a lot sacks right now but I'm still flirty okay is everybody back up in the building socks
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it's been a minute tell me how you're healing I'm about to get into my feelings how
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you feeling sax how you feel right now what language are you speaking right now the language called hip-hop sacks you
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might remember when you had at your 50th oh yeah when you had [ __ ] side yeah and she's saying
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and you're was dancing too delete that delete that let's start executing the insta strike
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with J Calvin why insta-strike when he says something that we just insta strikes we have to edit it later it's
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just instascribe it's because um I am uh taking back my power I was in therapy the other day and they told me I
00:00:56
need to take back my power insta strike but he apparently reads the comment section because he knew Friedberg that
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you won the episode last week oh big time it was big freedberg energy finally I honestly do not like the competitive
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nature of the show I think it makes us all hate each other and it's not a good Dynamic we should just [ __ ] do the
00:01:16
show with each other I know but the point is your performance after I threatened to fire off the show has gone
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up you know who also doesn't like the competitive nature Jake out because he's losing
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yeah totally the fact that I'm even still here is winning I love how Jacob thinks he can threaten the fire freeberg
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it's like the gender at Staples Center I think he's gonna fire LeBron because he
00:01:37
played poorly in a game this is a motivational technique I got the best out of him I'm like Michael Jordan he's
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my Dennis Rod you're like the hot dog dealer okay pal he's like LeBron James you're the hot dog deal I do not
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insta-strike these comments [Music] let your winners ride man dancing [Music] all right everybody uh welcome to the
00:02:09
all in pod uh with us again uh David Friedberg took a break from playing his stray video cat game uh sax is here in
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his deposition apparently by the way do you guys want to see this look at the size of this Jacob's
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apparently playing no comment today so I will open the show I will open the show by asking David Sachs would you
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like to tell us about what you're holding in your hand yeah okay so I got this subpoena from Twitter this is a
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non-party subpoena for didn't Twitter subpoena your tweets yes let me get into that is this a
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peanut I thought they're public they are these nitwits have walkedel lift and billing them are probably two thousand
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dollars an hour to subpoena tweets that are public I mean brilliant brilliant strategy but this is called a subpoena
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for production of business records in an action petting outside California so I'm
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not a party to the loss at least they're not suing me because I have no involvement in this thing but they sent
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me the broadest ever subpoena it's like 30 pages of requests and now I gotta hire a lawyer to go
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watch this thing because they basically want any of my communications with any of my friends over the last six months
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it's insane sax can you just explain to the audience and to us like is this is a
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court sanctioned subpoena the court is basically allowing the lawyers to demand that you hand over these communications
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is that right yeah but I haven't had a chance to fight it yet so now at my own expense I gotta hire a lawyer and go
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send them to fight it because this is a ridiculous over broad subpoena and by the way I'm not even involved in this
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thing I'm just a commenter on Twitter I don't have any let me just save walk till Lipton a lot of time right now I'm
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not in possession of non-public information about this and you know the craziest thing is yeah like you
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mentioned they cite my tweets as a as an exhibit here and they say they want all documents and Communications
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concerning your statement in a tweet dated April 16th that the quote new Twitter CEO checklist includes eliminate
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all Bots and fire useless employees 50 question mark so obviously they didn't like that uh your statement in a
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tweet dated April 25th crazy thought what if Jack masterminded this whole thing your statement in a tweet dated
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July 18th that quote randomly sampling 100 accounts a day is not a serious effort uh and or your statements and any
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other tweet concerning the merger blah blah let me just save them time right now I don't have documents and
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Communications concerning my tweets now I know to a lawyer at Wachtel Lipton that looking at my tweets and how
00:04:55
brilliant they are you may think that I have extensive documentation and Source material for them but let me tell you
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what happened I went to go take a [ __ ] and I basically tweeted off the cuff and
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that's how that tweet ended up in the public record there are no documents and Communications concerning my tweets and
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this idea that somehow I guess what they're trying to get at is that somehow I was tweeting on behalf of someone or
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at someone's behest not true go look well before this year at my public tweets and blogs about the topic of free
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speech I've been a Critic of twitters for a long time on the issue of free speech I've written a
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um a Content moderation I've written about what I think a Content moderation policy for a social network that cares
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about Free Speech should be you know I've written all these uh posts on medium going back years now you know I
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was a Critic of Twitter throwing Donald Trump off the platform so these views that I've publicly stated are the reason
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I've stated them is they're just My Views and there's just nothing more nefarious or something behind them other
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than that and they're just I think they're just trying to chase it there that's there is no there there right so
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let me just say a lot of time you and I can talk because our our friends have no comment on this matter one
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question I have a five question wait during this movement that you had and you composed the Tweet is there any
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documentation of the movement no but you know next time that I compose a tweet on the can I will document it
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thoroughly and I will send it to the lawyers that will tell Lipton Zach what happens if you don't respond
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in 20 days I don't know I mean I gotta I mean now I've hired a lawyer but by the way just
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so people understand you may think that because of my position in business or something that these things happen all
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the time they don't I've been maybe subpoenaed like three times in my entire career and I've never been subpoenaed in
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my capacity as an individual it's always been in connection with a company and I
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don't think I've got one of these in over five years so this just does not happen that often these guys are totally
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chasing at straws and it leads me to believe they're they're wasting my time and Twitter's money and they're trying
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to somebody on Twitter should just rein in their lawyers because they're I'm sure racking up a fortune in legal fees
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it sounds like um sex the case is that they're trying to make that Elon used his network of
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friends to help wash away the deal because he didn't like the price anymore and had his friends you know kind of
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tweet about Bots and other stuff to support his case for killing the deal because he didn't like the price and
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they're trying to see if there's any Communications that he specifically said he didn't like the price
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yeah I mean look they all in addition to my tweets they want all my documents and
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correspondence related to my appearance on Megan Kelly my parents on the will Kane podcast and you know other media
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appearances I've done look you know I had no coordination with Elon before appearing on any of those shows I just
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went on those shows and said what I think I mean look it's not like I'm a guy who doesn't have hot takes every
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single week on various issues you know right we do that we've been doing this podcast for years I've been tweeting for
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years I'm just a commentator on this I have I've never been in possession of non-public information and I've tweeted
00:08:07
my takes based on the public information that's been available about this dispute
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now you know after I appeared for example on Wilkin I remember Elon tweeted in support of my appearance but
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there was no coordination before I appeared or after for that matter he just liked the appearance yeah so it's
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just me spouting off doing what I've been doing on this pod and tweeting for years now I can understand if maybe
00:08:33
they're trying to read something into it they're on a fishing Expedition but I'm
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just talking I just think the whole thing is just such an enormous waste of time just get into court adjudicate the
00:08:44
thing and move on I was reading um yesterday this guy who follows the Delaware courts pretty
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closely he had a bunch of commentary and it he mimicked some of the stuff or or the judge apparently on the case
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said some stuff about preserving the Integrity of the Court meaning that the interpretation people are making is that
00:09:03
ultimately they don't wanna the court is unlikely to try and force the merger because if the merger then doesn't get
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consummated it damages the reputation of the Court's ability uh to make enforcement action therefore it's more
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likely that they just impose a fine but what is the enforcement action if I don't I don't know we should ask
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somebody who's a force them what does that mean Force I don't know about that okay all I know is that this
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discovery request is overly broad it's a fishing Expedition it's harassment of me
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it's gonna cost me time and money to get rid of this thing I didn't do anything to deserve it or prompt this I wasn't
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part of the transaction I just wasn't um and I've never I've never and I've never said anything in real guards to
00:09:49
the transaction that should lead anyone to believe that I'm in possession of non-public information yeah so this is
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harassment as punitive and the fact that they're citing my tweets in which I criticize Twitter's management it's as
00:10:02
Petty and vindictive yeah I agree reimbursed probably not good luck no five five or
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six years ago I approached Twitter about what I would have called a friendly activist myself in a
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and another large fund and the reality is there's a lot of data that sits uh in the public domain that you can use to
00:10:29
get a very clear view of Twitter's advantages and disadvantages and so you know all of these issues that Twitter is
00:10:37
dealing with has been known for a long time to people that spent any time analyzing this stock comparing it to
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other social media stocks so I just don't understand what all of this is about at the end of the day
00:10:50
a person that had a point of view has changed their mind get to the bottom of what that person thinks but going on
00:10:59
these broad fishing Expedition I think is just really stupid and then what was Joe Lonsdale subpoenaed for I mean he
00:11:06
just appeared for being at the all-in summit for being a guest at the all in Summit so so that that just shows you
00:11:12
how silly this is too because Elon we did an interview the four of us interviewed Elon at the all in Summit uh
00:11:19
in Miami back in was it may is when do we do that yeah um so Elon appeared but he dialed in by
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Zoom it's not like he was walking around the hallways bumping into people and talking like there was he did not
00:11:32
communicate with anybody else at the summit yeah he was a guess by Zoom so if you want to know the communications that
00:11:40
we had just go watch that public recording of us interviewing Elon there's just again this there's no need
00:11:46
for this fishing Expedition guys this is the this is the record for the longest amount of
00:11:51
time in his life jaycal has not spoken so I wanna I wanna acknowledge this moment and we can move forward
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um sax did you do any prep work for the interview with Elon while you were wow good question
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there's no prep work I showed up barely I barely showed up oh my gosh see and you guys don't want
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to do all in Summit 2022. come on 23. come on we're good we're good yeah exactly why do I need another one of
00:12:23
these I actually want to have Friedberg stands create an event honoring him and I'm
00:12:29
going to appear there as the keynote speed absolutely Sultan of science con actually I should really thank you
00:12:34
jaycal yeah first I blame Twitter's Executives then I blame you I think you could listen if
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we do another all in Summit maybe it's profitable and as a user just as a user okay commentary
00:12:53
the the bot issue is really real like how many accounts are there which have like 20 or 30 followers that just spew
00:13:03
vitriol either positive or negative constantly every time you tweet anything it makes tweeting impossible I used to
00:13:10
be an Ardent user of Twitter and I think in the last year it has become exceptionally unusable wow and so
00:13:19
they should just fix it they should fix that product quality problem In fairness
00:13:23
to sax he did pay ten dollars per account to have those created and to troll your replies but it is true if you
00:13:29
I always screenshot it I look at who's like trolling man replies and inevitably it is uh a six-month-old account with
00:13:37
that's following a hundred people and has no followers or five followers and it has like some you know
00:13:46
every time you say something every time I say something it's like every other comment is about a stock it's about a
00:13:53
crypto thing that they want you to click on and so you know this last month I've
00:13:57
started to experiment with turning comments off and it's been the best because I can
00:14:03
still communicate out it gets the same reach millions of people will see what I have to say but I don't have to deal and
00:14:08
all of the other people that follow me theoretically for useful information don't have to deal with all the [ __ ]
00:14:13
that comes with it now yeah but you can also pick there's a real problem on that
00:14:18
platform that needs to get fixed here's the thing it's easily fixable because if
00:14:24
you go to LinkedIn or Facebook or Instagram you don't see this so if it if the other platforms can
00:14:30
figure it out across many different companies it's not like there's some Secret Sauce here you just have to put
00:14:35
up you know a couple of reasonable Gates and have some reasonable reporting uh and you take a little friction out and
00:14:41
people will not be able to create bots on mass yeah I noticed that problem you know in the early days of the Ukrainian
00:14:47
War when I would tweet out my opinion my non-con my contrarian opinions my non-consensus opinions on the Ukraine
00:14:53
war you get attacked I saw I remember you were getting it was ruthless and those are not real people those are not
00:14:59
real people those are algorithms yeah when you would go click on those accounts you would see that they were
00:15:04
accounts created that month with zero followers zero following and uh there are brand new accounts without any
00:15:13
history and they were all tweeting the same thing accusing me of being devil Chamberlain it was all just you know
00:15:18
Putin talking points or whatever so there you know I think particularly when you speak out against the current thing
00:15:24
there's yeah you know an organized effort to try and drown you out and but look The
00:15:30
Washington Post had a story about this that Ukraine was really good at what they called strategic Communications
00:15:34
yeah we used to call that propaganda but in any event yeah I mean look there's absolutely a problem it's now A playbook
00:15:42
um if you I don't know if you guys saw the Zack Snyder uh recut of Justice League supposedly there were bought
00:15:49
armies that put the pressure on Warner Brothers to release his cut of that movie
00:15:54
and that he might have in some way been involved was the insinuation and it actually drove Commerce they gave him
00:16:00
the whatever 30 40 million dollars to recut the film uh all right let's talk about Market since that's what everybody
00:16:05
um really comes here for uh looks like inflation is uh finally maybe uh getting a little pushback gas and oil is way
00:16:13
down a big win for Americans and obviously the administration there clearly is an upper bound to how much
00:16:19
people will pay for a gallon of gasoline consumption is actually going down which
00:16:22
is interesting human's pretty adaptable there jobs and we've talked about this every month as
00:16:29
we watch it uh finally dipped under 11 million as Saks uh predicted you know we're going to shed three or four
00:16:35
hundred thousand jobs it seems every month uh which should take this uh you know 10 11 million number over the next
00:16:41
year down to maybe five or six which would still be an unbelievable number still put us that very robust full
00:16:48
employment which has been a big question so there's a number of of open job the the number of job wrecks it went down by
00:16:55
something like half a million in one month yeah and it's been going down three or four hundred so it's it's kind
00:17:00
of been pretty consistent but there's clearly something going on here and the stock market interestingly we've
00:17:10
started to see a little bump here even crypto um which the most speculative of all
00:17:15
assets I guess Bitcoin bounced as well you know hitting 22 23 now so what do you think chamoth about markets
00:17:26
we you you may have called the bottom uh here on the program a couple of months ago and uh I started J trading three
00:17:33
weeks ago based on our discussions here thinking we're bouncing along the bottom
00:17:36
is it a head fake right now I think at the time initially I think I said you know
00:17:43
it rallies to around 4 000 I was a little off rallies what rallies to four thousand the s p yeah
00:17:52
probably gets to forty two hundred forty three hundred look it's always important I'm trying to
00:17:59
have 21.50 today just so people know yeah yeah it's always important from my perspective to just take the other side
00:18:03
and just intellectually debate with oneself why the other side could be right so at this point right now what
00:18:11
people would say is okay the fed's going to capitulate at the beginning part of 2023
00:18:17
we have a pretty clear forecast for all the rate increases that have to happen everybody's doing the work that's
00:18:24
necessary either raising prices cutting costs or doing both letting people go Etc et cetera so maybe we're we're there
00:18:32
okay so what's the other side of that well I think again as I've stated before the other side
00:18:38
starts with energy and the reason why I think it's important is that it really is the
00:18:45
conflation of an economic system and a political system using an instrument and if you look inside of what's
00:18:52
happening in Europe there's a lot of complexities here that I think need to get unpacked so for
00:18:57
example a couple days ago the French government basically said that they're going to
00:19:03
start producing less nuclear energy and you'd say well why would they do that well it turns out because you know
00:19:10
the temperatures are so high you cannot use the water to cool these nuclear reactors because the the exiting
00:19:17
water is then so hot that would actually destroy the ecosystem of the lakes and rivers that they use to feed natural
00:19:23
fresh water in to cool the nuclear reactor second because it's so hot all the rivers are
00:19:32
below their natural level barges that carry coal and that gas are getting stuck on the Danube the PO which is the
00:19:40
longest river in Italy that feeds all the fields actually can't is below the level where
00:19:45
it can actually off you know offload the water so farmers can't basically do what
00:19:49
they need to do to produce a food supply so if you play all of that out you start to see
00:19:57
an issue where by you know October November of this year we're back into the same complexity where energy is the
00:20:04
tip of the spear around which everybody starts to debate all of the National Security issues that we have to deal
00:20:10
with the Ukraine war et cetera et cetera so I don't know I mean you know you've made a lot of money this year by
00:20:17
basically doing the following which is the exact opposite of everybody else when everybody else was freaking out
00:20:24
had you bought you would have made a ton of money now everybody's like it's over
00:20:28
and you can tell that by looking at the vix which is the volatility index we're about to get into the high teens
00:20:34
you have systematically it has been true that when the the vix is in the teens you tend to basically buy volatility
00:20:44
which is essentially you get short stocks and when the vix is in the 30s you tend to basically sell volatility
00:20:51
and you buy equities because we've hit the body if you've been doing that for the last year you've made a ton of money
00:20:55
so there you have it I really don't know what's going to happen from here but I tend to think things still have to get a
00:21:01
lot worse to flush everything through the system and for people don't know the vix is the ticker symbol that you can
00:21:06
look up yourself uh for the cboes volatility index which measures the stock market's expectation of volatility
00:21:13
based on the S P indexes options trading if you look at oil sacs we are now down
00:21:21
to uh 87 bucks for a barrel uh haven't been here since uh uh gosh looks like yeah February maybe
00:21:32
and so and gas prices plummeting something going well in this regard what are your thoughts yeah I mean it's
00:21:40
uh that particular commodity is coming down I still think we have a big inflation problem
00:21:45
um why do you think it's going down I guess production's stepping up I mean the response higher prices people
00:21:50
increase production and the price comes down no no no no no no there's less demand the the the crazy sad thing about
00:21:57
this whole thing with Biden was that OPEC came back and they basically said we can increase like 600 000 barrels a
00:22:03
day but the only two countries that are able to do it were I think Kuwait and Saudi and the total number of barrels
00:22:09
was about a hundred thousand so with all the blusters you're right actually there's no it's because the interest
00:22:14
rate increases are actually having an effect correct you know these rate increases are like chemotherapy you know
00:22:20
it's um on the economy the gas demand is lower than the summer of 2020 in the middle of the pandemic yeah you know
00:22:27
yeah you're right so the the commodity prices are reflecting expectations that the economy is slowing down and and you
00:22:34
know maybe in a recession Supply modestly up demand massively down equals hey we want to get people to buy this
00:22:42
commodity it will lower the prices low and behold same thing is happening a little bit with groceries uh and we'll
00:22:47
see what happens with travel homes also spectacularly falling down in price and the inventory spiking as well so
00:22:55
what's your yeah your take here unpack the 75 basis point increase in the chemotherapy that you were going down
00:23:00
that road well let me just speak to this this um this rally in the market for a second because I think there was a
00:23:05
really interesting chart that Philippe Lafont showed at that kotu Summit that we talked about on this pod a few months
00:23:10
ago and I'll just put it on the screen I put in the chat uh what it basically shows is that
00:23:17
uh is that during you know protracted bear markets you can still get substantial bear Market rallies and so
00:23:24
during the 2000-2001 uh.com crash you had these plus 32 plus 41 plus 45 rallies uh but even while the market as
00:23:38
a whole was going down and so they ended up being sort of Sucker rallies now I don't know if that is what's happening
00:23:45
here but it is a possibility um one interpretation sex of this could be people are picking the winning stocks
00:23:52
while the losers continue to lose and that's what's causing this you know Jagged Edge or the the dead count dead
00:23:58
cat bouncing as they say which is what we're seeing in a lot of these public companies right I don't know if you're
00:24:03
watching but Uber you know obviously I'm still a big shareholder had a massive print and other companies have been
00:24:09
doing equally as well Apple included I think two things happened last week one is there were a number of companies that
00:24:14
reported uh good earnings and I think even more currently has strong forecasts so that helped and I think it was just
00:24:21
there was so much pessimism and negativity that just companies reporting decreases that weren't as bad as people
00:24:28
were expecting created some room to move up but the other thing that that drove the rally is that the FED made these
00:24:35
comments on the heels of that 75 base Point rate increase that we were close to neutral
00:24:40
and so the market seemed to get really optimistic that we wouldn't get much more in the in the way of rate increases
00:24:48
maybe there'd be a 50 base Point rate increase towards the end of the year which would bring the FED funds rate up
00:24:55
to about the two-year bond rate so the idea was we're close to neutral and Marcus really reacted to that the thing
00:25:01
about that is though that I think what the pal what Powell and what the FED says today about rates is way less
00:25:09
important than what the inflation data will actually show in a few months if we still have nine percent inflation three
00:25:17
months from now then I don't think the rate increases are done so at the end of the day I think that the data here is
00:25:24
going to be a lot more important than what the FED says because certainly the FED has said a lot of things over the
00:25:30
past couple years that turned out not to be true you would agree they seem to be
00:25:33
doing something correct here with the 75 bips you know and taking it a little more seriously it's having an impact
00:25:40
I'll say it again I've said it now five pods in a row we've never seen a moment in history in American history where
00:25:47
when CPI has printed successively above five percent that it got under five percent without
00:25:53
fed funds getting to that same number so we should all hope that this is the exception that proves the rule but
00:26:01
there's an enormous amount of data that would tell you that we have to take rates to double what the equilibrium
00:26:10
rate is thought to be right now there was no print in August I take the month of August off they could do an emergency
00:26:15
print and then they're expecting 50 or 75 bips in September if they do that saxophone 50 I think 50 is the
00:26:23
expectation for September but look I think it's appropriate now after all the rate increase they've done to take a
00:26:28
pause they're going to get two full months now of inflation Data before the September fed meeting I think it's
00:26:34
appropriate to let the economy digest these rate increases and see where we're at and let's see where the next two
00:26:41
months inflation print is and then that'll determine what happens next freeberg based on all this uh what's
00:26:47
your outlook for the economy I think there's more we all try and be predictive based on
00:26:54
the current set of conditions in the world and there are a number of conditions in
00:27:00
the world that the switch could flip very quickly and there's enough of those triggering events right now
00:27:10
that um the probability of any one or any set of them happening in the next couple of
00:27:16
months is probably pretty high uh you know I kind of talked about it on the show a few weeks ago that it's like
00:27:21
a bunch of tortoises sticking their head out of the shell and you know there's a few that might
00:27:27
pop out here there's obviously a massive problem with getting gas to Western Europe for this
00:27:34
winter there's an emerging problem with food insecurity in Africa South Asia around the world
00:27:43
there is obviously continuing escalating conflict in Eastern Europe this NATO situation may or may not help
00:27:51
the Taiwan visit may or may not help is it escalating yeah well I mean I think you know Sweden and and whatnot joining
00:27:59
NATO is okay it's going to be viewed as provocatory and you know it it could not make things
00:28:08
cooler and calmer over there but make them more tense I mean we view it as a security issue but it really is a
00:28:14
conflict escalation issue and um and then I think that there are Emerging Markets problems you know
00:28:20
Argentina is facing 60 inflation Brazil has a criminal as their president right now and he has said publicly in
00:28:28
the last couple of days that he will not leave office if he loses the election because the election is fraudulent and
00:28:34
if that happens then you could see massive civil unrest he's been encouraging the population in Brazil to
00:28:39
go to the streets and fight back and there are a number of these flash points and by the way that's a massive
00:28:46
uh you know food supplier as well as a massive uh holding in EM credit portfolios
00:28:53
around the world um U.S consumer credit is a problem uh you know we just had the largest number
00:28:58
of new credit card accounts opened since 2008 in Q2 from the New York fed report
00:29:03
yesterday all of these things I'm painting as pictures of potential flash points for
00:29:10
what would could quickly become wildfires or brush fires that spread very quickly in markets and could
00:29:15
escalate some of the considerations so I don't feel like I look around and say everything is good we're in a good place
00:29:22
there are some indications that some of the stagflationary considerations and concerns we may have had in the way that
00:29:28
markets are behaving right now gives us a pause gives us a respite makes us feel
00:29:32
okay but there are also a lot of things that could go wrong and any one of those
00:29:37
things could be a triggering point so I always think in terms of probabilities there's a whole bunch of low probability
00:29:42
things but when you have enough low probability things the probability that something in the set is triggered
00:29:48
becomes High that's where I kind of say look the probability of something being a flash point for us this year is high I
00:29:55
also still think that globally we are very primed for conflict right now and we feel like and are hoping that the
00:30:02
Russia Ukraine thing resolves but there are other points of escalation look at what's happening with Pelosi visiting
00:30:07
Taiwan everyone that's you know even well informed is scratching their head saying what the heck is going on here
00:30:12
there is currently an Indulgence in conflict and I think that that Indulgence will um you know cause more
00:30:18
harm than good uh particularly for these financial markets that we're commenting
00:30:22
on right now uh in the months ahead so um look uh you know like I've always said I'm not going to be one to time
00:30:29
markets it's like trying to time social behavior like who's gonna say some word first I don't know the answer in a
00:30:36
population of people you know you can kind of guess how people are going to behave but markets are the output the
00:30:41
manifestation of social behavior and so timing markets is very difficult I think
00:30:45
you can do a good job analyzing businesses and the quality of businesses and how they will perform over time I
00:30:50
don't think that anyone over time can do a good job timing markets and I think that there's a lot of these things that
00:30:55
could really shift anyone's perspective on what you believe right now very rapidly in another Direction based on
00:31:01
any one of these uh things happening do you feel the world is as Dr Doom here is
00:31:07
you know setting up by the way I'm not being negative I'm just pointing out that there are a set of things that
00:31:12
could flip things the other way right absolutely I'm being slightly facetious here but you picked a pretty Stark
00:31:16
picture of hey there's all these tipping points around the world chamaki you feel
00:31:21
like this is how the world works there's always a bunch of potential tipping points there's always going to be Wars
00:31:26
uh sadly and there's always going to be countries uh that are dealing with dictators or insolvency especially in
00:31:33
Frontier markets and Emerging Markets or is this chaos you know really acute and and people
00:31:41
should be uh you know anxious and in a panic I think both of you guys are right like there's always stuff going on in
00:31:48
markets and markets represent the collective sum of our wishes and expectations and also the
00:31:54
realities this is why I think for me at least the way that I process this information is not trying to have an
00:32:00
opinion on any one of those things because I just I find it too hard and I don't have enough depth of
00:32:07
understanding of any of those things for me I'd rather go back to the historical
00:32:10
Trends because those I find a little bit easier to parse and whether any of those things are true to
00:32:20
inflation right now can they turn that right Jason we're just docking something oh okay no
00:32:27
problem it's just a little we can't hear it no problem the second helicopter is replacing the first helicopter because
00:32:35
swapping out yeah no that's important helicopters are switching on the helicopter I mean it takes a team to
00:32:40
park this boat I'll just be honest with it so they're they're trying to get it done no but listen
00:32:46
so so the the real problem is that like if I go back to the historical artifacts
00:32:52
have there been issues in the past the way that you know um Freeburg described absolutely
00:32:59
so this is why I think you can look at the fact that whenever there's inflation and whenever it's spiked this what has
00:33:04
had to happen by the FED is you have to take rates above that key five percent threshold when CPI
00:33:11
is above five percent to break enough demand so that the economy is reset and God I think that's where we are so
00:33:19
instead of trying to figure out whether you know I mean the the Brazil thing as an example that that Friedberg said is
00:33:24
crazy like he's basically you know he said publicly in a press release the Army's on my side and it's ready to
00:33:31
help me you know keep and staying just the crazy thing so what are you supposed to do the fighters need to take to the
00:33:37
streets so what are you supposed to do in my opinion I'm like you know what a version of Brazil has happened before
00:33:44
I don't know enough history quite honestly to know the specifics of what happened then and how that could
00:33:48
translate to now and I don't want to spend the time understanding what's going to happen in Brazil right now I'd
00:33:53
rather just say there are 20 or 30 things that could very much complicate the world economy
00:33:59
I think the reality is that governments need to flush all this excess money out of the system
00:34:06
so that we can really find out what equilibrium demand is and get back to normal there's also by the way a really
00:34:12
important Trend chamoth unlike that I think is playing out and will play out for the next decade on
00:34:18
de-globalization so as the U.S tries to build its own semiconductor manufacturing capacity as China loses
00:34:27
key trade Partners as all of these markets stop trading with each other and start to build redundancy there is a
00:34:34
massive longer range economic effect of de-globalization globalization enables efficient pricing it enables labor and
00:34:43
energy and everything to be done you know to go to the cheapest source that's the way globalization has benefited us
00:34:49
we've been able to get cheap energy and cheap labor in overseas markets to do work for us and as a result we've gotten
00:34:55
access to cheap products so when you de-globalize you end up having to pay more for labor more for energy you have
00:35:01
to build infrastructure and the price for everything goes up we've said this on the Pod for two years now that era of
00:35:09
cheaper faster better is over and what comes with that is better National Security but the cost of that
00:35:17
better National Security is higher prices higher prices less growth and there's nothing that we can do to avoid
00:35:23
that I'm not sure I agree with the less growth I actually think that there's enough access to slack to be absorbed by
00:35:28
all of this free money that I think you can still have sustained growth but it will come with higher interest rates and
00:35:35
higher inflation and higher input costs everybody will have to do their part to absorb some of this but that's what's
00:35:42
going to happen and I think we should just deal with the medicine as quickly as possible this is why the people that
00:35:47
actually think that the FED should just be very aggressive and get this over with quickly I suspect on the margins
00:35:52
are right the problem is they don't want to look at the Historical artifact because historical artifact would say
00:35:56
wait I need to raise interest rates by another 250 basis points that's just way too disruptive for what the world is
00:36:02
ready to to hear right now so we're going to incrementally plot along and I think what Friedberg says is Right which
00:36:08
is that there's going to be a whack-a-mole that emerges that's going gonna tilt the markets then the consumer
00:36:13
credit thing will implode that's going to tilt the markets enjoy your Bolson Arrow will try to take over Brazil
00:36:18
that'll tilt the markets and we'll go back to this you know inflationary fragmented de-globalized view of the
00:36:26
world that just frankly takes higher interest rates to normalize all right and sax I'll bring you on this I mean
00:36:31
counter to freeburg's point the the counter obviously would be hey we will have less dependency on dictators like
00:36:39
Putin Xi Jinping MBS Etc and that would be great for Humanity and we'd have resiliency in our supply chain uh and
00:36:46
you know the West now becoming Unified say what you will about the NATO membership and the timing of it
00:36:54
it's probably a great thing that the West is saying hey we're going to get together as a group I think you would
00:37:00
agree and stand against dictators invading other countries and if everybody pays their fair share to be
00:37:06
part of NATO well that's not that's not what they said that's not what it is well I mean no that is not but be
00:37:11
intellectually honest we all said the first part and just nobody talked about that second part and the only person who
00:37:19
you know which is Josh Hawley who's you know not exactly my favorite person in the world but maybe sax wants to comment
00:37:24
was the only one that actually said which is probably the fair thing which Jason you are saying is part of the deal
00:37:30
that is not part of the deal no no should be part of the deal I'm saying it should be part of the deal and for
00:37:34
people who miss what we said there United States spends three and a half percent of our GDP on uh military other
00:37:39
places in NATO might be spending one or two percent and we're trying to get them
00:37:43
all to two percent to be a little closer to us and then this obviously trip to Taiwan
00:37:49
strengthening our relationship with that country but at what cost and why are we
00:37:52
doing it now uh all come into play here so do you actually think that this trip to Taiwan actually strengthened our
00:37:58
relationship with Taiwan did we come up with a deal all of a sudden say in what way I'm curious well because
00:38:07
they are I mean did you not see their statements and giving Pelosi Awards and they Taiwan very much wants to
00:38:13
strengthen their relationship with the West that that is their goal they want to strengthen the West they want the
00:38:19
protection of the West so yes it does strengthen our relationship with Taiwan the question is does it provoke
00:38:26
China and was it necessary at this point in time in history when the world does feel like it's a little bit of a powder
00:38:32
attack no but so so six months from now when all the fruits and vegetables that have been embargoed and not sent to
00:38:37
Taiwan and then the sand that allows them to make chips continues to now flow do you think that they'll still be
00:38:42
positive about the trip we'll see I mean I I let's go to sax he likes to comment on these things so all
00:38:48
right well I'm gonna bring some mental everything you just said I know that's why I set you up for it I mean look once
00:38:55
it came out that Pelosi was going to Taiwan and China threatened her and the U.S saying you can't go obviously we
00:39:02
couldn't back down from that because we can't let China dictate which of our officials can go to Taiwan so at that
00:39:09
point we had to back her play and you saw that everybody from Fox News to 25 Republican Senators gone on board okay
00:39:16
but here's the issue the real issue is should she even have been going I think this trip was self-indulgent it was
00:39:24
Reckless she was told by the Biden Administration don't go this is not the right time this is a sensitive time the
00:39:32
uh the ccps got their Party Conference in the next couple of months there was no reason to basically provoke this
00:39:39
showdown right now and she just dismissed what the administration with a Biden and what the Pentagon told her to
00:39:46
do because she wanted to make some sort of valedictory tour to Taiwan so look Nancy Pelosi does not deserve
00:39:54
any credit for this trip did we have to defend her once you know once China threatened her yes of course we had to
00:40:01
like I said back her play but this was Reckless and it was self-indulgent and it didn't need to happen and you know it
00:40:08
really makes you wonder who is calling the shots in this Administration when Pelosi won't even respect the wishes of
00:40:15
a president and her own party and what is she doing going over there she's not the Secretary of State I had the same
00:40:21
question president had the same questions like why why now why not Thomas Freeman well because it's all
00:40:26
about her making this valedictory tour before she's going to hand over the gavel look the Democrats are going to
00:40:33
lose the house in November once she passes the gavel to a new Republican speaker of the house I think she'll be
00:40:39
announcing her retirement shortly after that so this is all part of her farewell
00:40:43
tour but it didn't need to happen and the fact that she did it in violation of The Wishes of a
00:40:51
president of her own party makes you wonder who's calling the shots over there and it kind of reminded me you
00:40:56
know a few weeks ago Gavin Newsom was over at the White House when bind was over in Europe and everyone was
00:41:03
speculating what's he doing over there is he measuring drapes yeah he's measuring the drapes so you know it just
00:41:09
goes to show this is this Administration have control over anything over the members of their own party over 60
00:41:15
percent of Democrats say they want someone different to run in 24. so yes there was a surface level
00:41:22
of consensus and packing of Pelosi but if you scratch beneath the surface you see that the trip was unnecessary and re
00:41:29
and reveals a president who doesn't seem completely in control of our foreign policy so in a statement
00:41:35
um almost universally uh the leadership of the Republican Party said for decades
00:41:39
members of the U.S United States Congress including previous speakers of the house have
00:41:43
traveled to Taiwan this travel is consistent with the United States One China policy to which we are committed
00:41:48
we are also committed now more than ever to all elements of the Taiwan relations
00:41:54
act so one China if you don't know is that Taiwan and China are all part of one uh unified uh entity so we're the
00:42:02
Republicans seem to be supporting this in a cynical way you're saying or it is consistent that other members of the
00:42:09
United States Congress have gone including other speakers of the house I think there is bipartisan support now to
00:42:14
defend Taiwan I actually think that that is in the cards I think there's a very high probability that we actually end up
00:42:21
in a war with China really this Century oh yeah I don't think so I think too much has the biggest Flashpoint in the
00:42:28
world uh I would agree with that but explain why you think there's going to be a war because I think a lot of people
00:42:33
think there's way too much at stake here for there to be a war so there is going
00:42:37
to be some sort of negotiate settlement in the South China Sea so why would you think you think the majority of cases
00:42:42
there's going to be a war really you you have to look at it first of all from the Chinese point of view they view
00:42:48
Taiwan as sacred territory and for decades now they have said in every single meeting diplomatic meeting with
00:42:54
the U.S Taiwan is always their number one issue they are hell-bent in recent unification of mainland China with
00:43:02
Taiwan and they would like to do it peacefully through coercion if they can but I think they will do it militarily
00:43:09
if they must and the only question is when they feel that they will be strong enough to basically take the island by
00:43:15
force so that's I think the Chinese point of view and I think America is increasingly
00:43:21
committed to the defense of Taiwan so you know we have contradictory statements on this the the one China
00:43:27
policy says that we respect that there's one China but on the other hand the Taiwan Relations Act
00:43:34
commits us to help in the defense of Taiwan so we have a contradictory policy on this but if you really don't
00:43:43
understand you would agree China has flip-flopped on this I mean it's only the last
00:43:47
hundred years that they've really considered Taiwan strategic they didn't care about it two or three hundred years
00:43:51
ago they were kind of like this is worthless you guys do what you want Taiwan was part of China until 1895 when
00:43:57
Japan took it from them yeah they they didn't want it at that time that's that's the other thing they were like
00:44:02
this is worthless real estate we don't care well Taiwan Taiwan is extremely important strategically and if you want
00:44:09
to understand why I think you need to look at this map yes it was really interesting to pull that
00:44:16
up actually yeah it's a really interesting discussion because 200 years ago they didn't care and then all of a
00:44:19
sudden they're like wait a second if we're going to be in wars with the west and Japan's going to be a democracy we
00:44:24
do actually have something at stake here we'd like that Island back the island chain strategy was originally created by
00:44:29
John Foster Dallas Justice one of the of Secretary of State I think under Eisenhower who was one of the
00:44:37
initial architects of our containment policy against the Soviet Union but also came with this idea of how we would
00:44:41
contain China and East Asia and the basic idea is that China is surrounded by a series of Island chains the first
00:44:50
island chain goes down from the southern tip of Japan to Okinawa to Taiwan to I think there's some islands in the South
00:44:58
China Sea the sproutly islands it's got the North West tip of the Philippines that's the first island chain second
00:45:04
island chain goes out to Vietnam eastern part of the Philippines no Vietnam's all
00:45:10
the way down I think the second island chain includes you know it goes down to Indonesia and
00:45:18
then I think there's even a third island chain that includes Guam although Guam actually might be in the second
00:45:22
somewhere it's somewhere around there it's a heavily fortified American base so the idea is if you want to bottle up
00:45:28
and contain China you do it by controlling these Island chains and Taiwan is really the central one it sort
00:45:36
of divides this East China Sea uh where you've got South Korea and Japan from the South China Sea where you've got
00:45:42
Vietnam and Malaysia between Vietnam and Japan it's literally if you were to draw
00:45:48
a center line of China's Coastal access that is it yeah so so the bottom line is
00:45:53
this if you want to pursue a policy of containment against China you really want to control these Island chains
00:45:59
another way to think about it is that these islands are Unsinkable aircraft carriers
00:46:06
they allow America to project power six thousand miles away into the Pacific that's how we saw during war two is we
00:46:13
had all these island hopping battles and as we took these islands they would then
00:46:17
become a runway for the next stage of to project American power to get all the way to Japan so you know if you believe
00:46:24
that we're headed for or we already are in Cold War II with China and I think we
00:46:31
are I think China is really I think we'd all geopolitical threat not Russia the way that you would contain China and
00:46:38
keep them bottled up is to have these islands in the American Alliance it's gonna be very hard for China which is
00:46:45
now building a huge blue water Navy has actually more ships to the United States
00:46:48
it's gonna be very hard for them to project their power all over the world if they are contained a balled up and
00:46:54
have to watch their own backs one note on the number of ships though in East Asia is you know they they have a lot of
00:46:59
small ships the tonnage wise we have much more tonnage and if you were to look you know even uh the the the
00:47:05
perfect setup as you explained through these islands is very similar to Nato and the um what's happening with Russia
00:47:12
you know we have Korea we have Japan uh we have Vietnam the Philippines we have an incredible Alliance in this area and
00:47:20
that's a great thing for America and Taiwan obviously is a jump ball here uh but this is a setup for China you know
00:47:28
having Jason what do you think about the repercussions of her visit so catl which
00:47:34
is Tesla's biggest battery supplier basically you know delayed the announcement of a of a factory it's not
00:47:40
clear whether they're going to put it into the United States they may actually pick a city in Mexico but what the
00:47:46
decision that was supposed to happen now has now been delayed until September October
00:47:50
there's a bunch of you know there's all of these crazy military drills that happened was it all worth it I mean that
00:47:55
is the question and and I'm asking why now was it worth it we don't have enough information I think
00:48:01
to know what why this was done now it was it a freelance he asked me a question let me finish is is it a
00:48:08
freelance and Nancy Pelosi is completely freelance or is there a bigger strategy
00:48:12
here is the question is China weak now are we trying to send a message to them and one could equally take the side of
00:48:20
the argument that the United States supporting Finland uh supporting Sweden supporting NATO
00:48:26
you know supporting the Ukraine and supporting the Pacific is actually the right move here to contain the dictators
00:48:32
I agree but we have a I agree but we have two people to do that so president and the Secretary of State
00:48:37
well that would be a much bigger provocation I think is the issue so if you sent the president that would be a
00:48:42
very big provocation the Thomas Friedman article that sax mentioned was pretty explicit that you know Lincoln and Biden
00:48:50
both told her please stand down yeah the NSC and the joint Chief said please stand down you are way over your ski
00:48:58
tips here and she's so great I agree I I I've been very public what is the point
00:49:03
of doing this now is the question and we don't have information once China tried
00:49:07
to dictate to Pelosi that she couldn't go of course we had to back her play but you have to be kind of a fool to fall
00:49:14
for this in the first place this was self-indulgent by Pelosi she didn't need to pick this battle the administration
00:49:19
asked or not to and look let me give Brian some credit here Biden has the right policy on Taiwan which was stated
00:49:25
this way he says that we support the status quo and we are against unilateral changes to the status quo we want the
00:49:33
United States to be a status quo power with respect to Taiwan and force China to be the revisionist power and we need
00:49:38
to be very careful that we do not come across as the revisionist power that would give China an excuse so we want to
00:49:46
just maintain the status quo that should be our policy all right everybody we'll
00:49:49
see you next time on the rain man [Music] we open source it to the fans and they've just gone crazy
00:50:04
[Music] somehow [Music] we need to get Mercies [Music] I'm going all in