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how good do I look I'm so sun-kissed how many how many buttons down are you oh my
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God I have three buttons okay at three buttons no look look look look is there a button below that we can't see no pants no pants
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either are you free buttoning and free balling it or is both happening or what let your winners ride Rainman David
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and instead we open source it to the fans and they've just gone crazy with it [Music]
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loveen hey everybody welcome back to the Allin pod this week our hostess with the
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mostess jcal is out with covid getting treated spending the day in bed we wish him well we wish him a speedy recovery we are going to plow forward like all
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championship teams do this week I think we're going to kick it off with a conversation about the election update
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obviously Harris came out guns are blazing in the media the accolades seem to be flying and uh the polling data is starting to become worrisome it seems
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for the Republicans just this week Nate silver released his newest model update the silver bulletin I think he's got it uh um trademark as nowadays and in the
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model he tries to estimate what does the polling data show us with respect to the Electoral
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College and the popular vote in the upcoming presidential election Harris uh currently has a 42.5% probability of winning the Electoral College Trump
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56.9% Kennedy coming in at 0% on the popular vote Harris has a 57.1% probability of winning the popular vote 42.9% probability for Trump I guess
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I'll start it off with David Sach TX given the momentum coming out of the gate since the announcement of Harris as
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the Democratic nominee and this recing polling data what's your read on the landscape today what's your read on where we stand and what's ahead here and what do you take away from these polls
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well look I think what happened is that Biden dropped out of the race he abdicated Harris took over and it
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created a sense of euphoria on the part of the left because they thought they had a shorefire loser with Biden and
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they were div Ed and then once Harris replaced him they thought okay now we got a shot and we can fully unify and
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and get behind this this new candidate so what you've seen is over the past couple of weeks the mainstream media has gone all out on behalf of kamla Harris
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and yes this has led to a rise in the polls but I think that the highs that Trump were at were always a little bit artificial in the sense that if the Democrats could field a candidate who
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could campaign P it was always going to be a close election Biden was artificially depressed in the polling
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because he just couldn't campaign he could barely read from a propor he couldn't do interviews so I think you're seeing the race normalizing this is
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going to be a close one it's going to be a nailbiter but I think the question about
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this honeymoon period that Harris has right now is whether it's sustainable I mean she has not done any press interviews she has not done any press conferences she's not uh answered one
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question she's not been asked one tough question by the media she has only read from a
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teleprompter she's only done scripted appearances and yet at the same time she's basically been changing all of her
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policy positions and running from every position she ever stood for so for example she said that she was in favor
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of Single Payer now she's against it she said she was in favor of packing now she's against it she said she was
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against fracking now she's in favor of It On the Border she said that we should consider abolishing ice now all of a
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sudden she's in favor of more funding for Border Patrol on crime she used to take kind of the the BLM position that
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you know cops don't make us safer to now she's saying that she's a cop and prosecutor herself she used to be in
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favor of federal gun buybacks now she's against them it just goes on and on I mean in the 2020 riots she raised money
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for the legal defense of of riers now she's distancing herself from those positions my point is this is that after
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spending really her whole career staking out positions on the far left she has now dropped all of these positions for
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political expediency and the question is what does she stand for at all does she just kind
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of blow with the wind and and say whatever helps her win whatever the next election is I mean I think that's that's
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basically what's going on here and normally what happens is the Press would ask you that question but she's been getting a free pass because the mainstream media has basically been operating as a division of the DNC and
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they're not holding her to account in any way they're not requiring her to answer any questions and as a result yes
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you're seeing this um this bounce in the polls but I think the question is can she sustain this for a 100 days can she really get through the entire election without having gone through a primary
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without ever having to explain her positions on issues and she just does these short scripted appearances I just
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think that at some point over the next 100 days that approach is just going to fall apart she's going to have to do a
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debate she's going to have to answer questions at that point I think the bloom will come off the rose a little
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bit here and you'll see the polls normalize do you think uh that JD Vance has negatively affected the interest in Trump that he you know there's a lot of media coverage about JD Vance being
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potentially the wrong pick for vice president and that he's creating more of a challenge uh for for the president's
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campaign than uh AB boom no listen anyone who Trump chose was going to be absolutely smeared by the other side and by the media if it had been Doug beram
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there would have been non-stop coverage of the sixth week abortion bill that he signed right you could go down the list
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I mean look what Democrats will say is we just want to see a moderate Republican but when Mitt Romney ran they
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were calling him a fascist so the reality is that the mainstream media and the DNC but I repeat myself are going to
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smear any one who's picked at the end of the day I don't think that it matters what matters is the top of the ticket
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Jam what do you think about the Harris campaign how it's going and the momentum that is being projected in the media and
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the polling data is clearly demonstrating an improvement over Biden's um standings in the polls I mean
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I think we had a situation where one candidate was not real and so saaks is right that a lot of
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the polling up until basically last week is not really reliable now you have this
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Snapback effect which is more about a lot of people that were coming around to this idea of voting for Trump because Biden was such a bad option now
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flip-flopping and so I think that's what explains the Snapback but saak is Right 100 days is a really long time and what Nate Silver's
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poll essentially shows is if she wants to win not the popular vote because at this point now three or four elections in a row that just doesn't matter anymore if you want to win the electoral
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college and be the president you got to go and win five states and in order to do that you have to be very precise on
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about four or five specific issues and in the absence of her defining herself on those four or five issues she's not going to win she'll win the popular vote but again
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when people win the popular vote and lose the Electoral College we've now gone through that enough times where that's just a f complete inside of
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American electoral politics so I think that the Trump campaign and the Harris campaign need to agree on some schedule of debates I hope that they do two and
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ideally three and that they both get after it in front of each other so that those five states that are really going to decide this election has an opportunity to make a a decision on
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behalf for the rest of the country yeah Nick if you pull that chart back up again based on Nate Silver's model of
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polls where he takes all the polling data that's been collected by different third parties he waights them based on
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the performance of those polls in terms of predictive power historically and he creates this kind of macro model that's
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the Nate silver approach here he's estimating that within the 80% bound every state on this list is up for grabs as you can see with the gray lines shown there there's a very slight Mar margin
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on the average in Wisconsin for Trump in Michigan for Harris in Pennsylvania for
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Trump in Nevada for Trump in North Carolina for Trump in Virginia for Harris and so on but each of those
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margins is so slim that there's still quite a lot of decision making ahead for voters so pretty clearly on point that there's is still very much an open election I'll give you guys my read I
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think that there's five camps of Voters going into this when Biden was the candidate the first is anti Biden
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anything but Biden the second is anything but Trump the third is pro Biden the fourth is pro Trump and then the fifth is the other and I think that
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that entire bucket of anything but Biden just became available once Biden dropped
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out of the race and it was a pretty sizable bucket that there's a large number of Voters out there that felt
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pretty strongly that Biden poses such a significant risk for leadership in this country because of the mental issues and the
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performance issues that we had seen that as much as people didn't love Trump they were willing to vote for him because
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he's not Biden and now that camp has an option and that option is Harris so some percentage of that camp and I would say
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probably a super majority of that camp is now switching into the the Harris bucket the prot Trump bucket doesn't
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move the pro Biden bucket probably doesn't move it sticks with Harris and the anything but Trump bucket doesn't move it sticks with Harris so you know the the fact that there was probably such a sizable number of Voters
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in the anything but Biden Camp is what's probably helping Harris at this point and creates a bit of a handicap for
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Trump going into this last stretch of the campaign that's my re because I know I know a lot of people with that point of view that's an interesting point of view and let me let me just respond to that for a
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second so one of our critiques of Biden not just in this election cycle but probably going back a year is that Biden had become basically a figurehead president almost a construct and he was
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fronting for a shadow cabinet or a group of powerful staffers who are really running the country basically because of
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his cognitive decline and we sorted a joke that whoever the White House intern was who was running the social media
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accounts or the staffer who was running the teleprompter was basically the president because they could dictate
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what Biden said now I think the question to ask is has anything changed KLA Harris refuses to do any interviews she doesn't want to do any unscripted appearances she's abandoned all of her
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policy positions that have been longstanding and were the reason why she ran for president in the first place in
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2020 so the question to ask is do we still have a construct as the president I mean the Biden staffers who are running Biden are now just running Harris we don't know what she stands for
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we don't have her appearing in unscripted natural appearances we don't have her being challenged by the Press she's not willing to do what Trump did Trump just
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walked into the lion's den yet again at the nabj National Association black journalists right exactly so Trump walks into a very hostile interview at nabj
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Harris was supposed to come and she didn't come she would have gotten a very softball interview she's not even
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willing to do that I think that in substantive terms I don't think that much has changed this election the Biden
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staff is still running for president I mean that's what you're voting for I would agree on this because I think in the last two weeks what I've seen is
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statements coming out of the Harris camp that clearly distinguish her and her campaign from Biden's policy positions
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and Biden's campaign rhetoric historically most most particularly saxs is on Israel
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when Netanyahu came to visit the United States she put out a very pro-israel statement that we all know the Biden
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Camp has largely avoided doing because of the concern over the pro Palestinian rights movement's reaction to the Biden
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Camp being pro pro-israel and the Harris statement was pretty finely worded and pretty strongly worded that she is very
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much in favor of Israel defending itself she acknowledged that there's a loss of Palestinian life that matters and we
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need to acknowledge and address it but she was very much in support of Israel which is not a position we've seen the B
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cam take and I think that we're starting to see what you know what is a little bit more of a fracturing between Harris
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being allowed to be free and being allowed to have an opinion outside of the party line dictated by the Biden
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camp and I think we'll probably see more of that in the next couple of weeks and we'll probably see her starting to be a
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little bit more refined in what that what what differentiates her from Biden because I do think that's what's going to allow her to win this election and
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she's gonna stand up and say Here's why I am not Joe Biden and here's what makes me different from that individual I
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respect him I love him he helped me but let let me tell you why I'm why I'm different and why that should matter she
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snubbed Netanyahu freeberg I don't know what you're talking about she snubbed Yahoo I think you're an example of the
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people that want to give her the benefit of the doubt okay I think there's a large fraction of those people that's
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not true don't no that's that's not a fair way to characterize me at all I'm simply pointing out that she made a
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state I'm pointing out that she made a statement that's different than what Biden said that's it that's all I'm saying hold on a second I think on
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Israel so first of all she didn't write that statement the staff did okay now what is the staff trying to accomplish
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on Israel they actually have a genuine Dilemma on the whole Israel Palestine issue because the Democrat Party is very
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much split on this the Democrat establishment is pro-israel but the progressive base is very pro- Palestine
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and even polling among youth shows significant support for Hamas even and a lot of these people are very much within the the sort of Hardcore left-wing base
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the Democrat Party so what the Biden Administration has been doing and what I think Harris is continuing is a process
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of talking out of both sides of their mouth Biden went to Israel hug BB basically supported his policy but then gave some lip service to the idea that
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he would limit the weapons that Israel is able to use Harris puts out this very pro-israel statement but then snubs
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Netanyahu at that speech he gave before Congress so look the Democrats are trying to have it both ways they have a
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base that is fractured on this issue and so they're trying to thread that needle
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now you're right that let's just up level let's move off the Israel issue for a second
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there's no question that Harris wants to run from her record as being Biden's vice president there's a good reason for that the Biden Harris Administration is historically unpopular what you have to
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ask though is whether it's credible Harris suddenly is in favor of more money for border patrol why didn't she
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advocate for that when she was Biden's borders are the media is furiously scrubbing its websites to remove
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references hold on they're removing historical references from during the Administration when she was openly
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called the borders are they're trying to memory hole that so look I have no doubt that the Harris campaign wants to drop
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every substantive policy position she's ever taken because they just want her to be a construct they just want people to
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be excited because I do think that what you're saying is exactly what she needs to answer to in public in the next couple of weeks to earn credibility on what is she different from the Biden
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Administration on in terms of policy and and why did she not make that clear when she was in the Biden Administration and
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she can say I didn't agree with it or she can say I've changed my mind and I think both of those might end up being
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where she needs to go to but you're right she does need to answer to that I don't think it's clear she has to do any of that you think she can just hide out
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and and Coast no right now the I right now the calculation is to get as many people to basically move into the not Trump voting stance and they're giving
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as much time as possible to measure that and see if it's a winning strategy but again and I think
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we just talked about this mathematically it can win the popular vote but it will not win the electoral college so she is
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going to have to appear and be in a position where she's confronted on about four or five key issues and that's where this presidency is going to get decided four or five issues in four or five
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states and we'll all know where she stand on the border on the economy by the way the problem is and if you look
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at what happening now we are in a recessionary stance there's going to be a lot of ink that gets spilled starting in September on the fact that X of a handful of companies were basically in a
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recession so that's going to have to get put on the feet of the sitting president and the sitting vice president so
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there's a whole set of complicated issues I think it's smart actually for her to strategically kind of stay quiet
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right now and just kind of see all the Goodwill that's pent up to the not Trump candidate is going to flow her way right the problem is that that's not enough to sustain yourself for a 100
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days and so she's just going to have to take a point of view well it might be if the Press Lester got away with it no
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because I I think David I think you're right because when when you go into a debate or when you go into these places
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people will want to know the answers to these questions and if the media tries to memory hold this thing I think the
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the thing that they most don't want which is another Trump Victory will actually happen because of it because
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people will come in this kind of like ambivalent group of folks that are or independent group of folks that are
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looking for very clear point of view on four or five issues maybe will'll come to a rally and instead of that they'll
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hear Megan the stallion and they'll Wonder to themselves well this is not what I came for I came to know where you
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stand on these four or five issues so the media actually in order to give her the best chance of getting elected and
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this is counterintuitive to which is why they probably won't do it they'll have to confront her on these issues yeah I
00:19:04
think that's fair and that's why I invite vice president Harris on to the all in podcast to join us for conversation I think we all really enjoy
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that and just to declare my position I am in Camp five the other Camp I am not pro or anti either of these candidates I obviously have issues that I think are far more existential to the longevity of
00:19:23
the United States and the Republic that need to be addressed that don't seem to be a priority for either candidate or either party as I've mentioned many
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times on the show that's where I stand let's move on sax I just want to ask do you think that Trump is at risk of shooting himself in the foot by being too public too open and too engaging if
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we take a look at what happened this week the National Association of black journalists had a convention on Wednesday it sent interview requests to
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both president Trump and vice president Harris and Trump accepted and went in person Harris said she couldn't do it in
00:19:53
person or via zoom and according to the uh National Association of black journalists Harris is in talks to do a
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Q&A session with them at some point in September there are two moments that are making a lot of news one was the first
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question Nick can you play this where adc's Rachel Scott went after Trump a lot of people did not think it was
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appropriate for you to be here today you have pushed false claims about some of your Rivals from Nikki Haley to former
00:20:18
president Barack Obama saying that they were not born in the United States which is not true you have told four Congress
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women of color who were American citizens to go back to where they came from you have used words like animal and
00:20:31
rabbit to describe black District Attorneys you've attacked black journalists calling them a loser saying
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the questions that they ask are quote stupid and racist you've had dinner with a white supremacist at your Maraga
00:20:43
Resort so my question sir now that you are asking black supporters to vote for you why should black voters trust you after you have used language like that
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well first of all I don't think I've ever been asked a question so in in such a horrible manner first
00:21:01
question you don't even say hello how are you are you with ABC because I think they're a fake News Network a terrible Network and I think it's disgraceful
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that I came here in Good Spirit uh I love the black population of this country I've done so much for the black population of this country uh including
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uh employment including opportunity zones with Senator Tim Scott of South Carolina which is one of the greatest programs ever for black workers and
00:21:37
black entrepreneurs I done so much and you know and I say this uh historically black colleges and universities were out of money they were Stone call broke and
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I saved them and I gave them long-term financing and nobody else was doing it I think it's a very rude introduction I don't know exactly why you would do
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something like that and let me go a step further I was invited here and I was told my opponent whether it was Biden or
00:22:06
Camala uh I was told my opponent was going to be here it turned out my opponent isn't here you invited me under
00:22:13
false pretense and then you said you can't do it with zoom well you know where's Zoom she's going to do it with zoom and she's not coming and then you were half an hour late just so we
00:22:24
understand I have too much respect for you to be late they couldn't get their equipment working or something Mr President I would love
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you I have answered the question Z is he shooting himself in the foot by agreeing to show up he showed up to the Bitcoin
00:22:37
conference which obviously went phenomenally well but Z is he shooting himself in the foot by being too open
00:22:42
and engaging too much and should he lay low no I mean look what kind of President do you want I mean I want the president who is fearless and willing to walk into the lion's den over and over
00:22:54
again and answer tough questions what you saw in that soundbite here is that Rachel Scott the interviewer that
00:22:59
whatever she was doing is not journalism this is supposed to be a journalism Association she turned that interview
00:23:04
into an ambush it was it was hostile what she did and right out of the gate I mean the first question she's attacking
00:23:10
him and he pushed back on it I mean I think you saw him push back on the media in a way that only Trump can do now you
00:23:18
also heard there I think a really key point that Harris basically passed on the opportunity to attend when she was
00:23:24
originally supposed to that would have been a softball interview for her but she is not willing to do any kind of
00:23:30
interview right now no questions no unscripted appearances she just wants to read from a teleprompter that um rally
00:23:37
she did in Atlanta that had Megan the stallion perform so it's a free concert and that Drew out a huge number of people then Hara spoke for 17 minutes and people were leaving five minutes in
00:23:48
because they're just there for the concert I guess the question that people need to ask I understand why this is strategic for her I mean obviously it's
00:23:56
better for you if you don't have to take any positions whatsoever and you can just abandon all of your previous positions
00:24:03
without any explanation whatsoever and the media gives you a free pass on that I can understand why that's strategic
00:24:08
but I think that voters need to ask the question who do you want representing the United States right now in a world
00:24:14
that's on fire who do you want to stand up to Putin or X or make peace with them
00:24:20
who do you want to stand up to or be allies with Netanyahu for example the United States right now is in a very difficult situation we can't have a teleprompter President we need a strong
00:24:30
president I appreciate the fact that Trump is willing to take on all Challengers I just think it's manifestly
00:24:36
clear that these are the qu the qualities and traits you want in a president of the United States okay so
00:24:41
your opinion is Trump needs to continue to engage openly and publicly it shows strength and it shows a capacity to deal
00:24:49
with adversity and conflict point taken so uh let's pull up the next clip where Scott Ben asked Trump if Harris was a
00:24:56
Dei candidate and uh here's his answer uh I've known her a long time indirectly not directly very much and she was always of Indian Heritage and she was
00:25:09
only promoting Indian Heritage I didn't know she was black until a number of years ago when she happened to turn
00:25:15
black and now she wants to be known as black so I don't know is she Indian or is she black she has always identified
00:25:21
as a black I respect either one I respect either one but she obviously doesn't because she was Indian all the
00:25:28
way and then all of a sudden she made a turn and she went she became a black person just to be clear sir do you
00:25:34
believe I think somebody should look into that too when you ask a continue in a very hostile nasty town timoth let me
00:25:41
ask for your response did Trump shoot himself in the foot with that comment and maybe you can give us your
00:25:47
read on how he's doing with respect to this you know active engagement with obviously adverse let's call them you
00:25:54
know journalists and interviews and forums well I'd like to I'd like to hear from the cauc do you guys think that
00:26:00
yeah I'm not talking about the answer itself I'm talking more about Trump getting out there and like engaging this way yeah here's what I will say I think
00:26:09
that from now until the end of time with social media tools replacing traditional
00:26:21
media and then with AI tools that are going to create enormous amounts of very sophisticated misinformation and disinformation I think the only strategy for politicians from here on out is to
00:26:36
leave zero ambiguity between what you think and what you say and so without judging the quality of the answer I think the thing that is
00:26:47
going to be the most critical for people is to know that the person that you're voting for is in charge and you get a great chance to vote this person up or down and and the more content that that
00:26:59
person puts out directly the less likely it is that this ambiguity exists that can then get exploited whether it's by
00:27:06
internal people inside of a country or whether it's foreign adversaries and so my perspective is it's pretty Fearless of somebody to
00:27:16
just constantly say what they think and again I'll just go back to where I what I said before with respect to the Harris campaign I think that America were smart
00:27:29
enough and I think you did a good job of dissecting the electorate into five groups Americans were smart enough to
00:27:35
basically say never Biden because of the risk it represented to not know what one was voting for irrespective of whatever
00:27:42
your historic allegiances were I think they're smart enough now to demand answers to the four or five questions
00:27:48
that really matter and I think if Harris wants to really win this and give it a legitimate shot she's going to have to
00:27:55
take a point of view on these five things and she's going to to step into the liance then and be asked very tough
00:28:02
questions by a lot of different people and she's going to have to leave no ambiguity that can be then exploited by
00:28:08
misinformation and disinformation between now and the election so you know that's honestly my reaction ZX final
00:28:15
word yeah look I would say that in that clip and other clips from that event I think you should pay a lot of attention
00:28:21
to the audience's reaction because what did they do in that moment when Trump was supposedly committing a faux getting
00:28:28
into dangerous territory they laughed you know when mint Romney spoke to this group a number of years ago when he was
00:28:34
running for president he got booed Trump never got booed he got a lot of laughter there was a lot of appreciation why
00:28:40
because Trump is always authentic he's always who he is whereas Mitt Romney always appears to be scripted and
00:28:46
frankly sort of patronizing so I think the audience appreciated Trump for who he is I think that when Trump goes into
00:28:54
these areas there's always a grain of Truth to what he's saying I think that Harris has leaned into different parts
00:29:01
of her Heritage for different audiences but I do think that this is ground he should get off of and I think a much better line of attack is to talk about
00:29:11
the fact that she has dropped all of her left-wing policy positions and refuses to answer questions or do unscripted
00:29:19
appearances without having a teleprompter in front of her I think that's a much better agree and I think
00:29:25
that's what the campaign will be about from here I you know I I don't I don't think we want this campaign to be about
00:29:30
identity I do think that the rise of the authentic politician the rise of the authentic CEO typically Founder The Rise of the authentic celebrity is definitely
00:29:44
the trend that we're seeing which is that authenticity counts for more than anything regardless of one's position and you know obviously having a trust in
00:29:53
in the individual is rooted in the authentic capacity of the individual rather than the prompter CEO or the
00:29:59
teleprompter politician or the teleprompter or buttoned up or image managed celebrity and that's definitely been a trend that's been building over the last 10 years culminating in a lot
00:30:12
of these changes that we're now seeing I mean look just think about just think about what's going to happen over the next four years if Harris is elected I
00:30:18
mean you're G to have a prompter president I mean she's just never going to be off prompter it's going to be like
00:30:24
B Biden at least tried to go off prompter whenever he did it was a disaster but I mean this this is one of
00:30:29
the criticisms of a lot of hired large Enterprise CEOs is that they come in they have their all their words written for them by a media team they
00:30:40
have all of their communication scripted managed every press interview is with the right journalist said in the right
00:30:45
way and the CEOs that seem to build the greatest value are those who are typically Founders because they're willing and able to be authentic because they weren't hired by the board it's their business built and so they're
00:30:59
willing to be authentic and the the CEOs who operate at scale with authenticity build the greatest market value I agree with you that whether you're a CEO or you're a politician authenticity counts
00:31:09
but I but I think this election is going to be a test of what people want in their president I mean do you think the president needs to be a chief executive who at some level is calling the shots
00:31:20
or do you think it's good enough for the presidency to essentially be a construct and to be a a manifest of the staff
00:31:28
right and I think people I think I think voters look at policy sacks and they look at character and with respect to
00:31:34
character there's a certain value that they ascribe to this authenticity component which is typically lacking in
00:31:40
most politicians and Trump delivers that authentic component in how he talks and
00:31:46
how he's off the cuff and so on he's got other character issues which I think hurt him and on the policy side people
00:31:53
really kind of look at those objectively those points what's your what's your policy and and you know do I trust you as
00:31:58
character right but I but see I think it's more than that because I think any large organization needs a chief executive uh what happens when you don't
00:32:05
have a chief executive or you don't have a strong chief executive you get drift the organization strategically drifts
00:32:11
100% yeah it gets driven from the bottom instead of from the top yeah the decisions that get made are the result of bureaucracy and political fighting
00:32:18
staffers exactly you need someone to control that and I think it's really interesting that when Biden was still
00:32:24
the candidate but everyone could tell that he was sort of impaired that the argument you started hearing from
00:32:30
Democrat partisans and and the media is that well you're voting for a team you're not just voting for a president
00:32:36
right you're voting for a shadow cabinet the exactly the thing that we criticize on this pod for the last year my point
00:32:41
is that you're still voting for a shadow cabinet unless Harris is willing to get out there and answer questions and be
00:32:46
unscripted you're just voting for a staff and I I don't think that's good enough I don't when we're in a world
00:32:53
where we're in a proxy war with with Russia and we could be in a war with with China and we have these problems in
00:32:59
the Middle East I want a decider I want to know that the buck stops here not the
00:33:05
buck stops wherever let's shift topics I'd like to talk about what's been I think a lot of chatter amongst friends
00:33:15
of ours who are active in the market that at a policy meeting on Wednesday the FED held rate steady Jerome pal said
00:33:22
quote a reduction in our policy rate could be on the table in September if inflation continues to fall he said
00:33:28
we're getting closer to the point at which it'll be appropriate to reduce our policy rate but we're not quite at that
00:33:35
point the next fed meeting where this R cut could happen is September 17th and 18th and if you look at the um the the Futures markets today the market is now
00:33:46
estimating a 20% probability of a 50 bit rate cut in the September meeting 80% probability of a 25 bit rate cut and basically no probability of no rate cut
00:34:01
anymore in September jamat is that your read on where we're at and you know is the Fed kind of appropriately reading
00:34:08
the economic teal leaves given the recessionary indicators that you just mentioned earlier and what else we're
00:34:14
seeing that the fed's Mandate obviously is meant to support both the monetary policy but also employment in this country I think we're in a recession and I think the problem with a recession is
00:34:27
even as inflation diminishes if your purchasing power is shrinking faster than prices
00:34:34
fall it still feels like prices are going up I don't know if you guys have been reading the Wall Street Journal but like the last couple of days they've
00:34:40
been doing a whole series on people that have been left behind by inflation and I was really surprised as
00:34:47
I read those articles just the sheer quantity of impact in terms of the number of people that's touching independent of salary and so
00:34:58
my takeaway kind of just reinforced the fact that we've sort of like looked past
00:35:03
the problem because of the stock market going up for the last few quarters because of
00:35:10
Seven companies and now that people are sobering up to the reality that even they don't have an answer for all the
00:35:15
money they're spending the stock market's down next to those seven businesses and I think that
00:35:21
you're going to start to see some real pain in the fall so Jerome Powell is probably going to cut 25 and and he and
00:35:27
and I think that if they get to him he'll try to cut 50 but the problem is it won't solve the problem and I think
00:35:34
if this is again where kamla Harris has to be she's gonna have to make a very difficult calculation here which is she's going to have to throw Joe Biden and then the economic team in the White
00:35:44
House under the bus here and say that was them yes they screwed it up it was against my wishes and here's my vision
00:35:50
for how we fix this because otherwise the Republicans will be all over it and I think if you have a bad economy like
00:35:56
what it looks like going into November it's going to be very difficult for the Democrats to to win the White House well
00:36:03
without bringing it back to politics sax economy good or bad and is Jerome pal gon to cut rates 25 bips 50 bips you
00:36:09
agree with what the Market's forecasting I guess what I would say about the economy is that in nominal terms we're
00:36:17
not in a recession according to the data that's come out the Q2 GDP was roughly 2% GDP growth however I think there's a
00:36:24
couple of problems one is that what we've seen over the past year or so is that the economic data that comes out
00:36:31
keeps getting reforecast down so they put out a provisional number and or an estimate and then when they finalize the
00:36:38
number three months or six months later it always seems to go in One Direction we've seen this over and over again with
00:36:44
new jobs being reforecast down and we saw this with the q1 GDP where initially they reporting I think it was like a 1.8% number and then it got restated down to 1.3% so the Q2 GDP number was
00:36:58
around 2% it was good but again it's a provisional number and let's see where it actually ends up the bigger problem
00:37:04
is government spending the deficit is running at 6% of GDP whereas economic growth is at let's call it charitably 2% well government spending is included in
00:37:17
GDP so if you were just to balance the budget let's say that you were to make government live within its means and not have a deficit we' have negative 4% GDP
00:37:29
growth so the only reason why we're in positive GDP growth territory is because of massive government spending that we know is not sustainable and at some point the bill is going to come due for
00:37:43
that so I'd have to say that you ask me is this a good economy I mean it's it's not the worst but there's definitely unsustainable things propping
00:37:54
it up and I I do think that the bill will come do at some point for this it's not just fully supported it's overly
00:38:00
supported by the federal government in the United States and I mentioned this last week federal government spending is
00:38:07
over 2x the sum of all state spending federal government spending into next year with the Biden budget proposal $7.3
00:38:14
trillion that's like 30% of GDP and I think you guys may remember this analysis I pulled together a couple months ago where I estimate something close to 30% of us employment is uh
00:38:28
either direct government employment or indirect government employment through government payments to third parties
00:38:35
that are employing those individuals so the government is becoming an integral part of maintaining
00:38:42
the flow of dollars in the economy because they are such an integral buyer and seller within the economy and an
00:38:49
integral employer within the economy and so to reverse that trend is what I worry about more than anything as I've shared
00:38:54
many times which is why I question whether either Poli IAL candidate actually solves this problem for us and we're almost like you know arguing over
00:39:01
which marbles I get while the Titanic is sinking that there is a real fundamental issue with how this economy is
00:39:07
structured I will tell you anecdotally I have a lot of conversations with folks that work in the agriculture industry in
00:39:13
the food industry in the industrial industry many of these industries that have a very different Capital flow cycle
00:39:19
than we all deal with typically in silic Valley and software and many of them are struggling I mean these are businesses
00:39:25
where some folks have told me orders completely fell off a cliff in Capital Equipment that some small business
00:39:30
owners that sell whatever piece of equipment you want to come up with they are not getting orders there's no
00:39:35
Revenue there are massive um over Supply and under purchasing happening in the food and a markets and yet folks are still trying to push up prices in order to make the debt payments that they have
00:39:46
to make on their High interest debt now and that creates a crippling condition for them across the economy I think
00:39:52
there's the Habs and the Have Nots as is indicated in this article that was just pulled up where there are some parts of
00:39:57
the economy where you have low debt high margin businesses that can continue to scale and continue to raise pricing have
00:40:04
a lot of elasticity and in in pricing and then there are the others that operate on you know 1% interest rate
00:40:11
charges changes Drive their profit or loss for the year in a pretty meaningful way and that's the part of the economy
00:40:17
that's really suffering and unfortunately the action that will be taken to resolve this isn't necessarily
00:40:23
a free market action it's going to end up being some sort of government intervention which furthers the government's involvement in the economy
00:40:30
and furthers the tentacles that make it much harder to ultimately pull out of this this spiral and this problem that's
00:40:35
my rant on this whole point but yeah no I agree with that I agree with all that I've seen some reports that a crazy
00:40:41
percentage of the job creation over the past year has have been government jobs all of it more than 100% so basically
00:40:49
there has been a net loss in private Market Jobs net of the effect of government employment or government
00:40:55
spending on companies that then use those dollars to go hire people let's talk about the impact on markets so you
00:41:00
know as a result of this uh this rate cut announcement or this rate cut indication markets have rallied a little
00:41:06
bit but you know to Chop's point there are definitely you know the halves and the have knots AMD beat they were up 4%
00:41:14
after hours on you know improved AI chip sales uh their revenue was $5.8 billion
00:41:19
up 9% year-over-year Microsoft had Soo results Nvidia jumped 12% on some comments made uh by meta um and Microsoft that both said that there's
00:41:31
increased AI demand and they're going to continue to uh to build out capacity so chamoff I know you've talked a lot about
00:41:37
this in the past maybe you can give us your read on the comments that were made this week you've historically said that a lot of this buildout is well ahead and
00:41:45
there's no real Roi yet but clearly some of the buyers of this Capital Equipment are saying Hey There is Roi we're going
00:41:51
to continue to build aggressively so maybe you can share a little bit on is anything different or we just kind of
00:41:56
seeing folks justify with the decisions they've made I mean sadly this is another case of Sela
00:42:02
news these things rallied Phantom in the after hours and if you look at them they've they've all just given back every dollar of gains so I think that people know that
00:42:16
that we're sort of at the tail end of the of the hype cycle in Ai and every chance every time these things Spike people take an opportunity to just massively sell I mean in has turned over
00:42:28
308 million shares today yeah it's crazy it's it's it's literally it's beginning
00:42:33
of the day it's trading like a penny stock it's going straight down like a lead balloon yeah meta rally they've
00:42:40
basically given up all of their gains it's gone kind of straight down today but the point isn't that these companies
00:42:46
are going to zero that's not the case it's just the point is that right now people are optimizing they're selling
00:42:52
every chance they get to kind of book the profits and I think that that's fair because you know at some point nobody
00:42:58
knows when all of this Phantom money is going to show up right so this is independent of what we would call the
00:43:04
economy independent of the recessionary conversation and the rate conversation we just had look I mean I'm in the
00:43:11
middle of this right now with 8090 it's been one of the joys of my career to actually start a company in the middle
00:43:17
of what I think is the most important wave that I've ever seen professionally since social networking and I jumped
00:43:24
into the middle of that wave and I kind of tried to ride the best wave I could there I'm doing it here but my honest
00:43:31
takeaway after being in this thing now for you know seven months intensely and I'll be into it for as many years as it takes to build a successful company is that AI is massively
00:43:46
deflationary it takes not that much money and the results are really meaningful in terms of the amount of efficiency that you can capture and the costs that you can save and the right
00:43:59
business people I.E startups that are starting from scratch like myself and my co-founders at 8090 we will pass that on
00:44:06
to our customers because it allows us to differentially price versus incumbent Solutions and so I don't see a path
00:44:14
where all of a sudden a multiple of the money that's been spent shows up I don't
00:44:19
see it I do see a path where companies find tremendous like think about it this way if you looked in the 1980s and said what is the most
00:44:30
profitable operational company that existed in the80s I don't know what that company was but I suspect that their EA
00:44:38
margins were roughly in the 30 or 40% range and it and it was probably incredible if you fast forward now 40
00:44:45
years the most efficient company is probably sort of 50 or 60% EIT to margins the reality is that the best AI enabled company will probably have
00:44:57
margins that are 70 and 80% in the next 15 or 20 years now that's an incredible thing that's a big prediction but that will again spur the principal law of capitalism that everybody keeps
00:45:09
forgetting which is you compete out excess return and so while you will have many companies that have you know 60 plus perc operating margins they'll be in much smaller markets and there'll be
00:45:21
thousands and thousands and thousands of them so I suspect what happens is that the overall market growth
00:45:27
but the number of companies Grows by an even order larger order of magnitude and
00:45:32
in all of that the reality is that it's going to be very hard for these big folks to to to sort of see this value
00:45:38
capture that makes any of this investment worthwhile so I think that you're going to have to have some sort
00:45:43
of reset in terms of the capex that's happened here I want to switch gears yet again and talk about the assassination
00:45:50
of is Han I hope I pronounced that right Han he was killed by bomb while staying
00:45:57
in a guest house in Tron according to the New York Times earlier reports indicated that he was in fact killed by
00:46:04
a missile strike from Israel but just this morning the New York Times reported that uh the guest house where he stayed
00:46:11
is run and protected by the Islamic revolutionary guard Corps and is part of a large compound known as nesat in an
00:46:17
upscale neighborhood of Northern Tron and the article in the New York Times goes on to report that according
00:46:24
to several Middle Eastern sources a bomb a remotely detonated bomb was actually planted in this guest house over two months ago in anticipation of the Hamas leader stay in
00:46:39
this guest house and it was then set off once he actually stayed in the guest house this obviously represents kind of
00:46:46
an incredible feat in operational capacity and intelligence I think we've known and talked a lot about and the
00:46:52
media is kind of covered quite a bit about the capacity of mosad but but um I just want to kind of get your guys
00:46:58
reaction to this I think that there's a bigger an important story here about the strength of Israel's intelligence and
00:47:05
Military capacity in the region and what that could mean for their posturing and
00:47:10
their demands and their activity in the region in the months and years ahead particularly with Netanyahu still in
00:47:16
charge so saaks maybe you can kick us off with your thoughts on this article and mad's role in the assassination of
00:47:23
this Hamas leader well there's no question that the Assad established or reestablished its
00:47:29
reputation for extreme competence here being able to infiltrate Iran in order to assassinate the top political leader
00:47:36
of Hamas while hania was a guest of Iran I mean that's deeply humiliating to Iran
00:47:43
I think he was there hania was for the swearing in of the new president of Iran so for them to be able to Target uh him while he was there and set the bomb
00:47:54
months in advance I mean that shows extraordinary planning and intelligence and a huge failure on the part of Iran I
00:48:02
think in terms of the the larger significance of this you know in in the wake of October 7th on this pod I said
00:48:09
that I hope that Israel did not go off half cocked responding the way that the United States did after 911 and when they started bombing Gaza I said this is going to
00:48:21
backfire and you know boy was at an understatement in terms of the reaction of world opinion I mean Israel went into
00:48:28
Gaza basically leveled the place and has alienated practically the entire world the only country that's solidly with
00:48:34
Israel anymore as the United States and even within the United States roughly half the people are now against Israel
00:48:41
and I think what I said at the time was that Israel could pursue or should pursue a more targeted strategy the way
00:48:48
that it did after the Munich Olympics this assassination within Iran shows that the Munich Olympic strategy I mean they basically shown that it's successful they've been able to do it I
00:49:00
wish they had limited their response in this more targeted way because I think that the destruction of Gaza has created
00:49:07
tremendous humanitarian suffering and it's alienated just about the whole world and what has it accomplished I don't think they've gotten rid of Hamas they have not been able to kill the
00:49:17
military leader of Hamas which is sinir who was the actual military planner of the October 7th attack and they have radicalized what you know whatever part
00:49:29
of the Palestinian population was not radicalized has been radicalized and they've turned so much of the Middle
00:49:35
East in the world against them in such a strong way that again I I wish that they
00:49:40
had pursued the the more measured strategy still a tough strategy I mean let me put you in netanyahu's seat you
00:49:49
are leading Israel um Hamas comes into your country attacks kills lots of people what is your measured response to that attack
00:49:59
from Hamas given the capacity you have the Israeli Air Force by the way is second only to the United States uh just to give you some statistics the Israeli
00:50:11
Air Force has 990,000 active and Reserve personnel and 614 aircraft Israel is reported to have up to 400 nuclear weapons and they have this extraordinary technical capacity with mad and
00:50:23
operational capacity that has kind of unrivaled pretty much in the world it seems what do you do if you're sitting
00:50:29
in netanyahu's seat that that provides a more kind of measured response and how do you kind of you know lead your nation
00:50:35
well first of all I'm not obviously sitting in that seat I don't live in Israel and I don't have skin in the game that way so I think the first thing that
00:50:41
they would say is you know you're not us you're not sitting here dealing with all of our enemies in the region and they
00:50:48
would have a point but what I advocated I think months ago was to take a more targeted measured strategy that I think the assassination of hania shows that they could have
00:50:59
executed and I understand why they went into Gaza and why they felt they needed to go into Gaza but I just this is not
00:51:06
an anti-israel statement it's just a questioning of the strategy I just don't see that it's produced much good I don't
00:51:12
think they've solved their Hamas problem they have not gotten sin war and they've lost a meaningful amount of global
00:51:18
support yeah chamat do you ever read I think that it was in hindsight a pretty big miscalculation by Netanyahu to the strategy that they did and I would have
00:51:30
much preferred what you're seeing now which is a very targeted approach I think it preserves and it would have preserved not just world political
00:51:41
support but just individual people support where instead of going into Gaza leveling the place creating all of this death and destruction and amplifying and
00:51:55
confusing people where they now all of a sudden had to make a decision between these two groups
00:52:01
and and and now get confused with antiemetic sentiment that should never have happened it's clear that mad is incredibly competent and Incredibly
00:52:13
capable I do believe that Sovereign countries have the right to defend themselves but then there was a bridge
00:52:21
too far and I think the Israeli government has crossed it in hindsight and I think I told you this story and I I may have relayed this in confidence but I'll just say it again on
00:52:34
October the eth what was offered and I'm not going to say by who was sort of the
00:52:40
a meeting of the right political leadership from the Middle East Israel and the United
00:52:47
States where they were all willing to sort of come and the idea would have been to extend some sort of structured
00:52:57
solution for the Palestinian people now that would have been so unintuitive and unexpected I think everybody would have been a little bit on their heels but I think what it would have done is it would have cast
00:53:10
Netanyahu in an incredible light it would have cast Israel in an incredible light they would have still preserved
00:53:16
the ability to go and kill the individual leaders that they wanted to but it was rejected and I think that
00:53:23
when we look back these are the kinds of decisions that hopefully history documents accurately so that folks who
00:53:30
are in the seat to your point freeberg the next time around can make a different calculation I I see you see
00:53:37
the pictures and there's just no way that you can turn them off you know what I mean I think Israel's biggest asset is
00:53:45
probably also their biggest liability which is their military and intelligence strength and it emboldens them in a way
00:53:54
that they can be more aggressive than perhaps they need to be with respect to maintaining the security of the state but perhaps being vengeful and vindictive and I know that that's a very
00:54:05
controversial statement to be made I want to underscore the strength of this military and this intelligence do you
00:54:11
guys remember the stuck s stuck net worm from a number of years ago yeah that story was incredible the new the New York Times broke this story in 2012 stet was a malicious computer worm and I'm
00:54:22
reading off of Wikipedia because there's a lot of reporting that has different opinions on this that was first cover uncovered in 2010 and was thought to
00:54:29
have been in development since at least 2005 now this computer worm was supposedly developed by mosad and the
00:54:37
NSA and it was a malicious computer worm that ultimately allowed intrusion into the control systems of the centrifuges of Iran's uranium refining systems and
00:54:49
they basically were then able to make those centrifuges go haywire and Destroy themselves and they did this over and
00:54:55
over for several years and the Iranians could not figure out what was going on or why they kept it completely secret
00:55:01
ultimately it was revealed that there was this operation organized by the United States called operation Olympic
00:55:06
games that was a cyber disruption operation and that mad had a critical role in by the way there there are two
00:55:11
other stories that build on top of this they that are tangential but related one is that there was a a nuclear engineer
00:55:19
that Israel felt should be unlid and the way that they did it was was via some like remote control machine gun that they planted off of like a highway where the car
00:55:32
egressed off the highway and then all of a sudden the thing was shut up a different example was there's a story
00:55:38
about how they figured out that yasra Arafat was sick because they were able to collect a stool sample from a pipe
00:55:45
that left his home and they were able to kind of diagnose that a it was his stool
00:55:50
and then be he had some chronic illness my my my point I think in all of this is is kind of where you're going which is
00:55:56
that when you have such capability and such Precision to go to the other end of the spectrum you really have to be sure that you're right and you know as sack
00:56:07
said I think we're looking back and it's clear that the support around the world it just isn't there for that kind of
00:56:14
mass casualty and that kind of like if Israel could actually destroy Hamas and achieve its military objective in Gaza
00:56:20
that'd be one thing but I think we've seen that that's impossible I mean basically bleeds in with the population it's indistinguishable and the leadership is hidden deep underground and the Israelis
00:56:34
have not been able to root them out against andir has not been found and so you've destroyed Gaza but you have not achieved your objective of eliminating Hamas and in the process you've deeply
00:56:44
alienated no I mean it's just most world and and you it's like the Russians and the Americans trying to chase the Taliban in Afghanistan forever this is not a group of IND individuals that once
00:56:57
they're gone everything is fixed everything's just worse I mean you still have the same problem in fact now the
00:57:03
entire Palestinian population's radicalized in fact the whole Arab and Muslim population in the Middle East is
00:57:10
more radicalized against you than they were before I mean I know there was already a significant amount of hatred but now it's worse and you have you
00:57:17
haven't fundamentally solved the underlying issue I think the 911 analogy is apt I mean we went off after 911 half
00:57:24
cocked into all these wars in the Middle East I think that going into Afghanistan I think you could that was
00:57:30
justified because they were harboring al- Qaeda but then we went into Iraq because really members of the Bush Administration had a pre-existing agenda and then they they lied us into it
00:57:41
saying that Saddam was connected somehow to 911 and we began a 20-year process of
00:57:47
just plunging ourselves into all these wars it only made everything worse you know one of the reasons why Iran is in
00:57:54
such a strong position today in the Middle East is because we took out Iraq we basically created a power vacuum in
00:57:59
the Middle East that they ended up filling I recently heard that after Israel struck the embassy in Damascus a
00:58:07
few months ago you may remember this Iran launched a a Counterattack and you remember there were all these like drones that they sent hundreds of them into Israel but
00:58:19
there was supposedly a four warning that these drones were on the way there was notice given and it was like this is it
00:58:25
this is our proportional response and we're done that's right that's right what I heard was that Netanyahu did not
00:58:34
want to stop he wanted to escalate after that response from Iran now that coupled with what's going
00:58:42
on in the West Bank right now where there is a restricted movement of Palestinians within the West Bank and continued development of Jewish settlements I think really represents a
00:58:54
major risk to the region middle east region that we could see an escalation beyond the response that may be mandated or necessary to secure the state that
00:59:06
makes things much much worse in the region and could isolate Israel even further and ultimately draw a lot of
00:59:13
powers to that region to try and figure out what side are you on and how do we resolve this and that could lead to
00:59:19
something much bigger and much nastier so I think while we all observe this and watch this the the behavior of the the
00:59:27
targeted attack in Hamas for me it's not the issue as much as indicating the capacity of this military this
00:59:33
intelligence that means that they probably feel highly emboldened to take whatever steps individuals feel are
00:59:40
necessary to secure the state for the long run which could mean an increased escalation in conflict and and that's I
00:59:47
think a real a real kind of point of concern and that's the one of the Black Swan events I think that's still
00:59:52
outstanding right now because if that does happen if there is for example an unraveling of the West Bank you could
01:00:00
see one of these sorts of events that everyone gets braw like a magnet to the Middle East and you end up with a a
01:00:07
major global conflict that becomes a problem for markets it becomes a problem for the world and and that could be the
01:00:13
catalyzing event that I don't think any of us want to see to use your logic from before the thing that may plunge the
01:00:20
world into having to have a point of view on this may actually be a political calculus Netanyahu has to engage in
01:00:27
which is around keeping small factions of his coalition government in place which may not actually represent the
01:00:32
full view of the Israeli people that's what's even more tragic so it's not obviously the Palestinians don't want it
01:00:38
but many Israelis may not want it either and there may be no Avenue if he wants to remain in power and that's what's so
01:00:43
scary look I think there's no question that we're on a path here where we could have a regional war in the Middle East
01:00:49
remember that after Israel hit the Iranian General in in Lebanon the Iranians responded two weeks later with that massive drone and missile attack
01:01:03
most of the missiles were intercepted by Iron Dome and I think America participated in that as well I think one
01:01:09
or two of them got through and then Israel launched kind of a weak missile attack on Iran and that was kind of the final word on it there were people in netanyahu's cabinet like smotrich and
01:01:21
benav sort of the more Hardline radical right-wingers who I think publicly tweeted that they they thought Israel's final word on it was weak and they clearly wanted to do more
01:01:32
so I think the point is just that when we had this last exchange between Israel and Iran it felt like it was on the
01:01:39
verge of tipping over into a regional War but I think partly due to the efforts of the United States we were
01:01:46
able to help Tamp that down I think now Iran's promising revenge for what just happened in teron and this could set that that escalatory spiral off again
01:01:58
totally if you were to place odds on on this I'd say it's at least 5050 that things escalate into a regional not much of a black yeah and by the way there's no such thing as a regional war in the Middle East because every one of those
01:02:10
countries has significant allies in Russia in the United States in China what is Saudi Arabia gonna do you know Jordan is going to end up in a situation where they may end up having to defend
01:02:22
the Palestinians and the West Bank which puts them across shooting field from the Israelis and the United States as an
01:02:29
ally to both Israel and Jordan what are we going to end up doing and that's where this whole this that's why this
01:02:34
whole situation is not just about a regional conflict it actually draws the whole world back to the Middle East and
01:02:40
kind of escalator this is why the counterfactual of what could have happened on October 8th is so important
01:02:46
because that would have been UAE United States Saudi was involved Israel no just those for and let's put Qatar in the mix as well
01:02:59
but my point is like my gosh like that it could have Rewritten world history in such a profound way it would have just
01:03:05
taken some restraint and proportionality turn the cheek the other way kind of yeah it would require incredible forbearance on the part of a population that just been
01:03:17
attacked with attacked and attacked and attack Mass atrocities on civilians but not just not just this attack like under
01:03:23
attack for Generations in a region that has been all about conflict and secularity and all of the kind of you know identity drivers that make this so deeply personal and rooted in history
01:03:36
not just in a moment or an event look when it happened to us on 911 we lashed out you know yeah exactly but the
01:03:41
results were not good yeah well look let's move on I'm not I'm not trying to judge anyone's behavior I'm just trying
01:03:48
to shine a light on the strength of Israel's capacity and what that may mean for their proclivity for escalatory Behavior which is really scary given that this is not just a regional issue
01:03:58
it becomes a global issue when it does happen sorry go ahead I thought you were going somewhere else with it which is I
01:04:04
I was just going to say in any in any other simulation the capability of the Mad is fodder for Incredible movies like it's out of a movie right you read these articles and
01:04:16
they just don't seem like they're real it's like what do you mean you smuggle the bomb into the safe house in Iran
01:04:24
where all the VIP stay two months ago two months ago two months ago how how does that happen what does it mean that
01:04:30
you actually develop yeah then sit tight what does it mean that you developed a virus that you were able to get into the
01:04:37
actual working computers of the Iranian control unit the control unit yeah the control the control Boards of the equipment made by Seamans of the equipment made by Seaman that we
01:04:48
shipped to Iran yeah that's not that's not like you tell that into something you know what I mean like that means that there was a person physically there
01:04:55
that then found a way to essentially get this firmware implanted and it's like no
01:05:00
you know what happened I remember the story they actually did not what happened was they let the virus
01:05:06
circulate in the world for years before someone randomly had it on a USB drive that didn't know they had it randomly plugged it into a computer in the Cent facility then infected sent out a notice
01:05:19
I'm in here and then after years it was finally in there through the random movement of this virus that no one isn't
01:05:25
that that's inred well let's wrap up with the Billman story sorry before you do that y
01:05:32
I hate to make this political but I just have to observe I mean look at this situation in the world I mean the Middle East is on the verge of regional War we
01:05:39
could be in a war there I should say there could be a regional War there by January 20th when the next president is
01:05:45
sworn in you've got United States in a proxy war with Ukraine you have major tensions with China in East Asia I mean is this really the time you want to put
01:05:56
in place an inexperienced president whose policy positions are unclear who's untested was never even tested by a
01:06:02
primary who the media refuses to test now who's basically a media construct this seems to me like a really bad idea all right so political pitch in from
01:06:13
David saxs we don't have J here to give the other side but let's keep going so Bill amman's withdrawn his plans to IPO
01:06:20
pushing Square you know Chim do you want to just give us kind of the background on what he was trying to do and obviously this
01:06:26
was an attempted $25 billion raise as an IPO he recently reduced the raise Target
01:06:31
to two billion and when the order book came in I believe at less than a billion he scrapped the plans entirely and just
01:06:37
announced yesterday that he's pulling the IPO so can you just explain a little bit about what this IPO was and then
01:06:44
we'll talk a little bit about why we think it fell apart I can only repeat what I read but I'll try to kind of like
01:06:49
translated into non Wall Street speaks so basically he has a company but what that company does is it gets investors to give it slash him money and then they
01:07:03
invested in all kinds of things that they deem worthwhile it could be bonds it could be stocks it could be
01:07:08
currencies it could be derivatives they generate a return and then they give those returns back to their investors so
01:07:14
that is a hedge fund the Holy Grail has always been trying to figure out how can
01:07:20
an organ sorry those funds are raised and distributed back right I mean I think you should I don't want me yeah go
01:07:27
ahead and say that but the holy grail for someone who runs those businesses is when they realize well listen I get paid
01:07:33
a great profit share from those funds when I'm successful I'm I'm also allowed to take
01:07:39
a 2% per year management fee but I believe I'm building equity and can I get somebody else to recognize the fact that I'm building equity and that's no different than a startup right so you
01:07:52
know freeberg you're building oh Hollow you believe that you're building all kinds of really interesting things
01:07:57
rooted in science and you want other people to judge the value of that as measured by your Equity right
01:08:03
independent of your revenues and profits today they want to project into the future the problem is that hedge funds
01:08:10
have not found a very elegant way to demonstrate that they have any Equity value and there there's only been a few
01:08:17
and the formula has been the same so companies like Blackstone companies like KKR companies like Apollo what have they proven they've proven that they can
01:08:30
raise enormous amounts of money so most of these organizations now are approaching a trillion dollars of
01:08:36
capital raised and they tell investors well look don't worry about the returns anymore worry about the 2% because that's like our revenue and we're generating $20 billion dollar a year of
01:08:48
Revenue that'll grow at some rable proportion we'll manage the teams we'll compensate them well but there'll be
01:08:55
lots of of profitability and people have bought that story so I think a lot of smaller organizations who aspire to be
01:09:02
like a Blackstone or an Apollo have tried to get people to buy into this story and I think what bill akman was
01:09:10
trying to do was some version of that which is to say I'm going to build an Enterprise here ping square is going to
01:09:16
be a standalone business it's going to have Enterprise Value and you're going to measure that based on the assets that
01:09:22
I manage and it's going to be much greater than I manag today and I think he manages roughly 10 billion today but
01:09:29
he thought he was going to raise another 25 in this IPO and then in very short order be at 50 billion and so he got
01:09:36
people to invest in that business on that premise and I think folks put in around a billion dollars and they valued
01:09:42
that entity at 10 billion and so he tried to go and raise his fund he thought it was going to be 25 and it
01:09:48
turned out I thought it was two but freeberg you just said it's less than one I didn't I I I guess or around one I
01:09:55
just that I'm just hearing that from you for the first time so I guess what is the takeaway like real quick you know
01:10:01
you this this was a this was a closed in fund he was trying to raise no but he's I think he's also said that persing
01:10:07
square eventually has a path to go public that's how he sold the billion of equity at 10 billion in the master LP
01:10:13
yeah but this IPO was just for a fund it was just there was there it was the IPO of the fund and then they were planning
01:10:19
afterwards the IPO they planning afterwards yeah yes which he didn't do my only point was that that the fund was
01:10:25
B basically it's launching a fund and then the goal is not the fund itself the goal is to butress the the underlying
01:10:31
logic to take the whole thing public the manager okay and that's what I mean by taking a company public in finance is
01:10:37
next to Impossible yeah so the whole point is like what are these businesses in the business of doing they're they're
01:10:43
in the business of making bets the problem is that those bets are shortterm anomalous events sometimes they work sometimes they don't work and the the problem with that is that investors who
01:10:56
are trying to underwrite 20 or 30 years of returns don't know how that's predictable over that period of time
01:11:02
like for example you're genetically engineering all kinds of produce that we are going to ingest if that stuff works at scale you will have built an Enterprise that theoretically has the
01:11:13
potential unless it's disrupted by something else to make revenue for 20 or 30 years so people can underwrite that
01:11:18
Google makes a search engine it's going to last for 20 or 30 years Facebook makes a social network it can last for
01:11:24
20 30 years the business of making bets is typically something that can only be measured in days or weeks maybe months at best and so I think what he ran into
01:11:36
was that realization it's very hard to get people to Value an institution in this way and so the thing did not work he'll go back and he'll retool the thing that
01:11:48
I give Bill akman an enormous amount of credit for is he is one of the most resilient individuals I've ever seen in
01:11:55
High Finance but generally as a business person this guy has he served some really big waves he's landed some really
01:12:03
good sets he's also gotten crushed a few times and the guy just keeps coming back and he seems to be getting more and more
01:12:09
refined and capable as a business person so you know he'll probably figure out a way this is not the first time he's publicly dealt with things that have not
01:12:21
worked but I think it just goes to show you that in finance these entities that try to sell a piece of the quote unquote
01:12:28
General partner as a company I just think that it's um frankly that it doesn't work and this is just you know an example yet another example that there's
01:12:39
not a lot of equity value in these businesses sex some reports indicate that investors
01:12:47
pulled out of the pushing Square IPO because of the current market conditions that a lot of uh Market indic seeds have stormed higher and that there is now
01:12:59
less upside um and it's not a great time to be entering the equity markets other reports indicate that investors lost
01:13:06
interest in amman's fund because of his activity on X or Twitter have you um do you have a point of view do you think that folks pulled out investors have pulled out you're obviously a fund manager who is very active and
01:13:19
opinionated on X Twitter like what you know do you think has this affected your relationship sh with with raising Capital if you willing to talk about it or maybe just comment on the acman you
01:13:29
know issue that he ran into why did this fail I just don't know I honestly haven't followed his um his IPO process
01:13:36
at all okay um I would say that the market we have right now it's not the best it's been but it's also not the
01:13:42
worst so I'm always reluctant to blame macro conditions without having a more specific explanation you a point of view on on investors having an issue with Amman because of his outspokenness on
01:13:54
various social and political issues over I can't imagine imagine I don't think so
01:14:01
investors care about making money and Bill amman's a money maker like that's undeniable the guy takes some losses but
01:14:07
his wins are way bigger than his losses and he is a proven Money Maker the problem is that I think the the way in
01:14:15
which he was trying to monetize the business is just a hard thing to do you have to have an organization of hundreds
01:14:22
approaching thousands of people that are raising all manner of funds and those funds just deliver very consistent returns not great but they never lose money and that's how you get towards a
01:14:33
trillion dollars and that's how you make it a company and not a great hedge fund
01:14:38
yeah let me also just say I think he's very thoughtful on Twitter you know I've gotten into some disagreements with him on Twitter other things I've agreed with
01:14:45
but overall I think he makes a strong case for himself I haven't heard him say anything out of bounds on Twitter
01:14:52
whether you agree with it or not so I can't imagine IM that's a a problem some people would disagree they think he's had a lot of comments on wokeism as he would call it and Di Dei topics and
01:15:05
agree with him on that and I think the vast majority of the country agrees that woke has jumped the
01:15:10
shark yeah but I think some people highlight if woke is so great why is KLA haris trying to distance herself from
01:15:17
every previous comment she's ever made about wokeism or Dei the point is more about like we talked about earlier which
01:15:23
is kind of having an authentic voice and speaking what you believe and speaking what your opinion is verus remaining
01:15:29
buttoned up and not speaking what you believe and towing the line he's in the only industry where his performance is
01:15:37
measurable every day in Precision right so what I would say is it's irrelevant what he says on Twitter meaning the quality of his decisions are independent of what he says because they're
01:15:49
measurable and they are not something you can gain and the reality it is that over the last few years particularly starting in Co he has gotten better and better and he's played a very good hand
01:16:03
I think he's an exceptional risk manager and he's tund it and so the people that
01:16:08
say that to you to be very honest are somewhat they're they're betraying their lack of financial sophistication yeah
01:16:15
and actually can I go further and I actually think that amman's presence on Twitter X is a huge positive for him
01:16:21
it's an asset because he has a gigantic followership and he's able to speak directly to his
01:16:28
audience in the way that we do and I think the reason why people say these things is because they don't have a
01:16:34
direct strategy and so they want to basically badmouth people who do but again if you don't go direct to your
01:16:40
audience then you have to go through the media and then they get to Define you and it creates ambiguity exactly so I I
01:16:46
think the fact that he's got what like a million plus followers and you know everything he puts out gets tens of
01:16:52
thousands of likes it's a huge positive huge positive and I think that the part of his business that he hasn't gone back
01:17:01
to which if he does in this chapter of his career with the following that he has is the activism part and I think there are two people who I think are
01:17:13
incredible at this and where both the written and the spoken word they have such a Mastery of Amman is one Dan L is the other and I think that you know in
01:17:24
this world where you have the ability to go Direct in a way that you've never had before is actually the realm of
01:17:32
um a different form of activism that I think could be extremely um economically uh rewarding and valuable in society all right
01:17:43
gentlemen this has been a great episode of the all and pod we missed our comedian and residents Jason cakenis uh
01:17:50
nostr canis nostril anus we miss him we wish him well speedy recovery this has been an episode without the usual humor and flamboyancy that we've all come to know and love but I think it
01:18:02
was great to chat this afternoon and we will see you all next week byebye love you boys got you we let your winners ride Rainman
01:18:17
David and instead we open source it to the fans and they've just gone crazy with it love you queen of K I'm
01:18:26
[Music] going besties are that's my dog taking your driveway man oh man we should all just get a room and just have one big huge orgy cuz they're all this useless it's like this like
01:18:46
sexual tension that they just need to release somehow [Music] we need to get merch our
01:19:00
[Music]