00:00:00
Jason do you want to go up to the
00:00:01
bedroom knock on the door and wake jamat
00:00:02
up where is he you're in his house go
00:00:05
get him let's go he's at the office he
00:00:07
went to the office he's not here oh you
00:00:08
went to the office we're trying to find
00:00:10
jamath at the moment oh here's jamat
00:00:12
okay are you wearing my goddamn sweater
00:00:15
what is what is is that my you're in my
00:00:17
house is that my no I am so tilted where
00:00:20
is my wife what the what don't worry
00:00:23
about your wife no oh my
00:00:25
God this port is great where is hold on
00:00:29
I'm calling
00:00:30
take off my okay don't touch my wife oh
00:00:35
my Lord oh my Lord Sheed so tilted tted
00:00:41
don't you worry am you know your cashmir
00:00:43
sweater it's so so
00:00:47
soft is so tiled get out of my house but
00:00:51
we'll be done at 1 o' so I'll see you
00:00:52
then please let me know you have lunch
00:00:54
in the garden yes please lunch in the
00:00:56
garden wear's something simple don't
00:00:58
don't get something simp great is that
00:01:01
the cashmere sweater with the Rhino horn
00:01:04
buttons it is you know what though I did
00:01:06
some shopping while I was here I did a
00:01:08
little shopping so I just I filled up
00:01:12
you know I just these uh these asops are
00:01:15
great because I don't have these at my
00:01:16
house I have Ivory soap so I got a
00:01:18
couple of these
00:01:20
froming but you know what I agree this
00:01:22
sweater is not so great I think I'm
00:01:23
going to Swit don't touch that sweater
00:01:25
Jason this one's incred I cannot him J
00:01:31
don't put it on I won't put it I won't
00:01:33
put it on but you know what this port
00:01:35
I'm not so sure Sean Sean yes
00:01:41
um's great but um any other options we
00:01:45
do have a delicious ice wine for you
00:01:47
come around here let's present let's
00:01:51
present you're not on my
00:01:55
chef Sean um SE so this is it looks like
00:01:58
a deep pull 19 86 Chateau CET uh BAC
00:02:03
what I mean this looks like it's worth
00:02:05
opening I mean it it's it was in the
00:02:07
rack that said don't open right Sean yes
00:02:09
sir all right
00:02:10
so and yeah let's just but you know what
00:02:13
pour half out because I like the bottom
00:02:15
half the texture so just pour half into
00:02:17
the garden here the um the spinach and
00:02:19
then I'll take the bottom half thank you
00:02:22
please take off my sweater oh my God
00:02:24
this is so
00:02:26
brutal let your winners
00:02:28
ride Rainman
00:02:33
David and instead we open source it to
00:02:35
the fans and they've just gone crazy
00:02:37
with
00:02:37
[Music]
00:02:41
it did you have a good night's sleep at
00:02:43
chim's house how did you sleep last
00:02:45
night I slept so good let me tell you
00:02:47
something I'm I will compare I sleep
00:02:49
here tonight the lady of uh sax Manor
00:02:52
just texted me and she would like me to
00:02:53
stay there tonight so you know when I'm
00:02:54
in the valley I get a lot of different
00:02:56
invites I have to spread the wealth so
00:02:58
I'll be dining with with the saxes
00:03:00
tonight and I may be staying at saxes so
00:03:02
that willare away sax hide the asop soap
00:03:06
from the bathroom I'm hoping he doesn't
00:03:08
have ASAP I'm hoping this is like when
00:03:10
he stole the papy vanwinkle from my
00:03:12
plane remember that that was good yeah I
00:03:16
mean it was it was three qus of a bottle
00:03:18
it's just sitting there I mean when are
00:03:20
you gonna drink it SX how do you prepare
00:03:23
for jcal coming over to your house to
00:03:24
visit and spend the night I mean what do
00:03:26
you do think anything that's not bolted
00:03:28
down is basically
00:03:30
it's like a a gift it's like a
00:03:33
freebie how do you think I got that love
00:03:35
seat in my kitchen I got that love seat
00:03:38
off the kitchen that came from Sax's
00:03:40
designer yeah yeah I just had two guys
00:03:42
my brother Josh came we took it out the
00:03:44
back it was fun we took it out the back
00:03:47
if I'm a guest I'm leaving with
00:03:48
something why don't you want to moderate
00:03:50
today you're on fire just moderate the
00:03:52
show well no I was just I was going to
00:03:54
be traveling and I wanted to do a good
00:03:55
job and I you know I thought maybe you
00:03:58
you would love to get your chance at
00:03:59
moderation so lead us off here Fearless
00:04:02
uh J freeberg so that is the
00:04:05
announcement to start the show Jason
00:04:08
taking a week off for moderating yes
00:04:10
gonna be a besti guesty gonna be a
00:04:12
participant on the panel this week and
00:04:14
we took this off so I'll be moderating
00:04:16
this week we're going to do a couple
00:04:19
housekeeping points first off very
00:04:22
excited to announce that we are doing
00:04:24
another live event after the success of
00:04:27
the summit during September we had great
00:04:29
content we had great parties everyone
00:04:31
had a great time but a lot of people
00:04:32
said They wish they could have been a
00:04:34
part of it so we are going to try and do
00:04:35
more Live Events so we have pulled one
00:04:37
together very last minute but we are
00:04:39
going to make it
00:04:40
incredible Saturday December
00:04:43
7th in San Francisco around 5:00 pm we
00:04:46
are going to do the all-in Holiday
00:04:48
Spectacular at the Palace of Fine Arts
00:04:50
in San Francisco it's going to be
00:04:52
incredible tickets are going on sale
00:04:54
today at allin.com
00:04:56
events not going to want to miss it
00:04:58
there's going to be a really fun show on
00:05:00
stage with us and some guests followed
00:05:03
by open bar food trucks DJ Casino party
00:05:07
it should be a really great time a real
00:05:08
fun Winter Wonderland after party after
00:05:10
the stage show and so we're really
00:05:12
excited to have folks come and join us
00:05:14
um at the Palace of Fine Arts on
00:05:15
December 7th it's gonna be awesome you
00:05:17
guys excited yeah excited yeah all right
00:05:21
so I have a question yeah is our
00:05:24
attendance required at this thing I knew
00:05:26
that was coming I have no desire to this
00:05:30
you don't want to be called a party
00:05:33
everybody in the world wants to do
00:05:34
something except SX I thought I was
00:05:37
signing up for a podcast I don't know
00:05:39
why I need to do all these events this
00:05:41
is literally a two-minute drive from
00:05:43
your house in San Francisco we are going
00:05:45
to load you in a van Jal and his
00:05:47
brothers are gonna come and grab you
00:05:49
throw you in the back drag you down
00:05:50
there we're gonna prop you up on stage
00:05:53
for a couple hours and then we'll put
00:05:55
you back in the van and you can go home
00:05:56
the good news is we might uh drink some
00:05:58
Tequila sex we might have something to
00:06:00
kill us so we got something to look
00:06:02
forward to and you get to see your
00:06:04
friends you get to see your friends
00:06:06
that's worth it right say yes David now
00:06:09
this is where you say yes no comment he
00:06:11
says no com for those of you listening
00:06:14
I'm happy seeing you guys through Zoom
00:06:16
you know we don't we we can minimize the
00:06:19
pic was his favorite holiday of all time
00:06:22
what's your favorite holiday SX pandemic
00:06:25
can we have that back pandemic he
00:06:28
celebrates the pandemic for six months
00:06:30
every
00:06:30
year it's part of his new ritual to not
00:06:34
see anybody for six months bring back
00:06:36
the pandemic Sox are you serving Wu
00:06:39
tonight I mean that's possible I'm gonna
00:06:42
tell him not do anything that nice
00:06:44
though for jcal keep it simple burgers
00:06:47
and dogs you put your order J J what did
00:06:51
you put your order in well you know I
00:06:52
talked to that I talked to Chef and um
00:06:54
he said morel's not in season but we we
00:06:57
are on the tail end of black ruffle so
00:07:00
we have that locked in but we're too
00:07:01
early for Morales obviously that's a
00:07:03
spring let let's give feedback about
00:07:06
last night's dinner Sean's I mean let's
00:07:09
be honest a picana is an underrated cut
00:07:12
of meat it's a very people say it's like
00:07:14
a serviceable meat but when cooked
00:07:16
properly with proper technique it will
00:07:19
stand right up there with a riye or a
00:07:21
New York strip it's the best but people
00:07:23
don't P never even heard of
00:07:26
that but it's like it's like it's the
00:07:28
Brazilian word for it but it's like a
00:07:30
specific cut of meat Sean did it last
00:07:32
night honestly David I'm telling you
00:07:34
it's better than any other cut of meat
00:07:35
you could get if it's properly made Sean
00:07:38
crushed it yesterday but it is bananas
00:07:42
it's so
00:07:46
good steak than ribey I like it more
00:07:49
than ribey 100% I like it more than the
00:07:52
New York strip that's terrible filet
00:07:55
terrible no fat it's it's um it's got a
00:07:59
a a fat cap on it which you know
00:08:02
sometimes be a little overwhelming for
00:08:03
people but Sean did a great job of kind
00:08:05
of meeting us halfway so it wasn't so
00:08:08
fatty just a nice layer of fat crisped
00:08:11
perfectly cooked to Perfection carrots
00:08:13
were great um was great I could I had no
00:08:17
notes you know I talked to Sean after I
00:08:18
had no notes so okay what the app part
00:08:21
was ridiculous too oh my burn sugar
00:08:24
apple burnt sugar apple tart what you're
00:08:27
a New York state guy I'm a New York
00:08:28
state guy well done
00:08:31
yeah what oh oh oh that's dis are
00:08:35
savages I think you just lost like I
00:08:37
think you just left three swing States
00:08:40
you
00:08:40
want if you're gonna do something I
00:08:43
would go to the New York I'm fine to
00:08:45
deal with the New York in and opava but
00:08:47
well done David SS that is unacceptable
00:08:50
shout out to Raul's and uh balazar two
00:08:54
best steo pavs in Manhattan in my
00:08:58
estimation let's get started welcome to
00:09:01
why don't we call an audible tonight and
00:09:02
go for Ste oav yeah just throw out the
00:09:05
uh the misot and the wagu and let's just
00:09:07
redo it boys welcome to the all-in Pod
00:09:10
this is episode
00:09:11
201 and we're gonna kick it off by
00:09:14
talking about what's going on in markets
00:09:16
which is one of the kind of most
00:09:19
interesting challenging enigmas of the
00:09:22
day or or maybe it's not maybe it's
00:09:24
pretty simple but there seems to be a
00:09:27
diversion in assets that is pretty un
00:09:29
ual that hasn't been seen in in some
00:09:31
time and a lot of Market commentators
00:09:33
analysts economists are kind of trying
00:09:36
to figure out what's going on and why
00:09:38
the first is that bonds are falling so
00:09:40
US Treasury
00:09:41
yields as a result of bonds declining in
00:09:44
price have spiked up we nearly hit the
00:09:47
10year yield dropping as low as
00:09:50
3.5 in September obviously leading up to
00:09:54
the the the big 50 bit rate cut and as
00:09:57
of this morning we're seeing the 10year
00:10:00
yield over 4 and a quarter at the same
00:10:03
time we're seeing gold prices Spike so
00:10:06
gold is typically a safe asset and gold
00:10:09
has moved considerably as you all can
00:10:10
see here from the start of the Year
00:10:12
where was around 2,000 an ounce up to
00:10:13
2750 an ounce an incredible runup one of
00:10:17
the best performing assets of the year
00:10:20
and then finally in a market like this
00:10:22
you would typically see pain in equities
00:10:24
but we've seen the opposite the S&P 500
00:10:28
is up considerably has been been on this
00:10:29
endless runup alltime highing at alltime
00:10:32
high where's Bitcoin buddy and let's
00:10:34
pull up
00:10:36
Bitcoin nobody cares about gold show
00:10:38
Bitcoin well there's a lot more assets
00:10:41
that have moved into gold than Bitcoin
00:10:42
but here's Bitcoin
00:10:44
at today this morning who picked that at
00:10:47
the beginning of the
00:10:49
year was it hold on one
00:10:53
second up give us your read on what's
00:10:55
going on there's a there's another
00:10:58
couple of nuances here that I think are
00:11:01
important the US dollar
00:11:04
complex is thriving which means like the
00:11:06
US dollar is
00:11:09
strong backend yields are
00:11:13
rising and then another thing that I
00:11:15
look at is this thing called put call
00:11:17
skew so basically like on balance how
00:11:19
are people hedging in the short
00:11:22
term and in the bond market they own a
00:11:25
lot more puts than they do
00:11:27
calls I think that this is the entire
00:11:31
Financial infrastructure of the
00:11:34
world repositioning itself from what was
00:11:37
a tossup election to a trump
00:11:40
win and when you look at
00:11:44
why it's because when you forget the
00:11:46
candidates themselves for a second but
00:11:48
if you think about the actual policies
00:11:50
and where the spending will
00:11:52
occur I think that there has been a very
00:11:54
clear
00:11:55
decision that the Trump economic plan
00:11:59
will drive better growth than the Harris
00:12:02
plan and if you think that there is more
00:12:04
growth
00:12:05
coming typically what will come with
00:12:09
that is a little bit more
00:12:12
inflation the risk premium that you're
00:12:14
going to need in a high growth
00:12:17
environment is higher what is risk
00:12:18
premium that
00:12:19
is how much do I want to invest for a
00:12:22
risky asset vers as a safe asset and so
00:12:25
all of these things are coalescing so so
00:12:29
I think that the shortterm takeaway that
00:12:32
I have just looking at all of this data
00:12:35
is that in
00:12:37
the economic distribution of outcomes
00:12:40
this is now tilted overwhelmingly to a
00:12:43
trump win and this is not an emotional
00:12:45
statement or what I want to happen but
00:12:48
this is just an observation how how tens
00:12:50
of trillions of dollars
00:12:53
of self-interested financial actors have
00:12:57
now repositioned their risk and if Trump
00:13:00
wins which it looks like he's
00:13:02
increasingly going to do and if he wins
00:13:05
by the margins that it looks like it's
00:13:07
going to do you're going to see a lot of
00:13:10
these things exacerbate Gold's going to
00:13:12
go up more probably Bitcoin will
00:13:14
probably go up the short-term economic
00:13:18
upside for the economy will probably get
00:13:20
reflected in higher Equity
00:13:22
prices but it'll also push out long-term
00:13:24
rates the inflation picture becomes a
00:13:27
little bit murkier
00:13:30
but I think that that's what's happening
00:13:31
I think that the the financial markets
00:13:33
are pricing in a trump wi sorry just to
00:13:36
understand better why is gold go up and
00:13:37
a trump win I think in the short term
00:13:40
what happens is that you see more
00:13:42
economic growth but in the medium- term
00:13:43
inflation goes up and so you want a
00:13:45
hedge right so it's it's more about a
00:13:47
durational balance of assets so in the
00:13:49
short term you'll be long the things
00:13:51
that will generate earnings but in the
00:13:53
medium to long term you want to head
00:13:55
yourself so Bitcoin and gold I think
00:13:57
will trade that way well let's up the
00:13:59
video clip from Paul Tor Jones Nick
00:14:01
given all the things you're saying are
00:14:03
you off buying gold and Bitcoin and and
00:14:06
I think all roads lead to inflation
00:14:09
we're going to end up if you so but does
00:14:12
all roads lead to inflation therefore
00:14:13
gold is a good investment is Bitcoin a
00:14:14
good investment to you I I I'm long gold
00:14:16
I'm long Bitcoin I think Commodities are
00:14:19
so ridiculously under owned so I'm long
00:14:22
Commodities I think most young people
00:14:24
find their inflation Hedges via the
00:14:26
NASDAQ that's also been great it's
00:14:28
probably some combination I probably
00:14:30
have some basket of gold Bitcoin
00:14:33
Commodities and NASDAQ something like
00:14:35
that and i' would own zero fixed income
00:14:37
if I had my cash it'd be very short term
00:14:40
SX well I think as you heard right there
00:14:43
the key line that Paul tutor Jones said
00:14:45
was all rad lead to inflation I mean
00:14:47
that that's what's basically happening
00:14:48
right now is that the market is afraid
00:14:51
that inflation is not whipped and it's
00:14:54
going to resurface and the FED may have
00:14:57
to Pivot from the pivot and raise
00:14:59
interest rates that's why he doesn't
00:15:01
want to own any
00:15:03
treasuries separately another Financial
00:15:05
Legend Stan drucken Miller gave an
00:15:08
interview where he has something like a
00:15:10
20% short position meaning 20% of his
00:15:15
Holdings are short us treasuries right
00:15:17
now so he's betting that there are
00:15:20
long-term inflation pressures and that
00:15:22
rates are going to have to rise and and
00:15:25
you're seeing again that since the FED
00:15:27
cut rates on September 18th by 50 basis
00:15:29
points that the 10e T bills yield has
00:15:33
risen by 60 basis points so I I think my
00:15:38
interpretation is that this is less
00:15:39
about the election and more about the
00:15:42
markets not liking the fed's ray cut on
00:15:46
September 18th I think that in hindsight
00:15:49
it was too big we discussed it on the
00:15:51
show and I pointed out that the 50 base
00:15:53
point cut was contradictory in the sense
00:15:56
that the only two times in recent
00:16:00
history where the FED began a rate
00:16:03
cutting cycle with a 50 basis point cut
00:16:06
was in 2001 and 2008 which were on the
00:16:10
verge of pretty big recessions and so
00:16:12
the FED felt like it needed to cut
00:16:15
dramatically in order to help Stave off
00:16:18
those recessions but that was not Pal's
00:16:21
rhetoric what pal said is the economy
00:16:23
was doing very well so what I said a
00:16:25
month ago was with the economy is doing
00:16:26
really well why w't you just tiptoe into
00:16:29
the rate cutting cycle with say a 25
00:16:30
base point cut and then see how the
00:16:33
market absorbs it and get another
00:16:35
month's inflation data well we've gotten
00:16:37
another month of inflation data and it's
00:16:40
showing that these are not huge moves
00:16:42
but it's showing that inflation in uh
00:16:45
was a core CPI was just a little bit
00:16:47
higher than expected so again the market
00:16:49
is concerned that inflation is not
00:16:51
whipped that the FED may have been
00:16:53
overly precipitous and how it cut cut
00:16:56
rates and then the other thing is they
00:16:58
just not like the long-term fiscal
00:17:00
picture of the US one other chart we
00:17:01
should bring up is interest on the
00:17:04
national debt what you can see here is
00:17:06
that it has gone absolutely parabolic in
00:17:09
the last couple of years our interest on
00:17:11
the debt what like 1.3 1.4 trillion a
00:17:14
year 1.35 trillion run rate yeah $3,500
00:17:17
per
00:17:19
American pre and it's something like 20
00:17:21
to 25% of federal revenue now is going
00:17:24
to Debt Service and this continues to
00:17:26
increase now I think there was an expect
00:17:30
that we'd be able to get this line to go
00:17:31
back down once we had rate Cuts right
00:17:34
because if inflation's licked and the
00:17:36
FED can lower interest rates again and
00:17:38
we can get back to a 2% 10year bond
00:17:42
which is where we were a few years ago
00:17:44
then all of a sudden that National Debt
00:17:46
Service becomes a little bit more
00:17:47
reasonable right I mean you can you
00:17:49
could service that debt at half the cost
00:17:52
but now it looks like that may not
00:17:54
happen so just to to wrap this up I just
00:17:58
think that the market doesn't like these
00:18:00
fundamentals of the US fiscal picture
00:18:02
you've got rapidly increasing debt
00:18:05
service costs you've got an inflation
00:18:07
picture that is murky and may not be
00:18:10
going away and the bond markets are
00:18:12
starting to price in higher interest
00:18:14
rates for longer and this is why Paul
00:18:18
tutor Jones is saying all Rose lead to
00:18:19
inflation and this is why Dr Miller is
00:18:22
shorting us
00:18:23
treasuries jcal do you think either
00:18:26
party uh or either candidate in this
00:18:29
presidential election is going to drive
00:18:32
a different outcome in terms of federal
00:18:33
spending and the long-term impact on
00:18:36
deficit and as a result
00:18:39
rates well if we look at previous
00:18:41
performance as an indicator of future
00:18:44
success the answer is no they're not
00:18:47
going to cut spending most of the
00:18:49
reports out say they're going to spend
00:18:52
another 10 trillion in the next
00:18:53
Administration independent of who you
00:18:55
vote for and I think that's actually
00:18:57
what you have to think about here is
00:18:59
where does all that money wind up right
00:19:01
it it's certainly not going to trickle
00:19:02
down and what's probably going to happen
00:19:05
is it's going to find its way into
00:19:06
equities and that's why these equities
00:19:08
are so high is because people are
00:19:11
recognizing correctly that if we do
00:19:13
spend another 10 trillion and go another
00:19:16
10 trillion into debt that money winds
00:19:18
up somewhere where does it wind
00:19:20
up government salaries contracts and if
00:19:24
we get a tax cut as well that's going to
00:19:27
Goose and I think one party will do do a
00:19:29
tax cut and spend 8 n 10 trillion the
00:19:31
other party will spend 10 trillion and
00:19:33
maybe raise taxes a little bit it's
00:19:34
going to net net into the same place and
00:19:37
then I think what we'll see on top of
00:19:39
that is what I think could be
00:19:44
cataclysmic contraction in White Collar
00:19:47
employment in the United States over the
00:19:49
next four to 10 years next two
00:19:51
administrations and that's going to
00:19:53
exacerbate this problem and create I
00:19:55
think some social tension because we've
00:19:58
had record low unemployment and so even
00:20:00
though people feel bad about the economy
00:20:02
generally and and some of that is
00:20:04
related to which parties you know which
00:20:06
party you're part of and how you
00:20:08
perceive the economy and all this data
00:20:10
but just brass tax you know we had the
00:20:12
lowest unemployment of our lifetime for
00:20:14
the past five 10 years and it's been
00:20:17
absolutely fabulous and salaries have
00:20:18
gone up and this is going to result in I
00:20:22
think a little bit of austerity measures
00:20:25
coming at some point probably won't come
00:20:27
in this next Administration but
00:20:28
certainly the one after that is going to
00:20:30
have to do some bell tightening and
00:20:31
we're going to have to address this
00:20:33
issue because spending you know
00:20:35
everybody in America having to pay their
00:20:37
share of that interest alone is
00:20:39
$3500 I mean let that sink in you're
00:20:42
going to spend for every member of your
00:20:44
family $3,500 a year in interest that's
00:20:47
your part of it take the 1.3 trillion
00:20:49
it's just a lot of money and um if that
00:20:52
is the case uh it's going to create a
00:20:56
massive bubble in equities again and
00:20:58
then if you look inside of the big
00:21:00
companies three or four years ago Uber
00:21:04
Airbnb Google and Facebook had more
00:21:06
employees or the same number of
00:21:08
employees they have now while growing
00:21:10
those companies are all growing 20%
00:21:11
year-over-year
00:21:12
so the earnings and the Topline of these
00:21:15
companies continue to grow while they
00:21:17
have a static team size this is like an
00:21:19
extraordinary thing we haven't seen so
00:21:21
the two pieces here that we haven't seen
00:21:23
before is what happens when you put
00:21:25
another I don't know 20 trillion dollar
00:21:27
of debt into the US economy and what
00:21:30
happens when companies the big ones stop
00:21:33
hiring and they just become wildly
00:21:36
efficient and become wildly profitable
00:21:38
and this will be a
00:21:40
renters renters you
00:21:43
know story where people who have
00:21:45
equities and people who own property are
00:21:47
going to do fabulous over the next 5 to
00:21:48
10 years and then the 40% 50% of people
00:21:51
who don't are going to really be feeling
00:21:54
a pinch well it does depend also on how
00:21:57
lever they are so just to give you a
00:21:58
sense total us household corporate and
00:22:01
government debt which include state and
00:22:03
local and federal so household debt in
00:22:05
the US about 18 trillion corporate debts
00:22:08
about 11 trillion state and local
00:22:10
government debts 3 trillion obviously
00:22:11
the federal debt 36 trillion that adds
00:22:14
up to a whopping $68 trillion of total
00:22:17
debt across um the US which if you
00:22:21
assume a 6% average interest rate you
00:22:23
know you got corporate debt and
00:22:24
household debt so it's a little more
00:22:25
risky so it carries a higher rate that
00:22:28
means we're spending about $4 trillion a
00:22:31
year of an economy that's only 29
00:22:34
trillion a year to service the debt just
00:22:36
to pay the interest on the debt so 15%
00:22:38
of every dollar that trades hands is
00:22:41
going towards interest payments on
00:22:43
existing leverage on existing debt it's
00:22:45
a highly leverage system and if you look
00:22:47
around the world this problem is not
00:22:48
just a US challenge Global Leverage is a
00:22:51
problem that's now becoming a crisis for
00:22:54
uh countries everywhere the UK is
00:22:55
waiting on a big budget proposal this
00:22:57
week higher taxes is going to be in
00:22:59
there to make up for a budget deficit
00:23:00
which is currently
00:23:01
4.4% of GDP the UK economy is only
00:23:05
growing at 0.9% a year France has a
00:23:07
major budget crisis underway right now
00:23:09
they're struggling to reduce their
00:23:11
deficit from 6% down to 5% of GDP and
00:23:14
they've got skyrocketing bankruptcies
00:23:17
74% of people that can work in that
00:23:18
country are working and they have and
00:23:21
that's because of large social programs
00:23:22
that support the balance 7.3% technical
00:23:25
unemployment and uh they're raising tax
00:23:28
on 440 firms 440 companies in the
00:23:31
country that make a billion or more in
00:23:32
Revenue with a quote temporary tax
00:23:35
there's a 4% searge on income over 500k
00:23:38
that's going into effect second home
00:23:39
real estate taxes and so on France is
00:23:42
struggling to figure out a way to
00:23:43
generate Revenue to make up for the
00:23:44
shortfall in Brazil there's a major
00:23:47
budget crisis States owe $130 billion to
00:23:49
the federal government there inflation
00:23:51
is accelerating at
00:23:53
4.6% rates are going to go higher and
00:23:55
longer complicating other economic
00:23:57
growth opportunities in the country
00:23:59
so um this is becoming kind of a global
00:24:01
leverage problem which might explain the
00:24:04
flight to Safety in assets like gold and
00:24:07
Bitcoin and um is going to present a lot
00:24:09
of real struggles for every global
00:24:11
economy now the question is does the US
00:24:14
dollar maintain its Reserve status
00:24:16
because ultimately I think it is
00:24:18
inevitable that the Federal Reserve in
00:24:20
the United States is going to need to
00:24:22
buy the debt they're going to need to
00:24:24
monetize the debt which means printing
00:24:26
money there is no one else to buy the
00:24:28
debt so pull up the China chart Nick
00:24:30
China's historically been the biggest
00:24:31
buyer and owner of us treasuries but
00:24:33
here's what's happened in the last
00:24:34
couple of years it peaked at about $ 1.3
00:24:36
trillion about 10 years ago and then
00:24:39
recently particularly starting around Co
00:24:42
they began selling down and have been
00:24:43
selling down at an accelerated Pace
00:24:46
today China is back to the level they
00:24:48
were at nearly 15 years ago in terms of
00:24:51
their treasury Holdings and they have
00:24:52
publicly declared that they are selling
00:24:54
off us treasuries and buying gold
00:24:56
instead so the big buyer of us
00:24:59
treasuries has kind of left the market
00:25:01
or is leaving the market who does that
00:25:04
leave well at the end of the day the
00:25:05
Federal Reserve has been the kind of
00:25:07
buyer of Last Resort and if they end up
00:25:09
buying treasuries that's where we have a
00:25:12
problem with too many dollars and
00:25:13
inflation kicking up and so it feels
00:25:15
like a lot of the trades in assets are
00:25:18
what's going to benefit from the
00:25:21
inflation and it's going to be gold it's
00:25:23
going to be Bitcoin and in some cases
00:25:25
because you're pumping more money in the
00:25:27
system it's going to be equities and uh
00:25:29
that might explain why equities are
00:25:31
moving up as well where do you guys
00:25:33
invest here I mean chamat like do you
00:25:36
care about how the Market's position or
00:25:38
how you're positioned in this election
00:25:40
right now and based on how we're seeing
00:25:42
markets trade and what these kind of
00:25:44
macro indicators are telling us or you
00:25:45
just business as usual heads down invest
00:25:48
and build as you always have yeah I I
00:25:51
think that you can't trade these
00:25:54
things and any attempt to do it is
00:25:57
probably a level of false decision where
00:25:58
you're going to lose more money and
00:26:00
there's a lot of slippage and even just
00:26:02
trying to execute it I mean at the
00:26:03
beginning of the year I said the
00:26:05
breakout
00:26:06
asset was going to be
00:26:09
Bitcoin I think it looks like it's going
00:26:11
to be the resounding inflation hedge
00:26:14
asset for the next 50 or 100
00:26:16
years so that die has been cast I think
00:26:20
you're seeing the last vestages of
00:26:21
people using gold as a rational
00:26:25
economic insurance policy but I think
00:26:28
the future is specifically Bitcoin on
00:26:32
that
00:26:33
Dimension so I guess you could trade
00:26:35
that you could speculate on that I think
00:26:38
the question that I've been grappling
00:26:39
with is in my scenarios what happens if
00:26:42
K Harris wins what the markets do and I
00:26:45
actually think it would reverse a lot of
00:26:48
these Trends over like the last month
00:26:49
and a half like I said I really do think
00:26:51
that there's a repositioning rebalance
00:26:52
component to everything that's happening
00:26:54
right now so I don't think there's much
00:26:56
to do unless you have a very specific
00:26:58
specific bet that you want to
00:27:01
make I would just keep my head down and
00:27:03
keep building are you the same place are
00:27:05
you are you Jake K are you guys trading
00:27:07
at all and I mean I I think trading is a
00:27:09
mistake time in Market is better than
00:27:11
trying to time the market and as I said
00:27:13
before where is all this money gonna
00:27:14
flow all this spending ass class right I
00:27:17
mean that's that's the key question
00:27:18
right like do you change what assets you
00:27:20
own I don't think so and I I I do think
00:27:24
there's another thing that's worth sort
00:27:26
of unpacking here because when you do
00:27:28
see people feel like the economy is
00:27:31
working against them all kinds of
00:27:34
interesting movements start cultural
00:27:35
movements Etc and I think that's what
00:27:38
we're seeing in this election is people
00:27:39
who believe in capitalism and free
00:27:41
markets and people who don't people who
00:27:42
believe in free speech people who
00:27:44
don't people who see themselves as
00:27:47
victims victims and then other people
00:27:48
who see them as creators
00:27:50
and I really study a lot of like what
00:27:53
young people are doing and I don't know
00:27:55
if you guys are watching sort of the
00:27:56
anti-war movement or the fire movement
00:27:59
which is financial Independence retire
00:28:02
early a lot of young people now are
00:28:05
looking at financial markets whether
00:28:08
it's Robin Hood or coinbase or prize
00:28:11
picks whatever Market it is young men
00:28:13
especially and they're saying I need to
00:28:15
control my destiny I need to this
00:28:17
capitalism is not working for me I need
00:28:19
to own equities I need to make trades
00:28:21
and I need to retire early and have
00:28:25
experiences because the capitalist
00:28:26
system is broken to some extent and then
00:28:28
then there's another group of people who
00:28:29
are just anti-work and there was this
00:28:31
term back in the day called neat not
00:28:35
employed not being educated and not in
00:28:37
training basically the people who are
00:28:40
called the
00:28:58
patient and we're 10% off that maybe
00:29:00
more maybe we're at 61 or 62 I think a
00:29:02
lot of people are going to give up
00:29:04
because the debt is going to be so
00:29:05
crushing that the logical thing to do if
00:29:07
you don't think you can get out from
00:29:08
under it might be to move in with your
00:29:10
parents or two or three other people
00:29:11
tighten your belts and enjoy life and go
00:29:13
skiing and and and go have experiences
00:29:16
and a lot of young people are electing
00:29:17
to do that in other words they're oping
00:29:19
out the American dream sorry to your
00:29:21
point the one thing the one thing that I
00:29:22
realized with a lot of young men that
00:29:25
Jason I think you're you're really
00:29:27
hitting the nail on the head is a lot of
00:29:29
them now do not view the job that they
00:29:31
do as their only path to economic
00:29:36
independence and if anything they may do
00:29:39
a job but then they're actively trading
00:29:42
on the
00:29:43
side something crypto options whatever
00:29:47
they're on Robin Hood they're using
00:29:48
coinbase because it's almost like
00:29:50
they've separated in their mind that the
00:29:52
job they do will never give them the
00:29:54
financial Independence they want and so
00:29:56
instead they're going to do that job
00:29:58
because they like it hopefully they love
00:30:00
it but then separately they're going to
00:30:02
go and speculate to try to make money
00:30:04
it's a really interesting thing because
00:30:05
I had always been taught you earn your
00:30:07
wealth through the job you have and so
00:30:09
if you wanted to make more money you
00:30:10
have to ladder up and do something
00:30:12
different yeah so that that's not true
00:30:14
that that idea has been sort of
00:30:16
decoupled now that's a really
00:30:17
interesting change in how people
00:30:18
approach work I call them gen bet like
00:30:22
they're the generation that believes on
00:30:23
there's just like subset of them it's
00:30:25
not all of them a number of them are
00:30:26
just quiet quitting and they just don't
00:30:28
believe in capitalism and then there's
00:30:30
this other group which are like trying
00:30:31
to get control I call them gen bet
00:30:34
because they just want to bet on
00:30:35
themselves and you know and if they
00:30:37
don't get wrecked by the financial
00:30:39
markets CH trading options you know and
00:30:41
and doing PR sorry the other the other
00:30:43
thing I'll say just in recruiting a
00:30:45
bunch of people at 8090 over the last
00:30:49
three or four months is there is an
00:30:50
enormous difference that I have seen
00:30:52
psychologically in the people that are
00:30:54
25 and older versus the people that are
00:30:58
25 and under and I'm calling 25 as a
00:31:01
rough number but there are kids that are
00:31:03
18 19 20 21 years old that are off the
00:31:08
charts good they're motivated they're
00:31:10
hungry they're like let's get after it
00:31:13
and they are honestly different in the
00:31:15
way they approach their job than folks
00:31:17
that are in their late 20s and early 30s
00:31:19
these folks I think they're the first
00:31:20
generation who didn't go into debt in
00:31:23
college and didn't buy into that like so
00:31:25
they might the the Millennials ahead of
00:31:27
them might might have like taken the
00:31:28
bullets you know yeah the folks that are
00:31:30
in their late 20s early 30s and I'm not
00:31:32
trying to generalize or disparage but
00:31:35
they lack a level of motivation again
00:31:37
generally speaking that the youngest
00:31:39
folks in the workforce have and that
00:31:42
also that people in our generation sort
00:31:44
of have so they're sort of sandwiched in
00:31:46
between a very different way of
00:31:48
approaching work and as a result they
00:31:51
stand out and I don't think they're
00:31:52
standing out for all the right
00:31:55
reasons well the majority now of young
00:31:58
people the number I believe and Nick if
00:32:01
you could pull this up 57% of Jen's
00:32:04
years want to be influencers as their
00:32:07
primary career now that the idea of
00:32:10
working a job is almost like a secondary
00:32:14
option the primary option that everyone
00:32:16
would thri strive
00:32:17
for is to be an
00:32:20
influencer and this number has grown
00:32:23
considerably continues to grow and in
00:32:25
fact if you look at the the rest of this
00:32:27
report this was out of a did you say 50%
00:32:30
of gen zers aspire to be influencers
00:32:34
correct okay 57% as their career or just
00:32:39
they want to be influential and build a
00:32:40
brand around themselves I wonder that's
00:32:42
what they want to do for a living that's
00:32:44
what they would like that's what they
00:32:45
want their paycheck to be
00:32:47
interesting they want to be independent
00:32:49
and I don't think they believe this they
00:32:50
believe the system's rigged against them
00:32:52
and why wouldn't you think the system's
00:32:53
rigged against you if you went 150 or
00:32:55
250k in debt and you couldn't get a good
00:32:57
job job sax as a successful influencer
00:33:00
how would you advise the youth on their
00:33:02
career
00:33:03
choices well played yeah look I think
00:33:06
that believing you're going to be an
00:33:07
influencer is like believing that you're
00:33:09
going to be like a rock star or movie
00:33:13
actor something like that pro aete pro
00:33:15
athlete yeah it's like a one in a
00:33:16
million
00:33:17
shot it's just not a great thing to want
00:33:21
to design your career around because
00:33:24
it's just very unlikely to happen so I
00:33:26
think you're better off
00:33:28
finding a career that you're passionate
00:33:30
about but where you're actually adding
00:33:32
value the world doesn't need 50
00:33:34
something per of the population become
00:33:36
influencers that's kind of crazy it it
00:33:38
reminds me of a line from Fight Club
00:33:40
where Tyler Duran says we've all been
00:33:43
raised on television to believe that one
00:33:44
day we'd all be millionaires and movie
00:33:46
gods and rock stars but we won't and
00:33:49
we're slowly learning that fact and
00:33:50
we're very very pissed off and that was
00:33:53
Gen X that was J X yeah so that was us
00:33:56
they headed they're headed for a uh a
00:33:59
fight club like realization about this
00:34:01
SX how do you advise a young person on
00:34:05
there there's this temptation to go and
00:34:07
spend all this time making content and
00:34:08
pursue that as your career and that's a
00:34:10
life opportunity for you now it's more
00:34:12
free and open they would think than
00:34:13
perhaps being a movie star or a
00:34:16
basketball player used to be so I think
00:34:18
it's it's just uh important to recognize
00:34:21
that if we ourselves are influencers the
00:34:23
the reason why we're not being
00:34:25
hypocritical is that none of us here
00:34:28
with the possible exception of JAL ever
00:34:29
set out to be influencers right we did
00:34:32
something different we actually had a
00:34:33
career and we did something interesting
00:34:36
and then as a result of that maybe
00:34:37
people want to listen to our pod the
00:34:39
idea that you can just go be an
00:34:41
influencer without having actually done
00:34:43
anything interesting what's your
00:34:45
credential for that so what I would
00:34:47
advise is just people should go do
00:34:49
something productive and then you know
00:34:52
if it leads to other people wanting to
00:34:54
hear from them then that that's good but
00:34:57
out to be someone that other people
00:34:59
should listen to without having any
00:35:02
experience or having done anything
00:35:03
productive in your life it's like why
00:35:04
should we listen to you yeah one thing I
00:35:06
I did build and sell two out of my three
00:35:08
businesses over the
00:35:10
years but there are tens of millions of
00:35:12
people making money in the long taale as
00:35:14
a content creator and it's low thousands
00:35:16
of dollars in some cases per month but
00:35:19
if you combine that with people who are
00:35:20
gig economy workers and they don't
00:35:22
believe in the system because they
00:35:24
worked really hard they got this job at
00:35:26
Google they went to the office then they
00:35:29
got laid off and nobody cares about them
00:35:30
now they're getting dragged back into
00:35:31
the office they still have these
00:35:33
payments and then they look at this
00:35:34
other system where hey they started to
00:35:36
get 10,000 followers they started to
00:35:37
make $11,000 a month then $3,000 a month
00:35:41
they actually see a path to being
00:35:44
independent of a system that has no
00:35:46
loyalty to me and that's what I hear
00:35:48
from folks and I think it's great if
00:35:50
we're not going to be loyal as like
00:35:52
corporations to individuals those
00:35:54
individuals are now responding and the
00:35:57
anti anote to that poison of just being
00:35:59
laid off randomly or being dragged back
00:36:01
to the office after you told you could
00:36:02
work from home all that stuff they now
00:36:05
believe hey I can be independent and
00:36:08
then you have to fight to get my
00:36:10
services and I think that's what this is
00:36:12
about if and and well we're g to talk
00:36:14
about Starbucks later and I think that's
00:36:15
a big part of the Starbucks problem
00:36:18
having a side hustle makes you
00:36:19
antifragile you you have other sources
00:36:22
of income and you can tell your boss to
00:36:24
f off and that's what young people are
00:36:26
doing I've seen it seen people just quit
00:36:28
jobs and just say you know what I've got
00:36:30
other ways to make money and I don't
00:36:31
have a big burn rate and so that's smart
00:36:34
for young people to do that and I think
00:36:35
my advice would be to build your brand
00:36:37
be as independent as possible and to
00:36:39
make things in the world and show people
00:36:41
what you made that's the best thing you
00:36:42
can do can I can I give you the other
00:36:44
side of this before we go back to macro
00:36:47
yeah imagine that Tom Brady who really
00:36:50
respected bill bellich but I wouldn't
00:36:52
say is super fond of him they're not
00:36:55
super close but imagine that Tom Brady
00:36:57
had a side
00:36:59
hustle and let's just say he drove an
00:37:01
Uber and he made enough money where when
00:37:04
things got hard and he didn't get enough
00:37:05
playing time he opted out would that
00:37:07
have made Brady the person he was I
00:37:10
think the answer is
00:37:11
no I think there are a lot of people who
00:37:13
started companies after being in very
00:37:17
difficult and challenging environments
00:37:19
that stretched and pushed them beyond
00:37:21
their comfort zone and they lived in
00:37:23
that world for years before they started
00:37:25
something
00:37:28
if all of a sudden the answer is let me
00:37:31
have an escape hatch so that I can
00:37:33
egress off whenever things get hard I
00:37:36
don't think you're going to accomplish
00:37:37
much of anything because I'm not sure
00:37:39
that that is the kind of boundary
00:37:42
conditions that push greatness upon
00:37:44
people so I would just keep that in mind
00:37:46
as well I'm not sure the side hustle
00:37:47
solves anything it may actually allow
00:37:49
you to quit before you actually get to
00:37:52
the other side of something and realize
00:37:53
what you're capable
00:37:55
of yeah I think that's a great point you
00:37:57
kind of have to mentally burn the boats
00:37:59
when you do a startup it's Cortez you
00:38:01
got to burn the boats yeah I agree with
00:38:03
that your life your life needs to be
00:38:05
like Cortez you got to burn the boats if
00:38:07
you keep the safety net with you as you
00:38:11
move through life all the time and you
00:38:13
never put yourself at risk you're never
00:38:15
going to figure out what you're capable
00:38:17
of and then you're going to look back at
00:38:19
some point and the odds that you're
00:38:20
going to be disappointed are higher than
00:38:23
if you actually just tried and lived it
00:38:25
it and just said okay you know what I'm
00:38:26
really glad I'm on myself here to wrap
00:38:29
up the the conversation about where
00:38:31
markets are headed SX I think we were
00:38:33
going to just do a quick round the horn
00:38:34
anything that you've repositioned in
00:38:35
your portfolio around investing or asset
00:38:38
classes that you shift as we Face kind
00:38:41
of looming budget crises the election
00:38:45
cycle I'm trying to sell every single
00:38:48
SAS startup I have in secondary markets
00:38:51
and you know how many bids there are for
00:38:52
these SAS companies negative one bid H
00:38:56
that's interesting I had a couple of my
00:38:58
startups
00:38:59
get get offers I've had three or four
00:39:02
secondary offers in the last two weeks
00:39:03
I've had to like deeply consider and
00:39:05
they weren't like 75 what kind of
00:39:07
companies let's see two were SAS and
00:39:10
then one I can't say because it' be too
00:39:12
easy to guess but the Bottom Feeders
00:39:13
went from offering like an 80% discount
00:39:16
to now a 25% discount so you know you're
00:39:18
not allowed to sell your your shares and
00:39:20
all in right I'm trying I'm trying Brad
00:39:22
G's bought 7% so far so I'm I'm I'm
00:39:25
quickly offloading to G much as I you
00:39:28
just you just super tilted freeberg
00:39:30
there looking he's laughing but inside
00:39:33
just the s% he gets 16 minutes per you
00:39:37
know what if he if he'll moderate I'll
00:39:39
have him I mean this is moderation going
00:39:41
okay or should I jump in and save the
00:39:43
show he should write all in a get fit
00:39:45
memo just on the question of you know
00:39:48
how do you reposition so first of all
00:39:49
the easy one to avoid is is treasuries
00:39:52
right I mean do you really want to
00:39:53
accept a 4.2% yield for 10 years to own
00:39:58
a US Bond and with the looming inflation
00:40:02
that is still out there or the looming
00:40:04
de crisis that might be out there so
00:40:07
that's probably the easy one I think the
00:40:08
hard one is around equities because
00:40:11
equities are at an all-time high part of
00:40:13
the reason why they're an all-time high
00:40:15
is because the FED telegraphed that we'd
00:40:18
have big rate Cuts this year remember at
00:40:20
the beginning of this year they said
00:40:21
there'd be seven rate
00:40:23
Cuts those expectations have kept coming
00:40:25
down I think we had one I guess we had a
00:40:28
double rate cut last month and we were
00:40:30
supposed to have one more 50 bit rate
00:40:32
cut this year I have to wonder if that's
00:40:33
still going to happen and more to the
00:40:36
point if you believe Dr and Miller and
00:40:38
Paul tutor Jones we might be in for a
00:40:41
extended period of higher interest rates
00:40:44
for longer and that will be bad for
00:40:47
equities equities normally are inflation
00:40:50
protected in the sense that those
00:40:51
companies can just raise prices over
00:40:52
time to keep up with inflation and so
00:40:55
equities are generally a pretty good
00:40:56
thing to own in the face of inflation
00:40:59
but if we're in for a period of high
00:41:02
interest rates longer than anyone thinks
00:41:05
that's going to be bad for equities well
00:41:06
I would just argue one thing which is
00:41:08
except in the scenario where you believe
00:41:11
the only inevitable path is for the
00:41:13
central banks to monetize the debt
00:41:16
meaning the central banks step in to buy
00:41:18
the outstanding treasuries that need to
00:41:20
be issued which both supports inflation
00:41:23
but also introduces Capital into the
00:41:25
system and that's where both equities
00:41:27
that that's where you could see a
00:41:27
scenario where equities and gold go up
00:41:29
while fixed income goes down to to have
00:41:32
higher rates so it's effectively a money
00:41:34
printing indicator or signal now my
00:41:37
personal position on this going into
00:41:39
this new era if it manifests as the
00:41:42
markets are telling us it will is kind
00:41:45
of where Paul tutor Jones is I think
00:41:46
that Commodities have and you know gold
00:41:48
is a commodity everyone talks about it
00:41:51
as being the safe haven asset but there
00:41:52
are other Commodities out there that are
00:41:55
much more fungible and used in in
00:41:57
production Cycles to make food to make
00:41:59
energy to make goods and a commodity
00:42:03
linked businesses meaning businesses
00:42:05
whose revenue or profit grows with the
00:42:07
underlying commodity price growing will
00:42:09
outperform other businesses they're
00:42:10
going to struggle to raise prices or
00:42:11
struggle to pay higher labor costs or
00:42:14
struggle to in to deal with higher cogs
00:42:17
whereas commodity link businesses that
00:42:18
effectively just make a margin on the
00:42:20
Comm example a mining business so
00:42:23
businesses that do mining of of Natural
00:42:26
Resources
00:42:28
um businesses that trade agricultural
00:42:29
Commodities so those businesses usually
00:42:32
make kind of a fixed margin on the
00:42:33
underlying commodity price and they do
00:42:35
they do well in these Cycles so anyway I
00:42:37
think that Paul tutor Jones rather
00:42:39
because if you own a commodity it's not
00:42:40
a productive asset it's not generating
00:42:41
yield for you but if you own a business
00:42:43
that's making a profit and just seems
00:42:45
like it's easier to own Bitcoin that's
00:42:48
one asset but the Bitcoin isn't a
00:42:50
productive asset right I mean so that's
00:42:51
one one way to kind of build a portfolio
00:42:53
but I I personally like owning
00:42:55
businesses where they're doing something
00:42:56
and making value and in the process they
00:42:58
earn a profit especially if the profit
00:43:00
grows with an underlying inflationary
00:43:03
pressure on Sak's point about the equity
00:43:05
markets there is this thing that people
00:43:06
look at called the buffet indicator
00:43:08
which is the total value of the Wilshire
00:43:10
5000 divided by GDP he mentioned it in
00:43:14
2000 and said it's probably the most
00:43:17
reliable measure of where equities are
00:43:20
and where they're about to go
00:43:23
and there is this long run mean when you
00:43:26
calculated going back back you know 50
00:43:28
60 years and every time it's had a
00:43:30
short-term High there's been a pretty
00:43:32
meaningful retrade so in 2000 in the
00:43:35
Doom bubble in 2007 during the great
00:43:38
financial
00:43:39
crisis during covid and now we've
00:43:42
actually set an absolute new high in
00:43:44
this thing which again to the extent
00:43:47
that you believe in indicators like this
00:43:49
would kind of tell you that at some
00:43:52
point here equities are
00:43:54
probably going to be cheaper before
00:43:56
they're going to get more expensive this
00:43:58
is definitely the high end of normal
00:44:01
Nick if you pull up the PE chart this is
00:44:03
the obvious one to look at is you know
00:44:05
not just the how dramatic the stock
00:44:08
market Peaks are but you know the the
00:44:10
price earnings ratio and it's uh at the
00:44:12
high end of normal at like I don't know
00:44:14
if we're at
00:44:15
25 um PE ratio on average David's right
00:44:19
how can you get
00:44:21
4.25% when you have all of these risks
00:44:24
looming over the next 10 years because
00:44:26
you know Howard marks
00:44:27
his letter uh he he had an investment
00:44:29
letter that he published this week and
00:44:33
it was so great because it was so
00:44:35
elegant in its Simplicity which is
00:44:37
investing in an equity and investing in
00:44:39
a bond are just completely opposite to
00:44:42
each other even though they're treated
00:44:43
and spoken as if they're the same thing
00:44:47
and his concept is like people need to
00:44:49
understand exactly what the terms fixed
00:44:51
income means it means that you will get
00:44:54
something reliably over a long period of
00:44:56
time time and so the question is whether
00:44:58
is that fair knowing everything you know
00:45:01
today and I mean all of you guys have
00:45:04
said this now for feels like years and
00:45:07
when you show these charts of like
00:45:10
ballooning debts and
00:45:12
deficits is it reasonable that the
00:45:15
market clearing price for government
00:45:17
issue debt over the next decade is 4% I
00:45:20
mean my gosh it could easily be 6% it
00:45:23
could easily be seven or 8% that is very
00:45:26
scary totally the big difference between
00:45:27
a bond and a stock is that the bond
00:45:29
provides you with like you said fixed
00:45:31
income payments and those would be
00:45:34
horribly debased if you have high
00:45:36
inflation a stock gives you earnings and
00:45:39
a company can always raise its prices
00:45:41
and so in theory it should be hedged
00:45:43
against inflation but both a stock and a
00:45:46
bond are similar in the sense that
00:45:50
they're both hurt badly by Rising
00:45:52
interest rates right because the
00:45:53
discount rate is higher so this is where
00:45:55
I'm just not sure about equities if we
00:45:57
do head into a new regime of higher
00:46:00
rates longer does that hurt equities
00:46:03
even though equities normally are pretty
00:46:05
good inflation hedge so I just don't
00:46:07
know the answer to that I do think we're
00:46:10
headed for a period of constraints I
00:46:13
think that since 2008 we basically were
00:46:16
living in a sort of a consequence-free
00:46:19
environment where the FED could keep
00:46:21
interest rates at or near zero the
00:46:24
federal government could spend as much
00:46:25
as it wanted we we you know we sort of
00:46:28
normalized emergency conditions first we
00:46:30
had trillion dollar deficits as a result
00:46:33
of the 2008 GFC and then those got
00:46:36
normalized then we had2 trillion doll
00:46:38
deficits as a result of covid and those
00:46:40
got normalized and then the Fed was also
00:46:43
doing QE which means that it's buying
00:46:45
the US government's own bonds thereby
00:46:48
propping up us bonds and the bond market
00:46:53
so now that's normalized that's
00:46:54
normalized yeah keeping interest rates
00:46:56
lower than otherwise would need to be to
00:46:58
attract those Bond holders so for about
00:47:02
15 years we kind of normalized emergency
00:47:05
conditions and consequence-free spending
00:47:07
by the US government I think now we're
00:47:10
we may be entering an era of
00:47:11
consequences and what that means is that
00:47:14
you can't push on one aspect of the
00:47:17
federal government's balance sheet
00:47:18
without giving up on something else so
00:47:20
in other words if you're going to allow
00:47:23
higher inflation basically monetizing
00:47:25
the debt the bond markets are going to
00:47:27
make the government pay higher interest
00:47:28
rates on its debt right because they not
00:47:30
dumb so we're going to be in a world of
00:47:32
higher interest rates which means that
00:47:34
equities get clobbered real estate gets
00:47:36
clobbered the value of people's homes
00:47:38
gets clobbered so there's real
00:47:39
consequences from that or you can tackle
00:47:43
inflation you know which means that the
00:47:45
fed's going to have to tighten but then
00:47:48
I think what that means is the federal
00:47:49
government's going to have to get
00:47:50
religion around spending they're not
00:47:52
just going to be able to spend all of
00:47:54
this money we've seen this austerity
00:47:56
measur in Europe right were pretty hard
00:47:59
for people in Greece and Spain and to
00:48:01
get their heads around and I think
00:48:03
Americans are going to have to get used
00:48:04
to we can't just spend and give handouts
00:48:06
constantly on the equity side though
00:48:08
there's also the concept sacks that you
00:48:10
can cut spending and increase earnings
00:48:13
and that that's well within your control
00:48:16
as a CEO and board and that's exactly
00:48:18
what we've seen coming out of Co and I
00:48:19
said it here a couple years ago I think
00:48:21
the earnings are going to do well
00:48:22
because people have this other lever and
00:48:25
they can just turn the dial and reduce
00:48:27
spending and increase earnings and it's
00:48:29
like oh that's painful but it's not so
00:48:32
painful that it's not worth doing and so
00:48:34
corporations have gotten religion around
00:48:37
cost cutting and austerity and
00:48:39
increasing earnings the question is and
00:48:42
individuals have to so they're pushing
00:48:44
out buying new cars and uh spending on
00:48:47
travel so then what happens when does
00:48:49
the government get that austerity that
00:48:51
companies and individuals are forced to
00:48:53
do and that's the problem you keep
00:48:55
talking about freeberg is you know this
00:48:58
entire election cycle is about who can
00:48:59
give more free enough with the free like
00:49:02
somebody's got to be an adult in the
00:49:03
room and say we don't have any more free
00:49:06
left I think this is what the market is
00:49:08
saying is that regardless of who gets
00:49:10
elected here they've both kind of shown
00:49:12
that the deficit will increase not
00:49:14
decrease uh under their presidency and
00:49:16
look maybe that is positioning to get
00:49:18
elected and maybe there is a kind of
00:49:21
more rational underlying economic
00:49:23
Advisory Group that is counseling a
00:49:26
different path than what they are
00:49:27
presenting and I I hope to whoever is
00:49:31
listening that that is the case for both
00:49:34
candidates uh very deeply hope if you
00:49:37
look at what happened in Argentina so
00:49:38
we've talked a lot about Javier mle he
00:49:40
came in as president and um his
00:49:43
austerity measures by absolutely
00:49:45
slashing government spending has reduced
00:49:48
monthly inflation from 25% to around you
00:49:51
know three and a half percent so he's
00:49:52
really kind of brought inflation under
00:49:54
control but the consequence of that is
00:49:56
that the economy has now shrunk because
00:49:58
the government is spending less that
00:49:59
means there's less revenue for certain
00:50:01
businesses there's less income for
00:50:03
individuals so they spend less so the
00:50:05
economy has shrunk by 1.7% in the last
00:50:08
quarter and um unemployment has spiked
00:50:11
so now unemployment is at 8% in
00:50:13
Argentina and it's rising fast so for
00:50:15
the US to actually execute this policy
00:50:18
when we have a fundamental mandate for
00:50:20
the Federal Reserve to keep unemployment
00:50:24
low means that something is going to
00:50:26
have to break you can't keep
00:50:28
unemployment low and inflation low if
00:50:31
federal spending gets too high and
00:50:33
federal debt gets too high so we are in
00:50:35
a condition now where federal debt is
00:50:37
too high and if we cut federal spending
00:50:39
too fast we end up seeing unemployment
00:50:42
Spike and if we don't we're going to
00:50:43
have inflation those those are the
00:50:45
two paths we could walk just one thing
00:50:48
to challenge what you say because I
00:50:51
actually I disagree with it is that I
00:50:53
don't think that people view the
00:50:55
spending package of both candidates the
00:50:57
same because the dollar is not created
00:51:00
equal so there are certain programs that
00:51:03
the Republicans have proposed that are
00:51:06
markedly different than the programs
00:51:09
that the Democrats have proposed even if
00:51:11
the numbers look the same and so this is
00:51:13
why I think you have to look at how the
00:51:14
short-term markets when they thought
00:51:17
Kamala was winning behaved versus now
00:51:19
the short-term markets short-term mean
00:51:21
how do you hedge this risk and that is
00:51:23
completely changed and this is why I
00:51:25
mean over the last 30 days you've had a
00:51:29
complete and absolute repositioning of
00:51:32
the front end of the yield curve in
00:51:33
terms of risk and who's making the bets
00:51:36
and I think why is because the the Trump
00:51:40
package whether we agree with him or not
00:51:43
is viewed as more stimulative to
00:51:45
long-term economic growth which is why
00:51:47
the inflation risk is being hedged out
00:51:50
versus The Comma risk which is they're
00:51:52
just going to spend money now on top of
00:51:54
that what I would say is
00:51:57
this may be
00:51:59
where Elon Musk being able
00:52:03
to streamline the government could be an
00:52:07
incredible gift for us as well as our
00:52:09
children and our children's children and
00:52:11
why is that it's because if there's this
00:52:14
sort of Damocles hanging over us
00:52:17
constantly of billions and trillions of
00:52:19
dollars of wasteful
00:52:21
spending he is probably in a position to
00:52:24
show us that we have spent decades
00:52:28
spending more and getting
00:52:30
less and now we can run the ab test
00:52:34
where we spend meaningfully meaningfully
00:52:36
less cut regulation and if we actually
00:52:40
get more you will have the proof and
00:52:43
That Could set us on a long-term path of
00:52:46
being more judicious in how we spend
00:52:48
money and I think that we deserve to run
00:52:51
that experiment somehow to just go back
00:52:53
to your your definition of GDP it's true
00:52:55
that if you cut government that might
00:52:57
cut GDP because GDP includes government
00:53:00
spending however one could argue that
00:53:04
although technically that is how the
00:53:05
definitions work that by cutting
00:53:09
government you actually unlock resources
00:53:12
that could be used by the private sector
00:53:13
and that ultimately it would lead to
00:53:16
more efficiency but also stimulate the
00:53:18
private sector and I think that argument
00:53:20
is particularly true when you've got an
00:53:22
economy running of Full Employment so
00:53:24
you know if we had lots of unemployment
00:53:26
then cutting all these government
00:53:27
workers would be very painful but if
00:53:29
you've got an economy that's doing quite
00:53:32
well and there's a lot of job creation
00:53:34
going on then it's a good time to
00:53:36
actually cut government because the
00:53:37
private sector can reabsorb these people
00:53:39
we should use the fact that we still
00:53:42
have that we have a good employment
00:53:43
picture to make these painful Cuts now
00:53:46
as opposed to waiting until it would be
00:53:48
far more difficult best point I've heard
00:53:50
in a long time that's a great Point sex
00:53:52
give us the election update what's going
00:53:53
on are we going to
00:53:54
get your guy in office is it going to be
00:53:58
uh vice president Harris what's the
00:54:00
sense of what the polls are telling you
00:54:03
of what the markets are telling us
00:54:05
what's your read on where we're at all
00:54:06
the data is basically pointing One
00:54:08
Direction which is a trump Victory and
00:54:11
by data I mean the polling I mean the
00:54:12
prediction markets and then the early
00:54:14
voting numbers so if you look at the the
00:54:17
polls there were two new polls by
00:54:19
mainstream Media One The Wall Street
00:54:21
Journal yesterday said that Trump was up
00:54:24
three nationally
00:54:27
and I think CNBC had a poll this morning
00:54:29
saying that Trump was up two nationally
00:54:32
that's very good because that's the
00:54:34
popular vote that's a popular vote so if
00:54:36
Trump is winning the popular vote it's
00:54:37
Landslide most prognosticators say that
00:54:41
because the Republicans have a slight
00:54:42
Electoral College advantage that Harris
00:54:45
would need to win the popular vote by
00:54:47
more than 2% to have a chance at winning
00:54:50
the Electoral College so if Trump is
00:54:52
winning the popular vote then it's a
00:54:54
landslide
00:54:56
second area is if you look at the
00:54:58
state-by-state polling Trump has been
00:55:01
advancing pretty much in every
00:55:03
Battleground State for the last couple
00:55:05
of weeks if you use RCP Trump is now
00:55:08
ahead slightly in every Battleground
00:55:10
State and the momentum is all towards
00:55:11
Trump and then the final data point is
00:55:14
around early voting in states where they
00:55:16
have this early voting and put out the
00:55:18
numbers the Republicans are tracking
00:55:20
well ahead of where they were in 2020
00:55:22
now there's still a question of you know
00:55:25
do this mean that Republicans are just
00:55:27
shifting their votes to voting earlier
00:55:29
and then they'll do less well on
00:55:31
Election Day there's always that chance
00:55:33
but right now if you're a republican
00:55:36
it's what you want to see and if you're
00:55:38
a Democrat it's definitely not what you
00:55:40
you want to see yeah and the essay that
00:55:42
Nate silver wrote that was published by
00:55:44
the New York Times yesterday said it's a
00:55:46
5050 tossup either candidate could win
00:55:49
but my gut tells me it's going to be
00:55:50
Trump he's kind of indicated that's
00:55:52
where you know as a guy who's obviously
00:55:54
been a big prognosticator says the
00:55:56
Market's headed jel you think saaks is
00:56:00
is right on this anything for to mention
00:56:02
prediction markets prediction markets
00:56:03
have moved very very sharply in favor of
00:56:06
trump it's almost two3 oneir now in
00:56:08
favor of trump so there's been a huge
00:56:10
move among betters that Trump is gonna
00:56:13
win on poly Market yeah poly market and
00:56:16
then Ki as well do you think it's over
00:56:17
jcal I'll go with Nate I mean I think
00:56:20
Nate's
00:56:21
probably the best thinker on this who I
00:56:25
think puts a lot of into it if he says
00:56:27
it's 50/50 with a slight advantage to
00:56:29
Trump I think I would go with his gut
00:56:32
but he's saying don't trust anybody I
00:56:34
don't trust the prediction
00:56:36
markets and I think the prediction
00:56:38
markets are closing that Gap as we get
00:56:40
closer because they are easily
00:56:41
manipulated poly Market is only offshore
00:56:44
right the US market is not allowed to
00:56:46
participate in poly market so it's all
00:56:48
foreign investors now of course
00:56:50
Americans could be putting money
00:56:52
overseas somehow and and using foreign
00:56:54
accounts to to place these bets I'm
00:56:56
guessing if you were a sharp and you
00:56:58
really want to make money that's what
00:56:59
you would do so I don't know what
00:57:01
percentage of it it was it was reported
00:57:03
this morning that a French Trader has
00:57:07
bet $45 million on Trump on poly Market
00:57:10
that he is the whale he's a French
00:57:11
national with quote extensive trading
00:57:13
experience he's not quote manipulating
00:57:15
the market he just really is trying to
00:57:16
build a big position so he sounds like
00:57:18
he's a pretty active Trader that uh made
00:57:20
the big move but it's a crypto-based
00:57:22
site so you you get the benefit of like
00:57:24
you can track some amount of this on
00:57:26
blockchains and then eventually find the
00:57:28
person but because it's crypto as well
00:57:30
you can also hide yourself pretty well
00:57:32
with tumblers and other systems so I I
00:57:35
would discount poly Market uh a bit it's
00:57:38
probably not as Extreme as it seems but
00:57:40
it does seem
00:57:41
like kamla has not helped herself with
00:57:44
the interviews they haven't been great
00:57:47
and um you know it it is a tossup and so
00:57:52
it's any surprise any October surprise
00:57:56
come in I mean there have been a few
00:57:57
attempts the last couple days I mean it
00:57:58
seems like the rhetoric for 24 hours
00:58:00
there have been some really gnarly ones
00:58:01
that we shouldn't give it I don't think
00:58:03
we should give any freedance too but
00:58:06
some Republicans have been coming out
00:58:08
talking about like a really gnarly one
00:58:10
about the Republican side and I mean
00:58:14
it's not much more gnarly than other
00:58:15
things that have been said about Trump
00:58:17
already and judgments that Trump is
00:58:19
against him already for $100 million so
00:58:21
it's in that vein but I do think that
00:58:23
that looks to me like it's cap and I
00:58:25
think there's going to be a lot of fake
00:58:28
news maybe even deep fakes that come out
00:58:30
you know in the last week or two so I I
00:58:32
think people should not trust anything
00:58:34
they see on social media be very careful
00:58:37
with that information I'll tell you guys
00:58:39
my kind of view is like things seem to
00:58:43
be getting more inflammatory leading up
00:58:45
to the election here it's like we've got
00:58:46
12 days left or or whatever it is and
00:58:50
the the rhetoric and the tonality of the
00:58:53
stuff that's being said is getting so
00:58:54
nasty on both sides
00:58:57
and um I just worry more about the
00:59:01
reconciliation reconstruction phase that
00:59:03
needs to happen in America see it on
00:59:05
both sides is it equal on both sides you
00:59:08
think that's your
00:59:10
observation
00:59:12
um I like I you know I think like Trump
00:59:15
leaning out the window of McDonald's and
00:59:17
it was I I mean I laugh pretty hard when
00:59:18
he was like someone said to him when
00:59:20
they interviewed Trump when he was
00:59:21
serving french fries and he said
00:59:24
something like I've now worked in
00:59:25
McDonald's 15 minutes longer than kamla
00:59:27
has and then they one of the reporters
00:59:28
said well why do you think she would lie
00:59:30
about that and he leans out the window
00:59:31
he says because she's lying kamla and
00:59:34
you know it's a funny joke that's his
00:59:35
quip he makes fun of everyone but I
00:59:37
think the whole thing about making fun
00:59:38
of everyone it's such a different tone
00:59:41
and a different rhetoric then I think
00:59:42
what's going to be needed because
00:59:44
imagine if she wins and you know he's
00:59:46
painted her as being you know a liar and
00:59:49
crooked and deep State I mean look I'm
00:59:51
you can possibly compare that to what
00:59:53
the Democrats are saying right now which
00:59:54
is that Trump is literally hit
00:59:57
call him a fist she called him a fist
00:59:59
she said it's democracies on the line
01:00:01
and obviously when you say something
01:00:03
like that when you say that the
01:00:04
fundamental system of the electoral
01:00:07
process is on the line it implies that
01:00:11
if he wins We've Ended democracy that
01:00:14
will inevitably lead people to feel like
01:00:16
we are in a place
01:00:18
of civil chaos and I don't think that
01:00:21
anyone's going to feel good coming out
01:00:22
of this how do you guys think we kind of
01:00:26
deal with a like the election outcome
01:00:28
here one side or the other I mean half
01:00:30
the country's gonna hate the president
01:00:31
and half the country is gonna hate where
01:00:33
where we are and how we sit as a country
01:00:35
and half the country is going to think
01:00:36
that democracy is over I mean one half
01:00:38
is going to feel like this is the end
01:00:41
and it's it just a temporary thing and
01:00:43
everyone reconciles and we all like get
01:00:44
back to work and the election's over and
01:00:46
whoever wins
01:00:47
wins I think unfortunately the
01:00:50
mainstream media is responsible for
01:00:51
giving roughly half the country a
01:00:53
psychosis about Trump because they are
01:00:55
pushing out this rhetoric non-stop that
01:00:57
he's a fascist that he's Hitler they
01:00:59
keep putting out all these fake stories
01:01:01
and they are basically training people
01:01:04
or indoctrinating them that he's just
01:01:06
like threat to democracy I was having
01:01:07
dinner last night with someone who's a
01:01:09
Democrat who pretty much gets all their
01:01:10
information from mainstream media and
01:01:12
she's like terrified of this it's just
01:01:14
not who Donald Trump is it's a it's
01:01:16
ridiculous hyperbole but if you're
01:01:18
locked in that media ecosystem and
01:01:21
that's all you hear you really are
01:01:22
frightened by this so I think that the
01:01:25
media the media's irresponsibility the
01:01:27
way that they don't report honestly and
01:01:30
that they Jin up these threats has
01:01:32
really terrified half the country do you
01:01:35
think that the Trump trump is Hitler
01:01:36
rhetoric indicates that the Democrats
01:01:38
feel they're lying I mean that's like
01:01:41
pretty par for the course what's so
01:01:43
horrible about that I mean you could
01:01:45
make the argument that she's lied about
01:01:47
a lot of things as Anderson Cooper
01:01:49
interrogated her quite well just
01:01:51
yesterday on that town hall he pointed
01:01:53
out that she had said 50 times that
01:01:55
Trump's was a stupid idea and now she
01:01:57
appears to be in favor of it so I think
01:02:00
that accusing your opponent of lying is
01:02:01
pretty par for the course for a
01:02:03
politician what's not part for the
01:02:04
course is saying that your opponent is
01:02:06
literally Hitler and a fascist that's
01:02:08
just going to a whole different level of
01:02:12
rhetoric okay jamat do you think we're
01:02:15
in a nasty State and we're going to be
01:02:16
able to get out of it after the election
01:02:18
and I think we're going to be fine okay
01:02:21
I'm actually pretty optimistic because I
01:02:22
actually don't think it's going to be
01:02:23
that close I mean right now it's looking
01:02:26
like maybe Landslide is too strong a
01:02:28
word but a solid victory for for Trump
01:02:31
that's what the polls are showing that's
01:02:32
the prediction markets are showing
01:02:34
that's what the early voting is showing
01:02:35
and if you look at all the other data
01:02:37
points right now it's showing Trump
01:02:39
winning pretty handily the other data
01:02:42
point that we haven't talked about is
01:02:43
just how these campaigns are acting in
01:02:45
the final stretch if you look at the
01:02:48
Trump campaign is pretty much Steady As
01:02:49
She Goes you look at the comma campaign
01:02:52
and they're in this throwing spaghetti
01:02:54
against the wall mode they're back to to
01:02:56
kind of the dark Brandon type messaging
01:02:59
where the reason to vote for us is
01:03:00
Trump's a fascist this is very different
01:03:03
than their messaging when they made the
01:03:05
switcheroo from Biden to Kamala right
01:03:08
when they first made that switch they
01:03:09
said okay let's get away from this dark
01:03:12
Brandon threat to democracy type
01:03:13
messaging it doesn't seem to be working
01:03:15
let's emphasize KLA Harris as a change
01:03:18
agent as a transformational candidate as
01:03:21
a candidate of joy and positive vibes
01:03:24
and they did get a big bounce in the PS
01:03:26
because of that the problem is that over
01:03:29
the last couple of months that sort of
01:03:31
Bounce in the polls has worn off as
01:03:33
Harris has not been able to explain what
01:03:36
she would change she keeps getting asked
01:03:38
in all these interviews what would you
01:03:39
do differently than Joe
01:03:41
Biden Anderson Cooper just asked her
01:03:43
that yesterday for like the 19th time
01:03:45
and she still does not have an answer to
01:03:47
that question and so the problem she has
01:03:49
is that the sort of veneer they gave her
01:03:52
as this change agent has kind of worn
01:03:54
off and she seen as a continuation of
01:03:57
Biden and the public does not want a
01:04:00
continuation of Biden and so now it
01:04:02
feels like they're frantically trying to
01:04:04
figure out how to reposition they're
01:04:06
back to the to the the anti-trump sort
01:04:09
of hysterical messaging which didn't
01:04:12
work it wasn't working three months ago
01:04:13
when they made the the switcheroo so I
01:04:15
tend to think that if you look at the
01:04:16
behavior of this these campaigns it's
01:04:18
pretty easy to see which one feels
01:04:20
confident and uh and which one is in a
01:04:23
panic okay Jal if you could go back in
01:04:25
time
01:04:26
and you were kamla's adviser when she
01:04:28
became the
01:04:30
nominee what would you have advised her
01:04:32
to do differently than she has done in
01:04:35
this campaign today I would have had a
01:04:36
speedrun primary and I would have let
01:04:38
democracy play out that was the big
01:04:40
mistake when when the Democrat if the
01:04:41
Democrats lose I think they'll look back
01:04:44
yeah 100% but and and then in terms of
01:04:46
thinking about why people believe that
01:04:51
Trump is an existential threat to
01:04:53
democracy I encourage everybody who's a
01:04:56
fan of this podcast to go back to
01:04:58
episode 16 of the all-in podcast and
01:05:00
that's the episode where we all reacted
01:05:03
the week of January 6th and we all had
01:05:08
great consensus amongst us that we
01:05:10
thought this was one of the most
01:05:11
disgusting horrific days in the history
01:05:13
of the country and that
01:05:15
Trump was trying to overthrow the
01:05:18
election results and that he was doing
01:05:20
so in a non-democratic fashion now I
01:05:23
know some people have re underr it or
01:05:24
changed their positions but encourage
01:05:26
you all to pause this episode and go
01:05:28
back and listen to our very thoughtful
01:05:30
discussion on episode 16 of the Allin
01:05:32
podcast because we were scared as well I
01:05:35
think that things happen in a moment and
01:05:37
you have to have enough compassion to
01:05:39
say you react in a moment but then you
01:05:42
also have to have the intellect to
01:05:43
separate yourself from the things that
01:05:45
happened learn more and possibly and
01:05:47
potentially change your mind I don't
01:05:49
want to be defined by a thing that I
01:05:51
said in a moment and I won't do that to
01:05:54
other people
01:05:56
in that moment I thought what happened
01:05:57
was really terrible and then since then
01:06:00
I've got to know the person and I don't
01:06:01
think that he actually incited much of
01:06:03
anything that's my belief yeah and
01:06:06
that's fine that's your belief but I do
01:06:07
think there's another group of people
01:06:09
agree with your original assessment yeah
01:06:12
well I think that those people need to
01:06:13
also rewrite the way I did because I'm
01:06:15
not really want to flip for random
01:06:18
reasons but that's not the point the
01:06:20
point is I think that if you still
01:06:22
believe what you believe then then you
01:06:24
should tell people to listen to you said
01:06:27
yeah okay but there are L listen to what
01:06:29
sa said and listen to what free said I
01:06:31
thought we had a very productive
01:06:32
discussion when it happened I think
01:06:33
people have memory hold it what you're
01:06:34
trying to say which I I partially
01:06:37
disagree with is those beliefs have
01:06:40
changed over time and I think it's it's
01:06:41
more balanced for you to say that that's
01:06:44
a point in time and if you believe that
01:06:47
that point in time still exists that's
01:06:49
fine for you to say that but I think
01:06:51
that's the way that you should say it
01:06:52
the other thing that I would like to say
01:06:54
about this election which I find really
01:06:56
interesting is we are in the part of the
01:06:59
cycle now where the side that's losing
01:07:03
is going to
01:07:05
panic and I think it's happened a couple
01:07:07
times but I would just remind everybody
01:07:09
we have run the ab
01:07:11
test we know what the presidency is
01:07:13
going to look like under Trump except
01:07:16
you get a real vice president plus RFK
01:07:19
plus Elon Musk whether you like them or
01:07:21
not but my point is I think you need to
01:07:23
consider that you're getting four for
01:07:25
the price of one and if the other side
01:07:29
if Harris wins you mostly
01:07:32
know what the trend will be because
01:07:35
you've seen the trend under four years
01:07:37
of
01:07:38
Biden the second thing is I think it's
01:07:42
interesting to see that when you get
01:07:45
into the home stretch the losing side
01:07:47
tends to turn on itself because they
01:07:49
start to play protectionism for their
01:07:51
own
01:07:52
careers and there's a lot of stuff that
01:07:54
I think you can consume
01:07:56
that starts to show that and I think
01:07:57
that's just an interesting observation a
01:08:00
lot of the tried and true most reliable
01:08:03
media
01:08:04
sources that I think were trying to
01:08:06
navigate as much as possible for a pro
01:08:09
Harris
01:08:10
presidency are starting to push back in
01:08:12
a way that I find a little surprising I
01:08:15
think the CNN town hall yesterday was
01:08:17
one of those moments for me where even
01:08:20
people like David Axelrod a little bit
01:08:22
throwing kamla Harris under the bus I
01:08:24
didn't expect that at all
01:08:26
so I think it's just important to
01:08:27
observe that these things are happening
01:08:29
I would agree with that we're going to
01:08:31
make it through whatever hold on let me
01:08:32
just give one thing to to your point
01:08:34
jamat since you know I am challenging
01:08:36
you with that episode 16 call
01:08:39
out I do hope that whoever wins we all
01:08:42
support that person to do the best they
01:08:44
can for all Americans and that's always
01:08:47
been my commitment and I did it the last
01:08:48
two times and I we will survive this one
01:08:51
I don't think we'll survive two or three
01:08:52
of these Cycles if we spend 10 trillion
01:08:54
each time just
01:08:56
you know since um Jak you're referencing
01:08:58
an episode that I participated in said
01:09:00
said things I mean look I think that the
01:09:03
goal of the mainstream media has been to
01:09:05
try and keep us in the heat of that
01:09:08
moment for four years I mean if you've
01:09:10
watched MSNBC for the last four years
01:09:13
it's like j6 is occurring every single
01:09:15
day I mean this is all that they talk
01:09:17
about but I think like jamas said we
01:09:19
have learned a lot of things since that
01:09:21
day I didn't know for example that
01:09:23
Twitter had censored president Trump's
01:09:26
tweets telling all of these people to go
01:09:29
home that basically he said to protest
01:09:31
peacefully and then when they rioted
01:09:34
that he actually published tweets to try
01:09:35
and tell them to go home so that was new
01:09:38
information and that what that came out
01:09:40
remember at the beginning of the whole
01:09:42
primary cycle Trump did that town hall
01:09:45
on CNN with Caitlyn Collins where he
01:09:47
dramatically pulled the piece of paper
01:09:49
out of his pocket with the tweets and
01:09:51
started reading them that was a lot of
01:09:52
new information for people and I think
01:09:54
that gave him a different picture and
01:09:56
then I think one other point that I
01:09:57
think is important is that imagine if
01:09:59
the Press had tried to keep us in the
01:10:00
Heat of the Moment of the summer of
01:10:03
20120 riots the George Floyd Floyd riots
01:10:06
then we'd have a very different
01:10:08
perception of which party was in favor
01:10:11
of riots because Tim Waltz was the
01:10:13
governor of Minnesota when those riots
01:10:14
occurred he did not want to send in the
01:10:16
National Guard Trump did and then K
01:10:19
haris tried to raise money for bail for
01:10:22
an organization that was bailing out
01:10:24
some of these protest ters and riers out
01:10:26
of prison so if the media was so
01:10:28
inclined they could portray KLA Harris
01:10:30
and Tim Waltz as the party of the Riots
01:10:33
of the summer of 2020 I think at the end
01:10:36
of the day that both those takes are
01:10:40
propagandistic and they happened four
01:10:42
years ago and it's certainly a piece of
01:10:44
information that voters can take into
01:10:46
account but it's only one piece of
01:10:48
information and there's a whole lot of
01:10:50
other issues and policies in this
01:10:52
election and I think at this point
01:10:54
everything that happened four years ago
01:10:56
is kind of priced into the stock and
01:10:57
what voters want to know about now is
01:11:01
what would you do on the issues what
01:11:02
would you do about immigration what
01:11:04
would you do about inflation what would
01:11:05
you do about the economy and when you
01:11:08
look at the polling on those issues that
01:11:10
voters say matter to them Trump has a
01:11:12
decisive advantage and KLA Harris cannot
01:11:14
explain what she would do differently
01:11:16
than Joe Biden David Axelrod word solid
01:11:18
City that's what he said last night
01:11:19
which was very shocking that he would
01:11:21
say that totally that is throwing her
01:11:23
under the bus but it's also just
01:11:25
preserving his own credibility because
01:11:26
it's hard to look but this is my point
01:11:29
Anderson Cooper now has to preserve his
01:11:30
own credibility you can only prop up a
01:11:33
candidate so long and then at some point
01:11:35
you have to prioritize your own media
01:11:36
career and I think Anderson Cooper last
01:11:38
night had to start to push back that's
01:11:41
what when everyone turned on Biden yeah
01:11:43
when that one night when everyone turned
01:11:45
on Biden after the debate all the
01:11:47
journalists who had been covering Biden
01:11:49
for so long that it was obvious in their
01:11:51
face the whole time they suddenly had to
01:11:53
be like okay I guess we got to admit now
01:11:55
now he's not really
01:11:57
there I think I think in one important
01:11:59
way KLA Harris has been set up to fail
01:12:01
here because on the one hand she wants
01:12:03
to distance herself from Joe Biden's
01:12:06
record but on the other hand she won't
01:12:08
say what she would do differently so
01:12:09
she's in this kind of like never
01:12:11
Neverland this this limbo yeah that's
01:12:13
right but that's also not her fault
01:12:15
that's the position the Democratic party
01:12:16
put her in and this goes back to what
01:12:18
jcal said we should have run a primary
01:12:21
they should have run a primary for sure
01:12:22
I think they could have had a better
01:12:23
candidate but also I think to go back to
01:12:25
fre B's question this is a little bit of
01:12:26
a premortem what should they have done
01:12:28
differently I think you either defend
01:12:30
Joe Biden's record or say what you would
01:12:32
do differently you can't be in this
01:12:35
limbo State and you know Joe Biden's got
01:12:38
to be in the white house there and
01:12:39
gritting his teeth like wanting to get
01:12:41
out on the campaign Trail and defending
01:12:43
his record because I think Joe Biden
01:12:45
thinks he has a good record and there
01:12:46
are things you could say in favor of
01:12:48
that record I mean I personally don't
01:12:50
think it's great but you could talk
01:12:51
about the Full Employment picture you
01:12:53
could talk about the fact that yes we
01:12:55
have had 9% inflation but now it's down
01:12:57
to 3% I mean there are things you could
01:12:59
say I mean he Market Equity markets are
01:13:02
an all-time high I mean he signed a lot
01:13:03
of legislation that he obviously
01:13:05
believed in so the Democrats do have a
01:13:08
record to run on it's not a record that
01:13:09
I personally believe in but it's
01:13:11
certainly one that I think you could
01:13:13
make an effort to defend and I think
01:13:15
Biden if he was the candidate would be
01:13:17
defending that record and it's very
01:13:19
awkward to have a candidate who was part
01:13:21
of this Administration who will not
01:13:23
defend that record who distance herself
01:13:26
from that record but won't really say
01:13:28
with any detail or conviction what she
01:13:30
would do differently that is just a
01:13:32
losing proposition and I think Anderson
01:13:34
Cooper exposed it more than Brett Bearer
01:13:36
last night because Anderson Cooper had
01:13:38
the time Brett Bearer only had 26
01:13:40
minutes and Brett Bear was seen as
01:13:41
adversarial whereas Anderson Cooper is
01:13:44
fundamentally a friendly interviewer and
01:13:46
when she can't answer those questions
01:13:48
for Anderson Cooper that's when you know
01:13:50
you're done by the way we've said this
01:13:52
now
01:13:53
consistently almost
01:13:55
monotonously now for about two or three
01:13:58
months she has to go into these swing
01:14:00
States and answer about four or five
01:14:02
critical
01:14:04
questions and and I would just
01:14:07
say this is still the problem so if she
01:14:10
wants to try to close this Gap in the
01:14:12
next 12 days and have a legitimate
01:14:14
chance of winning she I think there's
01:14:17
still 12
01:14:18
days I mean it's a very simple way to do
01:14:20
it number one the Border got out of
01:14:23
control we've shut it down already and
01:14:25
we're going to tighten it even more
01:14:26
number two the stock market's at a
01:14:28
record for a reason number three the
01:14:31
employment is at the lowest it's ever
01:14:33
been in our lifetimes this is the As
01:14:36
Good As It Gets folks and if you go with
01:14:38
the other guy honestly look what did on
01:14:41
manager well you're a better campaign
01:14:42
manager than the person that's running
01:14:44
the campaign right now they're not look
01:14:46
they're not doing a good job and I think
01:14:48
that saak is right they're afraid of
01:14:50
their own shadow and they're going to
01:14:52
walk into a a meaningful reset of the
01:14:56
democratic party of let me let me even
01:14:57
finish it number four this person
01:15:00
overturned roie Wade that's what they're
01:15:01
doing and his VP candidate has said he
01:15:03
wanted a national ban they walked that
01:15:05
back but if you're a woman you shouldn't
01:15:06
trust them and number five obviously you
01:15:09
saw what happened on January 6 he'll do
01:15:10
it again and they just said that over
01:15:13
and over and listen I'm not Biden Biden
01:15:15
obviously needs to retire he was a great
01:15:17
president he was a great Vice President
01:15:18
we thank him for a service I'm
01:15:19
completely different I have a different
01:15:21
approach to all of this and Trump is a
01:15:23
wild card that this country doesn't need
01:15:25
it the Sun the end and they would win
01:15:28
but I don't know who's advising her it's
01:15:31
the same thing with Trump I think Trump
01:15:32
could have just gone right to the middle
01:15:34
and when he was Trump 2.0 he should be
01:15:36
up 20 points on her the fact that he's
01:15:37
not up 20 points or 15 points on KLA and
01:15:40
that this is a dead heat I think is
01:15:42
crazy Trump's the easiest candidate to
01:15:44
beat Kamala is the easiest candidate to
01:15:46
beat I I wonder who's running both of
01:15:47
these campaigns well it's it's hard to
01:15:49
be up 20 points when the entire
01:15:50
mainstream media is against you that is
01:15:52
only reporting positive things about the
01:15:55
other candidates only reporting negative
01:15:56
things about you and you have a 3 to one
01:15:58
money disadvantage one thing you could
01:16:01
say for KLA Harris is she has been a
01:16:03
good fundraiser there's plenty of
01:16:04
billionaires who are funding her
01:16:05
campaign they literally have three times
01:16:07
more money than the Trump campaign and
01:16:10
even in California which is a safe state
01:16:12
for them you're seeing comma campaign
01:16:14
ads everywhere that just tells you
01:16:16
they're so flush with cash that they can
01:16:18
afford to spread the money around even
01:16:19
in California so look the reality is
01:16:22
that Trump has the entire establishment
01:16:24
against against him and I think for him
01:16:26
to be ahead in the in the polls and the
01:16:28
prediction markets and the early voting
01:16:30
fairly decisively is an extraordinary
01:16:33
achievement I think he's probably the
01:16:35
only candidate who could have done
01:16:37
that in any event and and I do think
01:16:40
jcal that kamla has tried to make some
01:16:43
of the arguments that you just said not
01:16:45
very crisply but she's trying to walk
01:16:47
back on the border the problem is they
01:16:49
have no credibility on that because the
01:16:50
Democrats for the last eight years have
01:16:52
fought Trump on the border wall it's his
01:16:55
signature issue and if you don't think
01:16:57
Republicans should be believed on
01:16:58
abortion there's absolutely no reason to
01:17:00
believe Democrats On the Border they
01:17:03
fought Trump's wall yeah I think that's
01:17:05
fair I thinkir they sold parts of it off
01:17:07
for scrap metal she was supposed to be
01:17:08
the Border Asar didn't even visit the
01:17:10
border which shows that she never
01:17:11
thought it was important now she wants
01:17:13
to pretend that she's Trump On the
01:17:14
Border Public's not buying it to handle
01:17:16
the border is just so simple she could
01:17:17
just say what work then is not going to
01:17:19
work now we we've we've we've filled up
01:17:21
and we just Trudeau just did a tweet hey
01:17:24
we're taking a pause for two years
01:17:25
that's all she's got to do we're taking
01:17:26
a pause for two years on the border we
01:17:28
obviously it got out of control the end
01:17:31
move on to the next issue all right if
01:17:33
the Harris campaign is listening J Cal's
01:17:35
advice is out there you you may come on
01:17:37
the Pod you're always welcome everyone
01:17:40
that's running for president is well did
01:17:42
you guys hear this rumor that bar she's
01:17:44
not my candidate by the way she's not my
01:17:46
candidate did you guys hear this rumor
01:17:47
that bartool
01:17:48
Sports was asked if they would interview
01:17:51
her and they turned her down is that is
01:17:53
this rumor true apparently I don't know
01:17:55
why wouldn't they take it though they
01:17:57
would take the interview so poroy claims
01:17:59
that the that the Harris campaign
01:18:01
reached out and asked to be on two or
01:18:02
three of their shows and bartool
01:18:05
declined having her on which is pretty
01:18:09
unbelievable well they just waited way
01:18:10
too late I mean there's no question the
01:18:12
last month they radically pivoted their
01:18:14
media strategy she became the candidate
01:18:16
roughly three months ago for the first
01:18:17
two months they didn't let her do any
01:18:19
press interviews then they realized that
01:18:21
their internals were bad they're behind
01:18:22
in the polls so now they're having her
01:18:24
go out and do a lot of media and like I
01:18:26
said a couple weeks ago that started to
01:18:28
create a doom Loop because she is not a
01:18:30
great media performer so her polls
01:18:32
started getting even worse so then they
01:18:34
got to put her out on more media to try
01:18:36
and you know rebut that your doom Loop
01:18:39
was a good call I I'll give you credit
01:18:41
if the Comm campaign were started we'd
01:18:43
be saying it's in a death spiral right
01:18:45
now okay got it you got your
01:18:47
line it's a dead heat we got it let's go
01:18:50
so we're gonna wrap up with stares what
01:18:53
I think's a pretty yeah starb super
01:18:56
interesting topic because it's a real
01:18:58
question around traditional shifting to
01:19:00
digital is that why Starbucks is having
01:19:03
challenges or is it just maturity or is
01:19:06
it what happens when a brand that's
01:19:07
successful as a luxury brand gets too
01:19:09
big and the kind of you know premium
01:19:13
experience commoditized so as you guys
01:19:15
know we covered the Starbucks CEO Brian
01:19:18
nickel joining a few months ago this was
01:19:21
after the prior CEO had been in the
01:19:23
office for just 16 months and there were
01:19:27
a lot of problems that were plaguing
01:19:29
Starbucks but just this Tuesday Brian
01:19:31
niichel came on and said that we're
01:19:33
suspending guidance for
01:19:35
2025 after reporting preliminary
01:19:38
earnings that showed another drop in
01:19:40
sales at Starbucks same store sales
01:19:43
which is the key metric in the qsr or um
01:19:47
or food and beverage retail business uh
01:19:50
it tracks what your revenue is
01:19:51
year-over-year same Source sales
01:19:54
declined 7% year-over-year uh earnings
01:19:57
per share dropped 25% uh year-over-year
01:19:59
so Nicholl said we're getting the bad
01:20:01
news out of the way now we're going to
01:20:03
this back to Starbucks Plan Focus On
01:20:05
Experience improve the throughput
01:20:07
experience and quality make Barista
01:20:09
choose Starbucks as a career and then he
01:20:11
went through a whole plan he put out a
01:20:12
six seven minute video on this whole
01:20:14
thing so clearly customers are
01:20:16
frustrated with the Starbucks product
01:20:18
the Starbucks experience the employees
01:20:21
are frustrated working there and a lot
01:20:23
of the system seem to be breaking down I
01:20:26
guess I wanted to kind of talk about
01:20:28
what is the core driver and is there a
01:20:30
business lesson in all of this about
01:20:32
premium brands or about scale and
01:20:34
maturity and markets to be learned from
01:20:36
the Starbucks story so I don't know if
01:20:38
any of you guys have gone through this
01:20:39
earnings report or looked at
01:20:41
the um I I go to Starbucks on the
01:20:44
regular and I think this really is just
01:20:46
a case of founder versus bean counter
01:20:48
it's reminds me of Boeing or you know
01:20:50
even apple with their inability to
01:20:52
produce new products post the the Steve
01:20:55
Jobs pipeline of products and if you
01:20:58
anybody read pour your heart into it
01:21:00
Schultz's biography it's absolutely
01:21:03
fantastic and he really had an obsession
01:21:05
with user experience like writing
01:21:07
people's names on the cups was a
01:21:09
Starbucks Innovation remembering
01:21:11
people's names empowering the green
01:21:13
aprons was like a big part of this and
01:21:16
then once he was out of the bean
01:21:17
counters came in and they just got all
01:21:19
about efficiency the a much smaller
01:21:22
number of Baristas at the store ordering
01:21:25
your drink through the app and just
01:21:26
trying to make these grinded efficiency
01:21:29
decisions as opposed to the experienced
01:21:31
ones and I think the Starbucks
01:21:34
experience starts and begins with the
01:21:35
Baristas and that's the main problem if
01:21:37
you've gone to a Starbucks over the last
01:21:38
couple years sometimes you go in and
01:21:41
there are literally 50 drinks from the
01:21:43
like I'm not kidding like 50 drinks on
01:21:46
the pickup counter and then this huge
01:21:48
wine if you come in person and it's the
01:21:51
most impersonal thing and the the stores
01:21:53
are a wreck they're disgusting they look
01:21:55
like a truck stop and the whole point of
01:21:57
Starbucks was to create this third space
01:21:59
this beautiful place that was welcoming
01:22:01
with Gorgeous lighting and the Baristas
01:22:03
was supposed to make you hang out and
01:22:05
enjoy yourself there and they lost that
01:22:08
and all you have to do is read Schultz's
01:22:10
book and do exactly what he did now
01:22:12
there are a lot of other issues there
01:22:14
around the competition for Starbucks
01:22:17
employees that I think are super
01:22:18
important do you think that's really
01:22:20
true jcal because like nickel came on
01:22:22
and he said we're going back to the core
01:22:24
FL whites espressos nice nice espressos
01:22:27
delicious coffee but the reality is in
01:22:30
order for them to have grown Revenue
01:22:31
over the last 20 years Starbucks has
01:22:33
expanded their menu as chamath has
01:22:35
pointed out to becoming a seller of
01:22:37
sugar they've become a seller of
01:22:39
milkshakes and flavored Beverages and
01:22:41
high sugar cocktails mocktails that
01:22:44
people you know run into the store to
01:22:45
buy two three times a day that's how
01:22:47
they were able to get the pickup not
01:22:49
selling what they started out doing
01:22:50
which was fine italian roast at espresso
01:22:53
it's now become a very different product
01:22:55
and a very different experience and so
01:22:58
can you really go back to the core and
01:22:59
not lose all the customers that I would
01:23:01
say aren't looking for a flat white and
01:23:03
an espresso they're looking for a
01:23:04
milkshake in the middle of day I think
01:23:05
you want to maintain the core is the key
01:23:07
you don't want to give up the core and
01:23:08
the core was having a great inore
01:23:10
experience and I think that is not what
01:23:13
you get when you go there putting the
01:23:15
sugar aside it is I think like going for
01:23:18
ice cream for kids so my kids will pick
01:23:21
if they want to go for ice cream or
01:23:22
Starbucks and to your point about the
01:23:24
sugar Mo it's basically the same
01:23:26
profile and it's a great place to get
01:23:28
breakfast I'll tell you that you know
01:23:30
the egg bites and the scum let's watch
01:23:31
Nichols let's watch Nichol's clip and
01:23:33
then shth you can give us your take on
01:23:35
this this is a 30 second clip from
01:23:37
nichel six minutes that he put out on
01:23:39
Twitter to succeed we need to address
01:23:41
Staffing in our stores remove
01:23:43
bottlenecks and simplify things for our
01:23:45
Baristas we need to refine mobile order
01:23:48
and pay so it doesn't overwhelm the cafe
01:23:50
experience we're fundamentally changing
01:23:52
our marketing we've been focusing on
01:23:54
Starbucks rewards customers rather than
01:23:56
talking to all our customers and we're
01:23:58
changing that quickly we will simplify
01:24:00
our overly complex menu fix our pricing
01:24:02
architecture and ensure that every
01:24:04
customer feels Starbucks is worth it
01:24:06
every single time they visit we must
01:24:08
reestablish ourselves as the Community
01:24:11
Coffee House by the way this is one of
01:24:13
the things that Nichols did at Taco Bell
01:24:16
when he was the CEO there you guys
01:24:17
remember the Taco Bell menu there was
01:24:19
always like really interesting hidden
01:24:21
things on that menu he simplified the
01:24:22
menu made it very small did the same at
01:24:24
Chipotle he takes this approach of
01:24:26
finding the best product simplifying The
01:24:28
Experience simplifying the operations
01:24:31
and giving the customers fewer choices
01:24:33
that ultimately leads to faster
01:24:35
turnaround better experience but the
01:24:37
trade-off is you have
01:24:40
less variety that people have come to
01:24:43
know and love and at Starbucks in
01:24:44
particular where there is just so much
01:24:46
variety to choose from now if your
01:24:48
favorite beverage got pulled off the
01:24:49
menu are you going to start to go there
01:24:51
less frequently you know Jam I don't
01:24:54
know if you a take on what's going on at
01:24:55
Starbucks and whether it tells you
01:24:56
something about the maturity about one
01:24:58
of the most iconic consumer brands in
01:25:01
America this business is in
01:25:03
trouble Nick please show the chart this
01:25:06
is Eli Lily versus Starbucks if you look
01:25:09
at it over a year you could look at it
01:25:11
over the year to date you could look at
01:25:13
it over two years five years five years
01:25:17
look at that but what does this show
01:25:19
this
01:25:20
shows sugar versus anti-sugar
01:25:25
and anti-sugar is winning say it
01:25:27
differently
01:25:30
gp1s versus things that cause you to
01:25:33
need
01:25:34
gp1s gp1s are
01:25:37
winning and so I think this existential
01:25:40
issue for Starbucks is about resetting
01:25:42
to a much smaller footprint and a
01:25:45
different product
01:25:47
portfolio that tries to see where the
01:25:49
puck is going where the puck is going is
01:25:51
where a large percentage of the people
01:25:55
that probably were buying Starbucks
01:25:59
products and were very loyal Starbucks
01:26:01
customers will have very different
01:26:03
consumption habits as they
01:26:06
more pervasively use these
01:26:09
gp1s and this in a nutshell is not
01:26:12
something that Starbucks can fix with
01:26:13
their current product mix and so I think
01:26:16
that they're fighting into a headwind
01:26:20
and these other companies are deeply
01:26:23
incentivized
01:26:24
to get American taste buds to be
01:26:29
different and so Jason the things that
01:26:31
you talked about are exactly the things
01:26:33
that I think start to fall off the menu
01:26:34
or just don't sell as much because
01:26:36
whatever the population of Americans are
01:26:38
that are on gp1s let's say it's single
01:26:40
digits the real question is what
01:26:42
percentage of Starbucks customers are on
01:26:44
these things and I think it's probably
01:26:46
much more than single digits and this is
01:26:47
why I think you see the continuous
01:26:49
decline in same store
01:26:51
sales and I think if you start to graph
01:26:54
the adoption of gp1s pervasively in
01:26:56
America to the drop in same store sales
01:26:59
I think as gp1 adoption goes up same
01:27:02
store sales will continue to go down but
01:27:04
it doesn't it argue towards the original
01:27:06
business freeberg that going there and
01:27:08
having a cup of coffee and hanging out
01:27:10
leisurely with your friends and having a
01:27:12
conversation and it being a third space
01:27:14
is the core value prop and maybe the
01:27:16
sugary drinks maybe will fall out of
01:27:18
fashion so it may be true but I think
01:27:21
that the the core
01:27:24
objective of any Corporation is to
01:27:27
maximize shareholder value driven by
01:27:29
growing profits over time so growing
01:27:32
profits over time requires increasing
01:27:34
your your revenue and I there are three
01:27:36
levers for doing this maximize brand
01:27:39
which is to get more
01:27:40
customers and I don't know if you can
01:27:42
get the brand to be any more maximal
01:27:44
than Starbucks maximize coverage which
01:27:47
is how many products can you get those
01:27:48
customers to buy whether it's on a daily
01:27:50
basis weekly basis or monthly basis how
01:27:52
much of their and wallet share you
01:27:55
getting and I don't know how many more
01:27:56
times you can get people to go back into
01:27:58
Starbucks each week than they've done
01:27:59
with their Rewards program with their
01:28:00
digital with their High throughput tools
01:28:02
that they've built over the last decade
01:28:03
and so on and then finally maximize
01:28:05
price there's a limit to how much you
01:28:06
can charge people when you put those
01:28:08
three together you got more customers
01:28:10
you're selling them more stuff at the
01:28:11
highest price possible at some point you
01:28:14
reach a revenue maximum that has
01:28:16
happened also at Apple I think that
01:28:18
Apple has faced a similar dilemma in the
01:28:20
last couple of years which is how do we
01:28:21
get more customers it's the most
01:28:23
recognized brand on Earth
01:28:24
you can only buy so many Apple products
01:28:26
now you know they tried to launch The
01:28:27
Vision Pro it didn't go well today they
01:28:29
announced that their this week they
01:28:30
announced their discontinuing production
01:28:32
or reducing production on the Vision Pro
01:28:35
and you can only charge so much for
01:28:36
these products and I I would argue that
01:28:37
Starbucks is a victim of the same
01:28:40
maximization effect that at some point
01:28:42
you get all the customers you get them
01:28:44
to come in and spend and buy as many
01:28:46
products from you as they can and you
01:28:47
charge them the highest price possible
01:28:49
and then you reach this kind of Maximum
01:28:51
point on the the business and I think
01:28:53
Starbucks has just reach that point of
01:28:54
maturity so to your point it doesn't
01:28:57
mean that it's a bad business at all it
01:28:59
could be a great business a nicely
01:29:00
profitable business but the growth ahead
01:29:03
of it is limited it cannot keep growing
01:29:05
same store sales as it has historically
01:29:07
because they've maximized all three of
01:29:09
those levers so fewer costs might be a
01:29:11
way to drive more profits you know more
01:29:13
efficient operations I think that's the
01:29:15
natural next state for nickel to tackle
01:29:17
at this company the sad thing for
01:29:19
Starbucks is that the only road that
01:29:21
they have is to actually double down on
01:29:23
sugar
01:29:24
and the reason is because the arpus are
01:29:26
meaningfully higher than traditional
01:29:28
coffee and so the the economic pressure
01:29:31
that shareholders will put on it is to
01:29:32
actually stay in the business that
01:29:34
they're in and try to do it as long as
01:29:37
possible as you say freeberg and just
01:29:38
strip out as much cash as possible and
01:29:40
then you just you grow profit by
01:29:42
reducing cost and getting more efficient
01:29:43
versus yeah trying to add more product
01:29:45
to get more customers which degrades the
01:29:47
experience but the structural problem is
01:29:49
Starbucks should be probably a 20
01:29:50
billion asset yeah and so what happens
01:29:52
when a company gets to this level of
01:29:54
maturity much like has happened with
01:29:55
apple is the multiples compressed no the
01:29:57
difference is though that Apple has not
01:29:59
had the competitive pressure that
01:30:00
Starbucks has because Starbucks competes
01:30:02
on a Level Playing Field with the Dunkin
01:30:04
Donuts of the world or the Pete's
01:30:06
coffees of the world but they compete in
01:30:08
an completely orthogonal plane with
01:30:11
gp1s and I think that is not something
01:30:13
that Apple deals with so Apple can still
01:30:15
be at the point that you described
01:30:17
earlier which is let me just maximize
01:30:19
free Clash flow generation which is what
01:30:20
they do and then let me allocate that
01:30:22
back to shareholders via bu back which
01:30:24
is also what they do so there could be
01:30:27
another decade or so where Apple can
01:30:28
continue to run this play with very
01:30:30
little impact to them or to the company
01:30:33
now I'll say something else about Apple
01:30:35
though which is I actually upgraded my
01:30:37
phone I think this was three years in
01:30:39
and I finally did it my gosh this phone
01:30:42
is
01:30:44
sucks iOS 18 software is janky iOS 18 is
01:30:49
just terrible I'll show you one example
01:30:51
of just like terrible design where if an
01:30:53
if a designer that work on my team
01:30:54
showed me this I would have fired them
01:30:55
look at this can you see this is it
01:30:57
possible to understand why you have two
01:31:00
images for the Do Not Disturb thing one
01:31:03
above the other
01:31:06
I no but it's a level of sloppiness and
01:31:09
not taking care which which just shows
01:31:12
you that it's like we make so much money
01:31:14
it just doesn't matter anymore that's
01:31:16
what I feel like they're telling me and
01:31:17
then I'm like well wait a minute why did
01:31:20
I just spend $1,200 of my hard-earned
01:31:22
money to upgrade to this thing if if you
01:31:24
don't care how much was it upgrade I
01:31:27
think it was like 1,200 bucks for this
01:31:28
new phone the other thing is
01:31:30
that the actual upgrade itself and I'm
01:31:33
not exactly sure why because I didn't
01:31:34
take the time to unpack it it took four
01:31:37
hours the actual migration of like from
01:31:40
an old phone to a new phone and and I
01:31:42
thought my gosh this is such
01:31:44
monopolistic Behavior right so if it
01:31:47
takes you an entire
01:31:49
day to basically upgrade your phone at
01:31:52
some point you're just going to stay
01:31:53
with the platform you're on and never
01:31:55
upgrade or you're just going to stay on
01:31:58
the exact same device because it's just
01:32:00
too complicated imagine going from an
01:32:02
Apple to an Android it's some ways both
01:32:05
of these businesses are victims of their
01:32:07
own success they reach like Market
01:32:09
Market saturation they reached their
01:32:11
natural audience and then some and
01:32:12
they've just got to figure out what to
01:32:13
do next and the adjacencies are hard to
01:32:16
find vision are hard adj also
01:32:20
photos terrible it's terrible stop
01:32:22
changing the interface this is basically
01:32:25
a camera and you made it terrible it was
01:32:28
good why did you do that I think they're
01:32:31
trying to change things for change sake
01:32:33
one of the things Amazon's gotten
01:32:34
correct and and other services like eBay
01:32:37
and Craigslist is when you have an
01:32:38
interface that works and and billions of
01:32:41
people rely on it you have to be very
01:32:44
very subtle in making changes to it and
01:32:46
they made a wholesale change to the
01:32:48
photos app and it did not work it
01:32:50
garbage how do I get rid of the second
01:32:53
silent thing on my thing how how can I
01:32:56
just go back to the old thing yeah
01:32:58
totally that's when you know you failed
01:33:00
as a product manager when people want
01:33:02
the old thing but isn't this just so
01:33:05
lazy something's not right yeah I I know
01:33:08
there's a lot of Apple people this is
01:33:10
come on guys can you just take the
01:33:11
control center is what he's showing and
01:33:13
the control center is massively
01:33:15
confusing it's like changing where the
01:33:17
lights are in your bedroom and like okay
01:33:20
yeah all right troubleshooting um part
01:33:22
of the all-in podcast is over I really
01:33:25
want to say thanks to saaks for
01:33:27
participating headily in our Starbucks
01:33:29
discussion saaks anything you want to
01:33:30
say on the maturity of Starbucks or
01:33:32
other mature Tech businesses or value
01:33:35
luxury businesses as they get big too
01:33:37
big too big to keep growing anything
01:33:40
else I mean yeah I'm just not an expert
01:33:43
on Starbucks I me I do like their
01:33:44
product but what do you get what's your
01:33:46
order tell us your order yeah what's
01:33:48
your order I just get an Americano with
01:33:50
a splash of oat
01:33:51
milk oh it's like my order
01:33:54
that's a great order what you you're
01:33:57
yeah that's great good for you how about
01:33:59
I just send you some Specialty Chemicals
01:34:01
so you can just pour it down your throat
01:34:02
some Zan milk bad some
01:34:06
carigan again and say you put in heavy
01:34:08
cream you're gonna get kicked out of
01:34:09
Maga cannot be ordering o milk and be
01:34:12
Maga they don't have nut milks at Mara
01:34:15
Lago I'm gonna find out in a couple
01:34:17
weeks I'll let you know don't put that
01:34:18
stuff in your body dude I bet they do
01:34:20
you should take that sweater that you
01:34:22
just took from chamath and wear that
01:34:23
marago when you go it's like a perfect
01:34:25
sweater for your marago visit oh yeah
01:34:28
don't touch it stop I'm still mad at n
01:34:30
I'm going to talk to her about this I'll
01:34:32
talk to her at lunch I'll talk to her at
01:34:34
lunch she's putting a sundress on before
01:34:36
you came on zo she was she was actually
01:34:38
she was just sitting on his lap and they
01:34:39
were just chatting and I'm like what is
01:34:41
going on here
01:34:43
outrageous what do you want for lunch I
01:34:45
said what do I want for lunch your
01:34:46
company that's what I told her oh
01:34:49
sweetheart that's what I said she said
01:34:52
oh you're
01:34:53
like you you speak to me so much more
01:34:55
kindly than Jam does God my God all
01:34:59
right this has been another amazing
01:35:00
episode of the all in pod as a team
01:35:02
player I have been here to pinch hit for
01:35:04
jcal he did not want to moderate this
01:35:05
week so I stepped in to fill the the
01:35:08
shoes J solid job solid job one of this
01:35:11
Show's greatest
01:35:14
moderators for your Sultan of science
01:35:18
for the Rainman for the chairman
01:35:20
dictator and for the world's most abs te
01:35:25
moderator um I want to thank you all and
01:35:28
a great life right now time he's
01:35:30
stealing anything that's not nailed down
01:35:33
I'm the world's greatest house guest
01:35:35
he's putting together his own gift bag
01:35:37
love you besties love you boys bye-bye
01:35:39
byebye I'll be there in a couple of
01:35:41
hours
01:35:43
s let your winners
01:35:46
ride Rainman
01:35:50
David and instead we open source it to
01:35:53
the fans and they've just gone crazy
01:35:55
with it love queen
01:35:59
[Music]
01:36:03
of
01:36:05
[Music]
01:36:06
Besties my dog taking
01:36:10
driveway man oh man my will meet me we
01:36:15
should all just get a room and just have
01:36:16
one big huge ory cuz they're all this
01:36:18
useless it's like this like sexual
01:36:20
tension that they just need to release
01:36:22
somehow what
01:36:26
[Music]
01:36:28
we need to get
01:36:31
[Music]
01:36:36
mer I'm going all in
