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Okay, welcome back to the All-In
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podcast. JCAL is not here this week. He
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is off in Detroit at the Knicks game.
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Congrats to the Knicks. Here's a photo
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of our boy JCAL hanging out with Who's
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that? Ben Stiller. Man, what happened to
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Ben Stiller? That looks like Shalamé
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right next to him. Timothy Shalam. Is
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that Shalom? You know, Ben Stiller was
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once referred to as the Jewish Tom Cruz,
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but he he has not held up like Tom Cruz.
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I gotta say that he should have joined
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theology.
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Keep it up. You got to represent for us
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a little better.
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[Music]
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Let your winners ride.
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[Music]
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Rainman said, "We open sourced it to the
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fans and they've just gone crazy with
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it." Love you. We
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can all sitting in this week is our boy
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Andrew Ross Sorcin, journalist, author,
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extraordininaire. Andrew, welcome to the
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show. Long time listener, first time
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caller. Thank you for having me. Andrew,
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I'm going to do just a couple of quick
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plugs and I'm going to give it over to
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the pro to do his work, take us through
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the docket today. I think this is going
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to be really fun. The world's greatest
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moderator. The world's greatest
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moderator is here today. That's fighting
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words. Shots fired. We'll see. We'll
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see. Hold your tongue. You can tell me
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when it's over. Before we kick it off, I
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just want to give a quick plug. The
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All-In Summit, if you haven't seen the
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video, check it out on YouTube and
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Twitter going into our fourth year, the
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2024 recap. We'll kind of give you a
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high set of highlights from last year.
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It's September 7th through 9th in LA.
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Trying to have the world's most
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important conversations. Andrew, I know
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it probably competes with one or two of
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your conferences, but let me just tell
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you, this one's way better. We're going
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to be blowing it out this year with
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parties.
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Allin.com/summit to apply to join us at
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the summit this year. Awesome.
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Andrew, thanks for being here. We're
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excited to have you. Okay, boys. Here we
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go. I'm curious. I want to get your take
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on all this stuff because I'm fascinated
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by what's going on in these markets this
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week. Let's start on the markets because
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we got a rally. The question, I think,
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behind the rally is, is this a Bessant
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put? Is this a J Pal's in the job? He's
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got a put on this thing. I don't know
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what you think is going on. We're uh up
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three to 7% for the week. There's been a
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she loves me, she loves me not situation
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with what Trump's been saying about
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China and whether there's a deal or not
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a deal. China's saying nobody's talking.
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He says everybody's talking. What do you
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guys think is really happening? And then
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we got to get into Alphabet. We got
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Tesla got a lot of earnings here that's
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also moving this around. I think that
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the most important piece of financial
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logic that we have to break is this idea
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that there is always a put. The put is
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this weird thing just for the folks that
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don't understand it is that when the
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market goes down, somebody can belly
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ache and cry and somebody in the
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government will say, "Okay, we'll buy
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your shitty securities at your bad
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prices." So that's what the put is. So
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typically what's happened is you can cry
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to the White House and they'll call the
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Federal Reserve and they will buy it.
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That's the Fed put. And in some very
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rare cases when things get really
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calamitous like in 2008, Treasury will
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set up a program and start to buy
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things. That's what was called TARP back
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in the GFC. So the question is, is there
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a put here? I mean, my honest answer is
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no. And the simple reason is if you look
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at where we are, the stock market's back
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to where we were in like May or August
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of last year. And if you had said that
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we would have
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upended 50 years of economic policy and
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the markets would only be off five or
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six hundred basis points, I would have
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been shocked. So there's no reason for a
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put. Maybe the more interesting question
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is who's asking for the put? The ones
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that have suffered from the volatility
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and a lot of those are the active market
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traders. So if you trace the feedback,
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who has been the most negative? Aman's
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been
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negative. Ken Griffin recently turned
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negative. And that's probably comes from
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the fact that they're not monetizing the
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V the way that they used to monetize the
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V more than the market has speared down
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to such a degree that the world is
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coming to an end because it isn't.
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Okay, Zach, can I build on that? So,
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there was a tweet two weeks ago when all
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this started by Nick Carter that I
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retweeted cuz I thought it was really
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interesting, which was if you think a
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market selloff delegitimizes Trump's
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presidency, you're going to give him
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unconditional credit when it rallies,
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right? Cuz those are the rules now. And
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that's exactly what's happened is that
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the market has rallied. Like you said,
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it's up 7% this week, but the media
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doesn't want to give Trump any credit
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for it. So, it's kind of created this
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narrative of a Bess and put. In other
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words, Besson is entirely responsible
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for it. Look, Scott is a very smart man.
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He understands markets. He understands
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the bond markets and he is a sure
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reassuring voice to those markets and I
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think he's doing a great job. But I
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think part of what's going on with this
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bestinput narrative is that no one ever
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wants to give Trump or his
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administration as a whole credit. So
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what they do on any particular week is
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valorize a particular member of the
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administration that they can then say,
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"Well, this is the person who's really
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responsible for this, not Trump, because
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they don't want to give Trump that
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credit." Next week, they'll be tearing
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Scott down and there'll be some other
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member of the administration they'll be
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trying to valorize to basically prevent
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the administration as a whole from
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getting credit for doing something good.
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So again, I think Scott's doing a great
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job. I think he's doing a great job
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making these deals and he's saying a lot
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of correct and reassuring things to the
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markets. But I think if the media is
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going to tear Trump down every time the
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market goes down, you have to give him
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credit when the market goes back up. And
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I think there's just a general
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reluctance to do that.
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Where do you land, Dave? I think that
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there's is he crazy enough to let it all
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fall
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apart signal that kind of got wiped out
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this week. That's really what it was. It
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was the fact that everyone realized that
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Bessant Trump are not going to let trade
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come to a standstill. They're not going
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to let the whole global economy grind to
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a halt. That they're going to have to do
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something. And I think that the read is
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that they're making the indications that
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they're going to get deals done, which
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means that their intention is to make
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sure that the market doesn't tank. That
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the
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most roughly three weeks ago when we
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started talking about this, I think I
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made the point, Shimoth made the point
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that part of the art of the deal here,
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so to speak, is an opening salvo, right?
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which is bold and some people would say
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maybe it's too extreme, but it's it's
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basically an opening bid to shift the
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conversation completely. Yeah. And that
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that would create tremendous leverage to
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get deals done. And isn't that exactly
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what's happened? Isn't that the way it's
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played out? Yeah. I remember there was a
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guy from Harvard who used to teach a
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class in negotiation. He put out all
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these videos and what he always said is
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like set your anchor point as far away
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as you possibly can if you want to get
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maximum leverage in a negotiation. I
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don't know what's farther away than 145%
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tariff. So, it's clearly, you know, a
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point for, as Sach said, for negotiating
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to a deal that seems like one that would
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have been impossible or implausible if
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you started from a 0% tariff beginning
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point in negotiating. And there was some
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percentage of the market or some
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probability that people were assigning
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to the fact that this administration
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could be crazy enough to tank the global
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economy by leaving tariffs really high
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and letting this kind of run. And I
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think that that's kind of being taken
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out of the market, right? But now that
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it's out of the market, that means that
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the leverage there's less leverage.
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There's less leverage in the
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conversation. And if the goal is to No,
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that's not true. That you're saying a
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critical thing and that is not true.
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Well, hold on. I if if if the goal is to
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effectively pressure China, which I
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think is the ultimate goal, I think as
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the bond market has spoken and as Trump
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and Besson administration has said,
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okay, we understand where the where the
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floor is here and what we got to what we
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got to do. I assume if you're Mark
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Carney, if you're the EU, name your
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place, India, Japan, you say, I'll make
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a deal with you. But you know, if you
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thought you were if you thought I was
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giving you the world before, no, no, no,
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no, no. You need me as much as I need
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you and you sat you seemingly need me
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even more now. So the part where I agree
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with you is that last part. Like I think
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too many times you look at the stock
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market and think that that's reflective
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of what's actually happening and it's
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not. The stock market I think the best
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way to think about it is it's an
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estimation of what the future would look
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like at a rate of return. You're
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superimposing a view on reality. So what
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is actual reality right now is if the
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United States was running negative2
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billion dollar a day of trade deficits,
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right? If our current account balance
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was minus2 billion on March 31st, the
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day before liberation day, the real
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question is what is that number
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mathematically after April 1st, right?
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Because you're ratcheting it up tariffs,
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okay? and you're implementing a scheme
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that should take that negative2 billion
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that's going out the door out of America
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shores, it would have flipped it
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positive. How positive? We don't know.
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But I'm sure that the government knows
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and I'm sure the White House knows what
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that number is. That's that's important
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fact number one. And then
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separately, the country that matters the
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most on the other side of that who was
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very positive, right? Let's say China
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was plus three or four billion a day.
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where did they go to? And I suspect that
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it's probably break even or possibly
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even negative. So if you think about
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what the new reality is today, April
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25th, as we tape the show, we've gone
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from minus2 to maybe plus one. And
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China's gone from plus4 billion a day to
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maybe zero or minus
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one. And I think that's what instills
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the leverage that is required to get the
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deal done. Then then we can all debate
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whether the forward PE of the S&P should
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be 16 times or 22 times. I don't think
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that that matters, but the actual cash
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flows have materially changed. By the
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way, I I think long term the America's
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got leverage here. Everybody wants to in
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is ultimately going to want to invest in
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America, including China. There's no
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question that we we have the advantage
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on a long-term basis. The question is,
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do we have the patience? Well, if you go
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from -2 to plus given our democracy,
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given our bond market, given everything
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that goes on, we're such an add society.
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Okay. Then you're then what I would say,
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Andrew, I think that that's a very good
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point. What I would say to that is then
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we need to communicate better. It needs
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to be a single point that's repeated by
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everybody in the cabinet. And what they
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should probably focus on is, hey guys,
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we just flipped cash flow. We went from
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negative cash flow to positive cash
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flow. Here are the actual numbers and
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don't deviate from that because then I
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think Americans would say, "Hey, this
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thing is working. Let's let it play
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out." To your point, hey Sax, here's my
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question for you. So, we hear, you know,
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the president say he's talking to
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President Xi. We hear Scott Besson say
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that he's in talks with China or that
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talks are going to begin. And then you
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hear China say, "No, no, no. We're not
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talking. There's no talks happening. We
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don't know what you're talking about.
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Stop saying these things." What are we
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all supposed to believe? Well, look,
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first of all, let me just say that when
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I'm on this show and I'm not talking
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about AI or crypto, I'm just a civilian,
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right? So, I'm not a spokesman for the
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administration on anything but the two
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issues that I work on. So, I don't want
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to come across as someone who has
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special knowledge cuz I'm just I'm not
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part of the trade conversation. So, I
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can't answer your question directly. But
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what I would say is that with respect to
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the China relationship, I think what's
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happened over the past few weeks has
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been a very important stress test and
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it's basically flagged some serious
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weaknesses or dependencies that have
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evolved in this relationship over the
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past few decades. You know, I flagged
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this in a previous episode that we did
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with Larry Summers where I said that 25
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years ago was a huge mistake to walk
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China into the WTO. And I think that
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just to build on on that thought, one of
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the problems with walking them into the
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WTO is that they got what's called
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developing nation status. Yeah. So, you
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know, you can either be a developing
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nation or a developed nation in the
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framework of the WTO. And maybe there
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was something legitimate to that in
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1978, you know, when Deng Xiaoping began
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his reforms, the average Chinese person
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was making $2 a day. By the year 2000,
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it was much more questionable and it
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certainly makes no sense in the year
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2025. And still to this day, China gets
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developing nation status. Now, what is
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the benefit to China of that? Well, they
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have a whole different set of rules.
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They're allowed to have tariffs. They're
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allowed to subsidize their industries.
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They have all sorts of different timets
00:13:03
for doing things. They're allowed to do
00:13:05
things that the US simply can't do. Now,
00:13:07
how have they leveraged that? They have
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identified strategically certain
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industries that are choke points in the
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global supply chain and they have taken
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them over and the best example of this
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is rare earth. So there was some good
00:13:19
stories in the New York Times about this
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over the past couple of weeks which I
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think were largely
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accurate. China identified this as an as
00:13:26
a critical industry and the rare earth
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the ore itself is distributed all over
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the world. I mean China has some
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advantages there but they're not huge.
00:13:35
It's the processing of the rare earth
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that's very expensive, very complicated,
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and they decide to dominate that
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industry. And they're responsible today
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for over 90% of the processing of rare
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earths. And then the next step in the
00:13:47
supply chain is that those rare earths
00:13:48
get cast into rare earth magnets, which
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are a critical component in pretty much
00:13:53
every electric motor. And so they're a
00:13:56
critical component of the automotive
00:13:57
industry, but not just cars, lots of
00:13:59
different products. And I think China
00:14:01
makes something like over 90% of the
00:14:03
cast rare earth magnets. Well, by the
00:14:05
way, this issue still has not been
00:14:06
resolved. China has now cut off the
00:14:09
United States. And so, as part of this
00:14:12
trade negotiation, we're going to have
00:14:13
to, you know, resolve that issue. And I
00:14:15
trust that it will be. I mean, what
00:14:17
you've heard from the president and the
00:14:18
Treasury sector over the past week is
00:14:19
that they're they've indicated a desire
00:14:22
to engage in bilateral negotiations with
00:14:25
China and to essentially deescalate this
00:14:27
trade war. But I think it's been very
00:14:29
useful again as a stress test to reveal
00:14:33
our critical
00:14:34
dependencies on China that we've
00:14:36
exposed. We never should have let this
00:14:38
happen. Just from a national security
00:14:40
standpoint, we worshiped at the altar of
00:14:43
this like free trade god to the point
00:14:45
where we became dependent on China for
00:14:47
these critical components in our supply
00:14:49
chain. I think that was a catastrophic
00:14:51
mistake and I think that it's exposed
00:14:54
these dependencies we've created on a
00:14:57
nation that is not our ally and that we
00:14:59
can't count on them. It's a country of
00:15:00
concern. So I ultimately think that
00:15:04
we're going to need to learn from this
00:15:05
experience and very rapidly make some
00:15:07
major corrections here. Andrew, let me
00:15:09
just highlight what I think is one of
00:15:12
not talked about point about the
00:15:14
discussions that are underway. There's a
00:15:17
lot of conversations about tariffs and
00:15:19
about trade deficits, but very little
00:15:21
about regulatory par. And I think that
00:15:24
this is really critical for these trade
00:15:26
negotiations to actually resolve to a
00:15:28
positive outcome for American businesses
00:15:30
and American enterprises because there
00:15:32
is not par and how American businesses
00:15:34
can do their work overseas relative to
00:15:37
how foreign companies can do work in the
00:15:39
US. So if you're a Indian company and
00:15:42
you want to sell something in the US,
00:15:43
you set up an LLC, you set up a bank
00:15:45
account, you set up a store, you take a
00:15:48
lease, and you sell your product. There
00:15:50
is not a lot of hoops and challenges to
00:15:53
that business operating in the United
00:15:55
States. I'll tell you a story. in uh
00:15:58
2005 2006 Monsanto which was a seed
00:16:01
company that doesn't exist anymore
00:16:03
launched in India cotton seed seed for
00:16:05
cotton farmers that basically had a
00:16:08
trait in it that would prevent worms
00:16:10
from eating the cotton and so Indian
00:16:13
farmers were paying 450 rupees an acre
00:16:15
for cotton seed before Monsanto
00:16:18
basically put this cotton seed the
00:16:20
yields went through the roof the farmers
00:16:21
made 5,000 rupees per acre of
00:16:23
incremental profit and they charged
00:16:26
1,500 00 or400 rupees per acre for this
00:16:28
seed. So, it was more expensive seed,
00:16:30
but it had a 5,000 profit improvement.
00:16:33
And it took off. Took the whole market.
00:16:35
90% of farmers bought the seed, not
00:16:37
because they had to, but because it was
00:16:38
better. And what ended up happening was
00:16:41
the Indian government stepped in and
00:16:42
said, "You got to lower prices. You got
00:16:43
to go back to the price of 450 because
00:16:45
that's what's fair for farmers." And the
00:16:47
farmers were like, "We we're doing
00:16:48
great. We don't need to have this kind
00:16:50
of price control." But the government
00:16:51
put it price control in and ultimately
00:16:54
sued the company, went to court and
00:16:57
stole their IP and they left the
00:16:59
country. And this was a company that had
00:17:02
invested, you know, well over a billion
00:17:03
dollars in developing and launching this
00:17:05
product. The same is true, by the way,
00:17:06
in pharmaceutical companies, in software
00:17:08
companies, in hardware companies. If you
00:17:10
want to go do business in China today,
00:17:12
you have to set up a 51% JV where some
00:17:14
local company owns 51% of your equity
00:17:16
and your IP. The stories around the
00:17:19
world I think start to paint a picture
00:17:21
of why American businesses find it so
00:17:24
hard to develop international markets
00:17:26
and sell into those countries when in
00:17:29
the US we make it so easy for companies
00:17:31
based in foreign countries to come and
00:17:33
sell in America. And that's a big part
00:17:35
of where the trade imbalances arise
00:17:37
from. It's not just because Vietnamese
00:17:40
people can't afford expensive American
00:17:41
goods. It's because it's so much more
00:17:43
regulatory difficult to do work in these
00:17:45
countries. they can come in and take
00:17:46
your IP. And so I think that this is
00:17:48
like a really important part of the
00:17:50
trade discussions and negotiations that
00:17:52
a lot of people miss that American
00:17:54
businesses will see massive revenue
00:17:56
growth and massive market adoption if we
00:18:00
can get regulatory par in some of these
00:18:01
uh key key trade. Okay, let me ask you a
00:18:03
different question. Chimath raised uh
00:18:05
the issue of Ken Griffin who made some
00:18:06
comments this week about the brand that
00:18:08
is America and effectively said there
00:18:10
was sort of a sell America situation
00:18:12
going on. And my question about the
00:18:15
brand that is America is whether you
00:18:17
think after these tariffs, whatever
00:18:20
deals get done, that you can put the
00:18:22
toothpaste back in the tube, that you
00:18:24
can get the trust back, that there's not
00:18:25
going to still be some kind of
00:18:27
toothpaste on the rim of the tube, that
00:18:30
you that you can't stick back, it gets
00:18:32
all nasty and crusty, right? That to me
00:18:35
is a fundamental question. I want to
00:18:37
read to you what Ken had to say. I think
00:18:39
Ken was probably a bit of a reluctant uh
00:18:42
Trumper the second term, but
00:18:44
nonetheless, he's been outspoken on a
00:18:47
couple things. He says, "If you think of
00:18:48
your behavior as a consumer, how many
00:18:50
times do you buy a product with a brand
00:18:52
on it because you trust that brand?" In
00:18:54
the financial markets, no brand compares
00:18:57
to the brand of US treasuries, the
00:18:59
strength of the US dollar, the strength
00:19:01
of creditworthiness of US treasuries. No
00:19:03
brand comes close. We put that brand at
00:19:06
risk. What say you? Well, look, I I
00:19:10
think there's a fundamental question
00:19:11
here about whether you think there's a
00:19:13
problem with the status quo or not. Ken
00:19:15
Griffin is one of the biggest winners in
00:19:17
our economy under the current status
00:19:19
quo, and I don't think he sees a big
00:19:21
problem that needs to get fixed. But I
00:19:24
think like we just talked about, I think
00:19:25
there are some big problems. I mean,
00:19:27
Freeberg just laid out the way in which
00:19:29
trade with China is non-rescrocal. Like
00:19:31
our companies cannot participate in
00:19:33
their markets the same way that they can
00:19:35
participate in ours. But it's worse than
00:19:37
that. Like I talked about, these WTO
00:19:39
rules gave China the opportunity to
00:19:42
strategically annihilate our core
00:19:45
industries that are critical in the
00:19:47
supply chain. And there's one other
00:19:48
piece of this which I think is really
00:19:50
important, which is the race to the
00:19:51
bottom. I mean, if you're an American
00:19:52
company and you are still producing in
00:19:55
America and your competitor is able to
00:19:58
go to China and undercut you, obviously
00:20:01
you have to do the same thing because I
00:20:03
mean those are just the rules of the
00:20:04
game. And so we've had this race to the
00:20:06
bottom where if you're an American
00:20:07
company operating under these rules, you
00:20:09
have no choice. It's worse but to export
00:20:11
your manufacturing, your supply chains.
00:20:13
So, you know, we've had these rules that
00:20:15
again under the status quo, I I would
00:20:18
say they're not free trade. It's unfair
00:20:19
trade. It has all these perverse
00:20:21
consequences. It's bad for middle
00:20:23
America and this manufacturing belt of
00:20:25
the country and it's created massive
00:20:27
strategic dependencies on an American
00:20:30
adversary. I'll say I'll say three
00:20:32
things. Let me just say three things
00:20:33
quickly. Number one, I think Ken is
00:20:35
massively long Pax America. I mean, he's
00:20:37
built a $42 billion empire. He owns a
00:20:40
billion dollars of American real estate.
00:20:42
So, I don't see him investing in Ecuador
00:20:44
anytime soon relative to the opportunity
00:20:47
set in the United States. And I think
00:20:49
that's what speaks to the second point,
00:20:51
which is investing is always a relative
00:20:53
exercise.
00:20:55
On Wednesday, I had a meeting with a
00:20:58
Brazilian multi-deioner, very, very,
00:21:00
very successful guy, and we were talking
00:21:02
about the tariffs and the investing
00:21:04
posture, and he's like, there's still no
00:21:07
other country other than America that I
00:21:08
can really put my money to work in that
00:21:10
makes any sense. And I kind of pushed
00:21:11
him, what about China? What about India?
00:21:13
And in all of these markets, there are,
00:21:15
as Freeberg mentioned, vagaries in
00:21:17
China. There's different problems in
00:21:20
India. There's different problems in
00:21:21
these other markets. Europe is roughly
00:21:23
uninvestable.
00:21:25
So the more generalized answer is is on
00:21:29
a relative basis the United States is
00:21:31
still the shining beacon on a hill.
00:21:33
There is no investable alternative for
00:21:36
scaled capital except the US. The the
00:21:40
last thing I want to say is just to
00:21:41
build on what Sax said, Andrew, the the
00:21:44
thing that we keep forgetting is when
00:21:47
economic leverage spills over to
00:21:49
political leverage, what happens to the
00:21:51
United States? And specifically, what
00:21:54
happened this week was on the rare earth
00:21:56
side, not only did China constrain rare
00:21:58
earths into the supply chain, what they
00:22:01
then did was tell South Korea what they
00:22:03
could do with the rare earths that they
00:22:04
gave them. And now all of a sudden you
00:22:07
have this geopolitical spillover where
00:22:09
it's not just a country constraining
00:22:11
supply. It's a country now dictating the
00:22:15
political and trade practices of another
00:22:16
country. So let me ask you a question.
00:22:18
How do you think America is in the best
00:22:21
position to make its own decisions? For
00:22:24
example, let's say that there's a China
00:22:25
Taiwan situation and we need to decide
00:22:28
one way or the other. And I'm not saying
00:22:30
which way is right or wrong, but for the
00:22:32
purposes of this, the thought exercise
00:22:34
is China and Taiwan get into some spat.
00:22:37
We have to take a side. And China says,
00:22:41
"We're going to constrain all the
00:22:42
pharmaceutical APIs into the supply
00:22:44
chain. We're going to constrain all the
00:22:46
battery cathode into the supply chain.
00:22:48
And we're going to constrain all of the
00:22:50
rare earths to anyone who doesn't take
00:22:52
our side." Now, how is America in a
00:22:55
position to actually decide for
00:22:57
ourselves what is in our best interests
00:22:59
if that's looming over us? And I think
00:23:02
that this is the big problem that this
00:23:04
has exposed. This rush to globalism, the
00:23:07
race to the bottom has actually created
00:23:10
a level of dependence that doesn't allow
00:23:13
you to do what's in your best interest.
00:23:16
So, real quick, I agree with you in so
00:23:19
many ways. I think the question that I
00:23:21
have is not in what the ultimate goal
00:23:24
is. It's how you get there. And is there
00:23:27
a way to do this with a a velvet glove,
00:23:30
if you will. And maybe there's no way to
00:23:32
do it in a in a in a better way. What is
00:23:35
to say? No, but what is to say this
00:23:36
isn't the velvet glove. This could be
00:23:38
it's that the stock market is down 6%.
00:23:41
Like it's not down 60%. But this this
00:23:43
what I think is so interesting, Andrew,
00:23:44
is is the way that Trump has already
00:23:46
shifted the conversation. Because the
00:23:47
truth of the matter is that before
00:23:49
Liberation Day on April 2nd, which is 3
00:23:51
weeks ago, no one was talking about the
00:23:54
unfair trade practices. No one was
00:23:55
talking about the dependencies on rare
00:23:58
earth. No one was talking about the race
00:23:59
to the bottom. And Trump has shifted the
00:24:01
conversation 100%. When Jared Kushner
00:24:03
was on the show, he talked about how the
00:24:05
Trumpian approach is controversy
00:24:07
elevates message. And we said at the
00:24:10
beginning that by having this liberation
00:24:13
day, by planting this flag in the
00:24:14
ground, Trump was creating leverage to
00:24:17
then have these negotiations and he
00:24:19
completely shifted the conversation.
00:24:21
Now, where I will agree with you is that
00:24:23
the administration has to stick the
00:24:25
landing here, right? Besson and it's not
00:24:27
just Besson, also Lutnik, these are all
00:24:29
smart, talented people. They do have to
00:24:32
then negotiate these deals and we have
00:24:34
to basically stick the landing. But I
00:24:36
think the fact that you're saying that
00:24:38
you don't disagree with where Trump is
00:24:40
trying to get to, but it's mostly just
00:24:42
tactical is a huge shift in the
00:24:45
conversation. It may it may raise the
00:24:47
issue the way you're describing, but at
00:24:49
some level it's also undermining a
00:24:51
semblance of trust. I just want to relay
00:24:53
two stories. One is, you know, I've been
00:24:55
talking to a whole number of of
00:24:56
multinational CEOs who do business in
00:24:58
China. I'm talking about the McDonald's
00:25:00
of the world, the Starbucks of the
00:25:01
world, the Nikes of the world. And so
00:25:04
many of them now talk about not just how
00:25:07
consumers aren't going necessarily in
00:25:09
their stores the way they used to, but
00:25:12
are really about the American dream, the
00:25:14
American brand. And they talk about the
00:25:16
idea that, you know, if you were a young
00:25:17
kid and you got a job at Starbucks, you
00:25:19
used to go home to your family in China
00:25:20
and say, and your family go, "Wow,
00:25:22
that's
00:25:23
amazing." They're not doing that right
00:25:25
now. So many of these companies are even
00:25:28
trying to reestablish how they market
00:25:29
and advertise their companies almost as
00:25:32
if they're a local business, not an
00:25:34
American brand. And I don't know what
00:25:36
that ultimately means. But I also was
00:25:38
talking to a a Chinese CEO who made a I
00:25:40
thought just a fascinating comment to
00:25:43
me, which was, you know, we're cool with
00:25:46
the US being the leader. We were always
00:25:48
cool with that. We're okay with that. We
00:25:50
don't love it, but we're okay with it.
00:25:52
It gets a lot more complicated when you
00:25:54
have to be the winner. And I think
00:25:56
that's an interesting sort of construct,
00:25:57
this idea that we're first and we have
00:25:59
to win. And I know we're telling it's,
00:26:02
you know, Trump is telling, you know,
00:26:04
citizens in the US that we're going to
00:26:05
win. But he's also telling the world
00:26:07
that. And I think that's a I think that
00:26:09
Chinese CEO should have written that
00:26:10
memo to Xiinping and seeing if he agreed
00:26:14
because I think he would say, "No, we
00:26:15
are the winner." Look, you got to
00:26:17
remember in 2003, three years after
00:26:20
China was admitted to the WTO, Huin Tao
00:26:22
became premier. He had this incredible
00:26:25
speech and in it what he said is there
00:26:27
are these 10 boxes and I've written
00:26:31
inside these 10 boxes all the critical
00:26:34
industries that in 25 to 30 years from
00:26:36
now will dictate supremacy in the world.
00:26:39
We are going to create national
00:26:41
champions he said in those 10 areas and
00:26:44
what's interesting about Xi despite the
00:26:48
ideological differences to who he
00:26:51
followed through with
00:26:52
it. This is a group of people. So we can
00:26:56
say what the CEOs are going to say but
00:26:58
at the end of the day the CEO of China
00:27:00
Inc. is one man and he and his seauite
00:27:04
have been pretty resolute which is even
00:27:07
when he inherited a political ideology
00:27:09
that he didn't completely agree with he
00:27:11
followed through with it which is these
00:27:12
guys in these 10 areas now own the
00:27:15
critical inputs that make the world go
00:27:18
around and I think it's pretty
00:27:22
reasonable to do a risk assessment to
00:27:24
say well how do you stand up to that and
00:27:28
actually have your own point of you if
00:27:30
you don't have your own method of having
00:27:32
access to those things. I think that is
00:27:35
the most important question. Everything
00:27:36
else about you know brand and all of
00:27:38
this other stuff I think comes after
00:27:40
this question. This is the critical
00:27:43
question because if they can tell you
00:27:45
what to think that is not winning. Yeah.
00:27:48
I would just add to that that you hear
00:27:50
this criticism of Trump a lot which is
00:27:52
that okay he's right on the issue or his
00:27:55
instincts are correct but there should
00:27:56
be a nicer way of doing it. And I guess
00:27:59
I would give that story more credence if
00:28:03
the people making that criticism had
00:28:04
actually been advocating for a change in
00:28:07
the status quo prior to Trump. And they
00:28:10
weren't. I mean, we had this bipartisan
00:28:11
globalist consensus that pretty much all
00:28:14
trade practices with China, no matter
00:28:17
how unfair they got, was basically good
00:28:19
for the United States. And no one was
00:28:21
really doing anything about it until
00:28:23
President Trump made it this issue and
00:28:25
made the unfair trade practice
00:28:26
conspicuous. So, if somebody else had
00:28:29
been willing to take that on, then I
00:28:31
maybe would give credence to this idea
00:28:33
that there's some non-Trumpian way of
00:28:34
doing this. But I just don't think
00:28:36
that's the way our political system
00:28:37
works. I think that the way our
00:28:39
political system works is that you have
00:28:40
to completely shift the conversation
00:28:43
first to create a new consensus and then
00:28:46
you work out the deals. And that process
00:28:48
can be a little bit disruptive. Okay,
00:28:51
one tiny follow-up. So, I don't know if
00:28:53
you guys saw the news this morning, a
00:28:55
report out that Apple is going to move
00:28:58
its manufacturing of iPhones that are
00:29:03
exported to the US or imported here in
00:29:05
the US, but they're going to manufacture
00:29:07
all that stuff in India, not in China
00:29:10
anymore. So, they're going to move all
00:29:12
the manufacturing to India.
00:29:15
See you in 20 See you in 2035.
00:29:18
They say they can do it supposedly in 18
00:29:20
months by the end of 26. Bet.
00:29:24
You say no way. Bet. Well, I think if
00:29:26
this is geopolitically smart. Yeah, they
00:29:29
should do it. But I'm just saying that's
00:29:30
a it's very smart. It's not going to get
00:29:34
done in 18 months.
00:29:36
I don't know how long it's going to
00:29:37
take. But look, I think one of the big
00:29:38
lessons here over the past 25 years is
00:29:41
that you have security first. Security
00:29:44
has to be worked out first, then you
00:29:46
have trade. If you build your whole um
00:29:48
supply chain and all your trading
00:29:50
relationships with countries that are
00:29:53
fundamentally adversarial to your
00:29:55
interests, and we can get into that part
00:29:56
of the the USChina relationship, but I
00:29:59
think most people would say that we're
00:30:01
in some version of a new cold war with
00:30:02
with China. Obviously, you're going to
00:30:04
have to revise your trade relationships
00:30:07
because again, we can't be dependent on
00:30:10
an adversary for core components that
00:30:12
then go into our military, for example.
00:30:14
So security always has to come first
00:30:16
then you work out trade and I think that
00:30:19
India is fundamentally extremely aligned
00:30:21
with us on security because they view
00:30:24
their biggest potential threat and
00:30:26
adversary as being China and that is
00:30:29
basically that the way that the US sees
00:30:31
the world as well. And so I do think
00:30:34
that the US India relationship is just
00:30:36
very aligned and I think therefore the
00:30:41
investments that get made and the trade
00:30:42
relationships that get forged will be
00:30:45
very stable over the next couple of
00:30:47
decades. Whereas you know if you make a
00:30:49
big investment in a country that could
00:30:50
be your adversary you should expect that
00:30:51
that relationship could get disrupted. I
00:30:53
don't think the Apple deal is from a
00:30:55
standstill. My understanding is Foxcon
00:30:58
and others have been working with Apple
00:31:01
to actually stand up manufacturing
00:31:02
capacity in India for some time now and
00:31:06
I do believe that they probably have one
00:31:09
or two model runs already active in the
00:31:12
country. So I don't think that this is
00:31:14
necessarily from a standstill. let's go
00:31:16
recruit the people, figure out the
00:31:18
processes, find the builders, stand up
00:31:20
the facilities that there's probably a
00:31:22
model system already running that's now
00:31:24
about replication and scale up, which is
00:31:25
why they have confidence in the state
00:31:27
stated goal. It's not often that Tim Ko
00:31:29
will stand up and say, I'm going to do
00:31:30
something in 18 months and then be
00:31:32
delayed by yours. He's not Elon. He's
00:31:34
going to come out. He's going to be very
00:31:35
clear. He's he's always been very clear.
00:31:37
So, and my understanding is this has
00:31:39
been thought about for some time.
00:31:41
Andrew, I think you've been to a lot of
00:31:42
conferences where for three years now,
00:31:45
you've been hearing people banging the
00:31:46
table saying, "Get everything out of
00:31:47
China as quickly as you can." Yeah. Tim
00:31:49
Cooks heard that message. He's been
00:31:51
thoughtful about it. He's been planning
00:31:52
for this day. I don't think he wanted to
00:31:54
be declarative about this until the day
00:31:56
came. Well, the day is here. And how do
00:31:58
we feel that it's gone to India? It's
00:32:00
not coming to America. I think we knew
00:32:01
it wasn't coming to America. Well, India
00:32:03
has one massive advantage over China,
00:32:06
which is that it has 1/5if the labor
00:32:07
cost of China, which has 1/5if the labor
00:32:09
cost of America. So, India is a natural
00:32:12
place for a lot of this next generation
00:32:15
labor to end
00:32:17
up. Plus, they have a very educated
00:32:19
workforce. Plus, they have a young
00:32:21
workforce. In many ways, you could say
00:32:22
that it's it's China circa 2003. I mean,
00:32:25
you have to remember, right? Like China
00:32:27
from 2006 I think to like 2012 their GDP
00:32:31
grew at like 10% a year. I mean can you
00:32:34
imagine what that must have been like
00:32:36
when a country that big is growing that
00:32:37
fast. So India is going to have that
00:32:39
moment over the next 20 or 30 years. I I
00:32:42
the only reason I scoffed at what you
00:32:44
said you invest in in in India would
00:32:45
you? I have a large rare earth mine in
00:32:48
India. Yeah. It's one of the largest
00:32:50
supplies of rare earths outside the
00:32:51
United States. We negotiated that deal
00:32:52
with the PMO and they gave us a great
00:32:56
deal to compete with the Chinese. A
00:32:59
specialty chemicals processing is on the
00:33:01
ground there. And then the idea is then
00:33:03
to import all of that specialty chemical
00:33:05
into the United States and then do all
00:33:07
the I like the macro. I just there's
00:33:10
something about China where there's a
00:33:11
lot of accounting fraud still and you
00:33:13
can't really trust a lot of the numbers.
00:33:15
But if that all gets cleaned up, the
00:33:16
macro is all right. It's exactly where
00:33:18
it should be for You mean India? India.
00:33:20
Yeah. Yeah. I mean I I just think the
00:33:23
structure the the structural realities
00:33:26
just make it a good place to invest
00:33:28
because I just think that India and the
00:33:30
US are going to be very aligned for for
00:33:32
a long time. Agreed. Again, their main
00:33:36
security threat is China and our main
00:33:39
security threat is China and that's just
00:33:41
not going to change for probably the
00:33:42
entire 21st century. A couple weeks ago,
00:33:44
Sax and I sat down with the Indian
00:33:47
ambassador and it's very clear they're
00:33:50
fundamentally aligned with the United
00:33:51
States and I think exactly what Sax said
00:33:53
is true. Everybody knows who needs to
00:33:56
cooperate in order to have a reset of
00:33:58
global trade policy and political
00:34:00
leverage. So I don't know I'm pretty
00:34:02
pro- India. It's a very difficult place
00:34:04
to invest. I agree with you Sorcin. I've
00:34:05
never made money there. I tried my hand
00:34:08
at tech investing over a decade. I maybe
00:34:11
have returned 50 cents on the dollar.
00:34:13
Why? So then so then what went wrong?
00:34:15
Like what's the macro reason? The market
00:34:18
was far too immature. My mental model
00:34:20
was about how American success looked
00:34:23
like and when I tried to impose that on
00:34:25
the Indian market, it all just blew up.
00:34:27
So a lot of the Indian entrepreneurs,
00:34:30
how they raised money was not from
00:34:32
Indian VCs, it was from American VCs.
00:34:34
And you can't tell an American VC an
00:34:37
idea that just makes no sense to you
00:34:39
because your frame of reference is the
00:34:41
United States. So what turned out to
00:34:44
work was a couple of very large bets
00:34:48
that were copies of American businesses.
00:34:50
So like the Indian Amazon worked, the
00:34:53
Indian PayPal kind of worked, the Indian
00:34:56
Door Dash kind of
00:34:57
worked, but everything else didn't work.
00:35:00
So then why because is it the consumer
00:35:02
market's not there or the No, because
00:35:04
markets aren't there. No, because we
00:35:06
have these mental biases that that will
00:35:09
never allow us to believe the way that
00:35:12
they would construct the business would
00:35:13
work. So, for example, they're like,
00:35:14
"Hey, here's a business where we're
00:35:16
going to buy food from the local farmer,
00:35:19
then we're going to put it in a
00:35:20
warehouse, then we're going to drive it
00:35:21
around on rick shaws and deliver it to
00:35:22
people." And you think, well, this
00:35:24
business can never work. Well, actually,
00:35:26
that business turned out to be a
00:35:27
ginormous success. Nobody in the United
00:35:29
States would have ever funded that. Now
00:35:30
what happened four years ago though was
00:35:33
after a bunch of meetings I pivoted to
00:35:36
these other areas because when you talk
00:35:37
to the Amanis and when you talk to the
00:35:40
Adanis they're like dude stop beating
00:35:43
your head against this wall like build
00:35:46
infrastructure it just works and uh it
00:35:49
was true they've been right okay one
00:35:51
geopolitical question how do you feel
00:35:53
about India buying as much oil as they
00:35:55
do from Russia I know we'll get into the
00:35:58
whole Ukraine thing later Smart. Smart.
00:36:00
Look, India is a country that has two
00:36:03
great powers in its neighborhood. China
00:36:06
and Russia. It has a contested border
00:36:08
with China. They've had border
00:36:10
skirmishes. When you have a country that
00:36:14
is much more powerful, that's actually a
00:36:15
security threat to you. You then seek
00:36:18
good relations, even possibly an
00:36:20
alliance with the other great power in
00:36:22
the neighborhood. That has been India's
00:36:24
philosophy. They've had good relations
00:36:25
with Russia for a long time, even going
00:36:27
back to the Cold War. That is what makes
00:36:29
sense for their security standpoint. By
00:36:31
the way, the exact same thing is true of
00:36:33
the United States. We just haven't
00:36:34
realized the strategic reality. China is
00:36:37
the pure competitor. I mean, Mir Sh made
00:36:40
this point at our all-in summit. China
00:36:42
is the pure competitor. It's the only
00:36:44
country in the world that is a peer of
00:36:47
the United States. It's the only country
00:36:49
that's really capable of threatening our
00:36:51
security.
00:36:53
Russia is a distant number three in
00:36:55
terms of the great power rankings. What
00:36:56
you want to do if you're in a sort of
00:36:58
heads up competition where there's two
00:37:01
superpowers is you want to make an
00:37:03
alliance with that number three. And
00:37:05
what we've done is we've pushed Russia
00:37:08
into the arms of China. What we ought to
00:37:10
have been doing is a reverse Kissinger.
00:37:12
We did this during the Cold War by the
00:37:13
way. We had the Soviet Union and we had
00:37:15
China. And in that case, the Soviet
00:37:18
Union was the big threat to American
00:37:19
security. So what did we do? We had
00:37:21
Nixon and Kissinger go to China and make
00:37:24
a deal with Mao. China was just as
00:37:26
communist as the Soviet Union. Mao had
00:37:30
blood on his hands to a degree that is
00:37:33
much greater than someone like Putin
00:37:35
has. And yet we were willing to shake
00:37:37
hands with him and make an alliance
00:37:39
because that was real politique. And I
00:37:41
think in a similar way, this is what our
00:37:43
strategy should have been with Russia
00:37:45
for the last two decades. And instead,
00:37:46
we've been foolishly pushing them into
00:37:48
the arms of China. Well, Sorcin, what's
00:37:50
your read? I mean, what's your opinion
00:37:51
on the I think India is a tough look,
00:37:54
India's India is a tough place to
00:37:56
invest. Every everybody I know who's
00:37:58
been talking India for the last, I don't
00:38:00
know, 15, 20 years has been talking it
00:38:02
up as the next great utopia. And it may
00:38:04
very well be. It probably will be. It's
00:38:06
just a question of when. I think you
00:38:08
have to and you have to be specific
00:38:10
about the end market. You know, like
00:38:11
there are people that have made a ton of
00:38:13
money there, but it's not the way
00:38:15
classical western economics has played
00:38:17
out by any means. Andrew, I mean, what
00:38:19
do you think about this sort of what I
00:38:20
would call balance of of powers logic
00:38:23
101? I get I get the idea that you you
00:38:26
go to your, you know, least uh I don't
00:38:30
know uh your least enemies your friend's
00:38:34
friend your enemy's enemy is your
00:38:36
friend. No, the enemy of your enemy is
00:38:37
your friend or whatever it is. Yeah. No,
00:38:39
the power logic. I I get I get where
00:38:42
you're going with this. I just think
00:38:43
that Russia given all that they have
00:38:46
done I'm not it's hard it's hard to look
00:38:49
at Russia and China and maybe Russia on
00:38:53
the margins on a relative basis in life
00:38:56
is better than China in certain ways but
00:38:58
in other ways it's not and so it's very
00:38:59
complicated to sort of for me to look at
00:39:01
it and go okay um it's actually
00:39:04
interesting who I mean there's a I was
00:39:06
going to use a real loaded word who's
00:39:08
more evil right is China more evil or is
00:39:12
Russia more evil
00:39:14
I mean, I think I think there'd be a big
00:39:15
debate about that in the world. Well, I
00:39:17
think it's it's unnecessarily
00:39:19
judgmental. Yeah. Right. I think it's
00:39:21
dangerous to look at foreign policy from
00:39:24
a position of extreme moralism because
00:39:27
ultimately the purpose of our foreign
00:39:28
policy is to ensure American security
00:39:31
and we can't rectify every injustice in
00:39:33
the world. And over the past 25 years,
00:39:35
we've become
00:39:37
hyperinterventionist, you know, in an
00:39:39
attempt. So, we've claimed to do that,
00:39:41
right? We keep saying that we we've
00:39:43
gotten involved in all these places
00:39:44
because we want to promote our values
00:39:45
and spread democracy. And by the way, we
00:39:47
did the opposite. I mean, you look at
00:39:48
the forever wars in the Middle East. We
00:39:50
had interventions and occupations in
00:39:52
Iraq, Afghanistan, Libya, Syria. How did
00:39:56
all those things work out? They did not
00:39:58
promote our values or spread democracy.
00:40:00
So, my point is just I don't think we
00:40:01
should look at foreign policy from an a
00:40:03
position of extreme moralism.
00:40:06
I prefer to think of neither of those
00:40:09
countries as as quote unquote evil and I
00:40:12
would prefer to think of them as
00:40:13
countries which have their own
00:40:14
interests. I think that with respect to
00:40:16
China, the real issue is that it is a
00:40:19
revisionist great power. It has made
00:40:21
clear that it wants to basically annex
00:40:23
Taiwan. It wants to turn the South China
00:40:26
Sea into effectively a Chinese lake. It
00:40:29
does not respect international waters.
00:40:32
It has territorial disputes with Japan.
00:40:34
And if we don't play a role in
00:40:36
containing China, then China will
00:40:40
revise the balance of power in East Asia
00:40:43
in a major way. And I think that would
00:40:44
have I think profound consequence for
00:40:47
the United States. I just don't throw
00:40:49
you off a roof and one day and you won't
00:40:51
even know it. I mean, that's the
00:40:52
difference. And I don't know if that's a
00:40:54
moral argument. I'm not worried about
00:40:55
the United States is not going to be
00:40:56
thrown off a roof by by Russia. And
00:40:58
that's the level at which we should
00:41:00
think about these things. If you look at
00:41:02
Russia's behavior, Russia actually is
00:41:04
not a revisionist great power. What it
00:41:06
wants is just security on its borders.
00:41:08
The revisionist power actually in Europe
00:41:11
over the past 25 years was the United
00:41:13
States because we pushed NATO right up
00:41:15
to Russia's borders despite the promises
00:41:18
that were made to Gorbachoff in the
00:41:19
'90s. So, we're the ones who've revised
00:41:21
the balance of power in a way that was
00:41:23
profoundly threatening to the Russians.
00:41:24
And I think it would be far better from
00:41:26
the American standpoint to just work out
00:41:29
a security architecture for Europe with
00:41:32
Russia that gives the Russians the
00:41:34
security they crave on the Western
00:41:36
border and gives Europe the security it
00:41:38
craves. And I think if we had had that
00:41:40
mentality as opposed to this highly
00:41:42
moralistic mentality where we basically
00:41:44
want to spread American style democracy
00:41:46
everywhere. You don't think that
00:41:47
American style democracy though has
00:41:48
helped the world in some way? I'm not
00:41:50
saying we did it right everywhere. I
00:41:52
think we've lost a lot of lot of wars
00:41:54
that we should not have attempted. But
00:41:55
if it could be done, you're right. But
00:41:57
the problem is, Andrew, the failure rate
00:41:59
is too high. Look at what happened in
00:42:01
Afghanistan, in Syria, in Iraq. As we've
00:42:04
gone in to make, you know, regime
00:42:07
change, we actually put those people in
00:42:09
a worse condition than they were before.
00:42:11
They don't end up with American
00:42:12
democracy. After a trillion dollars in
00:42:14
Afghanistan, the Taliban is back in
00:42:16
charge doing awful, brutal things,
00:42:18
right? Two trillion. And and I would be
00:42:20
I would be a proponent of and by the way
00:42:22
this was also part of the promise of the
00:42:24
open internet and I think from a
00:42:25
fundamental point of view the regulatory
00:42:27
regime we had in the United States with
00:42:28
the internet was driven by this notion
00:42:30
that the freedom of information would
00:42:32
actually allow democratic proliferation.
00:42:34
You know we were talking about the Arab
00:42:35
Spring as you'll you know recall like
00:42:36
that was going to be this big moment but
00:42:39
at the end of the day it turned out that
00:42:41
didn't work either. that there's
00:42:42
something much more complex in the
00:42:44
history of a people in a geography, the
00:42:46
deep ties that those people have, that
00:42:48
this idea that turning on a screen or
00:42:50
showing up with a tank is going to flip
00:42:51
the switch to democracy turns out not to
00:42:54
be true. And look, just to be clear, I
00:42:55
mean, I think my lucky star is that I'm
00:42:57
an American and we do have the type of
00:42:58
government we have here. And my parents
00:43:00
immigrated to the United States in 1977
00:43:03
for political reasons because we have
00:43:05
the type of government we have here. So,
00:43:06
look, I'm a strong believer in American
00:43:08
style democracy. The problem is our
00:43:10
efforts to promote it or impose that
00:43:14
style of government through regime
00:43:16
change operations simply has not worked.
00:43:18
I mean this is should be one of the big
00:43:20
learnings of American foreign policy
00:43:22
over the past 30 years. It's better to
00:43:23
model it right. It's better to Yeah. So
00:43:25
how do you model it? I think you model
00:43:26
it by being the shining city on the hill
00:43:28
by setting a good example by focusing on
00:43:30
our own country and making America the
00:43:32
best it can be so that people all over
00:43:34
the world look to us and say oh we want
00:43:36
to do that. And I actually think that
00:43:38
what I'm describing is an American soft
00:43:39
power. If you go back to the 1980s, we
00:43:42
had that soft power. I mean, the people
00:43:44
of places like in Russia, they love
00:43:47
buying American blue jeans and American
00:43:49
music. And we had that soft power. We
00:43:51
were inspiring to the world. But it all
00:43:53
changed say starting in the '90s, but
00:43:56
then really in the 2000s when we started
00:43:58
going into these countries with our
00:44:00
militaries and occupying all these
00:44:01
countries, we soured them on America. We
00:44:04
made them hate us. And this is the
00:44:07
problem with this hyperinterventionism
00:44:08
is what we should be doing is setting an
00:44:12
example, not trying to occupy these
00:44:14
countries. Let me read something to you.
00:44:16
This is this week. This is Trump
00:44:18
condemning the strikes going
00:44:22
on in Kiev. This is I'm not happy with
00:44:25
the Russian strikes in Kiev. Not
00:44:27
necessary. Very bad timing. Vladimir,
00:44:30
stop.
00:44:33
5,000 soldiers a week are dying. Let's
00:44:36
get the peace deal done. How is this
00:44:38
deal going to get done? I should also
00:44:40
say Secretary of State Marco Rubio
00:44:42
reportedly skipping a meeting on a
00:44:43
ceasefire talk on Wednesday after
00:44:45
Ukraine refused to recognize Russia's
00:44:48
annexation of Crimea. Well, the reason
00:44:50
why Rubio canceled that meeting is
00:44:53
because the Americans put forward a
00:44:55
peace proposal and Zalinsky dismissed
00:44:59
out of hand. Before the Russians could
00:45:00
do anything, Zilinsky dismissed it. And
00:45:03
recognizing Russian ownership of Crimea,
00:45:06
if you will, should be the easiest point
00:45:08
for Zillinsky to concede. And he
00:45:10
dismissed it out of hand. Now, why do I
00:45:12
say that? The Russians annex Crimea in
00:45:15
2014. So, this was not something that
00:45:17
happened in 2022. It happened over 10
00:45:19
years ago. And if you look at what the
00:45:23
people of Crimea want, and there's been
00:45:24
a lot of Western polling on this,
00:45:26
there's been man on the street
00:45:27
interviews by NBC. The people of Crimea
00:45:30
by something like over 80% say they want
00:45:32
to be part of Russia. They're ethnic
00:45:33
Russians. And I'd say the the final
00:45:35
point on this is that Zalinsky and
00:45:37
Ukraine tried to get Crimea back in the
00:45:39
summer of 2023 with a summer
00:45:41
counteroffensive. Remember the whole
00:45:42
point of that summer counter offensive
00:45:44
was to sever the land bridge to Crimea,
00:45:46
destroy the Kirch Bridge, isolate Crimea
00:45:48
and essentially lay siege to it. This
00:45:50
was the whole point of that and they got
00:45:51
nowhere with that. They didn't even
00:45:52
break through the first Servican line.
00:45:54
So my point is that it's militarily
00:45:57
impossible to retake Crimea. The people
00:46:00
of Crimea don't want Ukraine to retake
00:46:03
it. They want to be part of Russia. And
00:46:05
yet Zalinsky cannot give this up. Okay.
00:46:08
So how do we get to yes? How do we get
00:46:09
to yes? This was supposed to be done on
00:46:11
day one and here we are. The basic
00:46:14
problem is that Zalinski doesn't want to
00:46:16
make a deal. I mean, he he has rebuffed
00:46:18
the Americans on Crimea, which should be
00:46:22
the easiest point to give on. He's been
00:46:24
completely unrealistic about their
00:46:26
prospects on the battlefield. He was
00:46:28
insulting to the White House when he
00:46:31
visited the White House in his t-shirt
00:46:32
or whatever. He was dressed
00:46:33
inappropriately. And then one of the wor
00:46:35
tests for America, I think that meeting
00:46:37
was. Well, I mean, he was insulting to
00:46:40
the president and especially to the vice
00:46:42
president. He he murmured under his
00:46:44
breath a curse word to the vice
00:46:46
president. You remember that? I mean, it
00:46:48
was really quite something. And
00:46:49
remember, he's biting the hand that
00:46:51
feeds them. I mean, he has an
00:46:54
obligation, I think, to be respectful to
00:46:56
his patrons in a way that his patrons
00:46:59
may not
00:47:01
in a way that they we may not to him.
00:47:03
and he has demonstrated, I think, that
00:47:06
he's unrealistic in every possible way.
00:47:08
He's unrealistic about Ukrainian
00:47:10
prospects on the battlefield, about
00:47:11
retaking Crimea, and about who the the
00:47:13
hand is that feeds him. So, my view on
00:47:16
this is quite simple, which is if
00:47:17
Zalinsky won't see reality, let him go
00:47:21
find new patrons. Let Starmer and
00:47:23
Mcronone support him. They say they
00:47:25
will. They say they have the ability to
00:47:27
do this, but they can't. And, you know,
00:47:28
they can't enough. Well, they appear to.
00:47:31
My point is Zillinsky has made his bed.
00:47:33
Let him sleep in it. This is my point of
00:47:36
view on it. He refuses to listen to the
00:47:39
Americans. He refuses to recognize that
00:47:42
this administration even has leverage
00:47:44
over him. And you don't think that
00:47:46
ultimately if Putin takes Crimea plus
00:47:49
whatever that he's going after Poland
00:47:52
next or I mean that's it's the domino
00:47:54
theory that becomes the complicated
00:47:56
part. No, I don't think so. I don't
00:47:58
think there's any evidence that he wants
00:47:59
Poland. I don't even think he wants the
00:48:01
part of Ukraine that is chalk full of
00:48:03
Ukrainian ultraists because you would
00:48:06
have a massive insurgency there. He
00:48:08
doesn't want a Gaza type situation. And
00:48:10
by the way, just another point on
00:48:11
Crimea. Where is the insurgency? If
00:48:14
Crimea really wanted to go with Ukraine
00:48:16
as opposed to Russia, why has there been
00:48:17
no uprising there over the past 10
00:48:19
years? So, in any event, my point is
00:48:21
there's no evidence that that Putin
00:48:23
wants Poland. Poland's part of NATO that
00:48:25
would start World War II. I I think
00:48:27
Putin has shown that he's a calm,
00:48:31
rational decision maker and I don't
00:48:33
think he wants World War II. Now, the
00:48:35
Russians have said what their terms are.
00:48:37
They said it last year. They said they
00:48:39
basically in in this root cause speech
00:48:41
they gave in I think June of last year
00:48:43
and basically what it comes down to is
00:48:45
they want Istanbul plus there was a deal
00:48:47
to end this war in the in the first
00:48:50
month the Istanbul deal and it required
00:48:54
Ukraine to basically sever its security
00:48:56
relationship with the west and to
00:48:58
recognize that it would not become part
00:49:00
of NATO and they had to give up Crimea
00:49:02
basically that was the deal back then
00:49:04
what Russia has said is that's still the
00:49:06
deal plus realities on the ground so in
00:49:08
other
00:49:09
The Russians have lost I don't know 100
00:49:11
thousand plus hundreds of thousands of
00:49:13
soldiers now taking this territory in
00:49:16
the east and obviously they're not going
00:49:17
to give it up. So I think that the
00:49:20
Ukrainians could have had a better deal
00:49:21
in the first month of the war. The Biden
00:49:22
administration rejected that. Now
00:49:24
there's a different deal. It's Istanbul
00:49:26
plus and I I think that the American
00:49:29
proposal is pretty close to that. So I
00:49:31
think this administration
00:49:32
recognizes the wisdom and just reality
00:49:35
of that deal but the Ukrainians aren't.
00:49:37
So look, my view is simple. If the
00:49:40
Ukrainians are unwilling to take the
00:49:41
deal that's on the table and they want
00:49:43
to find new backers with the Europeans,
00:49:46
let them. But why should we continue to
00:49:48
support this? Okay, let's pivot. Let's
00:49:50
talk markets and let's specifically talk
00:49:52
a couple stocks because there's Andrew,
00:49:54
you disagree cuz I want to hear your
00:49:55
disagree. No, no, I I I could, but we're
00:49:57
going to I think we're going to run out
00:49:58
of time. Okay. I want to talk Alphabet.
00:50:01
So everybody thought the Blue Link
00:50:03
economy was dead. Open AI, Perplexity,
00:50:06
all of it was, you know, going to take
00:50:08
the search market. They come out with
00:50:10
earnings. Sundar
00:50:12
uh does way better than everybody
00:50:14
expected. Revenue up $90.2 billion is up
00:50:17
12%. Net income was up up almost 50%
00:50:20
year-over-year. You got the cloud still
00:50:22
ripping. You got a big buyback program.
00:50:25
He starts talking about Whimo on the
00:50:27
call for the first time in a long time,
00:50:29
if ever. Uh stocks up about 5% on the
00:50:32
news. What do we think? What an
00:50:35
incredible business. My gosh, there's
00:50:38
there's a lot of resiliency in Alphabet
00:50:40
that I don't think people have given the
00:50:42
company credit for. First of all, I'll
00:50:43
just highlight with the dividends
00:50:45
they're paying plus the share buyback,
00:50:47
you're basically getting a four, five%
00:50:49
yield on the stock. So, the dividends
00:50:52
are like 10 billion a year and they're
00:50:53
announcing 70 billion back on two
00:50:55
trillion
00:50:56
in market cap. So you're making 4% a
00:50:59
year just by owning the stock in the
00:51:01
dividends and the buybacks. Then if you
00:51:04
look at the revenue 90 billion, 77 in
00:51:08
services, 12 in cloud. So the 90
00:51:10
billion about half of it was ads on
00:51:13
search and a lot of people have been
00:51:15
talking about the decline in search due
00:51:16
to AI. That's the end of of Alphabet.
00:51:20
Here you can kind of see the breakdown.
00:51:22
What this shows is that there's such
00:51:24
significant growth. 9 billion in
00:51:26
YouTube, 7.5 billion in non- Googlele
00:51:29
ads, 10 billion in subscriptions with
00:51:32
270 million subscribers across
00:51:34
subscription businesses, 12 billion in
00:51:36
cloud revenue, which is growing 30%
00:51:39
year-over-year. There's a lot of
00:51:41
resiliency even if you take out search.
00:51:44
And so the question is, what's the
00:51:46
downside? What's the upside? Well, the
00:51:47
downside is what's the worst that could
00:51:49
happen to search? what they lose half of
00:51:51
the market to uh to chat
00:51:53
GPT. If they lost half the market to
00:51:56
chat GPT and the rest of the business
00:51:57
keeps growing the way it is, you get
00:51:59
back to parody pretty
00:52:01
quick. What's the upside? Well, the
00:52:03
upside is they're able to use AI to
00:52:05
actually reinvent search, retain the
00:52:07
audience, and create an entirely new
00:52:09
search experience that's chatbased or
00:52:11
has some chat integration into search.
00:52:14
So, it seems to me trading at 18 times
00:52:16
free cash flow, which is where this
00:52:17
thing's at right now, plus the 4% yield
00:52:20
on dividends and buybacks, plus the kind
00:52:23
of seemingly pretty significant gap
00:52:25
between the downside and the upside
00:52:26
here. It's just such a powerful
00:52:28
business. It just seems like it
00:52:29
highlighted that this is not a business
00:52:31
that's in decline and is about to die as
00:52:33
everyone's been kind of proclaiming.
00:52:34
There's enough growth engines here and
00:52:36
there's enough resilience and the price
00:52:37
is so good. I don't I feel quite good
00:52:39
about the I think there's hundred
00:52:40
billion dollars of hidden value called
00:52:42
Whimo in this business $250,000 rides a
00:52:45
week now growing like crazy and they're
00:52:47
only like four cities. It's crazy. And I
00:52:49
think I think the market's giving them
00:52:51
zero for that right now. Zero. I think
00:52:54
the most interesting stat that I saw and
00:52:56
they own% of SpaceX by the way which is
00:52:59
crazy. The most interesting stat in the
00:53:02
earnings was that I think they said that
00:53:04
they had
00:53:05
270 million total paid subscriptions
00:53:09
across YouTube and Google one. And my
00:53:12
initial thought was, well, when are you
00:53:14
just going to stick Gemini as the most
00:53:18
obvious interface in front of it? Like I
00:53:20
think that these companies now need to
00:53:22
confront that this open AI behemoth is
00:53:25
growing at a rate that was probably
00:53:30
a hindrance before and now is a real
00:53:32
strategic risk. And so if you have 270
00:53:35
million paid subs, come on guys, stuff
00:53:38
Gemini right in front of these guys.
00:53:39
That's that's that was my first
00:53:41
takeaway. But it's again, they're doing
00:53:42
it from a position of strength, but they
00:53:44
need to get going because they're
00:53:45
they're probably himing and hying and
00:53:47
there's probably all kinds of people,
00:53:49
all kinds of cooks in that kitchen. But
00:53:51
I've heard a lot of stories about this
00:53:52
question. I think Sundar, Larry, and
00:53:54
Sergey just need to take the equity and
00:53:56
the political capital they have as a CEO
00:53:58
and the two largest shareholders and
00:53:59
just stuff the decision down people's
00:54:01
throats. So that's that that's number
00:54:03
one.
00:54:05
The other thing that I think about
00:54:07
actually relates to what I spoke about
00:54:10
last week about Nvidia. So, just to give
00:54:12
you guys a little bit of a cleanup, you
00:54:15
know, after we spoke about Nvidia, the
00:54:17
Nvidia team reached out to me and they
00:54:20
were like, "Hey, Hmoth, here's a bunch
00:54:22
of stuff that will help
00:54:25
you unpack what you spoke about in a
00:54:28
little bit more detail. So, let me tell
00:54:30
you what Nvidia told me and then I think
00:54:31
it relates to GCP. So, what they told me
00:54:34
when you look at the SEC filings for
00:54:37
Nvidia and you add up all the revenue,
00:54:40
it says that about 47% of the revenue
00:54:42
goes to China, Singapore, Taiwan, I
00:54:45
think it was. And what these guys
00:54:48
educated me on is that they've been
00:54:51
trying to refine how this is described,
00:54:54
but it's not what it seems. meaning they
00:54:57
report revenue on what's called the
00:55:00
billing or the invoicing address. So
00:55:04
meaning you are an entity, you'll buy a
00:55:08
huge amount of chips or compute power
00:55:11
and you issue the invoice out of Taiwan
00:55:14
or Singapore or China. That's what
00:55:18
represents 47% of Nvidia's reported
00:55:21
revenue.
00:55:22
So it turns out that that's actually not
00:55:25
where the silicon gets shipped. So
00:55:28
there's a Singaporean office that
00:55:29
handles the invoicing. So then I said,
00:55:31
well, who are these companies that are
00:55:33
using these these places? And it turns
00:55:36
out that it's a bunch of major US
00:55:37
companies, including US OEMs and clouds
00:55:41
that use Singapore for invoicing their
00:55:44
suppliers.
00:55:46
But that the you know what industry
00:55:48
sources have told us is that all of
00:55:50
these products are almost always shipped
00:55:53
elsewhere including US, Mexico, Taiwan
00:55:56
etc all over the
00:55:57
place. So why is this interesting? There
00:56:00
was a study by artificial analysis Nick
00:56:03
I will send you the link but basically
00:56:05
what it showed was that the clouds were
00:56:08
not doing any real form of
00:56:11
KYC on who is using their stuff.
00:56:15
So now I think we get to this next place
00:56:18
which is like I think the Google
00:56:20
business is profoundly amazing. I think
00:56:22
they need to do something with the
00:56:23
subscriptions that they have and put
00:56:25
Gemini right in front and really do a
00:56:26
head-on attack against Chat GPT. Those
00:56:29
are the pluses. the minuses or the risks
00:56:33
that I think now will get uncovered is
00:56:36
are the clouds doing enough to make sure
00:56:38
that China and other folks aren't
00:56:41
getting access to compute that they
00:56:43
should not get access to and that could
00:56:46
have an impact on some of their revenue.
00:56:48
So that's a GCP problem. I think it's an
00:56:51
Azure problem. It's a AWS problem and
00:56:54
that's going to need to get sorted out
00:56:55
in the next couple of quarters because
00:56:57
if western governments basically say to
00:56:59
the clouds, hey, you need to KYC your
00:57:01
customers so that it's not somebody
00:57:04
distilling the best of our models into a
00:57:06
place we don't agree with. I think there
00:57:08
could be some blowback. All these
00:57:10
numbers obviously backward looking. Do
00:57:12
we think, and I would be talking too
00:57:13
much about tariffs, but do we think that
00:57:15
the tariff story is going to impact a
00:57:18
Google next quarter? Do we think it's
00:57:20
going to impact a meta next quarter? And
00:57:22
to the extent that Google is saying,
00:57:24
look, we're going to keep our big
00:57:26
infrastructure spend $75
00:57:28
billion, you know, full steam ahead,
00:57:31
which is great for the ecosystem, great
00:57:32
for Nvidia, great for great for
00:57:33
everybody in that world. Do we think
00:57:35
that holds up if we think there's a
00:57:37
hiccup between now and whenever all this
00:57:40
tariff stuff gets sorted? If it does, I
00:57:42
think it's going to hold up. I mean,
00:57:44
look, I just think that this investment
00:57:46
in in capex and the data center
00:57:48
buildouts is so strategic right now. I
00:57:50
mean, I think that the hyperscalers,
00:57:52
it's only good for their their
00:57:53
businesses, but I think they see it as
00:57:55
so strategic to their survival that they
00:57:57
just have to do it no matter what. In
00:57:58
other words, I think they're totally
00:57:59
inelastic on this. But let me just go
00:58:02
back to Google. Nick, can you throw up
00:58:03
this chart? I mean I think the problem
00:58:04
that Google has with respect to chat GPT
00:58:07
is that Gemini is just not getting the
00:58:10
usage and chat GPT is just growing like
00:58:13
crazy. If you look at how these models
00:58:16
perform according to the benchmarks,
00:58:18
Gemini is actually really good. I mean
00:58:19
Gemini has made substantial progress
00:58:22
catching up to chat GPT but they have
00:58:25
not caught up on the usage side. Now, to
00:58:26
Jamal's point, you could
00:58:28
just make Gemini the default interface
00:58:31
in Google search, but that is true
00:58:33
innovator's dilemma because if you do
00:58:34
that, you could be giving up more than
00:58:36
half the search revenue. So, I do think
00:58:39
Google is is in a really tough spot. And
00:58:41
the longer they wait to make Gemini
00:58:44
front and center, the worse this usage
00:58:46
problem gets. I mean, what's basically
00:58:47
happening right now is users are
00:58:49
learning a new habit. I mean, they
00:58:51
they're learning to go to chat GBT to
00:58:54
get their questions answered or just
00:58:56
their searches answered in a completely
00:58:58
different way. And let's be honest, they
00:59:00
make using Gemini impossible. And they
00:59:03
can do just a much better job. At a
00:59:05
minimum, give the best leading edge
00:59:07
Gemini model to the 270 million people
00:59:09
that are already paying you for a
00:59:10
subscription. Just do that. Do something
00:59:13
so that you can start to blunt the
00:59:14
growth of of Open AI. Otherwise, you're
00:59:16
going to look back in four years and
00:59:18
regret him and
00:59:20
hying today. So, Chimoth, you're the CEO
00:59:24
of Google. You've got a $200 billion run
00:59:27
rate ad search ad business. What's the
00:59:30
right kind of integration of Gemini such
00:59:33
that you don't massively disrupt the
00:59:35
search ad business overnight? Or do you
00:59:37
not care and you're just going to do it?
00:59:39
I think that's the conundrum they're
00:59:40
dealing with. That's not a conundrum. If
00:59:43
you don't understand how to value a
00:59:44
dollar today versus a dollar tomorrow
00:59:46
and a discount rate to disambiguate the
00:59:49
emotionalness of that decision, it's not
00:59:51
a hard decision to make. I think the the
00:59:53
the more difficult question is what is
00:59:55
the integration look like? And if you
00:59:58
are already paying for a YouTube
00:59:59
subscription or a Google one
01:00:01
subscription, what should your
01:00:02
experience be? That's a key question.
01:00:04
The second question is today they're
01:00:06
already inserting Gemini in all kinds of
01:00:09
uncomfortable ways. So, for example, if
01:00:11
you use Gmail or if you use Google
01:00:13
Workspace, what happens today is all
01:00:16
these random Gemini pop-ups come up all
01:00:18
over the place, that is an
01:00:20
implementation that happened at way too
01:00:22
junior a level by people that have no
01:00:24
product taste. So, if you just stop
01:00:27
that, it's not hard. But right now, you
01:00:30
have a bunch of, you know, honestly,
01:00:32
people that don't have taste and are a
01:00:34
little too junior creating a very
01:00:36
cluttered experience. And if you use the
01:00:39
products every day, it would be hard for
01:00:40
you to disagree with me. They have
01:00:42
infinite
01:00:43
capital and infinite access to talent.
01:00:46
Capital doesn't buy taste, right? So,
01:00:48
what do you think's wrong? I agree that
01:00:49
the Google interface trying to
01:00:51
incorporate Gemini into the 20 blue
01:00:53
links or whatever is very cluji, but I
01:00:56
don't know how you fix that without just
01:00:58
getting rid of the blue links. I mean, I
01:00:59
guess you can do a hybrid experience,
01:01:01
but it doesn't compare to chat GPT,
01:01:03
which is all in on the AI experience.
01:01:05
So, I think it's a real innovator's
01:01:06
dilemma for them. And look, the truth is
01:01:08
the market was killing them already
01:01:10
because people thought that that first
01:01:11
little AI summary thing was actually
01:01:13
going to kill the blue link economy,
01:01:15
right? Like that was that was their
01:01:16
worry. And so, it's this ter I mean, I
01:01:19
it is a terrible conundrum if if if
01:01:21
you're Sundar, how how do you how do you
01:01:22
do how do you do both things at the same
01:01:24
time? Jim, I think you're right. There's
01:01:26
a design way to do it, but they're not
01:01:28
doing it. This comes down to taste. And
01:01:30
I think you can't have group think drive
01:01:33
creativity and taste. You either have it
01:01:35
or you don't. And you need to find the
01:01:38
one or two people. And then you need to
01:01:39
use the strength of your leverage as a
01:01:43
CEO and the ownership that Larry and
01:01:46
Sergey have to impose one person's taste
01:01:50
on the decision. Well, let me ask you a
01:01:52
question. when the Google homepage where
01:01:55
they just have the search bar and the
01:01:57
you know you can basically submit your
01:01:58
search or I feel lucky or whatever.
01:02:00
Would you replace that with that search
01:02:03
bar with an AI chatbot? No. Here's what
01:02:05
I would do. I would first go to the
01:02:08
critical other points that are around
01:02:10
that today do not cannibalize the blue
01:02:13
links. So the obvious insight should be
01:02:15
if you look at the traffic patterns
01:02:17
almost as a Sanki diagram, right? Yeah,
01:02:19
we just show we just had one up. Show a
01:02:21
Sanki. Okay, who cares about revenue?
01:02:24
What the real thing you should be
01:02:25
looking at here is
01:02:28
where are the entry points into Google
01:02:31
that then result in a clickable link and
01:02:33
what you would have is a very different
01:02:35
sanki and what it would show you is that
01:02:37
there are certain places that are highly
01:02:39
deoptimized today for revenue generating
01:02:42
events. They happen as a byproduct but
01:02:44
they don't happen as the use case. So in
01:02:47
that example, you would put Gmail as a
01:02:50
critical place, the YouTube one, the
01:02:51
Google one subscription, and there's
01:02:54
like five or six other places. That's
01:02:56
where I would put Gemini as the front
01:02:58
door and start to
01:02:59
habituate 300 to 500 million people a
01:03:03
week in using that. I think then you can
01:03:07
figure out over time how much money you
01:03:09
can make from all of that or how it
01:03:12
directs derivative revenue and figure
01:03:15
out what to do with google.com last. But
01:03:17
my point is the experience in Gmail
01:03:20
should be done today. The experience in
01:03:21
YouTube should be done today. The
01:03:23
experience in Google one should be done
01:03:24
today. Would you Okay, Nick, can you put
01:03:26
up this? Here's their homepage. Right.
01:03:28
This is the famous shot. I just checked
01:03:30
in hasn't changed in 25 years or
01:03:33
whatever. I would leave I would leave it
01:03:34
alone because I think it's too
01:03:36
disruptive and it's it's too politically
01:03:38
fraught. I mean you could do something.
01:03:40
What if they replaced I'm feeling lucky
01:03:41
which is kind of antiquated now with AI.
01:03:44
I mean Gemini basically. I I mean you
01:03:46
you I would need to look at the Sanki to
01:03:48
understand how many people are actually
01:03:51
generating monetizable events or
01:03:53
behavior from I'm feeling lucky in 2025.
01:03:56
I'm not sure the novelty it was in you
01:03:58
know it is the novelty. I don't I think
01:04:00
it's there as like a whimsical thing. I
01:04:02
don't know if it drives revenue for them
01:04:03
or not. If it takes the user off site, I
01:04:06
don't see how it drives revenue for
01:04:08
them. Here's a I'll tell you a great
01:04:09
Facebook story just to explain this and
01:04:11
why I get so animated about this. I was
01:04:14
telling this to my 8090 team yesterday
01:04:17
because we're dealing with this one
01:04:18
product implementation issue and
01:04:22
engineers always end up fighting about
01:04:24
whether things should be optin or opt
01:04:26
out. Okay. And it's it's almost like
01:04:29
this religion where people feel like,
01:04:31
oh, you cannot force people to do
01:04:33
something. You you should always make
01:04:35
things optional. And I remember at
01:04:37
Facebook, we bought this little company
01:04:38
for a few million dollars that made
01:04:40
contact importers, which essentially
01:04:42
means if you're using any other email
01:04:45
service to sign up for Facebook other
01:04:47
than like Hotmail back in the, you know,
01:04:50
early 2000s, we could import your
01:04:53
address book. Anyways, long story short,
01:04:55
I remember getting into a huge fight
01:04:57
about whether that thing should be
01:04:58
opt-in or opt out. And I remember
01:05:00
telling the guy, and I'm not going to
01:05:01
say who it is because you guys all know
01:05:02
him. And and I was literally like,
01:05:04
honestly, just shut up and enjoy the
01:05:06
success that will come from keeping this
01:05:08
as an opt out. And it just reminds me
01:05:11
that at some point, somebody needs to
01:05:13
impose their will to make very difficult
01:05:16
product decisions. And if you leave it
01:05:19
to a team, you'll end up with, by the
01:05:22
way, go to Gmail today with 95 Gemini
01:05:25
pop-ups. It's not what will allow them
01:05:27
to win with what they have, which is a
01:05:29
better product, which I will agree it is
01:05:31
a meaningfully better model on multiple
01:05:34
dimensions than anything else. Okay, I
01:05:36
know Sax has to go. Before you go,
01:05:37
David, I just want to hit Tesla for half
01:05:40
a second. Tesla's out with earnings this
01:05:41
week. Stock is up 8% on the back of that
01:05:45
back of that news. 23% up in the last 5
01:05:47
days in large part because Elon
01:05:49
basically said, "I'm getting out of Doge
01:05:52
and I'm going back into Tesla." So, the
01:05:54
question is, what can he actually do to
01:05:57
fix Tesla at this point? What does he
01:05:59
have to do? And is he really out of
01:06:00
Doge? No, I don't I don't think he's out
01:06:03
of Doge. He didn't say he was out of
01:06:04
Doge. It was just a matter of how much
01:06:06
time he could allocate to each thing. I
01:06:08
mean, look, I saw this before when I was
01:06:10
part of the Twitter transition is that
01:06:12
for the first 3 months or so, he was
01:06:13
basically full-time at Twitter HQ
01:06:16
learning the business down to the
01:06:18
database level. I mean, every nook and
01:06:21
cranny of that business he learned
01:06:22
about. Once he felt like he had a mental
01:06:24
model and he had the people in place
01:06:26
that he trusted, he can move to more of
01:06:28
a maintenance mode. And I think that's
01:06:30
the only way he can manage five
01:06:32
companies is that he has these intense
01:06:34
bursts where he focuses on something,
01:06:35
gets the right people and structure in
01:06:37
place, feels like he understands it, and
01:06:39
then he can delegate more. And I think
01:06:41
that he has reached that point with
01:06:44
Doge. But he was also clear that he's
01:06:45
going to keep doing it because if he
01:06:47
doesn't, there's going to be a huge
01:06:49
backsliding where, you know, all the
01:06:50
corrupt interests will basically put
01:06:52
back all this corrupt spending. So he's
01:06:54
going to stay involved, but as an SGE,
01:06:56
he's limited to 130 days a year anyway.
01:06:59
And so it makes sense for him to kind of
01:07:01
now ration his days a little more
01:07:03
closely. But he's got the people in
01:07:05
place. Remember Doge, it wasn't just
01:07:08
him. It was also the US digital service
01:07:11
which is basically the IT branch of the
01:07:13
executive branch which got put under
01:07:15
Doge. So my sense is that Doge is going
01:07:17
to continue. It's just that Elon is
01:07:20
shifting to a mode where he can manage
01:07:21
it one day a week or two days a week as
01:07:24
opposed to being there 5 days a week.
01:07:26
Steve Bannon says he wants the receipts.
01:07:27
He says there are no receipts. We don't
01:07:29
have the receipts. He says we need
01:07:30
itemized receipts to see what has
01:07:32
actually happened. What do you think?
01:07:34
Why wouldn't we want to cut as much of
01:07:36
this corruption as possible? Well, I
01:07:38
think we have to. We have to. The
01:07:39
question is, should the public get to
01:07:41
see exactly what's been cut and what
01:07:43
hasn't? Why wouldn't they? Of course.
01:07:45
And what we really need is for Congress
01:07:47
to now embrace all the corruption that
01:07:50
Elon has found and eliminate it from the
01:07:52
budget. Because at the end of the day,
01:07:54
in order to capture the savings here, we
01:07:55
do need those appropriations eliminated
01:07:58
from the budget. And my biggest concern
01:08:01
is not something that that Doge is going
01:08:03
to do or not. It's not up to Doge to do
01:08:05
that. It's up to frankly these old bulls
01:08:08
in Congress who control the
01:08:09
appropriations process. Are they going
01:08:11
to basically backslide and just put the
01:08:13
spending back in because it's easier to
01:08:16
just do that to engage in this log
01:08:17
rolling or do we take advantage of this
01:08:21
I think incredible sacrifice that Elon
01:08:23
has made. I mean look this has cost him
01:08:25
enormously. One of the reasons why Tesla
01:08:28
is down is because you've had crazy
01:08:29
leftists engaging in terrorism
01:08:31
firebombing Tesla dealerships. In any
01:08:34
event, he's made this enormous sacrifice
01:08:36
in order to expose the corruption. And
01:08:38
look at what we've learned. We've
01:08:39
basically learned that this whole NGO
01:08:41
thing is a giant scam where, you know,
01:08:43
the people in government give enormous
01:08:46
amounts of money to their friends,
01:08:48
probably with the expectation that when
01:08:49
they leave government, they're going to
01:08:51
be next in line at the trough. And I
01:08:54
think Elon's done an enormous service
01:08:56
exposing this. But, you know, it's not
01:08:58
entirely up to him. In order for us to
01:09:00
realize the benefit, we need Congress
01:09:03
now to act on that. And I'm just afraid
01:09:05
that's not going to happen. What kind of
01:09:06
total number you think we get? I always
01:09:08
say a dollar saved is a dollar made and
01:09:09
we should we should say amen to that.
01:09:11
The question is what do you think the
01:09:12
total number is ultimately going to be?
01:09:14
Well, he says they're at 160 billion
01:09:15
right now. I think that's by the way
01:09:17
that's an annual number as far as I
01:09:19
understand it. So, you know what I
01:09:20
always hear with spending is they always
01:09:23
multiply everything by 10 because they
01:09:24
assume it's going to be 10 years. So, if
01:09:27
it is 160 billion a year, that would be
01:09:29
1.6 trillion over 10 years, probably
01:09:31
more because the spending always grows.
01:09:33
And look, that's 160 billion that we
01:09:35
weren't planning on saving before Elon
01:09:37
got involved in the government. So, if
01:09:38
that's all it is, that would be great. I
01:09:40
think there could be more. And it really
01:09:42
comes down
01:09:44
to whether Doge continues to be
01:09:46
supported by the political process. And
01:09:49
um look, Elon can't he can't force that,
01:09:52
right? I mean, ultimately, it's up to
01:09:55
legislators to take advantage of the
01:09:57
work that he did. And ultimately it's up
01:09:59
to the people to put pressure on those
01:10:01
legislators to embrace what he did. He's
01:10:04
done an enormous amount, you know, but
01:10:07
there's an old saying that you can bring
01:10:08
a horse to water, but you can't make it
01:10:09
drink. If the entrenched political
01:10:11
interests at the end of the day aren't,
01:10:13
you know, if they're not going to
01:10:16
embrace the the savings that Elon has
01:10:18
found, I you know, I don't know what we
01:10:19
can do about that. I mean, there's
01:10:20
there's the administrative and
01:10:22
discretionary aspect, but you know, I've
01:10:25
said for a while it's going to be
01:10:27
necessary to have statutory resolve to
01:10:29
actually fix the deficit problem in the
01:10:31
United States. And that means getting
01:10:33
Congress to act. And Congress has not
01:10:35
shown a willingness to act. And every
01:10:37
time I go to DC, I come back more
01:10:39
disappointed. I share the stories on
01:10:40
this show and I talk about the fact that
01:10:42
there are very few members of Congress
01:10:44
that are staying up and saying at the
01:10:46
end of the day the first thing we need
01:10:48
to solve is how do we reduce the
01:10:50
deficit? Then we can address all of the
01:10:52
policy issues that we want to talk
01:10:54
about. But if we don't solve the deficit
01:10:56
problem, there is no policy. There is
01:10:58
nothing we're going to be able to do
01:10:59
because the Treasury rates are going to
01:11:01
spike. There's going to be no capital.
01:11:03
There's going to be no funding. We're
01:11:04
going to go through a debt death spiral.
01:11:07
So, at the end of the day, we really do
01:11:09
need Congress to stand up and lead here.
01:11:11
It is not on one man's shoulders.
01:11:12
There's only so much Elon can do without
01:11:15
statutory authority from Congress. And I
01:11:18
think that's really important in this in
01:11:20
this budget reconciliation process. And
01:11:22
it's really important for the president
01:11:23
to also help lead Congress to where we
01:11:26
need to go on this. Members of Congress
01:11:28
are elected because they get stuff for
01:11:30
their constituents. The more they get,
01:11:32
the more likely they are to get elected.
01:11:34
and next cycle they got to get their
01:11:35
constituents more stuff. So it creates
01:11:37
an escalating spiral staircase. It's a
01:11:39
problem in how democracy operates. It
01:11:42
creates a tragedy of the commons.
01:11:43
There's a collective action problem
01:11:44
because like you said, each individual
01:11:47
congressman or
01:11:48
senator primarily wants to get stuff for
01:11:52
their district or their state, for their
01:11:55
special interests. And there's no one
01:11:57
really looking out for the public
01:11:59
interest, the overall common good. And
01:12:02
these appropriators are basically
01:12:04
engaged in log rolling where they're
01:12:06
willing to give, you know, their their
01:12:08
colleagues their pork if they get their
01:12:10
pork. And this is why we have a $2
01:12:11
trillion deficit. It's a really hard
01:12:13
thing to fix. I mean, it's really hard.
01:12:15
This is the
01:12:16
problem. I mean, people realize you
01:12:19
realize you can vote yourself all the
01:12:20
money and that's what you do. I I think,
01:12:22
you know, this has been something that I
01:12:24
remember uh Bush 41 in his State of the
01:12:27
Union called for a line item veto. This
01:12:29
was like 30 years ago and we still need
01:12:32
that, you know, because I do think that
01:12:34
if the president had more authority over
01:12:36
this process, it'd be less of a tragedy
01:12:38
of the commons. In my naive youth, I was
01:12:41
very against that and I felt like it was
01:12:43
giving too much power to the president
01:12:44
and I never really understood the wisdom
01:12:46
of it until we find ourselves at the end
01:12:48
of the cycle, which is where we are
01:12:49
here. That's Yeah. And unfortunately,
01:12:51
Congress will never, I think, change its
01:12:54
ways until they're forced to by some
01:12:56
sort of crisis, which Freeberg, I think,
01:12:58
is your point about eventually we'll be
01:13:00
in a debt crisis. And then Congress will
01:13:02
finally see the wisdom and they'll
01:13:04
finally appreciate what Elon did. You
01:13:06
know, there's all these entrenched
01:13:07
political interests complaining about
01:13:08
Elon. I mean, again, he undertook an
01:13:11
enormous sacrifice to try and fix our
01:13:13
fiscal situation, which is unsustainable
01:13:15
before there's a crisis. One day
01:13:17
there'll be a crisis. Everyone will see
01:13:18
that he's right. But to answer your
01:13:20
question, Andrew, Nick, you want to pull
01:13:22
up this poly market. So this is the poly
01:13:24
market on how much spending will unfort.
01:13:27
Yeah, we'll see you later. Bye. Love
01:13:28
you, Dave. That was great. Thank you.
01:13:30
Yeah, thank you. Poly market showing an
01:13:32
84% chance of less than 50 billion being
01:13:36
cut in
01:13:37
2025 and only 10% chance. Isn't the
01:13:40
number on doge.gov right now like 160?
01:13:43
That's what they're saying. They've cut
01:13:45
in contracts. So that means the
01:13:47
annualized run rate of savings from
01:13:49
cutting contracts. But what Poly
01:13:51
Market's showing is what's the actual
01:13:53
savings in 2025 from Doge action. Oh,
01:13:57
because these are multi-year contracts.
01:13:58
Multi-year contracts. But then there's
01:14:00
also reporting that like $92 billion of
01:14:02
it, I think, isn't actually itemized. So
01:14:04
it's hard to understand what's actually,
01:14:06
you know, on the list. And they haven't
01:14:08
they haven't done anything yet in
01:14:10
defense, right? So that's a
01:14:12
big honeypot, I guess, if you want to
01:14:15
use that word, potentially that system.
01:14:18
Do you think he's going to go there?
01:14:20
Well, I mean, there are people there are
01:14:22
people at at DoD and at HHS, but I don't
01:14:25
think we've had a readout from any of
01:14:26
those people yet, right? I mean, all of
01:14:28
this other stuff has HHS is huge. It's
01:14:30
the number If you look at their list on
01:14:32
the go the Doge tracker on the website,
01:14:34
HHS is the number one department of
01:14:36
savings right now. And they've got the
01:14:37
contracts. Yeah, defense is on. Okay.
01:14:39
Okay. So they are so they are finding
01:14:41
remember what they're doing is they're
01:14:42
just cutting wasteful contracts. So
01:14:43
they're cutting stupid stuff that aren't
01:14:45
used all the discretionary stuff. All
01:14:46
the that's not used or not
01:14:48
needed. No, no, but my point is like all
01:14:50
of these things are still these are not
01:14:53
line item appropriations, right? Because
01:14:54
you can't cut those. Well, here you can
01:14:56
see the Department of the Interior had a
01:14:58
$3 billion contract for refugee
01:15:01
resettlement with a company called
01:15:03
Family Endeavors, Inc. And so they put
01:15:05
that as the number one contract they cut
01:15:08
on the website. saves 2.9 billion total.
01:15:11
Treasury, they cut a deal with a company
01:15:13
called Centennial Technologies, which it
01:15:15
is an enterprise software company saves
01:15:18
$1.9 billion. What is the Department of
01:15:20
Defense technologies? Mike, I mean,
01:15:22
that's the thing. Go into this stuff.
01:15:23
You can in
01:15:25
that are all like small. You can click
01:15:27
on it. It shows you the contract. Here
01:15:29
it is. Well, no. I'm going to go and try
01:15:30
to find the Centennial Technologies. Who
01:15:32
are these guys? You're going to invest.
01:15:34
Yeah. Okay. Should we talk? You want to
01:15:36
still talk a little Tesla or you think
01:15:38
we should move to the science corner?
01:15:39
What I would say quickly on Tesla is I
01:15:42
would encourage all of you guys to try
01:15:44
FSD.
01:15:47
It's a new thing you've discovered. This
01:15:49
is the reason I bought my Tesla. I've
01:15:50
been using it for the quality. The
01:15:51
quality of FSD is just so good. Yeah,
01:15:53
but you never turn it on. You just set
01:15:55
it in the pre-thinking. No, I use it all
01:15:57
the time.
01:15:59
It is just an incredible thing. I I
01:16:01
don't I think like there was like a rev
01:16:02
of it probably in like the last month or
01:16:04
two that I think took it from like a 908
01:16:08
to like 99.5 or something. It's just
01:16:12
like there's just very few
01:16:13
disengagements.
01:16:15
Okay. So, are you a believer that we
01:16:17
that Tesla's doing real robo taxis in
01:16:19
two years?
01:16:21
Oh, I Yeah. Yeah. I mean, like right now
01:16:23
my car is effectively a robo taxi. The
01:16:25
shittiest part about my Tesla experience
01:16:27
is I have to hold the freaking steering
01:16:29
wheel and look ahead because this camera
01:16:32
is always looking at me. My wife, it's
01:16:34
so funny. She'll come home and she'll be
01:16:36
like angry because she like got
01:16:38
suspended because she was like looking
01:16:40
away and looking on her phone. And they
01:16:41
turn it off. They punish you. Tesla
01:16:43
punishes you if you look away too often.
01:16:45
They put you in like, you know, timeout
01:16:47
for like I don't know how many days or
01:16:51
whatever. It's that's the worst part
01:16:53
about the experience cuz it is so good.
01:16:54
you're just like, "Gh, can I just take
01:16:56
my hands off the wheel and just do
01:16:57
something else?" Well, there's a lot of
01:16:59
videos getting posted on Twitter of FSD
01:17:01
being on and then the car drives into
01:17:03
the sunlight and at a certain angle when
01:17:05
the sun hits the cameras, the car goes
01:17:07
into an emergency disconnect on FSD. And
01:17:10
I've had that happen. So, I know it's
01:17:11
true. I know it's real. So, it is a bit
01:17:14
of a risk with the camera only mode on
01:17:17
how Tesla operates FSD if they can
01:17:19
actually run a full, you know, never to
01:17:21
disengage robo taxi service like Whimo
01:17:23
does. still pushing LAR on them. Is that
01:17:25
what you're doing? I don't That's the
01:17:27
That's the word on Twitter, which is
01:17:29
watch out because without lidar, you're
01:17:31
going to have a lot of disengagement. El
01:17:32
Elon Elon's never doing LAR. Never doing
01:17:35
LAR. Here's an interesting factoid. I've
01:17:36
been working with somebody here on
01:17:38
trying to figure out what does next
01:17:41
generation AI data centers look like?
01:17:43
And do you build like inference pops all
01:17:45
over the all over the country? And I
01:17:49
talked to some folks at Whimo. I talked
01:17:50
to
01:17:51
Teedra. And what's interesting is the
01:17:53
Whimo approach is they don't need POPs
01:17:56
anywhere because all of the models are
01:17:58
on board. Yeah. So these things go fully
01:18:01
autonomous units out into the wild. They
01:18:03
can make every decision themselves. They
01:18:05
have the liar and then they come back to
01:18:07
the fleet and then they can reync the
01:18:09
models. Whereas everything else,
01:18:11
particularly if you have human
01:18:13
intervention, well, if you have human
01:18:15
intervention, so all of the food
01:18:18
delivery folks that have like central
01:18:19
knocks of people that can engage and
01:18:21
intervene, they need all these all this
01:18:24
real time ability so that things are
01:18:27
multi-milly maximum. Awesome. Should we
01:18:30
should we go to the science corner, my
01:18:32
friend? Yeah, if you're ready for it.
01:18:34
I'm ready. Today's science corner is on
01:18:37
a discovery of a massive thorium reserve
01:18:40
in China
01:18:42
and a disclosed molten salt reactor in
01:18:46
China that's been running for some time.
01:18:49
So at a private before you let me do the
01:18:51
tea for this Freeberg
01:18:54
tell us about these thorium reactors.
01:18:58
I think the the most important thing
01:19:01
that everybody should know before I tee
01:19:03
this up for Freeberg is that what he's
01:19:04
going to talk about is a material called
01:19:07
thorium which doesn't split. It doesn't
01:19:10
release
01:19:11
energy unless it absorbs a neutron and
01:19:15
then it transmutes to uranium 233. And
01:19:18
by this what I mean is this is a trans
01:19:20
that everybody should be able to get
01:19:21
behind. Over to you. Hey, he got it. He
01:19:24
got it. You get it, Andrew? I got it.
01:19:27
It's a beautiful thing. I don't think we
01:19:28
brought it up in Science Corner before,
01:19:30
but apparently there was a giant thorium
01:19:33
deposit discovered in Inner Mongolia
01:19:35
that has enough thorium to effectively
01:19:38
power the entirety of China for 60,000
01:19:42
years. It was made by the Bayion Obo
01:19:44
mining complex. It's a million ton
01:19:47
reserve in Inner Mongolia. And so
01:19:50
thorium is much more abundant in the
01:19:53
Earth's crust than uranium, which is
01:19:56
what we've historically used for fision
01:19:58
reactors and what we use today for all
01:20:00
of the even new generation nuclear
01:20:02
fision reactors. And for a long time,
01:20:03
folks have talked about building a
01:20:04
thorium reactor. There's a lot of
01:20:06
challenges with building a thorium
01:20:08
reactor. It's a new set of systems. But
01:20:09
if you build a molten salt thorium
01:20:12
reactor, you can ultimately produce
01:20:16
energy in a way that doesn't actually
01:20:18
have the risk of a meltdown. It can
01:20:21
passively shut itself down. It's not
01:20:22
high pressure, so it can't explode. So,
01:20:25
it's technically a much safer, much more
01:20:27
reliable way of producing power with a
01:20:30
much more abundant fuel source. And
01:20:32
people in the US have been talking about
01:20:33
building these thorium molten salt
01:20:34
reactors for decades. In fact, in 2009,
01:20:38
the US Geological Survey in the United
01:20:40
States went out and did a study to
01:20:42
identify how much thorium existed just
01:20:44
in the continental North American
01:20:46
region. Turns out the US has about
01:20:49
64,000 tons. Canada has 172,000 tons of
01:20:53
thorium reserves. And China just
01:20:55
discovered a million tons in this in
01:20:57
this one region. But the amount of
01:20:58
thorium that we have in the United
01:20:59
States is enough to power our country
01:21:02
for centuries. So in China, turns out
01:21:05
they built a molten salt reactor. This
01:21:07
was another secret. They've been
01:21:09
operating it now for some time. Last
01:21:12
June, while the reactor was running,
01:21:15
they replaced the fuel. So it basically
01:21:17
showed continuous use of the reactor
01:21:19
without needing to do a shutdown and
01:21:21
refueling cycle. It's a 2 megawatt
01:21:24
experimental unit, and they're actually
01:21:26
building and planning to take live a 10
01:21:28
megawatt unit by 2030. So this was all
01:21:32
shared in a private meeting. It got out.
01:21:34
The discovery in Inner Mongolia was also
01:21:36
kept confidential for I think nearly two
01:21:38
years and then it got reported out and
01:21:41
after it got reported out it was
01:21:42
confirmed ultimately in a government
01:21:44
meeting and that that's how we know
01:21:46
about it now. But I think this just is
01:21:49
this another kind of critical point
01:21:50
about this. Once China gets this 2 and
01:21:52
10 megawatt system running, this allows
01:21:55
for very small, very modular nuclear
01:21:57
reactors using a very abundant fuel
01:21:59
source that can be quickly built, stood
01:22:02
up, and safely operated in a distributed
01:22:04
way. You don't need to have one
01:22:06
gigawatt, which is a thousand megawatt
01:22:08
station running centrally, and then
01:22:10
you've got to have a big, you know,
01:22:11
construction project invested in to
01:22:13
build and operate this thing. You can
01:22:15
have many small reactors split around
01:22:17
neighborhoods, split around cities and
01:22:19
so on. This is not built into China's
01:22:22
energy projection. So they actually have
01:22:24
an electricity forecast that over the
01:22:26
next 15 years gets them from 3 terowatts
01:22:29
of electricity production to eight. And
01:22:31
that's through a combination of solar,
01:22:33
hydroelect electric, and then the Gen 3
01:22:35
and Gen 4 traditional uranium nuclear
01:22:38
reactors that they're building out. So
01:22:39
if you add this in, it provides even
01:22:41
more or perhaps lower cost or more
01:22:43
distributed energy production capacity
01:22:45
than is even provided in the forecasts
01:22:47
today. Again, this is I think one of the
01:22:50
base drivers that is part of the
01:22:53
compounding effect of China's economic
01:22:55
advantage for this century is energy
01:22:58
energy production. The cost of building
01:23:00
new energy production systems and the
01:23:02
cost to operate those energy production
01:23:03
systems. Can I say something about the
01:23:05
huena conversation about picking
01:23:07
national champions and getting focused?
01:23:10
This was an area that China chose and
01:23:13
now you know the US finds itself years
01:23:15
behind on a technology that we invented.
01:23:19
Right. So this was research that
01:23:20
happened at Oakidge National Lab. That's
01:23:22
right. We pioneered this decades ago and
01:23:25
then we sheld it. And then the person in
01:23:27
China that led it gave credit to the
01:23:30
United States and basically said, you
01:23:34
know, Americans let the research wait
01:23:36
for the right successor. We were that
01:23:38
successor. That's what he said in
01:23:40
quotes. So, you know, here we are. We
01:23:43
invent this cutting edge technology.
01:23:45
It's a huge leap in innovation. But
01:23:48
they put a regulatory fence around it
01:23:50
and we blocked it from getting organiz
01:23:52
and they're like, you know what, we can
01:23:54
we can just do this and we'll figure
01:23:55
this out.
01:23:57
Yeah, it's really it's really self goal
01:24:00
here. They have infinite thorium
01:24:02
reserve. They don't need to refine it.
01:24:04
One of the key advantages of thorium is
01:24:05
you don't need to go through a refining
01:24:07
process. In uranium, you have a very
01:24:10
expensive, very difficult kind of
01:24:12
refinement process where you end up, I
01:24:14
think, getting less than 1% of that
01:24:17
uranium that you pull out can actually
01:24:19
be used as file and you and you have to
01:24:21
enrich down to the uranium to find the
01:24:23
file material. With thorium, 100% of it
01:24:26
can be used as fuel. So it's a very
01:24:28
lowcost, very easy kind of fuel source
01:24:31
that can be very quickly kind of put
01:24:32
into production if we actually build out
01:24:34
the supply chain and build out the
01:24:37
energy systems to utilize it. So it's a
01:24:40
real kind of reinvention of nuclear
01:24:42
energy technology and this will take
01:24:45
off. I mean once this experimental
01:24:47
reactor is working quad reactor going
01:24:49
boom. Imagine how much fundamental leaps
01:24:52
in science that we have funded that are
01:24:55
just basically gathering dust or falling
01:24:57
through the cracks that other
01:25:00
countries are using right now and
01:25:03
probably a little bit snickering behind
01:25:06
our backs about the fact that, you know,
01:25:07
we did all of this work and then they
01:25:10
were able to take advantage of it. Well,
01:25:12
here I'll show you. Here's another um
01:25:14
let me put this in the group chat real
01:25:15
quick. But how much of this stuff do we
01:25:18
this I mean what what's our ability to
01:25:20
actually do this? We have invented it.
01:25:22
We invented we invented it. Well, the
01:25:25
big problem has been the regulatory uh
01:25:28
fencing we put around it. Andrew, so
01:25:30
there's a bunch of administr there's
01:25:31
forms. Yeah, there's pronouns. There's
01:25:35
all kinds of stuff. And just speaking to
01:25:36
this point, so we've talked in the past
01:25:38
about nuclear fusion. So Andrew, this is
01:25:40
I don't know how familiar you are, but
01:25:41
fusion is different than fision. Fision
01:25:43
is where you take a heavy element like
01:25:45
uranium or thorium and it breaks and you
01:25:47
release energy. Fusion is where you take
01:25:49
a light element like you know hydrogen
01:25:51
you accelerate it you make it really
01:25:53
dense and you jam the protons together
01:25:55
and when you jam those protons together
01:25:57
they fuse. So hydrogen turns into
01:25:59
helium. This is what goes on in the sun
01:26:01
and energy is released in a different
01:26:03
form through you know accelerated
01:26:04
neutrons. We capture that energy we make
01:26:06
electricity. So fusion is this nextgen
01:26:09
technology where we could theoretically
01:26:10
just use water from the ocean to create
01:26:12
all the electricity we need on planet
01:26:14
earth. 10 m by 10 meter by 10 meter of
01:26:16
water makes all the power the entire
01:26:18
planet uses every year. That's what you
01:26:20
could ultimately do with fusion
01:26:21
technology. So it turns out this is a
01:26:23
satellite photo that discovered a very
01:26:26
large scale fusion research center in
01:26:28
Myyang, China, which we did not know
01:26:31
about that was just kind of stumbled
01:26:33
upon. And it turns out it's the largest
01:26:35
fusion reactor experimental facility in
01:26:38
the world now. 50% larger than the
01:26:41
national ignition facility run in the
01:26:42
United States. Not only is China getting
01:26:44
this new energy infrastructure built
01:26:46
with all of the stuff that was
01:26:48
discovered last century, but they are
01:26:49
now getting ahead of us on the new
01:26:51
discoveries to be made in the next gen
01:26:53
of energy systems, which is fusion,
01:26:55
which at some point this century will
01:26:57
work and we'll end up having this
01:26:58
ability to unlock effectively unlimited
01:27:00
free energy. And these are compounding
01:27:03
value creators. China ultimately if they
01:27:05
can make new energy systems cheaper than
01:27:07
the United States, scale them faster,
01:27:09
they will ultimately have much cheaper
01:27:11
much higher volumes of electricity which
01:27:14
gives them the advantage of
01:27:15
manufacturing and production and
01:27:17
transportation and everything. And
01:27:19
that's where the economic advantage will
01:27:21
will ultimately acrue to them. So this
01:27:24
is I think key to the strategic puzzle
01:27:26
on what's going to happen in the great
01:27:27
race with China this century is the
01:27:29
buildout of electricity and the cost of
01:27:31
that buildout. So the regulatory
01:27:34
constraints need to be addressed first
01:27:36
and foremost. That's in my opinion the
01:27:38
number one mission critical strategic
01:27:40
imperative for the United States right
01:27:42
now.
01:27:43
Awesome. Yeah. Anyway, that's just a red
01:27:47
flag on China science corner for the
01:27:49
day.
01:27:51
Thorium is real. Dorian Man. So, how was
01:27:53
it, Andrew? How do you like hanging out
01:27:55
with the best I loved it? I you know, I
01:27:57
I still getting used to it. I'm still
01:27:59
getting used to the whole flow, trying
01:28:00
to figure out how you guys all roll. But
01:28:02
it's good. It's good. It was a lot of
01:28:03
fun. Do the Do the outro. You got to do
01:28:05
your out. You got to do the outro. Oh,
01:28:06
yeah. I got to do the outro. You guys do
01:28:08
the outro. Come on. It's your show. Do
01:28:10
the outro. Coming at you. KGB.
01:28:15
What is Well, okay. I'll do I'll do I've
01:28:17
never done an outro on you. Do the
01:28:19
outro. on behalf of our
01:28:21
cryptozar David Saxs
01:28:24
um our prince of panic attacks and
01:28:27
sultan of science David Freeberg our new
01:28:30
bestie guesty
01:28:32
Andrew Ross Sorcin thank you I am your
01:28:35
chairman dictator Pauly Hatia thank you
01:28:38
for listening to the all-in podcast
01:28:40
we'll see you next time love you
01:28:43
thanks guys that was a lot of fun
01:28:45
awesome
01:28:48
let your winners
01:28:50
Rainman David
01:28:55
and it said we open sourced it to the
01:28:56
fans and they've just gone crazy with
01:28:58
it.
01:29:01
[Music]
01:29:08
Besties
01:29:08
[Music]
01:29:09
are my dog taking your driveway.
01:29:15
Oh man, my habitasher will meet up. We
01:29:18
should all just get a room and just have
01:29:20
one big huge orgy cuz they're all just
01:29:21
useless. It's like this like sexual
01:29:23
tension that we just need to release
01:29:24
somehow.
01:29:29
Your
01:29:30
feet. We need to get Mercury's going all
01:29:34
in.
01:29:36
[Music]
01:29:41
I'm going all in.
