00:00:00
wait that's not even a sweater that's a
00:00:01
sweatshirt no no it's not even cashmere
00:00:04
it looks like polyester or something
00:00:05
okay quick freebrook come on the video
00:00:07
where you're wearing the same thing as
00:00:08
jkl so we can make a quick joke about it
00:00:11
morons i mean you guys are so
00:00:14
predictably dumb the two of you it's so
00:00:16
itchy
00:00:18
do you have a rash jason made me buy
00:00:20
this outfit and i put it on and i'm like
00:00:22
itching i'm about to take this thing off
00:00:24
polyester wool polyurethane
00:00:28
what's that made out of
00:00:31
[Music]
00:00:33
rain man david
00:00:41
[Music]
00:00:46
okay everybody welcome back to the all
00:00:47
in pod episode 87. here we go
00:00:51
tons of news going on thanks for all the
00:00:52
great feedback on episode 86. uh we're
00:00:56
going to start with emerging markets oh
00:00:57
again welcome to the program david
00:00:59
freeburg sultan of science the dictator
00:01:01
himself from his palace in sri lanka uh
00:01:04
his new pal is in sri lanka he'll be
00:01:06
taking over over there we'll get into
00:01:07
that and sax is in a in witness
00:01:10
protection right now apparently
00:01:12
where are you sacks in this white
00:01:13
nondescript room can you say where you
00:01:15
are this is my soundproof padded room
00:01:18
yeah oh is that what if that's what a
00:01:20
biden's done your vitamin derangements
00:01:21
in them they they put you in an asylum
00:01:24
what do you do you rock back and forth
00:01:25
and say inflation ukraine inflation
00:01:27
ukraine no we just had the room
00:01:29
soundproof for you know better
00:01:30
podcasting oh look at you taking the
00:01:32
taking the job seriously i don't think
00:01:34
it looks bad i think it looks good yeah
00:01:36
you could put a little art behind you or
00:01:37
something just put one of your monets
00:01:38
behind you you know the ones you have in
00:01:40
storage downstairs
00:01:41
okay emerging markets are facing uh some
00:01:44
huge challenges right now quick more
00:01:46
quick primer on three types of markets
00:01:48
developed emerging and the frontier
00:01:51
market if you don't know developed
00:01:52
markets are considered u.s japan europe
00:01:54
their gdp growth is lower single digits
00:01:56
typically in the emerging market it's
00:01:58
roughly defined as developing but not
00:02:00
fully developed that includes countries
00:02:01
like the brics which is brazil russia
00:02:03
india china and recently added south
00:02:05
africa
00:02:06
many other markets
00:02:08
are included in that they were
00:02:10
previously called the third world in the
00:02:11
80s people didn't like that term
00:02:14
investors will bet on them having uh
00:02:16
higher gdp growth typically two times or
00:02:18
three times what the developed world has
00:02:20
china for example 2019 six percent
00:02:22
growth u.s in 2019 2.1
00:02:26
growth and of course there's frontier
00:02:28
markets
00:02:29
these are viewed as small unstable
00:02:31
illiquid generally risky if you look at
00:02:33
something like kenya vietnam those would
00:02:36
fall into that category uh vietnam seven
00:02:39
percent gdp growth in 2019 to the us is
00:02:42
two percent sometimes people like to
00:02:43
make bets on them here's a nice little
00:02:45
chart for y'all to look at and you can
00:02:46
just see china versus vietnam in the
00:02:48
united states uh since the 80s and so
00:02:52
why is this all important well the wall
00:02:53
street journal reported last week that
00:02:55
ems the emerging markets have been
00:02:57
feeling massive pressure we'll get to
00:02:58
sri lanka in a moment that's a frontier
00:03:01
market to be clear
00:03:02
but three things well
00:03:04
we've got probably a half dozen things
00:03:06
going on let me just highlight maybe the
00:03:08
top five and then i'll hand it off to
00:03:09
the besties you have high bond in loan
00:03:11
yields the debts
00:03:13
debt rates are increasing in the
00:03:15
emerging markets and frontier markets
00:03:17
think what happens when you got a
00:03:18
variable mortgage or you try to get a
00:03:20
new market a new mortgage
00:03:22
in the developing markets
00:03:24
the developing market investors have
00:03:26
stopped investing in emerging markets
00:03:28
and frontier markets as you might
00:03:30
suspect during a downturn
00:03:32
and they're even pulling money out then
00:03:34
you have surging inflation we all know
00:03:36
about that and we're going to talk about
00:03:37
inflation here in the u.s because we got
00:03:38
the print this morning
00:03:40
and slowing growth we've also talked
00:03:42
about this for the last six months on
00:03:43
the program all these problems get
00:03:45
exacerbated when economic growth slows
00:03:48
and it's slowing globally and then
00:03:49
finally
00:03:50
we have the potential issue of contagion
00:03:53
we don't know exactly what's going to
00:03:55
happen when various countries are facing
00:03:57
these challenges although we did tell
00:03:58
you here what would happen with the
00:04:00
ukraine
00:04:01
shout out to uh sax and free bird
00:04:04
fertilizer wheat oil all that good stuff
00:04:06
and it's becoming very acute
00:04:08
perhaps to carry canary canary in the
00:04:10
coal mine is sri lanka
00:04:13
breaking news president uh
00:04:15
rajapaksa fled for the maldives and it's
00:04:18
a state of emergency curfews were to
00:04:20
clear declared i think that's been
00:04:22
canceled as of the taping of this
00:04:24
we can get into the state of sri lanka
00:04:27
your thoughts freedberg i know you've
00:04:29
been chomping at the bit to discuss this
00:04:30
yeah that was a good long intro i think
00:04:32
um
00:04:34
you know the
00:04:36
the high level
00:04:37
for me
00:04:38
if you look kind of at debt markets
00:04:40
around the world there's about 300
00:04:42
trillion dollars of global debt and i
00:04:44
put this uh chart in the chat here nick
00:04:47
you can put it on the
00:04:48
on the video
00:04:50
and about a hundred trillion of that
00:04:53
debt globally
00:04:54
is in um
00:04:56
emerging markets
00:04:58
and so these countries generally have
00:05:00
you know much more kind of
00:05:03
variable
00:05:04
gdp growth
00:05:06
as well as challenges ultimately with
00:05:08
their currencies most of this
00:05:11
debt recently and and this has been a
00:05:12
trend for a number of years lately
00:05:14
has been issued in their local currency
00:05:18
rather than in u.s dollars and so as the
00:05:20
currency devalues
00:05:22
it becomes more challenging for an
00:05:24
investor to make a return if they're
00:05:26
investing from a us dollar denominated
00:05:28
base or some other dollar denominated
00:05:30
base
00:05:31
so um look the em
00:05:33
the emerging markets are are heavily
00:05:35
saddled i mean some of these countries
00:05:37
have over
00:05:39
you know 300 percent or 250 percent
00:05:42
uh debt to gdp
00:05:44
and what's really gone on recently
00:05:47
is that many of them as net importers of
00:05:49
energy and food
00:05:50
are going to struggle to make the stuff
00:05:52
they need to make at home or to feed
00:05:54
their people at home
00:05:55
because of the rising inflation that's
00:05:57
been happening around the world
00:05:59
from the producers of those goods and
00:06:01
services of those goods and so to import
00:06:03
those goods is more expensive that makes
00:06:05
it more challenging for people to be
00:06:07
able to afford food to be able to afford
00:06:09
energy this is part of what we're seeing
00:06:11
happening
00:06:12
in um
00:06:13
in sri lanka what's compounding this is
00:06:15
we have rising inflation in the u.s so
00:06:17
as we've been talking about a lot the
00:06:19
fed's been raising interest rates here
00:06:20
in the us which means that you can now
00:06:21
buy treasuries that yield three percent
00:06:24
if you're an investor around the world
00:06:26
where else are you going to put your
00:06:27
money except u.s treasuries in a market
00:06:29
like this you want to buy three percent
00:06:31
yield in u.s dollars versus you know
00:06:34
getting 10 yield in you know some
00:06:37
currency denominated account some
00:06:39
currency denominated bond in a country
00:06:40
you don't really know well or trust as
00:06:42
much as the united states and so as a
00:06:44
result a lot of dollars are moving out
00:06:46
of emerging market debt
00:06:48
into u.s debt and the price of that debt
00:06:51
has collapsed and so we've seen in the
00:06:53
last couple of months a decline of
00:06:55
emerging market debt of about 20
00:06:58
this makes it harder for those countries
00:07:00
to issue new debt to fund things and
00:07:02
it's creating this really challenging
00:07:03
spiral that may ultimately lead to
00:07:06
defaults those defaults absolutely have
00:07:08
a trickling effect because if one
00:07:10
country starts to default and you're an
00:07:11
investor in emerging market debt you're
00:07:13
going to say hey wait a second this this
00:07:15
this i just took a huge loss in this
00:07:16
position you're going to start to sell
00:07:18
off other emerging market debt and then
00:07:20
it becomes harder for those countries to
00:07:21
raise more debt and fund themselves and
00:07:23
it can cause a cataclysmic spiral so you
00:07:26
know it's a really scary scenario we're
00:07:27
wading into now and i think we really
00:07:29
hope that the us starts to taper
00:07:31
interest rates and we find some
00:07:32
stability in these markets over the next
00:07:34
couple of months because it's not just a
00:07:36
food and energy crisis it's also a
00:07:38
humanitarian crisis and ultimately could
00:07:40
lead to a global financial
00:07:42
crisis in fact
00:07:44
it's highly complex but it's something
00:07:46
that folks are tracking very closely
00:07:47
here what's happening also is the
00:07:49
companies that were already at risk are
00:07:51
going to
00:07:52
start feeling this impact we could jump
00:07:54
into sri lanka if we want sri lanka has
00:07:57
i think
00:07:58
a bunch of short-term issues and
00:08:01
a couple of very long-term issues um let
00:08:04
me set the backdrop because i think this
00:08:05
is really interesting let's take um
00:08:08
let's study sri lanka through the lens
00:08:10
of two other countries jamaica and
00:08:12
singapore
00:08:14
if you go all the way back to 1960 so
00:08:16
you know roughly when singapore became a
00:08:18
nation
00:08:20
the jamaican population in 1960 was 1.6
00:08:24
million people the singaporean
00:08:26
population was 1.6 million people
00:08:30
sri lanka's population was 9.8 million
00:08:33
[Music]
00:08:34
jamaica's gdp was 700 million
00:08:38
singapore's gdp was 700 million sri
00:08:41
lanka's was 1.4 billion
00:08:44
now you fast forward to 2022
00:08:47
jamaica's gdp is about 13 billion
00:08:50
singapore's gdp
00:08:53
has grown to about 360 billion
00:08:56
um and sri lanka's gdp
00:08:59
is 80 billion so like what did singapore
00:09:01
do right
00:09:02
what did jamaica kind of get right
00:09:04
because one of the things that they kept
00:09:06
in check was their population even
00:09:07
though their gdp didn't expand that much
00:09:08
so per capita income was still quite
00:09:10
healthy
00:09:11
and then what did sri lanka get right
00:09:13
and what did sri lanka get wrong well
00:09:15
some of the things when you look at
00:09:16
singapore is that
00:09:18
they found a way to embrace
00:09:22
despite a very heterogeneous culture and
00:09:25
sets of religions inside of that entity
00:09:28
inside that city-state
00:09:30
they found a way to promote
00:09:31
multiculturalism yet also promote
00:09:33
english as the lingua franca why was
00:09:36
that small thing so important because it
00:09:38
allowed them to be a hub
00:09:40
for the rest of the world in a way that
00:09:42
many many other countries couldn't do
00:09:45
the second thing that they had
00:09:47
was a very low level of corruption
00:09:49
because they had a leader in that case
00:09:51
lee kuan yew
00:09:53
and again some people in the west will
00:09:54
paint it as slightly authoritarian
00:09:58
you know he would paint it as asian
00:09:59
values but the net result of it was very
00:10:02
low levels of corruption a small but
00:10:04
highly effective
00:10:05
public service
00:10:07
and meaningful investments in education
00:10:09
and health care to make that country
00:10:11
grow over decades and within a
00:10:12
generation
00:10:14
that country completely you know
00:10:16
exceeded all expectations
00:10:19
sri lanka struggled through a civil war
00:10:22
i was a byproduct of that civil war
00:10:25
it was partly religious it was partly
00:10:27
ethnic
00:10:29
and it was 20 plus years in the making
00:10:33
and in the happening and it took a very
00:10:35
right-wing
00:10:36
autocratic leader
00:10:38
the brother of the current deposed
00:10:40
president to basically root it out now
00:10:42
in order to root it out there were
00:10:44
enormous amounts of war crimes and all
00:10:47
kinds of things that i don't think
00:10:48
anybody would support except it brought
00:10:50
some amount of stability
00:10:52
and so then you would have thought okay
00:10:54
maybe this is the point at which you can
00:10:56
now really start to grow
00:10:59
but these guys yet again found a way to
00:11:01
naval gaze and just to infuse so much
00:11:04
corruption and graft inside of how the
00:11:06
government was run by the way and it
00:11:07
wasn't just the right it was also the
00:11:09
left
00:11:10
they spent two and a half times more on
00:11:12
defense as of last year than they did
00:11:14
when they were in wartime
00:11:16
it doesn't make much sense the public
00:11:18
service grew to the largest it ever did
00:11:21
in a moment where you know you really
00:11:23
should have prioritized private
00:11:24
enterprise so all of these things sort
00:11:26
of created a situation where they
00:11:28
fundamentally didn't know what they were
00:11:30
doing so the other two issues there i
00:11:32
think and that's a great summary of like
00:11:34
really those frontier countries and what
00:11:36
made them emerge singapore also has a
00:11:38
great strategic location which sri lanka
00:11:41
kind of shares they're both island
00:11:42
countries strategically located for
00:11:44
trade
00:11:46
and then i guess the policies right
00:11:48
singapore went on a very very aggressive
00:11:51
uh tax and business policy effort did
00:11:54
sri lanka do that as well and then maybe
00:11:56
could speak to just how important those
00:11:58
are as islands you know uh and their and
00:12:01
their geography because jamaica doesn't
00:12:03
obviously have that i mean sri lanka has
00:12:05
this massive growing importance as china
00:12:08
has emerged
00:12:10
the problem in these last few years is
00:12:12
that they did everything possible to not
00:12:15
just alienate china but to alienate
00:12:17
everybody on every dimension possible
00:12:19
you know they alienated china
00:12:22
the the coup de grace was that there was
00:12:24
an enormous shipment of fertilizer
00:12:26
chemical fertilizer that was sent to the
00:12:28
ports
00:12:29
and it was summarily rejected and turned
00:12:30
around
00:12:31
because somewhere along the way the
00:12:33
leadership in sri lanka decided that
00:12:35
they uh were woke and so they enforced
00:12:38
every farmer oh no to go organic the
00:12:40
problem with going organic and organic
00:12:42
fertilizer was all the small farms shut
00:12:44
down
00:12:45
all of the large farms had 20 to 30 crop
00:12:48
yield reductions the prices of food went
00:12:50
crazy they reversed policies two or
00:12:53
three times and really what they found
00:12:55
as the you know they tried to go woke
00:12:56
instead they went broke
00:12:58
and all of a sudden all these other
00:13:00
countries who were there trying to help
00:13:02
said wait what is going on here so they
00:13:04
offended china they offended the middle
00:13:05
easterners uh they offended the japanese
00:13:08
by cutting a light rail project that
00:13:09
japan wanted to fund i mean in every
00:13:11
step of the way they de-industrialized
00:13:13
this country found they didn't
00:13:15
de-industrialize they tried to follow
00:13:17
this woke agenda that is
00:13:18
de-industrialization i mean reversing
00:13:21
from like the modern techniques of
00:13:22
industrial production like fertilizer
00:13:24
and modern systems of farming is the
00:13:26
industrialization it's it's um
00:13:29
you know it's going to be a curse
00:13:30
ultimately sacks to your point we we
00:13:32
just discussed this last week with the
00:13:34
farmers
00:13:36
you know if you're in a frontier market
00:13:38
trying to adopt the regulations and the
00:13:41
strategic goals for the environment of
00:13:43
the emerging market is like two giant
00:13:46
hops it's it's it's probably
00:13:47
insurmountable
00:13:49
well look there's a strong analogy
00:13:51
between the populist uprising that's
00:13:53
happening in the netherlands with the
00:13:54
dutch farmers and the populist uprising
00:13:56
that's happening in sri lanka
00:13:59
basically they're implementing the same
00:14:00
policies this is that sri lanka is a
00:14:02
further down the road and it's a poor
00:14:04
country to begin with so you know like
00:14:06
jammoth mentioned in april of last year
00:14:08
the sri lankan government banned the
00:14:10
importation of chemical fertilizers and
00:14:11
pesticides used in farming they again
00:14:14
went with this idea they thought they
00:14:15
could encourage organic farming
00:14:17
so the result of that was that overall
00:14:20
production agricultural production fell
00:14:22
by a third and rice production fell by
00:14:25
43
00:14:26
and rice is you know the biggest staple
00:14:28
in the country so now you got people
00:14:29
there starving or going hungry you've
00:14:32
got massive food insecurity as well as
00:14:34
the whole economy basically has been
00:14:36
crippled and the result of that is
00:14:38
society has essentially collapsed so
00:14:40
you know now the question is why did the
00:14:43
sri lankan government feel compelled to
00:14:45
adopt these policies a lot of it has to
00:14:47
do with the fact they're getting these
00:14:48
massive loans from the world bank and
00:14:50
the imf
00:14:51
and the world bank and so forth are
00:14:53
imposing these esg requirements so sri
00:14:56
lanka has something like a 98
00:14:58
esg rating even as their economy and
00:15:02
society is collapsing how is that
00:15:04
possible well they're doing a great job
00:15:06
following the prescriptions
00:15:08
of the global elites of davos i mean
00:15:10
this sort of global elite flies into
00:15:12
davos from brussels and washington on
00:15:14
their private planes they have panels on
00:15:17
esg and then they prescribe these
00:15:19
policies for countries like sri lanka
00:15:21
and this is the result i mean it's crazy
00:15:23
they've been telling us for years that
00:15:24
somehow there's no trade-off between
00:15:27
their environmentalist policies and
00:15:29
creating a healthy growing economy and
00:15:30
this is an example of that's not true
00:15:32
there are real trade-offs here and the
00:15:35
crazy thing is that the elites expect
00:15:38
poor people in sri lanka to make up for
00:15:41
their environmental emissions and it's
00:15:44
not really fair at all here's another
00:15:45
example in march of 2020
00:15:47
sri lanka enforced one of the world's
00:15:50
strictest china-esque
00:15:53
9 lockdowns covered 19 knockdowns
00:15:55
despite one of the lowest death rates
00:15:58
and infection rates in the world and so
00:16:01
for nearly three months it literally
00:16:03
crippled the economy and the livelihood
00:16:05
of citizens there but here's where it
00:16:07
gets crazy
00:16:08
then
00:16:09
they actually go against global best
00:16:11
practice and they banned the burial of
00:16:13
covet 19 victims
00:16:15
claiming that it could lead to
00:16:16
groundwater contamination i don't even
00:16:18
know how they came up with this but you
00:16:20
know what this did was it significantly
00:16:22
undermined
00:16:23
the small minority of the country that
00:16:26
is muslim because a religious practice
00:16:28
there you know is you bury your dead and
00:16:30
then that caused great pain to them and
00:16:33
then it as in turn it hurt all these
00:16:35
international relationships with all
00:16:37
these gulf nations
00:16:38
so then you you come all the way around
00:16:40
and then you go back to those same gulf
00:16:41
nations a few months later and you're
00:16:43
like can i have subsidized oil and
00:16:44
they're like no not so much
00:16:47
and just to give paint a picture what's
00:16:48
happening there right now as i mentioned
00:16:50
before it's it's pretty much a state of
00:16:52
emergency you can see various videos
00:16:54
trending on social media
00:16:55
and you always take those with some
00:16:57
caution because sometimes people will
00:16:59
take clips out of context or
00:17:02
label them incorrectly or use clips from
00:17:03
other moments in time but what's really
00:17:06
happening there right now and you shared
00:17:07
a video in our group chat is
00:17:09
everything is now
00:17:12
uh being
00:17:14
sold out in very small amounts so there
00:17:16
there are lines for
00:17:18
basic goods and inflation is is
00:17:21
crippling there and as
00:17:23
freeberg mentioned they started to pin
00:17:25
um their exchange rate
00:17:29
and their currency to i guess the
00:17:32
world's exchange rate and now
00:17:34
everything is super expensive and
00:17:37
essential imports uh like food and
00:17:40
medicine and fuel they don't have the
00:17:41
money to pay for it so this is going to
00:17:43
be a complete societal collapse it seems
00:17:46
and they're going to need to get bailed
00:17:47
out there was a bill that was introduced
00:17:49
in the government that said the central
00:17:51
bank
00:17:52
would be
00:17:55
forced to have a discipline on money
00:17:57
printing sound familiar
00:17:59
in march of 2020 the central bank of sri
00:18:01
lanka began printing money in order to
00:18:03
finance
00:18:04
a growing budget deficit again happens
00:18:06
in many countries
00:18:08
and they did that in part to fulfill an
00:18:10
election promise that they made that
00:18:11
they would maintain single-digit
00:18:13
interest rates again sounds really
00:18:15
familiar
00:18:16
so
00:18:17
uh they've printed about a hundred
00:18:19
billion rupees in march in the next two
00:18:21
years the central bank printed 1.65
00:18:24
trillion rupees
00:18:26
right so 16 and a half times that first
00:18:28
number
00:18:29
and then as a result what they saw was
00:18:31
the highest inflation in
00:18:32
post-independence history so time after
00:18:34
time what you're actually seeing in sri
00:18:36
lanka is not a microcosm of something
00:18:39
that's endemic to whatever you want to
00:18:41
call it jason a developing country a
00:18:42
third world country
00:18:45
a frontier country a southeast asian
00:18:47
country in fact it actually resembles
00:18:50
many of the policies that exist in so
00:18:52
many countries all around the world and
00:18:54
what's really important here is that as
00:18:57
goes
00:18:58
sri lanka so goes ghana so goes pakistan
00:19:02
so goes a whole bunch of countries where
00:19:05
you're already starting to see
00:19:06
food riots food insecurity energy and
00:19:09
security rampant inflation uh sovereign
00:19:12
defaults
00:19:13
and you have to ask yourself like how
00:19:16
are we going to really tourniquet this
00:19:17
whole thing and prevent
00:19:20
a much bigger contagion like freebird
00:19:21
just talked about i think it's a
00:19:23
we might be out of the work
00:19:25
because uh you mentioned kovid it turns
00:19:28
out a lot of these frontier countries
00:19:30
were already on debt relief and being
00:19:33
given a moratorium on making their debt
00:19:36
payments since they got so walloped
00:19:38
during kovid and then now the other shoe
00:19:40
drops and here we are there's no relief
00:19:43
you can give them if they're already not
00:19:44
paying their loans in some cases by the
00:19:46
way here's another thing that happens in
00:19:48
a lot of these developing countries so
00:19:49
in the middle of all of this chaos what
00:19:51
do you think happened the parliament got
00:19:52
together they passed an amendment to the
00:19:54
constitution
00:19:55
and it enforced and it gave incremental
00:19:58
power to one individual the president
00:20:00
and typically in most of these countries
00:20:02
that run by a parliamentary system the
00:20:04
president is a figurehead right the
00:20:06
person shows up you know
00:20:08
shakes hand kisses babies that's it
00:20:10
right maybe convenes the senate but that
00:20:12
is it
00:20:13
now all of a sudden the person has
00:20:15
control over defense control over budget
00:20:17
control over the central bank and this
00:20:19
person cannot be you know voted out in a
00:20:22
no confidence build the same way that a
00:20:23
prime minister can
00:20:25
that happened here as well so yet
00:20:26
another example of if you start to see a
00:20:29
bunch of autocrats in some of these
00:20:30
developing markets
00:20:32
feel like the answer is more power
00:20:34
it's been tried here it didn't work
00:20:36
so i think that there's a there's a lot
00:20:38
of lessons i i
00:20:40
am a little concerned and skeptical that
00:20:42
many of these other developing countries
00:20:43
that are teetering on insolvency will
00:20:45
actually learn
00:20:47
well i mean what they need to do we are
00:20:48
the definition of the developed world
00:20:50
reportedly and we have a president who
00:20:53
tried to stay in power still an election
00:20:55
so it uh it literally is happening here
00:20:57
in the united states as well the
00:20:58
parallels are truly terrifying all right
00:21:01
the cpi uh i'm sorry it's actually said
00:21:03
something this is rolling my eyes that's
00:21:05
no noise that's what you're a noise from
00:21:07
an eye roll ah that's what it was it
00:21:08
sounded like a boulder going down a hill
00:21:10
wait sorry can i ask your mother a
00:21:11
question yep tomorrow by the way if
00:21:14
people don't know chamath is of sri
00:21:15
lankan descent just to make that clear
00:21:17
if you didn't hear his little mention
00:21:18
didn't you go there a couple years ago
00:21:21
i mean here's another great example of
00:21:23
in this case this was the left
00:21:26
who managed to
00:21:28
[ __ ] things up so it's not just the
00:21:29
right that screws things up in that
00:21:30
country it's the left as well so in this
00:21:32
example
00:21:33
um i went there
00:21:35
and i offered to bring google loon
00:21:38
myself and google
00:21:39
um we offered to bring internet access
00:21:41
to the entire country like guaranteed
00:21:43
internet access
00:21:45
um this was like five years ago
00:21:48
um and we set up an entity and the
00:21:50
government um tried to do the right
00:21:52
thing and grant some spectrum
00:21:55
and instead of sort of like um fast
00:21:58
tracking this and allowing
00:22:01
you know this project to become a
00:22:03
reality
00:22:05
there was an enormous amount of
00:22:06
infighting
00:22:08
that essentially said that you know we
00:22:10
were trying to steal the license or we
00:22:12
stole the license or we were trying to
00:22:13
monetize a license
00:22:15
and both me and google were just like
00:22:17
forget this this is not worth it and we
00:22:19
abandoned the project and walked away
00:22:21
instead google ends up servicing a whole
00:22:22
bunch of other countries and the reason
00:22:24
why sri lanka was part of it is because
00:22:26
the balloons follow a certain uh orbit
00:22:28
and it would have it cop it would go
00:22:30
over sri lanka no matter what so it's
00:22:32
kind of like we can light it up for free
00:22:34
all we need is spectrum in this country
00:22:36
google's already doing that work
00:22:37
so you know i've i've gone there a few
00:22:40
times
00:22:41
i found it very difficult to try to do
00:22:43
the right thing i think people
00:22:45
there's a level of infighting
00:22:47
that i hope this crisis
00:22:50
changes
00:22:51
i also think that it's an opportunity
00:22:53
for people to reset writ large
00:22:56
the gerontocracy that runs many of these
00:22:58
countries including the united states
00:23:00
quite honestly um there is an
00:23:03
opportunity there are some you know of
00:23:05
my friends who i think may emerge in the
00:23:07
next few weeks
00:23:09
who are very well known people in that
00:23:11
country who literally want to step one
00:23:15
remove
00:23:17
most of the executive power from the
00:23:18
presidency
00:23:20
make it a true you know parliamentary
00:23:22
style system with an empowered prime
00:23:24
minister and empowered elect
00:23:26
elected officials and let the country
00:23:28
run and fix itself you know
00:23:29
de-prioritize some defense spending
00:23:31
de-prioritize the growth of the public
00:23:33
sector
00:23:34
re-prioritize the growth of the private
00:23:36
sector i hope they're successful i've
00:23:39
would love to invest if given the
00:23:41
opportunity
00:23:42
under those kinds of market conditions
00:23:44
and i would love to go back at some
00:23:45
point but my history with the country
00:23:48
has been very fraught because as i've
00:23:50
gone to try to do the work freedberg
00:23:52
people are just haters
00:23:54
and they basically they will cut their
00:23:56
nose off despite the you know they
00:23:58
they'll just do the worst things
00:23:59
possible chamath there's i think you
00:24:01
have a second swing at bat here uh only
00:24:03
50
00:24:04
or so of people in sri lanka have
00:24:06
internet access
00:24:07
and maybe we could uh talk to our friend
00:24:09
over at starlink and that could be an
00:24:11
incredible mitzvah and changing thing
00:24:13
there if you get 100 of the country on
00:24:15
internet my god that could change
00:24:17
everything and it seems completely
00:24:18
doable
00:24:19
by the way and this is the most literate
00:24:21
country in the world you have to
00:24:22
understand like the people in that
00:24:23
country the human potential in that
00:24:25
country is incredible okay there are not
00:24:29
developing countries like this that have
00:24:31
this type of literacy the and the
00:24:33
kindness of the people these are
00:24:35
incredible hard-working people but the
00:24:37
elected class
00:24:39
is some of the most inward naval gazing
00:24:42
corrupt people
00:24:44
and this is the opportunity for the
00:24:46
young people of that country to wipe the
00:24:47
slate clean with all of them
00:24:50
and start over with some i think um yeah
00:24:53
the literacy rate is 92 or something
00:24:55
crazy there it's very high
00:24:57
it's a highly educated literate group of
00:24:59
people the truth is the number of people
00:25:01
living in extreme poverty has plummeted
00:25:04
uh thanks to globalization we we went
00:25:07
from almost yeah two billion people
00:25:09
living in extreme poverty now it's gonna
00:25:12
be that's gonna end in our lifetimes we
00:25:13
have maybe 500 600 million people living
00:25:15
in extreme poverty that's because of
00:25:17
globalization that's the great thing
00:25:19
that's happened now what's also happened
00:25:20
at the same time is people have gotten
00:25:22
out of sync we have elites to sax's
00:25:24
point who think they know better and
00:25:26
they're trying to enforce on in a
00:25:27
merging market or a frontier market god
00:25:30
forbid the things that we have the
00:25:31
luxury of doing in the development we
00:25:34
don't even do wait hold on well yes we
00:25:36
don't have a green we haven't banned
00:25:38
chemical fertilizers in the western
00:25:40
world well we do have in europe has
00:25:42
standards for gas mileages but one
00:25:43
example we have emission standards we
00:25:46
have the accords that we've been working
00:25:48
on all of these things are starting in
00:25:49
the developed world and now exactly to
00:25:52
what dave was just saying is we're
00:25:53
taking them from the developed world we
00:25:54
are imposing them and sri lanka
00:25:56
apparently embraced it i guess they get
00:25:58
points when they're at davos sri lanka
00:26:01
is not rich enough to resist that's the
00:26:04
issue so
00:26:05
the u.s has an esg rating of 51 sri
00:26:08
lanka has 98
00:26:10
why is that because in our country we're
00:26:11
not going to impose these crazy mandates
00:26:13
there's enough resistance to it but
00:26:16
if you're in sri lanka and you have
00:26:18
these massive loans and debt service you
00:26:20
have to do
00:26:21
what
00:26:22
the imf and the world bank and all these
00:26:24
internationals what your creditors tell
00:26:26
you to do yes exactly they're the ones
00:26:28
who imposed all this stuff so great so
00:26:31
sri lanka ends up with a 98
00:26:33
near perfect esg rating even as the
00:26:35
country is completely collapsing read
00:26:37
the schellenberger article here he says
00:26:39
the underlying reason for the fall of
00:26:40
sri lanka is as leaders fell under the
00:26:42
spell of western green elites peddling
00:26:45
organic old agriculture and esg
00:26:48
and then he mentioned that sri lanka has
00:26:50
a near perfect score of 98 higher than
00:26:52
sweden which is 96 us is 51. what is
00:26:55
having such a high esg score mean in
00:26:57
short it means that sri lanka's two
00:26:58
million farmers were forced to stop
00:27:00
using fertilizers and pesticides laying
00:27:03
waste to its critical agricultural
00:27:04
sector and then it goes on from there
00:27:08
so
00:27:09
it was the imposition
00:27:11
of it's not that sri lanka's politicians
00:27:14
implemented sri lankan ideas that caused
00:27:16
the collapse of their country they
00:27:18
implemented western ideas they
00:27:20
implemented they were also corrupt so it
00:27:22
was a combination sure enough corruption
00:27:24
they implemented the ideas they learned
00:27:26
at davos it's almost perverse you've got
00:27:28
all these
00:27:30
you know western elites again like john
00:27:32
kerry and so forth they fly in their
00:27:33
private jets to davos they come up with
00:27:36
these esg rules they coerce countries
00:27:38
like sri lanka to obey them
00:27:41
and it's the people of sri lanka who end
00:27:42
up paying the price
00:27:43
i mean this doesn't make any sense
00:27:48
what's your reaction to that jkl you're
00:27:49
somehow going to blame this on trump
00:27:52
no uh i don't know how trump has
00:27:55
anything to do with this
00:27:58
well i mean i'm just thinking about it
00:27:59
from first principles you know we we
00:28:01
should as a
00:28:03
you know species humanity should be
00:28:05
trying to trend towards taking care of
00:28:07
the planet and lowering emissions and
00:28:09
being in renewables and then how we go
00:28:11
about doing it perhaps there was good
00:28:13
intent here but obviously if the country
00:28:15
is corrupt and they're teetering already
00:28:17
and they don't have the bankroll to do
00:28:18
it forcing them to do it can lead to
00:28:21
collapse nobody forced anybody but what
00:28:23
did the score give you it's not as if it
00:28:24
all of a sudden they force them by
00:28:26
nature of you get your loans if you do
00:28:28
these esg requirements so that is
00:28:30
forcing them de facto okay fair enough
00:28:32
but i'm saying like you know now that
00:28:34
you have this score it's not as if you
00:28:35
issued green bonds and you could stave
00:28:37
off this default no they do anything do
00:28:40
what you said before it's like look at
00:28:41
the
00:28:42
sri lanka should be looking at what
00:28:43
singapore did and just copy the playbook
00:28:45
right i mean it's so obvious
00:28:47
that you know country it requires a
00:28:49
level of long-term leadership and and a
00:28:52
lack of and a lack of corruption and i
00:28:54
think those those two things are very
00:28:55
hard to come by and i think a third
00:28:57
which is a very controversial statement
00:28:58
to make is it required singapore to
00:29:00
adopt english as a lingua franca now in
00:29:02
fairness to singapore they also embraced
00:29:04
multiculturalism right so you had forced
00:29:07
you know enough force but you had
00:29:08
bilingualism in the school so hindi
00:29:10
malay or sorry tamil malay chinese right
00:29:14
you could you would learn all of those
00:29:15
and so you know you you kept an
00:29:17
ethnocentricity to where you came from
00:29:20
but they they allowed you to understand
00:29:22
the lingua franca that allowed you to
00:29:23
merchandise your skills to the rest of
00:29:25
the world exactly
00:29:26
are you saying they adopted the melting
00:29:28
pot playbook and they allowed everybody
00:29:30
from around the world to have their
00:29:31
culture but yet participate in a common
00:29:34
uh goal oh my god literally if you say
00:29:36
melting pot to young people today and
00:29:38
everybody should try to adopt you know a
00:29:41
new culture but keep some of their own
00:29:43
people find great offense to that and
00:29:45
that's what we were all taught the
00:29:46
melting pot is what made this country
00:29:48
great i think lee kuan yew just called
00:29:49
it multiculturalism uh but my point is
00:29:52
that you know i think the english
00:29:54
decision by singapore was important
00:29:57
i think steady predictable leadership by
00:29:58
lee kuan yew was really critical
00:30:00
um
00:30:02
and the lack of corruption
00:30:04
you know the way in which they they they
00:30:05
promoted their public sector meaning you
00:30:07
know some of the best paying jobs in
00:30:09
singapore was a public sector job right
00:30:11
like you you would aspire to work for
00:30:12
the government of singapore and so as a
00:30:14
result you had policies and movements
00:30:16
and and the movement of capital and
00:30:18
progress and rules that were just um
00:30:20
it's an example for for so many
00:30:22
countries
00:30:24
and you look where they are today for
00:30:25
such a small population they have the
00:30:27
same gdp by the way you showed vietnam
00:30:29
they have a larger gdp in the vietnam
00:30:30
which is an incredible statement you
00:30:33
know a testament to singapore's
00:30:35
ingenuity so
00:30:36
could that have been sri lanka i think
00:30:38
so knowing that the
00:30:41
you know the the levels of literacy and
00:30:43
intelligence and frankly like look the
00:30:45
the religious stability that can come
00:30:47
from buddhism
00:30:49
yet we're not there we're where we are
00:30:51
today which is a shame
00:30:53
yeah and and this is the canary in the
00:30:55
coal mine i think we're going to see
00:30:56
freeburg i i don't know what you think
00:30:58
is going to happen over the next six
00:30:59
months but
00:31:00
there's going to be other dominoes
00:31:01
certainly yes i mean i watch for
00:31:04
arab spring type behavior right i mean
00:31:07
you saw the protests and people storming
00:31:09
the presidential palace in sri lanka
00:31:12
um you know if
00:31:14
i would imagine if we had
00:31:16
a report uh from the intelligence
00:31:19
advisors to the president of the united
00:31:21
states there's probably a long list and
00:31:24
a growing list
00:31:25
of these nations you want to keep an eye
00:31:27
on right now
00:31:28
where there is food insecurity energy
00:31:30
and security declining currency
00:31:33
uh you know rising debt burden
00:31:36
and um you know there's a breaking point
00:31:38
for all of these
00:31:40
and as you start to hit that breaking
00:31:42
point you start to see more of what
00:31:43
happened in sri lanka now when
00:31:45
destabilization like this happens it's
00:31:47
scary because what happens um is there's
00:31:50
a new power that emerges and those
00:31:53
powers may or may not be aligned with
00:31:54
the interests of the united states with
00:31:56
the interests of allies with the
00:31:57
interests of the world with the interest
00:31:59
of western democracy and so there are
00:32:01
kind of scary moments that can emerge
00:32:03
over the next couple of quarters and
00:32:05
years
00:32:06
as these camels back start to break as
00:32:09
one straw after another is put on the
00:32:12
back of these camels so yeah and who's
00:32:14
the white knight who's going to come in
00:32:15
and save yeah and then these frontier
00:32:17
markets are going to be china india
00:32:18
russia or the united states we're
00:32:20
plowing 40 billion dollars into
00:32:22
supporting the ukraine conflict
00:32:24
um you know we're busy kind of
00:32:26
protecting our energy interests and our
00:32:29
interests with nato as as the united
00:32:32
states and as you point out china will
00:32:34
likely end up becoming the savior and
00:32:36
supporter particularly where they have
00:32:38
infrastructure investments and interests
00:32:41
i mean i don't know if you guys have
00:32:42
followed this china has been building
00:32:44
presidential palaces for african leaders
00:32:46
throughout the continent and these
00:32:48
people
00:32:49
they're incredible you guys should put
00:32:50
photos of them on the video
00:32:52
um oh sorry wait that's the wrong one
00:32:54
that's sax's house sorry guys
00:32:58
sorry hold on next one believe it or not
00:33:00
they might put sexist half to shame some
00:33:02
of these things but they're they're
00:33:03
really they brought the they brought the
00:33:04
president oh yeah oh sorry that's uh
00:33:07
next one so anyway but yeah this is a um
00:33:10
you know uh a moment to watch
00:33:12
yeah because there's a very you know
00:33:15
unfortunate confluence of circumstances
00:33:17
that may lead to destabilization that
00:33:19
may lead to influence and power being
00:33:22
gained by folks that aren't direct
00:33:23
allies of the united states so and this
00:33:25
is why we want to build up a great cash
00:33:27
reserve and have a really stable economy
00:33:30
so that when these moments do happen uh
00:33:33
you know the good actors of the world
00:33:34
can take advantage of i suppose the bad
00:33:35
ones and the united states is not in
00:33:37
great position for this every society as
00:33:39
they say is
00:33:40
three meal three missed meals away from
00:33:42
chaos
00:33:43
there are now a record 19 developing
00:33:46
countries
00:33:47
with sovereign debt trading at distress
00:33:49
levels 19 and two that have already
00:33:52
defaulted yeah just to start i mean
00:33:54
pakistan has nukes right i mean
00:33:57
that's problematic well and pakistan
00:34:00
who's famous for enabling other
00:34:02
countries iran north korea reportedly
00:34:06
they look at their nukes as an export
00:34:08
and they are more than willing to sell
00:34:09
you right now i just sent you guys a
00:34:11
link from forbes you know there are
00:34:12
currently as of today inflation protests
00:34:15
going on across sri lanka albania
00:34:17
argentina panama kenya ghana um and if
00:34:21
you look at the videos and you look at
00:34:22
the images of some of these protests and
00:34:24
again there's like you know in the
00:34:26
african continent there are um you know
00:34:29
very radical militant groups that will
00:34:31
try and seize power if there's
00:34:33
destabilization at the top
00:34:35
um and you know there are there are
00:34:37
risks in in south america i mean all
00:34:39
over the world
00:34:40
uh you know these sorts of moments um
00:34:42
can catalyze a real shift in power and
00:34:44
influence
00:34:46
um and uh and there's a lot of it going
00:34:48
on so you better believe that folks in
00:34:49
the u.s state department and the cia are
00:34:51
very busy right now
00:34:52
if you uh if you look at bond prices the
00:34:55
three countries that are the next
00:34:56
closest to defaulting so russia has
00:34:58
defaulted but that was more a vagary of
00:35:00
you know foreign currency controls that
00:35:02
that didn't allow them to pay but sri
00:35:03
lanka has officially defaulted and the
00:35:05
next three are el salvador ghana and
00:35:06
pakistan yeah
00:35:09
and by the way argentina just you guys
00:35:10
know the argentinian print on inflation
00:35:15
uh oh yeah these things are double 61
00:35:18
yeah yeah yeah it's if we think that 9.1
00:35:21
i know they had a structural default a
00:35:22
few years ago renegotiation they've been
00:35:25
back at the table over and over
00:35:26
negotiating for years
00:35:28
um and now they're facing this uh this
00:35:30
inflationary crisis yet again
00:35:33
uh it's a it's a scary moment um in
00:35:35
argentina
00:35:36
but
00:35:37
yeah this is exactly like the european
00:35:39
crisis with the portugal
00:35:42
italy greece and spain uh we're going to
00:35:44
see a lot of negotiations occurring i
00:35:46
really believe in this country and i
00:35:47
think the people are incredible and i
00:35:49
hope that
00:35:50
um whoever is the president
00:35:53
basically
00:35:55
takes as much power away from that role
00:35:56
and puts it in the prime minister and
00:35:58
gets out of the way
00:35:59
all right well we're hoping for the best
00:36:01
uh okay cpi as uh everybody who listens
00:36:03
to this show knows is a basket of goods
00:36:05
and services and how it changes over
00:36:07
time you can slice and dice the cpi uh
00:36:10
based on food energy shelter your house
00:36:12
et cetera last two months have been just
00:36:15
extraordinary to watch driven obviously
00:36:17
by energy which has been driven by uh
00:36:20
the russia ukrainian conflict cue the
00:36:22
sax rant on biden's administration
00:36:25
the core index doesn't include energy
00:36:28
and so if you were to look at the core
00:36:30
and index uh it and here's the chart 5.9
00:36:33
in june
00:36:35
and uh it peaked actually with 6.5
00:36:38
percent
00:36:40
in march so that's been trending down if
00:36:43
you take energy out of it
00:36:44
uh we haven't experienced energy and
00:36:46
food i think are excluded from core yeah
00:36:49
and if we haven't uh we haven't
00:36:51
experienced core inflation like this
00:36:53
since the 70s or 80s here's another
00:36:55
chart just to zoom out and you'll see
00:36:56
exactly how
00:36:58
jarring this has been uh for
00:37:01
basically our generation we haven't
00:37:03
experienced this since if you were born
00:37:04
in the 70s or so that's when it was
00:37:07
higher than it is today
00:37:09
and we've had obviously goods and
00:37:11
services plummet in our lifetime because
00:37:13
of globalization and low interest rates
00:37:15
uh energy hasn't seen inflation like
00:37:17
this
00:37:18
uh since this is what is this chart is
00:37:20
this cpi what is that that is the core
00:37:23
so that's inflation that's core so and
00:37:25
then here's the energy
00:37:27
one coming up next so when you look at
00:37:29
energy obviously
00:37:30
energy uh has been volatile in our
00:37:33
lifetime uh because a lot of the oil in
00:37:36
the world is controlled by dictators
00:37:38
middle east russia venezuela yada yada
00:37:40
but the 40 year of a year uh increase in
00:37:43
cost of gas and oil and energy has put
00:37:47
us back to the mid 70s 80s in terms of
00:37:49
pain that's this chart so you see it's
00:37:50
spiking all over the place but generally
00:37:52
it was uh under 20 percent and now we're
00:37:55
back above 20 percent it's all about the
00:37:57
oil
00:37:59
chamber you were we were talking in the
00:38:00
group chat before you were kind of
00:38:02
satisfied with 9.1 do you think the 9.1
00:38:05
we're seeing in the inflation print
00:38:07
today
00:38:08
which was higher than expectations
00:38:10
what is that going to lead to in terms
00:38:12
of the interest rate hike 75 basis
00:38:14
points or you think they just go right
00:38:16
to one you know we talked about this
00:38:17
that this was going to be a big print
00:38:19
right i think we all expected this to be
00:38:20
a big print um yeah i actually also kind
00:38:23
of put myself on a limb there and i said
00:38:25
you know i wouldn't be surprised if at
00:38:26
some point we print a
00:38:28
mid to high nines maybe even a 10 handle
00:38:30
at some point we're getting there
00:38:33
and the reason is because
00:38:34
uh you know rents are a little
00:38:38
you know uh they lag in how
00:38:41
they're reported inside of cpi so we
00:38:43
have a couple more months to go of of
00:38:45
rents and rents are moving or budging a
00:38:48
bit
00:38:50
that's number one um we do see a little
00:38:53
bit of fall off in in energy prices but
00:38:56
i'm not so sure that it's it's enough
00:38:57
frankly to to move the needle so i think
00:38:59
that we could be in a sustained period
00:39:01
for a while
00:39:02
the
00:39:03
more interesting thing i thought today
00:39:04
was that canada
00:39:06
surprised everybody and raised uh their
00:39:08
benchmark interest rate by a hundred
00:39:10
basis points okay so they just came one
00:39:12
full point 100 pips and they just said
00:39:14
we're going for it we need to tame
00:39:16
this we need to break the back of
00:39:18
inflation
00:39:19
they ripped the band-aid off yep
00:39:21
yeah and uh you know and i think if you
00:39:23
read the fed minutes
00:39:25
more carefully i think jerome powell is
00:39:27
basically ready to do the same thing yep
00:39:29
after this inflation print the
00:39:31
expectation for july
00:39:33
went to 80 basis points from 75 which
00:39:36
means a small percentage of people
00:39:37
actually think it's going to be a
00:39:38
hundred
00:39:40
and
00:39:40
september i think moved to 75.
00:39:44
so the question is is that enough
00:39:48
i just don't know i uh
00:39:50
i don't know and to be clear
00:39:53
this is for june the data we got on
00:39:55
today july 13th is for june what we did
00:39:58
see in july because we can track oil
00:39:59
prices that's down 20 percent month over
00:40:02
month and the cpi has been driven
00:40:04
largely by oil so speak to that chemoth
00:40:06
what do you think it's going to be in
00:40:08
july when we get it in august no but yes
00:40:10
and no because the again the owner
00:40:11
equivalent rents are up so much that
00:40:13
they may actually you know break even
00:40:16
right meaning
00:40:17
rents go up by so much oil goes down by
00:40:19
so much they cancel and we're still at
00:40:21
nine okay that's your prediction for
00:40:23
july which we'll get in august you think
00:40:25
nine yeah i'm worried that we're in a
00:40:28
sustained inflationary environment i'm
00:40:30
worried about that i i hope that we're
00:40:32
not
00:40:32
um
00:40:34
but then the question jason secondarily
00:40:35
is then what do the markets do and
00:40:37
what's so interesting today is like the
00:40:39
markets shook it all off i mean like you
00:40:41
could not have had a worse inflation
00:40:43
print everything was up well 10
00:40:46
meaning meaning like it was beyond the
00:40:48
number that was expected every component
00:40:50
of it was up everything looked horrible
00:40:53
and people were like meh
00:40:55
tell them is that because the market is
00:40:57
future looking uh sacks
00:40:59
the market is basically
00:41:01
pricing will get through this in six to
00:41:03
12 months is that what you're saying the
00:41:04
markets are down right now to be clear
00:41:06
the the print was definitely worse than
00:41:08
expected they were expecting
00:41:10
yeah they were expecting 8.8 it was 9.1
00:41:12
last month's number was 8.6 i remember
00:41:15
us talking about inflation a couple of
00:41:17
months ago saying that we thought it had
00:41:19
peaked you know maybe in april or may at
00:41:21
the latest simply because
00:41:24
inflation is measured on a
00:41:25
year-over-year basis
00:41:27
and we were starting to lap much bigger
00:41:28
comps last year remember this
00:41:29
conversation yes well the lapping effect
00:41:31
turned out not to be enough and
00:41:34
inflation is still rising so we have not
00:41:36
yet peaked on cpi i understand that core
00:41:39
we have peaked but
00:41:41
deciding to exclude
00:41:43
energy and food i mean that's a pretty
00:41:45
arbitrary decision those are two really
00:41:47
important variables that matter to the
00:41:49
ordinary american for sure
00:41:52
so we solve this problem and to chamas
00:41:54
point
00:41:55
we don't know when it's going to be when
00:41:56
it's going to subside and i think the
00:41:58
big question now is when does inflation
00:42:00
finally peak and start going down
00:42:03
back to where it should be and then how
00:42:05
much how severe recession do we have to
00:42:07
have in order for the fed to solve this
00:42:09
problem
00:42:11
it feels like things are turning over in
00:42:12
real estate we talked about that last
00:42:14
week the number of homes being listed is
00:42:16
skyrocketing the number of mortgages
00:42:19
being originated is plummeting while the
00:42:21
rate goes up so we're gonna see mortgage
00:42:23
rates probably go six seven percent
00:42:26
towards the end of the year that's going
00:42:28
to put a huge kibosh the um
00:42:32
high-end real estate is also starting to
00:42:33
get hit
00:42:34
massively uh the number of listings is
00:42:37
going up in the high end and the number
00:42:39
of sales is plummeting so
00:42:41
that was one of the cards we wanted to
00:42:43
see turn over and it looks like that's
00:42:44
turning over just so one small
00:42:46
clarification is you look we obsess over
00:42:48
cpi right now because we're all kind of
00:42:50
these
00:42:50
fake macro want to be traders but i just
00:42:53
want to remind you because the fed has
00:42:54
been pretty clear about this they don't
00:42:55
focus on cpi they focus on something
00:42:57
else instead called pce which is the
00:43:00
personal consumption expenditure price
00:43:02
index
00:43:04
and i don't know what the flow through
00:43:06
from cpi to pc epi is
00:43:08
exactly but
00:43:11
that is the broadest measure of goods
00:43:13
and services which does include food and
00:43:15
energy
00:43:16
so it stands to reason that pce may stay
00:43:19
elevated for a while which may give
00:43:21
the fed enough of the motivation they
00:43:23
need to go 100 to go another 100 or
00:43:26
maybe go 170 and then a 75 i think that
00:43:30
david's point is right like
00:43:32
all this taming that we've been
00:43:34
expecting to see we haven't seen it and
00:43:36
so every month it's like oh it's coming
00:43:38
next month every month it's been oh it's
00:43:40
happening next month at some point you
00:43:42
may just have to say maybe we're in like
00:43:44
a sustained period for a while and i
00:43:46
have to believe it's going up before i
00:43:47
believe it's going to stay stable or go
00:43:49
down well we did see energy go down
00:43:51
housing we are seeing now uh starting to
00:43:54
contract the number of um
00:43:56
price cuts has been surging according to
00:43:58
redfin so i think we're starting and the
00:44:00
layoffs obviously happened two months
00:44:01
ago so don't we think that we're
00:44:03
starting to see the headwinds and then
00:44:05
we were talking to a buddy of ours who's
00:44:07
big in the airline space he said god and
00:44:10
i think you were pointing out this
00:44:11
statistic that heathrow is now capping
00:44:13
the number of
00:44:15
people who can fly because it's been so
00:44:16
crazy so overloaded with with traffic of
00:44:20
passengers
00:44:21
that they
00:44:22
today came out and said we are capping
00:44:24
the number of passengers to one hundred
00:44:26
thousand a day no more
00:44:28
and this is after the cost of those
00:44:31
flights was skyrocketing you know six
00:44:33
seven thousand i really go back
00:44:36
go back to what sack said before he this
00:44:39
the nugget for me of this entire summer
00:44:41
was what he said
00:44:43
about his take away from the co2
00:44:45
conference right just to remind people
00:44:47
you know that the person said something
00:44:48
to the effect of oh well look all these
00:44:51
other people will be saving money and
00:44:52
cutting jobs i intend to hire and you
00:44:54
know nothing has changed for me
00:44:56
and the comment that i made in our group
00:44:58
chat is well maybe that's the psychology
00:45:01
of everybody it's not just the ceo of a
00:45:03
just yeah just just to be clear what
00:45:05
what kochu did is they they polled all
00:45:08
the founders in the audience the poll
00:45:10
results showed that on the one hand
00:45:11
everyone in the audience understood that
00:45:12
we were headed for a big downturn and
00:45:15
economic conditions and fundraising will
00:45:16
be much tougher on the other hand all
00:45:18
the founders or two-thirds of them said
00:45:20
that they were going to use this
00:45:21
downturn to accelerate their business
00:45:24
as opposed to cut my one-on-one
00:45:25
conversation with the various founders
00:45:26
basically are in line with that which is
00:45:29
it's all not me you know i know
00:45:31
everybody else is going to be impacted
00:45:33
it's going to have to cut but i'm going
00:45:35
to be the one exception and there will
00:45:37
be exceptions absolutely but everybody
00:45:39
can't be the exception so
00:45:41
consumers are saying i'm going to still
00:45:42
buy my car i'm still going on my summer
00:45:44
vacation everybody else has to make cuts
00:45:46
well it doesn't matter what they say
00:45:47
consumers are behaving that way you know
00:45:49
american airlines
00:45:51
basically put out what they where they
00:45:53
thought they were going to be their
00:45:54
stock was up 10 percent you know
00:45:55
heathrow says we have too much traffic
00:45:57
we're going to cap it at 100k there was
00:45:59
an article about
00:46:00
you know u.s home prices and rents and
00:46:03
there were these two uh housing
00:46:05
companies in the wall street journal
00:46:06
that were profiled and both of them
00:46:07
served middle-income neighborhoods in
00:46:09
houston and these other places they're
00:46:10
like we've never done better business
00:46:13
and you know there are fewer and fewer
00:46:14
people buying homes because of mortgage
00:46:16
rates they all want to rent we you know
00:46:18
our complete have we have complete ball
00:46:20
control
00:46:20
and so
00:46:22
where where is the stopping and the
00:46:24
slowing down of spending it just may be
00:46:25
reflexively this thing where everybody
00:46:27
feels like to be you know to have the
00:46:29
polite dinner conversation they have to
00:46:31
talk about how they're pulling back
00:46:32
it doesn't seem like anybody's pulling
00:46:34
back
00:46:35
austerity measures have not hit yet yeah
00:46:37
well i think i think they are in the
00:46:39
process of working but it just takes a
00:46:40
while i mean what i would say is look we
00:46:42
are 100
00:46:43
gonna solve this inflation problem why
00:46:45
do i say that because
00:46:48
price levels are fully within the power
00:46:50
of the fed they just have to raise
00:46:51
interest rates high enough
00:46:53
paul volkl proved that in the early
00:46:55
1980s he had to raise interest rates as
00:46:57
high as 20 percent but he crushed the
00:47:01
inflation 1970s but that's what it took
00:47:03
so i have no doubt that the fed can stop
00:47:05
inflation i think the question is how
00:47:07
much pain are they gonna have to inflict
00:47:09
how high do rates have to go and how
00:47:11
long do we live through this sort of
00:47:13
stagflationary period
00:47:15
and that's the unsettling thing is we're
00:47:17
just it doesn't seem like we're anywhere
00:47:18
near the end of this yet i wrote this i
00:47:21
wrote this last week in a little note
00:47:22
but
00:47:23
this is why if you look at the tailor
00:47:25
rate again
00:47:26
and you know people have abandoned the
00:47:27
tailor rate it's not what it used to be
00:47:29
i guess but you know it's still pretty
00:47:31
directionally accurate which is what is
00:47:33
the true equilibrium interest rate that
00:47:36
allows us to basically manage and meet
00:47:38
supply and demand together so that we
00:47:40
have a calm stable economy and that
00:47:43
uh that stable equilibrium rate is
00:47:46
approaching five percent
00:47:49
you know our target
00:47:51
the the collective wisdom of the of the
00:47:53
market believes that three percent is
00:47:55
enough to get the job done
00:47:57
we're right now at 1.5 to 1.75
00:48:01
so if there's any number between three
00:48:04
and five that is the true
00:48:06
price
00:48:08
we have a lot of
00:48:10
work to do to get there
00:48:13
yeah i think that's a really good point
00:48:14
because the ten year t bill has been
00:48:16
kind of floating around three percent so
00:48:18
that is the long-term expectation
00:48:21
of the interest rates that's required to
00:48:23
have sort of normal
00:48:24
inflation
00:48:25
but what if it's four percent if it's
00:48:27
five percent if that ends up being the
00:48:29
case it'd be a huge downside surprise to
00:48:31
the stock market
00:48:33
well how would you define that
00:48:35
10 pullback 20 pullback from here well
00:48:38
you have a bunch of things like we we
00:48:39
talked about this other issue before as
00:48:41
well which is
00:48:42
if you believe the stock market is
00:48:43
fairly valued you have to believe that
00:48:45
prices are right
00:48:47
and that the earnings are right right so
00:48:48
because it's effectually if it all boils
00:48:50
down to the price earnings ratio of the
00:48:52
s p 500
00:48:53
and
00:48:55
i'm going to still maintain that the e
00:48:57
is wrong
00:48:58
the earnings are wrong for most of these
00:49:00
companies so let why
00:49:02
well one is that when these companies
00:49:04
start to report their quarterly earnings
00:49:06
starting in the next few days
00:49:09
the year-over-year comparison is going
00:49:11
to be
00:49:12
to the numbers that they posted in q2 of
00:49:15
2021
00:49:16
which by all accounts was a blowout
00:49:18
number why because the number before
00:49:21
that was 2020 where their business was
00:49:22
zero
00:49:23
right so you have these incredibly tough
00:49:27
comps
00:49:28
in terms of growth percentages that you
00:49:30
have to reach which i don't think are
00:49:31
achievable
00:49:32
second
00:49:34
is everybody's costs of making and
00:49:36
selling things is going up which stands
00:49:38
to reason that unless you raise prices
00:49:40
quickly enough your profits will go down
00:49:43
if you actually do business outside of
00:49:45
the united states the u.s dollar has
00:49:47
rallied so much
00:49:48
that you actually have less income that
00:49:50
you're making in these other countries
00:49:51
when you convert them and bring them
00:49:52
back to the united states now most
00:49:54
people look through that last issue
00:49:57
but the point is if you add this all up
00:49:59
there is a reasonable probability
00:50:01
that the all the e's are wrong
00:50:04
in which case
00:50:06
we have to reassess what the right e
00:50:08
should be in which case what is the
00:50:09
right p e yes and earnings are a
00:50:11
function of what you spend and what you
00:50:12
make so that's why we see so many
00:50:14
companies doing layoffs cutting people
00:50:17
uh microsoft google everybody is now
00:50:20
putting people on notifications
00:50:23
they're they they're firing white-collar
00:50:24
labor but they're hiring
00:50:26
you know blue-collar labor faster and so
00:50:28
you know we're actually going to see a
00:50:29
downtick in productivity right you're
00:50:31
replacing a person that you know may sit
00:50:33
down at a desk and use a computer eight
00:50:35
to ten hours a day to do something but
00:50:37
you are hiring a lot of people that you
00:50:39
know may get paid by the hour or make it
00:50:41
pay to you know fix salary if you do the
00:50:43
right kind of work but
00:50:45
uh that qualifies as as more contractual
00:50:48
blue collar labor the difference in that
00:50:49
is a productivity difference ultimately
00:50:52
and just so everybody knows p for p e is
00:50:54
price earning ratios over time here's a
00:50:56
quick chart for you currently uh and
00:50:59
this is for the s p 500
00:51:01
we're currently at 20
00:51:04
or so and
00:51:06
we have twice in our lifetime kind of
00:51:08
hit that you know 13 14 15 level so we
00:51:12
could have a 25 correction from here in
00:51:15
the stock market um if you look at
00:51:18
the highs
00:51:19
our recent high
00:51:21
in december of 2020 we're at 38 price
00:51:23
earnings ratio so
00:51:25
uh we've fallen from 38 down to 20
00:51:29
you know almost in half and we could
00:51:31
still go down 25 from here and that
00:51:34
would
00:51:35
basically not even set a new record that
00:51:37
would just hit the last two crises we
00:51:39
had the thing that the
00:51:41
the thing that i think will work against
00:51:43
this happening jason so yeah you're
00:51:44
right the the maybe it goes to 3000 or
00:51:47
3200
00:51:49
but if you look again today you know and
00:51:51
what what i mean by like the market has
00:51:52
roughly shaken this off like the fact
00:51:54
that the markets right now as we as we
00:51:56
talk are you know are essentially down
00:51:58
half a point uh you know the the s p is
00:52:01
down
00:52:02
you know 12 points
00:52:04
uh it means that they are looking for
00:52:06
any and all reasons
00:52:08
to say this is a solved problem move on
00:52:11
nothing to see here
00:52:12
now that is a psychological reaction
00:52:15
most of that if you actually i called a
00:52:17
friend today and i said where are the
00:52:19
flows
00:52:20
and he said you know retail right now is
00:52:22
where all the flows are meaning it's
00:52:24
retail that's buying they're in the 30th
00:52:26
35th percentile of where they normally
00:52:29
buy which is a pretty healthy signal
00:52:31
wait explain what you mean
00:52:33
who's buying so the way the market works
00:52:35
basically is your buyers and sellers and
00:52:38
uh you know to to make it really really
00:52:39
simple you have hedge funds as one class
00:52:43
of buyer sure you have etfs but they're
00:52:46
they're not really big
00:52:48
yeah but they have fixed strategies and
00:52:50
so you know they're hedging they're
00:52:51
moving but whatever and then you have
00:52:52
retail okay so it's retail and hedge
00:52:55
funds those are the two main pockets of
00:52:57
of where the flows come into the stock
00:52:59
market from and
00:53:01
you can get a real sense of what's
00:53:03
happening what the psychology of the
00:53:05
market is if you see what those flows
00:53:07
are
00:53:08
and right now what we see is that hedge
00:53:10
funds are largely on the sidelines
00:53:13
but what it means is they are
00:53:15
well they've been so battered and
00:53:17
bruised in some ways i think they're
00:53:18
licking their wounds
00:53:20
but they're mostly waiting they're they
00:53:22
do not find a compelling reason to buy
00:53:25
right but they have to buy at some point
00:53:27
right chamoth this is their business
00:53:29
no well uh
00:53:31
find other opportunities their business
00:53:33
is to make money relative to their index
00:53:35
and so if their index gets torched they
00:53:37
doing nothing makes them look like
00:53:38
geniuses
00:53:39
um so they don't necessarily have to buy
00:53:41
at any point they just need to make
00:53:43
money at in the end
00:53:45
so right now we're in a situation where
00:53:47
the markets are looking for a direction
00:53:49
retail seems to think that direction
00:53:51
should be up
00:53:52
hedge funds don't have an opinion are
00:53:54
saying we're just going to wait this
00:53:56
thing out okay meanwhile the data
00:53:59
at best is a question mark and i think
00:54:01
that's the that's the tension we have
00:54:02
right now in the stock market is
00:54:04
the psychological desires for this thing
00:54:06
to be over
00:54:08
meaning i think people want to hear
00:54:10
inflation is done
00:54:12
we're starting the recession
00:54:14
give us three or four quarters we'll be
00:54:15
out here's a steady state interest rate
00:54:17
let's go tech people want to accept the
00:54:19
reality freeberg does that mean that
00:54:21
we're bouncing along the bottom for the
00:54:22
next year and then this is the time or
00:54:24
the opportunity to buy it i want to give
00:54:27
financial advice but what are your
00:54:28
thoughts if hedge funds in retail are
00:54:30
kind of waiting in the way asking me if
00:54:32
the stock market is at the bottom
00:54:34
are we bouncing along the bottom yes or
00:54:36
what would you how would you describe
00:54:38
the next year if you were to look at it
00:54:39
what do you think i'll tell you guys
00:54:41
some stories i i went to a conference in
00:54:43
march
00:54:45
with a lot of uh
00:54:46
fund managers probably managed several
00:54:49
trillion dollars in total
00:54:51
people were like in shock and awe at
00:54:53
that conference because they had taken
00:54:55
such significant write downs and they
00:54:57
were still getting written down so all
00:54:59
their investments were off they were off
00:55:01
40 from the peak they were freaking out
00:55:03
things were collapsing no one was doing
00:55:06
anything they were all sitting on the
00:55:07
sidelines hanging out waiting
00:55:10
i went to a conference last week and so
00:55:12
the tone and the demeanor was just like
00:55:13
morose
00:55:15
last week i went to a conference with a
00:55:16
lot of managers
00:55:18
also probably managing trillions of
00:55:19
dollars across the pool
00:55:21
and
00:55:23
people were just kind of they had
00:55:25
accepted this new reality and they were
00:55:27
kind of willing to look at new things
00:55:29
and
00:55:30
you know they were no longer engaged in
00:55:31
trying to shore up just their portfolio
00:55:34
and a lot of the stuff we talk about
00:55:35
which i think is tactical on the ground
00:55:36
how do we deal with our businesses and
00:55:38
our portfolio of investments that we
00:55:40
actively work with in the private
00:55:42
markets
00:55:43
they were much more interested in kind
00:55:45
of starting to explore and think about
00:55:46
new things and i hadn't seen that three
00:55:48
months ago so
00:55:50
that's a positive sign from a market
00:55:51
participant point of view
00:55:53
i think that folks have kind of call it
00:55:55
accepted a new normal an inflationary
00:55:58
normal a high volatility uh normal uh
00:56:02
you know a normal of uncertainty a
00:56:04
normal of kind of recession
00:56:06
and as people have started to kind of um
00:56:09
internalize that new normal i think
00:56:11
they're now starting to say okay what
00:56:12
should my action plan be and that action
00:56:14
plan is i've got trillions of dollars of
00:56:16
capital sitting on the sidelines what
00:56:18
should i start to do with it so you know
00:56:20
my my very very very anecdotal
00:56:23
experience has been
00:56:25
that significant market participants i
00:56:27
think are going to start to perk their
00:56:28
head up this quarter and start to think
00:56:30
about doing new things what that
00:56:32
translates into in terms of you know
00:56:34
stock price movements and indices i
00:56:36
don't know i've always said that there's
00:56:38
going to be a huge variation in outcome
00:56:40
during this big this year and some
00:56:42
industries some sectors some
00:56:45
types of businesses will outperform
00:56:46
others and so i don't want to create
00:56:48
generalized statements about indices but
00:56:50
i do think that capital activity is
00:56:52
going to start to come back this quarter
00:56:54
where people are going to start to think
00:56:55
about what to do rather than pull
00:56:56
everything out because of the massive
00:56:58
shift that's happened in the past couple
00:56:59
of quarters
00:57:00
sax what are you as a market participant
00:57:03
thinking you're looking at series a's
00:57:06
maybe doing some opportunistic flat
00:57:09
rounds are you looking at
00:57:11
the startup market mid-stage market and
00:57:13
saying hey this is an opportunity maybe
00:57:15
i should start looking to put some money
00:57:17
to work in the next six to 12 months or
00:57:20
are you we're still investing you're
00:57:21
still investing yeah so as a market
00:57:23
participant you're investing what are
00:57:24
you investing but we see that the pace
00:57:27
of deal making has slowed way down
00:57:28
because founders know that valuations
00:57:30
have gone down the fundraising
00:57:31
environment is tougher so last year
00:57:33
they're raising every nine months now
00:57:35
they know they should probably be
00:57:36
raising it once every two years so the
00:57:38
pace has slowed way down
00:57:40
that's a good thing
00:57:42
yeah i think it's happening it's more
00:57:43
it's healthier yeah it's more normalized
00:57:46
you know last year the
00:57:48
companies that could race did raise they
00:57:50
have big war chests so i think there's
00:57:51
going to be a delay it's definitely a
00:57:53
slower period we've done a couple of
00:57:55
growth deals recently i think the fact
00:57:57
that tiger and the other kind of
00:57:59
crossover investors the fact they've
00:58:00
pulled back way back from venture
00:58:03
markets gives smaller firms like us an
00:58:05
opportunity to do growth deals so how
00:58:06
did you make the decision to invest in
00:58:09
those companies they're both companies
00:58:10
we've known for a long time have wanted
00:58:12
to honest for a while so
00:58:14
you know the the opportunity arose to
00:58:16
invest and it was way less competitive
00:58:18
than it would have been so this is what
00:58:20
you call opportunistic
00:58:26
yeah we've basically done two deals in
00:58:27
the last like four months
00:58:29
and that's what was your pace
00:58:31
let's say 18 months ago
00:58:34
it was a little faster than that for
00:58:35
sure there's just more deals happening
00:58:37
so
00:58:39
interesting if you want to think about
00:58:40
tail risk where there's some event that
00:58:42
can massively shift the market you know
00:58:45
the indices south right make them go
00:58:47
negative and everyone pulls money out of
00:58:49
equities or out of bonds further
00:58:52
there are some of those events brewing
00:58:54
right we've talked about the consumer
00:58:55
credit i want risk we talked maybe
00:58:58
taiwan
00:58:59
maybe um this emerging market crisis
00:59:02
that that may kind of be emerging these
00:59:04
are like little turtles putting their
00:59:05
heads out they may not come out but
00:59:07
there's enough of these turtles now you
00:59:10
know kind of circling you that you know
00:59:12
there's still reason to be wary whereas
00:59:14
let alone a black swan event which would
00:59:16
be
00:59:18
these are just like
00:59:20
significant
00:59:21
known risks yes no known but significant
00:59:23
risks right yeah and if any of them do
00:59:26
kind of take off
00:59:28
um you know we're already in a very
00:59:29
shaky kind of period right now where
00:59:31
we're trying to manage inflation and
00:59:32
recession
00:59:33
and you know businesses are trying to
00:59:35
raise capital and again this is why a
00:59:37
lot of biotech companies are trading
00:59:38
below cash because the expectation is
00:59:40
they're not going to be able to raise
00:59:41
capital i mean anything will go out of
00:59:43
business
00:59:46
boom you know you start to see things go
00:59:48
so i think that's the reason people
00:59:50
investors portfolio managers are not
00:59:52
going to kind of rush back into putting
00:59:55
more money into equities is just you
00:59:57
know sitting around waiting to see how a
00:59:58
few of these things resolve
01:00:00
um you know before kind of taking action
01:00:02
but there are companies that do not face
01:00:03
the risk of ruin they just are sitting
01:00:04
on so much cash they have so much
01:00:06
revenue that there's no chance of that
01:00:08
yeah i've always said it doesn't matter
01:00:09
if you find a great business and you
01:00:11
believe in that business over the very
01:00:13
long run you don't need to worry about
01:00:15
timing the markets
01:00:16
you put money in that business as long
01:00:18
as you get a fair valuation for it today
01:00:20
relative to what it should be priced at
01:00:22
based on what markets are telling you
01:00:23
well 20 pe would be more than fair
01:00:25
history who knows but like whatever that
01:00:27
whatever that is but if you find a great
01:00:29
business that you think is going to
01:00:30
compound value for you
01:00:32
over the very long run market cycles
01:00:34
don't matter and long run you mean a
01:00:36
decade yeah call it a decade and you
01:00:38
know saks is business that he's invested
01:00:40
in these are tech companies that i don't
01:00:42
think they're planning to go public next
01:00:43
year he's making an investment in a
01:00:45
business that he considers to be a great
01:00:46
business that can compound value
01:00:49
not compound valuation but compound
01:00:51
business value meaning they can do
01:00:53
something more valuable next year than
01:00:55
they were doing this year and continue
01:00:57
to accrue an advantage in their business
01:00:59
that allows them to accumulate earnings
01:01:01
over time or accumulate revenue that
01:01:02
ultimately translates into earnings over
01:01:04
time and there are many businesses that
01:01:05
are public that that operate like that
01:01:07
that regardless of any of these turtles
01:01:09
popping their head out those businesses
01:01:11
will perform well over the next decade
01:01:13
and i think you know that's always a
01:01:14
great place to invest so so we basically
01:01:17
went from d-day saving private ryan and
01:01:19
seen you know in the first quarter to
01:01:22
now people have accepted we're in
01:01:23
wartime and we're not shell-shocked and
01:01:25
some people are looking for
01:01:26
opportunities
01:01:27
chemoth you found an opportunity maybe
01:01:28
you could talk about the deal you did
01:01:29
this week
01:01:31
um you know i tend to agree with
01:01:33
fredberg i mean you find these
01:01:34
businesses that you like and if they
01:01:35
appeal to you and you do your work
01:01:37
that's the most important thing
01:01:39
you shouldn't be afraid to write a check
01:01:41
can you stop right there and just say
01:01:43
define what you mean by do the work
01:01:45
because everybody here should say that
01:01:46
what does that mean for an investor for
01:01:48
somebody like yourself what is doing the
01:01:49
work mean it really depends on the
01:01:51
sector so for example when you know when
01:01:54
when we were uh when i was trying to
01:01:56
underwrite open door what i really
01:01:58
wanted to understand was
01:02:00
you know what do take rates look like in
01:02:02
all these various markets how do i think
01:02:04
take rates will evolve here how do
01:02:06
value-added services work what kind of
01:02:08
margins can you sustain what is the
01:02:10
sensitivity of different parts of the
01:02:12
real estate economy to interest rates
01:02:14
you know that's an example of work when
01:02:16
i was underwriting so far
01:02:18
you know what you're trying to
01:02:19
understand is you know how do banks
01:02:21
generate net inc net increased income
01:02:23
you know nim
01:02:24
um how does that change over time how
01:02:26
does bank charters change that
01:02:28
um you know how do loss rates change in
01:02:31
in you know times of um economic
01:02:34
expansion versus recessions how do you
01:02:36
price all of that into a fair fair value
01:02:38
of a business
01:02:39
it's just a lot of really
01:02:41
detailed diligence to understand all the
01:02:44
facets or as many of the facets as
01:02:46
possible of a business that allow you to
01:02:48
have a clear
01:02:49
eyed sense of what's possible then there
01:02:51
are others
01:02:52
which are pure technology bets
01:02:55
where you try to understand
01:02:57
either the biology
01:03:00
or the technology so in the case of the
01:03:02
deal that i did you know today or this
01:03:04
past week
01:03:05
myself um
01:03:07
a bunch of family offices around the
01:03:09
world um
01:03:10
led by a great chairman pablo lagaretta
01:03:13
who started a phenomenal business called
01:03:15
royalty pharma which is public
01:03:17
carlos slim a bunch of folks we put in
01:03:20
about half a billion dollars to
01:03:23
to help advance into you know uh
01:03:26
clinical trials this business that's
01:03:28
trying to provide a solution to chronic
01:03:30
kidney disease so in that example it was
01:03:33
a lot of scientific diligence on what
01:03:36
are the existing solutions how do they
01:03:38
work what is the mechanism of action
01:03:40
inside the body
01:03:42
how is this the same or different um
01:03:44
what is the early data say um how are
01:03:47
the clinical trials structured and then
01:03:49
you come to an answer um in this case i
01:03:51
decided the bet was worth taking and you
01:03:53
know like free tell us the name of the
01:03:55
company uh and what they do the company
01:03:57
is called pro kidney and basically the
01:03:59
idea
01:04:00
is that it uses your own body to help
01:04:02
heal your kidneys if you are on the
01:04:04
verge of chronic kidney disease or you
01:04:06
are getting dialysis etc and essentially
01:04:09
how it works is it removes cells from
01:04:11
your body
01:04:13
from your kidney actually
01:04:15
and then it does
01:04:16
basically puts it into a centrifuge does
01:04:18
some specific things to it grows and
01:04:20
amplifies
01:04:21
certain cell lines from your kidney and
01:04:23
then re-injects those back into your
01:04:24
kidney and tries to improve what's
01:04:27
called your egfr which is your estimated
01:04:30
glomular filtration rate which is
01:04:32
essentially
01:04:34
a number that we can use to estimate how
01:04:36
efficient your kidneys are and
01:04:38
essentially when you are you know a type
01:04:40
2 diabetic or you have chronic kidney
01:04:42
disease or kidney failure or you're on
01:04:43
dialysis it's because that filtration
01:04:46
capability has failed
01:04:48
and so all these toxins are getting
01:04:50
pushed back into your
01:04:52
body and so yeah we took a you know half
01:04:55
a billion dollar shot i wrote 125
01:04:57
million dollar check i hope it works
01:04:58
that's amazing freeberg we saw some
01:05:01
satellite images this week uh biden i
01:05:04
guess announced them they looked pretty
01:05:05
trippy explain to us
01:05:07
what the downstream effect of
01:05:10
what is i think the the most clear
01:05:12
picture we're seeing
01:05:14
of
01:05:15
the cosmos ever created and what that
01:05:17
could actually do for humanity
01:05:19
well this is short and this has nothing
01:05:27
they specifically had him
01:05:29
share it which i think maybe they were
01:05:31
looking for a mini win or something good
01:05:32
for him um it hasn't he has nothing to
01:05:34
do with this program um i i don't mean i
01:05:36
just mean that like the scientists and
01:05:38
the engineers that worked on this for
01:05:39
many years deserve all the freaking
01:05:41
credit the james webb telescope is a
01:05:44
space telescope just like the hubble
01:05:46
right remember the hubble space
01:05:47
telescope and this is a massive
01:05:48
improvement over the hubble so imagine
01:05:51
you're you're in a boat and you're
01:05:52
trying to look at the bottom of the
01:05:53
ocean you take a bunch of inocu pair of
01:05:55
binoculars you look into the ocean and
01:05:57
you try and see what's at the bottom of
01:05:58
the ocean how hard that would be right
01:06:00
there's all this murky stuff in the
01:06:01
water it's going to be really hard to
01:06:02
see it the the reason that we create a
01:06:05
space telescope is so that the same
01:06:06
problem that we would have looking at a
01:06:08
telescope through the earth's atmosphere
01:06:10
doesn't impact the light coming into the
01:06:12
telescope and so there's so much stuff
01:06:14
in the atmosphere right there's miles of
01:06:17
molecules and dirt and dust moving
01:06:18
around so by putting a telescope in
01:06:21
space we get rid of all that murkiness
01:06:23
and now we can really capture the light
01:06:25
that is coming from far far away
01:06:27
concentrate that light onto really
01:06:29
sensitive photo detectors these are
01:06:31
photo detectors that operate at nearly
01:06:35
the coldest point in the universe
01:06:37
negative 263 kelvin
01:06:39
and that photo detector makes it
01:06:41
extremely sensitive and using a 20 foot
01:06:44
wide mirror we can capture all the light
01:06:47
that's coming in concentrate onto the
01:06:48
photo detector and and read that light
01:06:52
um and so why is this important why is
01:06:54
this interesting well people get really
01:06:56
excited by and flip out over the cool
01:06:58
imagery that they see these images these
01:07:00
colorful images of galaxies and stars
01:07:02
far far away what we're really doing is
01:07:04
we're not just looking far away we're
01:07:06
looking back in time so these um these
01:07:08
images come to us from galaxies that are
01:07:11
4.6 billion light years away so it took
01:07:14
4.6 billion years for that light to
01:07:16
reach our planet and we're actually
01:07:18
seeing what happened in the earlier part
01:07:20
of the universe and we're seeing how
01:07:21
these uh galaxies uh formed how they're
01:07:24
moving how they interact with one
01:07:25
another how the plants planets interact
01:07:27
with one another but what a lot of
01:07:28
people miss that i think is the most
01:07:30
important thing to highlight as an
01:07:32
astrophysicist when you're looking
01:07:34
through telescopes and gathering
01:07:35
telescope data you're not looking for
01:07:36
imagery like we looked at today that's
01:07:38
really good to sell the story and get
01:07:39
biden to do a press conference what
01:07:41
they're really looking at is
01:07:42
spectrographs and a spectrograph is uh
01:07:45
you know uh it shows for every
01:07:47
wavelength of light across some spectrum
01:07:49
what the intensity is of that that
01:07:51
amount of light that wavelength of light
01:07:53
and particularly the james webb
01:07:55
telescope has incredible micro shutter
01:07:58
arrays an incredible sensitivity that
01:08:00
allows us to go from near infrared to
01:08:01
infrared and some visible light and look
01:08:03
at that spectrograph why is that
01:08:06
important because if you can capture the
01:08:08
spectrograph in a very high resolution
01:08:10
way for a sun or for a planet far away
01:08:13
it can tell you very specifically what
01:08:15
the movement is and what the chemical
01:08:17
composition is of that object and from
01:08:20
that we can start to do incredible
01:08:21
research and infer very important things
01:08:24
about how planets form how stars form
01:08:27
how many places like earth might be out
01:08:29
there how things are moving how much
01:08:31
mass or matter there is in the universe
01:08:34
and there are two very very big question
01:08:36
questionable phenomenons in astrophysics
01:08:38
right now one is called dark energy
01:08:40
one's called dark matter turns out the
01:08:42
majority of matter in the universe is
01:08:44
undetectable
01:08:45
and there also is this really weird
01:08:48
energy force pushing on everything in
01:08:50
the universe causing the universe to
01:08:53
accelerate its expansion so the universe
01:08:55
is expanding everything's moving away
01:08:57
from itself but it's not just expanding
01:08:58
and slowing down it's expanding and
01:09:00
speeding up
01:09:01
and so having this sort of instrument in
01:09:03
space that allows us to capture in a
01:09:05
very high resolution way using
01:09:07
spectroscopy and other tools that
01:09:09
astrophysicists use and better map out
01:09:11
how this is happening in different parts
01:09:12
of the universe starts to give us a
01:09:14
better sense and allows us to kind of
01:09:17
inquire
01:09:18
and start to develop theories around
01:09:19
what's really going on and i want to say
01:09:21
one more thing because because a lot of
01:09:22
people think that this stuff is just so
01:09:24
esoteric and it's like super interesting
01:09:26
why are we spending 10 billion dollars
01:09:27
in this
01:09:28
most applied engineering and the
01:09:31
technologies that we've developed as a
01:09:32
species started out initially as pure
01:09:35
research with no freaking clue where it
01:09:36
was going to go to
01:09:38
imaging dna penicillin electronics
01:09:42
mri machines so many of these
01:09:44
capabilities evolved from scientists
01:09:46
just querying the universe and asking
01:09:48
questions and gathering data and all of
01:09:50
a sudden they came across something
01:09:52
developed a theory built an application
01:09:54
of that theory and a technology emerged
01:09:57
that changed the course of our history
01:09:59
as a species and that's the reason to do
01:10:01
pure research and that's the reason it's
01:10:04
so important for us to put 10 billion
01:10:05
dollars into a program like this we're
01:10:07
going to discover amazing things with
01:10:09
this tool and it will ultimately
01:10:11
hopefully yield advances for humankind
01:10:14
that we cannot even contemplate today so
01:10:16
it could be energy right i mean
01:10:17
understanding dark matter
01:10:18
energy totally and then maybe has
01:10:20
changed everything in energy right jkl
01:10:22
think about it one day there might be a
01:10:24
capability where we say there's a new
01:10:25
class of matter and a new understanding
01:10:27
of energy that we can then apply in some
01:10:29
form of physics on earth that we can do
01:10:31
something interesting with and we have
01:10:33
to be able to query and understand the
01:10:34
universe to do that could we measure
01:10:36
there we go could we measure the matter
01:10:38
from uranus yes okay no it's coming i
01:10:41
mean the hubble telescope actually
01:10:43
if correct me if i'm wrong here it
01:10:45
actually told us the age of the universe
01:10:48
how much dark matter is in uranus
01:10:50
a lot a lot you're full of it um but we
01:10:53
now know i mean hubble told us the rate
01:10:55
of expansion of the universe and it also
01:10:58
told us the age of the universe and we
01:10:59
found all these other planets totally to
01:11:01
freeberg's point about you know looking
01:11:04
you know through the through the muddy
01:11:05
water
01:11:06
here's a great visualization on the left
01:11:08
you have hubble on the right you totally
01:11:10
web
01:11:11
and if you slide this you can just see
01:11:12
like just how crystal clear and these
01:11:15
images are and from my understanding we
01:11:17
found some
01:11:18
number of universes already that we
01:11:20
didn't know just from the first images
01:11:22
by the way i want to just give everyone
01:11:23
a heads up this imagery looks beautiful
01:11:26
and i'm going to print out a big one
01:11:27
i'll put it behind my friggin desk here
01:11:28
because i think it's so fantastic
01:11:30
astrophotography is one of my kind of
01:11:32
all-time you know favorite
01:11:33
forms of art but um remember this is
01:11:36
imagery that was actually captured in
01:11:39
near infrared and infrared spectra and
01:11:41
then they converted it to visible light
01:11:42
to make it look cool so remember that
01:11:44
these images you know that these clouds
01:11:46
if you were actually there don't
01:11:48
actually look at like that color but
01:11:50
it's a very cool way to visualize the
01:11:52
density and the the spectral changes
01:11:54
where does this sit for you in terms of
01:11:57
your excitement between the new season
01:12:00
of doctor who yeah and the foundation
01:12:02
series let me give you let me let me
01:12:04
just give you guys one more kind of
01:12:06
yeah really interesting if if you start
01:12:08
at our sun and you look at the sun it's
01:12:09
super bright
01:12:10
if you go at the speed of light for four
01:12:12
minutes you reach the earth or a couple
01:12:13
of minutes you reach the earth look
01:12:15
backwards six minutes or seven minutes
01:12:16
whatever it is look back and now the sun
01:12:18
looks like it does in our sky if you go
01:12:20
for another couple minutes
01:12:21
you end up looking back from saturn and
01:12:23
the sun starts to look like a star i
01:12:26
mean that's how how dim it gets
01:12:28
now imagine continuing to go at the
01:12:30
speed of light for another hour you look
01:12:32
back you'll hardly be able to
01:12:33
differentiate the sun from the rest of
01:12:34
the universe now do that for 4.6 billion
01:12:37
years
01:12:38
and you're shooting away for 4.6 billion
01:12:40
years now look back how freaking hard
01:12:42
would it be to see anything that's the
01:12:44
technical capability we just put into
01:12:46
space we've built a 20 foot wide mirror
01:12:49
to concentrate the light the photons
01:12:52
that traveled for 4.6 billion years lost
01:12:54
all of their density lost all of the you
01:12:56
know completely dimmed out completely
01:12:58
diffused and we're capturing a few of
01:13:00
them
01:13:01
run that concentrated way onto a
01:13:03
detector for minutes at a time and
01:13:05
generate this image it's really profound
01:13:08
how technically complex this is and
01:13:10
again that technical complexity can
01:13:12
ultimately yield other technological
01:13:14
tools that we could use in all sorts of
01:13:16
industry so i just i just want to
01:13:18
highlight that i posted it for you guys
01:13:20
uh it's an incredible story but
01:13:22
basically this program was riddled with
01:13:24
delays and things that weren't working
01:13:26
and then they put
01:13:28
this quiet very assuming engineer in
01:13:30
charge of it and he completely turned
01:13:32
the whole thing around and
01:13:34
it's one of the most incredible quotes
01:13:35
what's his name let's give him a shout
01:13:36
out his name is greg robinson and he
01:13:39
turned a 10 billion dollar debacle
01:13:42
into a groundbreaking scientific mission
01:13:44
this is the quote from the wall street
01:13:46
journal the the quote from the nasa
01:13:49
uh the head of nasa's
01:13:51
science mission directorate thomas
01:13:53
zurburkin says it all
01:13:55
there's a huge distance between success
01:13:57
and failure and only a few actions that
01:14:00
move you from one to the other
01:14:02
he said
01:14:03
greg robinson worked such wonders that
01:14:06
his boss calls him quote the most
01:14:09
effective leader of a mission i have
01:14:11
ever seen in the history of nasa unquote
01:14:14
really incredible uh this project yeah
01:14:17
the 11 billion big challenges robinson
01:14:19
yeah and this has been going on for i
01:14:21
guess 20 years now uh this process of
01:14:23
getting this built in
01:14:25
10 years of really intense building what
01:14:27
would the next and then we'll we'll
01:14:28
switch over to politics for a quick
01:14:29
second as we as we wrap up here freeberg
01:14:32
what's the next
01:14:34
telescope because obviously if we've
01:14:37
gone hubble to web what would the next
01:14:39
one conceivably look like and with the
01:14:41
timeline for that is there another one
01:14:42
that's going to come and then what would
01:14:44
that enable because it does feel like if
01:14:46
we accelerate this we're going to really
01:14:48
get a deep understanding of the universe
01:14:50
that
01:14:51
this seems to be accelerating our
01:14:52
understanding correct and our technology
01:14:54
is obviously accelerating so it feels
01:14:56
like we could you know send another one
01:14:58
of these out in the next 10 years that
01:14:59
would dwarf this one's capabilities yeah
01:15:01
so a lot of um
01:15:03
uh telescopes operate at different
01:15:05
wavelengths and they're meant to kind of
01:15:07
pursue different missions so you know
01:15:08
there are there are some telescopes that
01:15:10
are already operational and kind of the
01:15:12
gamma ray spectra
01:15:14
but really there's a
01:15:16
we i don't know if we ever talked about
01:15:17
this on the show but one of the really
01:15:19
interesting areas of inquiry
01:15:21
uh is these gravitational wave detectors
01:15:24
and there are new more advanced versions
01:15:26
of those systems starting to come online
01:15:28
those are not space-based telescopes uh
01:15:30
they're and we can talk about that
01:15:31
another time um
01:15:33
but uh they're creating new methods of
01:15:35
inquiry where we're not capturing
01:15:37
photons light coming from far away we're
01:15:40
actually capturing
01:15:42
the waves of gravity coming from um
01:15:45
interactions of matter around the
01:15:46
universe and it's a new way to kind of
01:15:47
observe the universe those telescopes
01:15:49
represent a new class of inquiry that
01:15:51
was just kind of you know discovered a
01:15:53
few years ago and proven out and now
01:15:55
there's there's a lot of work going on
01:15:56
into that area and freeberg you had
01:15:58
something you wanted to give a shout out
01:15:59
to yeah i just sent you guys a photo of
01:16:01
a new dog i adopted last week her name
01:16:03
is
01:16:05
we flew daisy out from virginia
01:16:07
daisy is one of 4 000 beagles that were
01:16:10
rescued
01:16:12
from a facility in virginia that was
01:16:14
shut down by the doj
01:16:16
this facility was investigated by peta
01:16:18
and the humane society
01:16:20
and they basically shut this facility
01:16:22
down this is in the united states
01:16:24
we only do animal testing on beagles
01:16:26
they're the only dogs that we do animal
01:16:27
testing on because they can put up with
01:16:29
pain and they have a high tolerance and
01:16:31
a high threshold for pain it's a really
01:16:32
awful fact we need to change that in the
01:16:34
united states the fda does not provide
01:16:37
good guidance on this so pharma
01:16:38
companies pesticide companies makeup
01:16:40
companies very often test on beagles so
01:16:43
this company
01:16:44
um you know that was operating this
01:16:45
beagle facility in virginia was shut
01:16:48
down for um you know ethical issues at
01:16:52
their facility
01:16:53
and the humane society took control the
01:16:57
company's called in vigo their parent
01:16:59
company is publicly traded i think that
01:17:00
the fact that we test on these beagles
01:17:02
in this country is awful we adopted
01:17:03
daisy uh there are 4 000 beagles like
01:17:06
daisy available for adoption i'll put
01:17:08
some links in the show notes here people
01:17:10
feel free to go and grab them
01:17:11
i'm sure there's a long list the dog is
01:17:13
absolutely incredible i think that it's
01:17:15
awful we test on dogs in this country
01:17:18
and i think i urge anyone that has
01:17:19
influence with the fda to get them to
01:17:21
provide better guidance this is not the
01:17:23
law it's not required and they don't
01:17:24
provide good guidance um and so a lot of
01:17:26
companies de facto and default testing
01:17:29
on beagles when they really don't need
01:17:31
to and shouldn't so brooke let me ask
01:17:32
you let me ask you a question i think
01:17:33
it's incredible that you adopted the dog
01:17:35
i hope all four thousand get adopted um
01:17:38
how should we do testing totally i look
01:17:41
i think that there's a there's really
01:17:42
important ethical lines here and we can
01:17:44
debate those this is a good nuanced
01:17:46
conversation we use mass models in
01:17:48
biology to explore solutions for human
01:17:51
disease we we use primate models right
01:17:53
which means we use primates we use dogs
01:17:56
we use cats we use mammals
01:17:59
there are there are certain things that
01:18:00
are obviously not necessary we don't
01:18:03
need to take beagles and pour tons of
01:18:05
kim kardashian's newest makeup line in
01:18:07
their eyes to see what happens it's not
01:18:09
required by law and it's not about
01:18:11
getting some pharmaceutical drug
01:18:12
approved this is in an area that i'm you
01:18:14
know i'm not going to get into the
01:18:16
debate on on exploring and resolving
01:18:18
kind of pharmaceutical solutions and
01:18:20
things that can actually treat human
01:18:22
disease where i'm particularly sensitive
01:18:24
to is when it's not needed and when
01:18:26
we're taking these animals and just
01:18:27
doing awful things to them uh when
01:18:29
there's no law that requires it we're
01:18:31
not putting stuff in our bodies and this
01:18:33
isn't about you know protecting humans
01:18:35
it's really about cover your ass
01:18:37
behavior for makeup companies and
01:18:39
pesticide companies that they don't need
01:18:40
to be doing and that's really what i'm
01:18:41
addressing 3999
01:18:44
beagles to go uh if you adopt one of
01:18:46
these beagles send us a photo and we'll
01:18:47
share it at the end of next week's
01:18:49
program thanks for letting me say that
01:18:51
guys it's really you know i think it's
01:18:52
super important and how we treat
01:18:55
uh dogs who are connected to humans in a
01:18:57
very special way i think speaks volumes
01:18:59
to us as individuals
01:19:02
saks would you like to
01:19:04
well on the biden administration talk
01:19:05
about 2022 or give us an update on
01:19:07
ukraine i give you the choices
01:19:10
i mean it's like elder abuse at this
01:19:11
point i mean i know you're trying to
01:19:15
can i ask you a question i know you're
01:19:17
trying to team me up here but like all i
01:19:19
can say is 9.1 percent i don't want to
01:19:21
beat a dead horse at this point can i
01:19:23
read you guys something and you can tell
01:19:24
me
01:19:26
there were these uh there's a there's a
01:19:28
group called committee to unleash
01:19:30
prosperity
01:19:31
but two researchers stephen moore and
01:19:33
john decker this is in the wall street
01:19:34
journal article i post in the group chat
01:19:36
the pair studied the resumes of 68 top
01:19:39
executive branch officials whose work
01:19:42
shapes the economy from president biden
01:19:43
and treasury secretary janet ellen to
01:19:45
white house special assistants on
01:19:46
economic policy
01:19:48
quote
01:19:49
average business experience of biden
01:19:51
appointees
01:19:53
is only 2.4 years
01:19:55
what
01:19:56
any fresh-faced 25-year-old on wall
01:19:58
street has clocked more private business
01:20:01
hours
01:20:02
again i'm reading from the journal
01:20:03
article than most of washington's top
01:20:05
officials 62 percent have quote
01:20:08
virtually no business experience unquote
01:20:11
the average donald trump cabinet
01:20:13
official had 13 years of experience in
01:20:15
the private economy the author said what
01:20:16
a disaster well somebody like sixty
01:20:19
seventy percent of democrats wanna get
01:20:20
rid of biden they don't want him to run
01:20:22
again i've never seen
01:20:23
a president been
01:20:25
defected on been turned on by his own
01:20:27
party so quickly into an administration
01:20:30
he needs to take back ownership of the
01:20:31
democratic party which means he has to
01:20:33
pivot back to the center and he needs to
01:20:35
have a wholesale replacement of
01:20:38
the team that he works with on domestic
01:20:40
policy it's not working and chamath that
01:20:42
was his pitch we're gonna go back to
01:20:44
normalcy he was going to be
01:20:46
you know more of a centrist and that's
01:20:48
not what we've gotten but of course he
01:20:50
was handed the disastrous economy that
01:20:52
trump created why do you say he was
01:20:53
handed a disastrous economy well because
01:20:55
of uh covet and because of the massive
01:20:57
stimulus that we spent those two things
01:21:01
that was like a setup i mean if trump
01:21:02
won a second do you think it would be
01:21:04
much different if trump was running the
01:21:06
economy with the setup was there trump
01:21:07
probably would have spent more money
01:21:08
right trump wanted to spend more money
01:21:11
that's a really good question actually i
01:21:13
have to think through that that's a
01:21:14
really good question let's move on
01:21:15
what's the update on ukraine there's a
01:21:16
really interesting chess game going on
01:21:18
right now where the russians are slowing
01:21:20
the flow of gas no no it's better than
01:21:23
that it's better than that they shut
01:21:24
down nordstream one for their annual uh
01:21:28
maintenance
01:21:29
[ __ ]
01:21:30
it's supposed to be back up by july 21st
01:21:34
and so the real question is what happens
01:21:36
if
01:21:37
uh putin hand checks europe and just
01:21:39
takes an extra day or two to get that
01:21:41
thing back up and going
01:21:44
let me make a prediction right i think
01:21:45
the western alliance is gonna fracture
01:21:47
come this winter yeah germany's gonna be
01:21:49
freezing the germans are not gonna take
01:21:51
this well when they can't put their heat
01:21:52
on listen a a foreign policy based on
01:21:54
virtue signaling is one thing when your
01:21:56
economy is good
01:21:58
and you're not worried about your energy
01:22:02
security and you can heat your homes
01:22:05
it's another thing to have a foreign
01:22:06
policy based on virtue signaling when
01:22:08
your economy is in recession you got
01:22:09
runaway inflation and you're in winner
01:22:12
and you can't heat your homes your
01:22:14
morals change real quick don't they yeah
01:22:16
three or four months ago the liberal
01:22:18
interventionists were triumphant about
01:22:20
this ukraine war there are three big
01:22:22
predictions one that ukraine was gonna
01:22:25
win
01:22:26
it looked like ukraine was winning the
01:22:27
first couple weeks but now it looks like
01:22:28
russia has won this donbass region
01:22:31
number two
01:22:33
they predicted that we would collapse
01:22:34
the russian economy with all these
01:22:36
sanctions the opposites happen we've
01:22:38
collapsed our own economy and number
01:22:40
three they predicted this would
01:22:41
strengthen the western alliance that's
01:22:43
the only card that hasn't you know
01:22:45
basically turned yet and i think it will
01:22:47
this this winter i think you're going to
01:22:48
see
01:22:49
serious opposition to the way the bible
01:22:52
administration has led
01:22:54
the western response i think it's well
01:22:57
said that if germany has the
01:22:59
gas lines that sri lanka had uh you
01:23:02
would see a definite fracturing of how
01:23:04
people look at it just like they flipped
01:23:05
last week and they made natural gas and
01:23:08
nukes
01:23:09
nuclear power a green energy so yeah
01:23:11
their morals and ethics and
01:23:13
their virtue signaling go as far as
01:23:16
their wallets and their heat and meals
01:23:18
go as we all know this has been another
01:23:20
amazing episode of the all-in podcast
01:23:22
for the baron of beagles the dictator
01:23:25
himself
01:23:26
and the rain man yeah it's definitely
01:23:28
biden's fault now there is no chance for
01:23:30
any of us to pass free brook on the
01:23:32
popularity he's just he just sealed the
01:23:34
deal with his [ __ ] thing
01:23:37
what do we do i'm going to save a whale
01:23:39
next week i am going to bring a dog
01:23:41
kill myself how about that
01:23:43
oh you're going to prepare dolphin
01:23:45
sashimi okay great that'll secure your
01:23:48
part as the most hated bestie we'll see
01:23:50
you all next time on episode 88 good
01:23:54
luck 88 of the all-in podcast bye bye
01:23:56
love you besties
01:24:02
rain man david
01:24:07
said we open source it to the fans and
01:24:09
they've just gone crazy with it
01:24:13
[Music]
01:24:19
besties
01:24:22
[Music]
01:24:43
we need to get
01:24:44
back
01:24:48
[Music]
