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