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