00:00:00
H TOA he's ready to go is that official
00:00:03
merch I got it online so I I hope she's
00:00:05
getting royalties I hope it's not I hope
00:00:08
it's not a fugazi a fugazi fugazi what's
00:00:11
up with your outfit jcal you going on
00:00:14
Fox News again dude I sign he didn't
00:00:17
signed on to a
00:00:18
contributor week what he's I'm a
00:00:21
contributor fo days a week they're
00:00:24
paying me that's hysterical wait what
00:00:27
for real for real yeah he's he's the
00:00:29
newest contributor oh my God that's
00:00:31
incredible do they know you have TDS
00:00:34
business loves me no they they're
00:00:35
looking for a moderate they want a
00:00:37
moderate independent thinker and they
00:00:39
love no canis branding nois he has to
00:00:42
finish this in two hours because he's
00:00:44
taping with Jesse Waters up my God I
00:00:46
honestly I will say that I I saw both of
00:00:49
your appearances on Jesse Waters and I
00:00:50
thought you crushed both of them so
00:00:52
totally you are excellent I think it's
00:00:53
actually a good move for them I like the
00:00:55
idea sax you would love for me to be a
00:00:58
contributor on Fox I would
00:01:00
you would I'm I'm pulling your leg I'm
00:01:02
pulling your leg I'm pulling your leg
00:01:04
they haven't made the they haven't made
00:01:05
the I want your training to continue
00:01:06
young padwan oh really this is like I
00:01:10
will bring ballots to the force yes the
00:01:12
chosen one you're the chosen one you are
00:01:14
my brother rein you was supposed to
00:01:17
bring BR to the
00:01:20
F let your winners
00:01:22
ride Rain Man
00:01:27
David and in said we open source it to
00:01:29
the fan and they've just gone
00:01:31
[Music]
00:01:35
crazy all right everybody welcome back
00:01:37
to the number one podcast in the world
00:01:39
it's been confirmed
00:01:41
by the CEO of beep who told us we are
00:01:45
the beep podcast on his platform it's
00:01:48
episode
00:01:49
186 from the uh home office in Italy the
00:01:54
chairman dictator choth po hoaa how you
00:01:57
doing brother hello Jason how are you
00:02:00
we're good we're good I we can see that
00:02:02
we are definitely in July now because we
00:02:04
have one button to go for August and so
00:02:07
the it's kind of like the Sund dial you
00:02:09
know the Greeks we created the Sund dial
00:02:11
math Plumbing philosophy democracy all
00:02:15
these great things and gosh the Italians
00:02:17
you guys created be chests can I tell
00:02:21
you how good Italian white wine is on a
00:02:24
hot humid day it may it may be the
00:02:28
closest thing to Ambrosia and modern
00:02:30
in modern society it's just so good is
00:02:33
that your sports drink it's just like
00:02:34
you get off the I I could picture you on
00:02:36
like a treadmill I drink so much white
00:02:38
wine during the summertime and I eat
00:02:40
gelato every day and I tend to still
00:02:42
lose couple pounds by the time I get
00:02:45
home love I love a lot of walking a lot
00:02:46
of walking let me ask you this have you
00:02:48
ever uh had a glass of wine while
00:02:51
working out has that happened you ever
00:02:53
been
00:02:54
tempted be
00:02:56
honest brought wine to the gym I knew it
00:03:01
I know it that's the level
00:03:03
of did you open the wine bottle in the
00:03:06
gym or did you just like glass no I
00:03:09
opened it it had to breathe I went and
00:03:13
then I had somebody just bring me a
00:03:14
little sippy poops just so I could see
00:03:16
if it was opening up properly okay were
00:03:18
you on the treadmill or you doing
00:03:19
weights you're on the weight bench when
00:03:21
you said yeah I was I was pushing weight
00:03:23
okay pushing wait okay Back in 88 okay
00:03:26
and uh getting ready according to
00:03:28
reports I don't know can talk about this
00:03:30
but uh David Sachs is in the think tank
00:03:34
getting ready for his RNC debut how are
00:03:37
you Rainman yeah definitely definitely
00:03:40
given a keynote well I wasn't supposed
00:03:42
to talk about that but I saw that
00:03:44
someone leaked it to the New York Times
00:03:46
this morning so it's out there okay and
00:03:48
yeah I'm gonna be speaking there next
00:03:50
week great any um theme that you're
00:03:52
going for you can give us a little idea
00:03:54
of maybe a theme or two that you want
00:03:56
there is a theme but I don't want to
00:03:57
talk about it yet I'm not supposed to
00:03:59
talk about it I'm not to say I'm doing
00:04:01
it but it got out there so I guess
00:04:03
there's no hiding anymore we'll we'll
00:04:05
keep the cards close to the chest
00:04:07
and from the
00:04:10
mountains at the beep beep that he can't
00:04:15
talk about your Sultan of science
00:04:18
looking oddly not pale you got a little
00:04:20
Sun there brother looking good Dave
00:04:22
freeberg lot of outdoor sunning
00:04:24
happening last couple weeks yeah
00:04:27
enjoying enjoying the enjoying the
00:04:29
vitamin D all right Gentlemen let's get
00:04:30
to the docket there's a lot to talk
00:04:32
about Let's uh let's start with macro we
00:04:33
haven't talked macro everybody wants us
00:04:35
talk a little macro and uh got a lot of
00:04:37
news today the big question is has the
00:04:39
soft Landing been secured obviously
00:04:41
stocks are still surging records again
00:04:43
this week last week all the jobs seem to
00:04:46
have burned off and uh unemployment is
00:04:50
moving up that was one of JP's major
00:04:52
efforts and all the stemmy savings as
00:04:54
you pointed out shth are long gone and
00:04:57
today the big news CPI came in at 3 %
00:05:00
perhaps inflation has been cracked
00:05:03
here's your chart gentlemen economists
00:05:06
were expecting 3.1 so the print was
00:05:08
meaningfully cooler than expected and
00:05:11
CPI actually fell 10 bips on a
00:05:14
month-on-month basis obviously when you
00:05:16
see that three handle that is year over
00:05:19
year and this is the first time we had
00:05:22
month over month CPI decrease since May
00:05:25
of
00:05:26
2020 so lowest CPI in three years JP
00:05:30
said the FED doesn't need he said this
00:05:32
earlier this week he doesn't need to see
00:05:33
the 2% inflation to start the cuts
00:05:35
obviously he I guess he wants to steer
00:05:37
or speed up going into the turn so
00:05:40
September cut looks highly likely if you
00:05:44
look at the prediction markets fed funds
00:05:46
Futures now see an 89% chance of at
00:05:48
least one rate cut by September that's
00:05:50
up from
00:05:52
73% before the print according to
00:05:55
fedwatch that's a tool that tracks
00:05:57
interest rate Traders we discussed the
00:06:00
FED wanting to see employment and
00:06:03
savings cool well in June unemployment
00:06:05
was 4.1% the highest since 2021 up from
00:06:08
4% in May here's the stunning chart of
00:06:11
unemployment since
00:06:13
1948 in April 20123 unemployment
00:06:16
bottomed out at 3.4% the lowest since
00:06:19
any of us were born
00:06:21
1969 and you can see here there's been
00:06:24
an uptick from this incredible historic
00:06:26
low So Soft Landing appears to be
00:06:30
working the jobs Market slowing down
00:06:32
inflation has dropped tempered and the
00:06:35
market continues to hit all those
00:06:37
all-time highs S&P up 26% since last
00:06:41
year mostly of course thanks to
00:06:43
nvidia's record breaking performance but
00:06:46
also meta Amazon Microsoft a lot of
00:06:49
the the Fang magnificent 7 so I guess
00:06:53
chamath let's just start with you has
00:06:56
the soft Landing been secured
00:06:59
it's pretty incredible actually but it
00:07:01
looks
00:07:02
like there's a really good chance that
00:07:04
it has I think the bigger question
00:07:07
though is if we are on the verge of a
00:07:11
real contraction in the
00:07:13
economy and I think there's been enough
00:07:15
people that have warned you have to
00:07:16
remember like even though the stock
00:07:18
market for seven companies is hitting
00:07:20
all-time highs the stock market for
00:07:23
every other company that isn't those
00:07:25
seven companies have not and that really
00:07:28
is about just the broad base demand in
00:07:30
the economy so yeah I think that
00:07:32
inflation is Contracting but it could be
00:07:35
contracting for a combination of reasons
00:07:37
one is because we have we have had high
00:07:40
rates for a long time but the other part
00:07:42
is now people are unemployed there is no
00:07:45
money and the question is whether you
00:07:48
have some sort of contraction
00:07:49
economically that is measured by a
00:07:51
recession or not I think that's the
00:07:52
really big question what happens in the
00:07:54
next couple quarters do we have a little
00:07:55
mini recession or not okay uh freeberg
00:07:58
your thoughts and and then we'll go to
00:08:01
sex I think the Market's priced in a lot
00:08:03
of the expectation already if you look
00:08:05
at the uh PE chart on the S&P 500 going
00:08:09
back five years let's pull this one up
00:08:11
real quick you can see that we peaked
00:08:13
out obviously in 2020
00:08:16
2021 uh where we had a big boom with all
00:08:20
the stimulus money coming in and all the
00:08:22
money found its way into the markets
00:08:23
during the end of the Zer era and then
00:08:26
there was the slow wind down as we
00:08:28
started to hike rates
00:08:30
and then rate hikes peaked and now
00:08:33
despite the fact that rate hikes have
00:08:35
stopped and there have been
00:08:37
conversations about when the reversal
00:08:39
will happen the markets already started
00:08:40
to price in that reversal so with
00:08:42
respect to like Market valuations we
00:08:44
have still seen a rather significant
00:08:47
increase in the PE Ratio across the S&P
00:08:49
500 now to CH off's point a large
00:08:51
percentage of that is contributed to by
00:08:53
the top seven tech companies that are
00:08:55
driving that ratio inflation but a lot
00:08:58
of the market makers have already
00:09:00
started to take action expecting the
00:09:02
rate cuts to come in as you point out JK
00:09:04
90% plus likelihood of rate Cuts
00:09:06
happening this year so I don't know how
00:09:08
much Market action we will see but there
00:09:11
has been a lot of conversation from DC
00:09:13
about the FED should reset expectations
00:09:16
on inflation from 2 to 3% and if they
00:09:19
did that that that becomes the new
00:09:21
normal and we're never going to get back
00:09:23
to 2% at least in this current kind of
00:09:26
era that might be the era that we start
00:09:29
the really people are talking about that
00:09:31
talking about that freeberg of that like
00:09:33
that's been a big push is that the the
00:09:36
Jerome pal Mandate of 2%
00:09:39
inflation may be an expectation that
00:09:42
cannot be met given the amount of
00:09:43
stimulus that went into the economy
00:09:45
during covid that it could take a decade
00:09:47
to earn its way out as a result we will
00:09:50
not see a normalized contraction of that
00:09:52
Capital coming out of the markets in a
00:09:53
way that will get us back down to 2%
00:09:55
inflation for the time being and I just
00:09:57
saw a presentation by a bunch of to Food
00:09:59
Company Executives recently and they
00:10:01
took 13 to 15% price hikes last year and
00:10:04
you've heard Elizabeth Warren kind of
00:10:06
chime on about this but the reality is
00:10:09
that inflation is not just in the US but
00:10:11
around the world and it affects the US
00:10:13
markets as well because a lot of us
00:10:14
companies have had to raise prices
00:10:16
because of their dependence on labor and
00:10:18
materials and commodities from other
00:10:20
countries that are inflating they call
00:10:23
this the inputs right this is what they
00:10:24
say the inputs exactly and because of
00:10:26
the way that the globalized economy
00:10:27
works today the inflation around the
00:10:29
world is going to continue to buoy
00:10:31
inflation in the US even if we get our
00:10:32
house in order so it's very unlikely
00:10:35
that we get back to a
00:10:36
two-handle you know at least in this
00:10:38
kind of era uh and as a result you'll
00:10:40
probably see the uh the market kind of
00:10:43
assume that we're going to be at a 3%
00:10:45
kind of inflation level for for quite
00:10:46
some time it's very interesting the
00:10:48
obsession with the with the two I
00:10:50
brought this up on the show The the 2%
00:10:53
handle and and this target came from The
00:10:55
Reserve Bank of New Zealand this guy
00:10:57
Roger Douglas Minister of Finance
00:11:00
and he came up with it because they just
00:11:01
asked him like well what's a healthy one
00:11:03
and he came up with that and then
00:11:04
everybody adopted it the Dunder Mifflin
00:11:06
inflation index basically it's just
00:11:08
sitting out there okay so for a
00:11:10
completely objective nonpartisan view of
00:11:14
all this incredible economic data we go
00:11:16
to our RNC correspondent David saaks
00:11:19
throw a wet blanket on this incredible
00:11:20
news I'm as nonpartisan as you are jako
00:11:23
exactly don't pretend like you don't
00:11:25
have a candidate in this race I am a
00:11:27
moderate independent as we all know from
00:11:29
Fox News hits yes exactly Fox News has
00:11:32
hired you to provide the opposite point
00:11:33
of view in any event um sorry what's
00:11:36
your question uh just going down the
00:11:38
middle here joking obviously but uh a
00:11:41
little bit um but this is just rate the
00:11:45
fed's reaction to this it seems like you
00:11:48
know the fed's supposed to be
00:11:49
independent obviously this uh this fed
00:11:51
share has worked across Administration
00:11:53
so we've said here very critically they
00:11:55
got started too late they should have
00:11:57
got ahead of this but I mean rate their
00:11:58
performance
00:11:59
since then do you think they're nailing
00:12:01
this and there's going to be a soft
00:12:02
Landing what you have concerns you
00:12:04
optimistic about the economy and and how
00:12:06
they've handled it well the the fed's
00:12:07
mistake was just waiting way too long to
00:12:10
react to the inflation and they didn't
00:12:12
just wait nine months after the first
00:12:15
inflation print came in that was too
00:12:17
high before they started raising rates
00:12:19
they continue QE for six more months so
00:12:21
when you talk about all the stimulus
00:12:23
that's still in the economy that they
00:12:24
can't seem to get rid of a lot of that
00:12:26
was created by the feds QE in the second
00:12:29
half at 2021 that should never have
00:12:31
happened since then they did what they
00:12:33
had to do which is they increased rates
00:12:34
to solve inflation that's what you do
00:12:37
and yes it does seem to be working but
00:12:40
we still have inflation being
00:12:42
persistently high at 3% and so now like
00:12:45
freeberg saying they're trying to change
00:12:47
the goalpost to somehow normalize 3% we
00:12:49
should just understand that what that
00:12:51
means is permanently higher interest
00:12:53
rates because the FED has to offer or
00:12:57
under normal circumstances has to offer
00:12:59
a return above the rate of inflation so
00:13:02
whatever that return is 1% 2% you stack
00:13:06
that on top of the inflation rate so in
00:13:08
other words let's say the FED wanted to
00:13:10
Target a 2% real return that means that
00:13:14
the interest rate would be 5% with the
00:13:17
3% rate of inflation whereas if
00:13:19
inflation could be managed down to 2%
00:13:21
you would have a 4% interest rate and
00:13:25
that persistently if we're talking
00:13:27
permanently higher interest rate rate
00:13:29
will create a drag on the economy
00:13:31
because lower interest rates create more
00:13:34
investment they reduce the hurdle rates
00:13:37
to take risk whereas higher interest
00:13:39
rates as we've seen create drag on
00:13:42
equities and drag on investment so if
00:13:45
they redefine the inflation rate to
00:13:47
three instead of two there will be
00:13:49
long-term consequences from that that is
00:13:51
not a free thing to do yeah so that
00:13:54
would be like one part of the answer the
00:13:56
other thing is just yeah look inflation
00:13:58
going from .1 to 3.0 is positive it's
00:14:02
good news better than it going from 3.1
00:14:04
to 3.2 but we're talking about 0.1% and
00:14:08
I just think people get a little too
00:14:10
excited reading into these prints when
00:14:13
these are not huge changes and numbers I
00:14:16
do think that once the inflation rate
00:14:18
starts with a two-handle that
00:14:20
psychologically I think will be a big
00:14:21
change for people psychology has so much
00:14:24
to do with this I thought I was doing a
00:14:25
little research on it why it's so
00:14:26
contentious and there's so much of a a
00:14:29
lack of consensus about it Nick pull up
00:14:31
this chart I wanted to share it with you
00:14:32
guys this is um basically a
00:14:35
psychological phenomenon called partisan
00:14:37
economic perception and uh this has been
00:14:39
studied for some time and what's really
00:14:42
interesting about it is it shows what
00:14:45
percentage of people who are Democrats
00:14:47
and Republicans here in the United
00:14:48
States of America say uh the econom is
00:14:50
good and if you look at Clinton and you
00:14:54
know he got to be uh president at the
00:14:57
helm during the internet re Evolution
00:14:59
and this incredible economic boom he was
00:15:01
obviously so Centrist right he appealed
00:15:03
to uh both sides of the aisle and you
00:15:05
had this very
00:15:07
tight consensus that the economy was
00:15:10
good Democrats were maybe three or four
00:15:13
percentage points above Republicans in
00:15:14
that perception and then Bush came in
00:15:17
and all of a sudden Democrats hated Bush
00:15:19
so much that they perceived the same
00:15:22
economy 2000 uh and you obviously have
00:15:24
the dotom bus there so they both went
00:15:26
down in unison especially after the
00:15:29
Great Recession but you you have this
00:15:32
disparity that comes up chth where you
00:15:34
have 25 points between how they perceive
00:15:37
it Obama obviously Democrats were
00:15:40
incredibly enthusiastic about Obama
00:15:42
effusive even but Republicans hated him
00:15:46
with a passion right I mean that was
00:15:47
really when Fox News started to get
00:15:49
cooking and then you look at Trump same
00:15:51
exact phenomenon it flips under Trump
00:15:54
80%
00:15:56
of Republicans think oh they economy is
00:15:59
good and then Democrats say it's it's
00:16:02
not good and that plummets and you get
00:16:04
this big dispersion there are two
00:16:05
moments in time freeberg where or three
00:16:09
when you start to see the consensus get
00:16:10
tighter and that's during a crash so
00:16:12
there's your.com crash great financial
00:16:15
crisis and an election yeah and great
00:16:17
that's a very good point actually I
00:16:18
didn't notice that and then also during
00:16:19
the pandemic so you have three crises
00:16:21
this is a great chart yeah so freeberg
00:16:23
you know looking at this I think it
00:16:25
explains so much of the the the tension
00:16:29
in the country that we can't even agree
00:16:31
on you know hey is the economy good it's
00:16:33
just everything is perceived through
00:16:35
your partisan lens what what what's your
00:16:37
takeaway from this is it that we just
00:16:39
don't run moderates anymore like
00:16:42
Clinton um well look I mean at the end
00:16:44
of the day if people feel like they're
00:16:46
progressing they feel happier if they
00:16:49
feel like they're not progressing
00:16:50
they're unhappy regardless of their
00:16:51
absolute State you know we talked about
00:16:53
this with with Jonathan ha on our
00:16:55
interview show we talked about this on
00:16:56
the show in the past I think that
00:16:59
there's some studies that show that if
00:17:01
income growth is not roughly 10% a year
00:17:04
you get an unhappiness indicator and
00:17:07
then there are other associations with
00:17:08
that like am I improving the size of my
00:17:10
house am I able to buy a new car am I
00:17:12
able to like progress in my career and
00:17:14
make more money all these factors kind
00:17:16
of play in and much of this ends up
00:17:18
being booed by uh the the political
00:17:21
ideology of the candidate that's in the
00:17:23
office and how they are
00:17:25
popularizing what they are doing to help
00:17:27
you progress even if you are or are not
00:17:29
actually progressing so then people hear
00:17:32
the political leadership say this is
00:17:34
what we're doing you associate that as
00:17:37
being positive or negative if you're a
00:17:38
Republican or you're a Democrat you
00:17:40
associate it as one or the other and so
00:17:42
you have this perception of progression
00:17:44
without actually having economic
00:17:46
progression be tied to it so the reality
00:17:48
is gets decoupled so I think it's a you
00:17:50
know it's an excellent chart to kind of
00:17:52
highlight that uh that fact I'm not sure
00:17:54
how much it ties to this inflationary
00:17:56
issue that we're dealing with right now
00:17:58
but I will tell you that and I and I'll
00:18:00
restate this again much of the inflation
00:18:03
like I think grocery prices are up 30
00:18:04
plus% Nick you could probably pull this
00:18:06
up since Co that is you're correct one
00:18:08
of the sticky points you know because
00:18:11
this the CPI you have to parse it like
00:18:13
you're saying and gross Yeah the more
00:18:16
the more the more globalized the more
00:18:18
globalized the businesses are that are
00:18:19
providing the goods or services to us
00:18:22
the more likely they are to need to hike
00:18:24
prices to make up for the inflationary
00:18:26
cost structure in their business because
00:18:28
of their global
00:18:29
you want to hear an interesting factoid
00:18:32
yes please there was an article in
00:18:34
Bloomberg I sent it to Nick but people
00:18:36
have been tracking the S&P 500 Index
00:18:40
versus the equal weighted index so when
00:18:42
you calculate the S&P 500 Index you
00:18:45
weight it for the market cap so the top
00:18:47
seven or eight companies obviously get a
00:18:48
lot more weight in it and so they look
00:18:51
at the spread between that index and an
00:18:55
equal weighted index where every 500
00:18:57
companies are you know the 500 companies
00:18:58
are e each equal and what's interesting
00:19:01
is the spread right now is the most
00:19:06
extreme since March of 2000 right before
00:19:10
the dock oh Jesus Christ thanks
00:19:12
Jam well this is Bloomberg's data so I'm
00:19:15
just repeating it I just I read that
00:19:17
article but that's incredible it's a tie
00:19:19
into the AI thing I guess that we're
00:19:21
going to talk about soon but next yeah
00:19:24
we could be at the end of just an
00:19:26
enormous hype cycle here where we have
00:19:28
have to contract the equity Market
00:19:30
that's probably not a bad thing by the
00:19:32
way because as sack said one of the
00:19:34
things that you have to do is I think
00:19:35
you have to underwrite to a rate of
00:19:37
return and right now nobody knows really
00:19:39
what to do because valuations would tell
00:19:43
you that you should price to the low end
00:19:46
but then it's not really clear what the
00:19:49
risk-free rate of return should be so
00:19:51
everybody's just sort of like they're
00:19:53
they're they're they're shrugging and
00:19:55
their arms are in the air no and nobody
00:19:57
knows what to do so if you really want
00:19:59
to get the economy moving at some point
00:20:02
you're going to have to reset something
00:20:03
you're going to have to reset rates or
00:20:06
you're going to have to set the equity
00:20:07
risk premium in the stock
00:20:09
market you're going to have to reset
00:20:11
people's expectations around whether
00:20:13
what what is actually happening in the
00:20:14
economy and right now we're in this
00:20:16
limbo where none of those things have
00:20:18
been decided but there are all of these
00:20:21
weird moments like data points that you
00:20:24
could use to kind of just justify your
00:20:27
bias quite honestly but the point is
00:20:29
that I think there's a lot of question
00:20:30
marks right now not a lot of answers
00:20:33
yeah that uh phenomenon you're talking
00:20:35
about previously is relative deprivation
00:20:40
freeberg it's a phenomenon where you
00:20:43
compare yourself to other people and you
00:20:44
feel like I I'm getting screwed
00:20:47
here sax what's your take
00:20:49
on this AI bubble because we I got some
00:20:53
data I'm about to pull up on it but
00:20:54
let's just get there right now how much
00:20:56
of this
00:20:59
boom that we're seeing in the stock
00:21:00
market is this
00:21:03
AI
00:21:04
bubble well a lot of the Boom is driven
00:21:07
by these AI stocks notably Nvidia I if
00:21:09
you take out the AI stocks I'm not sure
00:21:11
the market is up or maybe it's up a
00:21:14
little bit I mean a huge part of the the
00:21:16
gain is from these I don't know top five
00:21:18
top seven tech stocks uh is it a bubble
00:21:21
I think that's going a little too far I
00:21:23
mean I I personally think the AI wave is
00:21:25
real I think the question is whether the
00:21:28
level of investment that we're seeing
00:21:30
going into cloud service infrastructure
00:21:32
as sustainable there's a huge buildout
00:21:35
happening right now many many billions
00:21:37
of dollars building out these new cloud
00:21:42
service centers or Cloud infrastructure
00:21:44
cers data centers based on gpus instead
00:21:46
of CPUs and I think it's a good question
00:21:49
about whether that's sustainable I I I
00:21:51
do think that one of the things that's
00:21:53
going on is that the chips are really
00:21:56
expensive I mean these gpus from Nvidia
00:21:58
with they're like
00:21:59
$30,000 yeah per GPU an h100 right and
00:22:02
part of the reason for that is the
00:22:04
scarcity they haven't been able to
00:22:05
produce as much as there's demand for
00:22:07
and so they're commanding a premium
00:22:09
right now and just to be clear they're
00:22:11
not just a chip I mean people think
00:22:12
they're like a chip they think something
00:22:13
you hold in the palm of your hand
00:22:14
they're like a racked server that's like
00:22:17
thousands of yeah it's got like
00:22:18
thousands of components and it's a very
00:22:20
complicated product to make in any event
00:22:23
they're very expensive and so it's very
00:22:25
expensive to build out this new
00:22:27
infrastructure I do think that over time
00:22:30
the price of these chips just has to
00:22:31
come down it just doesn't make sense
00:22:32
that they'd be so expensive just as
00:22:35
production increases and they don't have
00:22:37
this rate limit on the supply then I
00:22:41
think the price should come down and the
00:22:42
cost of infrastructure should normalize
00:22:44
a bit well and you heard it here first
00:22:46
on the all-in Pod here's episode 181 six
00:22:48
weeks ago no shanis wasn't involved in
00:22:52
this one but here's jamaath and
00:22:53
freeberg you cannot spend this kind of
00:22:56
money and show no incremental Revenue
00:22:58
potential so while this is incredible
00:23:01
for NVIDIA the chicken is coming home to
00:23:03
roost because if you do not start seeing
00:23:06
Revenue flow to the bottom line of these
00:23:08
companies that are spending $26 billion
00:23:10
a quarter the market cap of Nvidia is
00:23:13
not what the market cap of Nvidia should
00:23:14
be and all of these other companies are
00:23:16
going to get punished for spending this
00:23:18
kind of money where are all these new
00:23:20
fangled things that we're supposed to
00:23:22
see that justifies a hundred billion
00:23:24
doll of Chip spend a year $200 billion
00:23:27
of energy spend hundred billion dollar
00:23:29
of all this other stuff we're now
00:23:31
spending $750 billion this is on the
00:23:34
order of a
00:23:36
national transfer payment and we've seen
00:23:39
nothing to show for it except that you
00:23:41
can mimic somebody's voice it doesn't
00:23:44
all hang together yet you know the
00:23:46
general statement might be made that
00:23:48
perhaps the first AI mini bubble is
00:23:51
bursting a bit and particularly with
00:23:53
respect to the accelerated expectations
00:23:56
that public market investors had for
00:23:58
Public Market technology stocks that
00:24:00
perhaps now is the time for a bit of a
00:24:02
reckoning that perhaps this isn't going
00:24:04
to happen at the same margin level or
00:24:06
the pace that folks had modeled correct
00:24:08
and this is going to cause a bit of a
00:24:09
setback and so I think inspired in part
00:24:11
by that David Khan from Sequoia Capital
00:24:14
legendary Venture firm here in Silicon
00:24:16
Valley published a Blog titled AI $600
00:24:19
billion
00:24:21
question KH said there was a $500
00:24:24
billion Revenue hole when considering AI
00:24:27
capex levels he got this number by
00:24:29
calculating that companies need to show
00:24:31
around 600 billion in AI Revenue to
00:24:33
justify projected capex levels in Q4 and
00:24:37
he generously assumes Google Microsoft
00:24:39
Apple meta Tesla and others will
00:24:41
generate 100 billion annually combined
00:24:44
that's pretty generous and uh that still
00:24:46
leaves a $500 billion hole here's the
00:24:49
Nvidia uh data center run rate Revenue
00:24:51
as you can see Q4 of 2023 50 uh billion
00:24:56
and now 150 billion and then you have
00:24:59
the data center facilities being built
00:25:02
and the cost to operate those imply data
00:25:03
center AI spend and then of course your
00:25:05
software margin conetti also thinks that
00:25:08
the GPU shortage already peaked last
00:25:10
year we'll get to that later on June
00:25:13
25th couple weeks ago Goldman published
00:25:16
a 31 page report called gen too much
00:25:19
Bend too little benefit so you heard it
00:25:21
here first on the All pod and I think
00:25:23
everybody's kind of catching up with
00:25:24
this theme companies are going to spend
00:25:27
one trillion according to the report on
00:25:29
AI cap X over the next several years
00:25:32
usually that's 3 to five and when use
00:25:34
the word several AI productivity gains
00:25:36
are limited in the near to midterm the
00:25:38
next 10 years and ai's Roi is likely
00:25:41
significantly limited due to costs the
00:25:43
cost of AI are so high and the repenti
00:25:45
so unclear that there a chance the
00:25:46
economics never make sense here's a
00:25:49
choice quote and then I'll get the
00:25:51
reaction from the team replacing
00:25:52
low-wage jobs with tremendously costly
00:25:54
technology is basically the polar
00:25:56
opposite of the prior technology
00:25:58
transitions I've witnessed in my 30
00:26:00
years of closely following the tech
00:26:02
industry and that's Goldman's head of
00:26:04
global equity research this an
00:26:05
interesting concept here chath that
00:26:07
you're saying like hey making like fun
00:26:09
images or you know maybe uh rewriting
00:26:13
your blog post but that's low that's low
00:26:15
wage work uh so what are your thoughts
00:26:18
on this report these two reports yeah
00:26:21
well I think we're all converging on the
00:26:23
same realization which is you can't
00:26:25
spend a trillion dollars and only have
00:26:27
toy apps to show for it so I think we've
00:26:30
all been Amazed by these AI demos I
00:26:34
think the four of us have talked pretty
00:26:36
incessantly about it now for 18 plus
00:26:39
months ever since we saw the first open
00:26:40
AI demos so that's great and the
00:26:43
underlying technology I think is really
00:26:45
important but it's
00:26:47
also important to acknowledge that the
00:26:50
underlying technology has enormous
00:26:52
gaps there's gaps in the quality of the
00:26:57
products that can be created to not have
00:27:01
hallucinations those gaps are too large
00:27:03
right now for them to be used reliably
00:27:06
in production settings unless you have a
00:27:08
very defined scope if you have a defined
00:27:11
scope though the implementation costs
00:27:14
are not nearly what needs the level of
00:27:17
spend to support so there's just a big
00:27:19
mismatch second is that we have a huge
00:27:22
problem with Nvidia and I'll just kind
00:27:24
of say the quiet part out loud which is
00:27:27
you can't spend this kind of money to
00:27:29
have technology lock in to one Hardware
00:27:31
vendor and that makes no sense and what
00:27:34
you're seeing now is that Amazon Google
00:27:37
Microsoft AMD Intel a plethora of
00:27:40
startups grock everybody trying to make
00:27:42
now different Hardware
00:27:44
Solutions the problem though that that
00:27:46
creates is that we have this massive
00:27:47
lock in right now because the code is
00:27:50
littered with all these Nvidia specific
00:27:52
ways of implementing access to gpus
00:27:54
that's not
00:27:55
sustainable so we have a we're in a of
00:27:58
an existential thrash and I think the
00:28:01
only way that we're going to get around
00:28:02
this is to do a little bit of a reset
00:28:05
and I think that's going to touch a lot
00:28:06
of startups that have already taken down
00:28:08
way too much money at really insane
00:28:11
valuations part of that was just because
00:28:14
we needed I guess the market wanted a
00:28:17
place to believe in again after the
00:28:19
crypto meltdown and after all of the
00:28:21
other SAS meltdown and all of the other
00:28:24
stuff that we've gone through so yeah I
00:28:26
think that we are in a bit of a
00:28:27
reckoning right now it's going to be a
00:28:31
complicated couple of quarters to at a
00:28:33
minimum and probably a complicated year
00:28:35
to sort out who's actually real it's
00:28:37
interesting psychological phenomenon
00:28:39
there freedberg of the capital
00:28:41
alligators the tech industry the
00:28:43
entrepreneurs they want to believe in
00:28:44
something and you know the previous
00:28:46
Paradigm shifts were ending and and here
00:28:49
we go new paradigm shift perhaps were
00:28:51
such a efficient capitalistic machine
00:28:55
now that we we we almost like processed
00:28:58
super quickly in some ways freeberg you
00:29:00
know we we deploy massive Capital we try
00:29:03
to solve huge problems I mean and then
00:29:05
maybe we hit the Reckoning in the trout
00:29:07
of Despair that we talked about you know
00:29:09
many times uh innovator's
00:29:12
dilemma you know you know crossing the
00:29:14
chasm kind of style so what are your
00:29:16
thoughts on Schat's point there or any
00:29:18
other point you might have there's a
00:29:19
cold heart truth here okay which is
00:29:22
there is a ton of capital that was
00:29:25
raised during the covid bubble era
00:29:28
and the Zer era that needed a place to
00:29:31
go and a lot of the traditional
00:29:34
businesses traditional business models
00:29:36
traditional in the technology sense SAS
00:29:38
and a lot of the biotech stuff it all
00:29:41
became it became uninvestable then
00:29:44
there's a lot of money in the public
00:29:45
markets that was sitting on the
00:29:46
sidelines that was sitting in treasuries
00:29:48
and so on so every dollar is looking for
00:29:50
growth and there's a lot of dollar still
00:29:52
sitting around out there from the the
00:29:54
the Zer era and coming into this kind of
00:29:56
post Zer era look looking for a place
00:29:58
for growth and there is very little
00:30:00
growth as we talked about with the S&P
00:30:02
493 not being very performative with
00:30:05
respect to growth and revenue and having
00:30:07
great outlook for the next five years so
00:30:10
then when there is a glimmer of upside
00:30:11
there's a glimmer of opportunity even if
00:30:14
it's just painting a picture of a growth
00:30:16
story all the capital drives into it and
00:30:18
we've all heard stories about these
00:30:21
series a startups in AI getting bid up
00:30:24
to a100 million valuation and I've seen
00:30:26
a couple of these where people have me
00:30:28
things on like protein modeling AI
00:30:29
startups and it's literally like two
00:30:31
guys from meta and open AI that left and
00:30:34
started this company and they get they
00:30:36
raised 30 on a 12 PR or something and
00:30:38
it's just two guys building a model and
00:30:40
that's because that Capital needs to
00:30:41
find a place where it can tell itself a
00:30:43
growth story and so I think that we're
00:30:45
still dealing with the the capital
00:30:47
hangover from zerp and the fact that
00:30:49
there's a dir of areas to invest for
00:30:51
real growth that has allowed the AI
00:30:53
bubble to kind of grow as quickly as it
00:30:55
has and now as Jamar points out we are
00:30:58
kind of rationalizing that back and I do
00:31:00
think that there's going to be a reset
00:31:01
now I'll also say that the Goldman
00:31:03
report which I read and some of the
00:31:05
other analyses that have been done I
00:31:07
think there was some commentary or some
00:31:08
analysis that hey it costs me six times
00:31:11
as much as having an analysts do this
00:31:12
work like the the the energy cost of the
00:31:15
AI is still so high the actual
00:31:16
performance of the model is not good but
00:31:18
what that fails to write it's right and
00:31:20
wrong it's right in the sense that yes
00:31:22
it is more expensive today and the
00:31:23
return on investment is not there today
00:31:26
it's wrong in that it ignores
00:31:28
the performative model improvements that
00:31:30
we're seeing in nearly any metric over
00:31:32
the past couple of months every few
00:31:34
months as we know we see new models new
00:31:36
improvements new architectures new ways
00:31:38
of leveraging the chips to actually
00:31:40
drive a lower token cost to drive lower
00:31:44
energy cost per per answer lower energy
00:31:46
cost per run and so every metric that
00:31:48
matters is improving so if you fast
00:31:50
forward another 24 36 months I do think
00:31:53
that there's a great reason to be
00:31:54
optimistic that there's going to be
00:31:56
extraordinary Roi based on the
00:31:58
infrastructure that's being built it's a
00:32:00
question of are you going to get payback
00:32:01
before the next cycle of infrastructure
00:32:03
needs to be made and everything comes
00:32:04
back in we saw this during the dotcom
00:32:06
boom where a lot of people built out
00:32:07
data centers and by the time they were
00:32:09
actually able to make money on those
00:32:10
data centers it was like Hey all the new
00:32:12
Telo equipment all the new servers need
00:32:13
to be put in and everything got written
00:32:15
off so there is a big capex kind of
00:32:17
question mark here but I do think that
00:32:18
the fundamental economics of AI will be
00:32:20
proven over the next couple of quarters
00:32:22
yeah I mean I I don't I don't think it's
00:32:24
going to be the next couple quarters
00:32:25
quite honestly I do think in the next
00:32:27
couple of De ades and in the next couple
00:32:29
of years what I would hope ambitiously
00:32:31
is that there are a few really useful
00:32:36
proof points where companies are making
00:32:38
revenu solving very specific defined
00:32:41
problems where quite honestly you're
00:32:43
taking workloads of X and making it X
00:32:45
over 10 right and I think that that's
00:32:48
possible but I think this generalized
00:32:51
idea that all of this spend is going to
00:32:52
have a good Roi I think is pretty
00:32:55
wishful thinking Saks you want to uh
00:32:57
maybe give a sure thoughts here bubble
00:33:00
do we work our way out of it are we
00:33:02
overspending or is this all Manifest
00:33:04
Destiny you know if you build it they
00:33:05
will come kind of situation we throw all
00:33:08
this Capital there we make a lot of uh
00:33:10
progress on these projects and something
00:33:13
comes out the other end as messy as it
00:33:15
is I think that's what's likely to
00:33:16
happen I'm much more bullish than you
00:33:18
guys about this investment that's being
00:33:20
made remember that when the internet got
00:33:22
started in the 90s it was via dialup I
00:33:25
mean you literally had to have a modem
00:33:27
and you would dial up the internet and
00:33:29
it was incredibly slow photo sharing
00:33:31
didn't even work so social networking
00:33:33
wasn't possible and basically what
00:33:36
happened next was that the Telecom
00:33:38
company spent a ton of money building
00:33:40
out
00:33:41
broadband and people started upgrading
00:33:44
to broadband then we had the Doom crash
00:33:45
everyone thought that telecom companies
00:33:48
had wasted billions of dollars investing
00:33:50
in all this Broadband infrastructure and
00:33:53
it turned out that no they were right to
00:33:55
do that it just took a while for for
00:33:57
that to get used and this is a pretty
00:34:00
common pattern with technological
00:34:02
revolutions is that you can have a
00:34:04
bubble in the short term but then it
00:34:07
gets justified in the mid to long term
00:34:10
the build out of the railroads in the
00:34:11
United States another example of this we
00:34:12
had huge railroad bubbles but it turned
00:34:15
out that that investment was all
00:34:17
worthwhile so I T of think that's what's
00:34:19
going to happen with AI I mean I I do
00:34:21
think that there's already enough let's
00:34:23
call it realness to the applications I
00:34:26
mean I'll give you three examples number
00:34:27
one open AI I mean open AI is
00:34:31
effectively semantic search right it's a
00:34:34
different kind of search engine where it
00:34:36
understands the question you're asking
00:34:38
and gives you an answer instead of Blue
00:34:40
Links and they're already at was it we
00:34:42
talked about this previously 3.4 billion
00:34:45
Revenue that's consumer at 20 bucks and
00:34:47
Enterprise at like 30 bucks a month and
00:34:50
then there's also the API yeah they're
00:34:52
just starting already I mean this is
00:34:53
this company's only been around for two
00:34:55
years with a product on the market and
00:34:57
it's doubling year over year so that's
00:35:00
just example number one right I mean
00:35:02
what's the most valuable application on
00:35:03
the internet until now it's been Google
00:35:05
right and soar search and so you have a
00:35:08
different kind of search now that I'm
00:35:10
not saying it's a one for one
00:35:11
replacement it's also a new market but
00:35:14
my point is just you already have a very
00:35:16
powerful application in the form of this
00:35:18
semantic search which open AI is
00:35:19
currently dominating the second one I
00:35:21
think will be when Apple comes out with
00:35:23
iPhone 16 you know with llm power Siri
00:35:28
assuming they do a decent job with that
00:35:31
I it's going to lead to a huge upgrade
00:35:33
cycle I mean I'm still on an iPhone 13
00:35:34
because I haven't seen a reason upgrade
00:35:36
I will definitely upgrade to the iPhone
00:35:38
snap upgrade snap upgrade snap upgrade
00:35:40
for that assuming that they roll their
00:35:43
own LM and use that to power Siri and
00:35:45
don't give my data to a third party llm
00:35:48
and there's been mixed reports about
00:35:50
that you don't trust samman with your
00:35:53
with your iPhone backup I don't want
00:35:54
Apple sharing any of my data yes course
00:35:57
which they obtain by being the operating
00:35:59
system with a third party llm
00:36:02
but a bunch of viewers of the show Post
00:36:05
in the comments that I had made a
00:36:06
mistake on this and that Apple was
00:36:09
rolling its own llm to power Siri and
00:36:11
they would only go to open AI during a
00:36:14
sech if their own llm can't do it for
00:36:18
some reason I'm just going to turn that
00:36:20
feature off but uh but in any event so
00:36:22
assuming Apple gets that right
00:36:24
everyone's going to upgrade their
00:36:25
iPhones the third app is is look you
00:36:28
know we're using llms to power glue and
00:36:32
the results aren't always consistently
00:36:35
awesome I would say the results are kind
00:36:38
of like a B+ right now but you do get
00:36:40
some really great results you know is a
00:36:44
strong start for you it's a strong start
00:36:46
yeah and you know in a year or so we're
00:36:47
going to be at the next gen version of
00:36:51
all the models you're going to be at I'm
00:36:52
sure uh you know Chach T5 will be out
00:36:55
and then the next version of claw and so
00:36:58
forth at that point it's going to be an
00:36:59
A+ and I got to tell you I've been using
00:37:02
Claude and chat GPT 40 and it is
00:37:06
extraordinary how fast theyve fixed
00:37:09
going to the web to get information it
00:37:10
used to be arduous and painful to get
00:37:13
updated information and so I was like
00:37:15
hey get me all of
00:37:17
these the I think I may have told this
00:37:19
story previously here on this week
00:37:21
startups but I was talking about like I
00:37:22
was doing research on salaries and I
00:37:24
said just grab me all the information
00:37:25
from glass door indeed High salary low
00:37:27
salary average salary these two
00:37:29
different cities put it in a table and
00:37:31
give me the links and it did it and I
00:37:33
was like that's like a college education
00:37:36
educated person's job for 40 bucks an
00:37:39
hour Call It Whatever It Is a 60 70
00:37:41
80,000 a year person so I I'm I'm in the
00:37:44
bullish capap with you saxs I I think
00:37:46
it's being overbilt sure but I think
00:37:49
we're going to see a Tipping Point next
00:37:51
year where a lot of Labor Arbitrage
00:37:54
occurs and what I mean by that is like
00:37:57
you people are figuring out ways to cut
00:38:00
jobs or have one person do three jobs
00:38:03
and I'm seeing it across all the
00:38:04
startups we invest in I'm seeing it with
00:38:06
Athena the company we invested in I
00:38:07
mentioned
00:38:09
earlier and uh I'm really interested in
00:38:12
robotics now too I think there's going
00:38:13
to be some incredible gains with Optimus
00:38:16
and some of the other robots that are
00:38:17
occurring and those things are only
00:38:18
going to cost 20 grand so it's this is
00:38:21
going to be pretty I I think I think the
00:38:23
lwh hanging fruit application wise in
00:38:25
the Enterprise is chat with a knowledge
00:38:28
base chat with your knowledge bases
00:38:30
that's what people want right yes and
00:38:32
we're still in the early stages of being
00:38:33
able to connect your Enterprise data to
00:38:36
an llm in a safe compliant way that's
00:38:40
where a lot of activity is happening
00:38:42
right now and the compliant part means
00:38:45
you're working in the tech group or the
00:38:47
Marketing Group and you don't guys you
00:38:49
know search the HR departments data yeah
00:38:52
guys let me ask you just a general
00:38:54
question though okay like we've spent a
00:38:56
trillion dollars
00:38:58
let's say that there's forward
00:38:59
purchasing commits for let's be generous
00:39:01
and say only half that number so now
00:39:03
there's 1.5
00:39:04
trillion so we're $ 1.5 trillion in the
00:39:07
J curve how much total revenue does the
00:39:10
entire AI economy that's established
00:39:13
today need to generate to pay that back
00:39:15
plus some reasonable rate of return
00:39:17
Revenue at at a fair multiple and and
00:39:20
and I think what I'm getting to is open
00:39:23
AI is a good example of a company that's
00:39:25
winning but unless they somehow figure
00:39:27
out a to start making $50 billion
00:39:29
there's another 47 billion of Revenue
00:39:32
that's missing that's my point yeah I
00:39:34
think they get there I'm totally honest
00:39:36
and I watching no no I'm saying I'm just
00:39:38
saying that's like just for the last
00:39:39
couple years of spent
00:39:42
yeah I mean there's so much dry powder
00:39:44
sitting around at these large companies
00:39:46
I think Capital as a weapon kind of
00:39:48
situation but it could be a big that's a
00:39:51
different explanation which is we we can
00:39:52
just take the rate of return to zero cuz
00:39:54
we have nothing better to do with the
00:39:56
money that's a fair answer as well Jason
00:39:59
I mean what are they going to do give a
00:40:00
dividend I mean God forbid right like I
00:40:02
mean Facebook's already giving one
00:40:04
Apple's given one so maybe you know I
00:40:06
think that's how they can't do m&a
00:40:07
because alinaa Khan yeah look where I
00:40:10
think where I think jamath has a point
00:40:11
is that these big tech companies are not
00:40:14
building out all this infrastructure
00:40:16
because they've modeled out the ROI and
00:40:18
it's extremely positive they're doing it
00:40:19
because it's an arms race it's so
00:40:22
strategic right now to have these AI
00:40:24
capabilities and to power the expected
00:40:26
next generation of AI apps they can't
00:40:28
afford to let one of their competitors
00:40:30
have that they have to compete so
00:40:32
they're all in an arms rate with each
00:40:33
other bidding up the cost of these gpus
00:40:36
because they have to have that Supply
00:40:37
it's like nukes it's like nukes you
00:40:39
never use them you built them out it
00:40:41
might be the good well I mean I think
00:40:42
they're going to use them but yeah I
00:40:44
mean the point is that it's a zero sum
00:40:46
game and if I let you have this GPU I
00:40:49
have one less GPU to use what do you
00:40:51
think of Andre this article that andrees
00:40:54
just turned on 20,000 gpus jamat to your
00:40:56
point it was reported early this week
00:40:58
that injuries in harowitz that's a very
00:40:59
large Venture Capital firm here in the
00:41:01
Bay Area is building a 20,000 GPU
00:41:04
cluster we mentioned earlier 20 $30,000
00:41:07
a GPU is what you can estimate there so
00:41:09
this is hundreds of millions of dollars
00:41:11
to try to cut deals and wind deals with
00:41:14
AI startups and so they they stole this
00:41:17
idea from Daniel gross which you
00:41:18
probably don't know who that is but it's
00:41:21
a company called Pioneer labs and Nat
00:41:23
fredman from GitHub they did this last
00:41:25
year same exact idea they they acquired
00:41:28
2500 h100s and they gave their portfolio
00:41:30
companies access to it in something
00:41:32
called the Andromeda cluster really
00:41:35
brilliant idea there's the tweet from
00:41:37
Nat it's not clear whether a16 is
00:41:41
purchasing these or they're just gonna
00:41:43
pay for them on AWS or Google Google
00:41:46
cloud or some other provider but if
00:41:49
these were purchased obviously hundreds
00:41:50
of millions of dollars what's your
00:41:53
thought here I won't go through all the
00:41:54
details I'll just go right to your
00:41:55
opinion Jamal what's your thought on
00:41:56
this yeah a friend of mine who's a very
00:41:59
successful debt fund
00:42:02
manager and I talked about it this week
00:42:04
friend of the Pod I won't name check him
00:42:07
but he knows who he is was and I am were
00:42:10
talking about this and basically I think
00:42:12
if you look at the the most typical deal
00:42:15
so like for example the the cor weave
00:42:16
deal which was floating around was
00:42:19
something along the lines of 40% of the
00:42:22
cost of all the gpus was put up in cash
00:42:24
and 60% was lent to cor weave by
00:42:27
a whole group of Bankers so if assuming
00:42:29
Andre was able to do roughly the same
00:42:32
thing the 20,000 GPU cluster at call it
00:42:35
say 20 to 30,000 is between 4 and 600
00:42:38
million of
00:42:39
cost and if they get 60% of it financed
00:42:42
I hope they did that still leaves 40%
00:42:45
that they would have had to pay for
00:42:47
which you're still talking about $100
00:42:50
million plus and so then the real
00:42:52
question is can they get enough equity
00:42:55
back to make that $100 million
00:42:58
investment worthwhile and just to put a
00:43:00
fine point on this if that's a 100
00:43:02
million of management fees the reality
00:43:04
is that that's actually $2 billion
00:43:06
dollar of value right because these
00:43:08
these management companies Trade It call
00:43:10
it say 20 odd times so what's so
00:43:12
interesting about this is like you take
00:43:14
a 100 million of management fee that's
00:43:16
worth two billion of Enterprise Value
00:43:18
you dump it into these chips in cash so
00:43:21
whatever Equity you get from these
00:43:23
startups will need to make about $2
00:43:25
billion plus a little bit to account for
00:43:27
the the the time value of money
00:43:30
otherwise you were probably better off
00:43:32
not doing this that's just the math of I
00:43:34
wonder if this is the 20 times math only
00:43:37
makes sense if it's 100 million a year
00:43:39
in perpetuity right if it's a onetime
00:43:41
spend on the 100 million then it's just
00:43:43
100 million well you also have to power
00:43:45
these you have to put them in a data
00:43:46
center there's a lot of cost to these
00:43:47
things there's a lot of ongoing cost
00:43:49
yeah a lot of ongoing cost so let just
00:43:51
say they'll spend that another 20 or 30
00:43:52
million over the next 10 years my point
00:43:54
is it's a drag on your Enterprise Value
00:43:57
that's probably in the billion plus
00:43:58
dollar range and so whatever Equity you
00:44:01
get needs to make up for that plus sum
00:44:03
and my only comment is that if you then
00:44:06
factor in Sachs as you said before the
00:44:09
desire to get these Nvidia chips down in
00:44:12
price but also to have Hardware
00:44:15
diversity it's a really speculative bet
00:44:18
and you have to be really right it's
00:44:20
also a crazy conflicted bet too because
00:44:23
Nvidia was using these chips in the same
00:44:25
fashion they were using allocations
00:44:27
to get investment allocations in
00:44:30
companies and then paying them off so
00:44:31
now you have inre buying them from
00:44:33
Nvidia it's also convoluted uh Amazon
00:44:36
was doing this as well with AWS giving
00:44:38
credits Etc so tried and true strategy
00:44:41
but very strange I don't think it's that
00:44:42
weird a
00:44:44
strategy because I mean look it's
00:44:46
definitely I'm saying it's weird because
00:44:48
of they're giving money to Nvidia I
00:44:50
don't think you need to do this to build
00:44:52
a successful Venture firm and if you
00:44:54
want to maximize the value of the entity
00:44:57
you would keep the 100 million for
00:44:58
yourself because then some investor will
00:44:59
pay you a huge multiple for that know
00:45:02
what I'm saying is is that they they're
00:45:04
buying these chips and then they're
00:45:05
effectively time sharing them out to to
00:45:08
portfolio companies and so they they're
00:45:09
going to charge for their use they're
00:45:12
going to amortise this cost they're G to
00:45:14
charge back you think they're going to
00:45:15
charge back the
00:45:17
startups I'm just saying you have to see
00:45:19
a path to make back what you're losing
00:45:20
in Enterprise Value is my point see I
00:45:21
think this is brilliant for year 012
00:45:25
like pioneer Labs was doing because
00:45:27
those people really don't have the money
00:45:29
if you're a viable concern you can
00:45:30
easily get the money to buy your own or
00:45:32
rent your own and we just said in the
00:45:35
previous story that the glut and the
00:45:37
weight is over for these so interesting
00:45:39
it depends on the rate of depreciation
00:45:41
if you buy these chips at a premium
00:45:43
because they're scarce right now and
00:45:44
then all of a sudden they rapidly
00:45:46
depreciate in value then you might lose
00:45:48
money on the other hand if the current
00:45:50
value of the investment remain stable
00:45:51
because they don't depreciate that
00:45:53
rapidly and then you can charge the cost
00:45:55
back to the stups who are using the
00:45:57
then you know you break even I think
00:45:59
that's an excellent point yeah and it's
00:46:01
basically a business development expense
00:46:03
I think this is a PR marketing this is a
00:46:06
PR marketing exercise and it worked well
00:46:08
done mark because we're talking about it
00:46:10
IND think a bad idea at all I mean I
00:46:13
think it's kind of interesting I think
00:46:14
they've gotten 100 million in marketing
00:46:16
of it just yeah I mean look it appeals
00:46:18
to a certain category of startup who
00:46:19
needs the GPU I mean just to be clear
00:46:22
like there's lots of AI applications
00:46:23
that don't need direct access to gpus
00:46:26
because you know for example we're using
00:46:29
the Claude models and we're using the
00:46:30
open AI model you're using the language
00:46:32
model API so it's abstract need them
00:46:35
yeah we don't deal with GP I mean you
00:46:36
have to be in the model business
00:46:38
effectively to need direct access to the
00:46:40
gpus as we wrap up here today freeberg
00:46:43
your thoughts uh and you had mentioned
00:46:44
in the group chat last minute addition
00:46:46
to the docket you wanted to talk about
00:46:48
the French elections and I know saxs was
00:46:52
tweeting about it because all the people
00:46:54
who hate him were sending it to me so I
00:46:57
always know when he tweets about
00:46:58
something spicy good free bur what do
00:47:00
you got there was
00:47:01
effectively a center and left alignment
00:47:05
that created kind of a a surprise upset
00:47:09
to the right that was surging in the
00:47:11
poles leading into the selection in
00:47:13
France and as we all saw there was a lot
00:47:16
of celebration in the streets and some
00:47:18
rioting and so on but it was a real kind
00:47:20
of surprise shift left in this kind of
00:47:23
important vote that happened in France
00:47:24
and then the party Ste up and put
00:47:27
forward these economic proposals they
00:47:29
said a 90% tax on income over €400,000 a
00:47:32
year a 14% mandatory wage increase
00:47:35
retirement age needs to be reduced to
00:47:37
the age of 60 from 64 which obviously
00:47:39
massively increases social spending and
00:47:41
that they want to put forward proposals
00:47:43
to put in place price controls on things
00:47:46
like food electricity gas and petrol so
00:47:48
effectively intervening in kind of the
00:47:50
free market pricing system last month in
00:47:53
India we also saw elections where the
00:47:56
BJP did not get a majority in Mexico we
00:47:58
saw shine bomb get elected with 60% of
00:48:00
the vote retaining the leftist
00:48:02
government shine bomb's
00:48:05
platform is that the government's role
00:48:08
is to really solve the economic
00:48:10
inequality kind of throughout the
00:48:11
country she is a Jewish scientist who
00:48:14
believes in technological progress but
00:48:16
her orientation is really around having
00:48:18
institutions manage progress not
00:48:19
individuals in free
00:48:21
markets we've seen this broad across
00:48:24
other places in in the UK there was a
00:48:26
big election in this past week but I
00:48:27
wanted to take a step back and just
00:48:29
highlight that there is this kind of
00:48:31
emerging tactical Alliance that we've
00:48:33
seen repeat a few times between the left
00:48:34
in the center that pushes back against
00:48:36
the right globally but really what I
00:48:38
think we're seeing is a much bigger
00:48:40
shift where there's this bigger battle
00:48:43
between socialism and free market
00:48:45
democracy and I think that we're seeing
00:48:48
it all happen at once because of
00:48:51
globalism
00:48:53
and because of the fact that globalism
00:48:56
has enabled just like we've seen
00:48:58
manifest in the United States massive
00:49:00
and significant economic progress but at
00:49:04
the cost of a small number of people
00:49:07
becoming very wealthy and a large number
00:49:08
of people feeling left behind as a
00:49:11
result of the wealth accumulating in a
00:49:14
major way to a small number of people
00:49:16
and the reaction that we're seeing in
00:49:19
France in India in Mexico in the US in
00:49:24
the UK is all very much kind of aligned
00:49:27
that there is this big push that
00:49:29
socialist practices can perhaps resolve
00:49:33
the inequality and the inefficiencies
00:49:34
that are seen in the markets today and
00:49:37
this is being manifested in a lot of
00:49:38
really nasty ways first of all I think
00:49:40
it's rationalized as being hey there's
00:49:42
economic excess for a few while the
00:49:44
majority have left behind it's activated
00:49:46
by big bureaucracy by anti-free market
00:49:49
principles and by tax policies and
00:49:51
spending policies that will ultimately
00:49:53
economic
00:49:55
growth and I I don't want to say I'm
00:49:57
against taxes because I'm all for taxes
00:49:59
to make up for budget deficits but I
00:50:02
think the results are ultimately across
00:50:04
all of this going to be what we saw
00:50:06
happen in Argentina which I think is on
00:50:08
the other side of this problem which is
00:50:10
unsustainable debt accumulation massive
00:50:13
inflation and crippling unemployment and
00:50:16
I think that we should really take a
00:50:17
hard look at what's happening around the
00:50:19
world right now as being all related all
00:50:21
of the industrialized world is voting in
00:50:24
a similar way and starting to shift in a
00:50:25
similar way that we should be fairly
00:50:28
concerned about and pay a lot of
00:50:29
attention to in the US there's this
00:50:32
expectation that Trump is going to
00:50:34
totally trounce Biden if Biden stays in
00:50:36
the
00:50:38
race I think that if we see the same
00:50:40
sort of thing happen in the US in that
00:50:43
the psyche of people are that we feel
00:50:46
left behind that there's a hierarchical
00:50:48
system that disadvantages the majority
00:50:50
of people because economic progress is
00:50:53
not proportional to everyone you could
00:50:56
end up seeing a surprise sort of voting
00:50:58
system emerge in the US where the left
00:51:01
may win because socialist principles are
00:51:04
on the rise in the psyche of the youth
00:51:06
in the industrialized world and I'm not
00:51:08
saying I'm making a prediction about how
00:51:09
the elections going to go in the US but
00:51:11
I do think that there's a big kind of
00:51:13
fundamental change underway here sax he
00:51:14
didn't
00:51:15
mention immigration specifically Muslim
00:51:18
Islamic immigration in France that seems
00:51:20
to be a big part of this issue that
00:51:22
people aren't talking about and the lack
00:51:24
of integration of that uh population
00:51:28
into society in fact you know I've been
00:51:31
told by folks in France that it's kind
00:51:33
of the opposite
00:51:34
like uh Islamic Muslim immigrants are
00:51:38
kind of shunned and aren't integrated by
00:51:40
the French people themselves I'm not
00:51:42
sure how true that is I don't have a lot
00:51:44
of firsthand experience in it but how
00:51:46
much of that is part of what's happening
00:51:49
in this right left you know uh Donnie
00:51:53
Brooke occurring in France because
00:51:55
they're literally on the streets
00:51:56
fighting
00:51:57
yeah writing yeah look I I don't think
00:51:59
that the use demand for socialism is
00:52:01
what's driving the results in France at
00:52:04
all let me explain what happened so the
00:52:07
the the way that the voting Works in
00:52:08
France it's a you know unusual system to
00:52:10
our eyes where they have a first round
00:52:13
of voting and in that first round of
00:52:16
voting Marine Le Pen party National
00:52:19
rally won a strong plurality of the vote
00:52:22
and the map looked like this where
00:52:24
literally they won every
00:52:27
District in the country except for Paris
00:52:29
I mean it was a really dominant
00:52:31
performance and so people were expecting
00:52:33
major reform and jcal you're right that
00:52:36
Marine Le Pen's major issue her party is
00:52:39
the unlimited immigration that's taking
00:52:41
place into France the French people or a
00:52:45
substantial portion of them are up in
00:52:47
arms about this and actually this is
00:52:49
something that's very common across all
00:52:51
of Europe they're Tire they're very
00:52:52
nationalistic let's call it what it is
00:52:54
well it's it they care about their
00:52:56
culture the indigenous people of France
00:52:58
are opposed to the selller Colonial
00:53:01
Invasion that's happening from the
00:53:03
global South and they want to preserve
00:53:05
their French culture and society and
00:53:07
Nation as it has always been and they do
00:53:11
not see how this unlimited immigration
00:53:13
from the global South is good for them
00:53:15
it's not good for them economically it's
00:53:16
not good for societal cohesiveness it's
00:53:18
not good for crime and so on so this is
00:53:22
undoubtedly a huge driver of national
00:53:25
rally success but then what happened is
00:53:27
that in the French system there's a
00:53:29
second round of voting a week later and
00:53:32
we got these results where National
00:53:35
rallies still got the plurality of the
00:53:37
vote they got
00:53:38
37% of the vote but they only won 142
00:53:41
seats whereas macron's party got 22% of
00:53:45
the vote won 148 and then a collection
00:53:47
of parties called the new popular front
00:53:49
which is basically a collection of
00:53:51
far-left parties under the radical
00:53:54
socialist John Luke melan Shan won only
00:53:57
27% of the vote but won the most seats
00:54:00
and this is what I think freeberg is
00:54:01
reacting to is the Socialist ended up
00:54:03
with the most seats well how did this
00:54:05
happen if National rally Marine lepen
00:54:08
party got a lot more votes than new
00:54:10
popular front the answer is that
00:54:14
macron President of France
00:54:16
conspired with the far-left to have 200
00:54:21
candidates quit to basically drive those
00:54:25
voters the voters in let's call it the
00:54:26
center left over to the far left in
00:54:29
order to block Marine Le Pen's party
00:54:31
from winning the number of seats that
00:54:34
they otherwise would have so just to to
00:54:36
recap what you're talking about they
00:54:37
have two rounds of Elections here they
00:54:39
have a first round a second round if you
00:54:41
don't win like the majority in the first
00:54:43
round then it goes to the second round
00:54:44
runoff and then
00:54:46
strategically what mcon and his party
00:54:49
did was they took the multiple parties
00:54:50
and said hey we'll just have you all
00:54:52
drop out and consolidate our votes
00:54:55
almost like in the in a microcosm in the
00:54:57
United States would be like RFK giving
00:55:00
dropping out at the last minute and
00:55:02
saying I endorse this person on left or
00:55:03
right so they did a very strategic thing
00:55:06
to right but they went District by
00:55:08
district and they basically said okay
00:55:09
great strategy yeah hold on in this
00:55:11
District we're going to let the we're
00:55:13
gonna have uh mone's candidate drop out
00:55:16
and endorse new popular front exactly so
00:55:19
that's what they did so so
00:55:21
brilliant well it's a manipulated result
00:55:23
and what it ends up with look a lot of
00:55:25
people said actually you're saying that
00:55:27
they rigged the election look they
00:55:28
didn't rig the votes okay I have no
00:55:30
reason to believe that the votes aren't
00:55:31
real but they did rig the candidates in
00:55:33
order to frustrate the desire of the
00:55:35
French people for reform the reform that
00:55:38
Marine lepen was offering and freeberg
00:55:41
you're interpreting this as basically a
00:55:42
big endorsement for socialism I don't
00:55:44
think that's what this is I think that
00:55:46
what happened here is that the senator
00:55:48
left under mcon was willing to throw the
00:55:50
election through legal I'm not saying
00:55:53
that he did anything illegal through
00:55:54
legal manipulation the candidates it
00:55:57
yeah exactly and so it's to me it's just
00:56:00
it's sad that you know one one person
00:56:02
tweeted that we we voted for reform we
00:56:06
voted for National sovereignty we voted
00:56:09
to restrict unlimited immigration and
00:56:12
what we got was communism this isn't
00:56:14
what we voted for right and so it's just
00:56:16
kind of sad that what's happening is
00:56:18
that the system the system politicians
00:56:21
are essentially getting together to
00:56:22
frustrate the popular will of the people
00:56:26
party still got outvoted in each of
00:56:29
those districts right is that correct
00:56:31
only because they dropped a candidate
00:56:33
200 candidates basically were
00:56:35
strategically dropped out in order to
00:56:37
throw the vote in those districts so all
00:56:39
these systems ultimately resolve to a
00:56:41
two-party system where some minority can
00:56:44
hijack one of the parties to enforce
00:56:47
their will ideologically I think that's
00:56:50
kind of my point sax I mean you know the
00:56:52
day after the election there was this
00:56:55
statement on some of their economic
00:56:57
priorities increase the tax rate to 90%
00:57:00
on income over 400k drop the retirement
00:57:03
age from 64 to 60 I mean you know you go
00:57:05
down the list you know putting in um
00:57:07
price
00:57:08
controls on you know free market
00:57:11
services and products and goods this is
00:57:13
a lot of what we're seeing kind of
00:57:15
repeated in a in a bunch of different
00:57:16
ways it's all the same story with
00:57:18
different characters all over the
00:57:20
industrialized world you're right about
00:57:21
that part so so basically on on the
00:57:23
heels of this vote uh with new popular
00:57:25
front winning all these seats Jean luk
00:57:27
melan gives this speech in which he you
00:57:30
know rails basically against mone's
00:57:33
neoliberal policies he wants to go back
00:57:35
to the restricted number of hours in the
00:57:37
work week he wants a 90% wealth tax and
00:57:40
so on across the board he does want
00:57:42
radical socialism and he says that he
00:57:44
will not cooperate with macron's party
00:57:48
so I mean this is like just it it's
00:57:50
almost cartoonish and clownish how much
00:57:53
this has backfired on macron he was so
00:57:55
hell
00:57:56
on trying to frustrate Marine Le Pen
00:57:59
that he threw the election to new
00:58:00
popular front who has now announced that
00:58:02
they will not work with him okay now Jal
00:58:05
you may want to say well this is the
00:58:06
will of the majority but the majority of
00:58:08
the country did not want to vote for
00:58:10
chaos but chaos is what they've got
00:58:13
because now there is no dominant faction
00:58:15
in their Parliament right and and new
00:58:17
Popular by the way in India they just
00:58:19
lost majority in India right which is
00:58:21
the first time in 12 years and the UK's
00:58:24
also up in disarray no there there's
00:58:26
it's a majority but not a super majority
00:58:28
not a super majority sorry yeah sorry
00:58:30
the good news freeberg is that melan
00:58:31
Shan will not have majority in the
00:58:33
assembly to push through those radical
00:58:35
policies that he wants no faction will
00:58:37
have a majority because they're not
00:58:38
going to work with each other you've got
00:58:40
three three big parties here or three
00:58:43
big groups and you need two of them
00:58:45
working together to get anything done so
00:58:47
what's going to happen is you're just
00:58:48
going to have basically uh a log Jam and
00:58:52
like Marine Le Pen said reform in France
00:58:54
is just going to have to wait and we're
00:58:56
going to lose another year do you think
00:58:57
socialist ideologies are on the rise in
00:59:00
the youth in the industrialized world
00:59:01
and is that showing up in elections
00:59:03
around the world I think what's
00:59:05
happening is that there is a pent-up
00:59:08
demand for reform people are craving
00:59:10
reform they understand the system does
00:59:12
not workig for everyone it feels rigged
00:59:15
it feels corrupt and it's and it's
00:59:18
resistant to reform and so they are
00:59:21
basically clamoring for that and they
00:59:23
will get it wherever they can take it in
00:59:25
the past soci ISM has won when this has
00:59:27
happened this has happened this happened
00:59:28
after World War I it's happened multiple
00:59:31
times in history where we've seen the
00:59:33
Socialist to rise in these moments well
00:59:36
I don't think it's because socialism is
00:59:38
that desirable I actually think that the
00:59:40
desire for reform I think it is first
00:59:43
and foremost looking for what I would
00:59:45
call a nationalist populist solution
00:59:48
right and you can see here that National
00:59:50
R did do better than new popular fronts
00:59:52
considerably better but it was that the
00:59:55
systems design desire to hand a victory
00:59:58
to new popular front that gave them the
01:00:00
win and I think you see a similar thing
01:00:02
in the United States look if Joe Biden
01:00:04
had just shut down the border for the
01:00:07
last four years he would be in a
01:00:09
materially different position absolutely
01:00:11
but the radicals in his party didn't
01:00:13
want to do that so in a way you could
01:00:14
say that you have a similar type of
01:00:17
conspiracy taking place where the center
01:00:20
left would rather enable and support the
01:00:23
radical progressives as opposed to
01:00:26
making sensible moderations or sensible
01:00:29
adjustments that would actually make
01:00:30
them much more popular it would and what
01:00:33
has Trump done in Trump 2.0 that I think
01:00:35
I don't know who could have possibly
01:00:37
coached or given any feedback to Trump
01:00:40
of how to win this election but he seems
01:00:42
much more presidential he seems normal
01:00:45
he basically went right to the middle on
01:00:47
abortion he went right to the middle on
01:00:49
immigration and he's not acting like a
01:00:51
lunatic and name calling and you know
01:00:53
his debate performance was fantastic he
01:00:55
just sat back by the way look look who's
01:00:57
been the most Ardent supporter of Joe
01:01:00
Biden it's been the progressive left
01:01:03
right those are the folks that have
01:01:04
actually said hey and and I think
01:01:07
probably it's because there's a
01:01:09
underlying quid pro qu at play AOC yes
01:01:12
Bernie Sanders all of these folks
01:01:15
Elizabeth Warren if they support Biden
01:01:18
and he wins a second term I suspect that
01:01:21
there's going to be a lot of their
01:01:22
legislative agenda that basically gets
01:01:24
put up for vote 100% 100% yes I think
01:01:28
there's a common denominator here that
01:01:30
both mcon and Biden would rather throw
01:01:34
the the government of the country to
01:01:36
radicals and Communists then Implement
01:01:40
sensible restrictions on immigration
01:01:42
it's mindblowing to me that neither
01:01:44
macron nor Biden can simply make a
01:01:47
sensible adjustment on immigration
01:01:49
people do not want open borders they
01:01:52
especially don't want them in Europe but
01:01:54
they don't want them here either
01:01:56
reasonable borders reasonable
01:01:57
immigration if I had to kind of give you
01:01:59
my opinion on all of this I do think
01:02:01
that when you look across all of these
01:02:02
countries I do think freeberg is
01:02:05
touching on something but I think the
01:02:07
explanation doesn't have to be this idea
01:02:11
that people are embracing socialism I
01:02:13
think there's a much simpler explanation
01:02:15
as well which is that we've gone through
01:02:16
a very difficult period of joblessness
01:02:19
of inflation of high costs and I think
01:02:22
typically what happens is you have
01:02:23
governmental turnover in these moments
01:02:27
and so the incumbent gets tossed out and
01:02:29
somebody else comes in and whatever
01:02:32
they're saying seems like the new thing
01:02:34
so for example in Canada right now the
01:02:36
opposite is trending which is the
01:02:38
liberal socialist government just looks
01:02:41
totally incompetent and it looks like
01:02:43
the progressives when this election
01:02:45
happens is just going to completely run
01:02:47
over them and so that's more of a swing
01:02:49
to the right so I think it's less left
01:02:51
or right I think it's incumbent people
01:02:54
who have not done neily a great job in
01:02:56
these last four years getting tossed out
01:02:58
for folks that are new and I think that
01:03:00
explains a lot of these elections more
01:03:01
than Socialism or anything else I really
01:03:03
hope you're right I just worry about
01:03:05
like the trend of economic
01:03:08
globalization has kind of moved every
01:03:11
because it used to be that every country
01:03:12
kind of looked like its own country
01:03:14
politically and there's just a lot of
01:03:15
alignment happening where sax is right
01:03:18
it's like look it's in every other
01:03:19
country of the
01:03:21
world other than the West you embrace
01:03:25
the National Traditions that make a
01:03:27
culture its own but if you came to Sri
01:03:30
Lanka you'd see people in saris you'd
01:03:32
see people dressed in traditional garb
01:03:35
you speak this one language that
01:03:38
somewhat complicated not spoken anywhere
01:03:40
else although we teach English as well
01:03:42
but the point is that there are these
01:03:43
cultural traditions and that's just an
01:03:45
example of a country that I know well
01:03:46
but many countries if you look across
01:03:48
Africa it's the same if you look across
01:03:50
Asia Central and South America in the
01:03:53
west it's more of that you know you come
01:03:55
and there's just kind of like kind of
01:03:57
like odd
01:03:58
monoculture and I think at some point
01:04:00
people are pushing back against that I
01:04:02
do agree with David that there is that
01:04:04
push back and I and I think that that's
01:04:06
well America push America is very unique
01:04:08
in that we we had a concept called The
01:04:10
Melting Pot where you were culturally
01:04:12
assimilate and if you say that today and
01:04:14
you were to teach that in schools I
01:04:16
think people would get very upset
01:04:18
thinking like you are giving up your
01:04:20
culture no you've chosen to leave your
01:04:22
land and make a new world here in this
01:04:25
new experiment called America and if you
01:04:28
assimilate you're welcome here if you
01:04:30
don't want to assimilate you're not
01:04:31
welcome in America that's what they
01:04:33
taught when we went to school as gen
01:04:35
xers in the 70s and 80s no no no so my
01:04:38
my only point and I I agree with you jel
01:04:41
is you as a country you're allowed to
01:04:44
have those beliefs it's not that just
01:04:45
because you're in the west you have to
01:04:46
throw that out and all of a sudden you
01:04:48
have to succumb to this belief that
01:04:51
everybody else's culture is better than
01:04:53
the one that you've had for the last
01:04:54
four or 500 years I don't think that
01:04:56
that's necessarily true and I think you
01:04:58
miss out on a lot by saying that so to
01:05:00
your point I I I just think that when
01:05:02
you look globally there's a really
01:05:04
interesting quote from Peter teal that
01:05:06
actually is he was he made this comment
01:05:08
which is if you look at the Ten
01:05:10
Commandments he's like the first and the
01:05:12
10th are the most powerful because the
01:05:14
first one is about looking up and the
01:05:16
second and the 10th is not about looking
01:05:18
down and everything else is about
01:05:19
looking left and right of you and he
01:05:21
brings it up in this context of all of
01:05:23
these Commandments the the middle eight
01:05:26
are all about how you should not be
01:05:27
looking to the left and the right
01:05:30
figuring out and making yourself getting
01:05:32
tilted about the fact that you have less
01:05:34
than the other person no coveting and
01:05:36
and I and I just think that there may be
01:05:38
something interesting in that idea which
01:05:39
is that what we've really done is we've
01:05:41
created tools that have allowed you to
01:05:44
just obsess and fantasize about all
01:05:46
these random people's lives who you
01:05:48
think are perfect but they're just
01:05:51
manufacturer trying to get views anyways
01:05:53
and you just leave being angry and
01:05:56
thinking your life sucks and in fact
01:05:57
your life is actually not that bad and I
01:06:00
think if we had more truth and honesty
01:06:02
and authenticity maybe there would be
01:06:04
less of this perception and you'd
01:06:05
actually try to just enjoy what you have
01:06:09
and I don't think we figured that out
01:06:10
let's wrap up here on the hot swap
01:06:13
summer update and the speedrun
01:06:16
primary Biden still insists he's still
01:06:19
running for a president and he will not
01:06:21
stand down since the last episode so
01:06:24
much has happened including George
01:06:27
Clooney writing an oped in the New York
01:06:29
Times this week I love Joe Biden but we
01:06:32
need a new nominee two weeks ago Clooney
01:06:35
co-hosted a fundraiser kenberg and some
01:06:38
other Hollywood bigwigs that raised 30
01:06:40
million for a President Biden twice as
01:06:42
much as you guys did for Trump but I
01:06:44
mean this is Hollywood they they had
01:06:46
95,000 people we had a 100 people I know
01:06:49
I'm just saying it's really impressive
01:06:50
what you guys
01:06:52
didone is also besties with
01:06:56
Obama and Obama has uh put out a tweet
01:06:59
in support of Biden here but according
01:07:02
to a political report Clooney gave Obama
01:07:05
the heads up before he published this
01:07:08
NBC is reporting that Biden has lost his
01:07:10
donor base anonimous quotes the money
01:07:12
has absolutely shut off it's already
01:07:15
disastrous two of the sources said uh
01:07:17
this month is on a path to be down by
01:07:19
possibly half or much more from large
01:07:21
donors Adam Schiff who is as partisan as
01:07:25
they come said Biden should slow down
01:07:28
and make the right decision here he also
01:07:30
said he should get new counsel
01:07:32
independent counsil so that was on Meet
01:07:34
the Press and Nancy Pelosi gave a
01:07:36
non-answer when asked if she supports
01:07:38
Biden as the nominee and again as
01:07:40
partisan as they come Tim Kane said
01:07:43
complete confidence Joe Biden will do
01:07:45
the Patriotic thing in regards which
01:07:47
Richard not go yeah that's pretty rough
01:07:50
and a
01:07:52
report let me let me ask you I'm putting
01:07:54
I'm putting in
01:07:56
you've seen you've seen all these clips
01:07:58
yeah do you think that there's an active
01:08:00
cover up going on by the White House
01:08:03
about his cognitive s hold on no Stanis
01:08:05
is going to make a prediction ah I've
01:08:07
got it a whistleblower will emerge in
01:08:11
the next 10 days if you are a doctor a
01:08:14
nurse a secretary an EA or part of the
01:08:18
Inner Circle here and you know he's
01:08:19
incognit
01:08:21
decline whistleblow it Hawk two on that
01:08:24
whistle and and get it out there folks
01:08:27
because my God we know there's a cover
01:08:30
up we know there's a cover up so spit on
01:08:34
that thing that's right all right Hawk
01:08:36
two that whistle HW two and let's get it
01:08:39
out there
01:08:41
because no but sorry kidding aside you
01:08:43
think there's a cover up of course
01:08:45
there's a cover up I mean come on there
01:08:47
did you see this report that a doctor a
01:08:50
neurologist went to the White House
01:08:52
visited the White House visited and the
01:08:54
New York Times is putting this out there
01:08:56
and then watch this clip of
01:09:00
kjp who is absolutely covering
01:09:03
everything up we all play poker this
01:09:05
person is bluffing they're lying it's so
01:09:08
obvious play the clip Nick a very basic
01:09:11
direct question hold on hold on wait the
01:09:15
wait a second eight times or at least
01:09:17
once in regards to president
01:09:20
specifically hold on a second not much
01:09:21
you should be able to answer by this
01:09:23
point about wait minut Ed please a
01:09:28
little respect here please every year
01:09:31
around the the president's physical
01:09:34
examination he sees a neurologist that's
01:09:36
three times right so I am telling you
01:09:39
that he has seen a neurologist three
01:09:41
times while he has been in this
01:09:43
presidency so that is answering that
01:09:46
question no it's not no it is it is
01:09:48
you're asking the White House but I just
01:09:51
I also said to you Ed I also said to you
01:09:54
for security reasons we cannot share
01:09:58
names
01:10:01
name it's in the unless the white
01:10:04
question hold on a second the point of a
01:10:06
press conference is that you ask
01:10:09
questions and you ask hard questions
01:10:11
this person is covering it up it is a
01:10:13
huge cover up I haven't seen somebody
01:10:15
lie this bold face since Elizabeth
01:10:18
Holmes if you had the machine that did
01:10:20
the blood test you'd show the machine if
01:10:23
there's a cognitive test that shows he's
01:10:25
not in Decline they would show the test
01:10:27
show the test if you're a whistleblower
01:10:30
release the test somebody out there has
01:10:32
the results of these test and if you're
01:10:33
a doctor and you're covering this up if
01:10:35
you work in that white house and you're
01:10:37
covering this up is the most unethical
01:10:39
unamerican immoral thing you can do and
01:10:42
this is the reason we have whistleblow
01:10:43
protections there are 50 people who
01:10:46
probably know what's going on here and I
01:10:47
know there's at least five so somewhere
01:10:49
in that number is somebody who has a
01:10:51
profile en courage who will come out and
01:10:53
tell the American people
01:10:55
what the hell is going on here oh I
01:10:58
think we already know what's going on
01:10:59
jcal I know but this not telling the
01:11:02
truth in a press conference with the
01:11:04
press and then admonishing the press
01:11:07
admonishing the Press like this it's
01:11:09
complete utter so in that press
01:11:11
conference it's nice to see the Press
01:11:13
actually doing their job because their
01:11:14
job is to hold truth to account and to
01:11:18
actually ask tough questions and they're
01:11:20
finally doing it but I see in that press
01:11:22
conference not just a liar at the podium
01:11:25
I I think the entire audience are a
01:11:26
bunch of liars too because they knew
01:11:29
they knew the truth about the situation
01:11:31
and they refused to report it and they
01:11:32
refused to investigate it until now now
01:11:36
what you've heard in the past week or so
01:11:38
is a bunch of of people who knew about
01:11:41
the situation telling on themselves so
01:11:43
first you had George Clooney and that
01:11:44
New York Times oped he says that after
01:11:47
the fundraiser we did yeah I knew and
01:11:49
everyone there knew that was a month ago
01:11:51
what took you so long to come out Olivia
01:11:54
newy had says she had the story for New
01:11:57
York Magazine 6 months ago okay she had
01:12:00
Anonymous sources but she said she was
01:12:02
afraid to publish it because the White
01:12:04
House would basically push back and she
01:12:06
didn't think the Press Court would back
01:12:07
her Chuck Todd just said it on a podcast
01:12:10
that a cabinet official okay in the
01:12:13
Biden White House told him two years ago
01:12:16
that he could not get a meeting with the
01:12:18
president because the president was
01:12:19
effectively incapacitated and his inner
01:12:21
circle was keeping him shielded Chuck
01:12:23
Todd you why didn't Chuck Todd report
01:12:26
that why didn't Chuck Todd pass it on to
01:12:28
an investigative reporter to NBC to
01:12:30
investigate that these people Duty a
01:12:34
dereliction of Duty of course but let me
01:12:37
tell you what they were trying to do
01:12:39
okay they were trying to weaken a Bernie
01:12:41
this thing absolutely they thought they
01:12:44
could get Biden through the election and
01:12:46
so they were on narrative and they
01:12:49
weren't going to report the truth about
01:12:50
his condition they were just going to
01:12:52
try and get him across the Finish Line
01:12:54
they're all complicit in this cover up
01:12:57
and they don't deserve any credibility
01:13:00
because now they're finally reporting it
01:13:01
because the only reason they're
01:13:03
reporting it is because of concerns
01:13:05
about bid's electability they're afraid
01:13:07
that he's going to lose and the turning
01:13:09
point was that debate because the whole
01:13:11
country could see it so in the wake of
01:13:13
that they're starting to panic and
01:13:14
they're realizing oh wait we need a new
01:13:16
candidate so finally they're telling the
01:13:18
truth about the situation but they had
01:13:19
absolutely no intention of telling the
01:13:21
truth about it because they could have
01:13:23
done it a long time ago and they were
01:13:25
justy they just going to try and drag B
01:13:27
across the finish line and we need to
01:13:29
give one person his flow here Dean
01:13:31
Phillips came on this program seven
01:13:33
months ago and if you listen to Allin
01:13:35
the number one podcast in the world
01:13:36
you're going to know what's going to
01:13:39
happen in the future it's not just sanis
01:13:41
here the guests come on and tell us the
01:13:43
truth Dean Phillips told us I quote when
01:13:46
I asked him I'm not sure who asked him
01:13:48
uh when we asked him he said people are
01:13:51
saying that I'm causing his problems
01:13:54
that I could risk his reelection I'm
01:13:57
certainly not the guy that has shown his
01:13:59
decline that's on video that's on audio
01:14:02
you see it he's a human being for
01:14:04
goodness sake seven months ago he said
01:14:07
this he's a human being he's now in his
01:14:09
80s he is clearly in Decline but do I
01:14:12
think he will be in a position to
01:14:13
continue leading this company this
01:14:14
country in the future I do not I think
01:14:17
I'm joined about 75% of the country and
01:14:19
saying that he was clear on this podcast
01:14:21
he was clear on this podcast and kudos
01:14:23
to Dean Phillips for Having the courage
01:14:24
to tell the truth truth he was one of
01:14:26
the only people in the Democratic party
01:14:27
to tell the truth remember he also said
01:14:29
in our podcast that he called up JB
01:14:31
pritzer he called up Gretchen Whitmer he
01:14:33
said where are you guys you're the
01:14:34
leaders of the Democrat Party why aren't
01:14:36
you challenging President Biden he
01:14:38
obviously isn't fit to serve they told
01:14:40
him shut up they wouldn't take his phone
01:14:42
calls okay and look Dean Phillips knew
01:14:44
the truth without having special access
01:14:47
to the president quite frankly he's a
01:14:49
backbencher right but it was obvious to
01:14:51
him they all knew the whole party knew
01:14:54
but they strategy was to pretend and
01:14:56
deny and to portray anyone who told to
01:14:59
excommunicate anyone like Dean philps
01:15:01
who told the truth and to try and
01:15:03
discredit anyone who reported the truth
01:15:05
as basically a partisan or a liar who
01:15:08
was trafficking in the che fakes
01:15:10
remember that so all these people are
01:15:12
complicit they're all complicit and the
01:15:14
only reason they're telling the truth
01:15:16
now is because they're afraid of losing
01:15:17
an election well and the receipts are
01:15:20
coming well let's just play this out so
01:15:22
if there is a grand cover up I think J
01:15:25
you are right that there is too much
01:15:26
time between now and the election there
01:15:29
will be
01:15:30
a deep throat Watergate St leak here you
01:15:34
know there will be a Woodward and burnen
01:15:35
and gets to the bottom of this I just
01:15:37
think the odds of that are 100% of it
01:15:39
not happening are too low so I guess
01:15:42
then the real question is is it that the
01:15:45
only way to keep the charade going is
01:15:49
the quote unquote threat of the Donald
01:15:52
Trump boogeyman is that what they use
01:15:53
basically to hang over people to of
01:15:56
course yes I mean that listen that
01:15:59
worked last time Trump in the the
01:16:03
overwhelming majority of Americans felt
01:16:05
Trump's first presidency was too
01:16:07
divisive and it was too chaotic they use
01:16:09
that to win okay fair enough now they're
01:16:13
trying to use that again it's not
01:16:14
working why Trump 2.0 he's coming across
01:16:16
as reasonable a lot of the things he got
01:16:19
right when you rewrited him about the
01:16:21
Border he got that right the economy was
01:16:23
pretty good under him he did some things
01:16:24
corre correct he's not like all
01:16:26
demagogue and all eal I have my problems
01:16:28
with his behavior I've made it
01:16:30
documented here but you cannot use that
01:16:32
excuse anymore because Americans are
01:16:34
going to say cognitive decline somebody
01:16:36
with alzheimer's like my aunt my uncle
01:16:38
my parent whatever they've experienced
01:16:40
it firsthand or Trump it's an easy
01:16:42
choice for most Americans and that's why
01:16:44
Trump will beat Biden and that's why
01:16:46
they're going to do the speedrun and
01:16:48
that's catching steam next and and let's
01:16:50
just we can wrap on that I think I
01:16:53
mentioned here the speedrun primary a
01:16:56
couple of weeks ago Nick R the clip must
01:17:00
credit no Stanis they're going to do the
01:17:02
Democratic primary speed here's what's
01:17:05
going to happen they're going to do five
01:17:06
debates in 10 weeks and then whoever
01:17:09
wins wins Cala he's gonna resign Kamala
01:17:12
becomes president kamla gets to um run
01:17:16
in the speedrun she gets to speedrun
01:17:18
like everybody else Dean Phillips gets
01:17:19
to come in everybody speeduns it the
01:17:22
they take over the media the media will
01:17:25
go crazy over the summer massive ratings
01:17:28
boom pull up the semaphor article after
01:17:31
I made my prediction two Democratic
01:17:33
party insiders have floated this very
01:17:35
unique idea in semaphor it's a pretty
01:17:37
obvious idea I guess Biden steps down as
01:17:39
the you get it from J Cal it was my idea
01:17:43
because I did not hear it anywhere okay
01:17:45
I I personally don't think it's gonna
01:17:46
happen but I still think you deserve
01:17:47
credit for being the first agree so you
01:17:49
came up with this and now it's a spread
01:17:51
or what oh well here we go amazing I
01:17:55
mean you're name checking yourself here
01:17:56
so this is pretty I don't I don't know
01:17:58
what's happening in this Bizarro
01:17:59
Universe I put on a red tie and all of a
01:18:01
sudden I'm getting everything right who
01:18:04
knows Biden steps down listen so many
01:18:07
times in the past your head has been so
01:18:08
far up your ass but this time it's
01:18:10
really real you open it and you see your
01:18:11
face but it's you just name checking
01:18:13
yourself I guess I gotta name check me
01:18:16
but uh here's what semaphor says this is
01:18:18
their version Biden steps down as the
01:18:19
nominee mid July okay that's now Biden
01:18:22
announces the new system with support
01:18:24
from Comm Harris candidates would have a
01:18:26
few days to throw their hats in the ring
01:18:27
Democrats would start a primary Sprint
01:18:30
oh not a speedrun a primary Sprint where
01:18:32
six candidates not 10 who received the
01:18:35
most votes from delegates pledge to run
01:18:37
positive only campaigns in the month
01:18:39
leading up to the DNC weekly forums for
01:18:41
each candidate would be moderated by
01:18:42
culture icons oh interesting punch-up
01:18:45
Michelle Obama Oprah Taylor Swift in
01:18:46
order to engage voters as I talked about
01:18:48
taking over the media nominee will be
01:18:50
chosen by delegates using rang Choice
01:18:52
voting your favorite sacks before the
01:18:54
start of the DNC on August 9th so anyway
01:18:57
there you have it folks speedrun coming
01:18:59
whistleblower August 19th speedrun and
01:19:03
The Whistleblower look for it this month
01:19:05
okay look I I I think you deserve credit
01:19:07
for being the first to talk about this
01:19:08
and that idea is clearly gaining some
01:19:10
currency on the left however at the end
01:19:12
of the day I don't think the Democrats
01:19:14
can afford to do that because they're
01:19:16
already in a state of chaos right now
01:19:17
and if they finally succeed in pushing
01:19:19
Biden overboard the last thing they're
01:19:21
going to want to do is have the chaos of
01:19:22
an open Open primary even if it is a
01:19:25
speedrun primary I think they're just
01:19:27
going to have to go to KLA Harris I
01:19:28
think that's what they've decided I
01:19:30
think that if they succeed in pushing
01:19:32
Biden out which does seem probably more
01:19:34
likely than not at this point I think
01:19:36
it's got to be Harris and I think she's
01:19:38
going to be the the nominee so I just
01:19:40
think beat
01:19:41
Trump you worried about him well no look
01:19:45
I think that Trump should win regardless
01:19:47
but it's an opportunity for them to
01:19:49
reset the race and that that's what's
01:19:51
driving all of this is that they're
01:19:53
concerned about losing but look let me
01:19:55
say this that everything that's happened
01:19:57
here with Biden's cognitive state is
01:20:01
just one in a series of hoaxes and
01:20:04
coverups that the Democrat Party has
01:20:07
transpired over the last several years
01:20:10
it's gotten to the point where you have
01:20:11
to wonder can these guys even run a
01:20:13
presidential campaign without hoaxes you
01:20:16
had the steel dossier okay you have the
01:20:17
whole suckers and losers hoax you have
01:20:19
the very fine people hoax you have that
01:20:21
this is the best version of Biden hoax
01:20:24
you had the whole cheap fake hoax and
01:20:27
You' just got to wonder is this a party
01:20:30
who deserves the trust of the American
01:20:32
people I think that Trump deserves
01:20:34
another term just as a rebuke to all the
01:20:36
misinformation and lies that the
01:20:38
Democratic party has told about him and
01:20:41
I think that he should win shout out to
01:20:42
Scott Adams and his hoax list here we go
01:20:45
the Scott Adam he's Scott Adams is
01:20:47
obsessed with 20% of the Hook's list
01:20:50
there's like 10 more okay no he's he's
01:20:53
been keeping a list yeah Trump deserv
01:20:54
deserves to win just based on all the
01:20:56
hoaxes that have been thrown at him all
01:20:58
right and you know what you got to give
01:20:59
him credit because it was his decision
01:21:02
to go on CNN in that debate that really
01:21:04
called their on this whole thing God
01:21:07
when when they started this is when you
01:21:08
knew something was in the air when he
01:21:10
got like started getting Ovations and
01:21:13
clapping from the rigged CNN audience
01:21:17
for the town hall I mean or maybe CNN
01:21:19
did that and set up themselves and set
01:21:22
up the the Democrats I don't know I
01:21:24
don't think set up I don't no I think
01:21:26
look I there are a lot of people who do
01:21:28
think that it was a controlled
01:21:29
demolition they want Biden out I don't
01:21:31
think so I think this situation that's a
01:21:33
conspiracy theory it is a conspiracy
01:21:35
theory and and I understand why people
01:21:37
might think that because so many
01:21:38
conspiracy theories have turned out to
01:21:39
be true however I don't believe that's
01:21:41
what happened I believe fascinating that
01:21:43
Biden's staff created conditions for the
01:21:46
debate that they thought would be
01:21:47
untenable to Trump right they said that
01:21:50
we're GNA choose the host they're gonna
01:21:52
be hosts who've basically already called
01:21:53
Trump Hitler right so it's like the most
01:21:55
favorable setting they said there's not
01:21:57
going to be an audience we're going to
01:21:58
turn off your microphone and they
01:22:00
thought that Trump would just say no to
01:22:01
all of this and they'd be able to get
01:22:03
Biden through without a debate but Trump
01:22:05
called their Bluff he said okay I'll do
01:22:07
it sure and he walked into the lion's
01:22:09
den just like remember a year ago he
01:22:11
walked into the lions den at CNN to do
01:22:14
that town hall remember he beat anybody
01:22:16
in comedically you got to admit that
01:22:19
Trump has the anybody in mainstream
01:22:22
media you got to admit that Trump has
01:22:24
the w
01:22:25
like Tony Montana said the only thing in
01:22:27
this world that gives orders is balls
01:22:30
absolutely you got to admit
01:22:33
you you gotta H don't forget the
01:22:36
balls epis off the rails four the
01:22:40
chairman dictator calling in from Italy
01:22:42
my bestie David Sachs I'll see you on
01:22:45
Jesse Waters and uh at the RNC for
01:22:48
freeberg who's genuflecting somewhere in
01:22:50
a retreat center I am no Stanis
01:22:55
I have a prediction I have a prediction
01:22:58
we're going to see you at the next
01:22:59
episode everybody
01:23:02
byebye
01:23:04
byebye let your winners
01:23:07
ride Rainman
01:23:11
David and instead we open source it to
01:23:14
the fans and they've just gone crazy
01:23:16
with it love queen of K
01:23:20
[Music]
01:23:25
besties
01:23:27
are that's my dog taking
01:23:32
driveways oh man my meet we should all
01:23:36
just get a room and just have one big
01:23:37
huge orgy cuz they're all this useless
01:23:39
it's like this like sexual tension but
01:23:41
they just need to release
01:23:42
[Music]
01:23:48
Som we need to get merch are
01:23:53
[Music]
01:24:00
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