Video File
Audio File
Full Transcripts
00:00:00 Speaker 1
You’re seeing now the the fresh summer collection of lower piano J.
00:00:04 Speaker 1
So really, is the thin summer gilet OK, hateful cashmere.
00:00:09 Speaker 1
It’s called like the kings cashmere or something.
00:00:12 Speaker 1
And then this is called a lovely yellow boating sweater.
00:00:17 Speaker 1
Anyways, I took sacks to my tailor and I took him to.
00:00:20 Speaker 1
Lower piano and.
00:00:21 Speaker 1
Then at some point I just ******* lost him and.
00:00:23 Speaker 1
Then I haven’t seen him since then.
00:00:25 Speaker 1
You took him to your Taylor and Taylor.
00:00:28 Speaker 1
And a.
00:00:29 Speaker 1
Yeah, Rob Grace, that show remains accessible.
00:00:33 Speaker 1
To the every man and woman.
00:00:35 Speaker 1
Their sites.
00:00:35
Right.
00:00:47 Speaker 3
I thought it’s so perfect.
00:00:50 Speaker 1
Their flower.
00:00:52 Speaker 3
Oh my God, you guys have an announcement today?
00:00:56 Speaker 1
Now, it’s good to see everybody focused on what matters. OK, everybody, welcome to all in episode 86, end of the world. Except for these two **********
00:01:04 Speaker 1
We thought.
00:01:05 Speaker 1
It would be really funny to fun to find the exact same outfit at low piano.
00:01:10 Speaker 4
I feel fully styled.
00:01:12 Speaker 1
What a great look.
00:01:14 Speaker 1
Yes, it’s still good.
00:01:15 Speaker 3
It’s like dumb and Dumber in Italy.
00:01:21 Speaker 4
The winter fly.
00:01:23 Speaker 2
Rain Man.
00:01:24
David Saturday.
00:01:28
We open source it.
00:01:29 Speaker 4
To the fans and they’ve just gone crazy.
00:01:31 Speaker 2
I love you.
00:01:32 Speaker 3
Queen of quinoa.
00:01:36 Speaker 1
Everybody, welcome to episode 86 of the All in podcast we’re not dead yet, still publishing with us from Italy, the rain.
00:01:44 Speaker 1
A man and the dictator in matching outfits.
00:01:48 Speaker 1
Gentlemen, how is Italy?
00:01:51 Speaker 1
It’s fantastic.
00:01:52 Speaker 1
And also with us, the Sultan of Science himself, David Friedberg, from an undisclosed conference somewhere which we can’t talk about.
00:02:02 Speaker 1
How you?
00:02:02 Speaker 1
I’m off the record this week.
00:02:04 Speaker 1
Off the record this week, and a little hungover it seems.
00:02:06 Speaker 1
Yeah, you need a.
00:02:08 Speaker 1
Cup of coffee?
00:02:08 Speaker 2
Wait, wait.
00:02:08 Speaker 1
Drinking a little Scotch last night, late night little Scotch.
00:02:11 Speaker 1
I I went Scotch and beer and it was.
00:02:14 Speaker 1
It was a late night, all right, everybody, we got a lot of news to get through.
00:02:17 Speaker 1
Let’s just parse through some of the data.
00:02:18 Speaker 1
’cause data has been coming in, and the minutes from the June fed are out.
00:02:22 Speaker 1
The key quote significant risk that elevated inflation could become entrenched if the public began to question the resolve of the Fed.
00:02:30 Speaker 1
So they went from transient to now fearing entrenched.
00:02:34 Speaker 1
Jobs have slipped a little bit.
00:02:36 Speaker 1
This is something we’ve been talking about, but just to give some context here, so a historic a number of job OPE.
00:02:43 Speaker 1
Things we peaked in March 11.9 million. In May, we dropped down to 11.3 and 11 million for six straight months.
00:02:53 Speaker 1
It’s just extraordinary if you look at this.
00:02:54 Speaker 1
Fred chart it’s.
00:02:56 Speaker 1
Just astounding to think that this many jobs are available.
00:03:00 Speaker 1
2 for one, in the United States there are two jobs available.
00:03:03 Speaker 1
For every one person who needs a job and.
00:03:07 Speaker 1
This they’re just absolutely stunning.
00:03:10 Speaker 1
If you look at the what do you think?
00:03:12 Speaker 1
This is a precursor to.
00:03:14 Speaker 1
Dropping down dramatically in the white collar sector is what the data is showing.
00:03:20 Speaker 1
What is awesome.
00:03:20 Speaker 1
Or major wage.
00:03:22 Speaker 1
Inflation, I mean.
00:03:24 Speaker 1
Yeah, this we do have.
00:03:26 Speaker 1
Really has to be done and if you.
00:03:27 Speaker 1
Lay people off.
00:03:29 Speaker 1
The number of unemployment now employed.
00:03:32 Speaker 2
Will go up.
00:03:32 Speaker 1
But at the end of the day, the thing that we know here is we have a structural unemployment problem, as you said, two openings for every person, which means those openings.
00:03:41 Speaker 1
Aren’t paying enough?
00:03:42 Speaker 1
For people to leave the sidelines and get on.
00:03:45 Speaker 1
The field, yeah.
00:03:46 Speaker 4
Or they’ve been incentivized to to be on the sidelines.
00:03:49 Speaker 3
There you go.
00:03:50 Speaker 3
You coming out, that’s obviously enough.
00:03:50 Speaker 4
So yeah, these, these job openings might actually be indicative, the opposite of what the Fed is telling us, right?
00:03:58 Speaker 4
The Fed wants us to believe that they can just keep jacking up rates and we’re not gonna go into recession because we have all these open job Recs.
00:04:05 Speaker 4
But what if we should see the labor market is really two separate markets, they’re sort of white collar professional.
00:04:11 Speaker 4
And you’re seeing all of these tech companies that were involved in slam on the brakes really quickly right now?
00:04:18 Speaker 4
So we’re going to see greater unemployment there.
00:04:21 Speaker 4
And then on the blue collar side, you have this issue of record low labor participation.
00:04:29 Speaker 4
And so you still have inflation lyrics.
00:04:31 Speaker 4
And for all the jobs, because there’s all these, like warped incentives around that.
00:04:35 Speaker 1
There are two. Just put a number on it, Sachs, we’re we’re 10% off the peak in terms of participation and if those folks would participate.
00:04:43 Speaker 1
It would really fill a lot of these jobs.
00:04:45 Speaker 4
That would increase the production of goods and services and that might take.
00:04:48 Speaker 4
Some of the pressure off inflation.
00:04:49 Speaker 1
And it would also increase monetary velocity, right?
00:04:52 Speaker 1
Sachs people would spend the money they make, which they’ll get us out of this mess.
00:04:55 Speaker 4
I think part of the problem with the Fed’s approach here is that it’s assuming that if they just keep jacking up rates, that will that will reduce demand and that will stop or slow down inflation.
00:05:04 Speaker 4
And there’s some truth to that.
00:05:05 Speaker 4
However, I don’t think this inflation is purely a problem of excess demand.
00:05:10 Speaker 4
I think there’s also a supply problem, meaning that not enough goods and services.
00:05:14 Speaker 4
Are being produced.
00:05:15 Speaker 4
And the commodity is the inputs that we need to the production of goods and services.
00:05:19 Speaker 4
Those prices are increased there.
00:05:22 Speaker 4
They’ve been inflated, and that started well before the Korean War.
00:05:25 Speaker 4
But I think the Ukraine war has now exacerbated this problem with respect to energy and food.
00:05:30 Speaker 1
If you had 7 minutes for your over under for sax dimension Ukraine.
00:05:34 Speaker 3
You took the under you one, yes, yeah.
00:05:35 Speaker 4
I’m just mentioning.
00:05:36 Speaker 4
It as a exacerbate are of the situation.
00:05:38 Speaker 1
It is an exacerbate are I think that’s actually really good framing that it’s an exacerbate are.
00:05:43 Speaker 4
Yeah, it didn’t start with us.
00:05:43
This is a.
00:05:43 Speaker 1
Really is.
00:05:45 Speaker 1
Yeah, so if you look.
00:05:46 Speaker 1
At the quits, let me just give you the quits number because this is really interesting.
00:05:50 Speaker 1
These are people who are sick, quitting jobs.
00:05:52 Speaker 1
It’s still at a record high, so this concept of a great resignation we’re still having over.
00:05:57 Speaker 1
4 million people quit their jobs every month.
00:06:00 Speaker 1
Free pandemic quits averaged under 3,000,000 a month, and if you look at that chart, it’s just staggering to think that in an economy that’s going down, people are so quitting now.
00:06:10 Speaker 1
What is that indicative of?
00:06:12 Speaker 1
It’s indicative of people believing that they can get another job.
00:06:15 Speaker 1
You don’t quit your job if you don’t think you can get another one or you have some savings.
00:06:19 Speaker 1
Available you want to Yolo.
00:06:21 Speaker 1
Maybe you know?
00:06:24 Speaker 1
You know, spend a little free time going on vacation or the new economy emerging, right?
00:06:28 Speaker 1
I mean, one of the cases to be made is that the pandemic and the stimulus that followed created a staggering short shift in the types of jobs and the types of businesses that people, you know, used to make.
00:06:43 Speaker 1
Money and, you know, a lot of people were able to shift to work from home.
00:06:47 Speaker 1
And when you shift to work from home, you have more flexibility and freedom to choose other jobs that you can now do from home.
00:06:53 Speaker 1
And people don’t want to work in restaurants.
00:06:54 Speaker 1
They don’t want to work in fast food and if they can find.
00:06:57 Speaker 1
Another job a.
00:06:58 Speaker 1
Gig like or services like or on demand type job where they can have more freedom and flexibility and more earnings in their lives.
00:07:05 Speaker 1
They’ll make that choice.
00:07:06 Speaker 1
And this happened so quickly because of the shutdown, the lockdowns and then the stimulants, a trillion dollars or $2 trillion that poured in.
00:07:12 Speaker 1
Better it created all these new opportunities and all these new incentives, some new types of work and the fact of the old economy.
00:07:20 Speaker 1
The old businesses, all.
00:07:21 Speaker 1
The fast food restaurants and the coffee shops, they’re sitting with half employment and they can’t fill the jobs because that’s, you know, that that used to be a job that there was demand for and now it’s not the case, you know, and I think that.
00:07:32 Speaker 4
Well, they do.
00:07:33 Speaker 1
And I didn’t, I think that’s which by the way I, I don’t, I don’t know if that necessarily reverts in the near term because I do think that there’s been a substantial almost permanent change in some of these sectors of the economy, not necessarily all summer resort.
00:07:45 Speaker 1
But it leaves big gaps in parts of the economy.
00:07:47 Speaker 1
And maybe fast food restaurants are not going to be as cheap as they used to be because in order to get people to work there, you gotta charge more.
00:07:52 Speaker 1
And there’s other parts.
00:07:53 Speaker 1
Of the economy like services on mute.
00:07:54 Speaker 1
Selling stuff on Etsy or not, that are working for people?
00:07:57 Speaker 1
Let me just put a number on that and then hand it off to use axe. So just put a number on that. The jobs that fell the most white collar off 325,000.
00:08:04 Speaker 1
And manufacturing 208,000 the jobs that are increasing the most? Hospitality and retail. So exactly to your point, people feel more options. This holding was accelerated during the pandemic sacks.
00:08:16 Speaker 4
Well, the question I want to ask Freiberg is, do you actually think that these new options have worked from home and remote work have actually made the economy more productive?
00:08:26 Speaker 1
I’ll tell you.
00:08:26 Speaker 4
It seems to me that obviously employees, if you give them the freedom over the decision of their trade off between work and leisure and let’s.
00:08:27 Speaker 2
One thing, yeah.
00:08:31 Speaker 2
No, just.
00:08:36 Speaker 1
No, maybe it’s made the economy more expensive.
00:08:36 Speaker 4
Decide which they want to work.
00:08:40 Speaker 3
How so?
00:08:41 Speaker 1
If you take a big step back to the day before the lockdowns started, we had a normal functioning economy that was growing by, call it 2% a year.
00:08:52 Speaker 1
And the minute that we enforce these lockdowns, I actually think what we did was we started a supply side recession.
00:09:01 Speaker 1
It’s what Zach said earlier.
00:09:02 Speaker 1
So what does that?
00:09:04 Speaker 1
Let’s just say you’re a factory and you make wheels, OK? Just make something really simple. You were growing at 2% a year.
00:09:11 Speaker 1
Everything seemed hunky Dory. You had employees, it was fine. You used to sell your products, make 1015% profits, everything was fine.
00:09:19 Speaker 1
And then the day after, the government said we need to.
00:09:21 Speaker 1
Shut your factory.
00:09:22 Speaker 1
Down because we can’t have people spending too much time close together because we need to get a handle.
00:09:27 Speaker 1
On this pandemic.
00:09:28 Speaker 1
OK, so you shut it down and then for the next 12 or 18 months, what happens? That stuff sits idle. These people that used to work for you get 2 1/2.
00:09:39 Speaker 1
Trillion dollars put into their bank.
00:09:40 Speaker 1
Once they spend their time doing other things and then all of a sudden people say, OK, it’s time to start the factory up again.
00:09:48 Speaker 1
People want to buy wheels, and now all of a sudden you find that because everything all around the world was shut down.
00:09:54 Speaker 1
There’s no rubber to make the wheels, there’s no steel to make the axle, there’s no people to put them all together.
00:10:01 Speaker 1
And So what happens? Well, prices go up because again, you gave everybody else 2 1/2 trillion dollars.
00:10:08 Speaker 1
So they’re like, well, I used to pay a dollar for you. We are willing to pay you $2.00. Now just make the wheel. Give it to me before you give it to somebody.
00:10:15 Speaker 1
So that is like the classic definition of a supply side recession and.
00:10:19 Speaker 1
Piece of that to chew.
00:10:21 Speaker 1
And sorry, just to finish the point and the Fed basically confirmed this in the Minutes that they just released today.
00:10:27 Speaker 1
Jason, can you just read the quote that you had in the in the notes well the one up top a significant risk that elevated inflation should become entrenched if the public bands to question the resolve their resolve.
00:10:36 Speaker 1
I think the point is that, you know, we were kind of in a supply side recession and now by raising.
00:10:41 Speaker 1
Rates to some crazy amount, the end of which we’re still not sure about, may actually then trigger the demand destruction to have a demand side recession.
00:10:51 Speaker 1
And so I don’t, I don’t know that we’ve lived in a modern point in time where both things had been true, right.
00:10:58 Speaker 1
There’s been a principle of macroeconomics that everybody is always kind of debating.
00:11:01 Speaker 1
Is this a supply side issue if there’s a?
00:11:03 Speaker 1
Demand side issue.
00:11:04 Speaker 1
We know that in COVID it was a supply side issue.
00:11:06 Speaker 1
We took all the supply out of the market.
00:11:09 Speaker 1
And now we’re trying to figure out when we exhaust, you know, all of the money we’ve given people and we destroy demand and take the incentives for demand to go away, right?
00:11:19 Speaker 1
Consumer confidence is now starting to turn.
00:11:21 Speaker 1
What happens then?
00:11:22 Speaker 1
Well, we’re going to figure that out in the next six or nine months, but The thing is you have both that are true.
00:11:27 Speaker 1
It’s not as if the supply side of the economy has been fixed. It’s not as if everybody is running at 100% capacity.
00:11:34 Speaker 1
It’s not as if it all the supply chain issues have.
00:11:36 Speaker 1
Been worked out, Yep.
00:11:37 Speaker 1
So I don’t know, I just think it’s a.
00:11:39 Speaker 1
Perfect pivot.
00:11:40 Speaker 1
Yeah, it’s it’s a perfect pivot and just to build on that trim off.
00:11:45 Speaker 1
The downstream effects always talk about the 2nd order impact because people are not going to work anymore. Downtown areas are dying, so office space, commercial real estate’s actually in that. So you can comment.
00:11:57 Speaker 3
On what’s happening.
00:11:59 Speaker 1
And then restaurants and commuting and all the stuff that was happening downtown San Francisco downtown let Mary London breed had a press conference and she’s been tweeting, hey, we have to revive.
00:12:09 Speaker 1
You know, Soma in San Francisco, that’s never going to happen, that that’s off the table.
00:12:13 Speaker 1
The tech biting tweeting we gotta drop gas prices.
00:12:16 Speaker 1
Yeah, I mean, we have complete incompetence, but we’ll get to politics.
00:12:19 Speaker 1
Jamath on sax.
00:12:20 Speaker 1
Don’t worry, we’ve got plenty of politics for you.
00:12:22 Speaker 4
On address lines, tweet.
00:12:22 Speaker 1
I’m just teeing it up.
00:12:23 Speaker 1
So there’s your flop, gentlemen.
00:12:25 Speaker 4
But on San Francisco real estate I I read an amazing statistic today from like one of the major brokers.
00:12:25 Speaker 1
The job you want.
00:12:32 Speaker 4
They they said that by the end of the year, they’re expecting 30 million square feet of office vacancy, 30 million.
00:12:39 Speaker 4
In San Francisco.
00:12:40 Speaker 4
By the end of the year.
00:12:41 Speaker 1
San Francisco is tiny, by the way.
00:12:43 Speaker 4
Because of subleases and and then tenants rolling off.
00:12:47 Speaker 4
So the first thing I did is I tried to Google what’s the total square footage in San Francisco.
00:12:52 Speaker 4
And I think it’s about 75 million of office space. So you’re talking about 40% vacancy by the end of the year. I’ve never heard of such a thing.
00:12:54 Speaker 1
Oh my Lord, passion is in it.
00:13:00 Speaker 1
40% let’s be clear, San Francisco is fairly.
00:13:03 Speaker 1
You may get a bit of an outlier in this circumstance because so much of it was, you know, tech heavy.
00:13:07 Speaker 1
And so much of it went remote.
00:13:08 Speaker 1
Yeah, and the city collapse and all about crime. But like, generally that’s not the case. I mean, you know, New York is apparently still pretty stable, right? And Miami is obviously doing well. LA often.
00:13:18 Speaker 4
Right here, here’s the piece with that people aren’t really thinking about, which is the only reason it’s stable is because tenants sign up for long term leases.
00:13:27 Speaker 4
And This is why it turns out that we work as a pretty bad business model is because if you’re if all your leases are month to month and you hit a recession, your revenue gets ramed.
00:13:35 Speaker 4
This is why landlords like long.
00:13:38 Speaker 4
Term leases with creditworthy tenants.
00:13:40 Speaker 4
They signed seven years, 10 years, and so on.
00:13:42 Speaker 1
Letters of credit putting her down.
00:13:43 Speaker 4
Right.
00:13:43 Speaker 4
So what that means though, is that.
00:13:45 Speaker 4
As these tenants start to roll, their leases roll over the next few years, they don’t need as much space because they’ve either gone remote or they’re like hybrid now.
00:13:56 Speaker 4
And so they’re thinking of their office Less’s headquarters, which everyone needs to go to and more as, like a coworking space their employees occasionally go to. So they’re all reducing their footprints.
00:14:06 Speaker 4
This is why services scope keeps increasing.
00:14:08 Speaker 4
Its vacancy is that as more and more of these leases roll, there’s just no they don’t need as much space, so they’re also downsizing.
00:14:17 Speaker 4
Now here’s the problem.
00:14:18 Speaker 4
Here’s the problem is that these buildings have debt on them, right?
00:14:22 Speaker 4
And that debt has was called a debt service coverage ratio DSCR and basically you become you as a building owner become in default on your debt covenants if your revenue from the building.
00:14:37 Speaker 4
Drops below a certain number.
00:14:38 Speaker 4
And here’s the problem.
00:14:39 Speaker 4
All these new leases that get signed to except there are any.
00:14:43 Speaker 4
They’re going to.
00:14:44 Speaker 4
Be at a fraction of what the old leases were because this vacancy is going to create a massively low market clearing price.
00:14:51 Speaker 1
Am I right to understand that they’re not allowed to sign those leases because they’re under it?
00:14:55 Speaker 4
So no, it’s.
00:14:55 Speaker 1
Can the landlord take it as better than nothing or do they are not allowed to take it?
00:14:56 Speaker 4
It’s not, it’s not.
00:14:59 Speaker 4
It’s not that, it’s just that the market clearing prices can be so much lower than their old leases that when they then look at the revenue from the building and and by the way that buildings can have a lot of vacancy on it now they’re just not going to hit their their debt service coverage ratio.
00:15:13 Speaker 4
So they will be in default?
00:15:14 Speaker 4
That means is.
00:15:15 Speaker 4
I don’t understand how in a place like downtown services scope half the buildings.
00:15:19 Speaker 4
Don’t end up getting owned.
00:15:20 Speaker 4
By the banks or the?
00:15:21 Speaker 4
Banks, they want to own all these buildings, so there will be a fire sale.
00:15:25 Speaker 4
But I don’t know who.
00:15:25 Speaker 4
The buyers are going to be and.
00:15:26 Speaker 1
I mean, they just have to convert it, right?
00:15:28 Speaker 1
I mean, that’s the only way that they got to convert these to.
00:15:30 Speaker 1
Residential ’cause we have a housing crisis.
00:15:31 Speaker 1
Still, that’s the only way out.
00:15:32 Speaker 4
But that takes years and years, that takes years and years, and that’s that’s a repositioning play.
00:15:36 Speaker 4
First, you need the cooperation of the city government, which isn’t gonna happen.
00:15:38 Speaker 1
Is never going to have them in.
00:15:39 Speaker 4
Then you need.
00:15:40 Speaker 4
They need developers to come in and have the capital to to basically make all those changes again.
00:15:45 Speaker 4
It takes a long time, but think about the systemic risk from that.
00:15:48 Speaker 4
Right, if you know.
00:15:50 Speaker 4
That a huge chunk of the real estate in is the commercial real estate in downtown.
00:15:55 Speaker 4
Service scripts used to be blue chip.
00:15:57 Speaker 4
I mean the most blue chip, right?
00:15:59 Speaker 4
Yes, there are those.
00:16:00 Speaker 4
Financial institutions who own those assets because they are now toxic assets and they will be revealed to be toxic assets as soon as the leases roll well.
00:16:08 Speaker 4
And then there are.
00:16:09 Speaker 4
Debt funds and banks as well, right?
00:16:12 Speaker 4
And so?
00:16:13 Speaker 4
What are the cascading effects?
00:16:15 Speaker 4
When those shoes start to.
00:16:17 Speaker 1
Yeah, OK.
00:16:18 Speaker 1
And so just to put a finer point also on the the jobs and that was our flop.
00:16:22 Speaker 1
Net international migration has just plummeted.
00:16:26 Speaker 1
We’re we’re well under a million folks coming into the country.
00:16:30 Speaker 1
So the obvious solution to our employment issues is to recruit people from other countries.
00:16:34 Speaker 1
But let’s go to the turn card.
00:16:36 Speaker 1
Yeah, there it is.
00:16:37 Speaker 1
We have just stopped letting people Trump just absolutely close the borders, as you can see 2016.
00:16:42 Speaker 1
And Biden also is in favor of closing the borders.
00:16:45 Speaker 1
It’s also sentiment.
00:16:46 Speaker 1
It’s like, you know, America is not the shining light on the.
00:16:51 Speaker 1
Hill it used.
00:16:52 Speaker 1
To be not in the same way.
00:16:53
OK.
00:16:54 Speaker 1
We could easily have three or 4 million people coming into the.
00:16:57 Speaker 3
Country if we wanted to, yeah.
00:16:58 Speaker 4
We have 3 million people have come into summer abide in illegal migration.
00:17:02 Speaker 4
Does that chart count illegal migration?
00:17:02 Speaker 1
OK, this no, this is legal.
00:17:05 Speaker 1
This is legal.
00:17:05 Speaker 4
OK.
00:17:05 Speaker 4
Well, so just make sure you count that ’cause.
00:17:06
Only result, yeah.
00:17:08 Speaker 4
We basically had a open border policy since Brian took over.
00:17:10 Speaker 1
Imagine if we didn’t, if we didn’t allow those workers in, what would happen?
00:17:13 Speaker 1
OK, let’s go to the turn card consumer Confidence Conference Board.
00:17:16 Speaker 1
Consumer confidence index in June fell to 98.7 from 103.2 in May.
00:17:22 Speaker 1
Expectation was 100. So it’s under the expectation, the expectation index, so when.
00:17:27 Speaker 3
You look at.
00:17:30 Speaker 1
Consumer confidence, there’s two your confidence in the present situation, that’s the blue on.
00:17:34 Speaker 1
The chart and.
00:17:35 Speaker 1
Then there’s your expectations of the future.
00:17:37 Speaker 1
And what you.
00:17:37 Speaker 1
See is a huge divergance there starting to happen?
00:17:41 Speaker 1
People are starting to look towards the future as negative, but they feel pretty good about today.
00:17:46 Speaker 1
And so, gentlemen, what do you think of this chart?
00:17:50 Speaker 1
It’s not.
00:17:51 Speaker 1
Like, this is sort of akin to what Sachs was relaying about that founder at the CO2 conference.
00:17:55 Speaker 1
Which is like, you know, he thinks everybody else is going to, you know, roll up their sleeves and buckle down, but he has no intention of doing it.
00:18:02 Speaker 1
I think people are roughly the same way and I think their behavior is, well, you know, if things are going to get hard, I’ll deal with it in the future.
00:18:12 Speaker 1
But right now I have money in my pocket and you know, if you look at airlines and.
00:18:17 Speaker 1
How many people are trying to travel?
00:18:18 Speaker 1
If you just look at like the cost of a hotel room, if you look at what’s happening this summer, it does not seem like people are slowing down or.
00:18:24
Tapping the brakes.
00:18:25
In any way?
00:18:26 Speaker 1
Yeah, yeah, I get concerned about credit because it’s not coming from wage gains.
00:18:30 Speaker 1
You know, the increased cost is there be increased income.
00:18:34 Speaker 1
It’s not.
00:18:35 Speaker 1
And you know, we’re seeing continued month after month increases in consumer credit balances and that I think, you know, this is with the point I made a few episodes ago, which I don’t think people are going to slow down how they’re living and how they’re spending.
00:18:48 Speaker 1
What they’re doing is showing.
00:18:51 Speaker 4
See, I don’t know about.
00:18:52 Speaker 4
That I don’t know that.
00:18:53 Speaker 1
Well I I just think after two years of a lockdown, I do think that people are anxious to re establish some amount of normalcy and this is really the first time.
00:19:03 Speaker 1
Where everybody with large can be out and do the.
00:19:06 Speaker 1
Things that.
00:19:07 Speaker 1
Yeah, last year was the Headfake summer, yeah.
00:19:09 Speaker 1
Last year was a little bit of.
00:19:10 Speaker 1
A head fake and look, you have two years of pent up.
00:19:12 Speaker 1
Plans of.
00:19:13 Speaker 1
You know why?
00:19:14 Speaker 1
50th Anniversary’s and.
00:19:15 Speaker 1
Weddings and all of the stuff that’s happening and so I think people are really spending.
00:19:19 Speaker 1
Money, if you look at it, you know.
00:19:21 Speaker 1
The the consumer is holding up amazingly.
00:19:24 Speaker 1
It’s got to be some combination of jobs, home prices and this.
00:19:27 Speaker 1
But This is why I there has not been a downtick in demand.
00:19:31 Speaker 1
I don’t know why everybody thinks that there’s been a downtick in demand.
00:19:33 Speaker 3
It has a mismatch in some of the numbers.
00:19:33 Speaker 1
There was an article like debris, yet it’s not showing up in the numbers yet.
00:19:36 Speaker 4
No, I think it is.
00:19:37 Speaker 1
Mean it’s, it’s just.
00:19:37 Speaker 4
I think it’s.
00:19:38 Speaker 1
Just subtle gets very subtle.
00:19:40 Speaker 1
OK, sure it is.
00:19:40 Speaker 1
There is a subtle.
00:19:41 Speaker 4
I actually disagree with you guys.
00:19:42 Speaker 4
I actually think that the economy is pivoting on a dime here and it’s it’s starting to show up suddenly in the numbers.
00:19:49 Speaker 4
Here’s some other data points.
00:19:50 Speaker 4
Consumer sentiment.
00:19:51 Speaker 4
Biggest drop in consumer sentiment in 40 years.
00:19:54 Speaker 4
That was in the last month.
00:19:56 Speaker 4
Right track, Wrong track polling. Only 10% of the country thinks we’re on the right track if you pull people and ask are we?
00:20:02 Speaker 4
In a recession.
00:20:03 Speaker 4
Something like plus 60% of the country already thinks we’re in a recession. There’s a slight political attempt to that, more Republicans than Democrats. Sticker recession. However, even roughly half of Democrats think we’re in a recession. So.
00:20:16 Speaker 4
I think that.
00:20:16 Speaker 1
Yeah, those are all feelings, not behavioral OSAX.
00:20:18 Speaker 1
We’re looking at the data, not the sentiment.
00:20:21 Speaker 4
I think the behavior will catch up with the sentiment.
00:20:23 Speaker 1
But of course it will, yes.
00:20:23 Speaker 4
I think the behavior.
00:20:24 Speaker 4
I think the behavior is pivoting.
00:20:26 Speaker 4
It’s just that I think you have to dig beneath the service surface and you have to look at things like retail sales, things like.
00:20:32 Speaker 1
I’m not sure, David, if you look back on all the number of times consumer sentiment is dipped that the correlation to spending patterns is so uniformly predictive as we think.
00:20:41 Speaker 1
I mean, I think that there are, there’s a slight positive correlation, I remember, but I don’t think it’s like, you know, .75 point 81, it’s not that. So there’s this weird preference falsification that happens.
00:20:52 Speaker 1
When you get asked what do you think is going to happen?
00:20:54 Speaker 1
First thing, what do?
00:20:55 Speaker 1
You do, yeah.
00:20:56 Speaker 1
And I think a lot of consumers, that’s why they have, you know, we know the data in America like less than a month of savings or whatever those numbers are.
00:21:04 Speaker 1
Despite all of the.
00:21:05 Speaker 1
Sentiment analysis and all of the stuff that you would think that there would.
00:21:07 Speaker 1
Be behavior change.
00:21:08 Speaker 1
But mostly people kind of just live in the moment and you know that that’s partly because they don’t have the structural support to save or other things.
00:21:18 Speaker 1
But the reality is that most folks, from what they say to what they.
00:21:22 Speaker 1
Behave there is.
00:21:22 Speaker 3
A gap. Yeah, and and.
00:21:24 Speaker 1
To your point, Saks, this is starting to catch up.
00:21:27 Speaker 1
We’re seeing a slight downtick and we’ll go to real estate next.
00:21:30 Speaker 1
But if you.
00:21:31 Speaker 1
Look, I thought I was doing some research on gasoline because that’s obviously where people getting hit the most.
00:21:36 Speaker 1
The average household is now spending 5000 a year on gasoline. That’s almost double last year, so this is going to have an impact.
00:21:42 Speaker 1
It’s going to catch up, but there’s so many jobs available and there’s so many people unemployed.
00:21:46 Speaker 1
I think it’s manageable.
00:21:47 Speaker 1
So to your point, your mouth.
00:21:49 Speaker 1
It feels like consumers can manage even this great headwind.
00:21:52 Speaker 1
Me just put.
00:21:53 Speaker 1
A point to it, I think.
00:21:54 Speaker 1
The average.
00:21:57 Speaker 1
Per capita income in the US? About $38,000 a year. That works out to about $17bucks.50 an hour, roughly.
00:22:06 Speaker 1
Think about a person with that level of earnings. The average household in the US has historically, you know, spent about 1/3 on housing, about 13%.
00:22:17 Speaker 1
On food and about 16% on, you know their car and their gas and they only have about 12% leftover for saving.
00:22:25 Speaker 1
So, you know, if that 13% on food have jumped by 30%, the 16% that they’re spending on gas is jumped by 40% or 50%.
00:22:34 Speaker 1
And even if housing prices take up a little.
00:22:36 Speaker 2
Bit all of a.
00:22:37 Speaker 1
Sudden, your savings are gone, and you’re actually not.
00:22:39 Speaker 3
The gas has actually.
00:22:40 Speaker 1
Doubled true, but it’s doubled ago, so.
00:22:42 Speaker 1
By the way, it’s worse than you say.
00:22:44 Speaker 1
No twisting to the consumers that you’re using a per capita number.
00:22:47 Speaker 1
Yeah, yeah.
00:22:48 Speaker 1
And So what, but I think what I’m trying to highlight is that there is a distribution.
00:22:51 Speaker 1
There is a group of the United States, a small percentage of minority that have owned good income and there are having their 50th anniversary like Jamal is talking about taking their travel and that shows up in the numbers.
00:23:02 Speaker 1
Outside spending.
00:23:03 Speaker 1
Happening with a segment of the economy, and what Sachs is saying I think is right as well, which is that the majority of Americans are facing this really critical budget crisis where their personal spending levels are now exceeding their income levels.
00:23:15 Speaker 1
And there’s a critical need for credit and for personal debt and spending to go down, and that’s what’s going to draw at significant risk in the next couple of months.
00:23:23 Speaker 1
Quarters mirrors.
00:23:25 Speaker 1
If the majority it looks some of the numbers would look good because there’s a segment of the economy that it’s overspending, but the majority of the economy is accessing, probably turning on a dime.
00:23:34 Speaker 1
But I think both things can be true.
00:23:36 Speaker 1
Yeah, let me, let me maybe tie a couple of these things together because I I tend to agree with you like I think that we have been in a supply side.
00:23:46 Speaker 1
That is what has caused inflation.
00:23:48 Speaker 1
We have to go through a process.
00:23:51 Speaker 1
Of taking all the excess money that’s been put in.
00:23:56 Speaker 1
And when you do that, we will destroy demand and then that’ll trigger a demand side recession because people will values and we will destroy asset values.
00:24:05 Speaker 1
Asset values went.
00:24:05 Speaker 1
So that’s that.
00:24:07 Speaker 1
Real quick, yeah, that will happen.
00:24:10 Speaker 1
So the balance sheets of that segment of the population that is overspending right now, once their balance sheets really take the hit and they take a hard look at what their savings are, they’re going to cut spending.
00:24:19 Speaker 1
Right.
00:24:20 Speaker 1
So but the point is I think we’re still firmly in that.
00:24:22 Speaker 1
First phase and I.
00:24:23 Speaker 1
And I hate to be the bearer of bad news, but the reason why I think that we’re still in the first part of this process is because people, broadly speaking, still have a lot of savings because of all the stimulus checks.
00:24:36 Speaker 1
There is still a lot of money.
00:24:38 Speaker 1
So what?
00:24:39 Speaker 1
How will we know?
00:24:40 Speaker 1
Maybe it’s the better.
00:24:42 Speaker 1
When all of that excess savings has been, you know, torn away from these people because of high prices, I suspect it’s when Jason first chart starts to close, right?
00:24:53 Speaker 1
So when people are, you know, go and they’re more motivated to re-enter the workforce, I think that’s a signal freeberg your signal is another one which has been.
00:25:01 Speaker 1
Credit delinquencies really start to spike.
00:25:04 Speaker 1
It’s because people then, you know, tapped out their savings, then they tap their credit cards and then all of a sudden they become delinquent.
00:25:10 Speaker 1
When all of those things happen, you’re probably now at a point where that first phase of the supply side issue.
00:25:16 Speaker 1
Those are largely done and now you get to the demand destruction.
00:25:19 Speaker 1
But all of those roads unfortunately lead to the same conclusion, which is like, you know, equities get really under pressure.
00:25:27 Speaker 1
There is no.
00:25:28 Speaker 1
Scenario where there’s a bridge to equities.
00:25:30 Speaker 1
Why would you buy something that has lower earnings in the future?
00:25:33 Speaker 1
Or why would you buy something?
00:25:36 Speaker 1
That has a lower discount rate for profits in the future.
00:25:38 Speaker 1
In this case, both are.
00:25:40 Speaker 1
All right, let’s get to that.
00:25:41 Speaker 1
’cause the piece we haven’t got to.
00:25:43 Speaker 1
So here’s the River card is housing because people homes are the majority of their wealth here in the United States and that I think, will be the true indicator.
00:25:51 Speaker 1
Trim off to your point.
00:25:52 Speaker 1
Labor participation, certainly one, but when this hits housing, that’s when we’re going to know we’re.
00:25:56 Speaker 1
In the end.
00:25:57 Speaker 1
Game the mortgage rate just hit 5.3%.
00:26:00 Speaker 1
Why do you say housing is the?
00:26:01 Speaker 1
End game?
00:26:02 Speaker 1
Well, I I think we haven’t seen the collapse of housing prices yet.
00:26:06 Speaker 1
We’re in a housing shortage and historically mortgages are still at you, you know, the 30 year average. So let me just give you the statistics here. The mortgage rate is 5.3% if you look at this chart from our childhood on.
00:26:20 Speaker 1
Our parents in the 80s were paying 151670 percent, 17% for their mortgages. We’re well below the 50 year average, even with the.
00:26:29 Speaker 1
Rate hikes. And so the 50 year average for mortgages and the 30 year mortgage is 7.77.
00:26:35 Speaker 1
So we’re at 5.3 well below that, but while this has been a very quick turn around from 2 1/2% mortgages all the way up to five.
00:26:42 Speaker 1
.3% home sales have started to show weakness sotas access point. This is starting to show up in the numbers, but ever so much.
00:26:50 Speaker 1
We’re down 6%, almost 7% year over year.
00:26:53 Speaker 1
And 3.5% month over month, but we’re holding up historically. So for the last 10 years we’ve been selling over 5,000,000 homes a month with the exception of the pandemic shut down.
00:27:03 Speaker 1
And that’s this next chart you’re going to see here and this is a really amazing chart I found which is existing home sales versus a 30 year fixed rate mortgage in our childhoods in the 80s where some 2-3 million.
00:27:14 Speaker 1
Year, as you see the rates, that’s the Orange line, come down massively from 17% and then under 10% housing starts to flip.
00:27:22 Speaker 1
People start flipping houses more and more often, but we’re still at that 5,000,000 that numbers got to drop down to probably 4 and then we would actually have some capitulation feedback.
00:27:35 Speaker 1
From the panel.
00:27:35 Speaker 4
I mean, look.
00:27:36 Speaker 4
There’s an old saying that a recession is when your neighbor loses his job, and a depression is when you lose your job.
00:27:44 Speaker 4
And the reality is we haven’t had.
00:27:47 Speaker 4
The big job losses yet it’s starting.
00:27:49 Speaker 4
We can start to see it in the.
00:27:50 Speaker 4
Or if open wrecks are getting closed, and then there were those job loss numbers that just came out which were a little higher than expected.
00:27:56 Speaker 4
So the job losses are starting, but so far it’s really been the step prior to that, which is people are seeing their full on caves get destroyed, stock markets down, they’re seeing their wages get destroyed by inflation, food and gas prices being much higher.
00:28:10 Speaker 4
So there’s a really good reason why people are sentiment is so negative out there, people feel poorer than they were before, and this could get worse.
00:28:17 Speaker 4
Like you’re saying, Jason, with their nest egg in their homes getting it.
00:28:21 Speaker 4
I agree.
00:28:21 Speaker 4
That’s the next shoe to drop, just like the commercial real estate is the next shoe.
00:28:25 Speaker 4
To drop but.
00:28:26 Speaker 4
I think the really big question over the next six months is what sort of job losses do we see because that really is going to be the big determinant of of how hard this recession hits.
00:28:37 Speaker 1
Yeah, I agree with you. And it’s it doesn’t look like if we, if we’re losing 300,000 jobs a month, it’s gonna take a long time for us to even get to 1 for one jobs.
00:28:46 Speaker 1
And so this is I just honestly, I I think, I think you were right, but I think we’re not even close to that.
00:28:53 Speaker 1
I just don’t see where all of a sudden there are these writ large mass layoffs, for example.
00:29:00 Speaker 1
I would believe what you’re saying if if the headline in the Wall Street Journal said Walmart lays off 10,000 people, right?
00:29:08 Speaker 1
That’s not what’s happening. And in fact, it’s the exact opposite. Walmart’s like, well, you know, we seem to have record demand. We’re raising prices and every supplier will have to pay a gas tax in the supplier tax and.
00:29:19 Speaker 1
Deal with it.
00:29:20 Speaker 1
So I just think that.
00:29:21 Speaker 1
You’re going to be right in the end.
00:29:24 Speaker 1
I just think we’re way too early in this process to get to that place where we did.
00:29:28 Speaker 1
We’re debating this.
00:29:29 Speaker 1
I I don’t.
00:29:30 Speaker 1
See sertraline.
00:29:31 Speaker 4
So you on board with the Ackman trade, basically, you know, acne basically came out that tweet storm a couple of days ago basically saying that, listen, inflation is still the big problem, not recession.
00:29:40 Speaker 4
The economy is humming along, there’s plenty of jobs and we’re.
00:29:44 Speaker 4
We’re gonna have a persistent problem with inflation.
00:29:45 Speaker 1
I think he’s kind of right and kind of wrong.
00:29:47 Speaker 1
I think that you can have inflation and a recession at the same time.
00:29:52 Speaker 1
This is what my point is.
00:29:53 Speaker 1
I think we have been in a supply side recession, meaning.
00:29:57 Speaker 1
The day of the pandemic, it’s not as if demand stopped.
00:30:01 Speaker 1
It’s not as if you and I, David, didn’t want to go out or use door dash or take an Uber or watch a movie.
00:30:06 Speaker 1
In a movie theater.
00:30:07 Speaker 1
We were not allowed.
00:30:09 Speaker 1
Right.
00:30:09 Speaker 1
And so we found other ways in order to fulfill our demand.
00:30:13 Speaker 1
That’s why Shopify, you know, did so well on behalf of the merchants that they served.
00:30:17 Speaker 1
That’s why Robin Hood did so well.
00:30:19 Speaker 1
That’s why Fortnite did so well, right?
00:30:21 Speaker 1
We found other.
00:30:22 Speaker 1
Places to spend money.
00:30:24 Speaker 1
But what went away was the supply, and those incentives didn’t come back, and they’re still not back.
00:30:29 Speaker 1
That’s why prices keep going up.
00:30:30 Speaker 1
This is the problem, is the definition of a recession, writes chamath.
00:30:34 Speaker 1
We’re we’re sitting here.
00:30:35 Speaker 1
Most people don’t understand that you can have a supply side recession and a demand side recession.
00:30:39 Speaker 1
They just manifest in different ways.
00:30:41 Speaker 1
So, well, I think, I think, I think like I guess acting is roughly right in some ways he’s roughly not so right in some others.
00:30:49 Speaker 1
I think that we have an issue where we are going to transfer.
00:30:54 Speaker 1
The supply side issues that are driving inflation to average everyday consumers and their ability to buy things.
00:31:02 Speaker 1
I still think that the average everyday consumers desire to buy things is what it was from before and on.
00:31:08 Speaker 1
The margin is probably higher.
00:31:11 Speaker 1
I do think at some point it will start to change when.
00:31:14 Speaker 1
Prices get high enough, but I don’t think we’ve reached that point of equilibrium yet.
00:31:19 Speaker 1
And the reason is because companies like the Walmarts of the world who see this demand.
00:31:26 Speaker 1
On literally a real time basis, knows better than anybody else when and how much they can raise prices downstream into their supply chain.
00:31:33 Speaker 1
So when you see something like this in the Wall Street Journal, I would just encourage us all to say they must see that demand is the same or better.
00:31:41 Speaker 1
And so they’re going to now push those price increases down to everybody else.
00:31:46 Speaker 1
Because now Walmart says here is an opportunity for me to defend my earnings power.
00:31:51 Speaker 1
And This is why I think we’re in this first inning of this.
00:31:54 Speaker 1
So I don’t know whether Ackman is right or wrong, but I think we’re in the early phases of a two phase recession and I don’t know what that looks like because I’ve never lived through one of those and I think in many ways it’s the combination of the two and it was it was largely because of government failure, government.
00:32:12 Speaker 1
Failure and how we reacted to the pandemic.
00:32:14 Speaker 1
In hindsight, Saxons right all the wrongs.
00:32:16 Speaker 1
We over reacted by shutting everything down.
00:32:18 Speaker 1
We probably could have kept some supply online by understanding masking early on and then secondly exacerbated with failed government policy because we gave everybody trillions and trillions of dollars and we entered the capital markets and perverted it with another seven or 8 trillion more.
00:32:33 Speaker 1
By the way.
00:32:34 Speaker 1
That has consequences.
00:32:36 Speaker 1
The consequences are.
00:32:37 Speaker 3
They’re talking about giving still.
00:32:39 Speaker 1
We list now in order to help people deal with.
00:32:43 Speaker 3
In friendship and it’s like second you can’t pour.
00:32:43 Speaker 1
So we are not, we are not learning.
00:32:47 Speaker 1
So if I ate on the fire, if I had to basically put what we are all saying into a neat little bow, I would say there needs to be a multi phased economic correction.
00:32:58 Speaker 1
One that.
00:32:59 Speaker 1
Corrects the supply that we took out of.
00:33:01 Speaker 1
The market during the panic.
00:33:02 Speaker 1
Pick one that corrects for all the excess money and then one that corrects for demand.
00:33:09 Speaker 1
That’s a lot of stuff we have to do it so like.
00:33:11 Speaker 1
So the more misguided.
00:33:13 Speaker 1
Government policy we have, the farther away from finding that equilibrium point we’re going to be, the longer it’s going to take.
00:33:18 Speaker 1
The more damage is going to be.
00:33:20 Speaker 1
So Sachs, the Fed is obviously, it’s pretty much consensus they’re going to do another .7575 basis points later.
00:33:26 Speaker 1
This month could be 50.
00:33:28 Speaker 1
Basis points.
00:33:28 Speaker 1
Who knows that there seems to be a couple of people saying that that might happen.
00:33:33 Speaker 1
If that does happen and it feels like inflation is starting to top out, do you think inflation?
00:33:39 Speaker 1
You know, starts to turn or do you think we’re still going to see prices go up? Because it does feel like it was starting to bounce along the ceiling. Where do you think’s going to happen if the .75 happens?
00:33:50 Speaker 4
You’re seeing the market rally today in the last few days, especially growth stocks because of this idea that the Fed is tackling inflation, they’re raising rates and the market is looking out six months and seeing the possibility of recession and they believe that is going to bring down.
00:34:05 Speaker 4
Demand and bring down prices and it could be what I just described would be a soft landing.
00:34:11 Speaker 4
I did some skeptical there’s gonna be a soft landing because of which month is saying which is this is a multi part problem and until we fix the supply side I don’t think that newly reducing demand is going to get us out of this.
00:34:23 Speaker 1
I really agree with.
00:34:24 Speaker 1
You it’s a production problem.
00:34:26 Speaker 1
It’s a demand problem.
00:34:28 Speaker 1
And it’s also, as we just talked about it a few minutes ago, an employment problem because the businesses that need to grow, that need to generate revenue, cannot get the businesses that are dependent on people to do service jobs cannot get those jobs filled.
00:34:42 Speaker 1
And so they cannot grow their revenue cannot make more profits and there’s a trickling effect in the economy of that.
00:34:48 Speaker 1
You know, we talked about that.
00:34:49 Speaker 1
Kind of job, chef, job market shift that’s happened.
00:34:52 Speaker 1
So all three and so all three or just this like dislocation that’s happened, right and it’s unclear, you know someone very smart I was talking to yesterday.
00:35:02 Speaker 1
He’s a former UM.
00:35:05 Speaker 1
Member of an administration said.
00:35:09 Speaker 1
We just, there’s literally no way to predict, but we.
00:35:12 Speaker 1
Just don’t ’cause.
00:35:12 Speaker 1
We think about the complexity of pulling three rocks in a pond, how do those three rocks interact and how do the ripples interact is really what we’re trying to predict, and it’s.
00:35:20 Speaker 1
Very hard to do.
00:35:21 Speaker 1
I mean, if you translate this into the markets for one second.
00:35:25 Speaker 1
I think what we’ve done since November of 21 and that you should play this clip because, you know, not to say, you know, we didn’t see this coming, but we really did.
00:35:34 Speaker 1
You know, we pointed to, you know, one of our friends and the person somebody else that we kind of know, Bezos and Elon, and he said.
00:35:41 Speaker 1
When the two smartest capital allocators in the world start divesting, they clearly understand and see things that the rest of us should pay attention to and to ignore.
00:35:50 Speaker 1
It seems reckless.
00:35:51 Speaker 1
Or in your clip.
00:35:52 Speaker 1
And we’ll be back.
00:35:53 Speaker 1
In 30 seconds after the clip.
00:35:55 Speaker 1
The two most important founders of our generation, the two smartest people who have really consistently run neuron Musk and Jeff Bezos, have collectively sold more than $11 billion of their holdings.
00:36:06 Speaker 1
This year alone, and if you can’t take all of that and decide for yourself that’s right for you and your family, you’re doing yourself a disservice.
00:36:13 Speaker 1
I think it’s important for me to never sort of like be forced to tell folks whether I’m buying or selling, although I’m willing to do it in moments where I.
00:36:20 Speaker 1
Think it’s important?
00:36:21 Speaker 1
But I think it’s really important to understand the context.
00:36:24 Speaker 1
And so I think like these folks that might think derisively about.
00:36:27 Speaker 1
Individuals who are managing risk, I think it’s really naive and I think it’s it.
00:36:32 Speaker 1
It creates a lot of missed opportunity for them as well.
00:36:35 Speaker 1
If the smartest people in the world are now selling their core holdings that they told you they would never sell, and you are.
00:36:44 Speaker 1
Not reconsidering your position on things.
00:36:47 Speaker 1
You’re either much smarter than them, or you’re being really, really reckless.
00:36:52 Speaker 1
That was November, you know, and at that moment I started a bunch of things in process, which we can talk about at the end, but I also sold a bunch of stuff.
00:37:02 Speaker 1
I started a process at that point and I sold the piece in December and then I just sold my move the last piece this week, but then, you know, I sold.
00:37:08 Speaker 1
The big piece of.
00:37:09 Speaker 1
Sofia in that moment, but the.
00:37:12 Speaker 1
The point was more the following, which is since that clip today.
00:37:18 Speaker 1
What we’ve gone through is a massive re rating of the discount factor of these companies, assuming nothing else changes, right?
00:37:27 Speaker 1
That’s all we’ve done.
00:37:28 Speaker 1
We’ve we’ve not questioned whether earnings can change.
00:37:31 Speaker 1
You know, all we said is, OK, well now we’re going to take the discount rate up, which means the value of this company is.
00:37:36 Speaker 1
Less than it used to be.
00:37:38 Speaker 1
That’s all we’ve done through all of this wealth destruction that’s happened since November.
00:37:43 Speaker 1
But now the second shoe has to drop, which is if you believe that after this supply side issues are resolved when you go through a demand destruction phase.
00:37:52 Speaker 1
The earnings of these companies are in real trouble.
00:37:54 Speaker 1
And Jason, you posted something I think about the social media companies and ad rates and, right?
00:37:59 Speaker 1
So one of the first things to go into recession is advertising.
00:38:02 Speaker 1
If you’re going to Bell Titan at a company where can you do it or your layoff employees but you can’t get out of your lease is as we talked about in real estate, but you.
00:38:08 Speaker 1
Can cut your spending on marketing and so.
00:38:12 Speaker 1
Right now, it’s looking pretty bleak for Facebook because of the headwinds they have.
00:38:17 Speaker 1
So the earnings could drop, which means by the way, detox ratio could be told.
00:38:21 Speaker 3
Before the earnings.
00:38:21 Speaker 1
We talked about that.
00:38:22 Speaker 1
Not real.
00:38:23 Speaker 1
Well, we talked about that.
00:38:25 Speaker 1
We talked about that over the last few weeks, which is every time the market rallied oddly, Facebook will be stagnant or trade off.
00:38:31 Speaker 1
And you know, when I called people on Wall Street, what they said was because, you know, we think this is the company that has the most pressure on earnings.
00:38:38 Speaker 1
I don’t know if that’s true or not, but they took every opportunity in rallies to trimming our position in Facebook.
00:38:44 Speaker 1
Now, if that’s true, you have to remind yourself that is one of.
00:38:46 Speaker 1
The 10 best companies in the entire.
00:38:49 Speaker 1
And so if you’re going to go and question the earnings power of one of the 10 best companies in the world, you may want to consider the earnings power of every other company that’s not Facebook.
00:38:59 Speaker 1
There are some unique things to the Facebook story.
00:39:01 Speaker 1
They are facing a unique, disruptive moment with Apple ankling their ability to target users.
00:39:07 Speaker 1
Supposedly, Google might.
00:39:08 Speaker 1
Follow suit with that which would be super anti competitive and also the surging.
00:39:13 Speaker 1
Talk taking market share from there’s some good news in energy, which will then dovetail into politics and into this farming situation.
00:39:20 Speaker 1
Freiberg. Turkish Government claims it just discovered almost 700 million metric tons of rare earth minerals. It’s 15 times China resolve. If this is true, you guys probably know we use about 150,000 metric tons.
00:39:33 Speaker 1
A year right now that’s going to double by 2030. This is something like 4000 years at the current demand and this would put them far beyond anybody else is Trump. You’ve got investments in this space, I don’t know if you’ve been.
00:39:45 Speaker 1
Tracking this news thoughts on?
00:39:47 Speaker 1
Another massive discovery of rare earths.
00:39:51 Speaker 3
Did you guys just have dinner?
00:39:52 Speaker 3
Did her?
00:39:53 Speaker 1
Serve for you guys.
00:39:53 Speaker 1
No, that’s the best she brought she.
00:39:55 Speaker 1
Brought us.
00:39:55 Speaker 3
Did you get?
00:39:55 Speaker 1
A little class he.
00:39:56 Speaker 1
There’s an incredible restaurant here in Milan called De Santis which makes the best paninis.
00:40:02 Speaker 1
You’ve ever tasted?
00:40:03 Speaker 4
Is this a harbinger of the future?
00:40:05 Speaker 4
DeSantis would be more perfect than.
00:40:06 Speaker 2
That right, here you go.
00:40:07 Speaker 1
Oh goodness, Anthony.
00:40:09 Speaker 1
It’s the Oracle sackable subliminal influence that sounds so good.
00:40:13 Speaker 4
This is what’s gonna get us out of.
00:40:14 Speaker 4
This situation, DeSantis.
00:40:17 Speaker 1
By tomorrow, just quickly on the rare earths if.
00:40:19 Speaker 1
This is actually true.
00:40:21 Speaker 1
What would this do?
00:40:22 Speaker 1
And have you been tracking the situation ’cause?
00:40:25 Speaker 1
It does seem there’s some truth to it, yeah?
00:40:27 Speaker 1
I think it’s important to just take.
00:40:28 Speaker 1
A step back.
00:40:28 Speaker 1
And kind of.
00:40:29 Speaker 1
Look at this thing with not like, complete skepticism, but just a little skepticism.
00:40:35 Speaker 1
It’s OK not surprising that there’s additional deposits all around the world, meaning we’ve always said rare earths are not particularly that rare.
00:40:43 Speaker 1
It’s just the question is, you know, which of the 17 rare earth?
00:40:47 Speaker 1
Governments at what grade?
00:40:49 Speaker 1
Meaning, at what percent concentration does it exist?
00:40:52 Speaker 1
And then really importantly, at what?
00:40:54 Speaker 1
Cost to extract it economically? Yep, right. So meaning there is a ton of underdeveloped rare earth athletes in Canada, the US, Africa, Australia, Brazil, Brazil.
00:41:04 Speaker 1
They’re just under under developed because when you put all of these factors together, it’s really tough. So the government release says they’re going to process like 570,000 tons of war that’ll produce around.
00:41:14 Speaker 1
10,000 kilo tons per year over Earth. So that implies sort of a 1.75 to 2% grade. It’s fine.
00:41:22 Speaker 1
So there’s just a lot more work.
00:41:23 Speaker 1
I would just sort of say it’s really directionally great.
00:41:26 Speaker 1
A lot more work needs to be done, and more importantly, they need to release enough of this detail so folks like us and others can actually diligence it to tell you more accurately.
00:41:37 Speaker 1
But the press release was exciting fryburg this reminds me a little bit of the peak.
00:41:42 Speaker 1
Oil headfake we had, you know, 15 years ago, everybody basically said we’re not going to find more oil.
00:41:48 Speaker 1
Here’s what’s left of oil.
00:41:49 Speaker 1
And then Norway is like, yeah, we just found more oil than.
00:41:51 Speaker 1
Existed previously, that’s been pulled out.
00:41:54 Speaker 1
And the whole concept that the world is going to run out of oil is now gone.
00:41:57 Speaker 1
So Friedberg what is happening in science that we just can’t predict?
00:42:01 Speaker 1
What resources are available we know?
00:42:03 Speaker 1
Little about what’s inside.
00:42:05 Speaker 1
The below the a certain depth.
00:42:07 Speaker 4
Of the crust of.
00:42:08 Speaker 1
The earth.
00:42:08 Speaker 1
So, you know, there’s some estimates.
00:42:13 Speaker 1
But we’re always surprised.
00:42:15 Speaker 1
And we know very little about the distribution of those elements in the crust of the Earth and below the crust.
00:42:20 Speaker 1
You know, mining an incredible industry. I don’t know the state-of-the-art in engineering and mining very well, but you know, from a pure geophysics point of view, by some estimates, we have 10 billion years of energy reserves below the crust of the earth that we can access in the form of nuclear resorts.
00:42:40 Speaker 1
By geothermal power, and that’s excluding, you know, some.
00:42:44 Speaker 1
Of the you.
00:42:45 Speaker 1
Know the potential of some of these elements and what they could do.
00:42:48 Speaker 1
Building a more sustainable.
00:42:50 Speaker 1
So why do people so pessimistic when we keep?
00:42:53 Speaker 1
People have been telling us this way.
00:42:55 Speaker 1
Anyone wants a great book, the money you got for the dinner that I did a few weeks ago where we had Steven Pinker come for dinner.
00:43:02 Speaker 1
Yeah, we did.
00:43:03 Speaker 1
Book enlightenment now.
00:43:04 Speaker 2
Or you could watch.
00:43:05 Speaker 1
One of his videos on YouTube where he’s got like all 60 slides.
00:43:09 Speaker 1
And he highlights.
00:43:09 Speaker 1
Like, you know, humans have a tendency to focus on the risks and concerns and the downsides, and we miss the.
00:43:16 Speaker 1
Incredible optimism that is apparent as we actually look at the data of what’s happening with our species and what we’re.
00:43:22 Speaker 1
Doing on our.
00:43:23 Speaker 1
Planet, we have every reason to be optimistic.
00:43:25 Speaker 1
You know, we have fewer rules than we’ve ever.
00:43:28 Speaker 1
Murder rate per capita levels had ever been, longevity is increasing, help is increasing, pretending everything is increasing.
00:43:34 Speaker 1
And I think that the same is true in terms of, you know, scientific breakthroughs, discovery and engineering our way to a more sustainable energy and food future.
00:43:42 Speaker 1
This is one of the great things about having you as a friend Freeburg is your relentless optimism and your actual cool, calm, collective lack of anxiety.
00:43:50 Speaker 1
In other amazing news, the EU Parliament has flipped again.
00:43:54 Speaker 1
Credit Thornburg is completely tilted.
00:43:58 Speaker 1
We talked about the virtue signalling EU.
00:44:00 Speaker 1
Element, you know, and Germany turning off their nuclear power plants and and just securing the bag for Putin.
00:44:07 Speaker 1
The EU Parliament flipped and they are now saying these virtue signalling knuckleheads, they came to the census and now they believe nuclear is green.
00:44:15 Speaker 1
Also green according to the EU Parliament is natural gas.
00:44:20 Speaker 1
So this to me feels like the beginning of the end for Putin in Saudi Arabia. If you look at the US becoming a net exporter of energy, it’s quite possible the EU could become that as.
00:44:30 Speaker 1
Well, if they.
00:44:31 Speaker 1
Actually, and this is a big if if they actually.
00:44:35 Speaker 1
You know, start building nuclear.
00:44:37 Speaker 1
It could be the beginning of the end of what some people are calling the world green movement and.
00:44:41 Speaker 3
Yeah, that’s mission.
00:44:42 Speaker 1
Certainly over.
00:44:43 Speaker 1
This realization that to transition to the next cut to the carbon economy is going to require continuing to invest in and support the carbon economy until those alternative solutions emerge and to.
00:44:55 Speaker 1
We have to do it right.
00:44:56 Speaker 3
Investing and I think.
00:44:58 Speaker 1
That’s what we’re seeing around the world in the United States and Europe now.
00:45:01 Speaker 1
And Europe has always been farther, way farther left in the United States in taking this point.
00:45:06 Speaker 1
Of view.
00:45:06 Speaker 1
And I think now this has been.
00:45:07 Speaker 1
A wake up call for everyone and.
00:45:09 Speaker 1
All it took was just a.
00:45:10 Speaker 1
Little bit of $6 gasoline and for people to personally suffer, for them to change their virtue, signaling nonsense.
00:45:17 Speaker 1
Yeah, this is this is markets at work.
00:45:19 Speaker 1
Yeah, this.
00:45:20 Speaker 1
Is really it’s educating the public.
00:45:22 Speaker 1
Would you rather be beholden to Putin?
00:45:24 Speaker 1
They pivoted because of people rather have.
00:45:25 Speaker 1
Nukes, they pivoted.
00:45:26 Speaker 4
From banning energy production to banning food.
00:45:29 Speaker 4
Option, she talked about the another one step.
00:45:31 Speaker 3
We’re about to get there.
00:45:32 Speaker 1
Well, so on the energy side, I did uh in the group chat.
00:45:36 Speaker 1
Just a little breakdown on the math.
00:45:37 Speaker 1
I think it may be interesting for people to understand.
00:45:40 Speaker 1
But today, globally around the world, every single country in the world that is involved in the oil business is able to produce exactly 1,000,000 more barrels per day than we need.
00:45:55 Speaker 1
So let’s assume that we, you know, need 100 million barrels of oil a day as a, as a, as a world.
00:46:01 Speaker 1
To continue to do everything we want to do, we produce 101 million. So we’re right.
00:46:06 Speaker 1
On the knife’s edge.
00:46:07 Speaker 1
By August, we’re going to go through a capacity increase in OPEC plus, which is, you know, OPEC plus, Russia, et cetera.
00:46:18 Speaker 1
Saudi Arabia is going to go from 10 million barrels a day to 11 million barrels, so not a huge increase.
00:46:25 Speaker 1
Russia has is thought to be able to cut production if they feel pressure up to 5,000,000 barrels a day without having any impact to their economy.
00:46:36 Speaker 1
So JP Morgan, I think and.
00:46:39 Speaker 1
Credit Suisse, they did this sensitivity analysis and here’s what they found. They found that if Russia were to cut 3,000,000 barrels of oil, so we would go from being over supplied by 1,000,000 to under supplied by two.
00:46:54 Speaker 1
The price of oil would go.
00:46:55 Speaker 1
To about 100 and.
00:46:56 Speaker 1
$80.00, A.
00:46:56 Speaker 1
Barrel if they.
00:46:58 Speaker 1
Cut 5,000,000 so the threshold at which their economy doesn’t really get that impacted.
00:47:03 Speaker 1
The price of oil could go as.
00:47:04 Speaker 1
High as 300.
00:47:05 Speaker 1
$80.
00:47:05 Speaker 1
A barrel while you would say, OK, well, we just need to pump more oil from other places.
00:47:10 Speaker 1
And this is the problem.
00:47:11 Speaker 1
In all of these rules that have existed for so long, the capacity doesn’t exist, right?
00:47:16 Speaker 1
We were destroying supply.
00:47:18 Speaker 1
Governments all around the world were making it very difficult to generate the supply of.
00:47:22 Speaker 1
Nuclear to generate the supply of oil and to generate the supply of Nat gas.
00:47:28 Speaker 1
So Saudi Arabia says we can get to 12 million.
00:47:31 Speaker 1
Well, guess what? They can only start the work in 2024. They’ll be done in 2027.
00:47:38 Speaker 1
Yeah, so to your point, all of a sudden we realized, wait, we needed these bridge fuels all wrong.
00:47:44 Speaker 1
The after we allow all of the supply destruction to happen and now we need to unwind it, it’s going to be a very complicated process.
00:47:52 Speaker 1
And if any of these things happen, if Russia decides to play hardball against?
00:47:56 Speaker 1
Europe or America, we better hope that it’s a mild winter because very quickly you can go from plus 1,000,000 barrels to minus two in a heartbeat.
00:48:05 Speaker 1
Yeah, and the last point on this Saudi.
00:48:05 Speaker 1
And America is going to start.
00:48:07 Speaker 3
Thinking about the example.
00:48:08 Speaker 1
Arabia, you’d think, OK, well, Saudi Arabia is going to go from 10:50, so that’s good. They have been at 11 million for sum total of eight weeks in their entire lifetime.
00:48:16 Speaker 1
We look at this.
00:48:17 Speaker 1
I mean Americans also.
00:48:18 Speaker 1
Buying 20 to 25.
00:48:20 Speaker 3
Miles per gallon cars?
00:48:21 Speaker 3
That’s got to.
00:48:22 Speaker 1
End to and so personal responsibility is part of.
00:48:25 Speaker 1
This the really interesting thing is China already has this plan.
00:48:28 Speaker 1
Their nuclear strategy with the belt and Rd initiative is to put 30 nuclear reactors in countries outside of China that they’re trying to have influence in and they’re they’re building 30 nukes right now.
00:48:40 Speaker 1
They got a.
00:48:40 Speaker 1
150.
00:48:41 Speaker 1
Planned so China is just ultimately savvy and thinking big.
00:48:46 Speaker 1
We’re about energy independence and we need to follow them other big anybody have anything else on the energy situation before we go to the farming situation?
00:48:56 Speaker 1
Let’s get to the farming.
00:48:57 Speaker 1
OK, so Dutch farmers are in revolt after a new proposed law to cut emissions. On Tuesday, Dutch lawmakers voted on proposals to slash emissions of pollutants like nitrogen oxide and ammonia. They’re targeting if 50% cut nationwide by 2030 livestock.
00:49:16 Speaker 1
Produces these emissions, so the plan will likely force Dutch farmers to cut their livestock herds or stop working altogether.
00:49:22 Speaker 1
Farmers protested. They put their tractors outside buildings. They’ve dumped fertilizer. 40,000 farmers gathered last week in the Central Netherlands agricultural heartland to protest these plans. And this caused.
00:49:34 Speaker 1
At them.
00:49:37 Speaker 1
Yeah, these tractors were doing some pretty gnarly things and stopping traffic and I guess it got heated and.
00:49:37
Got shot.
00:49:42 Speaker 4
Some other honking their horns.
00:49:44 Speaker 1
And there were some shots were fired.
00:49:45 Speaker 4
Where were they?
00:49:47 Speaker 4
No, wait.
00:49:48 Speaker 4
The government fired shots.
00:49:49 Speaker 1
There, there was.
00:49:50 Speaker 4
The protesters were unarmed, as far as what I read.
00:49:52 Speaker 1
Yes, they were unarmed, but supposedly they were doing some dangerous maneuvers.
00:49:54 Speaker 4
Were they honking their horns?
00:49:56 Speaker 4
Were they honking their horns?
00:49:57 Speaker 4
Is that why they got shot at, let’s say?
00:49:58 Speaker 3
No, no, no, no.
00:49:58 Speaker 3
I think they were using the.
00:50:00
No, no.
00:50:01 Speaker 4
So exactly.
00:50:02 Speaker 4
So shoot working class protesters if they’re.
00:50:03 Speaker 1
I’m not approving anybody.
00:50:04 Speaker 4
Honking their horns, right?
00:50:05 Speaker 1
I think they were threatening the safety of this is the other side of the story, sacks.
00:50:10 Speaker 1
Listen, neither us were there.
00:50:11 Speaker 1
But according to the sources, they were using the tractors to threaten the police like physical bodily harm, and that’s why they unloaded.
00:50:18 Speaker 1
We don’t know all the details.
00:50:19 Speaker 1
It will.
00:50:19 Speaker 1
Come out but.
00:50:20 Speaker 4
That sounds proportionate.
00:50:22 Speaker 1
I I mean, if you had a tractor coming at you to kill you and you’re a.
00:50:25 Speaker 1
Police officer out they get is proportionate.
00:50:25 Speaker 4
Tractors are pretty slow.
00:50:26 Speaker 1
To unload them.
00:50:27 Speaker 4
Let me just start.
00:50:27 Speaker 1
OK, so let’s talk about the science of it’s science.
00:50:30 Speaker 1
Mary, let’s go.
00:50:30 Speaker 1
Is it like the scene in Austin Powers where there’s a steamroller coming towards us?
00:50:35
I was just.
00:50:35 Speaker 2
2nd that Jason’s like, oh, they’re using the tractors.
00:50:40 Speaker 4
A weapon. So really?
00:50:41 Speaker 1
It’s just I’m.
00:50:42 Speaker 1
I was.
00:50:43 Speaker 1
You were not there.
00:50:44 Speaker 1
I was not there.
00:50:44 Speaker 1
I’m just telling you what was reported.
00:50:46 Speaker 1
I’m reporting what’s reported.
00:50:48 Speaker 1
OK, so the so I think, look, I think it’s worth just highlighting because this is a really important, this is the first time we’ve seen government action of this scale and the resulting kind.
00:50:58 Speaker 1
’cause rebound effect on something that’s really important. Humans use roughly between 2 and 6% of our energy on Earth every year to make ammonia.
00:51:08 Speaker 1
Ammonia is the primary fertilizer we use to fertilize our crops around the world and if not for the invention of the Haber Bosch process which you can read about in the.
00:51:17 Speaker 1
Book the alchemy there.
00:51:18 Speaker 1
And the creation of ammonia as a synthetic fertilizer.
00:51:22 Speaker 1
Humans would all have starved in the mid 20th century. It’s an incredible technology breakthrough. What we’ve learned over the years, however, is that when ammonia sits on the ground for too long, it volatilizes and it basically binds with oxygen and turns into nitrous oxide and goes into the atmosphere. Nitrous oxide is 300 times more potent.
00:51:42 Speaker 1
As a greenhouse gas than CO2, it lasts longer and it absorbs more heat. So there has long been concerned about the overuse of fertilizer and the overproduction of ammonia that just sits on the ground for too long that ultimately creates this incredible greenhouse gas.
00:51:58 Speaker 1
In fact, and so there has been talk in the United States under the Obama administration, under multiple EPA’s.
00:52:03 Speaker 1
There was a Supreme Court ruling a few weeks ago that started to touch on whether or not the EPA have regulatory authority here to actually regulate the use.
00:52:12 Speaker 1
Of ammonia.
00:52:12 Speaker 1
Farmers generally put a lot of ammonia on the ground, even if they get higher yields out of their crop.
00:52:17 Speaker 1
The problem is.
00:52:18 Speaker 1
Is that ammonia sits there for too long it?
00:52:20 Speaker 1
Turns into a.
00:52:20 Speaker 1
Greenhouse gas, and so regulating ammonia and regulating this nitrous.
00:52:23 Speaker 1
Oxide emission has.
00:52:24 Speaker 1
Then you know at the forefront of green, the green movement at the forefront of climate change as one of the ways to manage and reduce the effects of global warming from human industry.
00:52:36 Speaker 1
And now, you know, the Dutch Government has come out and started to do some of this regulation.
00:52:40 Speaker 1
It’s a little bit off because it comes from cows and and we’re seeing what happens.
00:52:45 Speaker 1
Free bird, can we finally admit that it’s the vegans?
00:52:47 Speaker 1
Faulkner well, at this point actually, you know.
00:52:51 Speaker 2
Boys, it is that a yes?
00:52:53 Speaker 1
But the ammonia production in another one from the Council, so the Netherlands just you guys know the.
00:52:58 Speaker 1
Netherlands is the is the world’s third largest dairy.
00:53:00 Speaker 1
Exporter, they export $3 billion a year of dare of milk to the referees role, to other countries. And so they have all these cows that are densely packed and they’re peeing everywhere and that P is a linear and it’s causing all of these problems.
00:53:12 Speaker 1
The other problem.
00:53:13 Speaker 1
With the money is if you.
00:53:14 Speaker 3
Guys, look at the United States.
00:53:15 Speaker 1
Corn farmers farm in the Midwest when it.
00:53:18 Speaker 1
Rains the ammonia on their field.
00:53:20 Speaker 1
Goes into the streams.
00:53:21 Speaker 1
Goes into the Mississippi River and goes into the Gulf.
00:53:24 Speaker 1
Of Mexico in.
00:53:25 Speaker 1
The Gulf of Mexico there is a massive hypoxic zone.
00:53:27 Speaker 1
They’re both fish.
00:53:28 Speaker 1
They’re all dead because when ammonia ends up in the water, it kills life.
00:53:32 Speaker 1
And so there’s this green algae and no fish.
00:53:34 Speaker 1
And everything dies.
00:53:35 Speaker 1
And so that’s what the Ducks are trying to regulate and the EU generally been trying to regulate is the removal of excess ammonia in AG production and in production.
00:53:44 Speaker 1
Still here, though, that if if if if we ate less vegetables, this wouldn’t.
00:53:48 Speaker 1
Be a problem?
00:53:49 Speaker 1
Not correct, not correct.
00:53:50 Speaker 1
Most of the production of ammonia is used to make animal feed, which is used to feed animals to make peace, which is a terrible decision.
00:53:56 Speaker 1
You could feed it olives.
00:53:57 Speaker 1
As we know, olives taste delicious.
00:53:59
Is there?
00:54:00 Speaker 1
Free parking is the issue here.
00:54:01 Speaker 1
That is the issue here, that the regulators hit the brakes too hard on these farmers and they should have maybe had a more.
00:54:08 Speaker 1
Which is my point is, it’s been talked about for a long time and in the US there’s just no way a law is going to pass because the US Senate is controlled primarily by rural states which are AG heavy. So you see a lot of, but you don’t see a lot of bills that.
00:54:21 Speaker 1
Let’s let’s get past the United States.
00:54:23 Speaker 1
Because the Senate.
00:54:24 Speaker 1
Is controlled by farmers that are elected.
00:54:26 Speaker 1
Sorry, senators that are elected by farmer, by big farming communities and.
00:54:29 Speaker 1
Thanks, States and so, you know, it’s been hard to get a regulation like this past where folks have tried to and talked about doing it around the world.
00:54:38 Speaker 1
However, in the place like the Netherlands and the EU, or as I mentioned before, there’s far more progressive and have this very kind of green hat on, they’re starting to take this sort of climate change action that they’re calling it.
00:54:49 Speaker 1
And that climate change action.
00:54:52 Speaker 1
You know, does have the ramifications of destroying.
00:54:54 Speaker 1
By the way, one of the things they said is we expect, and this will destroy the livelihoods of many dairy farmers in the Netherlands.
00:55:01 Speaker 1
That was horrible by the.
00:55:02 Speaker 1
Way look all.
00:55:03 Speaker 1
It said that they said that directly, by the way, and the dairy farmers are like, that’s you, you’re not destroying our business or.
00:55:08 Speaker 1
Climate change?
00:55:09 Speaker 1
And the specific question though, which is has there not been some efforts to engineer?
00:55:14 Speaker 1
How these plants themselves absorb?
00:55:17 Speaker 1
That’s great.
00:55:18 Speaker 1
I have three businesses.
00:55:20 Speaker 1
Is it totally right technology is going to solve this problem?
00:55:22 Speaker 1
I’m super optimistic on that.
00:55:25 Speaker 1
There are microbes that are being used to coat seed.
00:55:28 Speaker 1
Those microbes can pull nitrogen out of the atmosphere directly.
00:55:31 Speaker 1
So you don’t need ammonia like you use far less money.
00:55:34 Speaker 1
There’s a couple companies that are doing this really effectively.
00:55:36 Speaker 1
They’re growing.
00:55:37 Speaker 1
Like crazy they’re doing. Really.
00:55:38 Speaker 1
Well, there are other projects and there’s very simple solutions.
00:55:42 Speaker 1
My last company.
00:55:42 Speaker 1
Had a product called Nitrogen Advisor where we basically told farmers instead of dumping all this over the start of the season, you paste it out.
00:55:49 Speaker 1
So the fertilizer doesn’t sit there and volatilize with all these solutions that technology allows with software to bio engineering to these microbial solutions.
00:55:57 Speaker 1
And so we’re definitely I think going to resolve this.
00:56:00 Speaker 1
But meanwhile, these governments are in a frenzy to solve the climate change problem, and, you know, we’re going to start to pass these laws that really hurt the livelihoods of you.
00:56:09 Speaker 1
Know active which is.
00:56:10 Speaker 3
How do you?
00:56:11 Speaker 1
Guys think something like this happens because typically you would expect when the government is about to pass something like this.
00:56:16 Speaker 1
There’s sort of like a pretty fulsome review and all sides are brought together and there’s working groups and all of this stuff.
00:56:23 Speaker 1
And at some.
00:56:24 Speaker 1
Point you would talk to some scientists.
00:56:25 Speaker 1
At other points you would talk to economists.
00:56:27 Speaker 1
At other points, you talked to the people who be directly affected, like the farmers.
00:56:32 Speaker 1
Is it that the virtue signaling around sustainability and climate change is just so high?
00:56:37 Speaker 1
Say that people just turn off their brains.
00:56:40 Speaker 1
Or well, like what?
00:56:41 Speaker 1
Is actually happening here.
00:56:42 Speaker 4
I think what’s going on is you got a bunch of technocratic bureaucrats in Brussels who don’t know anything about farming, or these people who live in the Netherlands who’ve been doing this for generations, and they sit there in Brussels and they make up these completely arbitrary guidelines and requirements 50% by 2030. Those are suspiciously.
00:57:02 Speaker 4
Round numbers, OK and then some other you.
00:57:05 Speaker 4
Know authoritarian technique?
00:57:07 Speaker 4
Flat in the Netherlands then says, well, we got to implement this and.
00:57:10 Speaker 4
They pass some crazy law.
00:57:12 Speaker 4
And they don’t even think about.
00:57:13 Speaker 4
The impact on these farmers?
00:57:15 Speaker 4
Because they’re deplorables.
00:57:16 Speaker 4
I mean, it’s complete class bias.
00:57:18 Speaker 4
It’s just like the Canadian truckers.
00:57:20 Speaker 4
They don’t think about these people.
00:57:22 Speaker 4
They don’t factor with their equation.
00:57:23 Speaker 4
They don’t know how they live.
00:57:25 Speaker 4
And so that’s what’s going on here.
00:57:27 Speaker 4
And so you’ve got.
00:57:27 Speaker 4
This global elite of.
00:57:29 Speaker 4
Technocrats who are willing to use authoritarian tactics.
00:57:32 Speaker 4
They’re appropriating their farms or taking them away.
00:57:34 Speaker 4
That’s why they’re up in arms.
00:57:35 Speaker 1
You see the rest of it?
00:57:36 Speaker 1
You’re not saying it’s not just.
00:57:37 Speaker 1
Technocrats, it’s the actual global elite writ large, have wrapped themselves around the sustainability blanket, and they believe that that word justifies all kinds of bad, unscientific, innumerate policies.
00:57:48 Speaker 2
Right.
00:57:51 Speaker 2
Right.
00:57:51 Speaker 4
And and by the way, they’re they just woken up on energy, right?
00:57:54 Speaker 4
They they had just banned energy production in Europe, they realized.
00:57:58 Speaker 4
Wait a second.
00:57:58 Speaker 4
This is making us dependent on Russia and authoritarians.
00:58:01 Speaker 4
Well, what is the other big export of Ukraine?
00:58:04 Speaker 4
Its food, so they got.
00:58:06 Speaker 4
Smart on energy and.
00:58:08 Speaker 4
Now they’re about to repeat their.
00:58:09 Speaker 4
Same dumb mistake.
00:58:10 Speaker 4
Of basically prohibiting this area where they have an enormous natural advantage, which is food prod.
00:58:16 Speaker 4
Option so you know it’s like they just keep making.
00:58:18 Speaker 4
The same mistake over and over again and.
00:58:20 Speaker 4
And by the way.
00:58:20 Speaker 3
Let me ask you a question, yeah.
00:58:21 Speaker 4
By the way, look, I’m not going to question you on the.
00:58:24 Speaker 4
Science freebord, but here’s.
00:58:25 Speaker 4
What I would say is I think there’s a.
00:58:27 Speaker 4
Tendency on the part of these technocrats to think that the science is a lot more bulletproof than it actually is.
00:58:33 Speaker 4
That is certainly what we saw with COVID.
00:58:36 Speaker 4
Is we have the same sort of global elite?
00:58:38 Speaker 4
This these technocrats are claiming health experts. They made-up all these lockdown rules, or we talked about the beginning of.
00:58:44 Speaker 4
The show and what they do they they take the they.
00:58:45 Speaker 1
No, no, this isn’t speculative.
00:58:47 Speaker 1
This isn’t well, this isn’t speculative, but I but I will.
00:58:50 Speaker 1
I will agree with you that they just put the.
00:58:50
But they’re willing to.
00:58:51 Speaker 4
Use their own to use heavy-handed authoritarian tactics and I just don’t believe that the science is especially this 50%.
00:58:59 Speaker 4
By 2030.
00:59:00 Speaker 4
Why is that the guideline who can write move that those are the exact right numbers and?
00:59:04 Speaker 4
They’re willing to.
00:59:05 Speaker 4
Use any tactics necessary to to implement.
00:59:07 Speaker 4
Their crazy rules.
00:59:08 Speaker 1
Let me ask you question, Sacks.
00:59:09 Speaker 1
Let’s assume that there’s a technology transition possible.
00:59:13 Speaker 1
That there are solutions that could be used.
00:59:15 Speaker 1
I highlighted a few of them.
00:59:16 Speaker 1
They just cost money.
00:59:17 Speaker 1
They require some investment.
00:59:19 Speaker 1
And, you know, creating this distortion in the market by saying you can’t release 50% of the ammonia that you’ve been releasing forces a technological shift that otherwise would have taken longer in.
00:59:29 Speaker 1
The market do.
00:59:30 Speaker 1
You agree that there may be a scenario here whereby.
00:59:33 Speaker 1
You know, governments can and should intervene.
00:59:35 Speaker 1
And I’m not making the case personally.
00:59:36 Speaker 1
I’m just kind of, you know, highlights for you that I think this is where folks are coming from.
00:59:40 Speaker 1
There are alternative ways to make the dairy there alternative ways to feed the cows.
00:59:44 Speaker 1
They’re a little, you know, pretend to.
00:59:45 Speaker 4
Well, here’s here’s where I think you’re going with that, which could make sense, which is OK you’re saying there is a pollution externality here being created by the farmers.
00:59:46 Speaker 1
Produce this stuff.
00:59:52 Speaker 3
Exactly, exactly, exactly.
00:59:54 Speaker 4
Well, you need to basically internalize the externality.
00:59:56 Speaker 4
We need to capture the cost of that.
00:59:58 Speaker 4
So what you could do is gradually introduce some sort of permit system.
01:00:02 Speaker 4
You know a travel permit system, right?
01:00:05 Speaker 4
That would incentivize the creation of these technologies that.
01:00:07 Speaker 4
You’re talking about.
01:00:08 Speaker 4
You want to do it gradually so we don’t destroy the livelihoods of these farmers have been doing it for generations, so that would probably be the approach you’d want to take.
01:00:16 Speaker 1
I agree with you and I by the way, I think that I think that is what is going to happen around the world is that that sort of CAP and trade or taxation system is going to get slowly rolled out.
01:00:16 Speaker 2
But look, I think.
01:00:25 Speaker 1
So a lot of these externality costs in production and industry and agriculture, particularly because there are technological alternatives and it will incentivize the switch to those alternatives because the alternatives will cost less than the taxes.
01:00:37 Speaker 1
Sachs, based on what you’re saying, is one of the problems here that these technocrats, these professional politician?
01:00:42 Speaker 1
They don’t actually have great strategic, thoughtful, you know, real world experience to do planning.
01:00:49 Speaker 1
You know, looking at Germany, their inability to see the writing on the wall of what building a gas pipeline from Russia to Germany and shutting down nukes would do, it just seems like over and over there are just really bad strategic thinkers combined.
01:01:03 Speaker 1
I keep you long.
01:01:04 Speaker 1
No, Jason.
01:01:05 Speaker 1
They are influenced by these cultural.
01:01:08 Speaker 1
Elites who they wanted very favorable group sync.
01:01:08 Speaker 3
Well, that’s sort of my second part.
01:01:10 Speaker 4
It’s a lot of groups that going on and and he’s yeah behind the groupthink is.
01:01:11 Speaker 3
That’s what I would.
01:01:12 Speaker 3
That’s my second thought.
01:01:14 Speaker 4
A class bias, right?
01:01:16 Speaker 4
They only associate.
01:01:17 Speaker 4
With other members of the professional.
01:01:18 Speaker 4
Class who have, you know, basically graduated.
01:01:21 Speaker 4
These they don’t even interact with these farmers.
01:01:25 Speaker 4
Just like the just like the legislators making COVID rules, the health experts never interact with Canadian truckers.
01:01:32 Speaker 4
So there’s a huge amount of class prejudice saying that these people just don’t matter.
01:01:37 Speaker 4
We can force them to obey all rules and if they don’t like.
01:01:40 Speaker 4
It we’ll confiscate.
01:01:41 Speaker 4
Their farms.
01:01:42 Speaker 4
And by the way, the rest of you, you’ll have to learn to eat bugs, or tofu, or tempeh, or silex, troll, whatever.
01:01:48 Speaker 1
It goes right rather.
01:01:49 Speaker 1
Well, how is the De Santis wellwisher DeSantis?
01:01:52 Speaker 1
Was the De Santis brutal?
01:01:54 Speaker 1
What did?
01:01:54 Speaker 1
You have on that was if someone said Al.
01:01:56 Speaker 4
At a restaurant as a beautiful roast.
01:01:56 Speaker 1
My visor.
01:01:58 Speaker 1
Beef, beautiful, roast beef by, dissatisfied, brought, invited, said.
01:02:02 Speaker 3
It’s going to become.
01:02:03 Speaker 1
A meme.
01:02:03 Speaker 1
After this episode, I have consumer culture.
01:02:05 Speaker 3
That is the best market.
01:02:07 Speaker 1
Campaign ever.
01:02:08 Speaker 1
He’s a lock for president.
01:02:10 Speaker 1
I had pursued a cocktail with Brie, white truffle cream and lemon.
01:02:13 Speaker 1
I mean, did you have the white truffle on it as well?
01:02:16 Speaker 1
That’s like A plus.
01:02:18 Speaker 1
The euro smells like it heals.
01:02:19 Speaker 3
€8 bring some back, bring some back.
01:02:20 Speaker 1
Yeah, something.
01:02:22 Speaker 1
We I want to, I want to say something about this.
01:02:24 Speaker 4
The Democrats embrace this agenda wholeheartedly because if we get all the voters who want to eat roast beef, I’m pretty sure that’s a super majority in this country.
01:02:33 Speaker 1
The way to solve this freeburg is, with the right economic incentives, there’s no reason why the Dutch government had to go and basically put thousands of farmers out of business.
01:02:43 Speaker 1
Instead, what they could have done is actually creating the.
01:02:45 Speaker 1
Tax incentives that allowed farmers to adopt some of these bleeding edge technologies when they were probably too expensive to make it economically equivalent.
01:02:54 Speaker 1
That I mean, by the way, that is not a newfangled idea.
01:02:57 Speaker 1
This is not genius talk here, so.
01:03:00 Speaker 1
The reason why they don’t do the obvious simple thing is class bias.
01:03:04 Speaker 1
It is exactly what David said.
01:03:05 Speaker 1
It is the influence of people.
01:03:07 Speaker 1
It’s look, hold on who look down on these people.
01:03:10 Speaker 1
Yep, OK, and who believe that they are more virtuous because of their desire to defend climate.
01:03:18 Speaker 1
There’s also a pragmatic piece of this. This reminds me the cold debates we had. There are 62,000 coal miners in this country like this is a small number of people who were impacted. We could just.
01:03:28 Speaker 1
You know, basically give them severance or and a soft landing instead of the, you know, this.
01:03:33 Speaker 1
Or or let them continue to do their job and egress off naturally the economic free market will manage it will manage it on its own and instead what you could do is actually green light nuclear subsidise some of these more adventurous ways in which you can extract and refine LNG.
01:03:50 Speaker 1
But my point is, this is where it sits.
01:03:53 Speaker 1
A real head scratcher why politicians don’t do this.
01:03:55 Speaker 1
And I think the.
01:03:56 Speaker 1
Only thing that I can come up with is.
01:03:58 Speaker 1
That they are overly influenced.
01:04:00 Speaker 1
By these cultural elites, with their perspectives that do judge very harshly what they believe to be right and what they believe to be wrong, can we take a victory lap here in the United States that were energy independent and that were fruit independent?
01:04:15 Speaker 1
Can we take that victory lap here?
01:04:17 Speaker 1
That well, I think we now need to think instead of just being independent.
01:04:20 Speaker 1
I think our mission should be surplus, Jason, our President, you know, canceled the Keystone Pipeline.
01:04:25 Speaker 1
He cancelled a bunch of exploration permits in the Gulf.
01:04:28 Speaker 1
You know, again, it’s we’re one bad winter away.
01:04:32 Speaker 1
From all of a sudden being in the same situation as everybody else, so it’s not as sore.
01:04:37 Speaker 1
01 bad we’re not one Freeburg where are we in terms of our independence?
01:04:40 Speaker 4
Jacob, we are the #1AG exporter in the world and.
01:04:43 Speaker 4
By the way, under a.
01:04:43 Speaker 1
We are #1 by far, yeah.
01:04:44 Speaker 4
Different under a different president just a couple years ago where the number one energy exporter in the world.
01:04:49 Speaker 4
The fact that.
01:04:49 Speaker 3
I know that sounds like.
01:04:49 Speaker 4
Matter is when it when it comes to food.
01:04:50 Speaker 1
Should we take a victory lap?
01:04:51 Speaker 4
And energy we?
01:04:53 Speaker 4
Have the greatest natural resources and we should be developing that.
01:04:57 Speaker 1
We should be moving, but no sacks.
01:04:58 Speaker 1
My point is, what if the United States?
01:05:00 Speaker 1
Took a philos.
01:05:01 Speaker 1
The theme of not just being an independent, but being even like a stronger surplus to the point of like, you know, building routes.
01:05:08 Speaker 3
She felt the.
01:05:10 Speaker 1
We are.
01:05:10 Speaker 1
We’re working it out, the markets working it out and we’re taking, you know, we’re we just.
01:05:14 Speaker 1
Need to feel like we could.
01:05:15 Speaker 1
Do better, it feels like.
01:05:16 Speaker 1
I mean the issue with nuclear power, as you know, is the regulatory cost. So you know, it’s $10 billion and 30 years to get it.
01:05:24 Speaker 1
Move to the Lightning round.
01:05:26 Speaker 3
I just thought, no, I just want to show.
01:05:26 Speaker 1
We already covered.
01:05:27 Speaker 1
You guys the.
01:05:27 Speaker 1
Monmouth poll, which I think is really high.
01:05:29 Speaker 1
Writing we didn’t talk about it, but the Monmouth poll that was published a few days ago, which of the June 2022 poll, the number one, concern that America, the number one thing Americans are concerned about?
01:05:40 Speaker 1
Nick, you could put the chart the table in the in the the show notes 33% care about insulation, 2015% care about gas prices, 9% care about the economy.
01:05:50 Speaker 1
6% care about everyday bills and groceries. You know, you add that up. That’s the vast majority of what people are concerned about.
01:05:57 Speaker 1
And all the.
01:05:57 Speaker 1
Way down at the bottom of the table.
01:05:58 Speaker 1
Is climate change at?
01:05:59 Speaker 1
1%, yeah, absolutely.
01:06:02 Speaker 1
I think it’s just fast.
01:06:03 Speaker 1
To the point about, you know, there there is.
01:06:06 Speaker 1
And by the way, I’m not advocating that this is the right position, but I will say that there is a huge distinction or discrepancy between what the average American.
01:06:16 Speaker 1
Is worried about.
01:06:17 Speaker 1
And you know where political leaders are trying to carry us?
01:06:22 Speaker 1
I’m not sure what the right answer is, but there’s definitely a disconnect and I think it’s it’s being played out in this.
01:06:26 Speaker 3
Netherlands situation right now.
01:06:28 Speaker 1
One point for you on that as well and Nick, I put this article in the in the chat, but the top ESG fund manager in Europe of of the of 2022, they released their.
01:06:41 Speaker 1
Results and the guy was up like almost 16% and and he disclosed what he owns and it turns out that he owns Konikow, Valero and Exxon.
01:06:52 Speaker 1
And according to the ESG rules that these folks have passed, this qualifies as an ESG fund because he doesn’t own weapons ****
01:07:01 Speaker 1
And oil sands?
01:07:05 Speaker 1
But it allows all these people to walk around thinking that their investments are tide up in things that are actually cleaned.
01:07:11 Speaker 1
So it’s not true.
01:07:12 Speaker 1
So the point is that there are, there are these structural lies that have been baked into the system.
01:07:18 Speaker 1
That they are supported by very shoddy accounting or rules or science.
01:07:23 Speaker 1
And if we’re really going to fix this problem?
01:07:26 Speaker 1
I think you have to go and inspect these things and call them up.
01:07:28 Speaker 1
But like all of this ESG investing which perpetuates.
01:07:32 Speaker 1
By the way, perhaps you know why these governments just have no clue what’s going on.
01:07:37 Speaker 1
Sit on top of all of these lies.
01:07:39 Speaker 1
There’s nothing ESG about Conaco and Exxon Persephone.
01:07:43 Speaker 1
Let’s just call it for what it is.
01:07:44 Speaker 1
This guy is a good fund manager.
01:07:45 Speaker 1
It’s a she’s a good fund manager.
01:07:47 Speaker 1
He did well in the beginning period where everybody else was there.
01:07:49 Speaker 1
Let’s just celebrate that and not tell all.
01:07:51 Speaker 1
These marketing spin for a while, so.
01:07:52
It had a good.
01:07:54 Speaker 1
But it’s not just a marketing it allows people to believe that there’s a solution that is being affected.
01:07:59 Speaker 1
That is not true.
01:08:00 Speaker 1
That’s the part about it that’s super nefarious.
01:08:03 Speaker 1
OK, listen, we move science up because science got a short shrift last week.
01:08:06 Speaker 1
Is a.
01:08:07 Speaker 1
Lightning round? What is that?
01:08:08 Speaker 1
I just wanted to things that were small that weren’t like full segments.
01:08:13 Speaker 1
I my concept here was to just put things at the end of the show that we.
01:08:16 Speaker 1
Missed, but what I did this time was.
01:08:17 Speaker 3
Love you, I’ll give you a.
01:08:18 Speaker 1
Shout out you’re doing.
01:08:18 Speaker 1
A great job.
01:08:19 Speaker 1
Moderating today by the way.
01:08:20 Speaker 1
Thank you.
01:08:21 Speaker 1
Put a couple extra hours in.
01:08:21 Speaker 4
Yeah, but I think Schreiber made a really interesting point a minute ago about.
01:08:24 Speaker 1
Me being a great.
01:08:25 Speaker 1
Moderator no, not that, OK.
01:08:28 Speaker 4
About the about the polling the mom was polling where if you look at what voters care about.
01:08:35 Speaker 4
And what the elites?
01:08:36 Speaker 4
And the elected politicians care about there’s a huge divergent.
01:08:39 Speaker 3
Huge references.
01:08:39 Speaker 4
That’s clearly what happened in Holland, right?
01:08:42 Speaker 4
You got these Dutch farmers, their livelihoods are being taken away by people in Brussels or don’t even understand what they do.
01:08:48 Speaker 1
I mean, people want.
01:08:49 Speaker 1
To make a living there, it’s pretty simple.
01:08:50 Speaker 4
Yeah, so but but but This is why you’re seeing populist nationalist uprisings in all these countries is you’ve got a crowd of people who go to Davos and make policy and they’re completely disconnected.
01:08:59 Speaker 3
On both sides.
01:09:01 Speaker 4
They’re completely disconnected from the real.
01:09:02 Speaker 4
Concerns to electorate.
01:09:03 Speaker 1
Look at Bo Jo.
01:09:04 Speaker 1
Bo Jo just got booted today.
01:09:06 Speaker 1
Why ultimately, at the root causes, he was throwing COVID parties when he was telling you the same thing that everybody nailed Gavin Newsom for.
01:09:14 Speaker 1
This guy just got booted out as.
01:09:14 Speaker 3
Policy apart they?
01:09:15 Speaker 1
Prime Minister.
01:09:16 Speaker 1
Think they’re better than everybody?
01:09:17 Speaker 1
They’re hypocrites and they’re incompetent at their jobs.
01:09:19 Speaker 1
Let’s call what?
01:09:19 Speaker 1
It is association.
01:09:19
If the action.
01:09:20 Speaker 1
You try and do what you believe to be best for everyone, but it’s not.
01:09:24 Speaker 1
It’s not like that’s for you.
01:09:26 Speaker 1
You know, and I think that that’s the point.
01:09:28 Speaker 1
Like climate chicken claw.
01:09:29 Speaker 1
To change stopping COVID, I gotta do XY and Z for everyone.
01:09:33 Speaker 1
But I still want to fly in a private jet and I still want.
01:09:35 Speaker 1
To go to a COVID party.
01:09:36 Speaker 4
You know, to a dinner party.
01:09:37 Speaker 1
Exactly like super spam.
01:09:39 Speaker 4
This is why I think Biden is very unpopular, I mean.
01:09:41 Speaker 4
Look, he’s at like 30th.
01:09:41 Speaker 3
Hold on, hold on, let me check it.
01:09:42 Speaker 1
Out for yourself. Hold.
01:09:43 Speaker 3
On let me.
01:09:43 Speaker 3
See if that’s OK.
01:09:44 Speaker 3
So we will.
01:09:45 Speaker 3
So I’m gonna tied up to you.
01:09:45 Speaker 4
I will need it.
01:09:45 Speaker 3
Hold on.
01:09:46
OK.
01:09:49 Speaker 4
It’s funny.
01:09:49 Speaker 3
It’s a lot easier if I do that.
01:09:50 Speaker 1
Hold on, let me.
01:09:51 Speaker 4
Explain no I.
01:09:53
Want to tell you?
01:09:54 Speaker 3
Here comes the alley.
01:09:55 Speaker 3
Oop, OK, we just do 2 sentences.
01:09:55 Speaker 4
I don’t need the alley.
01:09:56 Speaker 4
Oop, I got the ball.
01:09:58 Speaker 3
It’s two sentences.
01:10:00 Speaker 1
Have a good joke?
01:10:01 Speaker 1
Just let me.
01:10:01 Speaker 1
Do it right.
01:10:02 Speaker 1
So all of the Friedberg stands were breaking my chops.
01:10:05 Speaker 1
That chamath was cackling, laughing during a science segment, and we rushed him.
01:10:09 Speaker 1
So I moved.
01:10:09 Speaker 3
Sides up, so to.
01:10:10 Speaker 1
The Friedberg stands.
01:10:12 Speaker 1
Please stand down.
01:10:13 Speaker 1
Now we go to Biden Derangement Syndrome segment. At the end of the show, Joe Biden’s cognitive decline is becoming the topic.
01:10:20 Speaker 3
Sachs have at it.
01:10:22 Speaker 4
Well, listen, if if you call this Biden Derangement syndrome, 62% of the country has Biden Derangement syndrome, because.
01:10:29 Speaker 1
Just like we all did for Trump.
01:10:30 Speaker 4
Barnes poll numbers are down to something like 38%. It’s historically low.
01:10:34 Speaker 4
For this point in time for the Presidency.
01:10:36 Speaker 4
But look what the point I was trying to make was.
01:10:38 Speaker 4
I think that Biden problems flow from this dynamic we’re talking about, which is he campaigned as Scranton Joe.
01:10:46 Speaker 4
He was a working class hero who is going to give us a return to normalcy and what has he done?
01:10:51 Speaker 4
He’s basically implemented every wacky idea.
01:10:54 Speaker 4
Of the progressive left, he basically is representing that part of the party that is completely disconnected from the ordinary desires of the working class.
01:11:04 Speaker 4
And what are people concerned about right now?
01:11:06 Speaker 4
Food and energy prices?
01:11:07 Speaker 4
What is Biden concerned about?
01:11:09 Speaker 4
Firstly, blaming it on mom and pop gas stations even.
01:11:12 Speaker 4
Even Jeff Bezos had to respond to that.
01:11:14 Speaker 1
That tweet was.
01:11:15 Speaker 1
Yeah, so just to keep the tweet, my message isn’t Biden.
01:11:18 Speaker 1
My message to the companies running gas.
01:11:19 Speaker 1
Stations and selling.
01:11:21 Speaker 1
And setting prices at the pump is simple.
01:11:24 Speaker 1
This is a time of war and global peril.
01:11:26 Speaker 1
Bring down the price price you are charging at the pump to reflect the cost you’re paying for the product.
01:11:31 Speaker 1
And do it.
01:11:32 Speaker 3
Now and then.
01:11:33 Speaker 1
For almost all small business franchises.
01:11:35 Speaker 1
Which is absurd.
01:11:36 Speaker 1
And that’s just not how the economy works.
01:11:38 Speaker 1
Do you think that they look?
01:11:39 Speaker 1
At a Chevron.
01:11:40 Speaker 1
And think it’s owned by Chevron or they cannot be voice tweeting for, well, some, some millennials and millennial with a couple of masters degrees.
01:11:48 Speaker 1
Oh, and 400.
01:11:49 Speaker 3
What is the strategy here is to strategy them?
01:11:49 Speaker 1
1000 of debt is rage tweeting from the white.
01:11:51 Speaker 1
House he to make him look incompetent.
01:11:53 Speaker 1
I mean, I am forever thankful for Joe Biden to getting Trump out before he took a third of.
01:11:58 Speaker 1
Take an 8 second Google search to know that less than 10% of the gas stations in America are owned by these corporates.
01:12:05 Speaker 1
Well, here’s basis quiett.
01:12:06 Speaker 1
Mom and.
01:12:07 Speaker 1
Pop businesses.
01:12:08 Speaker 1
This is insanity.
01:12:08 Speaker 3
So do it.
01:12:09 Speaker 4
A lot of immigrants.
01:12:10 Speaker 1
It’s a lot of South Asians.
01:12:11 Speaker 1
This is why it’s.
01:12:11 Speaker 1
Very sensitive to me.
01:12:12 Speaker 4
These gas stations, they are mom and pop owned, all of them are.
01:12:15 Speaker 4
Owned by immigrants and this is.
01:12:16 Speaker 4
Their small slice of the America.
01:12:16 Speaker 1
It’s very true.
01:12:18 Speaker 4
In dream and.
01:12:19 Speaker 4
Binder comes along and saying you’re doing too well. I mean, these people, their profit margins like 2%, it’s like.
01:12:24 Speaker 1
Two percent 2%.
01:12:25 Speaker 4
It sounds nothing.
01:12:26 Speaker 1
My buddies family, by the way, owns a bunch of gas stations in the Bay Area and he told me to make no money on gas.
01:12:31 Speaker 1
They make all their money selling cigarettes.
01:12:32 Speaker 1
And soda. That’s it.
01:12:34 Speaker 1
That’s the whole business.
01:12:34 Speaker 2
Yes, of course. Yeah, and.
01:12:35 Speaker 1
It’s a way to.
01:12:36 Speaker 1
Get people in a convenience store.
01:12:37 Speaker 1
Here’s my thought. I think I might have stated right here. Bezos is going to run for president in 2024. This is why he retired.
01:12:44 Speaker 1
But I would bet anything again, Sir.
01:12:46 Speaker 1
I would bet anything again.
01:12:47 Speaker 3
So OK, I got skinny odds props 115 to one, OK.
01:12:48 Speaker 4
Is too smart for.
01:12:49 Speaker 1
You doesn’t need that.
01:12:50 Speaker 1
You don’t need the headache.
01:12:52 Speaker 1
Well, you’ll see, right. Thank.
01:12:52
Dollars he’s too.
01:12:53 Speaker 3
You playing legacy games?
01:12:53 Speaker 4
Smart for that look.
01:12:55 Speaker 1
He’s playing legacy games.
01:12:56 Speaker 1
Why else would he become a shitposter on Twitter?
01:13:00 Speaker 1
Inflation is far too in bed.
01:13:00 Speaker 4
I’ll tell you why.
01:13:01 Speaker 1
Wasn’t even a.
01:13:02 Speaker 3
Shitpost well, anyway, he’s.
01:13:04 Speaker 3
He’s big, so let’s say he didn’t have.
01:13:05 Speaker 3
To run a.
01:13:05 Speaker 1
Company anymore? He’s Bezos.
01:13:07 Speaker 1
After dark, that wasn’t even.
01:13:08 Speaker 1
A shitpost that was kind of like, wow.
01:13:10 Speaker 4
He was outraged by the financial.
01:13:11 Speaker 3
I know that, but.
01:13:12 Speaker 4
Illiteracy, the sheer financial stupidity, and.
01:13:16 Speaker 1
The economic what?
01:13:16
You know and what?
01:13:17 Speaker 1
Motivated the upside for a billionaire to take on the president?
01:13:21 Speaker 1
There’s no upside there.
01:13:22 Speaker 3
You’re not taking it right.
01:13:22 Speaker 1
He’s starting a might.
01:13:23 Speaker 1
Check out.
01:13:24 Speaker 1
It’s just calling out something that on its face, that tweet, it was not written by Joe Biden, so let’s not pin the blame on him.
01:13:30 Speaker 1
But that office and that strategy is clearly broken because it is run by someone at a minimum, who’s innumerate and who’s clearly financially illiterate, who doesn’t know how to Google anything because that’s the only way you could write something.
01:13:43 Speaker 1
That insipid Biden should fire whoever it is every.
01:13:46 Speaker 4
100 providing is looking for scapegoats, OK?
01:13:46 Speaker 1
5%.
01:13:49 Speaker 4
His popularity is at historic lows.
01:13:52 Speaker 4
Like the right track.
01:13:53 Speaker 4
Wrong track.
01:13:53 Speaker 4
Numbers are at historic lows.
01:13:54 Speaker 4
He’s looking for anyone to blame.
01:13:56 Speaker 4
He’s been going through a whole city.
01:13:57 Speaker 4
Once and the year, the Putin price hike wasn’t working.
01:14:00 Speaker 4
He couldn’t even say it, right?
01:14:02 Speaker 4
So now they’re looking for anyone else.
01:14:04 Speaker 4
Remember Elizabeth Warren did something similar when they had food inflation, they started blaming the meat, the meatpacking industry or whatever.
01:14:10 Speaker 4
Look, this is not how these industries work, but they are looking for someone to blame for their own mismanagement of the economy, and by then.
01:14:18 Speaker 4
Bake this cake.
01:14:19 Speaker 4
Last year we’ve discussed this before.
01:14:21 Speaker 4
He canceled energy independence his first day in office, and then, moreover, look on this Ukraine situation.
01:14:28 Speaker 4
If you knew you were going to take this stuff with Putin approach, Jason, I know you support, OK?
01:14:32 Speaker 4
But if you knew a proxy war is coming or you’re willing to let 1 happen, you would want to basically create an energy glut.
01:14:38 Speaker 4
Not in energy.
01:14:39 Speaker 4
George would want to basically maximize the amount of American production and you would not want to alienate the Saudis.
01:14:45 Speaker 4
So what is Biden doing now?
01:14:46 Speaker 4
He’s going over.
01:14:47 Speaker 4
Saudi Arabia had in hand.
01:14:49 Speaker 4
Totally humiliating to beg for forgiveness for last year.
01:14:52 Speaker 4
Ostracizing them.
01:14:53 Speaker 4
And calling them pariahs.
01:14:55 Speaker 4
So this start they had no one.
01:14:55 Speaker 1
Let me read this here.
01:14:57 Speaker 4
Second, they had no grand strategy.
01:14:59 Speaker 4
If they weren’t pursue a tough on Russia strategy, they should have maximized energy production instead.
01:15:06 Speaker 4
They even think about it.
01:15:07 Speaker 4
They even think about.
01:15:08 Speaker 3
It strategically was not going well.
01:15:08 Speaker 4
It and now we’ve.
01:15:09 Speaker 4
Got energy inflation?
01:15:11 Speaker 1
I agree with you there.
01:15:12 Speaker 1
It also I will say, is notable.
01:15:15 Speaker 1
I think the Democrats are actually now up.
01:15:19 Speaker 1
I think they’re.
01:15:20 Speaker 1
Quietly pushing the Joe Biden cognitive decline so that they can put it they can.
01:15:25 Speaker 1
What do you mean quietly?
01:15:25 Speaker 2
And then.
01:15:26 Speaker 1
How do you allow a governor, a sitting governor, to run ads in a different state against the presumed Republican nominee unless it’s ordained?
01:15:38 Speaker 1
Well, I’m saying the cognitive decline, then I think they’re also not going to come out and say that.
01:15:43 Speaker 1
But I’m sorry to hear it.
01:15:45 Speaker 1
OK, here’s the tweet from Bezos, just so people hear it.
01:15:49 Speaker 1
Inflation is far too important.
01:15:50 Speaker 1
The problem for the White House to keep making statements like this?
01:15:53 Speaker 1
It’s either straight ahead misdirection or a deep misunderstanding of basic market dynamics.
01:16:00 Speaker 1
This is a very strong statement and the point I’m trying to make before is.
01:16:05 Speaker 1
Why would Bezos?
01:16:07 Speaker 1
Why would Bezos at this time?
01:16:10 Speaker 1
Would he take on the administration?
01:16:14 Speaker 1
I think it’s important for Biden to take control of his communication strategy and to reclaim more of the center going into the midterms.
01:16:21 Speaker 1
I think a lot of this content, the naming, the shaming, the blaming tends to be more of the playbook from the far progressive left and I think that there’s probably too many people that have infiltrated.
01:16:33 Speaker 1
The White House from those ranks, and I think he needs to close ranks a lot.
01:16:36 Speaker 1
Bit more.
01:16:37 Speaker 1
And so I don’t think he wrote this OK, and I don’t think he would have wrote it if he was given a chance.
01:16:43 Speaker 1
So it’s clearly something is breaking between what is being discussed as a team and then what is being.
01:16:50 Speaker 1
Executed on the ground.
01:16:52 Speaker 4
Look, Biden staff the wrong claims been with him.
01:16:55 Speaker 4
For years, they.
01:16:57 Speaker 4
Reflect his desires.
01:16:58 Speaker 4
I think this is classic Biden.
01:17:00 Speaker 4
If you look at his career in the Senate, he’s a grandstander y’all.
01:17:03 Speaker 4
I would like to basically scapegoat and denies this.
01:17:05 Speaker 4
Is this is a playbook?
01:17:06 Speaker 4
He may not have written the tweet, but he certainly endorsed it, and he’s given speeches now where he’s calling out this scapegoat and a scapegoat for basically the energy prices, which are totally his fault.
01:17:15 Speaker 4
He could add a better strategy around this.
01:17:17 Speaker 1
DeSantis versus Bezos.
01:17:17 Speaker 4
So yeah, on on the Bezos thing.
01:17:18 Speaker 1
You heard it here first, OK?
01:17:20 Speaker 4
Hold on a second, Jason, you’re not taking into account this is actually the second time.
01:17:24 Speaker 4
That business has tweeted about inflation, so I’m just like.
01:17:26 Speaker 1
I am taking data to account here.
01:17:27
OK, that was.
01:17:28 Speaker 4
Back in May, he called out the administration.
01:17:31 Speaker 4
It’s on this.
01:17:31 Speaker 1
Particular issue.
01:17:33 Speaker 4
I think he feels strongly about this issue and I think he’s looking at what the administration is doing into saying.
01:17:38 Speaker 4
This is a level of political stupidity and financial.
01:17:43 Speaker 4
Literacy that I just cannot stand.
01:17:45
And by the.
01:17:46 Speaker 4
Rules Jeff Bezos.
01:17:47 Speaker 4
This is a very liberal guy.
01:17:48 Speaker 4
He’s an outspoken critic of Trump, and he owns a very liberal BS at The Washington Post.
01:17:53 Speaker 4
So I think.
01:17:54 Speaker 4
This is a reflection that Biden has even lost.
01:17:57 Speaker 4
The Jeff bezels of the world and he’s trying to spend it as a good thing as therefore we don’t need these billionaires.
01:18:02 Speaker 4
But if your recent Jeff Bezos, you’re using a lot of people in the center, probably the entire center.
01:18:06 Speaker 1
Follow the bread crumbs.
01:18:08 Speaker 1
He bought the Washington Post.
01:18:09 Speaker 1
He bought the largest house in DC, and now he’s taking on the administration, hiding.
01:18:14 Speaker 1
It’s a clear path that he wants to run.
01:18:17 Speaker 1
You can you.
01:18:18 Speaker 1
Could you could at?
01:18:19 Speaker 1
Mentioned me on Twitter.
01:18:19 Speaker 1
If you disagree, I’ll tell you a funny story to end after.
01:18:23 Speaker 1
After the sale of the Warriors completed and I tweeted this thing out, it was really beautiful.
01:18:29 Speaker 1
Dre sent a beautiful text to me.
01:18:32 Speaker 1
So did David.
01:18:33 Speaker 1
Lee and then I got one text message.
01:18:36 Speaker 1
From Philadelphia saying.
01:18:37 Speaker 1
I dispute how much credit you’ve given me.
01:18:40 Speaker 1
I expected more.
01:18:42 Speaker 3
One, so 7 seconds to fill again, it only took seven.
01:18:47 Speaker 1
Seconds and then.
01:18:47 Speaker 3
Living fatigue ever play trade?
01:18:48 Speaker 1
Gone when he?
01:18:49 Speaker 1
Called, I showed I showed sax the text, right?
01:18:51 Speaker 1
It’s, it’s an unbelievable text art, Saxon Saxon testified.
01:18:54 Speaker 1
With Gemini, site lost his mind.
01:18:56 Speaker 1
Again, he lost his mind, he said.
01:18:58 Speaker 1
Basically like you.
01:18:59 Speaker 1
Know he he.
01:19:00 Speaker 1
He took the credit that I gave him one to throw it out the window.
01:19:02 Speaker 1
He thought I really tried to **** him over.
01:19:03 Speaker 1
And then he said, I I’m going to.
01:19:05 Speaker 1
Block you for a week, but then changed his mind.
01:19:08 Speaker 2
24.
01:19:09 Speaker 1
Just go buy him into the to the big game or something you.
01:19:13 Speaker 4
Know he didn’t money, he just wanted more credit.
01:19:15 Speaker 1
Well, credit out plenty more credit.
01:19:16 Speaker 3
No, but your steak and tell him let’s take.
01:19:18 Speaker 1
Him ’cause he.
01:19:19 Speaker 1
Did he did introduce you to the?
01:19:22 Speaker 1
I’ll take half a billion dollars.
01:19:24 Speaker 3
In the states after 10K.
01:19:24 Speaker 1
Hold on.
01:19:25 Speaker 1
Is it true?
01:19:26 Speaker 1
Is it true that he enjoyed that film and introduced you to the deal?
01:19:30 Speaker 1
Yes or no?
01:19:32 Speaker 1
She’s actually claims got it.
01:19:35 Speaker 1
So if if not for Phil, you probably would not have made that trade.
01:19:40 Speaker 1
I don’t know it’s.
01:19:40 Speaker 1
Not clear features they have.
01:19:42 Speaker 1
Maybe they had.
01:19:42 Speaker 1
No, they had bankers, and I was.
01:19:43 Speaker 1
You know, I.
01:19:44 Speaker 1
Was using Allen and company.
01:19:45 Speaker 1
So I mean.
01:19:45 Speaker 1
You know, there’s not a lot of people running around.
01:19:48 Speaker 1
In that moment, trying to write the 10% too, because he deserves any.
01:19:51 Speaker 1
Credit for you buying your staking warriors.
01:19:53 Speaker 2
Like I said.
01:19:54 Speaker 1
Fact when I thought I gave.
01:19:55 Speaker 1
Him an appropriate amount of credit.
01:19:57 Speaker 4
Yeah, German tweet stormed.
01:19:58 Speaker 4
It was like it was Phil.
01:20:00 Speaker 4
Peter Thiel and like one other.
01:20:02 Speaker 4
Oh, and then wake up.
01:20:02 Speaker 1
Makeup and it’s like better company he couldn’t find himself in.
01:20:04 Speaker 4
Yeah, framework.
01:20:06 Speaker 1
It’s the best he’s.
01:20:07 Speaker 1
Ever been.
01:20:08 Speaker 1
Except when he was.
01:20:09 Speaker 3
With Michael Jordan in jail.
01:20:10 Speaker 1
Easy, but other than that, this was the best films ever done.
01:20:13 Speaker 1
I think when I get did you say he made it?
01:20:15 Speaker 1
To the second.
01:20:16 Speaker 1
When I get my 4th ring, I’m going to take a.
01:20:18 Speaker 1
Picture like Michael with the four rings better.
01:20:20 Speaker 2
I have a great idea to tell Chelsea.
01:20:20 Speaker 4
But tomorrow, in the interests of peace?
01:20:22 Speaker 4
Maybe you should just think so right now.
01:20:27 Speaker 1
Freebirds laughing.
01:20:28 Speaker 1
He’s the only one that got that joke did.
01:20:30 Speaker 1
You get that?
01:20:30 Speaker 1
Joke, I was wondering if I should tell.
01:20:31
You to.
01:20:32 Speaker 1
Cut it or not?
01:20:32 Speaker 1
I don’t know.
01:20:32 Speaker 1
I think it’s good.
01:20:33 Speaker 1
Here’s a great one.
01:20:34 Speaker 1
You know how people don’t cut that part?
01:20:36 Speaker 1
I think it’s a funny joke.
01:20:37 Speaker 3
I feel.
01:20:37 Speaker 1
Know how Phil gives his bracelets away as like a recognition.
01:20:42 Speaker 1
You don’t have to do this, but pretend that you’re giving since you have four rings, but you wanted to thank the other three bases on the show and that you’re keeping.
01:20:49 Speaker 1
One ring for you.
01:20:50 Speaker 1
Oh my.
01:20:50 Speaker 1
Oh my God.
01:20:52 Speaker 1
Oh my God, man.
01:20:53 Speaker 1
For all.
01:20:54 Speaker 1
The support we’ve given.
01:20:55 Speaker 1
All the support for the Warriors, yeah.
01:20:56 Speaker 1
For the warriors that we gave you and all the Council we gave you over the.
01:20:59 Speaker 1
Years this will.
01:21:00 Speaker 1
Put him on.
01:21:01 Speaker 3
Negativity has gotten.
01:21:02 Speaker 1
One of the four rings.
01:21:05 Speaker 1
It’s the greatest April fools joke.
01:21:07 Speaker 4
Actually, that reminds me, Phils.
01:21:08 Speaker 4
Next ring is going to me, so I can’t say anything critical effects bracelet?
01:21:10 Speaker 1
Your bracelet, yeah.
01:21:12 Speaker 4
Yeah, bracelets.
01:21:12 Speaker 4
Next place is going to me, so I gotta.
01:21:14 Speaker 4
I can’t say yeah.
01:21:15 Speaker 3
You know what you’re going to do.
01:21:15 Speaker 1
You take that breaks.
01:21:16 Speaker 1
It whatever, I said.
01:21:17 Speaker 1
Critical cut.
01:21:18 Speaker 3
I guarantee you, sax takes them.
01:21:18 Speaker 4
It up. I want that.
01:21:21 Speaker 1
And loses it in the first three days, and.
01:21:24 Speaker 1
Never wears it.
01:21:24 Speaker 1
It doesn’t care.
01:21:25 Speaker 3
Right in the garbage.
01:21:27 Speaker 1
Never talks about it again.
01:21:28 Speaker 1
Everybody, we’re back.
01:21:29 Speaker 1
The team is playing professional crisp ball again.
01:21:34 Speaker 1
God is back.
01:21:35 Speaker 1
We’ll see you on episode 87. We’re going to make it to 100. I feel like we can make it to 100.
01:21:40 Speaker 1
This we’re going to.
01:21:41 Speaker 3
Make it that the vibe is back, the vibe is back.
01:21:43 Speaker 1
I love you guys. So.
01:21:44 Speaker 3
Shark attacks?
01:21:44 Speaker 1
She miss you in the.
01:21:44 Speaker 1
Text but it’s great.
01:21:45 Speaker 1
Here I.
01:21:46 Speaker 3
Which is all that matters about these.
01:21:46 Speaker 1
Gotta say I.
01:21:47 Speaker 1
I love hanging.
01:21:48 Speaker 1
I love hanging out with Zach Seafood.
01:21:49 Speaker 1
Like live in.
01:21:50 Speaker 1
Physical he’s a ******* little.
01:21:52 Speaker 1
She’s very rude.
01:21:53 Speaker 1
You just want to take him.
01:21:54 Speaker 1
For my lover, he’s good life.
01:21:55 Speaker 3
He’s goodbye.
01:21:55 Speaker 3
He’s great, dad.
01:21:57 Speaker 3
He’s running.
01:21:57 Speaker 1
He’s so good.
01:21:58 Speaker 1
Live, he’s really good.
01:21:59 Speaker 1
He’s really, really.
01:21:59 Speaker 1
A contract.
01:21:59 Speaker 3
Good. Live tracked. He’s an.
01:22:01 Speaker 1
******* Last time I hung out loud.
01:22:02 Speaker 1
And he had an ID hooked up.
01:22:03 Speaker 1
And he was recovering from the night before.
01:22:06 Speaker 1
Facts on an Ivy based basically on an Ivy.
01:22:08 Speaker 1
Now that’s how bad it’s gotten.
01:22:09 Speaker 1
For him, sake look terrible.
01:22:12 Speaker 1
Can you please get some sun and just maybe eat one less sandwich?
01:22:16 Speaker 3
How many did you have?
01:22:16 Speaker 1
He’s losing weight.
01:22:19 Speaker 1
I had two.
01:22:20 Speaker 1
No, but you could afford to. You’re in great shape. I mean, sacks, maybe 1/2 a DeSantis? Maybe. You should have 1/2.
01:22:23 Speaker 4
I don’t want, I don’t want no address.
01:22:26 Speaker 1
As the Santis, I think I’m gonna put.
01:22:27 Speaker 1
You on after, says we’ll.
01:22:28 Speaker 1
See you all next time on the olive tree, guys.
01:22:30 Speaker 1
Bye bye bye bye.
01:22:34 Speaker 4
But your winner is lied.
01:22:37 Speaker 1
Rain Man David sack.
01:22:42 Speaker 4
Today we open sources to.
01:22:43 Speaker 4
The fans and they’ve just gone crazy.
01:22:45 Speaker 3
Later, love you at ideas we know of quinoa.
01:22:54 Speaker 3
Bet these are packed.
01:22:57 Speaker 1
My dog take it out in your driveway.
01:23:02 Speaker 2
Oh man.
01:23:03
My habit Azure movie.
01:23:05 Speaker 1
We could all just get a.
01:23:05 Speaker 1
Room and just have one big huge origin ’cause.
01:23:07 Speaker 1
They’re all this useless like.
01:23:09 Speaker 1
This like sexual pension that.
01:23:10 Speaker 1
They just need to release somehow.
01:23:13
You’re about to be wet your baby.
01:23:15 Speaker 4
Here P right?
01:23:18
Where did you?
01:23:18 Speaker 3
Get murky tzarfati.