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00:00:00 Speaker 1
But that’s not even a.
00:00:01 Speaker 1
Sweater. That’s a sweatshirt.
00:00:04 Speaker 2
It looks like polyester or something.
00:00:05 Speaker 1
OK, quick fever, come on the video where you’re wearing the same thing with J.
00:00:08 Speaker 1
Cole so we can make a quick joke in here.
00:00:10 Speaker 1
I mean, you guys are so predictably dumb to prove you.
00:00:16 Speaker 1
It’s so itchy.
00:00:18 Speaker 1
If you ever rash, Jason made me buy this.
00:00:21
Outfit and I put it on and.
00:00:22 Speaker 1
I’m like itching. I’m.
00:00:23 Speaker 1
About to take this thing off.
00:00:24 Speaker 2
Polyester wool? Polyurethane.
00:00:28
Laid out.
00:00:33 Speaker 3
My e-mail.
00:00:34 Speaker 3
I gave it back.
00:00:46 Speaker 1
OK, everybody, welcome back.
00:00:47 Speaker 1
To the all in Pod episode 80.
00:00:49 Speaker 1
7 Here we go.
00:00:51 Speaker 1
Tons of news going on.
00:00:52 Speaker 1
Thanks for all the great feedback on episode 86. We’re going to start with emerging markets, so again, welcome to the program deals with Freberg social science, the dictator himself from his palace in Sri Lanka, his new palace in Sri Lanka.
00:01:06 Speaker 1
He’ll be taking over over there.
00:01:07 Speaker 1
We’ll get into that and fax is in a in witness protection right now, apparently.
00:01:12 Speaker 1
Where are you faxing this white non disk?
00:01:14 Speaker 1
Pick room.
00:01:15 Speaker 1
Can you say where you are?
00:01:16 Speaker 2
This is my soundproof padded room.
00:01:18 Speaker 1
Yeah. Oh, is that?
00:01:19 Speaker 1
What it said Biden done your bottoms or basement?
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Decipher what is it.
00:01:25 Speaker 1
You rock back and forth and say inflation.
00:01:27 Speaker 1
Inflation, Ukraine.
00:01:28 Speaker 2
No, we just.
00:01:28 Speaker 2
Had the room sensors for, you know, better podcasting.
00:01:31 Speaker 1
Well, look at you taking the taking the job.
00:01:33 Speaker 2
Seriously overlook styles, looks good.
00:01:36 Speaker 1
Yeah, you put a little art behind you or something.
00:01:38 Speaker 1
Just put one of your monets behind.
00:01:39 Speaker 1
You know the ones you have in storage downstairs, OK?
00:01:42 Speaker 1
Emerging markets are facing some huge challenges right now.
00:01:45 Speaker 1
Quick, mark, quick.
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Primer on three types of markets developed, emerging, and the frontier market.
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If you don’t know.
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So developed markets are considered US, Japan, Europe. The GDP growth is lower single digits. Typically in the emerging market, it’s roughly defined as developing but not fully developed.
00:02:01 Speaker 1
That includes countries like the bricks, which is Brazil, Russia, India, China and recently added South Africa.
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Many other markets.
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Are included in that they were previously called the Third World in the 80s.
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People didn’t like that term.
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Investors will bet on them having higher GDP growth, typically two times or three times what the developed world has.
00:02:20 Speaker 1
China, for example, 2019, 6% growth US.
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In 2019, two point 1% growth and of course there’s frontier markets.
00:02:29 Speaker 1
These are viewed as small, unstable or liquid.
00:02:32 Speaker 1
Generally risky if you look at something like Kenya, Vietnam.
00:02:36 Speaker 1
Those would fall into that category. The adopt 7% GDP growth in 2019 to the US is 2%.
00:02:43 Speaker 1
Sometimes people like to be tested on them.
00:02:44 Speaker 1
There’s a nice little chart for y’all to look at, and you can just see China versus Vietnam in the United States since the 80s.
00:02:51 Speaker 1
And so why is this all important, while the Wall Street Journal reported last week that EMS the emerging markets?
00:02:56 Speaker 1
Have been feeling massive pressure.
00:02:58 Speaker 1
We’ll get to free market in a moment.
00:03:00 Speaker 1
That’s a frontier market, to be clear.
00:03:02 Speaker 1
But three things.
00:03:04 Speaker 1
Well, we’ve got probably a half dozen things going on.
00:03:06 Speaker 1
Let me just highlight maybe the top five and then I’ll hand it.
00:03:09 Speaker 1
Off to the bestes.
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You have high bond and loan yields.
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The debt debt rates are increasing in the emerging markets of frontier markets.
00:03:17 Speaker 1
Think what happens when you got a variable mortgage or you try to get a new.
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Market a new mortgage?
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In the developing markets?
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The developing market investors have stopped investing in emerging markets and frontier markets, as you might suspect during a downturn.
00:03:32 Speaker 1
And they’re even pulling money out. Then you have surging inflation. We all know about that. And we’re going to talk about inflation here in the US ’cause we got to print this morning.
00:03:40 Speaker 1
And slowing growth, we’ve also talked about this for the last six months on the program.
00:03:44 Speaker 1
All these problems get exacerbated when economic growth slows and it’s slowing globally.
00:03:49 Speaker 1
And then finally, we have the potential issue of contagion.
00:03:53 Speaker 1
We don’t know exactly what’s going to happen when various countries are facing these challenges, although we did tell you here what would happen with the Ukraine.
00:04:01 Speaker 1
Shout out to sacks and free bird fertilizer, wheat oil, all that good stuff and it’s becoming very cute, perhaps to carry to their Canary in the coal mine is Sri Lanka.
00:04:13 Speaker 1
Breaking news president.
00:04:15 Speaker 1
Rajapakshe fled for the MALDI and it’s a state of emergency.
00:04:20 Speaker 1
Curfews were declared declared.
00:04:21 Speaker 1
I think that’s been canceled.
00:04:22 Speaker 1
As of the taping of this, we can get into the state of Sri Lanka drove off Freeburg.
00:04:29 Speaker 1
I know you’ve been chomping at the.
00:04:30 Speaker 1
Bit to discuss this, yeah.
00:04:31 Speaker 1
That was a good long intro I think.
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You know the.
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The high level for me, if you look kind of at debt markets around the world, there’s about $300 billion of global stack and I put this chart in the chat here. Next you can put it on the on the video.
00:04:51 Speaker 1
And about 100 trillion of that debt globally is in emerging markets. And so these countries generally have, you know, much more kind of.
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Variable GDP growth as well as challenges ultimately with their currencies.
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Most of this.
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Debt recently, and this has been a trend for a number.
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Of years lately has been issued in their local currency.
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Rather than indirect dollars.
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And so as the currency devalues, it becomes more challenging for an investor to make a return if they’re investing from a few at dollar denominated base or some other dollar denominated base.
00:05:31 Speaker 1
So look, the M, the emerging markets are are heavily saddled.
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I mean, some of these countries have over.
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You know, 300% or 250% debt to GDP, and what’s really gone on recently is that many of them, as net importers of energy and food, are going to struggle to make the stuff they need to make at home or to feed their.
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People at home because.
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Of the rising inflation that’s been happening around the.
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World from the producers of those goods and services of those goods, and so to import those goods is more expensive.
00:06:05 Speaker 1
That makes it more challenging for people to be able to afford food, to be able to afford energies. This is part of what we’re seeing happening in in Sri Lanka, with compounding this as we have rising inflation in the US, so as.
00:06:17 Speaker 1
We’ve been talking about a lot.
00:06:19 Speaker 1
The feds been raising interest rates here in the US, which means that you can now buy Treasurys that yield 3% if you’re an investor around.
00:06:25 Speaker 1
The world where?
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Else you going to put your money except you at Treasurys in a market like?
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You want to buy 3% yield in U.S. dollars versus you know giving 10% yields in you know some currency denominated currency denominated bond in a country you don’t really know well it trust as much as the United States.
00:06:43 Speaker 1
And so as a result a.
00:06:45 Speaker 1
Lot of dollars are moving out of emerging market debt into U.S. debt.
00:06:50 Speaker 1
And the price of that debt has collapsed.
00:06:52 Speaker 1
And so we’ve seen in the last couple of months a decline of emerging market debt of about 20.
00:06:57 Speaker 1
Percent this makes it harder for those countries creating new debts to fund things that it’s creating this really challenging spiral that may ultimately lead to defaults.
00:07:07 Speaker 1
Those defaults absolutely have a trickling effect because if one country starts to default, then you’re an investor in emerging market debt.
00:07:13 Speaker 1
You’re just saying, hey, wait a second.
00:07:15 Speaker 1
This this this.
00:07:15 Speaker 1
I just took a huge loss in this position.
00:07:17 Speaker 1
You’re gonna start to sell off other emerging market shares and then it becomes harder for those countries to raise more debt and find themselves, and it can cause a cataclysmic spiral.
00:07:25 Speaker 2
So you know.
00:07:26 Speaker 1
It’s a really scary scenario we’re wading into now.
00:07:28 Speaker 1
And I think we really hope that the US starts to take registration. We find some stability in these markets over the next couple of months because it’s not just the food and energy crisis, it’s also a humanitarian crisis and ultimately could lead to a global financial crisis.
00:07:43 Speaker 1
Action find issue.
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It’s highly complex, but it’s.
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Something that folks are tracking very closely here.
00:07:48 Speaker 1
What’s happening also is the companies that were already at risk are going to start filling this impact.
00:07:54 Speaker 1
We could jump into free Lanka if we want someone that has I think a bunch of short term issues and.
00:08:00 Speaker 1
And a couple of very long term issues.
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Let me set the background ’cause.
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I think this is really interesting.
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Let’s take.
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But studies remark that through the lens of two other countries, Jamaica and Singapore.
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If you go all the way back to 1960, so you know, roughly when Singapore became a nation.
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The Jamaican population in 1950 was 1.6 million people.
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Population was 1.6 million people.
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Three months of population was 9.8 million.
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Jamaica GDP with 700 million.
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Singapore’s GDP was 700 million. Sri Lanka was 1.4 billion.
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Now you Fast forward to 2022. Jamaican GDP is about 13 billions.
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Singapore’s GDP.
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Has grown to about 360 billion.
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And three months as GDP is 80 billion, so like, what is Singapore do right?
00:09:03 Speaker 1
What did Jamaica kinda get right?
00:09:05 Speaker 1
Because one of the things that they kept in shackles of population even though their GDP didn’t expand, their muscle per capita income was still quite healthy.
00:09:12 Speaker 1
And then what’s instruments to get right, and what do we?
00:09:14 Speaker 1
Want to get wrong? Well?
00:09:15 Speaker 1
Some of the things when you look at.
00:09:16 Speaker 1
Singapore is that they found the way to embrace.
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Despite a very heterogeneous culture and sets of religions inside of that entity, invest inside that city state.
00:09:30 Speaker 1
They found a way to promote multiculturalism, yet also promote English as a Ringgold, Franklin.
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Why was that small things so important?
00:09:38 Speaker 1
Because it allowed them to be a hub for the rest of the world in a way that many, many other countries couldn’t do.
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The second thing that they had was a very low level of corruption because they had a leader, in that case, Lee Kuan Yew.
00:09:53 Speaker 1
And again, some people in the West will painted are slightly authoritarian.
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You know, he would paint it as Asian values, but the net result of it was very low levels of corruption, a small but highly effective public service and meaningful investments in education and healthcare to make that country grow over decades and within a generations.
00:10:14 Speaker 1
That country completely, you know, exceeded all expectations.
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I struggled through a civil war.
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I was a byproduct of that civil war.
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It was partly religious with partly ethnic.
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And it was 20 plus years.
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In the making and in the happening and it.
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Took a very.
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Bright Ring, autocratic leader.
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The brother of the current supposed president to basically rooted out now in order to root it out.
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There were enormous amounts of war crimes and all kinds of things that I don’t think anybody would support accepted brought some amount of stability.
00:10:52 Speaker 1
And so then we would have thought, OK, maybe this is the point at which you can now really start to grow.
00:10:59 Speaker 1
But these guys yet again found a way to enable boot and just infuse so much corruption and graft inside of how the government runs.
00:11:07 Speaker 1
By the way, he wasn’t just the right, it was also the last.
00:11:10 Speaker 1
They spent 2 1/2 times more on defense as of last year than they did when they were in war time.
00:11:16 Speaker 1
Doesn’t make much sense.
00:11:17 Speaker 1
The public service grew the largest it ever did.
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In employment, where you know you really should have prioritized private enterprise.
00:11:25 Speaker 1
So all of these things sort of created a situation where they fundamentally didn’t know what.
00:11:29 Speaker 1
They were doing.
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So at the other two issues there, I think about the great summary of like really those frontier countries and what made to emerge.
00:11:37 Speaker 1
Singapore also has a great strategic location which will work on it.
00:11:41 Speaker 1
Sure, for both island countries strategically located for trade.
00:11:46 Speaker 1
And then I guess the policies, right, Singapore went on a very, very aggressive tax and business policy effort, discrete long to do that as well.
00:11:56 Speaker 1
And then maybe could speak to just how important those are as islands you know and their in their geography ’cause you make it doesn’t obviously have.
00:12:03 Speaker 1
That, I mean Sri Lanka has this massive, growing importance.
00:12:07 Speaker 1
As China has emerged.
00:12:10 Speaker 1
The problem in these last few years is that they did everything possible to not just barely make China, but to alienate everybody on every dimension possible.
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You know they alienated China.
00:12:22 Speaker 1
The the food growl was that there was an enormous shipment of fertilizer, chemical fertilizer that was sent to the.
00:12:29 Speaker 1
And it was summarily rejected and turned around because somewhere along the way the leadership insurance had decided that they will load.
00:12:37 Speaker 1
And so they enforced every farmer to grow organic.
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The problem of growing organic and organic.
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Fertilizer was all the small farms.
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Shut down all of the large farms had 20 to 30% crops, more reductions. The prices of food went crazy, they reversed policies two or three times and really what they found as they, you know, they tried to go woke instead they went broke and all of a sudden all these other countries who were there trying to help said, wait, what is going on here? So.
00:13:04 Speaker 1
They offended times.
00:13:05 Speaker 1
They offended the Middle Easterners.
00:13:06 Speaker 1
They tended to Japanese by cutting the light rail project that Japan wanted to fund.
00:13:10 Speaker 1
I mean in.
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Every step of the way.
00:13:12 Speaker 1
They deindustrialised.
00:13:13 Speaker 1
This country found out they didn’t deduct your face, they tried to follow this.
00:13:18 Speaker 1
That is, that is the industrialization reversing from like the modern techniques of industrial production like fertilizer and modern systems of farming is the industrialization.
00:13:27 Speaker 1
It’s it’s you know it’s going to be a curse ultimately it’s next to your point.
00:13:32 Speaker 1
We we just discussed this last week with the.
00:13:36 Speaker 1
You know, if you’re in a frontier market trying to adopt the regulations and the strategic goals for the environment of the emerging market is like 2 giant hops, it’s it’s probably insurmountable.
00:13:49 Speaker 2
Well, look, there’s a strong analogy between the populous uprising that’s happening in the Netherlands with the Dutch farmers, and the populist uprising that’s happening in Sri Lanka.
00:13:59 Speaker 2
Basically, they’re implementing the same policies such Fremont is a further down the road and it’s a poor.
00:14:04 Speaker 2
Country to begin with.
00:14:05 Speaker 2
So, you know, like Thomas mentioned, in April of last year the Sri Lankan government banned the importation of chemical fertilizers and pesticides used in farming.
00:14:13 Speaker 2
They again went with this idea.
00:14:15 Speaker 2
They thought they could encourage organic farming.
00:14:17 Speaker 2
So the result?
00:14:18 Speaker 2
Of that was that overall production. Agricultural production fell by a third and rice production fell by 43%.
00:14:26 Speaker 2
And rice is, you know, the biggest staple in the country.
00:14:29 Speaker 2
So now you got people there starving or going hungry.
00:14:32 Speaker 2
That massive food insecurity, as well as the whole economy basically has been.
00:14:36 Speaker 2
Bold and resulted out of society is essentially collapsed.
00:14:40 Speaker 2
So, you know, now the question is why did the Sri Lankan Government feel compelled to adopt these policies?
00:14:47 Speaker 2
A lot of it has to do with the fact they’re getting these massive loans from the World Bank.
00:14:50 Speaker 2
And the IMF and the.
00:14:52 Speaker 2
World Bank and so forth are.
00:14:53 Speaker 2
Imposing these ESG requirements so it’s free lunch.
00:14:56 Speaker 2
As something like as 98% FG rating, even as their economy and society is collapsing. How is that possible?
00:15:05 Speaker 2
Well, they’re doing a great job following the prescriptions of the global elites of Davos.
00:15:09 Speaker 2
That means this sort of global.
00:15:11 Speaker 2
Eat flies into Davos from Brussels and Washington on their private planes.
00:15:15 Speaker 2
They have panels on SG and then they prescribe these policies for countries like Sri Lanka and this is the result.
00:15:22 Speaker 2
I mean, it’s crazy.
00:15:23 Speaker 2
They’ve been telling us for years that somehow there’s no trade off between their environmentalist policies and creating a healthy, growing economy.
00:15:31 Speaker 2
And this is.
00:15:31 Speaker 2
For example, that’s not true. There are real trade-offs here, and the crazy thing is that the elites expect poor people in Sri Lanka to make up for their environmental emissions. There is not really fair at all.
00:15:45 Speaker 1
Here’s another example in March of 2020.
00:15:47 Speaker 1
Soon as that enforced one of the world.
00:15:50 Speaker 1
‘s strictest? China asks.
00:15:53 Speaker 1
COVID-19 lockdown, COVID-19 lockdowns, despite one of the lowest death rates and infection rates in the world, and so for nearly three months it literally crippled the economy and the livelihood of citizens there.
00:16:06 Speaker 1
But here’s where it gets crazy.
00:16:08 Speaker 1
Then they asked me go against global best practice and they banned the burial.
00:16:13 Speaker 1
Of COVID-19.
00:16:14 Speaker 1
This is claiming that it could lead to groundwater contamination.
00:16:17 Speaker 1
I don’t even know how they came up with it, but you know what this did?
00:16:21 Speaker 1
Was it significantly undermined the small minority of the country.
00:16:26 Speaker 1
That is marvelous.
00:16:27 Speaker 1
Because of religious practice their, you know, is you bury your dead and then that caused great pain to them and then it’s as in turn.
00:16:34 Speaker 1
It hurt all these international relationships with all these soft nations.
00:16:39 Speaker 1
So then you you come all the.
00:16:40 Speaker 1
Way around and then you go back to those same.
00:16:41 Speaker 1
Gulf nations, a few.
00:16:42 Speaker 1
Months later and you’re like can.
00:16:43 Speaker 1
I have subsidized world.
00:16:45 Speaker 1
They’re like, no, nothing.
00:16:47 Speaker 1
And just to give paint a picture of what’s happening there right now, as I mentioned before, it’s it’s pretty much a state of emergency.
00:16:53 Speaker 1
You can see various videos trending on social media, and you’ll always take those with some caution, because sometimes people will take clips out of context, or label them incorrectly, or use clips from other moments in time.
00:17:05 Speaker 1
But what’s really happening there right now?
00:17:07 Speaker 1
And you shared a video in our group.
00:17:08 Speaker 1
That is, everything is now.
00:17:14 Speaker 1
Rolled out in very small amounts, so there there are lines for basic goods and inflation.
00:17:21 Speaker 1
This is crippling there and as.
00:17:23 Speaker 1
Freebord mentions they started to pin their exchange rate.
00:17:29 Speaker 1
And their currency to I guess the world exchange rate and now?
00:17:34 Speaker 1
Everything is super expensive and essential imports like food and medicine and fuel.
00:17:41 Speaker 1
They don’t have the money to pay for it.
00:17:42 Speaker 1
So this is going to be a.
00:17:44 Speaker 1
Complete societal collapse, it seems.
00:17:46 Speaker 1
They never do need to get bailed out.
00:17:47 Speaker 1
There was a bill that was introduced in the government that said potential bank.
00:17:52 Speaker 1
Would be.
00:17:55 Speaker 1
Forced to have a discipline on money printing? Sounds familiar. In March of 2020, the Central Bank of Sri Lanka began printing money in order to finance.
00:18:04 Speaker 1
A growing budget deficit again.
00:18:06 Speaker 1
Happens in many countries and they did that in part to fill an election promise that they made that they would maintain single digits interface again.
00:18:15 Speaker 1
Sounds really familiar.
00:18:16 Speaker 1
So they printed about ₹100 billion in March. In the next two years, the Central bank printed ₹1.65 trillion.
00:18:26 Speaker 1
Price of 16 1/2 times that first number and then as a result what they saw was the highest inflation in post independence history.
00:18:34 Speaker 1
So time after time, what you’re actually seeing in Sri Lanka is not a microcosm of something that’s endemic to whatever you want to call it.
00:18:41 Speaker 1
Chase in a developing country or third world country.
00:18:44 Speaker 1
You know, the frontier country or.
00:18:46 Speaker 1
Southeast Asian country.
00:18:48 Speaker 1
In fact, it actually resembles many of the policies that exist in so.
00:18:52 Speaker 1
Many countries all around the world.
00:18:55 Speaker 1
But truly important here is that as goes Sri Lanka, so goes gonna so go Pakistan, so goes a whole bunch of countries where you’re already starting to.
00:19:06 Speaker 1
See food riots, food insecurity, energy and security, rampant inflation, sovereign defaults.
00:19:13 Speaker 1
And you have to.
00:19:14 Speaker 1
Ask yourself, like, how are we going to really tourniquet this whole thing and prevent a much bigger contagion like fever just talked about?
00:19:22 Speaker 1
I think it’s a really, it’s a really important issue.
00:19:27 Speaker 1
You mentioned COVID.
00:19:28 Speaker 1
It turns out a lot of these frontier countries were already on debt relief and being given a moratorium on making their debt payments since they got so walloped during COVID.
00:19:39 Speaker 1
And then now the other shoe drops and here we are.
00:19:42 Speaker 1
There’s no relief you can give them if they’re already not paying their loans in some cases.
00:19:46 Speaker 1
By the way, here’s another thing that happens in a lot of these developing countries.
00:19:49 Speaker 1
So in the middle of all of this chaos, what do you think happens?
00:19:52 Speaker 1
The Parliament got together, they passed the amendment to the Constitution and it enforced and diskaid incremental power to one individual deploy.
00:20:00 Speaker 1
And typically, in most of these countries that’s run by a parliamentary system, the president is a cigarette, right?
00:20:06 Speaker 1
The person shows up, you know, shake hand, kisses baby.
00:20:10 Speaker 1
That’s it, right?
00:20:11 Speaker 1
Maybe convenes a sentence.
00:20:12 Speaker 1
But that is it.
00:20:14 Speaker 1
Now the sudden the person has control over defense, control over budget, control of its central banks and this person.
00:20:20 Speaker 1
Cannot be, you know, voted out in no confidence, so it’s the same way.
00:20:23 Speaker 1
That a Prime Minister?
00:20:24 Speaker 1
Can’t that happens here as well?
00:20:26 Speaker 1
So yet another example of if you start to see a bunch of autocrats in somebody developing markets.
00:20:32 Speaker 1
Feel like he.
00:20:32 Speaker 1
Answers more power.
00:20:34 Speaker 1
It’s been tried here.
00:20:35 Speaker 1
It didn’t work.
00:20:36 Speaker 1
So I think that there’s a there’s a lot of lessons I.
00:20:40 Speaker 1
I’m a little concerned is sceptical that many of these other developing countries that are teetering on insolvency will actually learn.
00:20:47 Speaker 1
Well, I mean bumping history.
00:20:48 Speaker 1
We are the definition of the developed world, reportedly, and we have a president who tried to stay in power still in elections.
00:20:55 Speaker 1
So it it’s literally happening here in the United States as well.
00:20:58 Speaker 1
The parallels are truly terrifying.
00:21:00 Speaker 1
All right, the CPI.
00:21:04 Speaker 2
This is rolling my eyes.
00:21:05 Speaker 2
It’s annoying, so this year annoys from an eye roll.
00:21:05 Speaker 1
Oh, OK, OK, that’s what I heard.
00:21:08 Speaker 1
That’s what it was.
00:21:09 Speaker 1
It’s not like a.
00:21:09 Speaker 1
Boulder going downhill, but sorry to ask him.
00:21:11 Speaker 1
Off the question, yeah.
00:21:13 Speaker 1
Tomorrow, by the way, if people don’t know chamath is of Sri Lankan descent, just to make that clear if you didn’t hear.
00:21:18 Speaker 1
His little mention.
00:21:18 Speaker 1
Didn’t you go?
00:21:19 Speaker 2
There a couple years ago.
00:21:21 Speaker 1
I mean, here’s another great example of.
00:21:23 Speaker 1
In this case, this was.
00:21:24 Speaker 1
The last who managed to.
00:21:28 Speaker 1
Fox things up.
00:21:28 Speaker 1
So we practiced the rights that screws things up in that country.
00:21:31 Speaker 1
Still left as well, so in this example.
00:21:33 Speaker 1
Uhm, I went there and I offered to bring Google **** myself.
00:21:38 Speaker 1
And Google.
00:21:40 Speaker 1
We offered to bring Internet access to the entire country like guaranteed analysis.
00:21:45 Speaker 1
This was like five years ago and we set up an entity and the government tried to do the right thing in grants and spectrum.
00:21:55 Speaker 1
And instead of sort of like.
00:21:58 Speaker 1
Fast tracking mirrors and allowing.
00:22:01 Speaker 1
You know this project to become a reality.
00:22:04 Speaker 1
There was an enormous amount of infighting.
00:22:08 Speaker 1
That essentially said that, you know, we were trying to steal the license, so we stole the license, so we were trying to monetize their license.
00:22:15 Speaker 1
And those me and Google were just like, forget this, this is not worth it, and we abandoned the project and walked away.
00:22:21 Speaker 1
Instead, Google ends up servicing a whole bunch of other countries, and the reason why Spelunker was part of it is because the balloons follow a certain orbit and it would have it copied, would go over three months and no matter what.
00:22:32 Speaker 1
So it’s kind of like we can light it up for free.
00:22:34 Speaker 1
All we need is spectrum in this country.
00:22:36 Speaker 1
Google is already doing that work.
00:22:38 Speaker 1
So, you know, I’ve I’ve gone.
00:22:40 Speaker 1
There a few times.
00:22:41 Speaker 1
I found it very difficult to try to do the right thing.
00:22:44 Speaker 1
I think people, there’s a level of infighting that I hope this crisis changes.
00:22:51 Speaker 1
I also think that’s just an opportunity for people to reset writ large.
00:22:56 Speaker 1
The gerontocracy that runs many of these countries, including the United States.
00:23:00 Speaker 1
Quite honestly there is an opportunity.
00:23:03 Speaker 1
There are some you know of my friends who I think may emerge in the next few weeks.
00:23:09 Speaker 1
Who are very well known people in that country who literally want to step one.
00:23:15 Speaker 1
Remove most of the executive power from the presidency.
00:23:20 Speaker 1
Make it true.
00:23:21 Speaker 1
You know, parliamentary style system with an empowered Prime Minister and empowered elect elected officials and let the country runners fix itself.
00:23:29 Speaker 1
You know, deprioritize some defence spending, deprioritized the growth of the public sector reprioritize.
00:23:36 Speaker 1
Because of the private sector, I hope they’re successful.
00:23:38 Speaker 1
I’ve would love to invest if given the opportunity.
00:23:42 Speaker 1
Under those kinds of market conditions and I would love to go back at some point, but my history with the country has been very flawed because as I’ve gone to try to do.
00:23:51 Speaker 1
The word fever.
00:23:53 Speaker 1
People are just haters.
00:23:55 Speaker 1
Well, there’s a couple popular nose off to spite, you know, they they’ll just do the worst things possible. Schmack, there’s, I think you have a second string of fat here. Only 50% or so of people in Sri Lanka have Internet.
00:24:06 Speaker 1
Access and maybe we could talk to her friend over a star link, and that could be an incredible midsland changing fingers.
00:24:14 Speaker 1
You get 100% of the country on Internet. My God, that could change everything.
00:24:17 Speaker 1
And it seems to be.
00:24:18 Speaker 1
More readable by the way.
00:24:20 Speaker 1
And this is the most literate country in the world, yes.
00:24:22 Speaker 1
Understand, like the people in that country, the human potential right country is.
00:24:27 Speaker 1
OK, there are not developing countries races that have this type of literacy.
00:24:32 Speaker 1
The and the kindness of the people.
00:24:34 Speaker 1
These are incredible hard working people, but being elected class.
00:24:39 Speaker 1
Is some of the most inward navelgazing corrupt people and this is the opportunity for the young people of that country to.
00:24:47 Speaker 1
Wipe the slate.
00:24:48 Speaker 1
Clean with all of them.
00:24:50 Speaker 1
And start over with them.
00:24:52 Speaker 1
I think.
00:24:53 Speaker 1
Literacy rate is 92% or something crazy there. It’s very high. It’s a highly educated, literate group of people.
00:25:00 Speaker 1
Truth is the number of people living.
00:25:02 Speaker 1
In extreme poverty has plummeted banks to globalization.
00:25:06 Speaker 1
We went from almost, yeah, 2 billion people living in extreme poverty.
00:25:10 Speaker 1
Now it’s going to be that’s going to end in our lifetimes. We have maybe 500, six, 100 million people living in extreme poverty.
00:25:16 Speaker 1
That’s because of globalization.
00:25:18 Speaker 1
That’s the great thing that’s happened now.
00:25:20 Speaker 1
What’s also happened at the same time is people have gotten.
00:25:22 Speaker 1
Out of sync, we have released a fax this point we think they know better and they’re trying to enforce on in their emerging market or a frontier.
00:25:29 Speaker 1
The market God forbid the things that we have the luxury of doing in the design.
00:25:34 Speaker 1
We don’t even.
00:25:34 Speaker 1
Do wait, hold on.
00:25:36 Speaker 1
We’re getting.
00:25:37 Speaker 1
That means we don’t even ban chemical fertilizers in the Western world.
00:25:40 Speaker 1
What we do have in Europe has standards for gas mileage is but one example.
00:25:43 Speaker 2
No, Jason.
00:25:44 Speaker 1
We have emission standards, we have the accords that we’ve been working on.
00:25:48 Speaker 1
All of these things are starting.
00:25:50 Speaker 1
In the developed world and now exactly to what David is saying is we’re taking them from the developed world, we are imposing them and Sri Lanka apparently in.
00:25:57
Waste it I.
00:25:58 Speaker 1
Guess to get points when there is Java.
00:26:00
Three months.
00:26:00 Speaker 2
Lanka is not rich enough.
00:26:02 Speaker 2
To resist, that’s the issue.
00:26:04 Speaker 2
So the US has an F rating of 51%, relaunch as 98%. Why is that?
00:26:10 Speaker 2
Because in our country.
00:26:11 Speaker 2
We’re not going to impose these crazy mandates.
00:26:13 Speaker 2
There’s enough resistance to it.
00:26:15 Speaker 2
But if your issue Lanka.
00:26:18 Speaker 2
And you have these massive loans and debt service.
00:26:20 Speaker 2
You have to do what the IMF and the World Bank and.
00:26:24 Speaker 2
All these international.
00:26:25 Speaker 1
What your creditor tell you do.
00:26:25 Speaker 2
Points patients were your tears.
00:26:27 Speaker 2
Yes, exactly.
00:26:28 Speaker 2
They’re the ones who imposed all this stuff.
00:26:30 Speaker 2
So great, so she won’t enter with a 98% near perfect rating, even as the country is completely crossing.
00:26:37 Speaker 2
Read the Shellenberger article here.
00:26:39 Speaker 2
He says dennerlein reasons for the false true rank is as leaders fell under the spell of Western green elites peddling organic agriculture and SG.
00:26:48 Speaker 2
Then he mentions the freon said dear perfect score of 98 higher than Sweden which is 96 U.
00:26:53 Speaker 2
S is 51.
00:26:54 Speaker 2
What is having such a high ESG score mean it short? It means that Sherlock is 2,000,000, farmers were forced to stop using fertilizers and pesticides, laying waste to its critical agricultural sector, and then it goes on from there. So.
00:27:09 Speaker 2
It was the.
00:27:10 Speaker 2
Imposition of it’s not that true.
00:27:13 Speaker 2
Lots of politicians implemented true launching ideas that caused the collapse of their country.
00:27:18 Speaker 2
They implemented western.
00:27:20 Speaker 2
Ideas? They implemented the idea.
00:27:20 Speaker 1
Well, they were also corrupted, so there’s a combination of them.
00:27:22 Speaker 2
Fair enough.
00:27:23 Speaker 1
The corruption was very high then.
00:27:23 Speaker 2
But they implemented, they implemented the idea, as they learned at Davos.
00:27:27 Speaker 2
It’s almost perverse.
00:27:28 Speaker 2
He’s got all these, you know, Western elites again, like John Kerry and support.
00:27:33 Speaker 2
They fly in their private jets for Davos.
00:27:35 Speaker 2
They come with these rules.
00:27:37 Speaker 2
They coerce countries like Syria launcher to.
00:27:40 Speaker 2
Obey them.
00:27:41 Speaker 2
And it’s the people.
00:27:42 Speaker 2
You want to end up paying the price, I will say.
00:27:44 Speaker 2
Make any sense?
00:27:47 Speaker 2
Yeah, but you’re asking about J.
00:27:49 Speaker 2
He’s not gonna blame this on Trump.
00:27:52 Speaker 1
No, no.
00:27:55 Speaker 1
Our compatibility with this well, I mean, I I’m just thinking about it from first principles.
00:27:57 Speaker 2
The other brother.
00:28:01 Speaker 1
You know, we we should as a you know, species humanity should be trying to trend towards taking care of the planet and lowering image.
00:28:09 Speaker 1
And being in renewables and then how we go about doing it, perhaps there was good intent here, but obviously if the country is corrupt and we’re teetering already and they don’t have the bankroll to do it, forcing them to do it can lead to collapse.
00:28:21 Speaker 1
Nobody forced anybody, but what did the score give you?
00:28:24 Speaker 1
Not as if.
00:28:25 Speaker 1
Well no no they select them by nature of you get your loans if you do these CSU requirements.
00:28:30 Speaker 1
So that is forcing them defacto.
00:28:32 Speaker 1
OK, fair enough.
00:28:32 Speaker 1
But I’m saying, like, you know, now that you have this score is not as if you issue green bonds and you could stave off the Jingle.
00:28:38 Speaker 1
No, it’s it’s monthly.
00:28:38 Speaker 1
You said before it says look at the tree, Shree Lanka should be looking at what Singapore did and just copy the playbook, right?
00:28:46 Speaker 1
I mean, it’s so obvious.
00:28:47 Speaker 1
That, you know country, it requires a level of long term leadership and the lack of and the lack of corruption and I think those those two things are very hard to come by.
00:28:56 Speaker 1
And I think the third, which is a very controversial statement to make, is it required Singapore to adopt English as a lingua franca.
00:29:02 Speaker 1
Now in service to Singapore, they also embrace multiculturalism, right?
00:29:05 Speaker 1
So you had first.
00:29:07 Speaker 1
In other words, that you had.
00:29:08 Speaker 1
Bilingualism in the school.
00:29:09 Speaker 1
So Hindi, Malay, Tamil, Malay, Chinese, right.
00:29:14 Speaker 1
You would learn all of those.
00:29:16 Speaker 1
And so you kept in ethnocentricity to where you came from, but they allowed you to understand the lingua franca.
00:29:23 Speaker 1
That allowed you.
00:29:23 Speaker 1
To merchandise their skills to the rest.
00:29:25 Speaker 1
Of the world and are.
00:29:26 Speaker 1
Are you saying they adopted the melting pot playbook?
00:29:29 Speaker 1
And they allowed everybody from around the world to have their culture but yet participate in a common goal.
00:29:35 Speaker 1
Oh my God, literally, if you say melting pot to young people today and everybody should.
00:29:39 Speaker 1
Try to adopt, you know, a new culture, but keep some of their own people find great offense to that.
00:29:45 Speaker 1
And that’s where we were also at the melting pot is what made this country great.
00:29:48 Speaker 1
Anyone uses cultures? Multiculturalism?
00:29:51 Speaker 1
But my point is that, you know, I think the English decision by Singapore was important.
00:29:57 Speaker 1
I think steady, predictable leadership at least.
00:29:59 Speaker 1
I knew was really critical.
00:30:02 Speaker 1
Yeah, and the lack of corruption is, you know, the way in which they they promoted their public sector.
00:30:07 Speaker 1
Meaning, you know, some of the best paying jobs in Singapore was a public sector jobs, right?
00:30:11 Speaker 1
Like you would expire.
00:30:12 Speaker 1
The work for the Government of Singapore and.
00:30:14 Speaker 1
So as a result.
00:30:15 Speaker 1
You had policies and movements and the movement of capital and.
00:30:18 Speaker 1
Progress and rules that were just, it’s an example for for so many countries and you look where they are today for such a small populations they have the same GPU, shows Vietnam.
00:30:29 Speaker 1
We have larger GDP in Vietnam, which is an incredible statement in our investments of Singapore’s ingenuity. So could that Adventure America, I think.
00:30:38 Speaker 1
So knowing that the.
00:30:41 Speaker 1
You know, the levels of literacy and intelligence and frankly, like, look, the religious stability that can come from Buddhism.
00:30:49 Speaker 1
Yes, we’re not there where where we are today, which is a shame.
00:30:53 Speaker 1
And this is the Canary in the coal mine.
00:30:55 Speaker 1
I think we’re going to see Freeburg.
00:30:57 Speaker 1
I don’t know what you think is going to happen.
00:30:59 Speaker 1
Over the next 6.
00:30:59 Speaker 1
Months, but basically the other Domino’s, certainly yes.
00:31:02 Speaker 1
May I watch for Arab Spring type in Asia right and saw the protests and people stoning the presidential palace in Sri Lanka?
00:31:12 Speaker 1
You know, if I, I would imagine if we had a report from the intelligence advisers to the President of the United States, there’s probably a long list and a growing list of these nations you want to keep.
00:31:27 Speaker 1
An eye on right.
00:31:28 Speaker 1
Now, where there is food insecurity, energy insecurity, declining currency?
00:31:34 Speaker 1
You know, rising debt burdens.
00:31:36 Speaker 1
And you know there’s a breaking point for all of these.
00:31:40 Speaker 1
And as you start to hit that breaking point and start to see more of what.
00:31:43 Speaker 1
Happened in Sri.
00:31:44 Speaker 1
Lanka now, when destabilization like this happens, it’s scary.
00:31:48 Speaker 1
Because what happens is there’s a new power that emerges, and those powers may or may not be aligned with the interests of the United States and the interests of allies or.
00:31:57 Speaker 1
The interests of.
00:31:58 Speaker 1
The world with the interests of western democracy.
00:32:01 Speaker 1
And so there are kind of scary moments that can emerge over the next couple of quarters and years as these camels back star.
00:32:08 Speaker 1
To break as one straw after another is put on the back need camel so.
00:32:13 Speaker 1
Now who’s the one message come in and.
00:32:16 Speaker 1
Yeah. And that ultimately into or Bush or the United States, we’re ploughing $40 billion into supporting Ukraine conflict.
00:32:24 Speaker 1
You know, we’re busy kind of protecting our energy interests and our interests with NATO as as the United States and as you point out.
00:32:34 Speaker 1
China will likely end up becoming the Savior and supporter, particularly where they have infrastructure investments and.
00:32:41 Speaker 1
I mean, I don’t know if you guys have followed this.
00:32:43 Speaker 1
China has been building presidential palaces for African leaders throughout the continent.
00:32:48 Speaker 1
And these houses, they’re incredible.
00:32:50 Speaker 1
You guys should put photos of them on the video.
00:32:53 Speaker 1
Oh, sorry, but that’s the wrong one that tracks this house.
00:32:56 Speaker 1
Right.
00:32:57 Speaker 2
Not that factors.
00:32:58 Speaker 1
Out of habit whole time, that’s one.
00:32:59 Speaker 1
Believe it.
00:33:00 Speaker 1
Or not.
00:33:00 Speaker 1
They might push taxes, have to change so many things, but they’re they’re really.
00:33:03 Speaker 1
The president.
00:33:05 Speaker 1
Oh, sorry.
00:33:07 Speaker 1
Yeah, anyway.
00:33:08 Speaker 1
But yeah, this is a, you know, a moment to watch.
00:33:13 Speaker 1
Yeah, because there’s a very, you know, unfortunate confluence of circumstances that may lead to destabilization, that may lead to influence and power being gained by folks that aren’t direct out like.
00:33:24 Speaker 1
The United States.
00:33:25 Speaker 1
Right.
00:33:25 Speaker 1
Let’s have filled up a great cash reserve and have a really stable economy so that when these moments do happen, you know, the good actors in the world can take advantage of as part of the bad ones.
00:33:35 Speaker 1
And the United States is not in great position for this.
00:33:39 Speaker 1
Every society, as they say, is free meal, three missed meals away from Karen.
00:33:44 Speaker 1
There are now a record 19 developing countries with sovereign debt trading at distressed levels 19 and two that have already keeps all this, so nothing.
00:33:54 Speaker 2
It’s not something that’s new, right?
00:33:56 Speaker 2
I mean, it’s just that’s problematic.
00:33:59 Speaker 1
Well, in Pakistan, his famous for enabling other countries Iran, North Korea, reportedly they look at their nukes as an export and they are more than willing to sell you nuclear technologies.
00:34:11 Speaker 1
A link from Forbes.
00:34:12 Speaker 1
You know there are currently, as of today, inflation protests going around across solanka, Albania, Argentina, Panama, Kenya, Ghana.
00:34:20 Speaker 1
And if you look at the video, can you look at the images of some of these protests?
00:34:24 Speaker 1
And again, there’s like, you know, in the African continent, there are, you know, very radical militant groups that will prime seized power if there’s destabilization at the top.
00:34:35 Speaker 1
And you know, there are there are risks in in South America, I mean all over the world.
00:34:40 Speaker 1
You know, these sorts of moments can catalyze a real shift in power and influence.
00:34:46 Speaker 1
And and there’s a lot of it going on, you never believe that folks in the US State Department and the CIA are.
00:34:51 Speaker 1
Very busy right now.
00:34:53 Speaker 1
You know if you look at bond prices, the three countries that are the next closest to defaulting, so Russia and she faltered, but that was more of a degree of, you know, foreign currency controls that that didn’t allow them to pay.
00:35:03 Speaker 1
But three months has officially defaulted in the next three or El Salvador.
00:35:06 Speaker 1
And Pakistan?
00:35:09 Speaker 1
And by the way, Argentina, just you guys know, the Argentinian prints on inflation?
00:35:15 Speaker 1
Oh yeah.
00:35:16 Speaker 1
We think.
00:35:18 Speaker 1
If we think that our nine point.
00:35:21 Speaker 1
Now they had a structural default a few years ago, renegotiations.
00:35:24 Speaker 1
They’ve been back at the table over and over, negotiating for years, and now they’re facing this, this inflationary crisis yet again.
00:35:33 Speaker 1
It’s a it’s a scary moment in Argentina.
00:35:37 Speaker 1
Yeah, this is exactly like the European crisis with the Portugal, Italy, Greece and Spain and we’re going to see a lot of negotiations occurring.
00:35:46 Speaker 1
I really believe in this country and I think the people are incredible and I hope that.
00:35:51 Speaker 1
Whoever is the president.
00:35:53 Speaker 1
Basically takes as much power away from that.
00:35:56 Speaker 1
World and put it.
00:35:57 Speaker 1
In the Prime Minister and gets out of the way.
00:35:59 Speaker 1
Alright, so we’re hoping for the best.
00:36:01 Speaker 1
OK, CPI ’cause everybody who listens Fisher knows is a basket of goods and services and how it changes over time.
00:36:08 Speaker 1
You can slice and dice the CPI based on food, energy, shelter, your house, etc.
00:36:13 Speaker 1
Last two months have been just extraordinary to watch, driven obviously by energy which has been driven by.
00:36:20 Speaker 1
The Russia Ukrainian conflict here, the Sax rant on Biden’s administr.
00:36:25 Speaker 1
The core index doesn’t include energy, and so if you were to look at the core and index it in, here’s a chart 5.9% in June.
00:36:35 Speaker 1
And it peaked, actually with 6.5%.
00:36:40 Speaker 1
In March.
00:36:41 Speaker 1
So that’s been trending down.
00:36:43 Speaker 1
If you take energy out of it, we have an extremist core.
00:36:45 Speaker 2
Energy and food, I think, are our food from core.
00:36:49 Speaker 1
And if he haven’t, we haven’t experienced core inflation like this since the 70s or 80s.
00:36:54 Speaker 1
Here’s another chart just to zoom out and you’ll see exactly how.
00:36:58 Speaker 1
Jordan, this has been for basically our generation.
00:37:02 Speaker 1
We haven’t experienced it since.
00:37:04 Speaker 1
If you were born in the 70s or so, that’s when it was higher than it is today.
00:37:09 Speaker 1
And we’ve had, obviously, goods and services plummet in our lifetime because of globalization and low interest rates.
00:37:15 Speaker 1
Energy hasn’t seen inflation like this.
00:37:19 Speaker 1
Since the Federated communities.
00:37:19 Speaker 2
But what is the source of CPR would?
00:37:22 Speaker 1
That is the core.
00:37:23 Speaker 1
So that says it’s sharp course.
00:37:23 Speaker 2
That’s where inflation occurs.
00:37:25 Speaker 1
Oh, and then here’s the energy one coming up next.
00:37:28 Speaker 1
So when you look at energy, obviously energy has been volatile in our lifetime because a lot of the oil in the world is controlled by dictators, Middle East, Russia, Venezuela, yadda yadda.
00:37:40 Speaker 1
But the 40% year over year increase in cost of gas and oil and energy has put us back to the mid 70s eighties in terms of paying that dish sharp.
00:37:50 Speaker 1
So you see it’s spiking all over the place, but generally it was under 20% and now we’re back above 20%. It’s all about the oil.
00:37:59 Speaker 1
So Matthew, who were talking in the group chat before, you were kind of satisfied with 9.1. Do you think the 9.1 we’re seeing in the inflation print today, which was higher than expectations?
00:38:11 Speaker 1
What is that going to lead to in terms of the interest rate hike, 75 basis points or you think they just go right to one?
00:38:16 Speaker 1
You know, we talked about this, that this is going to be a big print, right?
00:38:19 Speaker 1
I think we all expected this to be a big print.
00:38:22 Speaker 1
I actually also kind of put myself on the line there and I said, you know, I wouldn’t be surprised if at some point we print to make the high 90s, maybe even attend handle at some point.
00:38:30 Speaker 1
Get in there.
00:38:33 Speaker 1
And the reason is because, you know, rents are a little, you know, they lag in how they’re reported inside of CPI.
00:38:43 Speaker 1
So we have a couple more months ago or a branch and rent starts moving or budgeting a bit.
00:38:51 Speaker 1
That’s number one.
00:38:52 Speaker 1
We do see a little bit of fall off in energy prices, but I’m not so sure that it’s it’s enough frankly to move the needle.
00:38:59 Speaker 1
So I think that we could be in a sustained period for a while. The more interesting thing I thought today was that Canada surprised everybody and raised their benchmark interest rate by 100 basis points.
00:39:11 Speaker 1
OK. So at basic schemes 1.100 bits and they just said we’re going forward.
00:39:15 Speaker 1
We need to tune.
00:39:16 Speaker 1
This we need to break the back end.
00:39:19 Speaker 1
They rip the Band-Aid off. Yeah, yeah. And you know, and I think if you read the Fed.
00:39:24 Speaker 1
Minutes, more carefully.
00:39:26 Speaker 1
I think Jerome Powell is basically ready to do the same thing after this inflation print the expectation.
00:39:32 Speaker 1
For July went.
00:39:34 Speaker 1
To 80 basis points from 75, which means a small percentage of people as you think it’s.
00:39:38 Speaker 1
Going to be.
00:39:38 Speaker 1
100 and September I can move to 75 food. So the question is, is that enough?
00:39:48 Speaker 1
I just don’t know.
00:39:49 Speaker 1
I don’t know.
00:39:52 Speaker 1
And to be clear, this is for June.
00:39:54 Speaker 1
The data we out on today, July 13th is for June.
00:39:57 Speaker 1
What we did see in July ’cause, we can track oil prices that’s down 20% month over month and the CPI has been driven largely by oil. So speak to that from off, what do you think it’s going to be in July?
00:40:08 Speaker 1
When we get.
00:40:09 Speaker 1
It in August, but yes or no because again.
00:40:11 Speaker 1
The owner equivalent.
00:40:12 Speaker 1
Rents are up so much that they may actually.
00:40:15 Speaker 1
You know, break.
00:40:15 Speaker 1
Even right meaning that.
00:40:17 Speaker 1
Rents go up by so much, oil goes down by so much, they cancel.
00:40:20 Speaker 1
And we’re still at 9.
00:40:22 Speaker 1
O’clock the Bachelor prediction for July, which we’ll get in August.
00:40:25 Speaker 1
You think nine, yeah?
00:40:26 Speaker 1
I’m worried that we’re in a sustained inflationary environment.
00:40:30 Speaker 1
I’m worried about that.
00:40:31 Speaker 1
I I hope that we’re not.
00:40:33 Speaker 1
I’ll, I’ll send the question, Jason.
00:40:35 Speaker 1
Secondarily, as in what do the markets do and what’s so interesting today is right that the markets shook it all off.
00:40:40 Speaker 1
I mean like you could not have had a worse inflation first, everything was out well.
00:40:46 Speaker 1
Meaning meaningless.
00:40:47 Speaker 1
It was beyond the number that was expected.
00:40:50 Speaker 1
Every component of it was off.
00:40:51 Speaker 1
Everything was horrible.
00:40:53 Speaker 1
And people like me.
00:40:55 Speaker 1
So the is that because it is future looking facts, your market is basically pricing will get through this in six to 12 months, is that we’re seeing that?
00:40:59 Speaker 2
There was. It was brilliant.
00:41:04 Speaker 2
Well, the the markets are down right now. To be clear, the the trend was definitely worse than expected. They were expecting, yeah, they were expecting 8.8%.
00:41:08 Speaker 1
Have a point.
00:41:12 Speaker 2
It was 9.1 last month number was 8.6. I remember us talking about inflation a couple months ago, saying that we thought.
00:41:19 Speaker 2
It had peaked.
00:41:20 Speaker 2
You know, maybe in April or May.
00:41:21 Speaker 2
The latest simply because inflation is measured on a year over year basis.
00:41:27 Speaker 2
And we’re starting a lot, much bigger.
00:41:28 Speaker 2
Com slash, you remember this conversation?
00:41:30 Speaker 2
Well, the laughing effect turned out not to be enough.
00:41:34 Speaker 2
And inflation is still rising, so we have not yet peaked on CPI.
00:41:38 Speaker 2
Understand that core we have peaked.
00:41:40 Speaker 2
But deciding to exclude energy and food, I mean that’s a pretty arbitrary decision.
00:41:46 Speaker 2
Those are.
00:41:47 Speaker 2
Two really important variables that matter to the ordinary American for sure.
00:41:52 Speaker 2
So we solve this problem, and the most point we don’t know when it’s going.
00:41:56 Speaker 2
To be when.
00:41:56 Speaker 2
It comes to slide and I think the big question now is when does inflation finally peak and start going down?
00:42:03 Speaker 2
Back to where it should be and then how much, how severe recession do we have to have in order for defensive of this problem?
00:42:11 Speaker 1
It feels like things are turning over in real estate.
00:42:13 Speaker 1
We talked about that last week.
00:42:14 Speaker 1
The number of homes being lifted is skyrocketing.
00:42:17 Speaker 1
The number of mortgages being originated, it’s plummeting while the rate goes up. So we’re going to see mortgage rates probably go six, 7% for at the end of the year. That’s going to put a huge kubasch the.
00:42:32 Speaker 1
The high end real estate is also starting to get hit massively.
00:42:35 Speaker 1
The number of listings is going up in the high end and the number of cells is plummeting so.
00:42:40 Speaker 1
So that was one of those cards we wanted to see turnover and it looks like that’s turning over just someone smoke verification.
00:42:46 Speaker 1
As you know, we obsess over CPI right now.
00:42:49 Speaker 1
We’re all kind of.
00:42:50 Speaker 1
These fake macro long day traders.
00:42:52 Speaker 1
But I just want to remind you ’cause, the Fed has been pretty clear about this.
00:42:55 Speaker 1
They don’t focus on CPI, they focus on something else instead called PC, which is a personal consumption.
00:43:01 Speaker 1
Expenditure pricing, yes.
00:43:04 Speaker 1
And I don’t know what the flow tool from CPI the CPI is exactly, but.
00:43:11 Speaker 1
That is the broadest measure of goods and services, which does include food and energy. So it stands to reason that PCE may stay elevated for a while, which may give the Fed enough of the motivation they need to go 100 to go another 100, or maybe go 100 and 7000 and 75. I think that David Point is.
00:43:31 Speaker 1
Right, like.
00:43:32 Speaker 1
All these changes that we’ve been expecting to see, we haven’t seen it.
00:43:36 Speaker 1
So every month, it’s like, oh is coming next month, every month instead of happiness.
00:43:41 Speaker 1
At some point you may.
00:43:42 Speaker 1
Just have to say maybe we’re in like a sustained period for a while and I have to believe it’s going up before.
00:43:47 Speaker 1
I believe it’s going to.
00:43:48 Speaker 1
Stay stable ago now.
00:43:49 Speaker 1
Well, we did see energy go down.
00:43:51 Speaker 1
Housing we are seeing now.
00:43:53 Speaker 1
Starting to contract, the number of price cuts has been surging, according to Redfin.
00:43:58 Speaker 1
So I think we’re starting, and the layoffs obviously happened two months ago.
00:44:02 Speaker 1
So don’t we think that we’re starting to see the headwinds?
00:44:05 Speaker 1
And then we were talking to a buddy of ours who’s big in the airline space.
00:44:09 Speaker 1
He said.
00:44:09 Speaker 1
Got it.
00:44:10 Speaker 1
And I think you were pointing out this statistic that Heathrow is now capping the number of.
00:44:15 Speaker 1
People could vote because if it goes crazy.
00:44:17 Speaker 1
So overloaded with traffic of passengers.
00:44:21 Speaker 1
But they today came out and said we are capping the number of passengers to 100,000 a.
00:44:26 Speaker 1
Day no more.
00:44:28 Speaker 1
And this is after the costs of those flights were skyrocketing, you know, 6-7.
00:44:33 Speaker 1
I really, I really got some attacks.
00:44:35 Speaker 1
I really would certainly go back to what Slack said before he did.
00:44:38 Speaker 1
This the nugget for me of this entire summer was what he said about his take away from the CO2 conference, right?
00:44:45 Speaker 1
Just to remind people he knows that the person said something to the effect of, Oh well, look, all these other people will be saving money and cutting jobs I intend to hire and you know, nothing has changed for me and the comment that I made.
00:44:59 Speaker 1
Well, maybe that’s the psychology of everybody.
00:45:02 Speaker 1
It’s not just the.
00:45:03 Speaker 1
CEO of a company.
00:45:04 Speaker 2
Yeah, just just to be clear.
00:45:05 Speaker 2
What coaches did is.
00:45:06 Speaker 2
They they pulled all the founders in the audience.
00:45:10 Speaker 2
The poll results showed that, on the one hand, everyone in the audience understood that we are headed for a big downturn and economic conditions and fund raising will be much tougher.
00:45:17 Speaker 2
On the other hand, all the founders of two.
00:45:19 Speaker 2
Thirds of them said they were going.
00:45:21 Speaker 2
To use this downturn.
00:45:22 Speaker 2
Or celebrate.
00:45:23 Speaker 2
Business as opposed to cut my one-on-one conversations with various founders basically are in line with that, which is it’s all, not me.
00:45:30 Speaker 2
You know, I know everybody else is going to be impacted, is gonna have to cut, but I’m going to be the.
00:45:35 Speaker 2
One exception and.
00:45:37 Speaker 2
There will be exceptions, absolutely.
00:45:38 Speaker 2
But everybody can’t be the exception.
00:45:40 Speaker 1
So I hear you know, I’m saying.
00:45:42 Speaker 1
I’m going to still buy.
00:45:43 Speaker 1
My car.
00:45:43 Speaker 1
I’m still going on my summer vacation.
00:45:45 Speaker 1
Everybody else has to make cuts.
00:45:46 Speaker 1
Well, it.
00:45:46 Speaker 1
Doesn’t matter what they say, consumers.
00:45:48 Speaker 1
Are behaving that way.
00:45:49 Speaker 1
You know, American Airlines.
00:45:51 Speaker 1
Basically put out what they where they thought they were going to be, their sources of 10%, you know, he still says. We have too much traffic. We’re.
00:45:57 Speaker 1
Going to capital.
00:45:58 Speaker 1
100 case.
00:45:59 Speaker 1
There is an article about, you know, US home prices and rents. And there were these two housing companies in the Wall Street Journal that were profiled and both of them served middle income neighborhoods in Houston. These other places they’re like.
00:46:11 Speaker 1
We’ve never done Better Business.
00:46:13 Speaker 1
And you know, there are fewer, fewer people buying homes because of mortgage rates.
00:46:16 Speaker 1
They all want to.
00:46:17 Speaker 1
Rent we, you know, our complete hubs, we have complete ball control and so.
00:46:22 Speaker 1
Where where is the stopping and the slowing down of spending it?
00:46:25 Speaker 1
Just maybe, reflexively, this thing where everybody feels like to be, you know, to have the polite dinner conversation they have to talk about how they’re pulling back, it doesn’t seem like.
00:46:34 Speaker 1
Anybody pulling off?
00:46:35 Speaker 1
1/3 of measures have not hit yet, yeah.
00:46:37 Speaker 2
Well, I think I.
00:46:38 Speaker 2
Think they are in the process of working, but it.
00:46:40 Speaker 2
Just takes a while.
00:46:41 Speaker 2
What I would say.
00:46:41 Speaker 2
Is like we are 100% going to solve this inflation problem. Why?
00:46:46 Speaker 2
Do I say that because?
00:46:48 Speaker 2
Price levels are fully within the power of the Fed they just to.
00:46:50 Speaker 2
Raise interest rates high enough.
00:46:53 Speaker 2
Paul Volcker proved.
00:46:54 Speaker 2
That in the.
00:46:55 Speaker 2
Early 1980s, he had to raise interest rates.
00:46:57 Speaker 2
As high as 20%, but he crushed.
00:47:00 Speaker 2
The inflation 1970s.
00:47:02 Speaker 2
But that’s what?
00:47:03 Speaker 2
It thought so.
00:47:04 Speaker 2
I have no.
00:47:04 Speaker 2
Doubt that the Fed could stop inflation.
00:47:06 Speaker 2
I think the question is how much pain are they after inflict how high you do race have to?
00:47:10 Speaker 2
Go and how?
00:47:11 Speaker 2
Long do we live through this.
00:47:13 Speaker 2
Sort of stationary period.
00:47:15 Speaker 2
And that’s the important thing, is we’re just.
00:47:17 Speaker 2
It doesn’t seem like we’re anywhere near.
00:47:19 Speaker 2
The end of this.
00:47:20 Speaker 1
Yet I wrote this, I looked at last week in little notes, but this is life.
00:47:24 Speaker 1
We look at the Taylor rates again and, you know, people have abandoned the Taylor rate.
00:47:28 Speaker 1
It’s not what it used to be, I guess, but you know, it’s still pretty directionally accurate, which is what is the true equilibrium interest rate.
00:47:36 Speaker 1
That allows us to basically manage and meet supply and demand together so that we have a common stable economy and that that that stable equilibrium rate is approaching 5%.
00:47:49 Speaker 1
You know, our target, the collective wisdom of the of the market believes that 3% is enough to get the job done. We’re right now at 1.5 to 1.75.
00:48:01 Speaker 1
So if there’s any number between three and five, that is the true price.
00:48:08 Speaker 1
We have a lot.
00:48:09 Speaker 1
Of work to do to get there.
00:48:13 Speaker 2
Yeah, I think it’s a really.
00:48:14 Speaker 2
Good point because the 10 year.
00:48:15 Speaker 2
T bill has been kind.
00:48:17 Speaker 2
Of floating around 3%.
00:48:18 Speaker 2
So that is the long term expectation of the interest rates that’s required to have sort of normal inflation, but what if it’s 4%?
00:48:27 Speaker 2
When it’s 5%, if that ends up being decayed, there’d be.
00:48:30 Speaker 2
A huge downside surprise to the stock market.
00:48:33 Speaker 1
Well, how would you define?
00:48:34 Speaker 1
That 10% pullback, 20% pullback from here.
00:48:38 Speaker 1
Well, you have a bunch of things this week.
00:48:39 Speaker 1
We talked about this other issue before as well, which is if you believe the stock market is fairly valued, do not to believe that prices are right.
00:48:47 Speaker 1
And that the earnings are right, right.
00:48:48 Speaker 1
So ’cause there is officially all boils down to the per price earnings ratio D.
00:48:52 Speaker 1
S&P 500.
00:48:53 Speaker 1
And I’m going to still maintain that the.
00:48:57 Speaker 1
E is wrong.
00:48:58 Speaker 1
The earnings are wrong for most of these companies, so why?
00:49:02 Speaker 1
But one is that when.
00:49:04 Speaker 1
These companies start to report their quarterly earnings starting in the next few days.
00:49:09 Speaker 1
The year over year comparison is going to be to the numbers that they posted in Q2 of 2021, which by all accounts was a blowout number while because the number before that was 2020 with her business was zero, right?
00:49:23 Speaker 1
You have these incredibly tough comps in terms of growth percentages that you have to reach, which I don’t.
00:49:31 Speaker 1
Think are achievable.
00:49:33 Speaker 1
2nd is everybody costs of making and selling things is going up, which stands to reason that unless you raise prices quickly enough, your profits.
00:49:41 Speaker 1
Will go down.
00:49:43 Speaker 1
3rd it’s not to do business outside of the United States. the US dollar has rallied so much that you actually have less income that you’re making in these other countries when we convert them and bring them back to the United States.
00:49:54 Speaker 1
Now most people look through that last issue, but the point is, if you add this all up, there is a reasonable probability that they all bikinis are raw.
00:50:04 Speaker 1
In which case?
00:50:06 Speaker 1
We have to reassess what the right scheme should be, in which case what is?
00:50:09 Speaker 1
The right PE.
00:50:10 Speaker 1
Yes, and earnings are a function of what you spend on what you make.
00:50:13 Speaker 1
So that’s why we see so many companies doing layoffs, cutting people, Microsoft, Google, everybody is now putting people.
00:50:21 Speaker 1
The applications are not their, their dates are final white collar labor, but they’re hiring in a blue collar labor faster and so, you know, we’re actually going to see a downtick in productivity.
00:50:31 Speaker 1
Right, you’re replacing a person that you know makes it sound a desk and use a computer 8 to 10 hours a day to do something.
00:50:37 Speaker 1
But you were hiring a lot of people that, you know, may get paid by the hour or make it paid, you know, fixed salary if you do the right kind of work.
00:50:45 Speaker 1
That qualifies as more contractual blue collar labor. The difference in that is a productivity difference ultimately. And just so everybody knows, for PD, use price earning ratios over time. Here’s a quick chart for you currently and this is for the S&P 500.
00:51:01 Speaker 1
We’re currently at 20 or so and.
00:51:06 Speaker 1
We have twice in our lifetime kind of hit that you know 131415 level. So we could have a 25% correction from here in the stock market if you look at the highs.
00:51:19 Speaker 1
Our recent high in December of 2020 left 38 price, earnings ratio. So we’ve fallen from 38 down to 20.
00:51:29 Speaker 1
You know, almost in half and we could further down 25% from here and that would basically not even set a new record that would just hit the last two crises we had the thing that the, the the thing that I think will work against this happening, Jason. So yeah, you’re right that the maybe it goes to 3000 or 3200.
00:51:49 Speaker 1
But if you looked again today, you know and what I mean by like the market is roughly shaking this off like the fact that the markets right now as we as we talk or you know or essentially down half a point you know the S&P is.
00:52:01 Speaker 1
Down, you know, 12 points.
00:52:04 Speaker 1
It means that they’re looking for any and all reasons to say this is a solved problem.
00:52:10 Speaker 1
Move on.
00:52:11 Speaker 1
Nothing to change.
00:52:12 Speaker 1
Now that is a psychological reaction.
00:52:15 Speaker 1
Most of that if you actually.
00:52:17 Speaker 1
I called a friend today and I said where?
00:52:19 Speaker 1
Are the.
00:52:19 Speaker 1
Flows and he said, you know, retail right now is where all the flows.
00:52:23 Speaker 1
Are, meaning it’s.
00:52:24 Speaker 1
Retail, that’s fine. During the 30th, 35th percentile of Worthing normally by which is a pretty healthy signal.
00:52:31 Speaker 1
We expect that you moved.
00:52:34 Speaker 1
So the way the market works, basically Asian buyers and sellers and you know, so to make it really, really simple, you have hedge funds as one class of buyer.
00:52:44 Speaker 1
Sure you had CPS, but they’re not.
00:52:47 Speaker 1
They’re not.
00:52:47 Speaker 1
Really being recognized?
00:52:48
Yeah, but they have.
00:52:49 Speaker 1
Fixed strategies and so you know they’re hedging their moving but whatever and then you have retail, OK.
00:52:54 Speaker 1
So it’s retail and hedge funds.
00:52:55 Speaker 1
Those are the two main pockets of where the flows come into the stock market flow and you can get a real sense of what’s happening, what the psychology of the market is if you see what those.
00:53:08 Speaker 1
And right now what we see.
00:53:10 Speaker 1
Is that hedge funds are largely on the sidelines.
00:53:13 Speaker 1
But what means?
00:53:14 Speaker 3
Is they are.
00:53:15 Speaker 1
Well, they’ve been so battered and.
00:53:17 Speaker 1
Bruised in some ways.
00:53:18 Speaker 1
I think they’re licking their wounds, but they’re mostly waiting there.
00:53:22 Speaker 1
They do not find a compelling reason.
00:53:24 Speaker 1
To buy, right?
00:53:26 Speaker 1
But they have to buy at some point right from office.
00:53:28 Speaker 1
Their business.
00:53:29 Speaker 1
Well, I guess we have to find.
00:53:31 Speaker 1
Other opportunities but their.
00:53:32 Speaker 1
Business is to make money relative to their index, and so their index gets torched.
00:53:36 Speaker 1
They doing nothing makes them look like geniuses.
00:53:39 Speaker 1
So they don’t necessarily have to buy at any point, they just need to make.
00:53:43 Speaker 1
Money in the.
00:53:44 Speaker 1
End so right now we’re in a situation where the markets are looking for a direction.
00:53:49 Speaker 1
Retail seems to think that direction should be up.
00:53:52 Speaker 1
Hedge funds don’t have an opinion or saying we’re just going to wait this thing out, OK?
00:53:57 Speaker 1
Meanwhile, the data is that fast.
00:54:00 Speaker 1
Question Mark and I think that’s the, that’s the tension we have right now in the stock market.
00:54:04 Speaker 1
Is the psychological desires for this thing to be over, meaning I think people want to hear inflation is done.
00:54:12 Speaker 1
We’re starting the recessions.
00:54:14 Speaker 1
Give us three or four quarters will be out.
00:54:16 Speaker 1
Here’s a steady state interest rate.
00:54:17 Speaker 1
Let’s go tech.
00:54:18 Speaker 1
People want to accept the reality Freebirds.
00:54:20 Speaker 1
Does that mean that we’re bouncing?
00:54:22 Speaker 1
Along the bottom for.
00:54:22 Speaker 1
The next year and then this is.
00:54:24 Speaker 1
The time or the opportunity to buy it or want to give financial advice, but what are your thoughts if hedge funds in retail or counterweighting in?
00:54:31 Speaker 1
You can.
00:54:31 Speaker 3
Their games, games.
00:54:32 Speaker 1
Use the stock market is at the bottom.
00:54:34 Speaker 1
I already bouncing along the bottom.
00:54:36 Speaker 1
Yeah, or or what would you, how would you describe the next year if you were to look at it?
00:54:39 Speaker 1
What do you think?
00:54:40 Speaker 1
Tell you guys some stories.
00:54:42 Speaker 1
I I went to a conference in March with a lot of fund managers.
00:54:47 Speaker 1
Probably managed several trillion dollars in total.
00:54:51 Speaker 1
People were like in shock and awe at that conference because they had taken such significant write downs and they were still getting written down, so all their investments.
00:55:00 Speaker 1
Were off. They were 40% from the piece. They were freaking out. Things were collapsing.
00:55:05 Speaker 1
No one was.
00:55:05 Speaker 1
Doing anything, they were all sitting on the sidelines, hanging out, waiting.
00:55:10 Speaker 1
I went to a conference lastly and so the tone and the demeanor was just like morose.
00:55:15 Speaker 1
Last week I went to a conference with a lot of managers, also probably managing trillions of dollars across the pool and.
00:55:23 Speaker 1
People were just kind of, they had accepted this new reality and they were kind of willing to look at new things and.
00:55:30 Speaker 1
You know, they were no longer engaged and trying to shore up this their portfolio and a lot of the stuff we talk about, which I think is tactical on the ground, how do we hear with our businesses and our portfolio investments that we actively work with in the private markets?
00:55:43 Speaker 1
They were much more interested in kind of starting to explore and think about new things and I hadn’t seen that three months ago.
00:55:49 Speaker 1
So that’s another positive sign in the market participant point of view.
00:55:53 Speaker 1
I think that folks have kind of call it accepted a new normal, an inflationary normal, a high volatility normal, you know, a normal of uncertainty.
00:56:04 Speaker 1
A normal of kind of recession.
00:56:06 Speaker 1
And as people have started to kind of internalize that mineral mole, I think they’re now starting to say, OK, what should my action Plan B.
00:56:14 Speaker 1
And that action plan is I’ve got trillions of dollars in capital sitting on the sidelines.
00:56:18 Speaker 1
What should I start to do?
00:56:19 Speaker 1
With it.
00:56:19 Speaker 1
So you know, my, my very, very, very anecdotal experience has been that significant market participants I think are going to start to perk their head up this quarter and start to think about doing new things.
00:56:32 Speaker 1
What that translates into in terms of, you know, stock price movements and indices, I don’t know.
00:56:37 Speaker 1
I’ve always said that there’s going to be a huge variance.
00:56:39 Speaker 1
And now comes during the State Fair.
00:56:41 Speaker 1
Here, and some industry subsectors, some types of businesses will outperform others, and so I don’t want to create generalized statements about indices.
00:56:50 Speaker 1
But I do think that capital activity is going to start to come back this quarter where people are going to start.
00:56:55 Speaker 1
To think about what?
00:56:55 Speaker 1
To do rather than pull everything out because of the massive shift.
00:56:58 Speaker 1
That’s happened.
00:56:59 Speaker 1
In the past couple of quarters, so that’s what are you as a market?
00:57:02 Speaker 1
Participant thinking you’re looking at series.
00:57:05 Speaker 1
Days maybe doing some opportunistic flat rounds.
00:57:09 Speaker 1
Are you looking at the startup market, mid stage market and saying hey, this is an opportunity, maybe I should start looking to put some money to work in the next 6 to 12 months or are you you’re still?
00:57:19 Speaker 2
Yeah, of course we’re still investing.
00:57:22 Speaker 1
In bed.
00:57:22 Speaker 2
Yes, of course.
00:57:22 Speaker 1
So as a market participant, you’re investing, what are you?
00:57:24 Speaker 2
We’re investing, but we see that the pace of dealmaking is slowed way down because founders know that valuations have gone down.
00:57:24 Speaker 1
Seeing right now.
00:57:31 Speaker 2
The fundraising environment is tougher, so last year they’re raising every nine months.
00:57:34 Speaker 2
Now they even though they should probably be raising it once.
00:57:36 Speaker 2
Every two years.
00:57:38 Speaker 2
So the pace has.
00:57:39 Speaker 2
Slowed way down.
00:57:40 Speaker 1
That’s a good thing.
00:57:40 Speaker 2
So something.
00:57:42 Speaker 1
Yeah, I think it’s healthier.
00:57:42 Speaker 3
Just it’s.
00:57:43 Speaker 2
More it’s healthier, yeah.
00:57:44 Speaker 2
It’s more normalized.
00:57:46 Speaker 2
You know last.
00:57:47 Speaker 2
Year, the companies that could raise did raise a big war chest, so I think there’s gonna be a delay.
00:57:52 Speaker 2
It’s definitely slower period.
00:57:54 Speaker 2
We’ve done a couple of growth deals recently.
00:57:56 Speaker 2
I just the fact that tiger and the other kind of crossover investors in fact they’ve pulled back way back from venture markets gives smaller firms like us an opportunity to do growth deals, so.
00:58:06 Speaker 1
How did you make the decision to invest in those companies?
00:58:10 Speaker 2
They’re both families have known for a long time with one or two guys for a while so.
00:58:14 Speaker 2
You know the.
00:58:15 Speaker 2
The opportunity arose to invest, and it was way less competitive than it would have been logic.
00:58:19 Speaker 1
This is what we call opportunistic.
00:58:21 Speaker 1
You use the firm, you have high confidence.
00:58:21 Speaker 1
And opportunistically saving money.
00:58:24 Speaker 2
So yeah, we faced and done.
00:58:26 Speaker 2
We basically done.
00:58:27 Speaker 2
Two deals in the last like four months and then?
00:58:30 Speaker 1
What we share pace, let’s say 18 months ago?
00:58:34 Speaker 2
Move all faster than that for sure.
00:58:35 Speaker 2
This is more deal deals happening, so.
00:58:39 Speaker 1
If you want to think about tail risk, where there’s some events that can massively shift the market, you know that the indices S right making no negative, and everyone pulls money out of equities or out of bonds.
00:58:51 Speaker 1
Further, there are some of those events brewing, right?
00:58:54 Speaker 1
We’ve talked about the consumer credit, whereas we talked maybe Taiwan.
00:58:59 Speaker 1
Maybe this emerging market crisis that may kind of be emerging.
00:59:04 Speaker 1
These are like little turtles putting their heads out.
00:59:06 Speaker 1
They may not connect, but there’s enough of these turtles now.
00:59:10 Speaker 1
You know, classic calling you that.
00:59:12 Speaker 1
You know there’s still reason to be wary, whereas let alone a Black Swan event which were being undefined.
00:59:16 Speaker 2
So I mean.
00:59:17 Speaker 1
Less like warranty, yeah.
00:59:19 Speaker 1
Significant impact, yeah, no known, but significant risk, right?
00:59:25 Speaker 1
And if any of them do kind of take off, you know, we’re already in a very shaky kind of period right now where we’re trying to.
00:59:31 Speaker 1
Manage inflation and recession.
00:59:33 Speaker 1
And you know, businesses are kind of raised capital and again, This is why a lot of biotech companies are trading below cash because the expectation is they’re not going to be.
00:59:41 Speaker 1
Able to raise capital.
00:59:42 Speaker 1
I mean any those all out of business so.
00:59:44 Speaker 1
Anyone who’s been caught up, boom, you know, you start to see things.
00:59:48 Speaker 1
So so I think that’s the reason people, investor portfolio managers are not.
00:59:53 Speaker 1
Going to kind of.
00:59:53 Speaker 1
Rush back into putting more money into equities.
00:59:56 Speaker 1
It’s just, you know, sitting around waiting to see how.
00:59:58 Speaker 1
Few of these things dissolve.
01:00:00 Speaker 1
You know before kind of taking, but there are companies that do not face for this room.
01:00:04 Speaker 1
They just are sitting on so much cash, they have so much revenue that.
01:00:07 Speaker 1
There’s no chance of that.
01:00:08 Speaker 1
Yeah, I’ve always said it doesn’t matter.
01:00:09 Speaker 1
He find a great business and you believe in that business over the very long run.
01:00:14 Speaker 1
You don’t need to worry about timing the markets, you.
01:00:17 Speaker 1
Put money in that business.
01:00:18 Speaker 1
As long as you get a fair valuation for it.
01:00:20 Speaker 1
Today, relative to what it should be priced at, isn’t what markets are.
01:00:23 Speaker 1
120 PE would be more than fair historian, but like whatever that, whatever that is, but if you find a great business that you think is going to compound value for you over the very long run, market cycles don’t matter.
01:00:35 Speaker 1
And long run renewal.
01:00:36 Speaker 1
Decade, yeah, call it a decade.
01:00:38 Speaker 1
And you know sacks, his business, he’s invested in user tech company, but I don’t think they’re planning to go public next year.
01:00:44 Speaker 1
He’s making an investment in a business that he considered to be a great business that can compound value but not not compound valuation, but compounds business value, meaning they can do something more valuable next year than they were doing this year.
01:00:56 Speaker 1
And continue to accrue an advantage in their business that allows them to accumulate earnings over time or ceiling revenue that ultimately translations earnings over time.
01:01:02 Speaker 3
Right.
01:01:04 Speaker 1
And there are many businesses in the public sets that operate like that, that regardless of any of these turtles popping their head out, those businesses will perform well over the next decade.
01:01:13 Speaker 1
And I think, you know, that’s.
01:01:14 Speaker 1
Always a great place to invest so.
01:01:16 Speaker 1
We basically went from D-Day Saving Private Ryan and seen you know, in the first quarter. So now people have accepted one more time and we’re not shell shocked and some people are looking for opportunities. Sumathy found an opportunity. They need to talk.
01:01:29 Speaker 1
About the dear leader this week.
01:01:31 Speaker 1
You know, I tend to agree with friedeberg.
01:01:33 Speaker 1
I mean, you find these businesses that you like and if they appeal to you and.
01:01:36 Speaker 1
You do your work.
01:01:37 Speaker 1
That’s the most important thing.
01:01:39 Speaker 1
Shouldn’t be afraid to write checks, so need software there to say and define what you mean by do their work ’cause.
01:01:45 Speaker 1
Everybody here should.
01:01:45 Speaker 1
Say that. What does?
01:01:46 Speaker 1
That mean for an investor, for somebody like yourself, what is doing?
01:01:49 Speaker 1
The working.
01:01:50 Speaker 1
It really depends on the sector.
01:01:51 Speaker 1
So for example when you know when when we were when I was trying to underwrite open door, but I really wanted to understand.
01:02:00 Speaker 1
You know what do take rates look like in all these various markets?
01:02:04 Speaker 1
So how do I think take rates will evolve here?
01:02:06 Speaker 1
How do value added services work?
01:02:07 Speaker 1
What kind of margins can you sustain?
01:02:09 Speaker 1
What are the sensitivity of different parts of the real estate economy to interest rates?
01:02:14 Speaker 1
You know, that’s an example of work when I was underwriting so far.
01:02:18 Speaker 1
You know what you’re trying to understand.
01:02:20 Speaker 1
Is you know how to bank generate settings, net interest income you know nearing.
01:02:25 Speaker 1
How does that change over time?
01:02:26 Speaker 1
How do bank charters change that?
01:02:28 Speaker 1
You know how to last rate change in times of economic expansions, which is processions having price, all of that into a fair, fair value of the business?
01:02:39 Speaker 1
It’s just a lot of really detailed diligence to understand all the facets, or as many of the facets as possible of the business that allow you to have a clear, high sense of what’s possible.
01:02:51 Speaker 1
Then there are others which are pure technology bets.
01:02:55 Speaker 1
Where you try to understand either the biology or the technology.
01:03:01 Speaker 1
So in the case of the deal that I did, you know today or?
01:03:04 Speaker 1
This past week.
01:03:05 Speaker 1
Myself, a bunch of family offices around the world.
01:03:09 Speaker 1
Some led by a great chairman, Pablo Galleta, who started a phenomenal business called World Department, which is public.
01:03:17 Speaker 1
Carlos ran.
01:03:18 Speaker 1
The bunch of folks may put in about half a billion dollars, too.
01:03:23 Speaker 1
To help advance into, you know, clinical trials, this business that’s trying to provide a solution to chronic kidney disease.
01:03:31 Speaker 1
So in that example, there is a lot of scientific diligence on what are the existing solutions, how do they work, what is the mechanism of action inside the body.
01:03:42 Speaker 1
How is this the same or difference?
01:03:44 Speaker 1
What is the early data say?
01:03:46 Speaker 1
How are the clinical trials structured and then you come to an answer.
01:03:50 Speaker 1
In this case, I decided the best workflow taking and you know.
01:03:53 Speaker 1
Like people at the name of.
01:03:55 Speaker 1
The company and what they do.
01:03:56 Speaker 1
The company is called Pro Kidney and basically the idea is that it uses your own.
01:04:02 Speaker 1
Body to help.
01:04:02 Speaker 1
Heal your kidneys if you are on the verge of chronic kidney disease or you are getting dialysis, et cetera.
01:04:07 Speaker 1
And essentially how it works is it it removes cells from your body, from your kidney actually and then it does.
01:04:16 Speaker 1
Basically puts it into centrifuge systems, specific things to it, grows and amplifies certain cell lines from your kidney and then re inject those back into your kidney and tries to improve what’s called your EGFR which is your estimated formula filtration rate which is essentially.
01:04:34 Speaker 1
The number that we can use to estimate how efficient your kidneys are and essentially when you are, you know, attached to diabetic or your partner kidney disease or kidney failure or you on dialysis, it’s because that filtration capability has failed and so all these toxins are getting pushed back.
01:04:50 Speaker 1
Into your body.
01:04:53 Speaker 1
And so, yeah, we took a, you know, half billion dollars, shot over $125 million checks.
01:04:58 Speaker 1
I hope it works.
01:04:59 Speaker 1
That’s amazing, free bird.
01:05:00 Speaker 1
We saw some satellite images this week.
01:05:02 Speaker 1
Biden, I guess, announced them.
01:05:04 Speaker 1
They looked pretty trippy.
01:05:06 Speaker 1
Explain to us what the downstream effect of what is, I think the the most clear picture we’re seeing.
01:05:14 Speaker 1
Of the cosmos ever created and what that could actually do for humanity.
01:05:19 Speaker 1
Well, there’s nothing to do with finance, but.
01:05:24 Speaker 1
We started on Monday.
01:05:25 Speaker 1
That’s all he made.
01:05:26 Speaker 1
He, they say specifically had him sharing, which I think maybe, yeah, good for him.
01:05:30 Speaker 1
Mini win or?
01:05:33 Speaker 1
He had nothing to do with this program.
01:05:36 Speaker 1
I I don’t need.
01:05:36 Speaker 1
I just hate that like the scientists and the engineers have worked on this anywhere.
01:05:39 Speaker 1
You deserve all the freaking credits.
01:05:42 Speaker 1
The James Webb Telescope is a Space Telescope, just like the Hubble, right?
01:05:46 Speaker 1
Remember the Hubble Space Telescope?
01:05:48 Speaker 1
And this is a massive improvement over the horrible.
01:05:50 Speaker 1
So imagine you’re in a boat and you’re kind of look at the bottom of the ocean.
01:05:54 Speaker 1
You take a bunch of inoculum pair of binoculars.
01:05:56 Speaker 1
You look into the ocean and try and see what’s at the bottom of the ocean.
01:05:59 Speaker 1
How hard?
01:05:59 Speaker 1
That would be, right?
01:06:00 Speaker 1
There’s all this murky stuff in the water.
01:06:02 Speaker 1
It’s going to be really hard to see it.
01:06:03 Speaker 1
The the reason that we create a Space Telescope is so that the same problem that we would have looking at a telescope through the Earth’s atmosphere doesn’t impact the light coming into the telescope.
01:06:13 Speaker 1
And so there’s so much stuff in the atmosphere, right?
01:06:15 Speaker 1
There’s miles of molecules and dirt and dust moving around.
01:06:19 Speaker 1
So by putting a telescope in space, we get rid of all that murkiness, and now we can.
01:06:23 Speaker 1
Really? Captures of light that is coming from far, far away concentrate that light onto really sensitive photodetectors. These are photo detectors that operate at nearly the coldest point in the universe -, 263 children.
01:06:39 Speaker 1
And that photodetector makes it extremely sensitive.
01:06:43 Speaker 1
And using a 20 foot wide mirror, we can capture all the lights that’s coming in concentrated onto the photodetector and read that light.
01:06:52 Speaker 1
And so why is this important?
01:06:54 Speaker 1
Why is this interesting?
01:06:55 Speaker 1
Well, people get really excited by and flip out over the cool imagery that they.
01:06:59 Speaker 1
These images, these colorful images of galaxies and stars far, far away, what we’re really doing is we’re not just looking far away, we’re looking back in time. So these, these images come to us from galaxies or 4.6 billion light years away.
01:07:13 Speaker 1
So it took €4.6 billion for that light to reach our planet, and we’re actually seeing what happened in the earlier part of the universe, and we’re seeing how these galaxies form, how they’re moving, how they interact with one another, how the plants, planets interact with one another.
01:07:28 Speaker 1
But what a lot of people miss such, I think, the most important thing to highlight as an astrophysicist when you’re looking.
01:07:34 Speaker 1
Through telescoping, rather than telescope data, you’re not looking for imagery like we looked at today.
01:07:38 Speaker 1
That’s really good to sell the story and get fighting to do a press conference.
01:07:41 Speaker 1
What they’re really looking at, a spectrograph, at a spectrograph, is, you know, it shows for every wavelength of light across some spectrum, with the intensity years of that, that amount of light.
01:07:52 Speaker 1
That that’s wavelengths of light.
01:07:53 Speaker 1
And particularly, the James Webb telescope has incredible micro shutter arrays and incredible sensitivity that allows us to go from near infrared to infrared in some visible lights.
01:08:03 Speaker 1
And look at that spectrograph.
01:08:05 Speaker 1
Why is that important?
01:08:06 Speaker 1
Because if you can capture as a spectrograph in a very high resolution way, for a son or for a planet far away, it can.
01:08:13 Speaker 1
Tell you very specifically what the movement is and what the chemical composition is of that object.
01:08:19 Speaker 1
And from that we can start to do incredible research and infer very important things about how planets form, have stars forms, how many places like Earth might be out there, how things are moving, how much mass or matter there is in universe.
01:08:34 Speaker 1
And there are two very very big questions, questionable phenomenons in astrophysics right now.
01:08:39 Speaker 1
One called dark energy, one called dark matter.
01:08:42 Speaker 1
Turns out the majority of matter in the universe is undetectable.
01:08:45 Speaker 1
And there also is this really weird energy source pushing on everything in the universe, causing the universe to accelerate its expansion.
01:08:55 Speaker 1
So the universe is expanding everything, moving away from itself, but it’s not just expanding and slowing down, it’s expanding and speeding up and so having this sort of instrument in space that allows us to capture in a very high resolution.
01:09:06 Speaker 1
Way using spectroscopy and other tools that after business is used and better map out how this is happening in different parts of the universe starts to give us a better sense and allows us to kind of improve.
01:09:17 Speaker 1
Fire and start to develop theories around what’s really going on.
01:09:21 Speaker 1
And I want to say one more thing because a lot of people think that this stuff is just so esoteric and it’s like super interesting.
01:09:26 Speaker 1
Why are we spending $10 billion in its most applied engineering? And the technologies that we’ve developed as a species started out initially as pure research with no freaking clue where it was going to go to.
01:09:38 Speaker 1
Imaging DNA penicillin you like.
01:09:41 Speaker 1
Chronic MRI machines.
01:09:43 Speaker 1
So many of these capabilities evolved from scientists just querying the universe and asking questions and gathering data.
01:09:50 Speaker 1
And all of a sudden they came across something, developed a theory, built an application of that theory, and a technology emerged that changed the course of our history as a species.
01:10:00 Speaker 1
And that’s the reason to do pure research.
01:10:02 Speaker 1
And that’s the reason it’s so important for us to put $10 billion into a program like this. We’re going to discover amazing things with this.
01:10:10 Speaker 1
And it will ultimately, hopefully, yield advances for humankind that we cannot even contemplate today, right?
01:10:15 Speaker 1
Could be understanding dark matter and dark energy is.
01:10:20 Speaker 1
And then they publish means everything in energy, right?
01:10:22 Speaker 1
They can’t think about it.
01:10:23 Speaker 1
One day there might be a capability where we say there’s a new class of matter and a new understanding of energy that we can then apply in some form of physics on earth that we could do something interesting with.
01:10:32 Speaker 1
And we have to be able to query and understand the university that here we go.
01:10:35 Speaker 1
Could we measured the matter from Uranus?
01:10:39 Speaker 1
Yeah, yeah, yeah, it’s coming.
01:10:40 Speaker 1
I mean the.
01:10:41 Speaker 1
Hubble telescope.
01:10:42 Speaker 1
Actually, correct me if I’m wrong here, he told us he.
01:10:45 Speaker 3
How much was not hurt getting hurt?
01:10:46 Speaker 1
Either of these numbers.
01:10:48 Speaker 1
How much dark matter is in Uranus?
01:10:49 Speaker 1
Come out a lot allowed.
01:10:51 Speaker 1
You’re full.
01:10:51 Speaker 1
Of it, but we now know the ending.
01:10:54 Speaker 1
Hubble told us the rate of expansion of the universe, and it also told us the age of the universe.
01:10:59 Speaker 1
And we found all these other planets told to pray Birch point about, you know, looking, you know, through the sort of muddy water.
01:11:06 Speaker 1
There’s a great visualization on the left.
01:11:09 Speaker 1
You have Hubble on the right.
01:11:10 Speaker 1
Use as labs, so if you slide this, you can just.
01:11:10
Hello beautiful.
01:11:12 Speaker 1
They like just how crystal clear and easily there are, and from my understanding we found some number of universes already that we did notice from the first images.
01:11:22 Speaker 1
By the way, I wanted to see if everyone heads up.
01:11:24 Speaker 1
This imagery looks beautiful and I’m going to print out a big warm.
01:11:27 Speaker 1
I’ll put it behind my sewing desk here, ’cause.
01:11:29 Speaker 1
I think it’s.
01:11:29 Speaker 1
Still fantastic.
01:11:30 Speaker 1
Astrophotography is one of my kind of all time.
01:11:32 Speaker 1
Your favorite forms of.
01:11:34 Speaker 1
But remember, this is imagery that was actually captured in near infrared and infrared Spectra, and then they converted it to visible light to make it look cool.
01:11:44 Speaker 1
So remember that these images, you know, that’s the this, these clouds, if you were actually there, don’t actually look just like that color.
01:11:50 Speaker 1
Yeah, it’s a very cool way to visualize the density and the spectral changes.
01:11:54 Speaker 1
Where does suppression that?
01:11:54 Speaker 1
In terms of your excitement between the new season of Doctor Who and the foundation period?
01:12:03 Speaker 1
Let me give.
01:12:03 Speaker 1
Let me, let me just give you guys.
01:12:04 Speaker 2
One more kind of you.
01:12:06 Speaker 1
Know really interesting if you start at our sun and you look at the sub super bright.
01:12:10 Speaker 1
If you go at the speed of light for four minutes, you recently or for a couple minutes here looked at or 6 minutes, or 7 wonders, look back and now the sun looks like it does in our sky.
01:12:19 Speaker 1
If you go for another couple minutes, you end up looking back from Saturn and the sun starts to look like a star, I mean.
01:12:26 Speaker 1
That’s how? How?
01:12:27 Speaker 1
Democrats now imagine continuing to go at the speed.
01:12:30 Speaker 1
Flight for another hour. You look fast. You’ll hardly be able to differentiate the sun from the Western universe. Now do that for 4.6 billion.
01:12:37 Speaker 1
Here and you’re shooting away for 4.6 billion years. Now look back. How friggin hard would it be to see anything?
01:12:43 Speaker 1
That’s the technical capability we just put into space. We’ve built a 20 foot wide mirror to concentrate the lights of photons that travel for 4.6 billion years, lost all of their density loss, all of that, you know, completely dimmed out.
01:12:57 Speaker 1
Completely diffused.
01:12:59 Speaker 1
And we’re capturing a few of them, run that concentrated way onto a detector for minutes at a time and generate this image.
01:13:06 Speaker 1
It’s really profound how technically complex this is.
01:13:10 Speaker 1
And again, that technical complexity can ultimately yield other technological tools that we could use in all sorts of industries.
01:13:17 Speaker 1
So I I just, I just.
01:13:18 Speaker 1
Want to highlight that?
01:13:19 Speaker 1
I posted it for you guys.
01:13:20 Speaker 1
It’s an incredible story, but basically this program was riddled with delays and things that weren’t working and then stayed put.
01:13:28 Speaker 1
This quiet, very ascending engineer in charge of it and he completely turned the whole thing around and it’s one of the most.
01:13:34 Speaker 1
Incredible clothes which?
01:13:35 Speaker 1
Is a human shadow.
01:13:37 Speaker 1
His name is Greg Robinson, and he turns a $10 billion a bottle into a groundbreaking scientific miss. And this is a quote from the Wall Street Journal that the quote from.
01:13:47 Speaker 1
The NASA.
01:13:49 Speaker 1
The head of NASA’s Science Mission Directorate, Thomas Zurbuchen, says it all.
01:13:55 Speaker 1
There’s a huge distance between success and failure, and only a few options that move you from one to the other, he said.
01:14:03 Speaker 1
Greg Robinson worked plus wonders that his boss called him quote, the most effective leader of Emission I have ever seen in history of NASA UN quote.
01:14:14 Speaker 1
Really incredible, this project. Yeah, the $11 billion after audiences. Yeah, and this has been going on for, I guess, 20 years now.
01:14:22 Speaker 1
This process of getting this built in 10 years of really intense building what would the next animal we’ll switch over to politics for quick second as we as.
01:14:30 Speaker 1
We wrap up here freeberg.
01:14:32 Speaker 1
What’s the net?
01:14:34 Speaker 1
Telescope, and obviously if we’ve gone Hubble to web, what the next one conceivably look like and what the timeline for that is there another one that’s going to come?
01:14:43 Speaker 1
And then what?
01:14:43 Speaker 1
Would that enable because it does feel like if we accelerate this.
01:14:47 Speaker 1
We’re going to.
01:14:48 Speaker 1
Really get a deep understanding of the universe that this seems to be accelerating our understanding correct?
01:14:54 Speaker 1
And our technology is obviously accelerating, so feels like we could, you know, send another one of these out in the next 10 years that would dwarf this one capability.
01:15:01 Speaker 1
A lot.
01:15:02 Speaker 1
Of telescopes operate at different wavelengths and they’re meant to kind of pursue different missions.
01:15:08 Speaker 1
So, you know, there are there are some telescopes that are already operational in kind of a gamma ray Spectra.
01:15:14 Speaker 1
But really there’s a we, I don’t know if we ever talked about this on this show, but one of the really interesting areas of inquiry is, is these gravitational wave detectors and there are new more advanced versions of those systems starting to come online.
01:15:28 Speaker 1
Those are not space based telescopes there and we can talk about that another time, but they’re creating.
01:15:34 Speaker 1
New methods of inquiry where we’re not capturing photons.
01:15:38 Speaker 1
Coming from far away, we’re actually capturing the waves of gravity coming from interactions as matter around the universe, and it’s a new way to kind of observe the universe.
01:15:48 Speaker 1
Those telescopes represent a new class of inquiry that was just kind, of, you know, discovered a few years ago and proven out and now there’s there’s a lot of work going.
01:15:56 Speaker 1
On in that area and Freiberg.
01:15:58 Speaker 1
That’s something you want.
01:15:59 Speaker 1
To get a shout out here.
01:15:59 Speaker 1
Just sent you guys.
01:16:00 Speaker 1
A photo of.
01:16:01 Speaker 1
A new dog I adopted last week. Her name is Daisy Wieseler, out from Virginia. Davy is one of 4000 beagles that were rescued.
01:16:04 Speaker 3
Well, it’s a huge.
01:16:12 Speaker 1
From a facility in Virginia that was shut down by.
01:16:15 Speaker 1
The DOJ this.
01:16:16 Speaker 1
Facility was investigated by PETA and the Humane Society and they basically shut this facility down.
01:16:22 Speaker 1
This is in the United States.
01:16:24 Speaker 1
We only do animal testing on beagles.
01:16:26 Speaker 1
They’re the only dogs that we do animal testing on because they can put up with pain and they have a high tolerance and a high threshold for pain.
01:16:32 Speaker 1
It’s a really awful fact.
01:16:33 Speaker 1
We need to change that.
01:16:34 Speaker 1
the United States, the FDA does not provide guidance on this, so pharma companies, pesticide companies, makeup companies very often tests on beagles.
01:16:42 Speaker 1
So this company you know, that was operating this people facilities in Virginia were shut down for, you know, ethical issues at their facility.
01:16:53 Speaker 1
And the Humane Society, so scratch control, the company called Envigo, their parent company, is publicly traded.
01:17:00 Speaker 1
I needed the fact that we test on these vehicles in this country.
01:17:02 Speaker 1
Awful. We adopted Daisy. There are 4000 vehicles like Daisy available for adoption. I’ll put some links and they throw notes here. People feel free to go and grab.
01:17:11 Speaker 1
I’m sure there’s a long list of dog is absolutely incredible.
01:17:14 Speaker 1
I think that it’s also we test on dogs in this country and I think I urge anyone that has influence with the FDA to get them to provide better guidance.
01:17:22 Speaker 1
This is not the law.
01:17:23 Speaker 1
It’s not required and they don’t provide good guidance.
01:17:26 Speaker 1
And so a lot of companies keep factor with defaults or testing on beagles when they really don’t encourage students.
01:17:31 Speaker 1
So yeah.
01:17:32 Speaker 1
Meeting question I think it’s incredibly useful to resolve.
01:17:35 Speaker 1
I hope also thousand get adopted sons.
01:17:38 Speaker 1
How should we do testing?
01:17:40 Speaker 1
I I look, I think there’s a really important at the lines.
01:17:43 Speaker 1
Here in this link today.
01:17:44 Speaker 1
So this is a good, nuanced conversation.
01:17:47 Speaker 1
We use mouse models in biology to explore solutions for communities.
01:17:51 Speaker 1
We we use primate models like this means.
01:17:54 Speaker 1
We use primers, we use dog, we use caps, we use mammals.
01:17:59 Speaker 1
There are certain things that are obviously not necessary. We don’t need to take Eagles and pour tons of Kim Kardashian’s newest makeup line in their eyes to see what happens.
01:18:08 Speaker 1
It’s not required by law and it’s not about getting some pharmaceutical drug approved.
01:18:12 Speaker 1
This is in an area that I’m, you know, I’m not going to get into the debate on exploring and resolving kind of pharmaceuticals.
01:18:19 Speaker 1
Only symptoms and things that can actually prove human disease well, I’m particularly sensitive to is when it’s not needed and when we’re taking these animals and just doing awful things.
01:18:28 Speaker 1
Then, when there’s no law that requires it, we’re not putting stuff in our bodies.
01:18:33 Speaker 1
And this isn’t about, you know, protecting humans.
01:18:35 Speaker 1
It’s really about cover your ask behavior who make up companies and pesticide companies that they don’t need.
01:18:40 Speaker 1
To be doing.
01:18:41
And that’s really.
01:18:41 Speaker 1
What I’m addressing 3999 details to go if you adopt one of these vehicles, send us a photo and we’ll share it at the end of.
01:18:48 Speaker 1
Next week.
01:18:50 Speaker 1
Thanks for letting me say that it’s.
01:18:51 Speaker 1
Really? No, I think.
01:18:52 Speaker 1
It’s super important and how we treat dogs who are connected to humans in a very special way, I think speaks volumes to us as individuals.
01:19:02 Speaker 1
Facts would you like to well on the Biden administration talk about 2022 will give us an update on Ukraine I.
01:19:07 Speaker 1
Give you the choices.
01:19:09 Speaker 2
Green. It’s like elder abuse.
01:19:12 Speaker 1
Second, can I ask you a question?
01:19:16 Speaker 1
On Canterbury, you’re trying to.
01:19:17 Speaker 2
I don’t.
01:19:17 Speaker 2
Cheer me up here, but.
01:19:19 Speaker 2
Like all I can say is.
01:19:20 Speaker 2
9.1% I don’t.
01:19:21 Speaker 2
Want to beat a dead horse at this point?
01:19:22 Speaker 1
Can I read you guys something and you can tell me?
01:19:25 Speaker 1
There would be, there’s a, there’s a group called Community to unleash prosperity.
01:19:31 Speaker 1
But two resources.
01:19:32 Speaker 1
Steven Warren, John Decker.
01:19:34 Speaker 1
This is in the Wall Street Journal article post. In the group chat, the pair studies of resumes of 68 top executive branch officials whose work shapes the economy from President Biden, Treasury Secretary.
01:19:44 Speaker 1
And they got to write how special assistance on economic policy, quote, average business experience of Biden’s appointees, which is only 2.4 years later.
01:19:56 Speaker 1
Any fresh faced 25 year olds on Wall Street has caught more private business hours. Again. I’m reading from the journal article then most of Washington’s top officials station 2% have quote virtually no business experience UN quote. And we still have Bloomberg.
01:20:12 Speaker 1
Donald Trump, cabinet official, had 13 years of experience in the private economy.
01:20:16 Speaker 1
They understand.
01:20:16 Speaker 1
Not a disaster or 63.
01:20:19 Speaker 2
Percent of Democrats want to get rid of Biden.
01:20:21 Speaker 2
They don’t want him to run again.
01:20:22 Speaker 2
I’ve never seen a president been defected on, been turned on by his own party so quickly into an administration.
01:20:29 Speaker 1
He needs to take back ownership of the Democratic Party, which means he has to take it back to the center.
01:20:34 Speaker 1
And he needs to have a wholesale replacement of the team that he works with on domestic policy.
01:20:41 Speaker 1
It’s not working.
01:20:42 Speaker 1
And Trimata was his pitch.
01:20:43 Speaker 1
We go back to normalcy.
01:20:45 Speaker 1
He was going to being, you know, more of a centrist and that’s not what we’ve gotten.
01:20:49 Speaker 1
But of course, he was handed the disastrous economy that Trump created.
01:20:53 Speaker 1
Why do you think he?
01:20:53 Speaker 1
Was handed a disastrous economy, so because of a COVID and because of the massive stimulus that we spent those settings.
01:21:01 Speaker 1
That was like.
01:21:01 Speaker 1
Uh, I mean, if Trump won a second, do you think it would be much different if Trump was running the economy with the setup was there?
01:21:07 Speaker 1
Trump probably would have spent more money, right?
01:21:09 Speaker 1
Trump wanted to spend more money.
01:21:11 Speaker 1
That’s a really good question.
01:21:12 Speaker 1
I should have to think through that.
01:21:14 Speaker 1
That’s a.
01:21:14 Speaker 1
Really good question.
01:21:15 Speaker 1
Let’s move on.
01:21:15 Speaker 2
What’s the update on Ukraine?
01:21:16 Speaker 2
There’s a really interesting chess game going on right now where the Russians are.
01:21:20 Speaker 2
Slowing the flow of gas fired.
01:21:22 Speaker 1
No, no, it’s.
01:21:22 Speaker 1
Better or not better that they shut down Nord Stream one for their annual maintenance with.
01:21:30 Speaker 1
It’s supposed to be back up by July 21st, and so the real question is what happens?
01:21:36 Speaker 1
Is put in hand, checks Europe and just takes an extra day or two to get that thing back up and going.
01:21:42 Speaker 1
It’s a.
01:21:44 Speaker 2
But I get prediction why I think the Western Alliance is going to fracture come this winter.
01:21:48 Speaker 1
Yeah, Germany is going to be freezing.
01:21:50 Speaker 1
The Germans are not going to take this well, when?
01:21:51 Speaker 1
They can’t put the heat on.
01:21:52 Speaker 2
Listen, a foreign policy based on virtue signalling is one thing when your economy is good and you’re not worried about your energy.
01:22:01 Speaker 2
The security and you can heat your homes.
01:22:05 Speaker 2
It’s another thing to have.
01:22:06 Speaker 2
A foreign policy based on virtue signaling.
01:22:08 Speaker 2
When your economy is in recession, you’ve got runaway inflation and you’re in winter and you can’t.
01:22:13 Speaker 2
Heat your homes and.
01:22:14 Speaker 1
The morals change real quick, don’t they?
01:22:16 Speaker 2
Three or four months ago, the liberal interventionists were triumphant about this Ukraine war.
01:22:22 Speaker 2
There three big predictions.
01:22:23 Speaker 2
One, that Ukraine was going to win.
01:22:25 Speaker 2
It looked like Ukraine was winning the first couple weeks, but now it looks like Russia has won the stone bass region #2 they predicted.
01:22:33 Speaker 2
That we would collapse.
01:22:34 Speaker 2
The Russian economy. With all these sanctions, the options happen. We collapsed our own economy and #3. They predicted this would strengthen the Western alliance.
01:22:42 Speaker 2
That’s the only card that hasn’t, you know, basically turned yet.
01:22:46 Speaker 2
And I think it will this, this winter.
01:22:48 Speaker 2
I think you’re going to.
01:22:48 Speaker 2
See serious opposition to the way the Vine administration has LED.
01:22:54 Speaker 2
The western response?
01:22:56 Speaker 1
I I think it’s well said that if Germany has the.
01:22:59 Speaker 1
Gas lines that Sri Lanka had, you would see a definite fracturing of how people look at it, just like they split last week and they made natural gas and nukes nuclear power a green energy.
01:23:11 Speaker 1
So yeah, their morals and ethics and their future signaling go as far as their wallets and their heat and meals go, as we all know.
01:23:19 Speaker 1
This has been another amazing episode of the All in podcast for the Baron of Beigels, the dictator himself.
01:23:26 Speaker 1
And the Rain Man, yeah, it’s definitely by.
01:23:29 Speaker 1
Now there is no chance for any of us to pass.
01:23:32 Speaker 1
Key broke on the popularity just just sealed the deal with this ******* legal thing.
01:23:35 Speaker 2
You should get it.
01:23:35 Speaker 1
Right now.
01:23:36 Speaker 1
I doubt.
01:23:36 Speaker 1
What do we do?
01:23:38 Speaker 1
I disable well next week.
01:23:39 Speaker 1
Am going to bring a dolphin that.
01:23:41 Speaker 1
I know myself.
01:23:42 Speaker 1
How about?
01:23:44 Speaker 1
You’re gonna prepare? Dolphin touched me. OK, great. That’ll that’ll substring your part as the most hated. Betsy will see you all next time on episode 88. Good luck, 88. Are they all in pocket? Bye. Bye. Love you, Betsy.
01:23:59 Speaker 2
You will let your winners live.
01:24:02 Speaker 1
Rain Man.
01:24:04 Speaker 3
Second, I said.
01:24:07 Speaker 3
We open source.
01:24:19 Speaker 1
He thought.
01:24:20 Speaker 3
No, hold her.
01:24:22 Speaker 1
It’s my dog.
01:24:34 Speaker 1
Like the sexual tension contribute to release right now.
01:24:39 Speaker 3
Nothing quite here. Free.
01:24:42 Speaker 3
This is.
01:24:44 Speaker 1
That is our back.