E98: Big tech starts making cuts, Fed incompetency, global debt, Russia/Ukraine & more

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00:00:00
Speaker 3
Hey everybody, welcome to episode 98 of the All in podcast with us again, the Sultan of Science, the Queen of Quinoa.
00:00:08
Speaker 3
Looks like you brought a trucker hat.
00:00:10
Speaker 3
What are you getting?
00:00:11
Speaker 3
Jealous of the Montclair hat?
00:00:12
Speaker 3
Or are you just not dating anyone, just going out further?
00:00:14
Speaker 1
Oh, I need a haircut.
00:00:15
Speaker 2
I’m having it.
00:00:16
Speaker 3
Like 6 weeks I’m getting my haircut.
00:00:17
Speaker 3
This afternoon it’s not going.
00:00:18
Speaker 3
To make a difference I think what Freeburg is.
00:00:20
Speaker 3
Trying to tell us is that he is the Zodiac killer.
00:00:23
Speaker 3
Second Montclair Saks is here with his $400.00 Montclair hat.
00:00:34
Speaker 3
And of course, the dictator himself.
00:00:37
Speaker 3
I asked Ron.
00:00:38
Speaker 3
I asked Ron to cut my hair so that the white patches more prominent.
00:00:42
Speaker 3
I think you did a good job.
00:00:42
Speaker 3
Do you add the white patch or?
00:00:44
Speaker 3
Coloring or is it?
00:00:45
Speaker 3
No, it’s natural, it’s just there.
00:00:47
Speaker 3
It’s just there’s no.
00:00:48
Speaker 3
Everything looks so odd if you were.
00:00:50
Speaker 3
Doing it on purpose.
00:00:51
Speaker 3
Second, I like the way it looks.
00:00:53
Speaker 1
OK.
00:00:55
Speaker 5
Jay Leno had a look.
00:00:57
Speaker 5
Like that I’m about.
00:00:58
Speaker 3
To go by the way, you know this in the fall it truffle teams and like to grow it.
00:01:02
Speaker 3
So that it’s no lazy white or white truffle season.
00:01:04
Speaker 3
Got it. I.
00:01:05
Speaker 3
Needed to have a reset cut, so then we.
00:01:07
Speaker 3
Could grow up lazy.
00:01:09
Speaker 3
For the fall for travel season.
00:01:11
Speaker 5
Listen, Sir Mark, the only thing it’s less relevant to us than your cashmere sweaters.
00:01:21
Speaker 5
Builders life.
00:01:23
Speaker 4
Raymond James.
00:01:28
Speaker 6
We open forces to the fan.
00:01:32
Speaker 1
Clean up.
00:01:35
Speaker 3
All right.
00:01:36
Speaker 3
Second, after hiring freeze and reorg at Meadow, he also said Meadow will reduce headcount for the first time in history.
00:01:44
Speaker 3
That if that count in 2023 will be smaller than it was this year. We called it the end of an era of rapid growth. This on top of Apple reporting, and I forgot.
00:01:55
Speaker 3
While Upton market from first happy forever by Apple pull back iPhone production for the support team after slower than anticipated demand.
00:02:04
Speaker 3
As I mentioned on previous episodes, this kind of done and gentlemen playoff.
00:02:08
Speaker 3
Similar to I think meta in that Apple said you have to be back in the office.
00:02:13
Speaker 3
Three days a week.
00:02:13
Speaker 3
A bunch of people quit so you don’t have to pay them.
00:02:16
Speaker 3
I guess.
00:02:17
Speaker 3
Huge packages when they quit that way.
00:02:18
Speaker 3
Google CEO Sundar Pichai also called out employees in July as you.
00:02:23
Speaker 3
Guys all read.
00:02:24
Speaker 3
And, he wrote, there are real concerns that our productivity as a whole is not where it needs to be for the head count.
00:02:29
Speaker 3
We have Google, of course, 175,000 employees, so I.
00:02:34
Speaker 3
Guess the question.
00:02:35
Speaker 3
I have.
00:02:35
Speaker 3
Here is, are these the last hours to fall term off in this pullback that we’ve seen?
00:02:40
Speaker 3
These are companies that don’t need to do the layoffs.
00:02:42
Speaker 3
They have tons of cash, so they’re obviously doing that.
00:02:44
Speaker 3
To maintain earnings, one would end.
00:02:47
Speaker 3
Maybe send a signal to employees that they need to work harder, which will read on this past week.
00:02:53
Speaker 3
Choose to drop.
00:02:54
Speaker 3
Well, definitely.
00:02:55
Speaker 3
Hear the end of an era?
00:02:56
Speaker 3
I think it is sort of like the the end of this phase of big tech where you had.
00:03:00
Speaker 3
This you know.
00:03:02
Speaker 3
Unscattered growth, where these business models were largely unassailable.
00:03:06
Speaker 3
And they?
00:03:07
Speaker 3
You know, we’re really just fighting to grow into their valuation and just generate more revenue to justify where they where they traded at.
00:03:16
Speaker 3
And now it’s this next phase where they would have to operate more like a cash cow business.
00:03:20
Speaker 3
And so, you know, it’s an acknowledgement that the growth is tapering.
00:03:26
Speaker 3
It’s an acknowledgment that they’re going to trade on a pretty tight band in terms of multiple, which means that they have to manage expenses much more tightly, which means.
00:03:34
Speaker 3
That they can’t.
00:03:35
Speaker 3
Have a really broad based.
00:03:38
Speaker 3
Surface area in which to operate an experiment got to keep the experiments small.
00:03:43
Speaker 3
You have to manage your expenses.
00:03:44
Speaker 3
You can’t have employees basically, you know.
00:03:49
Speaker 3
Run over the place.
00:03:50
Speaker 3
Management has to have a firm hand in dictating strategy and what people work on.
00:03:55
Speaker 3
So I think all of that signals that I actually, Jason, I don’t think this is the end.
00:03:59
Speaker 3
I actually think it’s the beginning because these companies, Apple, Facebook, Google.
00:04:05
Speaker 4
Maybe a?
00:04:06
Speaker 3
Little bit Microsoft.
00:04:08
Speaker 3
Are the most sensitive to valuation because they are the most widely held.
00:04:13
Speaker 3
But I think we need these are the, you know, the equivalent of US Treasury’s in the equity markets.
00:04:19
Speaker 3
The safest, most predictable state changing in times of stress.
00:04:24
Speaker 3
If you want to own big, chunky, cash flow generating businesses that you know are relatively unavailable, you couldn’t pick four better businesses than those.
00:04:32
Speaker 3
And so the.
00:04:33
Speaker 3
Not that they see enough on the horizon today.
00:04:36
Speaker 3
That we need to batten down the hatches should be a warning to everybody.
00:04:41
Speaker 3
Free budget, as simple as this.
00:04:42
Speaker 3
Without they’re.
00:04:43
Speaker 3
Moving from top line growth to bottom line.
00:04:45
Speaker 3
And they need to look at the expenses which will be on those for Silicon Valley.
00:04:49
Speaker 2
Well, I just want.
00:04:50
Speaker 3
To do now for a second because.
00:04:54
Speaker 3
I remember I started working in Silicon Valley in 2001.
00:04:58
Speaker 3
You guys were a little older than me, I think, but like, we were right at the kind of year oneofthe.com implosion and all the fallout that happened from all the funding that happened from 97 to 99.
00:05:10
Speaker 3
And 2000.
00:05:12
Speaker 3
And so from.
00:05:13
Speaker 3
O1 to O3 it was super.
00:05:15
Speaker 6
Like, just like.
00:05:15
Speaker 3
Nearly everyone is cutting costs.
00:05:17
Speaker 3
And all the money that had been raised.
00:05:19
Speaker 7
Kind of being away or companies.
00:05:22
Speaker 3
Were liquidating and you know so on.
00:05:24
Speaker 3
And then starting in 2004, which is actually when I joined Google, but there was also this big movement.
00:05:29
Speaker 3
Setting on three or.
00:05:30
Speaker 3
Four of like what people called bread 2.
00:05:33
Speaker 3
Then kind of new business models and new businesses started to emerge that seemed to have real traction.
00:05:38
Speaker 3
In real legs.
00:05:38
Speaker 3
And it was a different story.
00:05:40
Speaker 3
And a much more rational.
00:05:41
Speaker 3
Story than what you saw leading.
00:05:44
Speaker 3
Up to kind of 2000, 2001.
00:05:46
Speaker 3
And it was around that time when Google.
00:05:50
Speaker 3
Started offering these crazy benefits.
00:05:51
Speaker 3
So I do like there’s a gym and pretty food and all these amazing workplace and suddenly everyone has to do that to keep up, right?
00:05:59
Speaker 3
Facebook obviously mimic did all the other big companies benefit and then it became mainstay and they also raised compensation in the valley significantly because Google had really cracked the nut on how to extract value from the.
00:06:10
Speaker 3
And it really changed everything in Silicon Valley seems everything in tech.
00:06:14
Speaker 3
Because suddenly.
00:06:15
Speaker 1
Every tech company whether.
00:06:17
Speaker 3
You were enterprise software or hardware or Internet e-commerce sites to.
00:06:22
Speaker 3
Be competitive in the hire great talent, you.
00:06:23
Speaker 3
Have to have the same sort of.
00:06:25
Speaker 3
Environment high wages.
00:06:27
Speaker 3
Great salary would really share the value of your employment.
00:06:30
Speaker 3
Use, you know, gyms and free food and all that sort of stuff.
00:06:34
Speaker 3
So it’s the first time I think in a generation since like 2003, 2004 that we’re seeing things start to turn the other way where instead of adding more benefits at, you know, making things more attractive, giving more value to employees, we’re really seeing the recession hit, these kind of leading indicators of how things are going to be in the valley.
00:06:54
Speaker 2
And as.
00:06:55
Speaker 6
A result I.
00:06:55
Speaker 3
Think we should expect to.
00:06:56
Speaker 3
See meaning a similar impact on compensation on benefit.
00:07:01
Speaker 3
On values there and on kind.
00:07:04
Speaker 3
Of proclivity to hire.
00:07:05
Speaker 3
An opportunity to kind of jump jobs and you know opportunities that we’ve all kind of taken for granted over the past 18 years.
00:07:12
Speaker 3
And this is going to be a real shock to a lot of people that work in Texas and a lot of people that have gotten used to the idea that every company offers great benefits.
00:07:20
Speaker 3
There’s always another job to jump.
00:07:22
Speaker 3
To that will pay you more.
00:07:23
Speaker 2
And that that that.
00:07:24
Speaker 3
Engine of growth that was really driven by these big companies like Google, Facebook, Apple starts to slow.
00:07:31
Speaker 3
No one needs to compete with them anymore as much.
00:07:33
Speaker 3
And the compensation bands get tighter and the option value gets tighter and the free stuff gets tighter.
00:07:39
Speaker 3
So it’s the end of an era and I think it’s a new world for tech and.
00:07:43
Speaker 3
OK, I like sex.
00:07:44
Speaker 3
What are your thoughts here in terms of?
00:07:46
Speaker 3
Startups in relation to big Tech may be having these austerity measures kick in and refocusing on profitability.
00:07:53
Speaker 5
The big take away here is, is that nobody is faith, and it’s not just our stuff.
00:07:57
Speaker 5
To, you know, tighten their belts with these big companies too.
00:08:00
Speaker 5
And I think we’re headed for a broad based recession. That’s what it seems like. He’s not dropping those comments this week predicting a hard landing in 2023. No ones talking about software ending anymore. In fact, I think we’re all wondering who’s.
00:08:13
Speaker 5
Joining the plane? Yeah. So I didn’t. We’re headed for a pretty big recession, and I just take it a slightly different direction. I’m down here in LA, had dinner the other night with a friend who’s a showrunner.
00:08:24
Speaker 5
In Hollywood and so showrunner basically is like the head writer and they basically put together the writing team and the, you know, the content for a show and then they sold to networks.
00:08:34
Speaker 5
He said that like no one is buying anything anymore here at that last year you had, there’s tremendous, you know, activity and he’s all like the the Game of Thrones guys.
00:08:44
Speaker 5
You know DND they got like A3.
00:08:47
Speaker 5
$100 million deal from.
00:08:48
Speaker 5
Netflix and Shonda Rhimes about $3 million.
00:08:49
Speaker 3
You like the platform?
00:08:50
Speaker 3
Yes they did.
00:08:50
Speaker 5
Yeah, yeah. They got like there were massive multi, $100 million deals being made last.
00:08:55
Speaker 5
Year and that.
00:08:56
Speaker 5
Was just for like future writing deals.
00:08:57
Speaker 5
Like Netflix was even buying libraries when they did those.
00:09:00
Speaker 3
They were locking down talent for.
00:09:01
Speaker
The next year.
00:09:02
Speaker 5
So all of that has stopped.
00:09:05
Speaker 5
And the reason is that Netflix stock has been hammered right and only for they do not have the capital to do those kinds of crazy deals anymore.
00:09:14
Speaker 5
But they know that Wall Street is watching them, and so fundamentally they’re questioning whether the business model even works if they have to spend that much money on.
00:09:20
Speaker 5
Content. So then all of Netflix’s competitors basically have stopped. So this whole, like, flossing environment that you had her in Hollywood last year, that’s just over.
00:09:31
Speaker 5
The Fox has been turned off and it’s not even turned off to a trickle as this stopped.
00:09:35
Speaker 5
So he thinks that this like massive asset bubble that we had last year was just.
00:09:41
Speaker 5
In crypto and growth stock, it’s not.
00:09:44
Speaker 5
I think it actually trickled down into the real economy because Netflix was one of those growth stocks.
00:09:48
Speaker 5
The money then flowed into writers in Hollywood and then lots of other place.
00:09:53
Speaker 5
So this is one small example, right?
00:09:56
Speaker 5
That that this asset bubble wasn’t purely disrupting this can be localized to crypto.
00:10:01
Speaker 5
It affects real people in the real economy and we.
00:10:05
Speaker 5
Are just beginning to see the unwind of that.
00:10:08
Speaker 3
Yeah, that’s that’s absolutely correct.
00:10:10
Speaker 3
I think as people were more risk taking, they had free capital, they wanted to place more bets and sure, why wouldn’t you bet on the Game of Thrones writers for the next decade?
00:10:16
Speaker 3
But looking at this is going to be fantastic for startups.
00:10:20
Speaker 3
I mean, the startups I’ve worked with over the last five years have been.
00:10:23
Speaker 3
They always said, well I got a developer, but this person got three offers from you know, Facebook, Google and they’re like, how do I land this person? They got $300,000 a year offering $1,000,000 in our season.
00:10:37
Speaker 3
Basically, Founders had to say no, I can’t get that person.
00:10:40
Speaker 3
And so they got to get creative and they would hire people Ukraine yogli everywhere in between to try to find developer talent, and they have to get creative now.
00:10:48
Speaker 3
All of those people are not going to have four job offers, are going to have no job.
00:10:52
Speaker 3
What percent have gotten laid off and those crazy?
00:10:57
Speaker 3
Unrealistic out of school deals are going to be gone and this means massive consolidation of talent.
00:11:01
Speaker 3
If you look at the start up community right now, tons of companies are just going out of business, they’re packing it in.
00:11:07
Speaker 3
Those people are going to go work at the other startups that are stronger.
00:11:10
Speaker 3
So whoever makes it out of this as a start up, this is how the cycle restarts is talent.
00:11:16
Speaker 3
And consolidate on the winners would be like.
00:11:17
Speaker 3
Taking the NDA and getting rid of the bottom.
00:11:20
Speaker 3
You know, ten teams and just finding the best players.
00:11:23
Speaker 3
There, move up to the other teams and everybody else.
00:11:27
Speaker 3
You’re out.
00:11:27
Speaker 3
Of the league.
00:11:28
Speaker 6
So I I think.
00:11:29
Speaker 3
This is incredible set up for 2023 for startups to consolidate talent. So I’m actually.
00:11:35
Speaker 3
It’s another that’s, it’s another data point that, again, I said it last week, I’ll go out on a limb.
00:11:41
Speaker 3
And predict.
00:11:42
Speaker 3
My equivalent November fall predictions last while it was at the markets recommend pooped the bed.
00:11:50
Speaker 3
My prediction now is that I think the markets are bothered me in consolidating.
00:11:53
Speaker 3
Yep, and this is the time, I think, to start nibbling and start getting ready to really with the money in.
00:11:58
Speaker 3
And I think there’s enough signals every day that kind of like, tell me at least that on the margin.
00:12:04
Speaker 3
It’s time because I think the markets do reasonably good job of digesting news and then pricing the forward reality, right, like today’s price is really everything we already know and so the real gases that’s about to happen in the future and from my perspective.
00:12:19
Speaker 3
I’m actually pretty starting to get a little constructive here.
00:12:21
Speaker 3
I think that when companies like Facebook really do this and you know like if you think about it one way, the financial markets have always had this thing that we have called the Fed put, what does that mean to put is essentially the right to sell something and what market participants have always.
00:12:39
Speaker 3
Known for the last decade is that if things got very clear.
00:12:43
Speaker 3
If there was uncertainty in the market, the Federal Reserve would, and they have consistently stepped in to create a buyer of last resort.
00:12:52
Speaker 3
And so it always eliminated that last part of true, you know, supply demand balance because they would just come and say don’t worry in many ways intact.
00:13:03
Speaker 3
But the big tech companies were were that.
00:13:05
Speaker 3
You know, you could never really find what the true market clearing price for an engineer was, or what the true amount.
00:13:10
Speaker 3
Of expenses you should stand on office space or, you know, free services.
00:13:15
Speaker 3
Because you always have these companies, which was an escalating arms race.
00:13:19
Speaker 3
You know, one company had a massage.
00:13:23
Speaker 3
The next company had gyms and massage and physical therapists, and the other company would have buffers to take you to the GINS and massage and therapists.
00:13:29
Speaker 3
And the next company would have protein shakes that were freshly made.
00:13:32
Speaker 3
It only just keeps escalating and escalating because the costs didn’t matter and they want it, if nothing else, to get that marginal engineer.
00:13:43
Speaker 3
For product manager or business person to work at their company, which eliminated the risk that they would actually start something to disrupt them.
00:13:52
Speaker 3
Blocker strategies very well should have.
00:13:54
Speaker 3
The blocker strategies is very real.
00:13:55
Speaker 3
So when you take this big test put.
00:13:59
Speaker 3
Out of the market.
00:14:01
Speaker 3
You will get.
00:14:02
Speaker 3
The true price discovery and you will find out what the.
00:14:06
Speaker 3
Real price should.
00:14:07
Speaker 3
Be for this kind of an engineer, that kind of a product manager.
00:14:10
Speaker 3
You will find out what are the real expenses you need to bear in order to build a real lasting business, and you’ll be able to scroll through all of that stuff out.
00:14:18
Speaker 3
So I think it’s a really good name.
00:14:21
Speaker 3
And again, it’s.
00:14:21
Speaker 3
Yet another indication to me that I think, broadly speaking.
00:14:25
Speaker 3
The markets are now starting to stabilize.
00:14:28
Speaker 3
All the irrational behavior is starting to exit the system.
00:14:33
Speaker 3
The party is in the last few hours.
00:14:35
Speaker 3
Volume is going down, the alcohol is being taken away, people are.
00:14:39
Speaker 3
Hanging around with.
00:14:39
Speaker 3
A little bit lights are.
00:14:40
Speaker 3
Coming on till like 5 in here.
00:14:41
Speaker 3
A little too long and I think that that’s a very healthy process.
00:14:45
Speaker 3
Chronic onomy.
00:14:46
Speaker 3
And I think that that’s what’s happening right now.
00:14:48
Speaker 3
So I’m constructive on the little bullish, I’ll go, I’ll go.
00:14:50
Speaker 3
Out on a limb.
00:14:51
Speaker 3
I think you know.
00:14:52
Speaker 3
We could be 3 to 5% from.
00:14:53
Speaker 3
The rolls, but we’re more.
00:14:54
Speaker 3
Near the lowest in the highs.
00:14:56
Speaker 3
It certainly feels like the double bottoming out process.
00:14:59
Speaker 3
Was the bouncing.
00:15:00
Speaker 3
Along the bottom, yeah, who knows how hard the landing is, but I think it’s a great setup for startups and people who want to start.
00:15:07
Speaker 3
Presented yourself girly, degrading view.
00:15:10
Speaker 3
Not trended on the Twitter and just saying this is at that time to start a company and I have to agree with him like you’re going to have talent available and like who are you competing against for buying ads like there’s so many marketing opportunities available.
00:15:23
Speaker 3
The first thing to go in in a down market like this is advertising and marketing.
00:15:28
Speaker 3
And by the way, we will we will also be weird.
00:15:31
Speaker 3
What we have?
00:15:33
Speaker 3
Empirically known to be true, and it’s been it’s been pretty well proven. The investments that one makes in this period will probably be the depths for many, many years to come, because they’ll have the most asymmetric upside. And that was true in 2008 and 9 and 10.
00:15:50
Speaker 3
It was true in, you know, 2002 and three and four. Yeah. I mean, you’re talking incredible companies.
00:15:56
Speaker 3
Just in those two periods, think about risks of lasting Tesla, Huber, Google being being Gruber, Instagram, WhatsApp.
00:16:03
Speaker 3
Incredible businesses that have created tremendous value.
00:16:06
Speaker 3
And so there are businesses that have been invested in.
00:16:10
Speaker 3
For the first time in 2022 and will be invested in for the first time in two.
00:16:15
Speaker 3
1023 and.
00:16:16
Speaker 3
24 which will be the leading winners of this next phase and this next leg up?
00:16:23
Speaker 3
And so the real opportunity is to find out who those companies are and get behind.
00:16:27
Speaker 3
Them I.
00:16:27
Speaker 3
Think 100% as I recall, table fortunes are made in a down market are collected.
00:16:31
Speaker 3
In the upmarket.
00:16:32
Speaker 3
Flavored water your boss here in terms of the startup community or company builder and talent, because that that seems to be the piece that could be a silver lining on all of this mushroom that we’re going.
00:16:45
Speaker 3
Through I mean technology always marches forward, so.
00:16:50
Speaker 3
You know, there’s always progress to be, to be had and to be made.
00:16:55
Speaker 3
That’s one universal truth about it’s weird that we call it an industry, because a lot of technology companies in Silicon Valley today don’t sell technology to other companies, which is how Golden Valley started.
00:17:08
Speaker 3
Nowadays, Silicon Valley is reinventing other industries by being technology LED.
00:17:15
Speaker 3
And that is certainly so true, because there are so many.
00:17:18
Speaker 3
I hate using the term, but undisrupted industries.
00:17:22
Speaker 3
But for two efficiency gains across and technology built in Silicon Valley can can drive that.
00:17:28
Speaker 3
Now, when I say Silicon Valley, I don’t mean the physical location anymore.
00:17:31
Speaker 3
And that’s the confounding factor here, which is that there does seem to be this.
00:17:36
Speaker 3
Just produce an opportunity that’s also emerged at the same time.
00:17:41
Speaker 3
Where people are doing remote work and.
00:17:43
Speaker 3
Work from home and distributed workforce.
00:17:46
Speaker 3
Models that seems to be highly effective.
00:17:48
Speaker 3
You guys talked about it last year.
00:17:50
Speaker 3
Only ever had an office, right?
00:17:51
Speaker 3
I mean, don’t most other people work from home there?
00:17:54
Speaker 3
And I think that the success that’s been seen in software.
00:17:58
Speaker 3
Companies that have operated that model also changed is great, but aculus because not only are our wages lower and therefore the cost of operating as well or not needing a fancy expensive office in San Francisco is needed.
00:18:11
Speaker 3
But you can also access far more talent than you ever could before. You don’t just need people live in the Bay Area or New York or LA or wherever you’re operating from.
00:18:19
Speaker 3
So from a software perspective, this is an.
00:18:21
Speaker 3
Amazing time, I’ll tell.
00:18:22
Speaker 3
You there’s a flip side to this, like in life sciences.
00:18:26
Speaker 3
Real estate is more expensive than it’s ever been right now in the Bay Area.
00:18:29
Speaker 3
To get lab space is a total joke of space.
00:18:32
Speaker 3
So there’s certain segments that I think.
00:18:35
Speaker 3
Our physical needs around large space like specific, specific.
00:18:39
Speaker 3
Dude, I mean, there’s a revolution in genomics that’s totally transforming all of biology and human health and what I find so difficult.
00:18:45
Speaker 3
Type of location must sanction.
00:18:49
Speaker 3
For that, yeah, yeah.
00:18:51
Speaker 3
Is a certain kind of build out and it’s not, you know, so there’s a certain amount of square footage being seen built out a lot around this area.
00:18:57
Speaker 3
But the thing about life sciences companies is you.
00:19:01
Speaker 3
Do have to?
00:19:02
Speaker 3
Operate physically ’cause.
00:19:03
Speaker 3
You’re doing something, you’re building something physical.
00:19:06
Speaker 3
And so that is an industry.
00:19:08
Speaker 3
That continues to remain very well funded.
00:19:12
Speaker 3
And very competitive and I think.
00:19:14
Speaker 3
Like you know, there’s still tremendous value and there’s a lot of public company to invest in, not on the primary basis, but better tools, companies that are benefiting greatly from the continued demand and growth in spending in that category.
00:19:28
Speaker 3
So let’s let’s talk about competition.
00:19:30
Speaker 3
You know, lot of talk is as you know.
00:19:33
Speaker 3
These large companies.
00:19:34
Speaker 3
Pursuing many different verticals, we talked about anti competitive stuff in the car.
00:19:39
Speaker 3
Bundling in the suite of products at Microsoft, other firms.
00:19:43
Speaker 3
Now you have already seen.
00:19:46
Speaker 2
To the room.
00:19:53
Speaker 3
Of all the things she could send a letter to the.
00:19:55
Speaker 2
Do you know about?
00:19:56
Speaker 3
I guess, she said.
00:19:56
Speaker 3
Feel better about the Roomba.
00:20:06
Speaker 1
That’s not important.
00:20:08
Speaker 3
You know, all the things that are going on right now in 2022 is the room that gets on the IT gets that’s above.
00:20:14
Speaker 2
The line at.
00:20:15
Speaker 3
This point, so I mean my point factor is.
00:20:17
Speaker 5
Oh God, we’re just sleepwalking.
00:20:19
Speaker 3
Oh my God, what is going on?
00:20:19
Speaker 5
We’re free parking and 1st you know.
00:20:22
Speaker 3
Is that there’s a.
00:20:22
Speaker 5
Famous history of roll one called the Sleepwalkers, because that’s basically what it felt like is they did flip-flopped.
00:20:29
Speaker 7
Their way to World War One.
00:20:31
Speaker 5
Basically, what should have been a minor regional war, the third Balkans war, that nobody should have cared about, nobody should have cared about this transfer and then die.
00:20:40
Speaker 5
Except for, you know, the Austrians at the end.
00:20:42
Speaker 6
Good quality afternoon.
00:20:43
Speaker 5
But yeah.
00:20:43
Speaker 5
Exactly, but the whole world?
00:20:45
Speaker 5
Basically got themselves invested in this spring.
00:20:47
Speaker 5
And it’s, and this is what we’re worried about, we’ll worry about the Roomba when the administration is sleepwalking its way into the.
00:20:54
Speaker 3
Next World war?
00:20:55
Speaker 3
Well, I do not want Amazon to control my vacuum cleaner.
00:20:59
Speaker 3
I’m just gonna put it on the record.
00:21:00
Speaker 3
OK, because what happens?
00:21:02
Speaker 3
You take the gardens.
00:21:02
Speaker 3
They know which rooms are dirty.
00:21:04
Speaker 3
What happens if?
00:21:05
Speaker 3
They get a hold the room, but.
00:21:06
Speaker 3
I’ll tell you what happens.
00:21:07
Speaker 3
The next thing is.
00:21:07
Speaker 3
They’re going to.
00:21:08
Speaker 3
Go after Dyson.
00:21:09
Speaker 3
OK.
00:21:09
Speaker 3
And then once they do that.
00:21:10
Speaker 3
They’re going to put chips.
00:21:11
Speaker 3
In these things and all of a sudden they’re.
00:21:13
Speaker 3
Gonna know exactly.
00:21:14
Speaker 3
What? Jason said. What?
00:21:15
Speaker 3
Are you eat?
00:21:16
Speaker 3
Where your dumb bunnies are.
00:21:17
Speaker 3
Yeah, all of this stuff is this.
00:21:19
Speaker 3
Must be stopped in a car.
00:21:21
Speaker 3
No, but that is a point of competition.
00:21:24
Speaker 3
You you’re seeing cuts to you know, all the non core projects at these big companies.
00:21:30
Speaker 3
This is going to be great for startups, right?
00:21:32
Speaker 3
Like the idea that Facebook could focus on, you know, a fourth.
00:21:36
Speaker 3
5th, 6th doing is.
00:21:38
Speaker 3
Going to go away, yeah.
00:21:39
Speaker 5
Oh look, you’re right that.
00:21:41
Speaker 5
Great companies are built during downturns.
00:21:43
Speaker 5
PayPal is built largely during the downturn, and the sort by created Yammer was built largely during it.
00:21:49
Speaker 5
So listen, there’s going to be opportunities.
00:21:51
Speaker 5
Innovation doesn’t stop just because we’re in a recession or depression.
00:21:54
Speaker 5
But I gotta tell you, I unlike tomorrow, so I’m having a hard time finding a silver lining right now.
00:21:59
Speaker 5
Part of it is the comments that Druckenmiller just made.
00:22:03
Speaker 5
Which and he’s been right about this stuff we’ve been talking about his predictions for over a year on.
00:22:07
Speaker 3
This podcast and he inputs shorted being pound.
00:22:08
Speaker 4
He’s basically.
00:22:11
Speaker 3
For George Soros and made that feature.
00:22:12
Speaker 5
Celebrating his first.
00:22:13
Speaker 5
Thing started, but yeah.
00:22:14
Speaker 5
Since then, he’s one of the most successful macro traders in the world.
00:22:19
Speaker 5
And you.
00:22:19
Speaker 5
Know university was.
00:22:21
Speaker 5
I think deservedly so. Numbers. He said that that this was in mid 2021. He said that the Fed was engaged in a radical monetary policy because even though we were starting to get inflation, it was around 5% then that they were still engaged in this bond buying program. They’re still bought like 160 billion of bonds.
00:22:41
Speaker 5
And he’s the first one waving the alarm bell, saying what are they doing?
00:22:44
Speaker 5
But now his predictions have come true.
00:22:46
Speaker 5
I mean, we’re in the inflationary spiral and his prediction now is his central outlook is that the Dow Jones will be in the same place.
00:22:53
Speaker 5
Where it is today in 10 years and he made the point that yes, equity markets do go up in the long term, but how long term you talking about from night from roughly 1966?
00:23:02
Speaker 5
1982 the stock market was.
00:23:04
Speaker 3
Right ways.
00:23:05
Speaker 3
Japan had a lost decade as well, if it is not unprecedented.
00:23:08
Speaker 3
Yet after a national.
00:23:09
Speaker 5
Right.
00:23:10
Speaker 5
And then from the Great Depression, it took until 19.
00:23:12
Speaker 5
55 for the stock market recover.
00:23:15
Speaker 5
So in the long run, the stock market will go up.
00:23:18
Speaker 5
But it could be, you know, we could have a flat decade and this is his prediction, right?
00:23:22
Speaker 5
But he’s very smart.
00:23:24
Speaker 5
Right.
00:23:24
Speaker 5
And and then on top of that, it’s not to say that you can’t be one of the ones who make money during that period because lots of people do, but we’re.
00:23:33
Speaker 5
In for I think.
00:23:33
Speaker 5
A very tough economic period because of just this radical expansionary fiscal monetary policy that basically the Fed and.
00:23:44
Speaker 5
The administration printed last two ministrations, but especially this one printed $10 trillion.
00:23:51
Speaker 5
Over the last couple of years and they handled the flood St.
00:23:52
Speaker 3
His backtrack on that fact?
00:23:54
Speaker 3
Most of that was under, Trump continued.
00:23:56
Speaker 5
No, it’s not hot towel.
00:23:58
Speaker 3
I’ll pull it up in a second.
00:23:59
Speaker 5
But I keep going. We had binding, basically kept digging this hole. We had the $2 trillion of American rescue plan, which we didn’t need.
00:24:07
Speaker 5
We just had another 2 trillion of the infrastructure bill, the Inflation Reduction Act 500.
00:24:15
Speaker 3
Billion Priscilla student debt.
00:24:17
Speaker 5
Yeah, exactly.
00:24:18
Speaker 5
So, Jake, what are you talking about?
00:24:19
Speaker 5
And this was all after the emergency was?
00:24:21
Speaker 5
Over, but I think, I think that.
00:24:23
Speaker 3
You guys are debating the wrong thing.
00:24:24
Speaker 3
I think that wasn’t blocking Miller, I think by the way.
00:24:26
Speaker 3
Just to be clear, both trucking Miller and I.
00:24:29
Speaker 6
Can’t be right.
00:24:31
Speaker 3
Which is he’s commenting on the real world economy going into a recession.
00:24:35
Speaker 3
What I’m saying is that the stock market tends to be 9 to 12 months ahead of where we are.
00:24:39
Speaker 3
Nick Frostbite chart piece that I asked you guys to share, just to give you guys.
00:24:43
Speaker 3
A sense of what I mean by this.
00:24:44
Speaker 5
By the way, while you’re doing that tomorrow, Jason, look, I will agree with.
00:24:47
Speaker 5
You that a lot of it’s been rough.
00:24:47
Speaker 1
You did 7.
00:24:48
Speaker 3
Point I just hit 7.8 trillion so it’s.
00:24:50
Speaker 7
Listen, I wanted.
00:24:51
Speaker 3
We’ve done more than Biden, but time.
00:24:53
Speaker 5
Other thing that’s happened under Trump, you’re right, because that’s when basically COVID happened. Remember in in that Q2 of 2020 quarter, the economy shrank.
00:25:00
Speaker 5
At a 30%.
00:25:01
Speaker 5
Annualized rate everyone thought we’re going to uh.
00:25:04
Speaker 5
And that’s why they passed all this stimulus by huge bipartisan margins.
00:25:08
Speaker 3
I don’t know.
00:25:08
Speaker 3
His best point is that this is all post vaccine.
00:25:11
Speaker 5
Right.
00:25:12
Speaker 5
So, so look, and and I think we can definitely go back and second guess what happened during the Trump administration?
00:25:18
Speaker 5
And there’s an old thing that many of the worst ideas are bipartisan. And so, you know, the spending that happened in 2020 was.
00:25:25
Speaker 5
Clearly bipartisan, maybe it went way too far.
00:25:28
Speaker 5
But in the last two years, like drug said is post vaccine, post emergency and they kept spending and it’s not demonstration.
00:25:36
Speaker 5
It was the bond buying program of the Fed, where the economy was already fully back and they bought another 160 billion of bonds.
00:25:38
Speaker 4
The game.
00:25:43
Speaker 3
Yeah, I think, I think The thing is.
00:25:44
Speaker 3
That you know.
00:25:46
Speaker 3
I think Sam is approving.
00:25:49
Speaker 3
So maybe he is speaking a little bit of his book as well.
00:25:52
Speaker 3
I think it’s fair to say that both Trump and Biden did not help, but overwhelmingly I think where the where the problems fans is a central bank that was the same through both of those administrations and I think we should probably focus on them because you’re right what they did.
00:26:08
Speaker 3
Is expected and what they essentially said.
00:26:11
Speaker 3
Is that if there is volatility beyond a certain amount and people cry uncle, we will not allow the markets to sort themselves out in an orderly way.
00:26:22
Speaker 3
We will step in and that’s what you know generally just talked about the central bank put in this case the Fed and the interventions really.
00:26:31
Speaker 3
Perverted market because you don’t know what’s going on and that has huge ramifications in the real economy.
00:26:35
Speaker 3
So if you just throw up this chart, the thing that is really important here and what this chart.
00:26:41
Speaker 3
Those is essentially all of the hiking cycles that we’ve gone through since 1983, so 8387894990415 in the current one.
00:26:52
Speaker 3
And here’s what I just want to call out to you guys. What’s incredible is that other than the one in 83, so this is sort of like.
00:27:00
Speaker 3
You know.
00:27:01
Speaker 3
That last big one.
00:27:04
Speaker 3
What we’ve seen is that the stock market has a tendency.
00:27:09
Speaker 3
To immediately go to the conclusion.
00:27:12
Speaker 3
Very early on in a rate hiking cycle, and now why is that important for normal folks?
00:27:18
Speaker 3
Listening to this thing.
00:27:19
Speaker 3
While the reason why that’s important is right now we’re in month seven of a cycle, we obviously don’t know how long it’s going to be.
00:27:26
Speaker 3
But the odds are improving every day that we’re near the end versus the beginning.
00:27:34
Speaker 3
And why that’s important is, again, if you’re thinking about when to.
00:27:38
Speaker 3
You know, buy.
00:27:38
Speaker 3
Equities, for example.
00:27:40
Speaker 3
This is a really instructive guide, because what it tells you.
00:27:43
Speaker 3
Is the closer.
00:27:44
Speaker 3
We get to the end.
00:27:46
Speaker 3
Or more importantly, the closer we psychologically know that the.
00:27:50
Speaker 3
End is coming.
00:27:51
Speaker 3
We start buying and that and that’s just a broad based statement that.
00:27:55
Speaker 3
Has been true.
00:27:56
Speaker 3
So you know, what you see right now I think is really interesting which.
00:27:59
Speaker 3
Is that despite?
00:28:00
Speaker 3
All the bad.
00:28:01
Speaker 3
Information Oh my gosh, the Nord Stream pipeline blew up.
00:28:05
Speaker 3
Could it have been sabotaged?
00:28:07
Speaker 3
Wasn’t the CIO?
00:28:08
Speaker 3
Was it the Russians?
00:28:09
Speaker 3
Oh my God.
00:28:10
Speaker 3
Big tech is flowing spending and.
00:28:12
Speaker 3
Firing people? China is in a coup. Never said that rumor. Yeah. How about something more benign? You know the US, you know U SG-1 is really trading in a crazy way.
00:28:22
Speaker 3
The US euro is trading in a crazy way. the US pound is going crazy despite all of.
00:28:28
Speaker 3
But every time we trade down the market can qualities very quickly and we sort of like so I think performing a bottom.
00:28:37
Speaker 3
I do think that Stan is right. We are going to see a hard landing recession. Something will break in 2023. I hope it doesn’t. I hope it doesn’t affect a lot of normal people.
00:28:48
Speaker 3
But it’s likely but at.
00:28:49
Speaker 3
The same.
00:28:50
Speaker 3
We define hard commanding us, so I’ll tell you in a second, but at.
00:28:52
Speaker 3
The same time, I think.
00:28:53
Speaker 3
Happening is in the equity in financial markets.
00:28:57
Speaker 3
We are consolidating a bottom because we’re seeing through to that end state and this is where chief equity gets lost.
00:29:04
Speaker 3
So why is there a reason to sell now?
00:29:06
Speaker 3
I think a lot of the people that are selling the smart money sellers that I talked to are essentially right now selling to book any capital losses.
00:29:17
Speaker 3
To offset other capital gains from this year, a term that’s called tax loss harvesting.
00:29:21
Speaker 3
And so if you have given through this year, which some of us do this.
00:29:25
Speaker 3
Is a great moment.
00:29:26
Speaker 3
To just sell the losers, to book the loss, to net it out so that you can minimize your taxes for next year, that’s probably, I think.
00:29:33
Speaker 3
Where we are at?
00:29:35
Speaker 3
And I think that’s why they’re still consolidated by.
00:29:37
Speaker 3
So what is the hard landing, Jason, if I have to predict?
00:29:40
Speaker 3
I think what David said is absolutely right.
00:29:42
Speaker 3
You’re going to see unemployment get to an awkward and uncomfortable number five, 6%, I think, could be something that we see.
00:29:52
Speaker 3
And I think you’re going to see a.
00:29:53
Speaker 3
Lot more companies.
00:29:55
Speaker 3
Pull way back on their spend because demand is going to really modulate, you know, I’ll give you a crazy example.
00:30:03
Speaker 3
You know what happens to all the people in the United States that are unharmed?
00:30:06
Speaker 3
Mortgages, right?
00:30:07
Speaker 3
Adjustable rate mortgages.
00:30:09
Speaker 3
When those things means that they’re going to reset two 300 basis points higher, their monthly payments are going are going to go nuclear.
00:30:17
Speaker 3
Already happened to my brother.
00:30:18
Speaker 3
Had a family member call me about this anymore?
00:30:20
Speaker 3
Do I do so imagine carried in the UK?
00:30:24
Speaker 3
40% of all mortgage dollars are interest only arms that will reset in January to around 4%.
00:30:36
Speaker 1
40%, you imagine.
00:30:38
Speaker 3
How upside down the UK economy is going to be when people have to spend three and four times more together and then people have to go to work?
00:30:45
Speaker 3
So people who have not been participating are going to have their.
00:30:48
Speaker 3
Skills come in.
00:30:49
Speaker
And they’re going to have to.
00:30:49
Speaker 3
Go to work.
00:30:50
Speaker 3
They’re going to have to go to work, yeah.
00:30:52
Speaker 3
So Freeburg, what would you do, you think hard landing here?
00:30:55
Speaker 3
And then what do you think 2023 looks like in that regard there? Looking pretty bleak?
00:31:02
Speaker 3
Do you buy that?
00:31:03
Speaker 3
We’re bottoming out now.
00:31:06
Speaker 3
I mean, I’ll tell you.
00:31:09
Speaker 3
As well as some back in the envelope math.
00:31:12
Speaker 3
You know much better in the world.
00:31:15
Speaker 4
Take a guess.
00:31:21
Speaker 3
200.
00:31:22
Speaker 3
Couple 100 trillion.
00:31:25
Speaker 3
Currently trying about.
00:31:26
Speaker 3
300 trillion? Yeah, that’s a debt.
00:31:31
Speaker 3
Owed by governments, businesses and households and if.
00:31:37
Speaker 3
In response to the inflation which is response to fiscal stimulus, which is a.
00:31:43
Speaker 3
Response to the.
00:31:43
Speaker 3
Entire economy of the world shutting down for.
00:31:45
Speaker 5
A couple of months.
00:31:47
Speaker 3
We end up raising rates from zero to 5%.
00:31:52
Speaker 3
Best 50 million trillion dollars.
00:31:56
Speaker 6
Again we will test service.
00:31:58
Speaker 3
Which is like 18% of global GDP.
00:32:03
Speaker 1
Second, Death service alone.
00:32:08
Speaker 2
What does that mean?
00:32:08
Speaker 3
That means that for every dollar transactor.
00:32:11
Speaker 3
You not being said, no we didn’t do it, but does it mean like the code so?
00:32:13
Speaker 4
Good afternoon.
00:32:15
Speaker 3
That so I’m saying that there’s a massive.
00:32:18
Speaker 3
Please help that’s going.
00:32:19
Speaker 3
To happen, right?
00:32:20
Speaker 3
And So what ends up happening ultimately is ’cause you could run this across a local government.
00:32:25
Speaker 3
I think it means demand destruction.
00:32:27
Speaker 3
I mean appeared.
00:32:32
Speaker 3
I’ll tell you.
00:32:33
Speaker 2
So some people.
00:32:34
Speaker 3
Double but it.
00:32:35
Speaker 3
Means nothing, and I’ll tell you.
00:32:36
Speaker 3
Why do people keep more money?
00:32:39
Speaker 3
You print more money.
00:32:40
Speaker 3
I’m sorry to be the bearer of bad news, but like it is not as if we have a law or constitutional law.
00:32:46
Speaker 3
Or it’s not as if governments have collectively decided that you cannot have debt teaching GDP above.
00:32:52
Speaker 3
A certain number.
00:32:53
Speaker 3
That doesn’t happen, guys. We passed 100 under Obama and we just kept printing money. So whether we like it or not. And I’m not saying I’m a fan of this or it’s great.
00:33:02
Speaker 3
We are kicking the can down the road and what we’re doing is we’re extending the maturities.
00:33:07
Speaker 3
You know, you’ll eventually have 100 year government bonds, OK, just like you.
00:33:12
Speaker 3
Have right now.
00:33:13
Speaker 3
We know multi decade long corporate bonds.
00:33:15
Speaker 5
We missed the chance for that.
00:33:17
Speaker 5
We missed it.
00:33:19
Speaker 5
Because brilliant yellow and actually said no to that when when rates were like near 0 and we had the opportunity to refinance the US government debt with using long term rates basically long term bonds and actually with Trump who you know crazy compu suggestion look basically shift the debt to 100 year bonds and she said no, don’t worry doesn’t a dollar right so the.
00:33:39
Speaker 5
The problem is that.
00:33:41
Speaker 5
We have all the short term debt and looking.
00:33:43
Speaker 5
At the which?
00:33:44
Speaker 5
Is happened in the UK.
00:33:45
Speaker 7
When those tribes tried to prop up.
00:33:47
Speaker 5
The bond rates by basically intervening is basically an inflationary policy to fight inflation.
00:33:54
Speaker 5
The Market Street all over that and that’s when.
00:33:56
Speaker 5
They’re the pound.
00:33:57
Speaker 4
Hit, you know, new roads.
00:34:00
Speaker 3
There’s only, so you have to have a buyer of the debt.
00:34:02
Speaker 3
But I think the list trusting is really actually a microcosm of how, unfortunately, Western governments are working.
00:34:08
Speaker 3
But I think there’s a silver lining.
00:34:10
Speaker 3
Like she basically came.
00:34:11
Speaker 3
In a day after she got elected and said OK, guess what guys at the same time?
00:34:15
Speaker 3
I’m going to massively cut taxes and I’m going to give you fiscal stimulus, I’m going to cap your energy bills and I’m going to have these huge transfer payments from the government into the hands of the British citizens.
00:34:27
Speaker 3
I’m not going to comment on whether that’s right.
00:34:29
Speaker 3
Or right, right or wrong?
00:34:31
Speaker 3
But the financial markets to your point, it is absolutely hated it and within a few days you basically saw the pound get.
00:34:39
Speaker 3
But then what did you see?
00:34:41
Speaker 3
You saw the Bank of England decide that financial stability was more important than financial viability.
00:34:47
Speaker 3
Meaning the things.
00:34:48
Speaker 3
That she wanted to do were not viable.
00:34:50
Speaker 3
So you could have left the financial markets, sort this out, which would have forced the Prime Minister to basically abandoned the policy.
00:34:58
Speaker 3
But instead the.
00:34:59
Speaker 3
Building said.
00:34:59
Speaker 3
Now we’re on the unlimited buyer.
00:35:01
Speaker 3
Of UK gilts, which is the name of.
00:35:03
Speaker 3
The UK bond.
00:35:05
Speaker 3
And everything snapped back for back to where we were before her speech and before the chance for the Exchequer speech.
00:35:10
Speaker 3
And so says if nothing happened and that’s what’s so interesting, which is that even though the Bank of England by the way, in the next week or two we’re gonna raise rates 140 basis points, 140 basis points almost doubled up.
00:35:23
Speaker 3
The Fed is done the last three times.
00:35:26
Speaker 3
They’re doing both at the same time.
00:35:27
Speaker 3
They’re both raising rates.
00:35:29
Speaker 3
And are acting as a backstop for bad policy.
00:35:32
Speaker 3
And this is what’s wrong right now in the.
00:35:34
Speaker 3
World we do.
00:35:34
Speaker 3
Not have a real check and balance or so.
00:35:37
Speaker 3
My point to Freeburg is, is that I’m like emotionally in on your side, but the problem is if he smokes.
00:35:44
Speaker 3
Keep getting bailed out there that they’re just going.
00:35:46
Speaker 3
To keep doing this stuff and.
00:35:47
Speaker 3
There’s no end insight.
00:35:48
Speaker 3
But I mean the consumer doesn’t get done that.
00:35:50
Speaker 3
So that if you look at a micro basis instead of a macro basis, you’re correct.
00:35:54
Speaker 3
These governments will just bail people out even if they make bad decisions as we’re seeing.
00:35:57
Speaker 3
But then the person who’s variable interest mortgages kicked in has $500.00 less a month in savings, so they’re now not going to buy an iPhone 14.
00:36:06
Speaker 3
They’re not going to upgrade their car every six years.
00:36:10
Speaker 3
They’re going to do it every eight years.
00:36:11
Speaker 3
So the demand destruction that’s happening is going.
00:36:14
Speaker 3
To be quite.
00:36:14
Speaker 3
Severe, and that’s gonna reduce other sources monetary velocity.
00:36:18
Speaker 3
And as we record, mark my words, the Federal Reserve will intervene.
00:36:23
Speaker 3
This is why I think we’re in a bottoming process.
00:36:25
Speaker 3
I think the the bleeding edge of the smart financial actors are actually unsatisfied and feature side.
00:36:33
Speaker 3
But then they’re taking that next intellectual leap and saying, OK, well what happens when Apple basically says, hey guys, I’m gonna have to fire?
00:36:40
Speaker 3
15% of our.
00:36:40
Speaker 3
Employees, I think what happens is the Fed intervenes and I’m just using Apple as an example.
00:36:46
Speaker 3
But there there is.
00:36:47
Speaker 3
A threshold of demand destruction change.
00:36:48
Speaker 3
And I think you’re.
00:36:49
Speaker 3
Right where we have the Fed puts come back on the table and the market Cisco bonkers.
00:36:54
Speaker 3
Instead of doing 75 basis points 2/3 times.
00:36:56
Speaker 3
Directions of 50.
00:36:56
Speaker 1
No, no, no, no.
00:36:58
Speaker 3
No, no, no, no, no.
00:36:59
Speaker 3
They’re gonna, they’re gonna get.
00:37:00
Speaker 3
To 4 1/2 very quickly.
00:37:03
Speaker 3
And then this something’s gotta break like all these guys are saying I think they’re right.
00:37:07
Speaker 3
And then the set foot comes back on the table and will have will have the, you know, the meeting happening about 6 days.
00:37:15
Speaker 3
Fires will play out over six or nine months, but it’s gonna play out the exact same way and freebirds, right?
00:37:21
Speaker 3
You know, we should have capped debt at, you know, 100% of GDP or less. And Sass is right, we should have issued hundreds year bonds at zero rates when we had the chance.
00:37:29
Speaker 3
We didn’t.
00:37:30
Speaker 3
Why is it red for incompetence, fact.
00:37:32
Speaker 3
I mean there was no need to have raced this low for that long and it maybe they could just keep them at some average numbers are going down to zero or not spiking back up and just steering, you know spitting the steering wheel, you know so violently.
00:37:46
Speaker 3
Why don’t we have some basic concept of May?
00:37:49
Speaker 3
Be not having zero.
00:37:51
Speaker 3
Rates and keeping them at 2% or something reasonable, so you.
00:37:54
Speaker 3
Have some dry powder.
00:37:55
Speaker 5
Well, if you.
00:37:55
Speaker 5
Go back and listen to what the Fed said and drunk.
00:37:58
Speaker 5
Mixed this point they were all.
00:38:00
Speaker 5
Worried that they got those inflation print a few years ago.
00:38:02
Speaker 5
Whereas at 1.7% and they all started panicking about not being at 2% so for a .3% move.
00:38:10
Speaker 5
That they tried.
00:38:10
Speaker 5
To engineer, they opened the floodgates, OK?
00:38:13
Speaker 5
And that’s basically what happened.
00:38:14
Speaker 5
That’s why he’s so critical about.
00:38:16
Speaker 5
The other thing is the federal, federal offense that were going to be data-driven, but then the data came in last summer. We got that surprised 5.1% talent and they just missed this transitory.
00:38:27
Speaker 5
So they said there gonna be data-driven, but they weren’t they. They were dismissive. Now on what basis did they conclude transitory? Like what was the proof for that?
00:38:37
Speaker 5
There was no proof.
00:38:38
Speaker 5
That was a political consideration.
00:38:40
Speaker 5
The administration immediate and Yellen, big part of that, immediately reacted to basically downplay the news.
00:38:46
Speaker 5
And then they PR did.
00:38:47
Speaker 5
I mean, they didn’t want to admit that there was a problem.
00:38:48
Speaker 3
I mean, you’re right.
00:38:50
Speaker 3
From transitory to this is permanent to now.
00:38:54
Speaker 5
In six months, but during and now we are.
00:38:56
Speaker 3
Hard landing like.
00:38:57
Speaker 3
Right.
00:38:57
Speaker 3
People are not confident, are they just not confident?
00:39:00
Speaker 3
No, I think they’re really, I think they are competent, but I think that they’re a little bit fighting with one hand tied behind their back.
00:39:05
Speaker 3
I think if you had to keep the other side side, you know the problem is they have a very specific grain of data that they focus on and that data has all these weird anomalies to it.
00:39:17
Speaker 3
Like, you know, they should.
00:39:18
Speaker 3
Look at rent data.
00:39:20
Speaker 3
But the way that the rent data.
00:39:21
Speaker 3
Works is that?
00:39:22
Speaker 3
You know you’ve blended in 1/6.
00:39:25
Speaker 3
A month over six months, just like that, as an odd example.
00:39:28
Speaker 3
Or like new card data only comes in a certain way.
00:39:31
Speaker 3
So I think they’re driving.
00:39:32
Speaker 3
In the rear view mirror.
00:39:33
Speaker 5
I think there is something to that, but then just completing this which was listed, I think all politicians do this, which is when they get bad news they want.
00:39:39
Speaker 5
In it.
00:39:40
Speaker 5
And they’re gonna delay acknowledging the bad news as long as possible.
00:39:44
Speaker 5
So what happened last Monday when this inflation started?
00:39:46
Speaker 5
They all dismissed it.
00:39:47
Speaker 5
It was all a talking point.
00:39:49
Speaker 5
I mean, every single one of them.
00:39:50
Speaker 5
And here’s the crazy.
00:39:51
Speaker 5
Thing is Jay Powell.
00:39:52
Speaker 5
He’s the only Trump official who got reappointed by Biden by a huge majority.
00:39:58
Speaker 5
How do you think that happened?
00:40:00
Speaker 7
And when?
00:40:00
Speaker 5
Did it happen?
00:40:01
Speaker 5
It happened at the.
00:40:01
Speaker 5
End of May.
00:40:02
Speaker 5
Last summer, so just when this.
00:40:03
Speaker 5
Replacement print came out.
00:40:06
Speaker 5
And yellow in the administration were saying was transitory.
00:40:08
Speaker 5
That’s when powers up for Re nomination and he fretfully the only Trump appointment to basically be renominated without even a question by Biden.
00:40:17
Speaker 5
Why ’cause?
00:40:18
Speaker 5
He got on board the talking points.
00:40:20
Speaker 5
He wasn’t gonna basically talked them at that time.
00:40:23
Speaker 5
So he waited six months.
00:40:25
Speaker 5
He bought into.
00:40:25
Speaker 5
The talking points, that was 100%.
00:40:27
Speaker 5
Political 100%.
00:40:29
Speaker 3
I told you I will.
00:40:30
Speaker 3
Paul had a very compelling argument.
00:40:32
Speaker 6
I I read that there is really.
00:40:34
Speaker 6
It’s really sad, but compelling.
00:40:36
Speaker 3
Statue should be default broker bookkeeping at it.
00:40:39
Speaker 3
He basically says Rawin.
00:40:41
Speaker 3
Came to an oxide with a record and told them do.
00:40:45
Speaker 3
Not raise rates, so this idea.
00:40:46
Speaker 3
That this that is independent like.
00:40:49
Speaker 3
History now has shown us it is not like the there is massive political pressure on them.
00:40:54
Speaker
I I think.
00:40:55
Speaker 6
Well, firstly at the time.
00:40:56
Speaker 3
Your project in the.
00:40:57
Speaker 3
Rear View mirror clearly the data.
00:40:59
Speaker 3
They have is not great.
00:40:59
Speaker 3
And then all this data.
00:41:01
Speaker 3
If we want, you know, jobs and this massive amount of jobs we’ve had in this country is because of you, we have a new immigration policy. We don’t let people into this country. We take out pH D’s that we.
00:41:11
Speaker 3
And then housing, we have I.
00:41:12
Speaker 3
Buyers buying this, but to your point.
00:41:13
Speaker 3
Comma, I think a lot.
00:41:15
Speaker 2
Of the data.
00:41:15
Speaker 3
Has changed and there.
00:41:17
Speaker 3
They’ve got a bad data set to have a bad dashboard and they’re driving with bad information.
00:41:22
Speaker 3
They don’t know their direction.
00:41:23
Speaker 3
They don’t know their speed.
00:41:24
Speaker 3
Perfect if you want more fidelity on the data.
00:41:24
Speaker 4
Went through.
00:41:26
Speaker 3
You’re right if you run to a board of Directors meeting for.
00:41:28
Speaker 3
Your company and said.
00:41:30
Speaker 3
How’s the business doing?
00:41:31
Speaker 3
And the CEO says, well, you know, we’re going to have data.
00:41:34
Speaker 3
From six months ago.
00:41:36
Speaker 3
And it’s like, OK, I got that.
00:41:37
Speaker 3
But what about like last?
00:41:38
Speaker 3
Week and you would fire.
00:41:40
Speaker 3
That CEO to apply here and.
00:41:43
Speaker 3
And these things are knowable today.
00:41:45
Speaker 3
Like there are businesses, for example, that are selling billions of dollars worth of like IoT sensors here and there, energy sensors here.
00:41:53
Speaker 3
Everything is connected to the Internet.
00:41:55
Speaker 3
Everything is automated.
00:41:56
Speaker 3
Everything is running in code.
00:41:59
Speaker 3
You would think that the government would say there’s a national level directive here to get this into some kind of a system that we can use because these decisions are becoming.
00:42:08
Speaker 3
More and more important.
00:42:09
Speaker 3
I think that would be a wonderful idea and a.
00:42:11
Speaker 3
Project and what?
00:42:12
Speaker 5
Had huge value.
00:42:14
Speaker 3
A Manhattan Project for understanding the economy on.
00:42:17
Speaker 3
A very granular level.
00:42:19
Speaker 3
We invested in the story about Limpiar.
00:42:20
Speaker 3
Remember I heard the pitch where they had people around the world taking pictures of food prices at Africa, India, United States, anywhere, and then putting them into a database, normalizing him so you could know the price of tomatoes or potatoes on a global basis.
00:42:34
Speaker 3
You know and.
00:42:35
Speaker 3
Normalizing all that data they don’t seem to.
00:42:37
Speaker 3
Have this data there.
00:42:38
Speaker 3
They’re talking about August data and we thought.
00:42:40
Speaker 3
You know, we’re now in.
00:42:41
Speaker 3
October it’s really odd. Sufficient.
00:42:44
Speaker 5
I think you know our friend.
00:42:46
Speaker 5
My cursor made this point, which was that look in this last FOMC meeting the Fed raised their forecast for what?
00:42:54
Speaker 5
The neutral interest rate?
00:42:55
Speaker 5
Would be from.
00:42:56
Speaker 5
3 1/2 to 4.6%.
00:42:58
Speaker 5
So in two months they raised their forecast by over 100.
00:43:01
Speaker 5
Basis points what?
00:43:02
Speaker 5
Is that based on like is?
00:43:03
Speaker 5
There a model I assume.
00:43:05
Speaker 5
There is a model.
00:43:05
Speaker 5
I assume there’s data.
00:43:06
Speaker 5
Client is open source that why don’t they let the markets like?
00:43:10
Speaker 5
Being the model, they’re.
00:43:11
Speaker 5
Using so we have a little more predictability.
00:43:14
Speaker 5
Of course they.
00:43:14
Speaker 5
Always have the discretion to bucket or not follow it or whatever or.
00:43:17
Speaker 5
Change it but like.
00:43:19
Speaker 3
You know wouldn’t.
00:43:20
Speaker 5
That be a better approach is.
00:43:21
Speaker 5
To like, let us.
00:43:22
Speaker 5
Feed the data in the models in real time as it’s happening and then the community like like an open source project could actually like fork the model and actually create like better ones.
00:43:33
Speaker 3
Well, to your point, to your point like this, the the Fed is actually known as the gold standard of transparency.
00:43:39
Speaker 3
So the IMF has kind of like a A.
00:43:41
Speaker 3
View and how all these central?
00:43:42
Speaker 3
Banks are last week they actually excoriated.
00:43:46
Speaker 3
And this is, this hurts me to say, Canada.
00:43:51
Speaker 3
Because of their lack of transparency.
00:43:52
Speaker 3
Currently, Canada doesn’t even.
00:43:53
Speaker 3
Put out minutes.
00:43:55
Speaker 3
And so they’re like, hey, Canada, you touch like, yeah, you know.
00:43:59
Speaker 3
So Canadians are.
00:44:00
Speaker 3
I mean, the Canadian government at least spent total little virtue signalers.
00:44:04
Speaker 3
But they don’t value transparency, apparently.
00:44:07
Speaker 3
But your point is that there is a lot of capacity.
00:44:11
Speaker 3
In these things that really determine how the real world works and the impacts, individual people are going to go and get ratcheted way up and nobody really knows what to expect even though the data is there sitting in plain sight, the two things can be true.
00:44:27
Speaker 2
I think.
00:44:30
Speaker 2
The feds.
00:44:32
Speaker 3
The process of setting central bank rates by the Federal Reserve.
00:44:39
Speaker 6
Should be reset.
00:44:41
Speaker 3
I also think that it could be true that the Fed is not responsible.
00:44:46
Speaker 3
So a lot of the conditions were now facing we.
00:44:49
Speaker 3
Did have a bunch of policy decisions that the whole world got swept up in and seemed to accept AD propriate at the time when we shut.
00:44:57
Speaker 3
The global economy down.
00:44:59
Speaker 3
And there was some weird assumption.
00:45:02
Speaker 3
Or belief that fiscal policy would allow us to soft land or recover out of that.
00:45:08
Speaker 3
And at the end of the day with.
00:45:09
Speaker 3
All this fiscal.
00:45:10
Speaker 3
Policy dared, and I remember I was speaking with a.
00:45:14
Speaker 3
Marked person at the time and he said.
00:45:18
Speaker 3
All the feds going to do is they’re going to inflate everything and it’s going to take a while and everything will.
00:45:21
Speaker 3
Inflate and that way everyone will.
00:45:22
Speaker 3
Feel good for a while.
00:45:24
Speaker 3
But you can’t just stop the spigot of capital moving, goods moving, and services moving for months on end and assume that the repercussions will not actually be felt extremely harshly.
00:45:34
Speaker 3
And at some point things are going to come home to roots and.
00:45:37
Speaker 3
That is what’s happening.
00:45:38
Speaker 3
There was no winning solution for the feds or for any central banker.
00:45:44
Speaker 3
In light of the policy decisions that were made to shut the global economy down when COVID began not to argue whether or not that was appropriate, but that was simply at the statement of fact.
00:45:53
Speaker 3
I said it before.
00:45:55
Speaker 3
And I I.
00:45:55
Speaker 3
Don’t understand if you would take a very sensible point of view on this today and say, hey, let’s create a central bank and how it operates.
00:46:02
Speaker 3
You would take all the data from intuits.
00:46:04
Speaker 3
From PayPal, from Visa or MasterCard, from the Internet, you would take all of that data.
00:46:09
Speaker 3
You would let the algorithm for the AI or the software figure out what is most predictive of certain inflationary recessionary.
00:46:18
Speaker 3
Modeling and growth indicators totals and you would basically say look X percent growth, X percent inflation. Solve for what the the central bank interest rates should be and it should vary at 100th of a percent or a.
00:46:31
Speaker 3
Basis point every day.
00:46:34
Speaker 3
And every day the rate is reset and the software resets it.
00:46:37
Speaker 3
And to have, you know, some degree of human logic or oversight seems appropriate.
00:46:42
Speaker 3
But to have a decision made in quarter percent increments once every.
00:46:46
Speaker 3
Couple of weeks.
00:46:47
Speaker 3
It seems seems kind of arcane, so I think both things are true.
00:46:51
Speaker 3
the Fed isn’t necessarily fully responsible.
00:46:53
Speaker 3
We all want to point fingers.
00:46:54
Speaker 3
You know, we can point fingers at the the mania that swept over the entire world when we started our podcast and everyone was like, what the hell is going on?
00:47:04
Speaker 3
Why are we locking down the world?
00:47:06
Speaker 3
And this is nuts and it felt nuts and.
00:47:08
Speaker 3
The response may or may.
00:47:09
Speaker 3
Not have been appropriate, but at the end of.
00:47:10
Speaker 3
The day there was a cost and the cost.
00:47:13
Speaker 3
Is going to be blamed for very likely.
00:47:15
Speaker 3
A decade or more if we are able to.
00:47:16
Speaker 3
Get through it all.
00:47:17
Speaker 3
A lost decade is a possibility.
00:47:19
Speaker 3
In central density rewriting, so yeah.
00:47:21
Speaker 5
Well, I think there’s actually 2 original sins of the economic crisis or in one is lockdowns.
00:47:26
Speaker 5
You’re right, like that was a fiasco.
00:47:28
Speaker 5
It didn’t do anything to stop COVID.
00:47:30
Speaker 5
It was an economic disaster.
00:47:32
Speaker 5
And then we overreacted to lockdowns by then printing all this money both physically and dispense with monetary.
00:47:39
Speaker 6
Policy so freebirds.
00:47:40
Speaker 5
Right about that, but I think the.
00:47:42
Speaker 5
Other original sin here is the the QE and the surf, right?
00:47:46
Speaker 5
The 0 interest rate policy that began in 2008, 2009, we broke the glass in case our emergency and then it just became standard, like it was on autopilot. Why do we keep printing? Why did the government keep buying his arm?
00:47:51
Speaker 3
We we normalize it, yeah.
00:47:59
Speaker 3
The long tail event that became the meaning.
00:48:02
Speaker 3
Yeah, fine by the 3rd is a bad idea.
00:48:02
Speaker 5
The problem is that every time government.
00:48:05
Speaker 3
Mean it’s just.
00:48:06
Speaker 5
Yeah, Milton Friedman once said there’s nothing quite so permanent as a temporary government program.
00:48:10
Speaker 5
How many times do we see this?
00:48:12
Speaker 5
Every time the government supposed to do something on a one off emergency basis like voted, ends up becoming a specialized.
00:48:18
Speaker 5
We still have kids in schools in California wearing masks.
00:48:21
Speaker 5
I mean that.
00:48:21
Speaker 5
It’s the same crazy thing that people cannot get off these programs.
00:48:25
Speaker 3
The thing about syrup, which if you look back, what really happened if you think about like.
00:48:30
Speaker 3
How people live their lives.
00:48:32
Speaker 3
Every day what had happened, in our view of government and politicians, it’s really eroded since 2007, 2008, right?
00:48:40
Speaker 3
There’s huge amounts of rancor.
00:48:41
Speaker 3
Nobody gets along.
00:48:43
Speaker 3
Everything tends to happen on partisan lines.
00:48:45
Speaker 3
And the reason, I think that that was allowed to happen or that accelerated.
00:48:50
Speaker 3
Is actually because.
00:48:51
Speaker 3
Preserved because if you think about it, if you had failed policy right and the economy was completely broken, politicians would actually have to get together and try to solve the problem themselves.
00:49:02
Speaker 3
And the last time they really did that was actually in the great financial crisis if you look at TARP and if you look at how all these smart people actually had.
00:49:11
Speaker 3
To get together in a bipartisan way to.
00:49:14
Speaker 3
Figure out how do we?
00:49:14
Speaker 3
Bail out America and prevent a banking crisis.
00:49:17
Speaker 3
That was the last real effort that touched a lot of people.
00:49:21
Speaker 3
But then David, as you said at the on the heels of that we broke the glass.
00:49:25
Speaker 3
And we’ve been fighting ever since.
00:49:27
Speaker 3
And the peak of that fighting was basically Donald Trump getting elected.
00:49:31
Speaker 3
And so I think, like what it shows is that if you have these irrational central bankers that will are better willing to constantly bail people out, you will never get a high functioning government because policy is irrelevant.
00:49:44
Speaker 3
Good policy.
00:49:45
Speaker 3
Doesn’t matter, I think.
00:49:46
Speaker 4
Did work very well.
00:49:46
Speaker 3
Policy doesn’t matter if any of it goes wrong.
00:49:50
Speaker 3
The central banker.
00:49:51
Speaker 3
Will come in and deal with him when?
00:49:53
Speaker 3
The 2nd and 3rd order impact of these is can become quite acute and just for people who heard the word.
00:49:59
Speaker 3
So it’s like 3 * 0 interest rate policy, basically keeping interest rates very well.
00:50:03
Speaker 3
Very dangerous to do because you get like this, like look at the number of unemployed people.
00:50:10
Speaker 3
Per job opening and if you just look at this like ratio this is the.
00:50:13
Speaker 3
Number of jobs for unemployed person.
00:50:16
Speaker 3
It gets way out of whack.
00:50:18
Speaker 3
And then if you look at this other chart, just in terms of the total number of job openings you started, we talked about this earlier in the pod.
00:50:24
Speaker 3
Hitting eleven million to burn that off is crazy.
00:50:27
Speaker 3
Then what happens if you have too many jobs?
00:50:29
Speaker 3
Don’t let immigration and you you don’t have a functioning immigration policy.
00:50:33
Speaker 3
Well, then you get this great you know, people quitting their jobs by quitting and then.
00:50:41
Speaker 3
The boomers saw their networks go up so high because of their retirement accounts, because of the stock market boom, and because of the housing boom.
00:50:50
Speaker 3
You had all these rich parents now who are bailing out their kids who refuse to go to work, and labor participation goes from 70% down to 62%. These are the unintended consequences of slope that you know now. How do you get a generation?
00:51:02
Speaker 3
To go back to work, if their parents have, you know, a $2,000,000 home and 3 million in stocks or $1,000,000 home learning environment and that’s what they did, now they’re like, we’re going to break this, we’re going to.
00:51:14
Speaker 3
Get Google and.
00:51:15
Speaker 3
Apple, who have unlimited cash to do a rip.
00:51:19
Speaker 3
Those companies don’t need to do a lift, they’re doing it.
00:51:21
Speaker 3
Because they have no choice now.
00:51:24
Speaker 3
Because they they want to break the economy so hard. Boomers have 71 trillion in assets of the March.
00:51:29
Speaker 3
I mean, the wealth transfer doesn’t occur between recent generations is great.
00:51:33
Speaker 3
Why would any Umm millennial with a boomer parents even great work if they’ve got a million years?
00:51:38
Speaker 3
Payments of $71 trillion in assets.
00:51:41
Speaker 3
Yeah, that’s the number I have here since.
00:51:43
Speaker 3
An entire turn of global GDP in savings, that’s about one seventh of the world total assets.
00:51:49
Speaker 3
It’s just a lot of locked up.
00:51:52
Speaker 3
And this monetary policy was done by Boomers 70 trillion.
00:51:57
Speaker 3
Controlled by 76.4 million people. Yeah. So if you want to really talk about the, you know, the rich in a global context, the rich are very specifically US boomers.
00:52:09
Speaker 3
Yeah, that’s one seventh of the world, one seventh of the world dot that is controlled by 76 million people. How much of it is their homes?
00:52:19
Speaker 3
I mean, they were, they were at Woodstock.
00:52:21
Speaker 3
They, you know, they lived the best life in the best times.
00:52:23
Speaker 3
They enjoyed the most of the peace dividend in the 80s and the 90s and the 2000s. They are the ones that control everything.
00:52:34
Speaker 3
It’s pretty crazy.
00:52:37
Speaker 3
I think it’s less like Jeff Bezos and Gates and.
00:52:40
Speaker 2
Musk it’s boomers that.
00:52:43
Speaker 1
If you want.
00:52:44
Speaker 3
To go and really zoom out, get it right.
00:52:46
Speaker 3
It is boomers.
00:52:47
Speaker 3
It’s 1% of the global population that controls one seventh.
00:52:51
Speaker 6
Of the global wealth.
00:52:53
Speaker 3
And they’re all in US. Boomers hides in plain sight.
00:52:56
Speaker 3
US boomers 31.
00:52:58
Speaker 3
Well, once the in housing prices decline in the stock market declines, that numbers gonna shift and that really is what’s fundamentally happening with the fiscal policy and the effect that’s happening today.
00:53:07
Speaker 3
In having today.
00:53:08
Speaker 3
Which is a redistribution of that value because we’re basically deflating all those assets now.
00:53:14
Speaker 3
It’s deeply we’re going to deflate stocks.
00:53:15
Speaker 3
Is office and we’re going.
00:53:17
Speaker 6
To deflate real estate act.
00:53:19
Speaker 3
I mean, if you just do the math on that back in the envelope, these boomers are worth doing.
00:53:23
Speaker 3
$1,000,000 each.
00:53:24
Speaker 3
But think about that like every.
00:53:26
Speaker 3
Boomer is worth 9.
00:53:27
Speaker 3
100K and learning something in that room. Don’t point your mood. I mean, it’s bonkers.
00:53:32
Speaker 3
That’s the average.
00:53:35
Speaker 3
Speak about how much work they have blockers YouTube.
00:53:40
Speaker 3
No more jacks.
00:53:43
Speaker 6
There’s an.
00:53:43
Speaker 3
Accident with the worst we have the we, we.
00:53:45
Speaker 3
Had like we got.
00:53:46
Speaker 3
Really shafted.
00:53:46
Speaker 3
It’s like, you know, we grew.
00:53:47
Speaker 3
Up in flannel.
00:53:48
Speaker 3
We we also Alanis Morissette.
00:53:50
Speaker 3
Alanis Morissette.
00:53:54
Speaker 3
Smashing pumpkins.
00:53:57
Speaker 3
93 was probably the best year ever Smashing Pumpkins.
00:54:00
Speaker 3
Never did it for me.
00:54:01
Speaker 3
Billy Corgan voice.
00:54:02
Speaker 3
Is always around, yeah.
00:54:04
Speaker 3
Angry Lord Rage Against the Machine, we go quick.
00:54:06
Speaker 3
Shout out for Coolio.
00:54:08
Speaker 3
To ask, everybody passed.
00:54:11
Speaker 6
We’re here for you.
00:54:12
Speaker 6
Yeah, I.
00:54:12
Speaker 4
Mean it was.
00:54:13
Speaker 3
Really sad the guy was how old is?
00:54:14
Speaker 3
He why you?
00:54:15
Speaker 7
Were you a big fan of cuz?
00:54:20
Speaker 3
He’s Coolio story from the pod when he said gangsters paradise, I feel you.
00:54:25
Speaker
Yeah, then when?
00:54:26
Speaker 3
I saw miss doctors birthday last year.
00:54:28
Speaker 3
I was like, dude, I love Korea.
00:54:31
Speaker 3
I mean, I cannot tell you a big fan.
00:54:33
Speaker 3
I am.
00:54:33
Speaker 3
What was the one you said he?
00:54:34
Speaker 3
Said I feel you, I said.
00:54:36
Speaker 3
I appreciate you in his ear.
00:54:37
Speaker 6
I do appreciate you.
00:54:40
Speaker 3
We wiped out for the birthday.
00:54:42
Speaker 3
They yeah, they stopped you on the car from the plane for the for the house.
00:54:47
Speaker 2
We get to.
00:54:47
Speaker 1
The house and you know.
00:54:48
Speaker 3
We’re all waiting, of course.
00:54:49
Speaker 3
Taxes late.
00:54:50
Speaker 3
2 1/2 hours his own party rolling.
00:54:52
Speaker 3
Around starving.
00:54:53
Speaker 3
But then we go into the party and then.
00:54:55
Speaker 5
They have like cool show.
00:54:57
Speaker 2
Up so they’re like.
00:54:59
Speaker 1
Sitting down to.
00:54:59
Speaker 3
Dinner for two.
00:55:01
Speaker 3
All the sudden pop comes out of the blue.
00:55:03
Speaker 3
Or, Coolio, I lose my skin.
00:55:05
Speaker 3
I run.
00:55:06
Speaker 1
Up on the Pickles, then.
00:55:06
Speaker 7
Yeah, yeah, horrible.
00:55:08
Speaker 3
So yes, boy girl, clear.
00:55:10
Speaker 3
Like, it’s like high school jam.
00:55:11
Speaker 3
I mean, that’s like in the car cruising.
00:55:14
Speaker 3
And at this point I’m like 7 tequila watermelon.
00:55:18
Speaker 3
Oh my God.
00:55:29
Speaker 3
South Africa.
00:55:31
Speaker 3
Coolio comes up start high, fiving me and hugging.
00:55:34
Speaker 2
Me and I’m like, Oh my God, this is true.
00:55:38
Speaker 2
He’s like, how do you need this space is.
00:55:39
Speaker 3
Right next to my face.
00:55:40
Speaker 3
I didn’t know what this is.
00:55:42
Speaker 5
And I like.
00:55:47
Speaker 3
I love you.
00:55:57
Speaker 7
Oh my God.
00:56:00
Speaker 7
Oh my God, I.
00:56:01
Speaker 5
Think I saw free virtual panties on stage 2.
00:56:04
Speaker 3
Second was better. Nerd. Unbelievable.
00:56:05
Speaker 1
Oh God, I.
00:56:07
Speaker 2
Don’t know what to say?
00:56:10
Speaker 2
Is it really you don’t like this day?
00:56:13
Speaker 3
Yeah, my team, my my team and a TV that had a cameo made for me.
00:56:18
Speaker 3
That glorious entering.
00:56:19
Speaker 3
It was super heartfelt and also tax posted it on the Internet.
00:56:23
Speaker 1
I think right.
00:56:24
Speaker 4
That point.
00:56:24
Speaker 3
Yeah, we created it and it was, I don’t know, man, it.
00:56:28
Speaker 2
Was a he was a he was actually.
00:56:29
Speaker 3
A super nice guy, great guy, and it was super sad.
00:56:35
Speaker 7
It’s something that will go, bro.
00:56:38
Speaker 7
I’m out here on the golf course thinking about you.
00:56:42
Speaker 7
I appreciate you, man.
00:56:44
Speaker 7
So I want to.
00:56:44
Speaker 7
Wish you a very, very, very happy birthday, man.
00:56:48
Speaker 7
You tell me.
00:56:49
Speaker 7
I want you to drink, girl.
00:56:51
Speaker 7
Go to the smoke guard.
00:56:53
Speaker 7
I want you.
00:56:53
Speaker 7
To eat good, I.
00:56:54
Speaker 7
Want to have some fun though?
00:56:56
Speaker 7
Go big, do it right.
00:57:00
Speaker 7
You’re gay.
00:57:00
Speaker 7
Happy birthday man, from Coolio.
00:57:02
Speaker 7
Shocking Blue Man.
00:57:04
Speaker 3
Well, all these.
00:57:04
Speaker 6
At your side.
00:57:04
Speaker 3
Stories are coming out now and not your experience was not unique.
00:57:08
Speaker 3
He touched everybody he met, literally.
00:57:11
Speaker 1
You could always try.
00:57:11
Speaker 3
He twisted her like genuine, very kind like, you know, he’s a real quickly and.
00:57:17
Speaker 3
Like you.
00:57:17
Speaker 3
Know and and like.
00:57:18
Speaker 3
Wanted to ask about you.
00:57:20
Speaker 3
Like, I could have been a politician, if you.
00:57:22
Speaker
Didn’t become.
00:57:24
Speaker 2
He’s a superstar.
00:57:25
Speaker 3
And I found.
00:57:26
Speaker 3
Kenite looked incredible. He looked like he was 25. I mean, singing this. We went to the college.
00:57:33
Speaker 3
Has met him.
00:57:34
Speaker 3
He went there like, you know, frat house.
00:57:37
Speaker 3
He cooked him dinner and then he got a guitar out with him and he stand gangster paradise with him and he like orchestrated it with the crowd, singing whatever he was.
00:57:47
Speaker 2
Is it a smart video?
00:57:49
Speaker 3
From Dublin on the bar singing, can I just say something to it so I I give.
00:57:53
Speaker 3
Him, the message.
00:57:56
Speaker 3
Before, yeah, before.
00:57:58
Speaker 3
But like, you know.
00:57:59
Speaker 1
Perhaps, yeah.
00:58:00
Speaker 3
Like there, there, there are these incredible drugs.
00:58:04
Speaker 3
I just want to call out health as well.
00:58:07
Speaker 3
It’s Lipitor, for example, or press core or these statins are out looking for you.
00:58:12
Speaker 3
There’s this next generation kind of drug called the PCSK 9 inhibitor.
00:58:16
Speaker 3
Which essentially is affectively gene therapy that’s modeled after.
00:58:21
Speaker 3
This very specific group.
00:58:22
Speaker 3
Of folks in the Nordics, I believe who actually have affectively immunity against heart disease.
00:58:27
Speaker 3
And so it’s taking 20 years to refine this fraud, but this drug is a.
00:58:30
Speaker 3
Wonder drug in?
00:58:31
Speaker 3
Hiding out.
00:58:31
Speaker 3
There are versions of it now that are injectable.
00:58:34
Speaker 3
You know, once every.
00:58:34
Speaker 3
Six months or whatever.
00:58:36
Speaker 3
So go and ask your doctor if you’re not a statin stuff works for you. Look at the PCSK 9 inhibitors. And then separately, after you’re 45 or so, you should get a teaching angiogram because these things are really important for, you know, a heart flow.
00:58:53
Speaker 3
Where they actually inject the dyes, they characterize all your veins, they give you a couch and score.
00:59:00
Speaker 3
May not prevent this, but at least if it’s if it’s something cardiac related, you can get to the bottom of it and and it’s a knowable thing.
00:59:06
Speaker 3
Nowadays, yeah, rest in power to our friend and.
00:59:12
Speaker 3
Yeah, take care of yourself to your health.
00:59:14
Speaker 3
And Speaking of health, shout out to Gwyneth Paltrow.
00:59:17
Speaker 3
Japal who?
00:59:20
Speaker 3
In her group newsletter pointed out that she loves the orange pod and has to be honest.
00:59:27
Speaker 3
She’s obsessed with the personality.
00:59:28
Speaker 7
Is a little bit.
00:59:30
Speaker 3
Anybody want a handicap out?
00:59:40
Speaker 3
Wanted if you want to live in help out for a.
00:59:41
Speaker 3
Meal the best thing to eat.
00:59:43
Speaker 5
Is a little dark chocolate.
00:59:46
Speaker 3
You get your dark chocolate from group.
00:59:47
Speaker 3
Do you have group dark chocolate?
00:59:50
Speaker 3
I was trying to make a story where I had the dark chocolate love.
00:59:52
Speaker 3
Saying this I.
00:59:53
Speaker 3
Am her favorite personality, you *.
00:59:56
Speaker 3
So you’re handicapping that you’re her favorite?
00:59:58
Speaker 3
Which starts with the personality.
01:00:00
Speaker 3
Floral I’m gonna, I’m gonna.
01:00:01
Speaker 3
Where did he rank her besties I?
01:00:02
Speaker 3
Need to know I’m.
01:00:04
Speaker 3
Gonna rank as friebert.
01:00:06
Speaker 3
Oh really? You think?
01:00:08
Speaker 3
That makes that’s on, yeah, OK.
01:00:10
Speaker 3
Then mymenu.
01:00:12
Speaker 3
OK, I’ll take it the fact that.
01:00:15
Speaker 3
Apparent culture even understands that who we are is winning my bucksaw. I’ll be #4 on her list, but qipao? If you could rank the basking in your next newsletter, that would be appreciated.
01:00:25
Speaker 3
Second statue.
01:00:33
Speaker 3
So I I saw.
01:00:34
Speaker 3
You build the piece you want your.
01:00:35
Speaker 3
Red meat should be 13.
01:00:37
Speaker 5
Yeah, yeah.
01:00:38
Speaker 3
All right, here’s a tiger.
01:00:38
Speaker 5
Well, I mean, I think we we.
01:00:40
Speaker 5
Need a Ukraine update because, I mean, we’re talking about all the reasons.
01:00:44
Speaker 5
That there could be a silver lining or the markets bottomed.
01:00:46
Speaker 5
Out, I don’t think.
01:00:47
Speaker 5
You can know for sure it’s the markets are going to bottom out unless you know that there’s going to be successful resolution of this Ukraine war at least a non escalation of it and all the things that have happened in the last couple weeks have been on the road towards escalation exactly so.
01:01:01
Speaker 3
Last 48 hours.
01:01:03
Speaker 5
In the last.
01:01:04
Speaker 5
Like just few days you’ve had some risky thing that they want to be admitted to NATO. You’ve got Putin basically an excellent or saved in Annex the Donbass and somebody we don’t know who, but according to Radak, suchorsky use the Polish Foreign Minister. You think the US?
01:01:20
Speaker 5
Somebody blew up the NRD pipeline, So what is the complement involved?
01:01:24
Speaker 3
Which war did?
01:01:25
Speaker 3
It was blown up in one or two.
01:01:27
Speaker 5
It is the word one, so it’s the one that was actually like working.
01:01:31
Speaker 7
What is the?
01:01:32
Speaker 5
Common denominator of all these things?
01:01:34
Speaker 5
They’re all eliminating key elements of what a peace deal would look like.
01:01:38
Speaker 5
So everyone understands that a peace deal would require Zelensky to give up on data.
01:01:44
Speaker 5
It would require Putin to make some compromises, likely in the gone back.
01:01:50
Speaker 5
And it would require the sanctions be lifted and the energy flows to be.
01:01:54
Speaker 5
Turned back on well.
01:01:56
Speaker 5
So now those things basically have been removed from the table, or at least because that’s what’s happening.
01:02:01
Speaker 5
So I don’t see how you’re going to get.
01:02:03
Speaker 5
A peace deal?
01:02:04
Speaker 5
Now and so if you remove all the off ramps, what’s left escalation?
01:02:10
Speaker 1
Well, yeah.
01:02:10
Speaker 3
So basically the patient will keep escalating.
01:02:12
Speaker 3
I thought you wrote a good piece in the American Conservative Short America overland on Ukraine.
01:02:16
Speaker 3
If you haven’t read it, it is.
01:02:18
Speaker 3
80% of rehash of what we’ve talked about here for the last year, but there’s 20% new in it I think and.
01:02:25
Speaker 3
I thought what was interesting in terms of new stuff you put in a piece and it’s a good summary of you know poker strategy versus what’s going on here is that we’ve already proven, you know if you did want to prove that Russia is not a threat with the exception of their nuclear, we now have proven they’re really not going to be able to do a domino and go into.
01:02:45
Speaker 3
All these different countries.
01:02:46
Speaker 3
With the exception of obviously the threat of nuclear power, so I thought that that was fair.
01:02:50
Speaker 5
Well, what I was doing was, yeah, what I really respond to in that piece is the assertion by the media that Putin is bluffing.
01:02:50
Speaker 3
For that point.
01:02:57
Speaker 2
How do they know?
01:02:59
Speaker 5
Yeah, how do they know that?
01:03:00
Speaker 5
Like, you know, I think all of us understand poker pretty well and none of us ever would have.
01:03:06
Speaker 5
The confidence to.
01:03:07
Speaker 5
Assert that we know exactly what cards our opponent holds in any given hand and how exactly they’ll play them.
01:03:15
Speaker 5
What do we do?
01:03:16
Speaker 5
What is smart players do we put our opponent?
01:03:18
Speaker 5
On a range A.
01:03:20
Speaker 5
Range of possible hands of possibilities and.
01:03:23
Speaker 5
Then we evaluate.
01:03:24
Speaker 5
What did their previous actions tell us?
01:03:26
Speaker 5
What story are they telling through their previous actions when?
01:03:29
Speaker 5
What story has?
01:03:31
Speaker 5
Put in jelling.
01:03:32
Speaker 5
This was not a guy who blasts.
01:03:34
Speaker 5
In my opinion, or at least, that is not discouraged by this date.
01:03:36
Speaker 3
Do you think there’s a chance he would pop up a tactical nuke?
01:03:39
Speaker 3
It’s a non zero chance obviously.
01:03:40
Speaker 5
I this is that if his life is on the line, he is incentivized to use every relative proposal to try and prevent his violent overthrow.
01:03:50
Speaker 3
His life isn’t on the line here.
01:03:51
Speaker 3
He can’t even.
01:03:52
Speaker 6
Take it back out, yeah, but where is this?
01:03:53
Speaker 6
Pretty hard?
01:03:54
Speaker 5
If there’s no.
01:03:55
Speaker 4
Right.
01:03:55
Speaker 5
I think they, you know.
01:03:56
Speaker 3
I’m going to stick with.
01:03:57
Speaker 3
My original prediction that we wanted to.
01:04:00
Speaker 3
Ankle prudent.
01:04:01
Speaker 3
We wanted to prove he didn’t have, you know, as much strength as he did and we wanted to exhaust his resources.
01:04:05
Speaker 3
So we could finally.
01:04:08
Speaker 3
Basically, get him out of office at some point so didn’t regime change via exhausting him and I think it seems to have worked.
01:04:14
Speaker 3
We have exhausted now.
01:04:15
Speaker 5
It’s really great you agree with me.
01:04:19
Speaker 3
You have exhausted his.
01:04:21
Speaker 3
I mean, he’s proven he.
01:04:22
Speaker 3
Can’t fight a ground war, right?
01:04:23
Speaker 3
I mean that.
01:04:23
Speaker 3
That’s a pretty.
01:04:24
Speaker 5
No, he’s escalating now.
01:04:26
Speaker 5
She’s a spray.
01:04:26
Speaker 5
You said she’s gonna roll over.
01:04:28
Speaker 5
She got her role.
01:04:28
Speaker 3
What is that?
01:04:28
Speaker 5
Instead of Christ.
01:04:29
Speaker 3
I think he.
01:04:30
Speaker 3
But I think what we’ve proven, haven’t we, is that he can’t fight a ground war effectively.
01:04:35
Speaker 3
He doesn’t have the army he doesn’t have.
01:04:37
Speaker 3
The weapons compared to the left and he’s been exhausted, you know, and I think he he spent now the only thing he has left is what you’re talking about is the nuclear option.
01:04:46
Speaker 1
Hello, honey.
01:04:46
Speaker 5
Literally no, no.
01:04:47
Speaker 5
Well, no.
01:04:48
Speaker 5
There’s there’s more intermediate options.
01:04:49
Speaker 5
First of all, he’s this calls for the the mobilization of tears.
01:04:53
Speaker 5
Thousand more troops.
01:04:54
Speaker 5
So that’s step one.
01:04:54
Speaker 3
At that gun fun.
01:04:56
Speaker 3
People aren’t even in country.
01:04:56
Speaker 2
One second. Yeah, exactly.
01:04:58
Speaker 5
Look, there’s gonna be very high tax.
01:04:59
Speaker 3
Not going well for him.
01:05:00
Speaker 5
On the left hand.
01:05:00
Speaker 5
Side there’s gonna be very high cost on.
01:05:01
Speaker 3
Yeah, not going well for us.
01:05:02
Speaker 5
The right hand side, I would not assume that means that there’s something in it.
01:05:07
Speaker 5
Still really quick.
01:05:07
Speaker 3
What I’m saying is so you see.
01:05:08
Speaker 3
Even with this from you know.
01:05:10
Speaker 3
The conscription.
01:05:11
Speaker 3
He’s doing this draft, he’s doing forced draft.
01:05:13
Speaker 3
I mean he will kind of redundant, but this construction is draft.
01:05:17
Speaker 3
Whatever you want to call it has proven that he doesn’t even have to have the.
01:05:20
Speaker 3
Standing inside his own country.
01:05:22
Speaker 3
People are leaving, they’re breaking.
01:05:24
Speaker 3
They wouldn’t know how to break their arms like it’s.
01:05:26
Speaker 3
Pretty dark I think.
01:05:27
Speaker 5
Think about The Simpsons there.
01:05:28
Speaker 5
Just like the media was saying that he’s definitely block.
01:05:30
Speaker 5
So what I’m saying is we cannot know that he’s definitely block.
01:05:34
Speaker 3
No, I believe that.
01:05:34
Speaker 5
With the United States of America is blessed with being the most safe and secure country in the world and really in human history.
01:05:42
Speaker 5
And the history is full of humans constantly being at war and teach others.
01:05:46
Speaker 5
So that is a really valuable thing that we have.
01:05:49
Speaker 5
Why are we so secure?
01:05:50
Speaker 5
We’re surrounded by organic oceans.
01:05:51
Speaker 3
Section radical filters.
01:05:53
Speaker 5
We have these.
01:05:53
Speaker 5
Gigantic boats. In addition, thanks to the wisdom of the Monroe Doctrine, for 200 years we have prevented any great powers from getting a foothold in the Western Hemisphere.
01:06:02
Speaker 5
We are completely dominant here and no one could ever stage invasion United States.
01:06:06
Speaker 5
We only have one vulnerability judge.
01:06:08
Speaker 5
One I subbed. That’s really it. So what are we doing? We’re basically engaging in a proxy war with the person in the world who has the most ICBM’s and we are basically putting ourselves or respiratory pathogen.
01:06:23
Speaker 3
This would be like if Achilles.
01:06:25
Speaker 5
Had gone in.
01:06:25
Speaker 5
Front of the walls of Troy and basically taken off his.
01:06:28
Speaker 5
Armor and stuck his foot in the air and Arnold Bullseye around his his deal that.
01:06:33
Speaker 3
I’ll pick you up for the other side.
01:06:33
Speaker 6
Is what we’re.
01:06:34
Speaker 5
Doing nothing in the world.
01:06:35
Speaker 3
But then it works where?
01:06:35
Speaker 5
Why would we do that?
01:06:36
Speaker 5
Why don’t?
01:06:37
Speaker 2
We do that.
01:06:38
Speaker 3
If they are the last.
01:06:39
Speaker 3
Will forever, and they already Achilles heel if we can get those guys.
01:06:43
Speaker 5
They’re not the last threat.
01:06:44
Speaker 5
They’re not the last threat.
01:06:46
Speaker 5
We’re never going to be out of threats, OK?
01:06:48
Speaker 3
We got two venture wants the proxy bands, but anyway it looks like they were in the end game now.
01:06:52
Speaker 3
What do you think happens here?
01:06:53
Speaker 5
We’re not in the end game, we’re on a.
01:06:55
Speaker 5
Passport escalation because all the offers have.
01:06:57
Speaker 5
Been removed. That’s my point.
01:06:59
Speaker 5
And instead of saying instead of.
01:07:00
Speaker 5
Trying to find a diplomatic solution.
01:07:02
Speaker 5
We first of all we keep removing offers and then we we brightly disregard the threat to ourselves by saying he must be bluffing.
01:07:10
Speaker 1
This is incredibly.
01:07:11
Speaker 5
Stupid because better buses ask here.
01:07:12
Speaker 6
Did we conclude? Thanks today.
01:07:13
Speaker 5
Hold on a second.
01:07:14
Speaker 5
The better question to ask is what’s in it for us?
01:07:17
Speaker 5
What’s in it for the United States of America?
01:07:19
Speaker 5
Where is the vital interests that compels us to risk our security?
01:07:24
Speaker 5
There isn’t one this Kallenbach, region horn.
01:07:27
Speaker 5
This Donbass region is the France scored land of this situation.
01:07:31
Speaker 5
It is not historically important to us.
01:07:33
Speaker 5
We have invested in it all this importance.
01:07:37
Speaker 5
And we are potentially turning a regional war into a World War.
01:07:41
Speaker 5
We are sleepwalking towards this.
01:07:43
Speaker 5
Unless somebody finds an off ramp, we are escalating our way into a much larger conflict.
01:07:47
Speaker 5
That is my point.
01:07:49
Speaker 5
And I don’t see how anyone, I don’t see anyone should reenter the markets with this geopolitical risk.
01:07:53
Speaker 5
Hanging over our heads.
01:07:54
Speaker 3
Yeah, this is kind of like what I spent a few weeks ago and.
01:07:57
Speaker 3
JP Morgan put.
01:07:59
Speaker 3
Out a error report today saying that they were shifting from doing, you know, call it roughly positive.
01:08:06
Speaker 3
Sort of like to mock point earlier about being a little bit constructed in.
01:08:09
Speaker 3
The markets right now and.
01:08:10
Speaker 3
Coming in and finding opportunities to buy.
01:08:14
Speaker 3
Realizing that the sum of the portfolio of tail.
01:08:18
Speaker 2
Risks right now.
01:08:20
Speaker 3
You know, outweighs the upside that may arise from finding these low priced opportunities in the market.
01:08:24
Speaker 3
And that seems to be the prevailing market sentiment right now is that there are too many of these moments that while each one of them is low probability, the impact is of such high severity that the aggregate value is expensive.
01:08:40
Speaker 3
Now your expected loss of all of them.
01:08:42
Speaker 3
Is actually quite significant and that is heavily weighing on the market.
01:08:45
Speaker 3
And so to to Mark Point I think and to the question earlier about market conditions 1 catalyst, so upside in the market while there is fiscal strain and economic strain and gross training, there is also the geopolitical strength in the market.
01:08:58
Speaker 3
If one or more of these things starts to resolve, I think that wait starts to come out.
01:09:02
Speaker 3
The markets and you can see me.
01:09:03
Speaker 5
Oh yeah.
01:09:04
Speaker 6
Move up right.
01:09:04
Speaker 5
Look, I can see the market taking off like a rocket if Ukraine gets resolved.
01:09:05
Speaker 3
Now by way and then.
01:09:08
Speaker 3
And I’ll give it.
01:09:08
Speaker 5
You’re right, it’s all flat.
01:09:09
Speaker 5
Tail risk that about 20 pounds.
01:09:10
Speaker 3
Yeah, I think that can potentially be nice.
01:09:14
Speaker 3
The political motivation here, which is that enough people like chamath and you set making the calls to your representatives, pointing out a string.
01:09:23
Speaker 3
The market is because of the tension in the region right now that maybe there is some path to resolution that becomes more active rather than passive because that’s this may be a little controversial.
01:09:34
Speaker 3
So we can talk about it, but I think that the markets would have reacted much, much more negatively to a nuclear incident three months ago.
01:09:45
Speaker 3
Then now and may not even react as much as we may think it.
01:09:49
Speaker 3
Would premature now.
01:09:52
Speaker 5
But what do you mean by nuclear inference?
01:09:55
Speaker 5
Made a new goes off or.
01:09:56
Speaker 5
Just reflect you’re saying if.
01:09:57
Speaker 3
Putin blows up in New York.
01:09:59
Speaker 3
The markets may not react that.
01:10:00
Speaker 3
Much I think that the markets are.
01:10:05
Speaker 3
Ringfencing Russian planning risk in terms of currency instability, but that’s sort.
01:10:13
Speaker 3
Of now gone away.
01:10:15
Speaker 3
We’ve ringfenced the energy risk because it looks.
01:10:19
Speaker 3
Like energy reserves in Europe are actually can be pretty meaningful.
01:10:22
Speaker 3
They’re going to spend whatever it takes.
01:10:24
Speaker 3
So all of the 2nd and 3rd order effects, it would be a humanitarian crisis, which would be horrendous, OK?
01:10:31
Speaker 3
But the markets don’t, whether we like it or not, react to humanitarian crises.
01:10:36
Speaker 3
They react to the second and third order economic impacts.
01:10:40
Speaker 3
And if you actually try to think about what the second and third over economic impacts are, you’re seeing many of those things gets called.
01:10:49
Speaker 3
And So what it would be, it would be a highly isolating effect.
01:10:52
Speaker 3
It would be a humanitarian atrocity.
01:10:55
Speaker 3
He would be completely cornered from a from ruled by perspective.
01:11:02
Speaker 3
The the, the monetary and fiscal implications of that may not be as meaningfully disruptive today as.
01:11:09
Speaker 3
They would have been three months ago, that’s what I’m saying.
01:11:13
Speaker 5
Well, we actually clarify.
01:11:15
Speaker 5
I like Freebirds analysis for those, the fat tail recipes.
01:11:17
Speaker 5
I’m not saying it’s likely that this conflict goes nuclear, but I don’t need there to be a high likelihood in order for me to be very concerned about it because of how disastrous an outcome that would be so if you’re doing an expected value analysis.
01:11:32
Speaker 5
It’s really hard to analyze the expected value or negative value of a of a low probability disastrous event, right?
01:11:40
Speaker 5
That’s the classic flat tail risk.
01:11:42
Speaker 5
I do think that if the markets think they have priced in the effectiveness war, but then I think that’s an argument for a lot of downside to this market.
01:11:51
Speaker 5
Because it seems to me that we’re on the one way Ratchet here.
01:11:54
Speaker 5
All the off ramps for us, the bapes for a diplomatic solution has been systematically taken away, and all that’s left are potential aspirations.
01:12:04
Speaker 3
So no, I hear you, but how did those translate those escalations to outside of those two countries and into economic terms?
01:12:11
Speaker 5
The rest of the world.
01:12:12
Speaker 5
Oh, my gosh.
01:12:12
Speaker 5
Well, I mean, if the war spreads here, I’ll give you.
01:12:14
Speaker 5
A couple of scenarios I mean.
01:12:17
Speaker 5
Well, here’s one I think we’re just assuming that China is going to stay out of it.
01:12:20
Speaker 5
Imagine if you’re trying to endure watching what’s happening and you’re worried that actually Russia could lose this war so badly that it emboldens Hawks in America who want to target China next year, or basically on this global struggle against.
01:12:37
Speaker 5
But obviously you’re gonna look at that and go wait.
01:12:39
Speaker 5
A second, is it really in our?
01:12:40
Speaker 5
Trust for Putin and Russia to be completely toppled by this global struggle against autocracy.
01:12:48
Speaker 5
It seems to me they could enter the Russian side not militarily, but it jumps to support.
01:12:53
Speaker 5
So they would have an incentive again not to lose an ally and then by the same token, I think the Russians.
01:13:00
Speaker 5
Could lash out.
01:13:01
Speaker 5
I don’t think we’re gonna get nuclear right away, but I think they could pull it broadly.
01:13:05
Speaker 5
I mean, don’t you think that in the past year, well, when you’re in the Chechen war when Russia was losing, it is rubbled broadly and they basically doubled, so the ground?
01:13:06
Speaker 3
It’s all that is expected.
01:13:15
Speaker 7
So he doesn’t do.
01:13:16
Speaker 5
Anything like that yet?
01:13:17
Speaker 5
But if he’s facing defeat, isn’t that something that would be on the aspatore ladder is to basically start leveling?
01:13:25
Speaker 5
Ukrainian cities perform he infrastructure also, and then what is the response to the West?
01:13:26
Speaker 3
Again, I expect.
01:13:30
Speaker
Yeah, I know. I.
01:13:31
Speaker 5
Know, Wesley said. You know.
01:13:32
Speaker 5
What? That’s not acceptable.
01:13:33
Speaker 5
So I agree.
01:13:34
Speaker 3
No, I I like.
01:13:35
Speaker 3
I’m not debating how bad all of these things are.
01:13:37
Speaker 3
I’m just.
01:13:38
Speaker 3
Asking the question.
01:13:39
Speaker 3
What are the 2nd and 3rd order economic impacts?
01:13:42
Speaker 3
Because the market doesn’t reflect human atrocities.
01:13:46
Speaker 3
We may want it to, but it just doesn’t do a good job of it.
01:13:49
Speaker 3
It does do a reasonable job of reflecting a discounted set of events in the future related to economic events and impacts, and all I’m saying is that, you know the most obvious.
01:13:59
Speaker 3
Impacts of this war have been to currencies, to commodities, into energy, and the world has had six or seven months to re route what they needed to roughly solve a large percentage of those problems.
01:14:14
Speaker 3
It doesn’t take the fact that this is a.
01:14:16
Speaker 3
Bad war, and it should end.
01:14:18
Speaker 3
I’m not seeing any of them.
01:14:19
Speaker 5
Right, right.
01:14:19
Speaker 5
No look you make.
01:14:20
Speaker 5
You make a good point, which is that lets the market discounts cash flow.
01:14:23
Speaker 5
So how did the cash flows get impacted?
01:14:26
Speaker 1
You really write that?
01:14:27
Speaker 5
Valuation multiples have gotten close to correction.
01:14:31
Speaker 5
But I think.
01:14:32
Speaker 5
The thing that we don’t really know is what earnings and profits and revenues are gonna look like next year.
01:14:36
Speaker 5
And part of that is about the hard landing, right?
01:14:38
Speaker 5
Like how inflated.
01:14:40
Speaker 5
Are all these companies revenues and earnings because?
01:14:42
Speaker 5
Of what happened?
01:14:42
Speaker 3
I I hear you.
01:14:44
Speaker 3
I hear you, but This is why that chart.
01:14:46
Speaker 3
Is so important.
01:14:47
Speaker 3
Every other time except in 1983 in modern history. So the modern history.
01:14:51
Speaker 3
That we have all lived.
01:14:53
Speaker 3
Says that the stock market bottomed in the first third.
01:14:58
Speaker 3
Of a process. And so if you think that this process ends in 24, that’s a roughly 24 month process.
01:15:05
Speaker 3
21 month process we’re in month seven. We’re in the power alley of what would map to the last six or seven patterns of behavior.
01:15:15
Speaker 5
Yeah, I mean, I I guess you you may end up being right about this prediction.
01:15:19
Speaker 5
I guess what I’m saying is that I personally would not want to enter the market until some of these fat tail risks are taken off the table.
01:15:24
Speaker 3
Yeah, I think about.
01:15:25
Speaker 3
Middling in the market for six months.
01:15:27
Speaker 5
Ago likely I’m just very bad.
01:15:29
Speaker 2
Yeah, I understand.
01:15:30
Speaker 3
Now, obviously none of us want this to happen.
01:15:32
Speaker 3
I’m just asking a very specific question which is and making an observation, which is I wonder how the markets would react.
01:15:38
Speaker 3
And I I I don’t see it.
01:15:40
Speaker 3
Being down 1000 points and that may.
01:15:43
Speaker 3
Be wrong, but other effects of those things.
01:15:45
Speaker 3
Looking to just do that now.
01:15:47
Speaker 3
The diversity of views that you guys all share, I think probably represents the market.
01:15:54
Speaker 2
So what did?
01:15:54
Speaker 3
There is.
01:15:55
Speaker 3
You do.
01:15:55
Speaker 3
You have you?
01:15:56
Speaker 3
Have you?
01:16:04
Speaker 3
What interview here is your view that we’re OK, we’re about to just go through the toilet, but what is your view?
01:16:09
Speaker 3
From an equity market point of view, but just in general, yeah, like just the equity markets, your temperature, how do you feel like how do you feel?
01:16:15
Speaker 3
Yeah, I’m.
01:16:16
Speaker 3
Worried about money not moving?
01:16:18
Speaker 3
What does it mean?
01:16:19
Speaker 3
I’m really anxious about.
01:16:22
Speaker 3
Invested dollars at everyone seems.
01:16:26
Speaker 3
I think I mentioned a while ago that dollars were kind of locked up in March and then I went to this conference and people are like, yeah, we’re loosening up and.
01:16:32
Speaker 3
Making a plan again in July.
01:16:33
Speaker 3
’cause, the market was kind of turning back up and now equity markets are turning down, bond markets have turned down, interest rates have spiked, and there’s a bunch of these currency problems.
01:16:43
Speaker 3
So I’m very nervous.
01:16:45
Speaker 3
About the flow of capital, which I remember happening in 08 and I remember happening when we were all joking over text when COVID happened and we’re like, hey, the market can only go down 10% today for so many games, so for hold and everyone.
01:16:58
Speaker 3
Was kinda like.
01:17:00
Speaker 3
She was talking about wearing jeans instead of.
01:17:04
Speaker 3
Pair jeans.
01:17:11
Speaker 1
Is that a new field?
01:17:12
Speaker 2
Yeah, if I got.
01:17:13
Speaker 3
Any fancy clothes I can just wear?
01:17:14
Speaker 3
The same clothes I had with my wife.
01:17:15
Speaker 3
Lockers hold those clothes out as well.
01:17:17
Speaker 2
That was. That was.
01:17:18
Speaker 7
Right.
01:17:20
Speaker 3
Rep Rent remark runway.
01:17:24
Speaker 6
Did send.
01:17:30
Speaker 3
The biggest of economic health is the rate of rotation.
01:17:37
Speaker 3
’cause the I can take this thing off.
01:17:41
Speaker 3
I’ll just relax.
01:17:45
Speaker 3
I would guess that the rate of rotation of tomorrow’s project is probably predictive of IPO market window built.
01:17:50
Speaker 3
I was. I was there.
01:17:52
Speaker 3
Last time rotating it not rotating.
01:17:54
Speaker 3
It so maybe that’s a good sign.
01:17:55
Speaker 3
It kind of helps.
01:18:00
Speaker 3
Last week.
01:18:01
Speaker 3
And we’ll both be black truffles.
01:18:03
Speaker 3
And then he jumped the fence all of a sudden, right?
01:18:04
Speaker 3
Trump is over my shoulder.
01:18:06
Speaker 3
Second for the dictator.
01:18:15
Speaker 3
The Prince of panic attacks result in a fine.
01:18:18
Speaker 3
It’s the Queen of Steam rowhomes Kevin.
01:18:20
Speaker 3
Hart show here in San Francisco.
01:18:25
Speaker 3
For Montclair Ambassador during the talks with dictator himself.
01:18:32
Speaker 3
I am the Lord greatest moderator. Will see you on episode 99. Love you guys. Love you guys.
01:18:39
Speaker 5
Let your winners lie.
01:18:42
Speaker 3
Raymond Davis, actor.
01:18:45
Speaker 5
2nd we open sourced it to the fans and they just got.
01:18:51
Speaker 1
I can walk.
01:18:59
Speaker 1
That is our plan.
01:19:02
Speaker 3
My dog.
01:19:10
Speaker 3
I’ll just get a room and just have one big.
01:19:12
Speaker 3
Huge doors because.
01:19:12
Speaker 3
They’re all just using this like this.
01:19:14
Speaker 3
Like sexual tension, but they.
01:19:15
Speaker 3
Just need to release their house.
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