E87: Emerging markets, Sri Lanka, 9.1% CPI, market sentiment, NASA's Webb telescope & more
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Okay, everybody, welcome back to the all in pod episode de eighty seven. Here we go. Tons of news going on. Thanks for all the great fear back on episode eighty six. We're going to start with emerging markets all in.

And welcome to the program, David freeburg, often of science, the dictator himself, from his palace in sri I lancha h his new palace in shi lanka. He'll be taking over over there. Look IT into that. And sex is in a in witness protection right now, apparently. Where are you sex in this White, nondescript room?

Can you say where you are? This is my some proof party room.

yeah. So is that what if that biden done your best things with in room? They, what if you you rock back and forth and say, inflation ukraine.

Inflation ukraine? No, we just had the room some proof for, you know.

Better podcasting. Look at you taking taking the job .

serious looks bad thing that looks good.

Ah you could put a little art behind you or something. Just put one of your monies behind you you know, the ones you have in storage downstairs, okay? Emerging markets are facing uh, some huge chAllenges right now.

Quick more quick primer on three types of markets, developed, emerging and the frontier market. If you don't know, developed markets are considered us, japan, europe, their GDP growth. This lower single digital typically in the emerging market, it's roughly defined as developing but not fully developed.

That includes countries like the bricks, which is brazil, russia, in india, china and recently at the south africa. Many other markets are included in that they were previously LED the third world in the eighties. People didn't like that term.

Investors will bet on them having a higher GDP growth, typically two times or three times what the developed world has. China, for examples, to one thousand thousand and six percent growth. Us, in two and twenty two point one percent growth.

And of course, there's frontier markets. These are viewed as small, unstable, liquid, generally risky. You look at something like kenya, vietnam.

Those would fall into that category. Vietnam, seven percent. GDP.

Growth in two and nineteen to the U. S. Is two percent. Sometimes people like to make bets on them. Here's a nice little chart for all to look at, and you can just see china versus tina in the united states since the eighties.

And so why is this all important? While the wall street journal report last week that EMS the emerging markets have been feeling massive pressure will get to three locked in a that's a frontier market, to be clear, but three things. Well, we've got probably a few dozen things going on.

Let me just highlight maybe the top five and then on hand draft to the best ties you have high bond in loan yields. The debt, debt rates are increasing in the emerging markets of frontier markets. Think what happens when you got a variable mortgage.

You, you, you try to get a new market, a new mortgage in the developing markets. The developing market investors have stopped investing in emerging markets and frontier markets, as you might suspect, during a downturn, and they're even pulling money out. Then you have surging inflation.

We all know about that. And we're going to talk about inflation here in the us because we ve got the print this morning and slowing growth. We've also talked about this for the last six months on the program.

All these problems get exacerbated when a economic growth slows and is slowing globally, and that finally, we have the potential issue of contagion. We don't know exactly what's gna happen when various countries are facing these chAllenges, although we did tell you here what would happen with the ukraine. Shut out to, uh, sex and freeze d fertilizer, weed oil or that could stuff and it's becoming very cute.

Perhaps they can canarian the coal mine is shriek a breaking news? President uh Roger paca a fled for the maldives and it's a state of emergency. Refuse were clear, declared.

I think that's been cancelled as of the typing of this. We can get into the state of three loner your athens freedoms. G, I know you've been chomping at the bit to discuss this.

Yeah, that was a good long in tro, I think. Um know the the high level for me, if you look kind of at debt markets around the world, there's about three hundred trillion dollars of global debt. And I put this uh chart in the chat hair, I can put the on .

the video and about .

a hundred trillion of that death globally is in um emerging markets. And so these countries generally have a much more kind of variable, a GDP growth as well as chAllenges ultimately with their currencies. Most of this debt recently and and this has been a trend for a number of years lately, has been issued in their local currency rather than the U.

S. dollars. And so as the currency d values, IT becomes more chAllenging for an investor to make a return if they're n investing from A U S.

Dollar denominated base or some other dollar denominated base. So um look, the m and the emerging markets are are are heavily saddled. I mean, some of these countries have over you know three hundred percent or two hundred and fifty percent that to GDP.

And what's really gone on recently is that many of them as net importers of energy and food, are going to a struggle to make this stuff they need to make a home or to feed their people at home because of the rising inflation that's been happening around the world from the producers of those goods and service of those goods. And so to to import those goods is more expensive. That makes IT more chAllenging for people to be able to afford food, to be able to afford energy.

This is part of what we're seeing happening in uh, insured lanka. What's compounding this as we have rising inflation in the U. S.

So as we've been talking about a lot, the friends been raising interest rates here in the us, which means that you can now buy treasury ies that yield three percent. If you're an investor around the world, we're else, you're going to put your money. Except U.

S. Treasury is in a market like this. You want to buy three percent yield in U. S. Dollars verses, you know, getting ten percent yield.

You know, some currency denominated account, some currently dominated bond in a country you don't really know well to trust as much as the united states. And so as a result, a lot of dollars are moving out of emerging market debt, uh, into U. S.

dead. And the Price of the debt has collapsed. And so we've seen in the last couple of months a decline of emerging market dead of about twenty percent. This makes IT harder for those countries to issue new debt to fun things, and it's creating this really chAllenging spiralled that may ultimately lead to defauts.

Those default absolutely have a trickling effect because if one country starts to default and you're investor emerging market debt, you're gna say, hey, wait a second, I just took a huge loss in this position. You're going to start to sell off other emerging market that and then IT becomes harder for those countries to raise more debt and fund themselves and IT can cause a catelan mic spiral. So you know, it's a really scary scenario we're waiting into now.

And I think we really hope that the U. S. Starts to tape interest crates and we find some stability in these markets over the next couple of months because it's not just a food and energy crisis, it's also humAnitarian crisis and ultimately could read to a, uh, a global financial crisis. Fact is highly complex, but it's something that folks are tracking very closer here.

Happening also is the companies that were already at risk are going to start filling this impact. We could jump into three lanka if we want.

Sillinger has, I think, a bunch of short term issues and a couple of very long term issues. Um let me set the backdrop because I think this is really interesting. Let's take but studies we lunger through the lens of two other countries, jamaica and singapore.

If you go, although you back to one hundred and sixty, so you know, roughly one, singapore became a ation. The jamaican population in one thousand nine hundred and sixty was one point six million people. The singaporean population was one point six million people.

Three longest population was nine point eight million. Jamaica GDP was seven hundred million. Singapore is GDP was seven hundred million. Three lucas was one point four billion. Now you fast forward to two thousand and twenty two think jamaa GDP is about thirteen billion.

Singapore is GDP has grown to about three hundred and sixty billion um and three link S G D P uh is eighty billion. So like what did singapore do right? What did jamaa kind of get right? Because one of the things that they kept in check with your population, even though their GDP didn't expand that much of percent, IT income was still a quite healthy.

And then what did we like to get right? And what did we link a get wrong? Well, some of the things, when you look at singapore, is that they found a way to embrace, despite a very horigan, ous culture and sets of religions inside of that ended inside that city state.

They found a way to promote multicultural ism, yet also promote english as the lingua franca. Why was that small things so important? Because that allowed them to be a hub for the rest of the world in a way that many, many other countries couldn't do.

The second thing that they had was a very low level of corruption because they had a leader in that case lequel and again, some people in the west were painted as slightly the authoritarian um you know he would painted as asian value. But the net result at IT was a very low levels of corruption, a small but highly effective public service and meaningful investments in education and health care to make that country grow over decades. And within a generation, that country completely exceeded all expectations.

Sweet, like I struggle through a civil war. I was a by product of that civil war. IT was partly religious, he was partly ethnic, and IT was twenty plus years in the making and in the happening.

And they took a very right wing, autocratic leader, the brother of the current deposed president, to basically rooted out. Now, in order to root out, there were enormous amounts of war crimes and all kinds of things that I don't think anybody would support, accepted, brought some amount of stability. And so then you would have thought, okay, maybe this is the point at which you can now really start to grow.

But these guys, yet again, found a way to nail, gaze and just infuse so much corruption and graph inside of how the government run. By the way, that wasn't just the right IT was also the left. They spent two and a half times more on defensive as of last year than they did when they were in war.

Time doesn't make much sense. The public service grew to the largest IT ever did in a moment where, you know, you really should have prioritized private enterprise. So all of these things sort of created a situation where they fundamentally didn't know what they were doing.

So at the other two issues there, I think, uh, I had a great summary of like really those frontier countries and what made to emerge. Singapore also has a great strategic location, which requite shares there, both island countries strategically located for trade. And then I guess the policies, right? Singapore went on a very, very aggressive uh, tax and business policy effort to treat long to do that as well. And then maybe can speak to just how important those are as islands, you know uh and and their geography because jac a doesn't .

obviously have that. I mean, funa has a massive growing importance as china has emerged. The problem in these last few years is that they did everything possible to not just alienate china, but to alienate everybody on every dimension possible.

You know, the alienated china, the the cool ground was that there was an enormous ship in a fertilizer, chemical fertilizer, that was sent to the ports. And IT was similarly rejected and turned around, because somewhere along the way the leadership is relick decided that they, uh, were woke. And so they enforced every farmer to go organic.

The problem of doing organic and organic fertilizer was all the small farm shut down. All of the large farms had twenty to thirty percent crop dual reduction. The Prices of food went crazy.

They reverse policies two or three times. And really what they found, as you know, they tried to go walk. instead. They won't broke.

And all of a sudden, all these other countries who were there trying to help, I wait, what is going on here? So they offended china, they offended middle easterners, they offended the japanese by cutting a light rail project that japan wanted to fund. I mean, in every step of the .

way they d industrialized.

this country found a, didn't the industrial lize. They try to follow this work agenda.

That is the industry zi mean reversing from like the modern techniques of industrial production, like fertilizer and modern systems of farming is the industrializing. It's it's um you know it's gonna a course ultimately sex.

To your a point, we just discuss this last week with the farmers. You know if you're in a frontier market trying to adopt the regulations and the strategic goals for the environment of the emerging market, IT is like two giant hops. It's probably insurance table. Well, look.

there's a strong analogy between the populist uprising, this happening in the netherlands with the dutch farmers, and the populist uprising this happening in three long a basically they're implementing the same policies. This is actually long as as further down the road and a support country to begin with.

So you like to months mention in April of last year, the three long and government banned the importation of chemical fertilizers in the pesticides using farming. They began went with this idea. They thought they could encourage organic farming.

So the result of that was that overall production, agricultural production, fell by a third, and rice production fell by forty three percent and rises. You know, the biggest people in the countries now, you got people, they are starving or going hungry, you've got massive food. And security as well as the whole economy basically has been crippled, and the result of that as society is essentially collapsed.

So, you know, now the question is, why did the three long and government feel compelled to adopt these policies? A lot of them has to do with the fact that are getting these massive loans from the world bank in the I M. F.

And the world bank and so forth, or imposing this S G requirements. So three long has something like a ninety eight percent esg rating, even as their economy society is collapsing. How is that possible? Well, they're doing a great job following the prescriptions of the global eats.

A dov S, I mean, the sort of global lead flies into davos from brusson and washing on their private planes. They have panels on esg. And then they prescribed these policies for countries like three lanka.

And this is the result. I mean, it's crazy. They're been telling us for years that somehow there's no trade off between their environmentalists policies and creating a healthy growing economy.

And this is an example of that. Not true. There are real trade ffs here. And the crazy thing is that the elites expect poor people in three longa to make up for their environmental emissions is not really fair at all.

Here's another example, in march of twenty twenty three, like I enforced one of the word strictest, china ask covered nine lockdowns covet one thousand nine hundred towns, despite one of the lowest death rates and infection rates in the world. And so so for nearly three months, IT literally crippled the economy and the livelihood of citizens there. But here's where IT gets crazy.

Then they actually go against global best practice. And they ban the burial of covet nineteen victims, claiming that I could lead to groundwater contamination. I don't even know how they came up with this, but you know, what this did was IT significantly undermine the small minority of the country that is muslim, because a religious practice there, you know, is you bury your dead.

And then that caused great pain to them. And IT, as in turn, IT hurt all these international relationships with all these coffins. So then you come all the way around and then you go back to those same gulf nations a few months later. And you're like, can I have subsidized doyle? And they're like, no, not so much.

And just to give paint a picture, what's happening there right now, as I mentioned before, it's it's pretty much a state of emergency. You can see various videos s trending on social media um and you always take those with some caution because sometimes people will take clips at a context or label them incorrectly or use clipsed from other moments in time.

But what's really happening there right now, and you share a video in our group chat because everything is now being doled out in very small amount. So there there are lines for basic goods and inflation ing is crippling there. And as freeburg mentioned, they started to pin um their exchange rate and they are currency to, I guess, the world's exchange rate. Now everything is super expensive and essential imports uh like food and medicine and fuel, they don't have the money to pay for IT. So this is going to be a complete societal collapse IT seems need to get bail out.

There was a bill that was introducing the government that at the central bank would be forced to have a discipline on money printing, some familiar. In march of twenty twenty, the central bank of Frank began printing money in order to finance a growing budget deficit. Again, happens in many countries.

And they did that in part to fulfill an election promise that they made that they would maintain single digit interest rates. again. Sounds really familiar.

So, uh, they've printed about a hundred billion rupees in march. In the next two years, the central bank printed one point six five trillion rupees, right? So sixteen and a half times that first number. And then as a result, what they saw was the highest inflation in post independent history.

So time after time, what you're actually seeing in sy luna is not a microcosm m of something that's endemic to what everyone of colleges in a developing country, a third world country, a frontier country, a southeast station country. In fact, IT actually resembles many of the policies that exists in so many countries all around the world. And what's really important here is that as goes three lana, so goes ghana, so goes pakistan, so goes a whole bunch of countries where you're already starting to see food riots, food insecurity, energy insecurity, rampant inflation, uh, sovereign default. And you have to ask yourself, like how are we going to really turn into at this whole thing and prevent a much bigger contagion like fever just talked about. I think .

it's a might be really important. Um you mention covet IT. Turns out a lot of these frontier countries were already on debt relief and being given a mortal ont making their dead payments since they got so well up during code. And then now the other shoe drops and here we are there. There's no relief you can give them if they're already not paying their allows in some cases.

By the way, here's another thing that happens in a lot of these developing country. So in the middle of all of this chaos, what do you think happened? The parliament got together. They passed a member to the constitution, and IT enforced. And IT gave incremental power to one individual.

The, and typically in most of these countries that run by a parliamentary system, the president is a figure head, right? The person shows up now, shakes hand, kisses babies, that's IT right, maybe convinces a senate, but that is IT. Now, of a sudden, the person has control over defense, control over budget, control over the central bank.

And this person cannot be, you know, voted out in a no confidence with the same way that a prime ministry can. That happened here as well. So yet another example, if if you start to see a bunch of buttock rats in some boy's developing markets, feel like the answers, more power.

It's been tried here. IT didn't work. So I think that there's there's a lot of lessons. I I i'm a little concerned in sceptical that many of these other developing countries that are tearing on insolvent cy will largely learn.

Well, I mean, what they do, we are the definition of the developed world, reportedly. And we have a president who tried to stay in powers still in election. So IT literally is happening here in the united states as well. The parallel ls are truly .

terrifying. All right? The C. P. I, uh, sorry.

that's what I was. It's like a border going on to ill way.

sorry. Can ask chmagh S A question here to.

by the way, if people don't know chmagh is of three and decent just to make that clear, if you didn't hear .

his little did did you go there a couple years ago I mean.

here's another great example of in this case this was the left who managed to fuck things up. So it's not just the right that screws things up in that country, the left as well so in this example um I went there and I offered to bring google loon myself in google. Um we offered to bring internet access to the entire country, like guaranteed internet access.

Um this is like five years ago um and we set up an entity and the government um try to do the right thing and grants and in spectrum. And instead of sort of like fast tracking this and allowing you know this project to become a reality, there was an enormous amount of infighting that essentially said that we were trying to steal the license or we stole the license or we were trying to monetize the license. And both me and google were just, I forget this, this is not worth that, and we abandon the project and walked away.

Instead, google ends up serving a whole bunch of other countries. And the reason why silan ca was part of IT is because the balloons follow a certain uh orbit and IT would IT come. IT would go over, we link and no matter what.

So it's kind of like we can light IT up for free. All we need a spectrum in this country. Google already doing that work.

So you know, I i've gone there a few times. I found IT very difficult to try to do the right thing. I think people, there's a level of infighting that I hope this crisis changes. I also think that it's an opportunity for people to reset rid large the gerontocracy that runs many of these countries, including the united states, quite honestly. Um there is an opportunity.

There are some you know of my friends, who I think may emerge in the next few weeks, who are very wind known people in that country who literally want to step one, remove most of the executive power from the presidency, make IT a true in a parliamentary style system with an empowered prime minister and empowered elected officials, and let the country run and fix itself. You know, d priorities and defense spending. D prioritize the growth of the public sector.

We prioritize the growth of the private sector. I hope they're successful. I've would love to invest if given the opportunity under those kinds of market conditions, and I would love to go back at some point. But my history with the country has been very fraught because as i've gone to try to do the work, people are just haters, and they they will cut their nose off despite know, and they'll just do the worst things chamar.

There's I think you have a second swing at bat here, uh, only fifty percent or so of people three long to have internet access. And maybe we could talk to a friend over a starlink. And that could be an incredible mitha and changing thing there. If you get a hundred percent of the country on internet, my god, that could change everything.

And that seems to have people, by the way, and this is the most literate country in the world. You have to understand, like the people in that country, the human potential like country is incredible. Okay, there are not developing countries like this that have this type of literary, the and the kindness of the people.

These are incredible, hardworking people. But the elected class is some of the most inward naval gazing, corrupt people. And this is the opportunity for the Young people of that country to wipe the slate clean with all of them and start over with some.

I think literacy .

rate is ninety two percent or something crazy there. It's is very high.

It's a highly educated.

literate group of people. The truth is the number of people living in extreme poverty has plum ted. Thanks to globalization.

We we went from almost two billion people living in extreme poverty. Now it's going to be, that's going to end in our lifetimes. We have maybe five hundred, six hundred million people living in extreme poverty. That's because of globalization. That's the great thing that happened. Now what's also happened at the same time as people have gotten out a sink, we have the leads to saxes point who think they know Better and they're trying to enforce on an merging market or a frontier market got forbid, the things that we have the luxury of doing in the.

we don't even do we? A zs in western standards for gas knowledge is .

but one example. We have emission standards. We have the accords that we've been working on. All of these things are starting in the developed world.

And now exactly to a David are saying is we're taking them from the developed world. We are imposing them and stronger. I apparently embraced IT. I get to get points when there are three.

Lanka is not rich enough to resist. That's the issue. So the us. Has an st rating of fifty one percent three, long as ninety eight percent.

Why is that? Because in our country, we're not to impose these crazy Mandates. There's enough resistance to IT. But if your entre longa and you have these massive loans and debt service, you have to do what? Dim f and the world bank in all these international?

Yes, exactly.

There are the ones who you impose all this stuff. So great. So three lock enter with the ninety eight percent near perfect esg rating, even as the county is completely collapsing.

Read the showers ger article here. He says, decline reason for the falls. Ry, long as as leaders fell under the spell of western Green eetes peddling organic agriculture and esg.

And then he mentioned that three long has a near perfect score of ninety eight higher than sweden, which is ninety six in U. S. Of fifty one.

What is having such a high esg score mean? IT short IT means that three long as two million farmers were forced to stop using fertilizers and pesticides, laying ways to its critical agricultural sector. And then IT IT goes on from there. So IT was the imposition of its not that three longer politicians implemented three long and ideas that caused the collapse of their country. They implemented western ideas.

They implemented the idea. Corrupt actually .

imply they implemented the ideas they learn at davos. It's almost perverse. You ve got all these, you western elites, again, like john Carrier s so forth.

They fly their private jets to dodos. They come up with these st rules, the coerce countries like strate lanka to obey them. And it's the people's to entertained the Price.

I really just making sense. Yes, that's your reaction to that. J, K, L is somehow going to blame this on trump?

No, I don't know how long has something to do with this.

What I mean.

i'm just thinking about IT from first principles. You know we we should as a you know species, humanity should be trying to trend towards taking care of the planet and lowering emissions and being in renewables and then how we go about doing IT. Perhaps there was good intention er but obviously, if the country is corrupt and they're teetering already and they don't have the bank rule to do IT, forcing them to do IT can lead to collapse.

Nobody forced anybody. But what did the score give you?

It's not as if IT almost be used by nature of you get your loans if you do these esg requirements. So that is forcing them defective.

Okay, far off. But i'm saying like you know, now that you have the scores, not as if you issue Green bonds and you could stave off the revolt they do .

to do what you said before is like look at the a three long you should be looking at what singer did and just copy the playbook, right? I mean, it's so obvious that you know, country IT requires the level .

of long term leadership and and a lack of and a lack of corruption. And I think those those two things are very hard to come by. And I think a third, which is a very controversial step and to make, is IT required singapore to adopt english as a linger Franka.

Now, in fairness to singapore, they also embrace multi cultural ism, right? So you had forced, you know, of force, but you had bilingualism in the school. So hindi, mali, or, sorry, tael, malays, chinese, right? You could, you would learn all of those. And so, you know, you kept an ethnocentric ity to where you came from. But they they allowed you to understand the lingua franca that allowed you to merchandizes your skills to the .

rest of the world in a rth. Are you saying they adopted the melting pot playbook? And they allowed everybody from around the world to have their culture, but yet participate in a common a goal.

Oh my god, literally, if you say melting pot to Young people today, and everybody should try to adopt A A new culture, but keeps some of their own people find great offence to that. Uh, and that's what we were all thought. The melting part is what made this country great.

I think lecon you just called that multi cultural ism uh but my my point is that you know I think the english decision by singapore was important. I think steady predictable leadership by lecon you was really critical um and the lack of corruption, you know the way in which they they they promoted their public sector meaning know some of the best paying jobs in singapore was the public sector job right like you would inspire the work for the government of singapore.

And so as a result, you add policies and movements and and the movement of capital and progress and rules that we're just um it's an example for for so many countries um and you you look where they are today for such a small population they have the same GDP. By the way you should vietnam they have a larger GDP in the vietnam is an incredible state. Tem in testa to singapore is uh ingenuity. So could that have been to remark I think so knowing that the you know the the levels of literary and intelligence and Frankly like look the the religious stability that can come from bodza yet we're not there where we are today, which is a shame. Yeah and this is the .

canary in the coal mine. I think we're going to see freeburg. I don't know what you think is going to happen over the next six months, but this going to be other domain is .

certainly yes. I mean, I watch for arab spring tight behavior, right? I mean you saw the protest and people storming the presidential palace and a um you know if I would imagine if we had a report uh from the h intelligence advisors to the present of the united states, there's probably a long list and a growing list of these nations. You want to keep an eye right now where there is food and security, energy and security, decline and currency, uh you know rising dead burden and um you know there's a breaking point for all of these and as you start to hit that breaking point, you start to see more what happens in erotic. Now when destabilization like this happens, it's scary because what happens um is there's a new power that emerges and those powers mayor may not be alive with the interests of the united states, with the interests of allies, with the interests of the world, with the interests of democracy and so there are kind of scary moments that can emerge over the next couple of quarters and years as these camels back start to break, as one straw after another is put on the back of his camel so well and .

who's the White night who's going to come in and say, yeah and these frontier russia the we're playing forty .

billion dollars into supporting the conflict um you know we're busy kind of protecting our energy interests and our interest with nato as as the united states. And as you point out, china will likely end up becoming the savior and supporter, particularly where they have infrastructure investments and and interests. I mean, I don't know if you guys have followed this. China's been building presidential palaces for african leaders throughout the continent, and they're incredible. You guys should put photos of among on the video oh, sorry.

that's the wrong one. That sex is house. Sorry, sorry not that taxes, that sorry, the next one people .

not they might put sexes have to shame things, but they brought .

the president so anyway, that is a moment to .

watch ah because there is a very you unfortunate confluences of circumstances that may lead to the stabilization that may lead to influence and power being gained by folks that aren't correct.

the united states. So and this is why want to build up a great cash reserve and have a really stable economy so that when these moments do happen, uh, you know, the good actors of the world can take advancement. Suppose the bad, once in the united states is not in great position for this. Every society, as they say, is three meals, three missed meals away from kaos.

There are now a record nineteen developing countries with sovereign debt trading at distress levels. Nineteen and two, that of all, is default. Yeah, just pakistani is nuts.

right? I mean, if they save, but that's problems atic.

Well, in pakistan is famous for enabling other countries, iran, north korea, reportedly they look at their nukes as an export and they are more than willing to sell you.

I just think you guys a link from forms. You there are currently as of today, inflation protests going on across the lanka, albania, genta, panama, kena, gena.

Um and if you look at the videos and you look at the images of some of these protests, and again, there's like you know in the african continent there are um you know very radical militant groups that will try and seized power if there's this stabilization at the top um uh you know there are resting in south america, I mean all over the world, uh you know these sorts of moments um can catalist a real shift in power and influence um and and and there's a lot of IT going on so you Better believe that folks in the U. S. State department, in the C. I. A. Are very busy right now.

If you if you look at bond Prices, the three countries that are the next closest to defauts. So russia is defaulted. But that was more very real, you know, foreign rents.

Y he controls that that didn't allow them to pay. But three lua has officially default in the next three. Or I self were gone. And pakistan, yeah.

And by the way, argentina, just see, guys know the argentinian print on inflation.

Yeah, these things were doubled sixty one percent. Yes, if we think there are nine point one.

I know they had a structural default of years ago. renegotiation. We've been back at the table over and over negotiating for years um and now they're facing this uh this inflationary crisis yet again. Uh it's uh it's a scary moment um in argentina .

but yeah this is exactly like the european crisis with the portugal, italy, greece, ce and spin. Uh we're going to see a lot of negotiations occurring.

I really believe in this country, and I think the people are incredible. And I hope that whoever the president basically takes as much power away from that role in putting on the prime ministry and gets out of way right.

were hoping for the best. Uh, okay. Cps, as uh, everybody who listens to this show knows, is a basket of goods and services and how IT changes over time.

You get sliced and dice the CPI uh, based on food, energy, shelter, your house. Xetra last two months have been just extraordinary to watch, driven obviously by energy, which has been driven by uh, the russia ukrainian conflict. The sax rent on bid's administration.

Um the core index doesn't include energy. And so if you were to look at the core and index ah IT and here's a chart, five point nine percent in je and IT peaked actually with six point five percent in march. So that's been trending down. If you take energy out of IT.

we have an experience food, I think aren't are excluded from core.

And if we uh, we have an experience core inflation like this, ince, the seventies, eighties. Here's another charge just to zoom out and you'll see exactly how daring this has been a for basically our generation. We have an experience since if you were born in the seventies or so, that's when IT was higher than IT is today. And we've had obviously goods and services plumb in our lifetime because of globalization and low interest rates. Energy hasn't .

seen inflation like this since .

that is the core. So core so and then here's the energy one coming up next. So when you look at energy, obviously energy uh has been volatile in our lifetime uh, because a lot of the oil in the world is controlled LED by dictators, mental est, russia and israeli.

But the forty percent year of a year, a increase in cost of gas and oil and energy has put us back to the mid seventies, eighties in terms of pain. That's this short. So you see it's spiking all over the place, but generally IT was uh under twenty percent and now we're back above twenty percent is all about the oil.

Chamakh, you were we were talking in the group chat before you were kind of a satisfy with nine point one. Do you think the nine point one we're seeing in the inflation print today, which was higher than expectations, what is that going to lead to in terms of the interest rate hike? Seven, five basis points? And you think they just go right to one?

You know, we talked about this that this was gonna a big prd, right? I think we all expected this to be a big prd. I actually also kind of put myself on land there and I said, you know, I wouldn't be surprised if at some point we print mid high lines, maybe even a ten handle at .

some point get there.

And the reason is because, uh, you know, rents are a little you know uh, they lag in how they're reported inside of CPI. So we have a couple more months ago of of rent and restart moving or budging ing a bit. That's number one.

We do see a little bit of fall off in, in energy Prices, but i'm not so sure that it's it's enough, Frankly, to to move the needle. So I think that we could be in a sustained period for a while. The more interesting thing I thought today was that canada surprise everybody and raise uh their benchmark inta strap by a hundred basis points OK.

So and they came one four point one hundred bips. And they just said we're going for we need to tame this. We need to break the back of inflation.

They ripped the bandit off. Yeah, yeah. And you know, and I think if you've read the fed minutes more carefully, I think juran power is basically ready to do the same thing. Yes, after this inflation print, the expectation for july went to eighty basis points from seventy five, which means a small percentage of people actually think it's gonna a hundred. And september, I think move to seventy five.

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So the question is, is that enough? I just don't know. I I don't know. And to .

be clear, this is for june, the data we got on today, liberty, this for june, what we did see in july because we can track oil Prices that's down twenty percent month over month. And the CPI has been driven largely by oil, so speak to attra of what do you think it's gonna be in july when we get IT in August?

no. But yes, I know because the again the owner recover rents are up so much that they may actually you know break even, right? Meaning IT rents go up by so much, oil goes down by so much, they cancel and we're still at night.

O I that your prediction for july, which will get in August, you think nine .

ah i'm worried that we're in a sustained inflationary environment. I'm worried about that. I I hope that we're not.

Um but then the question, Jason, second early is then what do the markets do? And what's so interesting today is like the markets shook IT all off. I mean, like you could not have had a worse inflation print.

Everything was up well, ten meaning meaning .

like IT was beyond the number that was expected. Every component of IT was up. Everything look terrible and people .

like me well, is that because the market is future looking sex, the market is basically pricing will get through this in six to twelve months and years are down.

right? To be clear, the the print was definitely worse than expected. They were expecting yeah, they were expecting a point eight percent. That was nine point one last months number was at eight point six.

I remember us talking about inflation a couple months ago saying that we thought IT had peaked maybe in April or may at the latest simply because inflation is measured on a year of your basis and we are certain to lap much bigger comes last year. Remember this conversation? yes.

Well, the lapping effect turned out not to be enough and inflation is still rising. So we have not yet peaked on CPI. I understand that core, we have peaked, but I deciding to exclude energy and food, I mean, that's a pretty arbitrary sion.

Those are two really important variables that matter to the ordinary american, for sure. So we solve this problem. And to mos point, we don't know when it's going to be, when it's going to subside. And I think the big question now is when does inflation finally peak and start going down back to where should be? And then how much how severe recession do we have to have in order for the fed to solve this problem?

IT feels like things are turning over in real estate. We talk about that last week. The number of homes being listed is skyrocketing.

The number of mortgage being originated is pluming while the rake goes up. So we're going to see mortgage tes probably go six, seven percent towards the end of the year. That's gna put a huge cabasse.

The um higher real state is also started to get hit massively. Uh, the number of listings is going up in the high end and the number cells is plumbing. So that was one of the cards we wanted to see turn over and IT looks like that turning .

over just a one small thera ation. As you look, we obsess over CPI right now as we're all kind of these fake macro wanted be traitors. But I just want to remind you because the fed has been pretty clear about this, they don't focus on CPI.

They focus on something else instead called PC, which is the personal consumption expenditure presidence. And I don't know what to flow through from C P I 和 P C E。 P.

I is exactly, but that is the broader measure of goods and services, which does include food and energy. So IT stands to reason that P, C, E may stay elevated for a while, which may give the fed enough of the motivation. They need to go one hundred, to go another hundred, or maybe go one hundred and seventy and then seventy five.

I think that David's point is right. Like all this taming that we've been expecting to see, we haven't seen IT. And so every month, it's like, oh, it's coming next month.

Every month, it's been happening next month. At some point, you may just have to say maybe we're in like a sustained period for a while. And I have to believe it's going up before I believe it's going to stay stable. And now well.

we did see energy go down. Housing we are seeing now are starting to contract. The number of um Price cuts has been surging according to redfin. So I think we're starting in the layoff s obviously happened two months ago.

So don't we think that we're starting to see the headwinds? And then we were talking to a body of ours who is big in the airline space. He said, got the and I think you were pointing out the statistics that he threw is now capping the number of people can fly .

because this is so crazy, so overloaded with with traffic of passengers that day. Today came out and said, we are coping the number of passengers to one hundred thousand a day, no more.

And this is after the cost of those flights was skyrocketing, you know, six.

seven thousand. And I sax, I really to go back to what sex said before this. The nugget for me of this entire summer was what he said about his take away from the coto conference, right?

Just to remind people, the person said something to the effect of, oh, well, look, all these other people will be saving money in cutting jobs I intend to hire. And, you know, nothing has changed for me. And the comment that I made in our group chat is maybe that's the psychology of everybody. It's not just a .

CEO be clear what they they pulled all the founders in the audience. The poll results showed that on the one hand, everyone in the audience and to see that we are added for a big turn and economic conditions and fundraising very much tougher. On the other hand, all the founders, or two thirds of said that they were going to use this downturn to accelerate their business as supposed to cut.

My one to one conversation with the various founders basically are in line with that, which is it's all not me, you know, I know everybody else is going be impacted. It's going to cut, but i'm going to be the one exception. And there will be exceptions, absolutely, but everybody .

can be the exception. So I saying i'm going to stop my car. I'm still going on my summer vacation. Everybody else has to make cuts.

IT doesn't matter what they say. Consumers are behaving that way. You know, american airlines basically put out what they where they thought they're going to be. Their thought was up ten percent. You know he throws, says we have too much traffic.

We're going to capital a one hundred k there is an article about, uh you know us home Prices and rents and there are these two uh housing companies in the world street journal that were profile and both of them serve medal income neighborhoods in houston and these other places. They're like we've never done Better business. And you know there are fewer and fewer people buying homes because of mortgage rates.

They all want to rent. We in our complete have we have complete ball control. And so where where is the stopping and the slowing down of spending IT just may be reflexively this thing where everybody feels like to be to have the polite dinner conversation they have to talk about how they're pulling back IT doesn't seem like anybody's pulling back.

Austerity measures have not hit yet.

Well, I think I think they are in the process of working, but this takes a while. I mean, what I would say is, look, we are one hundred percent going to solve this inflation problem. Why do I say that? Because Price levels are fully within the power of the fed, that is, to raise interest rates high enough.

Paul cal proved that in the early one thousand nine hundred and eighty, he had to raise interest strates as higher twenty percent. But he crushed the inflation ninety seventies. But that's what IT took. So I have no a doubt that the fed can stop inflation.

I think the question is how much pain are they after inflict? How how do rates have to go and how long do we live through this sort of stack lation ary period? And that's the unsettle thing is where is that doesn't seem like where you are near the end of this yet.

I wrote this I wrote this last week in a little note but um this is why if you look at the Taylor rate again and you know people have the band in the taiLoring is not what I used to be, I guess but you know it's still pretty directional, accurate, which is what is the true equal librarian interest rate that allows us to basically manage and meat supplying demand together so that we have a constable economy and that uh that stable equilibrium rate is approaching five percent.

You know, our target, the the collective wisdom of the of the market believes that three percent enough to get the job done. We're right now at one point five to one point seven, five. So if there's any number between three and five, that is the true Price. We have a lot of work to do to get there.

Yeah, I think that's a really good point because that the ten year tea bill has been kind of floating around three percent. So that is the long term expectation of the interest strates that's required to have sort of Normal inflation. But what if it's four percent of its five percent? If that ends up being the case, they'd be a huge downside. Surprise the stock market.

Well, how would you define that ten percent pulled back to twenty percent? Pull back from here. Well.

you have a bunch of things like we we talked about this other issue before as war, which is. If you believe the stock market is fairly value, you have to believe that Prices are right and that the earnings are right, right? So because it's effect that all boils down to the or pricing ings ratio of the S M P five hundred.

And i'm going to still maintain that the e is wrong, the earnings wrong from most of these company. So let that why. Well, one is that when these companies start to report their quarterly earnings starting in the next few days, the year over year comparison is going to be to the numbers that they posted in q two of twenty twenty one, which by all accounts was a blow out number.

why? Because the number before that was twenty twenty, where their business was zero, right? So you have these incredibly tough cops in terms of growth percentages that you have to reach, which I don't think are achievable.

Second is everybody's costs of making and selling things is going up, which stands to reason that unless you raise Prices quickly enough, your profits will go down. Third, if you actually do business outside of the united states, the U. S.

Dollar has rally so much that you actually have less income that you're making in these other countries when you can work them and bring them back to the united states. Now most people look through that last issue. But the point is, if you add to sow up, there is a able probability that the all the ease are wrong, in which case we have to be assess what the right e should be, in which case what .

is the right p and earnings are a function of that's why we see so many companies doing layoff. S cutting people. Uh, microsoft, google, everybody is now putting people on the market. M they're .

firing White collar labor, but they're hiring, you know, blue collar labor faster. And so now we are actually gonna a downing in productivity, right? You are replacing a person that, you know, make IT down at a desk and use a computer eight to ten hours a day to do something.

But you are hiring a lot of people that, you know, make IT paid by the hour or make IT paid fix celer if you do the right kind of work. But uh that qualifies as has more contractual blue color labor. The difference in that is a productivity difference ultimately.

And just so everybody knows for pees Price sorting ratios over time, here's a quick chart for you currently and this is for the S A P. Five hundred were currently uh at twenty or so and we have twice in our lifetime kind of a hit that you thirty, fourteen, fifteen level. So we could have a twenty five percent correction from here in the stock market. Um if you look at the highs are recent high um in december of twenty, twenty or thirty eight Price earning ratio. So uh we fall in from thirty eight down to twenty, you know almost in half and um we could still go down twenty five percent from here and that would basically not even set a new record that would just hit the last two crisis.

We had the thing the thing that I think we will work against this happening, Jason. So yeah, you're right. Thought that maybe he goes to three thousand and thirty two hundred but if you look again today, know and what what I mean by like the market is roughly shaking this off, like the fact that the markets right now as we as we talk our you are essentially down half a point.

Uh, you know the S M P is down, you know twelve points. Uh IT means that they are looking for any in all reasons to say this is a solve problem. Move on, nothing to see here. Now that is a psychological reaction.

Most of that if you actually, I call the friend today and I said, wear the flows and he said, you know, retail right now where all the flows are, meaning it's retail that's buying there. The thirty thirty five percent out of where they Normally buy, which is pretty healthy signal, will explain what you mean, who is. So the way the market works basically is your buyers and sellers and um you know to make IT really, really simple, you have hedge funds as one class of buyer.

Sure, you have etf, but there they're not really yeah, but they have fixed strategies and so you know they are hedging, moving but whatever and then you have retail, okay, it's retail and hetch ones. Those are the two main pockets of of where the flows come into the stock market from. And you can get a real sense of what's happening, what the psychology of the market is if you see what those flows are.

And right now, what we see is that hetchy funds are largely on the sidelines. But what means is they are, well, they've been so Better than Bruce in some ways. I think they're licking their rules, but they're most see waiting there. They do not find a compelling reason to buy, right?

But they have to buy at some point, right your mother, this is their business no well.

other opportunities, their business to make money relative to their index. And so if their index gets torched, they doing nothing makes them look like. Um so they are not necessarily have to buy at any point.

They just need to make money at in the end. So right now, we're in a situation where the markets are looking for a direction. Retail seems to think that direction should be up.

Hedge funds don't have an opinion or saying we're just going to wait this thing out. okay? Meanwhile, the data IT had best is a question er and I think that's that's attention we have right now.

The stock market is the psychological desires for this thing to be over. Meaning I think people wanted hear inflation is done. We're starting the recession. Give us three or four quarters will be out. Here's a steady at interest.

Let's go tech. People want to accept the reality, rebounding the bottom for the next year. And then this is the time or the opportunity to buy. And I want to get financial advice.

But what are your thoughts if head, friends and retail or kind of waiting in the me, the stock market is at the bottom? I, are we bouncing along the bottom? yes. Or or what would you how would you describe the next year if you were to look at IT?

What do you think tell you guys some stories? I I went to a conference in march with a lot of uh, fun managers, probably managed several trillion dollars in total. People were like in shock and all at that conference because they had taken such significant right downs and they were still getting written down.

So all the investments were off. They were all forty percent from the pig. They were freaking out.

Things were collapsing. No one was doing anything. They were all sit on the sidelines, hanging out waiting. I went to a conference last week, and so the tone and the the minor was just like morose.

Last week, I went to a conference with a lot of managers, also probably managing trillions of dollars across the pool. And people were just kind of they had accepted this new reality and they were kind of willing to look at new things. And you know, there were no longer engaged and trying to shore up just their portfolio.

And a lot of the stuff we talk about, which I think is tactical on the ground, how do we deal with our businesses and our portfolio investments that we actively work with in the private markets? They were much more interested and kind of starting to explore and think about new things. And I hadn't seen that three months ago.

So that positive super market participant point of view, I think that folks have kind of call IT accepted a new Normal, an inflationary Normal, a uh high volatility uh Normal uh you know a Normal of uncertainty and Normal of kind of recession. And as people have started to kind of um internalized that new Normal, I think they're now starting to say, okay, what should my action plan b and that action plan is i've got trillion dollars in capital sitting on the sidelines. What should I start to do with IT? So you know my my very, very, very antidotal experience has been that significant market participants.

I think you're going to a start to park their head up this quarter and start to think about doing new things. What that translates into in terms of, you know, stock Price movements and indexes, I don't know. I've always said that there's going to be a huge variation and outcome, uh, during this week this year and some industries, some sectors, some types of businesses will outperform others. And so I don't want to create generalize statements about induces, but I do think that capital activities is going to start to come back this quarter where people going to start to think about what to do rather than pull everything out because of the massive shift has happened in the past couple quarter.

Sex, what are you as a market participant thinking you're looking at series as may be doing some opportunities, flat rounds. Are you looking at the start up market, midday ge market and saying, hey, this is an opportunity, maybe I should start looking to put some money to work in the next six to three.

five months? Or are you you're still .

investing so as a market participate.

you're investing what are we that th Epace o f d eal m aking a s mall w ay d own b ecause f ounders k now t hat v aluations h ave g one d own. The fundraising environment is tougher. So last year, they're reading every nine months.

Now they know they should be raising at once or three, two years. So th Epace h as s lowed w ay d own. That's a good thing. I think it's health.

It's it's healthy area.

It's more Normalized year. Last year, the companies that could raise did raise. They have big warchest.

So I think this can be a delay. It's defending a solar period. We've one a couple of growth deals recently. I think the fact that tiger and the other kind across investors effect, they've pulled back way back from venture market skins, smaller firms like us.

an opportunity growth deal. So how did you make the .

decision to invest in those companies a while? You know the the opportunity arose to invest and IT was way less competitive than I would have been.

You call opportunities, you knew the firm, you had high confidence in them. Ah we have we based .

on two deals in the last like four months.

And what is your pace, let's say, eighteen months ago.

there's low fast for sure. There is more deal deals happening. So interesting if .

you want to think about tail risk or there is some event that can massively shift the market, the the indica south, right, make negative and everyone pulls money out of equities, are out of bonds further. There are some of those events growing, right? We've talked about the consumer Price.

I is we talked maybe taiwan, maybe um this emerging market crisis that that that may kind of be emerging. These are like little turtles putting their heads out. They may not come out, but there's enough of these turtles now.

Including you that you know there's still reason to be worried were alone a black one event, which would be significant known but significant risks, right? And if any of them do kind of take off, um you know we're already in a very shaky kind of period right now where we're trying to manage inflation and recession and you know businesses are trying to raise capital. Again, this is why a lot of biotech companies are trading below cash because the expectation is they're not to be able to raise capital. I mean, any go out to close up, mom, you know you start to see things go. So I think that the reason people, investors, portfolio managers are not at a kind of rush back in to putting more money into equity is just you know sitting around when to see how a few these things resolve um of taking.

But there are companies that do not face the risk room. They just are sitting on so much cash, they have so much revenue that there is no chance of that.

Yeah i've always said that doesn't matter if you find a great business and you believe in that business over the very long run, you don't need to worry about timing the markets. You put money in that business long as you get a fair valuation for today relative to what I should be Priced somewhat, markets are telling you twenty pe would be more than fair history, who knows? But like whatever that, whatever that is.

But if you find a great business that you thinks you going to compound value for you over the very long run, market cycles don't matter. And long run you mean a decade? Yeah, call IT a decade. You know sex is business he's invested in. These are tech companies that I don't think they're planning to go public next year.

He's making an investment in the business that he considered to be a great business that can compound value, not not compound valuation, but compound business value, meaning they can do something more valuable next year than they were doing this year and continue to a crew an advantage in their business that allows them to accumulate earnings over time or accumulate revenue that ultimately translates earnings over time. And there are many businesses that are public that that Operate like that, that regardless of any of these turtles popping their head out, those businesses will perform well over the next decade. And I think, you know, that's always a great place to invest.

So we basically went from d day save in private rine and seen you know in the first quarter to know people have accepted we're more time and we're not shell shocked and some people are looking for opportunities to mothy found an opportunity. Maybe you could talk about the daily to this week.

Um you know I tend to degree with freedoms. K, I mean, you find these businesses that you like, and if they appeal to you and you do your work, that's the most important thing you shouldn't be afraid to write, check.

Can you stop there there to say to fine what you mean by do the work? Because everybody here to say that what does that mean for an investor? For somebody like yourself? What is doing the work mean?

He really depends on the sector.

So for example, one you know when when we were um when I was trying to underwrite open door, what I really wanted to understand was, you know what do take rates look like in all these various markets? How do I think take rates will evolve here? How do value added services work? What kind of margins can you sustain? What is the sensitivity of different parts of the real state economy to interest rates? You know that's an example of work when I was underwriting.

So if I you know what you trying to understand is you know how do banks generate that that Christian come you know them um how does that change over time? How does bank charters change that? Um you know how do loss rates change in in no times of um economic expansion versus recessions? How do you Price all of that into a fair, fair value of a business? It's just a lot of really detailed diligence to understand all the facts or as many of the facts as possible of the business that allow to have a clear high sense of what's possible.

Then there are others which are pure technology bets where you trying to understand either uh the biology um or the technology. So in the case of the deal that I did you know today or this past week myself, um a budgets of family officers around the world um LED by a great chairman public agra, or who started a phenomenal business called realty farma, which is public carlo slam, a bunch of folks we put in about half a billion dollars to to help advance into you know a clinical trials, this business that's trying to provide a solution to chronic Kitty disease. So in that example, IT was a lot of scientific diligence on what are the existing solutions, how do they work, what is the mechanism of action inside the body um how is this the same or different um what is the early data say um how are the clinical trials structured and then you come to an answer um in this case I decided the bed was were taking and like free certain name of the company uh and what they do the company is called pro kidney.

And basically the idea is that IT uses your own body to help heal your kidneys. If you are on the verge of chronic kidney section or you are getting dialysis, essentially, how much is IT remove cells from your body, from your kidney actually and then IT does basically put IT into interfuse does some specific things to IT grows and amplifies certain sell lines from your kidney and reinjects those back into your kidney and and tries to improve what's called your E G F R, which is your estimated clammer filtration rate, which is essentially a number that we can use to estimate how efficient your kidneys are. And essentially when you are, you know, a type of diabetic or you have created kiddy disease or kidney failure or your own dialysis, is is because that filtration capability has filed.

And so all these toxins are getting push back into your body. And so yeah, we took a know half billion dollars shot. I won one hundred and twenty five million dollar check.

I hope that works. That's amazing freedom. We saw some satellite images this week, uh, by and I guess announced them. They look pretty trippy, explained to us what the downstream effect of what is, I think the the most clear picture we're seeing of the Cosmos ever created and what that could actually do for humanity.

Well, sure about that.

But OK, no, I just like finding showed on monday. I just that's all those he made. They specifically had him share IT, which I think maybe they were looking for .

a many win or something good for him, has nothing to do with this program. I don't I just mean yet, like the scientists and the engineers and work on this for many years deserve all the freak credit. The James web telescope is a space telescope just like the hubble, right? Remember the hubble space telescope? And this is a massive improvement over.

So imagine you you're in a book and you're trying to look at the bottom, the ocean. You take a bunch of oculus, you look into the ocean and you try and see what's at the bottom, the ocean, how hard that would be, right? There's all this monkey stuff in the water.

It's going to be really hard to see IT. The reason that we create a space telescope is so that the same problem that we would have looking at a telescope through the earth's atmosphere doesn't impact the light coming into the telescope. And so there's so much stuff in the atmosphere, right? There's miles of molecules in certain does moving around.

So by putting a telescope in space, we get rid of all that Martinez. And now we can really capture the light that is coming from far, far away. Concentrate that light onto really sense of photo detectors.

These are photo detectors that Operate at merely um the the coldest point in the universe. I have two hundred and sixty three kelvin and that photo detector makes IT extremely sensitive and using a twenty foot wide mirror we can capture all the light that's coming in. Concentrate on to the photo detector and and read that light.

Um and so why is this important? Why is this interesting? Well, people get really excited by and flip out over the cool imagery that they see these images, colorful images of galaxies and stars far, far away.

What we're really doing is we're not just looking far away. We're looking back in time. So these are these images come to us from galaxies are four point six billion light years away.

So IT took four point six billion years for that like to reach our planet. And we're actually seeing what happened in the earlier part of the universe. And we're seeing how these uh, galaxies, uh, form, how they're moving, how to interact with one another, how the plant planets interact with one another.

But what a lot of people miss that. I think the most important thing to highlight as an astro physicist, when you're looking through telescope and gathering telescope data, you're not looking for an imagine like we looked at today, that's really good to sell the story and get by and to do a press conference. What they're really looking at a spectrograph s at a spectrograph is, uh, no, uh, IT shows for every wavelengths of light across some spectrum, what the intensity is of that that amount light, that that wavelength of light.

And particularly the jan's web telescope, has incredible microsoft race, an incredible sensitive that allows us to go from new inference to inference in some people like, and look at that spectrograph. Why is that important? Because if you can capture the spectrograph in a very high resolution way for a sun or for a planet far away, I can tell you very specifically what the movement is and what the chemical composition is of that object.

And from that we can start to do incredible research and infer very important things about how planet form, how stars form, how many places like earth might be out there, how things are moving, how much math or matter there is in the. And there are two very, very big in questionable phenomenon in astrophysics right now. One is called dark energy.

Once called dark matter. Turns out the majority of matter in the universe is undetectable. And there also is this really weird energy force pushing on everything in the universe, causing the universe to accelerate its expansion. So the universe is expanding, everything's moving away from itself, but it's not just expanding and slowing down, expanding and speeding up.

And so having this sort of instrument in space that allows us to capture in a very high resolution way, using spectroscopy and other tools that, after physicists to use and Better map out how this is happening in different parts of the universe, starts to give us a Better sense and allows us to kind of inquire. And start to develop theories and what's really going on. And I want to say one more thing because a lot of people think that this stuff is just so esthetic.

And it's like, super interesting why we spent tenderly notist m is most applied engineering. And the technologies that we've developed as a species started out initially as pure research, with no frequent clue where I was going to go to. Imaging, DNA, peninsula electronics, M R I machines.

So many of these capabilities evolved from scientists just query ying the universe and asking questions and gathering data. And all of a sudden they came across something, developed a theory, built an application of that theory and a technology 你 that change the course of our history as a species。 And that's the reason to do pure research.

And that's the reason it's so important for us to put ten billion dollars into a program like this. We are going to discover amazing things with this tool. And IT will ultimately hopefully yield advances for human kind that we cannot even context today. Energy right, understand dark matter. And to changed everything, energy right, to think about IT one day, there might be a capability where we say there's a new class of matter and a new understanding of energy that we can then apply in some form of physics on earth that we can do something interesting with and we have to be able to query and understand the universe to do that.

Could we measure? Could we measure the matter from .

uranium is coming? I mean, the how will the scope actually, if correct me, i'm here and actually told this the universe, how much drug matter is in your instrument out? A lot a lot you're full of IT um but we now know that I mean hubble told us the rate of expansion of the universe and IT also told us the age of the universe and we found all these are the planet total to freeboard point about you know looking you know through the through the muddy water. Here's a great visualization on the left you have bubble on the right b and if you slide this, you can just say like just how Christal clear and these images are. And from my understanding, we found some number of universes already that we did, not just from the first images.

By the way, I want to just give everyone a heads up. This image looks be beautiful. And one put IT behind my friend and desk cak, because I take IT.

So fantastic. C astro photography is one of my kind of all time, you know, favorite forms of art. But um remember, this is imagery that was actually captured in near infrared and infrared spectra, and then they converted IT to visible, like to make you look cool. So remember that these images, these clouds, if you are actually there, don't actually look at like that color is a very cool way to visualize the dentist and .

the where is for you in terms of your excitement between the new season of doctor who and the foundation series OK.

let me you let me let me just give you guys one more kind of, yes, really interesting. If if you start at our sun and you look at the sun and super bright, if you go at the speed of light for four minutes, you reach the earth a couple minutes, reach the earth, look at six minutes or seven one look. And now the sun looks like IT does in our sky.

If you go for another couple minutes, you end up looking back from saturn, and the sun starts to look like a star. I mean, that's how how? Now, imagine continuing to go the speed of light for another hour.

You look back, you will hardly be able to differentiate the sun for the rest of universe. Now do that for four point six billion years, and you're shooting away for four point six billion years. Now look back how freaked and harder to be to see anything that's the technical capability we just put into space.

We've built a twenty foot wide mirror to concentrate the light. The photon that traveled for four point six billion years lost all of their dead city, lost all of you, completely dim out, completely defused. And we're capturing a few of them, run that concentrated way onto a detector for minutes at a time and generate this image.

It's really profound how technically complex this is. And again, that technical complexities can ultimately yield other technological tools that we could use in all sorts of industry. So I I I just wanted highlight .

that I posted for you guys, uh, it's an incredible story. But basically this program was riddled with delays and things that weren't working. M.

M. They put this quite very assuming engineer in charge of IT, and he completely turned the whole thing around. And it's one of the .

most incredible quotes. What is name up?

His name is greg Robinson. And he turned a ten billion dollar to buckle into a ground breaking scientific mission. This is the quote from the wall street journal, the code from the NASA, the head of NASA science mission director Thomas ubi an says at all, there's a huge distance between success and failure and only a few actions that move you from one to the other. Uh, he said greg Robinson worked such wonders that his boss calls him, quote, the most effective leader of a mission I ve ever seen in the history of NASA unquote. Really incredible.

Uh, this project yeah, the eleven billion big yeah and this has been going on for, I guess, twenty years now um this process of getting this bilton ten years of really intense building, what would the next Normal will switch over the politics for a quick second as we as we wrap up here, free berg, what's the next telescope? And and because obviously, if we've gone hubble to web, what would the next one conceivably look like and what would the time mine that is another one that's gonna.

And then what would that enable? Because IT does feel like if we accelerate this, we're gonna get a deep understanding of the universe, that this seems to be accelerating, our understanding correct, and our technologies obviously accelerating. So feels like we could send another one of these out in the next ten years that would to work.

This one's capable. yes. So A A lot of um uh telescopes Operate a different wave links and there are to kind of pursue different missions. So there there some telescopes are already Operational and kind of a gama spectra, but really there's a we I don't know we ever talked about this on the show, but one of the the really interesting areas of inquiry, uh, is, uh, is these gravitational wave detectors. And there are new more advanced versions of those systems starting to come online.

Those are not space space telescopes uh and and we can talk about that another time um but uh, they're creating new methods of inquiry where we're not capturing photos right coming from far away. We're actually capturing the waves of gravity coming from um interactions of matter around the universe and it's a new way to kind of observe the universe. Those telescope represent a new class of inquiry that was just kind of you know, discovered a years ago and proven out.

And now there's there's a lot work. You guys a photo of a new dog I adopted last week. Her name is Daisy.

We figure out from Virginia daily is one of four thousand eagles that were rescued from a facility in Virginia that was shut down by the doj. This facility was investigated by Peter and the humane society, and they basically shut this facility down. This is in the united states.

We only do animal testing on bio. There are the only dogs that we do animal testing on because they can put up with pain, and they have a high tolerance and a high threshold for pain is a really awful fact. We need to change that.

The united states, the fda does not provide good guidance on this. So former companies, pesticide companies, makeup companies very often test on singles. So this company um you know that was Operating this eagle facility in Virginia was shut down for um you know uh ethical issues after facility and the humane society uh took a control uh the company is called in viga their parent companies publicly.

I think that the fact that we test on these goals in these countries awful we adopt a Daisy. Uh there are four thousand beagles like daily available for adoption. I'll put some links in the show now here people feel free to go grab.

I'm sure this long list the dog is absolutely incredible. I think that it's awful. We test on dogs in this country.

Um and I I think I urge anyone that has influences of the fda to get them to provide Better guidance. This is not the laws not required and they don't provide good guidance. And so a lot of companies defector and default testing on beagles when they really don't need to ensure that.

So let me ask your question. I think it's incredibly that you adopted the dog, I hope, all four thousand and get adopted. How should we do testing totally? I I look.

I think that there's this really important ethical lines here, and we can debate those. This is a good nuance conversation. We use mouse models in biology to explore solutions for human disease.

We we use primate models, right which means we use primate, we use dogs, we use cats, we use mammals um there there are certain things that are obviously not necessary. We don't need to take bigger and poor tons of kim cardatas. You just make up line in their eyes to see what happens. It's not required by law and its not about getting some pharmacology drug proof. This is in an area that I know i'm not going to get into the debate on, uh, expLoring and resolving kind of pharmacy tics solutions and and things that can actually treat human disease. Where i'm particularly sensitive to is when it's not needed and when we're taking these animals and just doing awful things to them, uh, when there's no law that requires IT, we're not putting stuff in our bodies and the season about um you know protecting humans, it's really about cover your ass behavior for makeup companies and pesticide companies that they to be doing and that's really what i'm addressing.

Three thousand nine hundred and ninety nine bags to go if you adopt one of these beagles, send us a photo and will share IT at the end of next weeks program.

Thanks for letting me say that guy is really important to me.

is super important. And how we treat a dogs who are connected to humans in a very special way, that speaks volumes to us, individuals, sex IT. Would you like to well on the biding and administration talk about twenty twenty two or give us update on the ukraine? And I give you the choices.

I mean, it's like elder abuse this point. No, you're trying to.

Can I ask your question?

I know you're trying to team me up here, but like all I can say is nine point one percent. I don't want to beat a dead orse at this.

Can I read you guys something? And you can tell me there were these. There's a, there's a group called committee to unleash prosperity. But two researchers, Stephen more and john decker, this is in the wall street journal article post in the group chat, the pair studied ed, the resumes of sixty eight top executive branch officials whose work shapes the economy from president biden and treasure secretary elen how special assistance on economic policy, quote, average business experience of biden appoints is only two point four years. Any fresh face twenty five year old on wall street has closed more private business hours again on reading from the journal article that most of washington top officials, sixty two percent, have virtually no business experience on, quote, we trust the average donal trump cabinet official had thirteen years of experience in the private economy.

The .

aster, I wanna get rid of biden that I want him to run again. I've never seen a president been defeated on and turned on by his .

own party so quickly into ministers. And he needs to have a wholesale replacement of the team that he worked with on domestic policy is not working and cheap.

That was his pitch. We would do a back to Normal sea. He was gonna, you know, more of a centers, and it's not what we've gotten. But of course, he was handed the disastrous economy that trump created.

Why do you say he was handed a disaster .

economy because of a IT and because of the massive stimulus that we spent? Those two things that was like a set up. I mean, if truck on a second, do you think that would be much different if trump is running the economy with the setup? Was there truth, probably spend more money, right? Truth.

what to spend more money? It's a really good question, actually have to think through that. It's a really good thing.

Let's move on. What's update?

Ukraine is a really interesting chest can going on right now where the russians are slowing the flow of.

no, no, Better than that. Better than that. They shut down nord stream one for their annual a maintenance. It's supposed to be back up by july twenty first. And so the real question is what happens if, uh, putin hand checks europe and just takes an extra day or two to get that thing back up and going IT get .

prediction right? I think the western alliance is going to fracture.

Come this winner. Yeah, germany is going to to be freezing. The germans are not going to take this. Well, we make up.

put the heat on. Listen, a foreign policy based on virtues. One thing, when your economy is good, good and you are not worried about your energy security and you can heat your homes, this is another thing to have a foreign policy based on virtual signing. When your economies in recession, you got n away inflation and you're in winter and you can't heat your homes.

you more change real quick.

Three or four months ago, the liberal interventionism triumphant about this ukraine war, there are three big predictions won that ukraine was gonna win. IT looked like ukraine was wearing the first couple of weeks. But now he looks like russia has one, the dawn bast region.

Number two, they predicted that we would collapse the russian economy with all these sanctions. The opposite happened with collapse our own economy. And number three, they predicted this would strength in the western alliance. That's the only car that hasn't know basically turned yet. And I think IT will this this winter, I think you're going to see serious opposition to the way that the by administration has LED the western response.

I I think it's well said that if germany has the gas lines that three long ahead, you would see a definite fracturing of how people look at IT, just like they flip last week and they made natural gas and nukes, uh, nuclear power of Green energy. So yeah, there are morals and ethics and the virtual signals a go as far as their wallets and their heat and meals go. As we all know, this is a bit another amazing episode of the all in podcast for the barren of eagles, the dictator himself and the rain man. Yet definitely bids fall.

Now there is no chance for any of us to pass feed on the popular. What do we do? I going to save a well d next week I am onna, bring a door. I kill myself.

Now you're going to prepare dolphins. that. Shami, okay, great. That that secure your part as the most hated.

Best day will see you all next time on episode eighty eight. Good luck. Eighty eight.

Do you all in park? Bye bye. Love you Better 拜拜。 Rainman give.

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