E98: Big tech starts making cuts, Fed incompetency, global debt, Russia/Ukraine & more
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Everybody, welcome to episode ninety eight of the all in podcast with us again, the sultan of science, the queen of kwa, looks like he brought a truck or hat. Are you getting jealous of the moncler hat or just not bathing?

I I haven't had heard like six weeks. I'm getting my cut this afternoon.

Not going to make a difference. I think what freebody just trying to tell us is .

that he is the audio killer long known as the union, right? And moncler sax is here with this four hundred dollar monk lair hat, and of course, the dictator himself.

I asked ron. I asked ron to cut my hair so that .

the White patch is .

more mini batch. It's just there.

No way that looks so odd if you are doing our purpose. It's super random.

I like the way that. I like the way .

that looks look like that i'm about to go.

by the way, you know this in the fall IT truffle seas and i'd like to grow IT so that it's .

more wave White for White truffle .

season gotten I needed to have a reset cut so that then we could grow wavy for the fall for troubles season.

Listen to think less relevant to us and your cashmere sweaters is your.

We can give.

We source to the fans .

and got.

right? I announce the hiring freeze in a riot at meta. He also said meta will reduced head count for the first time in its history. Meters account in twenty twenty three will be smaller than IT was this year.

He called at the end of an aero r of rapid growth, this on top of apple reporting, and apple got wallowed in the market for the first statement forever a apple pull back iphone production h for the fourteen after slower than anticipated demand. As I mentioned on previous episodes, they've done a gentlemanly off similar to, I think, matter in that apple said you had to be back in the office three days a week. Bunch people quit.

So, uh, you don't have to pay them, I guess, huge packages when they quit that way. Google C E O cdr PCI also called that employees in july as you guys are red and he wrote, there are real concerns that our productivity as a whole is not where IT needs to be for the headcount. We have google, of course, hundred seventy four thousand employees.

So I guess the question I have for you is, are these the last towers to falls to month in this a pull back that we've seen? These are companies that don't need to do the way off to have tons of cash. So they're obvious ly doing that to maintain earnings.

Uh, one would end to maybe, uh, send a signal to employees that they need to work hard at. What would you read this this past weeks? Shoes to drop. Well.

definitely is the end of an era. I think IT is sort of like the the end of this phase of big tech where you had this you know unfeared growth, where these business models were largely unassailable and they you we're really just fighting to grow into their evaluation and just generate more revenue to justify where they um where they traded that. And now it's this next phase where they have to Operate more like a cash cow business.

And so you know, it's an acknowledgement that the growth is tapering. It's an acknowledged that they're gna trade on a pretty tight band in terms of multiple, which means that they have to manage expenses much more tightly, which means that they can't have a really broad based surface syria in which to Operate an experiment. You have to keep the experiments small.

You have to manage your expenses. You can't have employees basically, you note, run over the place. Management has to have a firm hand in, in dictating strategy in what people work on. So I think all of that signs that I actually, Jason, I don't think this is the end.

I actually think it's the beginning because these companies, apple, facebook, google, maybe a little bit microsoft, are the most sensitive evaluation because they are the most widely held right? These are, these are the know the equivalent of U. S.

Treasuries in the equity markets, the safest, most predictable, safe haven. In times of stress, if you want to own big chunky cash for generating businesses that you know are relatively unassailable, you couldn't pick for Better businesses than those. And so the fact that they see enough in the horizon to say that we need to button down the hatches should be a warning everybody else.

Freeburg is is as simple as this that the they're moving from top line growth to bottom line and they going to need to look at the expenses, which you read on this first .

silicon value. Well, I just to zoom out for a second peak. Has I remember I started working in silicon valley in two thousand and one, you guys are little older than me, I think.

But I like we were right at the kind of year one of the dot com implosion and all the fall out that happen from all the funding that happened to ninety seven to ninety nine and two thousand. And so from o one to o three, IT was super like deflationary. Everyone is cutting costs and all the money that have been raised was kind of being pissed away or companies were liquid eating and you know, so on.

And then starting in two thousand and four, which is actually when I joined google, but there was also this big movement starting over three or four of, like what people called web two, then kind of new business models and new businesses started to emerge that seemed to have real traction and real legs. And IT was a different story and a much more rational story than what you saw leading up to kind of two thousand and two thousand one. And IT was around that time when google started offering these crazy benefits.

So I do was like, there's a gym and free food and all these amazing workplace. And suddenly everyone had to do that to keep up right? Facebook obviously limited, all the other big companies limited. And then I became mainstay. And they also raise compensation in the valley, significant because google had really cracked and not on how to extract value from the internet. And IT really changed everything in silicon valley and changed everything in tech because suddenly every tech company, whether you are enterprisers twi or hardware or internet e commerce site, to be competitive and higher, great talent, you have to have the same sort of environment, highway ages, great salaries really share the value with your employees, you know, gyms and free food and all the sort of stuff.

So it's the first time, I think, in a generation since, like two thousand and three, two thousand four, that we're seeing things start to turn the other way where instead of adding more benefits and 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. And as a result, I think we should expect to see a similar impact on compensation, on benefits, on value share and on kind of prohibiting the higher and opportunity to kind of jump jobs and you know, opportunities that we've all kind of taken for granted over the past eighteen years. And this is going to be a real shock to a lot of people that work in tech and a lot of people that have gotten used to the idea that every company offers great benefits.

There's always another job to jump you, to pay you more. And that that at that engine of growth that was really driven by these big companies, by google, facebook, apple, starts to slow. No one needs to compete with them anymore as much. And the compensation plans get tighter and the option value gets tighter and the free stuff gets tighter. So it's the end of an era, and I think it's a new world for tech and slogan meli sex.

What are your thoughts here in terms of startups in relation to big tech, maybe having these austerity measures kick in and a refocusing on profitability?

The big take way here is nobody and it's not just starts have to tighten their belts to see big companies to. And I think we're headed for a broad based recession. That's what IT seems like.

You saw drug Miller's comments this week predicting a hard landing in twenty twenty three. No one's talking about soft landing anymore. In fact, I think we're all wondering who's flying the plane.

So I think we're headed for a pretty big recession. And I just taken a slightly different direction. I'm down here in L A. Had dinner of the other night with a friend who is a show runner in hollywood.

And so a show runner bases like the head writer, and they basically put together the writing team and the the content for show. And then they saw to to networks. He said that like, no one is buying anything anymore here that last year you had, there is tremendous you activity and he saw like the the game ethra guys, uh D N D. They got like a three hundred million dollar deal from netflix and share .

a million dollar deal yeah they got .

like there are massive multi hundred million dollar deals being made last year and that was just for like future writing deals like netlist wasn't buying libraries when they did those.

They were walking down talent for the next year.

exactly. So all of that has stopped. And the reason is that netty xy stock has been hammered, right? And only so they not have the capital to do those kinds of crazy deals and anymore.

But they know that wall street is watching them. And so fundamentally, they're question whether a business small even works if they have to spend that much money on content. So then all of networks is competitors basically have stopped.

So this whole, like frothy, the environment that you had for in hollywood last year that is over the force has been turned off and is not even turned off to a trickle is just stopped. So you think that this like massive asset bubble that we had last year was just in crypto and gross stocks. It's not, I think that actually trickle down into the real economy because netflix is one of those great stocks.

The money then flowed into writers in hollywood and then lots of other places. This is one small example, right, that, that this asset bubble wasn't purely just something that can be localized to cyp, to IT affects real people in the real economy. And we are just begin to see the online of that yeah .

what's absolutely correct, I think, is people were more mistakes. They had free capital. They wanted to place more bets. And sure, why wouldn't bet on the game of thorn n retires for the next decade? Looking at this is going to be fantastic for startups.

I mean, the startups i've work with over the last five years have been they always come to me, so I ve got to developer. But this persons got three offers from you, facebook, google, and they're like hatamoto land. This person, they got three hundred thousand dollars a year, offering a million dollars in our use.

Basically, founder had to say, no, I can't get that person. And so they had to get creative. And they were hire people, ukraine, york, everywhere in between, to try to find developer talent and had to get created.

Now all of those people are not going to have for job offers, are going to have no job offers. They may have goten laid off. And those crazy, unrealistic at a school deals are going to be gone.

And this means of consolidation of talent. You look at the startups, uh, community right now, tons of companies are just going at a business they are packing IT in. Those people are gonna work at the other startups that are stronger.

So whoever makes an out of this as a startup, this is how the cycle of restarts is talent and consolidates on the winner. You would be like taking the N, B, A and getting rid of the bottom, you know, ten teams and just telling the best players there move up to the other teams and, uh, everybody else, you're out of the league. So I think this is incredible. Set up for twenty twenty three for startups to consolidate talent. So i'm actually excite another .

it's another data point that again, I said IT last week, i'll go out on a limb and predict. My equivalent november fall predictions last fall, that was that the markets were gonna cooped the bed. My prediction now is that I think the markets are about to me and consoler dating, yep, hundred percent.

And this is the time, I think, to start nimble and start getting ready to really rip the money in. And I think there's enough every day that kind of like tell me at least that on the margin, it's time because I think the markets do a 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 gas is what's about to happen in the future. And for my perspective, i'm actually pretty starting to get a little constructive here. I think that um when 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 known for the last decade is that if things got very, Harry, if there was uncertainty in the market, the federal reserve would and they have consistently stepped in to create a buyer of last resort.

And so I always eliminated that last part of true, you know, supply demand baLance because they would just come and say sorry in many ways in tech, what the big tech companies were, were that, you know, you could never really find what the true market clearing Price for an engineer was or what the true amount of expenses you should spend on office space or you know free services, because you always, always had these companies, which was an escalating arms race. You know, if one company had a massage, the next company had gyms in massage and physical therapy, and the other company would have buses to take you to the gyms in massage and therapies, and the next company would have protein shakes that were fresh. He made, you know, and I just kept escalating and escalating because the cost didn't matter. And they wanted, if nothing else, to get that marginal engineer or product manager or business person to work at their company, which eliminated the risk that they would actually start something to disrupt.

Blocker strategy is very well .

should the blocks strategy is very real. So when you take this big tech put out of the market, you will get true Price discovery and you will find out what the real Price should be for this kind of an engineer, that kind of a product manager, you'll find out what are the real expenses you need to bear in order to build the real lasting business, and you'll be able to sort through all of that stuff out. So I think it's a really good moment.

And again, it's yet another indication to me that I think, broadly speaking, the markets are now starting to stabilize. All the irrational behavior is starting to exit the system. The party is in the last few hours, volumes going down.

The alcohol's been taken away. People are hanging around with a little bit. Lights are coming on.

There have been here a little too long. And I think that that's a very healthy processor ign economy. And I think that that's what's happening right now. So i'm constructive and a little bish, i'll I go. I think we could be three to five percent from the laws but were more near the lows than .

the highs IT certainly feels like the double bottoming ap process was the on the bottom and ah who knows how heart the landing uh is but I think is a great set up for startups and people who want to start company. Is that if you saw girly did degrade interview that trended on the twitter and you to say this is the best time to start a company and I have to agree with him like you're going to a have talent available and who we competing against for buying acts like there's so many marketing opportunities available. The first thing to go in in a downmarket like this is advertising and marketing.

So and by the way, we will also relieve what we have empirically known to be true. And it's been it's been pretty well proven. The investment that one makes in this period will probably be the best for many, many years to come because they'll have the most asem tric upside.

And that was true in two thousand and eight and nine and ten IT was true in, you know, two thousand and two, three and four. You mean you're talking incredible companies just in those two periods. Think about this at last in tesla, goober, google, L B N B, uber, instagram, what's up? Incredible businesses that have created tremendous value. And so there are businesses that have been invested in for the first time in two thousand and twenty two and will be invested in for the first time in two thousand and twenty three and twenty four, which will be the leading winners of this next phase and this next leg up. And so the real opportunity is to find out who those companies are and get behind them.

I think hundred percent, as I tell people, fortunes are made in the down market. They are collected in the art market freeze. What are your thoughts here in terms of the start up community or company builder uh and talent because that that seems to be the peace that uh could be a silver lining on all of this uh, male room that we're going through.

I mean, technology always marches forward. So there's always you know there's always progress to be to be had and to be made. 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 a silicon valley started.

Now IT is silicon valley is reinventing other industries by being technology LED. And that is certainly still true because there are so many I hate using the term, but undisc pt industries to pursue efficiency gains across and technology built in silicon valley can, can, can drive that. Now when I say silicon valley, I don't mean the physical location anymore.

And that's the confounding factor here, which is that there does seem to be this distribution opportunity that also emerged at the same time where people are doing remote work and work from home and distributed workforce models that seem to be highly effective. You guys talk about IT last year, and I know they ever had an office, right? I mean, most of the people work from home there.

And I think that the success has been seen in software companies that have Operated that more also changes the the calculus because not only are our wages are lower and therefore the cost of Operating is lower. Not needing a fancy expensive office and safra o needed, but you can also access far more talent than you ever could before. You don't just need people to live in the bar in new york air wherever you're Operating from.

So from a software perspective, this is an amazing time. I'll tell you there's a flip side to this. Like in life sciences, real estate is more expensive than it's ever been right now. The the area to get lab space, there's a total dirt of space. So there's certain segments that I think .

our large lab space like a specific .

a specific design ic transforming biog health .

type of location that's sanctions for that.

Yeah yeah. Live space is a certain kind of built out and it's not. So there's a certain amount of square footage being built out a lot around the area.

But um the thing about life sciences companies is you do have to Operate physically because you're doing something, you're building something physical. And so that is an industry that continues to remain very well funded. I'm very competitive. And uh, I think you know there's still tremendous value. And by the way, is a lot of public companies to invest in, not on the primary basis, but that are tools companies that are benefiting greatly from the continued demand and and and growth in spending in that categories.

sex. Uh, to talk about competition, you know what to talk to you know of these large companies pursuing many different verticals. We talked about anti competitive stuff, the can, the bungling in the sweet of products at microsoft, other firms. Now you have all these being cut.

Get get to the room 吧。

Get to the room.

By the way, did you see the Elizabeth warn of all the things he could send a letter to the ftc. about? I guess he sent a letter about the room. Ba.

I me set a caren is just too much when, I mean, there's a lot of other stuff going you like you can let the room with sly like just let me like that's not important.

You know all the things that are going on right now in twenty, twenty two, it's the room, but that gets on the that gets that's above the line at this point. My oh my, got what is going on.

There's a famous history of war, or one called the sleep Walkers, because that's basic. What I felt like is they to sleep, walk way to a war. War one, basically, what should have been a minor regional war, the third buckings war that nobody should care about.

Nobody should care about this. France, further. And guy, except for, you know, the austral, yeah, exactly.

But the whole world, basic about themselves, invested in this thing. And IT feels this is what we're worried about. We're worried about the room bot when the administration is sleep walking its way .

into the next one. Well, I do not want amazon okay, to control my vacuum. Er, i'm just to o what happens?

Dr, they know which rooms are dirty. What happens if they get to hold the room?

But i'll tell you what happens. The next thing is they gona go after dyson OK. And then once they do that, they're going to put chips in these things. And all of them are to know that. But Jason said.

what are you eat where your dust bunnies are?

Yeah, all of this stuff, this must be stopped.

Lena on no. But that to the point of competition, you, you, you are seeing cuts to, you know, all the, uh, non core projects at these big companies. This is going to be great for startups, right? Like the idea that facebook could focus on, you know, a fourth, five, six thing is gonna away. yeah. Well, look.

are you you're right that great companies are built during downturns. Paypal was built largely during the downturn. The star P.

I created emr was built largely during a downturn. So listen, there's going to be opportunity as innovation doesn't stop this because we're in a recession or depression. But I gotta tell you, I like to moths.

I am having hard time finding a silver lining right now. 啊。 Part of IT is the comments that drug Miller just made with and he's been right about this stuff.

We ve been talking about his predictions for over a year on the .

arted yeah since then he's one of the most successful macro traders in the world and and you know university respected, I think. Deserve titely so member, he said that that this is in mid twenty twenty one. He said the fed was engaged in a radical monitary policy because even though we are going to get inflation, IT was around five percent then that they were still engaged in this bond buying program.

There are still bought like hundred sixty billion of bonds. And he is the first one waving the alarm by saying, what do they do and and now of his predictions have come true, I mean, wearing a inflationary spiral. And his prediction now is the central outlook is that the dal Jones will be in the same place where IT is today in ten years. And he made the point that, yes, equity markets to go up in the long term, but how long term you talk about for for roughly thousand, nine hundred and sixty six, thousand thousand nine hundred and eight two.

the stock market was sideways. Japan had a lost decades. Well, if this is not presented after an asset bubble.

right? And then from the great depression, IT took until one thousand nine hundred and fifty five for the stock market to recover. So in the long run, the stock market will go up.

But I could be that we could have um a flat decade. This is his prediction, right? But he's very small guy. And and then on top of that, it's not to say that you can be one of the ones who make money during that period because lots of people do. But we're in for, I think, a very tough economic period because of just this radical expansionary fiscal monitary policy. With that, basically, the fed and the administration printed the last two administrations, but especially this one, print a ten trillion dollars over the last couple of years.

and the most of us on continue.

No, not one. Po.

we had biden baskett g in this hole.

We had the two trillion dollars of american rescue plan, which we didn't need. We just had another two trillion of the infrastructure bill, the inflation reduction act, five hundred billion for.

so a student debt.

Yeah, exactly. So James, what are you talking about? And this was all after the emergency was over.

But I think, I think that you guys are debating the wrong thing. I think that was drink and Miller. I think, by the way, just to be clear, both drink, Miller and I can be right, which is he is commenting on the real world economy going into a recession. What i'm saying is that the stock market tends to be nine to five months ahead of where we are.

Nit through that chart, please.

that I ask you guys to share, just to give you guys a sense of trillion .

more than I I remember in the q two of twenty twenty quarter, the economy 是 a thirty percent and realized rate。 Everyone thought we're going to a great depression and that's why they passed all the stimulus by huge bye tian margins.

Just the Millers. Best point is that this is all post vaccine, right?

Ah yes, so so look and and I think we can find back and second guess what happened during the trump administration there's all saying that many the worst ideas are pie partisan. But then you know the spending that happened in twenty twenty was clearly by parts and and maybe I went way too far but in the last two years, like drug said, I was post vaccine and post emergency and they kept spending and is a noticeable strain. IT was the bond buying program of the fed, where the economy was ready fully back and they bought another hundred and sixty billion of bonds.

Yeah, I think I think the thing is that, you know, I think stand is a proven republican. So maybe he is speaking a little bit of his book as well. I think it's fair to say that both trump and biden did not help.

But overwhelmingly, I think where the where the problem stands 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 was excessive. And what they essentially said 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.

We will step in. And that's what you know. Again, what we just talked about, the central bank put in this case the fact interventions and and these interventions really uh prevert the market because you don't know what's going on.

And that has huge ramifications in the real economy. So if people throughout this chart, the the thing that is really important here and what this chart shows is essentially all of the hiking cycles that we've gone through since one thousand nine hundred eighty three. So eighty three, eighty seven, eight, ninety four, ninety nine o four, fifteen in the current one.

And here's what uh, I just want to call out for you guys. What's incredible is that other than the one and eighty three, so this is sort of you know that last big one, what we've seen is that the stock market has a tendency to immediately go to the conclusion very early on in a row hiking cycle. And now why is that important for Normal folks listening to this thing? Well, the reason why that's important is right now where in month seven of a cycle, we obviously don't know how long it's gonna, but the odds are improving every day that were near the end versus the beginning.

And why that's important is, again, if you're thinking about when to, you know, buy equities, for example, this is a really instructive guide because what IT tells you is the closer we get to the end, or more importantly, the closer we psychologically know that the end is coming, we start buying. And and that's just a bad base statement that has been true. So you know what you see right now, I think, is really interesting, which is that despite all the bad information, oh my god, the north stream pipeline blew up could have have been satoh was at the CIA was at the russians oh my god. Big tech is slowing spending .

and firing people. China in A O.

H, how about something more than the night? The the u know us you want is really trading in a crazy way. The U.

S. Euro is trading in a crazy way. The U. S. Pound is going crazy.

Despite all of that, every time we trade down, the market consolidates very quickly. And we sort of like so I think we're forming a bottom. I do think that stand is right.

We are going to see a hard landing recession. Something will break in twenty twenty three. I hope IT doesn't. I hope IT doesn't affect a lot of Normal people, but it's likely but at the same time to find hard lending us.

So so unless d but at the same time, I think what's happening is in the equity and financial markets, we are consolidating a bottom because we're seeing through to that end state. And this is where chea backy get spot. So why is there a reason to sell now?

I think a lot of the people that are selling the smart money sellers that I talk to are essentially right now selling to book in capital losses to offset other capital gains from this year, a term that's called tax loss harvesting. And if you have gains through this year, which some of us do, this is the great moment to just sell the losers to boot the losses to get out so that you can minimize your taxes for next year. That's probably, I think, where we are at, and I think that's why they're still consolidated buying.

So what is the hard landing, Jason, if I had to predict, I think what, David, that is absolutely right. You're going to see unemployment get to an awkward and uncomfortable number five, six percent I think could be something that we see. And I think you going to see a lot more companies pull way back on their spend because demand is gna really module.

You know, i'll give you an a crazy example. You know what happens to all the people in the united states that are on ARM mortgages, right? Adjustable rate mortgage, when those things reset, they're gonna reset, two, three hundred basis points higher. Their monthly payments are going, are gonna go? No, it's already happened.

I really had a family member call me about this, and they're like, what do I do?

So in the U. K, in the U. K, forty percent of all mortgage dollars are interest only arms that will reset in january to around four percent, forty percent.

Can you imagine how upside down the U. K. Economy is gona be when people have to spend three and four times more to.

and then people have to go to work. So people who have not been participating are going to have those bills come in.

and they gonna have to go to work.

They going to have to go to work. yeah. So freeze. Ry, what you what do you think? Uh, hard landing here. And then what do you think twenty, twenty three looks like in that regard?

Looking pretty. Lake, do you buy that we're bottom ing out now.

strong. T H, A sort of hypothesizing.

I mean, i'll tell you. I was run in some back the enveloped math. You know how much death there is in the world? Take a guess.

Two hundred couple hundred million, two hundred million.

three hundred trillion. Yeah, that's a dead route by government's businesses and households. And if in response to the inflation, which is response to fiscal stimulus, which is a response to the entire economy of the world shutting down for a couple of months, we end up raising rates from zero to five percent. That's a fifteen trillion dollars of annual death service, which is like eighteen percent of global GDP like that the debt service alone. But what is the percent that means that for every dollar .

transacted no means not tax?

No, me.

you have you. What does that mean? Like, so so what?

So i'm saying that there's a massive greece happen that's gonna en right? And so what ends up happening ultimately is because you could run this across a local governments.

I think that means demand destruction.

I mean, dead households yeah think.

No, no. You print more money. I'm sorry to be the bear bad news but like IT is not as if we have a law, a constitutional law or it's not as if governments have collectively decided that you cannot have dead to GDP uh, above a certain number.

That doesn't happen, guys. We past one hundred under obama and we've just kept printing money. So whether we like IT or not, and i'm not saying i'm a fan of this source, right, we are kicking the can down the road. And what we're doing is we're extending the maturity. You know you'll eventually have hundred year government bonds OK, just like you have like now you .

know multi decade bond E R T. Because brilliant yellow actually said note of that when rates were like near zero and we had the opportunity to refinance the U. S government debt with using long term rates, basically long term bonds, and actually was trump O U you know, crazy trump hooo suggest a less basic shift, the dead to hundred year bonds.

And SHE said, no. So a dollar, right?

So the problem is that we have all the short term debt and look what just happened in the U. K. When list trust try to prop up the uh, bond rates by basically intervening SHE is basically an inflationary policy to fight inflation. The markets pute all over that and that's when they are the pound to hit exactly.

There's only so you have to have a buyer of the debt.

Think the list trust thing is really actually a microcosm of how unfortunately western governments are working. But I think there's a silver lining.

Like SHE basically came in a day after SHE got elected and said, okay, guess guys at the same time i'm going to massively cut taxes and i'm going to give you fiscal stimulus, I mean a cap your energy bills and i'm going to have these huge transfer payments from the government into the hands of uh uh of uh british citizens. I'm not going to comment on whether that's right, right, right, wrong. But the financial markets, to your point, David absolutely hated IT.

And within a few days you basically saw the pound get crushed. But then what did you see? You saw the bank of england decide that financial stability was more important and financial viability, meaning the things that he wanted to do were not viable, so you could have let the financial market sort this out, which would have forced the prime minister to basically abandon the policy.

But instead the B O E said, now we're on the unlimited buyer of U. K. Guilt, which is the name of the U.

K. Bond and everything. Step back. We're back to where we were before her speech, before the cancer of the exchequer speech.

And so IT says, if nothing happened and that's what's so insane to me, which is that even though the bank of england, by the way, in the next week or you are going to raise rates one hundred and forty basis point, one hundred and forty basis points, almost double what the fed is done the last three times they're doing both. At the same time, they're boat raising rates and directing as a backstop for bad policy. And this is what's wrong right now in the world.

We do not have a real check and baLance. So so my point of freeburg is just that i'm like emotionally on your side. But the problem is with thee folks keep getting bail out, David, they're just gona keep doing this stuff and there's no under sight. Well.

any the consumer doesn't get about that so that if you look at out a microbes instead of a micro basis, you are correct. These governments will just bail people out even if they make a decisions as we're seeing. But then the person whose variable interest more you just kicked in has five hundred dollars last a month and saving.

So they're now not going to buy a iphone fourteen. They're not onna upgrade their car every six years, going to do IT every eight years. So the demand destruction that's happening is going to be quite severe and that's going to reduce more. That's going monitor sy.

And then we remarked my words, the federal reserve will intervene. This is why I think we're a about the process. I think the the bleeding edge of the smart financial actors are actually on taxi cide and freeport side, but then they're taking that next intellectual leaning.

okay. Well, what happens when apple basically says, hey guys, i'm going have to fire fifteen percent of my employees? I think what happens is the fed intervenes. I'm just using apple as an example, but there is a threshold of demand destruction. Jason, I think you're right where we have the fed put come back on the table and the mark just go bank.

So instead, seventy five base points to three times, just going to .

be like fifty. They're gone to get to four and half very quickly. And then this something's gonna break like all these guys are saying, I think they're right.

And then the fed put comes back on the table and we'll the have the U K, you know the U. K thing happening, what? Six days hs will play out over six or nine months, but it's gna play out the exact same way and freeburg right?

You know, we should have kept dead at, you know, one hundred percent of GDP or less. And sax is right. We should have issued hundred year bonds and zero rates when we have the chance.

We didn't do either those things. So incompetent sex, I mean, there was no need to have rates the slow for that long and IT, maybe they could just keep them at some average number that are going down to zero, that spiking back up and just string spitting the steering will uh you know so violent. Why don't we have some basic uh concept of maybe not having zero rates and keeping them at two percent or something reasonable? So you have some dry powder.

Well, if you go back and listen to what the fed said and drug makes this point, they were worry that they got there was an inflation print of few years ago, where is at one point seven percent. And they all started panicking about not being at two percent. So for a point, three percent move that they try to engineer, they open the flood gates.

okay. And that's basically what happened and that's why he's so critical of IT. The other thing is the for the fed said we're going be data driven, but then the data came in last summer, we got that surprise, five point one percent print, and they dismissed that is transitory.

So they said they're going to be data driven, but they weren't. They were dismissive. Now on what basis did they conclude transits? Like, what was the proof for that? There was no proof that was a political consideration.

The administration and yelling speak, part of that immediate reacted to basically dumpling the news. I mean, they P. R did. I mean, they didn't want me. There is a problem.

They went from transitory to this is permanent to now .

six months and now .

we're at hard landing. Like these people are not component. Are they just not component?

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. I think if you had to take the other side, sacks, you know, the problem is they have a very specific strain of data that they focus on. And that data has all these weird anonymous to IT like you. They should look at rent data, but the way that the rent data works is that you know you bleeding in one six a month over six months, just as that as an odd example, or like used car data only comes in a certain way.

So I think there are driving in the review, ma. I think there is something to that.

I think it's simple in this, which is, listen, I think all politicians do this, which is when they get bad news, want to spin and they're going delay acknowledging the bad news as long as possible. So what happened last summer when the inflation started? They all dismissed IT.

IT was all a talking point. I mean, every single one of them. And here's the crazy thing, is j pal.

He's the only trump official who got reappointed by biden by a huge majority. How do you think that happened? And when did that happen? IT happened at the end of may last summer.

So just when the inflation print came out and yelling, the administration was saying he was transat. That's one powers up for renovation ation. And he sweep through the only trump appointment to basically be renominated without even a question by bian.

why? Because he got on board the talking points he wants, going to basically bucked them at that time. So he waited six months. He bought into the talking points. That was a hundred percent political.

a hundred person. I O is a very .

compelling argument.

I read that .

it's really compelling. It's really compare. It's sad but compelling .

that you should read the provoker. But keeping at IT, he basically says reagan came to him off sight where they know they won't be record and told them do not raise rates uh, so this idea that the fed is independent, like history now has shown us IT is not like there is massive, uh, political pressure on them. I think driving in the review mirror, clearly the data they have is not great and all the data is nuance.

You know, jobs. And this massive amount of jobs we've had this country is because of we have a new immigration cause. We only people into this country, we kick out P, H, D, that we trained and then housing, we have eye buyers buying this.

So to your point, time off, I think a lot of the data has changed. And there they've got a bad data set. They have a bad dash word and their driving with bad information. They don't know their direction. They don't know their speed perfectly.

You want to a board of director's meeting for your company and how's the business doing? And the CEO says, well, you know well where we're going to have data from six months ago and it's like, okay, I got that. But what about like last week uh, you would fire that C E O, to your point um and these things are knowable today.

Like there are businesses, for example, that are selling billions of dollars worth of like IoT sensors here and their energy sensors here. Everything is connected to the internet, everything is automated, everything is running in code. Um you would think that the government would say there is a national level directive here to get this into some kind of a system that we can use because these decisions are becoming more, more important. I think that would be a wonderful idea and a project I would have huge value.

a manhattan project for understanding the economy on a very granular level you invest in. To start, at one point, I remember I heard the pitch where they had people around the world taking pictures of food Prices, africa, india, the united states, anywhere. And then putting him into a database, Normal alizon him so you could know the Price of tomatoes or potaters on a global basis, you know and Normalizing all the data, they don't seem to have this data. You're talking about August state and it's you know we're now in october.

It's a really old situation.

I think you know our friend barkers were made this point, which was that, look, in the last F M, C meeting, the fed raised their forecast for what the neutral interests or be from three half to four point six percent. So in two months they raise their forecasts by one hundred basis points. What is that based on? Like is there a model?

I assume there is a model. I assume there's data. So one of they just open source that one of they let the markets like see the model they're using. So we have a little more predictability. Of course, they always have the direction to bucket or not follow IT or whatever or change IT. But like you know, wouldn't that be a Better approach is to like let us see 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.

Well, to your point, to your point, like there's the the fed is actually known as the gold standard of transparency. So the I M F has kind of like a of you and how all the central banks act last week. They actually, uh, exordium this is, this hurts me to say canada, because of their lack of transparency.

Currently, canada doesn't n't even put up minutes. And so they are like key canada. You are you guys like ah you know look, canadians I mean the canadian government, at least the total moral virtue signals but they don't value transparency apparently. But your point, David, there is a lot of opacity in these things that really determine how the real world works. And the impacts to individual people are going to go and get radiated way up and nobody really knows what to expect, even though the data is there sitting in plain site.

And two things can be true, I think. The fed, the process of setting central bank rates by the federal reserve. Should be reset. I also think that I could be true that the fed is not responsible fully for a lot of the conditions were now facing. We did have a bunch of policy decisions that the whole world god swept up in and seem to accept as appropriate at the time when we shut the global economy down. And there are some weird assumption or belief that fiscal policy would allow us to soft land or recover out of that.

And at the end of the day, all the fiscal policy did and I remember of speaking with, uh, smart person at the time and he said, all the feds gonna there are just going to inflame everything and it's going to take a while and everything will inflated in that way. Everyone will feel good for a while. But you can't just stop the speed of capital moving, goods moving and services moving for months on end and assume that the repercussions will not actually be felt extremely, hartley.

And at some point, things are going to come home to roost. And that is what's happening. There was no winning solution for the fed or for any central banker in light of the policy decisions that were made to shut the global economy down when covet began.

Not to argue whether or not that was appropriate, but that was simply a statement effect I set up before. And I I don't understand if you were to take a first principles point of view on this today and say, hey, let's central bank and how should they Operate. You will take all the data from into IT, from paypal, from VISA, from master card, from the internet. You would take all of that data. You would let the algorithms or the AI or the software figure out what is most predictive of certain inflationary.

recessionary totally and .

growth indicators totally. And you basically say, look, x percent growth, x percent inflation solver, what the the central bank's interest way should be. And IT should vary at a hundreds of a percent or a basis point every day.

And every day the rate is reset and the software reset. Ted, and to have you know some degree of human logic or oversight, seems appropriate to have a decision made in quarter percent increments once every couple of weeks. Uh, seems seems kind of arcane.

So I think both things are true. The fed doesn't necessarily fully responsible. We all want to point fingers. You know, we can point fingers at at the the the mania that swept over the higher world when we started our podcast.

And everyone was like, what the hell going on where we locking down the world? And this is not. And IT felt nuts. And the response mayor may not have been appropriate, but at the end of the day, there was a cost, and the cost is going to be born for very likely a decade or more. If we are able to get through at all.

a lost decade is a possibility .

and said central banks can be read. So yeah, well.

I think there's actually two original sense of the economic crisis or in one is lockdowns. You're right, like that was a free aso IT didn't do anything to stop code IT was an economic disaster that we overreacted to lock downs by then printing all of this money, both fiscally and to expansion this monitary policy. So facebook is write ite about that.

But I think the other original sin here is the the Q, E. And the serve right is your interest state policy that began in two thousand eight, two thousand nine. We broke the glass, the case emergency.

yeah. Then I became standard, like IT was on autopilot. Why do we keep printing? Why did the government keep buying IT was .

tail event that became the mean, what is the problem .

every time government, that idea.

I mean, once said .

there's nothing quite so permanent as a temporary government program. How many times we seen this? Every time the government supposed to do something on a one off and mercy basis like zipit and are becoming institutionalize, ed, we saw have kids in schools in california wearing mass. I mean, that it's the same crazy thing that people cannot get off these programs.

The thing about serb, which if you look back what really happened, if you think about like how people live their lives every day, what what, what has happened in our view of government and politicians, it's really erode IT since two thousand and seven, two thousand and eight, right? There is a huge amounts of ranker. Nobody gets along.

Everything tends to happen on partisan lines. And the reason I think that, that was allowed to happen or that accelerated is actually because absorb. 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.

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 of these smart people actually had to get together in a bike partisan way to figure out how do we bail out amErica and prevent banking crisis, that was the last real effort that touched a lot of people. But then, David, as you said, at on the heels of that, we broke the glass and we've been fighting ever since.

And the peak of that fighting was basically Donald trump getting elected. And so I think, like what IT chose is that if you have these irrational central bankers that will are that willing to constantly bail people out, you will never get a high functioning government. Because policy is irrelevant.

Good policy doesn't matter. Good policy doesn't matter. If any of IT goes wrong, the central banker will come in and bill is out.

What the the second and third order impact of this is can become quite a cute and and just for people who heard the words serve like three times zero interest rate policy, basically keeping interest rates very low, very dangerous to do because you get SHE like this, like look at the number of unemployed per job opening. And if you just look at this like ratios, this is the number of jobs per unemployed person IT gets way out of wac.

And then if you look at this other charge, just in terms of the total number of job openings, and we started we talk about this earlier in the pod, hitting eleven million to burn that office crazy. Then what happens if you have too many jobs, you don't let immigration, you don't have a functioning immigration policy? Well then you get this great um you know people quitting their jobs, quit, quitting.

And then the bombers saw their network go up so high because that they are retirement accounts because of the stock mark boom and because of the housing boom. You had all these rich parents now who are belling out their kids who refuse to go to work. And labor participation goes from seventy percent down to sixty two percent. These are the unintended consequences observed that, you know, now how do you get a generation to go back to work if their parents have a two million hour home and three million and stocks are a .

million dollars million.

and that's what they like. We're gonna AK this. We're going to get google and apple who have unlimited cash to do a rif.

Those companies don't need to do a rif. They are doing IT because having no choice now because they they want to break the economy so hard. Boomers have seventy one trillion in assets of march.

I mean, the wel transfer that's going to occur between these two generations is crazy. Why would any with a bombing even go to work? Million U.

S. Problems have seventy one trillion dollars. And S. S. Said, yeah.

that's the number, alf here, an entire turn of global GDP in savings.

That's about one seven of the world's total assets. It's just a lot of locked up.

Well and this monetary policy was done by bom .

or seventy trillion control by seventy six point four 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 U. S. Boomers.

yeah, that's one seventh of the world.

One seventh of the world. Does that is controlled by seventy six million people. How much of IT is their homes? I mean, they were, they were Edward ds.

stock. They, you know, they live the best life in the best times. They enjoyed the most of the peace divide in the eighties and the nineties and the two thousands. They are the ones that control everything.

It's pretty crazy.

It's I think it's last like jeff baths and gates and mosque, it's bombers that if you want to go and really zoom out and get IT right, IT is bombers. It's one percent of the global population that controls one seventh of the global wealth. And they're all in the U.

S. Bombers hiding in plain site. U. S. Boomers.

there you are. Well, once these housing Prices decline in the dark market declines, that numbers going to shift. And that really is what's fundamentally happening with the fiscal policy in the effects is happening today is having today, which is a redistribution of that value because we're basically deflected all those assets. Now we can deflect.

I mean, if if you just do the math on the back of the envelope, these boomers are worth a billion, a million dollars each. Like think about that, like every bombers were nine hundred K A million, something in that right one point. I mean it's bunkers. That's the average. That's how much well, they have workers.

You you youtube .

A A magical no, we're jack an x and we had .

the worst. We had we we had like we got really shafted. It's .

like that we .

grew up a fan .

and and ninety three .

was probably the best .

year machine. Pumpkins, everything from me, Billy .

coins voice was in. Sad to hear that he passed. We're yeah, I mean, I was really sad. The guy, I was a hold duty fifty.

Were you a big fan of colliers?

I love.

This is coolio story from the pod. What he said, gangers paradise. I feel you.

yes. And when I saw him at saxes birthday last year, I was like, dude, I I love cool. I mean, I cannot tell you what a big fan I am.

What was the line you said to? You said, I feel you.

I said, I appreciate you and appreciate you. I appreciate you. We fly out for the birthday. You know, they shows you on the cars from the plane to the to the house, we get to the house and you know we're all waiting. Of course, sex is late two and a half hours, own party all hanging out starving.

But then we go to the party and then they have like, uh who susa so we're like sitting out a dinner for course too, all of the sun pop comes out of the the woodwork coolio I lose my shit. I run up on the the the dance fly up could you like is like high school James man, I think that's like in the car cruising. And at this point i'm like seven color ni .

thought I was sex heah .

to .

south africa guys co. Comes up me and hugging me and i'm like, what's unclear? Oh my god, this is like a dream come true.

It's like hugging me. His face is right next to my face. I didn't know what to say and I like had a little to A I White and hi, I appreciate you. 这。 This.

I appreciate .

you.

Wow.

I see you could. Oh, G, I think I.

what do you? What you know? Yeah.

my team, my team .

and A T, P, B, they had a camo made for me of that was super heart felt and awesome. Posted IT on the .

internet I think yeah to .

IT yeah to IT and IT was A, I don't know, a man. IT was, uh he was he was actually a super nice guy, great guy. And I was super sad.

要得。 Am I on the golf course thinking about you? I appreciate you, man, so I wanted, wish you a very, very, very happy birthday.

Man, you fill me. I want to drink a, want to the smoke, want to the ego and want to some fun. Bro, go big.

Do IT right your day. Happy birthday, man from coolio shaw. Man, well, all the .

stories are coming out now. And not your experience was not unique. He touched everybody. He met, literally, the college of genuine.

very kind, like, so super friendly and like and like, want to ask about your music. Very like, I could be politician if he didn't become a music, a music superstar.

The, he looked incredible. He looked like he was twenty five. I mean.

he actually went to this college kids meda. He went back to their like fried house. He cook them dinner, and then he got a guitar a with them, and he's sang ganger paradise with them. And he, like August, rated IT with the crowd singing. He was there was a video and doubling on the bar singing.

can I just say something to I? I given the message.

before.

yeah before. But like you, health, take care. Like there are these incredible drugs. I just want to call .

out health is wealth.

if liberal, for example, or crustal, or these stats are not working for you, there's this next generation kind of drug called the P C S K nine inhibitor, which essentially is a effectively a gene therapy that modeled after this very specific group of folks in the north, I believe, who actually have a effectively community against heart disease. And so it's taken twenty years to refine the drug.

But this drug is a one of drug, and there are versions of IT now that are injectable, you know, once every six months or whatever. So go and ask your doctor if you're not if stats don't work for you, look at the P C S K nine in hider and then separately after you're forty five per so you should get um A C T and geography because these things are really important. Or you know a hard flow where they actually inject to die.

They characters all your veins. They give you a cause him score may not prevent this, but at least if it's if it's something cardio related, you can get to the bottom of IT. And it's a now's .

thing nowadays. Rest in power to our friend. And yeah, take out of your health. And speaking of health, shout out to when, if paltriness g pal a who in her group newsletter pointed out that he loves the all in pod and has to be honest, she's obsessed with the personalities is .

a little bit anybody want .

to handicap that this .

and lets .

be honest, uh. Health after meal, the best thing to eat is a little dark chocolate. Do you get your .

dark chocolate from group? Do you have group or chocolate?

Jason? I was trying to make a story where I am the dark chocolate. I'm saying that I am her favorite personality you've flocking .

more on so you're handy happy that you're her favorite SHE said he's successes with the person plural. What did SHE rank her best .

is I need to know i'm a rank as reever.

Oh, really you that's okay.

Then me than you OK.

I'll take the fact that a great pillar even understands that who we are is win in my books all i'll be number four on her left. Uh, g pal, if you could rank the best is in your next news letter, that would be appreciated. And well, it'll take rank your best quality jeep out.

Alright, actually want some red meat. You I I saw you wrote a piece. You want your red meat?

Show me through. I think we need a ukraine update because, I mean, we are talking about all the reasons that there could be a silver lining or the markets bottom out. I don't think you can know for sure of the markets I got to bottom out unless you know that there is going be a successful resolution of this ukraine war, at least in not a escalator of IT.

And all the things that have happened in the last couple of weeks have been on the road towards escalation, exactly. So in the last, like a few days, you've had zilli sky saying that they want to be admitted to nato. You've got putin, basic and xing, or things is going to anx the dawn bath and somebody we don't know who but according to radically, of course use the publish forever minister.

He think the U. S, uh, somebody blew up the north pipeline. So what is the comment on .

on they say was blown up was in one or two.

I think it's not one. So as the one that was actually like working, what is the common on domination of all these things? They're all eliminating key elements of what a peace deal would look like.

So everyone understands that a peace deal would require uh zille skii to give up on data IT would require putin to make some compromises likely in the dawn bass and IT would require the sanctions to be lifted in the energy flows be turned back on. Well, so now those things basically have been removed from the table or at least potential to that's what's happening. So I don't see how you're onna get a peace deal now.

And so if you're remove all the off rams, what's left escalation? So here to me, this thing is going to keep escalating. I thought you .

wrote te a good piece in the american conservative america. Go all in on ukraine if you haven't read IT. IT is eighty percent of rehash of what we've talked about here for for the last year, but there's twenty percent new and and I think and I thought what was interesting, uh, in terms of new stuff you put in the piece and it's it's a good summary of poker strategy versus what's going on here is that we've already proved in you know if if you did want to prove that russia is not a threat with the exception of their nuclear, we now have proven that they're really not going to be able to do a domino and going into all these different countries with the exception of, obviously.

the threat of nuclear power. So I I was I was really what I really respond to in that piece is the assertion by the media that putin is bluffing. How do they know that? You know, how do they know that? Like, you know, I think all of us understand poker pretty well.

And none of us ever would have the confidence to assert that we know exactly what cards our opponent holds in any given hand and how exactly they'll play them. What do we do? What do smart players do? We put our phones on a range, a range of possible hands of possibilities. And then we evaluate what did their previous actions tell us, what story are they telling through their previous actions, or what story has putten been telling? This is not a guy who blows, in my opinion, is that is not the story.

You think there's a chance he would pop off a tactical look. It's in not zero .

chance yesterday. If his life is on the line. He is incentivize to use every weapon in his disposal to try and prevent his violent.

His life isn't .

on the line of prediction .

that we wanted to ankle putin. We wanted to prove he didn't have, you know, as much strength as he did. And we wanted to exhaust this resources so we could finally basically get them out of office at some point. So I do think regime changed via exhAusting him, and I think that seems to have worked.

We have exhAusting you agree with me.

I agree that we have exhausted his I mean, he's proof and he can't fight a ground while right? I mean, he's .

escalating now he's escalating. You think he's going to roll over. He's not gonna .

ll over his going. I think what we prove and haven't we, is that he can fight a ground war effectively. He he doesn't have the army. He doesn't have the weapons compared to the west, and he's been exhausted. You and I think he spent now the only thing has left is what you're talking about is the new option literally?

No, no. Well, there's there's more media options first. All he's just call for the the mobilization of three hundred thousand more troops. So that's going for step one.

People are going with the country.

Yeah exactly. Look, there's can be a very high cost of russian side. There be very high cost on the russian side. I would not assume that means that there's something in IT for us.

So what do you know if even with this you know the conscription he's doing, this draft he's doing for draft, I mean, he is kind of redone IT, but um this contribution or draft would have you want to call IT has proven that he doesn't even actually have the standing inside his own country. People are leaving, they're breaking. They are working about to break their arms like it's it's pretty dar.

I think you're making a lot of assumptions there, just like the media who are saying that he is definitely blueing. When i'm saying, as we cannot know that he is definitely bluffing, the united stay amErica is blessed with being the most safe and secure country in the world and really in human history. And the history is full of humans consent being awards each other.

So that is a really valuable thing that we have. Why are we so secure? We're surrounded by gigi's oceans. We have these dragani motes.

In addition, thanks to the wisdom of the monroe doctrine, for two hundred years, we have prevented any great powers from getting a foot hold in the western hemisphere. Here, we are completely dominant here, and no one could ever stage in invasion. The united states, we only have one vulnerability, just one I cbm. That's really yet.

So what are we doing? We are basically engaging in a proxy war with the person in the world who has the most icbms. And we are basically putting ourselves on an sory path with him.

This would be like if a kills had gone in front of the walls of toy and basically taking off his armor and stuck his foot in the air and on a little bulls ye around his, his heel. That is the ordering. Why in the world? Why would we .

do that? The real threat. And they are the A, Q, C, O. If we can not.

The last threat, they're not the threat. They're never going to be out of threat.

okay. What were two major ones with I anyway, IT looks like in the game.

Now you we're not in the n gay. We're on a pathworks s escalation because all the all fans have been removed. That's my point.

In the end, instead of saying, instead of trying to find a diplomatic solution, first all we keep removing all frames, and then we blindly disregard the threat to ourselves by saying he must be bluffing. This is an incredible stupid. The Better question to ask is, hold on a second.

The Better question to ask is, what's in IT for us? What's in IT for the united states of america? What is the vital interest that compels us to risk our security? There isn't one.

This domus region hole in this dombes region is the france third nand of this situation. IT is not historically important to us. We have invested in IT all of this importance, and we are potentially turning a regional war into a world war.

We are sleep walking towards this unless someone, he finds an old frame. We are escalating our way into a much larger conflict. That is my point. And I don't see how anyone I don't see anyone should reenter the markets with this geopolitical risks .

and over our heads. Yeah, this is kind of like what I said a few weeks ago. And J. P. Morgan put out a and report today saying that they were shifting from being, you know call IT roughly positive, sort of like chaos point earlier, about being all but constructed in the markets right now coming in and finding opportunities to buy to realizing that the sum of the portfolio of tail risks right now you know out ways the upside that may arise from finding these low Price opportunities in the market.

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, expected value, expected loss of all of them is actually quite significant and that is heavily weighing on the market. And so cute moth point, I think. And to be a question earlier about market conditions, one catalyst for upside in the market, while there is fiscal strain and economic strain and growth strain, there is also the geopolitical strain, the market. If one or more of these things starts to resolve, I think that weight starts to come .

off the markets. And you can see, I can see the off like a rocket. If ukraine gets resolved, right, is all fatal risk that.

but I think that can potentially be the political motivation here, which is that enough people like to math and you start making the calls to your representatives, pointing out how strain 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 this may be a little controversial. So we can talk about IT, but I um think that the markets would have reacted much, much more negatively to a nuclear incident three months ago then now and may not even react as much as we may think I was three months from now.

But what do you mean by nuclear incident? You mean a neuroses off or just a thread?

You saying if if putting blows up a nuke, the markets may. React damage.

I think that .

the markets .

are basically um ring fencing russia, ukraine risk in terms of a currency instability, but that sort of now gone away. Um we've ring fence the energy risk because IT looks like um energy reserves in europe, but actually going to be pretty meaningful. They are going to spend whatever IT takes.

So all of the second and third order effects, IT would be a humAnitarian, an crisis, which would be horrendous, kay. But the markets don't, whether we like IT or not, react to humAnitarian crisis. They react to the second and third order economic impacts of those things.

And if you actually try to think about what the second and third of economic impacts are, you're seeing many of those things gets solved. And so what IT would be? IT would be a highly isolated effect.

IT would be a humAnitarian, a rosy um he would be completely cornered from a from a worldwide perspective. Um the the the monetary and fiscal implications of that um may not be as meaningfully disruptive today as they would have been three months ago. That's what i'm saying.

Well, when he actually clarified like freeburg and analysis the fat tail risk because 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 elective value analysis, it's really hard to analyze the expected value of negative value of a of a low probability, disastrous event, right? That's the classic fat till risk. Um I do think that if the markets think they have Priced in the effect of this war, and then I think that's an argument for a lot of downside to this market because IT seems to me that we're on a one way rat IT here. All the options for a peace or a diplomatic solution have been systematically taken away, and all that's left are potential escalates.

So I hear you about how to those translate those escalations to outside of those two countries and into economic .

terms for the rest of the world. Go the reads of scenario. I mean, well, here's one. I think we're just assuming that china's gna stay out of IT.

Imagine if you're china, you're watching what's happening and you're worry that actually russia could lose this war so badly that IT in bold's hawks in amErica who wanted target china next know who are basically on this global struggle against photography. You're going to look at and go away. The second is that really in our interest for putin and russia to be completely topped by this global struggle against photography?

IT seems to me they could enter the russian side, not military, but in terms of support, so they would have an incentive, again, not lose an ally. And then by the same token, I think the russians could lash out. I don't think they are going to go nuclear right away, but I think they could pull a rosy. I mean, do you think .

that the next .

netty in war when russia was losing that is rubbed grown, they level to the ground? So you mean who doesn't anything like that yet? But if he's facing defeat, isn't that something that would be on the satory latter is to basically start leveling ukrainian cities, is destroyed key infrastructure? And then what is the response to the west?

I know.

I know I may say that.

so I agree. No, no, I I look, i'm not debating how bad all of these things are. I'm just asking the question, what are the second and third order economic impacts? Because the market doesn't reflect human atrocities we may want to do, but he just doesn't do a good job of that.

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 impacts of this four have been to currencies, to commodities and to energy. And the world has had six or seven months to reward what they've needed to roughly solve a large percentage of those problems. IT doesn't take the fact that this is a bad war and IT should end. I'm not saying any other right.

right? Look, you make a good point, which is that, look, the market discounts cashflow. So how do the cash flows get impacted? You may be write that valuation multiples have gotten close to correction, but I think the thing that we don't really know is what earnings and profits and revenues are going to look like next year. And part of that is about the hard landing, right? Like how inflated or all these companies revenues and .

earnings because you I hear you, but this is why that charted so important. Every other time I accept one thousand nine hundred eighty three in modern history, so the modern history that we have all lived. He says that the stock market bottoms s in the first third of a process.

And so if you think that this process ends in twenty four, that's a roughly twenty four month process, twenty one month process. We're in months seven. We're in the power rally of what would map to the last six or seven patterns of behavior.

Yeah, I mean, I guess you you may have being right about this prediction. I guess what I am saying is that I personally would .

not want to enter the market until .

are take off the table.

Yeah, obviously, none of us want this to happen. I'm just asking a very specific question which is and making an observation which is I wonder how the market would react on. I, I, I don't see IT being down a thousand points.

and that may be wrong. But by the .

verity diversity of views that you guys all share, I really represents the market.

What you do, you have you do you have a view?

Do I like what the five?

Oh, I mean.

is your view what is your view? You're your view that we're OK. We're about to just go through the toilet. Like what is your view from .

an equity markets point of view?

I was just in general yeah like tip equity markets, your temperature highty fuel like the fuel yeah.

I'm worried about money not moving.

What does IT mean money .

in my woman? I'm really anxious about invested dollars. Everyone seems, I think I mentioned a while ago that dollars were kind of locked up in march.

And then I went to this conferencing. People like we're loosening up and making a plane again in july because of the market was cut of turning back up. But now equity markets are turning down, bond markets have turned down, interest rates of Spike and there's a bunch of these currency problems.

So i'm very nervous about the flow of capital, which I remember happening in await and our member happening when we were all joking over text. When cove IT happening, we're like, hey, the market can only go down ten percent a day for so many days. zero. And everyone was kind like he was talking about wearing jeans instead of he's like, I could just wear the same pair. Genes for the rest of my life .

is something that's true. Demand destruction. When he .

came out, the genes was, I close.

right?

The mod and uros ana on sale rent mod o.

the C E O lauro's .

ana did send me a note after our podcast. He's like .

the at the g tell you guys the biggest dictor of economic health is the rate of rotation of chamakh closet because that .

is so big that I can take this season off. I'll just wear last summers season that you know.

I would guess the rate of rotation probably predictive of IPO market?

No, I just wish I wish there .

less rotating in. I'm rotating in. So maybe that's a good the economy .

of some companies. Public, no, no, no.

I'm ying. I'm buying sucks because I was at cheap last week and he was where we, black truffles, and then he jumped the fence, obvious and White truffles over my show as I chef, chef, chef, to matters .

shape.

shape, shape are I listen for the dictator, the prince of panic attacks are certain of science the queen of king wah him see the Kevin hard show if you'll incentence ces go in a and for monk ambassador David sacks, the dictator himself I am the world's greatest moderating and will see you on episode ninety nine happy guys, not you.

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