let me get everything queued up here how does jaycal open the show what does he say hey everybody yeah do it hey everybody hey everybody I'm Jason kalkanis I am the grifter with the mostest the mostest that's the shortest the shortest that's the baddest and the baddest that's the dumbest he's not even here you can't do that that's just bullying we'll let your winners ride
[Music] he wanted the week off and anytime any of us take the week off Jay Cal says the show must go on and he Rings up Brad gerstner and says hey we need a sub come on in this week this week when jaycal wanted the week off he said guys we're all taking the week off and Sack said The Show Must Go On jaycal refused to show up his producer editor refused to
show up so we are here solo hacking our way to all in Pod episode 136 as your moderator today Dave Friedberg I am extraordinarily joyous and happy to bring you the first episode of the all-in podcast without the hostess with the most is Jason callicanus joining me today IL Duce from Elba Island to mount palihapatia to moth firing up tweet storms lately taking over the Twitter
soon to take the threads by storm I'm sure Rain Man David Sachs joining us from a Curtin showroom in the south of wherever and from an attic in an old house the man who manages 10 billion dollars to generate 50 plus returns year to date the one and only Brad gerstner Brad welcome to the show great to have you good to be here appreciate the call half hour ago yeah
great thank you are we even gonna be able to drop this episode how are we gonna actually upload it to Apple podcasts and all the rest so here's the deal I have the email login I think I can get into the accounts I I have I'm gonna I'm gonna like do the request for password reset on all the accounts I I also have I have iMovie on my computer so I'm gonna use iMovie to
edit it it's gonna be fantastic I'll send you guys a little link before I'm going to create a descript account so we can edit our show and comment on it I'll see how that works so it shows is magically gonna appear on YouTube and apple podcast and jcal's gonna be like what happened exactly so let's not do that free bird Freeburg is Bernard Bernardo during the Takeover of lvmh
which is a great story if you've never heard about it I'd love to hear it he he basically is like he says he's gonna partner with this Irish entrepreneur to basically buy lvm Edge and you know they're going through and at the 11th hour he pulls the rug out from him stabs him in the back and basically does the deal himself gets to own lvmh and the rest is history but this is you Freeburg
you're pulling a Bernard or no at the last minute no no I would never stab Jake hell in the back I would just put him in the front and tell him you should show up to work in the front and steal the passwords it's not it's not stabbing in the front we showed up he didn't yeah he's trying to exercise passive aggressive control over the Pod he's been outvoted he does
not control the Pod we've done 135 episodes and every time we've suggested taking a week off as a group and he doesn't want to he says the show must go on and he calls up a guest and he keeps the show going at his whim and his uh discretion so this week we are doing the same The Show Must Go On Jake owl is enjoying a summer break wherever he is
maybe I think we're all on vacation this week right um I know he why he didn't want the show to go on is he has a deep insecurity that he might get replaced at some point yeah by someone smarter than him so oh gerstner you were supposed to replace me but you might end up replacing Jake house the truth is the truth is last year remember the Fateful morning when I get a call from Chama
and he said hey we need you to come in Jay calz out we got and we need you in is the fourth and talking to chamat my my phone rings and it's Jay cow and he said friedberg's out I need you to replace him I had both guys going at the same time and it's been that way for the last 12 months so okay I was in yeah I was in Vegas with when I had to sort this out it burned an
entire day a year ago it was a year ago that's right well at least at least we got our LLC doc sorry that's that's what came out of it it's literally like the show billions you know yeah all the Intrigue or whatever but that's why jaycal wanted to sabotage the show rather than have it go on without him because he's afraid that the audience might like the show better
without him there's certainly been a lot of commenters saying that sort of thing oh so I guess we're gonna find out the famous need to let us know what they think of this episode all right well let's kick it off um first uh topic on the docket today which I think is a great one and tomorrow if you've been tweeting a lot lately as we just talked about I think that'll end up
probably being our cold open um but uh Zuck announced and Facebook meta announced the launch of threads uh gerstner big shareholder of meta I think right reasonable reasonably side shareholder uh this uh Zuck this morning announced 30 million downloads of the app overnight the Reds is Instagram slash facebook slash metas competitor to Twitter looks almost like
a clone I mean it is so similar in features in interaction in Everything Brad maybe you can kick us off and talk a little bit about the importance of threads and how this is important to meta and we can talk a little bit about the app itself well I mean the the first thing is if rumors are true they developed this over a period of six to nine months with 20 people
okay and so the extraordinary Pace that's now occurring with inside uh or inside metal we've heard from several people inside that said people are pumped they're actually updating real time uh user accounts they're over 30 million users already on Instagram and it just gets back to this culture of flattening the organization speeding up the organization I think everybody's
excited you know the best engineers in the world want to see their products set free and so you know I think threads is really interesting for a couple reasons number one if we flash back to what went on in China with totio and doyon remember that text-based social networks were where kind of it started there and so it's a bit anomalous doyon which is the tick tock equivalent in China was
started based on totiao which was a text-based news feed and so it doesn't surprise me to see the social graph being leveraged into a text-based uh feed I think initially they're seeding it obviously with all your friends so it's it's uh it looks more like celebs and entertainment and it's my team is like it's easier to use it's faster it feels more free
um I think you know Adam massari he posted on threads that he stayed up all night last night um so excited with a product launch he and Zucker responding to people actually live on threads um and so I part of this just goes to the pulse of the company over the next four to six weeks they're gonna have massive launches out of uh the AI side of the business I expect a lot more
support for the open AI model or for their open uh llm I also think they're going to launch a bunch of age on WhatsApp and Instagram so what I see is just velocity and cycle time within the business improving and then one final thing in the age of AI right you want to collect as much data as you can from your users and we know that Facebook is very heavy
on video and pictures but what they're light on is text and so in a world where the most important thing on the internet to train your model is this is the word right now they're going to collect a lot of words a lot of conversations a lot of sentiment among the users um and you know maybe we'll come back to this you know I just want to kick it back and get people's thoughts on the
product but um already by my estimate these guys get to 100 million which it looks like they may be able to get to tonight based upon the monetization that Twitter has that's already a business that's doing something like two and a half billion dollars in Revenue if they chose to monetize it 1.2 or 1.5 billion in ebit apply their current multiple to that
that's about a 20 billion dollar increase in Enterprise Value built by if rumors are true 20 people over a course of six months yeah it's pretty impressive I remember in the early days of Friendster and Myspace and then even Facebook these social networks launched and everyone thought it was going to be a conversational system and so much of the
usage and the page views and the minutes spent ultimately accrued to photos an overtime video um and now it's almost like this interesting reversion back to the origin that it's back to this conversational system but these systems always seem to kind of evolve to hey just images or what when and what uh kind of gather up all the Mind space I mean shamop having
worked at Facebook maybe you can share a little bit about your point of view on threads as a product and um as an evolution away from social network on Facebook to Instagram and now to threads I I think what people don't understand is that the successful category winner in each of these categories needed to invent something de novo that nobody else had in the case of Facebook we invented
photo tagging when it didn't exist and then we invented the news feed when it didn't exist and then there was a bunch of people that copied it but it didn't matter because we had refined and owned that use case already so I think the real challenge for Facebook isn't can 20 people copy Twitter I mean you know Mastodon is a copy of Twitter there's a bunch of parlors a
copy of Twitter truth social is a copy of Twitter the challenge is going to be can you invent some de novo feature that makes people actually want to use this and you know rage quitting Twitter because you're not a fan of the product right now or Elon isn't a successful long-term use case because all those people will eventually come back so I don't know I'm a little bit more
skeptical of the whole thing I think that right now what you see is not even a full copy of the system it's you know a 50 60 copy with a lot less usage and so as a result a lot less traffic um but I think you need something new you know Tick Tock the reason why I became successful was it was a fundamentally new use case relative to the Alternatives and I think
that that captures people's imagination and mindshare so this is not what threads does and so in as much as it's a copy of something that is already an established Behavior I don't think it has very high chances of success but don't stories and and and reels undermine that argument I mean reels was a copy of tick tock and stories was a copy of Snapchat and they're both giant
products today um I think that you can definitely copy features into an existing product with new distribution but to invent a new product wholly from scratch that's a carbon copy of something but again reels attaches onto Instagram which is a unique use case right and so I think that again it goes back to you have these five or six established modes of
social media that essentially are from large pieces of content to small pieces that's probably the best organizing principle that we have and then that's one axis and the other axis is text video audio and along that Spectrum you can basically compartmentalize all these things and then there are about four of them that have real scale and and so in as much as you have
established distribution yes you can copy a feature from somebody else and it will get used but that's not what this is so if this instead gets integrated into Instagram I think it's much more dangerous to Twitter than as a standalone product as a standalone product I tend to think it's DOA for the most part unless again it invents something totally new that we're
missing sex you're an advisor to Twitter what do you advise Elon and you know how do you think about this as a competitive threat yeah I'm not I'm not a formal advisor to Twitter I was just a guy hanging around during the transition no look I mean I tend to agree with with chamoth the thing that Facebook did really well here is there's a one clicks sign up flow
from Instagram where you just click to download threads and then you can log in with your Instagram account and Port over your bio and all of your data and your social graph so it's super easy to get set up but by the same token you know if they have 10 million or even 30 million sign ups that's really just a three percent conversion rate on the billion you know users that Instagram
has so a lot of people are just going to make that a click because they're curious they want to find out what threads is I wouldn't be surprised I got 100 million users or 200 million users that way just people you know clicking over from Instagram to see what this new thing is the question is what's gonna be the habit forming Behavior here and the
people who use Twitter are really addicted to using Twitter it's where the conversation is there is a strong Network effect there not just around the users and the social graph but like the habit of daily usage so you know how many of these people who are signing up are actually going to go use it every day are they going to take the time to copy over to kind of copy paste all
their Twitter posts over to this new medium and then what about all the comments or applies so I wouldn't just look at the signups here I think you have to look at like the amount of posting and the actual usage before you know that Twitter has a threat right did uh did any of you guys use it this morning or last night yes you know we had we had our team playing
with it you know all morning and I started sharing with you um you know there it it feels to our team like common words being used we're snappier faster lower hurdle like it felt more fun and social therefore you it wasn't as uh considered a post right because most of the posts at least uh you know that our team engages in on Twitter are for mostly business purposes
right and so there's politics and business and more serious topics right Instagram's the home for fun it's for frivolity it's showing pictures of your friends and so I think it's going to orient more in that direction and again there's probably room in the world for a text-based social network around entertainment and culture and food and and the fun stuff and there's probably
room for one that's more about politics and business and you know more serious topics and perhaps they'll converge more over time I you know I think it's an interesting thing yes it's one click but you have to download a new app I mean this isn't you know just open up your Instagram and all of a sudden click on a new tab right and by my account I think
it's just in the US that they launch it so their conversion rates probably over 10 percent already in 24 hours and you got to download an app to get there um you know that feels to me like a little bit more of a hurdle but I agree with both of you at the end of the day it's going to be about engagement not about how many people you got to download the app and if they get high
engagement um you know and I think there's plenty of surface area for these guys to monetize that combined with you know chamat pointed out you know as much as we love Elon certainly there are people chimath you brought up with respect to Tesla that are orienting away because of the brand right like it may make sense or not but we know it's happening and so
I do think that there's a natural momentum I think this was you know like if this was the cage match right if this was the MMA between the two of them this is certainly you know an offensive blow that that you know meta just landed here and I expected you know it's going to amp up the heat so it's interesting because at the same time as threads is launching to compete with Twitter
there's some really interesting data coming out showing declining usage of chat GPT and interest level and Bard so both if you look at Google Trends as well as data coming out of similar web which attracts usage across sites um chat GPT usage seems to be falling from a Peak in May and it had a modest increase from March to April and then an even less modest increase from April to
May and may to June we're actually seeing a decline in usage the question is is this driven by educational usage so a lot of kids were using chat GPT to write essays and to use it in school and that seems to be a primary use case or does it speak to a more broad kind of challenge with chat GPT really disrupting search and disrupting other ways that people are kind of
accessing and and browsing the internet uh that it that as an interface uh maybe it's a little bit too challenged and it doesn't replace the the simple two-word keyword click and click on the result uh I'd love your guys point of view on the product and the experience as well as why do we think that there's declining usage uh in chat well you had these
products launch in a in a moment where there was in in many ways a usage vacuum what I mean by that is if you look back over like the last 15 or 20 years there were these waves that would create these layers of innovation that consumers would infatuate it with and try it actually came right it came right on the heels of a pretty massive head fake which was around VR
and that was supposed to be this next big tidal wave of consumer Innovation which turned out to be just a total fart in the wind and so I think that there was a setup here where consumers were you know hankering for something really interesting and unique and new and novel a lot of people wrap those labels around the chat versions of these llms and so you had again this explosion of
usage but I think what we're going to find there is that there's some pretty useful use cases but narrow where these chat interfaces are very useful and the usage will Decay to that number and that number is probably a fraction of what the peak was mean so then people will get disillusioned and the Press will say this was you know another fad from Silicon Valley
but then I think the reality is that the real stuff which is around enterprise software Healthcare uh the physical sciences that's where the real AI leaps I think will have really momentous value those are still 18 to 24 to 36 months away from seeing the light of day in in terms of real products that that actually work so um yeah again you know it's part of the
hype cycle and we all kind of fell for it the only winner here is NVIDIA I think the loser here here are most of the VCS who pumped in hundreds of millions to billions of dollars in Rando stuff too early um and the consumers they tried it they didn't like it they moved on they're waiting for the next thing Zach's agree disagree well I think that's that's going a
little bit too far I mean I I think that there may be a couple of things going on here one is that the Curiosity Factor may have been played out I mean the novelty has worn off a little bit I think there was a lot of people using it initially just to see what it could do and hearing about it and wanting to test it out so I think people have sort of scratched that itch also school is now
out of session so for all the people who are using it to do some kind of academic research there's not a need to do that right now um I I do agree that the use cases that are most exciting to me are are Enterprise uses and I agree with tremoth about that and I think that is all still to come I think in terms of the consumer um I I don't think it's going away but I
think that they're going to have to improve the the accuracy they're going to improve the performance the speed of it maybe improve the interface add some more features if they want to get to the next level of usage I mean think about think about the product today you know 100 million downloads the whole the whole downtick here is explained by kids being out of school I mean it's
down 10 percent and like kids have to be more than 20 of the usage of this thing yeah um so I think you set that aside but just think about how hard it is to use this product right if you most people you have four million people paying 20 bucks a month could you imagine people paying 20 bucks a month to use Google then on top of that try downloading plugins it's still
a pain in the ass and if you don't have a plug-in I think they're only 500 000 people using plug-in if you don't have a plug-in you have no new data past 2021 which makes it Dead on Arrival as a product so I don't even think I think we're so early in this that to judge the chat interface based upon the product that exists today I think is a huge mistake
um I think that what we're going to see is kids come back to school you're going to see the normal uptick in traffic it probably hangs out around this hundred million 150 million level in terms of usage I think the next 10x for a chat-based interface at least is it in so far as it concerns the consumer is when we move to from information retrieval to action
and you've heard Zuckerberg talk about this on the Lex Friedman podcast you've heard uh uh uh you've heard meta talk about you know this outside of that context and then you've heard Mustafa talk about it from pie which is this idea that I say hey show me the five best hotels in Milan um it shows you five hotels and then you say book me uh the Cipriani for these
dates and it actually will book it directly with the hotel engaging with an agent there now Mustafa from PI says this is months away Zuckerberg alludes to the fact that they're going to have Action Bots on WhatsApp and Instagram in the not too distant future um I think all of the you know all the links exist in the world to do this today so I would say look for that as
the next 10x feature for Consumer facing chat Bots and then finally I just say I was at the snowflake Summit last week there were 600 applications so new startups that applied uh for their startup contest they were each using an application of chat GPT built on top of snowflake data 600 new companies and there's a you know they just they just launched their application layer so
there's a tremendous appetite for people to help Enterprises right access that information and build much more seamless less discovery on top of it I I try to use chat gbt the mobile app on July 4th I was just trying to find a good quote to use in a you know by like an American Patriot or founder or framer of the Constitution something like that to use
to tweet out for July 4th and it just aired out on me and it was like one of these error messages that you can tell in engineer wrote it's totally not anticipated error and I tried it like two or three different ways a couple of different chat threads uh just didn't work it's completely inexplicable so when you have those kinds of experiences it makes you just want to go to Google
which is what I did you know I actually went to Google to find what I was looking for um I thought chat GPT could do a better job because I thought it could help me think find things that would be specifically appropriate for July 4th so as Christy what opinion it might have um but Google is just much more performant so they have to like work out those
Kinks I mean that's that's pretty clear I think like natural language prediction as a capability is certainly here to say to stay along with the agents in the action box that can integrate behind the scenes to do things for you the real question for me is is this a winner interface if I think back to you user interfaces user experience in the history of computing we can kind of go
back to the original terminal interface on dos and you would you know have like lines that you would type and you know you would kind of program the computer to do stuff that was almost like the first real Computing interface that people could use and then there was Windows and when Windows came along it was a new type of interface a new type of interaction model
um and then we had the icons that arose with the iPad iPhone Revolution and obviously the internet the browser was a was a new ux and the browser provided hyperlinks and in one window you would click through and go to lots of different things and then that browser interface eventually integrated images and video and then the interface that that we're almost used to lately
that we all probably spend most of our time on is the scrolling interface where there's infinite personalized content created for you and you just keep scrolling whether that's on Facebook or Twitter or Instagram or what have you and that's where we spend a lot of our time now and if you think about the transition you're getting more for Less meaning
you're getting more content you're getting more output with less input the challenge with the chat interface is that you're getting almost today in its current iteration a little bit less output because it's mostly textual and it's requiring more input you're having to write sentences and ask it stuff um and so I think if you think about the evolution of user interfaces in
Computing chat as an interface faces quite a bit of friction the output of it however is so compelling in certain use cases that Shabbat points out that there's certainly going to be places where it's absolutely going to replace the current modality um and then the back end of it can do incredible things that no other Computing interface can do but it needs
to have you know kind of a revision or rebuild on the front end for it to really work that's my point of view and how I think about kind of the long trajectory of where we've all been trained um mentally with respect to Computing interfaces and and how this might kind of be challenged I think that's the key how you you know four older guys have been trained watch how kids interact
with their their phones first they're never on a computer they're always on their phones and they're always talking to their phones and it's always chat based and so I think we have a whole new generation that like it's so native to the way that they interact with the world and you know to be honest I was sitting there this morning prepping for the for the Pod and I had a brilliant
conversation with chat GPT about what happened with rates and inflation Etc in 2000 2001 2002 it was interactive I was using my voice I wasn't typing anything I thought it was terrific way better than the experience I would have on Google so again I think we're early in the evolution of this um but you know I think that you know for my kids this is completely native
yeah I mean I think for kids it's amazing I just don't think kids will have 20 30 40 bucks a month to spend on this I mean they some kids will but that that'll just further exacerbate The Divide of the kids that can versus the kids that can't but I don't think that that's what's going to create evaluation framework for a multi-deca billion dollar company if you want to
see a well-used education product you know chegg's got something probably not near you know that's probably as good and that's a three or four billion dollar market cap company last time I checked so yeah well Brad you mentioned that you were doing a little research for the Pod talking about rates obviously that was in anticipation of the discussion
on uh the Federal Reserve meeting minutes that came out a couple days ago I'll read a few excerpts uh from the published minutes uh where obviously the the Federal Reserve meets to discuss overnight rates whether to raise rates and their outlook for rates um driven in part by current economic data including their view on inflation their view on economic activity
Etc reading from the notes directly um participants agreed that inflation was unacceptably high and noted that the data including the CPI for May indicated that declines in inflation had been slower than they had expected participants observed that although core Goods inflation had moderated since the middle of last year it had slowed less rapidly than expected in recent months
despite data and reports from business contacts indicating that supply chain constraints had continued to ease in their discussion on the household sector they noted that consumer spending so far this year has been stronger than expected and that aggregate household wealth remained high as equity in home prices had not declined much from the recent highs and a few participants
mentioned that while overall the household sector still retain much of the excess savings it had accumulated during the pandemic there were signs that consumers were facing increasingly tighter budgets given High inflation especially for low-income households despite savings um so Brad maybe you can give us your quick read on the minutes and they did
say that they're not raising rates but they do expect two more 25 basis point rate hikes later this year maybe you can tell us what Market data is indicating is that actually the case and is the Fed not giving a a clean reading on economic activity and inflation as it's being published in other places than what the FED is currently reading well I'm I mean I think the most
interesting thing here and perhaps the most non-consensus thing here is the Fed kind of seems to be orchestrating a pretty soft Landing right nobody wants to hear it the market fought it for the first half of the year the NASDAQ was just up 39 in the first half and most people didn't participate so everybody wants to talk this down and say that inflation's still out of control
chamat's been talking about inflation higher for longer but notice he doesn't say that's a problem or the economy therefore is going to crash it's just like inflation's going to be a little stickier on the way down rates are going to be a little bit higher for longer I think when you look at this in totality the reason they hit pause is because they've come a long way quickly they
know that things are starting to Trend in the right direction so their own forecast for CPI is that it comes down a lot by the end of the year Goldman Sachs is now at 3.3 percent and I know we have readings like true inflation that say the inflation today is actually lower than that but you don't even need to get to the debate between true inflation and
CPI they're both trending a lot lower but we got a really interesting reading this morning because like why do we want to you know raise rates well we want to cool off the economy and so everybody's looking for that indication that the economy is cooling the leading indicator for this is jobs so we had a really hot ADP jobs report this morning right over 450 000 new jobs
created and everybody got nervous the 10-year shot up to over four percent the market turned down at the start of the day and then we got the jolts report now Larry Summers has described joltz as a much more that's job openings okay so this is more of a leading indicator like how many of the job openings are we consuming and that actually came in better than expected so what it
suggested is that more people took jobs than we had anticipated and remember jolts peaked closer to 12 million and now we're at about 9.8 million and so when I look at that you know and then look at the jobs report ADP jobs report over half of the new jobs created were in hospitality and Leisure so think about what was happening a year ago Airlines were trying to hire people
restaurants were trying to hire people hotels were trying to hire people and nobody took the job for two reasons number one they were afraid of covid but number two they were getting stimmy checks from the government they didn't need to work now what we see is people are starting to take jobs those show up as higher employment numbers in ADP but in lower
jolts right so fewer job openings to me again that probably speaks to a you know healthy Trend uh in the economy um but clearly the economy is not crashing we had a lot of people who said that the economy was going to hit the skids in q1 or Q2 of this year due to these higher rates the economy is incredibly resilient but if I had to describe you know the rate trajectory
the FED has said listen we may have two more rate hikes that's basically priced in and if you look at real rates so this is the the interest rate that really acts as the break on the economy so this is effectively the 10-year versus future expected inflation it's now at one of the highest levels we've had since 2008 2009 back closing in on two percent so
you know it seems to me that the feds got its but pretty strong on the break it's Jawbone in the economy Sam will do more if we have to but the things that they're looking at job openings are coming down inflation is coming down so I don't know I think you have to leave open the possibility that the fat part of the distribution curve looks like a softer Landing than most people want to
want to admit yeah so chimat gerstner is predicting a soft Landing do you agree I mean you've said we're gonna see rates stay high for a very long period of time yeah I mean I think I've said this for the last few weeks so I'll just say it again but I think that it's um there's no hard Landing right that's the hard Landing was sort of the drucken Miller
thing that that I think that you know I said I think it was a few weeks ago it's very difficult to see a hard Landing when China stimulates um just because of their natural gravitational pull um in the world economy and you know we can talk about that again because it just looks like China is in super super trouble meanwhile I I sent this little image to you in Freeburg you may just
want to throw it up here just to look at but you know when you look at inflation we've done the best job of the developed Nations and getting this thing under control and so um I think now it's just about making sure that we adequately contract the money supply and making sure that we have bullets in the chamber in case things get bad what do I mean when you
look at this chart the thing that I think about is I'm glad rates are almost at six percent why because when you look at the UK Italy Germany most of the Euro area France Japan and then you know China it's non-existent but China has a different issue the reality is that you know a pretty bad set of economic circumstances could actually touch the Western developed Nations if you start to see
some of these countries rip rates higher to like seven eight nine percent the UK it seems like I don't know what you guys think it's definitely going to seven and it could go to eight I mean it could be a very bad situation for the UK they're in a lot of trouble and so I think it's important that the Federal Reserve have tools so by continuing to constrict the money
supply have rates that are relatively elevated maybe a quarter or two longer than they need to it gives them a lot of positive optionality if they need to step in if something bad really happens and so I generally think they've done a very good job and I think not to interrupt to your point what's really interesting is the Symmetry with what happened in 2000 so I think I think
we had all agreed that the last time we saw the zaniness that we saw in 2021 in the zerp environment was probably like 1999 2000 era well in 2000 remember we had this huge asset bubble and the FED raised rates from five and a half to six percent in two thousand okay in the first half of two thousand and they were saying that they're going to stay high
for long and remember in 2001 we entered a recession and we ended 2001 with rates all the way down at 1.75 percent those are the bullets in the chamber that you're talking about that then pulled us out of the recession um you know and some people blame them that they caused that reception recession but you know when you look back from it so in this case it looks
like yeah in this case it looks like the recession is really not of our making but you know we may actually have a soft Landing but the economy could actually contract because when you look at these Western economies turning over it's it's not a good situation I think the Eurozone quite honestly is probably a quarter into a recession already so you know we have six or seven of the really important
countries probably in a recession the UK in really big trouble the U.S relatively keeping things you know in a pretty good place China economically I don't know where the demand is going to come from you know on the same time that they're that their internal demand is imploding they're uh creating all these export controls that I think guys are not going
to actually help them solve the problem because it just accelerates Western economies desire to delever from China so the whole setup I think is very complicated one but the US looks really good frankly yeah look I don't think we're out of the woods quite yet um so so druckenmiller by the way said that he was predicting a hard Landing in the second half of the Year we're just
starting the second half of the year so he's still got six months to be proven correct um I find his analysis compelling or I did at the time I heard it uh but think about our situation we still have an inverted yield curve it's the most inverted it's been I think this is the longest it's been inverted now the FED is signaling that we're going to get two
or three more quarter point raid hikes so it's about to become even more inverted and what that does is it puts incredible pressure on the banking system because the whole banking business model is to borrow short which is uh from depositors and Len long and if short rates are higher than long rates that whole business model doesn't work so either they can't engage in
lending activities meaning there's a credit crunch or uh deposits to leave the system and then that's happening too so any business out there that's dependent on credit the real estate industry or Auto industry I mean any industry that depends on loans and credit they're going to continue to be hammered by this so I mean to your point Stacks I'll just read the minute
commentary on this the meeting did include a discussion on the stress on the banking sector and economic activity in general because of decreased lending participants generally noted that banking stresses had receded and conditions in the banking sector were much improved since March participants generally continue to judge that a tightening in credit conditions spurred
by banking sector stress earlier in the year would likely weigh further on economic activity but the extent remained uncertain so obviously a wait and see and that they mentioned that credit conditions did not appear have Titans significantly beyond what would be expected in response to the monetary policy actions taken since early last year so at this point saying it's a wait
and see does not seem to have overstretched in terms of credit tightening at this stage but well yeah I mean so here's the thing is that the FED engaged in an extraordinary intervention a few months ago to save the banking system with the bank term funding program right where they basically said to all the banks that if you have U.S treasuries and I think it also applied
to mortgage-backed Securities as well we will we will basically take all of those assets and give you par value we'll give you 100 cents on the dollar yeah in exchange for I guess you have to pay you the bank would have to pay the um the one year uh uh I think it was the one the 12-month interest rate with like 10 10 base points or something like that so if
you're sitting on bonds that have gone down 20 or 30 percent in value you can go get all that money back by you know presenting them to the fed and then you just have to you know you have to then take the 100 cents on the dollar you get and make sure you loan it out and higher than the one year interest rate which is around I guess five percent right which you can still
do in residential right because uh mortgages are still something like they're over seven percent so the FED has provided a lot of liquidity to the banks through this uh btfp it hasn't helped the commercial real estate guys I don't think that's why they're they're still I think huge problems in the commercial real estate sector but the FED did engage in a huge
intervention to save the banking system and they may not be done with that yet you guys so I just wonder you know I just wonder if the if you didn't have all these distortions what would the real shape of the economy be you know another one on the fiscal side on this on the fiscal side was the whole um binds Energy bill which is supposed to be 350 billion but as our energy
investor friends are saying it's probably gonna be more like a trillion when they add it all up no but that's honestly hold on those guys are being hyperbolic and they're just stupid and wrong because I know which friends they are and I know them to be mostly stupid and mostly wrong most of the time look the the good thing to know about oh my God I'm gonna get a text after this well
yeah you should because he doesn't know what the [ __ ] he's talking about and he keeps saying there's a lot of stimulus is the point whether it's half a billion sorry a half a trillion or a trillion just talk he's just talking his book but where can I just go back to where you're fundamentally right and where I think both of us can can be in unison on this
which is there is a looming credit crisis in the United States and you know we we've talked about this before um I tweeted something a few weeks ago but the the the debt wall that Corporate America is about to hit is pretty meaningful and to your point David A lot of these companies will have to thread a needle because if rates don't go down
materially in the next 18 to 24 months these folks are going to be paying rates that they cannot bear and they'll probably go in to still breach a covenant of some of the debt so you know one thing that's important here is that there's some very strict guidelines and Covenants that debt issuers sign up for and one of them is you know how much debt can I have as a percentage and or
as a multiple of my ebitda and so that's the way that bondholders govern the risk that you don't over borrow now the problem is if you have a ratings you know an earnings recession and or rates go up you can get one of these two things to go wrong and all of a sudden now you have seven or eight times your ebitda and you're in a very very bad state so I do think that that that's
possible but at the same time I don't think that that's a Calamity that touches the entire economy I think there are a whole portfolio of over levered companies and real estate and there's a whole portfolio of overloaded companies in private equity those folks will have to get recapped and that will probably cost trillions of dollars of capital impairment but I do
think that that can relatively be done without impairing the the economy at large I'll make a prediction right now my prediction is the federal government is going to help to monetize that debt and they're going to help to support that commercial real estate sector through some sort of structured lending program I don't see why do you think that why do you think it's because of
the donors because I think that there's a significant amount of capital that gets donated to so you think there's going to be a comfort like program for Real Estate private Equity a real estate privacy no you think there's going to be a tarp-like program for Real Estate assets and for private I'll take the other side of that yeah I'll say real
estate assets I don't know about the private Equity assets but I think for the real estate assets just because so much of it is a thousand to the SPCA yeah I'll do that oh wait what's the time frame maybe uh well you you tell me you want infinite uh no we'll do it until the FED starts no until the FED starts reducing rights so once the FED does their first rate
cut that's the end of our best oh wow that's an easy one uh I'm in I'm in for 25. no you can take five I take a hundred okay for myself can I just take the action for myself you know Friedberg on that I'm sorry let me just let me just tell you why sorry in addition to the significant donor dollars that come from Real Estate uh to politicians uh campaigns um but so much of those assets so many
of those assets are held in life insurance companies on banks balance sheets I mean you guys may have seen this report this week that because of the rise in interest rates there are several insurance companies that now be Tech may be technically insolvent according to DOI Department of Insurance regs in their respective States because the impairment on the bond portfolio has
declined has caused them to now not have enough Capital reserves to pay out the claims they have so the same I think ultimately will come true once you have to do a mark to Market on all these real estate assets um that there's a significant number of those real estate assets that are held in Pension funds that are held in life insurance companies that are held as
Securities in large pools of capital that are meant to support people's long-term needs and the government isn't going to let the federal government isn't going to let that um you know just get written down and have people's future pensions or insurance claims um you know get hampered so that's why I think there's going to be a moment or
two where there's going to be some step in and some structured program to support this uh this day I just don't think it's that Draconian rates are not that high you know we're still talking about a 10-year that's flirting with four percent and the fact I'm just talking about commercial real estate because there's also a demand problem right yeah I I know but the the other
side of this is the trend again there is no doubt oversupply and a problem particularly in a place like San Francisco where we're going to see some blow-ups because nobody wants to you know to to enter a long-term lease in a city that's under siege I understand that but the fact is that the market is telling you that rates are going to start going down right that the the
fed's going to come in battle until the edge right and then they're going you know feds are going to come rates are going to come down a little bit why is that because if they have two more quarter point rate increases now you have restrictive rates at something like 200 basis points that's higher than the FED ones that's the foot really hard on the brake so it's not like the Market's
crazy and thinking that we're going to have a couple rate Cuts next year I just told you in 2000 we went from six percent to 2001 ending the year at 1.75 and the Fed was doing the exact same jaw boning in the summer of 2000 okay so they they do evolve rate policy based upon what's happening in the economy all of the things are rolling over CPI is
rolling over jolts is rolling over Etc so again I just don't see the heightened concern I think to the bank issue sex to me that was you know that was the much scarier concern drucken Miller actually pulled forward his hard Landing expectation to Q2 of this year as a result of the bank crisis and now has pushed it back out to Q4 of this year I think if we have another you know Black
Swan like Banks or something that I can't foresee today um then you know that could certainly be the thing that would be the Catalyst to toss us into a hard Landing barring that I think that by the way you know the distribution of probabilities the fat part of the curve is that we have a softish medium you know sort of Landing here and I think you're right I think
you're right and by the way like if if if the UK had not left Europe then the whole contagion of Europe could be one of those Black Swan events that we would all be talking about as theoretically possible um but it looks like the UK is probably gonna it's it's really bad I think Britain is now the only major economy where inflation is still Rising the the oecd
said Tuesday that you're in your inflation and the G7 fell to 4.6 in May down from you know five percent in April so inflation is is tempering a bit but UK consumer Prices rose to 7.9 in May um which is up from 7.8 in April so an acceleration uh in the UK it seems like it's a pretty nasty spiral problem this is where you know the benefit of being part of a larger economy really pays
dividends right obviously there's a lot to do with you know language and currency and there's a whole bunch of issues rolled up into why the UK left the European Union but my gosh one of the real obvious advantages is you know you're smoothing out the variants right and smoothing out variants is really valuable so if you think about like all of these economies in Europe
um you know like PMS in a hedge fund right Brad you can you know you you know this it's like you you sometimes some guy crushes it you know look how Millennium or Sac or Citadel makes the real money it's by smoothing out variants and that's a great thing about being part of an economic Union like the EU offers and in the absence of that in times like this is it really exposes the
weaknesses of a small sub-scale economic system which unfortunately the UK has Europe Europe is going into recession too I mean Germany has huge problems that again it stems from the cutoff of cheap Russian gas economies in the EU they're going into recession as well so it's not it's not it's not with the same levels of inflation my point is like you
know it's one thing for an economy to start to recede but here it's you don't have the benefit of balance sheet borrowing of the scale of the EU nor do you have the disinflation of the EU and I think that's problematic much more for the UK than it is for any individual country in Europe that's just my point that's all can they can they you know one just philosophical thought you know
because if we rewind the clock to the beginning of the year you know there was absolute consensus in the markets right and you can go back and look at all the headlines Mike Wilson's consensus was that we were going to have a hard Landing in q1 hedge funds long only funds had their exposure super low everybody had post-traumatic stress from last year
it is a sure strategy to lose a lot of money or not make money if you're trying to always call the Market as though you know you have no idea right q1 and Q2 sure there was a possibility we could have a hard Landing right and the bank crisis made that look as though as a possibility what we try to do is look at that distribution of pro of possibilities right it's a distribution
curve and so I put up on the on the screen here what the markets implied fed fund rate changes are from today so what the market is betting on which from my perspective is better than any one of us trying to forecast right what's going to happen with future rate increases it's saying yeah we're going to go from 5.08 today to something like peaking at 5.45
November of this year and then at some point Beyond November could be December could be q1 of next year right we'll see enough turning over over of CPI enough turning over of jobs that now will say the balance of risk has shifted to being too punitive on the economy so we're going to reel back in one of those rate increases okay and I think that you know
so Friedberg just to to clarify on the bet we just made which I'm excited about you have to have this tarp you know commercial real estate rescue program before they reel back one of those rate increases which the Market's telling you could be as early as December yeah um but I I encourage everybody who listens you know like don't listen you know it's not like go all in because drunken
Miller says hard Landing or don't go all in soft Landing because we say soft Landing our our net exposure has come down over the course of the year at altimeter because we've moved the markets have moved up a lot they're pricing in more of a soft Landing today so the idea is to have high exposures when the world's panicked and then to reel in your exposures a little bit but
never be all or none I mean the the fascination with calling The Big Short the big hard Landing soft Landing it's just a sure way not to make much money um today there was a red hot U.S jobs report Brad U.S job openings dropped below 10 million in May but the labor market remains piping hot like I said you know the market I think is you know it's reading way too much I mean
this wasn't even a a I mean we'll get the official uh jobs numbers out of the out of the federal government tomorrow this was an ADP report um which are have been not particularly good but I already explained there's a rationale look peel behind the G the ADP report 250 000 of the 400 and you know thousand odd jobs that were created we're in hospitality and Leisure I mean these
were desperately needed because we have a peak summer travel season going on so you have hotels that hire a bunch of people those show up in the ADP job numbers right but the great news is the jolt's job openings goes go down and you know Summers was complaining last year that joltz wasn't going down fast enough he also said something that was really
interesting when joltz when he said when joltz goes down by over 10 percent so think we've had to move from 12 million to 9.8 million he said when Joe goes down by over 10 percent we have a reduction or an increase in the unemployment rate by two and a half percent in the subsequent 12 months so joltz is a leading indicator you got to reel in those job openings and then you
start seeing unemployment bump up so with a tight economy you know the foot on the the fed's foot on on rates some of the contraction that that sax has been pointing out um and then we start to see these early indicators in jolts I mean people need the job clearly or they wouldn't have taken them their stimi is run out um all of these things are are what the
FED is trying to manufacture right so I don't look at that jobs number in fact we were doing just the opposite uh you know in the market this morning uh to you know what the market was giving us I don't I don't think that was a a very good read through at all okay I want to talk a little bit about jobs uh the Florida State uh Senate bill 1718.
went into effect on July 1st this bill now requires that any company with more than 25 employees use the e-verify system to verify the legal immigration status of their workers of their employees and this will create um a real impact on businesses that employ more than eight hundred thousand illegal immigrants in the State of Florida to do a lot of work and a lot of
Labor it's unclear how many of those 800 000 illegal immigrants that are working in Florida today are working at a firm with more than 25 employees but the impact is going to range from the construction industry to farm labor and a lot of other manual labor sectors in a state that has 2.3 percent Unemployment uh DeSantis has made this um you know an important speaking topic
when he spoke in publicly he did quite a bit of press around the passage of this bill as a way to counter Biden's quote open immigration policy sex um I know that you've talked about DeSantis in the past do you have a read on the impact that this immigration policy will have do you agree with it would love your thoughts I mean I don't think this is a jobs bill
this is a immigration bill or it's an immigration issue and look I don't know what the impact on Florida is going to be from this I don't trust a single story that's out I guess there's just a story in the Wall Street Journal about it I mean this feels like a campaign story so um I want to see more stories before I reach determination on what the impact's
going to be but politically do I think this is smart yeah because the border is the number one issue in the country right now I don't think you guys are as clued in to like how on fire the country is about what's going on at the border and our fundraiser RFK talked about the the Border because he went there there's a bunch of really good Clips online I don't care who you are you can't
listen to that accounting it's just an accounting right so anybody could do it so it doesn't matter what your political um perspective is on RFK anybody who listens to that accounting can't be anything but shocked what he described it as what what rfk's described as he went to the the border at Yuma and there are literally holes in the wall uh you know from Trump's wall and
literally the building materials to finish the wall and plug those holes are sitting there on the ground and the bind Administration refuses to use them and plug the hole because they don't want to give any credit to Trump presumably um I mean literally that's how Petty it is or it's actually their policy they actually like having an open border so
something like seven million illegals have come in through the southern border since mine's been in office and they're not and they're not they're not from Central America it turns out these folks are from uh Eastern Europe um and Africa predominantly many men of military age and it's an entire business that's run by the cartels and as he describes it it's it's really just
plainly shocking can I ask you guys if one of our if one of our enemies wanted to get thousands of sleeper agents into the country it would have been very easy for them to do this okay can I can I just think about that um yeah I get it yeah can I pivot away from the border policy question to one of Labor we obviously as evidenced by the jobs report from ADP this morning
remain in a very tight labor market in the U.S and we as a group often talk about h-1bs and the importance of um allowing educated immigrants into this country uh to meet our our knowledge Workforce needs but there obviously is a pretty sizable manual labor workforce need in this country and a very tight labor market to fulfill that need ranging from construction where we have you know deep
um and significant aspirations as a country to improve infrastructure to farm labor where we have you know the largest agricultural export Market in the world and many of these industries rely on low-cost labor for those businesses to meet their economic objective to be able to be profitable and we simply may not have enough of a labor force of legal immigrants or legal
citizens or residents of the U.S to meet those obligations what is the answer sax is it that we are supposed to take anyone that's illegal in the country and make it impossible for them to work here and is that not going to have a very adverse effect on these important segments of our economy that today rely on um that labor force that is here illegally
and I'm not listening I think I'm not stating an opinion I'm asking the like the importance I get what you're saying I think we can start to resolve that issue when you solve the Border crisis the problem is the average American doesn't want to hear anything about you know quote-unquote comprehensive solutions to the Border crisis or immigration or what do you want I'm not
talking about politics I'm just talking about your personal point of view my personal point of view is we need to seal the borders so we stop having this problem okay but what about to work what about the labor yeah yeah let me uh I'll take a crack at it's very bird okay I'm just trying to I'm trying to diagnose the difference between the the Border
policy question and the real economic question I know at the California AG sector very well there's an important migrant Visa um that the entire farming economy depends on in the California and um these are illegal immigrants that are legally allowed to work in the farming sector and it allows Farms to be able to do the work they need to do because there is absolutely no labor to do that
work without this immigrant population and there there's other elements of this that are critical across the economy Sorry Brad go ahead no so why why can't we have a common sense migrant you know worker program worker visa you know predicated on that right the problem is I think where you know most people are in agreement that if you have a relatively secure border right then you
design good policies we should have a policy for people who want to come and work and earn some money and you know we we have job openings in this country and then return home right or go through a normal process right to get in line to citizenship but the problem is people cutting the line you know skipping the system and given the social safety nets
that states on the border have lined up and we as a you know a nation have lined up that's just unsustainable in a world where we're already whatever 35 trillion dollars in debt so I think these things can coexist you can treat labor humanely you can create a safe harbor for labor to come to the country but that doesn't mean that you should just have holes in
the wall and anybody who wants to come here can come here in whatever capacity they want assuming that the border is closed and we fix that problem what do you think the right solution is to the millions of illegal immigrants that are residing I'll answer that but let me let me ask you a question do you think we should seal the Border yeah for sure and why do you think we should seal the Border so
that we have a system that we can use to manage the flow of Labor and decide what's appropriate for our country and we can actually have a conversation about what qualifies someone to come across the border and to immigrate into the U.S I totally agree with you yeah I agree I think that looks like but so saying that you assume that the Border was sealed what would you do about you
know low-skill immigration that's kind of like asking other than that how is the play Mrs Lincoln I mean this is the hair on fire political issue is that we can't get the Border sealed that you've had seven million plus illegals come across it during the bind Administration and the administration obviously doesn't have the will to do anything about it
so you're kind of assuming away the central issue this is the issue one of the main main issues that got Trump elect in 2016 was building the wall no but I think wait I think we're all saying this it hasn't gone away we need to seal the Border we're all saying that right does anybody think we shouldn't seal the Border no I agree yeah why isn't the analysis on why that
doesn't happen when everyone in the country agrees that [ __ ] happened or just about everybody but I do think that there's a that there's a low-scale labor market need that's not met in this country there isn't a public restaurant um company that doesn't talk about the challenges that they're having with labor they cannot fill the jobs that
they all right well let me all right if you want to talk about that issue I want to flag a report that was presented to Congress and this is about 15 years old it's back in 2007 by Heritage but I don't think the numbers have changed much in the interim in fact they've probably gotten worse um the point that this researcher made is that if you look at the cost of law
school immigration the average low-skill immigrant household receives approximately thirty thousand dollars in direct benefits from the government by contrast these households only pay about ten thousand dollars in taxes so even though those low-skill immigrant households let's assume that they're working and do contribute to the economy in the way that you're saying there's still
a twenty thousand dollar gap between uh what they contribute and what they receive from the government and that is a big problem for the country my guess is that the counter argument would be that more than twenty thousand dollars of economic benefit accrues to the businesses that employ that labor because they can now be profitable they can now get the work done that they need
to do they can grow their revenue they can expand their footprint they can service their customers all the things that otherwise they might not be able to do without having access to that I think that's a big assumption I think that's a big assumption one of the problems with the system that we have is that there's a lot of government benefits and it and
so if you want to have a more open immigration policy that's sort of inconsistent with the idea of having a super generous no I think I think yeah I think there are three distinct things one is is it open or closed and you know second if it's closed what are the qualification criteria and how many and I think that's totally reasonable the third is about benefit what government
benefits are provided and you could reduce the government benefits if it's too costly you could improve the qualification criteria and increase the number of of um I know this may sound crazy but I think that tying together immigration and jobs um is like the best way to ensure that nothing actually happens on immigration right and what I mean by that is that
when you go to a restaurant for example and the service has decayed because they can't they can't get enough staff right um you don't walk out of that restaurant thinking well wow we need comprehensive integration reform you say thumbs down on Yelp I'm never going back here again and so unfortunately if it's that if it's service sector jobs in particular by the way
um there is no closed loop way where you actually tie these two issues together and so the issue becomes stranded which is what it has which is why I think what Brad said in Sac said Is Right which is there's an order of operations here where the American people probably want an immigration system that says something like here's some you know a point-based
approach right where we try to attract the world's best think about it like a draft right and we want to attract the world's best athletes to come play on our team team America Team USA we have all of the capabilities to do that but before we do that we have to kind of close the border and I think that that's the only way it's ever going to get done meanwhile the problem with
the jobs thing is a bit of red herring towards immigration because people just don't tie the two things together practically speaking well I was going to say one final point on this is that when you admit lots of low-skill immigration or labor into the country you're creating wage pressure for Americans at the lowest end of the totem pole and that is why they are so resistant to it
this is why average working-class Americans are very upset about the Border it's also a security issue and there's drugs pouring across as well you know the fentanyl crisis that we see but it creates a lot of wage pressure for Americans who are at the lowest end of the the latter yeah I mean what's wrong with just paying them a little bit more you know
so so here's some statistics for you guys um the total population of unauthorized immigrants um in the U.S peaked in in 2007 has declined slightly since California felt it first from 2010 to 2018 the unauthorized immigrant population in the state declined by 10 to 2.6 million mostly impacting the farm economy um so the state California state reports that from 2010 to 2020 the average
number of workers hired by California farms for Crop Production declined to 150 000 from 170 000. I talk with a lot of people in the farm economy as you guys know and this is an endemic problem in California Agriculture is that the lack of a labor force that allows the Farms to be profitable is really impacting folks ability to operate and to grow and you know that ultimately
translates into consumer prices and so on so there are huge consequences as to having effectively an open border policy that go beyond just you know arms or you know Vineyards not being able to hire enough cheap labor I mean look at what's going on in France right now yeah you've basically got riots you've got a civil war going on there's a large
unassimilated poor immigrant population in that country that's where open borders gets you that's the end result so there are huge consequences to allowing in huge numbers of low-skilled immigrants yeah especially illegal ones I don't think there's a lot this is where we get to you know last week we had the Canada H-1B and announcement about their technomatic visa program and I sent it
to two members of Congress I sent a tweet sorry just just recap for us what happened Brett okay so in Canada last week um you know the government announced an aggressive push to recruit uh technology workers from around the world to Canada so they made it easier for uh Tech workers to get what they are calling a digital Nomad Visa so you can now go and
work uh you know in Canada uh if you have a job offer and then they also in in kind of a gangster move um said if you already have an H-1B visa in the United States and it's starting to run out just bring you and your family to Canada and work from here right so it was like we've been talking about we need H1B Visa reform we need to recruit the world's best and brightest
and artificial intelligence Etc to the United States and they were you know they were doing it quite aggressively now the point is I sent that to two members of Congress a Democrat member of the House a Republican member of the Senate and I got back nearly identical answers from both of them they said no chance that happens here Dead on Arrival
because nothing's going to move until we have a comprehensive immigration uh policy in this country and then I said well why hasn't that happening they said elections right show me the incentives and I'll show you the outcome the problem is all four of us agreed we should have you know we should have sealed borders but at the same time immigration is what
makes this country great we want to treat people humanely we need migrant workers like this is not that hard a problem uh to solve in this country but there's not even a conversation the farce that is Washington DC on this topic is there's not even an honest conversation or attempt to get to an us to to get to a solution here so with a presidential election You Know lesson
you know uh a year and a half away we're just back to the same old tribal war that we've had before now I understand sac's point is like listen nothing happens until we have closed borders and maybe sequentially that's what we have to do but it doesn't stop there I think we all agree that what makes this country special is that we you know Fourth of July you know we throw open
the doors and we welcome uh you know folks from around the world to contribute to this great experiment some of them are on path to citizenship and some of them are not what doesn't sit right with anybody is breaking the rules and skipping the line I understand the desperation and the motivation of some people to do that but that is not ever going to be a system that works for the
majority so it sounds like what's that happening right right the way I interpret listen when you say that we can't do anything until we have comprehensive immigration reform by the way I heard future Democratic nominee Gavin Newsom say the same thing on Hannity what the party in power is doing is holding the country hostage and saying that we're not going to close the
border we're going to use the the Border as a bargaining chip until you give us the immigration package that we want but that really shouldn't be allowed because really it's the obligation of the federal government to have a secure border that's not something you trade that's something that we should already have well it's what we pay for that's what we pay for
so that when they talk about conference of immigration reform that's basically what they're saying is we're not going to give you a secure border until you give us enough policies that we want just to give you guys the and and Freeburg and sax are immigrants but you guys got your citizenship through your parents um I actually did the process myself as
an a TN Visa holder who then went to an H-1B um who I didn't I think went to eb1 so you know I've had to go through this and I've literally had to wait in line and you you can't I can't describe to you the anxiety you have when you know you know your Visa is running out you're waiting for customs and integration to basically give you the meeting so that they can actually
approve or tell you that your H1B is approved or your eb1 is approved and you go to this website it's Arcane you refresh it every day you do it for six months straight every day a few times a day you go into the forums where all these other immigrants are talking about how frustrated they are and how scared they are but we all stood in line and I think what people don't understand
who think that the southern border should be totally open is is the anxiety that those of us who actually played by the rules went through for months and in some cases if you come from countries like India and China years right but by the way that's not fair what you're saying is exactly why the Hispanic population the Hispanic citizens of the United States are
increasingly voting Republican because they have gone through the process they have suffered the the rigmarole and they don't want to see an open border policy that um you know isn't fair and doesn't feel right you know we're first generation Americans and I remember when my parents went through the process but I think my dad got a green card based on being a
doctor before we came here and then after five five years we became citizens it seemed a lot more orderly back then by the way totally the process just seemed to work now I've seen all the statistics showing the insane percentage of Silicon Valley startups that had at least one immigrant co-founder it's something like 40 to 50 percent of unicorn of unicorn companies in Silicon
Valley have at least one co-founder who's first generation American or or an immigrant so I understand full well the benefits to the country and our economy by being able to have immigrants come to America but generally speaking those are high skill immigrants and we should be able to have that as a feature of our system without having an open border
and the problem is all these things get conflated right now and I think what's happening is it shouldn't be so hard to get extensions to h1bs it is really crazy that we're giving Canada this opportunity and that we're potentially driving out really talented High School workers but the problem right now now is that the southern border is such a mess that the average American doesn't want
to hear anything about h-1bs or anything they don't hear about any of it they're just like I would encourage people to to listen to that RFK clip where he describes you know and he's one of the rare presidential candidates that has taken the time and gone down there and he just describes it very plainly so irrespective of what you think of him uh
listen to it because it's pretty factual and it's very scary it seems to me to be of such significant strategic national interests similar to the national debt um that there really should be a commission of Centrist folks uh you know appointed by whatever president this President the next president um that tries to craft something we can pass break it down into two or three bills
um but it you know this is really undermining our ability to compete in the world and we need to solve this problem and I think we've been discussing this you know for as long as uh you know we've been in Silicon Valley but certainly it's become an incredible problem in the age of AI Etc and you know um you know having the Tit for Tat of what's going on these news articles
shipping off you know illegal immigrants to uh to Martha's Vineyard you know I happen to be on Martha's Vineyard right now I think they set 49 you know folks here uh Venezuelan most of them Central American and I'll tell you this island is made better because of you know it has a tremendous number of portrait degrees and Central American workers
um you know who are active members of the community go to the school here Etc um so maybe that is part of the solution sax that you know when we do have uh you know people who want immigrant you know immigrate to this company country the burden is not just on the border states but the you know folks uh have an opportunity to locate anywhere in the in the country
well yeah and what happened with the Martha's Vineyard thing is I have seen some um articles like the New York Times articles saying how wonderfully it's all worked out but when it first happened the people living in Martha's Vineyard were up in arms and there were a bunch of angry press conferences and they were you know almost hysterical that the Sanchez had sent them there but what
that did is it exposed the hypocrisy because there's a lot of people in the country who are just fine with having an open border when they don't think it affects them totally but when it does affect them then all of a sudden they're holding press conferences denouncing it so I think it never works Tit for Tat never works you can have me a tit you don't need
who left the cocaine in the White House what's the answer uh I I actually don't think it was Hunter button I think it was probably like some young kid who was working like long hours and was like I need a little upper here to stay up and was like I need a bump and so the kid brought some nose candy I mean well how stupid is this kid and by the way they said that
there's no security footage it was in a cubby it was in a cubby he put it in the cubby whoever did it which is so stupid why would you take it off your off your person yeah I mean it's clearly he's clearly a conservative reporter who snuck in there to frame Hunter and by the way it was in the cubby where you're supposed to put your cell phone when you go into classified meetings sax
have you been to the White House lately no have you any of you guys been in the Oval Office I have yeah I'll tell you a very funny story about my my meeting in the in the it was in the Roosevelt room I had a fighting meeting where it was like me Andreessen me and reason I can't remember who else was this was like years ago a decade ago this is during Obama's administration
and something like we're meeting with like I don't know the the chairman of the Joint Chiefs and all these big monkey bucks and I remember the military guys because there was four of them and at the time it was there was like oh my God no this is right when the first Ukraine thing was going on okay so what was that sax 2014 Maybe 2013 2014 the first UK the Ukraine
think of magic anyways oh yeah 2014 yeah 2014 okay so we're we're there and they're talking about we're talking about new technologies whatever and I said guys I mean this is insane like why are you not are you guys not dropping you know small SATs so that you can get internet service into places like the Ukraine so that people can get the message up whatever's happening
and I said these things are really small like you can bring them anywhere and I said you know I could have smuggled one in here right now one of the guy says no we've been watching you since you got it oh wow this was so very funny I thought it was hilarious yeah well speak speaking of political forces here we go and uh no it's not red meat I mean I want to do a
just do a quick recap on the whole Chinese spy balloon thing I actually think there's a serious statement here about how our political system works but do you want to tee the sub free burger or do you want me no go for it yeah lead in yeah go for it all right so basically you guys remember a few months ago that we had this whole Chinese spy balloon thing that went on for a week I
mean we had 24 7 wall-to-wall cable and use coverage of this thing and the administration was accused of being soft on China and allowing the Spy balloon to Traverse across the United States and people are posting online yeah then finally the the White House deployed some f-16s to shoot down some 16 hobbyist balloons with 400 000 Sidewinder missiles to show that they
were really tough anyway it was this whole farce now it turns out that the Pentagon just released a statement so Pentagon press Victory Brigadier General Pat Ryder said the balloon not only did not transmit data back to China and never collected any and he said we're aware that it had an intelligence collection capabilities but it has been our assessment now that it
did not collect while it was transiting the United States so if it wasn't collecting any data it wasn't transmitting back to China and then I've also heard that it didn't contain any special equipment at all it just I've read articles saying that was just standard equipment that you could buy how is it still a spy balloon yeah and I remember they got worked up about this
thing that turned out to be but is it Chinese was it actually Chinese I think it was Chinese with American Technology so so now yeah like now all the reporting's covering the fact that it had quote American Technology on it like Sax's point is you could just buy the stuff off the shelf and if you guys remember around the time that it was discovered
we talked about this but it wasn't widely covered in the media that there was an upgrade to the um domestic radar system where they increased the resolution and the frequency of capture of these radar images so they were starting to pick up more fine-tunes smaller objects that were otherwise being missed including things like little you know weather balloons or you
know stuff that that otherwise wasn't getting paid attention to and that this you know balloon may have been the sort of thing that could have been a blip and ignored uh in the prior system but then when they upgraded the system it became a thing and to Sax's Point what's interesting is how it got spun into a you know domestic threat uh by the Chinese well we had this debate on the
Pod months ago where I was like look this is just this cannot be true it's just it makes no sense I mean the Chinese have spy satellites so if they wanted to spy on us they would just receive Imaging from space so then people started speculating well this is this by balloon must have new kinds of equipment you know new sensors or sound maybe they're trying to collect sound
patterns make recordings so in other words over Farmland over Northern Canada and then farmland and yeah like there's a lot of interesting stuff to pick up there instead of recognizing that the story was completely far-fetched they had to invent a narrative about why it made sense and then you know if you basically raise any questions whatsoever about this
narrative they you were looked on as if you were like Chinese spokesman like a spy or something in fact this this Pentagon statement came right after Tony blinken's visit to China right he just got back from China and there was a lot of closed door meetings and then they gave the usual hoopla about what was discussed and there was nothing new that
was introduced in the public statement about what was discussed behind the closed doors but do you think that maybe there was something that was negotiated behind closed doors where they said our this balloon was not a domestic threat you guys made it out to be you need to make a statement to correct the record yes I actually think that's exactly what happened is we know blinken went to
China he had seven hours of meeting meetings the the uh read out from those meetings said that they were a very candid conversations that's usually diplomatic code for uh yes exactly exactly and I think I think the Chinese were very upset that the story was relentlessly pumped for day and days that they were spying on America and I think they demanded a correction and I think that that is
exactly what the Pentagon did is they put out this press release they put out the statement but the way that the media covered it it's like the back page correction of a front page Story I mean this Chinese spy balloon story went on for days and days and days and the correction gets no coverage now look it's also possible that that somehow the statement is not true
now I mean look either they were hoaxing us to then or they're hoaxing us now because the statement they're saying now is incompatible with what they were saying three months ago but I believe the statement now and not what they were saying three months ago because it just makes a lot more sense um but you know remember a few months ago uh we had you know mids on Twitter
here let's just become a thing remember remember when mid's on Twitter you know when I invented that I came up with that my take was Aaron balloon major provocation could incite War blown up pipeline referring to Nordstrom which also got blown up around in that time not a provocation can never Insight or get it straight and then the mids on Twitter were you know
laughs and you learn a new vocabulary word but in his view Aaron was not a strong enough word to describe this unprecedented national security threat by the way for those of you listening uh the the mid that responded to sex was Jason callicanis formerly of the all-in-pod yeah oh my God it's so funny it shows how farcical our political system is because you know I here's
where I think actually happened is that you the story just picked up steam because it just it was it's too good not to right so Cable News starts picking it up and everyone's always trying to pump up the threat that China represents because there are Central Global competitor now and the White House I think very early on had a decision to make which is do
you try and fight the story or do you just roll with it and I think they just decided to roll with it because they would be seen as being soft on China if they try to fight it and say it wasn't true and so then you had this whole farce of them shooting down all these balloons and so forth um this is the whole course and trajectory right now of the United
States Democrats and Republicans both sides of the aisle have this vested belief that we are on a collision course with China and you know whoever kind of steps it up first ends up having uh the better footing and so every opportunity that exists whether it's on chips or Taiwan or human rights or the the Spy balloon is going to be levered and Amplified in some way to paint China as
this conflicting Force against the United States in some way um and it's not going to get toned down anytime soon clearly this is part of a a continuous escalation cycle that may take years may take a decade or two but ultimately uh there's going to be a point where this all comes to a head and it's really unfortunate to see that rather than have this you know deeply
Cooperative relationship uh and so are you think you think distinguished China is going to come to a head at some point I think we're just going to continue to escalate potential I'll take the other side of that too and prosperity forever no I mean I I think I've talked about this a little bit but I think China has just got so many internal issues they're not going
to be fighting Wars they're not gonna no look sorry hold on my point is more around the orientation of the the um politicians and the orientation is we have this escalating force in China and we need to kind of be ahead of the game well well I think the point fever is making is that the domestic Politics the politics inside the United States um leads to a a cycle of Republicans
Democrats constantly trying to one-up each other in terms of who's more hawkish towards China right exactly that that's what I think is going on regardless of what happens on the Chinese side and by the way I mean their domestic politics probably have the same Tendencies I'm sure that she's got hardliners and Hawks around him who don't want to back down
and so I think I think in a few years from now we won't be talking about this we talked about Japan for eight nine years we were worried they were the boogeyman they turned out not to be in we all moved on yeah it's a good data point so yeah I mean you're referring to a period I think it was like the 1980s where Japan was seen as a giant yeah yeah but it was never seen as a security
threat to the United States and China is a different kind of geopolitical competitor right there's a very vigorous security competition they have more people we have military bases in Japan it was it's it's a client in the United States it was never a security threat to the United States that was resolved no I don't think that's fair I just think that uh dollars
tend to lead these things and I think that in uh the next five to six years five to ten years we're not going to be talking about China the same way we are today okay prediction made we'll come back episode 8 uh 1247. uh Brad do our outdoor activities Brad's gonna do a really quick I gotta go fun um have a great time Brad's gonna do a quick science corner for us and
then we're gonna wrap Brad go ahead well you know one of the things I love about this pod is we cover everything from science to politics and and chamoth last year um you know in his biohacking series told us all to get pre-nuvo scans which I did which is interesting and I think I don't know maybe 10 people have have sent you notes and said hey you helped
me discover a tumor you know really amazing well so this year and I did that um you know this year you've been talking a lot about heart flow so I said to my general practitioner at my annual checkup hey I want to do this heart flow and she said oh you don't need to do a heart flow your ldls all your stuff looks real wait wait wait wait wait wait
wait wait you have a female GP uh she's fantastic fantastic Stanford educated really terrific I don't care where she went who does the prostate test he does Hey listen it's it you know the perks that come check in the PSAs I mean no but seriously you have it really I do I do that's a level of intimacy I didn't expect from you wow and so you know but what I found interesting is
when I suggested I get the heart flow she said oh you don't need it Etc your ldls are low you're very fit and she said but on second you know maybe you could go get this calcium score test right um I didn't know anything about this but you know I did a little quick research and it turns out a big Jam of study in 2017 over 50 percent of men and women over the age of 40 Carrie plaque
plaque's the number one killer it's a source of heart uh disease and and heart attacks and as Chamas been talking about there's you know a a prophylactic called Statin which is basically like a supplement very little downside no long-term downside effects but it immediately starts cutting down the amount of fatty cells and and and plaque that's carried in your blood so I
thought it was interesting I went and I had chemath uh as you know the core the coronary calcium scan it takes five minutes it costs between a hundred and four hundred dollars the fact that we don't have every person taking this over 40 is crazy and Frontline doctors should all be prescribed in it but it particularly if there's family history sorry but did you also do a contrast CT
with heart flow yeah so I started with the calcium score 150 bucks over at Stanford took five minutes and you know it told me uh you know which wasn't terribly surprising I was one of the 50 percent that did carry some level of calcium so it was called a non-zero score and then what they suggest is because you have a non-zero score you get this
you know chamoth you told me go do the contrast CT which then will image what this looks like actually in your artery so this past week in Boston I did the contrast CT again this took 10 minutes non-invasive like you know it just they run you into it invasive because you have to put the dye so they put yes so so a tiny bit I I suppose they shoot a little die into you but you know
um uh it didn't feel like anything I was in and out of the of the place in 40 minutes and what it found is you know fortunately that very little of this calcium had turned into what they call stenosis any narrowing of of the arteries okay but then it gave you just a very clear picture that if you are one of the 50 who carry plaque over the age of 40 you should be on a prophylactic
Statin so it's chamat knows I signed up to 10 milligrams of crestar which I'm taking daily has had zero you know zero adverse consequences and in two or three months they'll test the amount of you know we'll revisit this calcium score um but when I talked to the head of Cardiology what was so interesting he said every one of his friends over the
age of 40 he has them do this calcium coronary scan it's so cheap and if they're zero on their calcium reading that that's the end of the line but if they have a non-zero reading then he'll do the the CT coronary scan which is again very cheap more expensive than the calcium test but very cheap and when you think about the cost of the patients in this country right in our health care
System due to heart disease and when you think about the needless lives cut short I was shocked how easy all of this was and how empowered I feel by the data and how fortunate I feel that I'm actually taking a supplement I call it a supplement instead of statins because I think Statin has some spooky name it sounds to me like a better supplement
than any vitamins I can take and you know it's reducing the ldls or these fatties in your you know in your blood and I'll keep you posted but I was very grateful and you know as you know I posted it in our thread and I think all the besties you know we saw responses out of a bunch of folks in the thread this week are going to go get their calcium uh you know coronary scan and I
I think it should be Common Sense on the front lines for people over 40 particularly if there's any family history go get this calcium test done this summer while you have a little extra time there you have it folks 100 to 400 could save your life calcium coronary scan Brad gerstner thanks so much for science Corner this week um this has been great how did you guys
enjoy the show with our new foursome exactly love it love it I gotta go boys I really love you guys uh okay go to Vegas stuff your face with some truffles no no truffles until the fall all right bye bye love you guys [Music] we'll let your winners ride Rain Man David said we open source it to the fans and they've just gone crazy [Music] release [Music] [Music] I'm going all in [Music]