All-In with Chamath, Jason, Sacks & Friedberg - E86: Macro outlook: jobs, housing, inflation + Dutch farmers protests & EU climate missteps

Episode Date: July 8, 2022

0:00 Bestie open: Sacks' shopping spree 2:15 Macro outlook: jobs, consumer sentiment, housing, inflation, finding a bottom 39:21 Turkish government finds ~694 million mt of rare earth reserves & EU reclassifies nuclear & natural gas as "green" 48:58 Dutch farmers protests: root causes, how to move forward with smarter legislation 1:09:39 Biden's decline, Bezos responds to Biden's tweet on bringing gas prices down Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://fred.stlouisfed.org/series/JTSJOL https://www.cnbc.com/2022/07/06/jolts-job-openings-may-2022-.html https://www.bls.gov/charts/job-openings-and-labor-turnover/hire-seps-rates.htm https://www.marketwatch.com/story/u-s-job-openings-dip-to-11-3-million-but-labor-market-still-historically-strong-11657122659 https://www.bloomberg.com/news/articles/2022-07-06/fed-sees-more-restrictive-rates-possible-if-inflation-persists https://www.census.gov/library/stories/2021/12/net-international-migration-at-lowest-levels-in-decades.html https://www.investing.com/economic-calendar/cb-consumer-confidence-48 https://finance.yahoo.com/news/consumer-confidence-conference-board-june-2022-143536146.html https://www.mortgagenewsdaily.com/data/existing-home-sales#chart-existing-home-sales-vs-30yr-rate https://www.marketwatch.com/story/consumer-sentiment-drops-to-record-low-as-inflation-worries-grip-u-s-11656079725 https://www.forbes.com/sites/darreonnadavis/2022/07/05/88-of-americans-say-us-is-on-wrong-track/ https://thehill.com/policy/finance/3525909-56-percent-in-new-poll-believe-us-is-in-recession/ https://twitter.com/BillAckman/status/1544057786065092609 https://news.metal.com/newscontent/101881567/Turkey-Discovers-694-million-mt-of-Rare-Earth-Element-Reserves-with-Infrastructure-Construction-Starting-This-Year/ https://www.reuters.com/business/sustainable-business/eu-parliament-vote-green-gas-nuclear-rules-2022-07-06/ https://twitter.com/GretaThunberg/status/1544380486654590983 https://mobile.twitter.com/Noahpinion/status/1544573867804348416 https://www.reuters.com/business/sustainable-business/eu-parliament-vote-green-gas-nuclear-rules-2022-07-06/ https://www.bloomberg.com/news/articles/2022-07-01/jpmorgan-sees-stratospheric-380-oil-on-worst-case-russian-cut https://abcnews.go.com/Business/wireStory/explainer-dutch-farmers-protesting-emissions-85848026 https://www.amazon.com/The-Alchemy-of-Air-Thomas-Hager-audiobook/dp/B0046Y0BP0/ref=sr_1_1 https://www.monmouth.edu/polling-institute/reports/monmouthpoll_us_070522/ https://www.bloomberg.com/news/articles/2022-06-22/eurizon-fund-holds-unloved-assets-to-beat-peers-in-esg-market https://www.washingtonpost.com/world/2022/07/07/uk-boris-johnson-resignation/ https://twitter.com/POTUS/status/1543263229006254080 https://twitter.com/JeffBezos/status/1543409762867494912 https://twitter.com/JeffBezos/status/1525309091970699265 https://twitter.com/chamath/status/1544370315379109888

You're seeing now the the fresh summer collection of lorupiana this Jason. Oh really is the thin summer gelatine Okay, beautiful cashmere continue. It's called like the King's cashmere or something and then this is called a Lovely yellow boating sweater. Anyways, I took sex to my tailor and I took him to Lorupiana and then at some point I just fucking lost them and then I haven't seen him since so You took him to your tailor and to learn and to lorupiana. And then at some point I just fucking lost them and then I haven't seen him since. So you took him to your tailor and to Laura. And to Laura Piana. Wow, great that the show remains accessible to the Every Man and Woman. They're sucks.

Sucks. Ah! Ah! Fuck yeah! So good. Oh! Oh! Oh!

Oh! Look at you too, it's like twins! Oh my god, it's so perfect, Italy. You have this real ugly. Wow, Lord. Oh my god. You guys have an announcement today. Third announcement. Good to see everybody's focused on what matters.

Okay, everybody, welcome to all in episode 86. End of the world, except for these two douchebags. We find it be really funny to find the exact same outfit at Laura Piana. They're still fully styled. What a great look. You guys look so good. It's like dumb and dumb or in Italy. Like your winners ride.

Bring man David. Hey everybody, welcome to episode 86 of the All in Podcast. We're not dead yet. Still publishing with us from Italy, the Rainman and the dictator in matching outfits, gentlemen, how is Italy? It's fantastic. And also with us, the Sultan of science himself, David Friedberg from an undisclosed conference somewhere, which we can't talk about.

How you doing, man? I'm off the record this week. Off the record this week, and a little hungover, it seems. Yeah. You need a couple of coffee. You're drinking a little Scotch last night? Late night.

A little Scotch? Yeah, I went Scotch and beer, and it was a late night. All right, everybody, we got a lot of news to get through. Let's just parse through some of the data because data's been coming in, and the minutes from the June Fed are out, the key quote, significant risk that elevated inflation could become entrenched if the public began to question the resolve of the Fed.

So they went from transient to now fearing entrenched. Jobs have slipped a little bit. This is something we've been talking about. But just to give some context here, we're still a historic number of job openings. We peaked in March, $11.9 million in May. We dropped down to $11.3 million and $11 million for six straight months. It's just extraordinary. If you look at this Fred chart, it's just astounding to think that this many jobs are available to for one in the United States.

There are two jobs available for every one person who needs a job. And this, they're just absolutely stunning if you look at the, what do you think this is? This is a precursor two. Dropping down dramatically in the white collar sector is what the data is showing. What is major wage or major wage inflation? I mean, yeah. That work clearly has to be done. And if you lay people off, the number of unemployment, not unemployed will go up. But at the end of the day, the thing that we know here

is we have a structural unemployment problem. As you said, two openings for every person, which means those openings aren't paying enough for people to leave the sidelines and get on the field. Yeah, or... Or they've been incentivized to be on the sidelines. They've got. Exactly.

Exactly. Yeah, these job openings might actually be indicative of the opposite of what the Fed is telling us. Right? The Fed wants us to believe that they can just keep jacking up rates and then we're not going to go into a session because we have all these open job wrecks. But what if we should see the labor market

as really two separate markets? There's sort of white collar professionals, and you're seeing all of these tech companies that were involved in slam on the brakes really quickly right now. So we're gonna see greater unemployment there. And then on the blue collar side, you have this issue of record low labor

participation. And so you still have inflation there because they can't fill all the jobs because there's all these like warped incentives around that. There are to just put a number on its acts. We're 10% off the peak in terms of participation. And if those folks would participate, it would really fill a lot of these jobs. That would increase the production of goods and services that might take some of the pressure off inflation. And it would also increase monetary velocity, right, SACs?

People would spend the money they make, which they would get us out of this mess possibly. I think part of the problem with the Fed's approach here is that it's assuming that if they just keep jacking up rates, that will reduce demand and that will stop or slow down inflation. And there's some truth to that. However, I don't think this inflation is purely a problem of excess demand. I think there's also a supply problem, meaning that not enough goods and services are being produced.

And the commodity is the inputs that we need to the production of goods and services. Those prices are increased. They've been inflated. And that started well before the Ukraine war, but I think the Ukraine war has now exacerbated this problem with respect to energy and food. If you had seven minutes for your over under for Saks to mention, Ukraine, you took the under, you won't. Well, I'm just mentioning it as an exacerbator of the situation.

It is an exacerbator. I think that's actually really good framing that it's an exacerbator. Yeah, it is a real start with this. Yeah, so if you look at the quits, let me just give you the quits number because this is really interesting. These are people who are off-siquiting jobs. It's still at a record high.

So this concept of the great resignation, we're still having over four million people quit their jobs every month. Free pandemic quits averaged under three million a month. And if you look at that chart, it's just staggering to think that in an economy that's going down, people are still quitting. Now, what is that indicative of? It's indicative of people believing that they can get another job.

You don't quit your job if you don't think you can get another one, or you have some savings available and you want a yolo, maybe, you know, spend a little free time going on vacation. Or there's a new economy emerging, right? I mean, one of the cases to be made is that the pandemic and the stimulus that followed created a staggering short shift in the types of jobs and the types of businesses that people used to make money. And you know, a lot of people were able to shift to work from home. And when you shift to work from home,

you have more flexibility and freedom to choose other jobs that you can now do from home. And people don't want to work in restaurants, they don't want to work in fast food. And if they can find another job, a gig like or services like or on-demand type job where they can have more freedom and flexibility and more earnings in their life, they'll make that choice.

And this happens so quickly because of the shutdown, the lockdowns, and then the stimulus, the trillion dollars or two trillion dollars that poured in, it created all these new opportunities and all these new incentives for new types of work. And the fact is the old economy, the old businesses, all the fast food restaurants and the coffee shops, they're sitting with half employment and they can't fill the jobs because that's, you know, that used to be a job that there was demand for. And that would stop the case, you know,

and I think that, and I think that, and I think that that's what's, by the way, I don't know if that necessarily reverts in the near term because I do think that there's been a substantial almost permanent change in some of these sectors of the economy, not necessarily all, some will revert, but it leaves big gaps in parts of the economy and maybe fast food restaurants are not going to be as cheap as they used to be.

Because in order to get people to work there, you got to charge more. And there's other parts of the economy like services selling stuff on Etsy and whatnot that are working for people. Let me just put a number on that and then hand it off to you, Saks. To just put a number on that, the jobs that fell the most, white collar, off 325,000 and manufacturing, 200,000, the jobs that fell the most, white collar, off 325,000 and manufacturing, 200,000, the jobs that are increasing the most, hospitality and retail.

So exactly to your point, people feel more options. This whole thing was accelerated during the pandemic, sex. Well, the question I want to ask freeberg is, do you actually think that these new options of work from home and remote work have actually made the economy more productive.

This is to me that obviously employees, if you give them the freedom over the decision of their trade-off between work and leisure, and let's look at the customer's. No, maybe it's made the economy more expensive. How so? If you take a big step back to the day before the lockdowns started,

we had a normal functioning economy that was growing by call it 2% a year. And the minute that we enforced these lockdowns, I actually think what we did was we started a supply side recession. It's what SAC said earlier. So what does that mean? Let's just say you're a factory and you make wheels. Okay, just make something really simple. You were growing at 2% a year, everything seemed hunky-dory. You had employees. It was fine. You used to sell your products, make 10, 15% profits. Everything was fine. And then the day after the government said, you need to shut your factory down because we can't have people spending too much time close together because we need to get a handle on this pandemic.

Okay, so you shut it down. And then for the next 12 or 18 months, what happens? That stuff sits idle. These people that used to work for you, get two and a half trillion dollars putting to their bank accounts. They spend their time doing other things. And then all of a sudden people say,

okay, it's time to start the factory up again. People want to buy wheels. And now all of a sudden, you find that because everything all around the world was shut down, there's no rubber to make the wheels. There's no steel to make the axle. There's no people to put them all together. And so what happens? Well, prices go up because again, you gave everybody else two and a half trillion dollars. So they're like, well, I used to pay a dollar for your wheel. I'm willing to pay you two dollars now. Just make the wheel. Give it to me before you give it to somebody else. So that is like the classic definition of a supply side recession. There's another piece of that too, sure. And sorry, just to finish the point. And the Fed basically

confirmed this in the minutes that they just released today. Jason, can you just read the quote that you had in the notes? Well, the one up top, a significant risk, that elevated inflation should become entrenched if the public begins to question the resolve. Their resolve.

I think the point is that, you know, we were kind of in a supply side recession and now by raising rates to some crazy amount, the end of which we are still not sure about, may actually then trigger the demand destruction to have a demand side recession. And so I don't know that we have lived in a modern point in time where both things have been true, right?

There's been a principle of macroeconomics that everybody's always kind of debating, is this a supply side issue, is it a demand side issue? We know that in COVID it was a supply side issue. We know that in COVID, it was a supply side issue. We took all the supply out of the market. And now we're trying to figure out when we exhaust, all of the money we've given people, and we destroyed demand and take the incentives

for demand to go away, consumer confidence is now starting to turn. What happens then? Well, we're gonna figure that out in the next six or nine months, but the thing is you have both that are true. It's not as if the supply side of the economy has been fixed. It's not as if everybody is running at 100% capacity. It's not as if all the supply chain issues have been worked out. Yep. So I don't know. I just think it's a very complicated situation. Yeah, it's a perfect pivot and just to build on that,

Chimoff, the downstream effect. we always talk about the second order impact because people are not going to work anymore Downtown areas are dying so office space commercial real estate Sactuary in that so you can comment on what's happening and then restaurants and commuting and all the stuff that was happening downtown San Francisco's downtown let Marilyn and breed had a press conference and she's been tweeting hey we have to revitalize You know so much in San Francisco. That's never gonna happen. That's off the table. It's like Biden tweeting

We got a drop gas prices. Yeah, I mean, I do we have complete Incomplete but we'll get the politics to mouth. I'm sacks. Don't worry. We got plenty of politics I'm just seeing it out. So there's your flop gentlemen The real estate. I read an amazing statistic today from like one of the major brokers They they said that by the end of the year they're expecting 30 million square feet of office vacancy 30 million in San Francisco by end of the year San Francisco is tiny by the way because of sub leases and go by the end of the year. San Francisco is tiny, by the way. Because of subleases and then tenants rolling off. So the first thing I did is I tried to Google what's the total square footage in San Francisco, and I think it's about 75 million

of office space. Oh my god. Wow. About 40% vacancy by the end of the year. I've never heard of such a thing. 40%. Let's be clear. San Francisco is fairly unique and a bit of an outlier in the circumstance because so much of it was you know tech heavy and so much of it went remote yeah and the city drama and it all got crime but like generally that's not the case I mean you know New York is apparently still pretty stable right and Miami's obviously doing well LA often here's the piece that the people aren't really thinking about which is the only reason it's stable is because tenants sign up for long-term leases.

This is why it turns out that we work with a pretty bad business model, because if all your leases are month to month and you hit a recession, your revenue gets wayamied. This is why landlords like long-term leases with credit-worthy tenants, they sign seven years, ten years, and so on. And letters of credit, right? So what that means, though, is that as these tenants start to roll, their lease is roll over the next few years, they don't need as much space because they've either gotten remote or they're like hybrid now.

And so they're thinking of their office, less as a headquarters, whichever one needs to go to, and more as like a co-working space, their employees occasionally go to. So they're all reducing their footprints. This is why services go, keeps increasing its vacancy, is that as more and more of these leases roll, they don't need as much space. So, they're also downsizing. Now, here's the problem. And here's the problem, is that these buildings have debt on them, right?

And that debt has what's called a debt service coverage ratio, DSCR. And basically you become, you as a building owner become in default on your debt components. If your revenue from the building drops below a certain number, and here's the problem, all these new leases that get signed to accept there are any.

They're gonna be at a fraction of what the old leases were because this vacancy is going to create a massively low market clearing price. Am I right to understand that they're not allowed to sign those leases because they're under it? So can the landlord take it as better than nothing or do they are not allowed to take it? It's not that. It's just that the market clearing price is going to be so much lower than their old leases that when they then look at the revenue from the building

and by the way, that building's gonna have a lot of vacancy on it now. They're just not gonna be able to hit their debt service coverage ratio. So they'll be in default. What that means is, I don't understand how in a place like downtown San Francisco, half the building is gonna end up getting owned by the banks.

Well, the banks don't wanna own all these buildings so they're gonna give me a fire sale. But I don't know who the buyers are going to be. I mean, they just have to convert it. I mean, that's the only thing. They've got to convert these to residential because we have a housing crisis still. That's the only way out.

That takes years and years. And that's a repositioning play. First, you need the cooperation of the city government, which isn't going to happen. Now, they're going to need developers to come in and have the capital to basically make all those changes. Again, it takes a long time, but think about the systemic risk from that. If you know that a huge chunk of the real estate in the commercial real estate and down

to the services go, which used to be the most blue chip, right? Who are those financial institutions who own those assets because they are now toxic assets and they will be revealed to be toxic assets as soon as the lease is rolled. Then there are debt funds and banks as well, right? What are the cascading effects when those shoes start to drop? Yeah. Just to put a finer point to also the jobs and that was our flop. Net international migration has just plummeted. We're well under a million folks coming into the country. So the obvious solution to our employment issues is to

recruit people from other countries. But let's go to the turn card. Yeah, and there it is. We have just stopped letting people Trump just absolutely close the borders as as you can see, 2016, Biden also is in favor of closing the borders. It's also sentiment. It's like, America is not the shining, people still light on the hill it used to be, not in the same way. Either, either, it easily have three or four million people coming into the country if we wanted to.

But we have three million people have come in just under Biden and illegal migration. Does that chart count a legal migration? No, this is legal. This is legal. Well, so just make sure you count that because we've basically had a over-mortar policy. Yeah, imagine if we didn't allow those workers

in what would happen. Okay, let's go to the turn card. Consumer confidence, conference boards, consumer confidence index in June fell to 98.7 from 103.2 in May. Expectation was 100, so it's under the expectation. The expectation index. So when you look at consumer confidence, there's two.

Your confidence in the present situation, that's the blue on the chart, and then there's your expectations of the future. And what you see is a huge divergence there starting to happen. People are starting to look towards the future as negative, but they feel pretty good about today And so Gentlemen, what do you think of this chart? It seems to me like this is sort of akin to what sats was relaying about that founder at the co-two conference Which is like you know he thinks everybody else is gonna, you know

Roll up their sleeves and and buckle down, but he has no intention of doing it. I think people Are roughly the same way, and I think their behavior is, well, you know, if things are gonna get hard, I'll deal with it in the future, but right now I have money in my pocket, and you know, if you look at airlines, and how many people are trying to travel, if you just look at like the cost of a hotel room,

if you look at what's happening this summer, it does not seem like people are slowing down or tapping the brakes in any way. Yeah. It's more of a good concern about credit, because it's not coming from wage gains. The increased cost is there. The increased income is not. And we're seeing continued month after month increases in consumer credit balances. And that, I think, this was the point I made a few episodes ago, I don't think people are going to slow down how they're living and how they're spending. It's exactly what they did to show it. There's an inertia to, there's a lot of inertia.

I don't know. I just think after two years of a lockdown, I do think that people are anxious to reestablish some amount of normalcy. And this is really the first summer where everybody writ large can be out and do the things that they were planning to do. Yeah, last year was a little bit of a head fake. And look, you have two years of pent-up plans of, you know, 50th anniversary's and weddings

and all of this stuff that's happening. And so I think people are really spending money. And if you look at it, you know, the consumer is holding up amazingly, it's gotta be some combination of jobs, home prices, and this inflation. But this is why there has not been a down-to-can-demand. I don't know why everybody thinks

that there's been a down-to-can-demand. It hasn't. It's not showing up in the numbers yet. It's not showing up in the numbers yet. No, I think it is. It's a panic, total and guess. That's very subtle. Okay, sure. There is a subtle.

I actually disagree with you guys. I actually think that the economy is pivoting on a dime year and it's it's starting to show up suddenly in the numbers here's some other data points consumer sentiment biggest drop in consumer sentiment in forty years that was in the last month right track wrong track pulling only ten percent of the country things were on the right track if you pull people and ask are we in a recession something like close sixty percent of the country already thinks we're in a recession. There's a slight political

tint to that. More Republicans in the Democrats think we're in a recession. However, even roughly half of Democrats think we're in a recession. So, I think- Those are all feelings not behavior, those acts. We're looking at the data, not the sentiment. I think the behavior will catch up with the sentiment. I think the behavior is pivoting. Yeah. It's just that. I think you have to dig beneath the surface and you have to look at things like retail sales, things like that. I'm not sure, David, if you look back on all the number of times consumer sentiment is dipped

that the correlation to spending patterns is so uniformly predictive as we think. I mean, I think that there are, there's a slight positive correlation. I remember, but I don't think it's like, you know, 0.75, 0.81, it's not that. So there's this weird preference falsification that happens when you get asked, what do you think is gonna happen first again? What do you do?

And I think a lot of consumers, that's why they have, you know, we know the data in America, like less than a month of savings or whatever those numbers are, despite all of the sentiment analysis and all of this stuff, you would think that there'd be behavior change, but mostly people kind of just live in the moment. And that's partly because they don't have the structural support to save or other things, but the reality is that most folks from what they say to what they behave, there is a gap.

Yeah. And to your point, SACS, this is starting to catch up. We're seeing a slight down tick and we'll go to real estate next. But if you look, I was doing some research on gasoline because that's obviously where people getting hit the most. The average household is now spending 5,000 a year on gasoline. That's almost double last year. So this is going to have an impact.

It's going to catch up. But there's so many jobs available and there's so many people unemployed. I think it's manageable. So to your point, you're moth, it feels like consumers can manage even this great headwind. Let me just put a point to it. I think the average per capita income in the US about $38,000 a year that works out to about 17 bucks and 50 cents an hour roughly. Think about a person with that level of earnings. The average household in the US has historically spent about a third on housing, about 13% on food, and about 16% on their car and their gas, and they only have about 12% left leftover for savings.

So, if that 13% on food has jumped by 30%, the 16% that they're spending on gas has jumped by 40% or 50% and even if housing prices take up a little bit, all of a sudden your savings are gone and you're actually not saving. The gas is actually double-treeberg, it's double-tagasse. By the way, it's worse than you say.

No, it's worse than you say, because you're using a prop-capitan number. Yeah, yeah. And so what, but I think what I'm trying to highlight is that there is a distribution. There is a group of the United States, a small percentage of minority that have earned good income and are having their 50th anniversary, like Jimov is talking about, taking their travel. And that shows up in the numbers. There's outside spending happening with a segment of the economy. And what SACS is saying, I think, is right as well,

which is that the majority of Americans are facing this really critical budget crisis where their personal spending levels are now exceeding their income levels and there's a critical need for credit and for personal debt and spending to go down. And that's what's going to drive significant risk in the next couple of months and quarters and years is that the majority, it looks, some of the numbers will look good because there's a segment of the economy that is overspending, but the majority of the

economy is as sats is saying, probably turning on a dime. And I think both things can be true. Yeah, let me, let me maybe tie a couple of these things together because I, I tend to agree with you. Like, I think that we have been in a supply side recession. That is what has caused inflation. We have to go through a process of taking all the excess money that's been put in out. When you do that, we will destroy demand. Then that will trigger a demand side recession. Because people will...

We will destroy asset values. And we will destroy asset values. So that will be that process. Asset values went real quick. Yeah, that will happen. Second, so the balance sheets of that segment of the population that is overspending right now, once their balance sheets really take the hit may

take a hard look at what their savings are, they're going to cut spending. Right. So the point is I think we're still firmly in that first phase. And I and I hate to be the bearer of that news. But the reason why I think we're still firmly in that first phase. And I hate to be the bearer of that news. But the reason why I think that we're still in the first part of this process is because people, broadly speaking, still have a lot of savings

because of all the stimulus checks. There is still a lot of money. So how will we know maybe is the better point? When all of that excess savings has been torn away from these people because of high prices, I suspect it's when Jason's first chart starts to close, right? So when people are, you know,

go, they're more motivated to re-enter the workforce. I think that's a signal. Free book, your signal is another one, which is when credit delinquencies really start to spike. It's because people then, you know, tapped out their savings, then they tapped their credit cards, and then all of a sudden they become delinquent. When all of those things happen, you're probably now at a point where that first phase of the supply side issues are largely done, and now you get to the demand destruction.

But all of those roads, unfortunately, lead to the same conclusion, which is like, you know, equities get really under pressure. There is no scenario where there's a bit to equities. Why would you buy something that has lower earnings in the future? Or why would you buy something that has a lower discount rate for profits in the future? In this case, both are true. All right, let's get to that because the piece we haven't got to, so here's the river card, is housing because people's homes are the majority of their wealth here in

the United States. And that, I think, will be the true indicator, Schumacht to your point. Labor participation certainly won. But when this hits housing, that's when we're going to know we're in the end game. The mortgage rate just hit 5.3%. Why do you say housing is the end game? Well, I think we haven't seen the collapse of housing prices yet. We're in a housing shortage and historically mortgages are still at the 30-year average. So let me just give you the statistics here. The mortgage rate is 5.3%.

If you look at this chart from our childhood on, our parents in the 80s were paying 15, 16, 17% for their mortgages. We're well below the 50-year average, even with the rate hikes. And so the 50-year average for mortgages, the 30-year mortgage, is 7.77. So we're at 5.3, well below that. But well, this has been a very quick turnaround from 2.5% mortgages all the way up to 5.3%. Home sales have started to show weakness. So to saxist point, this is starting to show up

in the numbers, but ever so much, we're down 6%, almost 7% year of a year and 3.5% month over month, but we're holding up historically. So the last 10 years, we've been selling over 5 million homes a month with the exception of the pandemic shutdown and that's this next chart you're going to see here.

And this is a really amazing chart I found, which is existing home sales versus a 30 year fixed rate mortgage in our childhoods in the 80s. We're selling two, three million homes a year. As you see the rates, that's the orange line come down massively from 17% and then under 10% housing starts to flip. People start flipping houses more and more often. Um, but we're still at that 5 million. That number's got to drop down to probably four, and then we would actually have some capitulation feedback from the panel. I mean, look, there's an old saying that a recession is when your neighbor loses his job

and a depression is when you lose your job. And the reality is we haven't had the big job losses yet. It's starting. We can start to see it in the number of open wrecks are getting closed. And then there were those job loss numbers that just came out, which were a little higher than expected. So the job losses are starting, but so far, it's really been the step prior to that, which is,

people are seeing their 401k's get destroyed, stock markets down, they're seeing their wages get destroyed by inflation, food and gas prices being much higher. So there's a really good reason why people are so, sediment is so negative out there. People feel poorer than they were before, and this could get worse, like you're saying, Jason, with their nest egg in their homes getting it. I agree. That's the next shoot of drop, just like the commercial real estate is the next shoot a drop. But I think the really big question

over the next six months is, what sort of job losses do we see? Because that really is going to be the big determinant of how hard this recession hits. Yeah, I agree with you. And it does it look like, if we're losing 300,000 jobs a month, it's going to take a long time for us to even get

to one for one jobs. And so, this is very weird. Honestly, I think you are right, but I think we're not even close to that. I just don't see where all of a sudden there are these writ large mass layoffs. For example, I would believe what you're saying, if the headline in the Wall Street Journal said, Walmart lays off 10,000 people, right? That's not what's happening. In fact, it's the exact opposite. Walmart's like, well, you know, we seem to have record demand.

We're raising prices and every supplier will have to pay a gas tax and a supplier tax and deal with it. So, I just think that you're going to be right in the end. I just think we're way too early in right in the end. I just think we're way too early in this process to get to that place where we were debating this. I don't see. So, Chimath, are you on board with the the Ackman trade basically? You know, Ackman basically came out that tweet storm a couple of days ago, basically saying that, listen, inflation

is still the big problem, not recession, the economy is humming along. There's plenty of jobs, and we're going gonna have a persistent problem with inflation. I think he's kind of right and kind of wrong. I think that you can have inflation and a recession at the same time. This is what my point is. I think we have been in a supply side procession, meaning the day of the pandemic,

it's not as if demand stopped. It's not as if you and I, David, didn't wanna go out or use DoorDash or take an Uber or watch a movie in a movie theater, we were not allowed. And so we found other ways in order to fulfill our demand. That's why Shopify did so well on behalf of the merchants that they served. That's why Robinhood did so well. That's why Fortnite did so well. We found other places to spend money.

But what went away was a supply. And those incentives didn't come back and they're still not back. That's why prices keep going up. This is the problem is the definition of a recession, right? Chimap, we're seeing. It's not the problem is just that most people don't understand that you can have a supply side recession

and a demand side recession. They just manifest in different ways. So, well, I think, I think, like, I guess, Ackman is roughly right in different ways. So, well, I think, I think, I think, like, I guess, Ackman is roughly right in some ways. He's roughly not so right in some others. I think that we have an issue where we are going to transfer the supply side issues that are driving inflation to average everyday consumers and their ability to buy things. I still think that the average everyday consumers desire to buy things is what it was from before

and on the margin is probably higher. I do think at some point it will start to change when prices get high enough. But I don't think we've reached that point of equilibrium yet and the reason is because companies like the Wal-Mart's of the world who see this demand on literally a real-time basis knows better than anybody else when and how much they can raise prices downstream into their supply chain.

So when you see something like this in the Wall Street Journal, I would just encourage us all to say they must see that demand is the same or better. And so they're going to now push those price increases down to everybody else because now Walmart says, here is an opportunity for me to defend my earnings power. And this is why I think we're in this first inning of this. So I don't know whether Ackman is right or wrong, but I think we're in the early phases of a two phase recession. And I don't know what that looks like because I've never lived through one of those. And I think in many ways it's the combination of the two. And it was it was largely because of government failure, government failure and how we reacted to the pandemic in hindsight,

sex was right all along. We overreacted by shutting everything down. We probably could have kept some supply online by understanding masking early on. And then second, we exacerbated with failed government policy because we gave everybody trillions and trillions of dollars and we entered the capital markets and perverted it with another seven rate trillion more. By the way, that has consequences. Well, the consequences are still talking about giving stimulus now in order to help people deal

with the question. So we are not learning. That can you can't pour fire. So if I had to basically put what we are all saying into a neat little bow, I would say, there needs to be a multi-fazed economic correction. One that corrects the supply that we took out of the market during the pandemic, one that corrects for all the excess money and then one that corrects for demand. That's a lot of stuff we have to do.

So the more misguided government policy we have, the farther away from finding that equilibrium point we're going to be, the longer it's going to take, the more damage it's going to be. So SACS, the Fed is obviously, it's pretty much consensus that they're going to do another .75 basis points later this month. Could be 50 basis points who knows. There seems to be a couple of people saying that that might happen. If that does happen, and it feels like inflation is starting to top out, do you think inflation starts to turn, or do you think we're still going to see prices go up?

Because it does feel like it was starting to bounce along the ceiling. What do you think is going to happen if the 0.75 happens? You're seeing the market rally today in the last few days, especially growth stocks, because of this idea that the Fed is tackling inflation, the raising rates, and the market is looking out six months as seeing the possibility of recession. And they believe that is going to bring down out six months as seeing the possibility of recession. They believe that is going to bring down demand and bring down prices. It could. What I just described would be a soft landing. I just am skeptical.

There's going to be a soft landing because of what you're saying, which is this is a multi-part problem. Until we fix the supply side, I don't think that merely reducing demand is going to get us out of this. I really agree with you. It's a production problem. It's a production problem. It's a demand problem. And it's also as we just talked about a few minutes ago, an employment problem because

the businesses that need to grow, that need to generate revenue, cannot get the businesses that are dependent on people to do service jobs, cannot get those jobs filled. And so they cannot grow their revenue, cannot make their profits. And there's a trickling effect in the economy of that, you know, what we talked about, that kind of job shift, that job market shift that happened. So all three, and so all three are just this like dislocation that's happened. Totally right. And it's unclear, you know, someone very smart. I was talking to yesterday, who's a former member of an administration said, we just, there's literally no way to predict. We just don't, because think about the complexity

of throwing three rocks in a pond, how do those three rocks interact and how do the ripples interact is really what we're trying to predict. And it's very hard to do. I mean, if you translate this into the markets for one second, I think what we've done since November of 21, and Nick, you should play this clip because, you know, not to say, you know, we didn't see this coming, but we really did, you know, we pointed to, you know, one of our friends and a person, somebody else that we kind of know, Bezos and Elon. And we said, when the two smartest capital allocators in the world start divesting, they clearly understand and see things that the rest of us should pay attention to. And to ignore it seems reckless or you're in the clip.

And we'll be back in 30-second, technical clip. The two most important founders of our generation, the two smartest people who have really consistently won, Elon Musk and Jeff Bezos have collectively sold more than $11 billion of their holdings this year alone. And if you can't take all of that and decide for yourself what's right for you and your family, you're doing yourself a disservice. I think it's important for me to never sort of like be forced to tell folks whether I'm buying or selling, although I'm willing to do it in moments where I think it's important. But I think it's really important to understand the context.

And so I think like these folks that like think derisively about individuals who are managing risk, I think it's really naive. And I think it's, it creates a lot of missed opportunity for them as well. If the smartest people in the world are now selling their core holdings that they told you they would never sell, and you are not reconsidering your position on things. You're either much smarter than them or you're being really, really reckless. And that was November, you know,

and at that moment, I started a bunch of things in process, which we can talk about at the end, but I also sold a bunch of stuff. I sold the warriors positions. I started a process at that point and I sold a piece in December and then I just sold the bunch of stuff. I sold the Warriors position. I started a process at that point, and I sold a piece in December, and then I just sold the last piece this week, but then I sold a big piece of so-fi in that moment.

But the point was more the following, which is since that clip to today, what we've gone through is a massive re-rating of the discount factor of these companies, assuming nothing else changes. That's all we've done. We've not questioned whether earnings can change. All we said is, okay, well, now we're going to take the discount rate up, which means the value of this company is less than it used to be. That's all we've done through all of this wealth destruction

that's happened since November. But now the second shoe has to drop, which is if you believe that after this supply side issues are resolved, you go through a demand destruction phase. The earnings of these companies are in real trouble. And Jason, you posted something I think about the social media companies and ad racing. Wow, that's crazy. You're going to get hit, right? So one of the first things to go in a recession is advertising. If you're going to belt tighten at a company, where can you do it?

Well, you lay off employees, but you can't get out of your leases as we talked about in real estate. But you can cut your spending on marketing. And so right now, it's looking pretty bleak for Facebook because of the headwinds they have. So the earnings could drop, which means... And by the way, the earnings ratio could be totally... We talked about that.

The earnings are not real, right? Well, we talked about that over the last few weeks, which is every time the market rallied, oddly Facebook would be stagnant or trade off. When I called people on Wall Street, what they said was because we think this is the company that has the most pressure on earnings. I don't know if that's true or not, but they took every opportunity in rallies to trim their position in Facebook. Now, if that's true, you have to remind yourself

that is one of the 10 best companies in the entire world. And so if you're gonna go and question the earnings power of one of the 10 best companies in the world, you may wanna consider the earnings power of every other company that's not Facebook. There are some deep things to the Facebook story. They are facing a unique disruptive moment

with Apple, anchoring their ability to target users. Supposedly, Google might follow suit with that, which would be super anti-competitive, and also the surging TikTok taking market share for them. There's some good news in energy, which will then dovetail into politics and into this farming situation, Friedberg. Turkish government claims it just discovered almost 700 million metric tons of rare earth minerals. It's 15 times China's reserve if this is true. You guys probably know we use about 150,000 metric tons a year right now that's going to double by 20, 30. This is something like 4,000 years at the current demand and this would put them far beyond anybody else's. Tremati, you've got investments in this space. I don't know if you've been tracking this news,

thoughts on another massive discovery of rare earths. What did you guys just have dinner? Dinner was served? What do you guys know? That's the best she brought us. She got a little pasta, which I mean. There's an incredible restaurant here in Milan called De Santis, which makes the best paninis you've ever tasted.

Is this a harbored juror of the future? De Santis? What could be more perfect than that? Oh, the De Santis paninis you've ever tasted. Is this a harbored jurve the future? Decentis, what could be more perfect than that? Oh, the Decentis, panini, here you go. This is the Oracle. Sack to the subliminal influence. Absolutely, so good. This is what's gonna get us out of this situation, Decentis.

Oh, you know what I mean? All right, Tomov, just quickly on the rare earths. If this is actually true, what would this do? And have you been tracking the situation? Because it does seem there's some truth to it, yeah. I think it's important to just take a step back and kind of look at this thing with not like complete skepticism, but just a little skepticism. It's not surprising that there's additional deposits all around the world.

Meaning, we've always said rare earths are not particularly that rare. It's just the question is, you know, which of the 17 rare earth elements at what grade, meaning at what percent concentration does it exist, and then really importantly, at what cost to extract it economically? Right. So meaning, there's a ton of underdeveloped rare earth assets in Canada, the US, Africa, Australia, Brazil, Brazil. They're just underdeveloped because when you put all of these factors together, it's really tough.

So, the government release says they're going to process like 570,000 tons of ore. That'll produce around 10,000 kilotons per year of reirats. That implies sort of a 1.75 to 2% grade. It's fine. So, there's just a lot more work. I would just sort of say it's really directionally great. A lot more work needs to be done. And more importantly, they need to release enough of this detail. So folks like us and others can actually diligence it to tell you more accurately. But the press release was exciting.

Freeberg, this reminds me a little bit of the peak oil head fake we had, you know, 15 years ago. Everybody basically said, we're not gonna find more oil. Here's what's left of oil. And then Norway's like, yeah, we just found more oil than existed previously and has been pulled out. And the whole concept that the world's gonna run out of oil is now gone.

So, Freiburg, what is happening in science that we just can't predict what resources are available? We know very little about what's inside the below the, a certain depth of the crust of the earth. So, you know, there's some estimates, but we're always surprised. And we know very little about the distribution of those elements in the crust of the earth

and below the crust of the earth. You know, my name's an incredible industry. I don't know the state of the art in engineering and mining very well but you know from a pure geophysics point of view by some estimates we have 10 billion years of energy reserves below the crust of the earth that we can access in the form of nuclear reserves geothermal power and that's excluding you know some of the you know the potential of some of these elements

and what they could do in building a more sustainable energy economy. Why is people so pessimistic when we keep surprising ourselves in more resources? Anyone wants a great book? None of you guys were at the dinner that I did a few weeks ago where we had Stephen Pinger come for dinner. Read his book Enlightenment Now. Or you could watch one of his videos on YouTube where he's got like all 60 slides. And he highlights like, humans have a tendency to focus on the risks and the concerns and the downsides.

And we miss the incredible optimism that is apparent as we actually look at the data of what's happening with our species and what we're doing on our planet. We have every reason to be optimistic. We have fewer wars than we've ever had. Murder rate per capita is lowest than it ever been. Long jeopardy is increasing, health is increasing, per capita is increasing.

And I think that the same is true in terms of scientific breakthroughs, discovery, and engineering our way to a more sustainable energy and food future. This is one of the great things about having you as a friend, Freeberg, is your relentless optimism and your actual cool, comp collective lack of anxiety. In other amazing news, the EU Parliament has flipped again. Credit Thurneberg is completely tilted. We talked about the virtual signaling EU Parliament, and Germany turning off their nuclear power plants and just securing the bag for

Putin. The EU parliament flipped, and they are now saying these virtuous signaling knuckleheads, they came to the census, and now they believe nuclear is green. Also, green, according to the EU parliament, is natural gas. So this, to me, feels like the beginning of the end for Putin and Saudi Arabia. If you look at the US becoming a net exporter of energy, it's probably possible that you could become that as well. If they actually, and this is a big F,

if they actually start building nuclear, it could be the beginning of the end of what some people are calling the woke green movement. And that's certainly over. This realization that to transition to the next car to the beyond the carbon economy is going to require continuing to invest in and support the carbon economy until those alternative solutions emerge and to have dual track investing. And I think that's what we're seeing around the world in the United States

in Europe now. And Europe has always been farther, way farther left than the United States in taking this point of view. And I and Europe has always been farther, way farther left in the United States, in taking this point of view. And I think now this has been a wake-up call for everyone. And all it took was just a little bit of $6 gasoline and for people to personally suffer for them to change their virtual signaling nonsense. Yeah, this is markets at work.

Yeah, this is the belief that it's working. I mean, it's educating the public. Would you rather be beholden to Putin? They pivoted because of Putin. Or would you rather beholden to Putin? They pivoted because of Putin. Or would you rather have nukes? They pivoted from banning energy production to banning food production. She's talking about the Netherlands.

We're about to get there. We're about to get there. So on the energy side, I did in the group chat just a little breakdown on the math. I think it may be interesting for people to understand. But today, globally around the world, every single country in the world that is involved in the oil business is able to produce exactly one million more barrels per day than we need.

So let's assume that we need a hundred million barrels of oil a day as a world to continue to do everything we want to do. We produce 101 million. So we're right on the knife's edge. By August, we're going to go through a capacity increase in OPEC Plus, which is OPEC Plus, Russia, and etc. Saudi Arabia is going to go from 10 million barrels a day to 11 million barrels, so not a huge increase. Russia has is

thought to be able to cut production if they feel pressure up to 5 million barrels a day without having any impact to their economy. So JP Morgan I think and Credit Suisse, they did this sensitivity analysis. And here's what they found. They found that if Russia were to cut three million barrels of oil, so we would go from being over-supplied by one million to under-supplied by two, the price of oil would go to about $180 a barrel. If they cut five million,

so the threshold at which their economy doesn't really get that impacted, the price of oil could go as high as $380 a barrel. While you would say, okay, well, we just need to pump more oil from other places. And this is the problem in all of these rules that have existed for so long. The capacity doesn't exist, right? We were destroying supply governments all around the world were making it very difficult to generate the supply of nuclear, to generate the supply of oil, and to generate the supply of that gas. So Saudi Arabia says we can get to 12 million. Well, guess what?

They can only start the work in 2024. They'll be done in 2027. So to your point, all of a sudden we realize, wait, we needed these bridge fuels all along. How do we allow all of the supply destruction to happen? And now we need to unwind it. It's gonna be a very complicated process. And if any of these things happen, if Russia decides to play hardball against Europe or America,

we better hope that it's a mild winter because very quickly you can go from plus one million barrels to minus two in a heartbeat. Yeah. And the last point on this, Sadie Rabia, you'd say, okay, well, Sadie Rabia is going to go from 10 to 11, so that's good. They have been at 11 million for some total of eight weeks in their entire lifetime. If we look at this, I mean, Americans also buying 20 to 25 mile per gallon cars.

That's got to end too. And so personal responsibility is part of this. The really interesting thing is China already has this plan. Their nuclear strategy with the Belt and Road initiative is to put 30 nuclear reactors in countries outside of China that they're trying to have influence in. And they're building 30 nukes right now. They got 150 planned.

So China's just ultimately savvy and thinking big here about energy independence and we need to follow them. Other big, anybody having anything else on the energy situation before we go to the farming situation? Let's get to the farming situation. Okay, so Dutch farmers are in revolt after a new proposed law to cut emissions uh... on Tuesday, Dutch law makers voted on proposals to slash emissions of pollutants uh... like nitrogen oxide and ammonia they're targeting a 50% cut nationwide by 2030 livestock produces these emissions so the plan will likely force Dutch farmers to cut their livestock herds or stop working all together

farmers protested uh... they put their tractors outside buildings, they dump fertilizer. 40,000 farmers gather less week in the Central and the other and it's agricultural. Heartland to protest these plans. And this calls it shooting at them.

Yeah, these tractors were doing some pretty gnarly things and stopping traffic and the guests are defeated. And there were some shots were fired and there were shots for fire. No, wait, the government fire shots, the protesters were unarmed as far as what I am. Yes, they were unarmed, but supposedly they were doing some dangerous, they were hooking their horns. No, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no, no. So, the exact police to shoot working class protestors if they're hawking their horns, right?

Retting the safety of, this is the other side of the story, Sacks. Listen, neither of us were there, but according to the sources they were using the tractors to threaten the police, like physical, bodily harm, and that's why they unloaded. We don't know all the details. It'll come out, but that sounds unfortunate. I mean, if you had a tractor coming at you to kill you and you're a police officer, I think it is a great slow load.

Okay, so let's talk about the science of its science. Yeah, let's go. Wait, is it like the scene in Austin Powers where there's a steam roller coming towards Austin? Jesus, like, oh, they're using the tractor as a weapon. That's like really? I'm, I was telling you what was reporting reporting reporting what's reported and nobody knows the reports are true. So I think look I think it's worth just highlighting because

this is a really important this is the first time we've seen government action of this scale and and the resulting kind of rebound effect on something that's really important. Humans use roughly between two and 6% of our energy on Earth every year to make ammonia. Ammonia is the primary fertilizer we use to fertilize our crops around the world. And if not for the invention of the Haberbosh process, which you can read about in the book, The Alchemy of Air, and the creation of ammonia as a synthetic fertilizer, humans would all have starved in the mid-20th century. It's an incredible technology breakthrough. What we've learned over the years, however, is that when ammonia sits on the ground for

too long, it volatilizes. And it basically binds with oxygen and turns into nitrous oxide and goes into the atmosphere. Nitrous oxide is 300 times more potent as a greenhouse gas than CO2. It lasts longer and it absorbs more heat. So there has long been concern about the overuse of fertilizer and the overproduction of ammonia that just sits on the ground for too long that ultimately creates this incredible greenhouse gas effect. And so there has been talk in the United States under the Obama administration under multiple

EPAs. There was a Supreme Court ruling a few weeks ago, and it started to touch on whether or not the EPA has regulatory authority here to actually regulate the use of ammonia. Farmers generally put a lot of ammonia on the ground because they get higher yields out of their crop. The problem is, if that ammonia sits there for too long,

it turns into a greenhouse gas. And so regulating ammonia and regulating this nitrous oxide emission has been, you know, at the forefront of green, the green movement, at the forefront of climate change as one of the ways to manage and reduce the effects of global warming from human industry. And now, you know, the Dutch government has come out and started to do some of this regulation. It's a little bit off because it comes from cows and we're seeing what happens. Chim off. Freeberg, can we finally admit that it's the vegan's fault now?

Well, at this point, actually, you know, it's not a yes. No, the ammonia production in the Netherlands is from the... It's from the Netherlands. Just to get us know, the Netherlands is the world's third largest dairy exporter. The export $3 billion a year of milk to the rest of the world, to other countries. And so they have all these cows that are like densely packed and they're peeing everywhere and that pee is ammonia and it's causing all of this problems. The other problem with ammonia, so if you guys look at the United States, corn farmer is farm

in the Midwest, when it rains, the ammonia on their fields goes into the streams, goes into the Mississippi River and goes into the Gulf of Mexico. In the Gulf of Mexico, there is a massive hypoxic zone. There are no fish. They're all dead. Because when ammonia ends up in the water, it kills life. And so there is this green algae and no fish and everything dies. And so that's what the ducks are trying to regulate. And the EU generally has been trying to regulate is the removal of excess ammonia in ag production and in production. Right, but again, I still hear, though, that if we ate less vegetables, this wouldn't be a problem. Not correct.

Not correct. Most of the production of ammonia is used to make animal feed, which is used to feed animals to make beef, which is a terrible decision. You could feed it all of us. As we know, olives taste delicious. I'm sure it's the issue here. That is the issue here that the regulators hit the brakes too hard on these farmers and they should have maybe had a more gradual landing for that. Is it's been talked about for a long time and in the US there's just no way a law is going to pass because the US Senate is controlled primarily by rural states which are ag heavy.

So you see a lot of you don't see a lot of bills that hurt farmers get passed in the United States. Because the Senate is controlled by farmers that are elect, oh sorry, senators that are elected by farming, by big farming communities and farming states. And so, you know, it's been hard to get a regulation like this past where folks have tried to and talked about doing it. Around the world, however, in a place like the Netherlands and the EU, where, as I mentioned before,

they're far more progressive and have this very kind of green hat on. They're starting to take this sort of climate change action as they're calling it, and that climate change action, you know, does have the ramifications of destroying. By the way, one of the things they said is we expect, and this will destroy the livelihoods of many dairy farmers in the Netherlands. That was horrible. By the way, look, all of the kids are so sad.

They said that, they said that directly, by the way. And the dairy farmers are like, FU, you're not destroying our business for climate change. I have a specific question though, which is, has there not been some efforts to engineer how these plants themselves absorb nitrogen? Yes, correct.

Jamak, I have three businesses on this. It's totally right. Technology's gonna solve this problem. I'm super optimistic on that. There are microbes that are being used to coat seed. Those microbes can pull nitrogen out of the atmosphere directly, so you don't need ammonia. You use far less ammonia.

There's a couple companies that are doing this really effectively. They're growing like crazy. They're doing really well. There are other projects. And there's very simple solutions. My last company, we had a product called nitrogen advisor where we basically told farmers, instead of dumping all the fertilizer at the start of the season, you paste it out. So the fertilizer doesn't sit there and

volatileize. There's all these solutions that technology allows for software to buy engineering to these microbial solutions. And so we're definitely, I think, going to resolve this. But meanwhile, these governments are in a frenzy to solve the climate change problem. And, you know, they're going to start to pass these laws that really hurt the livelihoods of, you know, ag producers. How do you guys think something like this happens? Because typically you would expect when a government is about to pass something like this. There's sort of like a pretty fulsome review and all sides are brought together and there's working groups and all of this stuff. And at

some point, you would talk to some scientists, at other points you would talk to economists, at other points you talked to the people who would be directly affected like the farmers. Is it that the virtue signaling around sustainability and climate change is just so high that people just turn off their brains? Or what is actually happening here? I think what's going on is you got a bunch of technocratic bureaucrats in Brussels who don't know anything about farming or these people who live in the Netherlands who've been doing this for generations and they sit there in Brussels and they make up these completely arbitrary guidelines and requirements.

50% by 2030, those are suspiciously round numbers, okay? And then some other authoritarian technocrat in the Netherlands then says, well, we've got to implement this, and they passed some crazy law, and they don't even think about the impact on these farmers. Why? Because they're deplorables. I mean, it's complete class bias. It's just like the Canadian truckers.

They don't think about these people. They don't factor into their equation. They don't know how they live. And so that's what's going on here. And so you've got this global elite of technocrats who are willing to use authoritarian tactics. They're appropriating their forms, they're taking them away. That's why they're up in arms. You see the rest of it, which you're not saying.

It's not just technocrats. It's the actual global elite writ large have wrapped themselves around this sustainability blanket and they believe that that word justifies all kinds of bad unscientific enumerate policies. Right. And by the way, they've just woken up on energy, right? They had just banned energy production in Europe. They realized, oh, wait a second, this is making us dependent on Russia and authoritarian. Well, what is the other big export of Ukraine? It's food. So they've got smart on energy, and now they're about to repeat their same dumb mistake

of basically prohibiting this area where they have an enormous natural advantage, which is food production. So, you know, it's like they just keep making the same mistake over and over again. And by the way, let me ask you a question. By the way, yeah. Look, I'm not gonna question you on the science free bird, but here's what I would say,

is I think there's a tendency on the part of these technocrats to think that the science is a lot more bulletproof than it actually is. That is certainly what we saw with COVID, is we had these same sort of global elitists, these technocrats who claim to be health experts, they made up all of these lockdown rules, so we talked about the beginning of the show.

And what they do, they're intense. use any tactics necessary to implement their crazy rules? Let's ask you a question, Sacks. Let's assume that there is a technology transition possible, that there are solutions that could be used. I highlighted a few of them. They just cost money. They require some investment and creating this distortion in the market by saying you can't release 50% of the ammonia that you've been releasing, forces a technological shift that otherwise would have taken longer

in the market. Do you agree that there may be a scenario here whereby governments can and should intervene? And I'm not making the case personally. I'm just trying to highlight for you that I think this is where folks are coming from, that there are alternative ways to make the dairy, there are alternative ways to feed the cows, or to produce stuff. Here's where I think you're going with alternative ways to feed the cows. There are, or, you know, to produce stuff. Here's where I think you're going with that, which could make sense, which is, okay,

you're saying there is a pollution externality here being created by the farmers. Well, you need to basically internalize the externality. We need to capture the cost of that. So what you could do is gradually introduce some sort of permit system, you know, or a trade-able permit system, right? Where that would incentivize the creation

of these technologies that you're talking about. You want to do it gradually, so you don't destroy the livelihoods of these farmers who've been doing it for generations. So that would probably be the approach you'd want to take. I agree with you. By the way, I think that is what is going to happen around the world, is that that sort of cap and trade

or taxation system is going to get slowly rolled out for a lot of these externality costs in production and industry and agriculture particularly, because there are technological alternatives and it will incentivize the switch to those alternatives because the alternatives will cost less than the taxes. Sachs, based on what you're saying, is one of the problems here that these technocrats,

these professional politicians, they don't actually have great strategic thoughtful thoughtful, you know, real world experience to do planning, you know, looking at Germany, their inability to see the writing on the wall of what building a gas pipeline from Russia to Germany and shutting down nukes would do. It just seems like over and over there, just really bad strategic thinkers combined with this future. Right. No, Jason, they are influenced by these cultural elites who they want to create favor. That's my second piece.

It's a lot of groups that go on. That's my second piece. Yeah, behind the group think is a class bias, right? They only associate with other members of the professional class who have basically graduate degrees. They don't even interact with these farmers, just like the legislators making COVID rules, the health experts never interact with Canadian truckers. So there's

a huge amount of class prejudice saying that these people just don't matter. We can force them to obey our rules. And if they don't like it, we'll confiscate their farms. And by the way, the rest of you, you're gonna have to learn to eat bugs or tofu or tempeh or recycled excrement or whatever. I was the DeSantis. What was your DeSantis? Was the DeSantis Bruchotto? What did you have?

That was a some Mutral. And a roast beef. That's a beautiful roast beef. Beautiful roast beef by DeSantis. Brought to you by DeSantis. It's gonna become a meme after this episode. I had prosciutto caught though. Is the best market campaign ever.

He's a lock for president. Jekyll, I had prosciutto caught though with Bree White Truffle, Kreme and Lemon. I mean, did you have the White Truffle on it? That's like a plus, what's that? Bro, this isn't euros. No, it's like eight euros. Eight euros.

Yeah, yeah, yeah, yeah. Bring some back. Bring some back. Wait, I wanna say something about this. The hope of the Democrats embraced this agenda wholeheartedly because if we get all the voters who wanna eat roast beef, I'm pretty sure that's a super majority in this country. The way to solve this,

freeberg is with the right economic incentives. There's no reason why the Dutch government had to go and basically put thousands of farmers out of business. Instead, what they could have done is actually created the tax incentive that allowed farmers to adopt some of these bleeding edge technologies when they were probably too expensive

to make it economically equivalent. That, I mean, by the way, that is not a new fangled idea. This is not genius talk here. So the reason why they don't do the obvious simple thing is class bias. It is exactly what David said. It is the influence of people who look down on these people. Yeah.

Okay. And who believe that they are more virtuous because of their desire to defend climate change. There's also a pragmatic piece of this. This reminds me of the cold debates we had. There are 62,000 coal miners in this country. Like, this is a small number of people who are impacted. It reminds me of the cold debates we had. There are 62,000 coal miners in this country. This is a small number of people who are impacted. We could just basically give them severance

or in a soft landing instead of this craziness. Or let them continue to do their job and the egress off naturally, the economic free market will manage it on its own. And instead, what you could do is actually green light nuclear, subsidize some of these more adventurous ways in which you can extract and refine LNG.

But my point is, this is where it's a real head scratch or why politicians don't do this. And I think the only thing that I can come up with is that they are overly influenced by these cultural elites with their perspectives. I agree. That do judge very harshly what they believe to be right and what they believe to be wrong.

Can we take a victory lap here in the United States that we're energy independent and that we're food independent? Can we take that victory lap here that we're doing that way? For how much longer, Jason? No. Well, I think we now need to think, instead of just being independent, I think our mission should be surplus.

Jason, our president canceled the Keystone pipeline. He canceled a bunch of exploration permits in the Gulf. You know, again, we are one bad winter away from all of a sudden being in the same situation is everybody else. So it's not as so of one bad, we're not one. Where are we in terms of our independence? Jacob, we are the number one Ag exporter in the world.

And by the way, under a different president, just a couple of years ago, we were the number one Ag exporter in the world. And by the way, under a different president just a couple of years ago, we were the number one energy exporter in the world. The fact of the matter is when it comes to food and energy, we have the greatest natural resources. And we should be developing that. We should be moving, but no, Sacks, my point is, what if the United States took a philosophy of not just being independent, but being even like a stronger surplus to the point of like building new stuff.

We are, we're working it out, the markets work in it out and we're taking, you know, we're, we just need to, it feels like we could do better. It feels like we didn't even matter. I mean, the issue with nuclear power, as you know, is the regulatory cost. So, you know, it's $10 billion and 30 years to get it. Let's move to the lightning round. I just want to show you guys the mon with poll, which I think is worth highlighting.

Okay. We didn't talk about it, but the mon with poll that was published a few days ago, which is a June 2022 poll. The number one concern that America, the number one thing Americans are concerned about, Nick, you could put the chart, the table in the show notes. 33% care about inflation, 15% care about gas prices, 9% care about the economy, 6% care

about everyday bills and groceries. You add that up, that's the vast majority of what people are concerned about. And all the way down at the bottom of the table is climate change at 1%. Yeah, absolutely. So, I think it just speaks to the point about, you know, there, there is, and by the way, I'm not advocating that this is the right position, but I will say that there is a huge distinction or discrepancy between what the average American is worried about and, you know, where political leaders are trying to carry us forward. I'm not sure

what the right answer is, but there's definitely a disconnect. And I think it's being played out in this Netherlands situation right now. One point for you on that as well. Nick, I put this article in the chat, but the top ESG fund manager in Europe of 2022, they released their results and the guy was up like almost 16%. results and the guy was up like almost 16% and he disclosed what he owns and he turns out that he owns Conoco, Valero and Exxon and according to the ESG rules that these folks have passed, this qualifies as an ESG fund because he doesn't own weapons, porn and oil sense. But it allows all these people to walk around thinking that their investments are tied up

in things that are actually clean. It's not true. So the point is that there are the structural lies that have been baked into the system, that they are supported by very shoddy accounting or rules or science. And if we're really going to fix this problem, I think you have to go and inspect these things and call them out. But like all of this ESG investing, which perpetuates, by the way, perhaps, you know, why these governments just have no clue what's going on, sit on top of all of these lies. There's nothing ESG about

Conoco and Exxon per se. Let's just call it for what it is. This guy's a good fund manager. It's a he's a good fund manager. He did well in a period where everybody else was down. Let's just celebrate that and not tell all these. It had a good marketing spin for a while. So, you know, all right. No, but it's not just marketing. It allows people to believe that there's a solution

that is being affected. That is not true. That's not true. That's not true. That is super nefarious. Yeah. Okay. Listen, we moved science up because science got a short shrift last week. What is super nefarious. Yeah, okay. Listen, we moved science up because science got a short

shriff last week. What is a lightning round? What is that? I just wanted to, things that were small, that weren't like full segments. My concept here was to just put things at the end of the show that we missed. But what I did was give you a shout out,

you're doing a great job moderating today, by the way. Thank you. Put a couple extra hours in. By the way, I think Freeberg made a really interesting point a minute ago about. About me being a great moderator? No, not that. Okay.

About the polling, the mom of polling, where if you look at what voters care about and what the elites and the elected politicians care about, there's a huge divergence. Huge difference. That's clearly what happened in Holland, right? You got these Dutch farmers. They're lively. It's a big takeaway about people in Brussels, who? You got these Dutch farmers. They're livelihoods are being taken away by people who are in Brussels who don't even understand what they do.

I mean, people wanna make a living. It's pretty simple. But this is why you're seeing populist, nationalist uprisings in all these countries is you've got a crowd of people who go to Davos and make policy and they're completely disconnected. They're completely disconnected

from the real concern. Look at Bojo. What's up to it? Bojo just got booted today. Why? Ultimately, at the root causes, he was throwing COVID parties when he was telling the same thing that everybody nailed Gavin Newsom for. This guy just got booted out as Prime Minister of the United States.

They're hypocrites and they're incompetent at their jobs. Let's call what it is. The association is you try and do what you believe to be best for everyone, but it's not, it's not what's best for you. You know, and I think that that's the point, like climate fixing climate change, stopping COVID. I got to do X, Y and Z for everyone, but I still want to fly in a private jet and I still want to go to a COVID party, you know, to a dinner party. Exactly. Super spread. This is why I think Biden is very unpopular. I mean, look, he's at. Hold on, hold on. Hold on. Let me see if I can. Okay. So we are going to tee up. Hold it. Okay. Okay. Let me just let me just let me just explain it. It's a lot easier if I do that. Hold on. Hold on. Hold on. I want to give you the

alley. Here comes the alley. Okay. I don't need the alley. I got to give you two sentences. It's two sentences. Please. I have a good joke. Just let me do. All right. So all of the freeberg stands were breaking my chops that Shamath was cackling and laughing during a science segment and we rushed him. So I moved sides up, so to the Friedberg stands, please stand down. Now we go to Biden-Darrangement Syndrome segment at the end of the show. Joe Biden's cognitive decline is becoming the topic. Sachs, have at it.

Well listen, if you call this Biden derangement syndrome 62% of the country has Biden derangement syndrome because we all did for Trump. Bines poll numbers are down to something like 38%. It's historic low for this point in time of a presidency. But look, what the point I was trying to make was, I think that Biden's problems flow from this dynamic we're talking about,

which is he campaigned as Scranton Joe, he was a working class hero who was going to give us a return to normalcy. And what has he done? He's basically implemented every wacky idea of the progressive left. He basically is representing that part of the party that is completely disconnected from the ordinary desires of the working class. And what are people concerned about right now? Food and energy prices. What is Biden concerned?

Well, firstly, he's blaming it on mom and pop gas stations, even Jeff Bezos had to sponsor that. That tweet was insane. Yeah, so just to queue up the tweet, my message is Biden's tweet. My message to the companies running gas stations and selling and sending prices at the pump is simple. This is a time of war and global peril, bring down the price you are charging at the pump

to reflect the cost you're paying for the product and do it now. And then almost all small business franchises, which is absurd. And that's just not how the economy works. Do you think that they look at a chevron and think it's owned by chevron? Or they cannot be who's tweeting for money?

Some millennial, some millennial with a couple of masters degrees, and 400,000 dead is rage tweeting from the White House. Is it a strategy to make them look incompetent? I mean, I am forever thankful for Joe Biden to getting Trump out before he took a third or four-year. It would take an eight second Google search to know that less than 10% of the gas stations

in America are owned by these corporates. Well, here's Bayes, I suspect. These are mom and pop businesses. This is insanity. So, there's a lot of immigrants. It's a lot of South Asians. This is why it's very sensitive to be. These gas stations, they are mom and pop owned, a lot of them are owned by immigrants,

and this is their small. It's very expensive. It's very expensive. The American dream. And Biden comes along and he's saying, you're doing too well. I mean, these people, they're profit margins, like 2%. 2%. 2%, 2% nothing. My buddy's family, by the way,

owns a bunch of gas stations in the Bay Area. And he told me they make no money on gas, they make all their money selling cigarettes, and so that's it. That's the whole business. That's the whole business. That's the way to get people into a convenience store. Here's my thought.

I think I'm gonna state it right here. Bezos is gonna run for president in 2024. This is why he retired. What? This is why he retired. What? This is why he's giving money away. I will bet anything against him. Okay, this is your watch. Give me a watch.

He doesn't need that. He doesn't need that. 15 to one. Okay, well, you're saying I think he's trying to like his games. He's playing legacy games. No. Why else would he become a shit poster on Twitter?

Ouch. Inflation is far too, I wasn't even a shit post. Well, anyway, he's he's the base of the after that wasn't even a ship post that was kind of like he was out of the financial literacy the ship the

economic what is the lack of economic understanding take on the president there's no upside there he's trying to fight checkout it's just calling out something that on its face, that tweet, it was not written by Joe Biden. So let's not pin the blame on him. But that office and that strategy is clearly broken because it is run by someone at a minimum who's a numerate and who's clearly financially illiterate,

who doesn't know how to Google anything because that's the only way you could write something that insipid. Biden should fire whoever it is that wrote that. 100%. Biden is looking for scapegoats, okay? His popularity is at historic lows. The right track, wrong track numbers are at historic lows. He's looking for anyone to blame

and he's been going through a whole sequence and the Putin tricycle wasn't working. He couldn't even say it right. So now they're looking for anyone else. Remember, Elizabeth Warren did something similar when they had food inflation, they started blaming the meat packing industry or whatever. Look, this is not how these industries work, but they are looking for someone to blame for their own mismanagement of the economy. And Biden baked this cake last year. We've discussed this before. He canceled energy independence,

his first day in office, and then moreover, look, on this Ukraine situation, if you knew you were going to take this tough with Putin approach, Jason, that I know you support, okay? But if you knew a proxy war was coming, or you're willing to let one happen, you would want to basically create an energy, not an energy shortage, you would want to basically maximize the amount of American production, and you would not want to alienate the Saudis. So what is Biden doing now? He's going over Saudi Arabia had in hand totally humiliating to beg for forgiveness for last year ostracizing them and calling them pariahs. So let me read that.

No, hold on a second. They had no grand strategy. If they wanted to pursue a tough on Russia strategy, they should have maximized energy production. Instead, they even think about it. They even think about it. I know we've got energy inflation. I agree with you there. It also, I will say, is notable.

I think the Democrats are actually now, I think they're quietly pushing the Joe Biden cognitive decline so that they can put it, they can feel that what do you mean? Quietly, how do you allow a governor, a sitting governor to run ads in a different state against the presumed Republican nominee unless it's ordained? Well, I'm saying the cognitive decline thing. I think they're also not going to come out.

And Jason, I don't think this is happening surreptitiously. Okay, here's the tweet from Bezos, just so people hear it. Ouch, inflation is far too important a problem for the White House to keep making statements like this. It's either straight ahead, misdirection, or a deep misunderstanding of basic market dynamics.

This is a very strong statement, and the point I was trying to make before is why would Bezos, why would Bezos at this time, why would he take on the administration? I think it's important for Biden to take control of his communication strategy and to reclaim more of the center going into the midterms. I think a lot of this content, the naming, the shaming, the blaming, tends to be more of the playbook from the far progressive left. And I think that there's probably too many people that have infiltrated the White House from those ranks. And I think he needs to close ranks a little bit more. And so I don't think he wrote this. And I don't think he would have

wrote it if he was given the chance. So it's clearly something is breaking between what is being discussed as a team and then what is being executed on the ground. Sax. Look, Biden's staff, the wrong claims been with him for years, they reflect his desires. I think this is classic Biden. If you look at his career in the Senate, he is a grand standard. He always liked to basically scapegoat and demonize. This is a playbook. He may not have written the tweet, but he certainly endorsed it.

And he's given speeches now where he's calling out this scapegoat and that scapegoat for basically the energy prices, which are totally his fault. He could add a better strategy around this. Just add this versus Bayzo's. You heard it your first one. On the Bayzo's thing, but hold on a second. Jason, you're not taking into account this actually the second time that Bayzo's has tweeted about inflation. I have to take that into account, yeah. Okay, that hold on a second. Jason, you're not taking into account this actually the second time that Bayeson has tweeted about inflation.

I have to take that into account, yeah. Okay, that was back in May. He called out the administration. So, yes. It's on this particular issue. I think he feels strongly about this issue, and I think he's looking at what the administration is doing and just saying, this is a level of political stupidity and financial literacy that I just cannot stand. And by the way, who is Jeff Bezos? Bezos is a very liberal guy. He's an outspoken critic of Trump

and he owns a very liberal media asset, the Washington Post. So I think this is a reflection that Biden has even lost the Jeff Bezos is the world. And he's trying to spend it as a good thing as if we don't need these billionaires. But if you're losing Jeff Bezos, you're losing a lot of people in the center, probably the entire center.

We would follow the breadcrumbs. He bought the Washington Post, he bought the largest house in DC, and now he's taking on the administration. I think it's a clear path that he wants to run. You can, you can, you can, you can, you can, you can at-match him beyond Twitter, if you disagree.

I'll tell you a funny story to end. After, after the sale of the Warriors completed and I tweeted this thing out, it was really beautiful. Drey sent a beautiful text to me. So to David Lee. And then I got one text message from Phil Helm you saying, I dispute how much credit you've given me, I expected more. Wow. So seven seconds to fill. Again, it only took seven seconds.

And then he called, I showed, I showed Saks the text thread. It's an unbelievable text thread. Saks can testify to it. And then he's like, lost his mind again. He lost his mind. He said, basically like, you know, he took the credit that I gave him and wanted to throw it at the window. He thought I really tried to fuck him over.

And then he said, I'm gonna block you for a week, but then change his mind. I'll just tell him you'll buy him in to the big game or something. I'll be fine. No, he didn't want money, he just wanted more credit. More credit, he wanted more credit. Tell him you'll stake him,

because he did introduce you to the deal. Is it correct, so much? Is it correct? Is it correct, so much? Is it true? Hold So, is it true? Is it defability a dollar? Isn't he stated the deal? Hold on, is it true? Is it true that he, that Phil Hummouth introduced you to the deal? Yes or no?

He introduced me to Joe Lakeham. Got it. So, if not for Phil, you probably would not have made that trade. I don't know, it's unclear. Because they had bankers and I was using you know, I was using Allen in companies. Okay. I mean, do you, there's not a lot of people running around in that moment trying to write the 10% you ticked us.

He deserved any credit for you buying your stake in the Warriors. In fact, then I thought I gave him an appropriate amount of credit. Yeah, it's a mouth-tweet storm. It was like, it was Phil, Peter Teal and like one other, oh, and then, like a, and it's like better company. He couldn't find himself in. Right. It's the best he's ever been.

Except when he was with Michael Jordan and Jay Z. But other than that, this was the best Phil's ever done. I mean, you know, when I get to juicy, he made it to the second. When I get my fourth ring, I'm going to take a picture like Michael with the four rings, but it's. But Samath, in the interest of peace, maybe you should just think Phil right now. Oh, I have should just think Phil right now. Oh, I have a great idea to tell Phil.

Freeper, look at Freeper's laughing. He's the only one that got that joke. Did you get that joke? I always wonder if I should tell you to cut it or not. I don't know. I think it's good. Here's a great one. You know how Phil, don't cut that part. I think it's a funny joke. You know how Phil gives his bracelets away as like a recognition? You don't have to do this, but pretend that you're giving, since you have four rings,

that you wanted to thank the other three besties on the show and that you're keeping one ring for yourself. Oh my God. I'm giving us the other three rings. Oh my God. As a thank you for all the support we've given you. All the support for the warriors. For the warriors that we gave you

and all the counsel we gave you over the years, this will put him on mech. Super-tope. He should've got two. One of the four rings. Super-tope. It's the four rings. Super. Super. Super. It's the greatest April. Actually, that reminds me, Phil's next ring is going to me.

So I can't say anything critical. No, bracelet. Yeah, bracelet. Yeah, bracelet. Yeah, the next bracelet is going to me. So I got a, I can't say anything critical. You know what you're going to do? You take that bracelet.

What I write, said it's critical. I guarantee you, Zach takes the bracelet and loses it in the first three days. And never wears it. It doesn't. Right in the garbage. Don't you care. I've never wears it. It doesn't care. Right in the garbage. Don't take care. Never talks about it again. All right, everybody, we're back.

The team is playing professional. Chris, ball again, point God is back. We'll see you on episode 87. We're gonna make it to 100. I feel like we can make it to 100. Yes. We're gonna make it. The vibe is back.

The vibe is back. I love you guys. This issue in the text, but it's great here. Which I gotta say, I love hanging out with Sachsi Poo, like live and physical. He's a fucking little, he's very, you just wanna take him. I love him.

He's good, live. He's great. Yeah. He's so good, live. He's really good. He's really, really good, live. He's a contract. He's an asshole.

Last time I hung out live with him, he had an IV hooked up and he was recovering from the night before. Sachs on an IV. He's basically on an IV now. That's how bad. Last time I hung out live with him, he had an IV hooked up and he was recovering from the night before. Sax on an IV. Based, basically on an IV now. That's how bad it's gotten for him. Sax, you look terrible. Can you please get some sun and just maybe eat one less sandwich. How many pieces did you look scoop? I had two. No, but you could afford to. You're in great shape. I mean, Sax, maybe half a de Santos. No, but you could afford to. You're in great shape. I mean, sax maybe half a decentis. Maybe you should have a half a decentis I think I'm gonna put you on half to send us. We'll see you all next time on the all-in. Love you guys. Bye-bye

Bye-bye We'll let your winners ride Rainman David Sack We open source it to the fans and they've just gone crazy with it. Love you, S.I.S. Queen of kilowatt. I'm going all in. What, what, what's have to be casual, meet me at the place. We should all just get a room and just have one big hug or a cheek as they're all just

just like this like sexual tension that we just need to release that out. What, you're the beef? What, you're the beer of beef? Beef of beef? We need to get mercy. I'm going on, Leigh! I'm doing all it! I'm doing all it!