All-In with Chamath, Jason, Sacks & Friedberg - E90: Twitter subpoenas, market overview, Pelosi's Taiwan visit & more

Episode Date: August 5, 2022

0:00 Bestie intros 2:07 Twitter subpoenas the besties! 16:03 Markets overview: dead cat bounce or have we hit the bottom? 34:10 De-globalization trends, Pelosi's Taiwan visit  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://twitter.com/DavidSacks/status/1554963395660566533 https://davidsacks.medium.com https://ycharts.com/indicators/us_gas_price https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.newcomer.co/p/folk-songs-and-stock-charts-coatue https://twitter.com/mkraju/status/1554485039710310401 https://upload.wikimedia.org/wikipedia/commons/a/a1/Geographic_Boundaries_of_the_First_and_Second_Island_Chains.png https://www.nytimes.com/2022/08/01/opinion/nancy-pelosi-taiwan-china.html

Just a couple questions before we kick off. Okay. So it's what I told you before. It's bad bitch o'clock. Okay. It's thick 30. I've been through a lot of sacks right now, but I'm still 30, okay?

Is everybody back up in the building, Saks? It's been a minute. Tell me how you're healing. Because I'm about to get into my feelings. How you feel on Saks? How you feel right now? What language are you speaking right now? I don't know.

I don't know. You're still the language called hip hop Saks? You write me a remember where you had at your 50th? Oh yeah, when you had, and she sang, and she sang, and you're was dancing to, beep.

Delethan. Delethan. Let's start executing the insta strike with, Jake Hal. Why insta strike. When he says something that we just insta strikes, we don't have to edit it later. Just insta strike. It's because I am taking back by power. I was in therapy the other day and they told me I need to take back my power. Insta strike. But he apparently reads the comment section because he knew Freedberg that you won the episode last week. Oh, big time. Which I was being. I thought you'd do every job. It was Big Freedberg energy.

Finally, I honestly do not like the competitive nature of the show. I think it makes us all hate each other. And it's not a good dynamic. We should just fucking do the show with each other. I know, but the point is, your performance after I threaten to fire, if the show has gone up. You know who also doesn't like the competitive nature,

Jake out, because he's losing. Yeah, totally. The fact that I'm even still here is winning. I love how Jekal thinks he can threaten to fire Freeberg. It's like the January Staples Center I think he's gonna fire LeBron, because he played poorly in a game. This is a motivational technique.

I got the best out of him. I'm like Michael Jordan, he's my Dennis Rodd. You're like the hot dog dealer, okay, pal? He he's my Dennis Rodd You're like the hot dog dealer okay pal. He's like a bon James you're the hot dog deal. I do not Instustrike these comments And I said we open source it to the fans and they just go crazy. Love you guys. Nice. We know you can. I'm going to leave.

All right, everybody. Welcome to the All in Pod with us again. David Freiberg took a break from playing his stray video cat game. Saxus here in his deposition apparently. Chimac. You guys want to see this? Look at the size of this.

J.K.L. is apparently playing no comment today on the comment. So I will open the show by asking David Sachs. Would you like to tell us about what you're holding in your hand? Yeah, okay, so I got this subpoena from Twitter. This is a non-party subpoena for... Didn't Twitter subpoena your tweets? Yes, let me get into that. Is this subpoena your tweets yes let me get to that this is a peanut I thought they're public they are these netwits have walked out of lipped in building them a probably two thousand dollars an hour to subpoena tweets that are public brilliant brilliant strategy but this is called a subpoena for

production of business records in an action pending outside California so I'm not a party to the laws, at least they're not suing me because I have no involvement in this thing. But they sent me the broadest ever subpoena. It's like 30 pages of requests. And now I got to hire a lawyer to go quash this thing because they basically want any of my communications

with any of my friends over the last six months. It's insane. Saks, can you just explain to the audience and to us like, is this is a court sanctioned subpoena? The court is basically allowing the lawyers to demand that you hand over these communications. Is that right? Yeah, but I haven't had a chance to fight it yet. So now, my own expense, I got to hire a lawyer and go send them to fight it because this

is a ridiculous, overbroad subpoena. And by the way, I'm not even involved in this thing. I'm just a commenter on Twitter. I don't have any, let me just save, walk till I'm a lot of time right now. I'm not in possession of non-public information about this. And the craziest thing is, like you mentioned, they cite my tweets as an exhibit here, and they say they want all documents and communications concerning your statement in a tweet dated April 16th that the quote, new Twitter CEO checklist includes eliminate all bots and fire useless employees. 50% question mark. So obviously they didn't like that.

Your statement in a tweet dated April 25th, crazy thought, what if Jack Mastermind and this whole thing? Your statement in a tweet dated July 18th, that quote, randomly sampling 100 accounts a day is not a serious effort and or your statements and any other tweet concerning the merger blah blah.

Let me just save them time right now. I don't have documents and communications concerning my tweets. Now I know to a lawyer at Wachtel Lipton that looking at my tweets and how brilliant they are, you may think that I have extensive documentation and source material for them. Let me tell you what happened. I want to go take a shit and I was sitting off the cuff, and that's how that tweet ended up in the public record. There are no documents and vacations concerning my tweets.

And this idea that somehow, I guess what they're trying to get at is that somehow I was tweeting on behalf of someone or at someone's behest, not true. Go look well before this year at my public tweets and blogs about the topic of free speech. I've been a critic of Twitter's for a long time

on the issue of free speech. I've written a content moderation policy, I've written about what I think a content moderation policy for a social network that cares about free speech should be. You know, I've written all these posts on medium going back years now. I was a critic of Twitter throwing Donald Trump off the platform. These views that I've publicly stated are the reason I've stated them is they're just

my views. And there's just nothing more nefarious or something behind them other than that. I think they're just trying to chase a there. That's there is no there there Right, let me just say a lot of time you and I can talk because our our friends Have no comment on this matter one question. I have a file picture During this movement that you had and you composed the tweet. Is there any documentation of the movement? No, but you know next time that I compose a tweet on the can I will document it thoroughly and I will send the lawyers a lot to I'll opt in.

What happens if you don't respond in 20 days? I don't know, I mean I got a, I mean now I'm hired a lawyer but by the way just so people understand you may think that because of my position in business or something that these things happen all the time they don't. I've been maybe subpoenaed like three times in my entire career and I've never been subpoenaed in my capacity as an individual. It's always been a connection with a company and I don't think I've gotten one of these in over five years. So this just does not happen that often. These guys are totally chasing its straws and it leaves me to believe they're wasting my time and Twitter's money. And their products. Somebody at Twitter should just rain in their lawyers because I'm sure wrapping up a fortune in legal fees.

It sounds like SACS. The case is that they're trying to make that Elon used his network of friends to help wash away the deal because he didn't like the price anymore and had his friends tweet about bots and other stuff to support his case for killing the deal because he didn't like the price. And they're trying to see if there's any communications that he specifically said he didn't like the price. To some extent, they all, in addition to my tweets,

they want all my documents and correspondence related to my appearance on Megan Kelly, my appearance on the Wilkane podcast and other media appearances that I've done. Look, I had no coordination with Elon before appearing on any of those shows. I just went on those shows and said what I think. I mean, look, it's not like I'm a guy

who doesn't have hot takes every single week on various issues. We've been doing this podcast for years. I've been tweeting for years. I'm just a commentator on this. I've never been in possession of non-public information, and I've tweeted my takes based on the public information that's been available about this dispute.

Now, after I appeared, for example, on Wilkane, I remember Elon tweeted in support of my appearance, but there was no coordination before I appeared, or after for that matter, He just liked the appearance. So it's just me spouting off doing what I've been doing on this pod and tweeting for years. Now I can understand if maybe they're trying to read something into it, they're on a fishing expedition, but I've just told you the whole thing is just such an enormous waste of time. Just get into court to adjudicate the thing and move on.

I was reading yesterday, this guy who follows the Delaware courts pretty closely, he had a bunch of commentary and he mimicked some of the stuff or the judge apparently on the case said some stuff about preserving the integrity of the court, meaning that the interpretation people are making is that ultimately, they don't want the court is meaning that the interpretation people are making is that ultimately, they don't want to, the court is unlikely to try and force the merger because if the merger

then doesn't get consummated, it damages the reputation of the court's ability to make enforcement action. Therefore, it's more likely that they just impose a fine. But what is the enforcement action is, I don't know, we should ask somebody who's a force of the merger. No, but force you want to buy Twitter but what does that mean force I don't know about that okay all I know is that this discovery request is overly broad it's a fishing expedition it's harassment of me it's gonna cost me time

and money to get rid of this thing I didn't do anything to deserve it or prompt this I wasn't part of the transaction. I just wasn't. And I've never said anything in real guards to the transaction that should lead anyone to believe that I'm in possession of non-public information. So this is a last minute's punitive. And the fact that they're citing my tweets in which I criticize Twitter's management, it's this petty and vindictive. Yeah, I agree. I mean, look at your legal eye three in verse. I'd probably talk. Good luck. No.

Five or six years ago, I approached Twitter about what I would have called a friendly activist myself and a and another large fund. And the reality is there's a lot of data that sits in the public domain that you can use to get a very clear view of Twitter's advantages and disadvantages. And so all of these issues that Twitter is dealing with has been known for a long time to people

that spent any time analyzing the stock, comparing it to other social media stocks. So I just don't understand what all of this is about. At the end of the day, a person that had a point of view has changed their mind, get to the bottom of what that person thinks, but going on these broad fishing expedition, I think it's just really stupid.

And then what was Joe Lonsdale's subpoenaed for? I mean, he just appeared for being at the All in Summit. For being a guest at the All in Summit. So that just shows you how silly this is too, because Elon, we did an interview, the four of us interviewed Elon at the All in Summit in Miami back in, was it may, when did we do that?

Yeah, very bad. So Elon appeared, but he dialed in by Zoom. It's not like he was walking around the hallways bumping into people and talking. Like, he did not communicate with anybody else at the summit. He was a guest by Zoom. So if you want to know the communications that we had, just go watch that public recording of us interviewing Elon. There's just, again,

there's no need for this fishing expedition. Guys, this is the record for the longest amount of time in his life. J.K.L. has not spoken. So I want to acknowledge this moment and we can move forward. Sacks, did you do any prep work for the interview with Elon while you were in the commode? 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, 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 We're good. We're good. Yeah, exactly. Why do I need another one of these? I actually want to have freedberg stands create an event honoring him and I'm gonna appear there as the keynote speaker Absolutely Sultan of science con actually. I should really thank you Jake hell Yeah, it's all I'm sorry the summit. Thanks Jacob first. I blame Twitter's executives that I blame you I think think you could put, listen, if we do another all in summit, maybe it's profitable.

And we can just say, I think I just say, like, as a user, just as a user. Okay, commentator. The bot issue is really real. Like, how many accounts are there, which have like 20 or 30 followers, that just spew vitriol, either positive or negative constantly.

Every time you tweet anything, it makes tweeting impossible. I used to be an ardent user of Twitter. And I think in the last year, it has become exceptionally unusable. Well, in fairness, they should fix that product quality problem. In fairness to SACs, he did pay $10 per account to have those created and to control your replies. But it is true. If you, I always screenshot it.

I look at who is like trolling me and replies. And inevitably it is a six month old account with that's following 100 people and has no followers or five followers and has like some, you know, large. But I mean, it's like, it's like the time at the end of the name, every time you say something, every time I say something, it's like every other comment is about a stock. It's about a crypto thing that they want you to click on. And so, you know, this last month, I've started to experiment with turning comments off.

And it's been the best because I can still communicate out. It gets the same reach. Millions of people will see what I have have to say but I don't have to deal and all of the other people that follow me theoretically for useful information don't have to deal with all the bullshit that comes with it. Yeah, but you don't have to pick. There's a real problem on that platform that needs to get fixed. Here's the thing. It's easily fixable because if you go to LinkedIn or Facebook or Instagram, you don't see this. So if the other platforms can figure it out across many different companies, it's not like there's some secret sauce here. You just have to put up, you know, a couple of reasonable gates and have some reasonable reporting and take a little friction

out and people will not be able to create bots on mass. Yeah, I noticed that problem. In the early days of the Ukraine war, when I would tweet on my opinion, my non-contrarian opinion, is my non-consensus opinions on the Ukraine war. You get attacked, I saw, I remember. You were getting attacked on. Oh my God, it was ruthless.

And it was just a real people. Those were not real people. Those are algorithms. Yeah, when you would go, click on those accounts. You would see that they were accounts created that month. Zero followers, zero following, and they were brand new accounts without any history. They were all tweeting the same thing, accusing me of being devil Chamberlain.

It was all just Putin talking points or whatever. I think particularly when you speak out against the current thing, there's an organized effort to try and drown you out. But look, the Washington Post had a story about this that Ukraine was really good at what they called strategic communications. Yeah. Mr. President, yeah. You used to call that propaganda, but in any event, yeah, I mean, look, there is absolutely

a problem. It's not a playbook. I don't know if you guys saw the Zack Snyder recut of Justice League. Supposedly there were bot armies that put the pressure on one or brothers to release his cut of that movie and that he might have in some way been involved was the insinuation and it actually drove commerce. They gave him the whatever $30-40 million to recut the film. All right, let's talk about markets since that's what everybody really comes here for. Looks like inflation is finally maybe getting a little pushback gas and oil is way down,

big win for Americans and obviously the administration. There clearly is an upper bound to how much people will pay for a gallon of gasoline. Consumption is actually going down, which is interesting. Humans pretty adaptable there. Jobs, and we've talked about this every month as we watch it, finally dipped on her 11 million of sex predicted. We're going to shed 300,000 jobs.

It seems every month, which should take this 10, 11 million number over the next year down to maybe five or six, which would still be an unbelievable number. So put us at very robust, full employment, which has been a big question. Well, also there's a number of open job, the number of job wrecks. It went down by something like half a million in one month. Yeah. And it's been going down three or four hundred. So it's kind of been pretty consistent, but there's clearly something going on here.

And the stock market, interestingly, we've started to see a little bump here, even crypto, which the most speculative of all assets, I guess, Bitcoin bounced as well, hitting 22, 23 now. What do you think, Chamoth about markets? You may have called the bottom here on the program a couple of months ago. And I started J trading three weeks ago based on our discussions here of thinking we're bouncing along the bottom. Is it a head fake right now? I think at the time, initially, I think I said, you know, it rallies to around 4,000.

I was a little off. initially, I think I said, you know, it rallies to around 4,000. I was a little off rallies. What rallies to 4,000? The S&P. Probably gets to 4,243. Look, it's always important for 3150 today, just so people know. Yeah, it's always important from my perspective, just take the other side and just

intellectually debate with oneself why the other side could be right. So at this point right now what people would say is okay the Fed's going to capitulate at the beginning part of 2023. We have a pretty clear forecast for all the rate increases that have to happen. Everybody's doing the work that's necessary, either raising prices, cutting costs, or doing both, letting people go, etc., etc. So maybe we're there. Okay, so what's the other side of that? Well, I think, again, as I've said it before, the other side starts with energy. And the reason why I think it's important is that it really is the conflation of an economic

system and a political system using an instrument. And if you look inside of what's happening in Europe, there's a lot of complexities here that I think need to get unpacked. So for example, a couple days ago, the French government basically said that they're going to start producing less nuclear energy. And you'd say, well, why would they do that? Well, it turns out because the temperatures are so high, you cannot use the water to cool these nuclear reactors because the exiting water is then so hot that would actually destroy the ecosystem of the lakes and rivers that they use to feed natural fresh water

in to cool the nuclear reactor. Second, because it's so hot, all the rivers are below their natural level, barges that carry coal and that gas are getting stuck on the denube, the Poe, which is the longest river in Italy that feeds all the fields, actually, is below the level where it can actually off, you know, offload the water. So farmers can't basically do what they need to do to produce a food supply. So if you play all of that out,

you start to see an issue where by, you know, October and November of this year, we're back into the same complexity where energy is the tip of the spear around which everybody starts to debate all of the national security issues that we have to deal with, the Ukraine war, etc. So, I don't know. You've made a lot of money this year by basically doing the following, which is the exact opposite of everybody else.

When everybody else was freaking out, had you you bought you would have made a ton of money. Now everybody's like, it's over. And you can tell that by looking at the VIX, which is the volatility index, we're about to get into the high teens. You have systematically, it has been true, that when the VIX is in the teens, you tend to basically buy volatility, which is essentially you get short stocks. And when the VIX is in the 30s, you tend to basically sell volatility and you buy equities because we've hit the bottom. If you've been doing that for the last year, you've made a ton of money. So there you have it. I really don't know what's going to happen from here, but I tend to think things still have to get a lot worse to flush everything through the system. And for people

don't know, the VIX is the ticker symbol that you can look up yourself for the CBOE's volatility index, which measures the stock market's expectation of volatility based on the S&P index's options trading. If you look at oil, SACS, we are now down to 87 bucks for a barrel. Haven't been here since, gosh, looks like, yeah, February maybe. And gas prices plummeting, something going well in this regard. What are your thoughts? Yeah, I mean, that particular commodity is coming down. I still think we have a big inflation problem. Why did you it go down? I guess production is stepping up.

I mean, in a response higher price is people increase production and the price comes down. No, no, no, no. There's less demand. The crazy sad thing about this whole thing with Biden was that OPEC came back and they basically said we can increase like 600,000 barrels a day. But the only two countries that are able to do it were I think Kuwait and Saudi and the total number of barrels is about

100,000. So with all the bluster and all of the stuff, it's because the interest rate increases are actually having an effect. Correct. You know, these rate increases are like chemotherapy, you know, it's on the economy. The gas demand is lower than the summer of 2020 in the middle of the pandemic. Yeah, you're right. So the commodity prices are reflecting expectations that the economy is slowing down and maybe

in a recession. So supply, I think, I think that's the problem. Supply modestly up, demand massively down equals, hey, we want to get people to buy this commodity, but we'll lower the prices. We'll loan the whole. The same thing is happening a little bit with groceries, and we'll see what happens with travel. Homes also spectacularly falling down in price and the inventory spiking as well.

So what's your take here? Unpack the 75 basis point increase in the chemotherapy that you were going down that road. Let me just speak to this rally in the market for a second, because I think there was a really interesting chart that Philippe Lafone showed at that CO2 summit that we talked about on this pot a few months ago. And I'll just put it on the screen, I put it in the chat. What it basically shows is that during, you know, protracted bear markets, you can still get substantial bear market rallies. So during the 2000, 2001, dot com crash, you had these plus 32%, plus 41%, plus 45% rallies,

but even while the market as a whole was going down. And so they ended up being sort of sucker rallies. Now, I don't know if that is what's happening here, but it is a possibility. One interpretation sex of this could be, people are picking the winning stocks while the losers continue to lose, and that's what's causing this jagged edge

or the dead cat bouncing, as they say. Which is mostly seeing in a lot of public companies, right? I don't know if you're watching, but Uber, obviously I'm still a big shareholder had a massive print and other companies have been doing equally as well apple included i think two things happen last week one is there were a number of companies that reported uh good earnings and i think even more importantly has strong forecasts so that helped and i think it was just there was so much pessimism and negativity that just companies reporting decreases that weren't as bad as people were expecting helped. And I think it was just there was so much pessimism and negativity that just

companies reporting decreases that weren't as bad as people were expecting created some room to move up. But the other thing that drove the rally is that the Fed made these comments on the heels of that 75 base point rate increase that we were close to neutral. And so the market seemed to get really optimistic that we wouldn't get much more in the way of rate increases. Maybe there would be a 50-based point rate increase towards the end of the year, which would bring the Fed Fund's rate up to about the two-year bond rate. So the idea was we're close to neutral, and market's really reacted to that.

The thing about that is, though, that I think what the what Powell and what the Fed says today about rates is way less important than what the inflation data will actually show in a few months. If we still have 9% inflation three months from now, then I don't think the rate increases are done. So at the end of the day, I think that the data here is going to be a lot more important than what the Fed says, because certainly the Fed has said a lot of things over the past couple of years that turn out not to be true. You would agree they seem to be doing something correct here with the 75 Bips, you know, and taking it a little more seriously. It's having an impact. I'll say it again. I've said it now, five pods in a row. We've never seen a moment in history and American history,

where when CPI has printed successively above 5% that it got under 5% without Fed funds getting to that same number. So we should all hope that this is the exception that proves the rule, but there is an enormous amount of data that would tell you that we have to take rates to double what the equilibrium rate is thought to be right now. There was no print in August, they take the month of August off,

they could do an emergency print, and then they're expecting 50 or 75 Bips in September. If they do that, SACs, Jamal Thurber. I think 50 is the expectation for September, but look, I think it's appropriate now after all the rate increase they've done to take a pause, they're gonna get two full months now of inflation data before the September Fed meeting.

I think it's appropriate to let the economy digest these rate increases and see where we're at. And let's see where the next two months in Flation Print is, and then that'll determine what happens next. Freeberg, based on all this, what's your outlook for the economy? I think there's more, we all try and be predictive based on the current set of conditions in the world. And there are a number of conditions in the world that the switch could flip very quickly.

And there's enough of those triggering events right now that the probability of any one or any set of them happening in the next couple of months is probably pretty high. I kind of talked about it on the show a few weeks ago that it's like a bunch of tortoises sticking their head out of the shell. And there's a few that might that it's like a bunch of tortoises sticking their head out of the shell. And there's a few that might pop out here.

There's obviously a massive problem with getting gas to Western Europe for this winter. There's an emerging problem with food insecurity in Africa, South Asia, around the world. There is obviously continuing escalating conflict in Eastern Europe. This NATO situation may or may not help. The Taiwan visit may or may not help. Is it escalating? Yeah. Well, I mean, I think, you know, Sweden

and whatnot joining NATO is, okay. It's gonna be viewed as provocatory. And, you know, it could not make things cooler Okay. It's going to be viewed as provocatory. And it could not make things cooler and calmer over there, but make them more tense. I mean, we view it as a security issue, but it really is a conflict escalation issue. And then I think that there are emerging markets problems. Argentina is facing 60% inflation. Brazil has a criminal as their president right now

and he has said publicly in the last couple of days that he will not leave office if he loses the election because the election is fraudulent. And if that happens, then you could see massive civil unrest. He's been encouraging the population in Brazil to go to the streets and fight back. And there are a number of these flashpoints. And by the way, that's a massive treats and fight back. And there are a number of these flashpoints. And by the way, that's a massive food supplier, as well as a massive holding in EM credit portfolios around the world. US consumer credit is a problem.

We just had the largest number of new credit card accounts opened since 2008 in Q2 from the New York Fed report yesterday. All of these things I'm painting as pictures of potential flashpoints for what could quickly become wildfires or brush fires that spread very quickly in markets and could escalate some of the considerations. So I don't feel like I look around and say everything is good, we're in a good place.

There are some indications that some of the stagnationary considerations and concerns we may have had in the way that markets are behaving right now, gives us a pause, gives us a respite, makes us feel okay. But there are also a lot of things that could go wrong. And any one of those things could be a triggering point. So I always think in terms of probability.

There's a whole bunch of low probability things, but when you have enough low probability things, the probability that something in the set is triggered becomes high, that's where I kind of say, look, the probability of something being a flashpoint for us this year is high. I also still think that globally, we are very prime for conflict right now.

And we feel like, and are hoping that the Russia Ukraine thing resolves, but there are other points of escalation. Look at what's happening with Pelosi visiting Taiwan. Everyone that's, you know, even well informed is scratching their heads and what the heck is going on here. There is currently an indulgence in conflict. And I think that that indulgence will cause more harm than good, particularly for these financial markets that we're commenting on right now in the months ahead.

So, like I've always said, I'm not gonna be one to time markets. It's like trying to time social behavior. Like, who's gonna say some word first? I don't know the answer in a population of people. You know, you can kind of guess how people are gonna behave, but markets are the output, the manifestation of social behavior.

And so timing markets is very difficult. I think you can do a good job analyzing businesses and the manifestation of social behavior. And so timing markets is very difficult. I think you can do a good job analyzing businesses and the quality of businesses and how they will perform over time. I don't think that anyone over time can do a good job timing markets. And I think that there's a lot of these things that could really shift anyone's perspective

on what you believe right now very rapidly in another direction based on any one of these things happening. Sure, Bob, do you feel the world is as Dr. Doom here is setting you know? By the way, I'm not being negative. I'm just pointing out that there are no set of things that could flip things the other way. Absolutely. I'm being slightly facetious here, but you pay a pretty stark picture of, hey, there's all these tipping points around the world. Shabbat, do you feel like this is how the world works?

There's always a bunch of potential tipping points. There's always going to be worse, sadly, and there's always going to be countries that are dealing with dictators or insolvency, especially in frontier markets and emerging markets. Or is this chaos really acute and people should be anxious and in a panic? I think both of you guys are right. Like there's always stuff going on in markets, and markets represent the collective sum of our wishes and expectations and also the realities. This is why I think for me, at least the way

that I process this information is not trying to have an opinion on any one of those things, because I just, I find it too hard, and I don't have enough depth of understanding of any of those things. For me, I'd rather go back to the historical trends because those I find a little bit easier to parse. And whether any of those things are true, and can they turn that.

Can they turn that race? Jason, Jason, we're just talking some. Oh, okay, no problem. I just a little tweet. We're can't hear. Sorry. I want to. No problem. The second helicopter is replacing the first helicopter because of the two leak. She's helping out. Yeah, no, that's a point. Helicopters are switching on the helicopter. I mean, it takes a team to part this boat. I'll just be honest with you. So they're trying to get it done. So the real problem is that like if I go back to the historical artifacts, have there been issues in the past, the way that you know, for you, Burke described absolutely. So this is why I think you can look at the fact that whenever there's inflation and whenever it's spiked, this, what has had to happen by the Fed is you have to take rates above that key 5% threshold when CPI is above 5%

to break enough demand so that the economies reset. And I think that's where we are. So instead of trying to figure out whether, you know, I mean, the Brazil thing has an example that that freeberg said is crazy. Like he's basically, you know, he said publicly and at press release, the army is on my side and it's ready to help me, you know, keep and stay in gun. Just the crazy thing. So what are you supposed to do? The fighter thing to take to the streets. So what are you supposed to do in my opinion? I'm like, you know, a version of Brazil has happened before. I don't know enough history quite honestly to know the specifics of what happened then and how that could translate to now.

And I don't want to spend the time understanding what's going to happen in Brazil right now. I'd rather just say there are 20 or 30 things that could very much complicate the world economy. I think the reality is that governments need to flush all this excess money out of the system so that we can really find out what equilibrium demand is and get back to normal. There's also, by the way, a really important trend, Chimath, unlike that I think is playing out

and we'll play out for the next decade on de-globalization. So, as the US tries to build its own semiconductor manufacturing capacity as China loses key trade partners, as all of these markets stop trading with each other and start to build redundancy, there is a massive longer range economic effect of de-globalization. Globalization enables efficient pricing, it enables labor and energy and everything to be done, you know, to go to the cheapest

source. That's the way globalization has benefited us. We've been able to get cheap energy and cheap labor in overseas markets to do work for us. And as a result, we've gotten access to cheap products. So when you de-globalize, you end up having to pay more for labor, more for energy, you have to build infrastructure, and the price for everything goes up. We've sent this on the pod for two years now. That era of cheaper, faster, better is over. And what comes with that is better national security, but the cost of that better national security is higher prices. Higher prices, less growth.

And there's nothing that we can do to avoid that. I'm not sure I agree with the less growth. I actually think that there's enough access to be absorbed by all of this free money that I think you can still have sustained growth, but it will come with higher interest rates and higher inflation and higher input costs. Everybody will have to do their part to absorb some of this.

But that's what's gonna happen. And I think we should just deal with the medicine as quickly as possible. This is why the people that actually think that the Fed should just be very aggressive and get this over with quickly. I suspect on the margins are right. The problem is they don't want to look at the historical artifact because the sort of modern effect would say, wait, I need to raise interest rates by another 250 basis points. That's just way too disruptive for what the world is ready to hear right now. So we're going to incrementally plot along, and I think what Friedberg says is right, which is that there's going to be a whack-a-mole that emerges. That's going to tilt the markets.

Then the consumer credit thing will implode. That's going to tilt the markets. And Jair Bolsonaro will try to take over Brazil. That'll tilt the markets, and we'll go back to this inflationary, fragmented, deglobalized view of the world that just frankly takes higher interest rates to normalize. All right, and SACs, I'll bring you on this. I mean, counter to FreeBurxPoint, the counter obviously would be,

hey, we will have less dependency on dictators, like Putin, Xi Jinping, MBS, et cetera, and that would be great for humanity and we'd have resiliency in our supply chain. And the West, now becoming unified, say what you will about the NATO membership and the timing of it, it's probably a great thing that the West is saying, hey, we're going to get together as a group. I think you would agree and stand against dictators invading other countries.

And if everybody pays their fair share to be part of NATO, which is not that's not what they said. That's not what it is a fair. Well, I mean, no, that is not but look be intellectually honest. I have to be able to date. We all said the first part. And just everybody talked about that second part. And the only person who, you know, which is Josh Holly, who's, you know, not exactly my favorite person in the world, but maybe sax wants to comment. which is Josh Holly, who's not exactly my favorite person in the world, but maybe sax wants to comment, was the only one that actually said, which is probably the favorite thing with Jason, you are saying it's part of the deal. It is not part of the deal. No, no, it should be part of the deal. I'm saying it should be part of the deal. For people who've missed what we said there, the United States spends three and a half

percent of our GDP on military other places in NATO might be spending one or two percent and we're trying to get them all to two percent to be a little closer to us. And then this obviously trip to Taiwan, strengthening our relationship with that country, but at what cost and why are we doing it now, all come into play here. So, do you actually think that this trip to Taiwan actually strengthened our relationship with Taiwan?

Did we come up with a deal for just a few? No, it's the recent thing. It's all the sudden, say, say in what way I'm curious. Well, because they are, I mean, did you not see their statements and giving Pelosi awards and they, Taiwan very much wants to strengthen their relationship with the West. That is their goal. They want to strengthen the West. They want the protection of the West.

So yes, it's true that this was a coordinated, hold on. It does strengthen our relationship with Taiwan. The question is does it provoke China and was it necessary at this point in time in history when the world does feel like it's a little bit of a powder cake? No, but so six months from now and all the fruits and vegetables that have been embargoed and not sent to Taiwan, and then the sand that allows them to make chips continue to now flow, do you think that they'll still be positive about the trip? We'll see.

I mean, let's go to SACs. He likes to comment on these things. All right. Well, I want to make sense. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up.

I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up.

I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. I'm going to break that stuff up. US saying you can't go. Obviously, we couldn't back down from that because we can't let China dictate which of our officials can go to Taiwan. So at that point, we had to back her play. And you saw that everybody from Fox News to 25 Republican Senators got on board. Okay. But here's the issue, the real issue is should she even have been going? I think this trip was self-indulgent. It was reckless. She was told by the Biden

administration, don't go, this is not the right time, this is a sensitive time, the CCP's got their party conference in the next couple of months. There was no reason to basically provoke this showdown right now. And she just dismissed what the administration would buy in and what the Pentagon told her to do because she wanted to make some sort of valedictory tour to Taiwan. So, look, Nancy Pelosi does not deserve any credit for this trip. Did we have to defend her once, you know, once trying to threaten her? Yes, of course, we had to, like I said, back her play, but this was reckless and it was self-indulgent and it didn't need to happen and you know it really makes you wonder who is calling the shots in the

cementation when polo c won't even respect the wishes of a president in her own party and what is she doing going over there she's not the secretary of state i had the same question had same questions like what why now why not I had the same question. I had the same question. Why now? Why now? I was screaming at it. Well, because it's all about her making this valedictory tour before she's going to hand

over the gavel. Look, the Democrats are going to lose the House in November. Once she passes the gavel to a new Republican speaker of the House, I think she'll be announcing her retirement shortly after that. So this is all part of her farewell tour. But it didn't need to happen. And the fact that she did it in violation of the wishes of a president of her own party, makes you wonder who's calling the shots over there. And it kind of reminded me, you know, a few weeks ago, Gavin Newsom was over at the White House when Biden was over in Europe.

And everyone was speculating, what's he doing over there? Is he measuring the drapes? He's measuring the drapes. So it just goes to show that this administration have control over anything, over the members of their own party. Over 60% of Democrats say they want someone different to run in 24. So yes, there was a surface level of consensus and backing of Pelosi. But if you scratch beneath the surface, you see that the trip was unnecessary and reveals

a president who doesn't seem completely in control of our foreign policy. So in a statement, almost universally, the leadership of the Republican Party said, for decades, members of the US, the United States Congress, including previous speakers of the House, have traveled to Taiwan. This travel is consistent with the United States. One China policy to which we are committed. We are also committed now more than ever to all elements of the Taiwan Relations Act. So one China, if you don't know, is that Taiwan and China are all part of one unified entity.

So the Republicans seem to be supporting this in a cynical way you're saying, or it is consistent that other members of the United States Congress have gone. No, I think there is bipartisan support now to defend Taiwan. I actually think that is in the cards. I think there is a very high probability that we actually end up in a war with China. Really? They got this century. Oh, yeah. I don't think so. I think I want to stay in this flashpoint in the world. I would be really sad, but explain why you think there's going to be a war,

because I think a lot of people think there's way too much at stake here for their to be a war. So there is going to be some sort of negotiate settlement in the South China. So why would you think you think there's no way to case is there's going to be a war? Really? You have to look at it first of all from the Chinese point of view. They view Taiwan as secret territory and for decades now, they have said,

in every single meeting, diplomatic meeting with the US, Taiwan is always their number one issue. They are a hellbent on the reunification of mainland China with Taiwan. And they would like to do it peacefully through coercion if they can, but I think they will do it militarily if they must. And the only question is when they feel that they will be strong enough to basically take

the island by force. So that's, I think, the Chinese point of view. And I think America is increasingly committed to the defense of Taiwan. So, you know, we have contradictory statements on this. The one China policy says that we respect that there's one China, but on the other hand, the Taiwan Relations Act commits us to help in the defense of Taiwan.

So we have a country policy on this, but if you really want to- By the way, as does SACC's you would agree, China has flipped up on this. I mean, it's only the last hundred years that they've really considered Taiwan's strategic. They didn't care about it two or three hundred years ago. They were kind of like, this is worthless. You guys do what you want.

That's the last time Taiwan was part of China until 1895 when Japan took it from them. Yeah. They didn't want it at that time. That's the other thing. They were like, this is worthless real estate. We don't care. It's not true. Well, Taiwan is extremely

Important strategically and if you want to understand why I think you need to look at this map Yes I've been read up a map. It was really interesting. It was really interesting. Yeah, it's a really interesting discussion because 200 years ago They didn't care and then all of a sudden they were like wait a second if we're gonna be in worse with the West and Japan's gonna be a democracy We do actually have something at stake here. We'd like that island back. The island chain strategy was originally created by John Fuster, Dallas.

This one of the, of a secretary of state, I think under Eisenhower, who was one of the initial architects of our containment policy against Soviet Union, but also came with this idea of how we would contain China in the East Asia. And the basic idea is that China is surrounded by a series of island chains. The first island chain goes down from the southern tip of Japan to Okinawa to Taiwan to I think there's some islands in the South China Sea, the Spratly Islands.

It's got the northwest tip of the Philippines. That's the first island chain. Second island chain goes out to north west tip of the philippines that's the first island chain second island chain goes out to the eastern part of the philippines no Vietnam's all the way down and that's okay i think i think it's a kind of in-chain includes you know goes down to indonesia

and then i think there's even a third island chain that includes wallam although wallm actually might be in the second somewhere it's somewhere on their it's a heavily fortified American base. So the idea is, if you want to bottle up and contain China, you do it by controlling these island chains. And Taiwan is really the central one. It sort of divides this East China Sea, where you've got South Korean Japan, from the South China Sea, where you've got Vietnam and Malaysia.

If we distant between Vietnam and Japan, it's literally if you were to draw a center line of China's coastal access, that is it. Yeah, so the bottom line is this, if you want to pursue a policy of containment against China, you really want to control these island chains. Another way to think about it is that these islands are unsinkable aircraft carriers. They allow America to project power 6,000 miles away into the Pacific. That's how we saw during War II as we had all these island

hopping battles. And as we took these islands, they would then become a runway for the next stage of, to project American power to get all the way to Japan. So if you believe that we're headed for, or we already are in Cold War II with China, and I think we are, I think China is really the geopolitical threat, not Russia.

The way that you would contain China and keep them bottled up is to have these islands in the American alliance. It's gonna be very hard for China, which is now building a huge blue water navy, has actually more ships in the American Alliance. It's gonna be very hard for China, which is now building a huge blue water navy, has actually more ships in the United States. So it'd be very hard for them to project their power all over the world if they are contained

a balled up and have to watch their own paths. Well, one note on the number of ships in the East Asia. Is, you know, they have a lot of small ships. The tonnage wise, we have much more tonnage, and if you were to look, you know, even the perfect setup as you explain through these islands is very similar to NATO and what's happening with Russia. You know, we have Korea, we have Japan, we have Vietnam, the Philippines,

we have an incredible alliance in this area. And that's a great thing for America. And Taiwan obviously is a jump ball here. But this is a setup for China, you know, having Jason, what do you think about the repercussions of her visit? So CATL, which is Tesla's biggest battery supplier, basically, you know, delayed the announcement of a factory.

It's not clear whether they're gonna put it into the United States. They may actually pick a city in Mexico. but what the decision that was supposed to happen now has now been delayed until September, October. There's a bunch of, you know, there's all of these crazy military drills that happened. Was it all worth it? I mean, that is the question. And I'm asking you now, was it worth it?

We don't have enough information, I think, to know why this was done now. It was it a freelance aqua? He asked me a question. Let me finish. Is it a freelance and Nancy Pelosi's completely freelance, or is there a bigger strategy here? Is the question, is China weak now? Are we trying to send a message to them? And one could equally take the side of the argument that the United States supporting Finland,

supporting Sweden, supporting NATO, supporting the Ukraine, and supporting the Pacific is actually the right move here to contain the dictators. I agree, but we have two people to do that, it's a president and a secretary of state. Well that would be a much bigger provocation, I think, is the issue. So if you sent the president, that would be a very big provocation. The Thomas Friedman article that Saks mentions was pretty explicit that, you know,

Blinken and Biden both told her, please stand down. Yeah, the NSC and the joint chief said, please stand down. You are way over your skiships here. And she's still there. I agree. I've been very public. What is the point of doing this now?

Is the question, we don't have information. Once China tried to dictate to Pelosi that she couldn't go, of course we had to back her play, but you have to be kind of a fool to fall for this in the first place. This was self-indulgent by Pelosi. She didn't need to pick this battle. The administration asked her not to.

And look, let me give Biden some credit here. Biden has the right policy on Taiwan, which was stated this way. He says that we support the status quo and we are against unilateral changes to the status quo we want the United States to be a status quo power with respect to Taiwan and force China to be the revisionist power and we need to be very careful that we do not come across as the revisionist power. That would give China an excuse. So we wanna just maintain the status quo. That's where we are policy.

All right, everybody, we'll see you next time on the All In Pod. Bye-bye. Bye-bye. Well, let your winners ride. Bring man David Sack. I'm going home, yeah. And it said we open source it to the fans and they've just gone crazy with it.

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