新兴市场、斯里兰卡危机、9.1% 的 CPI 与韦布望远镜

Chamath Palihapitiya (00:00:00): Wait. That's not David Friedberg (00:00:00): even a sweater. That's a sweatshirt. No. David Sacks (00:00:02): It's not even cashmere. It looks like polyester or something. Jason Calacanis (00:00:05): Okay. Quick. Friedberg. Come on the video where you're writing the same thing as Jake House so we can make quick joke in the movie. morons. I mean, you guys are so predictably dumb between you. David Friedberg (00:00:16): It's so itchy. Do you have a rash? Jason made me buy this outfit, and I put it on. And I'm like itching. I'm about to take this thing off. David Sacks (00:00:24): Polyester wool, polyurethanes. Polyurethanes. What's that made out of? Chamath Palihapitiya (00:00:30): The let your winners ride. Rainman David Sanders. Speaker 5 (00:00:38): We open source it to the fans and they discover reason. Chamath Palihapitiya (00:00:46): Okay, everybody. Welcome back to the all in pod. Episode 87. Here we go. Tons of news going on. Thanks for all the great feedback on episode 86. We're gonna start with emerging markets. Oh, and, yeah, and welcome to the program, David Friedberg, Sultan of Science. The dictator himself from his palace in Sri Lanka. His new palace in Sri Lanka. He'll be taking over over there. We'll get into that. And Saks is in a in witness protection right now. Apparently, Where are you Saxx in this white nondescript room? Can you say where you are? David Sacks (00:01:16): This is my soundproof padded room. Chamath Palihapitiya (00:01:18): Yeah. Oh, is that what if when Biden's done. You're Biden's arrangements in them. They they put you in an asylum. What do you do? You rock back and forth and say, inflation, Ukraine. Inflation, Ukraine? David Sacks (00:01:28): No. We just had the room some proof for, you know, better podcasting. Chamath Palihapitiya (00:01:31): Oh, look at you taking the taking the job seriously. I don't David Sacks (00:01:34): think it looks bad. I think it looks good. Jason Calacanis (00:01:36): Yeah. You could put Chamath Palihapitiya (00:01:36): a little art behind you or something. put one of your Monet's behind you. You know, the ones you have in storage downstairs. Okay. Emerging markets are facing some huge challenges right now. Quick more quick primer on 3 types of markets developed emerging, and the frontier market, if you don't know, developed markets are considered US, Japan, Europe, GDP growth is lower single digits, typically. In the emerging market, it's roughly defined as developing but not fully developed. That includes countries like the Bricks, which is Brazil, Russia, India, China, and recently added South Africa. Many other markets are included in that They were previously called the 3rd world in the eighties. People didn't like that term. Investors will bet on them having higher GDP growth typically two times or three times what the developed world has. China, for example, 2019, 6% growth, US in 2019, 2.1%. Growth And, of course, there's frontier markets. These are viewed as small, unstable, illiquid, generally risky. If you look at something like Kenya, Vietnam, those would fall into that category. Vietnam, 7%, GDP growth in 2019 to the US is 2%. Sometimes people like to make bets on them. Here's a nice little chart for y'all to look at, and you can just see China versus Vietnam in the United States since the eighties. And so Why is this all important? Well, the Wall Street Journal reported last week that EMs, the emerging markets have been feeling massive pressure. We'll get to Sri Lanka in a moment. That's a frontier market to be clear. But three things well, we've got probably a half dozen things going on. Let me just highlight maybe the top 5, and then I'll hand you off to the besties. You have high bond and loan yields. The debts debt rates are increasing in the emerging markets and frontier markets. Think happens when you got a variable mortgage or you try to get a new market, a new mortgage. In the developing markets, The developing market investors have stopped investing in emerging markets and frontier markets as you might suspect during a downturn. and they're even pulling money out. Then you have surging inflation. Chamath Palihapitiya (00:03:35): We all know about that, and we're gonna talk about inflation here in the US because we got the print this morning. and slowing growth. We've also talked about this for the last 6 months on the program. While these problems get exacerbated when economic growth slows and it's slowing globally, And then finally, we have the potential issue of contagion. We don't know exactly what's gonna happen when various countries are facing these challenges. Although, we did tell you here what would happen with the Ukraine, shout out to Saxx and FreeBird fertilizer, wheat oil, all that good stuff. And it's becoming very acute. Perhaps the carrying canary canary in the coal mine is Sri Lanka, breaking news president Rajapaksha fled for the Maldives, and it's a state of emergency. curfews were clear declared. I think that's been canceled as of the taping of this. we can get into the state of Sri Lanka. Your thoughts, Freightberg, I know you've been choppy at the bed to discuss this. David Friedberg (00:04:30): Yeah. That was a good long intro. I think you know, the the high level for me, if you look kind of at debt markets around the world, there's about 300 $1,000,000,000,000 of global debt. And I put this chart in the chat here, Nick, you can put it on the on on the video. And about a 100 trillion of that debt globally is in Emerging Markets. And so these countries generally have, you know, much more kind of variable GDP growth. as well as challenges ultimately with their currencies. Most of this debt recently, and and this has been a trend for a number of years lately, has been issued in their local currency rather than in US dollars. And so as the currency devalues, it becomes more challenging for an investor to make a return if they're investing from a US dollar denominated base or some other dollar denominated base. So look, the EM, the emerging markets are heavily saddled. I mean, some of these countries have over you know, 300 percent or 250 percent debt to GDP. And what's really gone on recently is that many of them as net importers of energy and food are gonna struggle to make the stuff they need to make at home or to feed their people at home because of the rising inflation that's been happening around the world from the producers of those goods and service of those goods. And so to to import those goods is more expensive. That makes it more challenging for people to be able to afford food, to be able to afford energy. This is part of what we're seeing happening in Sri Lanka. What's compounding this is we have rising inflation in the US. So as we've been talking about a lot, the Fed's been raising interest rates in the US, which means that you can now buy treasuries that yield 3%. If you're an investor around the world, where else are you gonna put your money except US treasuries in a market like this? you wanna buy 3% yield in US dollars versus, you know, getting 10% yield in, you know, some currency. denominated accounts, some currency denominated bond in a country you don't really know well or trust as much as the United States. David Friedberg (00:06:43): And so as a result, a lot of dollars are moving out of emerging market debt into US debt, and the price of that debt has collapsed. And so we've seen in the last couple of months a decline of emerging market debt of about 20%. This makes it harder for those countries to issue new debt to fund things, and it's creating this really challenging spiral that may ultimately lead to defaults. Those defaults absolutely have a trickling effect. Because if one country starts to default and you're an investor at emerging market debt, you're gonna say, hey. Wait a second. This this this I just took a huge loss in this position. You're gonna start to sell off other emerging market debt. And then it becomes harder for those countries to raise more debt and fund themselves and it can cause a cataclysmic spiral. So, you know, it's a really scary scenario we're waiting into now, and I think we really hope that the US starts to taper interest rates and we find some stability in these markets over the next couple of months because it's not just a food and energy crisis, it's also a humanitarian crisis, and ultimately could read to a a a global financial crisis. Chamath Palihapitiya (00:07:42): And in fact, the bomb issue is -- It's David Friedberg (00:07:44): highly complex, but it's something that folks are tracking very closely here. Chamath Palihapitiya (00:07:48): what's happening also is the companies that were already at risk are going to start feeling this impact. We could jump into Sri Lanka if we want. Jason Calacanis (00:07:56): Suwilanka has, I think, a bunch of short term issues and a couple of very long term issues. Let me set the backdrop because I think this is really interesting. Let's take let's study Sri Lanka through the lens of 2 other countries, Jamaica and Singapore. If you go all the way back to 1960, so, you know, roughly when Singapore became a nation. The Jamaican population in 1960 was 1,600,000 people. The Singaporeian population was 1,600,000 people. Sri Lanka's population was Chamath Palihapitiya (00:08:32): 9,800,000. Jason Calacanis (00:08:34): Jamaica's GDP was Chamath Palihapitiya (00:08:36): 700,000,000. Jason Calacanis (00:08:38): Singapore's GDP was Chamath Palihapitiya (00:08:39): 700,000,000. Jason Calacanis (00:08:41): Sri Lanka was Chamath Palihapitiya (00:08:41): 1,400,000,000. Jason Calacanis (00:08:44): Now you fast forward to 2022, Singapore's GDP is about Chamath Palihapitiya (00:08:49): 13,000,000,000. Jason Calacanis (00:08:50): Singapore's GDP has grown to about Chamath Palihapitiya (00:08:54): 360,000,000,000, Jason Calacanis (00:08:57): and Sri Lanka's GDP is 80,000,000,000. So, like, what did Singapore do right What did Jamaica kinda get right? Because one of the things that they kept in check was your population even though their GDP didn't expand that much so per capita income was still quite healthy. And then what does Sri Lanka get right and what does Sri Lanka get wrong? Well, some of the things when you look at Singapore is that they found a way to embrace Despite a very heterogeneous culture and sets of religions inside of that entity in that inside that city state, They found a way to promote multiculturalism yet also promote English as the lingua franca. Why was that small thing so important? because it allowed them to be a hub for the rest of the world in a way that many, many other countries couldn't do. The second thing that they had was a very low level of corruption because they had a leader in that case, And again, some people in the west will paint it as slightly authoritarian. You know, he would paint it as Asian values. but the net result of it was very low levels of corruption, a small but highly effective public service, and meaningful investments in education And Health Care to make that country grow over decades. And within a generation that country completely, you know, exceeded all expectations. Sweden like I struggled through a civil war. I was a byproduct of that civil war, It was partly religious. It was partly ethnic, and it was 20 plus years in the making and in the happening, and it took a very right wing autocratic leader. The brother of the current deposed president to basically root it out. Now in order to root it out, there were enormous amounts of war crimes and all kinds of things that I don't think anybody would support except it brought some amount of stability. And so then you would have thought, okay, maybe this is the point at which you can now really start to grow. But these guys yet again found a way to naval gaze and just to infuse so much corruption engraft inside of how the government's run. By the way, and it wasn't just the right. It was also the left. Jason Calacanis (00:11:10): They spent two and a half times more on defense as of last year than they did when they were in wartime. doesn't make much sense. The public service grew to the largest it ever did in a moment where, you know, you really should have prioritized private enterprise. So all of these things sort of created a situation where they fundamentally didn't know what they were doing. Chamath Palihapitiya (00:11:30): So the other two issues there, I think, And that's a great summary of, like, really those frontier countries and what made them emerge. Singapore also has a great strategic location which Sri Lanka County shares. They're both island countries strategically located for trade. And then, I guess, the policies. Right? Singapore went on a very, very aggressive tax and business policy effort. Did Sri Lanka do that as well? And then maybe you could speak to just how important those are as islands, you know, and their and their geography because Jamaica doesn't obviously have that. Jason Calacanis (00:12:04): I mean, Sri Lanka has this massive growing importance as China has emerged. The problem in these last few years is that they did everything possible to not just alienate China, but to alienate everybody on every dimension possible. You know, the alienated China The the coup de grace was that there was an enormous shipment of fertilizer, chemical fertilizer that was sent to the ports and it was summarily rejected and turned around because somewhere along the way, the leadership in Sri Lanka decided that they were woke And so they had forced every farmer Chamath Palihapitiya (00:12:38): -- Speaker 5 (00:12:39): Oh, no. Chamath Palihapitiya (00:12:39): -- Jason Calacanis (00:12:39): to go organic. The problem with going organic and organic fertilizer was all of the small farms shut down. All of the large farms had 20 to 30 percent crop yield reductions. The prices of food went crazy. They reversed policies 2 or 3 times and really what they found as the you know, they tried to go woke instead they went broke. And all of a sudden, all these other countries who were there trying to help said, wait. What is going on here? So they offended China. They offended the Middle Easterners. They offended the Japanese by cutting a light rail project that Japan wanted to fund. I mean, in every step of the way Chamath Palihapitiya (00:13:12): -- David Friedberg (00:13:12): They de industrialized. -- this country found Jason Calacanis (00:13:14): a they didn't deindustrialize. They tried to follow this woke agenda. David Friedberg (00:13:18): That is deindustrialize. realization. I mean, reversing from, like, the modern techniques of industrial production like fertilizer and modern systems of farming is the industrialization. It's it's you know, it's gonna be a occurrence ultimately. Chamath Palihapitiya (00:13:31): Sachs, to your point, we we we just discussed this last week with the farmers. You know, if you're in a frontier market, trying to adopt the regulations and the strategic goals for the environment of the emerging market is, like, 2 giant hops. It's it's it's it's probably insurmountable. David Sacks (00:13:49): Well, look, there's a strong analogy between the populous uprising that's happening in the Netherlands with the Dutch farmers and the populous uprising that's happening in Sri Lanka. basically, they're implementing the same policies. This is that Sri Lanka is further down the road and it's a poor country to begin with. So you know, like Chamath mentioned, in April of last year, the Sri Lankan government banned the importation of chemical fertilizers and pesticides used in farming. They, again, went this idea they thought they could encourage organic farming. So the result of that was that overall production, agricultural production fell by a third and rice production fell by 43%. And rice is, you know, the biggest staple in the country. So now you got people there starving or going hungry. You've got massive food insecurity as well as the whole economy. Basically, it's been crippled. And the result of that is society has essentially collapsed. So You know, now the question is, why did the Sri Lankan government feel compelled to adopt these policies? A lot of it has to do with the fact they're getting these of loans from the World Bank and the IMF, and the World Bank and so forth are imposing these ESG requirements. So Sri Lanka has something like a 98% ESG rating even as their economy and society is collapsing. How is that possible? Well, they're doing a great job following the prescriptions. of the global elites of Davos. I mean, this sort of global elite flies into Davos from Brussels and Washington on their private planes. They have panels on ESG. And then they prescribe these policies for countries like Sri Lanka. And this is the result. I mean, it's crazy. They've been telling us for years that somehow there's no trade off between their environmentalist policies and creating a healthy growing economy. And this is an example of that's not true. There are real trade offs here. David Sacks (00:15:35): And the crazy thing is that the elites expect poor people in Sri Lanka to make up for their environmental emissions. It's not really fair at all. Jason Calacanis (00:15:45): Here's another example. In March of Chamath Palihapitiya (00:15:46): 2020, Jason Calacanis (00:15:47): Sri Lanka enforced 1 of the world's strictest China esque COVID 9 lockdowns. COVID 19 lockdowns despite 1 of the lowest death rates and infection rates in the world. And so for nearly 3 months, it literally crippled the economy and the livelihood of citizens there. But here's where it gets crazy. Then They actually go against global best practice, and they ban the burial of COVID 19 victims, claiming that it could lead to groundwater contamination. I don't even know how they came up with this. But you know what this did was it significantly undermined the small minority of the country that is Muslim. because a religious practice there, you know, is you bury your dead. And then that caused great pain to them, and then it as in turn, it hurt all these international relationships with all these gulf nations. So then you you come all the way around and then you go back to those same gulf nations a few months later, and you're like, can I have subsidized oil? And they're like, no. Not so much. Chamath Palihapitiya (00:16:47): And just to give paint a picture of what's happening there right now, as I mentioned before, it's it's pretty much a state of emergency. You can see various videos trending on social media. And you always take those with some caution because sometimes people will take clips out of context or label them incorrectly or use clips from other moments in time But what's really happening there right now when you shared a video in our group chat is everything is now being sold out in very small amounts. So there there there are lines for basic goods and inflation is is crippling there. And as Friedberg mentioned, they started to pin their exchange rate and and their currency to, I guess, the world's exchange rate. And now everything is super expensive and essential imports like food and medicine and fuel. They don't have the money to pay for it. So this is going to be a complete societal collapse, it seems. and never to need to get bowled out. Jason Calacanis (00:17:47): There was a bill that was introduced in the government that said the central bank would be Forced to have a discipline on money printing. Sound familiar? In March of 2020, the central bank of Sri Lanka began printing money in order to finance a growing budget deficit. Again, happens in many countries. And they did that in part to an election promise that they made that they would maintain single digit interest rates. Again, sounds really familiar. So They've printed about a 100,000,000,000 rupees in March. In the next two years, the central bank printed Chamath Palihapitiya (00:18:23): 1,650,000,000,000 Jason Calacanis (00:18:25): rupees. Right? So 16 and a half times that first number. And then as a result, what they saw was the highest inflation in post independence history. So time after time, what you're actually seeing in Sri Lanka is not a microcosm of something that's endemic to whatever you wanna call it, Jason. A developing a 3rd world country. Frontier. A frontier country, a Southeast Asian country. In fact, it actually resembles many of the policies that exist in so many countries all around the world. And what's really important here is that as goes Sri Lanka, so goes Ghana, so goes Pakistan, so goes a whole bunch of countries where you're already starting to see food riots, food insecurity, energy insecurity, rampant inflation, sovereign defaults. And you have to ask yourself like How are we going to really tourniquet this whole thing and prevent a much bigger contagion like Friedberg just talked about? I think it's a Chamath Palihapitiya (00:19:23): And we might be really bullish about -- Be because you mentioned COVID. It turns out a lot of these frontier countries were already on debt relief and being given a a moratorium on making their debt payments since they got so wallop during COVID. And then now the other shoe drops. And here we are. There there's no relief you can give them if they're already not paying their loans in some cases. Jason Calacanis (00:19:46): By the way, here's another thing that happens in a lot of these developing countries. So in the middle of all of this chaos, what do you think happened? The parliament got together. They passed an amendment to the constitution. and it enforced and it gave incremental power to one individual to president. And typically in most of these countries that run by a parliamentary system, the president is a figurehead. Right? The person shows up, you know, shakes hand, kiss his babies. That's it. Right? Maybe convene the senate. But that is it. Now all of a sudden, the person has control over defense, control over budget, control over the central bank, and this person cannot be you know, voted out in a no confidence vote the same way that a prime minister can. That happened here as well. So yet another example of if you start to see a bunch of autocrats in some of these developing markets feel like the answer is more power. It's been tried here. It didn't work. So I think that there's a there's a lot of lessons. I I am a little concerned and skeptical that many of these other developing countries that are teetering on insolvency will actually learn. Chamath Palihapitiya (00:20:47): Well, I Jason Calacanis (00:20:47): mean -- What they need Chamath Palihapitiya (00:20:48): to -- We are the definition of the developed world, reportedly, and we have a president who tried to stay in power still in election. So It it literally is happening here in the United States as well. The parallels are truly terrifying. Alright. The CPI I'm I'm sorry. It's actually said something. Speaker 5 (00:21:04): This is rolling my eyes. David Sacks (00:21:05): That's no noise. That's what I heard. Chamath Palihapitiya (00:21:06): -- David Sacks (00:21:06): noise from an eye roll. Chamath Palihapitiya (00:21:07): Ah, that's what it was. It sounded like a boulder going downhill. David Friedberg (00:21:10): Wait. Sorry. Can I ask Chamath a question? Chamath Palihapitiya (00:21:12): Yep. Chamath -- Oh, by the way, if people don't know, Chamath is of Sri Lankan descent just to make that clear if you didn't hear his little mention of it. Jason Calacanis (00:21:18): When did David Friedberg (00:21:18): didn't you go there a couple years ago? Jason Calacanis (00:21:21): I mean, here's another great example of in this case, this was the left who managed to Fuck things up. So it's not just the right that screws things up in that country. It's the left as well. So in this example, I went there And I offered to bring Google Loon, myself and Google. We offered to bring Internet access to the entire country like guaranteed Internet access. This is like 5 years ago. And we set up an entity, and the government tried to do the right thing and grant some spectrum. And instead of sort of like fast tracking this and allowing, you know, this project to become a reality, There was an enormous amount of in fighting that essentially said that, you know, we were trying to steal the license or we stole the license or we were trying to monetize the instance. And both me and Google were just like, forget this. This is not worth it, and we abandon the project and walked away. Instead, Google ends up servicing a whole bunch of other countries. And the reason why Sri Lanka was part of it is because the balloons follow a certain orbit and it would have it come it would go over Sri Lanka no matter what. So it's kind of like we can light it up for free. All we need is spectrum in this country. Google's already doing that work. So, you know, I've I've I've gone there a few times. I found it very difficult to try to do the right thing. I think people There's a level of infighting that I hope this crisis changes. I also think that it's an opportunity for people to reset writ large, the gerontocracy that runs many of these countries, including the United States quite honestly. There is an opportunity. There are some, you know, of my friends who I think may emerge in the next few weeks. Who are very well known people in that country who literally want to step Chamath Palihapitiya (00:23:14): 1? Jason Calacanis (00:23:16): remove most of the executive power from the presidency. Make it a true, you know, parliamentary style system with an empowered prime minister and empowered elect elected officials and let the country run and fix itself, you know, deprioritize some defense spending, deprioritize the growth of the public sector reprioritize the growth of the private sector. I hope they're successful. I would love to invest if given the opportunity under those kinds of market conditions and I would love to go back at some point. But my history with the country has been very fraught because as I've gone to try to do the work Friedberg, people are just haters. And Chamath Palihapitiya (00:23:55): -- Oh, wow. Here's a great thing. -- Jason Calacanis (00:23:56): cut their nose off despite the you know, they and they'll just do the worst things possible. Chamath Palihapitiya (00:24:00): Jamath, there's a I think you have a second swing at bat here. Only 50% or so of people in Sri Lanka have Internet access, and maybe we could talk to our friend over at Starlink and that could be an incredible Mitzva and and changing thing there. If you get a 100% of the country on Internet, my god. That could change everything, and it seems completely doable. Jason Calacanis (00:24:19): By the way and this is the most literate country in the world. Do you have to understand, like, the people in that country, the human potential in that country is incredible. Okay? There are not developing countries like this that have this type of literacy, the and the kindness of the people. These are incredible, hardworking people. but the elected class is some of the most inward, navel gazing, corrupt people and this is the opportunity for the young people of that country to wipe the slate clean with all of them and start over with some Chamath Palihapitiya (00:24:52): I think yeah. What what -- -- rate is 92% or something crazy there. It's it's very high. Jason Calacanis (00:24:57): It's a highly educated, literate group of people. Chamath Palihapitiya (00:25:00): The truth is the number of people living in extreme poverty has plummeted thanks to globalization. We we went from almost, yeah, 2 billion people living in extreme poverty. Now it's gonna be that's gonna end in our lifetimes. We have maybe 500, six hundred million people living in extreme poverty. that's because of globalization. That's the great thing that's happened. Now what's also happened at the same time is people have gotten out of sync. We have elites to Saks's point who think they know better and they're trying to enforce on an emerging market or a frontier market, god forbid, the things that we have the luxury of doing in the developer. Jason Calacanis (00:25:33): We don't even do. Wait. Hold on. Well, we don't we don't have a green we we haven't banned chemical fertilizers in the western world. Chamath Palihapitiya (00:25:40): Well, we do have in Europe has standards for gas mileage as but one example. We have emission standards. We have the accords that we've been working on. All of these things are starting in the developed world And now exactly to what Dave was just saying is we're taking them from the developed world. We are imposing them, and Sri Lanka apparently embraced it. Digesting at points when they're at Davos. David Sacks (00:26:00): Sri Lanka is not rich enough to resist. That's the issue. So The US has an ESG rating of 51%. Sri Lanka has 98%. Why is that? Because in our country, we're not gonna impose these crazy mandates. There's enough resistance to it. But if you're in Sri Lanka and you have these massive loans and debt service, you have to do what the IMF and the World Bank and all these international Chamath Palihapitiya (00:26:25): -- David Friedberg (00:26:25): What your creditors tell you to do? David Sacks (00:26:27): Yes. Exactly. They're the ones who imposed all this stuff. So great. So SriLock ends up with a 98% near perfect ESG rating even as the country is completely collapsing. Read the Sheldon Berger article here, he says, Dinner line reason for the fall of Sri Lanka is as leaders fell under the spell of Western Green elites peddling organic agriculture and ESG. And then he mentions that Sri Lanka has a near perfect score of 98, higher than Sweden, which is 96 and US is 51. What does having such a high ESG score mean? It short, it means Sechri Lanka's 2,000,000 farmers were forced to stop using fertilizers and pesticides laying waste to its critical agricultural sector. and then it it goes on from there. So it was the imposition of it's not that Sri Lanka's politician implemented Sri Lankan ideas that caused the collapse of their country. They implemented western ideas. They implemented ideas. Chamath Palihapitiya (00:27:21): also corrupt. So Here's a combination David Sacks (00:27:23): of the corruption here. They implemented they implemented the ideas they learned at Davos. It's almost perverse. You've got all these you know, Western elites, again, like John Carey and so forth, they fly in their private jets to Davos. They come up with these ESG rules they coerce countries like Sri Lanka to obey them. And it's the people of Sri Lanka end up paying the price. I mean, this doesn't make any sense. Chamath Palihapitiya (00:27:47): Yep. David Sacks (00:27:48): What's your reaction to that, Jay Kal? You're somehow going to blame this on Trump. No. Chamath Palihapitiya (00:27:54): I don't know how Trump has anything to do with this. David Sacks (00:27:57): You're the one who brought it up. Chamath Palihapitiya (00:27:58): Well, I mean, I I'm just thinking about it from 1st principles. you know, we we should as a, you know, species, humanity should be trying to trend towards taking care of the planet and lowering emissions and being in renewables. And then how we go about doing it, perhaps there was good intent here. But, obviously, if the country is corrupt and they're teetering already and they don't have the bank role to do it, forcing them to do it can lead to collapse. Jason Calacanis (00:28:21): Nobody forced anybody, but what did the score give you? It's not as if it all Chamath Palihapitiya (00:28:25): of a sudden They forced them by nature of, you get your loans, if you do these ESG requirements. So that is forcing them de facto. Jason Calacanis (00:28:32): Okay. Fair enough. But I'm saying, like, you know, now that you have this score, it's not as if you issued green bonds and you could stave off this default. So they they do anything. Chamath Palihapitiya (00:28:40): Do what you said before is, like, look at the Sri Lanka should be looking at what Singapore did. and just copy the playbook. Right? I mean, it's so obvious that, you know, a country -- Jason Calacanis (00:28:48): It requires a level of long term leadership and and a lack of and a lack of corruption. And I think those those two things are very hard to come by. And I think a third, which is a very controversial statement to make, is it required Singapore to adopt English as a lingua franca. Now in fairness to Singapore, they also embrace multiculturalism. Right? So you had force you know, not force, but you had bilingualism in the school. So Hindi, Malay oh, sorry. Tamil, Malay, Chinese. Right? You could you would learn all of those. And so, you know, you you kept an ethnocentricity to where you came from. But they they allowed you to understand a lingua franca that allowed you to merchandise your skills to the rest of the world in a Chamath Palihapitiya (00:29:26): really -- -- a month. Are you saying they adopted the melting pot playbook, and they allowed everybody from around the world to have their culture, but yet participate in a common goal? Oh my god. Literally, if you say melting pot to young people today and everybody should try to adopt, you know, a a new culture but keep some of their own, people find great defense to that. And that's why we were all taught the melting pot is what made this country great. Jason Calacanis (00:29:48): I think Lee Kwan Yu just called it multiculturalism. Yeah. But my my point is that, you know, I think the English decision by Singapore was important. Sure. I think steady predictable leadership by Lee Kwan Yu was really critical. geography. -- of corruption, you know, the way in which they they they promoted their public sector, meaning, you know, some of the best paying jobs in Singapore was a public sector job. Right? Like, you you would aspire to work for the government of Singapore. And so as a result, you had policies and movements and and the movement of capital and progress and rules that were just it's an example for for so many countries. And you you look where they are today for such a small population. They have the same GDP, by the way. You showed Vietnam. They have a larger GDP in Vietnam, which is an incredible state to you know, a testament to Singapore's ingenuity. So could that have been Sri Lanka? I think so. Knowing that the you know, the the levels of literacy and intelligence and, frankly, like, look, the the religious stability that can come from Buddhism? yet. We're not there. We're we're where we are today, which is a shame. Chamath Palihapitiya (00:30:53): Yeah. And and this is the canary in the coal mine. I think we're gonna see Friedberg. I I I don't know what you think is gonna happen over the 6 months, but there's gonna be other dominoes. Certainly. Yes. David Friedberg (00:31:02): I mean, I watch for Arab Spring type behavior. Right? I mean, you saw the protests and people storming the presidential palace in Sri Lanka, you know, if I I would imagine if we had A report from the intelligence advisers to the president of the United States, there's probably a long list and a growing list of these nations you wanna keep an eye on right now where there is food insecurity, energy insecurity, declining currency, rising debt burden, and, you know, there's a breaking point for all of these. And as you start to hit that breaking point, you start to see more of what happened in Sri Lanka. Now when destabilization like this happens, it's scary because what happens is there's a new power that emerges. And those powers may or may not be aligned with the interests of the United States, with the interests of allies, with the interests of the world, with the interest of western democracy, And so there are kind of scary moments that can emerge over the next couple of quarters and years as these camels back start to break. as one straw after another is put on the back of these camels. So Chamath Palihapitiya (00:32:13): -- Yeah. And who's the white knight who's gonna come in and save? Yeah. And that -- These Frontier markets are gonna be China, India, Russia, over the United States. David Friedberg (00:32:20): We're plowing $40,000,000,000 into supporting the Ukraine conflict. You know, we're busy kind of protecting our energy interests. and our interest with NATO as as the United States. And as you point out, China will likely end up becoming the savior and supporter particularly where they have infrastructure, investments, and and interests. I mean, I don't know if you guys have followed this. China has been building presidential palaces for African leaders throughout the continent. And these -- No. Chamath Palihapitiya (00:32:48): I'm actually -- They're incredible. David Friedberg (00:32:50): You guys should put photos of them on the the video. Chamath Palihapitiya (00:32:53): Oh, sorry. Wait. That's the wrong one. That's Saks's house. Sorry. Sakses House. Maybe not that Sakses out of house. Sorry. Hold on. Next one. Believe it David Friedberg (00:33:00): or not, they might put Sakses out to shame some of these things. But they're they're really Chamath Palihapitiya (00:33:03): -- They brought the they brought the president of Jeff. Oh, sorry. That's Chamath David Friedberg (00:33:07): next week. Anyway but, yeah, this is a, you know, a moment to watch. because there's a very, you know, unfortunate confluence of circumstances that may lead to destabilization that may lead to influence and power being gained by folks that aren't direct allies to the United States. Chamath Palihapitiya (00:33:24): So -- And this is why you wanna build up a great cash reserve and have a really stable economy so that when these moments do happen, you know, the good actors of the world can take advantage of them as opposed to the bad ones. And the United States is not in great position for this Every society, as they say, is 3 meal 3 missed meals away from chaos. There are now a record 19 developing countries Jason Calacanis (00:33:48): with sovereign debt trading at distress levels 19, and 2 that have already defaulted. Chamath Palihapitiya (00:33:53): Yeah. Just to start. David Sacks (00:33:54): I mean, Cassandra's nukes. Right? I mean, if this David Friedberg (00:33:57): if that's David Sacks (00:33:57): that's problematic. Chamath Palihapitiya (00:33:59): Well and Pakistan be who's famous for enabling other countries Iran, North Korea, reportedly they look at their nukes as an export, and they are more than willing to sell you -- I I just David Friedberg (00:34:10): sent you guys a link from Forbes. You know, there are currently, as of today, inflation protests, going on across Sri Lanka, Albania, Argentina, Panama, Kenya, Ghana. And if you look at the videos and you look at the images of some of these protests, And, again, there's, like, you know, in the African continent, there are, you know, very radical militant groups that will try and seize power. if there's destabilization at the top. And, you know, there are there are risks in in South America. I mean, all over the world, You know, these sorts of moments can catalyze a real shift in power and influence, and and and there's a lot of it going on. So you better believe that folks, in the US State Department and the CIA are very busy right now. Jason Calacanis (00:34:53): If you if you look at bond prices, the three countries that are the next closest to defaulting. So Russia has defaulted, but that was more a vagary of, you know, foreign currency controls that that didn't allow them to pay Lanka has officially defaulted in the next three are El Salvador Ghana and Pakistan. David Friedberg (00:35:07): Yeah. And by the way, Argentina, just so you guys the Argentinian print on inflation Chamath Palihapitiya (00:35:13): -- Oh, yeah. These things are double digits. David Friedberg (00:35:17): Yeah. -- 61%. Yeah. Chamath Palihapitiya (00:35:18): Yeah. Yeah. The it's -- We think that just t 9.1. -- David Friedberg (00:35:21): know they had a structural default a few years ago, renegotiation. They've been back at the table over and over negotiating for years. And now they're facing this this inflationary crisis yet again. It's a it's a scary moment in Argentina. But Chamath Palihapitiya (00:35:37): Yeah. This is exactly like the European crisis with the Portugal, Italy, Greece, and Spain. We're gonna see a lot of negotiations occur Jason Calacanis (00:35:46): really believe in this country, and I think the people are incredible. And I hope that whoever is the president basically takes as much power away from that role and puts it in hand the prime minister and gets out of the way. Chamath Palihapitiya (00:35:59): Alright. We're hoping for the best. Okay. CPIs as everybody who listens to this show knows is a basket of goods and services and how it changes over time. You can slice indice the CPI based on food, energy, shelter, your house, etcetera. Last two months have been just extraordinary to watch, driven obviously by energy, which has been driven by the Russia Ukrainian conflict to the Saks rant on Biden's administration. The core index doesn't include energy. And so if you were to look at the core and index, it and here's a chart, 5.9% in June, And it peaked actually with 6.5% in March. So that's been trending down. If you take energy out of it, We haven't experienced core -- -- food, David Sacks (00:36:46): I think, are are excluded from core. Chamath Palihapitiya (00:36:48): Yeah. And if we haven't we haven't experienced core inflation like this since the seventies or eighties. here's another chart just to zoom out, and you'll see exactly how jarring this has been. For basically our generation, we haven't experienced this since if you were born in the seventies or so, that's when it was higher than it is today. And we've had obviously goods and services plummet in our lifetime. because of globalization and low interest rates. Energy hasn't seen inflation like this since the 70 What David Sacks (00:37:20): is this charge to CPI? What is that? Chamath Palihapitiya (00:37:22): That is the core. So that's -- That's core inflation. -- core. So and then here is the energy one coming up next. So when you look at energy, obviously, Energy has been volatile in our lifetime because a lot of the oil in the world is controlled by dictators, Middle East, Russia, Venezuela, yadayadayada. But the 40% year over year increase in cost of gas and oil and energy has put us back to the mid seventies eighties in terms of pain. That's short. So you see it's spiking all over the place. But, generally, it was under 20%. And now we're back above 20%. It's all about the oil. Chamath, you were we were talking in the group chat before you were kinda satisfied with 9.1. Do you think the 9.1 we're seeing in the inflation print today which was higher than expectations. What is that gonna lead to in terms of the interest rate hike, 75 basis points, or you think they just go right to 1? Jason Calacanis (00:38:16): you know, we talked about this that this was gonna be a big print. Right? I think we all expected this to be a big print. Yeah. I actually also kinda put myself on a limb there. And I said, you know, I wouldn't be surprised if at some point we print a mid to high nines, maybe even a 10 handle at some point. Chamath Palihapitiya (00:38:31): We're getting there. Jason Calacanis (00:38:33): And the reason is because, you know, rents are a little you know, they lag in how they're reported inside of CPI, so we have a couple more months to go of of rents and rents aren't moving or budging a bit. That's number 1. We do see a little bit of fall off in in energy prices, but I'm not so sure that it's it's enough frankly to to move the needle. So I think that we could be in a sustained period for a while. The more interesting thing I thought today was that Canada surprised everybody and raised their benchmark interest rate by a 100 basis points. Chamath Palihapitiya (00:39:11): Okay. Jason Calacanis (00:39:11): So and they just came one full point, a 100 bps. And they just said, We're going for it. We need to tame this. We need to break the back of inflation. Chamath Palihapitiya (00:39:19): They ripped the Band Aid off. Yep. Jason Calacanis (00:39:21): Yeah. And, you know and I think if you read the Fed minutes more carefully, I think Jerome Powell is basically ready to do the same thing. Yep. After this inflation print, the expectation for July went to 80 basis points from 75, which means a small percentage of people actually think is gonna be a 100, and September, I think, moved to Chamath Palihapitiya (00:39:42): 75. Jason Calacanis (00:39:44): So the question is, is that enough? I just don't know. I I don't know. Chamath Palihapitiya (00:39:51): And to be clear, this is for June. The data we got on today, June July there 17th is for June. What we did see in July because we can track oil prices, that's down 20% month over month, and the CPI has been driven largely by oil. So speak to that Shamoff. What do you think it's gonna be in July when we get it in August? Jason Calacanis (00:40:10): But yes and no. Because the again, the owner equivalent rents are up so much that they may actually know, breakeven. Right? Meaning -- Okay. Chamath Palihapitiya (00:40:17): -- Jason Calacanis (00:40:17): rents go up by so much. Oil goes down by so much. They cancel, and we're still at Chamath Palihapitiya (00:40:21): 9. Jason Calacanis (00:40:22): Okay. I see that's Chamath Palihapitiya (00:40:23): your prediction for July, which we'll get in August. You think 9. Jason Calacanis (00:40:26): Yeah. Yeah. I'm worried that we're in a sustained inflationary environment. I'm worried about that. I I hope that we're not. But then the question Jason secondarily is then what do the markets do? And what's so interesting today is, like, the markets shook it all off. I mean, like, you could not have had a worse inflation print. everything was up Chamath Palihapitiya (00:40:44): -- Jason Calacanis (00:40:45): Well, 10. -- meaning meaning, like, it was beyond the number that was expected. Every component of it was up. Everything looked horrible. And people were like, Chamath Palihapitiya (00:40:56): is that because the market is future looking, Sacks? The market is basically pricing will get through this in 6 to 12 months. Is that what you're saying? David Sacks (00:41:04): The markets are down right now to be clear. The the print was definitely worse than expected. They were expecting -- -- point. Yeah. They were expecting Chamath Palihapitiya (00:41:11): 8.8%. David Sacks (00:41:12): It was 9.1. Last month's number was 8.6. I remember us talking about inflation a couple of months ago saying that we thought it had peaked, you know, maybe in April or May at the latest simply because inflation is measured on a year over year basis, And we were starting to lap much bigger comps last year. Remember this conversation? Chamath Palihapitiya (00:41:30): Yes. David Sacks (00:41:30): Well, the lapping effect turned out not to be enough and inflation is still rising. So we have not yet peaked on CPI. I understand that core we have peaked, but I deciding to exclude energy and food, I mean, that's a pretty arbitrary decision. Those are 2 really important variables that matter. to the ordinary American, for sure. So we solve this problem. And to Shamal's point, we don't know when it's gonna be when it's gonna subside. And I think the big question now is when does inflation finally peak and start going down back to where it should be? And then how much how severe a recession do we have to have in order for the Fed to solve this problem? Chamath Palihapitiya (00:42:11): It feels like things are turning over in real estate. We talked about that last week. the number of homes being listed is skyrocketing. The number of mortgages being originated is plummeting while the rate goes up. So we're gonna see mortgage rates probably go 6, 7 percent towards the end of the year, that's gonna put a huge kibosh, the High end real estate is also starting to get hit massively. The number of listings is going up in the high end, and the number of sales is plummeting. So That was one of the cards we wanted to see turn over, and it looks like that's turning over. Jason Calacanis (00:42:45): Just a one small clarification as you look. We obsess over CPI right now because we're all kind of these fake macro wannabe traders, but I just wanna remind you because the Fed has been pretty clear about this. They don't focus on CPI. They focus on something else instead called PCE, which is the personal consumption expenditure price index. Chamath Palihapitiya (00:43:02): Yes. Jason Calacanis (00:43:04): And I don't know what the flow through from CPI to PCEPI is exactly but that is the broadest measure of goods and services which does include food and energy. So it stands to reason that PCE may stay elevated for a while, which may give the Fed enough of the motivation they need to go a 100, to go another 100, or maybe go a 170 and then a 75. I think that David's point is right like all this taming that we've been expecting to see, we haven't seen it. And so Every month, it's like, oh, it's coming next month. Every month has been oh, it's happening next month. At some point, you may just have to say, maybe we're in, like, a sustained period for a while, and I have to believe it's going up before I believe it's going to stay stable or go down. Chamath Palihapitiya (00:43:49): Well, we did see energy go down. housing we are seeing now starting to contract. The number of price cuts has been surging, quoting to Redfin, So I think we're starting and the layoffs obviously happened 2 months ago. So don't we think that we're starting to see the headwinds? And then we were talking to a buddy of ours who's big in the airline space, he said, god, the and I think you were pointing out this statistic that Heathrow is now capping the number of People could fly, Jason Calacanis (00:44:16): but he's been so crazy. So overloaded with with traffic of passengers that they today came out and said we are capping the number of passengers to 100,000 a day. No more. Chamath Palihapitiya (00:44:28): And this is after the cost of those flights was skyrocketing, you know, 6, $7000 -- I really Jason Calacanis (00:44:34): I really go back to what Saks. I really must go back to what Saks said before. He this The nugget for me of this entire summer was what he said about his takeaway from the co 2 conference. Right? Just to remind people. you know, that the person said something to the effect of, oh, well, look. All these other people will be saving money and cutting jobs. I intend to hire and, you know, nothing has changed for me. And the comment that I made in our group chat is, well, maybe that's the psychology of everybody. It's not just the CEO of a company. David Sacks (00:45:04): Yeah. Just to just to clear, what what Khochoo did is they they pulled all the founders in the audience. The poll results showed that on the one hand, everyone in the audience understood that we were headed for a big downturn and economic conditions and fundraising are gonna be much tougher. On the other hand, all the founders or 2 thirds of them said that they were gonna use this downturn to accelerate their business. as opposed to cut. My one on one conversation with the various founders basically are in line with that, which is it's all not me. You know? I know everybody else is gonna be impacted. It's gonna have to cut. But I'm gonna be the one exception. And there will be exceptions, absolutely, but everybody can't be the exception. Jason Calacanis (00:45:40): So I hear -- -- consumers are saying, Chamath Palihapitiya (00:45:42): I'm gonna still buy my car. I'm still going on my summer vacation. Everybody else has to make cuts. Jason Calacanis (00:45:46): Well, it doesn't matter what they say consumers are behaving that way. You know? American Airlines basically put out what they where they thought they were gonna be. Their stock was up 10%. You know, Heathrow says we have too much traffic. We're gonna cap it at a 100 k. There was an article about, you know, US home prices and rents, and there were these 2 housing companies in The Wall Street Journal that were profiled and both of them serve Middle Income neighborhoods in Houston and these other places. They're like, we've never done better business. And, you know, there are fewer and fewer people buying homes because of mortgage rates they on our end, we, you know, our complete have we have complete ball control. And so where where is the stopping and the slowing down of spending? It just may be this thing where everybody feels like to be you know, to have the polite dinner conversation, they have to talk about how they're pulling back. It doesn't seem like anybody's pulling back. Chamath Palihapitiya (00:46:35): Austerity measures have not hit yet. Yeah. David Sacks (00:46:37): Well, I think I think they are in the process of working, but it takes a while. I mean, what I would say is, look, we are 100 percent gonna solve this inflation problem. Why do I say that? Because price levels are fully within the power of the Fed. They just have to raise interest rates high enough. Paul Volkle proved that in the early 19 eighties, he had to raise interest rates as high as 20%, but he crushed the inflation 19 seventies. But that's what it took. So I have no doubt that the Fed can stop inflation. I think the question is, how much pain are they gonna have to inflict how high do rates have to go and how long do we live through this sort of stagflationary period? And that's the unsettling thing is we're just it doesn't seem like we're anywhere near the end of this yet. Jason Calacanis (00:47:20): I wrote this I wrote this last week in a little note, but this is why if you look at the tailor rate again and, you know, people have abandoned the tailor rate not what it used to be, I guess. But, you know, it's still pretty directionally accurate, which is what is the true equilibrium interest rate that allows us to basically manage and meet supply and demand together so that we have a calm stable economy. And that that stable equilibrium rate is approaching Chamath Palihapitiya (00:47:47): 5%. Jason Calacanis (00:47:49): You know, our target the the collective wisdom of the of the market believes that 3% is enough to get the job done. We're right now at 1.5to1.75. So if there's any number between Chamath Palihapitiya (00:48:04): 35 Jason Calacanis (00:48:05): that is the true price, We have a lot of work to do to get there. David Sacks (00:48:13): Yeah. I think that's a really good point because the the tenure t bill has been kind of floating around 3%. So that is the long term expectation of the interest rates that's required to have sort of normal inflation. But what if it's 4% or if it's 5%. If that ends up being the case, it'd be a huge downside surprise to the stock market. Chamath Palihapitiya (00:48:33): Well, how would you define that? 10% pullback, 20% pullback from here? Jason Calacanis (00:48:38): Well, you have a bunch of things. Look. We we talked about this other issue before as well, which is If you believe the stock market is fairly valued, you have to believe that prices are right and that the earnings are right. Right? So because it's effectually, it all boils down to the price earnings ratio of the s and p 500. And I'm going to still maintain that the e is wrong. The earnings are wrong for most of these companies. So let let why? Well, one is that when these companies start to report their quarterly earnings starting in the next few days, The year over year comparison is going to be to the numbers that they posted in q2of2021. which by all accounts was a blowout number. Why? Because the number before that was 2020 where their business was 0. Right? So you have these incredibly tough comps in terms of growth percentages that you have to reach, which I don't think are achievable. 2nd is everybody's costs of making and selling things is going up, which stands to reason that unless you raise prices quickly enough, your profits will go down. 3rd, if you actually do business outside of the United States, the US dollar has rallied so much that you actually have less income that you're making in these other countries when you convert them and bring them back to the United States. Now most people look through that last issue But the point is if you add this all up, there is a reasonable probability that the all the e's are wrong. In which case, we have to reassess what the right e should be. In which case, what is the right p e? Chamath Palihapitiya (00:50:10): Yes. And earnings are a function of what you spend and what you make. So that's why we see so many companies doing layoffs, cutting people, Microsoft, Google. Everybody is now putting people on notice. because you said they're not different. -- form. Jason Calacanis (00:50:23): they're they're firing white collar labor, but they're hiring, you know, blue collar labor faster. And so, you know, we're actually gonna see a downtick in productivity. Right? You're replacing a person that you know, may sit down at a desk and use a computer 8 to 10 hours a day to do something, but you are hiring a lot of people that, you know, may get paid by the hour or may get paid to, you know, fix out if you do the right kind of work, but that qualifies as as more contractual blue collar labor. The difference in that is a productivity difference, ultimately. Chamath Palihapitiya (00:50:52): And just so everybody knows, p for PE's price earning ratios over time, here's a quick chart for you currently, and this is for the S and P 500. we're currently at 20 or so. And we have twice in our lifetime kinda hit that you know, 13, 14, 15 level. So we could have a 25% correction from here in the stock market if you look at The highs are recent high in December of 2020. We're at 38 price earnings ratio. So We've fallen from 38 down to 20, you know, almost in half, and we could still go down 25% from here. And that would basically not even set a new record. That would just hit the last two crises we had. Jason Calacanis (00:51:40): The thing that the the the thing that I think will work against this happening, Jason. So, yeah, you're right. The the maybe it goes to 3000 or Chamath Palihapitiya (00:51:47): 32100. Jason Calacanis (00:51:49): But if you look again today, you know and what what I mean by, like, the market is roughly shaking this off, like, the fact that the markets right now as we as we talk are you know, are essentially down half a point. You know, the the S and P is down, you know, twelve points. It means that they are looking for any and all reasons to say this is a solved problem. Move on. Nothing to see here. Now that is a psychological reaction. Most of that, if you actually I I called a friend today and I said where are the flows And he said, you know, retail right now is where all the flows are. Meaning, it's retail that's buying. They're in the 30th, 30 percentile of where they normally buy, which is a pretty healthy signal. Chamath Palihapitiya (00:52:31): Wait. Explain what you mean. Who is buying? Jason Calacanis (00:52:34): So the way the market works basically is you have buyers and sellers. And, you know, to to make it really, really simple, you have hedge funds as one class of buyer. Sure. You have ETFs, but They're not they're not really they have Chamath Palihapitiya (00:52:48): -- -- funds. Yeah. Jason Calacanis (00:52:48): Yeah. But they have fixed strategies, and so, you know, they're hedging. They're moving, but whatever. And then you have retail. Okay. So it's retail and hedge funds. Those are the two main pockets of of where the flows come into the stock market from. And you can get a real sense of what's happening, what the psychology of the market is if you see what those flows are. And right now what we see is that hedge funds are largely on the sidelines. The way it means is they are Well, they've been so battered and bruised. In some ways, I think they're licking their wounds, but they're mostly waiting. They're they do not find a compelling reason to buy. Right? Chamath Palihapitiya (00:53:26): But they have to buy at some point. Right? Chamath, this is their business. No. Well, I guess the business find other opportunities. Jason Calacanis (00:53:32): Their business is to make money relative to their index. And so if their index gets torched, they doing nothing makes them look like geniuses. So they don't necessarily have to buy at any point. They just need to make money at in the end. So right now we're in a situation where the markets are looking for a direction Retail seems to think that direction should be up. Hedge funds don't have an opinion are saying we're just gonna wait this thing out. Okay. Meanwhile, the data That's just a question mark. And I think that's the that's the tension we have right now in the stock market is the psychological desire is for this thing to be over. meaning, I think people wanna hear inflation is done. We're starting the recession. Give us three or four quarters. We'll be out. Here's a steady state interest rate. Let's go tech. Chamath Palihapitiya (00:54:18): people want to accept the reality? Friedberg, does that mean that we're bouncing along the bottom for the next year, and then this is the time or the opportunity to buy. I don't wanna give financial advice, but what are your thoughts if head trends in retail are kinda waiting in the past? David Friedberg (00:54:31): Give me if the stock market is at a bottom? Chamath Palihapitiya (00:54:34): Are we bouncing along the bottom? Yes. Or or what would you how would you describe the next year if you were to look at it? What do you think? David Friedberg (00:54:40): I'll tell you guys some stories. I I went to a conference in March with a lot of fund managers, probably managed several $1,000,000,000,000 in total. People were, like, in shock and awe at that conference because they had taken such significant write downs, and they were still getting written down. So all their investments were off. They were off 40% from the peak. They were freaking out. Things were collapsing. No one was doing anything. They were all sitting on the sidelines. hanging out, waiting. I went to a conference last week, and so the tone and the demeanor was just like Moros. Last week, I went to a conference with a lot of managers also probably managing 1,000,000,000,000 of dollars across the pool. And people were just kind of they had accepted this new reality and they were kind of willing to look at new things. And, you know, they were no longer engaged in trying to shore up just their portfolio. And a lot of the stuff we talk about, which I think is tactical on the ground, how do we deal with our businesses, and our portfolio of investments that we actively work with in the private markets. they were much more interested in kind of starting to explore and think about new things. And I hadn't seen that 3 months ago. Chamath Palihapitiya (00:55:49): So that's a positive sign. David Friedberg (00:55:51): From a market participant point of view, I think that folks have kind of call it accepted a new normal, an inflationary normal, a high volatility normal. you know, a normal of uncertainty, a normal of kind of recession. And as people have started to kind of internalize that new normal I think they're now starting to say, okay. What should my action plan be? And that action plan is I've got 1,000,000,000,000 of dollars of capital sitting on the sidelines. What should I start to do with it? So, you know, my my very, very, very anecdotal experience has been that significant market participants, I think, are gonna start to perk their head up this quarter and start to think about doing new things. What that translates into in terms of you know, stock price movements and indices. I don't know. I've always said that there's gonna be a huge variation in outcome during this big this year. and some industries, some sectors, some types of businesses will outperform others. And so I don't wanna create generalized statements about indices. But I do think that capital activity is gonna start to come back this quarter where people are gonna start to think about what to do rather than pull everything out because of the massive shift that's happened in the past couple of quarters. Chamath Palihapitiya (00:57:00): Sachs, what are you as a market participant thinking? You're looking at series a's, maybe doing some opportunistic flat rounds, are you looking at the start up market, mid stage market, and saying, hey. This is an opportunity. Maybe I should start looking to put some money to work in the next 6 to 12 months. Or are you -- David Sacks (00:57:20): We're still investing. Chamath Palihapitiya (00:57:21): You're still investing. David Friedberg (00:57:22): Of course. Chamath Palihapitiya (00:57:22): Yes. So as a market participant, you're investing. David Friedberg (00:57:24): What do you see? David Sacks (00:57:24): We're investing, but we see that the pace of deal making is slowed way down because founders know that valuations have gone down. The fundraising environment is tougher. So last year, they're raising every 9 months. Now they know they should probably be raising once every 2 years. So the pace has slowed way down. Chamath Palihapitiya (00:57:40): That's a good thing? Yeah. I think it's it's David Sacks (00:57:43): healthier. It's healthier. Yeah. It's more normalized. you know, last year, the companies that could raise did raise. They have big war chest. So I think there's gonna be a delay. It's definitely a slower period. We've done a couple of growth deals recently. I think the fact that Tiger and the other kind of crossover investors, the fact they've pulled back way back from. Venture markets gives smaller firms like us an opportunity to do growth deals. So Chamath Palihapitiya (00:58:06): -- How did you make the decision to invest in those companies. David Sacks (00:58:10): They're both companies we've known for a long time. We've wanted Chamath Palihapitiya (00:58:12): to invest David Sacks (00:58:12): for a while. So, you know, the the opportunity arose to invest. and it was way less competitive than it would have been Chamath Palihapitiya (00:58:19): -- So this is what you call opportunistic. You you knew the firm. You had high confidence in them. And opportunistically, they need money. Yeah. David Sacks (00:58:26): We've basically done 2 deals in the last, like, 4 months. And -- And Chamath Palihapitiya (00:58:30): what was your pace, let's say, 18 months ago? David Sacks (00:58:34): It was a little faster than that for sure. There's just more deal deals happening. Chamath Palihapitiya (00:58:37): So -- Interesting. David Friedberg (00:58:39): If you wanna think about tail risk where there's some event that can massively shift the market, you know, the the indices south. Right? Make them go negative, and everyone pulls money out of equities or out of bonds further there are some of those events brewing. Right? We've talked about the consumer credit -- Taiwan. Chamath Palihapitiya (00:58:56): -- David Friedberg (00:58:56): risk. We talked maybe Taiwan maybe this emerging market crisis that that that may kind of be emerging. These are, like, little turtles putting their heads out. They may not come out, but there's enough of these turtles now, you know, kind of circling you that, you know, there's still reason to be wary. Whereas -- Let Chamath Palihapitiya (00:59:14): alone a black swan event, which would be unrefined. -- David Friedberg (00:59:17): aren't even black swans. These are just, like, significant -- Known risks. Yes. -- known but significant risks. Right? Chamath Palihapitiya (00:59:24): Yeah. David Friedberg (00:59:25): And if any of them do kind of take off, you know, we're already in a very shaky kind of period right now where we're trying to manage inflation and recession. and, you know, businesses are trying to raise capital. And, again, this is why a lot of biotech companies are trading below cash because the expectation is they're not gonna be able to raise capital. I mean, anyone Chamath Palihapitiya (00:59:42): -- I know go out of business. Jason Calacanis (00:59:43): Look at a business. So any Chamath Palihapitiya (00:59:44): of the things David Friedberg (00:59:45): pops up, boom. You know, you start to see things go. So I think that's the reason people investors, portfolio managers are not gonna kind of rush back into putting more money into equities. It's just, you know, sitting around waiting to see how a few of these things dissolve. you know, before kinda taking action. Chamath Palihapitiya (01:00:02): But there are companies that do not face the risk of ruin. They just are sitting on so much cash. They have so much revenue that there's no chance of that happening. David Friedberg (01:00:08): I've always said it doesn't matter. If you a great business, and you believe in that business over the very long run, you don't need to worry about timing the markets. You put money in that business as long as you get a fair valuation for it today relative to what it should be priced at based on what markets are telling Jason Calacanis (01:00:23): you today. Chamath Palihapitiya (01:00:24): -- 20 PE would be more than fair. David Friedberg (01:00:26): Who knows? But, like, whatever that whatever that is. But if you find a great business that you think is gonna compound value for you over the very long run, market cycles don't matter. Chamath Palihapitiya (01:00:35): And long run, you mean a decade. Yeah. Call it a decade. David Friedberg (01:00:38): And, you know, Saks is business that he's invested in. These are tech companies that I don't think they're planning to go public next year. He's making an investment in a business that he considers to be a great business that can compound value. Not not compound valuation, but compound business value. meaning they can do something more valuable next year than they were doing this year and continue to accrue an advantage in their business that allows them to accumulate earnings over time or accumulate revenue ultimately translates into earnings over time. And there are many businesses that are public that that operate like that that, regardless of any of these turtles popping their head out, Those businesses will perform well over the next decade. And I think, you know, that's always a great place to invest. So -- So Chamath Palihapitiya (01:01:16): we basically went from D Day, saving private Ryan, and seeing you know, in the first quarter to now people have accepted. We're in more time, and we're not shell shocked, and some people are looking for opportunities. Chamath, you found an opportunity. Maybe you could talk about the deal you did this week. Jason Calacanis (01:01:32): You know, I tend to agree with Friedberg. I mean, you find these businesses you like. And if they appeal to you and you do your work, that's the most important thing. Shouldn't be afraid to write a check. Chamath Palihapitiya (01:01:41): Can you stop right there and just say define what you mean by do the work? because everybody here should say that. What does that mean for an investor for somebody like yourself? What does doing the work mean? Jason Calacanis (01:01:50): It really depends on the sector. So, for example, when, you know, when when we were when I was trying to underwrite Opendoor, what I really wanted to understand was, you know, what do take rates look like in all these various markets? Well, how do I think take rates will evolve here? How do value added services work? What kind of margins can you sustain? What is the sensitivity of different parts of the real estate economy to interest rates? You know, that's an example of work when I was underwriting. SoFi, you know, what you're trying to understand is, you know, how do banks generate net in net interest income, you know, NIM? How does that change over time? How does bank charters change that? You know? How do loss rates change in in, you know, times of economic expansion versus recessions? How do you price all of that into a fair fair value of a business. It's just a lot of really detailed diligence to understand all the facets or as many of the facets as possible of a business that allow you to have a clear eyed sense of what's possible. Then there are others which are pure technology bets. where you try to understand either the biology or the technology. So in the case of the deal that I did you know, today or this past week, myself, a bunch of family offices around the world. led by a great chairman Pablo Lagerreta who started a phenomenal business called Royalty Pharma, which is public, Carlos Slim, a bunch of folks, we put in about half a $1,000,000,000 to to help advance into, you know, clinical trials, this business that's trying to provide a solution to chronic kidney disease. So in that example, it was a lot of scientific diligence on what are the existing solutions? How do they work? What is the mechanism of action inside the body? How is this the same or different? What is the early data say? How are the clinical trials structured? And then you come to an answer. Jason Calacanis (01:03:50): In this case, I decided the bet was worth taking, and You know, like, research Chamath Palihapitiya (01:03:54): -- -- name of the company and what they do? Jason Calacanis (01:03:56): The company is called pro kidney, and basically the idea is that it uses your own body to help heal your kidneys if you are on the verge of chronic kidney disease or you are getting dialysis, etcetera. And, essentially, how it works is it it removes cells from your body. from your kidney actually. And then it does basically puts it into centrifuge. Does some specific things to it grows and amplifies. certain cell lines from your kidney and then reinjects those back into your kidney and tries to improve what's called your eGFR. which is your estimated globular filtration rate, which is essentially a number that we can use estimate how efficient your kidneys are. And, essentially, when you are, you know, a type 2 diabetic or you have chronic kidney disease or kidney failure or you're on dialysis, it's because that filtration capability has failed, and so all these toxins are getting pushed back into your body. And so, yeah, we took a, you know, half a $1,000,000,000 shot. I wrote a $125,000,000 check. I hope it works. Chamath Palihapitiya (01:04:59): That's amazing. Friedberg, we saw some satellite images this week. Biden, I guess, announced them. They looked pretty trippy. Explain to us what the downstream effect of what is, I think, the the most clear picture we're seeing of the cosmos ever created and what that could actually do for humanity. David Friedberg (01:05:19): Well, this has nothing to do with Biden. But Okay. Chamath Palihapitiya (01:05:23): No. I just that Biden showed it on Monday. I just -- That's all those. He made it. He they they specifically had him Sherry, which I think maybe they were looking for a mini win or something. David Friedberg (01:05:32): Good for him. He has he has nothing to do with this program. I I I don't mean I just mean that, like, the scientists, and the engineers that worked on this for many years Chamath Palihapitiya (01:05:40): -- Fair enough. Yep. -- deserve all David Friedberg (01:05:41): the freaking credit. The James Webb Telescope is a space telescope just like the Hubble. Right? Remember the Hubble space telescope, and this is a massive improvement over the hull. So imagine you're you're in a boat and you're trying to look at the bottom of the ocean and you take a bunch of binocular pair of binoculars, you look into the ocean and you try and see what's at the bottom of the ocean, how hard that would be. Right? There's all this murky stuff in the water. It's gonna be really hard to see it. the the the reason that we create a space telescope is so that the same problem that we would have looking at a telescope through the Earth's atmosphere doesn't impact the light coming into the telescope. And so there's so much stuff in the atmosphere. Right? There's miles of molecules and dirt and dust moving around. So by putting a telescope in space, we get rid of all that murkiness. And now we can really capture the light that is coming from far, far away, concentrate that light onto really sensitive photo detectors These are photo detectors that operate at nearly the the coldest point in the universe, negative 263 Kelvin, And that photo detector makes it extremely sensitive. And using a twenty foot wide mirror, we can capture all the light that's coming in. concentrate onto the photo detector and and and read that light. And so why is this important why is this interesting? Well, people get really excited by and flip out over the cool imagery that they see. These images, these colorful images of galaxies and stars far, far away. What we're really doing is we're not just looking far away. We're looking back in time. So these these images come to us from galaxies that are Chamath Palihapitiya (01:07:11): 4,600,000,000 David Friedberg (01:07:12): light years away. So it took 4,600,000,000 years for that light to reach our planet, and we're actually seeing what happened in the earlier part of the universe. And we're seeing how these galaxies formed, how they're moving, how they interact with one another, how the plants, planets interact with one another. But what a lot of people miss, that's I think is the most important thing to highlight. As an astrophysicist, when you're looking through telescopes and gathering telescope data, you're not looking for imagery like we looked at today. That's really good to sell the story and get by them to do a press conference. what they're really looking at is spectrographs. And a spectrograph is you know, it shows for every wavelength of light across some spectrum, what the intensity is of that that amount of light, that that wavelength of light. And particularly, the James Webb telescope has incredible micro shutter arrays and incredible sensitivity that allows us to go from near infrared to infrared in some visible light and look at that spectrograph Why is that important? Because if you can capture the spectrograph in a very high resolution way for a sun or for a planet far away, it can tell you very specifically what the movement is and what the chemical composition is of that object. And from that, we can start to do incredible research and infer very important things about how planets form, how stars form, how many places like Earth might be out there, how things are moving, how much mass or matter there is in the universe, and there are 2 very, very big question questionable phenomenons in astrophysics right now. One is called dark energy, one's called dark matter. Turns out the majority of matter in the universe is undetectable, and there also is this really weird energy force pushing on everything in the universe, causing the universe to accelerate its expansion. So the universe is expanding. Everything's moving away from itself, but it's not just expanding and slowing down. David Friedberg (01:08:59): It's expanding and speeding up. And so having this sort of instrument in space that allows us to capture in a very high resolution way using spectroscopy and other tools that astrophysicists use and better map out how this is happening in different parts of the universe starts to give us a better sense and allows us to kind of inquire and start to develop theories around what's really going on. And I wanna say one more thing because because a lot of people think that this stuff is just so esoteric and like super interesting, why are we spending $10,000,000,000 in this. Most applied engineering and the technologies that we've developed as a species started out initially as pure research with no freaking clue where it was gonna go to. Imaging DNA, penicillin, electronics, MRI machines, so many of these capabilities evolved from scientists just querying the universe and asking questions and gathering data And all of a sudden, they came across something, developed a theory, built an application of that theory, and a technology emerged that changed the course of our history as a species. And that's the reason to do pure research. And that's the reason it's so important for us to put $10,000,000,000 into a program like this. We're gonna discover amazing things with this tool, and it will ultimately hopefully yield advances for humankind that we cannot even contemplate today. Chamath Palihapitiya (01:10:16): it'd be energy. Right? I mean, understanding dark matter or dark energy. Totally. And then maybe -- -- changed everything in energy. Right? David Friedberg (01:10:22): Jake, I'll think about it one day. There might be capability where we say there's a new class of matter and a new understanding of energy that we can then apply in some form of physics on earth we could do something interesting with. And we have to be able to query and understand the universe to do that. Chamath Palihapitiya (01:10:36): Could we measure -- There we go. -- Jason Calacanis (01:10:37): could we measure the matter from Uranus? k. No. It's coming. Chamath Palihapitiya (01:10:41): I mean, the Hubble tell telescope, actually if correct me if I'm wrong here. It actually told us the age of the universe. -- famous. How much dark matter is in your age, Jamal? A lot. A lot. You're full of it. But we now know I mean, Hubble told us the rate of expansion of the universe. And it also told us the age of the universe, and we found all these other planets -- Totally. -- to Friedberg point about, you know, looking hit, you know, through the through the muddy water. Here's a great visualization. On the left, you have Hubble. On the right, you -- David Friedberg (01:11:10): Totally. Chamath Palihapitiya (01:11:10): -- have lab. Beautiful. And if you slide this, you can just see, like, just how crystal clear and these images are. And from my understanding, we found some number of universes already that we didn't know just from the first images. David Friedberg (01:11:22): I wanna just give everyone a heads up. This imagery looks beautiful, and I'm gonna print that a big one. I'll put it behind my freaking desk here because I think it's so fantastic. Astrophotography is one of my kind of all time, you know, favorite forms of art. But remember, this is imagery that was actually captured in near infrared and infrared spectra. and then they converted it to visible light to make it look cool. So remember that. These images, you know, that these clouds, if you were actually there, don't actually look at, like, that color. But it's a very cool way to visualize the density and the the the spectral changes. Jason Calacanis (01:11:54): Where does this sit Chamath Palihapitiya (01:11:55): for you in terms of your excitement between the new season of doctor who -- Yeah. -- and the foundation series. David Friedberg (01:12:02): Yeah. Let me give you let me let me just give you guys one more kind of Chamath Palihapitiya (01:12:06): Yeah. David Friedberg (01:12:06): Really interesting. If if you started our sun and you look at the sun, it's super bright. If you go at the speed of light for 4 minutes you reach the earth or a couple of minutes you reach the look backwards 6 minutes or 7 minutes, whatever it is. Look back, and now the sun looks like it does in our sky. If you go for another couple of minutes, you end up looking back from Saturn, and the sun starts to look like a star. I mean, that's how how dim it gets. Now imagine continuing to go at the speed of light for another hour, you look back, you'll hardly be able to differentiate the sun from the rest of the universe. Now do that for 4,600,000,000 years. and you're shooting away for 4,600,000,000 years now look back, how freaking hard would it be to see anything? That's the technical capability we just put into space. we've built a twenty foot wide mirror to concentrate the light, the photons that traveled for 4,600,000,000 years lost all of their dead city, lost all of the you know, completely dimmed out, completely diffused, and we're capturing a few of them. run that concentrated way onto a detector for minutes at a time and generate this image. It's really profound how technically complex this is. And, again, that technical complexity can ultimately yield other technological tools that we could use in all sorts of industry. So I I just I just wanna highlight that. Jason Calacanis (01:13:19): I posted it for you guys. It's an incredible story, but, basically, this program was riddled with delays and things that weren't working, and then they put this quiet, very assuming engineer in charge of it, and he completely turned the whole thing around. And it's one of the most incredible quotes. Chamath Palihapitiya (01:13:35): What's his David Friedberg (01:13:35): name? Let's give him a shout out. Jason Calacanis (01:13:37): His name is Greg Robinson, and he turned a $10,000,000,000 debacle into a groundbreaking scientific mission. This is the quote from The Wall Street Journal. The the quote from the NASA, the head of NASA's science mission directorate, Thomas Zurbukin, says it all. There's a huge distance between success and failure and only a few actions that move you from one to the other. He said, Greg Robinson worked such wonders that his boss calls him, quote, the most effective leader of a mission I have ever seen in the history of NASA, unquote. Really incredible. Chamath Palihapitiya (01:14:16): This project, yeah, the $11,000,000,000 project. Jason Calacanis (01:14:18): Greg Robinson. Chamath Palihapitiya (01:14:19): Yeah. And this has been going on for I guess, 20 years now, this process of getting this built in 10 years of really intense building. What would the next and then we'll we'll switch over to politics for a quick second as we as we wrap up here. Friedberg, what's the next telescope? And because, obviously, if we've gone Hubbell to Webb, What would the next one conceivably look like? And what would the timeline for that? Is there another one that's gonna come? And then what would that enable? Because it does feel like if we accelerate this, we're gonna really get a deep understanding of the universe that it this seems to be accelerating our understanding. Correct? and our technology is obviously accelerating. So feels like we could, you know, send another one of these out in the next 10 years that would dwarf this one's capabilities. David Friedberg (01:15:01): So a a lot of Telescopes operate at different wavelengths, and they're meant to kind of pursue different missions. So, you know, there are there are some telescopes that are already operational and kind of the gamma ray spectra. But, really, there's a we I don't know if we ever talked about this on the show, but one of the the really interesting areas of inquiry is is these gravitational wave detectors, and there are new more advanced versions of those systems starting to come online. Those are not space based telescopes. There and and we can talk about that another time. But they're creating new methods of inquiry where we're not capturing photons like coming from far away, we're actually capturing the waves of gravity coming from interactions of matter around the universe. And it's a new way to kind of observe the universe. Those telescopes represent a new class of inquiry that was just kind of, you know, discovered a few years ago and proven out. And and now there's there's a lot of work going on into that area. Chamath Palihapitiya (01:15:57): And Freightberg, you had something you wanted to give a shout David Friedberg (01:15:59): out to. Yeah. I just sent you guys a photo of a new dog I adopted last week. Her name is Daisy. We queued her out from Virginia. Daisy is 1 of 4000 beagles that were rescued. from a facility in Virginia that was shut down by the DOJ. This facility was investigated by PETA and the humane society, and they basically shut this facility down. This is in the United States, we only do animal testing on Beagle. They're the only dogs that we do animal testing on. because they can put up with pain, and they have a high tolerance and a high threshold for pain. It's a really awful fact. We need to change that in the United States. The FDA does not provide good guidance on this. So pharma companies, pesticide companies, makeup companies very often test on beagles. So this company you know, that was operating this Beagle facility in Virginia was shut down for, you know, ethical issues at their facility. and the humane society took control. The company is called Envigo. Their parent company is publicly traded think that the fact that we test on these beagles in this country is awful, we adopted Daisy. There are 4000 beagles like Daisy available for adoption. I'll put some links in the show notes here. People feel free to go and grab them. I'm sure there's long list. The dog is absolutely incredible. I think that it's awful we test on dogs in this country. And I I think I urge anyone that has influence with the FDA to get them to provide better guidance. This is not the law. It's not required, and they don't provide good guidance And so a lot of companies de facto and default to testing on beagles when they really don't need to and shouldn't. So -- Reeburg, Jason Calacanis (01:17:32): let me ask you let me ask you a question. it's incredible that you adopted the dog. I hope all 4 1000 get adopted. How should we do testing? David Friedberg (01:17:40): Totally. I look. I think that there's a there's there's really important ethical lines here, and we can debate those. This is a good nuanced conversation. We use mass models in biology. to explore solutions for human disease. We we use primate models, right, which means we use primates. We use dogs. We use cats. We use mammals. there are there are certain things that are obviously not necessary. We don't need to take beagles and pour tons of Kim Kardashian's newest makeup line in their eyes to see what happens. It's not required by law, and it's not about getting some pharmaceutical drug approved. This is in an area that I'm, you know, I'm not gonna get into the debate on on exploring and resolving kind of pharmaceutical solutions and and things that can actually treat human disease, where I'm particularly sensitive to is when it's not needed. And when we're taking these animals and just doing awful things to them, when there's no law that requires it, we're not putting stuff in our bodies, and this isn't about you know, protecting humans. It's really about cover your ass behavior for makeup companies and pesticide companies that they don't need to be doing. that's really what I'm addressing. Chamath Palihapitiya (01:18:43): 3999 Beagles to go. If you adopt one of these Beagles, send us a photo, and we'll share it at the end of next week's program. Thanks David Friedberg (01:18:50): for letting me say that, guys. It's really important to me. Jason Calacanis (01:18:52): I think Chamath Palihapitiya (01:18:52): it's super important and how we treat dogs who are connected to humans in special way. I think speaks volumes to us as individuals. Sachs, would you like to well, on the Biden administration, talk about 20 or give us an update on Ukraine. I give you the choices. David Sacks (01:19:10): I mean, it's like elder abuse at this point. I mean, I know you're trying to Jason Calacanis (01:19:13): Oh my god. Chamath Palihapitiya (01:19:15): Oh, I ask you a question, Orchid? Jason Calacanis (01:19:17): I know David Sacks (01:19:17): you're trying to tee me up here, but, like, all I can say is 9.1%. I don't wanna beat a dead horse at this point. Jason Calacanis (01:19:22): Can I read you guys something and you can tell me There were these there's a there's a group called committee to unleash prosperity, but 2 researchers Stephen Moore and John Decker. This is in the Wall Street Journal article I posted in the group chat. The pair studied the resumes of 68 top executive branch officials whose work shapes the economy from president Biden and treasury secretary Janet Allen to White House special assistance on economic policy. Quote, average business experience of Biden appointees, which is only 2.4 years. What? Any fresh faced twenty five year old on Wall Street has clocked more private business hours. Again, I'm reading from the journal article than most of Washington's top officials. 62% have, quote, virtually no business experience, unquote. Chamath Palihapitiya (01:20:10): And we could address Jason Calacanis (01:20:11): the average Donald Trump cabinet official had 13 years of experience in private economy, the others say. What a disaster. David Sacks (01:20:18): Well, it's alright. Like, 60 something percent of Democrats wanna get rid of Biden. They don't want him to run again. I've never seen a president been defected on, been turned on by his own party so quickly into an administration. He Jason Calacanis (01:20:30): needs to take back ownership of the Democratic party, which means he has to pivot back to the center and he needs to have a wholesale replacement of the team that he works with on domestic policy. It's not working. Chamath Palihapitiya (01:20:42): And Chamath, that was his pitch. We're gonna go back to normalcy. He was gonna be, you know, more of a centrist, and that's not what we've gotten. But, of course, he was handed the disastrous economy that Trump created. Jason Calacanis (01:20:53): Why do you say he was handed a disastrous economy per se? Chamath Palihapitiya (01:20:55): Well, because of COVID and because of the massive stimulus that we spent, those two things. That was like a setup. I mean, if Trump won a second, do you think it would be much different if Trump was running the the economy with the setup was there? Trump probably would have spent more money. Right? Trump wanted to spend more money. Jason Calacanis (01:21:11): It's a really good question, actually. I have to think through that. It's a really good question. Chamath Palihapitiya (01:21:15): Let's move on. What's the update on Ukraine? David Sacks (01:21:16): There's a really interesting chess game going on right now where the Russians are slowing the flow of gas. Chamath Palihapitiya (01:21:22): No. No. No. It's better Jason Calacanis (01:21:23): than that. It's better than that. They shut down Nord Stream 1 for their annual maintenance It's supposed to be back up by July 21st. And so the real question is, what happens if Putin handshakes Europe and just takes an extra day or 2 to get that thing back up and going. It sure makes sense. David Sacks (01:21:44): Let me make a prediction. Right? I I think the Western Alliance is gonna fracture come this winter. Jason Calacanis (01:21:48): Yeah. Germany's gonna be freezing. Chamath Palihapitiya (01:21:50): The Germans are not gonna take this well when they can't put their heat on. David Sacks (01:21:52): Listen, a a foreign policy based on virtue signaling is one thing when you're economy is good and you're not worried about your energy security and you can heat your homes. It's another thing to have a foreign based on virtue signaling when your economy is in recession. You got runaway inflation, and you're in winter, and you can't heat your at homes. Chamath Palihapitiya (01:22:14): Your morals change real quick, don't they? Yeah. 3 David Sacks (01:22:17): or 4 months ago, the liberal interventionists were triumphant about this Ukraine war. There are 3 big predictions. One that Ukraine was gonna win. it looked like Ukraine was winning the 1st couple weeks, but now it looks like Russia has won this Donbas region. Number Chamath Palihapitiya (01:22:32): 2, Speaker 6 (01:22:33): They predicted that we would collapse the Russian economy with all these sanctions. The opposites happened. We've collapsed our own economy. And number 3, they predicted this would strengthen the Western alliance. that's the only card that hasn't, you know, basically turned yet. And I think it will this this winter. I think you're gonna see serious opposition to the way that the Biden administration has led the western response. Chamath Palihapitiya (01:22:56): I I think it's well said that if Germany has the gas lines that Sri Lanka had, you would see a definite fracturing of how people look at it just like they flipped last week, and they made natural gas and Nuke's nuclear power, a green energy. So, yeah, there are morals and ethics, and the virtue signaling go as far as their wallets and their heat and meals go. As we all know, this has been another amazing episode of the All in podcast for the Baron of Beagles. the dictator himself and the rain man. Yeah. It's definitely Biden's fault. Jason Calacanis (01:23:29): Now there is no chance for any of us to pass freebrook on the popularity. He just he just sealed the deal with this fucking legal thing. Chamath Palihapitiya (01:23:36): I doubt it out. Jason Calacanis (01:23:37): What do we do? Chamath Palihapitiya (01:23:38): I'm gonna save a while Jason Calacanis (01:23:39): next week. I am gonna bring a dolphin and I kill myself. How about that? Oh, you're gonna prepare dolphin sashimi? Okay. Great. Chamath Palihapitiya (01:23:46): That'll that'll secure your part As the most hated bestie. We'll see you all next time on episode 88. Good luck, 88. Bye. Of the all in podcast. Bye bye. Love you, Betsy. David Friedberg (01:23:58): Bye bye. Chamath Palihapitiya (01:23:59): We'll let your winter ride. Rainman David Sachs. Speaker 5 (01:24:07): We open sources to the fans, and they've just gone crazy with it. Chamath Palihapitiya (01:24:14): besties Jason Calacanis (01:24:17): are gone. Chamath Palihapitiya (01:24:23): I wish you your driveway. We should all just get a room and have one big you, George, because they're all excuses. It's like this, like, sexual tension that we just need to release them out. David Friedberg (01:24:38): What? You're the bee bee. What? David Sacks (01:24:40): Pure feet. Be your feet. Chamath Palihapitiya (01:24:42): Sweat. Sweat. We need to get mercies are back.