Jason, do you want to go up to the bedroom knock on the door and wake Chamath up? Where is you're in his house go get him? Let's just at the office. He went to the office. He's not here. Oh, he went to the office. We're trying to find Chamath at the moment. Oh, here's Chamath. Are you my god damn sweater? What is what is is that my house? That my no I am so tilted. Where is my wife? What the fuck?
What don't worry about your wife. Oh, oh my god. I'm what I this part is great. Where is my hold on? I'm calling out take off my Okay, I'm what I don't touch my wife. Oh my god You know your cashmere sweater is so so so so Don't get out of my house. Take my word, but we'll be done at one of Fox. I'll see you then Let me know I have lunch in the garden Yes, please lunch in the garden. Where's something simple don't don't get something simple?
Is that the cashmere sweater with the wine oh horn buttons? It is you know what though? I did some shopping while I was here. I did a little shopping. So I just I filled up You know, I just these uh, I these aesop's are great because I don't have these on my house. I have ivory soap So I can't help but you know what I agree this sweater is not so great
That's what I'm chasing this one's incredible. I cannot You know what this port I'm not so sure Sean Yes That's great, but Any other options Delicious Let's present This is it looks like a deep pull 1986 Chateau Ted What do you I mean this looks like it's worth opening? I mean it's it's in the rack that said don't open right Sean? All right Yeah, let's just but you know what poor half out because I like the bottom half the texture So just poor half into the garden
For spinach and then I'll take the bottom half. Thank you Three six of my sweater. Oh my god. This is so brutal For what your winners ride Rainman David And it said we open source into the fans and they've just got I love you. I'm going to leave Did you have a good night's sleep at Chimal's house? How did you sleep last night? I slept so good. Let me tell you something I will compare my sleep here tonight the lady of Saks manner just texted me and she would like me to stay there tonight
So you know when I'm in the valley I get a lot of different invites. I have to spread the wealth So I'll be dining with the sacks of tonight and I may be staying at sacks So that was over where I sat hide the aesop soap from the bathroom. I'm hoping he doesn't have a soap I'm hoping he has something else. This is like when he stole the papi bear winkle from my plane That was good Yeah, I mean it was three quarters of a bottle. It's just sitting there. I mean when are you gonna drink it?
Saks, how do you prepare for jcal coming over to your house to visit and spend the night? I mean, what do you do? Anything that's not bolted down is basically uh, just like a gift. It's like a free big How do you think I got that love seat in my kitchen? I got that love seat off the kitchen back came from saks's designer Yeah Yeah, just two guys my brother Josh came we took it out the back. It was fine We took it out the back if I'm a guest. I'm leaving with something
Why don't you want to moderate today? You're on fire. Just moderate the show Well, no, I was just I was gonna be traveling and I wanted to do a good job and you know, I thought maybe you You would love to get your chance at moderation. So We had a soft here fearless J freeber moderated so that is the announcement to start the show Jason Taking a week off from moderating Yes, gonna be a bestie guestie gonna be a participant on the panel this week because we take this off
So I'll be moderating this week. We're gonna do a couple housekeeping points first off Very excited to announce that we are doing another live event after the success of the summit during September We had great content. We had great parties everyone had a great time But a lot of people said they wish they could have been a part of it So we are gonna try and do more live events So we have pulled one together very last minute, but we are gonna make it incredible Saturday, December 7th
In San Francisco around 5 p.m. We are gonna do the all-in holiday spectacular at the Palace of Fine Arts in San Francisco It's gonna be incredible tickets are going on sale today at all in calm slash events
Not gonna want to miss it. There's gonna be a really fun show on stage with us and some guests followed by Open bar food trucks DJ casino party It should be a really great time a real fun winter wonderland after party after the stage show And so we're really excited to have folks come and join us at the Palace of Fine Arts on December 7th It's gonna be awesome. You guys excited Yeah It's really exciting. Yeah. All right, so I have a question. Yeah Is our attendance required at this thing
You know it's coming. I have no desire to You don't want to be able to hold a party Everybody in the world wants to do something Yeah, I thought I was starting it for a podcast. I don't know why I need to do all these events
This is literally a two-minute drive from your house in San Francisco. We are gonna load you in a van J. Kellan his brother is gonna come and grab you throw you in the back So I did down there We're gonna prop you up on stage for a couple hours and then we'll put you back in the van and you can go home The good news is we might drink some tequila. Sex. We might have some tequila. So You got something to look forward to and you get to see your friends
You get to see your friends. That's worth it, right? They asked a valic this is what you say. Yes. No comment. He says For those of you listening. I'm happy seeing you guys through zoom, you know, we don't We can't we can't minimize your first stuff. It's favorite holiday What's your favorite holiday sex pandemic Can we have that back? He celebrates the pandemic for six months. Three years Probably be rich or not see anybody for six months
Bring back the pandemic. So are you serving? What are you tonight? I mean, it's possible I'm gonna tell them not to anything that nice though for J. Kellan Keep it simple Burgers and dots J. Kellan, what did you put your order in? Well, you know, I talked to the I talked to chef and he said Morales not in season But we we are on the tail and of black truffle. So we have that locked in but we're too early from Morales
Obviously, that's a spring okay, Jason. Why let's get let's get feedback about last night's dinner shons. I mean Let's be honest. Kanya is an underrated cut of meat It's a very people say it's like a serviceable meat But when cooked properly with proper technique it will stand right up there with a rib eye or a New York trip It's the best people don't leave it Never gonna hurt of that It's like it's like it's the Brazilian word for it, but it's like a specific kind of meat shunted at last night
Honestly, David. I'm telling you it's better than any other cut of meat you could get if it's properly made Sean crushed it yesterday, but it is Bananas it's so good I think It's like a more than a rib eye. Yeah, I like it more than a rib eye 100%
I like it more than the New York strip. That's terrible. Flaid terrible No fat It's it's it's got a fat cap on it which you know sometimes be a little overwhelming for people But Sean did a great job of kind of meeting us halfway So it wasn't so fatty just a nice layer of fat crisp perfectly cooked to perfection Carats were great I had no notes. You know, I talked to Sean after I had no notes So what would the outlet start was ridiculous too? Oh
I only like the bar sugar apple sugar apple tart what you're a New York state guy. I'm a New York state guy well done Oh Our savages I think you just lost like I think you just lost three swing states If you're gonna do something O'poivra I would go to the New York
I'm fine to deal with the New York in an O'poivra, but well done David Sacks that is unacceptable Shout out to Raouls and Balthazar two best stake O'poivs in Manhattan in my estimation Okay, let's get started welcome to why don't we call an honorable tonight and go for stake O'poiv Yeah, just throw out the the miso caught in the wago and let's just redo it
Boys welcome to the all-in pod. This is episode two oh one And we're gonna kick it off by talking about what's going on in markets Which is one of the kind of most interesting challenging Enigma's of the day or maybe it's not maybe it's pretty simple
But there seems to be a diversion and assets that is pretty unusual that hasn't been seen in in some time and a lot of market commentators Analysts economists are kind of Trying to figure out what's going on and why the first is that bonds are falling so US Treasury yields
As a result of bonds declining in price have spiked up We nearly hit the 10-year yield dropping as low as 3.5 In September obviously leading up to the the big 50-bit rate cut And as of this morning we're seeing the 10-year yield over four and a quarter at the same time we're seeing gold prices
Spiked so gold is typically a safe asset and gold has moved considerably as you all can see here from the start of the year Where's around 2000 announced up to 2750 announced an incredible run-up one of the best performing assets of the year
And then finally in a market like this you would typically see pain and equities But we've seen the opposite the S&P 500 Is up considerably has been on this endless run-up all time highs go all time highs Where's your day coin chart buddy and let's pull up Bitcoin
Why the other kind of nobody cares about gold show Bitcoin Well, there's a lot more assets that have moved into gold than Bitcoin, but here's Bitcoin at Today this morning 68,000 pick that at the beginning of the year So was it cheap hold on one second Well, Chimup give us your read on what's going on There's there's another couple of nuances here that I think are important The U.S. dollar complex is thriving which means like the U.S. dollar is strong Back end yields are rising
And then another thing that I look at is this thing called put call skew so basically like on balance how are people hedging in the short term And in the bond market they own a lot more puts than they do calls I think that this is the entire financial infrastructure of the world
repositioning itself from what was a toss-up election to a trump win And when you look at Why It's because when you forget the candidates themselves for a second But if you think about the actual policies and where the spending will occur I think that there has been a very clear decision That the trump economic plan will drive better growth than the Harris plan And if you think that there is more growth coming Typically what will come with that is a little bit more inflation
The risk premium that you're going to need in a high growth environment is higher what is risk premium that is How much do I want to invest for a risky asset versus a safe asset And so all of these things are coalescing so I think that the short term takeaway that I have just looking at all of this data is that in the Economic distribution of outcomes this is now tilted overwhelmingly to a trump win And this is not an emotional statement or what I want to happen
But this is just an observation how tens of trillions of dollars of self-interested financial actors Have now repositioned their risk And if trump wins which it looks like he's increasingly going to do And if he wins by the margins that it looks like it's going to do
You're going to see a lot of these things exacerbate gold's going to go up more probably Bitcoin will probably go The short term economic upside for the economy will probably get reflected in higher equity prices But it'll also push out long-term rates The inflation picture becomes a little bit murkier
But I think that that's what's happening. I think that the the financial markets are pricing in a trump win Sorry just to understand better why is gold go up in a trump win I think in the short term what happens is that you see more economic growth
But in the medium term inflation goes up and so you want to hedge right so it's it's more about a durational balance of assets So in the short term you'll be long the things that will generate earnings But in the medium to long-term you want to hedge yourself So Bitcoin and gold I think we'll trade that way Well, let's pull up the video clip from Paul Tudor Jones to even all of the things you're saying Are you off buying gold and Bitcoin and I think all roads lead to inflation?
We're gonna end up if you so But there's all roads lead to inflation. Therefore gold is a good investment is Bitcoin a good investment to you I'm long gold. I'm long Bitcoin. I think commodities are so ridiculously underground. So I'm long commodities I think most young people find their inflation hedges via the Nasdaq that's also been great It's probably some combination
I probably have some basket of gold Bitcoin commodities and Nasdaq something like that and I know zero fixed income If I had not cash it'd be very short term sex Well, I think as you heard right there the key line that Paul Tudor Jones said was all roads lead to inflation I mean that that's what's basically happening right now is that the market is afraid That inflation is not whipped and is gonna resurface and the Fed may have to pivot from the pivot
And raise interest rates. That's why he doesn't want to own any treasuries separately another financial legend stand drunken miller gave an interview where he has something like a 20% short position meaning 20% of his Holdings are short US treasuries right now
So he's betting that there are long term inflation pressures and that rates are gonna have to rise and And you're seeing again that since the Fed cut rates in September 18 by 50 basis points That the 10 year T bills yield has risen by 60 basis points So I think My interpretation is that this is less about the election and more about the markets
Not liking the Fed's rate cut on September 18th. I think that in hindsight it was too big We discussed it on the show and I pointed out that the 50 base point cut was contradictory in the sense that the only two times in recent history Where the Fed began a rate cutting cycle
With the 50 basis point cut was in 2001 and 2008 which were on the verge of pretty big recessions And so the Fed felt like it needed to cut dramatically In order to help stave off those recessions But that was not Powell's rhetoric what Powell said is the economy was doing very well
So when I said a month ago was with the economy is doing really well. Why wouldn't you just tip toe Into the rate cutting cycle with say a 25 base point cut And then see how the market absorbs it and get another month's inflation data
Well, we've gotten another month of inflation data and it's showing that these are not huge moves But it's showing that inflation And was a core CPI was just a little bit higher than expected So again the market is concerned that inflation is not whipped that the Fed may have been overly precipitous
And how it cut cut rates And then the other thing is they just do not like the long-term fiscal picture of the US One other chart we should bring up is Interest on the national debt what you can see here is that it has gone absolutely parabolic In the last couple of years are interests on the debt something like what like 1.3 1.4 trillion a year
1.3 5 trillion run rate. Yep, 35 hundred dollars per American Pre and it's something like 20 to 25 percent of federal revenue now is going to debt service
And this continues to increase now. I think there was an expectation That we'd be able to get this line to go back down once we had rate cuts right because if inflation is licked And the Fed can lower interest rates again and we can get back to a 2 percent 10-year bond which is where we were a few years ago Then all of a sudden that national debt service becomes a little bit more reasonable, right? I mean you can you could service that data half the cost But now it looks like that may not happen
So just to to wrap this up. I just think that the market doesn't like these fundamentals of the US fiscal picture you've got Rapidly increasing debt service costs you've got an inflation picture that is murky and may not be going away
And the bond markets are starting to price in higher interest rates for longer And this is why Paul Teter Jones is saying all roads lead to inflation and this is why drucumular is shorting US treasuries Jake help do you think either party or either candidate in this presidential election
Is going to drive a different outcome in terms of federal spending and the long-term impact on deficit and as a result rates Well, if we look at previous performance As an indicator of future success the answer is No, they're not going to cut spending most of the reports out say they're going to spend Another 10 trillion in the next administration independent of who you vote for and I think that's actually what you have to think about here is
Where does all that money wind up right? It's certainly not going to trickle down And what's probably going to happen is it's going to find its way into equities and that's why these equities are so high Because people are recognizing correctly that if we do spend another 10 trillion And go another 10 trillion into debt that money winds up somewhere. Where does it wind up?
government salaries contracts and if we get a tax cut as well That's going to goose and I think one party will do a tax cut and spend 8 9 10 trillion the other party will spend 10 trillion and maybe race taxes a little bit
It's going to net net into the same place and then I think what we'll see on top of that is What I think could be Cataclysmic contraction in White collar employment in the United States over the next four to 10 years next to administrations and that's going to exacerbate this problem and create
I think some social tension because We've had record low unemployment and so even though people feel bad about the economy generally and then some of that is related to which parties You know, which party you're part of and how you perceive the economy and all this data
But just brass tax, you know, we had the lowest unemployment of our lifetime for the past 5 10 years and it's been absolutely fabulous and salaries have gone up And this is going to result in I think a little bit of austerity measures coming at some point
Probably won't come in this next administration But certainly the one after that is going to have to do some bell tining and we're going to have to address this issue because spending You know everybody in America having to pay their share of that interest alone is $3,500 I mean less that sink in you're going to spend
For every member of your family $3,500 a year in interest. That's your part of it take the 1.3 trillion It's just a lot of money and if that is the case Uh, it's going to create a massive bubble in equities again and then if you look inside of the big companies Three or four years ago
Uber, Airbnb, Google and Facebook had more employees or the same number of employees that have now while growing those companies are all growing 20% year over year So the earnings and the top line of these companies continue to grow while they have a static team size This is like an extraordinary thing we haven't seen so the two pieces here that we haven't seen before is what happens when you put another I don't know 20 trillion dollars of debt into the US economy and what happens when companies
The big ones stop hiring and they just become wildly efficient and become wildly profitable and this will be our renters Rentiers, you know Story where people who have equities and people who own property are going to do fabulous over the next five to 10 years
And then the 40% 50% of people who don't are going to really be feeling a pinch Well, it does depend also on how lever they are so just to give you guys a sense total US household corporate and government debt Which includes state and local and federal So household debt in the US about 18 trillion Corporate debts about 11 trillion State and local government debts three trillion obviously the federal debt 36 trillion that adds up to a whopping 68 trillion dollars of total debt across the US
Which if you assume a six percent average interest rate, you know, you got corporate debt and household debts It's a little more risky so it carries a higher rate That means we're spending about four trillion dollars a year of An economy that's only 29 trillion a year
To service the debt just to pay the interest on the debt So 15% of every dollar that trades hands Is going towards interest payments on existing leverage on existing debt It's a highly leveraged system and if you look around the world this problem is not just a US challenge global leverage is a
Problem that's now becoming a crisis for countries everywhere the UK is waiting on a big budget proposal this week Higher taxes is what's going to be in there to make up for a budget deficit which is currently 4.4% Of GDP the UK economy is only growing at 0.9% a year France has a major budget crisis underway right now They're struggling to reduce their deficit from 6% down to 5% of GDP and they've got skyrocketing bankruptcies
74% of people that can work in that country are working and they have and that's because of large social programs that support the balance 7.3% technical unemployment And they're raising taxes on 440 firms 440 companies in the country that make a billion or more in revenue with a quote temporary tax
There's a 4% surcharge on income over 500k that's going into effect second-home real estate taxes And so on Francis struggling to figure out a way to generate revenue to make up for the shortfall in Brazil
There's a major budget crisis states. Oh 130 billion dollars to the federal government there inflation is accelerating at 4.6% Rates are going to go higher and longer complicating other economic growth opportunities in the country So this is becoming kind of a global leverage problem which might explain the flight to safety and assets like gold and Bitcoin And is going to present a lot of real struggles for every global economy
Now the question is does the US dollar maintain its reserve status because ultimately I think it is inevitable that the federal Reserve in the United States is going to need to buy the debt. They're going to need to monetize the debt
At which means printing money there is no one else to buy the debt. So pull up the China chart Nick China's historically been the biggest buyer and owner of US treasuries But here's what's happened in the last couple of years It peaked at about 1.3 trillion dollars about 10 years ago and then Recently particularly starting around COVID they began selling down and have been selling down in an accelerated pace Today China is back to the level they were at nearly 15 years ago
In terms of their treasury holdings and they have publicly declared that they are selling off US treasuries and buying gold Instead So the biggest buyer of US treasuries has kind of left the market or is leaving the market
Who does that leave well at the end of the day the federal reserve has been the kind of buyer of last resort and if they end up buying Treasuries that's where we have a problem with too many dollars and inflation kicking up And so it feels like a lot of the trades in assets are What's going to benefit from The inflation and it's going to be gold it's going to be Bitcoin
And in some cases because you're pumping more money in the system. It's going to be equities and that might explain why Equities are moving up as well
Where do you guys invest here? I mean Chimoff like Do you care about how the markets position or how you're positioned in this election right now and Based on how we're seeing markets trade and what these kind of macro indicators are telling us or you just Businesses usual heads down Invest in build as you always have yeah, I think that you can't trade these things And any attempt to do it is probably a level of false precision where you're going to lose more money
And there's a lot of slippage and even just trying to execute it. I mean at the beginning of the year. I said the breakout asset was going to be Bitcoin I think it looks like it's going to be the Resounding inflation hedge asset for the next 50 or 100 years
So that die has been cast I think you're seeing the last bestages of people using gold as a rational economic insurance policy, but I think the future is Specifically Bitcoin on that dimension So I guess you could trade that you could speculate on that I think the question that I've been grappling with is In my scenarios what happens if Kamala Harris wins whoop the markets do and I actually think it would Reverse a lot of these trends over like the last month and half like I said
I really do think that there's a repositioning rebalance component to everything that's happening right now So I don't think there's much to do unless you have a very specific Bet that you want to make I would just keep my head down and keep building Are you the same place sex? Are you are you Jake L? Are you guys trading at all? I mean I think trading is a mistake time in market is better than trying to time the market and as I said before Where is all this money gonna flow all this spending?
But that's that's right. I mean that's the that's the key question right like you change what assets you are I don't think so and I I do think there's another thing that's worth sort of unpacking here because when you do see
People feel like the economy is working against them all kinds of interesting movements start cultural movements etc And I think that's what we're seeing in this election is people who believe in capitalism and free markets and people who don't people who believe in free space people who don't
People who see themselves as victims victims and then other people who see them as creators and I really study a lot of like what young people are doing and I don't know if you guys are watching sort of the anti-work movement or the fire movement which is Financial independence retire early a lot of young people now are Looking at financial markets whether it's Robin Hood or Coinbase or price picks whatever market it is young men
Especially and they're saying I need to control my destiny. I need to this capitalism is not working for me I need to own equities. I need to make trades and I need to retire early and have experiences because the capitalist system is broken To some extent and then there's another group of people who are just anti-work and there was this term Back in the day called meat not employed
Not being educated and not in training basically the people who are called the unproductive and if you look at the peak Engagement and employment in our country In Japan has similar trends although they're probably ten years ahead of us and sounds sounds anything but me
Yeah, it's not me. It's not sterile but we we peaked at 68 69% labor participation and we're 10% off that maybe more We were at 61 or 62 I think a lot of people are going to give up because the debt is going to be so crushing that the logical thing to do
If you don't think you can get out from under it might be to move in with your parents or two or three other people Titan your belts and enjoy life and go skiing and and go have Experiences and a lot of young people are electing to do that in other words that
Love to your point American dream sorry to your point the one thing the one thing that I realized with a lot of young men that Jason, I think you're you're really hitting the nail on the head as a lot of them now do not view the job that they do As they're only path to economic independence and if anything They may do a job, but then they're actively trading on the side Something crypto options whatever they're on Robinhood they're using coinbase
Because it's almost like they've separated in their mind that the job they do will never give them the financial independence They want and so instead they're going to do that job because they like it Hopefully they love it, but then separately they're going to go and speculate to try to make money
It's a really interesting thing because I had always been taught you earn your wealth through the job you have and so if you want it to make more money You have to ladder up and do something different Yeah, I so that that's not true that that idea has been sort of decoupled now
That's a really interesting change in how people approach work I call them gen bet like they're the generation that believes on there's just like subset of them It's not all of them a number of them are just quiet quitting and they just don't believe in capitalism And then there's this other group which are like trying to get control I call them gen bet because they just want to bet on themselves and You know and if they don't get wrecked by the financial markets chain trading options
You know and do it the other sorry the other the other thing. I'll say just in recruiting a bunch of people At 80 90 over the last three or four months is there is an enormous difference that I have seen psychologically In the people that are 25 and older Versus the people that are 25 and under and I'm calling 25 is a rough number But there are kids that are 18 19 20 21 years old
That are off the charts good. They're motivated. They're hungry. They're like let's get after it And they are honestly different in the way they approach their job Then folks that are in their late 20s and early 30s. I think they're the first generation who didn't go into debt in college And didn't buy into that like so they might the millennials ahead of them Might have like taken the bullets, you know Yeah, the folks that are in their late 20s early 30s
And I'm not trying to generalize or disparate, but they lack the level of motivation again generally speaking That the youngest folks in the workforce have and that also that people in our generation sort of have so they're sort of sandwiched in between A very different way of approaching work
And I as a result they stand out and I don't think they're standing out for all the right reasons Well the majority now of young people The number I believe and Nick if you could pull this up 57% of gen zers Want to be influencers as their primary career now
That the idea of working a job is almost like a secondary option the primary option that everyone would thrive for Is to be an influencer and this number has grown considerably continues to grow and in fact if you look at the the rest of this report This was out of a morning. Do you say 50% of gen zers aspire to be influencers Correct Okay, just seven percent as their career or just they want to be influential and build a brand around themselves I wonder that's what they want to do for a living
That's what they want their paycheck to be interesting Well, they want to be independent and they don't think they believe the They believe the systems rigged against them and why wouldn't you think the systems rigged against you if you went a 150 or 250k in debt And you couldn't get a good job Sax as a successful influencer. How would you advise to you on their career choices?
Hopefully Yeah, look I think that believing you're going to be an influencer is like believing that you're going to be like a rock star or Movie actor like that pro athlete pro athlete. Yeah, it's like a one-and-a-million shot It's just not a great thing to want to design your career around because it's just very unlikely to happen So I think you're better off Finding a career that you're passionate about but where you're actually adding value the world doesn't need 50 something percent of the
population become influencers. That's kind of crazy I mean reminds me of a line from fight club Where Tyler Durdin says we've all been raised on television to believe that one day We'd all be millionaires and movie gods and rock stars But we won't and we're solely learning that fact and we're very very pissed off And that was GNX that was Jenna. Yeah, so that was us they're headed for a
A fight club like realization about this. Sax how do you advise a young person on There there's this temptation to go and spend all this time making content and pursue that as your career And that's a life opportunity for you now It's more free and open they would think then perhaps being a
Movie star or a basketball player used to be so I think it's it's just Important to recognize that if we ourselves are influencers the the reason why we're not being hypocritical is that None of us here with the possible except to jc I'll ever set out to be influencers, right? We did something different. We actually had a career And we did something interesting and then as a result of that maybe people want to listen to our pod
The idea that you can just go be an influencer without having actually done anything interesting. What's your credential for that? So what I would advise is just people should go do something productive And then you know if it leads to other people Wanting to hear from them then that that's good but Setting out to be someone that other people should listen to without having any Experience or having done anything productive in your life. It's like why should we listen to you?
Yeah, one thing I did build and sell two out of my three business over the years But there are tens of millions of people making money in the long tail as a content creator And it's low thousands of dollars in some cases per month But if you combine that with people who are gig economy workers And they don't believe in the system because they worked really hard They got this job at Google. They went to the office
Then they got laid off and nobody cares about them now. They're getting dragged back into the office They still have these payments and then they look at this other system where hey they started to get 10,000 followers They started to make $1,000 a month and $3,000 a month they actually see a path
To being independent of a system that has no loyalty to me And that's what I hear from folks and I think it's great if we're not going to be loyal as like corporations to individuals Those individuals are now Responding and the antidote to that poison of just being laid off randomly or being dragged back to the office after you told you could work from home all that stuff They now believe hey, I can be independent and then you have to fight to get my services
And I think that's what this is about if and really we're going to talk about Starbucks later And I think that's a big part of the Starbucks problem Having a side hustle makes you an antifragile you you have other sources of income And you can tell your boss to f off and that's what young people are doing I've seen it. I've seen people just quit jobs and just say you know what?
I've got other ways to make money and I don't have a big burn rate And so that's smart for young people to do that And I think my advice would be to build your brand be as independent as possible And to make things in the world and show people what you mean That's the best thing you can do Can I can I give you the other side of this before we go back to macro? Yeah Imagine that Tom Brady Who really respected Bill Belichick but I wouldn't say is
Super fond of him. They're not super close But imagine that Tom Brady had a side hustle And let's just say he drove an Uber And he made enough money where when things got hard and he didn't get enough playing time He opted out with that. It made Brady the person he was I think the answer is no I think there are a lot of people who started companies After being in very difficult and challenging environments That stretched and pushed them beyond their comfort zone
And they lived in that world for years before they started something If all of a sudden the answer is let me have an escape hatch So that I can egress off whenever things get hard I don't think you're going to accomplish much of anything Because I'm not sure that that is
The kind of boundary conditions that push greatness upon people So I would just keep that in mind as well I'm not sure the side hustle solves anything It may actually allow you to quit before you actually get to the other side of something and realize what you're capable of
Got an answer great point you kind of have to mentally burn the boats when you do a startup It's Cortez you got to burn the boats Yeah, I agree with that Your life your life needs to be like Cortez You got to burn the boats if you keep The safety net with you as you move through life all the time and you never put yourself at risk You're never going to figure out what you're capable of And then you're going to look back at some point and the odds that you're going to be disappointed are higher
Then if you actually just tried and lived it and just said okay, you know what?
I'm really glad I'm betting on myself here to wrap up the the conversation about where markets are headed Sacks I think we were going to just do a quick round the horn anything that you've repositioned in your portfolio around investing or asset classes that you shift As we face kind of Looming budget crises the election cycle I'm trying to sell for every single sass startup I have in second markets And you know how many bids there are for these sass companies negative one bid
Hmm, that's interesting. I had a couple of my startups get Get offers. I've had three or four secondary offers in the last two weeks I've had to like deeply consider and they weren't like 70 part what kind of companies Let's say two or sass and then one I can't say because it'd be too easy to guess But the bottom feeders went from offering like an 80% discount to now a 25% discount
So you know you're not a lot of your your shares and all in right. I'm trying. I'm trying. Brad Grossen's what seven percent so far I'm quickly off-limiting You just super tilted freeberg there You go up inside Yeah, you're gonna have to have the fifth best year here in the ocean percent he gets 16 minutes per You know, when if he'll if he'll moderate all have him I mean, this is moderation going okay, or should I do it saying he should write all in a get sit memo
Just on the question of you know, how do you reposition? So first of all the easy one to avoid is his treasuries, right?
I mean, do you really want to accept a 4.2% yield for 10 years To own a US bond and with the looming inflation that is still out there or the looming deck crisis that might be out there So that's probably the easy one I think the hard one is around equities because equities are at an all-time high Part of the reason why they're an all-time high is because the Fed Telegraph that we'd have big rate cuts this year Remember at the beginning of this year they said there would be seven rate cuts
Those expectations have kept coming down. I think we had one I guess we had a double rate cut last month And we were supposed to have one more 50 bit rate cut this year. I have to wonder if that's still going to happen And more to the point if you believe drunken miller and Paul Tudor Jones we might be in for a extended period of Higher interest rates for longer and that will be bad for equities
Equities normally are inflation protected in the sense that those companies can just raise prices over time and keep it with inflation And so equities are generally a pretty good thing to own in the face of inflation but if we're In for a period of high interest rates Longer than anyone thinks that's something bad for equities Well, I would just argue one thing which is Accept in the scenario where you believe the only inevitable path is for the central banks to monetize the debt
Meaning the central bank step in to buy the outstanding treasuries that need to be issued Which both supports inflation but also introduces capital into the system and that's where both equities That's where you could see a scenario or equities and gold go up while fixed income
Goes down to have higher rates So it's effectively a money printing indicator or signal now my personal position on this going into this new era If it manifests as the markets are telling us it will Is kind of where Paul Tudor Jones is I think that commodities have and you know gold is a commodity Everyone talks about it as being the safe haven asset But there are other commodities out there that are much more fungible and used in production cycles to make food to make energy
To make goods and a commodity linked businesses meaning businesses who's revenue or profit grows with the underlying commodity price growing Will outperform other businesses are going to struggle to raise prices or struggle to pay higher labor costs or struggle to To deal with higher cogs Whereas commodity linked businesses that effectively just make a margin on the commodity The mining business it's the businesses that do mining of Of natural resources
Businesses that trade agricultural commodities so those businesses usually make kind of a fixed margin on the underlying commodity price and They do they do well in the cycle. So anyway, I think that Paul Tudor Jones Because if you own a commodity it's not a productive asset. It's not generating yield for you But if you own a business that's making a profit and just seems like it's easier to own Bitcoin That's one asset, but the Bitcoin isn't a productive asset right?
I mean, so that's one one way to kind of build a portfolio But I personally like owning businesses where they're doing something and making value and in the process They earn a profit especially if the profit grows with an underlying Inflationary pressure on the sexist point about the equity markets
There is this thing that people look at called the Buffett indicator Which is the total value of the will share 5,000 divided by GDP He mentioned it in 2000 and said it's probably the most reliable measure of where equities are and where they're about to go and There is this long run meme when you calculated going back, you know 50 60 years And every time it's had a short-term high there's been a pretty meaningful Retrade so in 2000 in the dot com bubble in 2007 during the great financial crisis
During covid and now we've actually said an absolute new high in this thing which again to the extent that you believe in indicators like this What kind of tell you that At some point here equities are probably Going to be cheaper before they're going to get more expensive This is definitely
The high end of normal nickie be full of the pe chart This is the obvious one to look at is you know not just the How dramatic the stock market peaks are but you know the price earnings ratio and it's at the high end of normal at like I don't know for a 25
PE ratio on average 20 seconds right how can you get 4.25% When you have all of these risks looming over the next 10 years because you know howard marks it His letter he had an investment letter that he published this week and It was so great because it was so elegant in its simplicity which is
Investing in an equity and investing in a bond are just completely Opposite to each other even though they're treated and spoken As if they're the same thing and his concept is like people need to understand exactly what the terms fixed income means It means that you will get
Something reliably over a long period of time and so the question is whether is that fair Knowing everything you know today and I mean all of you guys have said this now for it feels like years And when you show these charts of like ballooning deaths and deficits Is it reasonable that the market clearing price for government issue debt over the next decade is 4% I mean my gosh it could easily be 6% it could easily be
7 or 8% that is very scary totally the big difference between a bond and a stock is that the bond provides you with like you said fixed income payments and those would be horribly Debased if you have high inflation A stock gives you earnings and a company can always raise its prices and so in theory it should be hedged against inflation but both a stock and a bond are similar in the sense that They're both hurt badly by rising interest rates right because the discount rate is higher
So this is where I'm just not sure about equities is if we do head into a new regime of higher rates longer does that hurt equities even though equities normally are pretty good inflation head So I just don't know the answer to that. I do think we're headed for a period of constraints I think that since 2008 we basically were living in a sort of a consequence free environment Where the Fed could keep interest rates at or near zero the federal government could spend as much as it wanted
We you know we sort of normalized emergency conditions first we had trillion dollar deficits As a result of the 2008 GFC and then those got normalized then we had 2 trillion dollar deficits as a result of COVID and those got normalized and then the Fed was also doing QE
Which means that it's buying the US government's own bonds thereby propping up US bonds and the bond market so now that's normalized that's normalized Yeah, keeping interest lower than the otherwise would need to be to attract those bondholders So for about 15 years we kind of normalized emergency conditions and consequence free spending by the US government I think now we're we may be entering an era of consequences And what that means is that you can't push on one aspect of the
federal government's balance sheet without giving up on something else. So in other words if you're going to allow Higher inflation basically monetizing the debt the bond markets are going to make the government pay higher interest rates on its debt Right because they're not Tom so we're again being a world of higher interest rates
Which means that equities get cloud-bird real estate. Let's gets cloud-bird the value of people's owns gets cloud-bird So there's real consequences from that or you can tackle inflation You know, which means that the Fed's going to have to tighten But then I think what that means the federal government's going to have to get religion around spending They're not just going to be able to spend all this money
We've seen this austerity measures in Europe right? We're pretty We are for people in Greece and Spain and to get their heads around and the Americans are going to have to get used to We can't just spend and give handouts constantly On the equity side though There's also the concepts acts that you can cut spending and increase earnings and that that's well within Your control as a CEO and board and that's exactly what we've seen coming out of COVID and I said it here a couple of years ago
I think the earnings are going to do well because people have this other lever and they can just turn the dial and reduce spending and increase earnings and it's like oh, that's painful but it's not So painful that it's not worth doing and so corporations have gotten religion
Around cost-cutting and austerity and increasing earnings The question is an individual's have to so they're pushing out buying new cars and spending on travel Just to be honest when does the government get that austerity that companies and individuals are forced to do and that's the problem
You keep talking about freeberg is you know this entire election cycle is about who can get more free Enough with the free shit like somebody's got to be an adult in the room and say we don't have any more free shit left
I think this is what the market is saying is that regardless of who gets elected here They've both kind of shown that the deficit will increase not decrease under their presidency And look maybe that is positioning to get elected and maybe there is a kind of more rational underlying
Economic advisory group that is counseling a different path than what they are presenting and I I hope To whoever is listening that that is the case for both candidates Very deeply hope if you look at what happened in Argentina
So we've talked a lot about Javier Melae. He came in as president and And his austerity measures by absolutely slashing government spending has reduced monthly inflation from 25% to around You know three and a half percent so he's really kind of broad inflation under control But the consequence of that is that the economy has now shrunk because the government is spending less
That means it's less revenue for certain businesses. There's less income for individuals So they spend less to the economy has shrunk by 1.7% in the last quarter And unemployment has spiked so now unemployment is at 8% in Argentina and it's rising fast
So for the US to actually execute this policy when we have a fundamental mandate for the federal reserve Who keep unemployment low Means that something is going to have to break you can't keep unemployment low and inflation low If federal spending gets too high and federal debt gets too high
So we are in a condition now where federal debt is too high and if we cut federal spending too fast We end up seeing unemployment spike and if we don't we're gonna have inflation spot just one those those are the two paths we could walk just one thing to
Challenge what you're saying because I actually I disagree with it is that I don't think that People view the spending packages of both candidates the same because the dollar is not created equal so There are certain programs that the Republicans have proposed that are Markedly different than the programs that the Democrats have proposed even if the numbers look the same And so this is why I think you have to look at how the short-term markets when they thought Kamala was winning
Behave versus now the short-term markets short-term right how do you hedge this risk and that is completely changed And this is why I mean over the last 30 days you've had a A complete and absolute repositioning of the front end of the yield curve In terms of risk and who's making the bets and I think why is because the the Trump package Whether we agree with him or not Is viewed as more stimulative to long-term economic growth, which is why the inflation risk is being hedged out
Versus the Kamala risk, which is they're just gonna spend money now on top of that what I would say is This may be where Elon Musk being able to Streamline the government Could be an incredible gift for us as well as our children and our children's children and why is that
It's because if there's this sort of damacles hanging over us constantly of billions and trillions of dollars of wasteful spending He is probably in a position to show us That we have spent decades spending more and getting less And now we can run the AB test where we spend meaningfully meaningfully less Cut regulation and if we actually get more You will have the proof And that could set us on a long-term path of being more judicious in how we spend money and I think that we
Deserve to run that experiment somehow to just go back to your your definition of GDP It's true that if you cut government that might Cut GDP because GDP includes government spending however One could argue that although technically that is how the definitions work That by cutting government you actually unlock resources that could be used by the private sector and that ultimately more efficient It would lead to more efficiency, but also stimulate the private sector
And I think that argument is particularly true when you've got an economy running a full employment So you know if we had lots of unemployment then cutting all these government workers be very painful But if you've got an economy that's doing quite well and there's a lot of job creation going on
Then it's a good time to actually cut government because the private sector can reabsorb these people We should use the fact that we still have that we have a good employment picture to make these painful cuts now As opposed to waiting until it would be far more difficult That's point I've heard in a long time. That's a great point sex. Give us the election update. What's going on? Are we going to get?
Your guy in office is it going to be Vice President Harris what's the sense of what the polls are telling you Of what the markets are telling us what you read on where we're at all the data is basically pointing one direction Which is a Trump victory and by data. I mean the polling
I mean the prediction markets and then the early voting numbers. So if you look at the the polls There were two new polls by mainstream media one the Wall Street Journal yesterday said that Trump was up three nationally And I think CNBC had a poll this morning saying that Trump was up to Nationally That's very good because that's the popular vote
That's a popular vote. So if Trump is winning the popular vote. It's landslide But most prognosticators say that because the Republicans have a slight electoral college advantage That Harris would need to win the popular vote by more than 2% To have a chance at winning the electoral college. So if Trump is winning the popular vote then it's a landslide Second area is if you look at the state by state polling Trump has been advancing
Pretty much in every battleground state for the last couple of weeks. If you use RCP Trump is now ahead slightly in every battleground state and the momentum is all towards Trump And then the final data point is around early voting in states where they
Have this early voting and put out the numbers their Republicans are tracking well ahead of where they were in 2020 Now there's still a question of You know, it's just the mean that Republicans are just shifting their votes to voting earlier and then they'll do
Less well on election day. There's always that chance But right now if you're a Republican is what you want to see and if you're a Democrat is definitely not with you You want to see yeah, and the essay that Nate silver wrote that was published by the New York Times yesterday said It's a 50 50 toss up either candidate could win, but my gut tells me it's gonna be Trump He's kind of indicated that's where you know as a guy who's obviously been a big prognosticator It says the markets headed
J. Cal Gevings acts as is right on this anything you're thinking about first mention prediction markets prediction markets have moved very very Charlie in favor of Trump. It's almost Two thirds one third now in favor of Trump. So there's been a huge move among betters That Trump is gonna win on polymarket. Yeah polymarket and then Cal she as well. Do you think it's over jcal? I'll go with Nate. I mean, I think Nate's probably The best thinker on this who
I think puts a lot of effort into it and he says it's 50 50 with a slight advantage to Trump. I think I would go with his gut But he's saying don't trust anybody. I don't trust the prediction markets And I think the prediction markets are closing that gap as we get closer because they are easily manipulated polymarket is only offshore right the US market is not allowed to participate in polymarket
So it's all foreign investors now of course Americans could be putting money overseas somehow and and using foreign accounts to place these bets I'm guessing if you were a sharp and you really want to make money that's what you would do So I don't know what percentage of it was reported this morning that a French trader Has bet 45 million dollars on Trump on polymarket that he is the whale He's a French national with quote extensive trading experience
She's not quote manipulating the market. He just really is trying to build a big position So he sounds like he's a pretty active trader that I mean he moved but it's a crypto based site So you you get the benefit of like you can track some amount of this on blockchains and then eventually find the person But because it's crypto as well You can also hide yourself pretty well with tumblers and other systems So I would discount polymarket a bit
It's probably not as extreme as it seems, but it does seem like Kamala has not helped herself with the interviews. They haven't been great and um You know It is a toss-up and so So you might think that's a prize. Yeah, any October surprise still coming I mean there've been a few attempts the last couple days. I mean it seems like the rhetoric for like 24 hours
There've been some really gnarly ones that we shouldn't give it. I don't think we should give any credence to but Some Republicans have been coming out talking about like a really gnarly one about the Republican side and
I mean it's not much more gnarly than other things that have been said about Trump already and judgments that Trump is against him already for a hundred million dollars So it's in that vein But I do think that that looks to me like it's cap and I think there's gonna be a lot of fake News maybe even deepfakes that come out, you know in the last week or two So I think people should not trust anything they see on social media
Be very careful with that information. I'll tell you guys my Kind of View is like things seem to be getting more inflammatory leading up to the election here It's like we've got 12 days left or or whatever it is and
the the rhetoric and the tonality of the stuff that's being said is getting so nasty on both sides and um, I just worry More about the reconciliation reconstruction phase that needs to happen in America actually see it on both sides Is it equal on both sides you That's your observation um
Like I you know, I think like Trump leaning out the window of McDonald's and it was I mean I mean, I laughed pretty hard when he was like someone said to him when the interview Trump when he was serving French fries And he said something like I've now worked in McDonald's 15 minutes longer than Kamala has and then they one of the reporters said Well, why do you think she would lie about that and he leads out the window? He said because she's lying Kamala
And you know, it's a funny joke. That's his quay if he makes fun of everyone But I think the whole thing about making fun of everyone It's such a different tone and a different rhetoric than I think what's gonna be needed Because imagine if she wins and you know, he's painted her as being you know a liar and Crooked in deep state. I mean look I don't know how you can possibly compare that to what the democracy is saying right now
Which is that Trump is literally Hitler literally calling him a fascist. She called him a fascist She said it's democracies on the line and obviously when you say something like that When you say that the fundamental system of the electoral process Is on the line it implies that if he wins we've ended democracy that will inevitably lead people to feel like we're in a place of civil chaos and I don't think that anyone's gonna feel good coming out of this how do you guys think we kind of
Deal with like the election outcome here one side or the other I mean half the country's gonna hate the president And half the country's gonna hate where we are and how we sit as a country and half the country's gonna
Think that democracy's over. I mean one half is gonna feel like this is the end And it's just a temporary thing and everyone reconciled and we all like get back to work and the elections over and whoever wins wins I think unfortunately the mainstream media is responsible for giving roughly half the country a psychosis about Trump Because they are pushing out this rhetoric nonstop that he's a fascist that he's Hitler They keep putting out all these fake stories
And they are basically training people or indoctrinating them that he's a slight threat to democracy I was having dinner last night with someone who's a democratic pretty much gets all their information from mainstream media and she's like terrified of this
It's just not who Donald Trump is. It's a ridiculous hyperbole But if you're locked in that media ecosystem and that's all you hear you really are frightened by this So I think that the media the media's irresponsibility the way that they don't report Honestly and that they gin up these threats has really terrified half the country Do you think that the Trump Trump is Hitler rhetoric indicates that the Democrats feel like you're losing this line?
I mean, that's like pretty far for the course. What's so horrible about that? I mean you could make the argument that she's lied about a lot of things as Anderson Cooper Interrogated her quite well just yesterday on that town hall He pointed out that she had said 50 times that Trump's wall was a stupid idea and now she appears to be in favor of it So I think that accusing your opponent of lying is pretty far for the course from a politician
What's not far for the course is saying that your opponent is literally Hitler and a fascist. That's just going to a whole different level of rhetoric Mm Okay, Timoth Do you think we're in a nasty state and we're gonna be able to get out of it after the election and I think we're gonna be fine Okay, I'm actually pretty optimistic because I actually don't think it's gonna be that close. I mean right now it's looking like
Maybe the landslides too strong a word but a solid victory for for Trump. That's what the polls are showing That's the picture markets are showing that's what the early voting is showing and if you look at all the other data points Right now it's showing Trump winning pretty handly the other Data point that we've talked about is just how these campaigns are acting in the final stretch if you look at the Trump campaign is pretty much steady as she goes you look at the Kamala campaign and
And they're in this throwing spaghetti against the wall mode. They're back to Kind of the dark brand and type messaging where the reason to vote for us is Trump's the fascist This is very different then they're messaging when they made the switcheroo from Biden to Kamala right when they first made that switch
They said okay, let's get away from this dark brand and threat to democracy type messaging. It doesn't seem to be working Let's emphasize Kamala Harris as a change agent as a transformational candidate as a candidate of joy and positive vibes And they did get a big bounce in the polls because that The problem is that over the last couple of months that Sort of bounce in the polls has worn off as Harris has not been able to explain
What she would change she keeps getting asked in all these interviews. What would you do differently than Joe Biden? Anderson Cooper just asked her that yesterday for like the 19th time and she still does not have an answer to that question And so the problem she has is that this sort of veneer they gave her as this change agent has kind of worn off And she's seen as a continuation of Biden and the public does not want a continuation of Biden
And so now it feels like they're frantically trying to figure out how to reposition. They're back to the To the the anti-Trump sort of hysterical messaging Which didn't work it wasn't working three months ago when they made the switcheroo So I tend to think that if you look at the behavior of these campaigns is pretty easy to see which one feels confident and
And which one is in a panic? Okay, Jake out when if you could go back in time And you were Kamala's advisor when she became the nominee What would you have advised her to do differently than she has done in this campaign today?
I would have had a speedrun primary and I would have let Democracy play out that was the big mistake when the democrat if the democrats lose I think they'll look back on it and say Yeah, 100% and then in terms of thinking about Why people believe that Trump is an existential threat to democracy I encourage everybody who's a fan of this podcast to go back to episode 16 of the all-in podcast and that's the episode where we all reacted The week of January 6th and we all had
Great consensus amongst us that we thought this was one of the most disgusting horrific days in the history of the country and that Trump was Trying to overthrow the election results and that he was doing so in a non-democratic fashion I know some people have re-underrided or changed their positions
But I encourage you all to pause this episode and go back and listen to our very thoughtful discussion on episode 16 of the all-in podcast Because we were scared as well I think that things happen in a moment and you have to have enough compassion to say you react in a moment
But then you also have to have the intellect to separate yourself from the things that happen learn more and possibly and potentially change your mind I don't want to be defined by a thing that I said in a moment And I won't do that to other people
In that moment I thought what happened was really terrible And then since then I've got to know the person and I don't think that he actually incited much of anything That's my belief Yeah, and that's fine that you're a belief, but I do think there's another group of people What I'm saying is I think of regional assessment Well, I think that those people need to also re-underwrite the way I did because I'm not really Want to flip for random reasons
But that's not the point the point is I think that if you still believe what you believe then then you should tell people to listen to what you said Yeah, there's a lot of that yeah, okay, but there are a lot of things to do with sex and mostly with freeberg said
I thought we had a very productive discussion when it happens I think people have memory hold it where you're trying to say which I I partially disagree with is Those beliefs have changed over time and I think it's it's more balanced for you to say
That that's a point in time and if you believe that that point in times still exists That's fine for you to say that But I think that's the way that you should say it the other thing that I would like to say About this election which I find really interesting Is we are in the part of the cycle now
Where the side that's losing is going to pen And I think it's happened a couple times, but I would just remind everybody we have run the AB test We know what the presidency is going to look like under Trump except you get a real vice president
Plus RFK plus Elon Musk whether you like them or not, but my point is I think you need to consider that you're getting for for the price of one and If the other side if Harris wins you mostly know What the trend will be because you've seen the trend under four years of Biden The second thing is I think it's interesting to see That when you get into the home stretch the losing side tends to turn on itself because they start to play protectionism for their own careers
And there's a lot of stuff that I think you can consume that starts to show that and I think that's just an interesting observation A lot of the tried and true most reliable media sources That I think we're trying to navigate as much as possible for pro-Harris presidency Are starting to push back in a way that I find a little surprising. I think the CNN town hall yesterday was one of those moments for me Where even people like David Axelrod
A little bit throwing Kamala Harris under the bus. I didn't expect that at all So I think it's just important to observe that these things are happened I would agree with that we're going to make it through whatever What hold on let me just give one thing to your point you're not since you know
I am challenging you with that episode 16 call out I do hope that whoever wins We all support that person to do the best they can for all Americans and that's always been my commitment And I did it the last two times and I we will survive this one I don't think we'll survive two or three of these cycles if we spend 10 trillion each time just to add You know since um jk how you're referencing it up so that I participated in said so things I mean look
I think that the goal of the mainstream media has been to try and keep us in the heat of that moment For four years. I mean if you've watched MSNBC for the last four years It's like j6 is occurring every single day. I mean this is all that they talk about But I think like Jamal said we have learned a lot of things since that day I didn't know for example that twitter had censored President Trump's tweets telling all these people to go home
That basically he said to protest peacefully and then when they Rided that he actually published tweets to try and tell them to go home So that was new information and that what that came out remember at the beginning of the whole primary cycle Trump did that town hall on CNN with Caitlin Collins where he dramatically pulled the piece of paper out of his pocket With the tweets and started reading them That was a lot of new information for people and I think that gave him a different picture
And then I think one other point that I think is important is that imagine if the press had tried to keep us in the heat at the moment Of the summer of 2020 riots the George Floyd Floyd riots Then we'd have a very different perception of which party was in favor of riots because Tim Wallace was the governor of Minnesota when those riots occurred He did not want to send in the National Guard Trump did and then Kamala Harris tried to raise money
For bail for an organization was bailing out some of these protesters and rioters out of prison So if the media was so inclined they could portray Kamala Harris and Tim Wallace as the party of the riots of the summer of 2020 I think at the end of the day that both those takes are propagandistic
And they happened four years ago and it's certainly a piece of information that voters can take into account But it's only one piece of information and there's a whole lot of other issues and policies in this election And I think at this point everything that happened four years ago is kind of priceless the stock and what voters want to know about now is What would you do on the issues? What would you do about immigration? What would you do about inflation?
What would you do about the economy and when you look at the polling on those issues that voters say matter to them Trump has a decisive advantage and Kamala Harris cannot explain what she would do differently than Joe Biden David Axelrod word salad city. That's what he said last night, which was very shocking that he would say that Totally that is throwing her under the bus, but it's also just preserving his own credibility because it's hard to look
But this is my point Anderson Cooper now has to preserve his own credibility You can only prop up a candidate so long and then at some point you have to prioritize your own media career And I think Anderson Cooper last night had to start to push back That's what because he's turned on Biden
Yeah, it's like At one night when everyone turned on Biden after the debate all the journalists who had been covering Biden for so long that it was obvious in their face the whole time they suddenly have to be like Okay, I guess we got to admit now he's not really there
Yeah, look at that I think I think in one important way Kamala Harris has been set up to fail here because on the one hand She wants to distance herself from Joe Biden's record, but on the other hand she won't say what she would do differently So she's in this kind of like never never let this this limbo. Yeah, that's right But that's also not her fault That's the position the Democratic Party put her in and this goes back to what Jake Kow said we should run a primary
They should have run a primary for sure. I think they could have had a better candidate But also I think to go back to freeberg's questions is a little bit of a pre-mortem What should they have done differently? I think you either defend Joe Biden's record or say what you would do differently You can't be in this limbo state And you know Joe Biden's got to be in the White House there and gritting his teeth
Like wanting to get on the campaign trail and defending his record because I think Joe Biden thinks he has a good record And there are things you could say in favor of that record I mean, I personally don't think it's great But you could talk about the full employment picture You could talk about the fact that yes, we had 9% inflation but now it's down to 3% I mean there are things you could say I mean he's
Equity markets equity markets are an all-time high. I mean he signed a lot of legislation that he obviously believed in So the Democrats do have a record to run on it's not a record that I personally believe in but it's certainly one
That I think you could make an effort to defend and I think Biden if he was the candidate would be defending that record And it's very awkward to have a candidate who was part of this administration who will not defend that record who Dissensors herself from that record But won't really say with any detail or conviction what you would do differently That is just a losing proposition and I think Anderson Cooper exposed it more than Brett bear last night because Anderson Cooper had the time
Brett bear only had 26 minutes and Brett bear was seen as adversarial whereas Anderson Cooper Is fundamentally a friendly interviewer and when she can't answer those questions for Anderson Cooper That's when you know you're done. By the way, we've said this now consistently Almost Minotinously now for about two or three months She has to go into these swing states and answer about four or five critical questions And and I would just say
This is still the problem. So if she wants to try to close this gap in the next 12 days and have a legitimate chance of winning She I think there's still 12 days I mean, it's a very simple way to do it number one
The border got out of control. We've shut it down already and we're gonna tighten it even more number two The stock markets at a record for a reason number three The employment is at the lowest it's ever been in our lifetimes This is the as good as it gets folks and if you go with the other guy honestly Well, you're a better campaign manager than the person that's running the campaign right now They're not for look. They're not doing a good job
And I think that sacks is right. They're afraid of their own shadow and they're going to walk into a A meaningful reset of the democratic party of the Let me even finish number four this person overturned roe v. Wade That's what they're doing and his VP candidate has said he wanted a national band They walked that back, but if you're a woman, you shouldn't trust them and number five
Obviously, you saw what happened on January 6th. He'll do it again And if you just said that over and listen, I'm not Biden Biden obviously needs to retire. He was a great president. He was a great vice president We thank him for a service. I'm completely different. I have a different approach to all of this and Trump is a wild card that this country doesn't need at the time. They end And they would win, but I don't know who's advising her
It's the same thing with Trump. I think Trump could have just gone right to the middle And when he was Trump 2.0 he should be up to 20 points on her The fact that he's not up to 20 points or 15 points on Kamala and that this is a dead heat
I think is crazy. Trump's the easiest candidate to be come all as easy as candidate to be I wonder who's running both of these campaigns Well, it's it's hard to be up 20 points when the entire mainstream media is against you There's only reporting positive things about the other candidates only reporting negative things about you and you have A three to one money disadvantage One thing you could say for Kamala Harris is she has been a good fundraiser
There's plenty of billionaires who are funding her campaign. They literally have three times more money Then the Trump campaign and even in California, which is a safe state for them. You're seeing
Kamala campaign ads everywhere. That just tells you there's so flush with cash That they can afford to spread the money around even in California So look the reality is that from has the entire establishment against him And I think for him to be ahead in the in the polls in the prediction markets and the early voting fairly decisively Is an extraordinary achievement I think he's probably the only candidate who could have done that
In any event and I do think jkow that Kamala has tried to make some of the arguments that you just said Not very crisply, but she's trying to walk back on the border The problem is they have no credibility on that because the Democrats for the last eight years have fought Trump on the border wall It's his signature issue and if you don't think Republicans should be believed on abortion
There's absolutely no reason to believe Democrats on the border. They fought Trump's wall. Yeah, I think that's fair I think that's fair parts of law for scrap metal She was supposed to be the borders are didn't even visit the border which shows that she never thought it was important Now she wants to pretend that she's Trump on the border Public's not buying it to handle the borders is so simple. She could just say what work then is not going to work now
We've we've we've filled up and we just true dough just did a tweet. Hey, we're taking a pause for two years That's what she's got to do. We're taking a pause for two years on the border We obviously it got out of control the end. Okay, move on to the next issue All right, if the Harris campaign is listening jkow's advices out there you you may come on the pod You're always welcome Everyone that's running for president is welcome. I'm not sure. Did you guys hear this rumor that bars?
She's not my candidate. She's not my candidate. Did you guys hear this rumor that bars tool sports Was asked if they would interview her and they turned her down. Is that is this rumor true? Apparently, I don't know why wouldn't they take it? No, they would take the interview So Portnoy claims that the cop that the Harris campaign reached out and asked to be on two or three of their shows and Bart's tool declined having her on
Which is pretty unbelievable. Well, they just waited way too late. I mean, there's no question the last month They radically pivoted their media strategy She became the candidate roughly three months ago for the first two months They didn't let her do any press interviews
Then they realized that their internals were bad. They're behind in the polls So now they're having her go out and do a lot of media and like I said the couple weeks ago That started to create a doom loop because she is not a great media performer So her polls started getting even worse So then they got to put her out on more media to try and you know, robot that your doom loop was a good call I'll give you credit if the comic campaign where start we'd be saying it's in a desk spiral right now
Okay, you got it. You got your long. It's a dead he it's a dead he we got it. Let's go So we're gonna wrap up with Starbees what I think so pretty yeah starbees super interesting topic because it's a real question around Traditional shifting to digital is that why starbucks is having challenges or is it just maturity or is it what happens when a brand that's Successful as a luxury brand gets too big and the kind of
You know premium experience commoditizes. So as you guys know we covered the starbucks CEO Brian nickel joining A few months ago. This was after the prior CEO had been in the office for just 16 months And there were a lot of problems that were plaguing starbucks But just this Tuesday Brian nickel came on and said that we're suspending guidance for 2025
After reporting preliminary earnings that showed another drop in sales at starbucks same store sales Which is the key metric in the qsr or or food and beverage retail business Uh, it tracks what your revenue is year over year same source sales declined 7% year over year Uh, earnings per share dropped 25%
Uh, year over year. So nickel said we're getting the bad news out of the way now We're going to this back to starbucks plan focus on experience improve the throughput experience and quality make baristas choose starbucks as a career And then he went through a whole plan. He put out a six seven minute video on this whole thing So clearly customers are frustrated with the starbucks product the starbucks experience the employees are frustrated working there
And a lot of the system seems to be breaking down. I guess I wanted to kind of talk about what is the core driver And is there a business lesson in all of this about premium brands or about scale and maturity and markets to be learned from the starbucks story So I don't know if any of you guys have gone through this earnings reporter looked at the nickel I have actually Um, I go to starbucks on the regular and I think this really is just a case of founder versus being counter
It reminds me of Boeing or you know, even apple with their inability to produce new products post the the Steve jobs pipeline of products and if you have anybody read for your heart and to it shouts his biography It's absolutely fantastic and he really had an obsession with user experience like
writing people's names on the cups was a starbucks innovation remembering people's names empowering the green aprons was like a big part of this and then once he was added and the bean counters came in And they just got all about efficiency the much smaller number of baristas at the store
ordering your drink through the app and just trying to make these grind it efficiency decisions as opposed to the experience once and I think The starbucks experience starts and begins with the baristas and that's the main problem if you've gone to a starbucks
So the last couple years sometimes you go in And there are literally 50 drinks from the like I'm not kidding like 50 drinks On the pickup counter and then this huge wine if you're coming person And it's the most impersonal thing and the the stores are a wreck they're disgusting
They look like a truck stop and the whole point of starbucks was to create this third space This beautiful place that was welcoming with gorge sliding and the baristas was supposed to make you hang out and enjoy yourself there And they lost that and all you have to do is re-shulks his butt and do exactly what he did now there are a lot of other issues there Around the competition for starbucks employees that I think are super important
Do you think that's really true j-k help because like nickel came on and he said we're going back to the core flat white Suspressos nice nice espresso delicious coffee, but the reality is in order for them to have grown revenue over the last 20 years
starbucks has expanded their menu as chimata has pointed out to becoming a seller of sugar They've become a seller of milkshakes and flavored beverages and high sugar cocktails mocktails that people you know run into the store to buy two three times a day That's how they were able to get the pickup
Not selling what they started out doing which was fine Italian roast at espresso It's now become a very different product and a very different experience And so can you really go back to the core and not lose all the customers that I would say aren't looking for a flat white and espresso
They're looking for a milkshake in the middle of it I think you want to maintain the core is the key you don't want to give up the core and the core was having a great in-store experience And I think that is not what you get when you go there putting the sugar aside It is I think like going for ice cream for kids So my kids will pick if they want to go for ice cream or starbucks and to your point about the sugar trim off it's basically the same profile
And it's a great place to get breakfast. I'll tell you that you know the egg bites and the scones very good Let's watch Nichols let's watch Nichols clip and then chimoff you can give us your take on this This is a 30 second clip from Nichols six minutes that he put out on twitter to succeed
We need to address staffing interstores remove bottle necks and simplify things for our baristas We need to refine mobile order and pay so it doesn't overwhelm the cafe experience We're fundamentally changing our marketing We've been focusing on starbucks rewards customers rather than talking to all our customers And we're changing that quickly We will simplify our overly complex menu fix our pricing architecture and ensure that every customer feels Starbucks is worth it every single time
They visit we must reestablish ourselves as the community coffee house By the way, this is one of the things that Nichols did at Taco Bell when he was a CEO there you guys remember the Taco Bell menu There was always like really interesting hidden things on that menu
He simplified the menu made it very small did the same at Chipotle He takes this approach of finding the best product simplifying the experience simplifying the operations And giving the customers fewer choices that ultimately leads to faster turnaround better experience
but the tradeoff is you have less Variety that people have come to know and love and at Starbucks in particular where there is just so much variety to choose from now If your favorite beverage got pulled off the menu are you going to start to go there less frequently?
You know, Chimalt, I don't know if you have a take on what's going on at Starbucks and whether it tells you something about The maturity about one of the most iconic consumer brands in America This business is in trouble Next please show the chart
This is Eli Lilly versus Starbucks if you look at it over a year you could look at it over The year to date you could look at it over two years five years Five years But what does this show this shows Sugar versus anti sugar And anti sugar is winning say it differently gLP ones Versus things that
Cause you to need gLP ones gLP ones are winning And so I think this existential issue for Starbucks is about resetting to a much smaller footprint and a different product portfolio That tries to see where the puck is going where the puck is going is where a large percentage of the people
That probably were buying Starbucks products and were very loyal Starbucks customers We'll have very different consumption habits as they more Provasively use these gLP ones And this in a nutshell is not something that Starbucks can fix with their current product mix
And so I think that they're fighting Into a headwind and these other companies are deeply incentivized to Get American taste buds to be different And so Jason the things that you talked about are exactly the things that I think start to fall off the menu or just don't sell as much
Because whatever the population of Americans are that are on gLP ones. Let's say it's single digits The real question is what percentage of Starbucks customers are on these things And I think it's probably much more than single digits
And this is why I think you see the continuous decline in same store sales And I think if you start to graph the adoption of gLP ones Provasively in America to the drop in same store sales I think as gLP one adoption goes up same store sales will continue to go down
But it doesn't it argue towards the original business freeberg that Going there and having a cup of coffee and hanging out leisurely with your friends and having a conversation And it being a third space is the core value prop and maybe the sugary drinks maybe we'll fall out of fashion
So it may be true, but I think that the the core Objective of any corporation is to maximize shareholder value driven by growing profits over time So growing profits over time requires increasing your revenue and there are three Leavers for doing this maximize brand which is to get more customers
And I don't know if you can get the brand to be any more maximal than Starbucks Maximize coverage, which is how many products can you get those customers to buy whether it's on a daily basis weekly basis or monthly basis
How much of their meals and wallet share you're getting and I don't know how many more times you can get people to go back into Starbucks each week Then they've done with their rewards program with their digital with their high throughput tools that they've built over the last decade and so on
And then finally maximize price. There's a limit to how much you can charge people When you put those three together you got more customers You're selling a more stuff at the highest price possible at some point you reach a revenue maximum That has happened also at Apple I think that Apple has faced a similar dilemma in the last couple of years
Which is how do we get more customers? It's the most recognized brand on earth You can only buy so many Apple products now, you know They tried to launch the vision pro it didn't go well today They didn't announce that they're this week they announced their discontinuing production or reducing production on the vision pro And you can only charge so much for these products and I would argue that Starbucks is a victim of the same
Maximization effect that at some point you get all the customers You get them to come in and spend it's and buys many products from you as they can and you charge them the highest price possible And then you reach this kind of maximum point on the business
And I think Starbucks has just reached that point of maturity So to your point it doesn't mean that it's a bad business at all It could be a great business a nicely profitable business But the growth ahead of it is limited it cannot keep growing same-store sales as it has historically Because they've maximized all three of those levers So fewer costs might be a way to drive more profits, you know more efficient operations I think that's the natural next state for nickel to tackle this company
The sad thing for Starbucks is that the only road that they have is to actually double down on sugar And the reason is because the arpus are meaningfully higher than traditional coffee And so the the economic pressure that shareholders will put on it is to actually stay in the business that they're in And try to do it as long as possible as you say freeberg and just strip out as much cash as possible
And then you just you grow profit by reducing costs and getting more efficient versus Yeah, trying to add more products to get more customers Degree-experience, but the structural problem is Starbucks should be probably a 20 billion dollar asset Yeah, and so what happens when a company gets to this level of maturity much like has happened with Apple is the multiples Compressor no the difference though that Apple has not had the competitive pressure that Starbucks has because Starbucks
competes on a level playing field with the Dunkin-Donuts of the world or the Pete's coffees of the world But they compete in a completely orthogonal plane with GLP once And I think that is not something that Apple deals with so Apple can still be At the point that you described earlier, which is let me just maximize free cash for generation Which is what they do and then let me allocate that back to shareholders via buybacks
Which is also what they do so there could be another decade or so where Apple can continue to run this play with very little impact To them or to the company now I'll say something else about Apple though, which is I actually upgraded my phone I think this was three years in and I finally did it my gosh this phone is sucks IOS 18 software is janky IOS 18 is just terrible I'll show you one example of just like terrible design where if in it if a designer that worked on my team showed me this
I would have fired them look at this can you see this is it possible to understand why you have two images for the do not disturb thing One above the other I just just No, but it's a level of sloppiness and not taking care Which which just shows you that it's like we make so much money. It just doesn't matter anymore That's what I feel like they're telling me and then I'm like Well, wait a minute. Why did I just spend $1,200 of my hard-earned money to upgrade to this thing if you don't care
How much was it separate? I think it was like $1,200 for this new phone the other thing is that The actual upgrade itself and I'm not exactly sure why because I didn't take the time to unpack it. It took four hours The actual migration of like from an old phone to a new phone and and I thought my gosh This is such monopolistic behavior Right, so if it takes you an entire day
To basically upgrade your phone at some point you're just gonna stay with the platform you're on and never upgrade Or you're just gonna stay on the exact same device Because it's just too complicated imagine going from an apple to an android It's a good way both of these businesses are victims of their own success They reach like market market saturation they reach their natural audience and then some and they've just got to figure out what to do next
And the adjacencies are hard to find also all those photos. Also photos. Oh, they do it. It's terrible It's terrible changing the interface apple. This is basically a camera and you made it terrible. It was good Why did you do that?
I think they're trying to change things for change thing one of the things amazon's gotten correct and and other services like ebay and crexuses when you have an interface that works and And billions of people rely on it you have to be very very subtle in making changes to it And they made a wholesale change to the photos app and it did not work it did not work How do I get rid of the second silent thing on my thing? How can I just go back to the old thing?
Yeah, totally that's when you know you've failed as a product manager when people want the old thing But isn't this just so lazy Something's not right. Yeah, I know there's a lot of apple people this is come on guys Can you just take your old center to what he's showing and the control center is massively confusing It's like changing where the lights are in your bedroom and like okay Yeah, all right trouble shooting
Um part of the all-in podcast is over. I really want to say thanks to sacks for participating heavily in our Starbucks discussion sacks Anything you want to say on the maturity of Starbucks or other mature tech businesses or value luxury businesses as they get big too big Too big to keep growing anything else I mean, I just saw next we're on Starbucks when I do like their product but I just can't what's your order tell us your order. Yeah, what's your order?
I just get an americano with a splash of oatmeal Oh Like my order sacks That's a great order. What happened to you? You're yeah, that's great good for you How about I just send you some specialty chemicals you can just pour down your throat some Zantin Cogas own milk bath some cargigain don't listen to me and say you put in heavy cream you're gonna get kicked out of maga This is not a good word. Don't milk and be maga
They don't have nut milks at marilago. I'm gonna find out in a couple weeks. I'll let you know Don't put that stuff in your body. I bet they do you should take that sweater They just took from chamath and wear that tomorrow. I go when you go. It's like a perfect sweater for your marilago Visitor. Oh, yeah, oh my god. Don't touch it. Stop touching it. I'm still mad now. I'm gonna talk to her about this
Don't talk to her out lunch. I'll talk to her at lunch. She's putting a sundress on Before you came on this to me she was reading she was actually she was just sitting on his lap and they were just chatting And I'm like what is going on here? How outrageous?
What do you want for lunch? I said what do I want for lunch? Your company. That's what I told her oh sweet heart All right, this has been another amazing episode of the olympod as a team player I have been here to pinch it for jcali did not want to moderate this week So I stepped in to fill the shoes One of this shows greatest moderators For your Sultan of science for the rainman for the chairman dictator and for the world's most absentee moderator I Want to thank you all
Next time he's stealing anything that's not nailed down. I'm the world's greatest house guests. He's putting together his own gift back Love you besties. Love you boys. Bye. Bye. I'll be there in a couple of hours. Tax Well, let your winners ride Rainman David I'm going on and it said we open source it to the fans and they've just got crazy with it. I'm going on Besties are gone. I'm going through the
That's my dog taking it away. She's driving So We should all just get a room and just have one big huge or two because they're all just like this like sexual tension We just need to release the