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There's been a lot of concern in the markets right now around Nvidia after this major event Happenalles's put this up there on the screen from the Wall Street Journal. It recently ascended to become the world's most valuable company, going over Microsoft in terms of its market capitalization, reminding a lot of people of what happened not that long
ago during the dot com bust. As they reference Cisco Systems in March of two thousand, was the last time a major, big provider of computing infrastructure surpassed Microsoft, and in retrospect, actually was a major indicator of some of the falling values to come now. I want to say, to be fair, the CEO of Cisco at that time,
while he said that there are some parallels. Said quote that the dynamics of AI are different than the previous ones such as internet and cloud computing, and he has said that he himself is majorly invested in AI and in cybersecurity, so he doesn't think it's necessarily a one to one situation. But part of the reason why it's kind of scary is that the exponential jumps in Nvidia are powering huge portions of everybody's retirement that they may
not even really be aware of. And it's not just them, it's that the market forces that are driving video above Microsoft are the same ones that are powering let's say Google or Meta or any of these other technology companies who are betting the farm on AI. They're investing massive hundreds of billions of dollars into this, and so if there's any crack in the system, it's not just going to come from Nvidio, it's going to share, you know, huge amounts of value off all of these technology companies.
And when you.
Add those up, I mean seven out of the eight trillion dollar companies in the world are US based technology companies. The only other one is Saudi Aramco. So that means that if you saw any drop in Nvidia. It's not just that Nvidia is so dramatically represented in the S and P five hundred.
So let's say you're normal investor.
You're Voo is like a meme online, which is like the Vanguard S and P five hundred ETF.
You're like, I have brought exposure.
It's like, well, you know, actually today you don't not nearly as much as you think. Let's put this up there on the screen just to give people an example.
I mean, you can see.
There clearly what the how far n video is powering the S and P five hundred above where things are, and so where we say, like, oh, the S and P five hundred is up what twenty five percent or whatever over the last year or so, Well, when we look at it, though, a huge portion of that is driven by those exponential n Vidia gains. So it's not just that the single stock is so behind the rally
in so many public markets. It's that if there were to ever be a crack in Nvidia, it would mean that there is a crack in the whole technology ecosystem, which is almost like a quarter of you US GDP at this point, and any significant plunge we're talking about capital problems, liquidity problems, people's retirements get wiped out. I mean, it's a disaster, as we all found out in two thousand and eight.
So this is something that a lot.
Of people that I know that are skeptical are starting to get worried about what happens here.
Should anything happen with this single company.
Yeah, and it.
Seems to me like the question isn't whether AI will ultimately be a transformative technology and whether these chips are going to continue to be central to a lot of
new tech development. But I mean that's the thing, like with the dot com bubble, it's not that the Internet wasn't transformation directs that you had a lot of you know, dumb company ideas, a lot of froth in the early days, and a lot of money just being thrown at absolutely anything, whether it had a real market, whether it had a real path to you know, earning revenue and becoming profitable or not. And you know, I mean you see this with a lot of new industries when they're first developing.
Some things will succeed and many other things will not make it and crash even though they were in the right place sort of at the right time. There were a lot of early personal computing brands that are no longer around, even as the PC obviously became really transformational technology. So,
you know what, I know, I'm a layperson. I'm just looking at this from the outside, but having lived through the you know, two thousand and that crash, it does seem like it could rhyme like we could be seeing a very similar dynamic where there's so much hype around AI, there's so much money being thrown at it, there's so much projection of what it will mean in the future that obviously in Nvidia's price right now like doesn't reflect where they are right now today. It's all based on
people's projections of what it could be in the future. Yes, so if anything rocks that, if you know, the if it doesn't come to fruition to be as transformation, or if a lot of these companies startup companies and other larger players that are incorporating this and betting on this for their future success, if it doesn't work out in the first iteration, there could be massive exposure here.
So I definitely think it's an important thing to keep an eye on.
I'm worried about it.
I mean, for example, you know, the quarterly revenue of Apple, which is I think the second most valuable company, is like ninety billion. It's like Nvidia is doing like twenty six billion. Well okay, so again, market people, I get it, it's about future.
Value, not current value.
But we're talking about Apple, a global brand with its own you know, proven infrastructure, has a lot more resilience. This is not the similar situation. I mean I was looking at some of the worries about Nvidia. The very first thing that the new tsmc CEO, the person who actually makes all the chips in Taiwan, He's like, yeah, I think Jensen and I are going to need to talk about prices, you know, forest chips. Yeah, well, this single company is making all the chips. You're basically have
the world's most valuable company. You're there, a soul supplier. What do you think you're going to do? It doesn't take an economics genius to figure it out. At the same time, I mean, we are a single one. Imagine this, China doesn't even invade Taiwan. They do what North Korea does and they just launch a missile over Taiwan that crashes over. You are going to see half the s and P five hundred go to zero. I mean, the
existential systemic risk that you see there is outrageous. I mean, and the back of the US economy is built on this, So we are really subject to a massive shock. And geopolitics, what you think Ukraine was important, Yeah, I get it. It's spike the price of gas and screwed up some wheat markets. That is nothing compared to the risk that is sitting on the Taiwan island. And when we consider you know, the geopolitical risk, but really a lot of the exposure that people have here.
People are very worried about froth.
They're worried about like miss price and it's like you just said, no one is saying this company is not extraordinarily valuable and it's not a trends but it is also one where it could be just overpriced from where it was, just like Amazon dot Com was in the middle of the dot com bubble, And ask any of your parents who lived through the dot com crash. It took a while for people to come out of that.
There were a lot of lessons learned. We're already seeing like some signs of a lot of these ai startups just going busts.
There's going to be a lot of pets dot com.
Yeah, and we're already watching it.
There was this famous Marquise Brownly like helped kill this company. It was called Humane AI. It was like a pin that you wear that you try and speak to and it was a terrible idea honestly. But I mean they raised like a quarter billion dollars. He actually uses it doesn't up doing well at all. Now I think they're you know, a fire sale or whatever on the company is a lot of these wearable AI texts.
Just from an observation. I know a lot of these people work in tech.
Two years ago they were all Web three you know, crypto guys.
Now they're AI guys or like using AI to power X, y and Z.
And the other funny thing is you watch how chat GPT for example, and it's translation. Whenever it rolled out real times translation, that wiped out like seven different companies who had.
Raised hundreds of millions of dollars.
Being like, we're going to use AI to real time translate and chat GPT is like yeah, but we could just do that well now, yeah, yeah exactly, And we're watching too here, Like Microsoft a huge portion of their rally is through their enterprise collaboration.
With open ai, right with chat EPT.
So you can just see how like there's a lot of like there's only a couple dominoes that need to fall here, and a lot of stuff is going to get wiped off.
Now, Microsoft not is going to go bankrupt.
I'm not saying that, but right, you know, you shaved what ten percent or whatever off the value that's two trillion dollar company.
Yeah, well, I mean you've got definitely the pets dot com phenomenon.
We already see that.
I mean the numbers in that first article we put up, they say that been fatiable flow of money into AIS raised eyebrows among investors uncertain the boom can continue without pause. Some fifty billion dollars has been invested in in videos chips since the boom began, according to a Sequoia capital estimate March, but generative AI stars have only brought in three billion in sales. So fifty billion invested but only
three billion in sales returned. No one should have any confidence also that the vcs that are primarily responsible for distributing a lot of this money have any more sophisticated understanding of what's going to work than basically like you or I do, we've seen the way that they have
been fleeced. If you come in with the right pitch and the right set of investors and the right board and people who seem like they're prestigious and know what they're doing, they can easily be fleeced on this stuff too.
So that's no check against this sort of froth. And then the other thing I would say is like, in the established players, it's not like some of the products they've put out have really gone over that well, what is it the Google like AI generated results have been dramatically wrong and embarrassing?
What was the image thing that we covered, or like.
They're like show me a Nazi soldiers or a black guy.
They went to the direction of being woke and it just like made it wrong, like just totally historically inaccurate, and their attempt not to have white people on the screen at any particular time. So it's not like even the established players have really lived up to the hype at this point.
So a lot of question marks there.
Yeah, I'm very worried because it you know, even at twenty five percent drop ten percent drop, which is you should always if you're buying and playing around in single stocks, you need to be prepared for that. And if that happens, huge portion of the S and P five hundred goes down.
Now we're asking all of these questions. I mean, if you go back and you study the dot com era, it took I think like seven years really to yield some of the investment results that eventually went down into the fact that dot com enabled people to lay broadband and fiber optics some of that stuff and eventually yielded results in two thousand and eight and forward. But I mean, it took a long time for some of that stuff
to materialize. And I always think about the sixty five year old of today because it's easy to think about, you know, oh, well, in the long run, everything will be okay. If you have to wait seven years and you're sixty five, it's a long time for you to wait for your retirement. Stating has to come back. At the same time, we do have a counter indicator that a Nvidia is not going anywhere and it's doing just fine.
Let's put this up there on the screen. Nancy, presumably her husband maybe her has now made over five million dollars off of some Nvidia options, up two hundred and thirty percent in two hundred and ten days. Still not sold her call option, she has made over twenty times her salary portfolio at an all time high of one hundred percent according to our friend unusual whales. So when she actually sells, then perhaps we may be in a problem.
But here's the other problem.
You won't find out in terms of reporting until like thirty days or whatever after we sell, So we don't have a real time indicator of whether she's getting out or not.
But I don't know she could be selling today.
We don't know exactly.
Personally, I'm just saying I'm worried about it because of first of all, a lot of friends who work in technology. But second, and really the most importantly is just anybody out there who's got tirem and savings and more. You have a lot more exposure to this stuff than you may even realize, and something could just happen and boom.
You know, we're in a totally different economy.
Yeah, and that has ripple effects for everyone, whether you're in the stock market or not.
All right, let's go to Russia and North Korea. This is something again been tracking very closely, and one in which the level of lying from the mainstream media is just out shocking to us. You know, really, let's put this up there on the screen. So President Putin recently visited North Korea. It was only the second visit of his entire presidency, and in this visit he's you know, heralded as a god. They roll out all the singing children for him, and the stadiums and all of the old school.
Propaganda that we know and love.
But perhaps most importantly was this is that Russia and North Korea have now signed a partnership deal that will be the strongest since the Cold War. The details of the deal are not one hundred percent clear, but they quote pledge mutual aid if either country faces a Russian and most importantly, it locks down a huge like a supply of ammunition from North Korea. North Korea has one of the largest stockpiles of the Soviet style ammunition and
production facilities of any country in the world. North Korea now is supplying a lot of these weapons and has a huge stockpile not just of Soviet style weapons, chemical weapons, all kinds of really nasty stuff. The most basics of artillery and others to Russia for the Russian war machine in Ukraine. The important thing behind this is that you would presume that this was inevitable.
It was not inevitable.
It is directly a product of Joe Biden abandoning the Trump policy of engagement with Pyongyang. Donald Trump shocked the world, and I'll never forget it. That's still one of the best things you ever did. When he just went to Singapore and sat across from Kim, shook his hand.
You know what happened.
We stopped seeing missile tests, We stopped seeing a lot of the aggression. Now at first, Fir people were very skeptical, the South Koreans and others, but the tensions were actually beginning to come down. Biden comes back into office immediately reverts back to the Obama policy of non engagement, where we tell the North Koreans nothing. We will not give
you anything as long as you have nuclear weapons. Now do you know anybody on earth, a hermit kingdom dictator with nukes who is just going to give him up?
Why would you?
And apparently from the people I've spoken to who sat across from the North Koreans, what do they always talk about Gadafi, They're like, listen, Gadafi gave up his stuff. You guys invaded in Iraq and then you know, he was sodomiyed on live television after you guys bombed his country and you took him out. If you think that we're going to take your word for it, we do not believe you. These nukes are the only things that
keep us in power. So we are basically locked in an existential battle with the North Koreans where they want to survive. That's all they want. They want the corrupt Kim regime to survive. We, for some stupid reason, just cling to the nuclearization policy, and in exchange, they say, fine, you know we need money, so what are we gonna do. We're going to the Russians. The Russians are gonna pay us. And so now we have this terrible new like actual alliance,
which let's say you care about Ukraine. Then the policy of isolation towards North Korea has been a disaster, you know. Same with respect to China. The Chinese apparently they're not like selling the Russians weapons directly, but they're facilitating the transactions. Obviously, the Kim regime is a client state of the Chinese, and they're actively encouraging this. And now what happens the European Union in the United States is trying to slap
China with sanctions over our policy visa vi Ukraine. It's like the whole world is all revolving around Ukraine. Is if it's the most important thing, but it's evolving a new axis against us, which make.
Fun of North Korea. All you want.
Ask the people in Soul who actually have to grapple with the threat. It's terrifying. They will openly say they're like, look, the North Koreans can destroy our most valuable city in forty five minutes. They could shell us. They've got the world's most powerful chemical weapons, they have all these stockpiles of ammunition. They're one of the world's largest standing armies. You can laugh at them all you want, but don't
underestimate both their military capability in Korea. But they can launch a mission and wipe Los Angeles off the map if they want to. So this is something that we had directly facilitated, both in our policy on Ukraine and in our policy in North Korean. It's so a very good example of what you talked about crystal the Biden brain of reversion back to the nineteen nineties, where we think that we have chips which are long.
Gone off of the table.
That's exactly right where he still thinks he's living in a world where we are the sole superpower. We can do whatever the hell we want and no one can do a goddamn thing about it. And because of that, I mean, the direct thing that Putin points to in going forward with this pact, and there had already been a lot of cooperation weapons sales, et cetera between North Korea and Russia in the context of the Ukrainian War.
The specific thing he pointed to was the fact that we said, and hey, Ukraine, go ahead and use our weapons, and are you know to to hit targets within Russia? So that very immediate, discrete decision. But above and beyond that, I mean, think of two, how we threw everything in our sanctions playbook against Russia. And that's the other thing that Russia and North Korea talked about here is part of the cooperation is an attempt to undercut and further short circuit.
Our sanctions regime.
I mean, Russia is already demonstrated that those sanctions, we just don't have the bite. We just don't have the power and the might to uh extract that economic cost and wage that economic war that we once did as well. So you know, we have we're already coming into a world of multipolarity by our actions in Ukraine, I think also with regard to Israel and the way you know,
most of the world has been oppositional to that. You know, even going back to our actions with regard to the a Rock War, we have helped to accelerate a shift away from us. We have helped to consolidate a block that isn't that is directly opposed and adversarial to us. And none of this was none of this was necessary, It didn't have to happen, and was not inevitable that we end up in this direction. This is all directly
because of decisions that were made in this administration and others. Besides, by the way, you know, going back a lot of years, and the way that we've acted with complete arrogance and disregard for any other actors and any other perspectives, and in this very warlike manner as well around the world.
Yeah, absolutely, let's put the next part up because this is a perfect example. Putin, not yet long ago, was a direct participant in US efforts to quote unquote denuclear eyes or at least halt nuclear weapons production in North Korea. And to be clear, also amy Ran, which is currently seeing signs of nuclear enrichment. Guess what Putin is now doing. Putin says, I don't care about literally any of that.
In fact, I'll probably help you if you want. As you see in front of you, Putin once tried North Koreas to curb North Korea's nuclear program that is now over with the signing of this mutual assistance pack. He's similarly helping Iranians build production facilities of their drones on Russian soil, which are then being used inside of Ukraine.
It's a great deal for Iran they get money, they get to see how their weapons perform against sophisticated Western technology win when same here for the North Koreans, Like it's just a battleground testing ground for them. They're like, sure, take as many much ammunition as you want. They've got literal slave labor that can crank it out. All of this could have been prevented, but we are just slowly pushing these countries together and we are underestimating the sheer
power that they now represent. We are not living in nineteen ninety one anymore, where we can just do whatever we want with relatively no consequences. These are powerful nations, and you know, watching this happen should be humbling in Ukraine, but instead things are actually flipping the opposite. Every single day, things actually get worse in terms of dragging us more and more into this war. For example, let's put this
up there. What do we see from CNN? The US and the UK and NATO allies are actively debating terms for Ukraine ahead of the summit. US the wants to communicate to say that Ukraine has a bridge to NATO membership. The UK and others want to say that Ukraine's path is irreversible. So the divide today is the language over Ukraine eventually getting into NATO, not anybody saying, yeah, maybe you're never going to get into NATO literally ever, Yeah sure, maybe we'll help you out if we want to, if
you actually conduct yourself in a good manner. But this
is the contours of the debate. And then just this morning, I wake up to this insane news that the US is currently halting all open orders of Patriot air defense systems and interceptors for all allies deliveries to countries that are actually important to US until quote Ukraine has enough to defend itself from Russia's air attacks, which basically means the entire US industrial military complex is working on behalf of freaking Ukraine right now, abandoning Taiwan or any of
these other countries genuinely important to the US economy. This is like we are just watching, like the whole US policy is revolving here around Ukraine for no discernible reason, Crystal and watching it happen is honestly terrifying, especially in
the North Korean context. I mean, if they develop what twenty fifty some nuclear weapons, that's going to put them on the par with some of the other great nuclear powers like Pakistan and India, and they're directly in an ally with China and with Russia, with Iran, presumably when just five ten years ago we easily had them on our side under the Trump administration and it was thrown away for no reason.
I mean, we've created, over the course of a number of years a landscape in which the incentives for smaller countries are all in the direction of obtaining nuclear weapons, because I mean Ukraine probably which as they still held onto their nuclear weapons as well, that is the direction that the motivation is all in, and Libya being the
primary example of why that is ultimately the case. But I mean with regards to Ukraine again, the original policy, which there was a big difference between how Barack Obama viewed how a relationship with Ukraine would be. He was actually much more sort of dubbish, unwilling to do some of the things that Trump did in terms of weaponshipments
and training for Ukraine. But Biden is locked into this ossified old Cold War arrogant mentality, and so the thinking was basically to use Russia's invasion as a pretext to re up the Cold War and use them, as the Ukrainians, as our plaything and engage in this proxy war under the arrogant assumption that we could actually foment some sort of regime change in Russia, that we could topple that regime and make it more compliant so that they just did,
you know, whatever we wanted them to do whenever we wanted them to do it. Now that the foolishness of that has been ultimately revealed. There is no other plan. There is no other plan. The plan is just to muddle through, hope to get through election day, sacrifice a lot more Ukrainians, and worsen their position visa any potential
future settlement. And it's just foolishness after foolishness, with no willingness to you know, change course, no willingness to readjust because Biden rightly perceives that to do so at this point, after you've said, you know, we're not going to give up, allow them to give up an inch of territory would be to admit to fee and it would be a political problem, especially.
The way that the media covers these things.
Yeah, so they're just you know, that's how you get locked into these forever wars. That and all the money that there is to be made off of warlike behavior.
Yeah, it's not. It's very terrifying.
All of this is just slow moving and it's like these things just happen and we move past. Oh, Biden gives permission to rut to Ukraine, to hit Russian territory. They're like, but don't hit Moscow. Okay, just not Moscow, but everywhere else is fine. And now now we're halting all production just making sure that it's going to Ukraine. And now, oh, we're actually stealing fifty billion dollars from Russian assets and breaking the integrity of the global financial
system just to give money to bankrupt Ukraine. On to protect democracy in a country which literally just canceled elections.
How does that work? Exactly? What? Sorry? Oh?
Also this, we have to protect human rights of Ukrainian civilians. Let's forget about Israelankaza. Don't worry about that.
Obviously.
People in the rest of the world, in the global South, Asia or whatever, they're like, what are you people doing?
You people are idiots. We don't believe a word that you say.
And then what was that China? You want to give me some money? Okay, sure, let me. I'll take the meeting. At least I'll take the meeting. That is basically the.
Road to where we are right now.
And look, you know, maybe it'll happen tomorrow, it could happened in a decade. But at the very least, we are setting things up in a way which is not good for us.
Not good.
I think there's no doubt about that. All right, Soccer, what are you looking at well.
If you have a brow of some kind in your life, you may have already heard the devastating news that I'm going to share with you. On June seventeenth, twenty twenty fourth, the tobacco giant Philip Morris International, announced they were pausing all sales of zin nicotine pouches online after being served a subpoena from the Office of the Attorney General for
the District of Columbia. The latest move is a result of outrageous government overreach targeted at the smokeless nicotine industry and fits with a nationwide witch hunt against a drug that stands to benefit society as we become more permissive to the worst substances in crimes around us. The subpoena by the Office of the Attorney General stems from a twenty twenty one law passed by the local jurisdiction titled quote the Flavored Tobacco Product Prohibition Amendment Act of twenty
twenty one. It's designed to keep tobacco out of the hands of miners under the age of sixteen.
Now.
The law fits with the overall federal government witch hunt against flavored vapes that's been spurred by the FDA. That is a law we now know to be totally ineffective and in fact counterproductive, resulting in many under twenty year old nicotine users switching to straight up combustible cigarettes, and also resulting in no change whatsoever to existing nicotine habits. So we have a law that was born of a completely false moral panic. It's counterproductive, and it applies only
to a single city. And if it was just that, I guess I could live with it. But because of the total insanity of the way that smokeless nicotine is regulated in the United States, this means Washington, d C, one of the most poorly run cities in the country, can now shut down all onlines in sales for the United States based upon a subpoena, a subpoena of suspicion that proves nothing that some flavored nicotine product may have been improperly sold in the district, and not even a vape.
The reason is that Philip Morris is terrified of having the same thing happened to Zin that happened to Jewell. They would rather nerve sales for the entire product online and show regulators that they will have to be in one hundred percent compliance rather than risk some ban that's down the line. Again, It's not even fair because the last company that preemptively did this was Jewell, which was still punished by the FDA under totally false pretenses, only
to have to reverse themselves years later. As I recently covered furthermore, this Attorney General's office, which is behind this is at best incompetent and at worst a straight up crime enabler himself. Under his leadership, Washington DC has defied all expectations of other major metropolitan areas and actually had a higher murder rate in twenty twenty three than the year before, beating out somehow, beating similar cities that are all across the East Coast even worse having a bad
murder rate. This Attorney General himself and his predecessor have contributed to a major scourge which is very unique to the district. As even here liberals in the Washington Post are now acknowledging a massive spike in violent crime perpetrated on children is being enabled by the Attorney General's decision
to dismiss violent and gun related charges against juveniles. As usual with these pro crime policies, it's in the language of leniency and race, and as always, in reality, it means an epidemic of actual violent juveniles against fellow children has now erupted so badly that city elders are begging the city to actually do something about it. This is directly attributable to this ag whose office has dismissed more than a third of juvenile cases, of many of whom
are involved in carjacking. Who wants to guess what people arrested for carjacking do after charges are dropped against them, you would guess right. It means carjacking is now in DC one of the highest rates in the entire United States, much of it perpetrated by the very people this guy is working to actively release. Now, not only that Washington, DC is now chopped full of marijuana shops, including one less than a block from the very studio I am
recording this right now. There has been an explosion of pot shops across this city. There has been zero pressure from the Attorney General or the city on allegedly attempting to keep this out of the hands of kids or similar finds that they're leveling at the tobacco industry. So, as usual, we have an insane double standard here.
What weed.
Smokers complained about in the two thousand about how cigarettes got to pass but they were somehow persecuted. That's gone. Everything is flipped. People have somehow decided marijuana it's self a dubiously useful drug that has exploded teen psychosis and itself pollutes the literal air around us, is now more permissible than flavored nicotine pouches, which don't even have cancer
causing tobacco in them. It has no linked adverse health effects and is one of the most powerful not tropics known to man.
Somebody make it make sense. You can't.
In the meantime, this is a national trend. You had Senator Chuck Schumer, a man who wants to legalize weed and nationwide calls in a quote pouch packed with problems, who is now pushing the FDA and FDC to crack down on them. The so called war on drugs is coming to a close. It is instead now war on nicotine. You get to choose what society that you want to live in. Is it one where people use tobacco free nicotine pouches or one where it get people get shot
left and right and the air reeks of weed. I think I know which one I choose? So, Crystal, I'm sure you've got our grand
If you want to hear my reaction to Sager's monologue, become a premium subscriber today at breakingpoints dot com.