AI Just Changed How Everything Gets Valued
This week on The Higher Standard, we break down hotter inflation, Warsh’s awkward Fed handoff, housing cracks, rising delinquencies, and why “resilient economy” may be the new “transitory.” Then we get into the big one: AI may be destroying the moat that terminal valuations are built on. If innovation moves so fast that no company can confidently project cash flows five to ten years out, venture capital math starts looking less like investing and more like praying with a spreadsheet. Also, apologies in advance: we had to silence the Big Boi interview with Kid Cudi due to a copyright restriction, which is tragic because Big Boi talking Pokémon deserved its own emergency Fed meeting.
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🔗 Resources:
Awkward! Kevin Warsh May Hike Interest Rates as Fed Chair, Not Cut Them (247 WallSt)
Zillow now expects 309 of 894 U.S. metro housing markets to see price declines by 2027 (Chris Naghibi via X )
13.1% of credit card balances in the US are now 90+ days delinquent, the highest since 2011 (Charlie Bilello via X)
The Death of Terminal Value — AI Disruption Repricing Framework (Chamath Palihapitiya via X)
⚠️ Disclaimer: Please note that the content shared on this show is solely for entertainment purposes and should not be considered legal or investment advice or attributed to any company. The views and opinions expressed are personal and not reflective of any entity. We do not guarantee the accuracy or completeness of the information provided, and listeners are urged to seek professional advice before making any legal or financial decisions. By listening to The Higher Standard podcast you agree to these terms, and the show, its hosts and employees are not liable for any consequences arising from your use of the content.
Transcript
Is that a quarter zip?
Speaker B:I did that for you.
Speaker A:I can't tell if that's really a quarter zip or if that's like a that for you.
Speaker A:Faux polo.
Speaker B:It's a faux polo.
Speaker A:Are you wearing a polo with a zipper on it?
Speaker B:I am Lulu, baby.
Speaker A:Lululemon.
Speaker A:Lulu.
Speaker A:Oh, yeah.
Speaker A:Kind of falling out of fashion now.
Speaker B:Not a fashion.
Speaker B:Not a fashionable guy, my friend.
Speaker B:If I was fashionable, you know what I'd do?
Speaker B:I'd head over to thspod.com and buy some THS merchant.
Speaker B:Oh, see what I did there?
Speaker B:I see that.
Speaker B:Welcome back to the number one financial literacy podcast in the world.
Speaker B:This is the higher standard sitting in front of me with the anti guru Guru Club T shirt that you can find@thspod.com, it's my partner in crime, Christopher Nahibi.
Speaker A:Wow.
Speaker A:I got a lot to say to you.
Speaker A:So you front end pimped the merch.
Speaker B:Front end, yeah.
Speaker B:Slap right in and then double down.
Speaker A:On the back end.
Speaker B:Yeah.
Speaker A:On the side gas on the way.
Speaker B:Out the back end.
Speaker A:Classy.
Speaker A:Thank you.
Speaker A:I like that.
Speaker A:Okay, so let's just run off the top.
Speaker A:You are wearing a polo with a zipper, which is not a quarter zip.
Speaker B:So I saw it.
Speaker B:I was like, I have to buy this for the podcast.
Speaker A:It just seems like.
Speaker A:I mean, you got chest hair.
Speaker A:That just seems.
Speaker B:Yeah, it's scary.
Speaker B:Honestly, I have to be very careful.
Speaker A:Zip it up.
Speaker A:You pull it out, right?
Speaker A:Then you zip it up.
Speaker A:You have to.
Speaker A:Okay.
Speaker A:Just want to be.
Speaker A:There's some logistics going on here.
Speaker A:There's a reason why we don't want to get sued and make one of these quarterbacks.
Speaker B:This is why.
Speaker A:So my risky partner in time, the one and only side Omar, everybody.
Speaker B:Sk.
Speaker A:Thank you, my man.
Speaker B:It's behind the desk in the production suite.
Speaker B:Also in ths merch is Mr.
Speaker B:Slim the fighting Fajun.
Speaker B:What's up, my guy?
Speaker B:Rail.
Speaker B:What's up, everyone?
Speaker B:What's up?
Speaker B:What's up?
Speaker A:How was furlough?
Speaker B:Yeah, was.
Speaker B:Did you hear that, by the way?
Speaker A:You did.
Speaker B:We furloughed you.
Speaker A:He came in salty.
Speaker A:He's like, I've been furloughed now.
Speaker B:Yeah.
Speaker B:I was like, oh, I got furloughed.
Speaker B:Oh, at least I'm wearing a th.
Speaker B:Ths Merchant.
Speaker A:You can't even spell out.
Speaker A:You shouldn't work here.
Speaker A:Anyway,.
Speaker B:We got all kinds of things to talk about today.
Speaker B:I mean, I did go over the notes a little bit, but are we even going to talk about the Avengers making their their way over to China?
Speaker A:That Took a little bit of hit.
Speaker A:I was like, wait a minute, like, Tim Cook's an avenger now?
Speaker B:I bet you.
Speaker B:I bet you if I was as rich as Tim Cook, I would be calling myself an avenger, first of all.
Speaker A:Yeah, that's.
Speaker A:That's probably the best description I've heard all day.
Speaker A:So kudos to you for that one.
Speaker A:But, yeah, the President calls up the.
Speaker B:Homies like, yo, let's go make a deal.
Speaker A:We all about to get rich, fellas.
Speaker A:Sorry, Richard.
Speaker B:Yeah, well, Uncle Jamie not invited.
Speaker A:Yeah, Uncle Jamie not invited.
Speaker B:Not invited, bro.
Speaker A:Uncle Jamie kicked him out, remember?
Speaker A:Yeah, I know.
Speaker A:Uncle Jamie said, hey, their guy, you're going to have to take your money elsewhere.
Speaker A:And he's very upset.
Speaker A:He's sued, I think, for like a billion or something.
Speaker B:Is it.
Speaker B:What's her name?
Speaker B:Jane Fraser.
Speaker B:She was invited, though.
Speaker A:Was she really?
Speaker A:I didn't know that she was invited.
Speaker A:So she was Scarlett Johansson.
Speaker A:Yes.
Speaker A:Or Wishing the Scarlet Witch.
Speaker B:Yeah, I don't know one.
Speaker B:One or the other, but yeah.
Speaker B:And then when Trump, when Trump announces it on Truth, you know, he doesn't even say Tim Cook.
Speaker B:He says Tim Apple.
Speaker A:Tim Apple, baby.
Speaker B:But he's also the outgoing.
Speaker B:But he's not wrong, though.
Speaker A:He's the outgoing CEO, though, if I'm.
Speaker B:Tim Cook, I'm considering changing my name to Tim Apple.
Speaker A:Let me be the world's biggest asshole to start the show.
Speaker A:Say, what's the name of Apple's new CEO?
Speaker A:I don't know.
Speaker A:It doesn't matter.
Speaker A:It doesn't matter.
Speaker A:It doesn't matter what his name is.
Speaker A:Yeah, it's.
Speaker A:It's pretty bad.
Speaker A:I don't know his name either.
Speaker A:I do this for living, right?
Speaker A:Yeah, it's not a good thing.
Speaker A:No, we're gonna forego the.
Speaker A:The foreplay.
Speaker A:That is the.
Speaker A:The Avengers assembling for this whole cockamamie pitch.
Speaker A:But yeah, everybody's been put it.
Speaker A:Putting these online.
Speaker A:We're just supposed.
Speaker B:They did eat pretty good, though.
Speaker A:Panda Express was served on Air Force One when the boys were headed to China.
Speaker A:Is that a real photo?
Speaker B:That can't be.
Speaker A:That's Elon Musk, Donald Trump, Tim Cook, Jensen Wang, and last guy, that's the banker dude.
Speaker A:That's Black Rock, right?
Speaker A:Yeah, it's Black Rock.
Speaker B:Are you upset if you're like David Solomon, you weren't invited to sit at the table, like, go sit in the back.
Speaker A:No, if you're David Solomon, you're probably in the back going, God, my jet's so much bigger than this.
Speaker A:I remember My first jet.
Speaker A:Right?
Speaker A:Air Force One got smaller since the last time I've been on it.
Speaker A:Yeah, they.
Speaker A:These guys live in a different world, man.
Speaker A:Bro love fast food.
Speaker A:Comment number one, Panda Express.
Speaker A:Number two, AI is out of control.
Speaker A:Great advertising for Panda.
Speaker A:Yeah, shout out to the Panda Express family.
Speaker B:Right?
Speaker B:Also a little racially insensitive, too, maybe.
Speaker B:You're going to China.
Speaker B:They're eating Panda Express.
Speaker A:This is.
Speaker B:This is not real.
Speaker B:I mean, that's America's best Chinese food right there.
Speaker B:Just like Taco Bell is America's best Mexican food.
Speaker A:Are you gonna put them back on furlough?
Speaker B:There's too many things we can't edit out right there.
Speaker A:We're just gonna have to leave it all in.
Speaker A:I hope you like unemployment, chief.
Speaker B:Yeah, you have to get paid to be unemployed.
Speaker A:Well, I didn't mean from this job.
Speaker A:I meant from your other jobs.
Speaker B:I'm union, bro.
Speaker A:You said what?
Speaker A:Yeah.
Speaker A:All right, so we had some prints come out.
Speaker A:There are some big numbers that came out.
Speaker A:Inflation, CPI came out, and, well, it not looking good.
Speaker B:Yeah, not looking good for the boys, especially.
Speaker B:Especially on the day when Kevin Wash was confirmed.
Speaker A:Yeah.
Speaker A:Well, that was an interesting side anecdote to the day is that he was confirmed, although only one Democrat voted for him.
Speaker B:Yeah.
Speaker A:I was like, damn.
Speaker B:Yeah, I know.
Speaker A:Y' all really do stick together, huh?
Speaker B:I swear.
Speaker B:What are you gonna do at this point?
Speaker B:Like, what are the other candidates?
Speaker B:You would have just, like, left JP out to dry?
Speaker A:Well, I mean, it's a sentiment at that point.
Speaker A:Like, you're like, we don't need to vote for him.
Speaker A:Why?
Speaker A:He's gonna get approved anyway.
Speaker B:Right?
Speaker B:So.
Speaker A:Yeah, right.
Speaker A:You know?
Speaker B:Right.
Speaker B:That way, when, if anything does go south, we could be like, that wasn't our guy.
Speaker A:If you know you're gonna sleep your date at the end of the night, you don't go expensive on the date.
Speaker B:Valid.
Speaker A:You know, Valid.
Speaker B:I don't know much about that.
Speaker B:It's been quite some time for me, sir.
Speaker A:I'm just saying.
Speaker B:So I go expensive on all my dates now?
Speaker A:I thought this was a date.
Speaker A:Is this not a date?
Speaker A:This is not what we're doing right now.
Speaker B:Why do you think I got so dressed up for?
Speaker A:I want the Diet Coke back.
Speaker A:Yeah, you're right.
Speaker B:That's why I get so dressed up for you.
Speaker B:Quarter zips, baby.
Speaker A:Take that risk with that shirt coming off.
Speaker A:Yeah, all the chest hair that comes out.
Speaker B:Look at you playing footsie with me already.
Speaker A:Yeah, sorry.
Speaker A:Okay, so CPI came in.
Speaker A:Yeah.
Speaker A:Okay, bring up the cpi Chart before you get nasty, CPI chart came out.
Speaker A:It did come in hotter than expected.
Speaker A:It came in at 3.8% highest in three years.
Speaker B:Four years.
Speaker A: was either March or December: Speaker A:I saw some varying reports.
Speaker A: umber was March of, I'm sorry: Speaker A:But yeah, consensus was 3.7.
Speaker A:This came in hotter than that.
Speaker A:But what I thought was more telling was the next day's print which was the Producer Price Index ppi.
Speaker A:Jill, you can read the next chart real quick.
Speaker B:It's been a while since we've done a, a little rundown on this.
Speaker B:Right?
Speaker B:So basically why the PPI index reporting is so important because it gives you insight into the next month's CPI report.
Speaker B:Because if, if wholesalers prices are going up, we all know that those prices ultimately get passed down to the consumer.
Speaker B:Therefore CPI will be going up again.
Speaker A:Man, this guy's Brazil.
Speaker A:I mean this version of Saeed, you don't know, you don't know the guy who was in the Matrix before.
Speaker B:Yeah bro, I took red pill for sure.
Speaker A:This guy now is a different animal.
Speaker A:But yeah, 100% right.
Speaker A:And that's why the Producer Price index really to me was the leading story of the last two days.
Speaker A:Data print.
Speaker A:The second story was really was kind of hidden.
Speaker A:Yeah.
Speaker A:Because this was so consensus was 4.9.
Speaker A:That's what everybody thought it was gonna come in at.
Speaker A:And then the previous print was 4.5 and we got a 6.
Speaker B:Right.
Speaker A:You know like that's, that's a big,.
Speaker B:That's a big miss.
Speaker B:And this has to be.
Speaker B:Listen, so for all the inflation stuff that the Biden administration had to go through.
Speaker A:Ok, has anybody seen him?
Speaker B:No, I mean is he still out there?
Speaker B:That's wild.
Speaker B:That like he's just like not around, right?
Speaker B:Exactly.
Speaker B:Yeah.
Speaker B:But for me it's ok. During the Biden administration there's a lot of things that Biden did wrong.
Speaker B:I'm not saying he didn't do anything wrong but like he didn't choose to start a war with Ukraine.
Speaker B:That happened on its own and there was a supply shock because of it.
Speaker A:Right?
Speaker B:There's, he's getting, there's a lot of criticism right now that these Producer Price Index prints and the CPI prints and the inflation that we're seeing, okay, it was, first it was the tariffs.
Speaker A:All right.
Speaker B:It's like man, he didn't have to do that.
Speaker B:Oh now it's, now it's the Iran war, man.
Speaker B:You really, really.
Speaker B:It doesn't feel like we had to do that.
Speaker B:So it feels a little self inflicted.
Speaker A:They look perplexed.
Speaker A:No, no, there's a compelling, I agree with the argument.
Speaker A:I think that's a compelling argument.
Speaker A:And I think that it's also kind of dovetails into a little bit of the confusion that I have in what we're seeing right now.
Speaker A:We're seeing all the talking heads and this is going to come up a little bit later on in the show as well.
Speaker A:Talk about how resilient the economy is.
Speaker A:Right?
Speaker A:Resilience, resilience, resilience.
Speaker A:Like the economy keeps going, especially the stock market, the equities market.
Speaker A:But it leaves me perplexed, it leaves me weirded out because we as a culture of Americans, I'm going to generalize a lot here.
Speaker A:I can see us going, okay, we're not Israel or Palestine and they've been fighting this war for generations.
Speaker A:I don't fully understand it, but it doesn't impact me because it's way over there.
Speaker A:Right, right.
Speaker A:So we, we as a, as a society have a tendency to overlook what otherwise atrocities happening in places in the world.
Speaker A:Right.
Speaker A:And there's a little bit of a social virtue signaling where people will make their comments online, you'll see some protests maybe in the street or something like that.
Speaker A:And then we as Americans tend to just let it die out.
Speaker A:And then something happened with Russia, Ukraine, like that's still going on.
Speaker A:Right.
Speaker A:They've recently talked about possibly coming to a conclusion.
Speaker A:This is now years, right.
Speaker A:So you look at all this stuff and you think to yourself, okay, wait a minute, why are we doing the exact same thing with this Iran us?
Speaker A:We are at war with this country.
Speaker A:Right.
Speaker A:Like we are literally spending our dollars on this country.
Speaker A:This is not something you can go, well, it doesn't really impact me, I don't have relatives there or something.
Speaker A:You know, whatever disconnect you want to use as your excuse.
Speaker A:But for reasons that I just don't fully understand, our stock market has largely other than the oil shock prices we saw a little bit today.
Speaker A:Our stock market wants to forget it.
Speaker B:Exactly.
Speaker B:And, but I, I feel like, and we've talked about this on the show before and maybe you could do us all a favor and help us explain maybe as to why.
Speaker B:But the stock market isn't a good indicator for how healthy the economy is.
Speaker B:Those are in my opinion, two completely different things.
Speaker B:You got the stock market is, I mean we have over 60% of the population, doesn't have $400 for an emergency expense.
Speaker B:But the stock market is Doing well, because that's, that, that's a different class that has their money invested, that understands that, look, we're not going to time the market.
Speaker B:We're going to continue to ride this wave.
Speaker B:And if you believe in anything that we've said, you know, and all the things that we've talked about, there's going to be a melt up in assets over the next year or so or for however long.
Speaker B:Assets are going to continue to melt up and overinflate and at some point there will be a bubble.
Speaker B:But let's continue to ride this wave.
Speaker B:And people who don't need to sell, they're not going to sell.
Speaker B:So that's why that's, in my opinion, doesn't do a, any service to look at the stock market and say the economy's been resilient.
Speaker B:That's not the economy.
Speaker B:Yeah, the economy is high interest, credit card debt hitting all time highs month over month over month.
Speaker B:That's the economy.
Speaker A:So we should get into that because I'm going to set the stage for what I think is going to be a likely landscape change that we're going to feel and experience.
Speaker A:And I think that it's already taken place.
Speaker A:I think you've seen a national rhetoric.
Speaker A:The President came out recently in an interview saying when they asked him about, you know, what his thoughts were about some decisions around the ceasefire in Iran, if you thought about the American, American people in their financial position.
Speaker A:He said he did not.
Speaker B:No, he said.
Speaker B:Not only did he not, he's not, he didn't just say, I don't, he's like, he's like.
Speaker B:Not even for a second.
Speaker B:Yeah, that's not on my concern.
Speaker B:I only care about.
Speaker B:What do you say exactly?
Speaker B:I only care about whether they have some nuclear, nuclear weapons.
Speaker B:I think that's what he said.
Speaker A:Yeah.
Speaker A:Which again, I mean, I guess I understand, like one is life threatening and one is not, but the, the messaging could have been better.
Speaker B:I feel like.
Speaker B:Yeah, he's getting to the point where he's like, you know what?
Speaker B:Screw it.
Speaker B:I'm just gonna say what I feel.
Speaker B:I think we're past that.
Speaker B:Yeah, no, I think I remember.
Speaker B:I feel like back during the first term, I don't feel like you would have answered this the same exact way.
Speaker A:Well, neither here nor there.
Speaker A:Right.
Speaker A:We are where we are.
Speaker A:And now you got the producer price index coming in significantly hotter, which to me signals that inflation, which came in at 3.8% CPI, is going to come in even higher during the next print.
Speaker B:And which is Scary.
Speaker A:Yeah, that is scary.
Speaker A:And you have a reignite reigniting of inflation.
Speaker A:Meanwhile, if you think the next chart is jobs, the jobs one was interesting because it dovetails into the second topic, which I didn't think really made the headlines.
Speaker A:The unemployment rate came in at 4.3%, which was consensus flat, steady, steady line.
Speaker A:These are very different lines in the charts.
Speaker A:If you're watching the show on Spotify, Apple podcast or on YouTube, you can see the charts, the THS branded charts we're talking about here.
Speaker A:But the lines all seem to suggest a very flat unemployment line.
Speaker A:Now that in and of itself could suggest that there isn't a problem there on the unemployment side, which I think is false.
Speaker A:We've talked many times about how Zero Hedge has proven that this data is unreliable, to say the least.
Speaker A:Right.
Speaker A:We've talked about how the headline number has add backs and detractions from it later on that nobody ever talks about the revisions.
Speaker A:But what was really interesting to me was at the same day that CPI came out, wage inflation numbers came out as well.
Speaker B:Yeah, it's in the report, right?
Speaker A:Yeah.
Speaker A:And wage inflation numbers that came out show that wage inflation salaries have gone up 3.6% year over year.
Speaker B:Oh, what does that mean?
Speaker B:So you have inflation at 3.8 and salaries are going up at 3.6%.
Speaker A:Right.
Speaker A:So even though unemployment, more people that are allegedly isn't going up, your salaries are all effectively going down.
Speaker A:And let us not forget that inflation CPI has printed is the basket of goods, you know, average of a bunch of goods assumption.
Speaker B:Right, right, exactly.
Speaker B:They're not measuring, okay, if bananas go up 10% one month, they're not saying, oh, inflation on bananas 10%.
Speaker B:No, they're looking at an equivalent, a substitute that you would likely use because a reasonable person wouldn't buy bananas again if they went up 10%.
Speaker A:And the other thing that's really fascinating about what we're experiencing now is oil shocks are inflationary.
Speaker A:Right.
Speaker A:Energy shocks in general are inflationary.
Speaker A:We knew this was gonna be the case.
Speaker A:There's a great episode we did on inflation versus stagflation, which talks in part about the strait of a mos.
Speaker B:Chris gave it two thumbs up.
Speaker B:He said, we did a great episode.
Speaker A:I did a great job myself.
Speaker A:Me.
Speaker A:I did that.
Speaker B:I did.
Speaker A:He, him and me.
Speaker B:Yeah, yeah.
Speaker A:Anyway, so, yeah, I think we knew that this was likely to be the scenario.
Speaker A:But what really scary to me about what we're seeing here is that the Fed's preferred gauge is core cpi.
Speaker A:And core CPI removes of Course, the more volatile pieces of inflation, which are.
Speaker B:Food and energy, which is, which is crazy, right?
Speaker B:Because it's almost like they take us, I feel like they take us as fools.
Speaker B:Food and okay, food and energy.
Speaker B:We all need food.
Speaker B:That's daily essential.
Speaker B:Right.
Speaker B:I mean, so essential that, you know, grocery stores were required to remain open during, during the pandemic.
Speaker B:And so it's essential we all going to need this.
Speaker A:Right.
Speaker B:We all agree.
Speaker B:And then energy trickles down into everything else.
Speaker A:Right.
Speaker B:So if oil, if oil spikes, okay, we're not, we're not going to count that towards the inflation numbers, but it impacts everything from transportations.
Speaker B:I mean, we've gone, the list goes on and on and on.
Speaker A:Yeah, but it also means that they're going to be slow to respond because if you're looking heavily at core inflation versus CPI headline inflation and you're excluding food and energy and you know that we're in an energy shock.
Speaker A:Right.
Speaker A:You either have to deviate from what has been your status quo and focus on the energy because you know this is going to be inflationary, or you're going to wait to see inflation pass through.
Speaker A:And if in my mind, if you're trying to be proactive versus reactive and Warsh has already said he'd prefer to be reactive, then you wind up in a situation where you are going to have to accept that inflation is going to go up and wage inflation is not going to keep up.
Speaker B:Right, I agree.
Speaker A:So that is an inevitable future which to me causes a great deal of concern because even if the Fed has two mandates like we've covered in the show before, one is employment and two is stable prices.
Speaker A:Right.
Speaker A:And they tend to be in contention with one another.
Speaker A:Well, right now inflation is surely rising,.
Speaker B:Which is signaling we need to keep rates right where they are.
Speaker B:And, and if it gets out of control, even raise rates.
Speaker A:Right.
Speaker A:And I think that that's becoming an increasingly large probability.
Speaker A:And I say that, you know, tongue in cheek with, I think because I, I know where the data is pointing and what's being suggested.
Speaker A:So this from 247 Wall street, the title is awkward.
Speaker A:Kevin Warsh may hike interest rates as Fed Chair, not cut them.
Speaker A:And this was put out the day after.
Speaker A:This is the PPI day.
Speaker A:So this is, I want to say it was on Tuesday that came out and it's a really interesting article because this is the first look at number one.
Speaker A:We don't understand how he thinks yet.
Speaker A:We just know his history.
Speaker B:Rich Dupree.
Speaker A:Yeah, Dupre.
Speaker A:Dupree Germain Germany So, so deaf.
Speaker A:So yesterday's Consumer Price Index CPI report came in above Wall street expectations.
Speaker A:And this morning's producer Price index report ran even hotter.
Speaker A:Together, the two inflation gauges delivered a message Bond markets understood immediately.
Speaker A:Inflation is not done fighting.
Speaker A:Now the bond market conversation here is one that we have to be thoughtful of because today, Wednesday 13th May, the day that we're recording this late in the evening, sultry and sexy as it might be, the bond markets internationally are taking really interesting hits.
Speaker A:You got Japan at 100 year black swan anomaly.
Speaker A:Okay.
Speaker A:You've got London, the UK seemingly having their rates just completely obliterate their economy.
Speaker A:And you're seeing pressure that will ultimately impact the United States.
Speaker A:That outside pressure.
Speaker B:Yeah.
Speaker A:Meanwhile, the 30 year bond here is now north of 5% and the 10 year, which we talk a lot about on the show, which is the best proxy for the 30 year mortgage rates in this country is already pushing up above 4.5%.
Speaker A:So we're starting to see the bond market get way out of whack with the sentiment in the equities market, the stock market.
Speaker B:Okay.
Speaker A:And what was interesting today is when I did the live today, you saw that the stock market showed that the Dow, the industrials were down.
Speaker A:But everything else, the nasdaq, the qqq, everything that had the tech impact was up.
Speaker A:Nvidia had a bit of a rock star day.
Speaker B:Okay.
Speaker A:That's how strong the tech sector is today.
Speaker B:Still, still after, after all this.
Speaker B:So I mean, has it spiked enough to where you think people are going to be fearful of.
Speaker B:Okay.
Speaker B:I've been waiting on the sidelines, hoping that rates will come down a little bit.
Speaker B:Maybe, maybe I just step in now and lock it in because I don't see any, anything positive on the horizon or maybe.
Speaker B:Yeah, just home.
Speaker B:Right, Homes.
Speaker B:If someone's on the sideline, we're waiting to buy a home.
Speaker B:But now be a good time to be like, maybe I just locked us in and if it does get better and you know, six months to a year, but I don't see it happening.
Speaker A:There's been a notable uptick in equity refinances recently.
Speaker A:People pulling money out of their house.
Speaker B:Oh yeah.
Speaker A:And I think that the reason why is not because the rate environment has improved.
Speaker A:Yeah.
Speaker A:Not because they're looking for great investment opportunities.
Speaker B:They want the cheapest debt possible or.
Speaker A:They have too much debt and they need to consolidate.
Speaker A:And you don't want to get rid of your first trustee which has got probably a 3 or 4% handle on it.
Speaker A:So you try to pull out equity from your home, which appears to be losing value, which is another sexy topic to really consider.
Speaker A:But before I get there, let's finish off a couple of elements from this 247 Wall street article here that creates awkward backdrop for Kevin Warsh, who was just approved by the Senate to join the Federal Reserve's Board of Governors and is widely expected to soon replace Uncle Jerome Powell as Fed Chair, AKA Bang Bang Powell.
Speaker A:Ironically, the man many investors expected to champion aggressive rate cuts may instead find himself considering hikes.
Speaker A:Inflation is heating up again.
Speaker A:And that is undeniable.
Speaker B:Exactly.
Speaker B:I mean, I think that he knew all along that he was at least going to come in and maintain status quo at the bare minimum.
Speaker B:But there was a hope, I know from a lot of people that he would come in because remember Jerome Powell and fomc, they've been trying to find that neutral rate.
Speaker B:And that neutral rate isn't in an exact figure.
Speaker B:Right.
Speaker B:We could be at the high end of it and there might even be a lower end to it.
Speaker B:Right.
Speaker B:So there was a, there was some hope that he would come in and just do a token rate cut right out the gate and then be like, I'm gonna hold, I'm gonna hold it from here.
Speaker B:But with these prints, forget about it, chief.
Speaker B:It ain't happening.
Speaker A:Yeah, I don't think that happening at all.
Speaker A:And to JP Morgan, I've talked about this a number of times on the show and live shows.
Speaker A:They said early in the year.
Speaker A:And David Kelly, who's their mouthpiece during the Fed rate cut meetings, he did not echo this.
Speaker A:He was very much contrary to this.
Speaker A:But JP Morgan came out and one of their analysts put together a great presentation saying that not only was there not going to be a rate cut this year, the first rate change would be a rate increase in 20.
Speaker A:I gotta be honest, like, that guy may have nailed it.
Speaker A:Like, that was in like January, February.
Speaker A:It was really early, early on.
Speaker A:And I agreed with it at the time.
Speaker A:I was like, this is a pretty compelling case, but there wasn't enough data to support it.
Speaker A:And now all the data is out there.
Speaker A:I'm like, damn it.
Speaker B:Yeah, he saw it.
Speaker A:Yeah, someone give that guy a raise.
Speaker B:Right?
Speaker A:I'm sure he's making like Carl Quinella money.
Speaker B:Yeah, yeah, I'll hand over the Nobel Laureate to him.
Speaker A:The green jacket.
Speaker B:The green jacket.
Speaker A:Can we get a moment of silence for the career of some of, some of the economists that we used to follow a lot on the show?
Speaker A:Dr. Doom, where are you bro.
Speaker B:It just.
Speaker B:Yeah.
Speaker B:What happened?
Speaker B:Now it's his time.
Speaker B:But you know.
Speaker B:Hey, bur.
Speaker B:Staying strong.
Speaker B:He's coming in.
Speaker B:He's coming and saying, hey, we're minutes away from the crash now.
Speaker B:Like, he's just trying to.
Speaker A:Like the watchman.
Speaker A:Yeah, yeah.
Speaker B:He's just saying whatever.
Speaker B:Just stayed relevant.
Speaker A:Right.
Speaker B:He's Takashi 69.
Speaker A:He's also autistic.
Speaker A:Like diagnosed autism.
Speaker A:Like, no, burry has real.
Speaker A:He's real autistic.
Speaker A:No, he's real.
Speaker B:Yeah, I was going to say.
Speaker B:You can't just come out and say that.
Speaker A:No, no, he's autistic.
Speaker A:He's like.
Speaker A:He's got legitimate autism.
Speaker A:So he.
Speaker A:He just says stuff like that.
Speaker A:But I. I think he's being 110.
Speaker B:He's got like a.
Speaker B:He's got like a Terminator eye too.
Speaker B:Have you noticed?
Speaker A:Okay, first of all, if mine was offensive but justified.
Speaker A:Because it's true.
Speaker B:No, but I feel like he's looked at numbers for so long.
Speaker B:You know, you stare at the computer so long it hyper focuses.
Speaker B:Like Kobe has the same thing.
Speaker A:What do you do all day?
Speaker B:I'm not staring at that one.
Speaker B:Look at.
Speaker B:Look at that.
Speaker A:I'm not.
Speaker B:He's locked in, bro.
Speaker A:Never.
Speaker A:So I can't unsee that.
Speaker B:Come on, you never.
Speaker B:You never notice that?
Speaker A:I mean, I pull up the images.
Speaker A:No, dude, don't do this, don't do that.
Speaker B:Hold on.
Speaker B:It's not insulting.
Speaker B:It is what it is.
Speaker B:Hold on.
Speaker B:I said Kobe's got the same thing.
Speaker B:And I love Kobe.
Speaker A:Kobe doesn't have a lazy eye.
Speaker B:Not a lazy eye.
Speaker B:It's when you hyper focus with one eye because you know, you use one eye more, more than the other.
Speaker B:Like, like watch.
Speaker B:Pull up.
Speaker B:Pull up Kobe Bryant photos.
Speaker B:You'll see.
Speaker A:That's not a thing.
Speaker B:It's a thing, bro.
Speaker A:No, I don't.
Speaker B:I know because I think he's a left eye shooter.
Speaker B:A right eye shooter.
Speaker B:Like, pull up.
Speaker B:Like, look at this one with the suit.
Speaker B:Oh, look at his left eye.
Speaker B:You see the difference?
Speaker B:Like, it's because it's over usage.
Speaker A:I've never noticed that before.
Speaker A:Do I have one?
Speaker B:Pay attention to detail.
Speaker A:Did you tell me if I have.
Speaker B:One of those, I would make fun of you.
Speaker A:Do I have one of those at all?
Speaker B:No, you do not.
Speaker B:You sure you don't focus enough?
Speaker A:I do.
Speaker B:One of my eyes is a little smaller.
Speaker A:Is it the third one?
Speaker B:I was thinking it.
Speaker B:I didn't want to say it, but I was thinking it.
Speaker A:You're Gonna give me freebies, bro.
Speaker A:I'm taking them.
Speaker A:Okay.
Speaker B:Take it and go.
Speaker A:Right?
Speaker B:He can say that.
Speaker B:Hold on.
Speaker B:He can say that.
Speaker B:We're not.
Speaker B:We don't gotta believe it out.
Speaker A:Yeah.
Speaker B:You're allowed to say that.
Speaker A:I can make fun of magic carpet rides.
Speaker B:I'm gonna say, too.
Speaker B:I mean, I am South Asian.
Speaker A:East Asian, yeah.
Speaker B:Right.
Speaker B:No, for Central south, yeah.
Speaker A:Vietnam.
Speaker A:Right.
Speaker A:All right, I'm sorry.
Speaker A:Vietnam.
Speaker A:Vietnam, right.
Speaker B:I get it.
Speaker B:No, yeah.
Speaker B:Those are my people.
Speaker B:Leave them alone.
Speaker A:I love Vietnam, bro.
Speaker A:Shout out to the homies from Ho Chi Minh.
Speaker B:Right.
Speaker A:Saigon in the house.
Speaker A:All right, so inflation's a problem.
Speaker A:We know this is an issue.
Speaker A:According to the latest data releases from Bureau of Bureau of labor statistics.
Speaker A:Yeah.
Speaker A:Headline CPI rose to 3.8% year over year, like we talked about.
Speaker A:Topping economist forecast, 3.7%.
Speaker A:Core CPI, which strips out food and energy prices, climbed 2.8%.
Speaker A:So.
Speaker A:Still above the 2% target, as we noted here earlier.
Speaker A:So you.
Speaker A:You what?
Speaker A:You find yourself in a bit of a pickle?
Speaker A:You know, for lack of a better.
Speaker A:I've been craving a pickle bagel from la.
Speaker A:You would crave a pickle from this place called Maurice.
Speaker B:A pickle and a bagel.
Speaker A:It's a sensation.
Speaker A:No, no, it's.
Speaker B:It's how.
Speaker B:What a coincidence.
Speaker A:It's a bagel with pickle.
Speaker A:It's really cucumbers.
Speaker B:The pickle go inside the bagel.
Speaker B:Is that.
Speaker B:Is that.
Speaker B:What.
Speaker B:Is that why?
Speaker B:Is that what it is?
Speaker A:Why?
Speaker A:I can't.
Speaker B:You said it.
Speaker A:We try to have a serious show.
Speaker A:This is not.
Speaker A:I'm trying to get real sponsors and you're making these just inappropriate gestures.
Speaker B:I'm trying to get the Einstein Bros to sponsor the show.
Speaker A:Morris Bagel.
Speaker A:That's the one right there at the top.
Speaker A:Yeah.
Speaker A:Morris Bagels.
Speaker A:This place is.
Speaker A:If you're ever in LA and you're.
Speaker A:You're in the Echo park area or so, and you're kind of down close to downtown la, man.
Speaker A:Really?
Speaker B:This is the spot, huh?
Speaker A:It's just such a fresh, good bagel.
Speaker B:Okay.
Speaker A:Yeah.
Speaker A:And you.
Speaker A:So they have a pickle one.
Speaker A:See if you can find the.
Speaker A:The ingredients on it.
Speaker A:It's basically.
Speaker A:It's not really pickles, it's cucumbers that have been pickled for a light amount of time.
Speaker A:So it's still like cucumbers that are.
Speaker B:Fresh the first day when we.
Speaker B:When we were in New York.
Speaker A:Bagels in New York are incredible.
Speaker B:Yeah.
Speaker B:We went to a.
Speaker B:A place called Liberty Bagels.
Speaker B:I thought it Was just like a hole in the wall joint.
Speaker B:Apparently it's franchise.
Speaker B:It's got.
Speaker B:They're all over the place.
Speaker B:But we thought we showed the kids something special and they had, like, rainbow bagels, right?
Speaker B:And the kids, like, lost their minds.
Speaker B:And, like, we had all these plans to go to, like, these other breakfast spots.
Speaker B:Like, you know, like, no, we just want.
Speaker B:We just want.
Speaker B:We just want the rainbow bagels.
Speaker B:We're like, oh, there's so much.
Speaker B:This is so much cheaper for us.
Speaker B:I'll do this.
Speaker A:There's so many good bagel shops in here, New York, trying to find the best bagel or the best pizza in New York.
Speaker A:It's.
Speaker A:Oh, my God.
Speaker A:Yeah, you can be eating for the rest of your life.
Speaker A:Good luck.
Speaker A:You know, they have this, like, pickle and dill bagel that I got last night.
Speaker A:I. I literally was driving by it.
Speaker A:I'm like, I'm going to stop here.
Speaker A:And Sarah was with me and we got.
Speaker A:Oh, my God.
Speaker A:Yeah, it was good.
Speaker A:She hated it.
Speaker A:It had like a thanks for the.
Speaker B:Thanks for.
Speaker A:No, it.
Speaker A:It.
Speaker A:It has like a Moroccan, like, style flavor to it, too.
Speaker A:It was.
Speaker A:It really interesting.
Speaker B:Thanks for the invite, bro.
Speaker B:Appreciate it.
Speaker A:N man.
Speaker A:Triple pickle.
Speaker A:That's the one.
Speaker A:Cream cheese, dill, cucumber, pickled onions, capers and lox, bro.
Speaker A:I had that on a Zanzibar bagel, too.
Speaker B:Zanzibar bagel?
Speaker A:Yeah.
Speaker A:I thought that was very racist, but yeah, it was good.
Speaker A:He's like, you want the Zenzel our bagel?
Speaker A:I'm like, yes, I do.
Speaker A:Yes.
Speaker B:How did you know?
Speaker B:How did you know?
Speaker A:Could you put some camel on it over here?
Speaker A:It was damn good, though.
Speaker A:I'm not gonna lie.
Speaker A:Yeah, that's Zatar.
Speaker A:Yeah.
Speaker B:Zanzatar is crazy.
Speaker B:Zanzatar is crazy.
Speaker A:All right.
Speaker B:Building it right now.
Speaker B:Okay.
Speaker B:$7 To, like, $30 for one bagel.
Speaker A:Hey, man.
Speaker B:Vegan.
Speaker B:Vegan cashew spread.
Speaker B:Wow.
Speaker B:I don't even shout out to all the vegans.
Speaker A:Egg salad on chala.
Speaker A:Isn't that.
Speaker A:What's his name from don't do it From X Men.
Speaker B:Don't do it.
Speaker B:Let's just move on.
Speaker B:Let's move on from bagels.
Speaker A:No.
Speaker A:T'.
Speaker A:Challa.
Speaker A:Sorry.
Speaker B:Adventures, bro.
Speaker A:That's Black Panther.
Speaker A:He said Max, man first started off, you're worse than him.
Speaker A:Oh, you said X Men.
Speaker B:You said X Men.
Speaker B:No, I said.
Speaker A:You said X Man.
Speaker A:No, no, you said X Men.
Speaker A:It was the cell.
Speaker A:Anyway.
Speaker B:Yeah.
Speaker A:All right.
Speaker A:Now that we got our official kit heads in the gutter.
Speaker A:Yeah, let's Go to Zillow.
Speaker A:Okay.
Speaker A:Zillow, which has traditionally been what I would call real estate career friendly.
Speaker B:Oh, okay.
Speaker B:Very optimistic.
Speaker A:Yeah.
Speaker B:Rosy.
Speaker A:They.
Speaker A:They tend to put the frown upside down.
Speaker B:Yeah, We're.
Speaker B:We're.
Speaker B:Yeah, we're an economic show, but we'll call it.
Speaker B:They're dovish.
Speaker A:Yeah.
Speaker A:Redfin would be a little more hawkish in the economy traditionally.
Speaker A:And Zillow, well, they like to make love to the dove.
Speaker B:Yeah, there you go.
Speaker A:Yeah, they're all up in there.
Speaker B:What are they saying?
Speaker A:They this shocked?
Speaker A:I thought this was AI at first.
Speaker A:This stunned me.
Speaker A:Okay.
Speaker A:Because Zillow has never in the last, like, 15 years done this.
Speaker A:Right.
Speaker A: kets to see price declines by: Speaker A:That's a big pivot.
Speaker A:Okay.
Speaker A:That's more than a third of the country they're calling for here.
Speaker A:So when someone says housing is fine, just understand they mean their housing might be fine.
Speaker A:Right.
Speaker A:That their commission might be fine or that their narrative, which they need to sell to the other real estate professionals who work for them might be fine, but the market, not so much.
Speaker A:Yeah, the market is del fuego.
Speaker B:Yeah.
Speaker B:Yeah.
Speaker A:Burning a little bit.
Speaker B:So it says in Phoenix, you got negative 1% year over year.
Speaker B:Louisiana, negative 0.1%.
Speaker A:Right.
Speaker B:But you got somewhere like in Hartford, you got an increase of 3% year over year.
Speaker B:Yeah.
Speaker A:What's really interesting is, for reasons that I don't fully understand, the east coast, up and down the Eastern seaboard, and particularly the Northeast are all, like, incrementally.
Speaker B:Positive because housing is so limited there.
Speaker A:Right.
Speaker A:I mean, not really.
Speaker B:You can't do a lot of new builds there.
Speaker A:But look, so look at the sunshine stage.
Speaker A:Right?
Speaker A:California, Texas, Arizona, New Mexico, all the way through Louisiana, in Mississippi, to.
Speaker A:To Florida.
Speaker A:All.
Speaker A:All negative, like.
Speaker A:Right.
Speaker A:I mean, negative or flat.
Speaker A:Right.
Speaker A:0%, Which, you know, is, I guess, probably better than negative, but.
Speaker A:Yeah.
Speaker A:And then there's this big.
Speaker A:Just patch a swatch, if you will, of, like, the Northeastern seaboard.
Speaker A:That's just all positive.
Speaker A:Right.
Speaker A:So in my experience, historically, the way this works is you get equity appreciation on the coast, and they come in centrally, and then equity depreciation, when values go down, start in the Central, like, part of America and go out to the coast.
Speaker A:Right.
Speaker A:It looks like that's already started in the Midwest and then gone out to the California side of the coast, the west coast, but it hasn't gone out to the east coast yet.
Speaker A:This is more of Like a kind of generalized observation.
Speaker A:But this is a very strange pattern and 1 I don't 100% understand, other than it looks like the exodus from California and the exodus from some of the states that were really, I guess, going all the way back to the pandemic, were challenged, has shown an influx in states like the Carolinas.
Speaker A:And you're seeing a little bit of that in some of the, you know, outlying state of Tennessee, for example.
Speaker A:Yeah, a lot, A lot of that.
Speaker B:I mean, this.
Speaker B:This is no secret.
Speaker B:Right.
Speaker B:Housing is.
Speaker B:Is regional.
Speaker A:Right.
Speaker B:It's very local.
Speaker B:Right.
Speaker B:So like a city like Irvine, where you live, could experience a lot of gains in a city where I live could see some decreases.
Speaker A:Right.
Speaker B:And it all kind of averages out.
Speaker B:I saw a headline the other day from an account online.
Speaker B:It says, US home sellers now outnumber buyers by 630,000 originally.
Speaker A:I bring up the next chart.
Speaker A:So say that was literally the next chart.
Speaker B:Yeah, I saw that too.
Speaker A:Yeah, he saw.
Speaker A:Wasn't a lob.
Speaker A:You didn't know.
Speaker A:He didn't know.
Speaker B:But great minds think alike.
Speaker B:I know that.
Speaker B:I knew that's where you wanted to go from here.
Speaker A:Because of an organic transition, it was built strong.
Speaker A:You know what don't make so welcome the show.
Speaker B:The lack of a.
Speaker B:The lack of appreciation is palpable, as Chris would say.
Speaker A:You know how long it took me to get this chart right?
Speaker B:What do you mean?
Speaker B:It does it automatically on its own.
Speaker B:This is.
Speaker B:This is our boy.
Speaker A:Took me about a couple seconds.
Speaker B:Yeah.
Speaker B:Yeah.
Speaker A:Atlas creates all these charts for us.
Speaker A:Now, America's housing market has buyers in short supply.
Speaker A:The seller gap to buyers is about, as I pointed out, 600,000.
Speaker A:This is up from about 400,000 the last print this came out.
Speaker A:So we're seeing an increase by approximately 50% just month over month.
Speaker A:That's a pretty big swing.
Speaker A:Now, if you look back historically, I found this to be really, really interesting.
Speaker A: So if you go back to: Speaker A:Right.
Speaker A:But look how big the gap is now.
Speaker A:It's significantly bigger.
Speaker A:Yeah, it's significantly.
Speaker A: e you, go back all the way to: Speaker A:There's been never been anything like this.
Speaker A:Right.
Speaker A:And that's.
Speaker A:Call it 12 years, 13 years.
Speaker B:Yeah.
Speaker A:I think you got a meaningful change in the.
Speaker A:Here's the crazy thing is you don't hear about this temperament change in the real estate market.
Speaker A:Everybody's talking about the market's Great.
Speaker B:Yeah.
Speaker B:Unless you have a, unless you're in it or you have friends and family, they'll tell you how slow it is.
Speaker B:But if you don't know someone close, you're not gonna feel it or hear it.
Speaker A:Can I just give you guys a general observation?
Speaker A:You know, we've been doing the show now live for what, four months?
Speaker A:Three or four months.
Speaker A:And I found, I found this the kind of sweet spot to be like a 30 minute, you know, space in the show.
Speaker A:It still allows us to get the right amount of traction the algorithm and.
Speaker A:But what I found really interesting throughout this time is one of the charts we built is the housing affordability chart which pulls down the data from the Fred series every single time I refresh the chart and go live on a show.
Speaker A:So every time you see it live on a show, that's fresh data.
Speaker A:And actually if the show goes longer than 15 minutes, which does it refreshes the data during the show.
Speaker A:Out of all the charts we built synthetic volatility index, the forecast modeling, the stock charts, everything we built that model has not meaningfully changed more than once in the time that we've done the show.
Speaker A:Wow.
Speaker A:And the reason why is the factors that go into the housing affordability chart, the interest rates that they use, the, the, the mortgage information supposed to be.
Speaker B:Slower to change, Right?
Speaker A:Right.
Speaker A:Well, it's all lagging indicators.
Speaker A:But when you think about in the context of you four updates a year on that housing affordability metric, how is it that the one thing we all own and have to buy or want to buy, Life, liberty, Pursuit of happiness.
Speaker A:Pursuit of happiness and homeownership.
Speaker A:Why is that the piece of data that we just don't update?
Speaker B:Yeah.
Speaker A:Like why are we okay with this 90 day lag on what the market is telling us?
Speaker A:Now keep in mind we have outside tertiary sources that give us some reporting.
Speaker A:Like this for example, this is from MLS and Redfin data and we know they're hawkish and dovish.
Speaker A:Right.
Speaker A:But so I just think that this is intentionally flawed.
Speaker B:I agree.
Speaker B:And there's, and there's a six month lag based on the regions.
Speaker A:Right.
Speaker B:So, and there's, it makes, I think it's all based off of executed sales.
Speaker B:Right.
Speaker B:Not whatever, not listings.
Speaker A:I think it's by design.
Speaker A:And to give you an idea, so I have been going through the AI build and I've been trying to just populate as much data as I can and I've go to different sources for different things because there's so much that our AI Does.
Speaker A:Ironically, a lot of lawyers are hitting me up trying to get what I built for the lawyer side now, because I found a way to partition the client HIPAA information and client privacy information.
Speaker A:And you build several models, and then the way to get rid of hallucinations is you have a model self.
Speaker A:Correct.
Speaker A:By using a different model to review the model's work, that your primary work.
Speaker A:Okay.
Speaker A:And all that model does is check for data.
Speaker A:So does the case name exist in a directory?
Speaker A:Yes or no.
Speaker A:Right.
Speaker B:A lot of models.
Speaker A:There's a lot of models.
Speaker A:Right.
Speaker A:But you know, I'm all about models and bottles.
Speaker B:You are models and bottles.
Speaker A:You know, y' all were at the white parties, right?
Speaker B:I was not at the white party, sir.
Speaker A:I got those shoes.
Speaker B:You know, maybe it's the ivory party, man.
Speaker B:Ivory?
Speaker A:No, I eat clean.
Speaker A:You know, I don't.
Speaker A:I don't need napkins.
Speaker A:It's white.
Speaker A:Is white, right?
Speaker A:Just white.
Speaker B:Just white.
Speaker A:One of the things I've noticed pretty clearly is, and I'm also a real estate broker and I belong to the Orange County Association Realtors.
Speaker B:And.
Speaker A:It's interesting to me that there is not one source other than Zillow and Redfin, which are data aggregators.
Speaker A:Right.
Speaker A:You list properties on them.
Speaker A:They have.
Speaker A:They're a large company, so they have access to all the MLs.
Speaker A:Right.
Speaker A:The actual national association of Realtors does not have a way for me to tap in and get the data beyond what membership I belong to, which is wild.
Speaker A:So if I belong to Orange county association of Realtors, I can get Los Angeles, I can get Orange county, but I can't get San Diego.
Speaker A:Right, Right.
Speaker A:Which to me makes.
Speaker A:Why are you.
Speaker B:And that's why sources like this, you know, where you could tap into Redfin data.
Speaker B:I think it's so much more valuable.
Speaker A:But they're.
Speaker A:They've also lobbied hard to where they're the source for a lot of the data the government gets.
Speaker A:Right.
Speaker A:So I don't.
Speaker A:This lobbying monopoly that they.
Speaker A:They were.
Speaker A:They've always been either number one or number two in recent years for lobbying and spending dollars to get what they want.
Speaker A:And you think about it, they're building their own friction to prevent the disruption of technology, changing the business of their constituents, which in this case are the realtors.
Speaker A:Yeah, right.
Speaker A:In some.
Speaker A:In case mortgage professionals as well.
Speaker A:So you look at this stuff and you go, this.
Speaker A:This has to be intentionally opaque.
Speaker A:Now they have the technology to combine all these MLs together.
Speaker A:They have regional MLs and regional groups because they're trying to create friction in the system to ensure that you can't get a holistic picture at any given time.
Speaker A:Yeah, yeah, yeah, right.
Speaker A:You can label however you want.
Speaker A:That's kind of where I'm getting to.
Speaker A:Right.
Speaker A:And the government seems to be okay with that data.
Speaker B:Yeah, because it helps them.
Speaker B:It helps them control the narrative.
Speaker A:Is that what it is?
Speaker B:I think so, yeah.
Speaker B:Because look, they, they've said all along, and at least, at least, actually for the last six months, I would say that all we're going to look at is the unemployment rate.
Speaker B:Right.
Speaker B:And if you control, if you're, if you're allowing for things like job estimates to be reported and it's just an estimate and, you know, we all know it's wrong every month, and they're fine with it because it allows them to control the narrative however they want it.
Speaker B:They don't have to react too fast.
Speaker A:You know how infuriating it would be to go into work every single day and the login and get an error code every single day saying your password is incorrect.
Speaker A:Like, just think about that as a human.
Speaker B:Right.
Speaker A:If you, if every single day you log in and it says your password is incorrect and you got to log in again and you know that that's a problem for you.
Speaker A:Like, how infuriating.
Speaker B:I've worked at companies where, like, you're running all these different platforms and softwares that, that, that you need to access quick.
Speaker B:And when you're in the zone and you're just flowing and then there's like a lag, you're like, bro.
Speaker B:You're like, I can't be productive like this.
Speaker B:This is too slow.
Speaker A:So at this point in time, they know it's broken.
Speaker A:They just intentionally not fixing it.
Speaker A:Right.
Speaker A:Like, they.
Speaker A:That's equally annoying.
Speaker A:Unless you want it.
Speaker A:Right, Right.
Speaker A:Because you can't, you can't just let this sit out there unless you know that it's really like, you're like, oh, it's broken.
Speaker A:Damn it.
Speaker A:I guess we can't access that today.
Speaker A:I mean, I mean.
Speaker A:Yeah, yeah, I guess I'm going to take that smoke break now.
Speaker A:People still do that, by the way.
Speaker B:I haven't seen anybody take a smoke break.
Speaker A:Do they do vape?
Speaker A:Vape breaks still a thing?
Speaker B:I think the kids probably do.
Speaker A:Yeah, vape breaks.
Speaker B:The vape breaks.
Speaker A:Kids, like, they vape when they drink.
Speaker A:That's why, like, that's the new thing.
Speaker A:And then you can do that in a, in a club in, like, states like California.
Speaker A:Right.
Speaker A:Because it's not smoke.
Speaker A:Technically, it's vapor.
Speaker B:No.
Speaker B:Can you?
Speaker A:I think so.
Speaker A:I don't know what the rules are here.
Speaker A:I don't know.
Speaker B:So you're just making stuff up.
Speaker B:You're just floating ideas.
Speaker B:No, you're just like, man, if I was a kid that vapes, I would try it out.
Speaker A:Other than you blowing smoke up my ass, I don't, I don't have any proximity to it.
Speaker A:I worked hard for that joke to build that in.
Speaker B:By the way, the club now only club I go to is Costco.
Speaker A:Right.
Speaker A:The run.
Speaker A:The run clubs are a big thing now.
Speaker A:Run.
Speaker B:You're right.
Speaker A:Obviously the three of us don't participate in.
Speaker B:Does sound so appealing when you have Fridays.
Speaker A:Look at the boom.
Speaker B:Look at the plug.
Speaker B:My man's good.
Speaker B:He's good.
Speaker B:He's learning.
Speaker A:Yeah, man.
Speaker A:As a guy who's had hair plugs before, I take offense to the plug rhetoric.
Speaker B:Why you take offense to anything I say?
Speaker A:Yeah, I'm going to bleep that out when we.
Speaker A:The show.
Speaker B:Oh, he says, I'm wrong again.
Speaker A:No, I'm going to put the plug part out.
Speaker A:What did you say?
Speaker A:And just like, look offended for the rest of the show.
Speaker B:Right.
Speaker A:So, of course, this all set me down the path of, okay, we have inflation, we've got wages, we've got, you know, America's housing problem.
Speaker A:Then I saw Charlie Bello's post here from the past 90 days.
Speaker A:90 Plus days delinquency by loan type.
Speaker A:And this sent me down yet another data path.
Speaker A:And the numbers here are kind of incredible.
Speaker A:Thirteen, 1.1% of credit card balances in the United States, 13.1% are now 90 plus days delinquent.
Speaker A: That's the highest since: Speaker A:Yikes.
Speaker A:But it gets.
Speaker A:There's more kids.
Speaker B:Hold on.
Speaker A: delinquent, the highest since: Speaker A:Right.
Speaker A:And 5.6% of auto loan balances are now 90 plus days delinqu, the highest level on record.
Speaker A:That's a biggie.
Speaker A:Yeah.
Speaker B:You know.
Speaker B:You know what I always thought?
Speaker A:Yeah, there's a lot of lines in that chart there.
Speaker B:There's what I always thought was like, okay, it does seem the whole.
Speaker B:It feels a little predatory, the whole student loan industry.
Speaker B:Right.
Speaker B:When you know, you're telling a kid that you can give the student loans.
Speaker B:I always thought that this was a tool that the government could have in their back pocket to, like, if we, if we need to stimulate the economy, you know what we'll do if if we're in a really bad spot, we'll just forgive all that and then it'll stimulate the economy.
Speaker A:Right?
Speaker A:Yeah.
Speaker A:That work out?
Speaker B:Yeah, it didn't work out very well.
Speaker B:And then now with this administration too, they're like, they made such a big stink about it.
Speaker B:Like, oh, we can't do that.
Speaker B:That, that tool's gone because we, we put a stop to a complaint.
Speaker A:Intentionally go from, to stink.
Speaker B:I.
Speaker B:That's what I do.
Speaker B:Yeah.
Speaker A:Yeah.
Speaker B:Okay.
Speaker A:Yeah.
Speaker A:I'm trying to figure out where you're going colloquially with this here.
Speaker A:Right.
Speaker B:Yeah.
Speaker A:Yeah.
Speaker B:So, you know, I'm like that, that I don't know what's going to happen because it's only going to get worse.
Speaker A:Well, speaking of which, there's another chart.
Speaker A:So Rajeel, naturally what I did is I've got access to data, I've got access to real time data.
Speaker A:So I went down to the Fed path and said, okay, let's take a look at consumer data.
Speaker A:Consumer data, particularly non household debt, is a problem, but let's see what it looks like.
Speaker A:So credit cards and other revolving plans, all commercial banks.
Speaker A: ick spike here which shows in: Speaker A:That's not actually an uptick, that's actually the data, the way they reported change for accounting purposes.
Speaker A: So look at really from: Speaker A: ou account for it, changed in: Speaker A:But the pandemic to now, it's not even close.
Speaker A:Right.
Speaker A: ,: Speaker A:Now this does not include buy now, pay later.
Speaker A:Right?
Speaker B:That's true.
Speaker A:And that has been increasing in its cadence to a large degree as well.
Speaker A:So much so people are using it for, you know, food.
Speaker A:Yeah.
Speaker A:So really kind of nonsensical environment.
Speaker B:If you're using that for food, that means you're already tapped out, maxed out on your cards too.
Speaker A:Yeah.
Speaker A:It's going to be difficult to make a compelling argument for why that's a financially savvy move.
Speaker A:Yeah.
Speaker B:And, and why the economy is resilient,.
Speaker A:As they say, that word being used for the economy.
Speaker A:It's, it's gonna, it's gonna come back.
Speaker A:And I can tell you what's gonna happen.
Speaker B:It's gonna be the new transitory.
Speaker A:That's it.
Speaker A:That's exactly it.
Speaker A:We're gonna make fun of.
Speaker A:Every asshole on, on television is like, you know, this, this is such a resilient economy.
Speaker A:It's so resilient.
Speaker A:Right?
Speaker B:And when, when it all does come, when the bubble does eventually pop, that's the reel we make.
Speaker B:We do.
Speaker A:That's.
Speaker B:We just, we, we just literally cut to each of them.
Speaker B:Resilient, resilient, resilient.
Speaker A:Hey, Carl, you make 8 million, right?
Speaker A:Yeah, yeah, it's going to be a problem.
Speaker A:I think it's going to be something we look back on and say we should probably not use that word anymore for a while.
Speaker A:Yeah, but look, I, I have.
Speaker B:I mean they're already starting though.
Speaker A:But you know what word has been making the headlines recently?
Speaker A:What?
Speaker A:Bubble.
Speaker B:Oh, they're all starting.
Speaker B:Yeah.
Speaker B:Float it.
Speaker B:I know, it's interesting.
Speaker B:It's interesting how all the talking heads all kind of get like work in unison.
Speaker A:Yeah.
Speaker A:Well, it's because consensus somebody will say something and it gets traction and then everybody wants to jump in on the traction.
Speaker A:Right?
Speaker A:Like if you're the wave, let's ride the wave.
Speaker A:Right.
Speaker A:If your buddy starts dating like a super chick, right, and he did something to get the super hot chick, you're like, I'm going to figure out what that guy did.
Speaker A:I'm going to do that.
Speaker A:Yeah, yeah, yeah.
Speaker A:Well that's, that's the way attention Media works.
Speaker B:That's, that's how the crypto bros all got into crypto.
Speaker B:The one guy got in and they're like, bro, I just made like $2,000.
Speaker B:What I want to make $2,000.
Speaker B:Boom.
Speaker B:And then the hype gets built.
Speaker A:Boom, boom, boom.
Speaker A:Well, hype and things moving quicker than design is kind of the tail end of this show.
Speaker A:And we've intentionally rushed the cadence here a little bit to give us a nice solid 20 minute segment that we're going to talk about terminal valuations.
Speaker A:Right.
Speaker B:Fancy.
Speaker A:It sounds like something from like a dystopian future, but unfortunately that's actually a financial tool.
Speaker A:Yeah.
Speaker A:Do you like financial tools?
Speaker B:I love honestly all the tools.
Speaker A:The bigger the financial, the better the.
Speaker B:Sometimes.
Speaker B:Yes.
Speaker A:Okay, well, terminal value represents the estimated value of a business or asset beyond a multi year forecast period, typically five to ten years.
Speaker B:Oh man, look at this.
Speaker B:Back to back episodes with Chamath.
Speaker A:Yeah, man, this was good.
Speaker A:Yeah, this was good.
Speaker A:I had in a discounted cash flow analysis.
Speaker A:So discounted cash flow analysis is really critical to underwriting the economic viability of making a loan to anybody because your primary source of getting Repaid back on any type of loan is always going to be the cash flow.
Speaker A:Secondary source will be the underlying equity build up in the assets, whether that's inventory or property's value.
Speaker A:And tertiary will generally be the sponsorship that's behind it.
Speaker A:Now if you're venture capital, there really is no sponsorship behind it.
Speaker A:You're backing the founders, if you will.
Speaker A:This is why Y Combinator and so many venture capital firms spend such a tremendous amount of time trying to figure out the arch type of a successful founder.
Speaker A:Because they're betting on it.
Speaker B:Yep.
Speaker A:And historically speaking, there's been a bit of a difference between venture capital and private equity.
Speaker A:Private equity kind of goes in circles in like a bunch of dirty vultures and tries to get in on an investment and then come up with efficiencies.
Speaker A:No, leave it up for Jill.
Speaker A:You're right, you're right.
Speaker A:Time.
Speaker A:Okay.
Speaker A:But venture capital is a bit of a different thing.
Speaker A:They try to get in early on businesses, right.
Speaker A:And they'll try to make an initial seed round, for example, hoping that in about, you know, call it five years they can reach their terminal valuation.
Speaker A:This cash flow analysis, Their projections come to fruition and then based on the discounted cash flow in five years the valuation will be why might go public as an exit strategy, whatever that might be.
Speaker A:And then they disposition their, their position in it or sell off some and cover some of their, their, their costs that are sunk in it.
Speaker A:But they know going into it as venture capital that a larger than half percentage of their investments will not work out.
Speaker A:But the ones that do hit, hit wildly good home runs.
Speaker A:Right.
Speaker B:It's the same, the same ideology on, you know, the speculative investments in your portfolio.
Speaker B:You don't expect to hit on all the speculative investments.
Speaker B:But then again, you only need one.
Speaker A:Yeah, you only need one really good one.
Speaker A:And then that, that, you know, that's your Google, that's your Facebook, that's the big companies that made billionaires.
Speaker A:Yes, right.
Speaker A:Get in early enough.
Speaker A:And it's also part of the reason by the time that an IPO comes around that all the venture capital, all the big money institutional investors, and now because of the attractive cachet of these payouts, the Hollywood people with name cache, the Ashton Kutchers of the world, for example, who will get in early?
Speaker B:Ryan Reynolds.
Speaker A:Ryan Reynolds of the world is right.
Speaker A:Just off topic, you brought it up.
Speaker A:Is Ryan Reynolds the modern day Chevy Chase, is he becoming that guy?
Speaker B:Good.
Speaker B:I can't hate, I can't hate that.
Speaker B:That's good.
Speaker A:So the way this Came about is I was sitting at home a couple nights ago and I watched a little bit of the Chevy Chase, you know, biopic documentary thing.
Speaker A:And he does come off as an asshole.
Speaker A:And I liked Chevy Chase, but I'm like, oh, it's really hard to divorce yourself from the guy in front of the camera telling the girl that she's not smart enough to understand him.
Speaker A:I mean, I'm just like, you know, and he's like, you're gonna edit this out, right?
Speaker A:I mean.
Speaker A:Right, right.
Speaker A:If you gotta say that, bro.
Speaker B:Right.
Speaker A:You know?
Speaker A:Yeah.
Speaker A:It's not.
Speaker A:It's not a good look.
Speaker A:Not good.
Speaker A:Yeah.
Speaker A:But he's got a history and a record.
Speaker A:And now I'm sitting here looking at.
Speaker A:I like Ryan Reynolds.
Speaker A:Funny.
Speaker A:But I kind of feel like that's.
Speaker A:That's the new version.
Speaker B:Really?
Speaker A:Yeah.
Speaker B:Is it because of all the Blake Lively stuff?
Speaker A:Hard to deny the impact there.
Speaker B:Yeah, yeah.
Speaker A:Can I be the guy?
Speaker B:Can I be a pollination there?
Speaker A:Okay.
Speaker A:This is terrible.
Speaker A:We're not gonna ever have Ryan Reynolds on the show, are we?
Speaker B:I'm okay.
Speaker B:Before going, okay.
Speaker A:I like him.
Speaker A:He's a good actor.
Speaker B:I used to love him.
Speaker A:Wow.
Speaker A:Used to love him.
Speaker A:Yeah.
Speaker B:I think he's.
Speaker B:I think.
Speaker B:I thought.
Speaker B:His delivery is very funny.
Speaker B:I like it.
Speaker A:Very funny.
Speaker A:Yeah.
Speaker A:Very witty.
Speaker B:He was great in Ben Wilder.
Speaker B:Great.
Speaker A:And Ben Wilder, going old school like that.
Speaker A:But, yeah, great role for him and, you know, very sharp.
Speaker A:Yeah, I dig it.
Speaker A:I don't like his wife.
Speaker A:Okay.
Speaker A:I just.
Speaker A:I just don't.
Speaker B:I'll be honest.
Speaker B:I haven't followed the case well enough to know, but I. I'm telling you, the PR team isn't doing a good enough job to.
Speaker B:To fix the image.
Speaker A:Let's just.
Speaker A:Let's just go down to the path here of you met her in Green Lantern.
Speaker B:Let's.
Speaker A:Let's put that part of your career in the past.
Speaker A:Okay.
Speaker A:Let's leave the whole thing back there.
Speaker B:Okay.
Speaker A:Okay.
Speaker B:So is that where people met her?
Speaker B:I know her from the town.
Speaker A:No, but they were.
Speaker A:They starred in the Green Lantern together, which was a. Oh, okay.
Speaker A:Wildly bad box office failure for him that even he makes fun of.
Speaker A:Okay, okay.
Speaker A:So I'm just saying, like, you know.
Speaker B:Oh, Ryan Reynolds and Blake Lively.
Speaker A:Yeah.
Speaker A:Oh, okay.
Speaker A:Okay.
Speaker B:Yeah.
Speaker A:I thought.
Speaker B:You mean, like, how people know her as being famous.
Speaker A:Okay.
Speaker A:No, I don't know why anybody thinks she's famous.
Speaker B:She wasn't a Gossip Girl.
Speaker B:Isn't she?
Speaker B:Isn't she, like, BFFs was a great show.
Speaker B:She's BFF.
Speaker A:We're not gonna let that fly.
Speaker A:We let that go.
Speaker B:We're gonna let.
Speaker B:No, you're gonna let that go because I'm gonna.
Speaker B:She's BFS with Taylor Swift.
Speaker B:Right?
Speaker A:Because let's be honest, Tay Tay was being taken advantage of, right?
Speaker A:Like, she didn't recognize she was in bed with you.
Speaker A:Still.
Speaker B:You still have hopes of having Tay Tay on.
Speaker A:First of all, Taylor Swift's an angel.
Speaker A:God bless her, right?
Speaker B:I can't believe you.
Speaker A:She's a goddamn national hero, Saeed.
Speaker B:She's a national treasure.
Speaker A:One of the few people who can sell out stadiums these days.
Speaker A:Okay, you know how many people.
Speaker A:You ever heard of this blue dot issue that's happening?
Speaker A:No.
Speaker A:So when you go to, like, event sites, right, and you try to book tickets, like on Ticketmaster, an empty seat that you can pick is a blue dot.
Speaker A:Right?
Speaker A:Right.
Speaker A:So a lot of these musicians are canceling their tours because you go to, like, their concerts, and there's blue dots everywhere because they're not sell people.
Speaker A:This is one of the discretionary spending pullbacks that we talk about a lot on the show that you're kind of seeing, and this is certainly one of them.
Speaker B:She didn't have blue dots.
Speaker A:She got no blue dots, man.
Speaker A:No, she out here just selling out all the stadiums.
Speaker A:Yep.
Speaker A:Typing away, looking up Gossip Girl reminiscing in the background.
Speaker A:Yeah, he's.
Speaker A:These.
Speaker B:Was it Taylor Swift's era?
Speaker B:Tour tickets have consistently averaged over a thousand dollars on the secondary market in 23 and 24.
Speaker A:Meanwhile, your boy kid Cudi can't sell out a 300 seat, bro.
Speaker B:Why you gotta bring up Cudi?
Speaker A:I love Cudi.
Speaker A:You got a podcast up now.
Speaker A:He's with our game.
Speaker A:Yeah.
Speaker A:Get your ass back in your lane, homie.
Speaker B:Yeah.
Speaker B:Top 1%, though.
Speaker A:I'm pretty sure he's top 1/2 1%.
Speaker B:Come on.
Speaker B: , and it goes for like,: Speaker A:Oh, Reil, he had Big Boy on from Outcast.
Speaker A:Remember Big Boy?
Speaker B:Yeah, I know.
Speaker A:Yeah.
Speaker A:Big Boy is a gangster.
Speaker A:I love Big Boy.
Speaker A: So how does Andre: Speaker A:Don't.
Speaker A:Don't.
Speaker A:This is.
Speaker A:This is a personal bonding moment between Brazil and I.
Speaker A:You better watch, Tone.
Speaker B: I'm a big Andre: Speaker B:He's top five.
Speaker B:Dead or alive.
Speaker A:Dead or alive.
Speaker A:And look, he chose to pull out the game because.
Speaker A:I know.
Speaker A:Pull out.
Speaker A:Yeah.
Speaker A:It's very hard.
Speaker B:Let's try to stay on topic.
Speaker A:Just try to stay on topic here, okay?
Speaker A:Like, yeah, he.
Speaker A:He Chose to pull out the game, travel the world.
Speaker A:Musician with flutes and stuff got a little weird.
Speaker A:But Big Boy is also a quirky dude.
Speaker A:So he got asked on Kid Cudi's podcast, like, what's something about him that most people don't know?
Speaker A:And he rolls around.
Speaker A:I'm gonna say just the way he said it.
Speaker A:Okay.
Speaker A:Because it's gonna sound weird, but this way, he said.
Speaker A:He's like, I love Pokemons.
Speaker B:Yeah.
Speaker A:He goes.
Speaker A:He goes.
Speaker A:I roll around with a Pokemon ball in my pocket, and rejuice, you got to Google this.
Speaker A:And I have to see if this is real.
Speaker A:Apparently, you can link the Pokemon ball ball thing that he has in his pocket to your actual Pokemon Go game.
Speaker B:And throw it in.
Speaker A:Huh?
Speaker B:And throw it and try to go.
Speaker A:It automatically hits the pokestops when you.
Speaker B:Walk by on a vibration.
Speaker A:But he was talking about his studio, where he goes to.
Speaker A:He's like, these Asian kids across the way in the parking lot don't know that Pokey stops there because of me.
Speaker B:Oh.
Speaker B:All right, let's flag.
Speaker A:Yeah.
Speaker A:Yeah.
Speaker B:That's.
Speaker A:Damn.
Speaker B:Pokemon.
Speaker B:That's right.
Speaker A:He knows the struggle.
Speaker A:Yep.
Speaker B:This is great.
Speaker B:This is great.
Speaker B:I'm.
Speaker B:I'm locked in.
Speaker A:See?
Speaker A:Flip.
Speaker A:I'mma get what you want.
Speaker B:So cool.
Speaker B:So number one, right?
Speaker A:Right out the gate.
Speaker A:I still love Big Boy.
Speaker A:He's still my guy.
Speaker A:He puts out an album.
Speaker A:I'm buying it.
Speaker B:Just.
Speaker A:Just because of the Pokemon.
Speaker B:He needs to drop another speaker box album.
Speaker A:Yeah.
Speaker A:Speaker box love below such a great cd.
Speaker A:And number two, Kid Cudi say the.
Speaker A:Out our game, baby.
Speaker A:We been in here.
Speaker A:Don't do this to us.
Speaker B:I know what you doing.
Speaker B:He looks like he's doing a good job, too.
Speaker A:Studio.
Speaker B:Studio looks nice.
Speaker B:They're relaxed.
Speaker A:It's.
Speaker A:It's a weird show, though, because some of the people he talks to are.
Speaker A:You know, they're rappers, but they're.
Speaker A:They're artists, so they're.
Speaker A:They're very eclectic people.
Speaker A:Like, Big Boy goes on to talk about how he's got owls, but he's got dogs in the house, so they can't be in the same room as the dogs because the owls will go for the dogs.
Speaker A:Yeah, but he's like, yeah, they just chill in the crib all day long.
Speaker A:And this is a surreal conversation.
Speaker A:Imagine talking to your homie being like, yo, man, how's Al?
Speaker A:He's.
Speaker A:Hootie's cool.
Speaker A:It's just strange, man.
Speaker A:These are strange conversations, at least with, like, Rogan and other people.
Speaker A:Like, you hear conversations about science and like aliens, you're like, oh, that's interesting.
Speaker B:Right?
Speaker A:How are you gonna relate to a dude with owl catching Pokemon in the studio?
Speaker A:Right?
Speaker A:That's, that's a weird mix.
Speaker A:Right?
Speaker A:Right.
Speaker A:I wouldn't, by the way.
Speaker A:I would have never called.
Speaker A:As soon as I heard, it was like 2 o' clock in the morning, I was going through like social media.
Speaker A:I thought about calling Rajeel at 2 o' clock in the morning to tell him.
Speaker B:And you guys are heavy into this game.
Speaker B:Yeah, I'm at level 56.
Speaker B:Are you really?
Speaker B:And do you disguise, do you disguise this as something I'm doing this for, for my kid, or is this really for you?
Speaker A:Oh, 100 for me now.
Speaker B:You were.
Speaker B:Because you were into it early.
Speaker B: Like back in the day,: Speaker A:It's been 10 years, dude.
Speaker B:Yeah, you.
Speaker B:I remember you were so excited, bro.
Speaker A:I'd be in the boardroom.
Speaker A:If there's any reason I should gotten fired, it was that one.
Speaker A:I'd be in the boardroom going like, yeah, do that.
Speaker A:And I'll be flicking pokeballs.
Speaker B:Approved.
Speaker A:Because there was a poke stop right outside the boardroom.
Speaker A:Right.
Speaker A:So I just hit the stop.
Speaker A:Special events.
Speaker A:I mean, I gotta go to the restroom real quick.
Speaker A:We're back.
Speaker A:Come back half hour later.
Speaker A:Yeah, I remember.
Speaker B:What's the most rare Pokemon that you caught?
Speaker B:I don't even know.
Speaker B:What's that?
Speaker B:What's considered rare?
Speaker B:I got, I got a Mew, a couple Mewtwos.
Speaker A:I got a Mewtwo.
Speaker A:I got one.
Speaker B:It was there different.
Speaker A:Is it three star Mewtwo?
Speaker B:Let me check right now.
Speaker B:Look at you.
Speaker A:Two star Wild.
Speaker A:Three stars.
Speaker A:Only in my hood, but yeah.
Speaker B:Are you buying?
Speaker A:Are you.
Speaker B:Would you ever be consider buying a collectible as an investment?
Speaker A:No.
Speaker B:Oh, I got a shiny mute.
Speaker B:I don't know, man.
Speaker B:Yeah, the collectible industry right now is crazy.
Speaker A:Yeah.
Speaker A:So a friend of mine, actually Brian in the gym, he trained me.
Speaker A:He was, he gave me.
Speaker B:Yeah, both had three stars.
Speaker B:Activating your glutes.
Speaker A:Yeah.
Speaker A:He calls it ass tastic is what he calls it.
Speaker B:Okay.
Speaker A:Anyway, so yeah, but he, he was here the other day.
Speaker A:He bought a Pokemon card for $2,000 literally a week ago.
Speaker A:He went to a convention over the weekend and somebody sold one that shows up as a comp now at that convention and it's now valued at 4, 500.
Speaker A:And he's trying to figure out whether he should get out now or hold because that more than doubled in price.
Speaker A:And I'm like, bro, sell.
Speaker A:I would be the Worst in this game because some of these guys will, they have like diamond hands like, you know, they did in the crypto space.
Speaker A:But these collectibles are no joke, man.
Speaker A:He's also got like a mewtwo tattoo on his leg.
Speaker A:He makes look like a novice.
Speaker A:I mean, Brian's hard.
Speaker B:He's bought in.
Speaker A:Yeah, yeah.
Speaker B:I don't go that hard.
Speaker A:Yeah, he goes hard.
Speaker B:Yeah.
Speaker B:You gotta, you gotta fully buy in.
Speaker B:I mean, look at like Logan Paul was rocking it as a chain.
Speaker A:Yeah.
Speaker A:The whole collectible market.
Speaker A:I gotta be honest, I don't understand it.
Speaker A:I, I, I don't.
Speaker A:And to me, and I'm okay, I don't want anybody understand it.
Speaker B:It's provocative.
Speaker B:It's what gets the people going.
Speaker A:Nobody understands what it means.
Speaker A:Yeah.
Speaker A:In my experience, this is my asterisk here.
Speaker A:Right.
Speaker A:In my experience, when collectibles get this valued, it's before a recessionary event starts to happen.
Speaker B:Right.
Speaker A:You get this frothy euphoria in the market and people are going to alternative assets and it feels more like gambling.
Speaker A:As a matter of fact, little guy by the, you may know him by the name of Warren Buffett did give an interview recently and he said that a lot of the behavior in the market resembles much more closely resembles gambling than it does investing thing.
Speaker B:Yeah, yeah, yeah.
Speaker A:And I think that that sentiment is what you feel.
Speaker A:It's, it's not like a tangible thing that you can point your finger at it, give you the pistols.
Speaker A:Yeah.
Speaker A:But it's a, it's a real thing.
Speaker B:Yeah.
Speaker A:And I think that that's, that's a serious thing.
Speaker A:I, I do want to talk about this venture capital thing a little bit more here because I think this is educational and valuable.
Speaker A:So dramatic goes on in this article which is posted on X, it's in our show notes.
Speaker A:Wherever platform you're on, it'll be there.
Speaker A:It'll be there to, to explain it.
Speaker A:And if you're, you know, doing something like at the gym, you can actually hit, if you have X, you can actually hit play and it'll read the audio to you, which is a great alternative here because I'm such a heavy audiobook guy.
Speaker A:That's how I look at you.
Speaker A:That's why I ingested it.
Speaker A:That's how I took it in.
Speaker B:You know how to ingest.
Speaker A:Yeah.
Speaker A:But he makes a very compelling argument here.
Speaker A:So basically what he's saying is the venture capital world is also going to have a bit of an issue.
Speaker A:And a great example of this is a company that came out Today I was telling the guys about it for the show started where they basically open sourced what is now 11 Labs.
Speaker A:If you're not familiar with 11 Labs, 11 Labs is a text to speech protocol, but you could also customize the speech to sound like you.
Speaker A:A lot of people who are doing these, you know, faceless videos on social media, whether it's Tick Tock or Instagram are using 11 labs come up that voice.
Speaker A:You probably heard that same voice.
Speaker A:Like why does everybody have the same voice?
Speaker B:Yeah, where are they getting that voice from?
Speaker A:Adam from 11 Labs, that's the name of the voice.
Speaker A:And they have this just massive international repository of different voice sounds that you.
Speaker B:Can use that you would have to like pay for.
Speaker B:Like if you were to use like what was it?
Speaker B:Artless, Right, like just like, if you were to like get like they have a music or sounds that are basically.
Speaker A:Copyright free, but it's basically $5 a month for the cheapest subscription and it goes up to enterprise value and stuff like that.
Speaker A:But you can basically have non human agent AI use a voice and this is the most common way of doing that.
Speaker A:Well, today this 11 labs is not public, right?
Speaker A:They're still in venture capital seed rounds.
Speaker A:Some of the biggest players in Silicon Valley have got investments into them.
Speaker B:How long does it usually take to go from venture capitalist seed rounds to ultimately the market?
Speaker A:So here you go, key investors in 11 Labs, Andreessen Horowitz, iconic Lightspeed Venture partners of etic and bo.
Speaker A:These are, these are massive, massive companies.
Speaker A:Sequoia 11 Lab.
Speaker A:Yeah, Sequoia is in there as well.
Speaker A:They're the lead investor on this 1.
Speaker A: billion as of February: Speaker A:So again, first round, seed round, Series A, series B, series C and the valuations of the company go up.
Speaker A:Right?
Speaker A:So seed round, you've generally got no revenue.
Speaker A:You can get in the Series A, you got some type of revenue and then you're basing this on that discounted cash flow we about talked talked about.
Speaker A:Right?
Speaker A:So the more money you're making, the more people that go, okay, you're going to get closer to this and they're really aiming to your answer your question.
Speaker A:Generally it's about a five year, five year turnaround, right?
Speaker A:So five.
Speaker A:So put your money in during the seed round and then five years from now you get your, you get your money, you get out.
Speaker A:Now they take it public.
Speaker A:This is why the public markets and IPOs don't make a whole lot of sense for the consumers because all these guys have gotten in super early in the valuations.
Speaker A:The, the celebrities, the, the big companies, the sequoias, the venture capital firms, they've gotten in at low, low, low dollar amounts.
Speaker A:By the time you go public, you're their liquidity exit strategy.
Speaker A:Right.
Speaker A:And the reason why it goes up from there, Right.
Speaker B:And the whole reason why it's so successful.
Speaker B:Right.
Speaker B:Is this what you were telling us like before the show is like in the past, if you got going right, all you needed was capital, and for anyone else to get started, it would take way too long.
Speaker B:We got, we, first of all, we already laid down all the groundwork.
Speaker B:Now we got the, the venture capitalist behind us with the money.
Speaker B:We're going to push this thing, right, Just, just to show like how big the value is here.
Speaker B:When these venture capitalist firms really get their money into something, these are the types of companies that they do seed round investing in and ultimately grow into.
Speaker B:Right.
Speaker B:You got Apple, Google, WhatsApp, Airbnb, Nvidia, Stripe, YouTube.
Speaker B:Like you.
Speaker B:These look, these are like staples in everyone's lives.
Speaker A:That's right.
Speaker A:But very few actually get to become staples like most of the ones that you're seeing now are a bit different.
Speaker A:So, so for context, that, that gap in the ability once you get capital to get to market, to beat these people to market is typically referred to as an industry vernacular as the moat.
Speaker A:Right.
Speaker A:And Shamath refers to it a lot.
Speaker A:He's basically arguing in this article that the summary is here.
Speaker A:He's arguing the moat is gone.
Speaker B:Yeah.
Speaker A:And the reason why is what happened today is a great example, is you've got all these companies backing 11 labs, $500 million Series D round, valuing the company at $11 billion.
Speaker A:And today a company released an open source free version of it that is arguably just as good because there's no moat.
Speaker A:Now with AI and with technology, you can build a suitable variant of that with much less capital.
Speaker A:Right.
Speaker A:And much, much quicker.
Speaker A:Right.
Speaker A:And because of that, the friction to getting the market, which is this capital.
Speaker A:Time.
Speaker A:Right.
Speaker A:Capital plus time gives you an ability that nobody else has.
Speaker A:Well, that's all gone now.
Speaker B:Yeah.
Speaker A:Time is no longer the, the, the friction point and capital is no longer your limitation.
Speaker A:You don't need a team of developers.
Speaker A:You can do it on your own.
Speaker B:What is it?
Speaker B:Vibe coding.
Speaker A:Vibe coding is certainly one way to do it.
Speaker A:And then you also have like a lot of other elements here that are at play.
Speaker A:So mistral that's the one.
Speaker A:Mistral AI just released a text to speech model.
Speaker A:It says Beats 11 labs and it's giving it away, giving away the weights for free.
Speaker A:And this is, this is such brilliant marketing on their part as well, right?
Speaker A:Like everyone's gonna be like all over.
Speaker B:This one, eat up some of the market share, right?
Speaker A:Yeah.
Speaker A:So it's called Voxtral tts, which is there.
Speaker A:So on Thursday morning, Vistral Mistral AI entered that fight with a fundamentally different position.
Speaker A:The Paris based AI startup released Vistral Voxtral.
Speaker A:Why is all the old what it calls the first frontier quality open weight text to speech model, designed specifically for enterprise use, where every major competitor in the space operates a proprietary API.
Speaker A:First business enterprise rent the voice, they don't own it.
Speaker A:Mistral is releasing the full model weights, inviting companies to download VoxTral TTS, run it on their own servers or even a smartphone, and never send a single audio frame to a third party.
Speaker A:Now if you're a company and you're regulated by, I don't know, the fdic, maybe the Fed, maybe the sec, if you're not sending conversation out.
Speaker A:So typically the way this would work historically is I as a customer call you Saeed.
Speaker A:You Saeed, have an open API to 11 labs.
Speaker A:You take my conversation to you transcribe it to text, take that text, send it out to 11 labs.
Speaker A:11 Labs then takes that text after you formulated a response to it and then trend, I'm sorry, goes to you, you get trans converted the text, you know, formulate a response, goes to 11 Labs, 11 Labs comes back with the audio and then you send it to me.
Speaker A:Right.
Speaker A:So a bit complex there.
Speaker A:That whole process has actually gotten a lot faster.
Speaker A:There's some models that have run locally that are super lightning quick with this and the only thing you're really lagging on is an API.
Speaker A:So what's cool about it now is now it can go from me to you.
Speaker A:And while I'm talking to your, transcribing in real time and sending it in real time so you're not waiting for me to finish, Right.
Speaker A:So it feels much more native in a human conversation.
Speaker A:So you're transcribing, going out with your response to, to the AI, the API and then going back.
Speaker A:But the problem is doing that creates me going to you as a company who's regulated you going out to a neutral third party.
Speaker A:Right?
Speaker A:That's exposure.
Speaker A:What if I'm talking to you about hipaa, right?
Speaker A:You know, what if I'm talking to you about my personal financial situation.
Speaker A:And what if your response, you're communicating back to me has some of those tidbits in there, right.
Speaker A:The last thing you want is a data leak at 11 labs, which is a text to voice.
Speaker A:You're like, well, that risk there isn't that big.
Speaker A:That's going to expose all my private information.
Speaker A:Right.
Speaker A:Well now Voxtral can be in your side servers and it's not going out anywhere.
Speaker A:Right.
Speaker A:So that's very attractive.
Speaker A:But if you're a venture capital, you're in Dreeson Horowitz and you're Sequoia and you've got 500 million, you just raised a series D round on after, you know, a seed round, an A and a B and a C. Now you're the d round with 500 million.
Speaker A:It's worth $11 billion.
Speaker A:You were hoping to go public one day and these just came out and said it's free and you can have it.
Speaker A:Yeah, you're going to.
Speaker A:And that's the moat disappearing.
Speaker A:Right.
Speaker A:And that, that's software as a service businesses, which is 87 of what the private credit businesses these banks are invested in are.
Speaker A:They all had a moat.
Speaker A:Right.
Speaker A:And that was.
Speaker A:You couldn't get there faster than they can get to market because they've already built all these things, infrastructure, resources.
Speaker A:And I first thought of a compelling argument that was very similar to this when we talked about what was the name of the company.
Speaker A:Damn it.
Speaker A:The one that just.
Speaker A:The $480 million and they went to a billion dollar run rate.
Speaker A:Damn it.
Speaker A:It's the GLP1 company.
Speaker B:Oh, oh, yeah, yeah, yeah, yeah.
Speaker A:The guy, the first MEDV.
Speaker A:MEDV.
Speaker A:God, thank you.
Speaker A:I was stuck on stupid there.
Speaker A:I think it's the bun that I got going on over here.
Speaker A:It's just sucking the intelligence out outside of my head.
Speaker A:By the way, somebody says something in the show and I'm gonna be honest.
Speaker B:With you, I Are you're offended?
Speaker A:Not offended.
Speaker A:No.
Speaker A:I don't know how to feel about it because it was like a complidus.
Speaker B:Yeah.
Speaker A:Somebody said that if Jason Momoa.
Speaker A:And see, I. I said Jason Momoa long time ago.
Speaker A:No offense.
Speaker B:No.
Speaker A:And George Clooney had a kid who would look like me.
Speaker A:That's an insult, right?
Speaker B:That's an insult.
Speaker B:Yeah.
Speaker A:It doesn't.
Speaker B:Doesn't feel good because you're not Clooney.
Speaker A:And I'm not Jason Momoa in both situations.
Speaker A:It's like if there's like you're not.
Speaker B:Good enough to be Clooney.
Speaker A:No.
Speaker B:And you're definitely not good enough to be Jason Momoa.
Speaker B:Honestly, I don't like.
Speaker A:I don't feel that.
Speaker B:Listen, I'm be honest.
Speaker B:I'm not shy about.
Speaker B:About admiring another man's aesthetics.
Speaker B:That's a good looking guy right there.
Speaker A:Right?
Speaker B:I'm okay with that.
Speaker A:Which one?
Speaker B:There's a lot.
Speaker B:There's a lot.
Speaker A:Oh, there's.
Speaker A:Outside the scenario.
Speaker A:You're looking a lot of dudes lately.
Speaker B:Oh, yeah.
Speaker B:All the time, dude.
Speaker B:You do too.
Speaker B:Stop it.
Speaker A:100.
Speaker B:Stop it.
Speaker B:Right?
Speaker A:Dude.
Speaker A:I size both of you guys up when you walk in the studio.
Speaker B:I'll be honest.
Speaker B:Jason Momoa.
Speaker B:That ain't it.
Speaker A:I got it.
Speaker A:Can we have this conversation?
Speaker B:That ain't it.
Speaker A:First of all, is anybody going to acknowledge that he's getting fat?
Speaker B:Yeah, that's.
Speaker B:That was your draw, bro.
Speaker A:Your draw was that you are Aquaman.
Speaker A:You literally have pictures of you shredded with a goddamn spear in your hand.
Speaker B:Honestly, kind of a wax.
Speaker A:Actually tried it, if I want to be technical here.
Speaker B:Kind of a wax superhero.
Speaker B:Aquaman.
Speaker A:Don't do that.
Speaker A:You don't do that.
Speaker A:You thought that he looked like.
Speaker B:Of all the superheroes, he's not even in your top 20.
Speaker A:If someone ever.
Speaker B:He's not in your top 20.
Speaker A:Stop it.
Speaker A:If someone ever offered you millions of dollars to get.
Speaker A:Get moist and do like a hair throwback and be shredded like that, I'm as hold.
Speaker B:I'm saying I would be all over that.
Speaker B:The problem.
Speaker B:The problem is he didn't.
Speaker B:He didn't shave the hair.
Speaker B:Right.
Speaker B:He still got the hair.
Speaker A:Which one?
Speaker A:The hair.
Speaker B:I'm just saying that's.
Speaker B:That ain't.
Speaker B:That ain't a look, bro.
Speaker A:So you don't like my hair either?
Speaker A:No.
Speaker B:Your hair's not long like that.
Speaker A:Your hair's not long like that.
Speaker B:I. I think that you used to have very nice haircuts.
Speaker A:I.
Speaker A:When you pay $26,000 for a hair transplant side, you've got to try to maximize your dollars.
Speaker B:Right.
Speaker A:The most.
Speaker A:Feel it.
Speaker B:You want to feel it, Right?
Speaker A:Right.
Speaker B:I want to have as much of it as possible.
Speaker A:Yeah.
Speaker B:Yeah.
Speaker A:And I do.
Speaker A:When you guys aren't around because I'm embarrassed.
Speaker A:I actually do like the whole emo thing and like have it on one side of my head.
Speaker B:It looks very confusing.
Speaker B:It looks like you're going rugged.
Speaker B:Look.
Speaker B:But then like I'm.
Speaker B:And then you got.
Speaker B:Man.
Speaker B:But it's like two different stories.
Speaker A:Wait.
Speaker A:I don't understanding why those compete with one another.
Speaker B:I just, just.
Speaker B:I feel like they compete.
Speaker B:I Don't feel like they're telling the same story.
Speaker A:What.
Speaker A:What story are they supposed to tell?
Speaker B:I don't.
Speaker B:That's.
Speaker B:I don't know.
Speaker B:You tell me.
Speaker B:What story you trying to tell?
Speaker A:I don't tell.
Speaker A:I'm not trying to tell anything.
Speaker B:Tell me your story, Christopher.
Speaker A:A long time ago.
Speaker B:The moat is gone.
Speaker A:The moat is gone.
Speaker A:So I do want to read a couple paragraphs from this real quick.
Speaker A:The entire architecture of modern capital markets rests on a single, rarely examined assumption that competitive advantages compound over time.
Speaker A:Moats persist, brands endure, networks affect network effects defend.
Speaker A:Strip that assumption away.
Speaker A:And you aren't just repricing some stock.
Speaker A:You would be dismantling the philosophical foundation of how capital has been allocated for a century.
Speaker A:Yeah.
Speaker A:Here's a scenario worth taking seriously.
Speaker A:AI lowers the cost of disruption so dramatically and raises the pace of innovation so relentlessly that no company can credibly project its free cash flow beyond five years.
Speaker A:I think we are there now.
Speaker B:Scary.
Speaker A:Yeah.
Speaker A:So that in and of itself is scary.
Speaker A:But because in the time you use AI to disrupt an incumbent, someone is laying the foundation to use a better model to disrupt you.
Speaker A:The cycle accelerates until markets stop paying for what a business might earn in the year seven onward, for example, or year five, like we talked about here.
Speaker A:Because year seven or year five becomes effectively unknowable.
Speaker A:Right.
Speaker A:You're betting on the future of this revenue stream that may not even be valuable at this point in time.
Speaker B:Yep.
Speaker A:So the result equities would need to get repriced not as discounted streams of future cash flows, but as multiples of what they generate right now.
Speaker A:Which means you're going to have to grind as a founder so you don't get the seed capital anymore.
Speaker A:At that point in time, you're going to have to make some revenue.
Speaker B:Yep.
Speaker A:You have to go to market.
Speaker B:Yep.
Speaker A:And then when you go to market, the amount of money you're going to get is less because it's going to be based on your cash flow.
Speaker A:Right.
Speaker B:You're going to have to prove up.
Speaker A:Yeah.
Speaker B:Yeah.
Speaker A:So this also happened.
Speaker A: xamples to taxi medallions in: Speaker A:Watch.
Speaker B:You know what you're going to see now even more so, which is going to be even that much more disgusting.
Speaker B:It's going to.
Speaker B:You're going to see more and more Hollywood stars.
Speaker A:Right.
Speaker B:Have to have to be, like, sponsored by.
Speaker B:By these companies and be the face.
Speaker A:Right.
Speaker B:To where it's like, okay, we got, we got a face.
Speaker B:They'll sell the story and that, that'll be our competing advantage.
Speaker A:I think you've always had an element of that.
Speaker B:No, you do, but I'm saying you're going to see it even more so.
Speaker A:Now, didn't we talk about in the previous show how Hollywood and No, we,.
Speaker B:You and I were sharing those articles.
Speaker A:So there is a reoccurring trend where I think the light bulb finally went on for Silicon Valley.
Speaker A:And what was happening originally was Hollywood actors were like, wait a minute, I've got name cache.
Speaker A:Right?
Speaker A:Yeah, if I.
Speaker A:And this is how Ryan Reynolds made his money.
Speaker A:Right.
Speaker A:If I lend my name cachet.
Speaker A:Because we're now in an attention currency based society.
Speaker A:Like your attention equals currency.
Speaker A:Right, right.
Speaker A:So if I lend my name cache and my power from an attention perspective to a brand.
Speaker B:Yeah.
Speaker A:And that brand gets more sales because of it.
Speaker A:I can do two things that are very unique to me.
Speaker A:Number one, I can physically manipulate this with my visual.
Speaker A:Visual presence.
Speaker A:Right.
Speaker A:Which has a bunch of tertiary benefits.
Speaker A:Like, for example, I'm a good businessman.
Speaker A:Right, Right.
Speaker A:But also I can put less money in, which I have money from.
Speaker A:Because I'm a well paid actor.
Speaker A:I can put less money in and leverage.
Speaker A:Hey, I'm going to get you X, Y and Z returns because of my power.
Speaker A:So now I'm not putting in 10 million, but I'm getting 10 million worth of value.
Speaker A:George Clooney's partners agree to sell Casamigos for up to 1 billion.
Speaker A:George Clooney and his partner used their star power to really lift up that brand.
Speaker A:And that has now been the model for Hollywood.
Speaker A:All these celebrities are doing this.
Speaker A:Right.
Speaker A:Look at the Kardashians and Matt Damon.
Speaker A:Matt Damon does this as well.
Speaker A:So a number of people have done this.
Speaker A:Ben Affleck did this with his AI startup, you know, Netflix.
Speaker A:So a lot of celebrities figured this part of the business cycle out and they're now leveraging their visual prowess and.
Speaker B:Their name and for some reason they're, they just are able to get away with, with nothing held against them if the company goes belly up.
Speaker B:Or I mean, think about all the celebrities that, that were, that were, that were backing ftx.
Speaker A:Well, in the.
Speaker A:Right.
Speaker B:I mean, you got Tom.
Speaker A:Nft Rug pools.
Speaker A:Yeah, right, right, right.
Speaker B:And then you got, and then you got, you know, Tom Brady who's just walking away with however millions of, you know, and he could just be like, how am I supposed to know?
Speaker A:Because people don't understand.
Speaker A:They look at the celebrity as somebody the company paid to endorse the product.
Speaker B:Yeah.
Speaker A:What they don't realize is, is these celebrities more and more are saying, hey, hey, I want to get paid in stock for this.
Speaker A:Right.
Speaker A:So a lot of them aren't getting paid a whole lot.
Speaker A:They're becoming shareholders, owners of the company.
Speaker A:And in the case of Ashton Kutcher, for example, he's investing in them heavily.
Speaker A:Right.
Speaker A:And because he's investing in them heavily, Right.
Speaker B:He was big on acorns.
Speaker B:Right?
Speaker A:Acorns.
Speaker A:He's been.
Speaker A:His fund has done exceedingly well.
Speaker A:He's invested in a lot of, like, early startups, but he's leveraging his.
Speaker A:He's not leveraging his visible presence in them as much as he's leveraging his network and connections.
Speaker A:Yeah, but someone like Ryan Reynolds is clearly doing that.
Speaker A:Then you have the Rock with his.
Speaker A:With his brands that are in Target.
Speaker A:Now you've got Papa Tui.
Speaker A:Yeah.
Speaker A:Strange name.
Speaker A:Honestly, I understand what he's doing there, but I don't know.
Speaker A:In, like, his energy drinks, something else.
Speaker A:So everybody's trying to build that.
Speaker A:That exit brand, but this is not new.
Speaker A:Okay.
Speaker A:This has just been something that we've seen in front of us.
Speaker A:What new is that?
Speaker A:Silicon Valley went, wait a minute, we need to be in Hollywood.
Speaker A:Yes.
Speaker A:So what they're now doing is the TVPN model.
Speaker A:Right.
Speaker A:Like, they go, okay, during the last election cycle, you had the.
Speaker A:The media really determine.
Speaker A:Determine who became president.
Speaker A:And Joe Rogan, arguably, is probably the most prominent visible portion of this.
Speaker A:Right.
Speaker A:Where he was able to really have an impact on the populist vote.
Speaker B:And he was.
Speaker B:No, he was very open about it.
Speaker B:He was worried about that being the case.
Speaker B:And he's like, I should.
Speaker B:I shouldn't have.
Speaker B:Have, like, this responsibility.
Speaker B:I shouldn't bear the responsibility of being able to do this.
Speaker B:But then even Trump pulls him aside after.
Speaker B:At a UFC event after he won the election, and tells him in his ear, you're the reason why I won the election.
Speaker A:So.
Speaker A:And this becomes a very serious threat to Silicon Valley.
Speaker A:Right.
Speaker A:You can't put your Silicon Valley CEOs in front of just anybody because there's a lot of bad things that some of these people do.
Speaker B:Yes.
Speaker A:So you find somebody like tbpn, you fund them under the table quietly, make them look like they're growing on their own, and then what do you do?
Speaker A:You announce that you bought them.
Speaker A:OpenAI.
Speaker A:Why would OpenAI buy podcast for.
Speaker A:I don't know, somewhere between 100 and 200 million dollars.
Speaker A:What's the value to OpenAI to do that?
Speaker A:Right.
Speaker A:Especially when OpenAI isn't going to control the, quote, journalistic integrity of the show.
Speaker A:Well, the reason why is they needed to build a platform they could send their people on that they can create sound clips.
Speaker A:Because here's the way this works.
Speaker A:A lot of people say, I watched this episode of Joe Rogan.
Speaker A:What they're really saying is, I saw the clip on social media.
Speaker A:The conversation that Cider was referring to earlier was an epiphany that I had.
Speaker A:Good word, right.
Speaker B:SAT vocabulary.
Speaker A:How often I give you guys epiphanies?
Speaker A:A lot.
Speaker B:Not very often.
Speaker A:The front of the back one.
Speaker A:The back epiphany.
Speaker A:Anyway, so it was that a lot of people talk about listening to podcasts and, and we.
Speaker A:We've seen our audio streaming numbers come down, but our video streaming numbers go way up.
Speaker A:And we've seen this back and forth and we always lament, like, I, you know, I feel like what we put out is such a great value and a great product, but at the same time, like, the, the numbers just don't seem to align in some cases.
Speaker A:And a lot of the numbers that are really strong are the streaming numbers, which nobody ever sees.
Speaker B:Yeah.
Speaker A:So now we're going back and forth and we realized that, unfortunately, whether you like it or not, we are effectively the Moby of the techno world.
Speaker A:Right.
Speaker B:Obi.
Speaker A:Nobody listens to techno no more.
Speaker B:And nobody listens to techno.
Speaker B:It's the Eminem line.
Speaker B:Okay.
Speaker B:Good job.
Speaker A:That's right.
Speaker A:Yeah.
Speaker A:But what happens is people listen to the clips.
Speaker A:The clips become the show.
Speaker A:The short form content becomes the show.
Speaker A:So you see Joe Rogan talk about aliens on this podcast, people go, oh, yeah, I saw that on Rogan the other day.
Speaker A:No, they saw a clip from Rogan's.
Speaker B:Podcast to the whole thing.
Speaker B:Right.
Speaker A:You know, listen to the whole thing.
Speaker A:And very few people really do that.
Speaker A:The attention spans are changing.
Speaker A:So Silicon Valley.
Speaker A:No, they needed an outlet that would make their network look good, that would be able to create short form content.
Speaker A:And then the rest of that is just clippers pushing it and making stuff go viral.
Speaker A:Because that's a whole different subset of people don't understand is that.
Speaker A:And this is a true story, when Twitch was getting started, they.
Speaker A:Streaming right now is a huge thing.
Speaker A:And the reason why Twitch is losing to kick is because Kik pays 95% of the advertising revenue to the streamers.
Speaker A:So all the streamers that are financially focused, you've seen a Lot of them migrate from traditional platforms to Snapchat.
Speaker A:Right.
Speaker A:Because Snapchat was paying the most for a long period of time.
Speaker A:And now Kik is paying a ton to these streamers because they're mimicking the Twitch content.
Speaker A:Twitch content right now.
Speaker A:The owners there are also interesting because there's some gambling owners involved in, like Twitch, for example.
Speaker A:But Kik is an interesting nuance here.
Speaker A:You're seeing this migration.
Speaker A:That's why you're seeing everybody like Clavicle or Clavicular, whatever his name is, show up on that all the time.
Speaker A:But what's really pushing them is that Kik came out and this is such a brilliant design.
Speaker A:They went to people and said, hey, we think you're likable.
Speaker A:We want you on our platform.
Speaker A:Come on.
Speaker A:Our platform will make sure you wind up on the main page.
Speaker A:You get a lot of traffic, but will also push your content with clippers.
Speaker A:And a lot of people early on didn't know what that meant.
Speaker A:What they were basically saying was, is they were going to influence the narrative by paying these clippers.
Speaker A:And the way the clippers work is if you're someone like, like a Mr.
Speaker A:Beast and you're going to.
Speaker A:You're going to go viral, more likely than not, they're going to pay you $3 per thousand views.
Speaker A:You get, you know, a million views.
Speaker A:You get paid three times, you know, times a million divided by thousand, whereas anybody else is normal.
Speaker A:You probably pay like $10 for a thousand views.
Speaker A:But these clippers get paid on that.
Speaker A:Some of these clippers are making $100,000 a month with videos that are just going viral.
Speaker A:Right, right.
Speaker A:But they will pay for clippers to push your content, to put you in front of more eyes so you become more known and recognized, and people come over and they push you forward.
Speaker A:So what does Silicon Valley do?
Speaker A:They go, wait a minute, we need this vehicle.
Speaker A:Yes.
Speaker A:We need the ability to not only have the long form content, have the short form content, and then clip and push it out.
Speaker A:So when the next cycle comes around or the public sentiment shifts against us, we can now control what becomes viral content and what doesn't.
Speaker A:And before, if Rogan put out something out and it went organically viral or not.
Speaker A:Yeah, right.
Speaker A:You didn't have a way to combat that.
Speaker A:Now Silicon Valley does.
Speaker B:That's right.
Speaker A:It was strategic and a brilliant play.
Speaker A:I don't know who put it together.
Speaker B:Eventually gonna.
Speaker B:Eventually was gonna.
Speaker B:Yeah, it was going to take over.
Speaker B:We just need Lawrence Yoon to hand pick us.
Speaker A:LAWRENCE yoon, NATIONAL Association Realtors yeah, no,.
Speaker B:I was actually thinking this is the platform.
Speaker B:This is the one we want.
Speaker A:Guys, we're for sale.
Speaker A:I don't know how to say it.
Speaker B:I have a price tag.
Speaker A:Yeah.
Speaker A:Just like tvp.
Speaker A:And we won't change a single damn thing about the show.
Speaker A:We will not compromise our journalistic integrity.
Speaker B:Right, right.
Speaker A:Or lack thereof.
Speaker A:Yeah.
Speaker A:And look, I don't claim to be TV.
Speaker B:That's greedy.
Speaker B:Yeah.
Speaker B:Honestly, 50.
Speaker A:50 Million.
Speaker A:I feel like it's appropriate.
Speaker B:I think it's appropriate.
Speaker A:You know, I mean, look, I'll come in.
Speaker B:I'll come in with a suit on if that's what it takes.
Speaker A:25% Of what open AI paid.
Speaker A:We've been around for literally three times as long.
Speaker A:Right.
Speaker A:You know, we got a much bigger audience.
Speaker B:Come on.
Speaker A:Now, I'm not saying it's about size, but it is how you use it.
Speaker A:Guys.
Speaker A:Okay.
Speaker A:Right.
Speaker B:I'm in.
Speaker B:Yeah, I'm in.
Speaker B:I agree.
Speaker B:Good show, sir.
Speaker A:Wasn't.
Speaker A:Yeah, I came in caffeinated.
Speaker A:Yeah.
Speaker A:Yeah.
Speaker B:I came in with the energy, too.
Speaker B:The Avenger lines got you going.
Speaker B:Got the people going.
Speaker B:The people, the peoples.
Speaker B:You got anything?
Speaker B:I'm not on furlough.
Speaker B:You know, you're.
Speaker A:No, you're here.
Speaker A:You're here.
Speaker A:Yeah.
Speaker A:You're welcome back.
Speaker B:Yeah.
Speaker B:Accruing PTO yet again.
Speaker A:The good news is, is it just became free to create the AI version of you.
Speaker A:So that's good.
Speaker A:Voxtroll.
Speaker B:If you're watching this show on YouTube and you haven't done it yet, please make sure you subscribe.
Speaker B:Hit that like button, ring the notification bell, do all the moist goody good stuff.
Speaker B:You can now watch the show on Apple and Spotify as well.
Speaker B:Yeah.
Speaker B:Leave us an honest five star review.
Speaker B:If it's an honest five star review, we will read it on the show.
Speaker B:And if you want to send a big thank you out for us, the best thing you could do is to refer this episode to a friend, family member, colleague, fellow investor, someone that you know would enjoy the show.
Speaker B:It'll do a lot for the show.
Speaker B:Show.
Speaker A:Yeah.
Speaker A:That's all that right there.
Speaker A:Okay.
Speaker B:Got anything?
Speaker A:No, I think I'm good.
Speaker B:Let's see if we get new headphones for the next episode.
Speaker A:I want to be in your ear holes.
Speaker B:Good night, everybody.
Speaker A:Bye.
