Okay, welcome back to the All-In

podcast. JCAL is not here this week. He

is off in Detroit at the Knicks game.

Congrats to the Knicks. Here's a photo

of our boy JCAL hanging out with Who's

that? Ben Stiller. Man, what happened to

Ben Stiller? That looks like Shalamé

right next to him. Timothy Shalam. Is

that Shalom? You know, Ben Stiller was

once referred to as the Jewish Tom Cruz,

but he he has not held up like Tom Cruz.

I gotta say that he should have joined

theology.

Keep it up. You got to represent for us

a little better.

[Music]

Let your winners ride.

[Music]

Rainman said, "We open sourced it to the

fans and they've just gone crazy with

it." Love you. We

can all sitting in this week is our boy

Andrew Ross Sorcin, journalist, author,

extraordininaire. Andrew, welcome to the

show. Long time listener, first time

caller. Thank you for having me. Andrew,

I'm going to do just a couple of quick

plugs and I'm going to give it over to

the pro to do his work, take us through

the docket today. I think this is going

to be really fun. The world's greatest

moderator. The world's greatest

moderator is here today. That's fighting

words. Shots fired. We'll see. We'll

see. Hold your tongue. You can tell me

when it's over. Before we kick it off, I

just want to give a quick plug. The

All-In Summit, if you haven't seen the

video, check it out on YouTube and

Twitter going into our fourth year, the

2024 recap. We'll kind of give you a

high set of highlights from last year.

It's September 7th through 9th in LA.

Trying to have the world's most

important conversations. Andrew, I know

it probably competes with one or two of

your conferences, but let me just tell

you, this one's way better. We're going

to be blowing it out this year with

parties.

Allin.com/summit to apply to join us at

the summit this year. Awesome.

Andrew, thanks for being here. We're

excited to have you. Okay, boys. Here we

go. I'm curious. I want to get your take

on all this stuff because I'm fascinated

by what's going on in these markets this

week. Let's start on the markets because

we got a rally. The question, I think,

behind the rally is, is this a Bessant

put? Is this a J Pal's in the job? He's

got a put on this thing. I don't know

what you think is going on. We're uh up

three to 7% for the week. There's been a

she loves me, she loves me not situation

with what Trump's been saying about

China and whether there's a deal or not

a deal. China's saying nobody's talking.

He says everybody's talking. What do you

guys think is really happening? And then

we got to get into Alphabet. We got

Tesla got a lot of earnings here that's

also moving this around. I think that

the most important piece of financial

logic that we have to break is this idea

that there is always a put. The put is

this weird thing just for the folks that

don't understand it is that when the

market goes down, somebody can belly

ache and cry and somebody in the

government will say, "Okay, we'll buy

your shitty securities at your bad

prices." So that's what the put is. So

typically what's happened is you can cry

to the White House and they'll call the

Federal Reserve and they will buy it.

That's the Fed put. And in some very

rare cases when things get really

calamitous like in 2008, Treasury will

set up a program and start to buy

things. That's what was called TARP back

in the GFC. So the question is, is there

a put here? I mean, my honest answer is

no. And the simple reason is if you look

at where we are, the stock market's back

to where we were in like May or August

of last year. And if you had said that

we would have

upended 50 years of economic policy and

the markets would only be off five or

six hundred basis points, I would have

been shocked. So there's no reason for a

put. Maybe the more interesting question

is who's asking for the put? The ones

that have suffered from the volatility

and a lot of those are the active market

traders. So if you trace the feedback,

who has been the most negative? Aman's

been

negative. Ken Griffin recently turned

negative. And that's probably comes from

the fact that they're not monetizing the

V the way that they used to monetize the

V more than the market has speared down

to such a degree that the world is

coming to an end because it isn't.

Okay, Zach, can I build on that? So,

there was a tweet two weeks ago when all

this started by Nick Carter that I

retweeted cuz I thought it was really

interesting, which was if you think a

market selloff delegitimizes Trump's

presidency, you're going to give him

unconditional credit when it rallies,

right? Cuz those are the rules now. And

that's exactly what's happened is that

the market has rallied. Like you said,

it's up 7% this week, but the media

doesn't want to give Trump any credit

for it. So, it's kind of created this

narrative of a Bess and put. In other

words, Besson is entirely responsible

for it. Look, Scott is a very smart man.

He understands markets. He understands

the bond markets and he is a sure

reassuring voice to those markets and I

think he's doing a great job. But I

think part of what's going on with this

bestinput narrative is that no one ever

wants to give Trump or his

administration as a whole credit. So

what they do on any particular week is

valorize a particular member of the

administration that they can then say,

"Well, this is the person who's really

responsible for this, not Trump, because

they don't want to give Trump that

credit." Next week, they'll be tearing

Scott down and there'll be some other

member of the administration they'll be

trying to valorize to basically prevent

the administration as a whole from

getting credit for doing something good.

So again, I think Scott's doing a great

job. I think he's doing a great job

making these deals and he's saying a lot

of correct and reassuring things to the

markets. But I think if the media is

going to tear Trump down every time the

market goes down, you have to give him

credit when the market goes back up. And

I think there's just a general

reluctance to do that.

Where do you land, Dave? I think that

there's is he crazy enough to let it all

fall

apart signal that kind of got wiped out

this week. That's really what it was. It

was the fact that everyone realized that

Bessant Trump are not going to let trade

come to a standstill. They're not going

to let the whole global economy grind to

a halt. That they're going to have to do

something. And I think that the read is

that they're making the indications that

they're going to get deals done, which

means that their intention is to make

sure that the market doesn't tank. That

the

most roughly three weeks ago when we

started talking about this, I think I

made the point, Shimoth made the point

that part of the art of the deal here,

so to speak, is an opening salvo, right?

which is bold and some people would say

maybe it's too extreme, but it's it's

basically an opening bid to shift the

conversation completely. Yeah. And that

that would create tremendous leverage to

get deals done. And isn't that exactly

what's happened? Isn't that the way it's

played out? Yeah. I remember there was a

guy from Harvard who used to teach a

class in negotiation. He put out all

these videos and what he always said is

like set your anchor point as far away

as you possibly can if you want to get

maximum leverage in a negotiation. I

don't know what's farther away than 145%

tariff. So, it's clearly, you know, a

point for, as Sach said, for negotiating

to a deal that seems like one that would

have been impossible or implausible if

you started from a 0% tariff beginning

point in negotiating. And there was some

percentage of the market or some

probability that people were assigning

to the fact that this administration

could be crazy enough to tank the global

economy by leaving tariffs really high

and letting this kind of run. And I

think that that's kind of being taken

out of the market, right? But now that

it's out of the market, that means that

the leverage there's less leverage.

There's less leverage in the

conversation. And if the goal is to No,

that's not true. That you're saying a

critical thing and that is not true.

Well, hold on. I if if if the goal is to

effectively pressure China, which I

think is the ultimate goal, I think as

the bond market has spoken and as Trump

and Besson administration has said,

okay, we understand where the where the

floor is here and what we got to what we

got to do. I assume if you're Mark

Carney, if you're the EU, name your

place, India, Japan, you say, I'll make

a deal with you. But you know, if you

thought you were if you thought I was

giving you the world before, no, no, no,

no, no. You need me as much as I need

you and you sat you seemingly need me

even more now. So the part where I agree

with you is that last part. Like I think

too many times you look at the stock

market and think that that's reflective

of what's actually happening and it's

not. The stock market I think the best

way to think about it is it's an

estimation of what the future would look

like at a rate of return. You're

superimposing a view on reality. So what

is actual reality right now is if the

United States was running negative2

billion dollar a day of trade deficits,

right? If our current account balance

was minus2 billion on March 31st, the

day before liberation day, the real

question is what is that number

mathematically after April 1st, right?

Because you're ratcheting it up tariffs,

okay? and you're implementing a scheme

that should take that negative2 billion

that's going out the door out of America

shores, it would have flipped it

positive. How positive? We don't know.

But I'm sure that the government knows

and I'm sure the White House knows what

that number is. That's that's important

fact number one. And then

separately, the country that matters the

most on the other side of that who was

very positive, right? Let's say China

was plus three or four billion a day.

where did they go to? And I suspect that

it's probably break even or possibly

even negative. So if you think about

what the new reality is today, April

25th, as we tape the show, we've gone

from minus2 to maybe plus one. And

China's gone from plus4 billion a day to

maybe zero or minus

one. And I think that's what instills

the leverage that is required to get the

deal done. Then then we can all debate

whether the forward PE of the S&P should

be 16 times or 22 times. I don't think

that that matters, but the actual cash

flows have materially changed. By the

way, I I think long term the America's

got leverage here. Everybody wants to in

is ultimately going to want to invest in

America, including China. There's no

question that we we have the advantage

on a long-term basis. The question is,

do we have the patience? Well, if you go

from -2 to plus given our democracy,

given our bond market, given everything

that goes on, we're such an add society.

Okay. Then you're then what I would say,

Andrew, I think that that's a very good

point. What I would say to that is then

we need to communicate better. It needs

to be a single point that's repeated by

everybody in the cabinet. And what they

should probably focus on is, hey guys,

we just flipped cash flow. We went from

negative cash flow to positive cash

flow. Here are the actual numbers and

don't deviate from that because then I

think Americans would say, "Hey, this

thing is working. Let's let it play

out." To your point, hey Sax, here's my

question for you. So, we hear, you know,

the president say he's talking to

President Xi. We hear Scott Besson say

that he's in talks with China or that

talks are going to begin. And then you

hear China say, "No, no, no. We're not

talking. There's no talks happening. We

don't know what you're talking about.

Stop saying these things." What are we

all supposed to believe? Well, look,

first of all, let me just say that when

I'm on this show and I'm not talking

about AI or crypto, I'm just a civilian,

right? So, I'm not a spokesman for the

administration on anything but the two

issues that I work on. So, I don't want

to come across as someone who has

special knowledge cuz I'm just I'm not

part of the trade conversation. So, I

can't answer your question directly. But

what I would say is that with respect to

the China relationship, I think what's

happened over the past few weeks has

been a very important stress test and

it's basically flagged some serious

weaknesses or dependencies that have

evolved in this relationship over the

past few decades. You know, I flagged

this in a previous episode that we did

with Larry Summers where I said that 25

years ago was a huge mistake to walk

China into the WTO. And I think that

just to build on on that thought, one of

the problems with walking them into the

WTO is that they got what's called

developing nation status. Yeah. So, you

know, you can either be a developing

nation or a developed nation in the

framework of the WTO. And maybe there

was something legitimate to that in

1978, you know, when Deng Xiaoping began

his reforms, the average Chinese person

was making $2 a day. By the year 2000,

it was much more questionable and it

certainly makes no sense in the year

2025. And still to this day, China gets

developing nation status. Now, what is

the benefit to China of that? Well, they

have a whole different set of rules.

They're allowed to have tariffs. They're

allowed to subsidize their industries.

They have all sorts of different timets

for doing things. They're allowed to do

things that the US simply can't do. Now,

how have they leveraged that? They have

identified strategically certain

industries that are choke points in the

global supply chain and they have taken

them over and the best example of this

is rare earth. So there was some good

stories in the New York Times about this

over the past couple of weeks which I

think were largely

accurate. China identified this as an as

a critical industry and the rare earth

the ore itself is distributed all over

the world. I mean China has some

advantages there but they're not huge.

It's the processing of the rare earth

that's very expensive, very complicated,

and they decide to dominate that

industry. And they're responsible today

for over 90% of the processing of rare

earths. And then the next step in the

supply chain is that those rare earths

get cast into rare earth magnets, which

are a critical component in pretty much

every electric motor. And so they're a

critical component of the automotive

industry, but not just cars, lots of

different products. And I think China

makes something like over 90% of the

cast rare earth magnets. Well, by the

way, this issue still has not been

resolved. China has now cut off the

United States. And so, as part of this

trade negotiation, we're going to have

to, you know, resolve that issue. And I

trust that it will be. I mean, what

you've heard from the president and the

Treasury sector over the past week is

that they're they've indicated a desire

to engage in bilateral negotiations with

China and to essentially deescalate this

trade war. But I think it's been very

useful again as a stress test to reveal

our critical

dependencies on China that we've

exposed. We never should have let this

happen. Just from a national security

standpoint, we worshiped at the altar of

this like free trade god to the point

where we became dependent on China for

these critical components in our supply

chain. I think that was a catastrophic

mistake and I think that it's exposed

these dependencies we've created on a

nation that is not our ally and that we

can't count on them. It's a country of

concern. So I ultimately think that

we're going to need to learn from this

experience and very rapidly make some

major corrections here. Andrew, let me

just highlight what I think is one of

not talked about point about the

discussions that are underway. There's a

lot of conversations about tariffs and

about trade deficits, but very little

about regulatory par. And I think that

this is really critical for these trade

negotiations to actually resolve to a

positive outcome for American businesses

and American enterprises because there

is not par and how American businesses

can do their work overseas relative to

how foreign companies can do work in the

US. So if you're a Indian company and

you want to sell something in the US,

you set up an LLC, you set up a bank

account, you set up a store, you take a

lease, and you sell your product. There

is not a lot of hoops and challenges to

that business operating in the United

States. I'll tell you a story. in uh

2005 2006 Monsanto which was a seed

company that doesn't exist anymore

launched in India cotton seed seed for

cotton farmers that basically had a

trait in it that would prevent worms

from eating the cotton and so Indian

farmers were paying 450 rupees an acre

for cotton seed before Monsanto

basically put this cotton seed the

yields went through the roof the farmers

made 5,000 rupees per acre of

incremental profit and they charged

1,500 00 or400 rupees per acre for this

seed. So, it was more expensive seed,

but it had a 5,000 profit improvement.

And it took off. Took the whole market.

90% of farmers bought the seed, not

because they had to, but because it was

better. And what ended up happening was

the Indian government stepped in and

said, "You got to lower prices. You got

to go back to the price of 450 because

that's what's fair for farmers." And the

farmers were like, "We we're doing

great. We don't need to have this kind

of price control." But the government

put it price control in and ultimately

sued the company, went to court and

stole their IP and they left the

country. And this was a company that had

invested, you know, well over a billion

dollars in developing and launching this

product. The same is true, by the way,

in pharmaceutical companies, in software

companies, in hardware companies. If you

want to go do business in China today,

you have to set up a 51% JV where some

local company owns 51% of your equity

and your IP. The stories around the

world I think start to paint a picture

of why American businesses find it so

hard to develop international markets

and sell into those countries when in

the US we make it so easy for companies

based in foreign countries to come and

sell in America. And that's a big part

of where the trade imbalances arise

from. It's not just because Vietnamese

people can't afford expensive American

goods. It's because it's so much more

regulatory difficult to do work in these

countries. they can come in and take

your IP. And so I think that this is

like a really important part of the

trade discussions and negotiations that

a lot of people miss that American

businesses will see massive revenue

growth and massive market adoption if we

can get regulatory par in some of these

uh key key trade. Okay, let me ask you a

different question. Chimath raised uh

the issue of Ken Griffin who made some

comments this week about the brand that

is America and effectively said there

was sort of a sell America situation

going on. And my question about the

brand that is America is whether you

think after these tariffs, whatever

deals get done, that you can put the

toothpaste back in the tube, that you

can get the trust back, that there's not

going to still be some kind of

toothpaste on the rim of the tube, that

you that you can't stick back, it gets

all nasty and crusty, right? That to me

is a fundamental question. I want to

read to you what Ken had to say. I think

Ken was probably a bit of a reluctant uh

Trumper the second term, but

nonetheless, he's been outspoken on a

couple things. He says, "If you think of

your behavior as a consumer, how many

times do you buy a product with a brand

on it because you trust that brand?" In

the financial markets, no brand compares

to the brand of US treasuries, the

strength of the US dollar, the strength

of creditworthiness of US treasuries. No

brand comes close. We put that brand at

risk. What say you? Well, look, I I

think there's a fundamental question

here about whether you think there's a

problem with the status quo or not. Ken

Griffin is one of the biggest winners in

our economy under the current status

quo, and I don't think he sees a big

problem that needs to get fixed. But I

think like we just talked about, I think

there are some big problems. I mean,

Freeberg just laid out the way in which

trade with China is non-rescrocal. Like

our companies cannot participate in

their markets the same way that they can

participate in ours. But it's worse than

that. Like I talked about, these WTO

rules gave China the opportunity to

strategically annihilate our core

industries that are critical in the

supply chain. And there's one other

piece of this which I think is really

important, which is the race to the

bottom. I mean, if you're an American

company and you are still producing in

America and your competitor is able to

go to China and undercut you, obviously

you have to do the same thing because I

mean those are just the rules of the

game. And so we've had this race to the

bottom where if you're an American

company operating under these rules, you

have no choice. It's worse but to export

your manufacturing, your supply chains.

So, you know, we've had these rules that

again under the status quo, I I would

say they're not free trade. It's unfair

trade. It has all these perverse

consequences. It's bad for middle

America and this manufacturing belt of

the country and it's created massive

strategic dependencies on an American

adversary. I'll say I'll say three

things. Let me just say three things

quickly. Number one, I think Ken is

massively long Pax America. I mean, he's

built a $42 billion empire. He owns a

billion dollars of American real estate.

So, I don't see him investing in Ecuador

anytime soon relative to the opportunity

set in the United States. And I think

that's what speaks to the second point,

which is investing is always a relative

exercise.

On Wednesday, I had a meeting with a

Brazilian multi-deioner, very, very,

very successful guy, and we were talking

about the tariffs and the investing

posture, and he's like, there's still no

other country other than America that I

can really put my money to work in that

makes any sense. And I kind of pushed

him, what about China? What about India?

And in all of these markets, there are,

as Freeberg mentioned, vagaries in

China. There's different problems in

India. There's different problems in

these other markets. Europe is roughly

uninvestable.

So the more generalized answer is is on

a relative basis the United States is

still the shining beacon on a hill.

There is no investable alternative for

scaled capital except the US. The the

last thing I want to say is just to

build on what Sax said, Andrew, the the

thing that we keep forgetting is when

economic leverage spills over to

political leverage, what happens to the

United States? And specifically, what

happened this week was on the rare earth

side, not only did China constrain rare

earths into the supply chain, what they

then did was tell South Korea what they

could do with the rare earths that they

gave them. And now all of a sudden you

have this geopolitical spillover where

it's not just a country constraining

supply. It's a country now dictating the

political and trade practices of another

country. So let me ask you a question.

How do you think America is in the best

position to make its own decisions? For

example, let's say that there's a China

Taiwan situation and we need to decide

one way or the other. And I'm not saying

which way is right or wrong, but for the

purposes of this, the thought exercise

is China and Taiwan get into some spat.

We have to take a side. And China says,

"We're going to constrain all the

pharmaceutical APIs into the supply

chain. We're going to constrain all the

battery cathode into the supply chain.

And we're going to constrain all of the

rare earths to anyone who doesn't take

our side." Now, how is America in a

position to actually decide for

ourselves what is in our best interests

if that's looming over us? And I think

that this is the big problem that this

has exposed. This rush to globalism, the

race to the bottom has actually created

a level of dependence that doesn't allow

you to do what's in your best interest.

So, real quick, I agree with you in so

many ways. I think the question that I

have is not in what the ultimate goal

is. It's how you get there. And is there

a way to do this with a a velvet glove,

if you will. And maybe there's no way to

do it in a in a in a better way. What is

to say? No, but what is to say this

isn't the velvet glove. This could be

it's that the stock market is down 6%.

Like it's not down 60%. But this this

what I think is so interesting, Andrew,

is is the way that Trump has already

shifted the conversation. Because the

truth of the matter is that before

Liberation Day on April 2nd, which is 3

weeks ago, no one was talking about the

unfair trade practices. No one was

talking about the dependencies on rare

earth. No one was talking about the race

to the bottom. And Trump has shifted the

conversation 100%. When Jared Kushner

was on the show, he talked about how the

Trumpian approach is controversy

elevates message. And we said at the

beginning that by having this liberation

day, by planting this flag in the

ground, Trump was creating leverage to

then have these negotiations and he

completely shifted the conversation.

Now, where I will agree with you is that

the administration has to stick the

landing here, right? Besson and it's not

just Besson, also Lutnik, these are all

smart, talented people. They do have to

then negotiate these deals and we have

to basically stick the landing. But I

think the fact that you're saying that

you don't disagree with where Trump is

trying to get to, but it's mostly just

tactical is a huge shift in the

conversation. It may it may raise the

issue the way you're describing, but at

some level it's also undermining a

semblance of trust. I just want to relay

two stories. One is, you know, I've been

talking to a whole number of of

multinational CEOs who do business in

China. I'm talking about the McDonald's

of the world, the Starbucks of the

world, the Nikes of the world. And so

many of them now talk about not just how

consumers aren't going necessarily in

their stores the way they used to, but

are really about the American dream, the

American brand. And they talk about the

idea that, you know, if you were a young

kid and you got a job at Starbucks, you

used to go home to your family in China

and say, and your family go, "Wow,

that's

amazing." They're not doing that right

now. So many of these companies are even

trying to reestablish how they market

and advertise their companies almost as

if they're a local business, not an

American brand. And I don't know what

that ultimately means. But I also was

talking to a a Chinese CEO who made a I

thought just a fascinating comment to

me, which was, you know, we're cool with

the US being the leader. We were always

cool with that. We're okay with that. We

don't love it, but we're okay with it.

It gets a lot more complicated when you

have to be the winner. And I think

that's an interesting sort of construct,

this idea that we're first and we have

to win. And I know we're telling it's,

you know, Trump is telling, you know,

citizens in the US that we're going to

win. But he's also telling the world

that. And I think that's a I think that

Chinese CEO should have written that

memo to Xiinping and seeing if he agreed

because I think he would say, "No, we

are the winner." Look, you got to

remember in 2003, three years after

China was admitted to the WTO, Huin Tao

became premier. He had this incredible

speech and in it what he said is there

are these 10 boxes and I've written

inside these 10 boxes all the critical

industries that in 25 to 30 years from

now will dictate supremacy in the world.

We are going to create national

champions he said in those 10 areas and

what's interesting about Xi despite the

ideological differences to who he

followed through with

it. This is a group of people. So we can

say what the CEOs are going to say but

at the end of the day the CEO of China

Inc. is one man and he and his seauite

have been pretty resolute which is even

when he inherited a political ideology

that he didn't completely agree with he

followed through with it which is these

guys in these 10 areas now own the

critical inputs that make the world go

around and I think it's pretty

reasonable to do a risk assessment to

say well how do you stand up to that and

actually have your own point of you if

you don't have your own method of having

access to those things. I think that is

the most important question. Everything

else about you know brand and all of

this other stuff I think comes after

this question. This is the critical

question because if they can tell you

what to think that is not winning. Yeah.

I would just add to that that you hear

this criticism of Trump a lot which is

that okay he's right on the issue or his

instincts are correct but there should

be a nicer way of doing it. And I guess

I would give that story more credence if

the people making that criticism had

actually been advocating for a change in

the status quo prior to Trump. And they

weren't. I mean, we had this bipartisan

globalist consensus that pretty much all

trade practices with China, no matter

how unfair they got, was basically good

for the United States. And no one was

really doing anything about it until

President Trump made it this issue and

made the unfair trade practice

conspicuous. So, if somebody else had

been willing to take that on, then I

maybe would give credence to this idea

that there's some non-Trumpian way of

doing this. But I just don't think

that's the way our political system

works. I think that the way our

political system works is that you have

to completely shift the conversation

first to create a new consensus and then

you work out the deals. And that process

can be a little bit disruptive. Okay,

one tiny follow-up. So, I don't know if

you guys saw the news this morning, a

report out that Apple is going to move

its manufacturing of iPhones that are

exported to the US or imported here in

the US, but they're going to manufacture

all that stuff in India, not in China

anymore. So, they're going to move all

the manufacturing to India.

See you in 20 See you in 2035.

They say they can do it supposedly in 18

months by the end of 26. Bet.

You say no way. Bet. Well, I think if

this is geopolitically smart. Yeah, they

should do it. But I'm just saying that's

a it's very smart. It's not going to get

done in 18 months.

I don't know how long it's going to

take. But look, I think one of the big

lessons here over the past 25 years is

that you have security first. Security

has to be worked out first, then you

have trade. If you build your whole um

supply chain and all your trading

relationships with countries that are

fundamentally adversarial to your

interests, and we can get into that part

of the the USChina relationship, but I

think most people would say that we're

in some version of a new cold war with

with China. Obviously, you're going to

have to revise your trade relationships

because again, we can't be dependent on

an adversary for core components that

then go into our military, for example.

So security always has to come first

then you work out trade and I think that

India is fundamentally extremely aligned

with us on security because they view

their biggest potential threat and

adversary as being China and that is

basically that the way that the US sees

the world as well. And so I do think

that the US India relationship is just

very aligned and I think therefore the

investments that get made and the trade

relationships that get forged will be

very stable over the next couple of

decades. Whereas you know if you make a

big investment in a country that could

be your adversary you should expect that

that relationship could get disrupted. I

don't think the Apple deal is from a

standstill. My understanding is Foxcon

and others have been working with Apple

to actually stand up manufacturing

capacity in India for some time now and

I do believe that they probably have one

or two model runs already active in the

country. So I don't think that this is

necessarily from a standstill. let's go

recruit the people, figure out the

processes, find the builders, stand up

the facilities that there's probably a

model system already running that's now

about replication and scale up, which is

why they have confidence in the state

stated goal. It's not often that Tim Ko

will stand up and say, I'm going to do

something in 18 months and then be

delayed by yours. He's not Elon. He's

going to come out. He's going to be very

clear. He's he's always been very clear.

So, and my understanding is this has

been thought about for some time.

Andrew, I think you've been to a lot of

conferences where for three years now,

you've been hearing people banging the

table saying, "Get everything out of

China as quickly as you can." Yeah. Tim

Cooks heard that message. He's been

thoughtful about it. He's been planning

for this day. I don't think he wanted to

be declarative about this until the day

came. Well, the day is here. And how do

we feel that it's gone to India? It's

not coming to America. I think we knew

it wasn't coming to America. Well, India

has one massive advantage over China,

which is that it has 1/5if the labor

cost of China, which has 1/5if the labor

cost of America. So, India is a natural

place for a lot of this next generation

labor to end

up. Plus, they have a very educated

workforce. Plus, they have a young

workforce. In many ways, you could say

that it's it's China circa 2003. I mean,

you have to remember, right? Like China

from 2006 I think to like 2012 their GDP

grew at like 10% a year. I mean can you

imagine what that must have been like

when a country that big is growing that

fast. So India is going to have that

moment over the next 20 or 30 years. I I

the only reason I scoffed at what you

said you invest in in in India would

you? I have a large rare earth mine in

India. Yeah. It's one of the largest

supplies of rare earths outside the

United States. We negotiated that deal

with the PMO and they gave us a great

deal to compete with the Chinese. A

specialty chemicals processing is on the

ground there. And then the idea is then

to import all of that specialty chemical

into the United States and then do all

the I like the macro. I just there's

something about China where there's a

lot of accounting fraud still and you

can't really trust a lot of the numbers.

But if that all gets cleaned up, the

macro is all right. It's exactly where

it should be for You mean India? India.

Yeah. Yeah. I mean I I just think the

structure the the structural realities

just make it a good place to invest

because I just think that India and the

US are going to be very aligned for for

a long time. Agreed. Again, their main

security threat is China and our main

security threat is China and that's just

not going to change for probably the

entire 21st century. A couple weeks ago,

Sax and I sat down with the Indian

ambassador and it's very clear they're

fundamentally aligned with the United

States and I think exactly what Sax said

is true. Everybody knows who needs to

cooperate in order to have a reset of

global trade policy and political

leverage. So I don't know I'm pretty

pro- India. It's a very difficult place

to invest. I agree with you Sorcin. I've

never made money there. I tried my hand

at tech investing over a decade. I maybe

have returned 50 cents on the dollar.

Why? So then so then what went wrong?

Like what's the macro reason? The market

was far too immature. My mental model

was about how American success looked

like and when I tried to impose that on

the Indian market, it all just blew up.

So a lot of the Indian entrepreneurs,

how they raised money was not from

Indian VCs, it was from American VCs.

And you can't tell an American VC an

idea that just makes no sense to you

because your frame of reference is the

United States. So what turned out to

work was a couple of very large bets

that were copies of American businesses.

So like the Indian Amazon worked, the

Indian PayPal kind of worked, the Indian

Door Dash kind of

worked, but everything else didn't work.

So then why because is it the consumer

market's not there or the No, because

markets aren't there. No, because we

have these mental biases that that will

never allow us to believe the way that

they would construct the business would

work. So, for example, they're like,

"Hey, here's a business where we're

going to buy food from the local farmer,

then we're going to put it in a

warehouse, then we're going to drive it

around on rick shaws and deliver it to

people." And you think, well, this

business can never work. Well, actually,

that business turned out to be a

ginormous success. Nobody in the United

States would have ever funded that. Now

what happened four years ago though was

after a bunch of meetings I pivoted to

these other areas because when you talk

to the Amanis and when you talk to the

Adanis they're like dude stop beating

your head against this wall like build

infrastructure it just works and uh it

was true they've been right okay one

geopolitical question how do you feel

about India buying as much oil as they

do from Russia I know we'll get into the

whole Ukraine thing later Smart. Smart.

Look, India is a country that has two

great powers in its neighborhood. China

and Russia. It has a contested border

with China. They've had border

skirmishes. When you have a country that

is much more powerful, that's actually a

security threat to you. You then seek

good relations, even possibly an

alliance with the other great power in

the neighborhood. That has been India's

philosophy. They've had good relations

with Russia for a long time, even going

back to the Cold War. That is what makes

sense for their security standpoint. By

the way, the exact same thing is true of

the United States. We just haven't

realized the strategic reality. China is

the pure competitor. I mean, Mir Sh made

this point at our all-in summit. China

is the pure competitor. It's the only

country in the world that is a peer of

the United States. It's the only country

that's really capable of threatening our

security.

Russia is a distant number three in

terms of the great power rankings. What

you want to do if you're in a sort of

heads up competition where there's two

superpowers is you want to make an

alliance with that number three. And

what we've done is we've pushed Russia

into the arms of China. What we ought to

have been doing is a reverse Kissinger.

We did this during the Cold War by the

way. We had the Soviet Union and we had

China. And in that case, the Soviet

Union was the big threat to American

security. So what did we do? We had

Nixon and Kissinger go to China and make

a deal with Mao. China was just as

communist as the Soviet Union. Mao had

blood on his hands to a degree that is

much greater than someone like Putin

has. And yet we were willing to shake

hands with him and make an alliance

because that was real politique. And I

think in a similar way, this is what our

strategy should have been with Russia

for the last two decades. And instead,

we've been foolishly pushing them into

the arms of China. Well, Sorcin, what's

your read? I mean, what's your opinion

on the I think India is a tough look,

India's India is a tough place to

invest. Every everybody I know who's

been talking India for the last, I don't

know, 15, 20 years has been talking it

up as the next great utopia. And it may

very well be. It probably will be. It's

just a question of when. I think you

have to and you have to be specific

about the end market. You know, like

there are people that have made a ton of

money there, but it's not the way

classical western economics has played

out by any means. Andrew, I mean, what

do you think about this sort of what I

would call balance of of powers logic

101? I get I get the idea that you you

go to your, you know, least uh I don't

know uh your least enemies your friend's

friend your enemy's enemy is your

friend. No, the enemy of your enemy is

your friend or whatever it is. Yeah. No,

the power logic. I I get I get where

you're going with this. I just think

that Russia given all that they have

done I'm not it's hard it's hard to look

at Russia and China and maybe Russia on

the margins on a relative basis in life

is better than China in certain ways but

in other ways it's not and so it's very

complicated to sort of for me to look at

it and go okay um it's actually

interesting who I mean there's a I was

going to use a real loaded word who's

more evil right is China more evil or is

Russia more evil

I mean, I think I think there'd be a big

debate about that in the world. Well, I

think it's it's unnecessarily

judgmental. Yeah. Right. I think it's

dangerous to look at foreign policy from

a position of extreme moralism because

ultimately the purpose of our foreign

policy is to ensure American security

and we can't rectify every injustice in

the world. And over the past 25 years,

we've become

hyperinterventionist, you know, in an

attempt. So, we've claimed to do that,

right? We keep saying that we we've

gotten involved in all these places

because we want to promote our values

and spread democracy. And by the way, we

did the opposite. I mean, you look at

the forever wars in the Middle East. We

had interventions and occupations in

Iraq, Afghanistan, Libya, Syria. How did

all those things work out? They did not

promote our values or spread democracy.

So, my point is just I don't think we

should look at foreign policy from an a

position of extreme moralism.

I prefer to think of neither of those

countries as as quote unquote evil and I

would prefer to think of them as

countries which have their own

interests. I think that with respect to

China, the real issue is that it is a

revisionist great power. It has made

clear that it wants to basically annex

Taiwan. It wants to turn the South China

Sea into effectively a Chinese lake. It

does not respect international waters.

It has territorial disputes with Japan.

And if we don't play a role in

containing China, then China will

revise the balance of power in East Asia

in a major way. And I think that would

have I think profound consequence for

the United States. I just don't throw

you off a roof and one day and you won't

even know it. I mean, that's the

difference. And I don't know if that's a

moral argument. I'm not worried about

the United States is not going to be

thrown off a roof by by Russia. And

that's the level at which we should

think about these things. If you look at

Russia's behavior, Russia actually is

not a revisionist great power. What it

wants is just security on its borders.

The revisionist power actually in Europe

over the past 25 years was the United

States because we pushed NATO right up

to Russia's borders despite the promises

that were made to Gorbachoff in the

'90s. So, we're the ones who've revised

the balance of power in a way that was

profoundly threatening to the Russians.

And I think it would be far better from

the American standpoint to just work out

a security architecture for Europe with

Russia that gives the Russians the

security they crave on the Western

border and gives Europe the security it

craves. And I think if we had had that

mentality as opposed to this highly

moralistic mentality where we basically

want to spread American style democracy

everywhere. You don't think that

American style democracy though has

helped the world in some way? I'm not

saying we did it right everywhere. I

think we've lost a lot of lot of wars

that we should not have attempted. But

if it could be done, you're right. But

the problem is, Andrew, the failure rate

is too high. Look at what happened in

Afghanistan, in Syria, in Iraq. As we've

gone in to make, you know, regime

change, we actually put those people in

a worse condition than they were before.

They don't end up with American

democracy. After a trillion dollars in

Afghanistan, the Taliban is back in

charge doing awful, brutal things,

right? Two trillion. And and I would be

I would be a proponent of and by the way

this was also part of the promise of the

open internet and I think from a

fundamental point of view the regulatory

regime we had in the United States with

the internet was driven by this notion

that the freedom of information would

actually allow democratic proliferation.

You know we were talking about the Arab

Spring as you'll you know recall like

that was going to be this big moment but

at the end of the day it turned out that

didn't work either. that there's

something much more complex in the

history of a people in a geography, the

deep ties that those people have, that

this idea that turning on a screen or

showing up with a tank is going to flip

the switch to democracy turns out not to

be true. And look, just to be clear, I

mean, I think my lucky star is that I'm

an American and we do have the type of

government we have here. And my parents

immigrated to the United States in 1977

for political reasons because we have

the type of government we have here. So,

look, I'm a strong believer in American

style democracy. The problem is our

efforts to promote it or impose that

style of government through regime

change operations simply has not worked.

I mean this is should be one of the big

learnings of American foreign policy

over the past 30 years. It's better to

model it right. It's better to Yeah. So

how do you model it? I think you model

it by being the shining city on the hill

by setting a good example by focusing on

our own country and making America the

best it can be so that people all over

the world look to us and say oh we want

to do that. And I actually think that

what I'm describing is an American soft

power. If you go back to the 1980s, we

had that soft power. I mean, the people

of places like in Russia, they love

buying American blue jeans and American

music. And we had that soft power. We

were inspiring to the world. But it all

changed say starting in the '90s, but

then really in the 2000s when we started

going into these countries with our

militaries and occupying all these

countries, we soured them on America. We

made them hate us. And this is the

problem with this hyperinterventionism

is what we should be doing is setting an

example, not trying to occupy these

countries. Let me read something to you.

This is this week. This is Trump

condemning the strikes going

on in Kiev. This is I'm not happy with

the Russian strikes in Kiev. Not

necessary. Very bad timing. Vladimir,

stop.

5,000 soldiers a week are dying. Let's

get the peace deal done. How is this

deal going to get done? I should also

say Secretary of State Marco Rubio

reportedly skipping a meeting on a

ceasefire talk on Wednesday after

Ukraine refused to recognize Russia's

annexation of Crimea. Well, the reason

why Rubio canceled that meeting is

because the Americans put forward a

peace proposal and Zalinsky dismissed

out of hand. Before the Russians could

do anything, Zilinsky dismissed it. And

recognizing Russian ownership of Crimea,

if you will, should be the easiest point

for Zillinsky to concede. And he

dismissed it out of hand. Now, why do I

say that? The Russians annex Crimea in

2014. So, this was not something that

happened in 2022. It happened over 10

years ago. And if you look at what the

people of Crimea want, and there's been

a lot of Western polling on this,

there's been man on the street

interviews by NBC. The people of Crimea

by something like over 80% say they want

to be part of Russia. They're ethnic

Russians. And I'd say the the final

point on this is that Zalinsky and

Ukraine tried to get Crimea back in the

summer of 2023 with a summer

counteroffensive. Remember the whole

point of that summer counter offensive

was to sever the land bridge to Crimea,

destroy the Kirch Bridge, isolate Crimea

and essentially lay siege to it. This

was the whole point of that and they got

nowhere with that. They didn't even

break through the first Servican line.

So my point is that it's militarily

impossible to retake Crimea. The people

of Crimea don't want Ukraine to retake

it. They want to be part of Russia. And

yet Zalinsky cannot give this up. Okay.

So how do we get to yes? How do we get

to yes? This was supposed to be done on

day one and here we are. The basic

problem is that Zalinski doesn't want to

make a deal. I mean, he he has rebuffed

the Americans on Crimea, which should be

the easiest point to give on. He's been

completely unrealistic about their

prospects on the battlefield. He was

insulting to the White House when he

visited the White House in his t-shirt

or whatever. He was dressed

inappropriately. And then one of the wor

tests for America, I think that meeting

was. Well, I mean, he was insulting to

the president and especially to the vice

president. He he murmured under his

breath a curse word to the vice

president. You remember that? I mean, it

was really quite something. And

remember, he's biting the hand that

feeds them. I mean, he has an

obligation, I think, to be respectful to

his patrons in a way that his patrons

may not

in a way that they we may not to him.

and he has demonstrated, I think, that

he's unrealistic in every possible way.

He's unrealistic about Ukrainian

prospects on the battlefield, about

retaking Crimea, and about who the the

hand is that feeds him. So, my view on

this is quite simple, which is if

Zalinsky won't see reality, let him go

find new patrons. Let Starmer and

Mcronone support him. They say they

will. They say they have the ability to

do this, but they can't. And, you know,

they can't enough. Well, they appear to.

My point is Zillinsky has made his bed.

Let him sleep in it. This is my point of

view on it. He refuses to listen to the

Americans. He refuses to recognize that

this administration even has leverage

over him. And you don't think that

ultimately if Putin takes Crimea plus

whatever that he's going after Poland

next or I mean that's it's the domino

theory that becomes the complicated

part. No, I don't think so. I don't

think there's any evidence that he wants

Poland. I don't even think he wants the

part of Ukraine that is chalk full of

Ukrainian ultraists because you would

have a massive insurgency there. He

doesn't want a Gaza type situation. And

by the way, just another point on

Crimea. Where is the insurgency? If

Crimea really wanted to go with Ukraine

as opposed to Russia, why has there been

no uprising there over the past 10

years? So, in any event, my point is

there's no evidence that that Putin

wants Poland. Poland's part of NATO that

would start World War II. I I think

Putin has shown that he's a calm,

rational decision maker and I don't

think he wants World War II. Now, the

Russians have said what their terms are.

They said it last year. They said they

basically in in this root cause speech

they gave in I think June of last year

and basically what it comes down to is

they want Istanbul plus there was a deal

to end this war in the in the first

month the Istanbul deal and it required

Ukraine to basically sever its security

relationship with the west and to

recognize that it would not become part

of NATO and they had to give up Crimea

basically that was the deal back then

what Russia has said is that's still the

deal plus realities on the ground so in

other

The Russians have lost I don't know 100

thousand plus hundreds of thousands of

soldiers now taking this territory in

the east and obviously they're not going

to give it up. So I think that the

Ukrainians could have had a better deal

in the first month of the war. The Biden

administration rejected that. Now

there's a different deal. It's Istanbul

plus and I I think that the American

proposal is pretty close to that. So I

think this administration

recognizes the wisdom and just reality

of that deal but the Ukrainians aren't.

So look, my view is simple. If the

Ukrainians are unwilling to take the

deal that's on the table and they want

to find new backers with the Europeans,

let them. But why should we continue to

support this? Okay, let's pivot. Let's

talk markets and let's specifically talk

a couple stocks because there's Andrew,

you disagree cuz I want to hear your

disagree. No, no, I I I could, but we're

going to I think we're going to run out

of time. Okay. I want to talk Alphabet.

So everybody thought the Blue Link

economy was dead. Open AI, Perplexity,

all of it was, you know, going to take

the search market. They come out with

earnings. Sundar

uh does way better than everybody

expected. Revenue up $90.2 billion is up

12%. Net income was up up almost 50%

year-over-year. You got the cloud still

ripping. You got a big buyback program.

He starts talking about Whimo on the

call for the first time in a long time,

if ever. Uh stocks up about 5% on the

news. What do we think? What an

incredible business. My gosh, there's

there's a lot of resiliency in Alphabet

that I don't think people have given the

company credit for. First of all, I'll

just highlight with the dividends

they're paying plus the share buyback,

you're basically getting a four, five%

yield on the stock. So, the dividends

are like 10 billion a year and they're

announcing 70 billion back on two

trillion

in market cap. So you're making 4% a

year just by owning the stock in the

dividends and the buybacks. Then if you

look at the revenue 90 billion, 77 in

services, 12 in cloud. So the 90

billion about half of it was ads on

search and a lot of people have been

talking about the decline in search due

to AI. That's the end of of Alphabet.

Here you can kind of see the breakdown.

What this shows is that there's such

significant growth. 9 billion in

YouTube, 7.5 billion in non- Googlele

ads, 10 billion in subscriptions with

270 million subscribers across

subscription businesses, 12 billion in

cloud revenue, which is growing 30%

year-over-year. There's a lot of

resiliency even if you take out search.

And so the question is, what's the

downside? What's the upside? Well, the

downside is what's the worst that could

happen to search? what they lose half of

the market to uh to chat

GPT. If they lost half the market to

chat GPT and the rest of the business

keeps growing the way it is, you get

back to parody pretty

quick. What's the upside? Well, the

upside is they're able to use AI to

actually reinvent search, retain the

audience, and create an entirely new

search experience that's chatbased or

has some chat integration into search.

So, it seems to me trading at 18 times

free cash flow, which is where this

thing's at right now, plus the 4% yield

on dividends and buybacks, plus the kind

of seemingly pretty significant gap

between the downside and the upside

here. It's just such a powerful

business. It just seems like it

highlighted that this is not a business

that's in decline and is about to die as

everyone's been kind of proclaiming.

There's enough growth engines here and

there's enough resilience and the price

is so good. I don't I feel quite good

about the I think there's hundred

billion dollars of hidden value called

Whimo in this business $250,000 rides a

week now growing like crazy and they're

only like four cities. It's crazy. And I

think I think the market's giving them

zero for that right now. Zero. I think

the most interesting stat that I saw and

they own% of SpaceX by the way which is

crazy. The most interesting stat in the

earnings was that I think they said that

they had

270 million total paid subscriptions

across YouTube and Google one. And my

initial thought was, well, when are you

just going to stick Gemini as the most

obvious interface in front of it? Like I

think that these companies now need to

confront that this open AI behemoth is

growing at a rate that was probably

a hindrance before and now is a real

strategic risk. And so if you have 270

million paid subs, come on guys, stuff

Gemini right in front of these guys.

That's that's that was my first

takeaway. But it's again, they're doing

it from a position of strength, but they

need to get going because they're

they're probably himing and hying and

there's probably all kinds of people,

all kinds of cooks in that kitchen. But

I've heard a lot of stories about this

question. I think Sundar, Larry, and

Sergey just need to take the equity and

the political capital they have as a CEO

and the two largest shareholders and

just stuff the decision down people's

throats. So that's that that's number

one.

The other thing that I think about

actually relates to what I spoke about

last week about Nvidia. So, just to give

you guys a little bit of a cleanup, you

know, after we spoke about Nvidia, the

Nvidia team reached out to me and they

were like, "Hey, Hmoth, here's a bunch

of stuff that will help

you unpack what you spoke about in a

little bit more detail. So, let me tell

you what Nvidia told me and then I think

it relates to GCP. So, what they told me

when you look at the SEC filings for

Nvidia and you add up all the revenue,

it says that about 47% of the revenue

goes to China, Singapore, Taiwan, I

think it was. And what these guys

educated me on is that they've been

trying to refine how this is described,

but it's not what it seems. meaning they

report revenue on what's called the

billing or the invoicing address. So

meaning you are an entity, you'll buy a

huge amount of chips or compute power

and you issue the invoice out of Taiwan

or Singapore or China. That's what

represents 47% of Nvidia's reported

revenue.

So it turns out that that's actually not

where the silicon gets shipped. So

there's a Singaporean office that

handles the invoicing. So then I said,

well, who are these companies that are

using these these places? And it turns

out that it's a bunch of major US

companies, including US OEMs and clouds

that use Singapore for invoicing their

suppliers.

But that the you know what industry

sources have told us is that all of

these products are almost always shipped

elsewhere including US, Mexico, Taiwan

etc all over the

place. So why is this interesting? There

was a study by artificial analysis Nick

I will send you the link but basically

what it showed was that the clouds were

not doing any real form of

KYC on who is using their stuff.

So now I think we get to this next place

which is like I think the Google

business is profoundly amazing. I think

they need to do something with the

subscriptions that they have and put

Gemini right in front and really do a

head-on attack against Chat GPT. Those

are the pluses. the minuses or the risks

that I think now will get uncovered is

are the clouds doing enough to make sure

that China and other folks aren't

getting access to compute that they

should not get access to and that could

have an impact on some of their revenue.

So that's a GCP problem. I think it's an

Azure problem. It's a AWS problem and

that's going to need to get sorted out

in the next couple of quarters because

if western governments basically say to

the clouds, hey, you need to KYC your

customers so that it's not somebody

distilling the best of our models into a

place we don't agree with. I think there

could be some blowback. All these

numbers obviously backward looking. Do

we think, and I would be talking too

much about tariffs, but do we think that

the tariff story is going to impact a

Google next quarter? Do we think it's

going to impact a meta next quarter? And

to the extent that Google is saying,

look, we're going to keep our big

infrastructure spend $75

billion, you know, full steam ahead,

which is great for the ecosystem, great

for Nvidia, great for great for

everybody in that world. Do we think

that holds up if we think there's a

hiccup between now and whenever all this

tariff stuff gets sorted? If it does, I

think it's going to hold up. I mean,

look, I just think that this investment

in in capex and the data center

buildouts is so strategic right now. I

mean, I think that the hyperscalers,

it's only good for their their

businesses, but I think they see it as

so strategic to their survival that they

just have to do it no matter what. In

other words, I think they're totally

inelastic on this. But let me just go

back to Google. Nick, can you throw up

this chart? I mean I think the problem

that Google has with respect to chat GPT

is that Gemini is just not getting the

usage and chat GPT is just growing like

crazy. If you look at how these models

perform according to the benchmarks,

Gemini is actually really good. I mean

Gemini has made substantial progress

catching up to chat GPT but they have

not caught up on the usage side. Now, to

Jamal's point, you could

just make Gemini the default interface

in Google search, but that is true

innovator's dilemma because if you do

that, you could be giving up more than

half the search revenue. So, I do think

Google is is in a really tough spot. And

the longer they wait to make Gemini

front and center, the worse this usage

problem gets. I mean, what's basically

happening right now is users are

learning a new habit. I mean, they

they're learning to go to chat GBT to

get their questions answered or just

their searches answered in a completely

different way. And let's be honest, they

make using Gemini impossible. And they

can do just a much better job. At a

minimum, give the best leading edge

Gemini model to the 270 million people

that are already paying you for a

subscription. Just do that. Do something

so that you can start to blunt the

growth of of Open AI. Otherwise, you're

going to look back in four years and

regret him and

hying today. So, Chimoth, you're the CEO

of Google. You've got a $200 billion run

rate ad search ad business. What's the

right kind of integration of Gemini such

that you don't massively disrupt the

search ad business overnight? Or do you

not care and you're just going to do it?

I think that's the conundrum they're

dealing with. That's not a conundrum. If

you don't understand how to value a

dollar today versus a dollar tomorrow

and a discount rate to disambiguate the

emotionalness of that decision, it's not

a hard decision to make. I think the the

the more difficult question is what is

the integration look like? And if you

are already paying for a YouTube

subscription or a Google one

subscription, what should your

experience be? That's a key question.

The second question is today they're

already inserting Gemini in all kinds of

uncomfortable ways. So, for example, if

you use Gmail or if you use Google

Workspace, what happens today is all

these random Gemini pop-ups come up all

over the place, that is an

implementation that happened at way too

junior a level by people that have no

product taste. So, if you just stop

that, it's not hard. But right now, you

have a bunch of, you know, honestly,

people that don't have taste and are a

little too junior creating a very

cluttered experience. And if you use the

products every day, it would be hard for

you to disagree with me. They have

infinite

capital and infinite access to talent.

Capital doesn't buy taste, right? So,

what do you think's wrong? I agree that

the Google interface trying to

incorporate Gemini into the 20 blue

links or whatever is very cluji, but I

don't know how you fix that without just

getting rid of the blue links. I mean, I

guess you can do a hybrid experience,

but it doesn't compare to chat GPT,

which is all in on the AI experience.

So, I think it's a real innovator's

dilemma for them. And look, the truth is

the market was killing them already

because people thought that that first

little AI summary thing was actually

going to kill the blue link economy,

right? Like that was that was their

worry. And so, it's this ter I mean, I

it is a terrible conundrum if if if

you're Sundar, how how do you how do you

do how do you do both things at the same

time? Jim, I think you're right. There's

a design way to do it, but they're not

doing it. This comes down to taste. And

I think you can't have group think drive

creativity and taste. You either have it

or you don't. And you need to find the

one or two people. And then you need to

use the strength of your leverage as a

CEO and the ownership that Larry and

Sergey have to impose one person's taste

on the decision. Well, let me ask you a

question. when the Google homepage where

they just have the search bar and the

you know you can basically submit your

search or I feel lucky or whatever.

Would you replace that with that search

bar with an AI chatbot? No. Here's what

I would do. I would first go to the

critical other points that are around

that today do not cannibalize the blue

links. So the obvious insight should be

if you look at the traffic patterns

almost as a Sanki diagram, right? Yeah,

we just show we just had one up. Show a

Sanki. Okay, who cares about revenue?

What the real thing you should be

looking at here is

where are the entry points into Google

that then result in a clickable link and

what you would have is a very different

sanki and what it would show you is that

there are certain places that are highly

deoptimized today for revenue generating

events. They happen as a byproduct but

they don't happen as the use case. So in

that example, you would put Gmail as a

critical place, the YouTube one, the

Google one subscription, and there's

like five or six other places. That's

where I would put Gemini as the front

door and start to

habituate 300 to 500 million people a

week in using that. I think then you can

figure out over time how much money you

can make from all of that or how it

directs derivative revenue and figure

out what to do with google.com last. But

my point is the experience in Gmail

should be done today. The experience in

YouTube should be done today. The

experience in Google one should be done

today. Would you Okay, Nick, can you put

up this? Here's their homepage. Right.

This is the famous shot. I just checked

in hasn't changed in 25 years or

whatever. I would leave I would leave it

alone because I think it's too

disruptive and it's it's too politically

fraught. I mean you could do something.

What if they replaced I'm feeling lucky

which is kind of antiquated now with AI.

I mean Gemini basically. I I mean you

you I would need to look at the Sanki to

understand how many people are actually

generating monetizable events or

behavior from I'm feeling lucky in 2025.

I'm not sure the novelty it was in you

know it is the novelty. I don't I think

it's there as like a whimsical thing. I

don't know if it drives revenue for them

or not. If it takes the user off site, I

don't see how it drives revenue for

them. Here's a I'll tell you a great

Facebook story just to explain this and

why I get so animated about this. I was

telling this to my 8090 team yesterday

because we're dealing with this one

product implementation issue and

engineers always end up fighting about

whether things should be optin or opt

out. Okay. And it's it's almost like

this religion where people feel like,

oh, you cannot force people to do

something. You you should always make

things optional. And I remember at

Facebook, we bought this little company

for a few million dollars that made

contact importers, which essentially

means if you're using any other email

service to sign up for Facebook other

than like Hotmail back in the, you know,

early 2000s, we could import your

address book. Anyways, long story short,

I remember getting into a huge fight

about whether that thing should be

opt-in or opt out. And I remember

telling the guy, and I'm not going to

say who it is because you guys all know

him. And and I was literally like,

honestly, just shut up and enjoy the

success that will come from keeping this

as an opt out. And it just reminds me

that at some point, somebody needs to

impose their will to make very difficult

product decisions. And if you leave it

to a team, you'll end up with, by the

way, go to Gmail today with 95 Gemini

pop-ups. It's not what will allow them

to win with what they have, which is a

better product, which I will agree it is

a meaningfully better model on multiple

dimensions than anything else. Okay, I

know Sax has to go. Before you go,

David, I just want to hit Tesla for half

a second. Tesla's out with earnings this

week. Stock is up 8% on the back of that

back of that news. 23% up in the last 5

days in large part because Elon

basically said, "I'm getting out of Doge

and I'm going back into Tesla." So, the

question is, what can he actually do to

fix Tesla at this point? What does he

have to do? And is he really out of

Doge? No, I don't I don't think he's out

of Doge. He didn't say he was out of

Doge. It was just a matter of how much

time he could allocate to each thing. I

mean, look, I saw this before when I was

part of the Twitter transition is that

for the first 3 months or so, he was

basically full-time at Twitter HQ

learning the business down to the

database level. I mean, every nook and

cranny of that business he learned

about. Once he felt like he had a mental

model and he had the people in place

that he trusted, he can move to more of

a maintenance mode. And I think that's

the only way he can manage five

companies is that he has these intense

bursts where he focuses on something,

gets the right people and structure in

place, feels like he understands it, and

then he can delegate more. And I think

that he has reached that point with

Doge. But he was also clear that he's

going to keep doing it because if he

doesn't, there's going to be a huge

backsliding where, you know, all the

corrupt interests will basically put

back all this corrupt spending. So he's

going to stay involved, but as an SGE,

he's limited to 130 days a year anyway.

And so it makes sense for him to kind of

now ration his days a little more

closely. But he's got the people in

place. Remember Doge, it wasn't just

him. It was also the US digital service

which is basically the IT branch of the

executive branch which got put under

Doge. So my sense is that Doge is going

to continue. It's just that Elon is

shifting to a mode where he can manage

it one day a week or two days a week as

opposed to being there 5 days a week.

Steve Bannon says he wants the receipts.

He says there are no receipts. We don't

have the receipts. He says we need

itemized receipts to see what has

actually happened. What do you think?

Why wouldn't we want to cut as much of

this corruption as possible? Well, I

think we have to. We have to. The

question is, should the public get to

see exactly what's been cut and what

hasn't? Why wouldn't they? Of course.

And what we really need is for Congress

to now embrace all the corruption that

Elon has found and eliminate it from the

budget. Because at the end of the day,

in order to capture the savings here, we

do need those appropriations eliminated

from the budget. And my biggest concern

is not something that that Doge is going

to do or not. It's not up to Doge to do

that. It's up to frankly these old bulls

in Congress who control the

appropriations process. Are they going

to basically backslide and just put the

spending back in because it's easier to

just do that to engage in this log

rolling or do we take advantage of this

I think incredible sacrifice that Elon

has made. I mean look this has cost him

enormously. One of the reasons why Tesla

is down is because you've had crazy

leftists engaging in terrorism

firebombing Tesla dealerships. In any

event, he's made this enormous sacrifice

in order to expose the corruption. And

look at what we've learned. We've

basically learned that this whole NGO

thing is a giant scam where, you know,

the people in government give enormous

amounts of money to their friends,

probably with the expectation that when

they leave government, they're going to

be next in line at the trough. And I

think Elon's done an enormous service

exposing this. But, you know, it's not

entirely up to him. In order for us to

realize the benefit, we need Congress

now to act on that. And I'm just afraid

that's not going to happen. What kind of

total number you think we get? I always

say a dollar saved is a dollar made and

we should we should say amen to that.

The question is what do you think the

total number is ultimately going to be?

Well, he says they're at 160 billion

right now. I think that's by the way

that's an annual number as far as I

understand it. So, you know what I

always hear with spending is they always

multiply everything by 10 because they

assume it's going to be 10 years. So, if

it is 160 billion a year, that would be

1.6 trillion over 10 years, probably

more because the spending always grows.

And look, that's 160 billion that we

weren't planning on saving before Elon

got involved in the government. So, if

that's all it is, that would be great. I

think there could be more. And it really

comes down

to whether Doge continues to be

supported by the political process. And

um look, Elon can't he can't force that,

right? I mean, ultimately, it's up to

legislators to take advantage of the

work that he did. And ultimately it's up

to the people to put pressure on those

legislators to embrace what he did. He's

done an enormous amount, you know, but

there's an old saying that you can bring

a horse to water, but you can't make it

drink. If the entrenched political

interests at the end of the day aren't,

you know, if they're not going to

embrace the the savings that Elon has

found, I you know, I don't know what we

can do about that. I mean, there's

there's the administrative and

discretionary aspect, but you know, I've

said for a while it's going to be

necessary to have statutory resolve to

actually fix the deficit problem in the

United States. And that means getting

Congress to act. And Congress has not

shown a willingness to act. And every

time I go to DC, I come back more

disappointed. I share the stories on

this show and I talk about the fact that

there are very few members of Congress

that are staying up and saying at the

end of the day the first thing we need

to solve is how do we reduce the

deficit? Then we can address all of the

policy issues that we want to talk

about. But if we don't solve the deficit

problem, there is no policy. There is

nothing we're going to be able to do

because the Treasury rates are going to

spike. There's going to be no capital.

There's going to be no funding. We're

going to go through a debt death spiral.

So, at the end of the day, we really do

need Congress to stand up and lead here.

It is not on one man's shoulders.

There's only so much Elon can do without

statutory authority from Congress. And I