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#FinanceDaily: Elon v. Zuck | UK Hikes Again | Modi visits US
Recorded: June 22, 2023 Duration: 1:30:51Space Recording
Short Summary
The transcript discusses various crypto-related topics, including the decline of NFTs, emerging trends in social media competition, and potential partnerships between the U.S. and India. Additionally, there are mentions of project launches and strategic collaborations in the AI and Web3 sectors.
Full Transcription
I'm wondering if this title is two-click baby.
Elon versus Zuck.
By the way, I'm excited to...
Is it the Elon versus Zuck, NFT?
Yeah, I should have probably...
Well, NFTs are dead, so...
Except for...
Even Mario got rid of his NFT.
So...
And Mario was...
About the Elon versus Duck EFT?
There's got to be a Vanguard fund, right?
ETF, ETF.
Oh, my gosh.
I need another cup of coffee.
All good.
So everybody just give us a minute or so until...
Oh, I was...
Someone sent me a message in the background.
Mario did not get rid of his NFT.
He's just not using it at profile photo.
All right, guys.
Anyways, I'm not going to make a comment on it since I'm going to get killed.
But it does not matter whether you buy or sell an NFT.
In my opinion, this is my opinion.
It's not financial advice since NFTs are not a real thing.
Sorry.
Eugene, I'll let you fight back, but I really don't want to have that argument.
Okay.
All right, give me like one more minute.
We're still waiting for everybody to show up.
What is this?
What is going on today?
People are lazy as hell.
So just give us like literally, I'm going to give them two more minutes.
Otherwise, we're going to get started.
Maybe some Twitter spaces engineers are fighting back today.
Well, they don't have to try too hard.
The platform fights for them, so...
Just kidding. Just kidding. Don't comment on it. Just kidding.
These people, I'm about to get, don't do it. Romi, do not send me a message. I am not going to respond.
So just for people that are up, there it is, hold on. Oh, there you go. Okay, she's laughing.
He's one of our producers.
To Mario's team, I'm sorry that I just baited him. I'm very sorry. Please accept my apology.
So what's really funny is, after yesterday...
I even got a message from Mario just saying, hey man, you got to cut that out.
But I don't care.
Because I'm going to keep...
As soon as they fix it, as soon as it does not take me three minutes to get on the page,
I swear Twitter Spaces team, I will have to be back.
You have built a cool platform, but, yeah, it has a few challenges.
Yeah.
I guess we're still waiting for people.
You should definitely be sending them like fruit baskets, fruit baskets and stuff too, when they get it right.
Definitely send them gifts.
I don't know about that.
We're going to see because you only send people gifts for doing a good job.
So I don't send people gifts for doing it not so good job.
All right.
Scott, I'm still hating on the spaces team just so you're aware.
That's fine.
I participate in the same activity.
It's just funny.
I was just mentioning that that Mario messaged me and was just like, dude, you got to stop hating on them.
Like, you know, they're working on a bunch of different things and they're doing such a good job.
And I was like, well, the day it takes me less than five minutes to get on stage and become host, I am happy to stop my tirade against them.
But, I mean, the struggle is real.
I will say we've had a few less drugs, I think.
It hasn't crashed quite as many times.
That might be the ultimate jinx.
It crashed yesterday.
Like I said, it crashes all the time.
It literally crashed after.
I can't remember how many people were in the room.
You know, for that submersive thing?
For some reason, the world is absurd.
It's something.
Why is the world obsessed with that story?
I know it's a sad story, but man, I have never seen some people care so much.
We have this hilarious, and we'll get started now.
Hey, Caleb.
It is really weird.
There are a lot of sad stories per day.
Why that one?
Yeah, for some reason, people pick that one.
But there's nothing new there.
I mean, do you remember Don was probably when we were kids, the kid in the well?
Oh, yeah. Why do people love these stories? It's like very interesting.
I think there's something about the like rescue effort, obviously, the human nature, but
imagining yourself in the situation. I mean, I think it's pretty much everybody's absolute
worst nightmare to be trapped in a small space, not knowing if they're going to be rescued.
And, you know, so I think everyone's mild mind is wild with the worst case possibility.
Yeah.
And for whatever reason, grapple onto it.
It obviously, I mean, it's just, you know,
it becomes a media hype.
And once it gets going, you know, it snowballs out of control.
You saw the same thing.
You're going to Chilean miners, too.
The same rescue effort in the world we came obsessed with.
Yeah, I think it's the whole rescue and the whole idea of, like,
is it going to happen?
People really latch onto it.
That's good call there, Scott.
But the thing that was the most distressing about it, and again, I'm just speaking from my own experience, it was an awful thing, of course.
But to be stuck in there with a parent sounds like especially challenging.
But maybe I think too much about myself.
Yeah, and the fact that the guy is a billionaire and you're imagining, well, he's probably sitting down there thinking, I could have done anything with my life.
I enjoyed every moment of it.
Here I am with myself.
What about being down there?
He's CEO.
He must be getting some pretty dirty looks during that entire night.
I'm sure he's just probably beat...
The sound you're hearing is probably them beating him on the hour.
That's sadly, but yeah.
Oh my God.
Oh my God.
It's so crazy.
But unfortunately, I think their oxygen time has passed.
So, you know, prayers for them.
Um...
So I wanted to start with the information out of, and I'm going to put it up here.
I have a tweet lined up for this.
Hold on.
So we're going to start talking about the UK first.
because this was interesting.
And I actually wanted Caleb to weigh in first on this.
So for people that are not paying attention, a Bank of England raised again.
They raised interest rates by 50 basis points.
And as a reminder, the U.S. chose to skip rate hikes.
this cycle. But this hike comes after something very specific happening in the UK, which is that
their core inflation increased in May to 7.1%, which is the highest it has been since 1992. This is now
the 13th consecutive hike putting UK interest rates at the highest they've been.
since 2008.
Now, I know, Caleb, you know, the reason why I wanted to go to you is because you've been pretty clear about your stance on inflation.
Now, you were talking primarily about U.S. inflation, but Caleb, I think you'll agree that inflation is a global financial.
What are your thoughts on this? I mean, does this change your hypothesis? Are you thinking that we're going to see disinflation in the UK soon enough? Or is there something specific about Europe that we should be keeping track of? And is there a concern that it might cause stickiness and inflation here in the U.S.?
Yeah, so let me just start off by saying my views on disinflation haven't been primarily on the U.S.
It's been exclusively on the U.S.
So I just want to be very clear about that.
I'm not calling specifically for disinflation in the U.K. and Germany and Spain.
Like I'm not familiar with those economies.
I had to look up right now what even is the U.K. inflation rate on a year-over-year basis for a headline data point.
But even still, I mean, if we look at that data point on a headline basis, last October, the headline rate was 11.1% year over year.
And we've been for two consecutive months at 8.7.
So I think on a headline basis, there's evidence of disinflation there.
One thing that I can comment on in terms of global disinflationary pressures, it's been a while since I saw this chart, maybe like a week and a half or two.
But I saw something that did basically global inflation.
on a GDP weighted basis.
So it's looking at global inflation.
You know, it's basically like, you know, similar to like the S&P 500, right,
which is going to be like 5%.
Apple and you know, so on and so forth.
And, you know, the smallest company in the S&P 500 might only have a weighting of like 0.2%.
So, you know, the U.S. is going to be the significant driver of that disinflation on a global
GDP weighted basis.
But even that metric has been experiencing significant disinflation, again, largely because
of the disinflationary pressures we're having here in the U.S.
And so I think, you know, I, like I said, I was not aware that UK core, uh,
CPI actually accelerated,
in the last month,
this is not something I really pay attention to.
but I guess,
you know,
given those circumstances,
we've seen some central banks like the Bank of Canada,
for example,
revert back to doing tightening after a couple months of pausing,
right?
And so in,
in some of those places we've seen,
apparently,
you know, inflation kind of heat up a little bit, once again, or reaccelerate higher.
And, you know, that's just quite simply not my view for what's going to happen in the United States based on, look, I mean, I did a post about this yesterday.
One year ago, the effective federal funds rate in the United States was 1.5%. Today, it's at 5.1.
Right. And we all know monetary policy operates with a long and variable lag.
Yet one year ago, the headline inflation rate in the United States was above 9%.
Today, we're right at 4%. So we've already halved the rate of inflation in basically one year
particularly in an environment, largely driven by lower commodity prices, but we're seeing disinflation in food.
We're seeing deflation and energy.
We're seeing deflation and used car prices.
We're seeing disinflation across the board, right?
Which simply means a lower rate of inflation.
So it's super key for people to understand and recognize that inflation, aka the rate of price increases, has peaked, but prices themselves have not peaked.
That's why we continue to see month over month increases in headline CPI.
That's why we continue to see month over month increases in core CPI.
Like prices are not going lower.
It's just that prices aren't going up as fast as they were before.
Right. And so that's still firmly my view, particularly given, you know, how shelters going to impact things and so on and so forth. And in addition to the fact that we still have to reckon with, you know, basically 350 basis points of rate hikes that haven't had their full impact on the economy or financial system yet.
So, you know, Caleb, I have another question for you and then I want to go to David. But, you know,
You know, we're talking about this yet, and I understand your thought process here.
It makes complete logical sense.
But the Fed chair yesterday reaffirmed that more rate hikes are coming.
And we saw that the odds of a 25 basis point rate hike in July just hit.
I think it was 80% yesterday, but I think it's like a little bit higher now, the Fed Fund future rate.
And so, and by the way, there's a 15% chance that there will be two more rate hikes by September.
The Fed doesn't seem to be backing down.
And, you know, it seems like some of the things that you're mentioning are true, at least here in the U.S., and I understand your point about, you know, rates or inflation.
and how it behaves elsewhere.
But can you give me a sense of what your thoughts are on Powell's point?
Are you in the camp that agrees that there are going to be more rate hikes?
And then the second question is, do you think that that's a good thing,
or do you think he's making a fatal error?
So on this topic, it's super important to remember that rhetoric and forward guidance is a policy tool.
So if, for example, Powell came out yesterday and said that was the last rate hike of the cycle.
We are officially done.
What we would see is we would see financial conditions loosen pretty significantly.
My guess is we would see yields across the maturity in spectrum fall.
And so in a lot of ways, Powell and the Fed need to remain stringent in terms of their rhetoric.
as a policy tool, right? That is a policy tool beyond the actual rate itself.
And so I'm not surprised to see him and other Fed officials continue to echo that more rate
hikes might be necessary. I agree they might be necessary. Let's see what inflation does based
on my view of what inflation is going to do. It won't be necessary. And especially given the fact
that, you know, when the Fed makes changes, when they reach inflection points in policy,
they don't like to flip-flop, right?
So they like to be very clear on what they're doing.
And so from my perspective, given the fact that, you know, they've,
They've continuously invoked the errors of Arthur Burns in the mid-1970s for his flip-flopping of policy.
The fact that they have officially paused now, even if it's a quote-unquote skip, right, let's just call it a skip, a pause, whatever we want to call it.
The fact that they've paused now, to me, is an indication of their confidence that inflation is likely going to continue to moderate back towards their 2% target in a very sustained fashion.
And so could that be incorrect?
Yes.
But the Fed wants to give themselves wiggle room.
So they can't come out yesterday.
Powell can't come out yesterday and say, we're done raising rates.
We're officially pausing.
And then in some, in my opinion, crazy scenario, if inflation heats up, now they back
themselves into a corner.
The Fed wants optionality.
They've given themselves that optionality for quite some time now by talking about how
they're going to be data dependent.
Surprise, surprise.
The Fed is always data dependent.
And so, look, there could be more rate hikes left in the chamber.
When I look at the three-month treasury yield, the six-month treasury yield,
they're still basically pricing in one more.
But I think that most of that spread between the six-month treasury yield
and the effective federal funds rate is largely being driven by the Treasury's issuance of new debt.
And so all else being equal as the Treasury comes out and they issue more bonds,
more supply equals higher yields.
So that's what I kind of think is happening there.
So from my perspective, the bond market is...
not super indicative that there will be another rate hike.
And I kind of lean in that position as well,
but I'm not going to come out and say like they're done or they will do too much.
Like I don't know.
No one knows.
Right.
So yeah.
So, so, you know, David, I'll go to you.
Thanks, Caleb.
I was going to, I was going to say, David, one of the challenges I have with this narrative around disinflation is shelter.
So, you know, CoreLogic single-family rent index came out, but it continued its year-over-year decline.
For people that are not familiar, the CoreLogic Single-Family Rent Index has been the best predictor of shelter inflation in the last 12 months.
So, and, you know, when we think about it, consumption, the largest has the largest weight
in the consumption basket.
And so for housing, even if it gets to 3% or 4%,
to get to the Fed's goal of 2%,
the rest of the inflation factors have to go way below 2%
given that housing and shelters such a large component.
So, David, how do we get to the 2%?
I mean, how do we do that also without causing a deep recession?
This is what I'm very confused about.
If we believe that the housing supply is still super tight,
if we believe that rental supply is still super tight,
which, by the way, for people, you know,
I was looking at this number up after last time,
you know, it's the lowest it's been pretty much since 2000
in terms of housing supply and housing inventory,
in terms of months of supply.
Yeah.
How does this work? How do we do this without just cratering the rest of the economy?
How do we get the rest of inflation to be way below percent so we can account for housing being,
you know, stuck in the three to four percent? Yeah, that's the key. The key is if you want to
get to two percent, which is the stated goal, that,
That's a big decline from where it's at.
And it just requires a break of demand.
And there just hasn't been a break of demand.
There's still a very, very strong demand for all sorts of asset classes right now,
except for bonds, right?
Bonds, there's been very, very little demand for long-term bonds.
But outside of that, of all the other risk asset classes,
commodities have pulled back.
Right.
but there's still very high demand for other asset classes.
And until that demand gets broken,
or the supply chain just really takes off and increases supply to a very large degree.
And money supply comes way back in.
Money supply has dropped.
And a lot of people made a big deal about the negative year-over-year numbers
and money supply, but the small negative year-over-year declines
still do not outweigh the large year-over-year increases before that.
So there's still a lot of work to be done to get to the 2% number.
Because I've told you before, as soon as we get to the August release of the July numbers,
the year-over-year CPI will stop going down because that's the prior year numbers peaked in June
and then actually went negative in July.
And from that point, there's a lower basis.
And so your year over year numbers will actually stop dropping.
They will hit 3%.
With the July release of the June numbers,
we'll hit 3%.
And there'll be a lot of cheering and stuff.
But the June number in 2022 is such a strong number.
That's the reason why.
Even if I think the nowcast has the June number being like at 0.4%.
It's still a pretty strong month-over-month number.
And so you're still, you're going to stop that number.
I told you gasoline is going to stop.
It has already bottomed out at its year-over-year declines.
And so there's a lot of work that has to be done.
And I think 3% is actually the bottom.
of the headline CPI.
And at that point, by the end of the year,
especially if stocks and these large cap,
mega cap names and housing continues to push higher,
trend higher again coming off the lows
and valuations of equities being as high as they are,
if we continue to push into the end of the year,
I wouldn't be surprised to see inflation
start to pick back up into the end of the year.
And that's again, like the last thing
the Fed once because once inflation starts to trend back up again, again, you know, it wasn't as transitory as they thought it was the first go around.
And if you look at the CPI chart over decades, it doesn't just go up once and come back down unless...
unless you've got, you know, unless you've got a Fed chair who is just willing to do whatever it takes,
no matter what the political or public pressure is.
But if you look at the, that's, that no one has been able to do that.
And so if you look at the, the chart of CPI, there's always multiple peaks of CPI over history.
It's not just the one.
And again, those multiple peaks end up being,
higher, even 2008 had a higher peak than the peak that was before that when the housing bubble was at its peak.
Eventually, the next CPI peak in 2008, right before the Lehman collapsed, like in the summer, May of 2008, that was a higher peak in CPI, higher than the housing bubble fuel peak before that.
So we're on that. I mean, I've said before, like, getting inflation down is not the hard part.
That's the easy raising rates, especially as fast as we did or such a short amount of time as much as we did.
That is the easy part.
The hard part is keeping it from coming back up again because, I mean, that's been the case through history.
And I don't see any reason why it wouldn't be the case this goal around.
Yeah, you know, one quick question before Caleb jumps in.
What are you thinking about the global aspect of this?
So, you know, as we mentioned about the UK, we're seeing right now in Turkey, we're seeing this continue across the world.
China's growth has sputtered, you know, there's a lot going on globally in terms of the factors there are, and OPEC plus cut barrels.
You know, I'm just trying to get a good sense of,
How much does inflation in the UK factor into our concerns about inflation and its ability to rear its ugly head here in the U.S.?
Well, the exchange rate has, the interest rate differential has been a big issue.
The Fed has been raising rates previously faster than anybody else had been.
So that's a big issue in terms of...
you know, where money is flowing into. And that, that produced a very strong dollar, a very, very strong dollar.
But if you look at, if you look at the individual components of the dollar index, the euro, the futures contract, not the trade weighted index, but the futures contract.
The euro, the yen and the pound make up like 70% of it combined. And the dollar was that like,
like decades lows against or highs, excuse me,
against all three of those currencies,
the pound included.
And so when those other currencies are at such significant low points relative to the dollar,
that's going to put eventually upward pressure on their own prices there locally.
Again, with the interest rate differential,
with their interest rates being lower,
for a time than at least on a relative basis,
but the Fed raising rates far faster,
and now they're catching up on a speed basis.
I think that is what's caused the lift
in inflation levels to stay persistent in those areas.
And obviously they're not at those lows anymore.
They're off of them.
They're still relatively low, but they were at such significant lows, the pound,
the yen and the euro especially were such significant lows against the dollar for so long.
That's going to have an impact on their inflation levels at some point.
Yeah.
Caleb?
Yeah, so one of the points that I wanted to make was kind of adding on, and David, I really respect your opinion.
And, you know, there's certainly a case to be made that inflation will be stickier going into the second half of the year, particularly as those kind of commodity dynamics become less and less of an influence on a year over year basis, right?
Because...
Like if I look, for example, at the Goldman Sachs Commodity Index, you know, basically in November of last year versus where we are today, you know, we're down about 7.5% from roughly the average rate.
of last November. And so, you know, that's going to be a steep decrease versus, you know,
the year-over-year reading right now of down basically like 20 percent, right? So as, you know,
those energy and commodity components become less deflationary, right? I'm trying to be very
careful with my words here. As those pressures become less deflationary, we might see
you know, more stickiness, if you will, in the broad-based measure of inflation.
It's just super important to remember, like, for right or for wrong, the shelter component
of the CPI makes up 35% of the overall weighting.
And we've only just started to see for the last two months a very brief deceleration there.
And when we look at the S&P K Schiller National Home Price Index, basically being up, you know,
1% year over year versus being up basically 20% last April.
You know, that's a significant disinflationary pressure that still needs to ripple through the lagging data from the Bureau of Labor Statistics.
Same with, you know, apartment lists.
Their latest reading for rents were up 0.9% year over year.
And so if you actually today swap out the shelter component of the CPI, you leave everything else the same.
But if you swap out shelter with real private market data for what consumers right now are actually paying for shelter,
The headline CPI will be at 1.9%. That's from Wisdom Trees data. This is a 95 billion AUM financial services company with a massive analytics team.
1.9% for headline CPI. We're seeing disinflation in median CPI. We're saying disinflation and trimmed mean CPI.
We're saying disinflation and core CPA. Like everything is still pointing toward disinflation.
So there's a great conversation to be had about the pace of that disinflation going forward.
My bold prediction is we're going to be below 2% by the end of the year.
Hold on. Sorry.
You think we're going to be below 2% by the end of this year?
Yep.
I'll confirm.
Yeah.
Okay.
So...
Um, so that, sorry, I just wanted to make sure I heard you correctly because to be, again, just to remind everybody and killed, you know, we can agree to disagree, right? That that's what this is about. But given the large weight of housing, so core logic's data came in, I think this morning.
the chances of us being below 4% on on so it's usually a leading indicator and can help predict what happens six to 12 months from now and from core logic's data and by the way again even according to larry summers has been the best predictor and you know i think nb er has been looking at it as well and so uh there was an there was an article by larry summers and he's not been right about everything he was right about inflation but um you know
if you do the math,
the chances are that shelter component
will come down to 4%.
So again, given how big of a portion it is
of the consumption basket,
unless you think that we're about to go
into a true deflationary spiral
and we're about to have crazy deflation
in other items in the basket,
there is literally no other way around this.
I just want to make sure I understand
You said that you think that shelter is going to come down more than people are expecting.
But shelter is super sticky.
Labor market is super sticky.
And I just put it up in the nest just for people that are listening.
Housing supply is incredibly tight.
Like, you know,
How do we do this without, unless you are predicting that we're going to have a really deep recession in 2023 or some Black Swan event, I just don't understand the timeline. I can maybe understand that 2024, maybe we might be able to hit it and, you know, people are incorrect in their overall assumption. But, but 2023...
Yeah, so, you know, one of the main kind of components of that outlook is if you overlay the ISM services prices paid index, that leads U.S. headline CPI by roughly three months.
And right now, that's at 2%. The ISM prices paid. And so, you know, that's telling us, you know, we could get to that 2% level rather quickly.
And...
Look, I'm saying it's a bold prediction.
I respectfully, you know, I fully accept your respectful disagreement,
and I'm happy to have that disagreement.
Like I'm not married to this narrative.
But I think, again, like I said, it's my bold prediction,
but I actually think it's much more likely than people I anticipate.
Unfortunately, time will tell, right?
So I'm going to be stoked to have this conversation in three to six months.
And I'll either look like a clown or look like I had some, you know, crystal ball.
I hope I'm neither, to be quite honest.
So let's see how it goes.
Well, it's interesting because, you know, this is the beauty of contrarian bets, right?
Like, you can make like a hundred contrarian bets.
And if you're right once, you're so contrarian that people will just be like,
holy cow, Caleb called it, right?
And like the other ones, they'll be like, well, he did say that, you know, it's a bold prediction.
Sorry.
And really quick, you know, I've been calling for massive disinflation since last December
when we got the November date.
I've been beating the drum on this as much as I could.
And it was a bold prediction back in December.
Everyone was talking about a second wave of inflation, the China reopening, oil price,
you know, all this stuff.
But so far the predictions come true.
So maybe my hot street comes to an end.
But, you know, I've been pretty spot on on this for the last eight months.
So, Amy, my question for you is I'm going to start with the, what do you think that
we're going to see significant disinflation in the housing market earlier?
Or do you think that it's even possible?
for us to hit 2% this year.
Just want to get a heat check here.
Oh, my goodness.
My question for Caleb was going to be,
is that prediction based on the Fed holding rates where they are?
Or does he calculating further hikes into that?
No, I'm not calculating further hikes into that.
Okay.
Okay, so just where we're at.
Hold on.
You think this is going to happen on its own, Caleb?
A bold direction, I have to say.
But you know, I love it.
Don't know.
There needs to be a remind me of this.
Sorry, Matt, one second.
There needs to be a remind me of this for freaking spaces
because there's so much news every day that is hard to remember.
But I'm going to choose to have none to remind us of this in three months.
Thanks, Rob.
Appreciate it.
Go ahead, Amy.
And then we'll go to Matt.
Amy, what did you think about CoreLogics data?
Do you agree that housing and labor are too tight for us to see, you know, significant disinflation?
I think they're too tight for us to get to 2% by the end of 2023.
I don't know, you know, I think we can still get some disinflation with them.
But I, my personal opinion is that the Fed is going to hike again.
Yeah.
Just based on everything that I'm seeing, I don't think that they're done, you know, in terms of whether or not we get a second wave of inflation.
That's still up for debate.
I'm not ruling that out either.
But just looking at where housing and the labor market are at right now, I do not think that, again, and then there's the other factor of could there be some crazy Black Swan event that's just going to send us straight into deflation? Yeah, if that happens, then Caleb might be right sort of through an alternate route. But I think what he's actually calling for is just...
straight disinflation without a black swan if i'm interpreting him correctly um and that seems
i just i don't see a path for that to happen i just i don't see how that can can work yeah you know
a question for you go ahead you had you had some interesting data on uh housing start wondering how you know
shelter is such a big part of potential potentially such a big part of cpi how do we feel about how
the housing start data could affect that
perhaps not in the near to medium term, but over the long run.
Well, yeah, I mean, because right now, I mean, all the housing starts, the housing starts data came in very bullish.
But again, you have to go back and look at it in the context of it absolutely crashed through the end of last year.
So when you take a one week or a one month piece of data and it says 20% jump over, you know, what we expected or over the previous month, well, in the context of it was at rock bottom.
So you have to put it into the full context of the picture.
So that is one thing I had to go back.
I'm sorry, Amy.
The other thing was housing starts takes forever to flush through the system to actually increase housing supply, right, Amy?
Yeah.
Yeah, so it would be, I mean, I would say minimum nine months, probably you're looking at 12 before you're actually going to see a difference in this new supply that's being started now actually coming to market.
And the only thing that I look at it in terms of bringing down home prices is, and the only place where I really see it being an actual, quote, problem in terms of supply, is if we have this new supply happen to coincide with...
a downturn in the economy, an uptick in unemployment, and it's also a point where the Fed decides,
oh, we can't keep breaks high anymore because something's breaking or something's going wrong.
Unemployment's raising too fast, and they start to cut.
Then I think what we're actually going to see happen is all of these –
And we're going to get the data today on existing home sales.
I think that's coming out, I don't know, in like an hour or two.
And that's going to be low.
And that's been consistently, though, because everybody's got a 3% or less mortgage and they don't want to sell their home.
But if we come into a situation about a year.
Not yet.
Not yet.
If we come into a situation about a year from now where unemployment is increasing, rates are coming down back to something more, quote, normal.
Right.
And we have all this new home supply coming on the market.
That's when we could see all these existing home sellers jump in.
So then we're going to get existing home inventory hitting the market at the same time
that we're getting all this new construction that's starting now,
at the same time as we're firmly in the beginning of a recession.
And that is where we can see home prices really start to take a hit down
because we're going to have all of these factors coinciding all at once,
which is going to be...
leading to increased demand for people to sell their homes and move,
but also decreased demand and ability for consumers to buy them at the same time.
Yeah, a follow on question or follow in thought is, you know, Donish is,
so Donish shared this graph, which is interesting, basically about how the housing market is historically tight.
So back post the GFC, so in 2009, 2010, we had what expectedly the, you know,
highest months of supply, highest rental vacancy rates.
So like six months of housing supply, you know, 10% rental vacancy rates.
But it's been like a 10 year decline, meaning it's gotten worse for those who want to
rent or buy since 2010, right?
But the median narrative, the popular narrative is, oh, you know, COVID and ZERP basically,
you know, you know, helped fuel that.
That was kind of the start.
But really more like accelerated, might be a better way to describe it.
But what did like the underlying fundamental causes behind that here, right?
I mean, unlike the UK, which has had.
for over a century. I actually posted that way back when we last talked about UK interest rates
about how housing has not housing and income levels that basically stayed flat over with a variation
between over like a century. But here in the U.S.,
if we're seeing the tenure what explains the 10 year like what's the secular decline what are the
core causes right especially when there's i mean all sorts of factors of like you know digital
nomadery and all this people moving around the world to cheaper places right so or even to
boise idaho i think that's a call out to one of our speakers here but you know places that are
not new york city and cheaper but yeah i'd love to hear about that amy or others
So your question is, is why has inventory been so increasingly tight over the last decade?
Yeah, 2008.
10 to 13 years.
Yeah, 13 years of this sort of making.
So if you're a buyer or a renter, it's gotten just worse for you almost every year on the dot for like 10 to 13 years since about 2010.
Right.
So what's what's been explaining the 10 years?
Yeah.
It's clearly, like, we've had the narrative of the COVID-fueled, you know, like zero interest rate, you know, ZERP environment.
What is the problem with the, you know, what has happened over the last 10 or 13 years?
Well, Matt, do you have an answer for that?
Yeah.
Well, I mean, like, go look in my backyard in Canada.
We have the worst housing prices on the upside in the world.
Our income to average home crisis.
is 6x the U.S.
And the answers for that are regulation and immigration.
High immigration, we just hit 40 million,
which is obviously small compared to like California,
but it's still massive for us.
And our incomes have not caught up.
So the average home in Canada is almost a million dollars
where the average income is, you know, less than $100,000.
So, and that's like a pooled income to buy a home.
So the U.S. is like not even, I think it's like two to one or something like that.
And that's because you have way more available cheap land.
But I think the home builders are also kind of controlling the market here.
There's different reasons for why they choose to build in certain areas.
They're not just going to put homes anywhere for one thing.
And second thing, I also want to come back to, I really want people to understand like the
real time data, the alternative real time data that the market participants are using is
not what the data that you guys are talking about is being reported on.
That is delayed data that is obviously being reported by organizations, by manufacturers,
by non-market participants, truly.
But the market participants are using real-time payment processing data,
e-commerce data, supply chain data in real time to place their bets in the market
that will actually be reported a month or three months out from when you guys actually start to see the headlines.
So I want to be very clear about like the data we talk about is old data.
And a lot of the smartest market participants are not using this stuff.
Yeah, the challenge is a lot of that real-time data can fake you out.
And that's one of the biggest challenges that we've seen.
So, for example, people about truflation data, but truflations quite swiftly and can often give you like little fakeouts.
So that's one of the challenges.
And the other is that, you know, this is one of the...
that I was going to say to what Caleb is saying.
I think I agree with Caleb more than it may have appeared,
but I don't agree with the timeline.
And a lot of the lag in the system is not clear.
Because the timeline is really...
I think most people can identify general trends in the market, but this is why I'm not a day trader.
And I don't recommend the average person goes out and does day trading because, you know, it's really hard to time the markets.
I think to your point, Matt, people have a lot more information that they're using to make decisions.
one thing I was going to mention also and you know and I we do have to move on to a few other
topics but I was going to say that
One of the interesting things in the U.S. has been the demographics, actually.
So the demographics in the U.S. have been driving housing supply issues and housing demand supply mismatch
more than, in my opinion, anything else.
According to the data that we have, 10,000 people are turning 65 every single day in the U.S.
So now you have this giant group of people that is, and by the way, by 2030, that number will be 15,000 every day.
So when you have this damage of people that have been saving up their whole lives and are buying off all the properties and actually are buying all the properties and then saying, and then by the way, coming into those communities and saying, hey, we're not going to build more.
So NIMB.
on top of that, you know, no offense to the boomers,
but they tend to be the greatest of the NIMBY's.
And so, you know, that has actually been a large part
of the local, Amy's loving this.
This is funny because Amy and I talk about boomers quite a lot.
But this is like one of the structural issues.
Also, when it comes,
who votes in state and municipal elections
more than anybody else?
Boomers.
Who goes, who sits on the condo boards?
Boomers.
Who sits on the, you know,
so this is all happening.
By the way, who has the money to lobby local politicians?
Boomers.
And so I don't want to blame boomers for everything,
but I do like the ability to be able to blame boomers for things for once
instead of them always blaming millennials.
And I am a geriatric millennial, but still,
Amy, I'll let you weigh in really quick,
20 seconds and then Mickle, 20 seconds,
and then we've got to move on.
We have way more fun topics than this.
Yeah, so going back to the question, you know, what changed in around 2010, I actually have a very succinct answer to that. And it is private equity entered residential housing. Love it.
That's awesome. That's a very good, they bought and hold, which is so held and so interesting.
Mickle, go ahead.
Yeah, I can be quick too. I just wanted to make a quick comment on the timing and the trueflation.
And I wonder if Caleb would agree with me. I think we both in watching that data, and I think we both probably think that the true flation data is running...
about four to five months ahead of what the fed's reporting.
So I think in terms of whether or not that data,
we're watching every single up and down,
I think we're zooming out and looking at the entire trend
and where that's headed and saying,
oh, based on this so far front running the Fed,
we think this is where their data will eventually catch up to.
Agreed. And that's what I was trying to kind of refer to, which is some of these real-time data solutions that are super helpful if you zoom out and get an idea of the trend of where things are going instead of using them for day trading.
That's what I'm going to keep pushing, which is day trading is not easy.
It is a mix of, you know,
understanding what's going on broadly, fundamental analysis and then technical analysis.
And it's just way too complicated, I think, for the average person or even somebody who thinks
that they're good at it.
You know, it gives you, when you win, it gives you a false sense of security.
And when you lose, you always think the game is rigged.
It's a very common problem for the average day trader.
So I would not do that unless you literally want to make it your life.
And like everything else.
You have to do hours and hours and hours of practice before you feel comfortable doing it as a full-time job.
It's my opinion.
Everybody's different.
But I do want to caution against that.
And it might be a good time for me to remind everybody that this is not financial advice.
And we make sure of that because ultimately our job is to inform you and then you have to do your due diligence.
People say all kinds of shit up.
but usually very, very, very well thought out shit, but still want to make sure that people aren't actually taking what we're saying and saying, hey, I can do this.
You can do whatever you actually have to know what the hell you're doing.
Scott, you unmuted.
I was just going to comment.
I mean, I was a day trader for years, but the statistics and the data wildly supports exactly what you just said.
I mean, it...
studies, there was a huge study years ago, but famously said 95% of people who attempt to trade at all, not even just day trade,
underperform the market. And when you look at the statistics of how many wash out completely in the first one to two months, it's just absolutely astounding.
And I think you kind of hinted at the biggest problem, which is it's a psychological concept called random reinforcement, which basically...
The market punishes people in both directions.
It makes you think you're a god tier trader in a bull market when things go well.
And then when you actually finally have a system that you put in place that should work over thousands of trades,
you'll wildly underperform for a certain stretch, which will then force you to make a bad decision, revenge trade,
and then of course that one trade will make back all your losses and you'll think you're a gods-tier trader again,
and go right back to the bad behavior and violate your system.
This is how it works for every single person, anybody who's been down that road.
knows and it's just a very very difficult path I kind of make a joke that people especially in
crypto seem to quit their 9 to 5 job in front of a computer for a 24-7 365 job in front of a
computer where they lose money and have to go back to their old job so I would just say yes not
financial bias is definitely you will lose unless you just happen to
perfect timing in that bull market, which is what I had, right? I came into crypto in 2016,
late 16, early 17, wrote the initial bull wave thought I was a genius. We've all been there.
Yeah, you know, talking about geniuses, though, if you are building an AI or a Web3 company
or are partnering with VCs and funds to do this, do reach out to our team.
We work with portfolio companies in return for equity in zero.
IBC does.
If interested, DM, Mario, and his team will get a call organized.
Also, they do some shark tank style pitches.
I know that they've been doing them in the crypto rooms and some of the...
AI spaces.
If there's anyone that is interested,
please do reach out to Mario
with his new non-Web3 photograph,
as you can see on the top left,
since, in my opinion,
these are dead. He still owns it.
but I don't believe in it.
All right.
We're going to keep moving forward.
Speaking of geniuses,
nobody does that better than talk.
Nobody, nobody.
The segue, beautiful.
My segues are getting better and better.
They're getting better.
I hope they're getting smoother.
By the way, I do get every single time I do this,
I get DMs in the back saying,
holy shit, that was expecting that.
And I love that people actually...
Ridiculous.
By the way, it probably explains why, you know, no one, no one enjoys my, enjoys giving me more sponsors.
But it's okay.
I'm actually enjoying the fact that I can have fun with this and about to get a message from the producers.
Okay.
So we're going to continue.
The next big topic that I really wanted to hit before we go to talk to close things out.
was that Modi is visiting the U.S.
You know, Matt kind of alluded to immigration in Canada.
For people that are not aware, immigration in Canada has skyrocketed from India and Pakistan, primarily India.
And it's been an interesting transition, let's say, Matt.
Modi is coming here, and one of the big topics of...
is whether the U.S. will maybe reopen the doors to Indians.
And that has been a big point of contention, just for people aware.
If you're an Indian that has lived here and is looking for a green card,
it can take 10, 15 years to get a green card or become a citizen.
And that path to citizenship is so long that we're losing a ton of talent.
It is a fair conversation, but right we have across both lines a huge conversation around being, you know, focusing on our own people and not, you know, and being a little bit restrictive on immigration, at least in the narrative.
But it's a fascinating challenge he's going to talk about.
And I think immigration really broadly about what our strategy is going to be, probably one of the tightest
employment markets that we've had time,
is immigration and legal immigration,
the solution to this type labor market?
I wanted to bring that up,
because again, if we can,
and I'll go to Neely first,
even though she didn't ask for it,
you know, Neely, do you think that
legal immigration of skilled workers,
something that we should really entertain
to help us break the gridlock in the labor market.
I think, I mean, yes. I mean, I think we, I think every, this is one of those topics where no matter where you are in the political spectrum in the United States, I have personally found there's a ton, literally, there's so much common ground.
This is not actually a divisive issue as much as I think people think it is or the media wants it to be.
I think most people...
see this or they have friends who are in that process or you know or they have peers and the student in the school systems um and it's
i think immigration is extraordinarily complicated and and here's what i don't understand is why it has to be so
complicated
And that is, you know, is it around our processes?
Is it just, is there just not enough political will to do campaign fundraising to put some, you know, action behind what actually needs to be done?
We know that whenever government gets involved, things become more bureaucratic and things become more complicated.
It's just an empirical fact, unless you're building like space stations.
But that is, it is...
It's actually more bipartisan than I think people actually make it to be.
So, I mean, I don't think this is a contentious topic.
I think the complexity is in how does this get done?
Yeah, I'm going to kind of jump in on that.
I mean, it's just expensive and difficult, right, to do it.
And I sponsored a lot of H-1Bs, you know, for employees from,
because it's all around the world, like, you know, Brazil, you know, India, Peru, et cetera.
I mean, just, you have these really talented people.
Some of whom have, you know, advanced degrees, and you're spending tons of money.
And by the way, this got worse during the Trump era.
So unfortunately, because of the rhetoric that was there, it actually did become more difficult and I had to pay our lawyers more money.
And a lot of them had so much work that, you know, you couldn't even hire them for as many jobs anymore.
And you know, you're paying, you know, in some cases, tens of thousands of dollars to get a talented person, right?
But, you know, I mean, we're lucky to be in a position to do that.
I mean, how many companies in the U.S. are going to be doing that despite how talented these folks are.
I mean, I'm fully convinced that to what, to what Donish is saying, that, you know, legal immigration of talented folks.
you know, would make such a difference in this country as it has over centuries.
I mean, this entire country is built on the back of immigrants, you know,
starting from the original Mayflower, right?
So it's unfortunate we're getting to the space.
And I can say as the practitioner, it's just getting more and more difficult, more expensive.
Unfortunately, I even had to do this for my spousal vista.
after I got married, which was in the post-Trump era.
And even that was more difficult than it should have been, to be frank.
Like, that's the one thing that people say is so easy to do.
And yet it was a big hassle, lots of lawyer fees, et cetera, just to get my own wife
to be able to legally stay in this country, let alone, you know, my employees, etc.
Like having gone through it, having paid lots of legal fees, I'm really just like,
man, we got to fix this because, you know, really talented smart people can't get in here.
You know,
you know, it's a problem for sure.
The chances of immigration being fixed are the chances of your taxes going down or the tax
code being put on one piece of paper.
It's impossible because the bureaucrats and the people in government enjoy having these
systems become complicated.
They make too much money off of it and it's too much of a point for them to leverage
whenever they want something else in the system.
Yeah.
It's impossible.
Even in Canada where we have a pretty good immigration policy,
our immigration policy has worked on a point system,
which most of the other G7 countries are except the U.S., I believe.
And the point system basically says if you have certain degrees, obviously you get higher points.
If you have the ability to invest half a million or a million dollars in Canadian businesses,
you get more points and different family members and things like that.
The U.S. is inherently complicated, just like the U.S.
medical insurance billing systems are complicated,
just like the tax code is complicated for a reason.
And we all know what that reason is because people make a lot of money off of confusion.
I think people make a lot of money, but it's also easy to blame.
I mean, isn't it in the big short they said you're going to, you know,
instead of blame the bankers, are going to blame poor people and immigrants, right?
Immigrants just make great scapegoats as well, right?
Yeah.
And then the other point is in elections, you know, everyone can use this argument as saying,
well, why would we let somebody else in when you're the one who's been paying taxes,
And you're the one who's here.
Even though these people are way more qualified,
are going to contribute way more to the economy.
We understand that, Donish.
I believe in that wholeheartedly.
But I think if you think about the people
who are actually the ones allowed to vote in the current elections,
they're the ones who don't believe that.
And that's where I wanted to go.
By the way, rest in peace, all of your DMs.
I'm just letting you guys know.
Neely is like, who would disagree with this?
Well, you're about to find out, Neely.
Because, by the way,
Sometimes on these stages, no one is willing.
I'm the voice of this interest.
I know, me too, actually, which is funny.
I'm the voice of the centrist.
Well, but it's going to be very interesting
because I am very curious for people to share
what DMs they're getting right now,
or are they going to get in the next few hours.
But I was going to say that, you know,
sometimes we have to be up on this stage
and give the counterpoint because unless somebody up here has a counterpoint to this, I'm going to have to do it.
Rob, Mickle, anybody else disagree that increased immigration to solve our employment problem right now?
Is there anyone here that just, oh my goodness, guys.
Come on, somebody else.
All right.
If nobody disagrees, I want people to go into the comments on the bottom right and give us good solutions that not involve immigration as our, as one of the primary solutions.
You know, one of the big.
The only thing that's possible is education.
It's the only way.
Occasion and lots and lots and lots of homegrown babies, lots of babies.
20 years from now, you've problems up.
Exactly. It's impossible.
So immigration is a short-term solution, but we need longer-term solutions as well.
I understand that.
I don't know if immigration is a short-term solution, actually, because what it does is that people
obviously emigrate here, which is fantastic, and they'll...
work and out to the economy.
And then with any luck, if it's attractive
and we provide their children good education,
they become part of the long-term solution
as well as a short-term fix.
So it's a both-in-book.
If immigration isn't there,
the problem is most of the young people in the world
don't live in these seven countries.
And so if you want to continue to have young talent come in,
you're going to have to accept the fact that they come from elsewhere,
which is...
I think is fine personally, but other people have got opinions on that.
You know what the worst kind of education is?
The worst kind that we have that's the easiest is student immigration.
The student immigration is the easiest ones to get, but they have to leave after they are finished their education.
Which is so done. It's such a done thing. We have it in the UK as well. They can stick around for two years, but if they're not earning a certain amount after that two years, which is normally the time when they earn the least amount, then they have to leave. And you're thinking, hold on, we just, we just specialize these people for them to then leave. Absolutely stupid policy.
I'm gonna do something that I usually don't do, which is I'm gonna invite people to raise their hand if you disagree, because there's too much consensus on this stage.
So I do want someone to give me a cogent argument against this.
But it's okay.
Don't worry.
People here are pretty respectful, you know, except Amy.
She's kind of a monster.
But the rest of the people here are very respect.
I'm just kidding.
The rest of the people here are very respectful.
I'm going to have to.
I'll tell you.
I'll tell you.
Say again, Eugene?
Oh, yeah.
Yeah, yeah.
You want me to play the other side?
I can play the other side.
Well, I was going to do it.
But it would be better for my DMs if you do it.
But I can do it.
It's fine.
And Eugene, you can just back.
But I was going to say that the other side of this argument is,
is that the labor market is not right because of skilled workers, a skilled worker shortage.
The labor market is because of vocational worker shortages.
And in reality, we have made a big mistake in this country over emphasizing college education.
That has been the number one mistake that we have made as a country.
Well, actually, when you look at where the labor market is tight, it's not in tech workers.
It's not in, it's in, it's,
people that work in the service industry or in other industries where, you know, like plumbers and
electricians. That's actually where our biggest issue is we have devalued the common American
worker over the last few decades and we're paying the price. The other big issue,
You want to disincentivize people from staying at home.
Now, we know that worker participation rates have dropped.
They are now returning.
Don't fight me Neely.
But I'm returning, but they're not returning fast enough.
We all can admit that they're not returning fast enough.
And part of that is that, you know, we haven't.
that encourage work.
Now, what we're doing right now with Medicaid is kind of messed up in many, many ways,
but it will encourage to reenter the workforce, and we will see that improve.
So some people would say, especially people that are a little bit more economically right,
you know what?
You reduce entitlements for unemployment, and suddenly people start enter the employment
sphere.
You...
mentorship models, which is what Trump tried to do,
and you really encourage it and you actually accept the fact that, by the way,
for people that are listening in the U.S.,
if you're sitting around and you're trying to figure out what you want to do with your life,
become a plumber because they make doctor money, just a heads up.
They make like real dollars.
You all don't know this, but like vocational trades, especially unionized.
That's the other third thing.
We have broken, we have done union breaking in this country,
which is leading to all of those roles.
You know, people don't know us, but my dad worked in a factory,
and it literally changed our family's life.
The upward mobility, economical mobility that that allowed us to have,
all three kids went to the best schools.
This is the reality.
That was the American dream.
And now the American dream is being a product manager and working from the pool.
It's freaking ridiculous, right?
And so this is the reality.
It sounds like you argue for more immigration then.
That's what it sounds like.
It sounds like you argue for more immigration because those people are more willing to take those jobs.
I'm arguing for more labor participation,
and I'm arguing for more vocational training,
and to solve the underlying actual issues
that are affecting our country,
and it has nothing to do with getting the best
and the brightest from other countries.
It has to do with encouraging people
to stop staying and living in mom's basement and move out, become, get a vocational job,
and actually do something with your life and build a family so that we can solve the underlying problems
that are solved that are causing all of this.
I have to get the opposite.
Okay, boomer.
I'm sorry?
Matt, go ahead.
Okay, boomer.
All right.
Easy there.
I think you're trying to say that every single person who's in their 20s is living in their parents' basement.
Okay.
No, that's not I'm saying. I'm saying the people that are and don't have a job do have the opportunity to get vocational training in six to 12 months and become productive and be able. But it's just not second to be in a good. Education is their solution. Education is a solution. But education, the way that most people talk about it is going to college. I'm talking about apprenticeships. I'm talking about vocational training. I'm talking about other forms. And I think Matt, you know,
They fall under the bucket of education, sure, but we're not talking about traditional approaches
to education.
We're talking about we need to reinvent and we need to have a real conversation about what's sexy
in this country.
And I can tell you right now, tech people are too obsessed with getting jobs and people are
too obsessed with getting jobs and things that see easy.
And what we really want is to start encouraging people to make real problems, which is we
don't have enough plumbers, we don't have electricians, we don't have enough unions.
We've been union busting for two decades straight.
It's time for us to start saying,
hey, maybe we should address the underlying issues.
Again, you know where I stand.
I told you where I stood.
My TikTok is filled with landscapers and pool cleaners and plumbers.
Actually, hilariously, your TikTok is not, in my opinion.
is filled with people that are using immigrants do those jobs,
when in reality, you know, there are opportunities.
And people want to own those businesses,
but then they want free labor or cheap labor.
There is an opportunity for us to make things better.
Mickle, go ahead.
Yeah, I just think one other thing we can add to this is I really do think technology is going to make a big difference too. And one of the things that I kind of thought was funny is someone who I honestly support RFK Jr. He came out and he was saying he was worried about how self-driving cars could disrupt all the truck drivers out there. And I just look at that as one of the.
perfect opportunities to transfer one portion of the labor force to another part that might be
more productive in its own capacity. And I think as we see technologies able to take over a lot of
jobs that like self-driving or moving cars around and a whole bunch of other stuff, like I don't
know if you guys have been to the store recently, there are so many less cashiers than I have
ever seen before. It's getting so automated. And we're going to see a lot of the workforce that
is being used at fast food restaurants and all these places,
move to other parts of the economy.
And I think that's also going to be a big thing going forward.
And I just would push back on this idea that we would want to stop any kind of this innovation.
I think it's so silly.
I think every single time we have a game-changing innovation,
that allows some of these workforces to be automated, those people find new jobs elsewhere, and it ends up making our entire society more productive.
So I really do think that's going to be important going forward.
And I think that's also going to play a part in trying to take some of the demand off the places that are strained right now.
I will also mention that was a good point.
I was going to say, you know, I'll also mention that we have a big dependent ratio issue in this country.
People aren't talking about it, but it's going to cause increased stress on the entire system.
You know, as I mentioned, 10,000 people today are turning 65 every single.
You know, that number goes up to 15,000 daily.
And, you know, not only do they own all the homes,
they also have not done a group of setting up their retirements.
And so, you know, it will start to have some real challenges.
They also don't have long-term care in this country figured out.
Long-term care insurance is not common in this country.
For people that don't know, about 30 years ago,
a lot of people used to take insurance out.
Ended up needing to, you know, if they got dementia or they had all these
They actually had insurance to help cover the costs of that.
We don't have that in this country done well.
And no one wants Nana in a home.
And so we are trying to age at home.
And it's incredibly challenging.
So we have this real big demographic crisis that's coming.
You know, they say demographics is destiny.
Well, graphics aren't looking too great right now.
But Neely, go ahead.
This is...
It's actually the topic of my dead talk,
Donish, which I never talk about,
but happened to know a lot about the great economy.
And it was, as it turns out,
it's actually our statistic of the day.
We're doing a whole series of hand-drawn statistics in,
This week we're focusing on people over the age of 60.
I just put it up in the nest.
Homeownership is really high, and you typically own your home free and clear.
We think adding to your point, aging in place is in fact starting to happen.
That was starting to be a little bit of a trend.
It's become significantly more of a trend on the other side of the pandemic, but
really for two primary reasons.
One is we saw our elderly family isolated, ignored, during lockdowns.
And that was scarring.
It was scarring for them.
It was scarring for people who were near retirement.
It changed perspectives about what it meant to head into a facility.
Nobody wants that.
And so we do believe that there is an emotional paradigm shift that's occurred because of what we observed during the pandemic.
Additionally, those homes that were purchased, particularly in the 30 to 39-year-old demographic,
they kind of reverse that trend of, you know, moving towards urban centers and now back towards suburban centers.
And in fact, we have statistics that show that mom and dad actually helped with a lot of down payments.
We think the value exchange for mom and dad helping with some of those value, with those down payments,
is that you moved closer to mom and dad in those suburban centers.
And so COVID bubbling, remember when we all had COVID bubbles?
Pandemic also trained us to, you know, choose to be within a bubble of family or really, really close friends.
And the pandemic, which had, you know, obviously just a laundry list of horrible things that came out of the pandemic and many of which we will be dealing with generationally.
One...
positive thing, although I would never want to do this again, is I do think it has completely
shifted the U.S.'s perspective about aging in place and aging near family, which could have
longer term benefits as the elderly, you know, obviously loneliness is a significant issue, a health
issue among the elderly as well. So if we can actually age near...
near to our deers that would be a positive.
But yeah, it's, yeah, it's something that's...
The only challenge, Neely, is who's going to bear the cost, right?
People have no income, not compared to the...
is going to retirement, they've saved up just enough to maybe make it 10, 15 years.
People are longer and longer.
The boomer makes it to 100.
And next thing you know, we are all, you know, kind of screwed.
And so it's a really interesting situation that I think will play out over the next few years.
I wanted to end with Modi.
Jeff is here, you know, just for people that are not, there has been a Modi roadshow
over the course of the next, the last two weeks.
Elon Musk, actually, I won't end with that.
We have a funny story at the end.
But let's talk about Modi real quick.
So Elon Musk, you know, our great Lord and Savior, came out and said, I love Modi.
By the way, I think he may have said I love G too at some point.
But, you know, he loves Modi.
They're thinking about a gigafactory and everything is all positive, except for the fact that
that Modi also has a lot of other issues.
So, you know, this is not the political show.
I'll recommend everybody do their own research on this,
but I will give you some information that you can Google
and it will be very helpful.
So Modi was trained by the RSS.
You can go Google RSS M-O-D-I.
All right?
I'm going to tell you what to Google.
Go ahead and find your own information.
RSS, I want you to do RSS space Hitler.
And I want you to look into what that tells you.
I'm not kidding.
All right?
So this is one of the challenges that we have,
which is information is so ubiquitous that it's incredibly hard to know what's true or what's not true.
I am telling you that there is a lot of, by the way,
60 minutes did an entire thing on RSS.
So you can even go watch that.
Okay.
This guy has been blamed, I don't know if this is true or not,
for what happening in Gujarat.
So you can also Google Modi, Gujarat, G-U-J-A-R-A-T.
And the reason why I'm bringing all of this up is because I am very, very concerned
about how the US is conducting its business.
And, you know, we have this stage.
We have, you know, nearly 5,000 people here.
And I want to be honest.
Yeah.
about my feelings.
So I'm being honest that people should look into this.
Now, you can look into this and say,
Donish, I don't care.
And that's totally fine.
But people should know.
You know, we talked about ESG for a very long time yesterday.
And I think ESG in principle has been good for the world.
I think it has.
Now, it has been hard in terms of supply chain.
And it's been done incredibly poorly.
But there's been some good in it.
I understand why we're lining up with India, you know, from an economic perspective, it enables us to have another partner that can help us through this.
But if we don't at least admit to ourselves that what we're doing is wrong, right?
Like when you were a kid, we're young and wild and free, you did some dumb shit, but you knew it was dumb.
We should at least know that what we're doing is incorrect in some ways.
And so I wanted to put that out there.
I want to be very honest from the beginning.
But beyond that, let's talk about the actual economic principles.
Because if I just talk about the economy side of this, we're not being truthful to ourselves.
So I want people to Google that if you want.
If you want to know why this is important, feel free to share that.
This is not about causing FUD.
It's not about causing issues.
It's just about being educated because when you're working with someone,
and by the way, what I'm telling you right now is that you're going to hear India a lot in the next 16, you know, next 18 to 24 months.
We're going to be talking about India like they are our best friends.
I'm telling you right now, this is our opportunity to start aligning with India.
The Indian people are incredible.
There's no doubt about that.
Just like the Chinese people are incredible.
This is not about causing trouble there.
It's literally about the fact that they have some serious governmental issues
and they are going to come to head in the next few years.
All right.
So from the economic perspective, one of the biggest things I mentioned that Modi
and the U.S. government are going to talk about is access to more visas.
There's going to be more, I have a feeling.
And Jeff, I'll let you jump in here.
You don't have to comment on the political stuff.
It's perfectly fine.
But, you know, I do want to comment your comment on how do we see alignment between the U.S. and India benefiting the U.S.
since we're already making a lot of those moves.
And also, you know, do you think that this is not going to be as positive of a trip as people are expecting?
Right.
Yeah, no, I think when you're doing supply chain design, and you look at what the U.S. has done over the last, you know, a couple of decades, basically, is there's a lot of eggs in the China basket.
If you look at medical, if you look at consumer electronics, you look at silicon, and you look at these things that take, you know, five to 10 to 15 years to unwind.
And if you're a supply chain professional,
one of the things you're taught or one of the things you teach,
is the importance of, you know, multi-sourcing or having, you know,
of multiple sources of supply in case you run into a natural disaster,
geopolitical issue, you know, pricing issues, whatever, contractual.
You need to have multiple sources of supply.
So we've actually been in a very dangerous situation.
I would say a very dangerous place the last couple of decades,
and it's really starting to play out as we see with China.
And so this moved to India.
This actually started a number of years ago.
And...
I mean, they have, you know, they have a very skilled workforce that kind of spans the gamut, right?
If you're doing, you know, complex software development all the way down to, you know, factory assembly, you know, they've got the right workforce to be a real hedge.
Not only a hedge, but actually...
a real second, like, viable alternative to China.
Now, it's going to take time, you know, to build up those supply chains,
but that's been happening, actually, over the last several years.
It's just not happening with the kind of, with the right concentricity and the right, um,
you know, it's not happening fast enough, quite frankly. So this visit to the U.S., you know, I think he's
definitely going to be talking about visas. He's definitely going to be talking about air travel, right,
and opening up more direct, if I were him, I would be wanting to get more direct flights,
especially if you're trying to set up business from the U.S., you know, from various, you know,
major cities, you know, in India. And he's, you know, he's meeting with Cook. He's meeting with
Sundar Pachai's meeting with Nadella,
smell with Elon.
These are the four,
these are the, you know,
the major tech titans in terms of building hardware,
you know, in the world.
Can I push back?
I want to actually ask questions
because I've always appreciated all
your announcements on supply chains,
but specifically at a macro level
pulling all the way back.
I do agree there's a lot of opportunity
between India and the U.S.,
but I think it's very specific
in this sense.
So, you know, India did this,
kind of weird bet like decades ago.
And the way it decided to try to become a first world nation.
So we're rewind the clock by 40 plus years, right?
You know, China, the Asian, well, Asian tigers first, right?
Singapore, Taiwan, South Korea, Singapore.
They industrialized very specifically.
And most of those tigers, as well as the ones that followed on,
and including China, decided to go, let's make the low value products.
And even Japan did this.
Let's make the low value easy to produce physical products.
And then, you know, kind of move up the supply chain, right?
So we saw that, you know, now, you know, went from, you know, textiles like, you know, Thailand and others have done this where they go from textiles.
And then they move up to electronics, for example, Samsung and Korea is a great example, right?
So they built up this great industry, you know, basically like,
How do we make physical things and then just make more expensive physical things?
India played a totally different game that decided to go to the services sector,
completely skipped over the industrialization part.
And they looked kind of wrong for the last, like, you know, for several decades.
But the one good thing about it is, you know, in Bangalore and New Delhi even,
the one thing to have is phenomenal, you know, tech workers coming out of IIT, right?
So if we're best bang for your buck, if you want great engineers, like India is probably the place, right?
So they seem to have a preponderance of really talented tech workers, but they're industrial,
like the industrial manufacturing complex is compared to even like new players like Vietnam, just decades behind, right?
So I'm not sure.
And we're not going to be talking about like, you know, the energy reserves and like, you know, in Rajasthan and elsewhere.
Yeah.
But specifically about that, the core of their economy is based on services.
Then in a tech, you know, globalizing the world, AI world, maybe that's a good thing.
Maybe their bet ends up paying off after a few decades.
But for a long time, they actually look like they made the wrong bet because they didn't
have the industrial manufacturing base in places like China as well as elsewhere in Asia,
of all the ones that got rich, right, or quote, richer, so to speak.
Yeah, I can speak for, I think you're a great point.
First off, I agree that they went services.
They started late.
But I'll tell you that because I'm dealing with setting up high volume production, very high-tech production in Vietnam and India.
They're not behind Vietnam.
They're not behind, you know, they're, you know.
Yeah, so, I mean, they're, they started late, but, you know, they'll catch up rapidly.
Here's the thing.
They see this EV explosion happening in China.
The EV adoption rate is off the charts in China, and they see all of these, you know, these new
EV manufacturers and designers popping up in China.
And they know one of these players is probably going to be, you know, top three, top five manufacturer in the world.
And they're behind the EV race.
So that's one of the reasons that they've been in discussions with Tesla actually for a couple of years.
But yeah, in general, I agree they started late on the manufacturing side.
They've been a great source of, you know, for software development and so forth.
But, you know, they're going to be a, I think they're going to be a real viable second source.
Now, what's been different, what's been a little bit different between them and China is,
is that when you go into China, they're not, they're protectionists, but they're not as protectionist as India.
I mean, India will levy 30 to 100% tariffs if you're not manufacturing locally.
So that's one of the things that Modi's been working on.
I know he's been working on it with a couple of these major tech companies.
I know he's been negotiating with Tesla on it.
And, but yeah, these companies, from an economics perspective, they're going to want to, if they're doing endpoint manufacturing and distribution in India, they're going to want to have their entire supply chain in India.
That's going to be the best thing from a unit economics perspective for them to do.
It's just going to take a little bit of time.
Well, maybe it's also not a bad thing for the country, right?
I mean, you know, for us in the U.S., we didn't like that, you know, how protection
China was on the digital internet side.
But guess what, Baidu, Alibaba, Tencent, the BAT companies and other companies like it grew
behind, you know, the protection of these tariffs, you know, sucks for us, sucks for Google,
sucks for Apple.
Well, you know, not so much for Apple, but sucks for Google, sucks for Amazon.
But, right?
Like, I mean, maybe that's the right thing for India, right?
Maybe that was the right thing for China.
And so perhaps, you know, I mean, I don't think India's going to go that way. And also the other complication is India's the world's democracy, right? I mean, most of these, you know, countries that grew from manufacturing were dictatorships, right? Korea was a dictatorship before it became rich and became a modern democracy, right? You know, Singapore still is a dictatorship, right? I mean, it's.
So actually, that's a question mark, right? Can you can you industrialize in the modern world and not be a dictatorship? There are examples of that that have been successful, but actually a lot of them, a lot of the best success stories were actually under full on dictatorships where people can make, you know, unsavory decisions that perhaps are better for the long term economy.
Yeah. And so we have six minutes left and one incredibly hilarious topic, which is, has anybody been watching what's going on with Elon and Mark Zuckerberg? Has anybody been looking at this?
Yes.
And the drama around it.
For people that have been living under a rock,
under the Twitter rock,
let me tell you what's going on.
So over the past 24 hours,
there has been talk about some random person, by the way,
that I have like a few followers.
I'm not even kidding.
Like I think maybe like less than a thousand followers.
Pitch the idea to Elon.
Elon then responded,
The idea being, hey, I wonder who would win in a fight against Elon versus Musk.
Or Elon versus Zuck.
Yeah.
Elon responded with, hey, I'd be interested in that.
Remember the exact words, but something like that, something to that effect.
The information then got back to Zuck, who on IG made a post and said, pick a place.
Right? Wasn't that right, Jeff? I'm pretty sure that's like...
Yeah, Elon, so this, actually, this started actually a number of years ago.
They've always been kind of trading, you know, unpleasantries.
I think a couple of years ago when it was rumor that, or a year or a year ago,
when Elon was rumored of buying Twitter.
Someone said, well, why don't you buy Facebook?
And he says, I would buy Facebook so I can download it and delete it.
And so, yeah, that started, it started a while ago.
And then now that Zuck has launched, or not launched,
but there's discussion of Facebook launching a Twitter website.
competitor called, maybe called threads.
We don't know what's actually be called.
I think it's called Project 92 internally.
I think that's really spurred a lot of this.
Elon's been, you know, visibly kind of upset at that.
And Zuck was, I guess there was an interview with Lex Friedman a week or two ago.
It said, you know, he goes, I don't know why Twitter's not at a billion users.
You know, a Twitter-like product, you know, should be at that.
So I think this is kind of stemming a little bit from that.
And then, so what happened yesterday is, yeah, that, yeah, yeah, oh, yeah.
And then Elon, Elon suggested one, yeah, a cage match.
He just said the word cage match.
And then it just spiraled out of control.
And now, you know, went on his Instagram story and put the screenshot in there and said, name the location.
And Elon said, Vegas Octagon.
That's where we are today.
This is like the fight of the nerds.
This is like incredible.
I have to say, like, what is going on in our society today that we're now starting to have nerds and geeks start talking shit to each other online?
Like...
Can we just all admit that this would be the most hilariously ridiculous fight that anyone has ever seen?
Yeah, I'd rather he go like he'd fight Bill Gates or something versus Zuck.
I mean, Zuck's like 12 years younger.
Oh, no, Jeff, you don't believe in Elon, Jeff?
Well, I mean, just.
It's about heart, Jeff.
It's not a thought skill.
Yeah, I like, I appreciate his walrus movies talking about.
I mean, Zuck's a jiu-jitsu white belt.
So he's, he's, you know, he could, he could submit Elon in probably a minute if Elon doesn't get properly trained.
So now I guess Andrew Tade is offered to train Elon.
So this is just spiraling.
I saw that because Andrew Tate's point was that, hey, I've been, the meta has, you know,
has blocked me for, or banned me for all these years.
It's time to train my adversary, their adversary.
And it was very interesting.
I found that fascinating.
There's no way that Elon takes him up on that.
But for people that don't know, Andrew Tate is a kickbox champion.
But, Jeff, if you have to pick.
Let's say they have 12 months, 12 months, Jeff, to train.
Who would you pick, Elon or Mark Zuckerberg?
Well, I mean, if they have 12 months and Elon takes it seriously, I mean, he's got the size advantage.
But, I mean, Zuck's been training for a couple of years.
So, I mean, it's going to be, I don't know, to me, this is a coin flip.
Oh, my God. So fascinating. Jeff, who has never, who loves Elon from the bottom of his heart, Jeff is now not a believer. This is fascinating. For people that are listening really quickly, because we have a few minutes, go to the bottom right and tell us, all you have to say is Elon or Zuck. Just put comments in there. Tell us if you think Elon's going to win.
or Zuck's going to win.
I'm actually very curious.
I was going to put a poll in there, but it's too much work at right now.
But, um, just put in, okay, we're going to go to Amy next.
And then Eugene, and then I will tell you my reasoning for why I think one of them is going to win
in an incredible fight.
All right, go ahead, Amy.
Who do you think, Elon or Zuck and why?
Okay, you'll love my answer.
Okay.
I am choosing Elon because Zuck is a millennial and we never win.
Oh, that's fair.
That is very true.
They do keep us down.
Go ahead, Eugene.
What is...
I was trying to look at those stats between these two.
I mean, it isn't interesting that Zuck has won a Jiu-Jitsu tournament, but in the Silicon Valley High School.
Yeah.
Yeah, I'm looking through the detail. I have no idea. I have no clue.
No, you got to make a choice. No cop-outs.
I mean, I actually, I think it's a reasonable thing for Jeff to say that if Zuck has been training, I think the trained person, you know, it always favors the trained person.
You know, Elon has said in the past. He doesn't like working out, right? I mean, he's building, you know, several world-changing companies. So don't blame him at all.
But yeah, I mean, if you have a year and you take it seriously, I do think Musk could have the advantage just from a pure size. But I think it really does come down a skill.
Choose a fighter.
Choose a fighter.
I'm not going to let you off the hook.
He has been training.
I mean, nothing more complex than that.
See, this is the quintessential problem with folks these days.
No one believes in raw talent.
No one believes in raw talent.
We over-index on a white belt in jujitsu guys.
We're over indexing.
Do you all remember when you had a white belt in karate class?
Were you any better than the bully in school?
The answer is absolutely not.
A white belt means nothing.
Y'all are nuts.
What kind of crazy shit are people saying on this stage?
Here's the truth of it.
Elon Musk has longer legs, longer reach.
He's a polymath.
He has built multiple companies, which means that he's able to do different things in different industries.
I am convinced that if you gave him six months, he would kick the living crap out of Mark Zuckerberg's, Mark Zuckerberg.
Think about it for one second.
Mark Zuckerberg probably had to learn how to kick.
Yeah.
uh like like at all uh you know like this is a guy that would not uh you know that would not
be in any fight ever since he literally doesn't work that way whereas i bet you elan's been in a few
scuffles so my answer is unequivocally Elon and i think it would be a blowout i think
iran would unmark Zuckerberg wouldn't be able to land a punch
Elon would just kick him away.
That is my final solution.
And I will stick with that.
Thank you, everybody, for joining us.
We will see everybody tomorrow morning, 8 a.m. Eastern.
And for people that are listening, you may not be aware.
But Mario, Suleiman, myself and others are going to be hosting the former prime minister of Pakistan tomorrow on these spaces.
Imran Khan, if he is not in jail...
There is a world in which he might actually be jailed before.
There is a real world.
He was actually taken to prison or taken to jail a few weeks ago.
He is coming on to share what's going on.
I cannot believe how crazy this is.
Elon and the Spaces team do not let us down.
This is a big event.
We're probably going to have hundreds of thousands of people in the room.
But please do join us tomorrow.
Tomorrow morning at 8 a.m. Eastern and then 4 p.m. Eastern for the Amran Khan event. Really, really excited. Everybody have a wonderful day. See you guys.
