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#FinanceDaily: Fed signals hikes | India-US | US healthcare worsens
Recorded: June 23, 2023 Duration: 1:16:19Space Recording
Short Summary
The crypto market is experiencing significant regulatory challenges, with the SEC's actions impacting major players like Binance and Ripple. Despite these challenges, Bitcoin's price remains strong, reflecting growth in market interest. The U.S. and India are strengthening their economic partnership, with India emerging as a key player in global supply chains and technological innovation. Meanwhile, the U.S. faces domestic challenges, including rising medical debt and healthcare issues, highlighting areas of economic and social decline.
Full Transcription
All right. We're going to be getting started in a few minutes. Today is a crazy day.
Excited to talk about all of these things. Just give us a second. People will be joining in a few minutes.
So there's one. Cody, how you doing?
Wonderful. Good morning. It's going to be a wild day today.
It's going to be a wild day. So if you don't know what we're talking about. By the way, how's my audio?
It's perfect. All right. Awesome.
Okay.
For people that don't know, today at 4 p.m. Eastern, the former prime minister of Pakistan
will be up on stage with me, Mario, and Soleiman.
It is a crazy thing to talk about.
So I grew up for many years.
I lived in Dubai.
And...
When I was, if people know anything about cricket, this is a very specific comment for brown people.
But cricket, you know, I grew up watching Imran Khan play cricket.
People don't know this, but before he became the prime minister, he was one of the most well-known cricketers of all time.
And I remember watching him when I lived in Dubai for like all those years.
I remember watching him play against.
There was like India, Pakistan cricket matches and it was like a war on the field.
It was this crazy experience.
And I remember watching him play and being like, wow, this guy is really good.
And now he was the prime minister of Pakistan.
And then now.
there's all this controversy.
We're still hoping very strongly,
hopeful that he doesn't get arrested,
at least not before the interview
at 4 p.m. Eastern today,
but this is like, it's like sort of, um,
a surreal experience. And so, you know, for people that don't know much about Pakistan,
it is the eighth largest country in the world and it's a nuclear power, which is so crazy.
And so now you put that in context with the fact that, you know, Modi is currently in the U.S.
The U.S. is clearly trying to improve its relations with India.
Amid much controversy.
We talked about some of it yesterday,
but I'm not gonna go over all of that today.
I kinda wanna talk more about the specifics
and the economics of it and why we're aligning with India.
But it's wild.
And so the fact that Modi is at the White House,
while Imran Khan is gonna be on this stage,
is like the weirdest experience.
I still can't believe that people even come
and listen to us every day.
It's the funniest thing in the world.
I just assume that all of you all are bots.
even though you're not
I know you're not
hey Scott
and then good morning
how are you
just waiting for a few people
to show up
we have to start late
because the Twitter space's
interface was not working
of course
Twitter spaces touched
You're right. Sorry. Sorry. Sorry. I got to stop.
By the way, are you noticing the more bad I'm saying about them, the more the spaces are not working?
Is anybody else noticing that?
It's as if they retaliation.
I'm going to go with coincidence on this one, hopefully.
Causation, correlation, something, something.
Well, you know, for people that don't know, last time Imran Khan was on a Twitter space, they had 1.3 million active listeners.
It wasn't like...
It wasn't like...
I don't know, dude.
It's like crazy.
People don't realize how active people from Pakistan and India are on spaces.
It's like this, or on Twitter, it's kind of interesting.
Like we don't even see as much, unless you like follow specific people.
You rarely see people from other countries way in.
It's like a weird thing about Twitter.
But they're actually like crazy, crazy active, like way more active.
when Twitter was public, if you look at their daily active use, over monthly active use,
people from the Arab world and from South Asia and Southeast Asia are way more active on Twitter
than we are, which is fascinating.
And they were using by the way.
It's not because, I mean, effectively, it's an early breaking news platform, right?
And if you live somewhere where...
Those things can be essential in real time and life and death.
I mean, people forget, I think, that now I'm trying to remember the specifics of it.
But the first time that Twitter really blew up that I recall was that terrorist event.
And people were reporting from inside the hotel and tweeting and nobody had ever heard of Twitter.
Can somebody now remind me exactly my mind is blanking exactly where and when that was?
It was like probably 2010-ish.
Do you remember that?
Yeah, I don't remember.
Was it in India?
I can't remember now.
But, yeah.
I think it was the Taj Hotel.
I'm like 90% sure.
But I didn't, yeah, I'm like 99% sure that that's, but you know what was the other thing was
Arab Spring was done completely on Twitter.
And so, you know, it's again, you know, it's a very interesting platform.
So again, the fact that.
that we're going to have a very international audience with Imran Khan on stage with us at 4 o'clock
today, Eastern. It's like this really weird, surreal experience, especially with Modi being in the
U.S. And yesterday, you know, Modi having a meeting and we're going to talk a little bit about
that meeting. But I'm going to bring Cal up and then let's just get started. We have a lot to
cover. I'm...
There's also some news coming in around inflows and outflows of capital through equities and into bonds.
There's been this huge movement, especially in Europe.
I'm going to send that article to Cody so he can review it because I want to run the show.
I'm going to throw it to Caleb, but Cody can do it too.
And we're just going to get started.
By the way, can you give us a quick crypto roundup?
Because there's a lot going on right now.
I saw the SEC actually did something good this time.
Yeah, they did.
I mean, I would necessarily do it.
I would say that they write it a wrong to some degree, which is in the BlockFi case,
people might remember that BlockFi obviously declared bankruptcy, and the SEC stepped in line ahead.
of all the unsecured creditors to be the first creditor to get paid back about $20 million
because they had that $100-ish million claim in settlement against Block 5 in the past.
We've actually, people, it went wildly underreported, but the IRS actually has stepped ahead
of unsecured creditors in the FPX case for like $40 billion tax claim or something
when the whole was only $7 or $8 billion.
So right now.
The implications of that if the IRS doesn't do the same as the FCC is that nobody would get paid back a cent in the FDX case besides the actual IRS.
So a lot of crazy things going on crypto.
Obviously, the market has, you know, raged, I think, over the last week, Bitcoin sitting around $30,000.
But there are some pretty big impending stories underlying right now.
I guess we'll get into the more in the space at 10.15 a.m. Eastern standard time.
But I can tell you what.
We have the prime trust situation, which is one of the trusted, regulated, heavily regulated
custodians in the crypto space.
And I can just tell you, we reported on it first two weeks ago.
BitGo came in to buy them, so we chose not to share what we knew and hoped the due
diligence would go through.
But it was announced yesterday the due diligence failed, which I could have told you
was going to happen because there's underlying fraud once again with a major crypto company.
Um, sadly, uh, that is supposed to be a trusted custodian of exchange assets.
Luckily, they're, uh,
customer base is effectively gone in the last year. So it's a very, very tiny amount of money.
But this will yet again be a regulated company that, you know, legislators and regulators will
likely point to as crypto fraud, which is ironic because these companies are regulated and that should
have been caught, right? We'll get into that much, much deeper later. And then of course,
the finance is going majorly on the offensive.
against the SEC right now, which I think is going to be a huge story.
Basically, Biden has accused the SEC of violating court rules by making false statements that were
designed to harm Binance US customers and to taint the jury pool.
And Binance has a really good case here.
I mean, we're going to speak to quite a few lawyers against that.
But effectively, the SEC made a whole bunch of accusations against finance that effectively
without having to prove anything just with this shock and awe sort of napalm campaign, we're
were able to shut down Biden and US's business just with allegations and rumors largely that were false.
You know, no proving of commingling funds has been done as of yet. It's eliminated all finance, US's
banking partners. Just they created this massive disaster and basically you could argue the SEC's
intent was just to shut this business down without having to actually shut this business down,
which is what they've done with, you know, naming
random coins and project securities, 67 of them so far in their enforcement actions without actually going after any of these companies.
They did the same with Kim Kardashian. I mean, they charged Kim Kardashian with promoting an unregistered security called Ethereum Max,
but never went after Ethereum Max and never officially deemed them an unregistered security.
I mean, it's really interesting the approach the SEC is taking.
It seems like they're fighting too many battles all at once, no?
Yeah, I think there's a big trouble.
You know, I think that, and this is not coming for me.
This is coming from quite a few lawyers that we speak to.
I think Gary has bit off more than he can chew.
And, you know, he assumed, obviously, that Biden and Elizabeth Warren
and the Democrats in power on the finance side really had his back.
And I think he was kind of doing their...
They're bidding, but now I think he's overstepped and there's been a ton of pushback from other legislators and even other regulatory authorities.
Now they're, you know, they have massive cases against coin-based ripple and finance, arguably the three most heavily equipped with the war chest to fight.
And they're going to be fighting for years beyond this regime in the SEC.
And now, you know,
With all of them fighting back, the SEC likely does not have the resources to take on any more fights and likely has already been off more than they can chew.
And they're just getting slaughtered in the court so far.
The SEC, every single one of these that's come to a first hearing, anything like that, the judges are literally just pushing back and, you know, pooing to the SEC.
It's been pretty much watch.
Can I just share also that the SEC should be focusing on the shadow banking system right now?
They should be focusing...
on the banking system right now. What are we doing? I mean, he said, I want to get the,
you know, I want to get the crypto industry under control. They're staffing up. But Scott,
like, what is what is the biggest risk right now to the economy? Can we not all say that the shadow
banking sector, PEs and funds that are investing in real estate, commercial real estate right now,
are the biggest risk to the economy? I'm sorry. I know you all think that.
I know you all are, you know, like there are people, there are true believers in the industry, in the crypto industry, and that's fine.
But like, why are we not focusing on the thing that could be the Black Swan event of the year?
I mean, we all are concerned about this Black Swan event.
And yet the SEC is stuck on something that, like,
Again, I know my opinion.
It's important to us in our echo chamber, but it's having no meaningful effect on the economy.
It literally is so, we're talking about a trillion dollar asset class in its entirety.
Bitcoin six or seven hundred billion depending on the day.
It should be.
Honestly, like I'm impressed it's being spoken of.
I can't believe it's still, it blows my mind, it's still a ticker on CNBC and such and that this is now, you know, mainstream news all the time.
But you're right.
I mean, this is a drop in the bucket as a story and it just seems like a strange obsession and a talking point for a certain part of the government.
it's crazy mickle yeah and on good and on top of what scott was saying what's even
funnier about it is it would make sense if the cc was at least going after the companies who
were actually rug pulling and hurting investors but at the end of the day the ones they're going after
arguably
are ripple and Coinbase, two of the players who are trying to be as honest as possible in this
industry. So on top of them going after a niche sector, they're also attacking the companies
in that sector that aren't really going to protect investors or they're not making the maximum
impact. And just as also push on what Scott was saying about them not doing well in these court
cases, we have the judge in the gray scale case, literally not even understanding the SEC's point
between a spot ETF and a future ETF and how they could...
except one and not the other.
We see they just got turned around on the Binance,
trying to shut down Binance's business
before the case even started.
And in the Ripple case,
they're losing ground fast on XRP being a security.
So the SEC is biting off more than it can chew,
and the courts are actually, to my surprise,
really looking into these issues pretty deep
and understanding the nuance of what the SEC is trying to do.
Yeah, and that's because they're obvious.
It takes five seconds flipping into it to say that the SEC has no grounds.
And I think they thought they would just be able to push all this through.
And it turns out judges actually know the law.
They wanted to bully these companies, yeah.
Yeah, and they're just failing to do it.
And I think it's more important, just remember, the SEC's mandate is to protect consumers and investors, right?
And there's zero way you can quantify anything other than that they've hurt tons of American investors who have invested in this asset class.
And they've protected nobody.
Retroactively going after the companies and bad actors...
and not actually stopping the action in advance.
And now deeming these coin securities over and over again and crashing the price,
25, 30 percent each time there's one of these suits is literally taking money out of the pockets
of American investors and helping nobody in the future.
I mean, it's, this is, it just seems so wild with everything else that's going on in the world.
You know, we're going to start talking about some of that.
I wanted to start with the Fed.
The Fed yesterday, it seemed very obvious that they are signaling really hard that there are going to be more rate hikes.
In fact, pretty much the fun future expectations now are saying that it's going to be two more rate hikes.
For people that are not paying attention, everybody was expecting rate cuts this year.
So, you know, is this all bark or is there true bite here?
Is there something that they're worried about?
that we're kind of, you know, glossing over.
I think the general market sentiment literally 45 days ago was that there was going to be at least one rate cut.
Cody, is there something else going on that they are worried about?
Obviously, it's that inflation is going to be stickier.
But it is interesting.
Is this just perfect timing for Caleb to join too?
But, you know, should we believe the Fed?
Yeah, I can't wait to hear Caleb's thoughts on some of this.
You know, I personally don't believe that we'll see another rate hike.
I definitely don't believe that we're going to see rate cuts any time this year.
But I do believe that the Fed is about to pull the rug on...
the banks and especially it's going to squeeze that private equity shadow banking sector
that you've touched on quite a bit.
We're on the ground.
I've done some digging and spoken with some private equity companies.
Just to kind of feel out some of Amy's thesis and some of the other people that have come onto the panel, Neely, to see what's really going on.
It seems that there are some interesting mechanics in the background there that don't seem sustainable.
I imagine some of the build numbers that we saw this week will be revised dramatically.
but that's another topic of conversation.
So again, no, no, but it's fine.
So you're talking about the housing starts numbers,
which looks at permits they are submitted.
Correct.
So you're saying that they're going to be revised because...
Yeah, so without giving up too much.
So I've spoken with some private equity funds on the backside to see what was happening.
Obviously, we do more custom build stuff.
You know, a lot of this comes in.
you know, with financing and play, what we're seeing across the board is outside of our world is that some of these PE firms are doing build to rent funds.
They're going to the home builders, securing and signing contracts that initiate build permits, and then
are raising capital on the backside.
So it's like a futures contract on real estate builds,
on build to rent.
And the funding hasn't been secured on any of these, right?
They're relying on some of the regional banks to fund portions of these,
and they're relying on the commitments from their LPs,
but the funds aren't filled.
And so I would imagine that a lot of this...
falls on its face as these banks get squeezed.
And then the markets, you know, there's no floor in the markets.
All the short positions got washed out.
And so it'll be really interesting to see what happens from here through probably September.
So Caleb, yesterday's commentary from the Fed was very, very hawkish.
I think they were essentially saying there's consensus that there are going to be two more rate hikes this year.
Are you buying it or is this just more barking?
The consensus is that they may do two more rate hikes if necessary.
So it's not consensus that they will.
It's consensus that they may, right?
So what is the Fed doing?
They're using forward guidance as a policy tool.
Rhetoric is a policy tool.
I mean...
Quite honestly, what do we expect Powell to come out and say yesterday?
In addition to the comments he made on Wednesday or on Tuesday, I can't remember what day it was now.
You know, particularly after last week's comments at the press conference following the FMC meeting,
Right?
We're done raising rates, you know, and policy is going to stay here for some time.
You know, this is the Fed moves extremely slowly, right?
They're driving a cruise liner yacht, right?
Like a massive cruise ship.
And so they need to be very careful about how they shift their stance.
And so look, they shifted their stance from raising 0.75 down to 0.5, down to 0.25 for several meetings.
And now we've achieved a pause.
So we're already seeing this inflection point and a rate of change in their policy.
And so I think it's unfair to expect the Federal Reserve
to come out and decisively say what they are going to do next
because they want to allow themselves some wiggle room.
We have to remember, guys, we have more than a month until the next meeting.
we're still going to get a significant amount of inflation data, a significant amount of labor market data, a significant amount of broader economic data, and not only in the U.S., but internationally.
Right.
And so obviously the Fed is going to be 95% focus on what's happening here in domestic markets in the United States.
But, uh,
When we look at where the CME Fedwatch tool is right now, it has an amazing track record of predicting what the Fed is going to do the day before the meeting.
Right. So just to sit here and look at it, you know, being like 75% or 78% in favor of a rate hike for the next meeting, like, sure, yeah, but at the same time, we have to concede that we just don't know right now because of how the data is going to evolve over the next four to five weeks.
And so it's going to be super important to give the Fed a lot of slack here and allow them to use rhetoric and forward guidance as a policy tool because it's a significant, significant policy tool.
Also, Caleb, I now have my phone ready to record. Can you repeat your prediction from yesterday? I will, I'm just kidding. I'm sorry. It's just funny. It's just, it's just, it.
Not, not, I was about to do it.
I'll do it.
All right now.
Somebody record.
I guess the space is recorded.
Go ahead, Caleb.
Let's hear your prediction from yesterday.
I did a whole tweet on it yesterday too.
Donich, I think I DM'd it over to you if you want to see the details of my of my project.
Oh, I'll check it out.
I'm trying to scroll through my feed here to pin it up.
I believe firmly that the headline year over year CPI is going to be at or below 2%.
by the time we get the December, 2023 data, which will be coming out, excuse me, in mid-January of next year.
But my prediction is that we will be below the Fed's 2% target by year end.
For sure.
That's so.
What do you think, buddy?
No, I think he's 100%.
I mean, what?
The Fed gave clear guidance, or I'm sorry,
Jay Powell gave clear guidance in his, his Congress.
I won't have what you guys are happy.
Yeah, like, dude, for real,
what are you guys smoking this Friday morning?
They're moving from a rate hiking regime to a regulatory regime.
This might be worse for markets moving forward.
There is no way, Scott.
By the end of this year, we're going to be at 2%.
I'm going to try to find my drugs.
I don't know if I have any from college, but I want to join these guys.
I don't know.
It can happen.
I just don't see right now us getting there by the end of the year.
I do believe, I mean, I've been pretty aggressively beating the drum
conceptually on the idea that we'll be talking about deflation in a year more than inflation.
Certainly, I just can't see how we get there in six months.
So actually, I think I agree with the premise.
I just don't think it's any time soon.
And I think it's important to remember that...
You know, don't fight the Fed obviously works in both directions.
The Fed has never changed their tune here.
They have not lied yet.
We keep thinking that they're going to lie.
The market keeps pricing in their lies,
but Powell's telling you he's going to raise again.
I think he'll raise again.
I don't think it'll matter that much because I think it should be priced in by now.
But I think the idea that they're going to cut this year,
and I just don't see it.
I think they learned a lot of hard lessons from easy money.
Well, it's really interesting because Caleb's thesis,
does not rely on increased rate hikes.
He actually believes that there will be, Caleb, I just want to confirm and make sure.
You don't believe there will be additional rate hikes, right?
I don't believe that there will be cuts.
I just recognize that monetary policy operates with a long and variable lag.
This time last year, the federal funds rate was 1.5%.
Today, it's above five.
So as far as I'm concerned, the U.S. financial system and economy still needs to reconcile
with 350 basis points of rate hikes that have not yet had their effect and full impact on the system.
But what about unemployment?
That is the one thing.
It's coming higher. That's disinflationary.
Yeah, but unemployment is not coming up.
When you're at a low, historic low, there's only one direction to go.
I definitely agree with Caleb there.
And that's basically...
as an effect of the tightening from six, eight months ago.
Obviously, I agree with you conceptually on the lagging data.
I just don't see how to get that low that.
Sure.
I'd encourage everyone who's listening to this call to read the pinned tweet that I put up in the nest
where I outline the multiple, multiple aspects of my disinflationary outlook
and why I think will be at or below 2% by your end.
And we do believe the competing threat.
I'm just kidding.
Go ahead, Cody.
I'll say if we do believe the narrative that some of these home builds won't occur, that's an enormous amount of jobs, right?
And then if we believe the narrative that these VC-funded companies will start to get squeezed even harder, that's a lot of jobs.
It's just not as many jobs as people think they are.
That's the thing.
That in reality, the average American doesn't work at a VC-funded startup.
or specifically in New Start construction.
They often work for the government,
which is only getting bigger.
Infrastructure package is pushing that along.
They work in the service industry
that has never been hotter.
They work in...
in local manufacturing businesses that are doing fine right now.
Like the sectors that we're talking about are sectors that traditionally have really,
real estate being one of them and startups being the other,
both of them have really high revenue per employee.
In fact, I believe I'm going to look this up today,
but I believe those are the two highest rates.
revenue per employee sectors is tech and um and uh real estate uh jeff go ahead yeah i just gonna say
i'm looking forward to reading caleb's tweet it just there's two fundamental things that are
true that really can't if you they're there are truths and as long as you you know believe these
things because they've actually happened have been proven and
then, you know, I don't know if we're going to hit the 2% by year end, but you just have to understand.
One, they have to be hawkish until the day, the minute, the hour that they decide to fully pause or pivot.
They have to do that.
That's the tool that...
that Caleb's talking about.
There's no other choice for them.
They can't be happy friendly.
Now, they can be split,
which started happening,
I think, over the last month with the vice chair and so forth.
And I think that was the first crack.
But number one, Powell has to be hawkish,
and then he's basically, you know,
most of them have the auctioned.
The second thing that has to be,
that is true that's been proven is that they've proven they have no,
they have an inability to forecast.
And the reason they have an inability to forecast
are the tools that they actually use.
They've proven this.
The Fed Funds rate that Cody talked about,
you know,
from a year ago,
their ability to forecast unemployment,
their ability to forecast inflation.
You know, it's, you know, it's, you know, it's,
you know from from starting late and then you know possibly going too long here so as long as you
believe those two fundamental truths and they've the fed has actually proven you know these things
to be true then you know that you don't necessarily you can't necessarily believe like what they're
going to do or it's a it's a you know it's they're going to do the two hikes we don't know what
they're going to do we know what they have to say but we don't know what they're going to do so
I post as something in the nest that, look, do I think you guys are right on premise,
wrong on timeline. That's okay. We can agree to disagree. But, you know, it's not the end of the world.
You know, and again, the beauty of a bold prediction is that you can say, look, I was directionally correct,
but not about timing. And it's still valid. Anybody that's using this to predict timing is like,
is, you know, unless you're an expert like Caleb, it's really hard to do this.
So don't try to time the market.
Just know which direction is going, my opinions.
But, you know, I put something up that I think is more of a black swan event.
And, you know, I just posted it up in the nest, which is about corporate debt.
That's what I'm more worried about,
Cody,
honestly,
than anything else.
and I think Peter Gade
may have posted this as well.
and I keep trying to get him
into the room,
but he keeps saying
that there are people
that have blocked him
or that he's blocked
so you can't get in.
So one thing that,
you know, we're seeing is that there's 11 trillion in corporate debt that's scheduled to mature from
2021 through 2026. And so with interest rates increasing, this is going into an interest rate
increased market, you know, are we sort of...
expecting a credit event?
I mean, like,
is that the big,
like a corporate credit event?
Is that the real thing
that's looming?
And for, again,
for people that don't realize this,
I just want to make sure.
So when you think about corporation,
and I have to like make it simple for everybody
because I have to make it simple for myself.
So the way you think about
corporations in America,
they have,
essentially,
essentially, you know, three sources of capital. One is through their revenues, the other is through
equities, and then the third is through debt. All right? That's how it works. It's just the three
major inflows. The third inflow being debt, corporate debt, can be rated many different things. So
depending on the strength of the investment and the company, the fundamentals, the investment grade can be
different. Now,
what we're seeing is that since 2022, so again, they have debt, which is literally a loan that has to be paid or upgraded when interest rates change.
All of these interest rates are going to be, you know, all of this debt is going to start maturing.
And we're talking about debt that was built up.
And if you look at that chart, holy shit, this is like all-time high debts.
And so we're seeing all of this start to mature.
It could be a major credit event because, one, interest rates are higher.
And two, the thing that Gade didn't mention was that...
Credit is less available. Debt is harder to get.
So now people are going to be scrambling for the same zero-sum dollars.
It is like a legitimate credit crisis looming.
And especially in a tight liquidity environment.
Caleb, is that the event that you're most concerned about?
Corporate debt?
Not necessarily because corporate balance rates have been really strong.
Corporate earnings have been stronger than expected.
You know, I'm all here for the commercial banking data because that's what I used to do professionally for a couple of years as a commercial portfolio analyst helping to manage over $30 billion in commercial loans.
And so, you know, I was just one analyst on that team, but I got to get a pretty good glimpse at how these banks operate internally.
So if we look, for example, at the delinquency rate on all commercial real estate loans, excluding farmland from U.S. commercial banks, it's at historic lows, but it's been rising for the past two quarters, right?
So the latest quarter was coming in at 0.76%. So that means less than 1% of all commercial real estate loans.
are past due on their payments by at least 30 days.
So that's a very low historical number.
It's just important to recognize with delinquency rates, with default rates,
once these variables start to accelerate to the upside,
they typically carry that momentum forward.
Right.
So we typically see once delinquencies rise, they continue to rise.
Once default rates rise, they keep rising.
So I think that's super, super important to point out is we're already seeing some early stage weakness here.
I do want to kind of go back to, you know, the chart that you shared up there, Donners, because I think it's fantastic.
This is exactly what I'm talking about with all this corporate debt maturing and going to have to be basically reissued in a lot of ways.
The economy is being built around higher interest rates after decades of being built around basically zero percent interest rates.
So you can look at what the former Kansas City president Tom Honig said back in like 2016, talking about how you can't expect to get off that zero rate and expect it to be costless.
Right. So, you know, a direct quote, you have taken the economy in your economic system and you've moved it to an artificially low rate. You've had people make investments on that basis and people not making investments on that basis. And now you're just going to adjust it back. Good luck. It isn't going to be costless.
He said this back in like 2016 or 2017, right?
And Caleb, I got to clarify for our audience.
Again, not everybody that's listening like knows everything about this stuff.
Caleb, why is that a huge deal on a, you know, in terms of,
How does it affect the decision making of those corporations?
I just want to make sure that that's clear because, you know,
them getting debt at a higher interest rate,
how does that affect them?
I know it's an obvious answer, but I need you to say it.
So it depends on the use case of the debt.
Sometimes companies just have working capital lines to kind of fund payroll or, you know,
like weekly expenses, but then sometimes, in a lot of cases, you have something called commercial
industrial loans. And these loans are typically used to expand production or, you know, things of that nature.
And so that's basically your hurdle rate.
for an investment return. So the higher the cost of capital is, the higher your hurdle rate becomes,
therefore implying that there are less attractive investment opportunities in the fundamental
economy for businesses to make. And therefore, they will be less willing to expand production,
less willing to invest, so on and so forth, which therefore leads to a contraction in economic
activity over the long run.
Exactly. And ultimately, all those investments are being put in. When you're building a new factory, you're hiring more people. When you're building a new factory, you're expecting revenues to accelerate. All of the growth expectations need to be tempered in a new interest rate environment. And I think cost of capital going up is a huge, huge challenge. But I wanted to go to Patrick real quick.
Patrick, you shared, this is different than what you usually do.
This is a, I don't know if this is, I want to talk about the gold, silver, and oil price action.
Because you're saying that it's telling us something.
Yeah, I want you to walk through that first.
Thank you. Can you guys hear me well?
Because I'm testing, talking through the...
Yeah, great. It sounds wonderful.
Yeah.
Well, look, the precious metals, well, the commodities, they are like the barometer of their financialized and like a barometer.
If you don't see silver breaking out and it's trying to fall down, I've shown the chart maybe a while back where silver oil, they bought them in the abyss of recessions.
So we kind of had that big dip just a little bit ago and all the commodities start rallying with the U.S. equities.
But now, if gold can't break out, if silver can't break out, if oil is continuing to drip downwards, the market's pricing in some type of deflation event.
And then that's why you have to start looking at any type of weakness you could see in the regular U.S. stocks.
And like the Bank of America chart is terrible.
It's like...
I don't know if that's a big bank in the States there, one of your bigger ones, but that thing is on the wrong side of everything.
It's below moving averages. It's below resistance. And now that's below support with Chanel Wall.
Are you seeing that, Patrick, across all the banks?
No, not all. I'm checking a few big ones. Some are holding their like Wells Fargo or JP Morgan.
They're holding that line, that rising trend line there. They're barely holding it.
But Bank of America, I don't know, that one's, that one didn't fall with the regional banks.
But if we, the regional banks used to look like that before they fell.
So from a scientific way, the probabilities now of a fall or greater than a rise because you're just below that momentum has totally dried up.
And you're just drifting sideways now.
And everybody's like just looking at that thing.
So the market's got, Bank of America has to go back above that $30 real, real soon because.
This is a dire straits there.
I don't want to scare people, but that chart.
Yeah, yeah.
And this is not financial advice for anyone that's listening, but it is insight into how Patrick,
who, by the way, is one of the best chart experts on Twitter, thinks, and how he's looking
at specific stocks.
Patrick, you know, are you going to be posting up others like J.P. Morgan and the other
big banks?
Because Bank of America is actually a systemically important bank.
And so this is kind of.
kind of a very critical.
And again, people have been worried about the banking sector.
I just, to be completely, completely honest,
Bank of America wasn't even on my radar
because they're a systemically important bank
and the underlying assumption was that this is going to,
this entire crisis was going to affect
non-systemically important banks first.
Why would Bank of America, I mean,
you don't have to answer the fundamental question,
but clearly the chart is showing you something.
Is there, you know, are you, is this...
Where are we with the commercial and local regional banks?
I had to pop up those charts, but I think the last time we talked there, they hit some important support, and they were bouncing.
But I could refresh after I finished doing this little thing.
I'll go refresh those charts and I'll embed them for the list for the guys.
And right before I do that, just to backtrack to when the Fed rate can cut, well, again, when the Fed looks to seem to track the initial jobless claims.
And as long as that keeps tracking up, that charts nested guys in the space.
If the initial claims keep going up, going up, going up, going up, and don't seem to go down, that could spook the Fed.
And we've seen historically that they love cutting when the initial claims keep going up there.
But the challenge I have with the jobless claims data is the adjustments.
Like so talking about this data is the data based on adjusted?
claims? Well, it's the
Fed, it's their data series there from the website. So adjust it
or not, when that thing treads upwards, then
that's when they cut there. Well, the challenge, though, is that the adjustments are
getting bigger and bigger. That's been the weird part about
all of this data from the Fed on jobs. I just think
that there's something, you know, when that happens,
it makes it difficult to follow. But yeah, no, I think
trend-wise, this is fair, which is as jobless claims increase, the Fed is open, much more open to making cuts.
I'm still not convinced that we're at that level yet.
We still have, like, legendary...
levels of jobs right now.
I mean, this is like crazy.
Neely, walk me through.
I'm sorry, go ahead, Patrick.
And then we'll go.
You're right.
We don't know when that's going to be the trigger point,
when they're going to cut.
But the idea is you're now in the landscape
where it is possible.
Let's say jobless claims are trending downwards
and forget about, you know,
let's say cuts or stuff like that.
It's less probable.
But if they're trending up,
you've got to keep that in the bag burner
that that's evidence that there's possibilities
that a cut could happen.
Yeah, Neely, what are your thoughts?
Well, a couple things.
One, you know, just the hilarity of yesterday's jobless claims, you know, it almost felt fake.
264,000 versus 264,000, like, comma, zero, zero, zero on seasonally adjusted data.
So, I'll put a little fun pin tweet up there.
But, yeah.
here's the here's actually the more concerning aspect is that we might be actually feeling more pain
before we even get to those higher levels of signal for the Fed and that is primarily because if you are
like a gig worker you have your own business you're likely not actually paying into the system
and therefore not even eligible to qualify for an initial claim if your business goes under just a little bit of a
We uncovered in the CBO, the Congressional Budget Office's monthly budget review just in the month of April,
they took kind of a stealthy $28 billion hit to their disaster loans,
which is kind of a ghost print way of looking at the health of these EIDL loans,
which were lent out to about 4 million small businesses and a notional value of about 400 billion.
they just started to really go back and repayment and already the SBA, the Small Business Administration agency within the government's starting to take defaults on these loans.
So we think that there's a small business is actually going to very likely be the more difficult to track, but more impactful to the decline of GDP and consumption in the economy.
And it's something to just be watching for. A lot of small businesses are rapidly falling apart in our purview right now.
We advise large public companies, but we invest in small business.
We kind of live in both worlds.
And it's actually pretty profound how quickly we're seeing it in our purview right now.
So for people that are listening that run small, I know, by the way, people don't know what our audience is like, but we actually have a lot of people that work and actually more importantly run small businesses.
If you're seeing pullback in your small business.
or are starting to say, hey, look, we're going to start firing people,
or there are changes happening on the local level.
Can you go to the bottom right and send some comments?
The way we work is if you have a comment that is insightful,
we might bring you up or at least pin up your tweet and share it with the group.
Thank you so much for everybody that's listening.
You know, I wanted to make sure that we also spoke a little bit about what has happened in the last 24 hours with Modi and India.
You know, yesterday I went on a tirade.
I'm not going to do that today.
People can find their own information about Modi and about the Indian government.
It's more, I want to focus today on what has occurred.
So over the last.
24 hours, you know, President Joe Biden has met with Prime Minister Narendar Modi in Washington.
And actually, they've already had, they've been working on some deals that were announced yesterday.
There was two main...
announcements, but really, I mean, we can kind of walk through all of them, but two of them
that were, in my opinion, pretty consequential.
But there's way more.
So let's just walk through all of them.
Screw it.
It'll be a good opportunity for us to walk through everything.
The visa stuff that we were talking about yesterday, it was announced by the State Department that, you know, Indians and other foreign workers on H-1B visas will now be able to renew their visas without having to travel abroad.
I have an employee that had to go back to India to get his...
his visa renewed, which is a ridiculous thing to have to go back to your country just to get
a visa renewed. That is being changed. And then there's two new consulates in India that are being
built and one new consulate in Seattle. But, you know, from an economic, that's important
from an economic perspective because there's so many Indian employees on visas. I was expecting
something to be done about.
the immigration policy as it pertains to India,
for people that are not aware,
today there is a, you know,
because there's the way our immigration system works,
when a lot of people from one country apply for visas,
they get into one line.
And so there's a lot of people that are working in the U.S.
that have, you know, Indian H-1B visas,
or American H-1B visas,
but in there are originally from India,
that are, you know, that have to wait
10, 15 years to be able to get a green card.
It is the most ridiculous thing I've ever heard.
And these are people that are productive and are helping us
and are helping with the tech shortage that we have in general.
The second one was chipmakers to invest in India.
It was very, people may remember Micron got kicked out of China.
And now they said that they would invest in
$825 million in a new chip assembly and test plant in Gujarat,
which would be its first factory in India.
Micron said that would support from the Indian government,
the total investment will be $2.75 billion.
We can do the math, y'all.
Nearly $2 billion is coming from India for Micron to build a chip factory there.
Right.
and, you know, 50% will come from India and then 20% comes from the state of Gujarat.
Also, applied materials will invest 400 million over four years in a new engineering center in India.
So again...
China was a large part of our supply chain, and now we're starting to talk about diversifying to India.
Obviously, we have the Chips Act in the U.S.
And so it's a very interesting.
It's becoming a multipolar sort of manufacturing landscape.
And we'll get Jeff's thoughts on that in a minute.
The other big, big one was the trade, the trade, um,
tariffs have now been removed.
So India removed the retaliatory tariffs,
which had imposed in response to Section 232 national security measures on steel and aluminum.
And so now you might start noticing some things in the grocery stores like, I don't know.
I believe it was, they mentioned in the article, but it was like,
like vegetables that we get from India that are now going to be way cheaper,
which is helpful in terms of our inflation issue, potentially.
And then the mineral side, this was to me the most interesting one.
And actually, I'll stop here for a second to get Jeff's thoughts on this one.
So India...
joined the Mineral Security Partnership, MSP,
which is a US-led partnership
to create critical energy mineral supply chain.
So now India is joining 12 other countries,
including partner regions, including the European Union,
uh this is probably to me one of the big initiatives that biden has been working on
jeff the critical minerals issue has been an issue as we're talking about evs as we're talking about
all of these uh technologies that we're working on how big of a deal is this one and then even the
other stuff around manufacturing in india what are your thoughts and it's a pretty big it's a pretty
big deal i mean i think some of the uh
the concerns around mineral. If you look at where battery technology is, let's start with auto,
you know, a lot of the nickel, a lot of the cobalt is actually coming out and being reduced
in concentration. So, but I mean, those two minerals still get played up a lot and then lithium
gets played out a lot. There's enough lithium.
in North America that's really unmind that could actually support the entire world's needs.
So the thing with lithium is not actually, it's actually the refining capacity is where there's a bottleneck.
But, you know, this is good that India's going to be part of this.
And hopefully that'll be recognized as a, you know, in the Inflation Reduction Act.
So if there's minerals that come from there and they're used in batteries, that, you know, they'll count towards that.
So I think, again, stepping back, I think the world needs...
you know, a second viable, you know, supply chain, you know, for major consumer electronics, for auto, for, you know, and I think the U.S. is going to, you know, bolster its own auto market, you know, but I don't see the U.S. making big moves on, like, the manufacturing of,
consumer electronics and like what are those bold moves are they you know are they working with
you know the apples the googles uh you know that or just any major consumer electronics
manufacturing company to to bring back production here because if you bring back silicon
production here and it's going to play out over the next couple of years um
If you bring back major silicon production here,
but then you have to ship it out to get it put in the product
and then brought back here,
there's actually going to be a structural cost issue from doing that.
So I think you have to think a couple steps ahead of the supply chain,
and we've got to figure out, like,
if we're going to generate all the silicon,
where is it physically going?
Where is its next stop?
Because if it's going to be sold back in the U.S.
In end product, you'd sure love to be able to build it an end product, you know, in the U.S.
So it's not, it doesn't have all these frequent flyer miles.
So anyway, that's just something to kind of think about as we, you know, as we move forward.
Yeah, interesting later.
Say again?
Columbia.
Columbia.
What about Columbia?
I don't get it.
That's where I think it'll go.
Electronic assembly and way for creation.
Interesting.
I was going to say that the other big news was around all of the private stuff.
So Indian solar panel maker, Vikram Solar,
said it would invest up to $1.5 billion in the U.S.
Fighter jets-wise General Electric signed a deal for...
with Hindustan aeronautics to make fighter jet engines for the Indian Air Force.
Indians Defense Ministry has approved the procurement of a bunch of drones from Sea Garden.
Guardian, they'll buy 31 drones made by General Atomics worth over $3 billion.
India agrees to join the U.S.-led Artemis Rec Accords.
Yes.
and then advanced computing wise,
India, United States, establish a joint
Indo-US quantum coordination mechanism.
I mean, can we just say that India is just throwing around
their economic power right now
in a very interesting way?
You know, again, that's pretty much what's going on.
India's buying their love...
You know, like when I mess up with my wife, I often have to buy her something nice.
It's sort of the same thing.
It feels like India is saying, look, I know I didn't support you in certain wars, but let me just help some of your companies do better.
And let me just help you with your supply chain issues.
Is that what's going on, Jeff?
Yeah, and we should, you know, we should be accelerated.
The thing we have to, like, the thing with China, like, we don't have to have all this open, like, negative rhetoric.
I mean, we should be stern with them, but, like, you know, calling him a dictator.
I don't, we don't have to do that.
I mean, they are dictators, though.
Yeah, but we don't have.
There's things that we could, we, we have to say and things we don't.
And the thing that is the gut punch for China is what we're doing with India.
And if we can accelerate that and then what we're doing with the Chips Act in the U.S.,
like this is the gut punch for China.
Like we should be like really trying to like firm up our relationship with them
and trying to, you know, play a little bit nicer.
And while we're doing all these other things.
Like we should just accelerate all these other things.
And because here's the thing, like, we're not going to get like what we need out of India in time.
It's going to take a couple of years to ramp all this up.
We're not going to get the output of the Chips Act in time.
It's going to take a couple of years.
So why not, you know, try to, you know, try to firm up some relations with China.
And so at least we can get to that point.
We have a bridge to that point.
Yeah, it's interesting. You know, I wanted to bring in Saraj. Saraj, welcome to our stage. I don't know if you've been up on our stages before, but I wanted to get sort of an honest assessment from an Indian perspective. You know, how is Modi's trip to India being perceived locally?
Hey, Danish. Hey, Mario. Good to be here again. So, you know, it's very interesting, Danish, because what, like, I mean, everyone knows that in today's geopolitics, right, especially among the really big countries, right? If you look at the, let's say, top seven, eight economies, right now, U.S. is number one, India is number five.
as of today in terms of GDP strength.
There's nothing called a blind alliance
unless, of course, you are completely subservient
the way Japan has been post-World War II
or the way you can say other Asian country,
like South Korea has been towards the US post-war War II.
With India and US, it's definitely,
and this is something which pretty much everyone's acknowledged,
it's a case of convenience or a strategic partnership
as opposed to an alliance, right?
So in effect,
India and the US are pretty much going on three things.
Whatever you want to call it,
alliance.
I mean, I guess the really optimistic, bullish ones would.
or just a partnership. One, of course, is the big elephant in the room, China. So it's a case of
trying to, you know, curtail China in terms of the whole geopolitic situation with U.S. trying to, you know,
use India as a Philip Wiesowee China. And of course, I think we all know that Blinken recently,
you know, went to Meade Z in Beijing and, you know, he came back recently. And of course,
again, before this visit, you had...
the United States Defense Secretary, Lloyd Austin spending, you know, a recent amount time here with Rajna Singh, who was the Indian Defense Minister.
And there were a lot of deals, you know, worked on before this.
But, okay, now before I get into the main deals, I think you've touched upon a bit of it.
The second, of course, is the economy, you know, with India.
I think Prime Minister Maudin has addressed to the Congress yesterday.
He mentioned that when he took office in 2014, India was the 10 biggest economy.
in terms of GDP size. Now it's the number five. And very soon give it a couple of years,
it's going to be number three behind US and China. Because, I mean, due to the sheer sides of the
population and of course, you know, the other things we'll the way the economy going up.
So economy is definitely number one and I'll just come to a couple of the big deals that's
going to be signed. I think it's on it's pretty much already agreed on, but you know,
the framework is going to take a bit of time.
The third, I think, is going to be the most controversial of the lot, is, you know, what they say, the value-based friendship, the democracy, the trust, etc., etc.
Listen, we both know that there's no perfect democracy.
Nothing is going to be, you know, perfect.
Some people will call Modi a dictator.
Some people will call them a secular guy in terms of some data.
The U.S., of course, I mean, with regards to the black community, how happy are they or certain other Hispanic or Asian communities there.
How happy are they vis-a-vis the democratic framework there?
There are all question marks, right, in both countries about the size or rather the value-based democracy
or how good a democracy in either country is.
But effectively, the main deal, going beyond the embassies that one of you spoke about in, I think there's going to be one in Seattle, the one in Bangalore, which is, you know, at least from India perspective, the one that people have been really looking out for because that's where the IT industry really is.
The main deal is, and this is very interesting, right?
Yeah.
The main deal is GE is going to now pretty much make fighter jets.
So there's an Indian company called HAL, which is Hindustan Aeronautics Limited,
which again, you know, produces aircrafts, which produces fighter jets, etc., etc.,
which is, I mean, been nowhere near the pace at which we'd like it to grow because of
government bureaucracy, red tape, what have you, in the last 60, 70 years.
So G is going to...
jointly produce these F.O.14 jet engines to power the, you know, the Tejus light aircraft,
which again, you know, HAL makes. And that's pretty much, you know, going to bolster the I.F, the engine
air force. Now, what is interesting in this particular, you know, segment is, this is for the first time when GE
When Prime Minister, and even to be fair, when the previous Indian Prime Minister, Mani
talked about this deal and even Prime Minister Modi, this is the first time when GEs agreed to share
critical technology to make these engines, which was completely flat out denied in the past.
So Modi is pretty much going back to his domestic base to talk about, you know, the fact that,
oh, we've looked at US, you know, eye to eye or from a bit more leverage than we've had in the past,
as opposed to when...
We have pretty much been a subservient state, agreed to the nuclear deal demands in 2008 when Dr.
Manmohen Singh was a prime minister and I think Obama was the president.
Bush started the whole thing.
So, you know, there's a lot of politics at play.
And the one thing which I don't know if you've touched upon this Danish, but which I think
Biden is also looking at or other Democrats are looking at, is they're also looking at the
Indian American vote, especially if I can be very blunt, the Hindu American vote.
which is roughly on 1, I think, what is it, 1%, 1.2%.
of the population, which is of course very wealthy in the United States.
He's looking at that vote to kind of get the, you know,
on the Democratic side in 2024.
Remember, both India and U.S. have elections in 2024.
India, of course, in April and May, I mean, next year, and the U.S. at the end of it.
So there's a lot of domestic politics that play for both sides
and, of course, shared interests, selfish interests, on both sides.
Yeah.
Yeah, you know, on the political side, what's been really interesting is how clearly the progressive base has been boycotting and upset about Modi's trip.
And I do find it quite fascinating how...
you know, again, you have to, just for people that are not aware,
Modi was not allowed to be in the U.S.
I think he was banned for a little bit because of what happened in Gujarat,
which again, I don't want to get into the politics of it.
And so that switching has been quite interesting on Biden's end.
But you're right. It's a...
It's an alliance of convenience and mutual mutually assured growth.
I mean, I just think what's really interesting is today or yesterday, Modi, in his statement,
said that what was happening in the South China Sea was concerning for him.
And so there is something else here at play, which is India is rising.
and it's causing China a little bit of heartburn.
And India is making the decision,
okay, do we ally, do we become an ally of China?
Or do we start building an economic partnership with the U.S.?
Where, by the way, we have a significant portion of Americans
are ethnically Indian.
There is something there.
You're not wrong.
It's just very interesting because I wonder before the end of this trip,
whether...
there's going to be continued conversations around India.
I'll just make one quick one final point and this because I have been in the US
spent a good three, four years there before coming back to India and you know,
have a lot of family there and of course
Here in India, I have bureaucrats, you know, people who work with the government, etc.
What is very interesting is, you know, the common perception, both among the Modi's hardcore base and, of course, you know, Trump's hardcore base and even, you know, if you look at the Dem base, is that, you know, if you look at
you know, you should get along well because, you know, both were right wing, et cetera, et cetera.
And, you know, it's just a perception was that they would just get long.
But actually, if you look at what Modi and Jashankar, who is this, you know, the Eastern Affairs Minister, is key aid, have managed to do here in this trip.
Modi and Jashankar have actually managed to get more out of Biden than Trump.
Trump was pretty, you know, whether you like him or not, he was pretty tough.
And he didn't agree to, you know, a lot of deals being shared.
He didn't want G to obviously, you know, share critical technology and, you know, what have you.
And he was, you know, far from keen of opening, you know, more embassies and this and that.
But, and of course, immigration, he's, you know, tougher than Biden.
But he, Modi has actually got more from Biden.
And, you know, considering that Kamala Harris, well, despite she being an Indian, she's taken a lot of positions which don't suit, you know, the BJP, which is Modi's party's vote bank. And, you know, she's generally been seen in India as, you know, someone who's anti-Moddy or not exactly very comfortable with the current establishment in India.
So he's actually managed to get a lot of work done, which has surprised people, especially Modi's own supporters here, you know, at least by my interaction, but I'm not surprised at all. I think India, because of the democratic, you know, the social base,
which, I mean, you can say that more Indians are now voting Republican,
despite that majority of Indians have been voting Democratic,
that's been the way things have been.
I think it just gives him a bit more flexibility to get more things done.
And I think this wizard has proved that, you know, by and large.
Yeah.
Yeah, the question really is, is that a good thing from an American person?
Because, again, you know, the question is we have a tight labor market.
Immigration could help with that.
You know, we have many challenges, especially as they pertain to China.
So, you know, it's so interesting how in India they'll think that, you know,
you know, Modi got a lot out of Biden.
And then the U.S., people will say, well, you know, my crown was in trouble.
All of these companies were, you know, and China is causing us a lot of trouble.
And now America got what they wanted out of Modi.
It's going to be very interesting because that's the ideal situation, actually, in most negotiations.
So it will be quite interesting how this goes.
I was, I will say, very surprised at how, uh,
directly
Modi mentioned
the Indo-Pacific region
and the challenges therein,
I was very surprised
that he did that
with
with the U.S. I have a feeling that there is potentially,
that is the point of alliance that will be very interesting,
is that how does this whole situation in Taiwan,
how does the situation in South China Sea affect India
and how is India looking at its own ability?
And people always forget,
but India and China share a border.
And so there is a lot of, a lot there.
You know, I think,
If people have questions for Saraj, by the way,
Saraj is great.
I would recommend following him.
He talks about this stuff.
And if people have questions,
please go on the bottom right and share them.
Did anybody else have a comment on India?
Have you moved to the data from the U.S.?
It's about to get really sad.
With respect to India,
I think one of the key things,
and sorry if you had mentioned it before,
is that...
you know this is a relationship at the same time when we are tightening our trade relations and
you know we just had we just had diplomatic relations basically blow up after uh biden called
called za dictator and uh you know blinkin just got back you know we have a situation um
where you know if if we were to open up immigration right we could
There's a gentleman last night who basically said that he had pulled, you know,
Chinese, you know, Chinese American.
And if we had opened up immigration, both Chinese and Indians would be rushing to the U.S.
But the situation now is that in China, you would have much more, especially after the lockdowns of COVID.
And the average Chinese citizen, you know, pretty...
worried about their status in China and how Xi was able to control even, you know, food
deliveries to their home during their crisis. We have a situation where, you know, a lot of
Indians that I speak to are actually comfortable staying in India. They don't want, I mean,
new generation are pretty comfortable. They don't want to move to, they don't necessarily want
to move to the U.S. like they did 20 years ago, 30 years ago, 40 years ago. But at the same time,
you know, they're building their own, they're building their own factories, they're building their own businesses, and, you know, partnerships with India, whether it's Tim Cook and Apple, or the fact that, you know, Microsoft, Google, you know, very, you know, there's two trillion of Fortune 500 companies represented in meetings with Modi over the last week.
And I think the importance of India and the growing...
middle class, you know, in fact, the percentage of people in the middle class in India is actually
going to be higher than China. Both India and Mexico are going to have middle classes as a percentage
of their total population that are going to be greater in China because of China's demographic
cliff over the next three to five years. China's population, middle class population,
actually peaked in 2018.
So they're at a point in time where,
you know,
not only is light manufacturing,
heavy manufacturing,
leaving the country,
but unless they can figure out how to become more of a consumer economy,
their economy,
according to the latest,
you know,
JPMorgan data,
can't grow more than 4%
over the next 10 years.
Like they are at a very difficult...
point in their growth where they've relied on infrastructure in China and real estate
growth over the last 20, 30 years, they relied on manufacturing.
Manufacturing is going away.
They can't build more properties because there's no one there to live in them.
So the two biggest drivers of growth are going away.
And at the same time, their trade relations are weak when it comes to the U.S., and you can see
through the...
German trade data, right, that their trade with Europe isn't really growing either because
you look at Chinese exports and import data. It's been, you know, May versus April has been
much lower than expected. And, you know, one of the biggest exporters to China, Germany,
is now seen to enter a recession again because they're not exporting enough. So, you know,
you know this comes in a very interesting time where it makes sense for the u.s to develop stronger
relations in india you know
I think you've had a lot of the semiconductor companies as well, you know,
starting to build factories in India, build factories in Israel, build factories,
essentially in every place outside of, you know, East Asia, specifically China.
So this is not a new shift.
This has been a shift that has been pushed since 2020.
And there have been tariffs through the prior to administrations even before COVID.
But yeah, it was an interesting conversation that you guys brought up.
I think it was very important that they had this meeting.
And I think that ties are going to get stronger between the West and with India.
And India is going to play it very strategically, right?
They're going to try to keep their relationship with Russia so they can buy arms and the proximity there to buy oil.
In fact, Russia is probably taking market share from Saudi.
And that's why Saudi cut.
They know what's happening.
You know, and they're probably doing that in a pretty aggressive way.
And it's interesting.
You know, there's, if there's anybody that knows how to get a deal done, it's the Dacys.
It's Indians.
And so I have to say it's not surprising that, you know, that's the case.
You know, the other big thing with India also is, you know,
look at where we're putting the consulate.
I mean, can we just admit that we're just...
And who was at the meeting, you know, at the White House?
It was Satya Nadela, Sunder Panchay,
you know, Sam Altman.
Like, India also might become a big hub for AI,
which I think a lot of people,
the Indian government's putting a lot of resources into AI.
You know, talking about AI, though...
IBC incubates and accelerates AI companies
and partners with VCs and funds
to work with their portfolio companies
in return for equity and zero cash.
If there's interest, please DM Mario and his team
and they'll get a call organized.
They're also doing some Shark Tank style pitches
on AI and crypto and other things.
Please, if you have a portfolio company,
reach out to Mario and his team
and they'll get something set up.
That was actually not as bad.
Thank you. Thank you.
That was pretty smooth.
That was pretty smooth.
I appreciate that.
I appreciate that.
I've been working on it quite a lot recently.
But...
I was going to say that, you know, I wanted to share some information today.
It has economic consequences, and I'll get to it.
But it's an area of deep interest for me, and I think for most Americans,
as the rest of the world, and you can look at that data across the world,
it continues to get better in terms of their access to health care.
The U.S. Commonwealth Funds data just came out.
And from 2019 to 2021, preventable deaths in Louisiana, Mississippi, Texas, and New Mexico increased by 35%.
And Arizona, preventable deaths increased by 45%.
And a lot of it was actually driven by not what you think.
So everybody's thinking about old people right now.
That's not the data.
The data showed that the mortality rate for women
during their reproductive years rose by 40%.
And it was largely related to maternal mortality.
And of course, that means that we need more reproductive care.
I put it up in the nest for people that are interested.
But the financial part of this is that today...
In certain states, medical debt has become such a huge issue.
One out of four people in West Virginia are crippled by medical debt.
Think about how crazy that is.
And it's affecting, you know, we were talking about, I remember Jay, Neely, and myself,
were talking about Medicaid.
And we were talking about how they're removing Medicaid for people all over the country.
This is important because without the social safety net,
people, more people are going to get into medical debt.
And according to the report, they kept on saying, well, primary care is great.
Primary care is great.
We also at the same time have the lowest percentage of doctors that are going into primary care ever.
And so, you know, I wanted to bring up that information because we keep talking about employment is great.
We keep talking about...
You know, people have more money than they did before.
But as the situation worsens, we actually have the highest medical debt that we have ever had in the history of this country on a per capita basis.
And it's because the cost of health care is skyrocketing.
I believe that's on an inflation adjusted basis, but I can double check.
So literally right now, we have all of this debt that's occurring for medical debt and we're doing nothing about it.
I don't know what the answers are, but I wanted to share that number one, our outcomes are worse.
So preventable debts is up by, you know, not just double digits, like 30, 40 percent.
and we're worse off for it and costs.
So I don't want to end on a sad note,
but I wanted to make sure that I mentioned this
because there are economic consequences
for people that are listening,
but there's also social consequences.
And it is wild that Modi's here.
Healthcare in India is getting better every day.
Healthcare in other countries is getting better every day.
They are figuring out how to balance this
And I just wanted to bring that up because as you guys go out and do your days, everybody that's up here pretty much has access to the best doctors, the best systems.
And many of the people that are listening have that.
But I just wanted to bring that up because now think about the fact that one out of four people in an entire state in America are crippled by medical debt and how crazy that is for us.
So sorry about the PSA for people that got depressed from this.
But on this Friday, I wanted to bring that up.
Those numbers completely floored me.
I could not believe that preventativele that have gone up by nearly 40% in certain states.
It's unreal.
So on that note.
Everybody, please join us today at 4 o'clock Eastern.
We're going to have Imran Khan here.
I can't believe it.
It's crazy that he's going to be on the stage with us.
We're going to ask him a lot of tough questions.
And also give him an opportunity to voice what he's been struggling with.
It's going to be...
It's going to be wild.
By the way, last time in Ron Khan was up on a Twitter space,
there was 1.5 million listeners.
It was crazy.
And so, you know, please do join us and share that that's happening.
We're incredibly excited.
And I get to co-host, so I get to ask some real tough questions.
So if there are specific questions you want me to ask,
please do DM me, message me, do whatever you need to do to get my attention.
I want to talk, I want to hear from experts and make sure that we're educated on this.
Thanks, everybody.
Have a wonderful day.
We'll see you on Monday or either that or tonight at 4 o'clock.
See ya.
Bye.
