Eugene, I came armed this time. I have a sh*t on my data on the VC industry right now. And what's going on? We're gonna have a spar. I'd get prepared.
And this has to do with China, just a little bit of. I didn't want to put China again in the title because this is broadly about VCs in general, but this is, I came armed with actual stats now and articles and
So, I'm just waiting to see if he's going to show up, but he message me.
me and said, yeah, no, I'd be done and talk about this. How much of that data from China do you think you can, can we rely on and believe that the data is not from China directly. The data is from the Middle East.
That's right. I guess it's Friday so everybody's taking their time. Give us a couple more minutes. Maybe like 7 or 5 is central. So 5 more 4 or 5 minutes.
Michael, do you see the Binance? France news? I saw the Dutch news. I didn't see the French news. Apparently, Binance is under investigation in France now.
that doesn't surprise me is I think a lot of places coordinated with the United States will probably all kind of work together to pressure them here. Yeah.
Maybe they did actually do something. I mean, it is actually possible. Well, I completely, I always agree they did do something. I just, I'm not surprised that it's all going to come out at once.
That's a good point. Very good point. I was in France's Binance blockchain. We compared this last fall and the amount of theatre of France trying to embrace blockchain crypto. I mean, like, you know, French people like regulators and stuff on stage. And now just a little over a half a year later that the about about
It's just interesting because I just seeing there how much they were excited about finances presence in France Only about half a year ago, so I'm only gonna say this once, but I don't know if you can trust the French. I'm just kidding. That's a joke. Sorry. What about the Black Rock news? Interesting people are missing her putting it
It's not actually an ETF. It's a trust, which is very different. Yeah, we'll get denied to no doubt about that. Maybe, but the markets are reacting to it. It's very interesting. Okay, give us one more minute and then we're going to get started. Thanks, everybody. We're waiting on a few more people.
I think as long as Gary Gensner is at the SEC, there's a very, very low chance that any crypto related products are going to be able to make it through him, but that's my own opinion.
It will be very interesting. I'm actually kind of curious to see what ends up happening. There's a story that I don't think most can predict right now. Because I feel like what's going to end up happening is what always happens, which is the government will pick winners and losers. That's what I think will actually happen. But I'm kind of curious to see how.
Yeah, I agree with that overall sentiment. I think it's going to be their argument for why they denied grayscale, which obviously our government doesn't always act in completely logical ways, but was because
there's an manipulation in the spot market so it's going to be funny to see them try to square the two for why they would be able to approve black rocks in that aspect and not grayscale so I think there's going to be some interesting insight. I'm probably going to
say this later anyway? Again, because you know the room has barely begun, but you guys remember when a few weeks ago I told you that BlackRock was capped on the shoulder and told to pull money out of China that was not just
us. It was pretty public news that you remember that? You all remember that? All right. Well, maybe that has something to do with this. Isn't that fascinating? The timing of everything is just nuts.
Crazyness this frickin' countryman As we're waiting I'll tell the story of Something that people don't even think about but once I sharing
it for people in the US, everybody will recognize what this means for actual healthcare. And Michael and I both come from healthcare, so we can kind of talk a little bit about this.
But for people that are not aware, you know when you go to your doctor's office and your doctor is not paying attention to you and your doctor is like sitting on their computer looking away from you. Anybody, anybody been through that experience? Please put it in the comments on the bottom right.
What they're doing is they're putting all the information in the medical record system. So what the record system is, it is the way that there's keep notes, supposedly. Now, these notes are actually used
For payments from the government 50% of all health care in the US is actually paid by the government It's more actually because of health care exchange Obama care and so to get paid the highest possible amount you have to meet something called meaningful use which is a ridiculous
to say it even because once you understand what it is, it's crazy. Meaningful use is you have to meet a certain amount of requirements and your electronic medical record which is being used to put all this information in is meet certain criteria. And so with this hilarious situation,
where we're going from paper records into electronic records. This is like 20 years ago. Okay. This is about my times or 15 years ago. And so guess what happens when we're thinking about this. So nobody's talking about this. Nobody, absolutely nobody is talking about this. Okay.
And Obama is like, we're going to make free healthcare. We're going to make free healthcare. Okay, cool. We're going to do free healthcare. Great. One, the only way he was able to get across the finish line was by getting the insurance company all the way
the Affordable Care Act. Since then, insurance companies have skyrocketed. It looks like that 1971 thing that everybody talks about. You can do the same thing with healthcare and be like, "Why is everything suddenly going?" And one of them was, we won't
We'll talk about the insurance company as much, but insurance companies that pulled back like crazy in the last week. And that as well, since that's an area of expertise. Two, there was this lady out of Wisconsin that nobody knew her name was Judy Faulkner.
I want people who are listening to go and Google Judy Faulkner. This is like something this never heard of. By the way, today, her company. This that is more outrageous than the Google campus. Yet you have never
never heard of her. Yet she has her company has led to burnout of hundreds of thousands of doctors. When you say love her company, every doctor has like a visceral reaction just like, "Ugh!"
And that company is epic, not epic games, epic in healthcare.
and Faulkner was the founder and CEO of Epic, Bill Is. And Judy worked with Obama to write
the actual laws that govern all medical records. While she was the f*cker and CEO of a medical electronic medical records company.
Electronic medical records were made crazy complicated. Easy complicated. I can tell you the barrier to entry was so broad.
And the incentives to convert from paper to electronic, whether you would get paid double digit percentages more per. So now all the health systems in the country are like one second.
increasing our margins. This we're going to switch to it. But along the way was the worst user interface. It was so complicated. It led to so many issues. Many people believe that this medical record issue, which I
The reason why I'm bringing that is because this is an example of actual corruption in the government. This is like real corruption in the government. When I say that when we see this news about BlackRock,
When we see this news about BlackRock, don't just sit there and say, huh, that's interesting.
Take a step back and ask the questions about, okay, well, what's happened in the last six months? What is BlackRock done for the US government in the last six months?
And for people that join us every day at 8, usually the first 10 minutes, I speak my truth, I feel. I feel like I'm the most honest in the first 10 minutes. I don't play games in the first 10 minutes.
play host. I just like speak what I think. For people that have been watching and you know we have the best looking smartest crowd on Twitter spaces. Our audiences is very perceptive and
If you are looking at what happened in the last month and BlackRock starting the uncopling of US investments from China, by the way, I brought receipts today of this.
If you see that and then you see the black rock
one thing you said, I think that we'll get approved.
I think this is the game they're playing. And I think they're doing it. The US has pulled back significantly. And again, I have receipts from a, and I will share those receipts. But US investment in China has seen one of the large
old backs ever i have receipts now and i have receipts from like mainstream media to for people that are interested tonnex you blocked out you blanked out when you were saying what will be approved and you didn't say you couldn't hear if you say yes or nothing yeah down here a little choppy right now you say you know
Oh, I am. Hold on. Yeah, I just probably I would say every 25 seconds you get like a two second cut.
Okay, good to know. Can you guys tell me better now?
Yeah, it sounds like it. Yeah, well better. Okay. So what I was going to say is that if you look at BlackRock, and I don't know how much you guys heard, I don't know if it all makes sense, but what I was, Joe, I was tying, I was telling you
the story of the company that was involved in doing the US government a favor and ultimately won an entire market because of it. It was Epic, which is the medical records company, that was on the committee, the founder and CEO of a private medical records company.
that electrified or made electronic medical records was sitting at the table writing the laws that essentially led to a barrier to entry for anybody else to enter that market. Today, Epic still owns most of that market. And in fact, most people will say that that's part of the problem with electronic
medical records. The reason why your doctor is not looking at you and listening to you during the visit is because they have so much work to do on the electronic medical record, just so people know. You know how you feel like your doctors don't have time? Google this. Two-thirds of a doctor's time going into documenting.
This is the reality of healthcare, all right? And this lady has made a billion dollars, billions of dollars because of this. Hundreds of thousands of doctors have quit their jobs because of this. And nobody's talking about it because it was done in the back rooms on Capitol Hill.
And so the reason why I'm bringing that up is because if you don't think this shit happens I know a lot of people appear to know it happens, but if you don't think this shit happens you don't you know you're not paying attention and what I said was Joe you know if you
If you were here about a month ago, I mentioned a story that was not publicized broadly, but I said, "Huh, this is interesting." BlackRock started pulling its investments out of China.
It's about a month and a half, maybe two months ago. And I can't say that we completely broke it here first. I think Zero had me, I mentioned it too, maybe the same day, but I think we had the same sources. And we were like, huh, the BlackRock got tapped by the US government to remove their investments in China. This is frickin' weird. Like, why would they do this?
And now we know why. And that's why what Michael was like, hey, I don't think that Black Rock's gonna get approved. Mark my words, that trust. By the way, did you guys notice how I wasn't a spot ETF? How it was a trust specifically? Did anybody else notice how weird that is?
I bet you that gets approved.
And for any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any further, any#
Yeah, and fidelity is moving in the same direction like they're they're getting everything in place to be able to custody BTC You know, it's kind of odd that the biggest banks in the world are all well and
biggest banks in the US, oh the world. We're all moving in that direction and all this legal stuff's coming down. It just seems like more corruption to be honest.
Yeah, and you know, I'm going to post now some of the receipts. I'm going to start posting the receipts on China. The real story here is Chinese VCs are losing US support. That's step number one. Okay, this is the uncoupling happening and we're
We're going to talk about this quite a lot over the course of the next few weeks, the months. So we're going to talk about this quite a lot because again, our jobs, I'm going to put it up in the nest, is to tell you what we think is going to happen before it happens. Now again,
If you're listening to Twitter spaces for financial advice and not doing your own due diligence, that's on you, but this is not financial advice. What we believe is important is to just inform and let people make their own decisions. So I just posted up in the nest.
The story that is being pushed is that Chinese VCs are looking to the Middle East for a US dollar lifeline, but in reality the story that nobody's talking about is too old. Okay, number one, the Chinese VCs are not able
to raise money from Chinese investors, huh, I thought we were talking about this yesterday. I'll bring more receipts on that. Chinese investors are pulling back in record numbers. And then number two, the US is pulling back.
So just so people know that right now, venture capitalists in China who once relied on US investors are now focusing on Middle Eastern money. Remember even yesterday, exactly what I was going to say.
And you know, and the narrative that's building is that the Middle East is investing in China, but that's actually not the case completely. That is half the story. Number one, Chinese investment firms, including family, I mentioned this yesterday. I this comes from very good sources that Chinese investors
are pulling back from US investment in record numbers. What this is telling me is that they're also pulling back from Chinese venture capital investments likely in such large numbers. Number two, this is telling me that the US
investors, by the way, who are a large part of Chinese venture capital and PE firms and institutional investment, are pulling back. Again, there's been reported now, always a few weeks after we mentioned it, it's been reported that BlackRock and others have pulled back significant investments. Yes, in commercial
state there which is really hurting and residential real estate there which is really hurting but also in other investments in China. And so now there's this giant hole so where do the Chinese go to their friends in the Middle East. So there's been a bunch of China Middle East conferences, many Middle East investors are looking at Chinese venture capital
firms and even CNBC admits that the money will not be able to replace all the pullback in US investment. So it gives you a sense of what is going on. So that's step number one. We're seeing Chinese VC firms now struggle.
And for people that don't know, Chinese venture capital is pretty prominent, especially over the course of the pandemic, they became really big. And so we're seeing that. I mentioned, again, I have receipts on what's happening in American venture capital. So I'm very interested to learn to learn more about this. But let's start here.
What people's thoughts about this decoupling that's happening in investment between the US and China? Gary? Hey guys, if I could just bounce in because I'm taking one of my kids to get a license at 16 years old, she's really excited about that. I think what we're seeing, guys, is we're seeing the declobalization that
is taking place. I'm not an expert on what BlackRock has done, but I suspect they're splitting up some of their businesses for focus and for being prepared for markets to compete with each other. I don't think
I think that has to happen once we walk through the de-globalization world where we're just going to compete with each other in various markets, which I actually think is healthy. On the point of BlackRock coming in to the crypto industry and fidelity, I
I get a little confused by the industry. I thought we wanted adoption. I don't think we're going to get adoption without the big boys coming to the table. Sadly, it is us who has created a bit of a
mess in our own toilet bowl where other big players are like the government is going to most surely want these big players in because they're going to act a bit more mature than what we've been doing. So I think this is about us needing to regulate ourselves. Understanding the Bitcoin is going
to be the winner. I will make that prediction that Bitcoin will become the big winner from all of these sanctions. So I'm really excited about the opportunity once this gets cleaned up. So I want to let Austin, or Michael, ask go ahead, you know, do you agree with Gary that you actually need
the the fidelities and the black rocks to enter this industry for it to become more legitimate and better and work better for the average investor.
So you can unmute the bottom left. Yeah, how are we doing guys? So I'm Mario how are you? Yeah, I said to Mario and I've started all this mess with Luna that yeah, we do need more rig
regulation we do need more eyes looking in on it. And I kind of wish they acted a bit quicker than they did. And they might have caught Sam out. So I sort of, I've been in crypto for 12 years. So I've watched, you know, what it was created for and what we did to it. You know, that putting it on
exchanges, she coins, leverage, all that sort of stuff was not what it was invented for. So we sort of, you know, the world did that, made a lot of money, lost a lot of money, corruption, and you know, those two big companies you're talking about, everybody is eventually going to have to have it on their books.
Bitcoin is not going anywhere. I think all of this on this are going to agree on that. We are going through a tough time in the world and it's probably going to get tough on us. Bitcoin will keep going down like every investment will, but Diamond hands and keep buying. But I think companies like that, they'll be foolish.
not to because as I said when you know when they call it Sam out I caught Alex out you know they've caught which is known from Luna you know we're running out of bad eggs I said in one of the 20 spaces we're running out of bad players in the industry they can
I'm not convinced that with our regulation we would run out of bad players. Mickle would love for you to weigh in. Yeah, so I definitely think it's a positive step forward, not necessarily in that some massive game changer, but I think it's legitimized as the asset class.
to a certain degree. I mean, at the end of the day, BlackRock, if this fund does get approved, it's going to bring in massive amounts of new capital. For me, although it's exciting, the whole story about just another large asset manager just holding Bitcoin, while that's cool, I don't think it's really anything game-changing for the technology.
I'm really excited for some of the really really deep uses of blockchain really just transforming tokenization for these massive asset managers transforming cross-border payments transforming for grandability of the underlying rails of the financial system. That's what I find really exciting when it comes to institutions.
and really transforming the rails and pipes of our financial system. I think this is really cool and good for adoption at a whole. But when it comes down to the technology of what these decentralized instant settlement platforms are doing, an asset manager holding Bitcoin is more of just some kind of monetary instrument use of
Bitcoin rather than the technology itself exciting but I don't think it's necessarily a game changer for the tech. Not your keys, not your coin. Say again. I said not your keys, not your coin. Well, I agree with that Eugene, but I think there's a lot of people out there who I mean in my personal opinion shouldn't be self-custeting like I
I know a lot of people in my own personal life who are much better with just a fond on an exchange and as long as that's regulated they're going to be perfectly happy locking into their account and just seeing that representation of the Bitcoin. So while I agree with you, me and you are both technologists and me and you can handle it and be safe with our investment, I do think this is a good
I know a lot of people still can't figure out how to work their iPhone. I don't feel comfortable with them self-pusted. Yeah, how many people? Why I'd like to kind of fish back a bit on this because how many people do I do want to focus? This is what happens with crypto.
It's like a black hole. We have a crypto space. I recommend everybody go to that. But I want to make sure that we focus on the core story, which the uncopling between China and the US and also how China
Chinese investors are not investing in their own VC funds, US investors are no longer investing in their VC funds. And then we're seeing broadly this take place in a much crazier way. So, Jean, why don't you jump in? Yeah, sure. So, great to have some of the data.
So basically, I think at the end of the day, the losers end up being the folks in the US and the folks in China and the winners are everybody else. There's talk in the Middle East here, but whenever there's trade, at least if you believe in trade, increasing value for the traders. Just the basic Econ 101 like Ricardo's theory
of competitive advantage if you stop trading, you lose utility in a purely utilitarian perspective. That's what I see. I was in the FYI, the Future Investment Initiative in Riyadh and Saudi Arabia pre-COVID. One of their big conferences, they bring all sorts of folks from around the world, like global investors, really fascinating
to see what was going on. And really, there, the story was like, you know, Piff. I mean, irony is like Piff, the public investment fund of Saudi Arabia, so a huge sovereign wealth fund manages, you know, a ton of money. You know, they put like 40 billion something dollars into the Japanese soft bank vision fund, so Masayoshi's son's vision fund, and then Masayoshi's son,
invest that into American companies like Uber etc. So you have money from Saudi Arabia going to Japan going to, you know, going to, you know, SF companies like Uber and some other ones. So what I'm thinking about that is that, you know, that in theory the idea around that is it creates value for all the participants but the problem that we're having now.
is who are going to be the winners when China and USD couples, it's not going to be China and US, so they're going to lose relatively compared to, you know, for example, the Saudi Arabia's of the world, the UAE's of the world, the even Africa, I think, is low-key growing in ways that a lot of folks aren't really even focused on, you know, we haven't talked a lot about that on this panel#
So, yeah, I think we end up losing on this set of coin. Can I give a pushback to that first sector? So the pushback to that is that when American money flows into American companies that actually follow our intellectual property law,
And actually are governed by our reporting laws. I think and don't share all of our data with their governments. Even if they end up sharing the data with our own government, that's at least better than them sharing their data.
data with the CCP or with other national organizations that are keeping sovereign clouds. And so if you keep track of what's happening in China, most of the data has to run on their sovereign cloud. That infrastructure is built to take information away. Now again, this is not about Tiktok, Tiktok, US and
I don't want to talk about that. Anybody bring that up, you're being sent down. But this is about the fact that the startups there are building on their infrastructure and their infrastructure is inherently built to help their country. When we build infrastructure here, the best example of
example of this is the Chips Act. Right now we are winning because we are going to win because we are building chips here. We're reducing our reliance on TSMC in Taiwan and we're building TSMC's building in the US. We're increasing incentives to build in the US and I think that's better. Now I'm not some like nationalists
or something. It's more just about the fact that right now is a very, very scary, interesting time, especially with the advent of AI. And I am very concerned around the fact that we don't want to power another organization that won't do the right things that we can trust them to do.
And so that's the only pushback I have Eugene. I think that all global trade is good. Data has shown that it's good for businesses, but I have to say like what's good for businesses now? May not be what was good for businesses in the end. The last thing I'll say is the industry has shifted. Global is
and trade was good for businesses selling products. I am not convinced that in today's service economy it will be the right move. In the service economy we want to get our people out of, you know, off of their butts and working and we want AI being built here. That's the only
point that I was going to say, go ahead Eugene. Sure. Yeah. So I think they're fair points. And you know, for all of us here in America, we've been playing, hey, the game was rigged in China. Well, guess what? They're right. Yeah, the game was rigged. But you know, what are we going to do about it? Right? Are we just going to sit and complain? You know, or#
and they allow companies like Baidu, Alibaba, Tencent, essentially copies of the Amazon, the Google, etc. Even like Twitter is of the world to become large. Now the BAT, Baidu, the BAT companies, as they call them, are gigantic companies. And they, by the way, are a huge player in the venture capital space.
venture capital in America, not necessarily the A players, right? The A players of the companies like Sequoia, they're independent, but in China, the corporate venture capital firms are actually gigantic players having sort of dealt with actually all of them. But the thing I'd say about it is, well, like, okay, let's talk about Apple, right? And I know you're talking about services, not in a way, so I will get to that.#
but Apple, you know, you open up an Apple package that says designed by Apple, you know, in California, right, specifically in Cupertino, one infinite loop, but it's okay. So you got a $3 trillion company, Apple, how much of it is an American company versus a Chinese company, right? Just given all of the operations they have to have in China. That's just one example on certain
with good side. I'd say on the services side, I think the AI question is very interesting, but I think there's a lot of unknowns in AI. I'm sitting here in San Francisco, which I think is the capital of the AI world, maybe Beijing, Shenzhen have sort of a number two claimant spot, but they're far behind. But I'd say that on the services side, we have been a services economy. We have been growing into#
services economy away from a good economy for decades. So I'm not sure we could say that comparative advantage doesn't work on the services side. And by the way, that also includes relatively healthy GDP growth in the US for developed country. So I'd say like all of this, I mean, I think we're, unfortunately, I think we're heading into a D globalized world. I think we've had almost 100 years of global
right? Like literally huge, you know, trend. This has been a big macro trend. And unfortunately, I think in the last 10 plus years, we've seen the cracks and we're going to probably go through a multi-decade legalization cycle. Which I think is going to be everybody. Really? Okay. Yes. I do. I want to do it. I want to do it. Yeah, real quick. Because again,
We should talk about this. People want us to kind of jump into this more. Please go to the bottom right and comment. We'll have a deeper discussion today about this. I do want to go to Jeff because he was waiting and he was so tired he had to put his hand down. Go ahead Jeff. >> I know worries. My day job when I'm
One of the things I do is I advise mechicap tech on their supply chain design and a lot of it revolves around what's happening geopolitically. And prior to that, I had two decades and kind of sea level management of supply chain both on the technical side and the operation.
and really seen the build up of China in the early 2000s where we, from my perspective, we built up the mobile phone world there and eventually the smartphone world. And then I can go through this whole history and do it in chunks.
room. We want to do it, but it's wild. I mean, we everybody just flooded in there in the late 90s in early 2000s. And we couldn't get in there fast enough. We were staying in Chinese hotels, Chinese national hotels weren't enough American hotels and based on what city you were in. I mean,
I mean, depending on what kind of, you know, a combination you had, and we would stay there for weeks, we were setting up manufacturing because, you know, the labor rates were basically, you know, one, one eighth, one tenth of what they were here, and the trade lanes are open, and everybody wanted to, you know, it was a rush to make
More money and then over time I'll accelerate through some of this but it actually got Increasingly expensive in China to build and not obviously not more expensive than it would have been To build here, but in the major cities as you got closer to a major city and if you had a
manufacturing setup, which a lot of us did near Beijing, near Shenzhen, that cost structure went up massively. And so what actually started moving and migrating people out of China actually wasn't actually this geopolitical risk with Taiwan. It was actually the cost structure and
China and one of the first, and that's where you started seeing this exodus to some of the other countries in Southeast Asia. So, Jeff, I want to clarify that there's a distinction here. The uncomplain of the financial and capital markets is very different than the uncomplain of supply chain.
And what I was referring to specifically was investment in China from US financial institutions and US venture capital versus, and by the way, we got slapped happy with that during the pandemic, which was really interesting because a lot of the things, remember,
zero COVID, right? So all of the things that made sense in the Zerp, zero COVID world in the US ended like last year. And then, you know, when China was still continuing. So people started pumping money and growth stage equity in China. But I'm sorry, keep going. Yeah, just I was sorry. Basically, the young coupling has started actually, I want
to say about six, seven years ago, and it was financial on coupling, just because like the reality was, this labor, these labor rates weren't going down. So the first stage that happened is a lot of companies started moving to more remote areas in China, and they were studying that manufacturing. So you'll see some of the biggest
So on behalf of like let's say a company like Apple or whatever, some of the bigger factories are now set up in these fairly remote areas, which have now been built up as cities around where these companies established. I can go through many examples of that, but that was like the first
stage of my migration was actually in China. And then long story short, about more than about five years ago, everybody started leaving for Southeast Asia, Thailand, Vietnam. And that's what's been happening. And so it started as financial decoupling due to labor rates and just due to
the regulations actually building up in China. And now for the last, I want to say two, three years, what moved to the front of the conversation was Taiwan and geopolitical risk of that situation. And like, what is the plan basically day one?
When that major conflict, if that major conflict were to occur, like what does your day one supply chain look like? And that's where the conversation is shifted. I want to say over the last 18 to 24 months, the reality is set in. I will tell you that.
There's been a huge pull back from China. There's basically a lot of opportunities that they're giving, whether it's new factory construction, whether it's tax breaks, whether it's whatever.
I mean the dollars that they're putting up trying to keep kind of those next manufacturing lines or bring them back in is enormous, but some of these other countries are also I mean they're getting very aggressive so it's super interesting to see what's happening, but the financial the the decoupling now is almost entirely
entirely geopolitical driven and the finances are actually starting to add up. I'll give you an example. The labor rate issue got so bad. If you go from China to Vietnam, you're seeing upwards of a 30% reduction.
in labor rate. It's so fascinating because then people would say, "Well, are the Vietnamese labor as skilled as Chinese labor?" And the answer is, "Yes." It's a transition. So what happened is the initial answer
is no. And then over time, that whole infrastructure around manufacturing has to get built. So you set up a factory, you need tool and diamakers. Okay, where is that experience coming from? Who's setting that up? And so what you're seeing is you're seeing Singaporean nationals
Taiwanese nationals, US nationals that are setting up that it's a multi year thing, but they're getting there. They're not on par with China. I mean, we've built in other countries have built China into, I mean, their capability is tremendous, especially on consumer electronics. Yeah, China reminds me
me of a zero interest rate. I don't want to say this. I'm going to say something people are not going to like it. But you know how all those startups where zero interest rate phenomena, I'm very convinced that China is a zero interest rate phenomena. But we will see. Joe, go ahead. Yeah. You know, I don't really call it a global decoupling. I see it more like a
pro pro us anti us decompling let's say. You have a third of the world under us actions. You know this thing really started in 2008 I think Bitcoin was the unpredictable player in the plan where they kind of have a sandbox they can both play in.
But what I'm seeing is all these countries on sanctions, the third of the world, they're looking for an alternative, they realize that innovation is key that would drove America a lot. And I think there's ultimately going to be two players, the pro-US and anti-US, that's kind of the way
I'm seeing it and that's why Middle East is kind of playing both sides. They don't know who's going to win and they're investing on in both. I will tell you, Joa, I lived in the Middle East for many years and I will tell you that you cannot envision a world in which the Middle East was
ever choose China in any close approximation as compared to the US and if the US puts our hands on their shoulder. Can we remember that the most, I mean Saudi Arabia is one of the most culturally
strict countries and yet they signed the Abraham Accords. I just want to remind everybody that the America, when we whisper in the Middle East ear, they listen. So, you know, I want to push back on this thing. Right now, all we know is that Chinese
We don't know how much Middle East is actually allocating to them. And remember as Chinese VCs pull out of the US, which is also in that same article, as they pull out of the US as Chinese investors pull out of the US, it's going to leave a hole. So if you are an investor,
from a sovereign wealth fund or ultra high net within the individual in the Middle East, in Dubai or in Saudi or in other countries. Are you going to fill cerebral valley? Are you going to fill backfill these VCs up in the US? Are you going to bet on China?
which has all of these geopolitical concerns. But that's what I'm saying. I think they're playing both. Like I don't think they seem to be creating more peace treaties between each other. There are sanctions in certain Middle East and countries. I guarantee you their neighbors don't really like that. They're going to play both.
I think they're leaning a little bit away from the US and leading a little bit towards China. I'm not saying they went full-blown China, but they're looking into it and they're diversifying their assets, let's say. I think that's kind of what they're doing. Of course, that's not equal. I don't think it would be a long time before that
investment is equal, but they're not blind to the fact that there is a possibility we're trying to win. And they want to have money in that game or not even wins just does well. The verification right? Exactly. You know, it's like it's interesting even, you know, tell like,
There was a flight to Dubai to Tel Aviv. For anyone who knows Middle East, Israel versus neighbors, there's also flights that are open. This is just a few years ago, Bahrain to Tel Aviv. I was noticing this because I was trying to figure out I was in Dubai recently and looking at where I could fly direction, I was like, "Wow, I can fly. I can fly. I do direct Dubai to Tel Aviv." I discovered#
I think these are small indications that I kind of agree with you. I think why not play all the sides right? I mean, if diversification America is one of the principles of finance. Oh, interesting. So can you describe that? I'm actually curious. I'm not sure. You mean China versus because I just talked about, you know, Japan soft bank fund right and obviously
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When America has pulled the money out of China in the first quarter of this year, where did the money go? We know the answer Japan Look at the Niki interesting, okay. Yeah, so if you start looking at it, can you see this in FDI flows? Yes, okay interesting and it was reported I think two days ago
ago in CNBC. So where do you think the money is going? The money is going to Japan. I think it's just going to go everywhere. I mean, again, I brought up Africa, but there's just a whole lot of stuff happening there. I guess who's winning in Africa, China, right? Not the US, right? And we have our VP go out there to try to
make friends with all the folks because we were all as how behind we the America are in that. I mean, basically they call Africa China's second continent, right? So I think everyone's making plays sort of around the world. And, you know, I worry. I mean, I posted it up in the nest, but I was trying to figure out exactly how much de-globalization is happening. So globalization can be actually objectively measured
by world exports percent of world GDP and they have data that the world trade organization has data since 1870 on this. So we had 60 years of globalization until from 1945 until the O.A. crisis. I think it was Michael who said that or who mentioned that and since O.A. and others I think and since O.A. it's been a little shaky. We've had globalization right are we now going to have multi decades of
coupling and the D globalization is a good thing. Look, I think the D globalization has been happening for a lot longer than most people think. I mean, you know, the iPhone was brought up, you know, the things were brought up. I think like 13 or 13 to 17% of the value in the iPhone
Most of the value I add comes in their other parts of manufacturing points China's demographics over the long term just don't look good You know the setup between the North American Alliance and
What's happening between the US and Canada, Mexico, South America, with regards to places like Colombia, look really solid. All of our resources that we consume for the most part, I think it's like...
82% of it happens in the North American Alliance. So yeah, I think this is a fine thing. I think it's going to happen. I think it's been happening since 2013.
I'm bringing up AK since AK works in the global markets for people that don't know so AK can join us and tell us his thoughts in the end the question really becomes What happens moving forward? AK what do you agree with the general?
commentary on the fact that there's clearly a decoupling happening between the US and China in terms of the capital markets. And then do you think that this is going to have a negative or adverse impact on US firms and US companies?
Okay, you got an immediate bottom left.
going once. So, you know, as a kid, there he is. Go ahead, okay. You muted again. Sorry, can you repeat your question? Said there's a decoupling of the assets. Well, you know, there's a story today and we've, I was talking about it yesterday, which is kind of how it goes, which was that China was moving its
money out of the US. We know that BlackRock started the movement of US funds out of China, moved a lot of those funds to Japan. So we're seeing this whole movement happening and this decoupling happening in the capital markets between China and the US. We also, you know, Jeff was mentioning about the cost of labor in China's higher, where
moving a lot of the production and supply chain to Vietnam and India, with all of this happening, the question really is, is this good for the US? Let's be a little bit US-centric. Is it good for the US that this decoupling is occurring? First of all, do you agree that the decoupling is occurring?
You know, we provided some evidence I'd want to hear the other side of it if you're interested, but you know if you think the decoupling is occurring do you think it's a good thing? That's a tricky one. Then I shall tell you that one because you know the US it's never good when when
US Treasury are dropping or US bonds are dropping in terms of their national reserves held by countries like China and the like-suffs. You know, American debt is held by China. What happens when China pulls out slowly and slowly and slowly? Who starts to support that? That's what I call
to look at myself personally. In terms of economy-wise, I think it's a stimulant. I think that the U.S. economy is strong enough to survive on its own, but I
and be high little on what the what the what's actually unraveling currently in the markets I was more so concerned with what the Fed is doing in terms of the markets rate
now. So I'll tune in and I'll chime in as I take a little bit more on what's happening with this decoupling currently. No, absolutely. So you know, Jeff, go ahead.
other to say if like we're not ready, we're not anywhere close to be ready to be the couple from China. I can just, I can speak on the text side. But you know, the process has has started and you refer to the chips act earlier. It's going to be
couple years before that even starts to ramp up with like physical fabs producing meaningful output. And in a way where we can actually move orders, whether it's out of TSMC or out of other China fabs,
you know, into US Favs. That's going to be totally fine, I think, by the way, from an economics perspective, because as long as we can actually set up more system level manufacturing in the US, the chips act is going to be a great thing. What would be really bad with the chips act is like, if we start building
We still have a ways to go because with the CHIPS Act, from a labor perspective, it's a really small labor component versus the product output, the total economics of product output of silicon. There's a really small labor component.
to that. A lot of it's automated. So, but anyway, we started the process and, but if China rolled in tomorrow to Taiwan and there was, you know, there's a, obviously we responded in some way. Our day went, we're in bad shape. I mean, I can speak with a concern about China.
did it between Google and Motorola in 2013. We did it in Texas and I went through I know the whole economics behind it and you'd be surprised that it is manageable inside of the cost structure of what people are willing to pay for a smartphone.
which back then it was actually less than it is today. These companies could do this. These companies could do this. It's very achievable. Your phone is not going to double. It's not going to even go 50%. It's going to be a much smaller number based