Biden chaos, Soft landing secured? AI sentiment turns bearish, French elections

1. 0:00 – 4:29

   Bestie intros!

   1. JCJason Calacanis0:00

      Talk to her, he's ready to go.

   2. CPChamath Palihapitiya0:02

      Is that official merch?

   3. DSDavid Sacks0:03

      I got it online, so I, I hope she's getting royalties. I hope it's not, I hope it's not a fugazi.

   4. JCJason Calacanis0:09

      Fugazi? Fugazi?

   5. DSDavid Sacks0:11

      What's up with your outfit, J-CAL? You going on Fox News again?

   6. CPChamath Palihapitiya0:15

      Which I think now-

   7. JCJason Calacanis0:15

      Dude, he just signed on-

   8. CPChamath Palihapitiya0:15

      Oh, that didn't tell you?

   9. JCJason Calacanis0:16

      ... he didn't, he signed on to become a contributor, dude.

   10. CPChamath Palihapitiya0:18

       He just signed on to become a full-time deal, dude. (laughs)

   11. JCJason Calacanis0:19

       Every week.

   12. DSDavid Sacks0:20

       Wait, what?

   13. CPChamath Palihapitiya0:20

       (laughs)

   14. JCJason Calacanis0:20

       I'm a contributor.

   15. CPChamath Palihapitiya0:22

       You're a contributor to Fox News? (laughs)

   16. DSDavid Sacks0:23

       You're a contributor to Fox News? (laughs)

   17. JCJason Calacanis0:23

       Three days a week, they're paying me.

   18. DSDavid Sacks0:25

       That's hysterical. Wait, what?

   19. CPChamath Palihapitiya0:26

       That's gonna be their

   20. DFDavid Friedberg0:27

       For real. For real.

   21. CPChamath Palihapitiya0:29

       Yeah, he's a, he's the newest contributor.

   22. DFDavid Friedberg0:30

       Oh my God, that's incredible. Do they know you have TDS? Do they know about that?

   23. JCJason Calacanis0:34

       Jesse loves me, Fox Business loves me. No, they, they're looking for a moderate. They want a moderate, independent thinker and they love Nostricanus.

   24. CPChamath Palihapitiya0:40

       Nostricanus.

   25. JCJason Calacanis0:40

       They're branding Nostricanus.

   26. CPChamath Palihapitiya0:42

       He has to finish this in two hours because he's taping with Jesse Watters, I've heard.

   27. DFDavid Friedberg0:45

       Oh my God. I, I, honestly, I will say that I, I saw both of your appearances on Jesse Watters-

   28. CPChamath Palihapitiya0:50

       Oh, thank you.

   29. DFDavid Friedberg0:50

       And I thought you crushed both of them, so-

   30. CPChamath Palihapitiya0:52

       Totally.
2. 4:29 – 20:48

   Macro picture: Soft landing secured? Rate cut on the horizon? Partisan economic perception

   1. DFDavid Friedberg4:29

      the vitamin D.

   2. JCJason Calacanis4:29

      All right, gentlemen. Let's get to the docket. There's a lot to talk about. Let's, uh, let's start with macro. We haven't talked macro. Everybody wants to talk a little macro. And, uh, got a lot of news today. The big question is, has the soft landing been secured? Obviously, stocks are still surging, records again this week, last week. All the jobs seem to have burned off, and, uh, unemployment is moving up. That was one of Jay Powell's major efforts. And all the stimmy savings, as you pointed out, Chamath, are long gone. And today, the big news, CPI came in at 3%. Perhaps inflation has been cracked. Here's your chart, gentlemen. Economists were expecting 3.1, so the print was meaningfully cooler than expected. And CPI actually fell 10 bips on a month-on-month basis. Obviously, when you see that three handle, that is year over year. And this is the first time we had month-over-month CPI decrease since May of 2020. So, lowest CPI in three years. Jay Powell said the Fed doesn't need, he said this earlier this week, he doesn't need to see the 2% inflation to start the cuts. Obviously, he, I guess he wants to steer or speed up going into the turn. So, September cut looks highly likely. If you look at the prediction markets, fed funds futures now see an 89% chance of at least one rate cut by September. That's up from 73% before the print, according to Fed Watch. That's a tool that tracks interest rate traders. We discussed...... the Fed wanting to see employment and savings cool. Well, in June, unemployment was 4.1%, the highest since 2021, up from 4% in May. Here's the stunning chart of unemployment since 1948. In April 2023, unemployment bottomed out at 3.4%, the lowest since any of us were born, 1969. And you can see here, there's been an uptick from this incredible historic low. So soft landing appears to be working, the jobs market slowing down, inflation has dropped, tempered, and the market continues to hit all those all-time highs. S&P up 26% since last year, mostly, of course, thanks to NVIDIA's record-breaking performance, but also Meta, Amazon, Microsoft, uh, a lot of the, the FAANG, Magnificent Seven. So I guess, Chamath, let's just start with you. Has the soft landing been secured?

   3. CPChamath Palihapitiya6:59

      I mean, it's pretty incredible actually, but it looks like there's a really good chance that it has. I think the bigger question, though, is if we are on the verge of a real contraction in the economy, and I think there's been enough people that have warned... You have to remember, like, even though the stock market for seven companies is hitting all-time highs, the stock market for every other company that isn't those seven companies have not, and that really is about just the broad base demand in the economy. So yeah, I think that inflation is contracting, but it could be contracting for a combination of reasons. One is because we have, we have had high rates for a long time, but the other part is now people aren't employed, there is no money, and the question is whether you have some sort of contraction economically that is measured by a recession or not. I think that's-

   4. JCJason Calacanis7:52

      Ah.

   5. CPChamath Palihapitiya7:52

      ... the really big question. What happens in the next couple quarters? Do we have a little mini-recession or not?

   6. JCJason Calacanis7:57

      Okay. Uh, Freberg, your thoughts? And, and then we'll go to Sachs.

   7. DFDavid Friedberg8:02

      I think the market's priced in a lot of the expectation already. If you look at the, uh, P/E chart on the S&P 500 going back five years, let's pull this one up real quick, you can see that we peaked out, obviously, in 2020, 2021, uh, where we had a big boom with all the stimulus money coming in and all the money found its way into the markets during the end of the ZIRP era, and then there was this slow wind-down as we started to hike rates, and then rate hikes peaked. And now, despite the fact that rate hikes have stopped and there have been conversations about when the reversal will happen, the market's already started to price in that reversal. So with respect to, like, market valuations, we have still seen a rather significant increase in the P/E ratio across the S&P 500. Now, to Chamath's point, a large percentage of that is contributed to by the top seven tech companies that are driving that ratio inflation. But a lot of the market makers have already started to take action, expecting the rate cuts to come in, as you point out, J-Kal, 90% plus likelihood of rate cuts happening this year. So I don't know how much market action we will see, but there has been a lot of conversation from DC about the Fed should reset expectations on inflation from 2 to 3%, and if they did that, that, that becomes the new normal and we're never gonna get back to 2%, at least in this current kind of era. That might be the era that we start the, the-

   8. JCJason Calacanis9:29

      Oh, really?

   9. DFDavid Friedberg9:29

      ... level that we start to cut.

   10. JCJason Calacanis9:29

       People are talking about that? Talking about that, Freberg, of that, like...

   11. DFDavid Friedberg9:33

       That's been a big push-

   12. JCJason Calacanis9:34

       Interesting.

   13. DFDavid Friedberg9:34

       ... is that the, the Jerome Powell mandate of 2% inflation may be an expectation that cannot be met given the amount of stimulus that went into the economy-

   14. JCJason Calacanis9:45

       Mm.

   15. DFDavid Friedberg9:46

       ... during COVID, that it could take a decade to earn its way out. As a result, we will not see a normalized contraction of that capital coming out of the markets in a way that will get us back down to 2% inflation for the time being. And I just saw a presentation by a bunch of food company executives recently, and they took 13 to 15% price hikes last year. And you've heard Elizabeth Warren kind of chime on about this, but the reality is that inflation is not just in the US but around the world, and it affects the US markets as well, because a lot of US companies have had to raise prices because of their dependence on labor and materials and commodities from other countries that are inflating.

   16. JCJason Calacanis10:22

       They call this the inputs, right? This is what they say, the inputs.

   17. DFDavid Friedberg10:25

       Exactly. And because of the way that the globalized economy works today, the inflation around the world is gonna continue to buoy inflation in the US, even if we get our house in order. So it's very unlikely that we get back to a two handle, you know, at least in this kind of era. Uh, and as a result, you'll probably see the, uh, the market kind of assume that we're gonna be at a 3% kind of inflation level for, for quite some time.

   18. JCJason Calacanis10:47

       It's very interesting, the obsession with the, with the two. I, I brought this up on the show. The, the 2% handle and the, and this target came from the Reserve Bank of New Zealand, this guy Roger Douglas, Minister of Finance, and he came up with it because they just asked him, like, "Well, what's a healthy one?" And he came up with that, and then everybody adopted it.

   19. CPChamath Palihapitiya11:05

       The Dun-

   20. JCJason Calacanis11:06

       (laughs)

   21. CPChamath Palihapitiya11:06

       The Dunder Mifflin inflation index?

   22. (laughs)

   23. JCJason Calacanis11:07

       Basically. It's just sitting out there.

   24. CPChamath Palihapitiya11:10

       (laughs)

   25. DFDavid Friedberg11:10

       (laughs)

   26. JCJason Calacanis11:10

       Okay. So for a completely objective, uh, non-partisan view of all this incredible economic data, we go to our RNC com- correspondent, David Sachs. Throw a wet blanket on this incredible news.

   27. CPChamath Palihapitiya11:21

       I'm as non-partisan as you are, J-Kal.

   28. JCJason Calacanis11:23

       Exactly. (laughs)

   29. CPChamath Palihapitiya11:24

       Don't pretend like you're not the candidate in this race. (laughs)

   30. JCJason Calacanis11:26

       I am a moderate independent, as we all know-
3. 20:48 – 40:51

   AI sentiment turns Bearish due to massive spend with little revenue

   1. JCJason Calacanis20:48

      Sax, what, what's your take on this AI bubble? 'Cause we... I got some data I'm about to pull up on it, but l- let's just get there right now. How much of this boom that we're seeing in the stock market is this AI bubble?

   2. CPChamath Palihapitiya21:05

      Well, a lot of the boom is driven by these AI stocks, notably NVIDIA. I mean, if you take out the AI stocks, I'm not sure the market is up, or maybe it's up a little bit. I mean, a huge part of the, the gain is from these, I don't know, top five, top seven tech stocks. Uh, is it a bubble? Th- I think that's going a little too far. I mean, I, I personally think the AI wave is real. I think the question is whether the level of investment that we're seeing going into cloud service infrastructure is sustainable.

   3. JCJason Calacanis21:33

      Mm-hmm.

   4. CPChamath Palihapitiya21:34

      Yeah.

   5. There's a huge build-out happening right now, many, many billions of dollars building out these new cloud service centers or cloud infrastructure- ... data centers based on GPUs instead of CPUs. And I think it's a good question about whether that's sustainable. I, I, I do think that one of the things that's going on is that the chips are really expensive. I mean, these GPUs from NVIDIA, what, they're like $30,000-

   6. JCJason Calacanis22:00

      Yeah.

   7. CPChamath Palihapitiya22:00

      ... per GPU?

   8. JCJason Calacanis22:01

      For an H100, yeah.

   9. CPChamath Palihapitiya22:02

      Right, and part of the reason for that is the scarcity. They haven't been able to produce as much as there's demand for, and so they're commanding a premium right now.

   10. JCJason Calacanis22:10

       And just to be clear, they're not just a chip. I mean, people think they're like a chip they think something you hold in the palm of your hand. They are like a racked server-

   11. CPChamath Palihapitiya22:16

       Yeah.

   12. JCJason Calacanis22:16

       ... that's like 50 pounds, yeah.

   13. CPChamath Palihapitiya22:17

       There's thousands of... Yeah.

   14. JCJason Calacanis22:18

       Yeah.

   15. CPChamath Palihapitiya22:18

       It's got like thousands of components-

   16. JCJason Calacanis22:19

       Yeah.

   17. CPChamath Palihapitiya22:19

       ... and it's a very complicated product to make. In any event, they're very expensive. And so it's very expensive to build out this new infrastructure. I do think that over time the price of these chips just has to come down. It just doesn't make sense that they'd be so expensive. Just as production increases and they don't have this rate limit on the supply, then I think the price should come down and the cost of this infrastructure should normalize a bit.

   18. JCJason Calacanis22:44

       Well, and you heard it here first on the All-In Pod, here's episode 181 six weeks ago. Uh, Noshra Kanis, uh, wasn't involved in this one, but here's Chamath and Friedberg. (laughs)

   19. CPChamath Palihapitiya22:54

       You cannot spend this kind of money and show no incremental revenue potential. So while this is incredible for NVIDIA, the chicken is coming home to roost because if you do not start seeing revenue flow to the bottom line of these companies that are spending $26 billion a quarter, the market cap of NVIDIA is not what the market cap of NVIDIA should be, and all of these other companies are going to get punished for spending this kind of money. Where are all these newfangled things that we're supposed to see that justifies $100 billion of chip spend a year, $200 billion of energy spend, $100 billion of all this other stuff? We're now spending $750 billion. This is on the order of a national transfer payment, and we've seen nothing to show for it except that you can mimic somebody's voice. It doesn't all hang together yet. You know, the general statement might be made that perhaps the first AI mini bubble is bursting a bit and, particularly with respect to the accelerated expectations that public market investors had for public market technology stocks, that perhaps now is the time for a bit of a reckoning, that perhaps this isn't gonna happen at the same margin level or the pace that folks had modeled.

   20. JCJason Calacanis24:07

       Correct.

   21. CPChamath Palihapitiya24:08

       And this is gonna cause a bit of a setback.

   22. JCJason Calacanis24:09

       And so I think inspired in part by that, David Cahn from Sequoia Capital, legendary venture firm here in Silicon Valley, published a blog titled AI $600 Billion Question.Kahn said there was a $500 billion revenue hole when considering AI CapEx levels. He got this number by calculating that companies need to show around 600 billion in AI revenue to justify projected CapEx levels in Q4, and he generously assumes Google, Microsoft, Apple, Meta, Tesla, and others will generate, uh, 100 billion annually combined. That's pretty generous and, uh, that still leaves a $500 billion hole. Here's the NVIDIA, uh, data center run rate revenue. As you can see, Q4 of 2023, 50, uh, billion, and now 150 billion. And then you have the data center facilities being built and the cost to operate those, implied data center AI spend, and then of course, your software margin. Kahn said he also thinks that the GPU shortage already peaked last year. We'll get to that later. On June 25th, a couple weeks ago, Goldman published a 31-page report called Gen AI: Too Much Spend, Too Little Benefit (laughs) . So you heard it here first on the All-In Pod, and I think everybody's kind of catching up with this theme. Companies are gonna spend one trillion, according to the report, on AI CapEx over the next several years. Usually, that's three to five. I'm gonna use the word several. AI productivity gains are limited in the near to midterm, the next 10 years, and AI's ROI is likely significantly limited due to costs. The costs of AI are so high and the revenue potential is s- so unclear that there's a chance the economics never make sense. Here's a choice quote, and then I'll get the reaction from the team. "Replacing low-wage jobs with tremendously costly technology is basically the polar opposite of the prior technology transitions I've witnessed in my 30 years of closely following the tech industry." And that's Goldman's head of Global Equity Research. There's an interesting concept here, Chamath, that you're saying, like hey, e- making like fun images or, you know, maybe, uh, rewriting your blog post, but (laughs) that's low, that's low-wage work. Uh, so what are your thoughts on this report-

   23. CPChamath Palihapitiya26:19

       I think we're-

   24. JCJason Calacanis26:19

       ... these two reports, yeah?

   25. CPChamath Palihapitiya26:21

       Well, I think we're all converging on the same realization, which is you can't spend a trillion dollars and only have toy apps to show for it. So I think we've all been amazed by these AI demos. I think the four of us have talked pretty incessantly about it now for 18-plus months, ever since we saw the first OpenAI demos. So that's great, and the underlying technology I think is really important. But it's also important to acknowledge that the underlying technology has enormous gaps. There's gaps in the quality of-

   26. JCJason Calacanis26:57

       Mm-hmm.

   27. CPChamath Palihapitiya26:57

       ... the products that can be created to not have hallucinations. Those gaps are too large right now for them to be used reliably in production settings, unless you have a very defined scope. If you have a defined scope though, the implementation costs are not nearly what needs the level of spend to support. So there's just a big mismatch. Second is that we have a huge problem with NVIDIA, and I'll just kind of say the quiet part out loud, which is, you can't spend this kind of money to have technology lock-in to one hardware vendor. And that makes no sense. And what you're seeing now is that Amazon, Google, Microsoft, AMD, Intel, a plethora of startups, Grok, everybody trying to make now different hardware solutions. The problem though that that creates is that we have this massive lock-in right now because the code is littered with all these NVIDIA-specific ways of implementing access to GPUs. That's not sustainable. So we have a, we're in a bit of an existential thrash, and I think the only way that we're gonna get around this is to do a little bit of a reset. And I think that's gonna touch a lot of startups that have already taken down way too much money at really insane valuations. Part of that was just because we needed, I guess, the market wanted a place to believe in again after the crypto meltdown and after all of the other SaaS meltdown and all of the other stuff that we've gone through. So yeah, I think that we are in a bit of a reckoning right now. It's going to be a complicated couple of quarters to s- at a minimum and probably a complicated year to sort out who's actually real.

   28. JCJason Calacanis28:37

       It's an interesting psychological p- phenomenon there, Friedberg, of (laughs) the capital alligators, the tech industry, the entrepreneurs. They want to believe in something and, you know, the previous paradigm shifts were ending and, and here we are, new paradigm shift. Perhaps we're such a efficient capitalistic machine now that we, we, we almost like process stuff super quickly in some ways, Friedberg. You know, we, we deploy massive capital, we try to solve huge problems. I mean, and then maybe we hit the reckoning and the trough of despair that we talked about, you know, many times, uh, innovator's dilemma, you know, you know, crossing the chasm kind of style. So what, what are your thoughts on Chamath's point there? Well, or any other points you might have.

   29. DFDavid Friedberg29:19

       There's a cold hard truth here.

   30. JCJason Calacanis29:20

       Okay.
4. 40:51 – 46:41

   A16Z's 20K GPU cluster

   1. CPChamath Palihapitiya40:51

   2. What do you think of the Andreessen, this article that Andreessen just turned on 20,000 GPUs?

   3. JCJason Calacanis40:56

      Chamath, to your point, it was reported earlier this week that Andreessen Horowitz, that's a very large venture capital firm here in the Bay Area, is building a 20,000 GPU cluster, we mentioned earlier, 20, $30,000 a GPU is what you can estimate there, so this is hundreds of millions of dollars, to try to cut deals and win deals with AI startups. And so they, they stole this idea from Daniel Gross, uh, which you probably don't know who that is, but it's a company called Pioneer Labs and Nat Friedman from GitHub, they did this last year. Same exact idea. They, they acquired 2500 H100s and they gave their portfolio companies access to it in something called the Andromeda Cluster. Really brilliant idea. There's the tweet from Nat. It's not clear whether A16 is purchasing these or they're just gonna pay for them on AWS or Google, Google Cloud or some other provider. But if these were purchased, obviously hundreds of millions of dollars, what's your thought here? I won't go through all the details, I'll just go right to your opinion, Chamath. What's your thought on this? Yeah.

   4. CPChamath Palihapitiya41:57

      A friend of mine who's a very successful debt fund manager and I talked about it this week, a friend of the pod. I won't name check him but he knows who he is, was, and I were talking about this and basically, I think if you look at the, the most typical deal, so like for example, the, the CoreWeave deal which was floating around was something along the lines of 40% of the cost of all the GPUs was put up in cash and 60% was lent to CoreWeave by a whole group of bankers. So if, assuming Andreessen was able to do roughly the same thing, the 20,000 GPU cluster at, call it, say, 20 to 30,000, is between four and six hundred million of cost.... and if they get 60% of it financed, I hope they did, that still leaves 40% that they would have had to pay for, which you're still talking about $100 million-plus. And so then the real question is, can they get enough equity back to make that $100 million investment worthwhile? And just to put a fine point on this, if that's 100 million of management fees, the reality is that that's actually $2 billion of value, right? Because these, these management companies trade at, call it, say, 20 odd times. So what's so interesting about this is, like, you take $100 million in management fee, that's worth two billion of enterprise value, you dump it into these chips and cash. So whatever equity you get from these startups will need to make about $2 billion, plus a little bit to account for the- the- the time value of money. Otherwise, you are probably better off not doing this. That's just the math of it.

   5. JCJason Calacanis43:34

      I wonder if this is defensive-

   6. CPChamath Palihapitiya43:35

      Well, hold on. The- the 20 times math only makes sense if it's 100 million a year in perpetuity, right? If it's a one-time spend on the 100 million, then it's just 100 million.

   7. JCJason Calacanis43:44

      Well, you also have to power these, you have to put them in a data center. There's a lot of cost to these things.

   8. CPChamath Palihapitiya43:48

      There's a lot of ongoing costs, yeah.

   9. JCJason Calacanis43:49

      Yeah, a lot of ongoing costs, so.

   10. CPChamath Palihapitiya43:50

       Let's just say they'll spend yet another 20 or 30 million over the next 10 years. My point is, it's a drag on your enterprise value that's probably in the billion-plus dollar range. And so whatever equity you get needs to make up for that, plus some. And m- my only comment is that if you then factor in, Sacks, as you said before, the desire to get these NVIDIA chips down in price, but also to have hardware diversity, it's a really speculative bet and you have to be really right.

   11. JCJason Calacanis44:20

       It's also a crazy conflicted bet too because NVIDIA was using these chips in the same fashion. They were using allocations to get investment allocations in companies and then paying them off. So now you have Andreessen buying them from NVIDIA. It's all so convoluted. Uh, Amazon was doing this as well with AWS, giving credits, et cetera. So tried and true strategy, but very strange.

   12. CPChamath Palihapitiya44:42

       I don't think it's that weird a strategy because, I mean, look, it's definitely different but-

   13. JCJason Calacanis44:46

       I'm just saying it's weird because of in- they're giving money to NVIDIA.

   14. CPChamath Palihapitiya44:50

       I don't think you need to do this to build a successful venture firm.

   15. JCJason Calacanis44:53

       No, no, I agree.

   16. CPChamath Palihapitiya44:53

       I mean, if you wanted to maximize the value of the entity, you would keep the 100 million for yourself because then some investor will pay you a huge multiple for that.

   17. JCJason Calacanis45:02

       Yeah.

   18. CPChamath Palihapitiya45:02

       No, but what I'm saying is-

   19. JCJason Calacanis45:02

       That's all I'm saying.

   20. CPChamath Palihapitiya45:03

       ... is that they, they're buying these chips and then they're effectively timesharing them out to- to portfolio companies and so th- they're going to charge for their use. They're going to amortize this cost over-

   21. JCJason Calacanis45:14

       They're going to charge back. You think they're going to charge back the startups, so the startups don't need to-

   22. CPChamath Palihapitiya45:16

       Yeah, yeah, no, like I know that, right?

   23. Yeah, yeah, yes. Yeah, yeah.

   24. JCJason Calacanis45:16

       ... free, you know, yeah.

   25. CPChamath Palihapitiya45:18

       I'm just saying you have to see a path to make back what you're losing in enterprise value is my point.

   26. JCJason Calacanis45:21

       See, I think this is brilliant for year 0, 1, 2 like Pioneer Labs was doing because those people really don't have the money. If you're a viable concern, you can easily get the money to buy your own or rent your own. And we just said in the previous story that the glut and the wait is over for these, so interesting.

   27. CPChamath Palihapitiya45:39

       It depends on the rate of depreciation. If you buy these chips at a premium because they're scarce right now and then all of a sudden they rapidly depreciate in value, then you might lose money. On the other hand, if the current value of the investment remains stable because they don't depreciate that rapidly and then you can charge the cost back to the startups who are using the chips, then, you know, you break even and it's-

   28. I think that's an excellent point, yeah.

   29. ... and it's basically a business development expense.

   30. JCJason Calacanis46:03

       I'm about to say-
5. 46:41 – 1:06:10

   Broad implications of France elections

   1. CPChamath Palihapitiya46:41

   2. JCJason Calacanis46:41

      As we wrap up here today, Friedberg, your thoughts, uh, and you had mentioned in the group chat la- last minute addition to the docket. You wanted to talk about the French elections, and I know Sacks was tweeting about it because all the people who hate him were sending it to me. (laughs) So I always know when he tweets about something spicy. (laughs) Go ahead, Friedberg. What do you got?

   3. DFDavid Friedberg47:00

      There is effectively a center and left alignment that created kind of a, a surprise upset, uh, to the right that was surging in the polls leading into this election in France. And as we all saw, there was a lot of celebration in the streets and some rioting and so on, but it was a real kind of surprise shift left in this kind of important vote that happened in France. And then the party stepped up and put forward these economic proposals. They set a 90% tax on income over 400,000 euro a year, a 14% mandatory wage increase, retirement age needs to be reduced to the age of 60 from 64, which obviously massively increases social spending. And that they want to put forward proposals to put in place price controls on things like food, electricity, gas, and petrol, so effectively intervening in kind of the free market pricing system. Last month in India, we also saw elections where the BJP did not get a majority. In Mexico, we saw Sheinbaum get elected with 60% of the vote, retaining the leftist government. Sheinbaum's platform is that the government's role is to really solve the economic ill- inequality kind of throughout the country. She is a Jewish scientist who believes in technological progress, but her orientation is really around having institutions manage progress, not individuals in free markets. We've seen this broad across other places. In- in the UK, there was a big election in this past week, but I wanted to take a step back and just highlight that there is this kind of emerging tactical alliance that we've seen repeat a few times between the left and the center that pushes back against the right globally. But really what I think we're seeing is a much bigger shift...... where there's this bigger battle between socialism and free market democracy. And I think that we're seeing it all happen at once because of globalism and because of the fact that globalism has enabled, just like we've seen manifest in the United States, massive and significant economic progress, but at the cost of a small number of people becoming very wealthy and a large number of people feeling left behind as a result of the wealth accumulating in a major way to a small number of people. And the reaction that we're seeing in France, in India, in Mexico, in the US, in the UK, is all very much kind of aligned that there is this big push that socialist practices can perhaps resolve the inequality and the inefficiencies that are seen in the markets today. And this is being manifested in a lot of really nasty ways. First of all, I think it's rationalized as being, "Hey, there's economic excess for a few while the majority are left behind." It's activated by big bureaucracy, by anti-free market principles, and by tax policies and spending policies that will ultimately cripple economic growth. And I, I don't wanna say I'm against taxes, 'cause I'm all for taxes to make up for budget deficits, but I think the results are ult- ultimately across all of this gonna be what we saw happen in Argentina, which I think is on the other side of this problem, which is unsustainable debt accumulation, massive inflation, and crippling unemployment. And I think that we should really take a hard look at what's happening around the world right now as being all related. All of the industrialized world is voting in a similar way and starting to shift in a similar way that we should be fairly concerned about and pay a lot of attention to. In the US, there's this expectation that Trump is gonna totally trounce Biden if Biden stays in the race. I think that if we see the same sort of thing happen in the US, in that the psyche of people, or that we feel left behind, that there's a hierarchical system that disadvantages the majority of people, because economic progress is not proportional to everyone, you could end up seeing a surprise sort of voting system emerge in the US where the Left may win, because socialist principles are on the rise in the psyche of the youth-

   4. JCJason Calacanis51:06

      Hmm.

   5. DFDavid Friedberg51:06

      ... in the industrialized world. And I'm not saying I'm making a prediction about how the election's gonna go in the US, but I do think that there's a big kind of fundamental change underway here.

   6. JCJason Calacanis51:14

      Sax, you didn't mention immigration, specifically Muslim, uh, Islamic immigration in France. That seems to be a big part of this issue that people aren't talking about and the lack of integration of that, uh, population into society. In fact, you know, I- I've been told by folks in France that it's kind of the opposite, like, H- uh, Islamic, Muslim immigrants are kind of shunned and aren't integrated by the French people themselves. I'm not sure how true that is. I don't have a lot of firsthand experience in it. But how much of that is part of what's happening in this right, left, you know, uh, donnybrook occurring in France? 'Cause they're literally on the streets fighting and, yeah, rioting.

   7. CPChamath Palihapitiya51:57

      Yeah. Look, I- I don't think that the huge demand for socialism is what's driving the results in France at all. Let me explain what happened. So the- the- the way that the voting works in France s- uh, you know, unusual system to our eyes, where they have a first round of voting. And in that first round of voting, Marine Le Pen's party, National Rally, won a strong plurality of the vote. And the map looked like this, where it literally, they won every district in the country except for Paris. I mean, it was a really dominant performance. And so people were expecting major reform. And J-Cal, you're right that Marine Le Pen's major issue, her party, is the unlimited immigration that's taking place into France. The French people, or a substantial portion of them, are up in arms about this and actually this is something that's very common across all of Europe. They're tired-

   8. JCJason Calacanis52:52

      They're very nationalistic, let's call it what it is.

   9. CPChamath Palihapitiya52:53

      Well, it's- it-

   10. JCJason Calacanis52:55

       They care about their culture.

   11. CPChamath Palihapitiya52:56

       The indigenous people of France are opposed to the seller colonial invasion that's happening from the global South, and they want to preserve their French culture and society and nation as it has always been. And they do not see how this unlimited immigration from the global South is good for them. It's not good for them economically, it's not good for societal cohesiveness, it's not good for crime, and so on. So this is undoubtedly a huge driver of National Rally's success. But then what happened is that i- in the French system, there's a second round of voting a week later, and we got these results, where National Rally still got the plurality of the vote. They got 37% of the vote, but they only won 142 seats. Whereas Macron's party got 22% of the vote, won 148, and then a collection of parties called the New Popular Front, which is basically, uh, a collection of far-left parties, under the radical socialist Jean-Luc Melenchon, won only 27% of the vote but won the most seats. And this is what I think Friedberg's reacting to is that the Socialists ended up with the most seats. Well, how did this happen if National Rally, Marine Le Pen's party, got a lot more votes than New Popular Front? The answer is that Macron, President of France, conspired with the far left to have 200 candidates quit to basically drive those voters, the voters in, let's call it the center left, over to the far left, in order to block Marine Le Pen's party from winning the number of seats that they otherwise would have.

   12. JCJason Calacanis54:35

       So just to, to recap what you're talking about. They have two rounds of elections here. They have a first round, a second round. If you don't win, like, the majority in the first round, then it goes to the second round runoff, and then strategically-What Macron and his party did was they took the multiple parties and said, "Hey, we'll just have you all drop out and consolidate our votes," almost like, in a- in a microcosm in the United States it would be like RFK giving, dropping out at the last minute and saying, "I endorse this person" on left or right.

   13. CPChamath Palihapitiya55:04

       Yeah.

   14. JCJason Calacanis55:04

       So they did a very strategic thing to-

   15. CPChamath Palihapitiya55:06

       Right. But they went district by district and they basically said-

   16. JCJason Calacanis55:09

       Oh, great strategy. Yeah.

   17. CPChamath Palihapitiya55:10

       ... "Okay, hold on. In this district we're gonna let the... we're gonna have, uh, Macron's candidate drop out and endorse New Popular Front."

   18. JCJason Calacanis55:18

       They cut the votes.

   19. CPChamath Palihapitiya55:18

       Exactly. So that's what they did. So-

   20. JCJason Calacanis55:20

       So brilliant.

   21. CPChamath Palihapitiya55:22

       Well, it's a manipulated result and what it ends up with... Look, a lot of people said, "Sachs, you're saying that they rigged the election." Look, they didn't rig the votes, okay? I have no reason to believe that the votes aren't real, but they did rig the candidates in order to frustrate the desire of the French people for reform, the reform that Marine Le Pen was offering. And Freeberg, you're interpreting this as basically a big endorsement for socialism. I don't think that's what this is. I think that what happened here is that the center left under Macron was willing to throw the election through legal... I'm not saying they did anything illegal, through legal manipulation.

   22. JCJason Calacanis55:55

       Yeah. They consolidated the candidates.

   23. CPChamath Palihapitiya55:57

       Yeah, exactly. And so it's... To me, it's just, it's sad that, you know, one- one person tweeted that "We- we voted for reform, we voted for s- national sovereignty. We voted to restrict unlimited immigration and what we got was communism. This isn't what we voted for."

   24. JCJason Calacanis56:15

       Right.

   25. CPChamath Palihapitiya56:15

       And so it's just kind of sad that what's happening is that the system, the system politicians are essentially getting together to frustrate the popular will of the people.

   26. JCJason Calacanis56:26

       Le Pen's party still got outvoted in each of those districts, right? Is that correct?

   27. CPChamath Palihapitiya56:31

       Only because-

   28. JCJason Calacanis56:32

       They dropped a candidate.

   29. CPChamath Palihapitiya56:33

       ... 200 candidates basically-

   30. JCJason Calacanis56:35

       Dropped out.
6. 1:06:10 – 1:15:55

   Hot swap update: President Biden holds firm as backers flee, chaos in the press corps, speed-run primary chances

   1. CPChamath Palihapitiya1:06:10

      that out.

   2. JCJason Calacanis1:06:10

      Let's wrap up here on the, uh, hot swap summer update and the speed run primary. Biden still insists he's still running for president and he will not stand down. Since the last episode, so much has happened, including George Clooney writing an op-ed in the New York Times this week, "I love Joe Biden, but we need a new nominee." Two weeks ago, Clooney co-hosted a fundraiser, Katzenberg and some other Hollywood bigwigs, that raised 30 million for President Biden. Uh, twice as much as you guys did for Trump, but, I mean, this is Hollywood and, and Clooney is on top.

   3. CPChamath Palihapitiya1:06:46

      Well, they had, they had 95,000 people. We had 100 people.

   4. JCJason Calacanis1:06:49

      Yeah. I know. I'm just saying, it's very-

   5. CPChamath Palihapitiya1:06:50

      It's different.

   6. JCJason Calacanis1:06:50

      ... impressive what you guys did.

   7. CPChamath Palihapitiya1:06:51

      (laughs) . Sure different.

   8. JCJason Calacanis1:06:52

      Clooney is also besties with Obama.... and Obama has, uh, put out a tweet in support of Biden here, but according to a Politico report, Clooney gave Obama the heads up before he published this. NBC is reporting that Biden has lost his donor base. Anonymous quotes, "The money has absolutely shut off." "It's already disastrous," two of the sources said, uh, "This month is on a path to be down by possibly half or much more from large donors." Adam Schiff, who is as, uh, partisan as they come, said, "Biden should slow down and make the right decision here." He also said he should get new counsel, independent counsel, so... That was on Meet the Press, and Nancy Pelosi gave a non-answer when asked if she supports Biden as the nominee, and again, as partisan as they come. Tim Kaine said, "Complete confidence Joe Biden will do the patriotic thing in regards (laughs) to future's nominee."

   9. CPChamath Palihapitiya1:07:48

      My gosh.

   10. JCJason Calacanis1:07:49

       Yeah, that's pretty rough. And Axios reported-

   11. CPChamath Palihapitiya1:07:52

       What... Jason, Jason-

   12. JCJason Calacanis1:07:52

       ... that Chuck Schumer-

   13. CPChamath Palihapitiya1:07:53

       ... let me, Jason, let me, let me ask you.

   14. JCJason Calacanis1:07:54

       ... has sick-

   15. CPChamath Palihapitiya1:07:54

       I'm putting, I'm putting you on the spot here.

   16. JCJason Calacanis1:07:55

       You're putting me on the spot.

   17. CPChamath Palihapitiya1:07:56

       Y- you've seen, you've seen all these clips.

   18. JCJason Calacanis1:07:58

       Yeah.

   19. CPChamath Palihapitiya1:07:58

       Do you think that there's an active cover-up going on by the White House-

   20. JCJason Calacanis1:08:03

       (laughs)

   21. CPChamath Palihapitiya1:08:03

       ... about his cognitive state?

   22. JCJason Calacanis1:08:04

       Hold on. Nostrakanus is gonna make a prediction.

   23. CPChamath Palihapitiya1:08:07

       (laughs) Oh, wow.

   24. JCJason Calacanis1:08:07

       Ah, I've got it. A whistleblower will emerge in the next 10 days. If you are a doctor, a nurse, a secretary, an EA, or part of the inner circle here, and you know he's in cognitive decline, whistle blow it, hock two on that whistle-

   25. CPChamath Palihapitiya1:08:25

       (laughs)

   26. JCJason Calacanis1:08:25

       ... and get it out there, folks.

   27. CPChamath Palihapitiya1:08:27

       (laughs)

   28. JCJason Calacanis1:08:27

       Because-

   29. CPChamath Palihapitiya1:08:28

       Oh my God.

   30. JCJason Calacanis1:08:28

       ... we know there's a cover-up.

Episode duration: 1:25:37