DeepSeek, Open Source, Tariffs, DOGE, Market Impact | BG2 w/ Bill Gurley & Brad Gerstner

28:31You know, some people think this means, oh, we need to embrace open source and encourage more open innovation in America. And the other people think, oh my god, you know, and Dariel put out a long piece, you know, I guess consistent with his entire tenure here just begging for more lockdown and regulation. So let's go into that because I do think it's industry interesting, right? Sam and the industry response seems to be tipping more in the direction where we're going to go open to. And my suspicion is you will see that this year, you know, out of folks like like Open AI, but the discussion about deep sea clearly touched a national nerve, right?

29:09Jensen, you know, got called to the White House last Friday or we all see me. I think they said it was pre -scheduled. Well, I'm not sure whether or not that was the case, but let's assume it was. But it's opened up this broader conversation about whether the US can or even whether it's wise for the US to try to stop China from advancing along the AI frontier, right? And some of the arguments are human talent in China will always find a way to innovate, you know, keeping, keeping China six months behind is not worth the cost, scarcity fuels innovation. It turns AI into a global arms race or the one that I've been advocating is I think we've focused so much on slowing China down.

29:54We haven't focused enough on speeding America up, right? Removing, removing the regulations around power generation, all the things we need to get America running full speed. But I would say this is probably the biggest divide in Silicon Valley among technologists regarding, you know, kind of this president's policies, right? So there's a camp, as you know, of China hawks led by, you know, folks like, you know, Alex Carp was on the Palantir call last night, who viewed this as an existential holy war and that we must battle on every front and, you know, in order to slow China down. And then I would say there are people who are more what I would consider China constructivist.

30:33And I put you in that camp, I would put myself in that camp, I would put frankly, you know, Elon in that camp and others who seem to think that it's a losing battle just to focus on slowing China down. And what we really need to focus on is more engagement and speeding the US up. So can you lay out a little bit, you know, your views on those two computing sites and where we may end up coming down I think you framed it perfectly. The problem is that the, by the way, I think on the on the anti -China side in Silicon Valley, you have like three groups, you have the people like Dario who are, you know, maybe worried about competition, maybe worried about more, but certainly question that you have the new kind of VC back defense companies who all, and maybe I kind of put Palantir in that group, but they all, I think have an incentive to kind of have tension with China, if you will, it actually increases revenue.

31:36Now, come to the new Neocons. And then, and then I think you just have a large group of people who were raised to be anti -China. They're just, it's what they were taught growing up. It's the anti -communist thing. It's what got us into the Vietnam War. It's been around forever, but your parents might have taught you that like it's just in the ethos. One thing I would add to you on the wrist side, you listen to him, you listen to a lot of great points. You know, one thing I would add is that protection of US companies causes harm. Like Detroit is not globally competitive anymore. And putting tariffs on BIDs cars is not going to make Detroit more competitive.

32:19It's going to make them less competitive and they're going to fall further behind. And I think this idea of raising the wall and increased decoupling is a super dangerous idea. We may find that the rest of the world is perfectly fine by 10 ,000 BID cars and using deep sea. And we may we may just be shutting ourselves. I found this interesting data point I wanted to share with you. To highlight my fascination with China, I've kind of studied it over a very long time, friend. It turns out most people have no reason to know this, but in 1820, China's economy was wide open and they actually had 33 % of the global economy.

33:0633 % of global GDP was China. Most people probably wouldn't know that. And the reason they might not know it is because 150 years later at the end of Mao's reign and Mao had raised the wall and kind of turned China inwards. They had fallen to 5 % of global GDP. And they've been working their way back from that. So we know this emergent China from that place. But you know, that's the real risk. If you're not a globalist, if you don't believe in all the great economic work that shows how specialization can work to the benefit of everyone and you close that wall, you may be surprised at what happens.

33:47To wrap this section, it does the perfect segue to talk about terrorists. But I would say this, I think there is a middle ground. I took a little, when I first read your tweet, you would rather, you know, it's better for an open source Chinese model to win versus a foreign. I knew what the hell you meant. Then a closed US model, I want team America to win on this. I want a, you know, I would love to see the US frontier labs open source more stuff. I agree with you fundamentally on the principles of open source. I believe they will. And unquestionately, I want to see the US win when it comes to the race in AI.

34:29And I know you do too. Secondly, I would say on this is that I think a lot of the things that we've done in the name of being tough on China, right, are actually counterproductive. It takes the eye off the prize. It slows us down, right. And it doesn't focus on speeding us up. And frankly, it's not very effective or backfires entirely in terms of slowing China down. And one of the places where I think that this bill, you know, takes us to is really Trump's tariffs that brought us to the fore this week. But you have something to say. Yeah, I just want to say two things to what you said, and then we'll go to the tariffs.

35:12So one, you know, I was being provocative when I said foreign, and you could read China. But if you think about it, like Linux doesn't have a geography, right. And so one possible reality that I don't think meets your goal of America wins is you get to a place that's Linux like where the model doesn't have a sovereignty. And because of the 1300 variants of R1 that are on hugging face already, like the, and because of that MIT license, though it could be that model that wins, you know, it doesn't have to be the one that they're doing. It could be a fork of it. So anyway, I wanted to make that point.

35:55And then the other thing I wanted to say on just on a wrist side, you know, and by the way, there are proposals in Congress right now. I just that it would kill open source that would say we couldn't use variants of R1. There's, there's like a lot. There's a huge breath of of perspectives, as you already said. But I think if you, I think I can imagine that if you just poke China enough, if you keep poking and you keep poking and you keep raising the constraints, you increase the odds that they make a run at Taiwan. And I just think it's important to always think from their perspective, you know, and and I just think we need to be careful about how hard we push.

36:40We may end up with the exact worst outcome. Unintended consequences, right? So this week we woke up, you know, or really ended Friday at a late press conference the president had and then it went into effect over the weekend, right? 25 % tariffs on on on Mexico and Canada, 15 % tariff or 10 to 15 % tariff on China. Before we dive into the economic debates foreign against tariffs, let's just kind of lay this out. You know, so Monday morning, the markets overnight Sunday, the markets are falling a lot. Monday morning, Kevin Haset, chairman of the National Economic Council comes out on the White House lawn.

37:16He said, oh, these are all being misinterpreted. This is not about a trade war. This is a drug war. This is about fentanyl. You know, he did happen to say we may revisit in the future as part of a tax reform strategy.

37:32So then the president on Monday talks to both sides. They both commit 10 ,000 troops to the border to fight fentanyl and you delay the tariffs for 30 days. And I think the market reaction now is that they're not going to hit it all. So let's first start on what we think happens here. So help me predict what you think happens. And then I would love to get into kind of the merits and the merits from an economic and from maybe the tech industry perspective on this tariff strategy. So Brad, I'm going to be brief because look, this is more your world than mine. You're looking at a lot of large public companies and all the things that impact them.

38:11You know, even I guess even the medium size public companies I work with, especially if you have physical goods, you've got supply chains all around the globe. And I imagine one thing you've had to do in your shop is when a new tariff pops up, is just immediately asked, well, who's impacted? Who sources there? Who, like who, who had, and you know, probably just creates a lot of chaos, right? In the short term, as we try and figure those things out, you know, there's different Foxconn plants all around the globe, right? And different people's sorts, different, you know, whether it's fashion products or anything, you know, from Vietnam or from Indonesia or from China.

38:52During COVID, I think one of the things we realized is there is some flexibility. They can move, move a lot faster than people thought. But it's still chaotic. And based on, like I, as I said, you know, my default is a globalist. Now, I don't know enough to know if we have unfair deals that need to be honed and that this is just a means to an end. And if so, maybe it's not that big a deal. I don't believe that creating a lot of, you know, bringing the wall up, as I said earlier, around AI, I don't believe that that'll be in the US's long term best interest. You make a good point about, you know, clearly Trump extracted a concession that was a pretty damn good concession from Canada and Mexico when it comes to defending the border, right?

39:42So as a tactical negotiating tool, you know, his batting average is exceptionally high. You know, whether it was getting Colombia to take the detained deportees where he threatened to tariff. And so I think that that's the market's reflexive belief. In fact, Scott Bessent, the Treasury Secretary, in a letter he wrote about a year ago to his investors, he used this concept that Trump's tariffs, he shouldn't be afraid of them because he said his strategy was to have a fully loaded gun, but rarely discharge, right? Fully loaded gun, but rarely discharge. And so the interpretation is he's just using this as a big stick to achieve very tactical goals.

40:22Now I call this bill the Bessent Consensus. I believe this is the market consensus view, the Bessent Consensus. But I want to throw out an alternative view, right? I think that Trump may in fact have a much, much deeper and more principled belief in tariffs. If you listen to his speeches, if you read him, then this goes back over a decade, okay? He believes that McKinley was one of the best presidents. He thinks that the country, he believes that the country and their arguments for this was at his peak or at his best during peak tariffs in 1880 and that you could in fact replace, when we moved to replace tariffs.

41:02So prior to 1910, which is when we got the income tax, right? The vast majority will put this chart in the pod. The vast majority of revenue to the US government came from tariffs. And then you see starting in 1910, basically revenue from tariffs plummeted and the amount of revenue that came from income tax and so security tax, you know, thereafter skyrocketed. And so I think there's a belief that replacing tariffs with high income taxes and corporate taxes has gutted the middle class. Not only did it destroy jobs in America, but in fact, cause these people to be burdened with taxes, you know, to pay for social services that could have otherwise been paid for by tariffs.

41:47So that to me is a variant view, right? If you believe that to be true, there is a much more principled architecture that he wants to move to that this is not the best consensus, which is have a fully loaded gun that's rarely discharged, but it's a fully loaded gun that you fully intended to discharge. So let's assume for the moment that he does have that view, maybe more of a fortress America, right? I think you've outlined where you stand on this. You believe that that hurts us technologically and it would hurt us in in terms of our global economic standing, is that right? Well, look, I'm not a a chair of expert, but when you told me you wanted to talk about this, I did I did some research and maybe maybe we could have your son or your son's professor on to talk more about this, but all of the, even the success stories around tariffs, if you ask, your favorite AI to tell you, they seem very short windowed, even the McKinley ones were like four years.

42:52So I don't know of a long term successful high -terror program. And I think it gets back to what I was saying about China, like pulling up the wall is, I don't think there's any economic argument that that works to help a country in the long run. And going back to the, I do want to take a brief second to talk about what you just said about the like the American middle class may have been affected by this. You know, there's a time and place when a country is in a great place to be competitive globally in scaling out production. And it relates to having a educated workforce that has a very low standard of living that's willing to work for a wage that's highly competitive globally and maybe willing to work 996, you know, right?

43:54Like way more hours than... 9 in the morning to 9 at night, 6 days a week. Right. And so if you look at when America, you know, was mostly successful scaling out as post -World War II, you're being decimated. Japan's been decimated. Yeah. And we had a lot of people moving up the social ladder and prosperity ladder as a result of being willing to do that. You know, if you fast forward to to where we are today, you know, I don't think there's any way to say this other than to be blunt. Like there are people in China, Vietnam, Indonesia, Mexico that are willing to work harder and longer for a wage that is radically lower than what people in the US are willing to work.

44:43And they're going to move from a place on the prosperity and social ladder that's low to a place that's still beneath the average American. And I don't know how, as a humanist, you can say they don't deserve that right. And I think we misinterpreted this as somehow a result of tariffs or trade. It's just global fairness, right? It's just good. But I think... But I think... No, totally. And I think you make a good point, a good defense for globalism, but I think the exact response would be if you're the president of the United States, you know, you're not looking out for, you know, the standard of living for all humans or for all people around the globe.

45:22You're looking out for the standard of living of people in the United States, you know, who you have a constitutional oath to. No, no, no. But my point is that even with that lens, you have to think about the dynamics around the globe and pulling up the wall and trying to get people to make a $40 microwave in America is going to fail. But you're just going to end up with more expensive products. We watch this happen in Europe. Like we watch this play out in Europe. You're just going to make yourself Europe. I do think there are some great economic arguments on this. Like I said, Kevin Hasis, Chairman of the National Economic Council, is at the Hoover Institute, you know, he's going to be on the front lines of carrying the tariff policy, defending the tariff policy.

46:07But if you look at the McKinley tariff, they certainly caused a lot of strife. But they're very good arguments that they helped us industrialize in a way we never would have. And more importantly, they helped us build critical strength heading into World War One. So had we not done the industrialization in 1880, 1890, would we have been even prepared? But the world does look very different today, Bill. Global supply chains, the cost of shipping is radically lower, et cetera. But I thought what was interesting is, you know, the Fed actually did a study on the the tariff in 2018. They did it. I think it was on washing machines, you know, and they basically said it led to a lot higher pricing for washing machines, right?

46:47Where there were, you know, tariffs put on them. And even for dryers that had no tariff put on them, but because they're usually sold together, the prices went on those as well. And interestingly enough, even the domestic producers raised prices, because now the competitive market had raised prices. So they know how to price an umbrella that they could raise prices into. And I think they concluded that very few jobs were actually created. Now they were looking at this only two years in a Rears Bill. So they, you know, again, they weren't looking at the long run effects of, you know, did this play out.

47:19So I think, you know, one area I'm really focused on for Silicon Valley. So imagine a tariff on, you know, on GPUs or on chips, right? Which has been threatened this week, like they're talking about just a tariff on the market. We actually can't make those chips in America, right? We do don't have two nanometer, three nanometer fabs where we could build them even if we wanted to. So when I look at that, that's really just a tax on chip manufacturers and on the end buyers, right? So that would be a tax on the Nvidia's and AMD's and others. And it would be a tax on meta and Amazon and all the folks that would have to have to pay that tax, which which likely means that you get less chips purchased and less AI research, right?

48:08So if our number one goal is to win the race in AI, this is a classic case where in the short run, I think it's self -defeating. But I do think there are ways to do this where you can bring more fabs to the US. But if you wanted to have, you know, if you want to have a permanent 50 % tariff on all chips in the US starting now, I think like that's this, that's just going to have negative repercussions. But if you said all the 50 % tax on chips, but I'm going to delay it for two and a half years and you have to meet these hurdles for building fabs in the US, et cetera. So more of a negotiating tactic than it is kind of a permanent and a higher tax.

48:43I think there are some, you know, some some really good outcomes of that. We're less dependent upon Taiwan, which is, you know, always threatened by a, you know, what what most people believe is a foreign adversary, you know, less dependency in the case of some situation evolving there. So I think it's going to have to be something that we watch. But the main thing I wanted to point I wanted to make today on this is don't be lazy in believing the best consensus. Don't think that this is just about, you know, a negotiating tactic. Go back and read the speeches. I think Trump and Trump's administration has a much more principal view here that maybe a value added tax equivalent, a tariff that is somehow, you know, a proxy for these value added taxes is a more efficient and better mechanism for helping the middle class in the United States than an income tax.

49:33And, and, you know, and we saw that that back door was kind of left open. You know, we said, Terris, maybe we may come back to Terris as part of tax reform. So keep your eyes out for that. Well, and look, any analysis of this situation is made more difficult by the blatant reality that even if Trump is just using tariffs as a negotiating chip, he can never say that out loud or it would take away the, their ability to be used in that way. So he has to be obscure about it either direction. And so it makes it harder to know exactly what, which ways up. So let's move on to Doe. So you were in Washington.

50:15What took you to Washington? And, and, and would you see what's your perspective of Doe's and like I love the update on your specific visit. But then could you reflect on why or why not Doe's matters to attack him? Yeah, no, I think this is so, I think it's so important because I think again, like with tariffs, we're in this fog of war bill. Right? Where, you know, you like their change brings a lot of contentiousness. And I think sometimes we lose, you know, the basic facts of what we're trying to achieve here. It's super important to understand that there is nobody like Elon. I mean, he's truly an end of one in working on issues like this.

50:57You know, so he's working 20 hours a day. He's working through the weekend. His team is in fact sleeping across from the White House and, you know, in the executive office building. But most importantly, right? Elon is a systems thinker. I mean, he literally showed up in Washington. And he didn't do what normal people do when they show up in Washington, which is, you know, fat, you know, fed all the politicians and understand, you know, what he needs to do in order to play by all the rules that everybody else has. He just starts asking questions. And not surprisingly, the first question he asks is, who sends out the wires?

51:33Like, who controls the wires? Can I just get a list of all the wires that are scheduled to go out? Like, what are we, what are we spending the money on, you know, over the next month? Have they been audited? You know, and as I think he started doing that, of course, the Leviathan of Washington just convulses, right? Because they're like, whoa, nobody questions, nobody, nobody looks at the wires. He's like, well, that's kind of what, you know, the president has asked me to do. So I need to do that. And so the antibodies, you know, really started attacking when the only thing he really asked to do in the first instance is, you know, his first principles led him to thinking that, you know, like, where, where to look?

52:12So, you know, I want to bring it back to this idea that changes hard, but changes necessary. Right? We're simply talking about his whole purpose here is to balance the budget that both parties have proven the inability to do in the normal process. And most people agree it's, it's bankrupting the country. And so it's not that hard. You know, we, we showed this on the pod where we went through. If you just returned to the baseline of 2019 bill, if we just go back to the baseline, grow up by two and a half percent from 2019, you balance the budget in this president's term. Right? But that requires us getting a trillion dollars cut off the COVID high.

52:56We lost our minds. Remember the letter to meta time to get fit. It was like, we lost our mind. Well, Silicon Valley's gotten fit. We, we've made some reductions, but government hasn't gotten fit. It all hasn't done anything except stay at that COVID high. And all Elon say in his listen, let's just go back. Let's start with just getting a trillion of this out, which is, you know, the excess that we put in. And so the other thing that he's doing is he's literally live blogging this on Twitter. You know, he hosted this Doge spaces on Sunday night. Anybody, you know, can join this thing. It's not like they're hiding anything.

53:29Sunday nights of euphemism. It was a midnight Easter. Which, you know, to me, I mean, it's not that. I mean, I think most people thought that was like, he didn't be a mischievous. I, what, what I took away, I mean, the guy works around the clock. Right. That was a free moment. Right. And, and like two, two congressmen, and you know, yeah. And so one of the things I tweeted on Sunday night after that was if we do this, and if we tell, if we, if we tell the American people, you know, that we're going to do this, and we put together a believable plan where you're going to cut a trillion dollars and balance the budget in the next few years, I'll tell you what's going to happen.

54:09Right. Interest rates are going to come down. Right. Because the whole reason bond vigilantes moved into the bond market and started shorting it is they thought, okay, here we go. Trump's going to stimulate the hell out of the economy with a continuation of taxes, et cetera. And nothing's going to really change on costs. And I think the big thing that I came back thinking is people are wrong. Right. Like there, there is a fundamental difference in how these folks are attacking, removing inefficient spending from the federal government and getting us back to what is a very sensible 2019 baseline.

54:46Remember, nobody thought in 2019 bill that we were like starving babies in the streets because our spending was so low. Nobody thought that, okay. Like everybody thought we were spending plenty of money 2019. And that's all they're talking about. And yet if you watch the convulsion coming out of Washington, you would think that, you know, something very draconian was going on. Well, I mean, but you would expect that, right? Like, um, we don't have term limits. We have lifelong politicians in Washington. They, we, because of citizens united, it basically can raise money, unlimited amounts of money from corporate interests.

55:27I, you know, I gave the speech a year and a half ago on, on regulatory capture. I'm, I'm not surprised that the, the entity that is Washington pushes back on someone that wants to take away the tools that give them power. I'm just telling not, not surprised. Well, I think, I think what people expected, frankly, is, you know, immediately after people started seeing the relationship with Trump, what's the first thing people did? They all started speculating how long until the relationship blows up and, you know, Trump always fires everybody and, and just the opposite is happening. And then I think they all expected Elon just to come to Washington, not do anything like just to maybe make some recommendations to Congress on things that could be cut.

56:11But you and I know, Eli, like, there's no chance he's going to Washington to just like, you know, run some research and make some recommendations. So I think that was, uh, misplaced. So let me tell you how I think Doge fits in with the normal budget process because I also think this is very misunderstood, right? So remember, I think the way to think about this in your head is we have two tracks going on here. Track one is the normal budget process. And in this case, they're using a, a, a, a parliamentary tool called reconciliation. Okay. And basically what that means, I'll spare you the details.

56:48But this is out of the white house led by Kevin Hassett in the house, obviously led by the speaker and the house budget committee. But basically, recommend, reconciliation is a special budget process that allows you to get an omnibus budget bill past Congress without having to get to the 60 votes in the Senate that is filibuster proof. Okay. And they're working hard on this. I expect some meaningful improvements that will come out of this and spending. I suspect that Doge will be offering their ideas. How to save some money in this. But this is kind of the normal process that occurs in Washington.

57:22And the president, I think it said he wants something to sign out of the reconciliation process in April or May, right? And so it has to go through this normal. All the committees are going to have their hearings. They're going to put together the budget that they think complies with reconciliation. There's going to be a grand negotiation, you know, that occurs with 10 people around the table. And you know, all the horse trading that usually occurs in Washington. So that's track one bill. Track two is Doge and cuts in spending by executive authority. And this is the part that I think has Washington up in arms.

57:58So that's what you see that's causing the fury. Elon is advising the president and then the president is deciding in real time whether certain people need need to be cut and whether certain spending should be stopped. And when the answer is no, this amount of money and these people are not required to faithfully execute the laws that I've been given, they say they're going to downsize the executive agency tasked with executing the law. And they're going to stop spending the money that they believe is wasteful and not needed to fulfill the law. So they're saying, especially in the face of a national fiscal crisis where we're falling further and further into a debt spiral, we need to do this.

58:41So they in the town hall on Monday, not around Sunday night. You know, for example, Elon called USAID. So this is an organization that's quite controversial. You research it that spends $50 billion a year on foreign aid. Okay. And it has thousands of people in the agency. And he said between I think among employees, it's probably closer to a thousand or two and then a lot of contractors. And basically what Elon said on Sunday night is I called the president. I told him, unfortunately, there's no apple to be saved. It's a total ball of worms. If there was just one worm in the apple, we'd pull the worm out, but the whole thing is a ball of worms.

59:23So the whole thing needs to be shut down. And we're we're we're we're going to let thousands of people go and we're going to save $50 ,000 on the budget or $50 billion on the budget. It subsequently looks like on Monday that, you know, they made a deal where Mark a Rubio, right, who's the secretary of state is going to become the acting director of the agency. And now it looks like they're going to eliminate whatever they think is wasteful. And then they'll consolidate perhaps other parts of that spending into the state department. But basically, this is what Bill caused Schumer and folks to come out on Monday morning, declare all of this activity unconstitutional to say that, you know, nobody elected Elani can't do this.

1:00:07It's unconstitutional. And this is where I think you're going the whole challenge is now going to move. But remember, this has nothing to do with track one, right, except your angering a lot of people on the democratic side. But this is really about track two. Does the president have executive authority not to spend money that they deem is wasteful? So you asked me a question and and and maybe we'll touch on it for a second earlier, which is, is it constitutional? Right. And so I think that's a pretty fascinating constitutional question. I've consulted with a lot of people, I think, are experts in the area area.

1:00:43And I do expect that Schumer or a group of members as early as this week is going to file, you know, a claim, a lawsuit in federal court where they say that there's a violation of the constitution under article one section nine clause seven, where Congress has the power of the purse strings and the Supreme Court, you know, as long upheld this. You know, basically the Supreme Court has said separation of powers generally support the idea that it's Congress who appropriates funds and anybody else who doesn't spend those monies that would be unconstitutional. So that that's likely the argument they're going to make, Bill.

1:01:18And they're going to say immediately they got a cease and desist from, you know, Elon shutting off wires or not spending money or shutting down USAID. Now I happen to think that's on pretty weak footing. Okay, but it is go I think it's going to have a bizarre weak footing. Why? So just think about this for a second, right? The president has the authority to execute the laws. And there's this doctrine that's known as impoundment, which the courts largely recognize. And it's basically the president saying, okay, I see the law that we're supposed to uphold. And I don't need all this money. And in fact, I have a further and maybe supreme duty, an overriding duty to the constitution that supersedes the constitutional control of the purse to execute faithfully the laws to protect the general welfare of the American people, which he might argue includes protecting the country from bankruptcy.

1:02:13Right? So he's just saying, listen, I'm doing my duty. Yes, I'm executing all the laws they told me to execute. However, I'm doing it for less money. And given that we're in a national debt crisis, I need to do that in order to protect the American people. So I think that this is going to eventually come to head. Imagine it goes to the to the Supreme Court to decide. And I think there's a decent chance along the way that at a minimum, think about what what Chuck Schumer is going to have to defend. He's going to have to defend some of this really crazy spending that we all know exists. I mean, I don't think there's anybody in either side of this argument who doesn't think there's a bunch of inefficient and silly spending by the government.

1:02:55So effectively, that's the that's what you're going to have to defend if you want to defend this lawsuit. So I think the political pressure is going to be massive. This brought to bear, particularly because Doge is being so transparent on this, right? Like you do not want to be defending every single line item to the American people, which is exactly what Doge is going to put you on the spot to do. And so I think two potential outcomes. Number one, the political pressure causes, you know, them to cut a lot more as part of track one, right? This reconciliation process. Or number two, that the Supreme Court actually does, in fact, recognize some more expansive, you know, executive power around empowerment.

1:03:38But, you know, I think either way, you know, I imagine before this is all said and done bill that we're going to see headlines that say Elon causing a constitutional crisis, right? That, you know, we have the we have the courts involved. And you have the solicitor general that's that would be defending the executive branch and the White House on on this matter. Now, bring it home, you know, and as I said in the question, bring it back like, why does this matter for tech investors? What let's presume it goes either way? What's it going to mean to how tech investors should be thinking about the markets and and tech stocks?

1:04:19Yeah, I mean, just think about what were the three topics we talked about today. The first one was like just massive technological uncertainty, right? Like where you said it, it's a pace of change you've never seen in your career, highly disruptive, multi, you know, companies that are valued at $150 billion that are being challenged by, you know, a Chinese startup on a shoe string. So you and I would both say our ability to forecast the future as to where this is going, right? Is is challenged because it's moving so fast. Then we talk about tariffs. Well, massive economic uncertainty bill. I mean, you know, free trade has been generally established as a principle in the economy for the better part of certainly for you and you and my entire investment career, the markets could count on that.

1:05:06And now I'm suggesting that at least there's some probability that this president is going to move in a very different direction, right? That maybe it's not the best at consensus that maybe it's something else. It's it's a we might call it the Trump new normal, right? Where tariffs become standard practice and maybe as a replacement income tax. So okay, there's a lot of uncertainty around that. And now this third one is political, right? Like it's been a while since we had a looming political constitutional crisis where, you know, where an issue between the congressional branch and the executive branch went to the Supreme Court, that also yields a lot of uncertainty.

1:05:44When you add these uncertainties up, what does it do for the value of assets that you and I look at, right? You and I are valuing those future cash flows. We have to apply a discount rate. Discount rate measures the risk associated with those future cash flows. So you and I have to take the discount rate up. Why? Because we're a lot less certain about technology, politics and economics. So to me, that means multiples come down and asset prices have to come down. Why the world sifts through all this. The surprising thing to me really builds how well the public markets have held up in the face of all of this, right?

1:06:18And I think part of that has to do with they believe Trump is going to be a super pro -growth president. You're going to have lower taxes, etc. But I think that's the risk on the table. As a risk manager, what I have to say to my team is, okay, we've got a downsize risk, right? You don't do the 10th best idea, right? Or the 11th best idea. You really got to make sure that you better understand this stuff. And so I think for the long term investor, perhaps they can just ignore the noise and they could say, I'm fully invested. I believe in the super cycle, AI is going to be great for everything.

1:06:55But what I would say to our friends at Silicon Valley is expect way more volatility. I think the next six months, all of this uncertainty means that you're going to have a lot of volatility. It's exactly what we felt all weekend long. It's exactly why the markets were gapping down overnight on Sunday. And then they did this U -turn because we got a change in policy or what appeared to be a change in policy out of the White House. And so, you know, welcome back to 2017, the team bill. All of this change may be absolutely necessary and totally good for team America. But it's going to mean that we have more sleepless nights.

1:07:31Yeah. And look, I think I think because of so much chaos and because of such massive uncertainty in regulatory action, and the fact that it can often backfire, I mean, I give you the example, like when deep seek popped up, first of all, I think this whole economic thing kind of got blown out of proportion. The paper originally said six million was just toward the post training. And somebody interpreted that as the whole thing. And then it led to, but, but a lot of people then, I would say a lot of Nvidia bulls ran out and said, no, no, no, they had way more Nvidia that way more GPUs than they thought.

1:08:09Well, guess what pounding the table on that may cause some in Washington to say, oh, we should have had higher restrictions. So you're an Nvidia bull. Think you're protecting Nvidia by exposing deep seek. And you may end up with sanctions that end up hurting Nvidia's revenues. So it's a dangerous place to play. Well, I mean, you just eat a showed. I mean, you have all of these forces at play. Listen, what do I do as an investor? You know, what did I do in the fall of 22 that led me into Nvidia in the first place? I just studied what was happening in technology in the company. I didn't have to think about free trader tariffs.

1:08:47I didn't have to think about export restrictions. I didn't have to think about, you know, constitutional crisis. All I had to figure out is, is the forecast for Nvidia too low because of the explosion we're about ready to have an AI? And that's the bet we made and we won big on. But now as I sit here today, the valuation for a video is much higher. And now I have to take into consideration all these other risks. And all I'm saying is all else being created equal. I think that the super cycle is, is, you know, if I'm just doing my fundamental analysis, I think it's on fire. I think we're going to need way more compute than we have.

1:09:21I think deep seek unleashes the amount of inference we're going to need. I think deep research out of open AI unleashes that. So I think the fundamental is bigger than ever. But at the same time, I also am humble in the face of what's known and knowable about the next 12 months, you know, around tariffs around export controls around all these other risks in the economy. And I just think we have to, you know, you have to look in the mirror and acknowledge that a lot of this is unpredictable. And that impacts what what folks are willing to pay, what multiple folks are willing to pay. And for our friends in the VC markets, right, particularly some of these high valued companies, you know, a mid and late stage VC, it's going to impact, right?

1:10:03There's always that lag effect. But the public markets and the risk appetite and the multiples they pay, that rolls downhill. And so I would just say I think that we may get to the back half of this year, and the next year. And it may in fact be the golden age and off to the races. But I think at the moment, it's the golden age of uncertainty. Hey, Brad, let's, let's, let's, I think that's, that's well said, let's close with where we started with the sovereign wealth fund. Thanks. So pick you to the pro or the con, make the argument. And then I'll take the other stuff. Well, I mean, I think you saw me post in our thread as a general matter, right?

1:10:42I'm, you know, I love the fact that we have people with business sensibilities and incentives looking out for America who want to negotiate on behalf of America, right? And who, you know, we sell, we sell wireless spectrum and licenses, right? I would love to see that go to the benefit of all the citizens in the country. You know, we, we, you know, have, you know, drilling licenses on national lands. That's that, that money belongs to the citizens. So I love that idea, you know, in the fund. Here's my challenge with it, Bill. We have 40 trillion in debt. And we probably have another 50 trillion of unfunded liabilities.

1:11:19So we're a debt or nation. And we're paying 5 % on all that debt. So the hurdle rate to our return that is needed on the sovereign wealth fund, right, is 5%. Otherwise, you would just take all those monies and you would pay down the debt, right? If this was our personal balance sheet. So what you and I would describe this is, is we're leveraging up the balance sheet of the United States to earn the spread between the sovereign wealth fund returns and the 5 % that we're paying to borrow all the money. So I think net net, I probably have it in place because I think it's a good tactical lever. You know, I do worry about what administration administration, it could lead to some crony capitalism and deal making that benefits certain people, et cetera.

1:12:04So I don't know. It's a close call for me, but I think it's going to happen either way. I would, you took both sides. So I'll do a quick, quick both sides. Yeah. I mean, in addition to the snares you talked about, and you and I have debated this in the past, but if I look at Goldman Sachs GM, even United, like if the government's going to be the lender of last resort, I would argue they should take all of the equity. And this could be a vehicle for that. Although there's nothing that's kept the government from doing that. I think in the GM case they did take equity. So it's like, it has done it in the past without the vehicle.

1:12:40I'm way more skeptical than you on the crony capitalism. It would be a 99 % certainty that this asset would be rated from transition to transition in the government. And I would highlight that probably the most successful sovereign wealth funds in the world are all enough talker sees.

1:13:10They're not into Korea to Canada. We have a lot of great sovereign wealth funds. But I do think, you know, that's fair. That's fair. One of the things I would say in all those countries, what you do have Bill is consistency and independence in the management of the sovereign wealth fund, independent from like some unilateral control by that by the executive branch. And then if you want to see how I can go really wrong, please go read Billion Dollar Wales. One of the most exciting books you could possibly read about what happened to the Malaysian sovereign wealth funds. So, as always, it's fun to get together.

1:13:50Thanks for making the talk. We'll talk soon. All right.

1:14:02As a reminder to everybody, just our opinions, not investment advice.