4/2/26: US Allies Turn On Trump, Israel Takes Massive Fire, Iran War Ending US Dominance, AI Bubble

26:04They would have to build a runway, a temporary runway to have to come in and come out. They would have to drop the special operations force, and they would have to drop a force to protect the special operations force. And it would take close air support and ground operations to make sure that nobody could even come close to them as they take the weeks and or months to actually carry out this mission. And a lot of people obviously think that that's totally crazy. But what's even crazier is that it could even be in the works. Remember the 82nd Airborne is there. You've got special operations units.

26:35But we wanted to flag this. This is a viral video that came out from San Diego. Can we go and put this video up here on the screen where a user actually took this video of excavators that were moving via train to the naval boatyards in San Diego? They said, look, we don't know obviously why all this equipment is moving in, but you could see that it was very clearly moving on the train to potentially good reason. There's a lot of use for military assets and for things like that. But don't forget San Diego, all of the special operations forces and conventional forces that are all stationed there, not to mention the naval base.

27:12So we did want to flag it as at the very least you can see some of this type of equipment, which is making its way to the base. And who knows from where it could go. I don't even really know if it would have to be shipped over there. Of course, if they have to also drop it in via air, but you can see very clearly what this would entail. It's not just some grab-and-go style mission. The Iranians know you're coming. And remember in our last show, Crystal, we told everybody they hit that ammunition dump in Isfahan, not a missile city, an ammunition dump specifically of artillery and of weapons, which would be used as defense in some sort of ground combat operation.

27:50I don't think that was a mistake, that they hit that and that you're seeing all of this. I'm not saying it's going to happen, but saying if they did, they're setting the ground if they want to. I mean, those are some of the signs we talked earlier about the A-10s. That would be another sign, you know, that those are going to the region. You've got also reports that some additional infrastructure around Isfahan has been struck, things like, you know, bridges and other logistical infrastructure that would make it more difficult for Iranians to respond to any sort of an attack there. Also worth noting that this completely insane plan to seize this nuclear material, this was drawn up apparently at Trump's request per this report from the Washington Post.

28:33So this wasn't something the military was like, here's one of your options. Here's another option. Here's the Cargill and idea. Here's this. I know he was like, what would this actually look like? Which I think is just a demonstration that this is the this is a direction that he is very interested in. You know, it has a lot of Trumpian hallmarks. He would be able to have some sort of a victory narrative. He would be able to claim, as he did after the 12-Day War, that their nuclear program was completely obliterated and there was no chance for them to develop a nuclear weapon. And so he would be able to assert some sort of a victory out of this whole mess.

29:11But very likely, given the highly risky nature of what is being contemplated here, it could be a complete and utter disaster where it just completely fails. At the very least, it's highly likely you will have significant casualties to come out of such a risky operation. And then once you've had a large number of American service members killed, are you really able to just walk away at this point, at that point? And how does Iran respond? How does Israel respond, et cetera? So if I had to say this is the direction that his psychology would most lead him towards, I'm not even sure whether he's particularly made up his mind about exactly what he wants to do.

29:55It seems like he's getting a bunch of assets in the region to have a whole lot of different options. But to me, the idea that they're just going to continue this air-only campaign for another two to three weeks, it's not going to fundamentally change anything in terms of the strategic objectives. And then he's just going to walk away with his presidency in shambles and having effectively, you know, de facto declared a complete surrender to the Iranians. That's very difficult for me. The other problem with this whole two to three week timeline is, you know, the war is going to continue and it's not just us bombing them.

30:29It's them bombing us and Israel. So let's put some of this video up here on the screen that we have. Israel continues to get pounded every night. And remember, they're rationing missile interceptors. They are having a lot more sites that are struck. Anybody can go and can watch video of all of the damage that has happened in Tel Aviv. Just yesterday, there were multiple foreign journalists and others reporting the number of intense missiles barrages that were coming in as a result of Iranian ballistic missiles, which were not being intercepted and were actually striking, as you guys can see, just from the ground of what it looks like.

31:09You did not see much of this in the very opening days of the war when their interceptor stockpile was much more. That was, I believe it was an oil refinery that you all are watching right now on your screen. And you can actually see, let's put the Times of Israel report up there, they are even admitting right now Iran and Hezbollah launch attacks as Israelis are hosting the Passover Seder, sending the millions into the shelters. But they also note that the number of strikes was more than at any time since the first week of the war. So it's actually an increase in the number of missiles that you saw that were coming directly into Israel.

31:46Not to mention, again, all of the targets across the Gulf. Let's go ahead and put D5 and some of the other video that we have from the Gulf strikes. This was a very striking video that came out. This was an Iranian missile coming in and hitting a facility near U.S. troops. You can actually see one of the troops there who's in the video. There's multiple other videos that even came out overnight before we started the show of facilities, U.S. facilities in Jordan that were being struck. I mean, just all across the Middle East. And remember that there's an intense amount of censorship that is coming out.

32:20We do know that some 300 or so U.S. troops have been wounded now so far. I believe six remain seriously wounded. The vast majority have returned to service. But this continues for two to three weeks. You just don't know. You had the refueling tanker that went down over Iraq that claimed the lives of some four service members. You've got 13 now who've been confirmed dead, several hundred who have been wounded, I believe a dozen or so who were seriously wounded, and six or so who remain in critical care. So it's not like that we haven't had a toll ourselves, not to mention all of the energy infrastructure and other things that continue to be targeted.

32:59Every day you can watch and see the UAE, Straits of Hormuz, attacks in the Straits of Hormuz. You've seen attacks in the Dubai, like in the port, against Saudi Arabia. There were multiple missile strikes that happened there. And they still have the capability and the capacity to launch strikes at the critical energy infrastructure. They're holding off on it for right now, but they're ready to go if they need to, if there's some sort of escalation. So just keep that in mind. And we do have D6. This is part of the problem about the strategic logic which is happening, is that Axios is reporting the Saudis sound like Mark Levin.

33:38They want the U.S. to finish the job by wiping Iran off the globe now. we don't want to, is what you have now is a situation where the UAE and Saudi, who have gone all in with America, right? Well, now they're held hostage their entire economies by Iran and the streets of Hormuz. They don't want to pay the hostage toll, even though that would be the rational thing to do at this point. It would probably be easier for everybody involved. So they're pushing the U.S. like, no, you have to finish the job. You have to finish the job. And then America's in a very tough position, right, Crystal? Because, well, we can follow their lead.

34:13We could do what they want to the detriment of our people and of course of our forces, our nation, what we want. But if we don't do what they want, then maybe they're going to say, well, okay, then all your troops have to go. So we're in a very tough position where the people who are in the region who are US allies are the people who are actually going to push us the hardest to continue on with the war. It's only Qatar and Oman really, which are the ones who are like, look, we can find some sort of diplomatic solution. And remember that's only because they're much closer to Iran, the rest of them who are really all in and who have their own problems, they are really pushing America to escalate this war.

34:48So it's an alignment of Gulf interests and Israeli interests to continue the war. Yeah. And we can put D8 up on the screen here, which speaks to that with regard to UAE. I mean, basically they're sort of feeling like, all right, we're in. And for them, it truly is existential because Dubai, Abu Dhabi, you know, these family U.S.-backed monarchies that are installed there, they do not feel that at this point, given the way that they've been hit by Iran and the risk that would persist if the U.S. just walks away, they don't think that that's something they can bear. So they asked the U.N. to approve this measure to force the Strait of Hormuz open.

35:27You know, not that the U.N. really has any teeth in this regard, but trying to get some sort of international consensus around the idea that what Iran is doing with the Strait of Hormuz is in violation of international law. And then this report, D9, we can put up on the screen from the Wall Street Journal, also was quite extraordinary. They say UAE wants to force Hormuz open and is willing to join the fight. So meaning they would not just allow the U.S. to use bases in their country, but they would also actively join as combatants, which would be extremely significant. And so, yeah, if you join as a combatant and then the war ends without Iran, you know, without the strait being open, with Iran maintaining significant military capabilities, that is going to be a dire situation for UAE.

36:19So that's the logic that they've adopted at this point. And so if Trump tries to sort of unilaterally walk away, which to me is looking less likely all the time, but let's say he tries to do that. Well, Saudi is going to be calling him. UAE is going to be calling them and basically being like, what the hell? You can't do this. So one of Iran's major goals that they've talked about from the beginning of this war is we don't want U.S. bases in the region. And a lot of these countries are going to look in the aftermath of this and say, was this really worth it to have these U.S. forces on our soil and make us and our countries and our people and our key assets to make them a target as well?

37:02That's the problem. I mean, I really do get it from their perspective. You're Saudi. You're the UAE. you have bought tens of billions of dollars from the United States. You have invested hundreds of billions, if not trillions, into the U.S. economy. It was built on a singular, singular promise. We do this. You protect us. Now we created a situation where literally almost 100 % of their economy is reliant on the Strait of Hormuz, which we have now created a situation where it's closed. and we're telling other countries, hey, you got to go and you got to open it, which is not like Saudi and the UAE can.

37:40So they're like, hey, what was all this money for? We literally, this is the reason that we did it. So you got to go and you got to finish the job, but we don't want to. So then for them, I mean, what are they going to do? They're going to rewrite the way that they have their entire economy or security relationship with the US. That seems untenable. It seems equally untenable for them. I mean, they just took all these missiles and all these hits from Iran. Can they really just sit there and be sitting ducks? Theoretically, yes, but you would need a bunch of security guarantees and other operations from the US, which are not going to happen.

38:11Or you could abandon America, which also seems equally disastrous for them because now they do have this real existential threat. So they're in a real tough spot. I don't see any situation in the near future where they're paying the Iranian toll. I just, I can't see it right now because the amount of pain they've experienced, It's not enough to get to that threshold where you want to make a deal with your enemies, even though, unfortunately, they'll probably get there at some point if we stay the course of where we are. Or we're just going to escalate to an insane and dramatic occupation, which also seems, you know, very, very likely if we continue on this course.

38:52And, you know, you can just see, though, that the damage that they're taking in Israel and in the Gulf, that only points in one direction. You know, to rational people, maybe people like we're watching, listening to this, are like, wow, we should get out of this. Yes, we agree. But for them, it only pushes them up the escalation ladder and increases the logic of total war, which would, of course, draw us in and create this conflict in an even more prolonged situation. It's really bad. All right, we've got Nicholas Mulder. He is a historian of economic warfare and a professor at Cornell University.

39:23He's going to join us now to talk about the end of the ability of the U.S. to wage unilateral economic warfare. When people turn to telehealth or weight loss, they're looking for real support. That's why more people are choosing orderlymeds.com. Orderly Meds connects you with real doctors and access to proven GLP-1 medications like semaglutide and terzeptatide. No guessing, just a more supportive experience. And all shipped directly to your door in discreet packaging. Do your research, ask questions, then visit orderlymeds.com slash podcast for an exclusive offer. That's orderlymeds.com slash podcast.

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40:28We'll be right back. and lets you backtest it against the S &P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com slash podcast and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash podcast. Paid for by Public Investing. Brokerage services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Generated assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice.

40:59Complete disclosures available at public.com slash disclosures. Let's talk about modern home shopping. It's sort of become a fun side hobby, right? Scrolling listings at night, dreaming about kitchens you've never seen, or backyards you haven't even stepped foot in. All from the comforts of pretty much anywhere. Redfin knows a lot of people like you want to own, but are stuck in this browsing mode loop. That's where Redfin flips the script. With listings that update within minutes, and tours you can book right from the Redfin app, you can see your dream home the moment it appears. Now, liking a listing is easy, but actually landing it, that's where Redfin comes in.

41:38Redfin has over 2 ,200 agents with local expertise. And Redfin agents close twice as many deals as other agents. That means they want to help you win, not just window shop. Redfin is built to help you go from just looking to wait. This could actually be home. So become the newest neighbor on the block. Visit redfin.com to start finding and start owning. That's redfin.com. Joining us now is Nicholas Mulder. He is a professor at Cornell University. He's an expert on economic warfare sanctions, and he wrote a very interesting piece in the Financial Times that we wanted to talk to him about. Let's go ahead and put this up here on the screen.

42:18This really grabbed my attention. What you wrote is that the era of U.S. dominance in economic warfare is over. America has long used sanctions to coerce adversaries, but Iran and China can wield powerful economic weapons too. Nicholas, tell us a little bit about the study that you've made here now so far of U.S. sanctions, their effectiveness now, and how they're working out in this war with Iran. Yeah, so the United States came into this century, the 21st century, with a really unique position of economic power, And it's been using that for years against many countries to impose economic and financial sanctions.

42:55So Iran has been under sanctions since 2009. They were briefly lifted. And then there was a nuclear deal. And then Trump got out of that nuclear deal in 2018 and reimposed maximum pressure sanctions. But if you look at any number of other conflicts, there were in Ukraine, of course. There were big sanctions imposed against Russia, export controls on ships going to China. So it's been a big part of U.S.-Chinese competition. North Korea, Cuba, Venezuela, all the conflicts I think that we are seeing at the moment really involve the use of sanctions. And the United States has been using them a lot really because it gives an easy alternative to boots on the ground and to directing more military effort towards these conflicts.

43:39But increasingly, you see that the sanctions not only don't really work or they take a very long time to work, they also have really counterproductive effects. One of them is that the targets of these sanctions begin to cooperate more. So a lot of these countries are driven together more by the fact that they're all exposed to this US pressure. We can see that at the moment, particularly in the rise of this big shadow fleet, so a very large part of the global transport infrastructure that is now being devoted to basically trading oil outside of the reach of US sanctions. And increasingly also regimes that are exposed to it, countries that are exposed the sanctions becoming more and more hardline.

44:18They don't see any real reason to negotiate with the United States, and they don't really trust the United States' negotiating position. And for that reason, I think that sanctions often first built as an alternative to war have now really become kind of an on-ramp to war. And this is a conflict where we see that too, really. Yeah, that's a fascinating insight, and I think an important one. The other one, Well, you have a number of insights here, but another significant insight in this piece is just how consequential it will be if Iran maintains control and there's a new status quo with regard to the Strait of Hormuz because that effectively gives them a powerful sanctionability as well.

44:59Yes, absolutely. And it'll be very interesting to see in the next few weeks if a regime for the control of the Strait of Hormuz emerges. There are some indications now in the last few days that Iran has begun to levy tolls on ships that can pass. And moreover, that it is implementing a kind of tiered system of egress, so of being able to leave the Strait of Hormuz. Friendly countries that are friendly to Iran. So we have confirmations that Pakistan, but also the Philippines and China have been able to send tankers and ships through the Strait of Hormuz can go through it without any problem. Then there seems to be a group of neutrals that are forced to pay tolls.

45:37And here the question is really whether Iran imposes a very heavy toll or if it's going to be a light one. One of the things about this current energy crisis caused by the war is that actually the cost of one or two dollars per barrel toll is not that much. So it actually, I think, might be surprising how quickly countries see this as a price worth paying to regain access to some of their energy flows. After all, the United States has imposed 15 % tariffs on most other countries last year, and most countries accept that too. So it's actually, I think, possible that countries accept this more quickly than we might expect.

46:12And then the final group of countries, those are hostile countries in Iran's words, they are continuing to be denied access to the Gulf and also the ability to leave from there. And I think one of the things we might see is that Iran is going to really use that three-tiered system to try and break up some of the coalition behind the war and to try and move countries that the U.S. is now hoping might help open the strait-of-ramews and tear those countries away from the United States, try and explore some rifts in that coalition. And particularly Asian countries are in a very dire situation, so they really need access.

46:50So we'll have to see how it's used, but potentially a very powerful source of diplomatic leverage for Iran here. Got it. So, Nicholas, you just referenced, let's put E1 up here on the screen. This is about secret codes and demands for won fees to get ships through Iran's Hormuz toll booth. What you're saying is that sanctions, and specifically I really think the Ukraine sanctions, created the runway for this new ecosystem of oil and these shadow fleets that move across the seas, and that Iran in this situation is really the beneficiary of that and could accelerate that trend of booking oil on Chinese yuan or on crypto entirely outside of the U.S.

47:29banking system, which makes sanctions effectively irrelevant in any sort of future conflict. Is that right? Yeah, that certainly seems to be one hope. Whether they can do it is an open question, but they definitely have means available to them in the infrastructure that's grown up around that shadow fleet to make those payments and receive them. And the question is how many neutral countries and other traders in the rest of the world are going to enter that system and use it basically to settle these trades, even if they, in doing so, run the risk of being exposed to US financial sanctions. And that's going to be a difficult calculus to make.

48:05But I think as this energy crisis gets worse, we will see more and more countries trying to run the risk of being entangled in U.S. financial sanctions because ultimately what you would like more and what countries need more for their economy is energy, fertilizer, all the things that pass through the straightforward moves, right? So there's a real premium on being able to access the physical goods. And some measure of financial sanctions risk may need to be tolerated. And moreover, we've seen also the Trump administration already lift some sanctions on Iranian oil already at sea. They've lifted them on Russian oil at sea.

48:37That wasn't intended at all. It was really an improvisation to deal with the second order effects of their own economic war and their direct military attack on Iran. But it's already shown, right, that in principle, the US is willing to lift some of those sanctions. And that too, I think will strengthen the Iranian negotiating position. So one question is, depending on how long this war goes on, whether Iran will ultimately agree maybe to open Hormuz to all countries in return for a much broader sanctions lifting. So that's also financial sanctions on Iran. That means the ability of other countries to invest in Iran and potentially help reconstruct some of its economy, things the Iranians have been wanting for many, many years.

49:19And they've always lacked the means to do so. And potentially now they have an instrument in their hands with which they can try and negotiate for that broader access to the world economy. Got it. Let's talk about Russia a little bit more here, because Sagar and I have been tracking, you know, the, I guess, degradation of the U.S. sanctions regime, especially as it applies to Russia's war on Ukraine. And, you know, we made Russia the most sanctioned country on the planet, and certainly it had a negative impact on them. But they also had planned for that, and they've been able to withstand that, you know, aggressive sanctions regime.

49:53And now de facto they are getting some significant sanctions relief because of our desperation, the desperate situation that we find ourselves in because of a war of choice in Iran. So how impactful do you see those developments as being in terms of sort of, you know, creating an alternative financial infrastructure that allows people to evade sanctions and also in demonstrating that there are severe limits to the ability of the U.S. to really extract, you know, effective pain or force some sort of regime overthrow with our sanctions? Yeah, I think that the shadow fleet as it's emerged in the last decade, decade and a half, has really been an important factor in continuing to facilitate this trade.

50:36And it has now also created a whole network of shell companies. Oftentimes, these are in jurisdictions where, you know, individuals and companies also go to evade taxation. So this is an offshore economy that also exists for the benefit of corporations and of people with a lot of money who put their assets there. And the shadow fleet is using those same jurisdictions. So we're talking about Caribbean islands. The Emirates actually are an important hub of this as well. Hong Kong, and places like this. And the shadow fleet depends really on a network of brokers and intermediaries that can incorporate companies in those jurisdictions.

51:16And the question then is, can the sanctions policymakers in the United States and in Europe track down those companies quickly enough to put them on the sanctions blacklist before these people create new companies. And it's a real cat and mouse game. And we've seen right in the global fight against tax evasion that no matter how well-intentioned you are, it is very difficult to keep tracking these offshore entities quickly enough. It's possible, but we are going to need a big investment in state capacity to do that. And more broadly to your question, Crystal, about the limits of US leverage, I think one of the things that the Russia sanctions have really shown is that Asia is the absolutely pivotal economic player in the world economy when it comes to making sanctions effective and particularly making them hermetic.

52:01And one of the things that was sorely underestimated in the run-up to the war in Ukraine is that Western policymakers believe that if they launched very big sanctions, those would be sufficient and they didn't really need to incorporate large Asian economies. And what the last three, four years have shown is that if only China and India continue to buy Russian oil, that is actually enough to keep the Russian economy afloat and even doing reasonably well. The sanctions are definitely imposing costs on Russia, but they can survive for the time being. And they're not under any immediate, very strong pressure.

52:35And that's really key. So I think that the Russia-Ukraine war is the first geopolitical crisis where we see that Western economic power alone is not enough to make sanctions decisive. You really need to have Asian countries on board and even all the major Asian economies. And that's exactly what you see in this crisis, too. It really, I think, is going to be a question of how Iran and the Asian economies negotiate because those links are the most important. and that's I think where we're going to see the most important developments about what might stabilize out of this Hormuz control weapon. Got it.

53:12Well, thank you so much for joining us, Professor. We appreciate it and we'll continue to read your work. So thank you. Appreciate your time. Thanks very much for the invitation. Pleasure. Are you trying to get weight loss support through telehealth, but it feels overwhelming and rushed? Check out orderlymeds.com now. Orderlymeds.com was built to be different. Here, you connect with real doctors who take the time to understand your goals, review your eligibility, and guide you through a plan that's right for you. Orderly Meds provides access to proven GLP-1 medications like semaglutide and terzepatide, including both name brand options and personalized compound versions when appropriate.

53:48So you have choices backed by clinical oversight, not guesswork. It's a simpler, more supportive telehealth experience designed around people who want clarity, care, and confidence in their weight loss journey. And your medication is delivered directly to your home in discreet packaging. So your experience stays private from start to finish. Do your research. Ask the right questions. Then visit orderlymeds.com slash podcast for an exclusive offer. Again, that's orderlymeds.com slash podcast. Individual results may vary. Not medical advice eligibility required. See site for details. Support for the show comes from Public, the investing platform for those who take it seriously.

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55:00Go to public.com slash podcast and earn an uncapped 1 % bonus when you transfer your portfolio. That's public.com slash podcast. Paid for by public investing. Brokerage services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC registered advisor. Generated assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available at public.com slash disclosures. Let's talk about modern home shopping. It's sort of become a fun side hobby, right? Scrolling listings at night, dreaming about kitchens you've never seen or backyards you haven't even stepped foot in, all from the comforts of pretty much anywhere.

55:37Redfin knows a lot of people like you want to own but are stuck in this browsing mode loop. That's where Redfin flips the script. With listings that update within minutes and tours you can book right from the Redfin app, you can see your dream home the moment it appears. Now, liking a listing is easy, but actually landing it, that's where Redfin comes in. Redfin has over 2 ,200 agents with local expertise. And Redfin agents close twice as many deals as other agents. That means they want to help you win, not just window shop. Redfin is built to help you go from just looking to wait. This could actually be home.

56:15So become the newest neighbor on the block. Visit redfin.com to start finding and start owning. That's redfin.com. So very much related to the war, although a bit of a separate issue, we've been tracking some signs of concern, we'll say, in the massive AI sector, in the AI data center sector in particular, which has been the backbone of what's kind of kept the U.S. economy afloat in spite of declines in almost every other sector of the economy. So let's put this up on the screen. I saw this with quite a lot of interest yesterday from Bloomberg. They're saying that half of U.S. data centers planned for 2026 are expected to be delayed or canceled.

57:00One big reason is a shortage of electrical equipment such as transformers, switchgear, and batteries. U.S. does not have the manufacturing capacity forcing it to rely on imports. And very much, Sagar, related to the last segment we did on economic sanctions and economic power, most of those imports come from China. So we are, you know, really betting the whole farm on this AI revolution. The particular approach that we have taken, that our AI companies have taken is building out as many of these data centers as they possibly can. There is an insane amount of money being spent here. You also have a political backlash in all of these localities, you know, that's really cross-partisan against these data centers being located in the town.

57:51And then while this big bet is being placed, at the same time, they're projecting out all these data centers that they don't even have the parts to build and, you know, are trying to import from China, et cetera. But even trying to import them, they simply don't have the materials to build out what they have promised investors they are going to build out. So seems like a pretty alarming situation. Well, let's also remember, what did Ryan and Emily cover in their very first show yesterday? Amazon facility got hit in the Gulf. And I actually don't think we can take this away from the war because let's think about it.

58:27The AI data center is fundamentally needs cheap power. Like the reason why we're in a crisis with data centers in the first place, why it actually is like a binary choice between data center or our own electricity is because we don't have the electrical grid capacity. Right now, LNG and gas prices are actually pretty good here in America, and it's largely because we don't have the capacity to liquefy it and to send it abroad, which doesn't make it as much of a global commodity. However, it's very possible in the future that we may have to ramp up liquefaction and export in order to backfill a complete closure of the Straits of Hormuz.

59:04And remember, that's what Donald Trump wants. He wants Europeans and others to come and buy LNG and other products from America. That would actually increase the overall price of our own electricity prices here in the US, which would make it much more difficult for these AI models and others, and data center projects, which need cheaper power. And then on top of all of that, you have venture capital investment. A massive portion of venture capital investment comes from the Gulf. Also, it comes from all over the rest of the world, sovereign wealth funds, et cetera. Guess what? What's happening with all that money?

59:38It's drying up or at the very least, they're having to massively pause a lot of their build out. So there's like multiple factors as to why this is all going to continue to spiral. And the AI bubble, you know, itself was propped up on big tech valuations, which were obviously disconnected from reality. But fundamentally, what is the US economy? We don't really make a lot of shit. We just buy it. We're a massive consumer economy. Well, we're all about to take a huge haircut on consumer spending because of gas prices and because of inflation, which just means, by definition, consumer spending is going to go down.

1:00:15That's going to drag down everything, not just AI bubble plus consumer sentiment. So you put all this stuff together and you can see how the real economy would go down, why an AI bubble pop is very, very much, I think, in an open conversation. And that was the only thing propping up our GDP at all, was building out these data centers. It's another reason why the war, what a folly. What a folly. You're going to go to war and hit the energy supply of the whole world at a time when that's the only thing that's boosting the United States economy, and then drop the bottom out of consumer spending too.

1:00:49So it's a mess. And antagonize China, too. And at a time when you have not built out the industrial capacity to be self-sufficient, far to the contrary. I mean, a lot of during the Trump administration, in fact, we've gone backwards in a lot of regards with respect to trying to build out our own industrial capacity. So you're antagonizing the entire world. supposedly, you know, the way that the Trump administration and these heads of American AI tech companies, the way they see things as this like existential race versus China to be the first to dominate the AI sphere. And yet we're still in the most basic level, fundamentally dependent on China to be able to import these parts for a bunch of these rare earths, you know, all sorts of portions of this.

1:01:37We've also talked about helium being disrupted in the Strait of Hormuz and how that ties in as well. So just on multiple levels, we've created a massive crisis for the AI industry that we've decided to apparently bet our whole economy on. And those cracks are just starting to show. There were some, and let's put F3 up on the screen. You know, it's hard to say what's going on here behind the scenes, why these decisions are being made. But we've got Claude Code users who are hitting usage limits faster than expected. and they're putting in some limits for, you know, people who are extensively using Claude, sort of trying to pull back, especially during the highest use hours, pull back some of the usage of Claude.

1:02:20You also had this story, F4, where Sora, the video generation site from OpenAI, has been completely, it's being completely shut down, ending in April. This was announced with a lot of fanfare. This was a central sort of core promise and achievement of open AI. The idea was that Zorro was going to be a major part of their plans for the future. And now that is being shut down as well. Some of this, too, Sagar, speaks to the fact that the business models just haven't as of yet really panned out. You know, it has a lot of similarities to the early Internet phase where you had all these websites and all this promise.

1:03:04And yet a lot of, and obviously the internet worked down and a lot of companies did make a lot of money, but in the early days, some of the business models didn't make any sense. And so what these AI companies needed was a lot of time and bandwidth and patience from investors, willingness to continue to funnel them tons and tons and tons of money, cheap energy to continue this data center build out while they figure out some sort of revenue model that is actually going to generate profits that justify these massive investments. and what the impact of the war, I think, is effectively to dramatically shrink those timelines and put a lot more pressure on all of these companies.

1:03:43Yeah, I just think, you know, looking at, first of all, no tears for Sora or for their Disney porn, which is, let's call it what it is, that's what it was about, and all of their erotica that they just abandoned with ChatGPT. But really, I think, look, limits and server time is really about power. Like this is an entire conversation about power. And by the way, I mean, it's pretty shocking that we're in this crisis and not a single national leader is saying, hey, doesn't this mean that we should just like become more energy independent? And the answer is obviously yes. I actually anticipate all of the Asian countries and maybe a lot of the European countries, this could finally push them over the edge to nuclear power to overcome their 50-year hangover over the issue.

1:04:31They're burning more coal right now in Asia than probably ever before, and they will continue to do so as long as this crisis continues because people need electricity. But here at home, like this should be the impetus to be like, hey, we need to be 100 percent energy independent because even if we are a net exporter of oil, with oil at a global commodity, we're still very vulnerable to a shock. This is the – I mean why are we still paying$4 a gallon in gas if we are a net exporter? And the answer is because of this global commodity, which we still remain entirely reliant on, but where there's no like real vision or even plan really to do anything about that.

1:05:09And if you want a data center, you can have that too. If there's cheap and abundant power, then none of us really have to pick and choose. But that's what I think that this whole conversation is gonna be about in the future. And that's really bad for AI. And the worst part is that probably just means a recession. I mean, already, you know, things were on the edge in terms of inflation and consumer sentiment. But with gas at$4 a gallon for at least a few months, likely, you know, at this time, I don't know, how can you possibly, you know, pull out of a spiral like that? because of all the follow-on effects.

1:05:40Now you have high inflation, that means high rates and no rate cuts. There's gonna be a drop in the stock market. Already I think the stock market is down a couple percent at the very least year to date. It could have an entirely down year overall. All of these things are just bad. Also, one story you and I haven't talked about, private credit. I'm not sure if you've been reading or keeping an eye on that. Yeah, the private credit markets are really drying up. That has a lot of impact actually on tech, on venture capital and more. So that could be another place where everything could blow up, especially on top of what's happening with Iran.

1:06:13It's a majorly important financial story. Yeah, I was just looking. There was actually a headline that came across this morning that I was just looking for. Blue Owl capped redemptions after investors asked to withdraw 22 % of the private credit giant's$36 billion fund. So another private credit giant that's effectively experiencing bank run. And this is not the first instance of this that we've seen over the past several weeks. But, you know, zooming out to your point, I think nuclear, yes, is a potential option and renewables. And the U.S. under Trump has effectively bet, like, we're going to steal Venezuela's oil.

1:06:50We obviously have a lot of fossil fuel production ourselves. Trump has said multiple times now, you know, what he wants to do in Iran is take their oil as well. I think the bet from the U.S. in terms of energy was we are going to be this fossil fuel behemoth. And obviously it's not working out too well for us in terms of the Iran war, but that was the idea. China, meanwhile, has aggressively invested in renewable technology. They are at the bleeding edge in terms of solar panel development. Those renewable technologies have gotten much, much better. And obviously we've talked a lot about how their EV tech is just like blows Tesla, anybody in the US out of the water.

1:07:32So, you know, they're well positioned on that front as well, not to mention having been much more strategic about securing the supply lines to enable that technology as well. So that's the direction that they decided to, you know, that's where they decided to place their bets. And, you know, I think there's going to be a lot that's going to be pushing the world in that direction, because it feels a lot more secure than, you know, hoping that the oil supply through the Strait of Hormuz remains open and free and safe from any sort of interference. There was one last story that I just wanted to get in here because it had significant F2 on AI, which is that Anthropic, which is supposed to be the paragon of safe AI development.

1:08:16These are supposed to be the responsible players in the field. They accidentally leaked 500 ,000 lines of their own source code. and contained in here was obviously all sorts of information about how, you know, the product works and their approach, et cetera. There were also, there were also product updates that haven't been released yet that gave, you know, everybody in the world, including their competitors inside into, okay, here's what Claude Code is going to be the direction that they're moving in next. And I'm sure there's, I mean, of course, Anthropic is embarrassed and it's a major blow to them.

1:08:52It's To me, the significant piece is just even the ones who are supposed to be the responsible, good guys, being safe and cautious, et cetera, are prone to really self-destructive, incredible, sloppy, humiliating errors. And I don't think that that should comfort anyone about the direction that AI is going in. Very true. All right. Thank you guys so much for watching. We appreciate it. There'll be a Friday show for everybody tomorrow. And, of course, we're all on Ground Invasion Watch. So we'll see you all later.

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