November 12, 2025 • 75 mins
A faster lap by going blind sounds reckless until you hear Lando Norris say he drives better with the delta display switched off. That’s the spark for a bigger idea we explore: acid capitalism, where imagination and shared beliefs move markets more than the neatest spreadsheet ever can.
We start with the critique that more frequent shows dilute intrigue and use it to sharpen the mission: reduce noise, focus on decision design. From there we test how narrative beats decimals in places you wouldn’t expect. An F1 franchise marked at six billion becomes a case study in brand economics. Nvidia stops looking like “just chips” and reveals its platform moat through CUDA and TSMC’s world-class execution, while hyperscalers quietly stretch asset lives to boost reported earnings. Tesla’s 20-quarter coil is not dead money; it’s stored energy that can compress a future rerate positive or cataclysmic into a single year. Meanwhile, China’s 10-year yield hovering below 2 percent acts as a simple, powerful tell for local equities.
We also dig into mispriced complexity. Spirits makers face a brutal cobweb: whiskey needs a decade, tequila seven years, and changing demand punishes inventory mistakes for an age. That’s why Diageo and peers trade near decade lows; not because the category is broken, but because time is. Pain today sets up tomorrow’s scarcity. We map one pragmatic approach: harvest option income against depressed, range-bound leaders to grind down cost basis while you wait for pricing power to return.
Along the way, we examine Bitcoin vs MicroStrategy premiums, joke about longevity supplements, and acknowledge the temptation to obsess over every decimal point. The takeaway is consistent: decide what to ignore. Turn off the dashboard that steals your attention, then do the simple, hard work and respect cash over optics, find moats that scale, and back visions that mobilise real capital.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:01):
We are we, you, and I, I believe we are recording.
And I missed a day.
I told you I was going to have amagnificent weekend.
I'd like to confirm that I did.
(00:24):
I found myself in Eden Rock.
I had a lunch that lasted fourhours with Trader Mike.
He regaled me of stories ofbeing the card counter at the
blackjack table.
(00:44):
But ladies and gentlemen, I missMonday.
I'm on Tuesday.
And I'm reading, I'm reading onI'm reading on the Twitter.
There's a guy and he wrote, he'scalled Jedi.
Jedi Pooh poop.
Yeah, poo-poo.
And he wrote, H H, increasingthe frequency of your podcasts
(01:08):
has seriously diluted theirintrigue.
You come across less funny, lessinquisitive, less interesting,
and more more like an old manrambling.
Truly less.
Less, my friend, is more.
(01:29):
What do we what do we say tothat, ladies and gentlemen?
Shall we do that?
Shall we shall we respond?
Sorry, sorry, sorry, sorry,sorry.
I'm still again until you sendme messages, I'm gonna continue
(01:49):
having fun.
I mean, come on, help me, helpme.
What do you think?
What do you think of the Jedi?
I'm less funny.
Okay, I don't know.
Less inquisitive.
Come on, I'm not lessinquisitive, less interesting.
I mean, I don't know.
(02:10):
Anyway, it kind of sucks whenyou hear that.
But for sure, and actually, itcoincided.
I was speaking to Gigi, my18-year-old daughter, today.
And she's like, Oh, I kind ofsaw your thing come up, the
headline come up.
She gets the email like all mysub stackers and Patreons.
(02:32):
He said, Oh, that kind of soundsintriguing.
And so I started watching it,and you were talking about
girlfriends, you were talkingabout everything except the
title.
So maybe Jedi has a point.
And I've taken a lot of notes.
So what I do is I kind of tryand take a computer log of my
(02:59):
inquisitive mind.
And so anything I read, I take ascreenshot of, and then I try
and come back to it and try andweave some sense, see if I can
weave a narrative.
There is always fear.
I don't know if you hear thefear, you don't hear the fear in
(03:20):
my voice.
But you you do hear it in thechaos of the beginning.
I have to just speak.
I have to become comfortablespeaking.
(03:40):
Damn, I forgot to put myrecorder on this.
I'm determined again to get thisbelow one hour.
Started at nine o'clock.
Yeah, so I have to speak beforeit all kind of begins to make
sense and I can begin to seewhere I want to push.
(04:02):
I am back in Blanc Blue.
I left the ghetto today.
I a point of order, a point ofbusiness order.
I will be traveling to Londonthis Sunday.
And I am going to be doing alive version of a podcast,
(04:23):
possibly this one, with thewonderful, with the wonderful
Nick Searle.
And I'm going to be, where am Igoing to be?
I'm going to be, let me see thisdamn thing.
I'm present.
I've never heard of thesecharacters.
I should be saying amazingthings about them, but Melo
without a W, M-E-L-L-O, MelloLondon.
(04:48):
I am day two.
And I do not look like RichardStaveley of Rockwood Strategic.
And I certainly do not look likeJudith Mackenzie.
Both fine.
I'm sure outstanding members ofthe financial community.
Instead, I look like the assetcapitalist.
(05:08):
And with Nick Sarrell onWednesday, the 19th in the
afternoon, Nick will beinterviewing me.
So if you're in London, it's atthe Clayton Hotel in Chiswick.
I don't think I've ever done agig in Chiswick.
(05:29):
There's always a first.
Wow, we're on five minutes.
Maybe I can try and sketch outthe meaning, the deeper
meanings, the layers, the layercake of acid capitalism.
(05:56):
A light bulb came on in my head.
And I remembered a an interviewI'd read with the Formula One
driver, who's currently numberone.
Looks like he's a more thanlikely contender for the winning
(06:20):
the championship this year.
And it probably came to mindbecause I saw that Toto Wolf,
who I think has about aone-third stake in the very
successful Mercedes Formula Oneteam, is looking to sell some of
(06:41):
his equity.
And again, I think we hold on asecond.
Let's get ready for.
I guess these things don't workif I'm kind of preempting.
The purported value of theFormula One franchise is quite
(07:01):
frankly absurd.
And I think marks a high watermark.
I'm going to say the number.
Six billion dollars.
(07:21):
Wow.
You thought football soccerclubs were expensive.
In fact, I'm gonna jump into theold chat.
Where's the old chat GPT?
Let's ask it.
Oh, actually, I've been using alot of grok today.
What?
My dear friend, what is the mostvaluable sports franchise?
(07:51):
Boom.
Any guesses?
Any guesses?
Should we should we do the thedrum roll?
I I actually'm gonna I'm gonnaban myself from noises for a
good five minutes.
Noises are sounds.
Results show that the DallasCowboys is the top Forbes NFL
(08:14):
team.
And you've got Real Madrid.
Talk amongst yourselves,Wikipedia list sites, the Dallas
Cowboys at 10 billion.
I just I anyway, regardless, Ithink six billion.
I was like, what?
Really?
Six billion?
It did actually.
(08:34):
The the FT article gave us somedata that we could actually make
a comparison.
Yeah, there you go.
Six hundred million in these aresterling figures.
And the valuation is thevaluation of sterling valuation.
He's looking to sell fivepercent.
Stake of five percent.
(08:55):
So that'd be a sixth of histotal uh total stake.
Um the and so we're competingsix billion dollars, which is
maybe five billion in sterling,with sterling sales of six
hundred and thirty six.
(09:17):
And that was two years ago, andthat had jumped from 546, so
that was like a 20% increase,and they're and a really big
jump in profits.
They're making 163.
What is that?
163 divided by 636, making 26%margins.
(09:44):
So, yeah, like you'd think likeyou'd think three, four.
Let's be generous, five timessales.
So six, so say six hundred andthirty-six, say it grows another
twenty percent, seven hundredand sixty-three.
You know what?
Let's round that up to eighthundred million.
Let's multi uh put it intodollars, one one, and let's be
(10:07):
generous, multiply it by 1.3.
That's a billion.
Yeah, that's how you get there.
And then they're saying, yeah,we're worth five times sales.
Okay.
Anyway, I thought the more thethe more interesting thing was
this quote from Lando Norris.
(10:27):
So um, he's a young English kid,and he seems to overthink and
definitely lives in the shadowof the the the Dutch champion
Verstappen, who again just seemsto have a lot of intelligence,
what do we call it?
Emotional intelligence.
But back um, I think three raceraces ago in Mexico, Mexico
(10:52):
City, Norris, he secured pole.
He'd been and he'd beenstruggling, he'd made a lot of
unforced errors, and then heseemed to get his shit together.
And he secured the pole positionon the grid, which is very, very
important given the incrementaldifferences between the cars and
(11:12):
their performance, it's soincredibly small.
And he's he got that poleposition because he was zero.
I'm rounding again.
I will not use three decimalpoints, and we will come back to
that.
But he was 0.3 seconds quicker,and that's quite a big deal
because this is the thirdshortest circuit in the in the
(11:33):
rostrum of the the places theygo over the year.
So it's it's really goodperformance.
And uh he was interviewing, likein his conversation from the
cockpit with his engineer,saying, even I don't know how I
did that.
And then he further alluded tosomething which kind of caught
(11:56):
my attention.
And he said, the less I know,the better I drive.
The less I know, the better, thebetter I am.
And I hope for for those of youwithin the 3,000 hardy souls
that download the show eachtime, I hope you recognize
(12:19):
that's something I say a lot.
I'm not professing or claimingthat I'm a Formula One driver,
but I'm I'm suggesting thatthere are similarities in what
we're trying to do.
And it emerged that Landogenuinely had no idea how he did
(12:40):
it until he actually crossed theline, until he actually got out
of the car and looked at themonitors.
You see, they have a thingcalled the Delta Time Display,
the DT, the DTD.
And amongst amidst his personalslump, going back going back a
(13:08):
while, he he turned it off, hedecided to drive blind the Delta
time display.
It reveals live and lap by lap,in fact, corner by corner.
And it's telling you, it'scomparing what you've just done
with your with your previousbest, um, with the the previous
(13:30):
best of the contestants.
Uh and it's telling you if youwhere you are, it's telling you
if you're on pole or close topole at any moment as you whiz
around that track.
And even having switched it offto drive blind, seemed, I mean,
(13:50):
not blind, but you know, it's Imean, is that not is that not
the fabled scene from the firstStar Wars movie when Obi-Wan
Kenobi says to Luke, who ishaving a a tough day in his
Formula One spacecraft trying toblow up the Death Star, trying
(14:14):
to guide his missile into theventilator shaft, because
they've discovered a flaw in theDeath Star.
And try as he might, a damn ductis very small, and Obi Wan
Kenobi says Luke, switch off theDelta Time display.
(14:35):
Trust the force, switch it off,Luke.
And so and I've got a quote fromnot Obi Wan Kenobi, not Luke
Skywalker, but our very ownLando Norris.
The thing when I don't have theDelta display, I push no matter
(14:59):
what, no matter how the start ofthe lap was, no matter how any
corner was.
And I guess it's because I'vegot no reference, and I'm always
just trying to maximize everycorner.
He said, otherwise I just stareat the damn thing too much.
(15:20):
And I thought, I thought tomyself, that Lando, that my
friend, that deserves a round ofapplause.
And and there were and I Ireceived there were two comments
(15:42):
from Substack of Patreons.
Jimmy was coming in saying, hey,AI cuts jobs, you know, the the
title, what if AI cuts jobsfaster than rates can fall?
Yes, and he was per top.
He's like, WTF.
I mean he didn't say that, buthe said, what is keeping
treasury yields up?
(16:06):
Every rule of the last 40 yearsseems to have been repealed.
Will they ever fall again?
And later on we might discusstenure Chinese sovereign bond
yields of 1.8.
They kind of rose.
They had a kind of a Z-scorekind of day on Monday after the
(16:29):
weekend release of consumer andproducer prices, which were
quite frankly a head scratcher.
The Beijing reporting in termsof consumer, forgive me, I think
the an acceleration and thelargest year-over-year leap in
(16:54):
consumer prices in in 20 months.
Which caused the 10-year to theyield to jump to 1.8.
But to Jimmy's point, I mean,like they're they're 4% in
America.
And and did someone wise saytrade a mic?
(17:14):
I mean, he was presenting, hewas the start on at the summer
camp.
I don't know if people hear itheard him.
And he's not alone.
Very wise, very successfulinvestors are saying they can
imagine adult unemployment being20% within the next five years,
(17:34):
I heard one say.
But is keeping long-termtreasury yields up?
Why are they four in America?
1.8 in China.
And then there was anotherquestion.
And oh my god, heavens, I've gotthis in quite low font size.
So the I'm gonna read thisquickly.
It doesn't really matter.
(17:55):
The latest uptick in volatilityis a sign of the shortage of
money, question mark.
So if the Fed response is to endquantitative tightening, and if
that doesn't begin untilDecember, and then it's
reinvesting into treasury bills,no, reinvesting into treasury
bills for cash, that's going tobe modest.
(18:15):
And reserves must grow, and andif the Fed concentrates purchase
at the short end, what if CPI isfalling?
What if long rates don't fall?
Etc.
etc.
The Fed's announcement, stablecoins, heavy treasure issuance.
Oh la la la la la la.
(18:37):
Bro, trying, trying, trying,trying too hard, maybe.
And I said to you, this is likea a log of whatever's coming
into my mind.
I think of the podcast as beingthe algo.
(18:57):
Is the podcast the algo or isthe podcast the output?
Not sure.
But the inputs definitely arethings like reading the
Financial Times, XX, otherfinancial publications, and
clearly the sports pages andwhatever else, a vogue.
(19:19):
I am loving, and I've certainlyquoted without attributing it in
the past, a YouTube series, achannel, which is called
Predictive History.
And I'm not suggesting you gooff and watch it.
But it is a professor in China,Zhang, I have no idea how you
(19:45):
pronounce his surname.
Zi Qin, I'm gonna say.
X U E Q I N.
I need a glass of gin to thinkof Zhang Zhiquin.
And so it's his class teaching,I don't know, philosophy,
history seems to becivilization.
(20:05):
And it is absolutely wonderful.
And the episode I listened to,heaven's god, I think after
lunch with Twitter Mike, I waslike passed out on the beach at
Eden Raw.
I was listening, I was listeningto it in my in my ears, and and
I discovered a trick actually.
(20:28):
I cut and pasted the the linkand put it into duck duck goal.
And I could listen to it withoutthe damn interruptions, without
all those adverse.
So that was good.
But it was a it was in praise,and this is me trying to get
back to this point of assetcapitalism.
(20:52):
The diff it was about theconceit of modern thinking, that
somehow our analyticalprocess-driven state of mind.
I mean, even at art school, yougo to art school today and half
the curriculum is how youprepare, process.
(21:14):
And this conceit that we aresomehow smarter than every
generation that preceded us, isquite frankly wrong.
And the and Professor Zhang isvery uh compelling and elegant
and very listenable in hisdissertation.
(21:38):
You know, and so the conceitwould be look at excuse who are
just listening, I'm gonna use myfingers, pyramid.
The the pyramids are a wonder ofthe world.
Some have been led to questionwhether they were built by the
(21:58):
Egyptians or it's evidence of asuperior civilization from
somewhere out there in theuniverse that happened to be
passing.
Such is the conceit that we'rebetter.
What if the ancients were betterthan us?
And where where that seemscredible is in a time long past
(22:27):
without computers.
What do you do withoutcomputers?
What do you do without pens andpaper, calculators?
What do you use?
Imagination.
And and asset capitalism is isabout trying to tap into the
kind of spiritual world.
(22:48):
I mean, I I believe that you andI that we're gods.
I mean, I do breathing exercisesand I bust the the circuit
breakers which drown the mindwith noise.
And and and there is a verysimple breathe, simple to
describe, very hard to achieve,breathing exercise.
(23:10):
And you go into like thisincredible, incredible
trance-like state.
I mean it does feel like you'relevitating.
And the chap who introduced itto me, who won double Olympic
(23:32):
swimming medals at the LAOlympics back in 1984.
Celebrated in the with HughHefner in the Playboy mansion,
and boy did he did he celebrate.
But thereafter, I've told thisstory before, but thereafter,
you imagine the dedication to bea swimmer.
(23:53):
Why, that's tough.
And he he did it, he achievedeverything.
What do you do?
And you go looking for somethingfulfilling because there's a big
void.
And he he he he barefoot walkedaround around Egypt in 1980,
(24:20):
probably 1985.
He slept on a pyramid on the onthe the the lower enormous
stones.
You didn't have the securitythat you have now.
It was actually possible.
And um and you know, he raisedthe question that hey, you know,
(24:43):
empire and and the economiesthat we that we have today, the
hegemon of America, the vast,vast Chinese economy, wouldn't
be possible if we all walkedaround like me, going, I'm the
Asset capitalist, I'm a god.
You know, and so instead we kindof pushed all that geist, that
(25:07):
tapping into the spiritualworld, and we closed it off.
And we became workarants, veryobedient.
That's how you create empire,and you close down that
imagination, and the pyramid,God, I may as well be doing the
(25:32):
guy's presentation.
See if I can remember, but thepyramid is, and I love that the
pyramid.
I'm doing the pyramid, I lovethat.
And you know, if you do anupside-down pyramid, it's like a
heart.
Pyramid, heart.
And the pyramid is like it'stranscendental.
Civilizations back then, no oneneeds something to believe in.
And they had very, verysophisticated religious beliefs.
(25:58):
And again, it was all we wereco-joined with spirituality,
with something that's invisible,but maybe there.
And we were trying to, thepyramids are all about, and and
all of these, they're temples.
And and they are not tombs forthe pharaoh.
The pharaoh, the pharaohs werethey weren't that type of, they
(26:20):
weren't, they weren't like, hey,let's build myself a big, like,
you know, a big cock, kind ofthing.
Like it was like, it was a giftfor the people, something that
they could believe in.
And you were bringing heaven,heaven on earth.
That was the tagline, heaven onearth.
(26:40):
And there was someone.
They there was the originalperson who got the Pharaoh's
ear.
And with this imagination, he'slike whispering in his ear,
telling him how wonderful.
I mean, you know, he couldn'tdraw.
There were no drawings, therewere no PowerPoint, there was no
(27:01):
presentation.
It was someone's someone'simagination.
They built it from the insideout.
Took 20, what, 20 years atleast.
And the imagination is sopowerful and virus-like, that
(27:21):
thousands and thousands andthousands of people, they call
them slaves.
They wanted to, they shared thisvision.
Heaven.
Heaven on earth, heaven isheaven is heaven is a place on
earth, Belinda Carlisle.
Like got me in into a blindalley for a long time.
So not alien technology, butcontagious vision, like the
(27:47):
telepathy that they shared likethe teleph telepathy without the
video monitor to to share theimage.
Imagination is the directparticiple in the process of
creation.
So we're million miles away fromthe manipulation of data or
(28:09):
process.
The closest I can think of isreally someone like Elon, Elon
Musk, Mars Project, imagination,making the impossible happen.
Actually, Elon, I I I I lookedat the something, yeah.
(28:30):
I I have to survey the the day'sheadlines, yesterday and today,
and so there's always a headlineon Tesla.
And I brought the chart up.
And I think it was Friday.
I was, you know, I think it wasmisreported.
And I Michael Berry was on hisex channel on Monday, pushing
(28:57):
back against Alex Carr fromPalantir.
And again, I'm going to comeback to that.
What I read and what he said wasjumping to the wrong
conclusions.
And I think I hope I hope youyou agree with me that I was
saying that would bepreposterous to say the headline
was he he was a billion dollarsshort Palantir.
(29:21):
And my point to you was a goodpro, and Burry is the pros pro,
would not be shorting Palantir.
It's a mem meme stock.
Yes, it's gone, it went fromwhat, two bucks to 230 bucks.
It's completely unpredictable.
And the granddaddy of all memestocks, because again it's a an
(29:42):
imagination, is telepathy, it'sElon's imagination.
And he's telepathic in thesharing of that imagination.
It's contagious.
Is is Tesla.
A trillion dollar meme stock.
I mean I want to say gold feelsas if it's become meme-like, and
(30:03):
that's a 35 trillion memes ofthere are bigger memes.
But I was looking, and again onthe Substack and Patreon, when
when I write this up and we dothe essay, I brought the chart
up again.
And if I look at the chart,you've got to think it's going
higher.
But it's a decision point.
(30:24):
And and the longer it decides,ooh, you know, I was saying to
you, the um the great error ofshort sellers were were the
people in 2020 and 2021 whoshorted every new high.
You don't short highs.
The intriguing thing about Teslais that you've now had and this
(30:48):
was the point of mentioning theTesla stock.
Again, I I would steer clear ofspeculation there.
If you think of yourself asbeing professional, because
completely it's just punting.
But I think it's I was I usequarterly data.
I'll be presenting this chart,and I think it's 20 quarters
(31:11):
where it has essentially gonesideways.
Now, in in a Tesla like range,highs of like what is it, highs
of 500 and lows of you know,like 125, but it's essentially
it's a it's a it's a compressedchannel.
(31:33):
And it really has to, you know,600 would really be a convincing
break.
But 20 quarters, and I I want tosay it was the same previously,
it was 20 quarters.
How history rhymes, doesn'trepeat, but 20 quarters between
2015, 2016, 2017, 2018, 2019,arguably 2014, where it went
(31:58):
sideways.
And then remarkably, all of themarket cap accretion was
achieved in one, two, three,four, five.
Five in one year.
One year it went from 16 to 270.
(32:18):
Anyway, the granddaddygranddaddy of them always Tesla.
And and so what has all that gotto do with asset capitalism?
It's imagination.
Imagination.
The consiving of contentiousnarrative, the imagination of
(32:45):
what tomorrow might bring asopposed to the process of the
spreadsheet, the process of thesuper super quick
telecommunication line.
The the need for PhDs.
How many PhDs do they have atcentral banks?
(33:06):
British central banks sold theirgold, sold half of their gold
right at the very, very bottom.
Oh, the PhDs at central banksare these geniuses right now
that central banks are buyinglots.
We don't know.
Right, right.
I do like that, but imaginationis the doubt.
(33:28):
I made that up.
Imagination is the directparticiple in creation.
Um and so again, to the Jedi guyYeah, I wasn't gonna do it
tonight.
I was like, ah you know, maybethe guy's right, but you screw
the guy.
(33:48):
And his meander and this ismeandering.
Yeah, it's there are no bulletpoints.
It's purpose, spiritual.
I'm seeking meaning.
I'm trying to replace hiscalculations with my
imagination.
(34:10):
I'm seeking I'm seekingtranscendence.
I'm seeking perception beyond myexperience as a human being.
Maybe I'm reading too muchSartre in Hidego.
But I think you and I we can gobeyond the present self.
Create pyramids.
(34:34):
Reach for the possibility of noof actually knowing what happens
next.
Reaching beyond ourselves.
Anyway, Michael Burry.
Um I again, I I feel like we'regoing back and forward.
You're like, yeah, we're goingback and forward, back and
forth.
But I feel like we're going backand forward because I believe it
(34:55):
was only last week I was talkingto you about at university I
studied.
I studied accountancy andeconomics.
A joint, I had a joint degree.
And I said to you, my finalhonors year, I studied
market-based accountingresearch.
(35:15):
And there I was before Applewith these funny box boxes
called computers with blackscreens and green font.
I was studying, I was studyingthe hypothesis that the market
was intelligent, and I wasstudying its ability to
(35:40):
distinguish between signal andnoise.
And and we were, as a proxy forthat, we were using company
announcements, announcements tothe stock exchange, which
involved changes of accountingpolicy, which would impact
profit, but not cash flow.
(36:02):
It would either increase orreduce, mostly it would increase
profit, but not cash flow.
And the theory would say themarket should ignore it because
the company's only worth thecompany is the present value
discounted of all future cashflows, not profits.
Profits are transcendentalagain.
(36:24):
I mean, they're not bringingheaven to earth.
I mean, for the CEOs, it mightbe given the bonuses they can
get.
But it's what is it?
It's it's a real it's it's thecult of religion and and and the
ability to to change themessage.
(36:45):
And my studies revealed that byand large the stock price looked
through it.
So interesting that and and I Idon't need Michael to tell me
this.
In fact, with Trader Mike, wewere we were actually discussing
it before his thing hit thetapes, before Michael Berry's
(37:06):
thing hit the tapes.
But these hyperscalers who areinvolved in spending what's
going to be trillions ofdollars, who've been cash flow
financed, but such as the scale,they're moving on to they're
gonna, and so it's been equityfinanced, but now we're beyond
(37:29):
debt, special purpose vehicles,and lots of kind of less than
transparent offshore of offshoreoff balance sheet financial uh
(37:49):
microscopes.
They've been extending theeconomic life, their estimate of
the useful life of their GPUs,their NVIDIA semiconductors.
They've been extending them by afew years.
(38:12):
Let's look at that.
Uh meta in 2020.
Useful life was three years.
Well, it's now five and a half.
Google was three, it's now six.
Oracle was five, it's six,Microsoft was three, Microsoft
is six, Microsoft has doubledthe the economic life
assumption.
Microsoft, really?
(38:32):
Bill, Bill, are you listening?
Amazon.
Amazon went from four to six andthen brought it back again a
little bit to five.
Well done, Amazon.
Is the market seeing through it?
Because Michael Burry did someback of the envelope estimates
(38:54):
that the extension of usefullife it on it lowers the the
annual depreciation charge.
You get that, yeah?
I mean, if it's got a three-yearlife and it's 90 billion, then
you're gonna have to charge uh30 billion a year in in
(39:19):
depreciation.
If it's now six years, thecharge against your profits
halves from 30 to 15.
So Michael Berry was sayingthey'll they'll understate
depreciation and thereforeoverstate profit by 176 billion.
(39:42):
Now they all trade on about 30times earnings.
So what's that?
That's$5 trillion.
Oh, the valuation of thesethings out by$5 trillion.
It's a big, big deal.
Oracle profits are overstated by27%, meta by 21%.
(40:04):
Interesting.
Back and forth.
We're being transcendental.
And and then of course a bit ofthe news today was Softbank had
sold the entirety of its Nvidiaholding for just under six
(40:25):
billion dollars.
And and I'd forgotten, but I'msure you you're wiser than I,
but it's not the first timeSoftbank uh has sold the
entirety of its holding becauseit it bought 5% of the company
back in 2017.
And two years later, it soldeverything for 3.3 billion.
(40:49):
And if it had held on and it wasselling that stake today, it
would not be raising sixbillion.
No, no, no.
It'd be raising, oh come on, weneed it.
Come on, be raising two, itwould it would be it would have
200 billion dollars that couldgo and waste another AI
(41:14):
ventures.
Um I mentioned that I'm workingthrough my notes here.
I I did mention that the Chinainflation core CPI accelerated
to 1.2%.
That was its highest in 20months.
And and again, the SubstackPatreon with the essay, you'll
(41:37):
see a chart of the 10-yearChinese yield.
And it moved from yeah, it movedabout six basis points, 176 to
182, but quite a big move.
But the if you were to push backa bit, look at it on the year to
date, 11 months or so, um, it'sessentially gone sideways.
(42:02):
Start of the year, these greatpolicy announcements, boom, you
know, uh, we're gonna we'rehyperscaling the equity market.
Number one economic policy inChina is higher stock prices.
And the tenure yield went froman incredibly low level of one
six to two percent, and thenpromptly came all the way back
(42:28):
to 160.
And then there were furtherannouncements, uh and the stock
market's been kind of catchingfire, and that yield is now well
was 190, and it came all the wayback down to 170, and so now
it's 180, blah, blah, blah.
I mentioned that because I thinkthat's one of the most important
(42:52):
charts out there.
If the 10-year Chinese canconvincingly break 2% and move
higher, I think that'd be agreat validation for Chinese
equities.
And I I as you know, the there'sa the notion of a model
portfolio, and I think I've gota 3.5% or two and a half percent
(43:12):
NAV position in the FXI Chineselargest companies.
Not because I want it, butbecause I'm I'm I'm aware that
I'm very prejudicial with allthings China.
Uh that I don't see it.
If that bond yield was tosurpass the highs of this year,
(43:33):
maybe the uh the argument wouldbe that I should raise that that
that holding in in the equities.
But for now, um, it's stillgoing sideways.
So interesting.
Oh, the with I meant to say thatagain, how my maybe just trying
to reveal how my mind works as Iprepare for these podcasts,
(43:58):
algos.
But I was like, yeah, in thevideo, in the video, in the
video.
And I said, hey, you know, it'sjust you and me, digital
assistant.
I was like, can I ask you a fewdumb questions?
Can you pretend I'm 12?
Kind of like, what aresemiconductors?
Why isn't the video a fivetrillion, is it five or four
trillion dollar company?
(44:18):
Because they think semis areubiquitous.
They're made from silicon andthey they control electricity
and they make things work.
Electronically, they light upthings, and there are billions
of them.
They're mostly basic and boring.
(44:38):
So what's so special about thevideo?
I mean, do you know?
I mean, I don't I I don't know.
I've uh so let me share with youwhat I what I took from it.
You know, the the the GPU.
I mean, just again, funny howthings work out.
You know, and these were now I Idid know this, these were
(45:00):
special processors uh for thevideo games award that made
pictures and explosions, youknow, made it all very, very
realistic.
But they really, really workvery, very well for the zillion
math problems that you've got todo very, very, very, very
quickly.
(45:20):
That's the GPU.
And you know, the Intel, andwe've we've mentioned Intel,
we've mentioned AMD and howthey're American and they're
being promoted by the Americangovernment, and the hyperscalers
need them because there's onlyso much Nvidia can do or can
deliver.
(45:41):
And historically, you know,Intel was in your computer, it
was running your laptop.
They just don't have the Nvidiaspeed.
And again, I wasn't sure.
It was like, well, how much isthe GPU?
It's like 30,000 bucks, probablyhigher than that.
(46:04):
And then can't they just becopied?
But we we mentioned ARMpreviously.
And as you know, Nvidia is likea virtual company, almost like a
software company, is and thisthe software is CUDA C U D A.
And that that's the magic saucewith those with those chips.
(46:26):
That's the thing that's hard forthe Chinese.
You can't just buy the Chinese,could obviously have the best of
the Nvidia chips, you know, thatthe sovereign nation could
procure them secretly, stripthem apart, but you you can't
find the secret sauce, the thethe CUDA.
Nvidia, we mentioned Mercedes.
(46:47):
Is it a Mercedes or is it aFerrari when it's like in a
world of semiconductor bicycles?
This Ferrari came roaring out ofthe video games world.
Incredible.
(47:11):
And do you know they they theyspend ten yards a year?
Billions of little pieces underlike I mean I say ten is if it's
a big number.
I'm gonna I'm gonna go on andtalk about DiAgio.
DiAgio.
And and Archer, not ArcherMidland Daniels, I'm gonna talk
(47:35):
about Brown Foreman, so thedrinks industry.
And they they spent that kind ofmoney just on trying to persuade
you to to drink poison.
And of course, the video,they're fab less.
It's the super Taiwansemiconductor.
And and so even if the Intelersand even if the Chinese or
whatever could crack the cuda,they can't damn make it.
(48:00):
And the Americans, of course,won't won't allow ASML to sell
those machines to the Chinese.
The lithography.
We all know why Softbank issold.
They're Nvidia, but go Nvidia.
(48:22):
I'm not saying buy, I'm justsaying I feel like I I know a
little bit.
I I feel like I can bluff my waythrough a dinner party if people
ask me about Nvidia.
And that's what it's all about.
No real economic data at thelast two days.
Today was marred by Trump beingbuffoon-like, or the night
(48:42):
before, being idiotic andreactionary, old school
political nonsense.
This notion of a$2,000 tariffrebate to all Americans.
Households earning, what, lessthan a million dollars or less
than$100,000?
(49:02):
Stupid, stupid, stupid.
I don't think it will happen.
Talking of Trump, I was readingthe FT's doing a special piece
on a series, a recurring seriesof pieces on the longevity.
Living forever, very much what Iwant to do.
I'm enjoying life and I want toenjoy a very long, prosperous,
(49:25):
and healthy and productive life.
And so I take I take some spermin the morning.
Wheat sperm.
Spermidine, named from 17thcentury research things been
around for a long time.
And I should, I mean, I do takewheat germ powder with my
(49:48):
breakfast.
Um, but I also do take somespermidine pills, which are
preposterously expensive, butthey have been clinically proven
to extend the lifespan in inyeast, in worms, in flies, and
in mice.
They seem to reduce thesenescence again.
Did I mention senescence?
(50:09):
It's the age-relateddeterioration when the cells are
like uh going off, and we havethis thing, apophagy?
Forgive me for thepronunciation, but it's like
Placman and younger the youngerbody, we have these Pac-Mans,
and they go around the bodyeating off these sentient cells,
(50:29):
making them go away.
Otherwise, they just litter thelitter our bodies up, get in the
way.
Um I'm just telling you, there'sno great insight, but I guess
I'm telling you that because Igot the opportunity to say I
took sperm in the morning.
Jim Chanos, more interesting,talking about talking about
sperm and Michael Sailor.
(50:50):
Uh you know, the I'm hesitatingbecause well done, Jim.
Well done, Jim.
I presented on stage with Jimone year in Miami, I think, on
the Chinese economy.
(51:11):
And he's Channels', I mean, he'sretired, but he's clearly, I
think, family office his ownmoney.
And he has just unwound hisshort on a micro strategy.
The premium in the microstrategy valuation versus its
(51:32):
holdings of what 650,000bitcoins has fallen from two and
a half times, and I think we'redown to about one point one
point one.
It's all gone, Michael.
It's all gone.
And again, it just meme and howI mean that was neat because you
(51:54):
could and yeah, I was lamentingGeorge Gamon with his very, very
successful short on Carmax andhis pair long against the SP.
And I was lamenting that therewas so much idiosyncratic risk,
so many things that could gowrong, where you you could
actually lose money on bothsides of that pair trade.
(52:14):
Whereas this was safer that theperformance, short-term,
medium-term, long term, betweenBitcoin and MicroStrategy would
be very, very similar.
And therefore, the the notion ofthe premium being unwound seemed
(52:37):
correct.
Amazing how we've seen this.
You know, we we we saw this inthe grayscale.
It was the only way of playingit, and Bitcoin was going up,
and people were rushing, andpeople would take no for an
answer.
They wouldn't take no for ananswer, and and that premium
went from what 1.6, 1.7 timesall the way down to like I think
(52:57):
a 50-60% discount to NEV.
I I support Sailor in that Ithink it was the right thing to
do.
He's a huge shareholder instrategy, and he was able to buy
(53:23):
he was able to increase hispersonal holding in the Bitcoin
funded by foolish investors.
I say foolish because why onearth would you agree to pay two
and a half times?
And the most preposterous reasoncited.
(53:47):
Keep it simple.
People transcend it, betranscend the nonsense.
That's what I say.
And of course, so many ways, somany ways to play Bitcoin.
I mean, you know, the Black RockETF.
(54:10):
Why, why, why, oh why would youwould you buy a strategy?
So well done, Jim Chanos.
Because I've got the position inthe or I'm liking the the notion
(54:30):
of a a long breakout.
So again, a long breakout.
I'm talking about charts, and Ihad mentioned Tesla, and I said
that we've now gone sideways for20 quarters.
And Tesla kind of does this, andthen it breaches that and it and
it explodes.
It's not guaranteed to explode,but it did explode and it became
(54:50):
the most valuable, overvaluedcar company in the world.
Is it going to break out againto the upside?
Or is it going to break to thedownside?
The suspense is killing me.
But 20 quarters, it would seem.
And 20 quarters, plus for thepharmaceutical sector, that when
(55:11):
I started my career, these werethe most decorated, the most
celebrated growth companies inthe world.
And now they're almost valuecompanies.
Except, of course, during theawful, awful pandemic, when you
were either for, you were eitherpro-public policy or against.
I was very much against.
(55:33):
But Pfizer, of course, playedthat game very, very well.
And so it feels kind of it feelslike nothing, but it's the
redress is that Pfizer's marketcap has fallen by a fifth of a
trillion dollars since then.
(55:58):
Take that, Pfizer.
Aided and abetted by aproportionously silly, well,
overvalued acquisition.
So Michael Saylor was I mean, atleast he was taking his
overvalued stock.
I guess you could say actuallyPfizer too actually took its
(56:20):
overvalued stock at the end of2021.
So actually it's very that'sthis is a coincidence, but it's
very, very similar to Saylor andstrategy.
They took their stock inflatedwith the nonsense of COVID and
the vaccine.
And they they sold lots of it.
(56:43):
They sold 40 yards, 40 yards, Ithink.
How much did they sell of it?
How much did they sell of it?
How much?
I'm asking myself, they yeah, 43billion.
Um, and they made thisacquisition of a of a uh an
existing pharmaceutical stockcalled CGN.
(57:04):
They paid 21 times revenue.
And I mention it because thecheap boy, they've just outbid
Novo Nordisk, the Ozempicmanufacturer, the weight loss.
The European challenger to EliLilly, which is the the king and
the queen sitting on the throne.
(57:26):
And Pfizer internally could notmake their medicine work, and so
they felt obliged and they'vecome in and they've they beaten
Novo Nordisk and they they'vebought another group for 10
yards.
And so that kind of raised thatthat I kind of thought, ooh,
what are they up to?
Because you know, they they theytend to overpay.
(57:47):
And the chief executives, it'sthe same guy's called Albert
Burla.
What did he say?
He had a great line.
I I love acquisitions becauseit's revealing, and it's very,
very frustrating when they don'tgive you all the information.
The newspapers like, we want toknow what did they pay EV to
sales?
We want to know what were thelast five, ten years of average
(58:08):
EBIT margins, you know.
Um but what did Albert say?
He had a he he he must be acharacter.
It was reported as his commentswere candid.
I am over a nervous annoying.
Uh in candid remarks, Burlastarted, stated, if the whole
(58:29):
thing, but if the whole thingfails, then we overpaid.
If the whole thing succeeds,then it's a fucking good idea.
That's what he said with the Cgen deal.
I'm not sure it was a he stillmaintains it was a great deal.
I yeah, I don't know.
I don't know.
The share price has come downfrom 60 to 24.
(58:54):
And you can buy Pfizer at thesame prices that prevailed, I
think, in 1997.
What he was buying was seizure,and I thought, well, let's look
at it.
He was buying, and again, I'mI'm just sharing my knowledge
with you.
Take it as you wish.
ADC antibody drug conjugates.
(59:14):
He was buying magic bulletmedicine.
They definitely need a magicbullet for that share price.
So the antibody.
Forgive me, I'm still on the12-year-old's infantile mind,
but the antibody is like this.
The days of Taunton and theIndians, and we're cowboys,
we're we've got our scouts,we're out there ahead reporting
(59:38):
back, and they're the specialproteins, and they can spot
cancer cells.
The cancer cells have got kindof weird flag, flags or markers,
which healthy cells don't have.
And so the the scouts, theantibody sticks, sticks to the
bad cells like glue.
And when it's stuck, it thenzaps up.
(01:00:00):
Some poison, which hopefullykills so at the at the cellular
level, kills the cancer like atiny bomb.
And the conjugate, what the hellis a conjugate?
Conjugate's the rope, you you'reuh tying the scout and the and
the the the weapon together.
Kind of kind of cool and kind ofneat.
(01:00:24):
And of course, it's better thanchemotherapy.
But is it worth the hype?
I mean the doctors love itbecause you know it is targeted,
but it it may be targeted, butagain, you've still got safe
dosage kind of issues.
(01:00:46):
It can be hard to even thescouts can find it, it can be
hard to penetrate the tumor.
And again, like the dosage,dosage and penetration are
issues, and then they'refriggin' expensive, they're
really, really complicated tobuild.
Really, really complicated.
(01:01:07):
So I hope they work, and thenit'll be what honor these again.
A fucking great deal, but so forall the for the the rise and
rise and rise of the Nvidia's,there are visors and Merrick.
Merrick, Merck is kind of shareprices trying to stabilize.
I hope I said to you on Fridaythat trader mic when it's
(01:01:30):
covered coals, he's looking forgreat one-of-a-kind businesses
that that have had a glitch.
They've fucked up because ofthat.
And they fucked up, again,forgive me, at a point where
they were really loved andtherefore overvalued.
(01:01:54):
And so the penalty is extreme,they fall 60%.
And even that's not good enoughfor Mike to come in.
Mike, you know, we're talkingabout those quarterlies of going
sideways and the like.
Mike needs evidence that he'snot buying a falling knife.
(01:02:14):
And so just two companies, Merckand Pfizer, you were looking at
the best part of half a trilliondollars, just two companies
which have reversed as thehyperscalers obviously have
added trillions to their marketcapitalization.
And then I thought I'd close onthe story of D'Agio.
Sounds like a rapper or itsounds like a soul singer.
(01:02:38):
They make Johnny, Johnny Walkerwhiskey.
Casamigos, my friends, thetequila, and of course,
Guinness.
And it's another one where themarket cap.
Now they're not the size, theirmarket cap is what I want to
say.
I think it's 40 billion dollars.
(01:03:02):
You got 20 billion dollars ofdebt, which is a bit nasty.
And I'm not just talking aboutDeAzhu, I'm talking about the
Spirits companies.
Berno Ricard.
They make vodka absolute.
They bought that.
Uh in America, our very ownBrown Foreman, Jack Daniels
Whiskey, my brothers and mysisters.
(01:03:24):
I never got the chance to saygood evening, brothers and
sisters.
Let me correct for that as wereach the zenith or the end of
the show.
Collectively, the share pricesare at 10, 15 year lows.
It's still dropping.
I mention it because Diageo cameacross the screens, I think,
(01:03:48):
yesterday.
They've got a new chiefexecutive, and his nickname is
drastic Dave.
And he's drastic when it comesto cost.
He's a slasher.
Now, if you recall, I didmention whiskey.
(01:04:09):
I can't remember the context ofwhich I was discussing this.
I was telling you that I thinkyes, I it was the context of
Carmax and where they're exwhere they had been caught out
by the bringing forward, therenting of future demand and
(01:04:30):
bringing it into the present tobeat tariffs.
The tariffs would lead to analmost certain rise, which could
be a household additional costof five or ten thousand dollars
as they sought to replace thefamily car.
And so better to replace soonerrather than later and avoid the
(01:04:54):
tariff-induced inflation.
And that through Carmax's plansand its planning of demand and
supply, it got it all wrong andthe share prices collapsed.
And I gave the example, I saidproduction planning, planning
and trying to see the future isa challenge across the universe.
(01:05:17):
It's tough being like an easybusiness, forgive me.
And I know that's nothing iseasy but toothbrush, toothpaste.
The lags are modest, the demandis constant, and even then the
production is hard.
And I was can I was contrastingthat with the drinks and
(01:05:39):
especially whiskey.
Whiskey's hard.
Ten years.
You're gonna make it, and it'sgonna sit there for 10 years
before you sell it, and thatleads to huge, huge supply
issues.
And we were discussing thecobweb theorem.
And so, you know, imagine you'rea farmer and you grow, you grow
(01:06:01):
whiskey.
Maybe I should say you grow uhbarley, but you grow whiskey.
And and the whiskey, it takesthe whole summer to grow, and
you plant the whiskey seeds inthe spring and you harvest in
autumn.
Now, if the whiskey is sellingfor a high price, you go, Wow,
(01:06:26):
I'm gonna plant a lot morewhiskey next year.
But the thing is, all the otherwhiskey farmers they do the
same, and so when you come tothe harvest, there is too much
whiskey, and the prices crash.
And then and then people regretthe the whiskey farmers regret
their behavior and they plantless.
(01:06:49):
And you repeat this in intoinfinity, and so it's kind of
you're kind of blowing a spiderweb.
It's a spider web blowing in thewind, not a candle in the wind,
a spider web.
That's the cobweb theorem.
Businesses are having to makeguesses based on today's prices,
(01:07:10):
and it causes big ups and bigdowns.
And for the spirit companies, ohmy god, have they again let's
use the F-bomb, have they fuckedup that 10 years to age in the
barrows?
And and of course, whathappened?
Well, a few years ago, more thana few, I guess you go around to
(01:07:32):
around about 2010 with Chinabooming, they started buying
fancy whiskies and what's thatawful?
It's like a whiskey.
Covassur.
Brandy, brandy, yeah.
Gifts, gifts of ostentatious,ostentatious gifts to say, oh
look, we're doing really well,or to bribe people and to look
(01:07:55):
good.
And and so the the consumptionand the prices you could achieve
were off the charts.
And what did the what did thewhiskey cup, what did the drinks
companies do?
They they produced a hell of aletter.
They're like this gonna lastforever.
Same thing.
(01:08:16):
And this has been an extendedfuck-up because in between,
because you know, then China islike the it starts to go, holy
Moses, we kind of got the Chinathing wrong.
Then COVID comes through andeveryone's stuck at home.
You can't go to the bar unlessyou're in St.
Bart's, the bar's closed, and soyou're like on Amazon and you're
(01:08:37):
ordering fan.
You can't actually order drinkson Amazon, you're ordering
fancy, what do I mean fancy,expensive premiums?
Yeah, we'll take that salesboom, and to make it worse, they
go and buy each other atpreposterous pfizer-like C gen
(01:08:58):
valuations.
Tequila, everyone's drinkingtequila, me included.
Tequila grows, it takes youseven years for the agave plant
to grow.
So a bit better than thewhiskey, but still, seven is a
long time.
Vodka, you you should just stickto vodka.
Vodka is like lemonade, noaging.
(01:09:20):
Uh, you don't have the cobwebtheorem.
All the problems lurk within thewhiskey.
You're really whiskey-dependent,guys.
Brown Foreman.
Oh my god, Niger Prize has hasabsolutely collapsed.
I actually came across anotherone.
I'm gonna have it's I I'll showyou its share price in the
Substack in the Patreon.
MGP.
(01:09:41):
MGP.
I love discovering newcompanies.
MGP makes is a barley.
It makes it makes the the theraw material for the whiskey.
Sales down 19%.
Stock trades on like four timesearnings or something.
Share price has gone from 130 uhto 25, and it's come, it had a
(01:10:05):
it had a ceiling that became atrampoline, and then the
trampoline would come all theway back down to the ceiling.
Interesting.
But a microcap stock, we'retalking like half a billion
dollar uh market capitalization.
But you know, Brown Foreman losttwo-thirds of the market value.
The whole alcohol industry hashas dropped a trillion dollars.
(01:10:28):
So again, Nvidia, alphabet,microsoft, et al meta going
higher by trillions, and not azero-sum game, but you know,
coming back.
And the problem you have is soyou you you're starting making
(01:10:49):
the stuff.
You know, the far the whiskeyfarmers like, okay, less
planting, less, less, less, lessplanting.
But you've got all that surplusin in your bonded warehouse.
So the production is down likebetween 20 and 30 percent.
(01:11:10):
But you know, you're not gonnasee you're not gonna deal with
the the surplus.
You need years and years andyears to deal with the surplus.
Uh and then with those EPIC,people are drinking less.
The Gen Z are drinking less,apparently.
(01:11:31):
I mean, I don't know if I'dbelieve that every Gen Z I see
is drinking as much as I am.
I mean, I'm drinking less.
I'm drinking less.
China's still not booming,regardless of what those
inflation figures were saying.
And I I read and I didn't knowthis.
The US government was proposingputting like a kind of
carcinogenic warning on onspirits.
(01:11:54):
Have you heard that?
I I'm not I was not aware ofthat.
Um, anyway, that's the glitch.
That's the glitch.
And you know, you you saw this,it repeated itself.
It's well, we are repeating thepast.
When Japan was China, you know,the glorious 1980s, the share
(01:12:16):
price performance of whiskeycompanies were on fire because
you had a decade, it takes adecade to correct.
And you had scarcity, and so youhad pricing for a decade and
huge demand.
So at some point, we have tokeep these on our radar.
But because at some point itwill turn.
(01:12:39):
This is the pain now.
Now, drastic Dave, I think theDe Azure share price was up 7%
today or yesterday.
Cutting costs, I mean, I wouldyou yeah, I don't care his
reputation.
I mean, he worked at Unilever inTesco for Christ's sake.
Yeah, Moses.
It's the second time I mentionedMoses.
Getting all biblical.
(01:13:01):
I would I would have noenthusiasm for what one man can
do.
One man needs probably anotherfive years.
But and the stock, I mean,Diagio is gonna cut its dividend
almost certainly.
It's got debt, which is 20, 50%of its market cap, which is
never good, it's ugly.
(01:13:22):
So you're looking for them tocut their dividend to fall
further.
And unfortunately, the ball willnever be that high.
But there'll be a point wherethey're so low.
If you buy a stock down 60, 70%,trading at 20-year lows and it
goes sideways.
What does that sound like?
That sounds like Nokia,Ericsson.
(01:13:43):
The Nokia was high, if thevolatility was high enough, you
could just sell weekly expiringcalls, kind of at modestly just
off at the money.
And do that weekly.
Maybe you only maybe you onlyget an income of half a percent
per week, but do thatconsistently.
(01:14:03):
And in three, four years' time,maybe your your absolute in
price for the for the stock youbuy will be nothing.
And then when the cobweb turns,boom, baby, you will be, you
will be a winner.
So there you have it.
Today was very we did trans withtranscendental asset capitalism.
(01:14:25):
We've examined some economictheories.
We've in the apps, oh the thegovernment is reopening.
We're gonna have governmentdata, but we're gonna have
government data, and we're gonnahave decimal points.
But what do we need?
Say it after me.
We need imagination.
This has been your nightly,weekly shot of imagination.
(01:14:50):
Um this week I think we're ontwo, two at most.
Maybe the Jedi is right.
Write in and tell me if he'sright or if he's wrong.
My brothers and my sisters, I amHugh Henry.
I am the asset capitalist, and Ivery much believe that I have
brought heaven to earth, andwe've called it Blanc Blue and
(01:15:14):
Saint Bart's, and I'm gonna havea joyous sleep tonight.
When you receive this show,receive it with my my immense
gratitude.
Until the next time, good night,good morning, good afternoon.
We are we, you, and I, I believe we are recording.
And I missed a day.
I told you I was going to have amagnificent weekend.
I'd like to confirm that I did.
(00:24):
I found myself in Eden Rock.
I had a lunch that lasted fourhours with Trader Mike.
He regaled me of stories ofbeing the card counter at the
blackjack table.
(00:44):
But ladies and gentlemen, I missMonday.
I'm on Tuesday.
And I'm reading, I'm reading onI'm reading on the Twitter.
There's a guy and he wrote, he'scalled Jedi.
Jedi Pooh poop.
Yeah, poo-poo.
And he wrote, H H, increasingthe frequency of your podcasts
(01:08):
has seriously diluted theirintrigue.
You come across less funny, lessinquisitive, less interesting,
and more more like an old manrambling.
Truly less.
Less, my friend, is more.
(01:29):
What do we what do we say tothat, ladies and gentlemen?
Shall we do that?
Shall we shall we respond?
Sorry, sorry, sorry, sorry,sorry.
I'm still again until you sendme messages, I'm gonna continue
(01:49):
having fun.
I mean, come on, help me, helpme.
What do you think?
What do you think of the Jedi?
I'm less funny.
Okay, I don't know.
Less inquisitive.
Come on, I'm not lessinquisitive, less interesting.
I mean, I don't know.
(02:10):
Anyway, it kind of sucks whenyou hear that.
But for sure, and actually, itcoincided.
I was speaking to Gigi, my18-year-old daughter, today.
And she's like, Oh, I kind ofsaw your thing come up, the
headline come up.
She gets the email like all mysub stackers and Patreons.
(02:32):
He said, Oh, that kind of soundsintriguing.
And so I started watching it,and you were talking about
girlfriends, you were talkingabout everything except the
title.
So maybe Jedi has a point.
And I've taken a lot of notes.
So what I do is I kind of tryand take a computer log of my
(02:59):
inquisitive mind.
And so anything I read, I take ascreenshot of, and then I try
and come back to it and try andweave some sense, see if I can
weave a narrative.
There is always fear.
I don't know if you hear thefear, you don't hear the fear in
(03:20):
my voice.
But you you do hear it in thechaos of the beginning.
I have to just speak.
I have to become comfortablespeaking.
(03:40):
Damn, I forgot to put myrecorder on this.
I'm determined again to get thisbelow one hour.
Started at nine o'clock.
Yeah, so I have to speak beforeit all kind of begins to make
sense and I can begin to seewhere I want to push.
(04:02):
I am back in Blanc Blue.
I left the ghetto today.
I a point of order, a point ofbusiness order.
I will be traveling to Londonthis Sunday.
And I am going to be doing alive version of a podcast,
(04:23):
possibly this one, with thewonderful, with the wonderful
Nick Searle.
And I'm going to be, where am Igoing to be?
I'm going to be, let me see thisdamn thing.
I'm present.
I've never heard of thesecharacters.
I should be saying amazingthings about them, but Melo
without a W, M-E-L-L-O, MelloLondon.
(04:48):
I am day two.
And I do not look like RichardStaveley of Rockwood Strategic.
And I certainly do not look likeJudith Mackenzie.
Both fine.
I'm sure outstanding members ofthe financial community.
Instead, I look like the assetcapitalist.
(05:08):
And with Nick Sarrell onWednesday, the 19th in the
afternoon, Nick will beinterviewing me.
So if you're in London, it's atthe Clayton Hotel in Chiswick.
I don't think I've ever done agig in Chiswick.
(05:29):
There's always a first.
Wow, we're on five minutes.
Maybe I can try and sketch outthe meaning, the deeper
meanings, the layers, the layercake of acid capitalism.
(05:56):
A light bulb came on in my head.
And I remembered a an interviewI'd read with the Formula One
driver, who's currently numberone.
Looks like he's a more thanlikely contender for the winning
(06:20):
the championship this year.
And it probably came to mindbecause I saw that Toto Wolf,
who I think has about aone-third stake in the very
successful Mercedes Formula Oneteam, is looking to sell some of
(06:41):
his equity.
And again, I think we hold on asecond.
Let's get ready for.
I guess these things don't workif I'm kind of preempting.
The purported value of theFormula One franchise is quite
(07:01):
frankly absurd.
And I think marks a high watermark.
I'm going to say the number.
Six billion dollars.
(07:21):
Wow.
You thought football soccerclubs were expensive.
In fact, I'm gonna jump into theold chat.
Where's the old chat GPT?
Let's ask it.
Oh, actually, I've been using alot of grok today.
What?
My dear friend, what is the mostvaluable sports franchise?
(07:51):
Boom.
Any guesses?
Any guesses?
Should we should we do the thedrum roll?
I I actually'm gonna I'm gonnaban myself from noises for a
good five minutes.
Noises are sounds.
Results show that the DallasCowboys is the top Forbes NFL
(08:14):
team.
And you've got Real Madrid.
Talk amongst yourselves,Wikipedia list sites, the Dallas
Cowboys at 10 billion.
I just I anyway, regardless, Ithink six billion.
I was like, what?
Really?
Six billion?
It did actually.
(08:34):
The the FT article gave us somedata that we could actually make
a comparison.
Yeah, there you go.
Six hundred million in these aresterling figures.
And the valuation is thevaluation of sterling valuation.
He's looking to sell fivepercent.
Stake of five percent.
(08:55):
So that'd be a sixth of histotal uh total stake.
Um the and so we're competingsix billion dollars, which is
maybe five billion in sterling,with sterling sales of six
hundred and thirty six.
(09:17):
And that was two years ago, andthat had jumped from 546, so
that was like a 20% increase,and they're and a really big
jump in profits.
They're making 163.
What is that?
163 divided by 636, making 26%margins.
(09:44):
So, yeah, like you'd think likeyou'd think three, four.
Let's be generous, five timessales.
So six, so say six hundred andthirty-six, say it grows another
twenty percent, seven hundredand sixty-three.
You know what?
Let's round that up to eighthundred million.
Let's multi uh put it intodollars, one one, and let's be
(10:07):
generous, multiply it by 1.3.
That's a billion.
Yeah, that's how you get there.
And then they're saying, yeah,we're worth five times sales.
Okay.
Anyway, I thought the more thethe more interesting thing was
this quote from Lando Norris.
(10:27):
So um, he's a young English kid,and he seems to overthink and
definitely lives in the shadowof the the the Dutch champion
Verstappen, who again just seemsto have a lot of intelligence,
what do we call it?
Emotional intelligence.
But back um, I think three raceraces ago in Mexico, Mexico
(10:52):
City, Norris, he secured pole.
He'd been and he'd beenstruggling, he'd made a lot of
unforced errors, and then heseemed to get his shit together.
And he secured the pole positionon the grid, which is very, very
important given the incrementaldifferences between the cars and
(11:12):
their performance, it's soincredibly small.
And he's he got that poleposition because he was zero.
I'm rounding again.
I will not use three decimalpoints, and we will come back to
that.
But he was 0.3 seconds quicker,and that's quite a big deal
because this is the thirdshortest circuit in the in the
(11:33):
rostrum of the the places theygo over the year.
So it's it's really goodperformance.
And uh he was interviewing, likein his conversation from the
cockpit with his engineer,saying, even I don't know how I
did that.
And then he further alluded tosomething which kind of caught
(11:56):
my attention.
And he said, the less I know,the better I drive.
The less I know, the better, thebetter I am.
And I hope for for those of youwithin the 3,000 hardy souls
that download the show eachtime, I hope you recognize
(12:19):
that's something I say a lot.
I'm not professing or claimingthat I'm a Formula One driver,
but I'm I'm suggesting thatthere are similarities in what
we're trying to do.
And it emerged that Landogenuinely had no idea how he did
(12:40):
it until he actually crossed theline, until he actually got out
of the car and looked at themonitors.
You see, they have a thingcalled the Delta Time Display,
the DT, the DTD.
And amongst amidst his personalslump, going back going back a
(13:08):
while, he he turned it off, hedecided to drive blind the Delta
time display.
It reveals live and lap by lap,in fact, corner by corner.
And it's telling you, it'scomparing what you've just done
with your with your previousbest, um, with the the previous
(13:30):
best of the contestants.
Uh and it's telling you if youwhere you are, it's telling you
if you're on pole or close topole at any moment as you whiz
around that track.
And even having switched it offto drive blind, seemed, I mean,
(13:50):
not blind, but you know, it's Imean, is that not is that not
the fabled scene from the firstStar Wars movie when Obi-Wan
Kenobi says to Luke, who ishaving a a tough day in his
Formula One spacecraft trying toblow up the Death Star, trying
(14:14):
to guide his missile into theventilator shaft, because
they've discovered a flaw in theDeath Star.
And try as he might, a damn ductis very small, and Obi Wan
Kenobi says Luke, switch off theDelta Time display.
(14:35):
Trust the force, switch it off,Luke.
And so and I've got a quote fromnot Obi Wan Kenobi, not Luke
Skywalker, but our very ownLando Norris.
The thing when I don't have theDelta display, I push no matter
(14:59):
what, no matter how the start ofthe lap was, no matter how any
corner was.
And I guess it's because I'vegot no reference, and I'm always
just trying to maximize everycorner.
He said, otherwise I just stareat the damn thing too much.
(15:20):
And I thought, I thought tomyself, that Lando, that my
friend, that deserves a round ofapplause.
And and there were and I Ireceived there were two comments
(15:42):
from Substack of Patreons.
Jimmy was coming in saying, hey,AI cuts jobs, you know, the the
title, what if AI cuts jobsfaster than rates can fall?
Yes, and he was per top.
He's like, WTF.
I mean he didn't say that, buthe said, what is keeping
treasury yields up?
(16:06):
Every rule of the last 40 yearsseems to have been repealed.
Will they ever fall again?
And later on we might discusstenure Chinese sovereign bond
yields of 1.8.
They kind of rose.
They had a kind of a Z-scorekind of day on Monday after the
(16:29):
weekend release of consumer andproducer prices, which were
quite frankly a head scratcher.
The Beijing reporting in termsof consumer, forgive me, I think
the an acceleration and thelargest year-over-year leap in
(16:54):
consumer prices in in 20 months.
Which caused the 10-year to theyield to jump to 1.8.
But to Jimmy's point, I mean,like they're they're 4% in
America.
And and did someone wise saytrade a mic?
(17:14):
I mean, he was presenting, hewas the start on at the summer
camp.
I don't know if people hear itheard him.
And he's not alone.
Very wise, very successfulinvestors are saying they can
imagine adult unemployment being20% within the next five years,
(17:34):
I heard one say.
But is keeping long-termtreasury yields up?
Why are they four in America?
1.8 in China.
And then there was anotherquestion.
And oh my god, heavens, I've gotthis in quite low font size.
So the I'm gonna read thisquickly.
It doesn't really matter.
(17:55):
The latest uptick in volatilityis a sign of the shortage of
money, question mark.
So if the Fed response is to endquantitative tightening, and if
that doesn't begin untilDecember, and then it's
reinvesting into treasury bills,no, reinvesting into treasury
bills for cash, that's going tobe modest.
(18:15):
And reserves must grow, and andif the Fed concentrates purchase
at the short end, what if CPI isfalling?
What if long rates don't fall?
Etc.
etc.
The Fed's announcement, stablecoins, heavy treasure issuance.
Oh la la la la la la.
(18:37):
Bro, trying, trying, trying,trying too hard, maybe.
And I said to you, this is likea a log of whatever's coming
into my mind.
I think of the podcast as beingthe algo.
(18:57):
Is the podcast the algo or isthe podcast the output?
Not sure.
But the inputs definitely arethings like reading the
Financial Times, XX, otherfinancial publications, and
clearly the sports pages andwhatever else, a vogue.
(19:19):
I am loving, and I've certainlyquoted without attributing it in
the past, a YouTube series, achannel, which is called
Predictive History.
And I'm not suggesting you gooff and watch it.
But it is a professor in China,Zhang, I have no idea how you
(19:45):
pronounce his surname.
Zi Qin, I'm gonna say.
X U E Q I N.
I need a glass of gin to thinkof Zhang Zhiquin.
And so it's his class teaching,I don't know, philosophy,
history seems to becivilization.
(20:05):
And it is absolutely wonderful.
And the episode I listened to,heaven's god, I think after
lunch with Twitter Mike, I waslike passed out on the beach at
Eden Raw.
I was listening, I was listeningto it in my in my ears, and and
I discovered a trick actually.
(20:28):
I cut and pasted the the linkand put it into duck duck goal.
And I could listen to it withoutthe damn interruptions, without
all those adverse.
So that was good.
But it was a it was in praise,and this is me trying to get
back to this point of assetcapitalism.
(20:52):
The diff it was about theconceit of modern thinking, that
somehow our analyticalprocess-driven state of mind.
I mean, even at art school, yougo to art school today and half
the curriculum is how youprepare, process.
(21:14):
And this conceit that we aresomehow smarter than every
generation that preceded us, isquite frankly wrong.
And the and Professor Zhang isvery uh compelling and elegant
and very listenable in hisdissertation.
(21:38):
You know, and so the conceitwould be look at excuse who are
just listening, I'm gonna use myfingers, pyramid.
The the pyramids are a wonder ofthe world.
Some have been led to questionwhether they were built by the
(21:58):
Egyptians or it's evidence of asuperior civilization from
somewhere out there in theuniverse that happened to be
passing.
Such is the conceit that we'rebetter.
What if the ancients were betterthan us?
And where where that seemscredible is in a time long past
(22:27):
without computers.
What do you do withoutcomputers?
What do you do without pens andpaper, calculators?
What do you use?
Imagination.
And and asset capitalism is isabout trying to tap into the
kind of spiritual world.
(22:48):
I mean, I I believe that you andI that we're gods.
I mean, I do breathing exercisesand I bust the the circuit
breakers which drown the mindwith noise.
And and and there is a verysimple breathe, simple to
describe, very hard to achieve,breathing exercise.
(23:10):
And you go into like thisincredible, incredible
trance-like state.
I mean it does feel like you'relevitating.
And the chap who introduced itto me, who won double Olympic
(23:32):
swimming medals at the LAOlympics back in 1984.
Celebrated in the with HughHefner in the Playboy mansion,
and boy did he did he celebrate.
But thereafter, I've told thisstory before, but thereafter,
you imagine the dedication to bea swimmer.
(23:53):
Why, that's tough.
And he he did it, he achievedeverything.
What do you do?
And you go looking for somethingfulfilling because there's a big
void.
And he he he he barefoot walkedaround around Egypt in 1980,
(24:20):
probably 1985.
He slept on a pyramid on the onthe the the lower enormous
stones.
You didn't have the securitythat you have now.
It was actually possible.
And um and you know, he raisedthe question that hey, you know,
(24:43):
empire and and the economiesthat we that we have today, the
hegemon of America, the vast,vast Chinese economy, wouldn't
be possible if we all walkedaround like me, going, I'm the
Asset capitalist, I'm a god.
You know, and so instead we kindof pushed all that geist, that
(25:07):
tapping into the spiritualworld, and we closed it off.
And we became workarants, veryobedient.
That's how you create empire,and you close down that
imagination, and the pyramid,God, I may as well be doing the
(25:32):
guy's presentation.
See if I can remember, but thepyramid is, and I love that the
pyramid.
I'm doing the pyramid, I lovethat.
And you know, if you do anupside-down pyramid, it's like a
heart.
Pyramid, heart.
And the pyramid is like it'stranscendental.
Civilizations back then, no oneneeds something to believe in.
And they had very, verysophisticated religious beliefs.
(25:58):
And again, it was all we wereco-joined with spirituality,
with something that's invisible,but maybe there.
And we were trying to, thepyramids are all about, and and
all of these, they're temples.
And and they are not tombs forthe pharaoh.
The pharaoh, the pharaohs werethey weren't that type of, they
(26:20):
weren't, they weren't like, hey,let's build myself a big, like,
you know, a big cock, kind ofthing.
Like it was like, it was a giftfor the people, something that
they could believe in.
And you were bringing heaven,heaven on earth.
That was the tagline, heaven onearth.
(26:40):
And there was someone.
They there was the originalperson who got the Pharaoh's
ear.
And with this imagination, he'slike whispering in his ear,
telling him how wonderful.
I mean, you know, he couldn'tdraw.
There were no drawings, therewere no PowerPoint, there was no
(27:01):
presentation.
It was someone's someone'simagination.
They built it from the insideout.
Took 20, what, 20 years atleast.
And the imagination is sopowerful and virus-like, that
(27:21):
thousands and thousands andthousands of people, they call
them slaves.
They wanted to, they shared thisvision.
Heaven.
Heaven on earth, heaven isheaven is heaven is a place on
earth, Belinda Carlisle.
Like got me in into a blindalley for a long time.
So not alien technology, butcontagious vision, like the
(27:47):
telepathy that they shared likethe teleph telepathy without the
video monitor to to share theimage.
Imagination is the directparticiple in the process of
creation.
So we're million miles away fromthe manipulation of data or
(28:09):
process.
The closest I can think of isreally someone like Elon, Elon
Musk, Mars Project, imagination,making the impossible happen.
Actually, Elon, I I I I lookedat the something, yeah.
(28:30):
I I have to survey the the day'sheadlines, yesterday and today,
and so there's always a headlineon Tesla.
And I brought the chart up.
And I think it was Friday.
I was, you know, I think it wasmisreported.
And I Michael Berry was on hisex channel on Monday, pushing
(28:57):
back against Alex Carr fromPalantir.
And again, I'm going to comeback to that.
What I read and what he said wasjumping to the wrong
conclusions.
And I think I hope I hope youyou agree with me that I was
saying that would bepreposterous to say the headline
was he he was a billion dollarsshort Palantir.
(29:21):
And my point to you was a goodpro, and Burry is the pros pro,
would not be shorting Palantir.
It's a mem meme stock.
Yes, it's gone, it went fromwhat, two bucks to 230 bucks.
It's completely unpredictable.
And the granddaddy of all memestocks, because again it's a an
(29:42):
imagination, is telepathy, it'sElon's imagination.
And he's telepathic in thesharing of that imagination.
It's contagious.
Is is Tesla.
A trillion dollar meme stock.
I mean I want to say gold feelsas if it's become meme-like, and
(30:03):
that's a 35 trillion memes ofthere are bigger memes.
But I was looking, and again onthe Substack and Patreon, when
when I write this up and we dothe essay, I brought the chart
up again.
And if I look at the chart,you've got to think it's going
higher.
But it's a decision point.
(30:24):
And and the longer it decides,ooh, you know, I was saying to
you, the um the great error ofshort sellers were were the
people in 2020 and 2021 whoshorted every new high.
You don't short highs.
The intriguing thing about Teslais that you've now had and this
(30:48):
was the point of mentioning theTesla stock.
Again, I I would steer clear ofspeculation there.
If you think of yourself asbeing professional, because
completely it's just punting.
But I think it's I was I usequarterly data.
I'll be presenting this chart,and I think it's 20 quarters
(31:11):
where it has essentially gonesideways.
Now, in in a Tesla like range,highs of like what is it, highs
of 500 and lows of you know,like 125, but it's essentially
it's a it's a it's a compressedchannel.
(31:33):
And it really has to, you know,600 would really be a convincing
break.
But 20 quarters, and I I want tosay it was the same previously,
it was 20 quarters.
How history rhymes, doesn'trepeat, but 20 quarters between
2015, 2016, 2017, 2018, 2019,arguably 2014, where it went
(31:58):
sideways.
And then remarkably, all of themarket cap accretion was
achieved in one, two, three,four, five.
Five in one year.
One year it went from 16 to 270.
(32:18):
Anyway, the granddaddygranddaddy of them always Tesla.
And and so what has all that gotto do with asset capitalism?
It's imagination.
Imagination.
The consiving of contentiousnarrative, the imagination of
(32:45):
what tomorrow might bring asopposed to the process of the
spreadsheet, the process of thesuper super quick
telecommunication line.
The the need for PhDs.
How many PhDs do they have atcentral banks?
(33:06):
British central banks sold theirgold, sold half of their gold
right at the very, very bottom.
Oh, the PhDs at central banksare these geniuses right now
that central banks are buyinglots.
We don't know.
Right, right.
I do like that, but imaginationis the doubt.
(33:28):
I made that up.
Imagination is the directparticiple in creation.
Um and so again, to the Jedi guyYeah, I wasn't gonna do it
tonight.
I was like, ah you know, maybethe guy's right, but you screw
the guy.
(33:48):
And his meander and this ismeandering.
Yeah, it's there are no bulletpoints.
It's purpose, spiritual.
I'm seeking meaning.
I'm trying to replace hiscalculations with my
imagination.
(34:10):
I'm seeking I'm seekingtranscendence.
I'm seeking perception beyond myexperience as a human being.
Maybe I'm reading too muchSartre in Hidego.
But I think you and I we can gobeyond the present self.
Create pyramids.
(34:34):
Reach for the possibility of noof actually knowing what happens
next.
Reaching beyond ourselves.
Anyway, Michael Burry.
Um I again, I I feel like we'regoing back and forward.
You're like, yeah, we're goingback and forward, back and
forth.
But I feel like we're going backand forward because I believe it
(34:55):
was only last week I was talkingto you about at university I
studied.
I studied accountancy andeconomics.
A joint, I had a joint degree.
And I said to you, my finalhonors year, I studied
market-based accountingresearch.
(35:15):
And there I was before Applewith these funny box boxes
called computers with blackscreens and green font.
I was studying, I was studyingthe hypothesis that the market
was intelligent, and I wasstudying its ability to
(35:40):
distinguish between signal andnoise.
And and we were, as a proxy forthat, we were using company
announcements, announcements tothe stock exchange, which
involved changes of accountingpolicy, which would impact
profit, but not cash flow.
(36:02):
It would either increase orreduce, mostly it would increase
profit, but not cash flow.
And the theory would say themarket should ignore it because
the company's only worth thecompany is the present value
discounted of all future cashflows, not profits.
Profits are transcendentalagain.
(36:24):
I mean, they're not bringingheaven to earth.
I mean, for the CEOs, it mightbe given the bonuses they can
get.
But it's what is it?
It's it's a real it's it's thecult of religion and and and the
ability to to change themessage.
(36:45):
And my studies revealed that byand large the stock price looked
through it.
So interesting that and and I Idon't need Michael to tell me
this.
In fact, with Trader Mike, wewere we were actually discussing
it before his thing hit thetapes, before Michael Berry's
(37:06):
thing hit the tapes.
But these hyperscalers who areinvolved in spending what's
going to be trillions ofdollars, who've been cash flow
financed, but such as the scale,they're moving on to they're
gonna, and so it's been equityfinanced, but now we're beyond
(37:29):
debt, special purpose vehicles,and lots of kind of less than
transparent offshore of offshoreoff balance sheet financial uh
(37:49):
microscopes.
They've been extending theeconomic life, their estimate of
the useful life of their GPUs,their NVIDIA semiconductors.
They've been extending them by afew years.
(38:12):
Let's look at that.
Uh meta in 2020.
Useful life was three years.
Well, it's now five and a half.
Google was three, it's now six.
Oracle was five, it's six,Microsoft was three, Microsoft
is six, Microsoft has doubledthe the economic life
assumption.
Microsoft, really?
(38:32):
Bill, Bill, are you listening?
Amazon.
Amazon went from four to six andthen brought it back again a
little bit to five.
Well done, Amazon.
Is the market seeing through it?
Because Michael Burry did someback of the envelope estimates
(38:54):
that the extension of usefullife it on it lowers the the
annual depreciation charge.
You get that, yeah?
I mean, if it's got a three-yearlife and it's 90 billion, then
you're gonna have to charge uh30 billion a year in in
(39:19):
depreciation.
If it's now six years, thecharge against your profits
halves from 30 to 15.
So Michael Berry was sayingthey'll they'll understate
depreciation and thereforeoverstate profit by 176 billion.
(39:42):
Now they all trade on about 30times earnings.
So what's that?
That's$5 trillion.
Oh, the valuation of thesethings out by$5 trillion.
It's a big, big deal.
Oracle profits are overstated by27%, meta by 21%.
(40:04):
Interesting.
Back and forth.
We're being transcendental.
And and then of course a bit ofthe news today was Softbank had
sold the entirety of its Nvidiaholding for just under six
(40:25):
billion dollars.
And and I'd forgotten, but I'msure you you're wiser than I,
but it's not the first timeSoftbank uh has sold the
entirety of its holding becauseit it bought 5% of the company
back in 2017.
And two years later, it soldeverything for 3.3 billion.
(40:49):
And if it had held on and it wasselling that stake today, it
would not be raising sixbillion.
No, no, no.
It'd be raising, oh come on, weneed it.
Come on, be raising two, itwould it would be it would have
200 billion dollars that couldgo and waste another AI
(41:14):
ventures.
Um I mentioned that I'm workingthrough my notes here.
I I did mention that the Chinainflation core CPI accelerated
to 1.2%.
That was its highest in 20months.
And and again, the SubstackPatreon with the essay, you'll
(41:37):
see a chart of the 10-yearChinese yield.
And it moved from yeah, it movedabout six basis points, 176 to
182, but quite a big move.
But the if you were to push backa bit, look at it on the year to
date, 11 months or so, um, it'sessentially gone sideways.
(42:02):
Start of the year, these greatpolicy announcements, boom, you
know, uh, we're gonna we'rehyperscaling the equity market.
Number one economic policy inChina is higher stock prices.
And the tenure yield went froman incredibly low level of one
six to two percent, and thenpromptly came all the way back
(42:28):
to 160.
And then there were furtherannouncements, uh and the stock
market's been kind of catchingfire, and that yield is now well
was 190, and it came all the wayback down to 170, and so now
it's 180, blah, blah, blah.
I mentioned that because I thinkthat's one of the most important
(42:52):
charts out there.
If the 10-year Chinese canconvincingly break 2% and move
higher, I think that'd be agreat validation for Chinese
equities.
And I I as you know, the there'sa the notion of a model
portfolio, and I think I've gota 3.5% or two and a half percent
(43:12):
NAV position in the FXI Chineselargest companies.
Not because I want it, butbecause I'm I'm I'm aware that
I'm very prejudicial with allthings China.
Uh that I don't see it.
If that bond yield was tosurpass the highs of this year,
(43:33):
maybe the uh the argument wouldbe that I should raise that that
that holding in in the equities.
But for now, um, it's stillgoing sideways.
So interesting.
Oh, the with I meant to say thatagain, how my maybe just trying
to reveal how my mind works as Iprepare for these podcasts,
(43:58):
algos.
But I was like, yeah, in thevideo, in the video, in the
video.
And I said, hey, you know, it'sjust you and me, digital
assistant.
I was like, can I ask you a fewdumb questions?
Can you pretend I'm 12?
Kind of like, what aresemiconductors?
Why isn't the video a fivetrillion, is it five or four
trillion dollar company?
(44:18):
Because they think semis areubiquitous.
They're made from silicon andthey they control electricity
and they make things work.
Electronically, they light upthings, and there are billions
of them.
They're mostly basic and boring.
(44:38):
So what's so special about thevideo?
I mean, do you know?
I mean, I don't I I don't know.
I've uh so let me share with youwhat I what I took from it.
You know, the the the GPU.
I mean, just again, funny howthings work out.
You know, and these were now I Idid know this, these were
(45:00):
special processors uh for thevideo games award that made
pictures and explosions, youknow, made it all very, very
realistic.
But they really, really workvery, very well for the zillion
math problems that you've got todo very, very, very, very
quickly.
(45:20):
That's the GPU.
And you know, the Intel, andwe've we've mentioned Intel,
we've mentioned AMD and howthey're American and they're
being promoted by the Americangovernment, and the hyperscalers
need them because there's onlyso much Nvidia can do or can
deliver.
(45:41):
And historically, you know,Intel was in your computer, it
was running your laptop.
They just don't have the Nvidiaspeed.
And again, I wasn't sure.
It was like, well, how much isthe GPU?
It's like 30,000 bucks, probablyhigher than that.
(46:04):
And then can't they just becopied?
But we we mentioned ARMpreviously.
And as you know, Nvidia is likea virtual company, almost like a
software company, is and thisthe software is CUDA C U D A.
And that that's the magic saucewith those with those chips.
(46:26):
That's the thing that's hard forthe Chinese.
You can't just buy the Chinese,could obviously have the best of
the Nvidia chips, you know, thatthe sovereign nation could
procure them secretly, stripthem apart, but you you can't
find the secret sauce, the thethe CUDA.
Nvidia, we mentioned Mercedes.
(46:47):
Is it a Mercedes or is it aFerrari when it's like in a
world of semiconductor bicycles?
This Ferrari came roaring out ofthe video games world.
Incredible.
(47:11):
And do you know they they theyspend ten yards a year?
Billions of little pieces underlike I mean I say ten is if it's
a big number.
I'm gonna I'm gonna go on andtalk about DiAgio.
DiAgio.
And and Archer, not ArcherMidland Daniels, I'm gonna talk
(47:35):
about Brown Foreman, so thedrinks industry.
And they they spent that kind ofmoney just on trying to persuade
you to to drink poison.
And of course, the video,they're fab less.
It's the super Taiwansemiconductor.
And and so even if the Intelersand even if the Chinese or
whatever could crack the cuda,they can't damn make it.
(48:00):
And the Americans, of course,won't won't allow ASML to sell
those machines to the Chinese.
The lithography.
We all know why Softbank issold.
They're Nvidia, but go Nvidia.
(48:22):
I'm not saying buy, I'm justsaying I feel like I I know a
little bit.
I I feel like I can bluff my waythrough a dinner party if people
ask me about Nvidia.
And that's what it's all about.
No real economic data at thelast two days.
Today was marred by Trump beingbuffoon-like, or the night
(48:42):
before, being idiotic andreactionary, old school
political nonsense.
This notion of a$2,000 tariffrebate to all Americans.
Households earning, what, lessthan a million dollars or less
than$100,000?
(49:02):
Stupid, stupid, stupid.
I don't think it will happen.
Talking of Trump, I was readingthe FT's doing a special piece
on a series, a recurring seriesof pieces on the longevity.
Living forever, very much what Iwant to do.
I'm enjoying life and I want toenjoy a very long, prosperous,
(49:25):
and healthy and productive life.
And so I take I take some spermin the morning.
Wheat sperm.
Spermidine, named from 17thcentury research things been
around for a long time.
And I should, I mean, I do takewheat germ powder with my
(49:48):
breakfast.
Um, but I also do take somespermidine pills, which are
preposterously expensive, butthey have been clinically proven
to extend the lifespan in inyeast, in worms, in flies, and
in mice.
They seem to reduce thesenescence again.
Did I mention senescence?
(50:09):
It's the age-relateddeterioration when the cells are
like uh going off, and we havethis thing, apophagy?
Forgive me for thepronunciation, but it's like
Placman and younger the youngerbody, we have these Pac-Mans,
and they go around the bodyeating off these sentient cells,
(50:29):
making them go away.
Otherwise, they just litter thelitter our bodies up, get in the
way.
Um I'm just telling you, there'sno great insight, but I guess
I'm telling you that because Igot the opportunity to say I
took sperm in the morning.
Jim Chanos, more interesting,talking about talking about
sperm and Michael Sailor.
(50:50):
Uh you know, the I'm hesitatingbecause well done, Jim.
Well done, Jim.
I presented on stage with Jimone year in Miami, I think, on
the Chinese economy.
(51:11):
And he's Channels', I mean, he'sretired, but he's clearly, I
think, family office his ownmoney.
And he has just unwound hisshort on a micro strategy.
The premium in the microstrategy valuation versus its
(51:32):
holdings of what 650,000bitcoins has fallen from two and
a half times, and I think we'redown to about one point one
point one.
It's all gone, Michael.
It's all gone.
And again, it just meme and howI mean that was neat because you
(51:54):
could and yeah, I was lamentingGeorge Gamon with his very, very
successful short on Carmax andhis pair long against the SP.
And I was lamenting that therewas so much idiosyncratic risk,
so many things that could gowrong, where you you could
actually lose money on bothsides of that pair trade.
(52:14):
Whereas this was safer that theperformance, short-term,
medium-term, long term, betweenBitcoin and MicroStrategy would
be very, very similar.
And therefore, the the notion ofthe premium being unwound seemed
(52:37):
correct.
Amazing how we've seen this.
You know, we we we saw this inthe grayscale.
It was the only way of playingit, and Bitcoin was going up,
and people were rushing, andpeople would take no for an
answer.
They wouldn't take no for ananswer, and and that premium
went from what 1.6, 1.7 timesall the way down to like I think
(52:57):
a 50-60% discount to NEV.
I I support Sailor in that Ithink it was the right thing to
do.
He's a huge shareholder instrategy, and he was able to buy
(53:23):
he was able to increase hispersonal holding in the Bitcoin
funded by foolish investors.
I say foolish because why onearth would you agree to pay two
and a half times?
And the most preposterous reasoncited.
(53:47):
Keep it simple.
People transcend it, betranscend the nonsense.
That's what I say.
And of course, so many ways, somany ways to play Bitcoin.
I mean, you know, the Black RockETF.
(54:10):
Why, why, why, oh why would youwould you buy a strategy?
So well done, Jim Chanos.
Because I've got the position inthe or I'm liking the the notion
(54:30):
of a a long breakout.
So again, a long breakout.
I'm talking about charts, and Ihad mentioned Tesla, and I said
that we've now gone sideways for20 quarters.
And Tesla kind of does this, andthen it breaches that and it and
it explodes.
It's not guaranteed to explode,but it did explode and it became
(54:50):
the most valuable, overvaluedcar company in the world.
Is it going to break out againto the upside?
Or is it going to break to thedownside?
The suspense is killing me.
But 20 quarters, it would seem.
And 20 quarters, plus for thepharmaceutical sector, that when
(55:11):
I started my career, these werethe most decorated, the most
celebrated growth companies inthe world.
And now they're almost valuecompanies.
Except, of course, during theawful, awful pandemic, when you
were either for, you were eitherpro-public policy or against.
I was very much against.
(55:33):
But Pfizer, of course, playedthat game very, very well.
And so it feels kind of it feelslike nothing, but it's the
redress is that Pfizer's marketcap has fallen by a fifth of a
trillion dollars since then.
(55:58):
Take that, Pfizer.
Aided and abetted by aproportionously silly, well,
overvalued acquisition.
So Michael Saylor was I mean, atleast he was taking his
overvalued stock.
I guess you could say actuallyPfizer too actually took its
(56:20):
overvalued stock at the end of2021.
So actually it's very that'sthis is a coincidence, but it's
very, very similar to Saylor andstrategy.
They took their stock inflatedwith the nonsense of COVID and
the vaccine.
And they they sold lots of it.
(56:43):
They sold 40 yards, 40 yards, Ithink.
How much did they sell of it?
How much did they sell of it?
How much?
I'm asking myself, they yeah, 43billion.
Um, and they made thisacquisition of a of a uh an
existing pharmaceutical stockcalled CGN.
(57:04):
They paid 21 times revenue.
And I mention it because thecheap boy, they've just outbid
Novo Nordisk, the Ozempicmanufacturer, the weight loss.
The European challenger to EliLilly, which is the the king and
the queen sitting on the throne.
(57:26):
And Pfizer internally could notmake their medicine work, and so
they felt obliged and they'vecome in and they've they beaten
Novo Nordisk and they they'vebought another group for 10
yards.
And so that kind of raised thatthat I kind of thought, ooh,
what are they up to?
Because you know, they they theytend to overpay.
(57:47):
And the chief executives, it'sthe same guy's called Albert
Burla.
What did he say?
He had a great line.
I I love acquisitions becauseit's revealing, and it's very,
very frustrating when they don'tgive you all the information.
The newspapers like, we want toknow what did they pay EV to
sales?
We want to know what were thelast five, ten years of average
(58:08):
EBIT margins, you know.
Um but what did Albert say?
He had a he he he must be acharacter.
It was reported as his commentswere candid.
I am over a nervous annoying.
Uh in candid remarks, Burlastarted, stated, if the whole
(58:29):
thing, but if the whole thingfails, then we overpaid.
If the whole thing succeeds,then it's a fucking good idea.
That's what he said with the Cgen deal.
I'm not sure it was a he stillmaintains it was a great deal.
I yeah, I don't know.
I don't know.
The share price has come downfrom 60 to 24.
(58:54):
And you can buy Pfizer at thesame prices that prevailed, I
think, in 1997.
What he was buying was seizure,and I thought, well, let's look
at it.
He was buying, and again, I'mI'm just sharing my knowledge
with you.
Take it as you wish.
ADC antibody drug conjugates.
(59:14):
He was buying magic bulletmedicine.
They definitely need a magicbullet for that share price.
So the antibody.
Forgive me, I'm still on the12-year-old's infantile mind,
but the antibody is like this.
The days of Taunton and theIndians, and we're cowboys,
we're we've got our scouts,we're out there ahead reporting
(59:38):
back, and they're the specialproteins, and they can spot
cancer cells.
The cancer cells have got kindof weird flag, flags or markers,
which healthy cells don't have.
And so the the scouts, theantibody sticks, sticks to the
bad cells like glue.
And when it's stuck, it thenzaps up.
(01:00:00):
Some poison, which hopefullykills so at the at the cellular
level, kills the cancer like atiny bomb.
And the conjugate, what the hellis a conjugate?
Conjugate's the rope, you you'reuh tying the scout and the and
the the the weapon together.
Kind of kind of cool and kind ofneat.
(01:00:24):
And of course, it's better thanchemotherapy.
But is it worth the hype?
I mean the doctors love itbecause you know it is targeted,
but it it may be targeted, butagain, you've still got safe
dosage kind of issues.
(01:00:46):
It can be hard to even thescouts can find it, it can be
hard to penetrate the tumor.
And again, like the dosage,dosage and penetration are
issues, and then they'refriggin' expensive, they're
really, really complicated tobuild.
Really, really complicated.
(01:01:07):
So I hope they work, and thenit'll be what honor these again.
A fucking great deal, but so forall the for the the rise and
rise and rise of the Nvidia's,there are visors and Merrick.
Merrick, Merck is kind of shareprices trying to stabilize.
I hope I said to you on Fridaythat trader mic when it's
(01:01:30):
covered coals, he's looking forgreat one-of-a-kind businesses
that that have had a glitch.
They've fucked up because ofthat.
And they fucked up, again,forgive me, at a point where
they were really loved andtherefore overvalued.
(01:01:54):
And so the penalty is extreme,they fall 60%.
And even that's not good enoughfor Mike to come in.
Mike, you know, we're talkingabout those quarterlies of going
sideways and the like.
Mike needs evidence that he'snot buying a falling knife.
(01:02:14):
And so just two companies, Merckand Pfizer, you were looking at
the best part of half a trilliondollars, just two companies
which have reversed as thehyperscalers obviously have
added trillions to their marketcapitalization.
And then I thought I'd close onthe story of D'Agio.
Sounds like a rapper or itsounds like a soul singer.
(01:02:38):
They make Johnny, Johnny Walkerwhiskey.
Casamigos, my friends, thetequila, and of course,
Guinness.
And it's another one where themarket cap.
Now they're not the size, theirmarket cap is what I want to
say.
I think it's 40 billion dollars.
(01:03:02):
You got 20 billion dollars ofdebt, which is a bit nasty.
And I'm not just talking aboutDeAzhu, I'm talking about the
Spirits companies.
Berno Ricard.
They make vodka absolute.
They bought that.
Uh in America, our very ownBrown Foreman, Jack Daniels
Whiskey, my brothers and mysisters.
(01:03:24):
I never got the chance to saygood evening, brothers and
sisters.
Let me correct for that as wereach the zenith or the end of
the show.
Collectively, the share pricesare at 10, 15 year lows.
It's still dropping.
I mention it because Diageo cameacross the screens, I think,
(01:03:48):
yesterday.
They've got a new chiefexecutive, and his nickname is
drastic Dave.
And he's drastic when it comesto cost.
He's a slasher.
Now, if you recall, I didmention whiskey.
(01:04:09):
I can't remember the context ofwhich I was discussing this.
I was telling you that I thinkyes, I it was the context of
Carmax and where they're exwhere they had been caught out
by the bringing forward, therenting of future demand and
(01:04:30):
bringing it into the present tobeat tariffs.
The tariffs would lead to analmost certain rise, which could
be a household additional costof five or ten thousand dollars
as they sought to replace thefamily car.
And so better to replace soonerrather than later and avoid the
(01:04:54):
tariff-induced inflation.
And that through Carmax's plansand its planning of demand and
supply, it got it all wrong andthe share prices collapsed.
And I gave the example, I saidproduction planning, planning
and trying to see the future isa challenge across the universe.
(01:05:17):
It's tough being like an easybusiness, forgive me.
And I know that's nothing iseasy but toothbrush, toothpaste.
The lags are modest, the demandis constant, and even then the
production is hard.
And I was can I was contrastingthat with the drinks and
(01:05:39):
especially whiskey.
Whiskey's hard.
Ten years.
You're gonna make it, and it'sgonna sit there for 10 years
before you sell it, and thatleads to huge, huge supply
issues.
And we were discussing thecobweb theorem.
And so, you know, imagine you'rea farmer and you grow, you grow
(01:06:01):
whiskey.
Maybe I should say you grow uhbarley, but you grow whiskey.
And and the whiskey, it takesthe whole summer to grow, and
you plant the whiskey seeds inthe spring and you harvest in
autumn.
Now, if the whiskey is sellingfor a high price, you go, Wow,
(01:06:26):
I'm gonna plant a lot morewhiskey next year.
But the thing is, all the otherwhiskey farmers they do the
same, and so when you come tothe harvest, there is too much
whiskey, and the prices crash.
And then and then people regretthe the whiskey farmers regret
their behavior and they plantless.
(01:06:49):
And you repeat this in intoinfinity, and so it's kind of
you're kind of blowing a spiderweb.
It's a spider web blowing in thewind, not a candle in the wind,
a spider web.
That's the cobweb theorem.
Businesses are having to makeguesses based on today's prices,
(01:07:10):
and it causes big ups and bigdowns.
And for the spirit companies, ohmy god, have they again let's
use the F-bomb, have they fuckedup that 10 years to age in the
barrows?
And and of course, whathappened?
Well, a few years ago, more thana few, I guess you go around to
(01:07:32):
around about 2010 with Chinabooming, they started buying
fancy whiskies and what's thatawful?
It's like a whiskey.
Covassur.
Brandy, brandy, yeah.
Gifts, gifts of ostentatious,ostentatious gifts to say, oh
look, we're doing really well,or to bribe people and to look
(01:07:55):
good.
And and so the the consumptionand the prices you could achieve
were off the charts.
And what did the what did thewhiskey cup, what did the drinks
companies do?
They they produced a hell of aletter.
They're like this gonna lastforever.
Same thing.
(01:08:16):
And this has been an extendedfuck-up because in between,
because you know, then China islike the it starts to go, holy
Moses, we kind of got the Chinathing wrong.
Then COVID comes through andeveryone's stuck at home.
You can't go to the bar unlessyou're in St.
Bart's, the bar's closed, and soyou're like on Amazon and you're
(01:08:37):
ordering fan.
You can't actually order drinkson Amazon, you're ordering
fancy, what do I mean fancy,expensive premiums?
Yeah, we'll take that salesboom, and to make it worse, they
go and buy each other atpreposterous pfizer-like C gen
(01:08:58):
valuations.
Tequila, everyone's drinkingtequila, me included.
Tequila grows, it takes youseven years for the agave plant
to grow.
So a bit better than thewhiskey, but still, seven is a
long time.
Vodka, you you should just stickto vodka.
Vodka is like lemonade, noaging.
(01:09:20):
Uh, you don't have the cobwebtheorem.
All the problems lurk within thewhiskey.
You're really whiskey-dependent,guys.
Brown Foreman.
Oh my god, Niger Prize has hasabsolutely collapsed.
I actually came across anotherone.
I'm gonna have it's I I'll showyou its share price in the
Substack in the Patreon.
MGP.
(01:09:41):
MGP.
I love discovering newcompanies.
MGP makes is a barley.
It makes it makes the the theraw material for the whiskey.
Sales down 19%.
Stock trades on like four timesearnings or something.
Share price has gone from 130 uhto 25, and it's come, it had a
(01:10:05):
it had a ceiling that became atrampoline, and then the
trampoline would come all theway back down to the ceiling.
Interesting.
But a microcap stock, we'retalking like half a billion
dollar uh market capitalization.
But you know, Brown Foreman losttwo-thirds of the market value.
The whole alcohol industry hashas dropped a trillion dollars.
(01:10:28):
So again, Nvidia, alphabet,microsoft, et al meta going
higher by trillions, and not azero-sum game, but you know,
coming back.
And the problem you have is soyou you you're starting making
(01:10:49):
the stuff.
You know, the far the whiskeyfarmers like, okay, less
planting, less, less, less, lessplanting.
But you've got all that surplusin in your bonded warehouse.
So the production is down likebetween 20 and 30 percent.
(01:11:10):
But you know, you're not gonnasee you're not gonna deal with
the the surplus.
You need years and years andyears to deal with the surplus.
Uh and then with those EPIC,people are drinking less.
The Gen Z are drinking less,apparently.
(01:11:31):
I mean, I don't know if I'dbelieve that every Gen Z I see
is drinking as much as I am.
I mean, I'm drinking less.
I'm drinking less.
China's still not booming,regardless of what those
inflation figures were saying.
And I I read and I didn't knowthis.
The US government was proposingputting like a kind of
carcinogenic warning on onspirits.
(01:11:54):
Have you heard that?
I I'm not I was not aware ofthat.
Um, anyway, that's the glitch.
That's the glitch.
And you know, you you saw this,it repeated itself.
It's well, we are repeating thepast.
When Japan was China, you know,the glorious 1980s, the share
(01:12:16):
price performance of whiskeycompanies were on fire because
you had a decade, it takes adecade to correct.
And you had scarcity, and so youhad pricing for a decade and
huge demand.
So at some point, we have tokeep these on our radar.
But because at some point itwill turn.
(01:12:39):
This is the pain now.
Now, drastic Dave, I think theDe Azure share price was up 7%
today or yesterday.
Cutting costs, I mean, I wouldyou yeah, I don't care his
reputation.
I mean, he worked at Unilever inTesco for Christ's sake.
Yeah, Moses.
It's the second time I mentionedMoses.
Getting all biblical.
(01:13:01):
I would I would have noenthusiasm for what one man can
do.
One man needs probably anotherfive years.
But and the stock, I mean,Diagio is gonna cut its dividend
almost certainly.
It's got debt, which is 20, 50%of its market cap, which is
never good, it's ugly.
(01:13:22):
So you're looking for them tocut their dividend to fall
further.
And unfortunately, the ball willnever be that high.
But there'll be a point wherethey're so low.
If you buy a stock down 60, 70%,trading at 20-year lows and it
goes sideways.
What does that sound like?
That sounds like Nokia,Ericsson.
(01:13:43):
The Nokia was high, if thevolatility was high enough, you
could just sell weekly expiringcalls, kind of at modestly just
off at the money.
And do that weekly.
Maybe you only maybe you onlyget an income of half a percent
per week, but do thatconsistently.
(01:14:03):
And in three, four years' time,maybe your your absolute in
price for the for the stock youbuy will be nothing.
And then when the cobweb turns,boom, baby, you will be, you
will be a winner.
So there you have it.
Today was very we did trans withtranscendental asset capitalism.
(01:14:25):
We've examined some economictheories.
We've in the apps, oh the thegovernment is reopening.
We're gonna have governmentdata, but we're gonna have
government data, and we're gonnahave decimal points.
But what do we need?
Say it after me.
We need imagination.
This has been your nightly,weekly shot of imagination.
(01:14:50):
Um this week I think we're ontwo, two at most.
Maybe the Jedi is right.
Write in and tell me if he'sright or if he's wrong.
My brothers and my sisters, I amHugh Henry.
I am the asset capitalist, and Ivery much believe that I have
brought heaven to earth, andwe've called it Blanc Blue and
(01:15:14):
Saint Bart's, and I'm gonna havea joyous sleep tonight.
When you receive this show,receive it with my my immense
gratitude.
Until the next time, good night,good morning, good afternoon.
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