Latest / Breaking Points with Krystal and Saagar / 6/8/26: Chips Stocks Hammered, Trump Floats Gov Stake In AI Companies

Transcript

6/8/26: Chips Stocks Hammered, Trump Floats Gov Stake In AI Companies · Breaking Points with Krystal and Saagar

• 0:00
  Speaker 1: Hey guys, Saga and Crystal here.
• 0:01
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  Speaker 3: We need your help to build the future of independent
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  Speaker 3: news media and we hope to see you at Breakingpoints
• 0:29
  Speaker 3: dot com. Turning now to the stock market, absolutely insane
• 0:36
  Speaker 3: things happening. There are drops, there are increases, but overall,
• 0:39
  Speaker 3: the shakiness over the last couple of days from Friday
• 0:42
  Speaker 3: to Monday reveal potential major weaknesses in the US economy,
• 0:46
  Speaker 3: which lead us directly into our next segment with Jeff
• 0:49
  Speaker 3: Stein on AI.
• 0:50
  Speaker 1: But let's start with D six. Actually, let's put.
• 0:52
  Speaker 3: It up here on the screen. This was written over
• 0:54
  Speaker 3: the weekend. The market route leaves Wall Street bracing for
• 0:57
  Speaker 3: rockier times. Investors have to confront the challenges from the
• 1:01
  Speaker 3: latest inflation reading and SpaceX ipo in the days ahead. Specifically,
• 1:05
  Speaker 3: they show stocks, bonds, gold, Bitcoin. Investors entered the new
• 1:08
  Speaker 3: week battered by a market sell off that left very
• 1:11
  Speaker 3: few places to hide. The route followed Friday's stronger than
• 1:14
  Speaker 3: expected jobs report, which sheared four point two percent off
• 1:17
  Speaker 3: the Nasdaq, sending investors erasing to increased bets that the
• 1:21
  Speaker 3: Federal Reserve will raise interest rates by year end, and
• 1:24
  Speaker 3: sparked a bond slide that lifted yields on treasuries to
• 1:27
  Speaker 3: their highest levels since early twenty twenty five that pressured
• 1:30
  Speaker 3: shares of multinational and smaller domestic companies alike, and gold
• 1:33
  Speaker 3: fell to its lowest levels on the year. The tumble
• 1:36
  Speaker 3: drew warnings from Wall Street that more turturmoil lies ahead.
• 1:39
  Speaker 3: Ray Dallio of Bridgewater said this Friday was an important
• 1:43
  Speaker 3: move that highlights the central role that the global craze
• 1:46
  Speaker 3: for artificial intelligence and other related stocks is played in
• 1:48
  Speaker 3: the record run. With valuations stretched and yields rising, bonds
• 1:52
  Speaker 3: are now much more attractively priced than stocks, leaving the
• 1:55
  Speaker 3: market in a precarious position. Market and economic concentration is
• 1:58
  Speaker 3: in one new sector that is highly volatile and risky
• 2:02
  Speaker 3: is super popular among unsophisticated investors.
• 2:04
  Speaker 1: Quote that is classic bubble stuff.
• 2:07
  Speaker 3: So the two things that caused the Nasdaq and stock
• 2:10
  Speaker 3: market to go down significantly on Friday were the jobs
• 2:13
  Speaker 3: market that came in a little bit stronger than normal.
• 2:15
  Speaker 3: Now why would that matter because it would mean that
• 2:18
  Speaker 3: they believe that, thus the Federal Reserve would have to
• 2:21
  Speaker 3: raise interest rates. Everything from the AI stocks to the
• 2:25
  Speaker 3: general rise had actually previously been bet on the fact
• 2:28
  Speaker 3: that the Fed was going to lower interest rates or
• 2:30
  Speaker 3: at the very least keep them the same. So when
• 2:32
  Speaker 3: that reading came in, they immediately bet that the interest
• 2:35
  Speaker 3: rate was going to go up. That's already crushing now
• 2:37
  Speaker 3: multiple years of generally high interest rates.
• 2:39
  Speaker 1: How does that affect AI?
• 2:41
  Speaker 3: Basically, from what I've been able to gather, a lot
• 2:43
  Speaker 3: of it is based on the construction of the capex
• 2:45
  Speaker 3: costs for borrowing, because they have to borrow all this
• 2:48
  Speaker 3: money to build all these new data centers and for
• 2:50
  Speaker 3: all these other things. Money being more expensive increases the cost.
• 2:53
  Speaker 3: And it also demonstrates as he was talking about with
• 2:56
  Speaker 3: the bonds, making it less attractive to bet on these
• 2:59
  Speaker 3: ultra risky investments like I mean, you got Micron out
• 3:02
  Speaker 3: there up like one thousand percent, and all these other
• 3:04
  Speaker 3: chip companies which are up, you know, by boatloads. AMD
• 3:07
  Speaker 3: is up by two hundred percent, end videos up. God
• 3:10
  Speaker 3: only knows how much.
• 3:11
  Speaker 1: Google metat everybody.
• 3:12
  Speaker 3: They all got hammered, largely either because of the bond issue,
• 3:16
  Speaker 3: interest rates, and then sometimes things just kind of break. Now,
• 3:19
  Speaker 3: I do want to be clear, on the day that
• 3:20
  Speaker 3: we're recording this, it currently does look like the market
• 3:23
  Speaker 3: is actually up. It's up by some point eighty five percent.
• 3:25
  Speaker 3: So it's a race, you know, maybe like a percent
• 3:28
  Speaker 3: or so of the general drop that it had. We
• 3:30
  Speaker 3: don't want to make too much of the drop itself.
• 3:32
  Speaker 3: We're trying to look for the rockiness of where some
• 3:35
  Speaker 3: of the investor beliefs are and what that will mean
• 3:38
  Speaker 3: in the future. So, for example, let's put D two
• 3:41
  Speaker 3: up there on the screen. There was all that carnage
• 3:44
  Speaker 3: in the chip stocks, quote hit extra hard in the
• 3:47
  Speaker 3: top heavy market. Everything has been dependent now on a
• 3:51
  Speaker 3: small group of big tech companies, which they specifically point to, Micron, Supermocuter,
• 3:56
  Speaker 3: and sand Disc. They all lost more than eleven percent
• 3:58
  Speaker 3: in a single day. Cisco and Nvidia dropped six percent.
• 4:01
  Speaker 3: Caterpillar lately, apparently an AI play because of its power
• 4:04
  Speaker 3: and energy business, fell by three point eight percent. All
• 4:07
  Speaker 3: of that you can point to these you know, semiconductor
• 4:09
  Speaker 3: indexes and others combined to a RaSE more than one
• 4:12
  Speaker 3: point two trillion in market value on the single day,
• 4:15
  Speaker 3: And this chip story really was the big story out
• 4:17
  Speaker 3: of the general drop, and I think highlights how much
• 4:20
  Speaker 3: of the current market is dominated in this one sector.
• 4:23
  Speaker 3: So yes, it was like a little bit of a blip,
• 4:25
  Speaker 3: but I think that we have to focus on it
• 4:27
  Speaker 3: just to make sure that we're covering our bases because
• 4:30
  Speaker 3: in the future, this a massive drop in those chip
• 4:32
  Speaker 3: stocks will significantly deplete the all of the gains from
• 4:37
  Speaker 3: the S and P five hundred. It won't erase all
• 4:39
  Speaker 3: of them, but so much of your current wealth is
• 4:41
  Speaker 3: tied up in that basically, no matter who you are,
• 4:44
  Speaker 3: really because it's not like your companies and others aren't
• 4:46
  Speaker 3: betting on that that it will mean genuine catastrophe for
• 4:50
  Speaker 3: US markets, and that is actually what we're pushing, push
• 4:52
  Speaker 3: us into a full blown recession if something.
• 4:54
  Speaker 2: Absolutely you know, I mean in terms of the level
• 4:57
  Speaker 2: of expenditure. The data center build down has now surpassed
• 5:01
  Speaker 2: the price tag of all public infrastructure spending the entire country. Like,
• 5:06
  Speaker 2: that's the scale that we're talking about here. You know,
• 5:10
  Speaker 2: this is beyond the railroad build down, It's beyond the
• 5:13
  Speaker 2: dot com boom. So if it does turn out to
• 5:17
  Speaker 2: be a bubble, there will be the entire economy is
• 5:21
  Speaker 2: bet on this. I mean, that's not an exaggeration. So
• 5:24
  Speaker 2: there will be just a massive, massive crash. And so
• 5:28
  Speaker 2: you know, you won't be surprised that investors, they are
• 5:32
  Speaker 2: aware of that, are a little bit jittery anytime anything
• 5:35
  Speaker 2: happens that could pump the brakes on that, you know,
• 5:38
  Speaker 2: ever expanding valuations and investment. So I think that's part
• 5:43
  Speaker 2: of why you see the volatility there.
• 5:45
  Speaker 4: You know.
• 5:46
  Speaker 2: At the same time, we should put a D four
• 5:48
  Speaker 2: up on the screen here about how voters are feeling
• 5:51
  Speaker 2: about the Trump economy, because while the markets might be
• 5:54
  Speaker 2: up for most voters, that is not the thing that
• 5:58
  Speaker 2: they are focused on. This is from the Financial Times
• 6:01
  Speaker 2: they say voters sour on Trump's handling of inflation and
• 6:07
  Speaker 2: grocery put prices. I was saying before that even Republicans
• 6:11
  Speaker 2: there's been a lot of upset about how Trump is
• 6:15
  Speaker 2: doing on inflation in particular, So they have thirty only
• 6:20
  Speaker 2: thirty eight percent approval among Republicans of Trump's handling of inflation.
• 6:25
  Speaker 2: He's actually underwater among Republicans on his handling of inflation.
• 6:31
  Speaker 4: And if you look at the numbers.
• 6:32
  Speaker 2: Overall, sixty eight percent disapprove of his handling of inflation,
• 6:37
  Speaker 2: only nineteen percent approve. Those are the worst numbers from
• 6:42
  Speaker 2: this entire poll of various issues. They're also not happy
• 6:46
  Speaker 2: with government spending. He's deeply underwater on a run, deeply
• 6:49
  Speaker 2: underwater on tariffs and trade, and all of these things
• 6:53
  Speaker 2: are areas where it has you know, it is.
• 6:56
  Speaker 4: Completely under his control.
• 6:58
  Speaker 2: So whatever the stock market is do, I mean, things
• 7:00
  Speaker 2: could get much much worse if you have a stock
• 7:02
  Speaker 2: market crash and then the one thing that is a
• 7:05
  Speaker 2: bright spot in the economy also goes south with tons
• 7:08
  Speaker 2: of carnage, and then you have, you know, utter decimation
• 7:11
  Speaker 2: across our entire economy. But even without that happening for
• 7:15
  Speaker 2: the American consumer, this has been a very very difficult
• 7:18
  Speaker 2: period and all owing directly to the choices made by
• 7:21
  Speaker 2: Donald Trump.
• 7:21
  Speaker 3: Yeah, and I think what this highlights to is, look,
• 7:25
  Speaker 3: while everybody's looking at AI the general cost for all
• 7:28
  Speaker 3: of us. Let's go to the next one show we
• 7:29
  Speaker 3: D five. For example, we haven't talked about jet fuel
• 7:32
  Speaker 3: here in a while. Airlines to face a one hundred
• 7:35
  Speaker 3: billion dollars hit on jet fuel from the iron energy shock.
• 7:38
  Speaker 3: Industry warns that profits will be had by the surging
• 7:41
  Speaker 3: energy costs. Oh, I mean, yeah, feeling so bad for
• 7:43
  Speaker 3: airline profits, But we also know what that means is
• 7:46
  Speaker 3: that these.
• 7:46
  Speaker 1: Prices are never going back down.
• 7:48
  Speaker 3: We talked about some of those those new surcharges that
• 7:51
  Speaker 3: United and American and all this other people have added
• 7:54
  Speaker 3: after the war and even across the world.
• 7:56
  Speaker 1: Yeah, call me.
• 7:58
  Speaker 3: So when jet fuel is trading at like half the
• 8:00
  Speaker 3: price and I don't know, like three or four years,
• 8:03
  Speaker 3: I can virtually guarantee you that price or those surcharges
• 8:07
  Speaker 3: will continue to be there. And that is the general
• 8:10
  Speaker 3: quote and shitification I think of the US economy. You
• 8:12
  Speaker 3: will see continued inflation be used as an excuse, both
• 8:16
  Speaker 3: because of supplier costs, but all because they want to
• 8:18
  Speaker 3: of general, increase price and it will never go down.
• 8:21
  Speaker 3: We were talking earlier outside of the show about these
• 8:24
  Speaker 3: NIX tickets. I think this is a perfect example, is
• 8:27
  Speaker 3: that you have an immense amount of wealth with the
• 8:29
  Speaker 3: S and P where it's at. The wealthy ten percent
• 8:32
  Speaker 3: of Americans have so much unbelievable amounts of money. People
• 8:36
  Speaker 3: are out there paying eight grand for noseblade tickets to
• 8:39
  Speaker 3: Madison Square Garden. I told you about the US Open.
• 8:42
  Speaker 3: People are out there playing six thousand bucks for like
• 8:44
  Speaker 3: normal US Open tickets, which previously would have been something
• 8:48
  Speaker 3: that you could go to the NBA Final, apparently the
• 8:50
  Speaker 3: World Cup, at least in some you know, some of
• 8:52
  Speaker 3: these more luxury cases is the same.
• 8:54
  Speaker 1: F one is another example.
• 8:55
  Speaker 3: It's are just purely for the super rich, and it's
• 8:58
  Speaker 3: only continued to explode. All those prices continue to go up. Meanwhile,
• 9:01
  Speaker 3: all of our costco prices also.
• 9:03
  Speaker 1: Continue to go up.
• 9:04
  Speaker 3: But the wealthy people, because they have so much wealth
• 9:06
  Speaker 3: tied up in the markets and just fundamently their wealth
• 9:09
  Speaker 3: is very different from the way that most w two
• 9:11
  Speaker 3: people make money, that they're able to afford that while
• 9:14
  Speaker 3: everybody else's everyday life continues to get more expensive and
• 9:17
  Speaker 3: they're little luxuries that they may have had in the past.
• 9:19
  Speaker 3: You save up to take your dad to a game,
• 9:21
  Speaker 3: I mean maybe at this point, but even that's so
• 9:25
  Speaker 3: crazy expence. Yes, steak dinner exactly once a month, steak
• 9:28
  Speaker 3: dinner or a barbecue they may want.
• 9:30
  Speaker 1: To throw for your friends.
• 9:30
  Speaker 3: You better have like five hundred dollars if you're going
• 9:32
  Speaker 3: to try to feed thirty or forty people nowadays. And
• 9:35
  Speaker 3: that will only continue to go up as the war continues.
• 9:39
  Speaker 3: And I just don't think it'll ever come down. I
• 9:41
  Speaker 3: really don't after the evidence of the last five years.
• 9:43
  Speaker 4: No, it does it. It only goes one way. That's the
• 9:45
  Speaker 4: way this.
• 9:46
  Speaker 1: Works, all right. So we got our guest standing by
• 9:47
  Speaker 1: Jeff Stein. Let's get to.
• 9:48
  Speaker 2: Them joining us now to talk all things AI, including
• 9:54
  Speaker 2: a very important new scoop. Is a long time front
• 9:57
  Speaker 2: of the show, Jeff Stein, he is now an economics
• 9:59
  Speaker 2: course on it with notice guragec.
• 10:01
  Speaker 5: Jeff Man, Hey, thanks so much for having me on.
• 10:03
  Speaker 2: Yeah, of course, So let's go ahead and start with
• 10:06
  Speaker 2: this scoop that you were able to obtain. Put E
• 10:09
  Speaker 2: one up on the screen. So Trump is talking with
• 10:12
  Speaker 2: tech executives about acquiring pieces of major AI companies. You
• 10:18
  Speaker 2: say that, he said on Friday he's talking with the
• 10:20
  Speaker 2: leaders of the largest AI companies about having the government
• 10:23
  Speaker 2: acquire pieces of their firms. This actually confirmed your previous
• 10:26
  Speaker 2: reporting that he had been discussing that idea with Sam
• 10:29
  Speaker 2: Altman in particular.
• 10:31
  Speaker 4: So what do we know at this point?
• 10:32
  Speaker 6: Jeff So, I think this has the potential to be
• 10:37
  Speaker 6: one of the most dramatic federal interventions in the economy
• 10:41
  Speaker 6: in modern American history. The big mystery at the heart
• 10:46
  Speaker 6: of this that I've been trying to figure out is
• 10:48
  Speaker 6: why do you open Ai? Does Open Ai do Sam Altman?
• 10:53
  Speaker 6: Why do they want this? And I'm curious for your
• 10:55
  Speaker 6: guys potential take on this. But essentially what we revealed
• 10:59
  Speaker 6: last week is that open Ai has gone to the
• 11:01
  Speaker 6: Trump administration and said, you know how, we're moving forward
• 11:04
  Speaker 6: with this potentially trillion dollar IPO to become sort of
• 11:08
  Speaker 6: a public company. What if the government stepped in and
• 11:13
  Speaker 6: became one of the largest shareholders, and not because the
• 11:16
  Speaker 6: government would come in and buy shares, like if you
• 11:19
  Speaker 6: or I wanted to go out and buy shares in
• 11:22
  Speaker 6: open Ai or ananthropic stock that would be one thing.
• 11:24
  Speaker 6: What they're talking about here is having Sam Altman as
• 11:27
  Speaker 6: proposing to the Trump administration effectively seeding controls of his
• 11:32
  Speaker 6: company to the government. And that's the story we broke,
• 11:35
  Speaker 6: and we reported that the Trump administration is looking into
• 11:37
  Speaker 6: this and thinking about it, and then Trump confirmed that.
• 11:40
  Speaker 5: They were doing that.
• 11:41
  Speaker 6: And so this is, you know, an unusual thing where
• 11:44
  Speaker 6: you have the head of a major company said to
• 11:47
  Speaker 6: the US government, Hey, would you guys like billions.
• 11:49
  Speaker 5: And billions of dollars worth of my private company.
• 11:53
  Speaker 6: I don't know about you, guys, but I can't remember
• 11:56
  Speaker 6: the head of any company ever saying to anyone, much
• 12:00
  Speaker 6: less the government, like, what if you guys came in
• 12:02
  Speaker 6: and made me billions of dollars poorer? And it's such
• 12:06
  Speaker 6: a head spinning thing and it raises I think a
• 12:09
  Speaker 6: lot of questions about motivations, about money, about sort of
• 12:14
  Speaker 6: the Trump Administration's rolling all of this, and it opens up,
• 12:17
  Speaker 6: I think, a really important and fascinating policy debate.
• 12:19
  Speaker 3: Yeah, let's go ahead and take a listen to Trump
• 12:21
  Speaker 3: actually confirming the story.
• 12:22
  Speaker 1: Let's take a listen.
• 12:23
  Speaker 7: When Bernie Sanders lost, you know that I got many
• 12:26
  Speaker 7: of his people. They voted for me because we are
• 12:30
  Speaker 7: on an economic plan. As far as economics is concerned,
• 12:34
  Speaker 7: we have certain things that aren't that far apart. People
• 12:36
  Speaker 7: are surprised, but many of you, as if you'll take
• 12:40
  Speaker 7: a look, many of the people that voted for Bernie Sanders,
• 12:44
  Speaker 7: but he was no longer there to vote for it,
• 12:46
  Speaker 7: they went to me. I picked up a lot of
• 12:48
  Speaker 7: his a tremendous amount of his voters.
• 12:51
  Speaker 1: So there he was confirming the Bernie idea.
• 12:53
  Speaker 3: Being asked specifically about AI, so both Bernie had previously
• 12:57
  Speaker 3: proposed some legislation, I think taking a fifty percent or
• 13:00
  Speaker 3: so equity stake as part of a sovereign wealth fund.
• 13:03
  Speaker 3: What do you think is the Trump administration's motivation though,
• 13:06
  Speaker 3: behind exploring this type of deal.
• 13:09
  Speaker 6: I think the Trump administration on AI is an incredible
• 13:13
  Speaker 6: sort of two forces colliding right on top of each other.
• 13:17
  Speaker 6: And one is that the base of the Republican Party
• 13:20
  Speaker 6: on every poll and every demonstration that we see is
• 13:24
  Speaker 6: extremely skeptical almost the way like there are a lot
• 13:27
  Speaker 6: of Republican voters who are skeptical of the party elite
• 13:30
  Speaker 6: on Israel, right are a huge portion of the base
• 13:33
  Speaker 6: is really riled up about data centers. It's not seeing
• 13:36
  Speaker 6: the benefit to them of this AI explosion and is
• 13:41
  Speaker 6: pushing back. I mean, I think we saw the head
• 13:43
  Speaker 6: of the Michigan Republican Party expressing new openness to data
• 13:46
  Speaker 6: centers because at the ground level, the base of the
• 13:48
  Speaker 6: Republican Party is extremely skeptical of this, but then at
• 13:51
  Speaker 6: the elite establishment level, the Trump administration, I'm not breaking
• 13:55
  Speaker 6: any news here, is deeply intermeshed with the biggest tech companies.
• 14:00
  Speaker 6: Trump relied on, you know, the biggest players in this game,
• 14:05
  Speaker 6: David Sacks and others to set administration policy, and that
• 14:08
  Speaker 6: administration policy has been very supportive. And we're at a
• 14:12
  Speaker 6: point now where because in part of that supportive policy
• 14:15
  Speaker 6: there's trillions and trillions of dollars. I mean, I don't
• 14:18
  Speaker 6: know what your guys take is on this, but it
• 14:20
  Speaker 6: seems quite possible to me not to sound over the
• 14:23
  Speaker 6: top at we are heading towards an enormous bubble popping,
• 14:28
  Speaker 6: and the risk from the Republican Party's standpoint is that
• 14:31
  Speaker 6: the base opposition to these data centers and to AI
• 14:36
  Speaker 6: will basically prevent the build out on which trillions of
• 14:41
  Speaker 6: dollars on investment is now contingent. So right, you're seeing
• 14:45
  Speaker 6: like like those two trains are heading towards each other,
• 14:48
  Speaker 6: and what the Trump comments they're confirm, which I was
• 14:53
  Speaker 6: kind of delighted to see because a lot of people
• 14:56
  Speaker 6: before my story came out, we're like, this isn't true.
• 14:58
  Speaker 5: You have no idea what you're talking about, likelah blah blah.
• 15:00
  Speaker 6: And then of course, like the president himself is like, yeah,
• 15:02
  Speaker 6: of course that like sounds great. But like, the really
• 15:10
  Speaker 6: interesting thing to me is that Trump is sort of
• 15:12
  Speaker 6: implicitly acknowledging that they have this problem, that people don't
• 15:15
  Speaker 6: like this. And so if the suggestion seems to be
• 15:18
  Speaker 6: if they can absorb the shares of the AI companies
• 15:21
  Speaker 6: and maybe redistribute them through a dividend payment, maybe they
• 15:24
  Speaker 6: using the paid down the debt, like there's lots of
• 15:26
  Speaker 6: ways they can use that money. Then maybe they can
• 15:30
  Speaker 6: maintain elite support for the buildout of AI while simultaneously
• 15:34
  Speaker 6: assuring people at the bottom that they're not getting totally
• 15:37
  Speaker 6: screwed by this.
• 15:38
  Speaker 2: Yeah, that there's going to be some benefit to them,
• 15:40
  Speaker 2: because right now all they're saying is there electricity prices
• 15:44
  Speaker 2: going up and everybody's brain's being rotted and a bunch
• 15:46
  Speaker 2: of oligarchs, you know, plotting whatever evil plans they have.
• 15:51
  Speaker 2: And Jeff, let's get to that question about the motivation
• 15:54
  Speaker 2: from open Ai and Sam Altman. I mean, to me,
• 15:57
  Speaker 2: the most straightforward reading is that they too are worried
• 16:00
  Speaker 2: that it's a bubble that is about to come crashing
• 16:03
  Speaker 2: down at some point, and they want to guarantee that
• 16:07
  Speaker 2: they're going to be able to get their government bail out.
• 16:10
  Speaker 1: Yeah.
• 16:11
  Speaker 6: I mean, I think that's the main criticism I've heard
• 16:14
  Speaker 6: that if the government is a major shareholder in open Ai,
• 16:18
  Speaker 6: then the incentives for the government to step in in
• 16:22
  Speaker 6: the event that open Ai has a true bubble bursting
• 16:25
  Speaker 6: I can only collapse, that incentive will be greater. I
• 16:30
  Speaker 6: think it's a little I don't know, and maybe that
• 16:32
  Speaker 6: is what's going on. I think part of my hesitation
• 16:35
  Speaker 6: is that, like, if they're just seating shares, the US
• 16:38
  Speaker 6: investment in this will technically be zero dollars. Yeah, it's
• 16:41
  Speaker 6: not like they have an investment to recoup. But maybe
• 16:45
  Speaker 6: like just the fact that the US government is more
• 16:48
  Speaker 6: part of this company now means that they have a
• 16:50
  Speaker 6: greater incentive to step in. That makes a degree of sense.
• 16:52
  Speaker 6: I mean, I think the other major thing that's going
• 16:55
  Speaker 6: on here is that there's a war within the Trump
• 16:56
  Speaker 6: administration over the regulation of AI, and you have on
• 17:01
  Speaker 6: the one side, David Sachs, who left the administration, but
• 17:03
  Speaker 6: he sort of articulates the embodies the idea that there
• 17:06
  Speaker 6: should be essentially no, maybe that's an overstatement, but very
• 17:10
  Speaker 6: very little federal overset of this industry at all, that
• 17:13
  Speaker 6: it flows down sort of the innovation, and that we
• 17:16
  Speaker 6: are an interference fight with China, and that the best
• 17:18
  Speaker 6: way to wait is to not exert really almost any
• 17:20
  Speaker 6: scrutiny over these companies. And then on the other side,
• 17:23
  Speaker 6: we've seen recently Pete Hegseth and the Department of whatever
• 17:27
  Speaker 6: we're calling it war is now saying these capabilities are
• 17:31
  Speaker 6: so dangerous to US national security, as they're framing it,
• 17:35
  Speaker 6: that we need some degree of federal intervention.
• 17:37
  Speaker 5: And I think part of what might be.
• 17:39
  Speaker 6: Going on here is that Open Ai and the other
• 17:41
  Speaker 6: AI companies are saying, well, we're trying to prevent this
• 17:45
  Speaker 6: regulatory on slot. If we bring the government in a
• 17:48
  Speaker 6: little bit, maybe they have less of an you know,
• 17:52
  Speaker 6: if we're generating all this money for the government they
• 17:54
  Speaker 6: have made, they might have less of an incentive to
• 17:55
  Speaker 6: slow down the pace of our growth. Which is a
• 17:58
  Speaker 6: little different than the argument, but maybe maybe not not
• 18:01
  Speaker 6: this similar in.
• 18:02
  Speaker 4: Some ways too interesting.
• 18:04
  Speaker 2: So they think they'll be regulated less if because their
• 18:08
  Speaker 2: view is I don't know that this is totally true,
• 18:11
  Speaker 2: because Anthropic has been like not perfect, but the most
• 18:14
  Speaker 2: responsible on the safety front and has also been very successful.
• 18:19
  Speaker 2: But anyway, their view is that is as much off
• 18:22
  Speaker 2: to the races as that they can be with little
• 18:25
  Speaker 2: hindrance and as irresponsible as possible, the more they're going
• 18:29
  Speaker 2: to profit, and the more they're likely to win the
• 18:31
  Speaker 2: race to you know, super ai AGI, whatever the goal
• 18:35
  Speaker 2: ultimately is.
• 18:36
  Speaker 5: So that's the idea is.
• 18:38
  Speaker 6: If they somehow set up a dividend payment. The math
• 18:41
  Speaker 6: doesn't quite out. I don't think for this, but you
• 18:44
  Speaker 6: can imagine a world where they say, okay, Trump accounts exist,
• 18:48
  Speaker 6: and we'll add one thousand dollars into each person's Trump
• 18:51
  Speaker 6: account from the shares of open Ai and the other
• 18:55
  Speaker 6: AI companies that we've acquired. Then the thinking is regulation
• 19:00
  Speaker 6: and makes that payment go down, so the government is
• 19:02
  Speaker 6: less likely to do it.
• 19:04
  Speaker 2: And people will be less interested in regulation generally, maybe
• 19:08
  Speaker 2: they'll be less populous.
• 19:10
  Speaker 4: Pressure that could be. That could be the bigging.
• 19:12
  Speaker 6: Correct And I think I think to go to your
• 19:14
  Speaker 6: point about Anthropic, which I think is really important and interesting.
• 19:17
  Speaker 5: We reported in our first story.
• 19:19
  Speaker 6: That Anthropic that basically open AI and Sam Altman have
• 19:23
  Speaker 6: been pushing this with the administration, and that Anthropic has
• 19:25
  Speaker 6: not discussed this idea with the administration. In my sense
• 19:28
  Speaker 6: from sources is that Anthropic is much cooler to this,
• 19:31
  Speaker 6: which is kind of an interesting inversion of like the
• 19:34
  Speaker 6: idea that Anthropic is kind of.
• 19:35
  Speaker 4: The good guys.
• 19:37
  Speaker 5: Yeah, yeah, right.
• 19:38
  Speaker 6: And maybe that's a function of the fact that open
• 19:41
  Speaker 6: Ai has a bigger pr problem where they're like, please
• 19:43
  Speaker 6: take our money because we are so unpopular, and Anthropic
• 19:47
  Speaker 6: doesn't have that problem, or maybe it's you know, the
• 19:50
  Speaker 6: it raises questions about Sam Altman's motivations and is it
• 19:54
  Speaker 6: partly a reflection of his coziness with the Trump administration.
• 20:00
  Speaker 2: Talk a little bit more about you started earlier. You
• 20:02
  Speaker 2: think that this is a bubble. There are many others
• 20:05
  Speaker 2: who do related to that. We have SpaceX IPO which
• 20:09
  Speaker 2: is imminent, and we can put this up on the screen.
• 20:12
  Speaker 2: From CNBC, they wrote up this Morning Star analysis that SpaceX,
• 20:17
  Speaker 2: in their estimation, is worth less than half of its
• 20:21
  Speaker 2: one point seventy five trillion dollar IPO target, and of
• 20:25
  Speaker 2: course SpaceX is includes Xai, includes you know, Grock and Xai,
• 20:30
  Speaker 2: but it also is a much larger company.
• 20:32
  Speaker 4: Obviously they do the rocket ships.
• 20:34
  Speaker 2: Their most profitable business is starlink, which is generally genuinely
• 20:39
  Speaker 2: like a good product that is in demand. A lot
• 20:42
  Speaker 2: of the other stuff in here is a money loser,
• 20:44
  Speaker 2: including Xai at this point. So what do you make
• 20:48
  Speaker 2: of the valuation here? Do you think it is overvalued
• 20:52
  Speaker 2: and overhyped and could help to further fuel and potentially
• 20:55
  Speaker 2: helped to collapse this potential bubble.
• 20:58
  Speaker 6: Yeah, My first disclaimer is never take stock advice from
• 21:02
  Speaker 6: Jeff Stein, as my friends have discovered, and for all
• 21:05
  Speaker 6: the listeners out there, don't trade on anything I say.
• 21:09
  Speaker 6: That said, there's a new report coming out today from
• 21:12
  Speaker 6: economists Adam Seper. They're going to find essentially that they
• 21:19
  Speaker 6: did a systemic analysis of the dot com bubble and
• 21:23
  Speaker 6: the current AI bubble, and the findings, which I've been
• 21:27
  Speaker 6: talking to the researchers about, are really striking. In nineteen
• 21:31
  Speaker 6: ninety nine, Microsoft's the peak of the Microsoft stock was
• 21:36
  Speaker 6: twenty percent was six percent of GDP, so that number
• 21:42
  Speaker 6: was the top, and then after the dot com bubble burst,
• 21:46
  Speaker 6: the number one to three percent of GDP. Today, we've
• 21:50
  Speaker 6: seen Nvidia stock come close to twenty percent of GDP,
• 21:56
  Speaker 6: so more than three times the the relevant metric for
• 22:02
  Speaker 6: evaluating how much money as a percentage of the economy
• 22:05
  Speaker 6: is pouring into these sort of really frothy tech stocks,
• 22:11
  Speaker 6: and that to me suggests, you know, obviously Microsoft did
• 22:17
  Speaker 6: become an extremely profitable, successful company.
• 22:21
  Speaker 5: So it's a little bit of a nuanced picture.
• 22:23
  Speaker 6: Where I think there's a good chance that SpaceX is
• 22:26
  Speaker 6: making products that make money and that it will take
• 22:30
  Speaker 6: you know, some time to do that, but that is
• 22:32
  Speaker 6: not a sign that you know, no one would look
• 22:34
  Speaker 6: back and say Microsoft was a failure, right, But that
• 22:38
  Speaker 6: reality was simultaneously true with the reality that this was
• 22:42
  Speaker 6: a bubble. And from what you mentioned right about sort
• 22:46
  Speaker 6: of the profitability and the revenue that SpaceX is generating
• 22:50
  Speaker 6: is so far from the evaluation, and we're seeing that
• 22:53
  Speaker 6: across the tech sector, not just Nvidia, not just SpaceX,
• 22:56
  Speaker 6: but Opening Air and Thropic. It doesn't mean that this
• 23:00
  Speaker 6: technology is unimportant or unvaluable for this for us to
• 23:03
  Speaker 6: be heading towards a major course correction in the valuations.
• 23:06
  Speaker 3: The other thing that was a huge red flag to me,
• 23:08
  Speaker 3: can we put E four up here on the screen?
• 23:10
  Speaker 3: I had no idea about this, but Fidelity actually slashed
• 23:14
  Speaker 3: its SpaceX minimum to two thousand dollars for retail investors,
• 23:18
  Speaker 3: So basically they changed the getting into an IPO for
• 23:23
  Speaker 3: the offer price is normally a privilege that's reserved for
• 23:26
  Speaker 3: big accounts. From what I could see, you needed a
• 23:28
  Speaker 3: minimum balance of like one hundred K or something like
• 23:30
  Speaker 3: that for Charles Schwab. Fidelity actually changed that, offering it
• 23:34
  Speaker 3: to any customer with only two thousand dollars in a
• 23:36
  Speaker 3: retail brokerage account, a fraction of the threshold that has
• 23:39
  Speaker 3: been quote historically gated access to hot new users.
• 23:42
  Speaker 1: That's the easy end.
• 23:43
  Speaker 3: The costly out is a fifteen day calendar leash and
• 23:46
  Speaker 3: penalties that escalate with each early sale until a third
• 23:50
  Speaker 3: strike trigger is a lifetime ban on Fidelity IPOs. They're
• 23:53
  Speaker 3: tied to your Social Security number, so basically you can
• 23:56
  Speaker 3: buy it with a very small amount of money in
• 23:59
  Speaker 3: your bank account, but if you sell it, you'll get
• 24:01
  Speaker 3: banned sometime in the future. But this appears to have
• 24:04
  Speaker 3: been a coordinated effort by SpaceX and others to let
• 24:06
  Speaker 3: retail investors buy into the IPO. I mean zooming out
• 24:11
  Speaker 3: generally seems like froth the activity. I'm clearly curious to
• 24:14
  Speaker 3: see what you think.
• 24:16
  Speaker 5: I haven't seen that report, but that is really interesting.
• 24:19
  Speaker 6: I saw another report basically that SpaceX has been trying
• 24:23
  Speaker 6: to essentially circumvent the normal process for being put on
• 24:27
  Speaker 6: the stock market. They wanted to essentially move it up
• 24:29
  Speaker 6: faster than any other company has done, which I mean
• 24:33
  Speaker 6: is probably not a great sign of the confidence of
• 24:35
  Speaker 6: the long term durability of the stock. If they're like,
• 24:39
  Speaker 6: we have a ton of moments and the cash in
• 24:41
  Speaker 6: on right now, and if we let people take the
• 24:45
  Speaker 6: average amount of time to invest, that is a threat
• 24:48
  Speaker 6: to us that seems inauspicious to put them mildly.
• 24:51
  Speaker 2: Well, the other impact of that is so they were
• 24:53
  Speaker 2: denied this fast track and entry for the s and
• 24:56
  Speaker 2: P five hundred, but they were granted it for the
• 24:59
  Speaker 2: now stak and so a lot of people who aren't
• 25:03
  Speaker 2: like you know, retail investor day traders just have you know,
• 25:06
  Speaker 2: a lot of money and what's supposed to be very
• 25:07
  Speaker 2: safe index funds. That means without doing anything, you know,
• 25:11
  Speaker 2: SpaceX shares will flow into like their four oh one
• 25:14
  Speaker 2: ks and so you will have a lot of retail
• 25:17
  Speaker 2: of normal investors who aren't the top point one percent
• 25:21
  Speaker 2: who end up exposed to SpaceX and this potential overvaluation.
• 25:26
  Speaker 2: So it is definitely a concerning situation, given the fact
• 25:30
  Speaker 2: in particular that you know, me, I think the entirety
• 25:33
  Speaker 2: of the lofty valuation here is based on the possibility
• 25:37
  Speaker 2: of XAI and the idea that you know, this could
• 25:40
  Speaker 2: be incredibly, incredibly profitable. But XAI also hasn't been at
• 25:45
  Speaker 2: the sort of bleeding edge of the competition. Anthropic is
• 25:49
  Speaker 2: considered the best in some areas, open Ai is considered
• 25:53
  Speaker 2: the best in other areas. Xai has kind of fallen
• 25:55
  Speaker 2: a bit behind. So even from that perspective, it seems
• 25:59
  Speaker 2: it is hard to justify.
• 26:01
  Speaker 6: Let's say, yeah, I mean, I think we're all just
• 26:03
  Speaker 6: going to be insanely jealous when everyone else sees their
• 26:06
  Speaker 6: SpaceX stock triple and value and the three of us
• 26:09
  Speaker 6: are left without without anything. I mean, I don't know,
• 26:13
  Speaker 6: I think there's there's to argue the other side of this.
• 26:17
  Speaker 6: Maybe you know, Elon, you know, took the long view
• 26:23
  Speaker 6: on Tesla and the company has had problems, but it
• 26:27
  Speaker 6: is also you know, the most successful ev maker in
• 26:30
  Speaker 6: the world right now, and the Starlink product is unbelievable.
• 26:36
  Speaker 6: It's incredible, as you mentioned, But no, I don't. I'm
• 26:41
  Speaker 6: out of the world's biggest expert in the space X stock.
• 26:45
  Speaker 6: But you know, the idea that we are on the
• 26:50
  Speaker 6: precipice of some something that is sort of beyond any
• 26:53
  Speaker 6: of our conceptions of what the economy might look like
• 26:56
  Speaker 6: is such a sort of either or dichotomy that if
• 27:00
  Speaker 6: you are of the mindset that we are about to
• 27:02
  Speaker 6: like enter a different dimension almost in our sort of
• 27:07
  Speaker 6: political economy, that these technologies are so transformative that we
• 27:13
  Speaker 6: can't even conceive of what the world is going to
• 27:15
  Speaker 6: look like in a year or two because everything will
• 27:18
  Speaker 6: be run by these firms.
• 27:20
  Speaker 5: Then like, yeah, then it's a rational investment.
• 27:22
  Speaker 6: But there's so many, so many regulatory and real world
• 27:28
  Speaker 6: logistical hurdles to the extent of deployment that these guys
• 27:33
  Speaker 6: have bought in on in their own in their own heads,
• 27:36
  Speaker 6: that that we are on the precipice of that.
• 27:39
  Speaker 5: It's it's so hard.
• 27:40
  Speaker 6: For me to see that in a year or two
• 27:42
  Speaker 6: we are going to be in this brave new world
• 27:45
  Speaker 6: that everything looks different and every AI company is valued
• 27:49
  Speaker 6: six times above it's projected profit in you know, in
• 27:54
  Speaker 6: the near term future.
• 27:55
  Speaker 2: Well where I am currently, and this could shift as
• 27:58
  Speaker 2: I continue to take in new information and try to
• 28:00
  Speaker 2: figure out where to land on this stuff. Is that
• 28:02
  Speaker 2: it is both a bubble and it is going to
• 28:04
  Speaker 2: be extraordinarily transformational. I think it's both, and there are
• 28:08
  Speaker 2: parallels right to the dot com bubble there as you're
• 28:10
  Speaker 2: pointing out before that it was a bubble, but also
• 28:12
  Speaker 2: the Internet did change the world. And part of why
• 28:16
  Speaker 2: i think it's potentially a bubble, and I've been talking to.
• 28:19
  Speaker 4: Zach Exley about this.
• 28:20
  Speaker 2: This is his view is, you know, if you look
• 28:23
  Speaker 2: at the AI that most startups and entrepreneurs and companies
• 28:27
  Speaker 2: are using at this point, it's not open Ayes, it's
• 28:31
  Speaker 2: not Claude, it's not chat.
• 28:33
  Speaker 4: GPT, it's deep Seek. It's the Chinese.
• 28:35
  Speaker 2: Competitor because it's almost as good and it's way way
• 28:40
  Speaker 2: cheaper cheap.
• 28:40
  Speaker 7: Yeah.
• 28:41
  Speaker 2: Incredibly, the idea that you're going to have, you know,
• 28:44
  Speaker 2: one of the American companies that establishes this dominant position
• 28:47
  Speaker 2: and then everybody goes to that one, That's not the
• 28:50
  Speaker 2: way it's playing out right, now it may end up
• 28:52
  Speaker 2: being much more like a utility that is, you know,
• 28:56
  Speaker 2: cheap and easily available, and you know, then yes, it's
• 28:59
  Speaker 2: still bill has that incredibly transformative impact, but it doesn't
• 29:04
  Speaker 2: lead to all of these USAI companies being fabulously successful
• 29:09
  Speaker 2: from a revenue perspective. That's kind of where I am
• 29:12
  Speaker 2: at this point with what's likely to happen here.
• 29:15
  Speaker 5: Sagar is at your view as well.
• 29:16
  Speaker 1: I don't know. I go back and forth. At the
• 29:20
  Speaker 1: same time.
• 29:21
  Speaker 3: I see all of these reports about people inside of
• 29:23
  Speaker 3: these companies who say, well, we don't even use AI
• 29:26
  Speaker 3: all that much. Then I also see people who what
• 29:29
  Speaker 3: is that company that spent half a billion dollars in
• 29:32
  Speaker 3: a single month and on Thropic credits. I'm like, okay,
• 29:35
  Speaker 3: well they're spending the money not for nothing, like they're
• 29:37
  Speaker 3: clearly buying it. And despite deepstak being available, Anthropic and
• 29:40
  Speaker 3: open Ai do make billions of dollars. They're not profitable,
• 29:43
  Speaker 3: but that's because their outlay is still very large. There's
• 29:46
  Speaker 3: still I think open Ai revenue it's like ten fifteen
• 29:49
  Speaker 3: billion or something like that. I'm projected, well, yeah, but
• 29:51
  Speaker 3: it was projected to increase year over year, so The
• 29:56
  Speaker 3: thing is is that there does seem to be a
• 29:57
  Speaker 3: genuine technological edge, at least for tech on the forefront
• 30:01
  Speaker 3: of technology.
• 30:02
  Speaker 1: The utility point remains there as well.
• 30:05
  Speaker 3: But circling back to the original story that you originally
• 30:08
  Speaker 3: that you said about the stake in government, I also
• 30:11
  Speaker 3: think that there's an element here, not just of regulation,
• 30:14
  Speaker 3: of being too big to fail and entrenching yourself with
• 30:17
  Speaker 3: the government and with Trump's penchant for wanting to take
• 30:19
  Speaker 3: stocks and companies anyways, to make sure that you preference
• 30:23
  Speaker 3: government regulation and others to keep them afloat no matter what,
• 30:27
  Speaker 3: like maybe in the future even banning cheaper Chinese AI
• 30:30
  Speaker 3: Deep Seek or any of these other models.
• 30:32
  Speaker 1: That's just kind of read.
• 30:33
  Speaker 6: That's a really good point, the potential desire for these
• 30:36
  Speaker 6: companies to ban foreign competitors and the government's incentive to
• 30:41
  Speaker 6: do that if yeah.
• 30:43
  Speaker 4: Yeah, I think that's very possible too.
• 30:46
  Speaker 5: That makes a lot of sense.
• 30:47
  Speaker 4: Jeff. The last thing I.
• 30:48
  Speaker 2: Wanted to ask you about is that the SpaceX ipo
• 30:51
  Speaker 2: is likely to make Elon. It's set to make Elan
• 30:54
  Speaker 2: a trillionaire, world's first trillionaire. We're going to be minting
• 30:58
  Speaker 2: many new billionaires between you know that I PO plus
• 31:01
  Speaker 2: you know, potentially open AI and anthropic. What impact does
• 31:06
  Speaker 2: this have on society? You know, how do you think
• 31:09
  Speaker 2: people are going to take in this, this brave new
• 31:13
  Speaker 2: world in terms of wealth that is already being created
• 31:16
  Speaker 2: before our eyes.
• 31:17
  Speaker 6: I've just spent the last year or so not in
• 31:20
  Speaker 6: this program and working on a biography of Senator Bernie Sanders,
• 31:24
  Speaker 6: whose view on this is now like something I read
• 31:27
  Speaker 6: about every day and have for the last year. So
• 31:29
  Speaker 6: it's hard to think of that question and not think of,
• 31:32
  Speaker 6: you know, the things he was saying in the sixties
• 31:34
  Speaker 6: and seventies about how one day America is heading towards
• 31:39
  Speaker 6: a trajectory of unbelievable inequality that makes democracy extremely difficult
• 31:48
  Speaker 6: to persevere in the face of of that degree of
• 31:53
  Speaker 6: wealth disparity and that degree of the different differential empower.
• 31:59
  Speaker 5: You know, I think this gets backed.
• 32:01
  Speaker 1: I really want to.
• 32:01
  Speaker 5: I've seen a lot of confusion on Twitter about this.
• 32:05
  Speaker 6: Bernie Sanders and Donald Trump do not have and you
• 32:08
  Speaker 6: see it in that clip, right, Trump is sort of like, Oh,
• 32:10
  Speaker 6: Bernie and I aren't that different. The proposal that Sanders
• 32:14
  Speaker 6: has in the proposal Trump has are incredibly different. They're
• 32:19
  Speaker 6: similar in the sense that both of them are talking
• 32:21
  Speaker 6: about having the government involved in these companies.
• 32:24
  Speaker 5: But Sanders is talking.
• 32:26
  Speaker 6: About forcibly seizing control and over half of each of
• 32:32
  Speaker 6: these companies and redistributing the gains from them to the
• 32:36
  Speaker 6: entire American citizenry through a sovereign wealth fund. Trump is
• 32:40
  Speaker 6: talking about seizing a tiny fraction, maybe five, maybe ten percent,
• 32:44
  Speaker 6: we don't know yet, but a small percentage of these
• 32:47
  Speaker 6: companies and allowing the private sector and these these trillionaires
• 32:53
  Speaker 6: now to continue to have full control over them. And
• 32:59
  Speaker 6: I just think it's really important for the public to
• 33:00
  Speaker 6: understand that those are very different paths for the future
• 33:05
  Speaker 6: of what they themselves are saying is the most important
• 33:08
  Speaker 6: technology in world history or whatever.
• 33:11
  Speaker 4: Yeah, very important.
• 33:13
  Speaker 2: Note Jeff, excited about your your new position there at notice,
• 33:17
  Speaker 2: super excited about the burning book that you've been working on,
• 33:20
  Speaker 2: and it's great to see you.
• 33:21
  Speaker 4: Where can people find your work now?
• 33:25
  Speaker 6: My Twitter is now ja Stein Underscore Star, which is
• 33:29
  Speaker 6: actually not the name of the publication right the problem
• 33:33
  Speaker 6: so Jeff Stein Underscore publication name TVD.
• 33:38
  Speaker 5: But thanks for everyone.
• 33:39
  Speaker 4: Great to see you, Jef, Thanks.
• 33:41
  Speaker 5: For having me on. Guys, really appreciate it.
• 33:43
  Speaker 1: Thank you guys so much for watching. We appreciate it.
• 33:45
  Speaker 1: We'll see you all tomorrow.