Does OpenAI Need a Bailout? Mamdani Wins, Socialism Rising, Filibuster Nuclear Option

Summary

This episode of the All-In Podcast features guest Brad Gerstner joining the besties to discuss a turbulent week in AI markets following Sam Altman’s controversial appearance on the BG2 podcast and OpenAI CFO Sarah Frier’s “federal backstop” comments. The hosts analyze whether OpenAI needs a bailout (consensus: no), the competitive AI landscape, and the importance of federal regulatory frameworks versus a patchwork of state regulations that could hamper US AI competitiveness against China.

The conversation pivots to market conditions and growing concerns about economic bifurcation, with the low-end consumer struggling while equity holders prosper. Trump’s approval ratings have declined 30% in a month, with two-thirds of the country feeling he has fallen short on the economy and middle-class issues. The hosts debate whether AI is causing job losses, particularly among young workers aged 20-24 who face 9.2% unemployment.

The final segment covers Zohran Mamdani’s victory in the New York City mayoral race as a self-proclaimed democratic socialist, validating David Friedberg’s earlier prediction about rising socialist movements in America. The discussion explores root causes including student debt, housing affordability, and the broken “generational compact” that Peter Thiel warned about in 2020. Sacks argues for eliminating the Senate filibuster to allow Republicans to pass domestic policy reforms.

Highlights

”Sam Altman Gets Feisty on BG2”

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“First of all, we’re doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I’ll find you a buyer.” — Sam Altman, 1:27

”No Federal Bailout for AI Companies”

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“There’s not going to be a federal bailout for AI. Not going to happen. We have five major frontier model companies right now, and there are new companies being formed all the time. And if one of them fails, hey, it’s going to go out of business and the other ones are going to replace it.” — David Sacks, 11:00

”Jensen Huang: China Will Win the AI Race”

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“China is going to win the AI race.” — Jensen Huang (quoted), 18:25

”Peter Thiel’s 2020 Warning on Socialism”

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“If one has no stake in the capitalist system, then one may well turn against it.” — Peter Thiel (from 2020 memo), 1:08:46

”Chamath Becomes Sympathetic to Student Loan Forgiveness”

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“This was the first moment in years where I have now become sympathetic to this idea of student loan forgiveness. I was never sympathetic to this idea. I am sympathetic to it now.” — Chamath Palihapitiya, 1:10:49

”Millennials as Socialists Might Be Unemployable”

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“Maybe the fact that all these millennials are socialists might have something to do with the fact they’re unemployable. Who the hell wants to hire young Lenin 2.0 communist revolutionary to be in their company if they don’t believe in capitalism?” — David Sacks, 1:12:11

Key Points

• Sam Altman’s BG2 Appearance (0:38) - Brad Gerstner asked Altman how a company with $13B revenue could justify $1.4T in spending commitments; Altman’s feisty response went viral
• OpenAI Revenue Clarification (15:33) - Sam Altman posted that OpenAI will end the year at $20B run rate, not the $13B figure being cited
• CFO “Backstop” Controversy (8:24) - Sarah Frier’s comment about federal backstop for financing sparked bailout concerns; she later clarified OpenAI is not seeking government bailout
• No Federal AI Bailout (10:26) - David Sacks confirms there will be no federal bailout for AI companies; the sector is one of the most competitive in the economy
• Build Out Not Bailout (13:08) - Government focus is on regulatory reform to enable infrastructure buildout, not financial backstops
• Jensen Huang on China (18:16) - Jensen says “China is going to win the AI race” if US doesn’t address state-by-state regulations and power constraints
• Federal AI Framework Needed (19:55) - 25% of AI bills are in four blue states (CA, NY, CO, IL); without federal preemption, blue states will set rules for everyone
• Cursor Switches to Chinese Model (19:03) - Cursor 2.0 swapped out Anthropic for open source Chinese model Qwen, illustrating competitive threat
• Doomer Narratives Are Astroturfed (28:15) - Three tech billionaires (Moskovitz, Talon, Buterin) contributed over $1B to doomer think tanks spreading anti-AI narratives
• OpenAI vs Anthropic Business Models (30:43) - OpenAI is ~75% consumer revenue; Anthropic is mostly enterprise/API; both are fastest growing companies in Silicon Valley history
• AI Super Cycle (32:48) - Brad Gerstner betting on the super cycle across OpenAI, Anthropic, Google, Microsoft, and Nvidia
• Consumer Cracking (39:43) - Low-end consumer faltering; credit card delinquencies back to 2009 levels; regional banks rolling over
• Market Decoupling (43:22) - MAG 7 dragging indices forward while 493 S&P companies left behind; Wall Street disconnected from Main Street
• Trump Approval Drops (45:38) - Net approval down from -9.4% to -13% in 29 days; 65% feel he’s fallen short on middle class
• Youth Unemployment Spike (46:57) - Ages 20-24 at 9.2% unemployment and rising; Jason attributes to AI, Sacks disputes
• October Layoffs Highest Since 2003 (56:03) - Largest number of layoffs in any October in over 20 years
• Mamdani Wins NYC (1:05:41) - Democratic socialist wins with 50.4% of vote; first Muslim mayor; youngest in 100+ years
• Freeberg’s Socialism Prediction (1:07:08) - Predicted dramatic rise in socialist movements 6 months before anyone knew Mamdani
• Peter Thiel’s 2020 Warning (1:08:15) - “If one has no stake in the capitalist system, one may well turn against it”
• Student Loan Reform (1:09:45) - Need to differentially price degrees based on earnings power; Chamath now sympathetic to loan forgiveness as part of comprehensive reform
• Filibuster Nuclear Option (59:13) - Sacks argues Republicans should eliminate filibuster since Democrats will do so when they next have the trifecta

Mentions

Companies

• OpenAI (0:38) - Central topic; revenue clarifications, CFO backstop controversy, spending commitments
• Anthropic (30:22) - Mostly enterprise/API revenue; impressive growth trajectory with lower capital burn
• Microsoft (5:39) - OpenAI partner; stock down 6-20% during correction
• Nvidia (5:39) - Partner in AI infrastructure; Jensen’s comments on China winning AI race
• Google (7:22) - Phenomenal earnings; Apple may pay them billions for AI (Siri)
• Apple (7:28) - Seeding AI business to Google; paying billions for search and potentially AI
• Meta/Facebook (7:22) - Earnings described as “terrible”
• Cursor (19:03) - Cursor 2.0 switched from Anthropic to Chinese open source model
• Amazon (47:43) - Andy Jasse said 30K layoffs due to ZIRP and DEI, not AI
• Oracle (5:39) - OpenAI partner affected by market correction
• Broadcom (5:39) - OpenAI partner affected by market correction
• XAI (20:41) - Only major AI company headquartered in Texas rather than blue states
• Altimeter (40:22) - Brad Gerstner’s fund; moved from small to XL positioning after tariff resolution
• Palantir (1:11:17) - Announced they won’t hire from college anymore
• Eli Lilly (51:13) - Selling GLP-1s for $149/dose as announced by Trump
• Novo Nordisk (51:13) - Also selling GLP-1s at reduced price

Products & Technologies

• ChatGPT (30:22) - OpenAI’s consumer product driving most of their revenue
• Gemini (10:10) - Google’s AI; Gemini 3 expected to be great
• Claude (10:10) - Anthropic’s model; developers trust they won’t encroach on application layer
• Grok (10:10) - XAI’s model mentioned as frontier competitor
• Qwen (19:07) - Chinese open source model now used by Cursor
• GLP-1s (51:13) - Weight loss drugs now available at lower prices
• Bitcoin (45:09) - About to break through $100K to downside with 5-10% more to run
• Stargate (17:26) - AI infrastructure buildout project people were laughing about 18 months ago

People

• Sam Altman (0:38) - OpenAI CEO; controversial BG2 appearance; clarified $20B run rate
• Brad Gerstner (0:00) - Guest; Altimeter founder; asked the question that “crashed the stock market”
• Sarah Frier (8:24) - OpenAI CFO; “backstop” comment controversy
• David Sacks (10:26) - AI Czar; confirmed no federal bailout coming
• Jensen Huang (18:16) - Nvidia CEO; warned China will win AI race if US doesn’t act
• Zohran Mamdani (1:05:41) - NYC mayor-elect; democratic socialist; first Muslim mayor
• Andrew Cuomo (1:05:55) - Lost to Mamdani by 9 points
• David Freeberg (1:06:55) - Predicted rise of socialism 6 months before Mamdani emerged
• Peter Thiel (1:08:15) - Predicted socialist turn in 2020 leaked memos
• JD Vance (54:09) - Said Republicans need to focus on domestic picture
• Andy Jasse (47:43) - Amazon CEO; said layoffs due to ZIRP/DEI not AI
• Scott Bessent (42:21) - Pounding table for lower rates; expects Q1 tax refund boost
• Sundar Pichai (32:53) - Google CEO; “coming off the mat swinging”
• Lina Khan (1:06:31) - Added to Mamdani’s transition team; called “super villain”
• Tony Hinchcliffe (36:57) - Kill Tony host; performing at All-In Holiday Spectacular
• Dustin Moskovitz (28:30) - Funded doomer think tanks with over $1B
• Vitalik Buterin (28:35) - Funded doomer think tanks
• Joe Manchin (1:00:08) - Drew bright line against eliminating filibuster; now gone from Senate
• Kyrsten Sinema (1:00:44) - Also opposed eliminating filibuster; now gone

Surprising Quotes

“First of all, we’re doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I’ll find you a buyer.” — Sam Altman, 1:27

“China is going to win the AI race.” — Jensen Huang, 18:25

“If one has no stake in the capitalist system, then one may well turn against it.” — Peter Thiel (from 2020 memo), 1:08:46

“This was the first moment in years where I have now become sympathetic to this idea of student loan forgiveness. I was never sympathetic to this idea. I am sympathetic to it now.” — Chamath Palihapitiya, 1:10:49

“Maybe the fact that all these millennials are socialists might have something to do with the fact they’re unemployable. Who the hell wants to hire young Lenin 2.0 communist revolutionary to be in their company if they don’t believe in capitalism?” — David Sacks, 1:12:11

Transcript

0:00 Brad Gerstner’s here joining us hot after crashing the stock market and popping the AI bubble. Well done, Brad. We’re going to get into it. All of our portfolios, thank you. We’re all down 15% this week. Can we ask OpenAI to just put a moratorium on any more public statements or appearances for another couple months? Good job, Brad. You decided you’d be a podcaster. You’re like, “Hey, let me ask a couple of hard questions here.” And you pop the AI bubble.

0:38 So Sam, of course if you’re not in the industry, Sam Altman appeared on the fabulous BG2 podcast last Friday and it got a little frisky when our fifth bestie here asked what I thought was a completely legitimate, mundane question. Hey, you’re making 13 billion. It’s actually a softball question to be honest. It was an underhanded pitch. The way that it was asked, I think you did a very reasonable job of asking a good question in a very fair way.

1:15 So, let’s just show this clip here and then I want to go behind the pod with you, Brad. “So, I think the single biggest question I’ve heard all week and hanging over the market is how can a company with 13 billion in revenues make 1.4 trillion of spend commitments, and you’ve heard the criticism, Sam.” “First of all, we’re doing well more revenue than that. Second of all, Brad, if you want to sell your shares, I’ll find you a buyer.”

2:48 That’s the interesting thing, right? I mean listen, we bust each other’s chops all the time. We get feisty with one another. Sometimes it runs amuck. Like we don’t know if somebody’s being serious or not serious and Sam and I had a good laugh after. I think Sam was feisty but I think he also intended it as a joke. He knows that I don’t want to sell my shares. He knows that I would like to buy more shares in the company.

3:17 But I think the reason that it went so viral is because it is a super important question. People are really nervous. They’re wondering, are we walking into an AI bubble? Like, how can these huge numbers, how can you be talking about 1.4 trillion in spending when you have kind of gap revenue that’s been reported to 13 billion this year.

4:00 So, I was a little disappointed and I tweeted about this afterwards that kind of the feistiness got in the way of the answer. But if you listen to his words during the rest of the segment, he basically said, “Listen, we think we’re going to have 100 billion in revenues over the course of the next couple years.” And the 1.4 trillion, it’s super important to remember this is over a period of five or six years. I estimate about half of that spending is going to be borne by the partners.

4:42 So now we’re talking $700 billion in spending. Spread that over five or six years. In the out years, you’re probably talking about $150 billion of capex to OpenAI. So he’s probably sitting there saying, we’re going to have over 100 billion in revenue. So if we have 150 billion in revenue and 150 billion in capex now it begins to pencil out a little bit more. But importantly he said if we don’t have those revenues we’ve got to match our revenues to our expenses.

5:39 This is an important point because we don’t know, we haven’t seen these actual deals and if they have conditions or outs or if they can push it out or they can cancel it. That will come out I guess in the public filings. But putting all that aside, the market was not happy about this. Microsoft, Nvidia, Oracle, Broadcom who all are the partners, when you see these charts of all the deals Sam has done - Sam’s a great deal maker obviously - they were all down 6 to 20%.

6:06 I think these are uncorrelated. Every now and then you have a bad day. I’ve done thousands of hours on TV. I’ve had a couple of really bad days. I suspect that if Sam had to do it over, he wouldn’t have said what he said in the way he said it. And even if he was joking, he would have practiced it a little bit more and just landed it.

6:33 So what’s actually going on? I think right now we are in a period of getting a little risk off and rebalancing. There are two sets of things that are happening. The first set of things is the market is learning to digest all of the capex that has happened and they’re all breathlessly trying to build models that try to predict what the ROI is of that spend.

7:02 The second part of that is they’re trying to figure out how this new spend will actually impact future earnings. And this is less to do with OpenAI, but it has much more to do with the big stalwarts of the MAG 7. Google’s earnings were phenomenal. Their AI numbers were blazing hot. Facebook’s was terrible.

7:28 Apple is now in this really interesting place where it seems like they’re going to seed their AI business to Google and pay them billions of dollars a year like they get paid billions of dollars a year for search from them. The second part is as you go into year end, there’s just a little bit in the market and people are like, “Let me just consolidate. Let me book some wins. Let me get ready for the new year. Let me tax loss harvest.”

8:06 So I wouldn’t pin this on Brad and Sam. I just think this is natural market machinations. But to be clear, we are very much getting into a phase of risk-off.

8:18 Yeah. And this got exacerbated Sacks because on Wednesday, OpenAI decided to be in the news again when their CFO Sarah Frier told the Wall Street Journal she hopes the US government, that’s you Sacks, will backstop financing of its 1.4 trillion in data centers. Here’s a direct quote: “the backstop, the guarantee that allows the financing to happen.” And she said that the federal guarantees would quote “really drop the cost of financing.” Of course, it would. And this would allow OpenAI to borrow more money at lower rates from a much larger pool of lenders.

9:00 That went viral and everybody said, “Oh my god,” it started feeding I think the narrative that maybe OpenAI is insolvent in fact and there’s no way for them to pay their bills, which obviously is a little bit ridiculous. And people are trying to correlate this to obviously the dotcom bust and then the great financial crisis.

9:21 But on Wednesday night, Frier walked back her comments. “I want to clarify my comments. OpenAI is not seeking a government backstop for our infrastructure commitments. I used the word backstop and it muddied the point. I was making the point that American strength in technology will come from building real industrial capacity which requires the private sector and government playing their part.”

10:10 Sax, you came over the top and tweeted that there will be no federal bailout. There’s plenty of people available to pick up the mantle if OpenAI needed a bailout. You got five major frontier model companies. Grok, Claude, Gemini, plenty of them. So Sax, you came in. Daddy’s home and you settled it.

10:29 Well, this morning my entire feed was full of comments by people, analysts, consumers, business people, and politicians saying that we can’t allow OpenAI to have a federal bailout. And I think they were kind of connecting Sam’s original comments or prickliness to what Brad talked about, with Frier’s comments that they need a backstop to say, hey, this company’s not solvent, it’s going out of business and they’re demanding a federal bailout.

11:00 What I said is, look, there’s not going to be a federal bailout for AI. Not going to happen. We have five major frontier model companies right now, and there are new companies being formed all the time. And if one of them fails, hey, it’s going to go out of business and the other ones are going to replace it. So, nobody is talking about a bailout.

11:21 In fact, I would say that the AI sector is maybe one of the healthiest, meaning most competitive sectors of the entire American economy right now. To the extent that you just love ruthless competition driving innovation, that’s what we have right now. So, if one of these companies gets over its skis and ends up going bankrupt, the chips are going to fall where they may.

11:45 Now, I also made the point, which I think is important, that to give OpenAI the benefit of the doubt, I don’t think anyone at OpenAI was asking for a bailout. If you watch the video with Sarah Frier, she’s clearly searching for the right word to describe what she’s trying to say, and then she settles on a word that she now regrets, which is backstop. Definitely not the right word.

12:28 What I think is important and I think maybe where she was going is that I do think that we want to make it easier to build infrastructure in this country and that means making permitting easier, making power generation easier. That’s all about regulatory reform. And I think that the goal here is to enable a rapid infrastructure buildout without increasing residential rates for electricity, which nobody wants.

13:08 The way that you solve that problem is by making it easier for these AI companies to stand up their own power generation behind the meter. And that requires regulatory reform. That’s what the president has called for is allowing the AI companies to do behind the meter. So no one’s talking about bailout. Nobody’s talking about backstop. We are talking about making permitting easier and making it easier to do buildout. Build out not bailout should be our motto here.

13:48 Listen, it’s a national imperative that we accelerate the buildout of AI infrastructure across the country. I’ve said before the $4 trillion that Jensen Huang has estimated will be built out over the next 5 years is 10 times the size of the Manhattan project that was totally federally funded. And this is all being privately funded. But it wouldn’t be possible without the government clearing out the regulatory hurdles.

14:31 Power is really the gating issue here and so it’s been amazing to see what the federal government is doing. I think that’s what Sarah was trying to get to that they need to have a public private partnership. They’re going to do their job, raise their money. Backstop was not the right choice of words, but they are deeply grateful for what the federal government is doing to accelerate the buildout of power and infrastructure.

15:08 By the way, Sam just posted something about 15 minutes ago. And he was pretty authoritative in addressing the three critical questions. The first thing he says is that we, meaning OpenAI, will end the year on a $20 billion forward run rate which means December revenue will be 1.666 billion at least. So we kind of know where the revenue is going from 1.2 to 1.6 over these next few months which is a pretty staggering growth rate.

15:50 I think this is a tempest in a teapot. I think people are on pins and needles. They’re agitated. Some people have had no gains. Other people have had incredible gains. Everybody’s agitated. We are getting in the risk-off phase for at least two or three months. We will be back firmly in risk-on mode in February is my suspicion.

18:16 Great segue, Brad. Jensen told the FT straight up, quote, “China is going to win the AI race.” His argument is that US state-by-state regulations and power constraints are making it harder for US AI companies. As we’ve discussed here countless times, whereas the CCP is obviously just making it super affordable to run all those GPUs.

18:57 He’s 100% right. I don’t know if you guys saw, but Cursor 2.0 launched this week. My team at 8090 uses it. It’s an incredible product. Guess what they did? They swapped out Anthropic for an open source Chinese model. They’re using Qwen. My point is we are right now running with one hand tied behind our back. We are going to have to deal with 50 different sets of legislation from state legislators who think they know what AI is. They don’t. Sax knows. So, there should be a federal framework and that should be it.

20:04 I was a little bit disappointed to see some politicians associating a bailout with a single federal framework as opposed to the patchwork of 50 state regulatory regimes. Because if Republican governors think that they’re the ones who are going to be writing the rules, they’re sorely mistaken about this. 25% of the bills going through state legislatures are in four states: California, New York, Colorado, and Illinois. In other words, the biggest blue states.

20:41 Those also happen to be the states where these big AI companies are all headquartered with the one exception of XAI which is in Texas. But these companies are in California. The blue states have the most market power and if they end up creating the regulations, I just think it’s naive to think that the AI companies won’t write their models to those regulations of the blue states.

21:21 What the blue states are going for here is to reinsert DEI into AI models to achieve ideological capture. And the way they do this, they don’t say we’re requiring DEI. They say that we’re prohibiting algorithmic discrimination, which means that the model says something bad about a protected group. You end up with the same end result, which is again ideological capture.

22:08 I think all Republicans should be opposed to this. There’s only one way to stop it, which is with federal preemption. Otherwise, the states will do what they want and the blue states will basically dominate. I think the arguments that make the most sense right now are the commerce clause arguments where look, the Constitution wants to create a single national market for interstate commerce. AI clearly qualifies and let’s give President Trump, not Gavin Newsom or JB Pritzker or Kathy Hochul or Jared Polis, the ability to write the rules.

26:03 No one was more critical of the big tech companies engaging in censorship in Silicon Valley than me when Donald Trump was kicked off every big tech platform. I think I was literally the only person in Silicon Valley who was publicly objecting to that on this podcast. So, I’m perfectly willing to criticize the big tech companies when they make a mistake. But when they’re engaging in healthy competition and innovation and we want to prevent ideological capture, let’s make sure it ends up in the right place.

27:15 We’re in this race to win AI globally and one of the major concerns I have is that AI is becoming deeply unpopular in America. Silicon Valley is losing the battle around AI. Doomers are now scaring people about jobs. They think all these job cuts that are going on in America are the result of AI. And number two, they’re seeing their electric bills go up and they think that’s also the result of AI.

27:48 I’ve talked with a lot of Republican senators and House members who say they are afraid to mention the words AI because their popularity ratings go down. We need to get on the other side of that because that is a losing proposition for America. If what takes hold here is that it’s politically popular to push back against AI, then I think that’s what you’re seeing at these state levels with Republican governors as well.

28:18 In terms of the public discourse, it’s true that the doomer narratives have had this tremendous effect that you can see in the poll numbers. But where do these narratives come from? Three big tech billionaires who are on the left contributed over a billion dollars to these doomer think tanks. Basically Dustin Moskovitz, Jaan Tallinn, and Vitalik Buterin. From Open Philanthropy and from some of these other entities, they have spun up hundreds of these astroturfed organizations that are spending literally hundreds of millions of dollars to spread these doomer narratives.

29:04 Right now, the two biggest narratives that we’re seeing on social media and in mainstream media are number one, the idea that there’s a huge AI bubble right now. In other words, it’s all totally fake. The other biggest narrative is that AI is on the verge of super intelligence and we’re all going to get replaced. These two things are contradictory. If it’s a bubble, it’s not going to be on the verge of super intelligence. And if AI is really that powerful, then obviously on some level this economic activity is justified. I think it’s possible to believe in neither one of them, which is where I’m at.

30:43 Let’s talk brass tacks before we move on. If they’re at 20 billion in revenue run rate, I think it’s pretty well known their majority of their revenue is consumer. 75% is the number I heard. And cost 20 bucks a month, 240 a year. That’s about 60 million paid subscriptions a year. And then on the other side, you got Anthropic, which got the opposite. They’re mostly APIs.

31:03 Well, I would just say they correlate with what the information has reported as leaked data from both companies and that makes them both the fastest growing companies in the history of Silicon Valley.

31:24 Two challenging questions for you since you have a big bet here. Google, Apple make these products free. They have pretty robust ad networks. That’s a massive headwind. And then on top of that, in the startup community, we just talked about Cursor. People are not trusting OpenAI and their API anymore because they know OpenAI is creating competing services. And so there is a big movement in the startup community to not use OpenAI’s API products.

32:48 Yeah, I mean, listen, I’m betting on the super cycle. This is the biggest super cycle of all of our lives. I’m an investor in OpenAI and Anthropic and Google and Microsoft and Nvidia, etc. And so, I don’t think you have to make the call right now, one of these companies winning. The fact of the matter, as Sax said, we have one of the most vibrant and competitive ecosystems in AI in the world.

33:12 I love the fact that Sundar is coming off the mat swinging. I think Gemini 3 is going to be great at Google. They may in fact make it free. I think Apple, I love seeing Apple pay Google to make Siri better. The only way that OpenAI wins is they got to build a product that we all love. The cohort curves are things of dreams, right? This is the retention rate, the engagement rate as people stay with the service longer.

34:04 Amongst the startups out there, they basically believe Claude is not trying to take their business. Claude has been very careful to say, “Hey, we’re not going to encroach into the application layer.”

34:16 By the way, the most impressive revenue chart when you showed that leak from OpenAI was Anthropic. If that revenue chart is real, what’s really impressive is Anthropic is not really in a J curve at all. And they get to very similar points of free cash flow but will not have burned through near as much capital to get there. That’s my singularly interesting observation about this chart.

36:30 Hey, just a quick plug here. We’re going to have an amazing holiday party. Come spend another Christmas with your besties at the All-In Extravaganza with Kill Tony. Joining us on stage, the host of Kill Tony is going to mercilessly roast everyone in Silicon Valley and the besties. Tony Hinchcliffe is coming to the Bay Area. We’re going to have the same great stuff we always do. Casino nights, poker, DJs, open bar, food, cocktails.

39:03 All right, listen. We got to talk about markets. We got Brad here, our fifth bestie. Stock market pulling back as Chamath just said. Hey, we’re going to be risk off. And we have been getting a lot of data, a lot of hand wringing going on. GDP growth, hey, maybe that’s mostly due to AI. The unemployment rate’s ticking up, inflation’s ticking up. Lots of concerning signs.

39:23 Let’s rewind the clock a little bit to April of this year. I think on an intraday basis, the NASDAQ was down 20% year to date in April. We’re now up 20%. So, a 40% move higher in a few months. Same with the S&P. I think it was down over 10%, now it’s up 14% on the year.

40:40 The first one is just there’s growing signs the consumer is pulling back. You heard it out of Chipotle, you heard it out of Cava, you heard it out of NCO, you heard it out of JetBlue. We have this two-tier economy. The low-end consumer is faltering. The higher-end consumer is hanging in there.

41:01 Now, compounding that is US credit card delinquencies are now back to 2009 levels. So you have consumer cracking a little bit, delinquencies, and now we’re seeing regional banks roll over. We’re seeing the credit markets beginning to crack a little bit, credit spreads blowing out a little bit.

41:46 The Fed is still got the market tight because they’re seeing the market at all-time highs. They’re seeing AI stocks rip, but under the surface, I think there’s a lot of concern and question about what’s going on. The good news about this is we still have firepower.

42:21 So Scott Bessent on the one hand is saying, “Listen, in Q1, we’re going to have some big tax refunds because of no tax on tips, no tax on overtime, and he thinks that’ll give it a boost.” But clearly, you hear them pounding the table that we need to get rates down.

43:22 Yeah, it used to be the case that as goes Main Street, so goes Wall Street or vice versa. The unfortunate reality is that there’s a handful of companies that have bids that are totally speculative and well into the future, but they are so well bid and they’re so highly valued that they drag the entire indices forward. Even though underneath the waterline, you’re leaving 493 companies behind. And the reality is that those companies more accurately reflect what’s happening to middle-income America.

44:00 We need to find some visible wins in the domestic policy arena. I think that’s what we need now because if you think of each year of a presidency as an act in three parts, I think act one was tariffs. I think act two has been foreign policy. And now it’s an opportunity for act three to refocus on domestic earnings and the domestic wealth effect of middle-income Americans.

45:09 I think if you look at some of these other markets, it’s really incredible. Bitcoin is about to break through 100,000 to the downside which I think is a psychological barrier that probably has another five or 10% more to run. There’s a dispersion happening in the MAG 7 as of this past quarter earnings.

45:27 You nailed it. 29 days ago I talked to you guys a little bit about the net approval rating here and how the country is feeling. And you can see Trump’s net approval rating at -9.4%. It’s gotten worse. Here’s the numbers from November. It’s gotten 30% worse. Now Trump’s down 13%. I attribute it to the fact that we’ve had all this layoff news. Inflation ticked up to 3%, everybody knows it was down at 2.3.

46:29 If you look at this next chart, it’s super interesting. What gets all the press is the foreign policy. But if you look at where the country feels Trump has fallen short, it’s where he was elected for being so strong. Look at these last three: The economy, 63% believe Trump has fallen short. Looking out for the middle class, 65% of the country believes he’s fallen short. And inflation and the cost of living, 66%.

46:57 If you look at people who are aged 20 to 24, they’re at 9.2% unemployment and it is spiking. Why is it spiking? I can tell you from the front lines, hiring young people and being at startups with young people in them. As companies cut and they use AI to solve problems, they’re saying hiring young people and training them is not as rewarding or efficient as training an AI to do the same task.

49:08 Trump sold people that prices would go down. We’re back up to 3% inflation, folks. Not only is it not going down, it’s going up. And I think when you put together what people are seeing, this focus on a big ballroom being added, focus on tariffs, things that Americans are not seeing hit their wages and they’re seeing their kids not be able to get jobs, that 9%, this is what’s concerning Americans.

50:13 I think everybody can find a piece of data to hang their bias on. And I think that what this most recent spate of elections shows is that most people are looking for some form of a price break. And so if you’re a New York mayoral candidate and you offer giveaways, you get a lot of attention.

51:06 The question is why is that happening? I think it’s fair to say that the reason why that’s happening is that we have now spent a lot of time setting the table for a wave of domestic policy initiatives and I think now is just the opportunity to follow through on those.

51:13 Trump announced today that Eli Lilly and Novo Nordisk would be selling GLP-1s for like $149 a dose. I think like that’s good. But there are all of these other programs that I think need to get addressed. The student loan thing is a key one. It’s time for legislation that says we’re going to stop federally underwriting these things. Force it into the public market. Force it into the open.

52:15 And people are seeing equity holders like us, people in crypto get rich. We’re all up 20-30% this year. And the working man in this country and the working woman is not. That’s the truth of it. And I think that’s why 60-65% of the country blame the Republicans for the shutdown and people aren’t getting food stamps and people aren’t getting paid and people see their healthcare prices are about to spike.

53:03 What do you think, Brad? If you’re right and we have inflation over 3% next November and you have higher youth unemployment and the economy is only growing at 1.5% and interest rates stay high, then I think it’ll be a rough midterm for the Republicans. I don’t actually think that’s the flight path for the country. I actually think you are going to get three to four rate cuts. I actually think you are going to see a reacceleration of GDP.

54:09 JD Vance basically said that Republicans need to focus on the domestic picture and they will. Now, if you’re talking about the election, one thing I want to point out is that all the major races were in blue territory and we got blue results. So, this wasn’t unexpected. And furthermore, Trump wasn’t on the ballot.

54:37 I concede to you that Republicans have a problem that when Trump is not on the ballot, our voter turnout is lower. In this election, the only thing that was a little disappointing was the gap in excitement between the Democrats and the Republicans. Democrats were able to turn out their voters. Republicans were not. That’s a problem that Republicans are going to have to solve for the midterms and in 2028.

55:21 I agree with the part of it that said that Republicans now need to focus on the domestic picture. But look, one of the biggest problems we have right now is the government is shut down. Who does the public blame for that? Unfortunately, they’re going to blame the party that’s in power, not realizing that the reason why the Democrats are able to shut down the government is because of the filibuster.

55:53 Unfortunately I think the public perceives that they gave power to Republicans but the government is shut down. The reason for that is because Democrats can shut down the government with just 41 votes basically. And President Trump has called for getting rid of the filibuster if the Democrats won’t reopen the government. I think we should do that.

56:15 Most people don’t understand the filibuster or how it works or why that’s even a part of democracy. Basically what it says is that for votes where the filibuster is in play, you need 60 votes, a super majority in the Senate as opposed to 50. If you ask most people in the country what is democracy? They would say it’s 50 plus one in the House, 50 plus one in the Senate and the presidency. That’s all you need. But that’s not true.

56:56 And we know the Democrats will do it. The next time the Democrats have the trifecta, they will absolutely get rid of the filibuster. We know that’s true because when we interviewed Joe Manchin, he was very clear. He was asked by Schumer and Biden, let’s vote out the filibuster, and he drew a bright line in the sand and said no. But you’re right, they would have.

57:25 The two Democrats who were opposed to getting rid of the filibuster were Manchin and Sinema. They are now both gone. So, the moderate Democrats are largely out of the caucus now. And if and when the Democrats will at some point return to power, they’re going to get rid of the filibuster.

57:59 And here’s the crazy thing. You can get rid of the filibuster with 50 votes in the Senate. I don’t think people realize that. So why would the Republicans foolishly abide by this sort of gentleman’s agreement that doesn’t exist anymore, hold themselves to a 60 vote majority?

58:27 The country gave President Trump a mandate. They gave him a sweeping reelection. Seven out of seven swing states, the House and the Senate, and they want results. And those results are being thwarted by a government shutdown and more generally by this crazy filibuster rule. Why wouldn’t we get rid of it now and actually pass the reform that the country wants and then let’s be judged on that in the midterms?

1:02:03 October layoffs highest since 2003. So hey listen we’re all trying to figure things out in real time here. But it’s not just the All-In pod talking about what’s going on here with jobs. It’s a big discussion on CNBC and everywhere in between social media.

1:03:24 I want to read you something from Morgan Stanley this week on this question of are the job losses caused by AI or are they caused by something else. The title of this section is “Flatter is Faster.” It says the cynical take has always been that this just wouldn’t last, that companies wouldn’t be able to maintain this level of discipline and that they were doomed to repeat the mistakes of the past. But the cynical take seems wrong again. Guess what? It’s cool to have fat margins, no debt, maximum flexibility, and be efficient.

1:04:28 Let’s move on to Mamdani. The Zohran has won New York City. The Dems won across the board. Zohran won every borough except Staten Island. He finished with 50.4% of the vote. Nine-point lead over Cuomo. Curtis was a distant third at 7%. No surprise if you’re on Polymarket because they have been saying this for months.

1:05:53 He’s been a big favorite since he crushed Cuomo in the primary in June and he’s held the lead the whole way. He’s self-proclaimed Democratic socialist. Some people think he’s a communist. And he’s the first Muslim mayor and the youngest in over a hundred years.

1:06:15 Big promises seem to have resonated with young folks, especially women in New York. Affordability, rent freezes, free public transit, higher taxes on the rich. You’re going to pay an extra 2%. I think it’ll be 54% will be the highest tax rate in New York, the highest tax rate in the nation. And hilariously, he added super villain Lina Khan to his transition team. And she’s going to go break up the bodegas.

1:06:55 And shout out to our friend who’s not here today, the Sultan of Science, David Freeberg, predicted the rise of socialism on this very show, about 6 months before anybody knew who Zohran was. Here’s the clip. Give him his flowers.

1:07:14 [Freeberg clip] “The party line is that socialism was defeated in this election cycle and that there was a resounding kind of vote from the American populace against socialism. And I actually think my contrarian belief is that we’ll see a rise, a dramatic rise in socialist movements in 2025 in the United States. We’re going to see an unleashing of economic growth because of deregulation and AI. There’s going to be some parts of the economy that are going to be big winners and some parts that are going to be big losers. When you have this sort of change this fast, there are often large contingents of people that are left behind.”

1:08:15 Peter Thiel predicted this in 2020. There was a bunch of leaked memos between Peter and Zuck and Andreesen, but he put his finger on it in January of 2020. Basically, what Thiel said was, “From the perspective of a broken generational compact, there seems to be a pretty straightforward answer to me, namely that when one has too much student debt or if housing is too unaffordable, then one will have negative capital for a long time and find it very hard to start accumulating capital in the form of real estate. And if one has no stake in the capitalist system, then one may well turn against it.”

1:09:11 This has been floating around for years and I think Thiel yet again has seen the forest from the trees many years ago. So yeah, what is happening? I think that we’ve put our finger on it. We need to come back and now focus on domestic policy and fix some of these core pernicious issues.

1:09:35 One is clearly that we now need to address how student loans are underwritten. We cannot allow generation after generation of people to graduate from degrees that they don’t quite understand with hundreds of thousands of dollars of debt that they have zero chance of paying off. That is a horrible way to start your life.

1:10:05 We need the free market to be able to tell somebody, as hard as it may sound to hear, that an art history PhD will cost you $800,000 so that the people that take it have the money or are willing to bear that cost. Meanwhile, if you became an electrician, it would only cost you 40 or 50,000 and you could have an incredible life. My point is that we need to differentially price degrees based on the value and the earnings power that it creates for people.

1:10:39 This was the first moment in years where I have now become sympathetic to this idea of student loan forgiveness. I was never sympathetic to this idea. I am sympathetic to it now. Why? Because I think that we should have fixed this problem a long time ago. We should have not allowed these loans to be underwritten the way that it was for so long.

1:11:25 So, I actually agree that maybe loans should be forgiven if you get a total overhaul of the system. What you don’t want to do is acknowledge that all the loans are bad and they need to be written off and then continue making them. And that was the problem with, I think, the Biden loan forgiveness program is he’s going to write off trillions of dollars of loans while keep funding the system without any reform.

1:12:11 By the way, maybe the fact that all these millennials are socialists might have something to do with the fact they’re unemployable. Who the hell wants to hire young Lenin 2.0 communist revolutionary to be in their company if they don’t believe in capitalism. How are they going to work their way up through a capitalist system?

1:13:00 In terms of Mamdani getting elected, you got to remember New York City is like 80-20 Democrat and he won very narrowly. It was like 50.4% of the vote. So, this was not some overwhelming victory. It was a narrow victory. He squeaked by, but he did win. And it’s because the base of the Democratic party is energized by this socialist ideology.