00:09:39 · Skanda Amarnath, Joe Weisenthal, Tracy Alloway
[00:09:39] S2: Yeah, yeah. [00:09:39] S0: Where there's not even any destruction. It just, the people just disappear. It's everyone. [00:09:44] S1: It's like, and it's also not just the things that you hear about. It's like the comptroller, the lieutenant governor. [00:09:50] S0: The education board. They're going to like change the University of Texas regents because someone just told me like that person's coming out for retirement and Hinojosa is going to get to work. appoint his replacement. Like the entire state in one night essentially goes like hard party rule. Like no one like, look, I know like the purple Texas stuff has been like for years. But now it's like you wake up one morning and Texas is not just like, at least for two years, it's not just like a blue state, but like a hardcore. It's really weird. Like everyone is just like, this is like a very surreal thing to see. [00:10:26] S2: Yeah, I mean, I think that the scale of the victory itself points to, there's just like newer possibilities in a lot of these states. And when you kind of think about Texas, when I think about what the business class sort of corporate America tends to tout certain states is like, this is the state you want to be. And, like, obviously it was Texas for a long time. Wait, tell us about this business court in Texas. No, this is important. [00:10:47] S0: We'll have to do a separate episode. [00:10:48] S2: I think you'll probably need to get a separate episode. [00:10:50] S0: What's the story here? [00:10:51] S2: So Texas has created a new business court, right? And there's a lot of.
00:10:51 · Skanda Amarnath, Tracy Alloway, Joe Weisenthal
[00:10:51] S2: So Texas has created a new business court, right? And there's a lot of. [00:10:54] S1: We did an episode on this. Oh, yeah. [00:10:56] S0: This is a compete with the Delaware. Yeah. [00:10:58] S2: So there's a lot of corporate law competition in terms of where you want to set up your corporation. And there have been some lawsuits in Delaware that have rankled certain founders to say, oh, I have to do all this for shareholders. and I find a more friendly place to incorporate. [00:11:11] S1: This was supposedly one of the reasons why Elon Musk moved to Texas. [00:11:14] S2: That is right. And so Texas has created a new business court also to kind of support that. And I think it's like all the statewide races Dems won. So it's a little farcical where I think that is probably, this is the place where I feel like the surprise is probably in some ways most underrated. It's like, oh, this guy like, oh, Texas is perfect. Texas is the perfect business environment. It's like, well, Political conditions can change, and it clearly wasn't that popular. [00:11:38] S0: And California just rejected the wealth tax, and didn't they ban all wealth taxes going forward? Like, wasn't there two measures on the ballot? [00:11:47] S2: I'm not as familiar with the specifics of the California... I know that the wealth tax didn't pass. Clearly, there was a lot. [00:11:50] S0: I think they also... I could be wrong. I think they also banned future wealth taxes.
00:11:50 · Joe Weisenthal, Skanda Amarnath
[00:11:50] S0: I think they also... I could be wrong. I think they also banned future wealth taxes. [00:11:56] S2: I think there were probably some constitutional changes, I'm guessing, but it is... Yeah, I could be wrong. Clearly, that was very... controversial for a lot of reasons and a lot of money thrown at it, even in a state that is as blue as California, where it's basically Dem versus Dem in most races. I think these are, it's just telling that the state, the state landscape just looks a lot different for sort of what corporate America perceived. And when you think about the states that are kind of the leaders of kind of data center construction, AI, it's like, actually they're all, I think, now controlled by democratic governors. So if you think about Texas, Georgia, Pennsylvania, Ohio, Virginia, even Wisconsin, the landscape has shifted in quite a way. Most power-related data center construction kind of resides at the state level, state and local, not federal. [00:12:43] S0: Okay, so I'm just reading killmatters.org. So the billionaire tax failed, but then there was a separate Proposition 42, which prohibits new taxes on personal property, such as business holdings, intellectual property, and financial assets. So this one was put on by billionaires in the hopes that if the wealth tax passed, that this one would cancel it out. And this one is also winning by a wide margin. So California might be just like the best place to do business.
00:12:43 · Joe Weisenthal, Tracy Alloway
[00:12:43] S0: Okay, so I'm just reading killmatters.org. So the billionaire tax failed, but then there was a separate Proposition 42, which prohibits new taxes on personal property, such as business holdings, intellectual property, and financial assets. So this one was put on by billionaires in the hopes that if the wealth tax passed, that this one would cancel it out. And this one is also winning by a wide margin. So California might be just like the best place to do business. [00:13:09] S1: Yeah. Can we talk more about data centers? So you mentioned things shifting very quickly, like literally overnight for a lot of states. And one of the headlines on the Bloomberg terminal this morning is open AI to change how it handles data center efforts after outcry. So it feels like the change is kind of filtering down to a corporate level pretty quickly. So they're not going to do NDAs anymore. They're not going to have actual residents pay for electricity of the data centers and things like that. The obvious question is, are we just going to see a big slowdown in data center construction?
00:13:58 · Skanda Amarnath
[00:13:58] S2: I suspect what will matter most there is economics more than the politics. And I do think that we were seeing, we're definitely seeing whispers and whiffs of this before the election itself. Oh, there's like, markets aren't always rewarding more CapEx. How useful is this? Oh, now we start to see the S1 from Anthropic. We haven't yet seen that on OpenAI. It's like, this is a lot of investment. It's a lot of risk. Do we just kind of keep greenlighting it because it's progressing the frontier? Or is there actually like, because CapEx is also a burden. So I think we're seeing some of that, some of the rewarding of capital efficiency over just raw CapEx. Nevertheless, I feel like this is going to be a bit of a sea change in terms of the politics now where, yeah, look, if you take five or six governors and they all are of the same party, could presumably even coordinate their own efforts if they really wanted to. That sort of changes how easy it is to do business For a long time, even in a lot of blue states, there were like a lot of tax breaks for data centers. And it was sort of seen as like, oh, we want to invite this economic activity. It's very good. And at least for the past 12 months, it got super toxic in terms of politically. That might not be the case going forward, or at least there may be a better path ahead. But yeah, clearly there are new variables for a lot of the hyperscalers, a lot of sort of the companies that are really kind of leading this sort of construction effort to kind of grapple with that they did not have to deal with before. Josh Shapiro and Greg Abbott probably two of the most pro-data center governors I can probably point to. I think they both made pivots, and Josh Shapiro seems to have pulled off the pivot very successfully, Greg Abbott less so. That might just be a function of the macro environment more than data center messaging in any way. But I think it's quite telling, right? That even those who are the most favorable towards this type of activity have had to read the room, recognize that things have to change, at least to manage the electoral cycle. And I think the question from here is, is there an ability to rebrand any of this stuff, or will there just be a focus on Maybe we don't need to have such a heavy footprint.
00:15:50 · Skanda Amarnath, Joe Weisenthal, Tracy Alloway
We can find other ways to kind of do what we need to do without attracting so much nimbyism or any kind of like specific detractors in political space. [00:15:58] S0: Maybe we short USD-MYR, short the dollar-ringgit pair on the expectation that, well, yes, there will be the big semi, there will be the big compute shortage that everyone is expecting on a certain maybe medium timelines. It's just not going to be built in the United, maybe it won't be built in the United States, but there are other jurisdictions where they're building a lot of data centers, including Malaysia. It's also interesting, you know, there's, again, you sort of hinted at it, the economics, this sort of theory. Well, maybe it's good for just like the existing hyperscalers already have pretty big footprints. Maybe like this means that implicitly Meta gets to charge higher chip rents and it's a Louisiana data center, et cetera. It feels like there's a lot yet. There's a lot we don't know about. [00:16:47] S2: Yeah, yeah. [00:16:49] S1: Rental prices for H100s, by the way, went up yesterday. [00:16:51] S0: Yeah, they're still going up. [00:16:52] S2: Yeah, there's definitely, depending on where you sit in the value chain, do you want maximal activity? Probably Jensen would love maximum activity. [00:17:02] S0: Yeah, Caterpillar would want maximal activity.