00:26:48 · Skanda Amarnath
[00:26:48] S2: Yeah, part of that is a rates move. And so you have just a, there's clearly some effect of if you have less AI CapEx, you will have maybe a softer economy, lower interest rates. There's more room for other things to thrive. I'm quite skeptical that if you did see AI CapEx really cool off, these things tend to not be very linear. It tends to be more binary. It's on or off. And once it's off, is there something that's going to pick up that slack very quickly? That's obviously the Goldilocks outcome. Yeah, I'd say history suggests that's hard to pull off. So we are obviously in a world where I'd still characterize it as an AI boom. I'd still say there's obviously a lot of activity going on. There's a lot of activity still booked to happen. But if the tide comes out, I'm not as convinced that there is going to be some big housing boom that offsets it. So another set of... Those things take time to really get going as well. So you don't have this super nice sort of counter-cyclicality here in terms of how the economy works. And so you have the share of what I call the AI-sensitive segments of spending in the kind of GDP mix have grown at such an enormous pace. It's something getting close to 8% of GDP if I think about just your tech hardware, tech software, and industrial equipment. Those categories itself make up such a large share of the U.S. economy. From the demand side, obviously a lot of it is imported, but it still matters. This is still like spending. Spending is a risk. Someone who is spending is putting that on their income statement, their balance sheet in the U.S. And so these dynamics are probably going to dictate the cycle. I think that's not actually at this point very original to say, but we have coming into this year, there's a sense of, oh, the non-AI economy is soft. It's like, I'm not sure that's quite true. It's like not amazing. The other side is inflation, right, where we have three themes, maybe four at this point, that are going to matter. Look, the Strait of Hormuz closure and to some degree, obviously, some of the refining capacity issues that are maybe tied also to the Russia-Ukraine conflict have clearly blown out sort of set of prices for jet fuel. And that has pushed up airfares quite considerably.
00:28:49 · Skanda Amarnath
So when people are saying, ah, well, services inflation is running hot, it's like because airfares are sensitive to energy. It's not necessarily because of the labor market. diesel prices are very high. Caught a lot of political attention, but the effects actually on the consumer have yet to be seen really, which is to say like there's a lot of, I'm curious for a lot of the food retailers who have had to take on additional energy costs and transport costs. Are they going to have to pass through higher prices than the food, food services inflation, which actually does matter for core. That energy dynamic is clearly one big thing that I think, I suspect we're still kind of processing. It may not, be more aggressive in the next several months, but it may be called just as aggressive or pretty close to what we've seen in the last several months. Then you have the AI boom itself, where it's still places where this is showing up. Again, maybe we're past the peak impulse, but it may be more durable than people realize in terms of we had a lot of prices that spiked for your laptops, for various sort of things tied to memory, but there's still more things that could rise. So that might just mean that we had to deal with more durable inflation there. And the third piece of this is obviously tariffs itself. Look, there are a lot of categories that have already moved. There are some categories, notable categories that have not moved yet. Cars, right? Like you have not seen anything that's happened in the auto space. And some of that is because it's a different tariff regime there. But even so, there were a lot of the Canadian tariffs that were put on and on off that still cost that's not yet passed through to the consumer. And so I think those three themes are still with us. It may not mean that we're going to go to 4% inflation, but we might be stuck around three a lot longer than is currently suspected.
00:30:33 · Tracy Alloway, Skanda Amarnath, Joe Weisenthal
[00:30:33] S1: Last question. Are we going to see a democratic socialist on the ticket in 2028? [00:30:38] S2: My prognosticates, probably not. I think that this is. [00:30:41] S0: If you had to pick, you don't have to say it on air. If you had to pick, nominate. Just a guess, not a preference. [00:30:50] S2: I think the prediction markets here is a... Ossoff is, I think, moving into frontrunner now. And I believe in efficient markets like Joe. [00:30:57] S0: Don't lean on prediction markets.
00:30:57 · Joe Weisenthal, Skanda Amarnath
[00:30:57] S0: Don't lean on prediction markets. [00:30:59] S2: What I suspect that's important for that primary at this point is, like, the Senate map looks different. And Democrats have not been competitive in the Senate for a long time. Yes, there's one faction that's very progressive and has their political leanings that are ideologically based. That will matter. How do you excite them? There's another segment that obviously likes to be competitive and win. Winning is also itself very kind of addicting and attracting. And so I imagine for those who are governors in a lot of states, they probably will want to push it, whether it's Andy Beshear or Josh Shapiro. I think Jon Ossoff, the margins he won by are going to be very compelling. So I think Ossoff is a pretty reasonable favorite right now, but it's really early. This will ping-pong. back and forth. The field is pretty large. There's no obvious front runner. Large and flat, basically. Large and flat. It's not like Hillary Clinton going into the 2016 cycle or even the 2008 cycle where she was clearly the front runner and over time, instead of Obama and obviously John Edwards, the other one, that was the race. We don't really know what the head-to-head will be, who will be the top three. I suspect Ossoff is right now the front runner, but there are a lot of people who are the front runner coming right out of midterms. That could just change very quickly. [00:32:14] S0: All right, Skanda Amarnath, thank you so much for breaking it all down for us. [00:32:20] S2: Thanks for coming on all day. That's right.
00:32:20 · Skanda Amarnath, Joe Weisenthal, Tracy Alloway
[00:32:20] S2: Thanks for coming on all day. That's right. [00:32:33] S0: Tracy, that was a lot of fun. I think this election... was a sort of mini version of what we always talk about. It's like, wow, there's a lot of new stuff to consider. [00:32:42] S2: Yeah. [00:32:43] S0: It's just like, it's just, and no one really knows. And it's just a lot of new things. [00:32:48] S1: And it happened literally overnight. [00:32:50] S0: It's really weird. [00:32:51] S1: Yeah. [00:32:52] S0: But like now, you know, for a long time when I sort of thought about the two parties, I thought it's like, okay, they're like, you know, roughly even in the grand scheme of things, Democrats, Republicans, heavily coastal california new york new jersey etc a few big cities and then you're just like no like the democrats are a national party in a way they haven't been in ages and in some places i just do not think the republican party exists that they were dominant in that's what it feels like in texas to me.
00:32:52 · Joe Weisenthal, Tracy Alloway
[00:32:52] S0: But like now, you know, for a long time when I sort of thought about the two parties, I thought it's like, okay, they're like, you know, roughly even in the grand scheme of things, Democrats, Republicans, heavily coastal california new york new jersey etc a few big cities and then you're just like no like the democrats are a national party in a way they haven't been in ages and in some places i just do not think the republican party exists that they were dominant in that's what it feels like in texas to me. [00:33:24] S1: Yeah well i mean texas so i remember my Dad is Texan. He comes from, like, a small town outside of Dallas. I remember my aunt used to be a closeted Democrat. She wouldn't tell her friends and family because it just, like, wasn't socially acceptable, like, way up until the early 2000s, which is kind of crazy. But the one thing I'm thinking, a lot of this can change pretty fast. Like, you know, a lot has happened in the past two years. A lot could happen in the next two years. I remember after Watergate, there was a big Democratic sweep, right? And then what, like, Eight years later, Reagan was in office, something like that? [00:33:58] S0: No, people were comparing this election to the post-Watergate election. And it's actually a pretty good, like, it's both because of the scale, but because what are, like, the two things? It's, like, high inflation and a deeply unpopular president together. [00:34:15] S1: Yeah.