1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:07,640 --> 00:00:11,200 Speaker 2: China's moves to support is ala economy and markets continue, 3 00:00:11,240 --> 00:00:14,760 Speaker 2: with its banks slashing benchmark lending rates by more than 4 00:00:14,760 --> 00:00:18,759 Speaker 2: investors and economists were expecting. They're taking cues from officials 5 00:00:18,760 --> 00:00:22,120 Speaker 2: who have implemented a host of measures to revive growth 6 00:00:22,160 --> 00:00:25,480 Speaker 2: and put a floor under the housing market. The PBOC 7 00:00:25,600 --> 00:00:29,240 Speaker 2: has already signaled that more easing is on the cards, 8 00:00:29,280 --> 00:00:33,559 Speaker 2: including lowering the reserve requirement ratio. Now, just over a 9 00:00:33,600 --> 00:00:37,400 Speaker 2: month ago, going short Chinese stocks was one of the 10 00:00:37,400 --> 00:00:42,159 Speaker 2: world's most popular traits. Fast forward to now bullish China, 11 00:00:42,240 --> 00:00:45,440 Speaker 2: it's one of the most crowded positions after paging stimulus 12 00:00:45,479 --> 00:00:48,640 Speaker 2: blitstoked a short lived rally. Well our next guests became 13 00:00:48,680 --> 00:00:52,280 Speaker 2: famous back in twenty eleven, shorting Chinese companies at a 14 00:00:52,320 --> 00:00:56,040 Speaker 2: time when they were the Wall Street darlings, joining us 15 00:00:56,080 --> 00:00:59,959 Speaker 2: exclusively now Mighty Water's founder cousin Block smptimes called. 16 00:01:00,080 --> 00:01:02,280 Speaker 1: The king of short selling costs and good to have 17 00:01:02,360 --> 00:01:03,000 Speaker 1: you with us. 18 00:01:03,240 --> 00:01:06,080 Speaker 2: It seems like China is a great spot to start 19 00:01:06,160 --> 00:01:10,080 Speaker 2: because you started short selling Chinese companies back in twenty eleven. 20 00:01:10,120 --> 00:01:15,160 Speaker 2: The likes of Sino four is Ichi e lacking coffee, 21 00:01:15,560 --> 00:01:19,000 Speaker 2: and you're still not lacking China, even though I've seen 22 00:01:19,040 --> 00:01:23,119 Speaker 2: a slew of measures, policy changes and efforts to perhaps, 23 00:01:23,600 --> 00:01:25,679 Speaker 2: you know, have more transparency. 24 00:01:25,920 --> 00:01:26,720 Speaker 1: Why is that. 25 00:01:29,160 --> 00:01:29,479 Speaker 3: Sure? 26 00:01:29,640 --> 00:01:34,039 Speaker 4: Well, I come at China mostly from the US listed 27 00:01:34,200 --> 00:01:37,880 Speaker 4: China stock perspective and to a lesser extent, Hong Kong. 28 00:01:38,440 --> 00:01:42,840 Speaker 4: But the thing, the reasons why I have been calling 29 00:01:42,959 --> 00:01:47,199 Speaker 4: China uninvestable in terms of the equities since twenty ten 30 00:01:47,760 --> 00:01:51,560 Speaker 4: have to do with governance, and so particularly for the 31 00:01:51,680 --> 00:01:57,120 Speaker 4: non mainland listed equities. Governance was always a problem because 32 00:01:57,160 --> 00:02:01,680 Speaker 4: it was especially for US listed ADR for people who 33 00:02:01,880 --> 00:02:04,480 Speaker 4: in China managers who wanted to commit fraud. It was 34 00:02:04,520 --> 00:02:08,400 Speaker 4: a heads I win tales, I don't lose proposition because 35 00:02:08,840 --> 00:02:16,960 Speaker 4: the US has never actually materially disciplined a confirmed fraudster 36 00:02:17,200 --> 00:02:21,880 Speaker 4: from China. So you had that issue of governance. But 37 00:02:22,760 --> 00:02:27,400 Speaker 4: then you overlay the capriciousness of China's policy and we 38 00:02:27,480 --> 00:02:32,000 Speaker 4: began really seeing this around twenty eighteen twenty nineteen, when 39 00:02:32,520 --> 00:02:35,640 Speaker 4: China began just turning dials and all of a sudden 40 00:02:35,680 --> 00:02:39,560 Speaker 4: deciding that it was going to zero effectively for some 41 00:02:39,639 --> 00:02:42,919 Speaker 4: period of time, the for profit education industry and then 42 00:02:43,360 --> 00:02:46,760 Speaker 4: d D. Tushi which was about to go public, and 43 00:02:47,560 --> 00:02:54,480 Speaker 4: Ali Baba's and Financial so you now have this, So 44 00:02:54,560 --> 00:02:57,959 Speaker 4: you have that capriciousness of policy, and that has gotten worse. 45 00:02:59,480 --> 00:03:04,520 Speaker 4: But the other thing that foreign investors in particular didn't understand, 46 00:03:04,639 --> 00:03:06,560 Speaker 4: or took them a long time to understand, is that 47 00:03:07,560 --> 00:03:10,760 Speaker 4: China doesn't view itself, at least at the policy making level, 48 00:03:10,800 --> 00:03:15,160 Speaker 4: as on a long term basis needing foreign capital. So 49 00:03:15,240 --> 00:03:17,519 Speaker 4: every now and then they'll say the right things, and 50 00:03:17,560 --> 00:03:21,600 Speaker 4: there's history of this, they'll attract foreign capital and then 51 00:03:21,720 --> 00:03:23,480 Speaker 4: they'll help incinerate it. 52 00:03:23,960 --> 00:03:25,120 Speaker 3: So on top of. 53 00:03:25,040 --> 00:03:28,679 Speaker 4: The governance risks, the capriciousness of policy risks, you also 54 00:03:28,760 --> 00:03:33,760 Speaker 4: now have the geopolitical risks. She has been pretty clear 55 00:03:33,880 --> 00:03:37,880 Speaker 4: at times that something that I thought was never actually 56 00:03:37,920 --> 00:03:41,200 Speaker 4: on the table a few years ago, that China might 57 00:03:41,280 --> 00:03:45,200 Speaker 4: try to take Taiwan by force, that is I think 58 00:03:45,280 --> 00:03:48,720 Speaker 4: on the table. So there were previously, again just for 59 00:03:48,760 --> 00:03:51,200 Speaker 4: governance reasons. If you own these stocks and you're in 60 00:03:51,200 --> 00:03:53,440 Speaker 4: the US, you could wake up one morning and you 61 00:03:53,480 --> 00:03:54,400 Speaker 4: know one. 62 00:03:54,280 --> 00:03:55,600 Speaker 3: Of the companies is zero. 63 00:03:56,400 --> 00:04:00,440 Speaker 4: Then with capriciousness of government policy, you know several of 64 00:04:00,480 --> 00:04:02,200 Speaker 4: your stocks you could wake up and find them to 65 00:04:02,200 --> 00:04:05,560 Speaker 4: be zeros. But now with the geopolitical risk, all of 66 00:04:05,560 --> 00:04:07,640 Speaker 4: the China equities you own, you could wake up one 67 00:04:07,720 --> 00:04:11,800 Speaker 4: day and there're zeros because war has started. So from 68 00:04:11,880 --> 00:04:15,720 Speaker 4: a medium to long term perspective, I once again just 69 00:04:15,960 --> 00:04:19,840 Speaker 4: still fail to see how having money committed to China 70 00:04:19,960 --> 00:04:22,120 Speaker 4: makes sense now on a short term basis. 71 00:04:22,680 --> 00:04:23,679 Speaker 3: I don't have an opinion. 72 00:04:24,080 --> 00:04:27,440 Speaker 4: So if you're long China because you get that it's 73 00:04:27,480 --> 00:04:31,120 Speaker 4: a trade, okay, great, Like you know, reasonable people can 74 00:04:31,240 --> 00:04:32,080 Speaker 4: disagree on that. 75 00:04:32,480 --> 00:04:34,159 Speaker 3: I'm not going to argue with that. 76 00:04:34,400 --> 00:04:39,359 Speaker 4: But if you're thinking of marrying this, that's a path 77 00:04:39,560 --> 00:04:42,440 Speaker 4: that a lot of people have been burned by before 78 00:04:43,000 --> 00:04:45,720 Speaker 4: and I wouldn't think that this time would be different. 79 00:04:47,160 --> 00:04:50,160 Speaker 2: So constant China is a trade, It is not an investment. 80 00:04:50,200 --> 00:04:51,880 Speaker 2: I just want to put it out there as well. 81 00:04:52,240 --> 00:04:55,479 Speaker 2: China does need foreign capital right now. And when it 82 00:04:55,520 --> 00:05:00,000 Speaker 2: comes to transparency, accountability, governance, it is really trying to address. 83 00:05:00,160 --> 00:05:02,880 Speaker 2: We've seen a lot of reforms, yet you say it 84 00:05:02,920 --> 00:05:03,960 Speaker 2: has not done enough. 85 00:05:04,520 --> 00:05:06,960 Speaker 1: Would you say it is in the right direction? 86 00:05:09,360 --> 00:05:10,599 Speaker 3: Well, okay. 87 00:05:10,640 --> 00:05:14,400 Speaker 4: From a very long term perspective, there are two things 88 00:05:14,440 --> 00:05:20,120 Speaker 4: that I think she has done at a very high 89 00:05:20,200 --> 00:05:26,040 Speaker 4: level correctly So number one, the fixed asset bubble. I mean, 90 00:05:26,120 --> 00:05:29,800 Speaker 4: it was no secret for over twenty years that there's 91 00:05:29,839 --> 00:05:34,840 Speaker 4: a massive fixed asset bubble. And every now and then policymakers, 92 00:05:34,920 --> 00:05:38,119 Speaker 4: you know, particularly under the cool Wind regime, they would 93 00:05:38,160 --> 00:05:42,200 Speaker 4: talk about how they need to rebalance the economy and 94 00:05:42,240 --> 00:05:44,080 Speaker 4: they would start to do that. They would tighten up 95 00:05:44,120 --> 00:05:48,720 Speaker 4: on lending to property and other consumers or other deployers 96 00:05:48,720 --> 00:05:51,240 Speaker 4: of capital in the fixed assets, and then they would 97 00:05:51,240 --> 00:05:53,640 Speaker 4: look at the data. The lights flash red, they stared 98 00:05:53,640 --> 00:05:55,839 Speaker 4: into the abyss and they lost their nerve and the 99 00:05:55,880 --> 00:05:57,200 Speaker 4: taps were opened again, and the. 100 00:05:57,120 --> 00:05:58,720 Speaker 3: Bubble continued to inflate. 101 00:05:59,160 --> 00:06:05,640 Speaker 4: So he probably because he's been able to perfect population 102 00:06:05,760 --> 00:06:10,320 Speaker 4: control measures during COVID, has felt that he has the 103 00:06:10,360 --> 00:06:14,960 Speaker 4: ability to really tighten the screws and prick that bubble 104 00:06:15,400 --> 00:06:18,719 Speaker 4: in a way that he previously didn't and the government 105 00:06:18,839 --> 00:06:23,400 Speaker 4: before he became chairman did not feel. So from a 106 00:06:23,520 --> 00:06:28,719 Speaker 4: long term perspective, that's good. That's necessary to reset the 107 00:06:28,880 --> 00:06:31,960 Speaker 4: balance in China's economy. The other thing that he's done 108 00:06:32,000 --> 00:06:35,839 Speaker 4: that smart is his focus or he's had the focus 109 00:06:35,880 --> 00:06:40,760 Speaker 4: on technology go away from that traditional you know, consumer 110 00:06:40,880 --> 00:06:45,800 Speaker 4: led technology SaaS you know, online et cetera into real 111 00:06:46,040 --> 00:06:51,200 Speaker 4: hardcore industrial technologies. So from a strategic perspective for China, 112 00:06:51,839 --> 00:06:56,559 Speaker 4: that's beneficial. But you know, in terms of yes, China 113 00:06:56,640 --> 00:07:00,240 Speaker 4: wants foreign capital right now, but the moment that she 114 00:07:00,720 --> 00:07:04,560 Speaker 4: feels that doesn't need it, or that the costs of 115 00:07:04,600 --> 00:07:11,320 Speaker 4: it outweigh the benefits foreigners are going to be horribly abused. Again, 116 00:07:11,480 --> 00:07:13,720 Speaker 4: it's this movie plays repeatedly. 117 00:07:15,320 --> 00:07:17,360 Speaker 2: So what would it take for you to change your mind? 118 00:07:17,480 --> 00:07:19,640 Speaker 2: What would it take for China to be investible? 119 00:07:20,760 --> 00:07:24,560 Speaker 3: Well, you know, look, I'm obviously never the person. 120 00:07:25,040 --> 00:07:28,480 Speaker 2: Are you just not liking China at all? No matter 121 00:07:28,520 --> 00:07:30,320 Speaker 2: what China does, you're not going to like it. I mean, 122 00:07:30,400 --> 00:07:32,800 Speaker 2: is that a fair assumption to make? Is that the 123 00:07:32,840 --> 00:07:35,080 Speaker 2: real picture when it comes to constant block in China? 124 00:07:36,040 --> 00:07:40,840 Speaker 4: Well, I've always considered that the domestic equities were different 125 00:07:40,880 --> 00:07:45,040 Speaker 4: from a governance perspective than the offshore equities, particularly the 126 00:07:45,160 --> 00:07:49,120 Speaker 4: US equities. There was always more recourse, the heads on 127 00:07:49,200 --> 00:07:52,880 Speaker 4: wind tails, I don't lose equation doesn't necessarily exist with 128 00:07:53,040 --> 00:07:57,960 Speaker 4: domestic onshore equities. So, and that's something that we haven't 129 00:07:57,960 --> 00:08:00,960 Speaker 4: looked at before. But if you're looking at buying Chinese equities, 130 00:08:00,960 --> 00:08:05,920 Speaker 4: in the US that governance risk is always there. I 131 00:08:06,000 --> 00:08:08,800 Speaker 4: don't believe the numbers. I do trust the numbers are 132 00:08:08,920 --> 00:08:11,440 Speaker 4: much more likely to trust the numbers on shore. But 133 00:08:11,520 --> 00:08:14,960 Speaker 4: at the end of the day, China, in contrast to 134 00:08:14,960 --> 00:08:21,160 Speaker 4: say Vietnam, which we are very constructive on, doesn't feel 135 00:08:21,240 --> 00:08:24,360 Speaker 4: like it really needs foreign capital, and I don't think 136 00:08:24,400 --> 00:08:27,800 Speaker 4: it intends to be accommodating the foreign capital on a 137 00:08:27,840 --> 00:08:28,800 Speaker 4: long term basis. 138 00:08:30,320 --> 00:08:34,720 Speaker 2: Okay, let's talk about the US over valued. Some say, 139 00:08:34,800 --> 00:08:38,400 Speaker 2: we've seen what forty seven straight sessions of record and 140 00:08:38,679 --> 00:08:40,359 Speaker 2: the most expensive in decades. 141 00:08:41,080 --> 00:08:42,520 Speaker 1: Is that something to be concerned about. 142 00:08:44,559 --> 00:08:49,120 Speaker 4: Well, there's a debate as to what really drives when 143 00:08:49,120 --> 00:08:51,320 Speaker 4: you talk about the US market, especially the S and 144 00:08:51,360 --> 00:08:55,880 Speaker 4: P five hundred or the MAG seven. I'm in the 145 00:08:55,920 --> 00:09:00,239 Speaker 4: camp that although I haven't I don't have the facility 146 00:09:00,280 --> 00:09:02,320 Speaker 4: with math to really try to prove this out. But 147 00:09:02,720 --> 00:09:06,160 Speaker 4: I'm in the camp that believes of what drives that 148 00:09:06,320 --> 00:09:11,040 Speaker 4: index are flows. And so at the end of every month, 149 00:09:12,360 --> 00:09:15,040 Speaker 4: US workers, you know a lot of them, their paychecks 150 00:09:15,080 --> 00:09:17,920 Speaker 4: go into their four one case, which are retirement funds, 151 00:09:18,160 --> 00:09:21,120 Speaker 4: and there's a robo bid for these stocks. And what 152 00:09:21,240 --> 00:09:25,480 Speaker 4: happens is you reduce the effective supply of stock because 153 00:09:25,480 --> 00:09:29,760 Speaker 4: you're taking out the active owners of stocks that will decide, hey, 154 00:09:29,840 --> 00:09:32,079 Speaker 4: at this price, I'm the seller at a lower price 155 00:09:32,080 --> 00:09:36,040 Speaker 4: on the buyer, and you're replacing that with a holder 156 00:09:36,120 --> 00:09:40,720 Speaker 4: that will never sell unless and until it has outflows 157 00:09:40,800 --> 00:09:45,320 Speaker 4: because people are drawing down the retirement accounts. So, according 158 00:09:45,360 --> 00:09:48,800 Speaker 4: to that view, as long as the labor market is 159 00:09:49,200 --> 00:09:52,920 Speaker 4: reasonably strong in the US, which it is, you're not 160 00:09:52,960 --> 00:09:55,400 Speaker 4: going to see outflows. You're just going to continue to 161 00:09:55,440 --> 00:10:00,880 Speaker 4: see inflows, especially in those in the most heavily weighted 162 00:10:01,400 --> 00:10:03,640 Speaker 4: names in the UH, in the S and P five hundred. 163 00:10:03,760 --> 00:10:07,680 Speaker 4: So I have in the past few years I have 164 00:10:07,800 --> 00:10:10,319 Speaker 4: looked back on my career as an activist short seller 165 00:10:10,440 --> 00:10:13,319 Speaker 4: and you know, kind of done the math and felt like, well, 166 00:10:13,840 --> 00:10:17,280 Speaker 4: you know, I probably could have just been levered long 167 00:10:17,360 --> 00:10:20,439 Speaker 4: the S and P five hundred, deferred my taxes and 168 00:10:21,760 --> 00:10:25,440 Speaker 4: gone through a lot less bs and and being more 169 00:10:25,520 --> 00:10:29,439 Speaker 4: or less the same possession financially. So yeah, I mean 170 00:10:29,480 --> 00:10:31,920 Speaker 4: that that does make the market more fragile. 171 00:10:32,679 --> 00:10:35,559 Speaker 3: But there's a FED put. There's always a FED. 172 00:10:35,480 --> 00:10:38,000 Speaker 4: Put, you know, is there does there come a point 173 00:10:38,000 --> 00:10:40,080 Speaker 4: in time when the system breaks and the FED can't 174 00:10:40,080 --> 00:10:41,600 Speaker 4: fix it. 175 00:10:41,800 --> 00:10:45,200 Speaker 3: Theoretically, yes, in our lifetimes. I don't know. 176 00:10:45,920 --> 00:10:48,800 Speaker 4: So I think for now it probably just pays not 177 00:10:48,840 --> 00:10:51,080 Speaker 4: to think too much. Just close your eyes and buy 178 00:10:52,240 --> 00:10:54,560 Speaker 4: you know, probably bag seven uh. 179 00:10:54,800 --> 00:10:57,240 Speaker 1: Cost and speak of mech seven. Let's speak about Nvidia. 180 00:10:57,320 --> 00:11:01,440 Speaker 2: I mean, that's what's driving that sentiment that that were 181 00:11:01,480 --> 00:11:04,440 Speaker 2: seeing three trillion dollar market cab we're talking about pe 182 00:11:04,520 --> 00:11:07,880 Speaker 2: of sixty three. It's driving a lot of the other 183 00:11:07,960 --> 00:11:12,000 Speaker 2: companies up as well. Are that companies which are unduly 184 00:11:12,520 --> 00:11:16,080 Speaker 2: benefiting from that run we're seeing because of Nvidia? 185 00:11:16,760 --> 00:11:17,600 Speaker 1: Point them out. 186 00:11:17,520 --> 00:11:23,160 Speaker 4: For us, so not ready to do that. You know, 187 00:11:23,280 --> 00:11:26,040 Speaker 4: when we point them out, there's usually a full report 188 00:11:26,080 --> 00:11:28,880 Speaker 4: behind that because you know, but we need that in 189 00:11:28,920 --> 00:11:31,800 Speaker 4: case we get sued, which does happen quite a bit. 190 00:11:32,200 --> 00:11:36,400 Speaker 4: But in every hype cycle, and AI is obviously the 191 00:11:36,440 --> 00:11:40,320 Speaker 4: hype cycle, in every hype cycle, you get opportunists who 192 00:11:40,520 --> 00:11:45,040 Speaker 4: have companies that are maybe semi real, maybe not even 193 00:11:45,080 --> 00:11:48,120 Speaker 4: that real, but they decide to take advantage of it 194 00:11:48,160 --> 00:11:52,480 Speaker 4: because there's so much money chasing that. So yes, there 195 00:11:52,520 --> 00:11:56,200 Speaker 4: will continue to be more. I mean, previously it was 196 00:11:56,240 --> 00:11:58,280 Speaker 4: crypto and there were you know, there were a number 197 00:11:58,280 --> 00:12:02,400 Speaker 4: of companies that were really dodgy in a crypto crypto 198 00:12:02,480 --> 00:12:06,640 Speaker 4: mining space or crypto adjacent spaces. So I mean, and 199 00:12:06,720 --> 00:12:10,439 Speaker 4: even the full on crypto companies are probably pretty dodgy 200 00:12:10,720 --> 00:12:12,679 Speaker 4: to begin with. But yeah, there will be a lot 201 00:12:12,720 --> 00:12:15,000 Speaker 4: of people who take advantage of the AI hype cycle. 202 00:12:15,920 --> 00:12:17,880 Speaker 4: You can make money as a trader there as long 203 00:12:17,920 --> 00:12:19,760 Speaker 4: as you're in on the joke and you're not left 204 00:12:19,800 --> 00:12:24,160 Speaker 4: holding the bag. But there will be painful bag holding eventually. 205 00:12:25,880 --> 00:12:28,000 Speaker 2: So there is a bubble wedding to bust, and if so, 206 00:12:28,200 --> 00:12:29,720 Speaker 2: how soon do you think that might happen? 207 00:12:31,120 --> 00:12:33,880 Speaker 4: Well, I mean that doesn't necessarily mean that it's a bubble. 208 00:12:33,880 --> 00:12:38,760 Speaker 4: Like I don't opine on in video. I've got two friends, 209 00:12:39,200 --> 00:12:42,600 Speaker 4: each very smart, highly accomplished, and they've got a bet 210 00:12:42,679 --> 00:12:43,480 Speaker 4: about whether. 211 00:12:43,280 --> 00:12:46,000 Speaker 3: In video is going to be down by. 212 00:12:46,000 --> 00:12:49,560 Speaker 4: Fifty percent in the next you know, I guess another 213 00:12:49,760 --> 00:12:53,280 Speaker 4: nine months or so. They each make compelling arguments. I 214 00:12:53,320 --> 00:12:55,320 Speaker 4: don't have a view, but I do know that there 215 00:12:55,320 --> 00:12:58,440 Speaker 4: will be a lot of pretenders in the space looking 216 00:12:58,480 --> 00:13:01,520 Speaker 4: to vacuum up the dollars are being thrown into the space, 217 00:13:02,360 --> 00:13:04,560 Speaker 4: and those are the ones that are not We will 218 00:13:04,559 --> 00:13:05,320 Speaker 4: consider shortening. 219 00:13:06,880 --> 00:13:09,760 Speaker 2: If you're not a pining over Nvidio? Are you a 220 00:13:09,880 --> 00:13:12,880 Speaker 2: pining of a Tesla? We've seen how you know Elon 221 00:13:13,000 --> 00:13:17,640 Speaker 2: Moss has unveiled his ROBOTAXI, much anticipated but lacking on details, 222 00:13:17,679 --> 00:13:20,880 Speaker 2: big plans of course, that human EIGHTE robot as well, 223 00:13:21,160 --> 00:13:26,439 Speaker 2: that robo van lots of plans about lacking details invested, 224 00:13:26,480 --> 00:13:29,679 Speaker 2: obviously not liking. We've seen how the stock has you know, 225 00:13:29,800 --> 00:13:30,800 Speaker 2: has taken a tumble. 226 00:13:31,080 --> 00:13:32,960 Speaker 1: What's your take on Tesla? 227 00:13:34,800 --> 00:13:38,600 Speaker 4: Well, yeah, I make everybody mad when I talk about Tesla, 228 00:13:38,720 --> 00:13:43,360 Speaker 4: the bulls and the bears, because number one, nobody, probably 229 00:13:43,400 --> 00:13:46,439 Speaker 4: nobody has ever played the public company game better than 230 00:13:46,440 --> 00:13:51,679 Speaker 4: Elon Musk. And several years ago the only letter I've 231 00:13:51,720 --> 00:13:56,640 Speaker 4: ever written to investors, I had this epiphany about Tesla 232 00:13:56,679 --> 00:14:01,440 Speaker 4: and Elon Musk, and you know, there is is in life, 233 00:14:01,800 --> 00:14:06,520 Speaker 4: probably a need for a certain amount of gilding the lily. 234 00:14:06,760 --> 00:14:10,280 Speaker 4: When it works, we call it hutzpa, and we applaud. 235 00:14:11,160 --> 00:14:14,600 Speaker 4: Now when it's too much, it doesn't work, then the 236 00:14:14,640 --> 00:14:18,120 Speaker 4: person's Trevor Milton, and you know we he's derided and 237 00:14:18,240 --> 00:14:28,320 Speaker 4: occasionally prosecuted. Elon has this perfect balance between bsing and delivering. 238 00:14:28,960 --> 00:14:29,840 Speaker 3: Okay, I mean. 239 00:14:29,840 --> 00:14:35,240 Speaker 4: The cars drive the rockets fly, the satellites work. 240 00:14:35,680 --> 00:14:37,400 Speaker 3: He does these incredible things. 241 00:14:38,120 --> 00:14:42,360 Speaker 4: Does he routinely over promise, I mean say things that 242 00:14:42,480 --> 00:14:45,200 Speaker 4: it's hard to imagine he can say with a straight face, 243 00:14:45,680 --> 00:14:51,840 Speaker 4: Yes he does. But does that matter? Apparently not? 244 00:14:53,720 --> 00:14:53,880 Speaker 1: So. 245 00:14:54,120 --> 00:14:56,920 Speaker 4: Yeah, nobody's played the game better than he has. It's 246 00:14:57,000 --> 00:15:01,640 Speaker 4: it is a volatile stock, but you know, it continues 247 00:15:01,640 --> 00:15:04,800 Speaker 4: to get flows, going back to what I said earlier, 248 00:15:06,000 --> 00:15:08,520 Speaker 4: and will continue to get flows. And I think what 249 00:15:08,840 --> 00:15:12,040 Speaker 4: was really what everybody on the bear side missed about it. 250 00:15:12,320 --> 00:15:15,160 Speaker 4: You know, the arguments were, oh, Tesla doesn't have the scale, 251 00:15:15,160 --> 00:15:18,920 Speaker 4: it can't compete with Toyota, Volkswagen, blah blah blah. And 252 00:15:18,960 --> 00:15:23,320 Speaker 4: that's true, they didn't have the the sales base scale 253 00:15:23,480 --> 00:15:27,360 Speaker 4: or the manufacturing scale. But what all of the bears 254 00:15:27,440 --> 00:15:30,720 Speaker 4: missed and was what my epiphany really was in twenty 255 00:15:30,720 --> 00:15:35,120 Speaker 4: one was that Elon understood that the base, that the 256 00:15:35,160 --> 00:15:37,960 Speaker 4: scale he needed to have was capital base. And so 257 00:15:38,080 --> 00:15:40,920 Speaker 4: when he was able to yoke that stock price way 258 00:15:41,000 --> 00:15:44,160 Speaker 4: up and have this enormous market cap, I mean even 259 00:15:44,720 --> 00:15:48,640 Speaker 4: you know, even if the company's bleeding billions of dollars 260 00:15:48,680 --> 00:15:51,200 Speaker 4: and the stock is sinking, there's so much market cap 261 00:15:51,440 --> 00:15:56,400 Speaker 4: that he continued, can continue to raise money, and Tesla's 262 00:15:56,440 --> 00:16:00,360 Speaker 4: not going bankrupt in the you know, for a very 263 00:16:00,400 --> 00:16:03,000 Speaker 4: long time. And that's what the bears missed because the 264 00:16:03,040 --> 00:16:05,080 Speaker 4: bears were hung up on this, Oh it bleeds money, 265 00:16:05,120 --> 00:16:08,840 Speaker 4: it's going to go bankrupt. And look, I was in 266 00:16:08,840 --> 00:16:12,360 Speaker 4: that camp for a number of years, but now he 267 00:16:12,640 --> 00:16:18,000 Speaker 4: Elon pulls rabbits out of the hat constantly. It's one 268 00:16:18,000 --> 00:16:20,680 Speaker 4: thing to bet on him or bet on Tesla, but 269 00:16:21,000 --> 00:16:24,760 Speaker 4: I just I just won't bet against Elon. I did 270 00:16:24,800 --> 00:16:27,960 Speaker 4: in a minor way several years ago we had long date, 271 00:16:28,040 --> 00:16:31,360 Speaker 4: We had crash puts on Tesla that almost hit and 272 00:16:31,360 --> 00:16:31,920 Speaker 4: paid off. 273 00:16:32,000 --> 00:16:34,800 Speaker 3: But it's just you can't bet against the guy. 274 00:16:36,280 --> 00:16:38,560 Speaker 2: If you take a look at Tesla stocks, right, Carson, 275 00:16:38,680 --> 00:16:42,560 Speaker 2: I mean, big loser this year, but still trading at 276 00:16:43,000 --> 00:16:46,600 Speaker 2: high multiples pe of sixty one, The question really is 277 00:16:46,640 --> 00:16:51,960 Speaker 2: whether Tesla's fundamentals can support this kind of pricing for 278 00:16:52,000 --> 00:16:52,440 Speaker 2: the stock. 279 00:16:52,680 --> 00:16:56,320 Speaker 3: Your take on that, well, my take is it doesn't matter. 280 00:16:56,360 --> 00:16:57,280 Speaker 3: It's never mattered. 281 00:16:57,360 --> 00:16:59,760 Speaker 4: And if you really scratch the surface on the earnings, 282 00:17:00,040 --> 00:17:03,160 Speaker 4: a lot of that has to do with selling credits, 283 00:17:03,240 --> 00:17:07,359 Speaker 4: you know, carbon credits. So from an in Tesla's accounting 284 00:17:07,400 --> 00:17:11,280 Speaker 4: has always been heavily criticized by the bears, and they're 285 00:17:11,320 --> 00:17:13,600 Speaker 4: not wrong. And I look, I'm not current on the 286 00:17:13,640 --> 00:17:15,280 Speaker 4: accounting or the numbers, just to be. 287 00:17:15,359 --> 00:17:18,520 Speaker 3: Clear, but it doesn't matter. 288 00:17:18,680 --> 00:17:20,840 Speaker 4: And when you look at I mean, it's amazing to 289 00:17:20,880 --> 00:17:23,040 Speaker 4: look at the evolution of Elon Musk, right. 290 00:17:23,080 --> 00:17:24,720 Speaker 3: He was once the. 291 00:17:24,560 --> 00:17:27,960 Speaker 4: Darling of the political left in US. He was seen as, 292 00:17:28,160 --> 00:17:31,320 Speaker 4: you know, an environmentalist, and now he's the darling. 293 00:17:31,000 --> 00:17:34,040 Speaker 3: Of the political right. And it hasn't hurt. 294 00:17:34,240 --> 00:17:37,159 Speaker 4: I mean, he's and you know, and he was a 295 00:17:37,280 --> 00:17:41,640 Speaker 4: lot of people now do compare him to Trump, and 296 00:17:41,760 --> 00:17:45,280 Speaker 4: I think there are I think in terms of personality, 297 00:17:45,400 --> 00:17:47,880 Speaker 4: there are a lot of valid comparisons. But what's interesting 298 00:17:47,960 --> 00:17:51,679 Speaker 4: is when Elon started his jihad against short sellers, especially 299 00:17:51,800 --> 00:17:57,359 Speaker 4: Jim Chinos, probably back around twenty fifteen sixteen if I 300 00:17:57,440 --> 00:18:01,440 Speaker 4: remember correctly, just like Trump himself, when Trump was running 301 00:18:01,480 --> 00:18:06,960 Speaker 4: for president, Elon recognized the potential of a populist movement. 302 00:18:07,400 --> 00:18:10,200 Speaker 4: So he made he created this whole sort of market 303 00:18:10,240 --> 00:18:14,040 Speaker 4: populist movement, the sentiment that hey, by buying my stock, 304 00:18:14,560 --> 00:18:19,360 Speaker 4: you are sticking it to these powerful shadowy short sellers. 305 00:18:19,560 --> 00:18:23,280 Speaker 4: And you know, back then, I didn't understand why he 306 00:18:23,359 --> 00:18:25,720 Speaker 4: was so fixated on short sellers, and I thought it 307 00:18:25,760 --> 00:18:28,600 Speaker 4: was just some you know, thin skin or you know, 308 00:18:28,680 --> 00:18:31,800 Speaker 4: easily bruised ego, and that could be true, but I 309 00:18:31,840 --> 00:18:34,840 Speaker 4: think it was really strategic that he understood that by 310 00:18:34,840 --> 00:18:39,199 Speaker 4: setting up this plot of good versus you know, purportedly evil, 311 00:18:39,720 --> 00:18:42,960 Speaker 4: he could get people to buy the stock. And that 312 00:18:43,520 --> 00:18:46,200 Speaker 4: is part of the reason why you don't bet against 313 00:18:46,200 --> 00:18:48,800 Speaker 4: the guy, and why nobody has played the game, the 314 00:18:48,800 --> 00:18:52,080 Speaker 4: Public Company game better than Elon Musk. 315 00:18:51,920 --> 00:18:57,160 Speaker 2: The thing is constant. He's aligned himself so closely with Trump. 316 00:18:57,520 --> 00:18:59,119 Speaker 2: Is there a risk to that? 317 00:19:01,320 --> 00:19:06,320 Speaker 4: Yeah, people thought so back then, but I you know, 318 00:19:06,440 --> 00:19:11,840 Speaker 4: I don't think so. I mean, it's but the. 319 00:19:13,520 --> 00:19:13,720 Speaker 3: Guy. 320 00:19:13,800 --> 00:19:15,720 Speaker 4: The guy is incredible. I mean I don't say that 321 00:19:15,800 --> 00:19:20,080 Speaker 4: as a fanboy, but it's now. I once thought, I 322 00:19:20,119 --> 00:19:22,080 Speaker 4: once thought that that would be a risk to the brand, 323 00:19:22,200 --> 00:19:25,200 Speaker 4: but you know, they're I mean, America. 324 00:19:24,800 --> 00:19:27,919 Speaker 3: Is pretty evenly split. The world is pretty evenly split. 325 00:19:28,400 --> 00:19:30,600 Speaker 4: So you know, if the if the left isn't going 326 00:19:30,640 --> 00:19:32,560 Speaker 4: to buy the cars, then the right's going to buy them. 327 00:19:32,600 --> 00:19:35,440 Speaker 4: And if you went back to twenty fifteen or twenty sixteen, 328 00:19:35,760 --> 00:19:37,680 Speaker 4: you know, the right would scoff at the idea of 329 00:19:37,760 --> 00:19:40,359 Speaker 4: electric cars, and now they love Elon Musk, and for 330 00:19:40,480 --> 00:19:42,560 Speaker 4: them buying a you know, a tesla is a bit 331 00:19:42,560 --> 00:19:46,760 Speaker 4: of a you know, a symbol of supporting libertarianism or 332 00:19:47,800 --> 00:19:49,480 Speaker 4: you know, a right wing populism. 333 00:19:49,560 --> 00:19:52,960 Speaker 3: So yeah, I don't think it matters for the brand. 334 00:19:55,000 --> 00:19:56,840 Speaker 2: I just want to put it out there though, that 335 00:19:57,040 --> 00:19:58,680 Speaker 2: once upon a time you did say that. 336 00:19:58,520 --> 00:20:00,399 Speaker 1: Elon Musk is a liar. 337 00:20:01,480 --> 00:20:02,480 Speaker 3: Yeah, well he does lie. 338 00:20:02,640 --> 00:20:04,399 Speaker 4: Yeah, I mean that's I mean, I think I just 339 00:20:04,600 --> 00:20:06,679 Speaker 4: said that, you know a few minutes ago. Yes, he 340 00:20:06,720 --> 00:20:11,159 Speaker 4: does lie, but there's enough truth in what he does. Again, 341 00:20:11,800 --> 00:20:17,600 Speaker 4: the rockets fly, the cars drive, you know, the satellites work, 342 00:20:18,760 --> 00:20:21,800 Speaker 4: you know, So there's He's got this. He has this 343 00:20:21,880 --> 00:20:27,760 Speaker 4: perfect balance between lying and deception and delivering in truth, 344 00:20:28,160 --> 00:20:30,800 Speaker 4: the perfect balance for this moment in time. 345 00:20:33,000 --> 00:20:33,600 Speaker 2: A lot of our. 346 00:20:33,480 --> 00:20:37,200 Speaker 1: Eyes on the US election. Does it matter who wins 347 00:20:37,200 --> 00:20:38,320 Speaker 1: for the financial markets? 348 00:20:38,359 --> 00:20:42,000 Speaker 2: Would you know a Trump administration be better for the 349 00:20:42,040 --> 00:20:44,120 Speaker 2: stock market or would Kamala Harris? 350 00:20:45,760 --> 00:20:48,320 Speaker 3: Well, I'm going to answer that with some nuance. 351 00:20:49,400 --> 00:20:54,000 Speaker 4: I think, for if you're in the finance industry in America, 352 00:20:54,840 --> 00:20:58,560 Speaker 4: Trump is definitely better for you. Does it matter to 353 00:20:58,600 --> 00:21:02,199 Speaker 4: the markets, and going back to my view that the 354 00:21:02,320 --> 00:21:05,080 Speaker 4: kind of an autopilot effectively or at least you know, 355 00:21:05,160 --> 00:21:09,200 Speaker 4: the S and P five hundred is because of blows 356 00:21:10,640 --> 00:21:13,080 Speaker 4: and just excess liquidity. I mean, even with the Fed 357 00:21:13,160 --> 00:21:16,000 Speaker 4: having raised rates, there's still so much liquidity in the 358 00:21:16,000 --> 00:21:18,119 Speaker 4: system that you see, you know, I mean to me, 359 00:21:18,320 --> 00:21:22,080 Speaker 4: I'll never understand what the actual value of bitcoin is, right, 360 00:21:22,119 --> 00:21:26,200 Speaker 4: it's a currency without a country, and if there's any 361 00:21:26,200 --> 00:21:29,200 Speaker 4: intrinsic value, it's well beyond that. So that just shows 362 00:21:29,240 --> 00:21:31,760 Speaker 4: you there's still so much liquidity in the system. 363 00:21:31,880 --> 00:21:32,960 Speaker 3: So I don't. 364 00:21:32,880 --> 00:21:42,040 Speaker 4: See Kamala winning impacting that. But definitely Trump makes finance 365 00:21:42,680 --> 00:21:47,879 Speaker 4: somewhat less crappy to be in as an industry. Somewhat 366 00:21:48,440 --> 00:21:50,840 Speaker 4: you can't really put the toothpaste back in the tube, 367 00:21:50,880 --> 00:21:54,840 Speaker 4: given how far we've come in terms of onerous legislation, 368 00:21:55,160 --> 00:21:58,920 Speaker 4: rules and regulation, but he'll make it somewhat less onerous. 369 00:22:00,640 --> 00:22:01,920 Speaker 1: I want to touch on Vietnam. 370 00:22:02,040 --> 00:22:06,520 Speaker 2: What's a short seller like you betting long on Vietnam Alia? 371 00:22:06,640 --> 00:22:09,639 Speaker 2: When you talked about how you're taking issue with China 372 00:22:09,680 --> 00:22:16,320 Speaker 2: because of you know, transparency, governance, accountability, the same issues 373 00:22:16,760 --> 00:22:18,560 Speaker 2: do apply with Vietnam. 374 00:22:19,840 --> 00:22:25,520 Speaker 4: Well, dam not, I'll so I'll obviously take the other 375 00:22:25,600 --> 00:22:30,520 Speaker 4: side of that. And look, with China, I've lived there twice. 376 00:22:30,560 --> 00:22:33,880 Speaker 4: I've done about six years in country. I was living 377 00:22:33,920 --> 00:22:36,080 Speaker 4: there again from five to ten, and that's when I 378 00:22:36,080 --> 00:22:39,639 Speaker 4: started Muddy Waters, and I studied, started to kind of 379 00:22:39,680 --> 00:22:43,320 Speaker 4: by act, I mean, effectively by accident. But at the 380 00:22:43,400 --> 00:22:47,680 Speaker 4: time I started it and realized that, my god, there's 381 00:22:47,720 --> 00:22:50,760 Speaker 4: this whole world that has no idea. You know, they 382 00:22:50,800 --> 00:22:52,560 Speaker 4: throw all this money into China and they have no 383 00:22:52,640 --> 00:22:57,640 Speaker 4: idea what's going on. It was stunning to me that 384 00:22:57,960 --> 00:23:01,160 Speaker 4: there was such an information disconnect, such a disconnect between 385 00:23:01,200 --> 00:23:03,919 Speaker 4: perceptions of foreigners as to how business is done in 386 00:23:04,000 --> 00:23:08,840 Speaker 4: China and what really goes on. And then in twenty seventeen, 387 00:23:09,480 --> 00:23:11,480 Speaker 4: I was going around saying, hey, you know, Trump has 388 00:23:11,480 --> 00:23:16,720 Speaker 4: been became president, and so many aspects of the US 389 00:23:16,840 --> 00:23:22,359 Speaker 4: China bilateral relationship are underwater. But in the markets that's 390 00:23:22,400 --> 00:23:26,120 Speaker 4: not yet underwater, and everybody's really excited about Chinese stocks. 391 00:23:26,200 --> 00:23:30,359 Speaker 4: But twenty twenty, when COVID hit, that was a breaking point, 392 00:23:30,440 --> 00:23:33,439 Speaker 4: and so I ask I said to myself, this is 393 00:23:33,440 --> 00:23:35,879 Speaker 4: going to be different. This is going to be the 394 00:23:36,040 --> 00:23:40,359 Speaker 4: time when finally the West has a real serious break 395 00:23:40,359 --> 00:23:43,160 Speaker 4: with China, and it's going to be the biggest geopolitical 396 00:23:43,400 --> 00:23:47,679 Speaker 4: realignment since World War Two, and it's all going to 397 00:23:47,760 --> 00:23:52,680 Speaker 4: involve countries' relationships to China. And so the winners in 398 00:23:52,840 --> 00:23:56,800 Speaker 4: that world or in this world that we're in are 399 00:23:57,160 --> 00:23:58,760 Speaker 4: the ones that are non aligned. 400 00:23:59,240 --> 00:24:02,680 Speaker 3: So in in Vietnam, and you. 401 00:24:02,640 --> 00:24:07,119 Speaker 4: Know, Vietnam's number going to be the US's ally, but 402 00:24:07,240 --> 00:24:10,880 Speaker 4: it's definitely not going to be China's ally, right, And so. 403 00:24:11,240 --> 00:24:12,600 Speaker 3: With SBI. 404 00:24:15,040 --> 00:24:17,720 Speaker 2: Thomas quickly running out, I have to get this in. 405 00:24:17,920 --> 00:24:19,679 Speaker 2: I want to take a look at the outlook for 406 00:24:19,760 --> 00:24:23,359 Speaker 2: short selling. You've said before, how you know you feel 407 00:24:23,400 --> 00:24:26,800 Speaker 2: like a gun is pointed at short sellers and that 408 00:24:26,880 --> 00:24:30,960 Speaker 2: you're years as a short seller are pretty numbered. Talk 409 00:24:31,080 --> 00:24:34,760 Speaker 2: to us about where this is going and might it 410 00:24:34,880 --> 00:24:38,000 Speaker 2: be the end for you soon into the shot selling, 411 00:24:38,960 --> 00:24:39,640 Speaker 2: so that. 412 00:24:40,080 --> 00:24:43,840 Speaker 4: What you're referring to is actually I think it was 413 00:24:43,920 --> 00:24:46,800 Speaker 4: an article that a couple of Bloomberg print journalists wrote 414 00:24:47,000 --> 00:24:50,080 Speaker 4: a couple of years ago, and we took issue with 415 00:24:50,160 --> 00:24:52,960 Speaker 4: that because they spent an entire day with me, and 416 00:24:53,400 --> 00:24:56,600 Speaker 4: I think they took that somewhat out of context, but 417 00:24:57,240 --> 00:25:01,000 Speaker 4: really excited about our Vietnam Fund product. But that doesn't 418 00:25:01,000 --> 00:25:03,560 Speaker 4: mean that I'm getting out of short selling. We're doing 419 00:25:03,600 --> 00:25:07,080 Speaker 4: things and resources mostly on the long side. Doesn't mean 420 00:25:07,080 --> 00:25:10,160 Speaker 4: I'm getting out of short selling. It's a difficult time 421 00:25:10,480 --> 00:25:14,440 Speaker 4: for short selling. But yeah, I mean I'm still coming 422 00:25:14,480 --> 00:25:17,800 Speaker 4: to the office and you know, long and strong vehicles. 423 00:25:19,240 --> 00:25:21,320 Speaker 1: Carson, we have delivered that. Thank you for joining us. 424 00:25:21,320 --> 00:25:24,240 Speaker 2: Cousin Block Muddy Waters Capital founder and CIO. 425 00:25:24,960 --> 00:25:26,800 Speaker 1: This is Lumberg. Stay with us.