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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: Hello and welcome to another episode of the Oddlocks podcast.

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Speaker 3: I'm Jill Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, there's a lot going on in the world.

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Speaker 3: Are we going to start every podcast with that sentence?

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Speaker 2: It's sort of a cliche. Now, there's a lot going

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Speaker 2: on in the world. I have to say, you know,

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Speaker 2: I recently were recording this February twenty fifth. I don't

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Speaker 2: know the exact date that's coming out. I recently took

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Speaker 2: a vacation and they did a pretty good job, Tracy,

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Speaker 2: wouldn't you say like being unplugged, Like I probably sent

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Speaker 2: like six or seven tweets. I don't think I responded

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Speaker 2: to any emails or what's that message.

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Speaker 3: I actually noticed this that the volume of Joe's digital presence, Yeah,

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Speaker 3: was way way down and normally listeners. Normally when Joe

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Speaker 3: is on vacation and sometimes board, he just starts firing

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Speaker 3: off emails saying like, oh, we should do this and

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Speaker 3: we should do that. None of those. This time. It

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Speaker 3: was a vacation for me too.

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Speaker 2: A vacation from your co host. Yeah, I really did

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Speaker 2: not do much. And then I have to say, like

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Speaker 2: re entry into the world, my thirty five hundred emails

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Speaker 2: catching up. Everything that happened in a week in the

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Speaker 2: world was a lot this time. And I'll just say

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Speaker 2: it's a cliche to say a lot happened, but it

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Speaker 2: was like, Okay, I really have some catching up to do.

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Speaker 3: It.

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Speaker 2: I felt it, and it made the re entry from

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Speaker 2: vacation words.

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Speaker 3: Well, it's not just the number of things that are happening,

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Speaker 3: it's the significance as well. Right, So I imagine one

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Speaker 3: of the things you came back to after your week

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Speaker 3: off was the idea of a rift, a growing rift

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Speaker 3: between the US and Europe. There's all these lingering concerns

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Speaker 3: as well about competing with China AI technology. Big themes

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Speaker 3: to think about. Now.

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Speaker 2: I saw, like scrolling on my phone, I saw like JD.

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Speaker 2: Evance has given this big speech in Munich, and I'm like,

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Speaker 2: do I want to watch this on the beach? And tuloum,

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Speaker 2: I do not want to watch this on the beach.

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Speaker 2: And so but now I have to understand how the

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Speaker 2: world changes and again from week to week. But big

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Speaker 2: things afoot in the world, and how should we make

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Speaker 2: sense of these and how should we cut through the

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Speaker 2: noise and all that stuff. Anyway, I'm very excited. We

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Speaker 2: really do have the two perfect guests to discuss big

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Speaker 2: things in the world, like technological changes, especially through the

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Speaker 2: geopolitical lens and this ratum the geopolitics of what will

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Speaker 2: be the nature of the US's relationship with Europe and

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Speaker 2: other countries. We're going to be speaking with Jared Cohen,

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Speaker 2: President of Global Affairs and co head of the Goldman

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Speaker 2: Sex Global Institute, and George Lee, the other co head

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Speaker 2: of the Goldman Sex Global Institute. So Jared and George,

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Speaker 2: thank you both for coming on Ovlach joining us in

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Speaker 2: the studio.

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Speaker 4: Thank you, thank you. As I mentioned you before, I'm

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Speaker 4: a longtime listener, first time caller of the pod, so

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Speaker 4: thrilled to be on it with you.

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Speaker 3: Oh, thank you. I love it when people say that

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Speaker 3: on air. I know I have a question just to

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Speaker 3: begin with, what is the Goldman Sachs Global Institution.

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Speaker 4: Sure, I'll start, George to pitch in. So, the Goldman

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Speaker 4: sax Global Institute is a new platform at the firm.

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Speaker 4: We formed about two and a half years ago and

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Speaker 4: the goal is to promote the firm's thought leadership at

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Speaker 4: the intersection of technology change, geopolitics, and markets, and the

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Speaker 4: idea is that these factors have become extraordinarily consequential for boards, CEOs,

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Speaker 4: investment committees and many of our client types. And so

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Speaker 4: this ability to transmit our thinking, be provocative, share a

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Speaker 4: worldview is just a great way to engage our clients.

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Speaker 4: It's been a lot of fun.

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Speaker 5: The other thing that I would add is for some

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Speaker 5: of the really kind of big strategic clients, Let's take

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Speaker 5: sovereigns as an example, there's a lot of ambitions that

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Speaker 5: they have over the next three to five years, and

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Speaker 5: what the Institute does is we pull together all the

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Speaker 5: expertise that we have at the firm to essentially cover

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Speaker 5: their ambitions. So when they say, you know, here's at

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Speaker 5: a high level what we want to try to do

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Speaker 5: in the AI space, or here's what we want to

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Speaker 5: try to do in the Indo Pacific region, our job

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Speaker 5: is to be able to respond as a firm, to

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Speaker 5: help them think through and define what that looks like

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Speaker 5: and then to help them make it happen. And through

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Speaker 5: the combination of our banking franchise and our asset management franchise,

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Speaker 5: that's what we try to.

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Speaker 2: Do Okay, let's just jump right into question. I didn't

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Speaker 2: when I was on the beach watch that JD. Van

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Speaker 2: speech that he made in Munich, and I know there's

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Speaker 2: all this falling out, you know, he's frustrated columns and

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Speaker 2: the Financial Times and stuff like that and all these

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Speaker 2: big things. What was that all about? What happened there?

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Speaker 5: So I was there, great and tell us and there's

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Speaker 5: a little bit of it before and after. So I

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Speaker 5: was with a number of the European leaders the month before,

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Speaker 5: and they were getting ready for the Trump administration to

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Speaker 5: come into office and dealing also with the first twenty

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Speaker 5: four to forty eight hours. And their biggest concern at

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Speaker 5: the time was that a deal would be struck on

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Speaker 5: Ukraine above their heads and the Ukrainians heads. Now, I

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Speaker 5: think that that was a little bit of a false concern.

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Speaker 5: It was more of a reflection of the difficulties they

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Speaker 5: thought they'd find in the transatlantic relationship. I think a

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Speaker 5: month later, by mid February, they were surprised that a

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Speaker 5: deal was actually being cut above their heads, not just

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Speaker 5: between the Trump administration and the Russians, but then broker

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Speaker 5: by you know, the Gulf as an honest Broker, and

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Speaker 5: I think what was interesting about JD. Vance's speech is

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Speaker 5: he gave a speech at a security conference and there

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Speaker 5: was really nothing to offer on the foreign policy front.

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Speaker 5: It was, you know, for all intents and purposes, kind

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Speaker 5: of a lecture about free speech. And I think it

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Speaker 5: was more of a reset in a negative way of

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Speaker 5: the Transatlantic relationship. And I think what I was surprised

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Speaker 5: by is that the Europeans were surprised by the speech.

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Speaker 5: You know, it would have been very easy, by the way,

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Speaker 5: for them to acknowledge that there was no new policy

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Speaker 5: set in the speech. He didn't announce anything on Russia, Ukraine,

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Speaker 5: he didn't announce anything on the Middle East, he didn't

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Speaker 5: announce anything on China. It was just kind of a

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Speaker 5: difficult moment in the Transatlantic relationship. I think part of

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Speaker 5: the reason the Europeans are experiencing so much consternation over

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Speaker 5: this is the lack of economic growth in Europe is

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Speaker 5: causing Europe to essentially evaporate geopolitically. They don't have a

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Speaker 5: seat at the table on the Middle East, they don't

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Speaker 5: have a seat at the table on Ukraine. They're trying

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Speaker 5: to figure out what tariffs are coming and how to respond.

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Speaker 5: Then they know that lingering on the horizon is a

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Speaker 5: confrontation with the US over them having less dependence on

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Speaker 5: China for manufacturing markets and other issues, and so they're

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Speaker 5: scrambling figuring out what to do. They're having a hard

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Speaker 5: time acting collectively, which is making it difficult for them

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Speaker 5: to respond in a way that's sufficiently robust to level

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Speaker 5: the playing field with the Trump administration.

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Speaker 3: You mentioned that you leaders were preparing for the Trump

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Speaker 3: administration late last year. What does that look like? How

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Speaker 3: do you prepare.

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Speaker 5: Well for starters? Most of them weren't around when he

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Speaker 5: was president last time. And if you look at who

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Speaker 5: is around last time, you had Macron, who Trump doesn't

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Speaker 5: particularly like, Zelensky, who Trump doesn't particularly like, in Victor

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Speaker 5: Orbon who he does like, and so most of these

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Speaker 5: leaders hadn't dealt with Trump before. I think that one

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Speaker 5: of the things that they're all surprised by is that

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Speaker 5: what they observe and recall from watching the first Trump

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Speaker 5: presidency that this feels less like a second term and

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Speaker 5: more like a totally separate presidency with a four year

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Speaker 5: interregnum in between. And that also shouldn't be surprising because

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Speaker 5: he didn't recycle very many of the same people from

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Speaker 5: the first time around, the world has completely changed in

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Speaker 5: four years. In this time around, he wasn't surprised to win,

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Speaker 5: and so he's coming in with a very clear doctrine

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Speaker 5: and agenda focus really on reciprocity, so defense spending, trade deficits,

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Speaker 5: you know, areas where he feels like there's an imbalance

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Speaker 5: and other countries haven't been kind of quote carrying their load.

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Speaker 5: He's then taking a transactional approach to address that. And

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Speaker 5: there's look, there's a little bit of what we've seen

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Speaker 5: you administrations do recently, which is show up with opposite day,

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Speaker 5: which is if the previous administration was for it were

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Speaker 5: against it. But when you look at the policy in

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Speaker 5: the Indo Pacific, that's where you've seen the most consistency.

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Speaker 5: You know, you don't yet have kind of a special

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Speaker 5: envoy on you know, China and Indo Pacific issues. The

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Speaker 5: meetings with the Quads have persisted. The administration did South

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Speaker 5: Korea a solid amidst their political turmoil by reinforcing the

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Speaker 5: importance of the Japan US South Korea trilateral reinforcement of

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Speaker 5: the Quad and even on tariffs, you know, he's launched

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Speaker 5: a series of trade investigations into China which will culminate

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Speaker 5: in May. Whereas with you know, Canada and Mexico, he's

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Speaker 5: come in hot and heavy. With Europe, he's come in

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Speaker 5: hot and heavy. In those tariffs look more robust than

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Speaker 5: they did in twenty seventeen and twenty eighteen.

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Speaker 4: Jared, you you've observed in the past that, well, we

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Speaker 4: don't have the same shock and awe from that community

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Speaker 4: that we had in twenty sixteen. They're kind of used

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Speaker 4: to him stylistically and in his cadence. You know, there

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Speaker 4: is a fundamental difference in that it's unclear who in

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Speaker 4: the administration is running which pieces of the portfolio. And

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Speaker 4: this seems to be more of a Trump forward, you know,

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Speaker 4: policy leadership by him himself. Maybe, is that Yeah?

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Speaker 5: I think that's right. And by the way, when the

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Speaker 5: forty fifth president was in office, there was also not

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Speaker 5: a ton of clarity on you know, who was going

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Speaker 5: to get fired on the toilet versus you know, who

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Speaker 5: was going to end up running a fiefdom. I do

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Speaker 5: think what George is referring to is a various stute observation,

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Speaker 5: which is the first time around the departments and agencies.

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Speaker 5: The heads of the departments and agencies exerted an enormous

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Speaker 5: amount of influence, and policy was much more decentralized. Different

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Speaker 5: people had different accounts and different agendas that they were pushing,

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Speaker 5: and occasionally the President would weigh in and there'd be

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Speaker 5: a recalibration. This time around, you don't see that sort

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Speaker 5: of strength that the departments and agencies, and policy feels

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Speaker 5: much more centralized at the White House, with a sea

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Speaker 5: of special envoys for just about every issue that you

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Speaker 5: can imagine, and policy seems to be set more by

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Speaker 5: the president, with everybody waiting to see what this sort

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Speaker 5: of policy mark to market is before they fast follow

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Speaker 5: and figure out what their agenda is going to be.

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Speaker 2: Use the word Europe evaporating geopolitically, and it hadn't clicked

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Speaker 2: to me. This is something we've talked about to the

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Speaker 2: sort of what ails Europe, but you know, even within

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Speaker 2: the context of this most recent episode, like it hadn't

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Speaker 2: clicked to me the sort of elevated role that the

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Speaker 2: Gulf States have had in playing intermediary talk about how

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Speaker 2: the world, whether it's political leaders or business leaders, are

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Speaker 2: like thinking about this reality that what is still you know,

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Speaker 2: one of the richest regions on Earth is at this

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Speaker 2: moment where like people are asking existential questions about its

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Speaker 2: capacity to be a player in anything.

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Speaker 5: So look, if you look at the Gulf. I've been

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Speaker 5: traveling there for twenty five years, and for most of

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Speaker 5: that time, the international system was in a global War

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Speaker 5: on terror paradigm, and in that context, the geopolitics were

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Speaker 5: driving the economic interest. And when you talk to these leaders,

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Speaker 5: they would say we wanted to be the other way

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Speaker 5: around that they were stuck in this paradigm, and so

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Speaker 5: the most important conversations that were happening at the political

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Speaker 5: level were around geopolitics and security. But you had these

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Speaker 5: growing sovereign wealth funds that were kind of off to

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Speaker 5: the side, and so these were countries that had sovereign

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Speaker 5: wealth funds, but geopolitics was front and center. And then

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Speaker 5: a series of new leaders showed up in twenty fifteen

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Speaker 5: and twenty sixteen in Saudi and Cutter and UAE, and

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Speaker 5: they just brought with them a different set of ambitions

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Speaker 5: that are born out of a different generation, where they

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Speaker 5: wanted to diversify the economies. They wanted to be leaders

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Speaker 5: in science and technology, not followers, and they wanted to

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Speaker 5: broaden the reach and international influence of each of their

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Speaker 5: respective countries, but they were still stuck in a global

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Speaker 5: war on terror framework. And then COVID happened, and it

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Speaker 5: completely shifted the paradigm towards a great return of great

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Speaker 5: power competition and competitive coexistence between the US and China.

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Speaker 5: And with all of that geopolitical brush cleared, that was

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Speaker 5: the paradigmatic shift where these countries finally had a situation

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Speaker 5: where their economic interests could drive the geopolitics. And what

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Speaker 5: I would sort of say flippantly, that was the moment

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Speaker 5: where they went from being countries with sovereign wealth funds

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Speaker 5: to sovereign wealth funds with countries. And you know, but

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Speaker 5: another way, you know, they're now leading with strategic capital

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Speaker 5: as opposed to being a place where people come to

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Speaker 5: for capital. And so it's giving them the right to

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Speaker 5: play the chessboard. And we lump the Gulf countries together

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Speaker 5: because that's what historically we've done. These are distinct countries

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Speaker 5: with unique ambitions, and what they have in common is

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Speaker 5: they have a lot of money. After that, each of

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Speaker 5: them are after very different things and they're engaged in

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Speaker 5: their own degree of competition with each other.

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Speaker 3: So Jared mentioned this idea of a slowdown in the

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Speaker 3: European economy contributing to all the let's call it existential

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Speaker 3: angs that you see right now. And George, I want

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Speaker 3: to bring you in here because one thing you often

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Speaker 3: hear is this idea that Europe is lagging behind in

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Speaker 3: AI and if AI is going to be the next

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Speaker 3: big thing, the next big economic driver, that's really a

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Speaker 3: problem for them.

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Speaker 4: Yep, Tracy's a great question. You know, having been in

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Speaker 4: technology for thirty five years and seen my share of

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Speaker 4: platform transitions and new technologies arise, this is really the

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Speaker 4: first one where world leaders have tagged AI as a

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Speaker 4: matter of national destiny really early. It's going to be

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Speaker 4: consequential for their economies, their growth, their culture, their defense.

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Speaker 4: And so we've seen enormous focus and you know, I'm

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Speaker 4: just back. I was recently at the AI Action Summit

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Speaker 4: in Paris, which was quite an impressive event and coalesced

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Speaker 4: a bunch of investment in within the borders of France's

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Speaker 4: something Macron I think is a real leader on and

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Speaker 4: some of these European countries are a wellspring of enormous

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Speaker 4: intellectual capital think about the grandicles in France, that combination

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Speaker 4: of and statistics that they lead in with excellence. You've

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Speaker 4: got Cambridge and Oxford and places like that. So there

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Speaker 4: is an enormous amount of intellectual capital emerging from Europe

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Speaker 4: and there's some really inspiring companies like miss Strawl out

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Speaker 4: of France, et cetera. Whether they can marshal the the

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Speaker 4: intent and capital to really lead in building the infrastructure

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Speaker 4: and they need to support that intellectual capital is the

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Speaker 4: big question, and it's why you saw a lot of

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Speaker 4: the announcements around the AI Action Summit be about bringing

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Speaker 4: capital to France, scaling their lead in atomic energy, which

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Speaker 4: is a great energy source for this, and so everyone's

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Speaker 4: giving it their best shot. But competing with the energy abundance,

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Speaker 4: capital abundance of the Gulf countries or the just natural

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Speaker 4: tech leadership of the US, I think it's a hard

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Speaker 4: brief for them to compete in the scale that they

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Speaker 4: want to, but make no mistake, they have real assets.

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Speaker 2: Well, actually, there's a question I want to pose to

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Speaker 2: both of you because whether we're talking about you know,

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Speaker 2: what is it actually take to say commercialize the intellectual

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Speaker 2: capital of Europe or what does it actually take for

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Speaker 2: the EU to be a geopolitical power player, so that

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Speaker 2: they're not taking a backseat and watching all of these actions,

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Speaker 2: all of these conversations take place above their head. There

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Speaker 2: is this sense that large European organizations have been very

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Speaker 2: good at expanding the number of member countries over time

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Speaker 2: that exist, that they grow out, but that the issue

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Speaker 2: of like internal depth, single rules, market cohesion has really difficult,

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Speaker 2: and the sort of the deepening of these various unions

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Speaker 2: that exist on the European continent. And every once in

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Speaker 2: a while there will be some leader and you know,

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Speaker 2: to come up with one hundred page report. I think

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Speaker 2: we talked about recently on the podcast. You know, I

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Speaker 2: asked your Mario Dragi issued to big report, and there's

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Speaker 2: always some new report about competitiveness or whatever. I'd love

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Speaker 2: to hear from both of you whether you think that

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Speaker 2: the tides are shifting in Europe in such a way

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Speaker 2: that all of these things that sound good on PDFs

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Speaker 2: and institutional websites can change the way the nature of

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Speaker 2: politics and policy is wrung within the content.

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Speaker 5: So look, you're getting at a debate that we certainly

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Speaker 5: hear playing out every single day, which is the bearishness

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Speaker 5: on Europe overplayed, right. No, nobody's questioning that the lack

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Speaker 5: of economic growth, and nobody's fooled by the economic rally

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Speaker 5: they've had at the beginning of the year. There's some

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Speaker 5: fundamental questions. I won't try to argue the other side

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Speaker 5: because I'm quite bearish on it. And I'm quite bearish

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Speaker 5: on it because it's not that European leaders don't know

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Speaker 5: what they need to do.

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Speaker 4: Right.

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Speaker 5: So let's take geopolitics and defense, and George, you should

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Speaker 5: talk on the AI side and the regulatory side, but

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Speaker 5: on defense, right, it's very clear. I mean, what's interesting

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Speaker 5: about Vance's speech, which you were talking about before. Privately,

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Speaker 5: every European leader said, you know, the US has a

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Speaker 5: point on defense spending, they have a point on migration,

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Speaker 5: they have a point on regulation, and every European leader

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Speaker 5: has an idea for how to fix it, and they

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Speaker 5: all like drag eas report. The question is implementation, right.

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Speaker 5: So Europe has a number of challenges, one of which

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Speaker 5: is you become prime minister if you get the largest

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Speaker 5: percentage of the vote, which is usually thirteen, fourteen, fifteen percent,

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Speaker 5: or if you're mergency know twenty nine percent with a

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Speaker 5: blocking minority from the AfD right. And so if you're

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Speaker 5: sitting on top of one of these coalition governments that

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Speaker 5: you can barely scrap together in order to do the

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Speaker 5: meaningful policy changes that you have to do, you're likely

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Speaker 5: going to break the coalition in the process. So you

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Speaker 5: have coalition politics getting in the way. That's one issue.

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Speaker 5: On defense, three percent of GDP is the new two percent.

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Speaker 5: And in a lot of respects what's happened with Ukraine

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Speaker 5: and the fact that the Europeans now conclude they can't

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Speaker 5: rely on the US for security guarantees, it's made them

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Speaker 5: more comfortable with the idea of three percent or as

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Speaker 5: you move east to places like poll In five percent.

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Speaker 5: The problem again is implementation at a collective level. So

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Speaker 5: you know, there's certain countries that are strong on defense

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Speaker 5: and certain countries that have medium and small sized defense players.

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Speaker 5: So is the answer that if Europe is going to

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Speaker 5: get big enough from a defense perspective, you're going to

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Speaker 5: have to have cross border mergers and acquisitions and consolidation. Okay, fine,

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Speaker 5: who gets the national champion the EU? Yes, it's a

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Speaker 5: coalition of countries or a union of countries. These are

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Speaker 5: still national governments underneath it, and you're really going to

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Speaker 5: tell you a medium sized Central European country that they

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Speaker 5: have to give up two of their biggest companies because

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Speaker 5: Sweden's going to get bigger on the defense side, when,

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Speaker 5: by the way, they're closer to the Russian threat. So

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Speaker 5: this is just one example of where it breaks down

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Speaker 5: implementation within the EU. You still have zo some politics

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Speaker 5: that exist between the national governments, and then that gets

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Speaker 5: exacerbated by the point I made earlier about coalition politics.

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Speaker 4: Yeah, I'm struck. I've been at a couple of Golden

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Speaker 4: Sex gatherings where you bring together CEO level leaders in

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Speaker 4: Europe in a couple different countries. I was struck by

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Speaker 4: the degree of pessimism and almost resignation about their ability

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Speaker 4: to influence policy that provides more of a pro growth

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Speaker 4: environment for them. Look, I think that you know, hopefully

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Speaker 4: events over take some of this inertia, because the competitive

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Speaker 4: impulse for these countries is going to get increasingly important

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Speaker 4: and challenging, and so maybe it will mediate some change

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Speaker 4: and more collective, more effective collective action. But the business

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Speaker 4: leaders are are certainly frustrated, and one of the things

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Speaker 4: they reflect on is how Europe's leadership and AI in

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Speaker 4: some ways perceptually has been defined by its leadership on

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Speaker 4: AI safety. By the way, that's a.

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Speaker 2: Worthy and important goal.

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Speaker 4: One of my observations in the world of AI they're

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Speaker 4: kind of fascinating, is you know, chat GPT emerged in

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Speaker 4: November twenty two, and there was an immediate outcry about

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Speaker 4: AI safety, existential risk, a lot of headlines, a lot

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Speaker 4: of inks, build a lot of time and energy. Fast forward.

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Speaker 4: Now we have machines that are one hundred to a

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Speaker 4: thousand times more powerful, and it's a much more muted

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Speaker 4: dialogue about those risks. Interestingly, but there's frustration in Europe that,

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Speaker 4: you know, kind of characteristic focus on privacy, regulatory bounds,

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Speaker 4: safety is retarding their progress in something that now has

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Speaker 4: really become kind of a commercial, military, and cultural arms

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Speaker 4: race across the face of the earth.

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Speaker 3: This is what always happens, Joe. The US invents the technology,

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Speaker 3: China maybe improves on it, and Europe writes the regulations

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Speaker 3: and the thought pieces about it. Jered. Just going back

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Speaker 3: to a point that you made about the European response.

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Speaker 3: You use that word transactional earlier to describe the Trump

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Speaker 3: administration's approach to geopolitics, and funnily enough, we just recorded

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Speaker 3: an episode yesterday where we said the exact same thing.

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Speaker 3: I guess I'm wondering, do you see any signs that

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Speaker 3: the approach is actually working, because so far, when you

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Speaker 3: look at the response from EU leaders, it's all about

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Speaker 3: increasing their own domestic defense spending. No one seems to

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Speaker 3: be taking the bait just yet about you know, well,

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Speaker 3: we'll work with Trump and then in return we'll get

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Speaker 3: security protection.

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Speaker 5: Well, I don't think anyone in Europe believes that that's

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Speaker 5: a doable trade, at least in the short term. And

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Speaker 5: I think realizing this time around that they were maybe

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Speaker 5: naive to last time around is I don't think that

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Speaker 5: they look at any bilateral relationship and assign a historic

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Speaker 5: premium to it as special. So this nostalgia for the

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Speaker 5: transatlantic relationship, which I certainly have, and this feeling that

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Speaker 5: certain bilateral relationships are special, which I certainly believe in

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Speaker 5: many others certain believe, there's no evidence that they're showing

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Speaker 5: up with that as a set of assumptions, and I

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Speaker 5: think the Europeans are quickly realizing this. I think, honestly,

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Speaker 5: this is a playbook that they're not quite used to.

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Speaker 5: It's the same in Canada and Mexico. By the way,

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Speaker 5: we haven't talked talked about they don't have a playbook

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Speaker 5: for a scenario where they're being threatened with twenty five

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Speaker 5: percent tariffs that could lead to double digit unemployment. And

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Speaker 5: that's like a serious conversation. So I think everybody's kind

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Speaker 5: of gone off script in a sea of democratic countries

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Speaker 5: where you're not used to having to go off script

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Speaker 5: with each other. And this to sort of another debate

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Speaker 5: we talked about how one of the debates that's playing

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Speaker 5: out is are we too bearish on Europe? Another debate

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Speaker 5: that's playing out is should we maybe relax our skepticism

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Speaker 5: about the forward direction of travel in the US China relationship.

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Speaker 5: I there also subscribe to the view that I think

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Speaker 5: the relationship is going to get worse for longer. So

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Speaker 5: the question then is why do things seem slightly calmer

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Speaker 5: in that relationship right now? Well, I think if you're hijinping,

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Speaker 5: you're watching all the dynamics play out in North America

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Speaker 5: between the US, Canada and Mexico and in the transatlantic relationship,

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Speaker 5: and you're enjoying an early Q one economic boom and

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Speaker 5: tariffs on your country have been sort of punted until

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Speaker 5: we get an outcome from these trade investigations, And you're

435
00:22:44,760 --> 00:22:47,159
Speaker 5: thinking to yourself, I don't really need to insert myself

436
00:22:47,240 --> 00:22:50,119
Speaker 5: in this, but the fundamental issues in terms of the

437
00:22:50,160 --> 00:22:53,040
Speaker 5: tension between the US and China, I think persist. It's

438
00:22:53,040 --> 00:22:56,200
Speaker 5: still the case that America's most formidable adversary is also

439
00:22:56,200 --> 00:22:59,040
Speaker 5: its third largest trading partner. It's still the case that

440
00:22:59,080 --> 00:23:02,320
Speaker 5: short term geopl thinking on both sides are coming at

441
00:23:02,320 --> 00:23:05,959
Speaker 5: the expense of medium and long term economic consequences. And

442
00:23:06,000 --> 00:23:09,120
Speaker 5: it's therefore still the case that both countries are capable

443
00:23:09,119 --> 00:23:12,639
Speaker 5: of doing something that's incredibly economically foolish in service of

444
00:23:12,640 --> 00:23:15,360
Speaker 5: some of those short term geopolitical goals. I just don't

445
00:23:15,359 --> 00:23:19,160
Speaker 5: think we're going to see that excite in the short term.

446
00:23:19,200 --> 00:23:21,360
Speaker 5: I think that's much more of a medium term horizon.

447
00:23:21,520 --> 00:23:24,399
Speaker 4: This brings back this interesting intersection set that Jared and

448
00:23:24,440 --> 00:23:27,399
Speaker 4: I operate in technology and geopolitics, because one of the

449
00:23:27,760 --> 00:23:30,280
Speaker 4: key dimensions of the US China relationship is this battle

450
00:23:30,320 --> 00:23:33,080
Speaker 4: for supremacy around AI and I know on your pod

451
00:23:33,119 --> 00:23:35,280
Speaker 4: you've beaten the deep Seak topic to death.

452
00:23:35,480 --> 00:23:37,040
Speaker 2: No, never enough deep sea time.

453
00:23:37,240 --> 00:23:39,520
Speaker 4: Yeah, I just actually think, when you step back from it,

454
00:23:39,560 --> 00:23:42,520
Speaker 4: I think the technology exploits, while impressive, are part of

455
00:23:42,520 --> 00:23:46,400
Speaker 4: a continuum of improvements in AI and not super extraordinary.

456
00:23:46,480 --> 00:23:50,200
Speaker 4: Impressive but not super extraordinary. The greatest provocation of deep

457
00:23:50,200 --> 00:23:52,840
Speaker 4: seek may well be the open source decision under the

458
00:23:52,960 --> 00:23:56,800
Speaker 4: MIT super permissive License. And you know, I'm sort of

459
00:23:56,800 --> 00:23:59,639
Speaker 4: paraphrasing Mark Andresa and no I heard recently talk about this,

460
00:23:59,720 --> 00:24:03,040
Speaker 4: which the irony of a country that we believe to

461
00:24:03,080 --> 00:24:07,280
Speaker 4: be generally more closed in orientation creating the most abundantly

462
00:24:07,320 --> 00:24:09,200
Speaker 4: available open source model in the world.

463
00:24:09,480 --> 00:24:10,760
Speaker 2: While the US an.

464
00:24:10,600 --> 00:24:13,720
Speaker 4: Open society has obviously meta in the open space, but

465
00:24:13,800 --> 00:24:16,879
Speaker 4: by and large hosts research shops that have more closed orientation.

466
00:24:17,440 --> 00:24:20,280
Speaker 4: And so this impact of a Chinese model that is

467
00:24:20,400 --> 00:24:24,960
Speaker 4: freely available, distillable, tunable, very low cost, that's a real

468
00:24:25,000 --> 00:24:28,000
Speaker 4: provocation in this competition and relationship.

469
00:24:28,359 --> 00:24:31,040
Speaker 2: So when deep seek made headlines and it had been

470
00:24:31,119 --> 00:24:34,560
Speaker 2: percolating for a while and then suddenly everyone was talking about.

471
00:24:34,320 --> 00:24:35,920
Speaker 3: It, everyone was a deep Seek bro.

472
00:24:36,240 --> 00:24:40,199
Speaker 2: Yeah, I declared myself as such. For one week I

473
00:24:40,280 --> 00:24:43,520
Speaker 2: switched my default to deep sink. But so here's something

474
00:24:43,560 --> 00:24:45,600
Speaker 2: I always thinking about then like that moment, like you

475
00:24:45,680 --> 00:24:47,320
Speaker 2: had this hit to the stock market and there was

476
00:24:47,359 --> 00:24:49,320
Speaker 2: this where oh, this is, in fact, it's more efficient.

477
00:24:49,320 --> 00:24:51,320
Speaker 2: What's it going to mean for Nvidia demand, et cetera.

478
00:24:51,720 --> 00:24:54,440
Speaker 2: But then the other the bold case from a sort

479
00:24:54,480 --> 00:24:57,960
Speaker 2: of pure market standpoint is, look, this moment established the

480
00:24:58,000 --> 00:25:01,240
Speaker 2: idea of the race. And if you think that we're

481
00:25:01,280 --> 00:25:03,720
Speaker 2: in a quote race, that's not going to mean less spending.

482
00:25:03,840 --> 00:25:05,760
Speaker 2: This is where right, like, this is going to mean

483
00:25:05,840 --> 00:25:08,200
Speaker 2: a lot of spending and we can't lose this, et cetera.

484
00:25:08,600 --> 00:25:11,240
Speaker 2: But then that made me wonder, and you said something

485
00:25:11,280 --> 00:25:15,400
Speaker 2: in the beginning, this idea that government's embraced AI is destiny,

486
00:25:16,240 --> 00:25:18,760
Speaker 2: and I wonder do we have to accept this premise.

487
00:25:18,840 --> 00:25:21,800
Speaker 2: I'm very impressed with AI tools a lot, but when

488
00:25:21,800 --> 00:25:23,919
Speaker 2: you say AI is destiny, or when you compare it

489
00:25:23,960 --> 00:25:27,320
Speaker 2: to who gets the nuclear bomb, you're guaranteed that there's

490
00:25:27,320 --> 00:25:30,080
Speaker 2: just a flood of money. And that's great for private companies.

491
00:25:30,520 --> 00:25:32,840
Speaker 2: Do we ever have to pause here and say, yeah,

492
00:25:32,880 --> 00:25:36,000
Speaker 2: this is a great narrative if you're a private AI company,

493
00:25:36,080 --> 00:25:38,520
Speaker 2: or if you're selling power, or if you're selling chips,

494
00:25:38,600 --> 00:25:41,760
Speaker 2: et cetera. And should we pause and say like, yeah,

495
00:25:41,760 --> 00:25:44,679
Speaker 2: it's quol tech for doing various things. But can we

496
00:25:44,840 --> 00:25:47,840
Speaker 2: question the premise that AI is in fact this destiny

497
00:25:47,880 --> 00:25:50,800
Speaker 2: that a country must win in order to be powerful

498
00:25:50,840 --> 00:25:51,400
Speaker 2: in the future.

499
00:25:52,160 --> 00:25:55,520
Speaker 4: Absolutely, And look, I should stipulate we are two and

500
00:25:55,560 --> 00:25:57,760
Speaker 4: a half years in to this, and so if you

501
00:25:58,000 --> 00:26:01,199
Speaker 4: put that in comparison the public face dimension of generative A,

502
00:26:01,560 --> 00:26:04,040
Speaker 4: if you put that in comparison to other technology shifts,

503
00:26:04,240 --> 00:26:06,520
Speaker 4: we were at a very primordial state in those other

504
00:26:06,560 --> 00:26:08,920
Speaker 4: shifts two and a half years later, and we still

505
00:26:08,960 --> 00:26:12,159
Speaker 4: are now. And so this is moving very fast. It

506
00:26:12,200 --> 00:26:15,960
Speaker 4: feels super consequential, but there's uncertainty we may reach some

507
00:26:16,160 --> 00:26:19,840
Speaker 4: glass ceiling of improvement and the impact of this technology

508
00:26:19,800 --> 00:26:22,640
Speaker 4: to be less profound than we expect. I personally don't

509
00:26:22,680 --> 00:26:25,200
Speaker 4: think that will be the case. I think the ability

510
00:26:25,440 --> 00:26:27,520
Speaker 4: just to think about your own personal use cases the

511
00:26:27,520 --> 00:26:32,199
Speaker 4: way you consume information, you're having a machine interlocutor that

512
00:26:32,320 --> 00:26:34,960
Speaker 4: is helping you understand the world, and it's transmitting a

513
00:26:35,000 --> 00:26:38,960
Speaker 4: notion of culture that's embedded in that machine. And so

514
00:26:39,000 --> 00:26:41,919
Speaker 4: if you think about that from a country perspective, and

515
00:26:41,960 --> 00:26:45,440
Speaker 4: you have your citizens accessing an information source to help

516
00:26:45,480 --> 00:26:48,040
Speaker 4: them understand the world, make sense of the world and

517
00:26:48,080 --> 00:26:50,680
Speaker 4: those values are being so those cultural values embedded in

518
00:26:50,760 --> 00:26:52,840
Speaker 4: that machine are being set in some other part of

519
00:26:52,880 --> 00:26:56,600
Speaker 4: the world. Just that alone is important. Now we can

520
00:26:56,640 --> 00:26:59,040
Speaker 4: debate about whether it is going to be really profound,

521
00:26:59,160 --> 00:27:01,480
Speaker 4: fast moving a canomic impact, or whether it's going to

522
00:27:01,480 --> 00:27:05,400
Speaker 4: be slower. We should talk more about that. And already

523
00:27:05,520 --> 00:27:09,439
Speaker 4: we see evidence that generative AI technology on the backs

524
00:27:09,480 --> 00:27:12,480
Speaker 4: of more traditional forms of AI and machine learning, are

525
00:27:12,520 --> 00:27:16,320
Speaker 4: having a real impact on the way that defense systems work,

526
00:27:16,720 --> 00:27:20,000
Speaker 4: how warfare is being conducted, and the shape of the

527
00:27:20,040 --> 00:27:23,280
Speaker 4: battlefield in the future. So yes, I think it's really

528
00:27:23,280 --> 00:27:25,119
Speaker 4: good to take a deep breath and pause and not

529
00:27:25,160 --> 00:27:28,320
Speaker 4: get over our skis. And yet I believe it's going

530
00:27:28,359 --> 00:27:30,679
Speaker 4: to be very consequential. Evidence of the fact that we

531
00:27:30,760 --> 00:27:33,320
Speaker 4: all might be slightly over our skis is just the

532
00:27:33,440 --> 00:27:36,080
Speaker 4: very deep seek reaction you mentioned in and of itself,

533
00:27:36,160 --> 00:27:40,119
Speaker 4: the reflexivity of markets. This is so much uncertainty today,

534
00:27:40,160 --> 00:27:44,200
Speaker 4: but when there's a possible disruption or interruption, the market

535
00:27:44,200 --> 00:27:46,480
Speaker 4: seems to like self first and ask questions later and

536
00:27:46,480 --> 00:27:49,360
Speaker 4: then recalibrate. We saw that with deep seek. We saw

537
00:27:49,400 --> 00:27:51,560
Speaker 4: that even this week with a sort of I think

538
00:27:51,720 --> 00:27:55,199
Speaker 4: misconstrued remark out of Microsoft and one of the analysts

539
00:27:55,240 --> 00:27:58,879
Speaker 4: someone in the endless community about Microsoft data center leasing activities.

540
00:27:58,920 --> 00:28:02,560
Speaker 4: So the market, it's twitchy it. The market is supporting

541
00:28:02,600 --> 00:28:05,520
Speaker 4: this heavily. People are heavily invested in it, and when

542
00:28:05,560 --> 00:28:08,600
Speaker 4: these moments of uncertain or disruption emerge, it causes very

543
00:28:08,600 --> 00:28:09,720
Speaker 4: significant market ripples.

544
00:28:09,800 --> 00:28:14,639
Speaker 5: One way to think about this question of AI being

545
00:28:14,640 --> 00:28:18,480
Speaker 5: a country's destiny is there's a category of country that

546
00:28:18,520 --> 00:28:20,600
Speaker 5: George and I talk a lot about that we sort

547
00:28:20,640 --> 00:28:23,040
Speaker 5: of describe as geopolitical swing states, right, and these are

548
00:28:23,040 --> 00:28:25,960
Speaker 5: countries that, in a world where the US and China

549
00:28:25,960 --> 00:28:29,000
Speaker 5: are locked in competition and need other countries to gain

550
00:28:29,040 --> 00:28:31,840
Speaker 5: the extra edge, countries that have a differentiated part of

551
00:28:31,840 --> 00:28:34,639
Speaker 5: the supply chain, an abundant amount of flexible capital, and

552
00:28:34,720 --> 00:28:38,560
Speaker 5: are attractive economically for near shoring, offshoring, and friend shoring.

553
00:28:38,560 --> 00:28:40,400
Speaker 5: Are in a position with the right leader where they

554
00:28:40,400 --> 00:28:43,080
Speaker 5: can kind of set an agenda that's independent of Washington

555
00:28:43,120 --> 00:28:45,360
Speaker 5: and Beijing and swing on an issue by issue basis.

556
00:28:45,360 --> 00:28:48,040
Speaker 5: In these countries, rather than the non aligned movement of

557
00:28:48,080 --> 00:28:49,560
Speaker 5: the Cold War, they kind of tend to go itt

558
00:28:49,560 --> 00:28:53,000
Speaker 5: more alone, and they're leaning into this particular paradigm of

559
00:28:53,040 --> 00:28:56,360
Speaker 5: great power competition and their status of geopolitical swing states

560
00:28:56,360 --> 00:28:59,040
Speaker 5: to achieve a certain level of mobility. Right, And so

561
00:28:59,600 --> 00:29:03,040
Speaker 5: not all geopolitical swing states possess an advantage when it

562
00:29:03,080 --> 00:29:06,560
Speaker 5: comes to AI. But the golf countries, which I think

563
00:29:06,600 --> 00:29:11,000
Speaker 5: are quintessential geopolitical swing states, are looking at the attributes

564
00:29:11,480 --> 00:29:13,720
Speaker 5: that they have to make them competitive with AI, which

565
00:29:13,760 --> 00:29:17,560
Speaker 5: is unlimited capital, regulatory environments. They control the ability to

566
00:29:17,600 --> 00:29:22,400
Speaker 5: do massive infrastructure at scale very quickly, and sovereign ambition

567
00:29:22,840 --> 00:29:25,200
Speaker 5: and again the ability to kind of play both sides.

568
00:29:25,560 --> 00:29:29,040
Speaker 5: And they see a once in a generation opportunity to

569
00:29:29,160 --> 00:29:35,000
Speaker 5: differentiate themselves in the AI space and leapfrog generations of

570
00:29:35,160 --> 00:29:36,560
Speaker 5: geopolitical status.

571
00:29:36,640 --> 00:29:36,800
Speaker 3: Right.

572
00:29:36,920 --> 00:29:39,320
Speaker 5: But you're seeing this When I spent a lot of

573
00:29:39,440 --> 00:29:44,240
Speaker 5: years at Google and Alphabet and Saudi Arabia cutter UAE,

574
00:29:44,320 --> 00:29:47,840
Speaker 5: these countries were nowhere on anyone's radar screen. They were

575
00:29:47,840 --> 00:29:50,640
Speaker 5: not relevant technological players, They were not part of the conversation.

576
00:29:50,720 --> 00:29:52,440
Speaker 5: There was no evidence they were ever going to be

577
00:29:52,440 --> 00:29:55,760
Speaker 5: part of the conversation in a favorable way. Now there's

578
00:29:55,760 --> 00:29:59,200
Speaker 5: not a single major deal in the AI space. There's

579
00:29:59,200 --> 00:30:03,120
Speaker 5: not a single a conversation of any real significance that

580
00:30:03,160 --> 00:30:07,240
Speaker 5: doesn't involve one of the three big sovereign countries in

581
00:30:07,280 --> 00:30:09,320
Speaker 5: the Middle East, and Kuwaita is not far behind, as

582
00:30:09,320 --> 00:30:12,800
Speaker 5: they're on the precipice of certain transformations nine months post

583
00:30:13,240 --> 00:30:17,520
Speaker 5: dissolving parliament, and so for them, AI is destiny because

584
00:30:17,560 --> 00:30:19,760
Speaker 5: that destiny is geopolitical mobility.

585
00:30:20,000 --> 00:30:21,920
Speaker 4: And you know, we wrote a companion piece to our

586
00:30:21,920 --> 00:30:25,840
Speaker 4: Geopolitical Swing States thesis around AI swing states, and clearly

587
00:30:25,880 --> 00:30:28,680
Speaker 4: the Gulf is frontally involved in all of that. But

588
00:30:28,840 --> 00:30:31,440
Speaker 4: some others might surprise you. I mean the Netherlands, the

589
00:30:31,440 --> 00:30:35,000
Speaker 4: home of ASML, that makes that extremely strategic and relevant

590
00:30:35,000 --> 00:30:37,440
Speaker 4: in the world. Who would have thought semi conductor capital

591
00:30:37,480 --> 00:30:41,600
Speaker 4: equipment would become so geopolitically relevant. South Korea the home

592
00:30:41,680 --> 00:30:44,680
Speaker 4: of sk Telecom, the biggest provider of high band with

593
00:30:44,840 --> 00:30:47,880
Speaker 4: a memory, which there's going to be extraordinary demand for

594
00:30:48,080 --> 00:30:52,200
Speaker 4: going forward. India with all its APEX, technical talent and

595
00:30:52,280 --> 00:30:55,680
Speaker 4: a huge population, how they deploy and understand AI is

596
00:30:55,720 --> 00:30:57,880
Speaker 4: going to be critical to the world. So the Gulf

597
00:30:58,040 --> 00:31:00,600
Speaker 4: is you know, in the headlines, but there are many

598
00:31:00,640 --> 00:31:03,560
Speaker 4: other nations for whom this is, you know, really important

599
00:31:03,560 --> 00:31:16,080
Speaker 4: to their strategies.

600
00:31:20,760 --> 00:31:23,120
Speaker 3: I want to try to connect, I guess the old

601
00:31:23,360 --> 00:31:27,400
Speaker 3: geopolitics with some of the new stuff that's happening, especially AI.

602
00:31:27,600 --> 00:31:31,080
Speaker 3: Can we talk maybe about subc cables. I've had people

603
00:31:31,120 --> 00:31:33,400
Speaker 3: tweeting at me for the past week saying we need

604
00:31:33,440 --> 00:31:37,720
Speaker 3: to do an episode on subse cable warfare. So consider

605
00:31:37,760 --> 00:31:40,800
Speaker 3: this maybe a preview for something longer that's coming up.

606
00:31:41,240 --> 00:31:41,880
Speaker 2: Yeah, asolutely.

607
00:31:41,920 --> 00:31:45,160
Speaker 5: If you think about two topics that are discussed a lot.

608
00:31:45,240 --> 00:31:49,760
Speaker 5: One topic is trade and the other topic is AI.

609
00:31:50,280 --> 00:31:52,760
Speaker 5: And if you look at global trade, eighty percent of

610
00:31:52,800 --> 00:31:57,000
Speaker 5: it flows above the ocean, and then ninety five percent

611
00:31:57,320 --> 00:32:00,160
Speaker 5: of all data flows on seven hundred and fifty d

612
00:32:00,280 --> 00:32:04,320
Speaker 5: thousand miles of undersea cables that are the equivalent of

613
00:32:04,360 --> 00:32:07,200
Speaker 5: circling the earth thirty times. So what does that actually mean?

614
00:32:07,560 --> 00:32:11,400
Speaker 5: That is ten trillion dollars of daily transactions, that's all

615
00:32:11,400 --> 00:32:15,080
Speaker 5: the instant messages, that's offshore energy, and by the way,

616
00:32:15,120 --> 00:32:18,959
Speaker 5: that's national secrets. And there's one hundred and fifty cable

617
00:32:18,960 --> 00:32:22,360
Speaker 5: breaks on average a year. And that number is going up,

618
00:32:22,640 --> 00:32:24,840
Speaker 5: not just in terms of volume, but in terms of

619
00:32:24,880 --> 00:32:28,080
Speaker 5: geopolitical sensitivity. So just to give you an example from

620
00:32:28,160 --> 00:32:29,880
Speaker 5: you know, let's call it the last six months, right,

621
00:32:29,920 --> 00:32:33,600
Speaker 5: so in November, a Chinese vessel dragged and anchor one

622
00:32:33,640 --> 00:32:36,800
Speaker 5: hundred miles in the Baltic Sea, severing an undersea cable

623
00:32:36,880 --> 00:32:40,440
Speaker 5: that connected Sweden to Lithuania and also Finland to Germany.

624
00:32:40,680 --> 00:32:43,680
Speaker 5: A month later, Russian vessel, as part of the sort

625
00:32:43,680 --> 00:32:46,080
Speaker 5: of Russian ghost fleet, also in the Baltic Sea, did

626
00:32:46,080 --> 00:32:49,640
Speaker 5: the same thing, cutting an undersea cable from Finland to

627
00:32:50,160 --> 00:32:52,880
Speaker 5: Estonia and had to be seized by Finnish authorities. And

628
00:32:52,960 --> 00:32:56,600
Speaker 5: so these things continue to happen. What's interesting is the

629
00:32:56,680 --> 00:33:00,440
Speaker 5: multilateral architecture that was established for repairing undersea cable. It

630
00:33:00,480 --> 00:33:03,719
Speaker 5: predates the tech competition between the US and China. Undersea

631
00:33:03,760 --> 00:33:06,680
Speaker 5: cables you know, started being laid in the eighteen fifties,

632
00:33:06,960 --> 00:33:09,200
Speaker 5: and so the ocean is broken up into different zones.

633
00:33:09,240 --> 00:33:12,200
Speaker 5: So you can have an undersea cable that breaks in

634
00:33:12,240 --> 00:33:15,400
Speaker 5: the South China Sea and the Chinese have the authority

635
00:33:15,720 --> 00:33:18,640
Speaker 5: to bring their repair vessels to repair it. Now, that's

636
00:33:18,640 --> 00:33:21,000
Speaker 5: a very tricky thing when you start worrying about malware

637
00:33:21,040 --> 00:33:25,080
Speaker 5: being thrown undersea cables. It's not the sexiest technology in

638
00:33:25,120 --> 00:33:27,320
Speaker 5: the world, but it's in a lot of respects. I

639
00:33:27,320 --> 00:33:30,960
Speaker 5: think the most one of the most important geopolitical features

640
00:33:31,120 --> 00:33:34,400
Speaker 5: of the AI conversation and the technology conversation. But it's

641
00:33:34,440 --> 00:33:39,040
Speaker 5: heavily dominated by Western players. So there's three companies, you know, Subcommon,

642
00:33:39,120 --> 00:33:42,240
Speaker 5: the us NEC in Japan, and Alcatel in France that

643
00:33:42,240 --> 00:33:44,200
Speaker 5: have eighty seven percent of the market share. And then

644
00:33:44,480 --> 00:33:47,600
Speaker 5: you know, China has a minority player in this. And

645
00:33:48,000 --> 00:33:52,280
Speaker 5: the US has actually been very successful at thwarting China's

646
00:33:52,280 --> 00:33:55,479
Speaker 5: efforts to take control of subse cables, right, So they

647
00:33:55,520 --> 00:34:00,600
Speaker 5: use a combination of incentives, threats, telegraphing potentials, actions to

648
00:34:00,720 --> 00:34:03,479
Speaker 5: ensure that that China doesn't win the bid for some

649
00:34:03,520 --> 00:34:06,200
Speaker 5: of these cables. And it's been quite it's been quite effective.

650
00:34:06,440 --> 00:34:11,000
Speaker 5: The other thing that's interesting is the hyperscalers have increasingly

651
00:34:11,080 --> 00:34:14,880
Speaker 5: been forming these consortiums with the big telecom companies to

652
00:34:15,000 --> 00:34:18,160
Speaker 5: play a role in subse cables. And so Google, for instance,

653
00:34:18,239 --> 00:34:20,080
Speaker 5: is either a hole or part owner of thirty three

654
00:34:20,440 --> 00:34:22,960
Speaker 5: different subse cables. And so I think we're going to

655
00:34:23,000 --> 00:34:24,799
Speaker 5: see more and more breakage. And by the way, it's

656
00:34:24,840 --> 00:34:28,200
Speaker 5: not just state actors, right, So when the Huthi started

657
00:34:28,200 --> 00:34:31,480
Speaker 5: firing missiles into the Red Sea, they hit a commercial

658
00:34:31,600 --> 00:34:34,480
Speaker 5: vessel that sank and it's anchor broke two of the

659
00:34:34,520 --> 00:34:37,640
Speaker 5: subse cables in the Red Seed. Ninety percent of data

660
00:34:37,680 --> 00:34:41,560
Speaker 5: traffic from Europe to Asia carries through fourteen cables in

661
00:34:41,600 --> 00:34:44,359
Speaker 5: the Red Sea. So again this isn't a highly talked

662
00:34:44,360 --> 00:34:48,200
Speaker 5: about space, but when so much of our digital information

663
00:34:48,400 --> 00:34:52,160
Speaker 5: moves under sea, five miles below the surface, in some cases,

664
00:34:52,280 --> 00:34:53,680
Speaker 5: it's a very important theater.

665
00:34:53,920 --> 00:34:55,799
Speaker 4: It's interesting to reflect us the Jared as your guy

666
00:34:55,800 --> 00:34:57,640
Speaker 4: as it comes to subse cables. He knows a lot

667
00:34:57,640 --> 00:34:59,839
Speaker 4: about it, studied it a lot, but to me at

668
00:34:59,760 --> 00:35:03,080
Speaker 4: a high levels are fascinating. That subse cable complex is

669
00:35:03,160 --> 00:35:06,799
Speaker 4: kind of the silk roads of the information you know, economy,

670
00:35:06,840 --> 00:35:10,719
Speaker 4: And so just like the soak roads securing them, the

671
00:35:10,719 --> 00:35:14,319
Speaker 4: interstate transit that occurred, the international transit occurred there like

672
00:35:14,640 --> 00:35:17,160
Speaker 4: the same dynamic as playing out here. These are the

673
00:35:17,280 --> 00:35:19,440
Speaker 4: roads that our economy is traveling today.

674
00:35:19,719 --> 00:35:21,120
Speaker 2: By the way, I just have to say, in the

675
00:35:21,200 --> 00:35:25,800
Speaker 2: year twenty twenty five, the existence of subse cables actually

676
00:35:25,840 --> 00:35:29,040
Speaker 2: still blows my mind. And the fact that the first

677
00:35:29,080 --> 00:35:31,960
Speaker 2: one was laid down in the eighteen fifties. There are

678
00:35:32,000 --> 00:35:34,240
Speaker 2: various things in the past I can't wrap my head around.

679
00:35:34,280 --> 00:35:37,640
Speaker 2: I can't wrap my head around in the Hunting tunnel

680
00:35:37,719 --> 00:35:40,560
Speaker 2: or whatever, how they build a tunnel Brooklyn Bridge. The

681
00:35:40,600 --> 00:35:42,160
Speaker 2: fact that in the eighteen there's a great book, the

682
00:35:42,239 --> 00:35:46,280
Speaker 2: Victorian Internet. The great Book's fantastic about that. It's also

683
00:35:46,320 --> 00:35:49,360
Speaker 2: why the US UK exchange rate is called a cable anyway.

684
00:35:49,440 --> 00:35:52,759
Speaker 2: That always, sorry, that always just blows my mind. I

685
00:35:52,800 --> 00:35:56,640
Speaker 2: have one very random quick question for you, Jared, and

686
00:35:56,760 --> 00:35:59,239
Speaker 2: I know there's a little off topic, but you mentioned it.

687
00:35:59,400 --> 00:36:02,560
Speaker 2: You know, China's gotten little free pass. Trump really seems

688
00:36:02,600 --> 00:36:06,240
Speaker 2: to have it out for Canada, at least with Mexico.

689
00:36:06,600 --> 00:36:11,080
Speaker 2: It's obviously a source of significant drug traffic and there's

690
00:36:11,120 --> 00:36:13,480
Speaker 2: a lot of migration that comes through the southern border.

691
00:36:13,960 --> 00:36:17,040
Speaker 2: What is up with the antipathy for Canada? Which I

692
00:36:17,120 --> 00:36:18,200
Speaker 2: just don't think much about.

693
00:36:18,360 --> 00:36:22,320
Speaker 5: So some of it is interpersonal. He and Justin Trudeau

694
00:36:22,440 --> 00:36:25,640
Speaker 5: never got along particularly well, which is also part of

695
00:36:25,719 --> 00:36:29,160
Speaker 5: why I think Germany might be taking the wrong lesson

696
00:36:29,280 --> 00:36:33,920
Speaker 5: from Prime Minister Trudeau going tomorrow Lago amidst the concerns

697
00:36:33,960 --> 00:36:38,280
Speaker 5: about Trump tariffs and trying to figure things out, only

698
00:36:38,320 --> 00:36:40,840
Speaker 5: to be you know, on the receiving end of even

699
00:36:40,960 --> 00:36:43,800
Speaker 5: harsher treatment. Their view was that means you need to

700
00:36:43,800 --> 00:36:45,360
Speaker 5: show up with a loaded gun and be ready to

701
00:36:45,360 --> 00:36:47,839
Speaker 5: pull the tariff trigger. I think they're underestimating how much

702
00:36:47,880 --> 00:36:50,279
Speaker 5: of this is interpersonal. But I also think it gets

703
00:36:50,280 --> 00:36:53,200
Speaker 5: back to look. I don't claim to be an armchair

704
00:36:53,239 --> 00:36:57,480
Speaker 5: psychologist for the forty seventh president, but I don't think

705
00:36:57,520 --> 00:37:01,520
Speaker 5: he's necessarily hiding this principle of reciprocity. That's a key

706
00:37:01,520 --> 00:37:04,280
Speaker 5: feature of his administration. And if you look at defense

707
00:37:04,280 --> 00:37:07,040
Speaker 5: spending in Canada and you look at the trade deficit

708
00:37:07,400 --> 00:37:12,360
Speaker 5: with Canada, it falls right in Trump's line of site,

709
00:37:12,640 --> 00:37:15,319
Speaker 5: and I think he's if you sort of add the

710
00:37:15,320 --> 00:37:18,120
Speaker 5: context that his starting point is not that there's a

711
00:37:18,120 --> 00:37:21,400
Speaker 5: special relationship between the US and Canada and you're just

712
00:37:21,400 --> 00:37:23,560
Speaker 5: looking at the numbers. I'm not saying it starts to

713
00:37:23,560 --> 00:37:25,799
Speaker 5: make sense, but you're asking me kind of what's up

714
00:37:26,120 --> 00:37:28,959
Speaker 5: with Canada. That's my best guess. What I will say

715
00:37:29,000 --> 00:37:30,880
Speaker 5: also is if you look at the tariffs, I think

716
00:37:30,880 --> 00:37:33,640
Speaker 5: they fall in three categories. I think there's tariffs that

717
00:37:33,800 --> 00:37:35,480
Speaker 5: are based on things we've seen in the past, with

718
00:37:35,520 --> 00:37:37,240
Speaker 5: a lot of detail that they announced that they intend

719
00:37:37,320 --> 00:37:39,799
Speaker 5: to implement and they will implement. Then you have what

720
00:37:39,840 --> 00:37:42,920
Speaker 5: happened with Columbia, where it's clear that the tariffs are

721
00:37:42,960 --> 00:37:46,960
Speaker 5: either something retroactive in response to an action that a

722
00:37:47,000 --> 00:37:49,399
Speaker 5: country took that the administration doesn't like, or they're used

723
00:37:49,400 --> 00:37:52,480
Speaker 5: as a negotiating tactic. But it's this third category, and

724
00:37:52,520 --> 00:37:55,799
Speaker 5: I think the tariffs on Canada and Mexico, which we'll

725
00:37:55,800 --> 00:37:58,600
Speaker 5: find out more about in the next week, fall into

726
00:37:58,640 --> 00:38:02,319
Speaker 5: which is they announced with enough detail that it's clear

727
00:38:02,400 --> 00:38:05,120
Speaker 5: they want to implement them, and they intend to implement them,

728
00:38:05,160 --> 00:38:08,319
Speaker 5: but they go beyond precedent, and the second and third

729
00:38:08,400 --> 00:38:13,520
Speaker 5: order economic implications are not yet understood, nor are the

730
00:38:14,040 --> 00:38:17,239
Speaker 5: responses from the countries that have never found themselves in

731
00:38:17,280 --> 00:38:19,319
Speaker 5: this situation. And so what you don't know is this

732
00:38:19,400 --> 00:38:21,480
Speaker 5: going to be a six month headfake to the market

733
00:38:21,520 --> 00:38:24,520
Speaker 5: that ultimately, you know, ends up getting walked back because

734
00:38:24,520 --> 00:38:26,840
Speaker 5: the economic pain is too much, or is it in

735
00:38:26,880 --> 00:38:29,080
Speaker 5: fact going to get implemented. And I think the market's

736
00:38:29,080 --> 00:38:31,000
Speaker 5: going to have to learn to be a little bit

737
00:38:31,239 --> 00:38:34,360
Speaker 5: patient and whether the volatility, but I think given so

738
00:38:34,400 --> 00:38:36,719
Speaker 5: many countries have never been in this situation before, there's

739
00:38:36,719 --> 00:38:40,680
Speaker 5: a ton of room for miscalculation, right, and miscalculation, you know,

740
00:38:41,400 --> 00:38:44,560
Speaker 5: happens when countries are forced to go off script, and

741
00:38:44,560 --> 00:38:46,719
Speaker 5: that's where you can have unforced errors, and that's where

742
00:38:46,760 --> 00:38:48,280
Speaker 5: you can have unnecessary chaos.

743
00:38:49,320 --> 00:38:52,560
Speaker 3: So on that note, I have a theoretical, I guess,

744
00:38:52,600 --> 00:38:55,799
Speaker 3: big picture type question, and I think given that you

745
00:38:55,840 --> 00:39:00,080
Speaker 3: guys said you're all about connecting geopolitics with technology and markets,

746
00:39:00,160 --> 00:39:03,720
Speaker 3: you are the perfect people to ask this. But markets

747
00:39:03,719 --> 00:39:07,799
Speaker 3: seem to really struggle with geopolitical uncertainty. It's such a

748
00:39:07,960 --> 00:39:12,439
Speaker 3: huge topic. The possibilities are almost endless. You can get

749
00:39:12,600 --> 00:39:18,440
Speaker 3: almost infinite permutations of geopolitical events and situations. It seems

750
00:39:18,560 --> 00:39:23,640
Speaker 3: really hard to price and incorporate into your strategy. How

751
00:39:23,640 --> 00:39:27,120
Speaker 3: do you actually go about doing that? So this conversation

752
00:39:27,200 --> 00:39:29,640
Speaker 3: that we just had, which was great and very interesting,

753
00:39:29,920 --> 00:39:32,239
Speaker 3: if I'm an investment manager, what do I actually do

754
00:39:32,360 --> 00:39:33,040
Speaker 3: with this info?

755
00:39:33,640 --> 00:39:36,319
Speaker 4: Yeah, well, Jarji Jumpins, we have an opportunity to talk

756
00:39:36,360 --> 00:39:39,320
Speaker 4: some of the leading investors in the world around these topics.

757
00:39:39,760 --> 00:39:42,080
Speaker 4: You know, it's funny began to undertake a study to

758
00:39:42,120 --> 00:39:45,000
Speaker 4: try to discern what are the market impacts of you know,

759
00:39:45,080 --> 00:39:48,120
Speaker 4: really profound geopolitical events. First of all, as you know,

760
00:39:48,400 --> 00:39:51,480
Speaker 4: as students of the market, it's very hard to isolate

761
00:39:51,520 --> 00:39:54,200
Speaker 4: any given effect among the panoply of different things that

762
00:39:54,320 --> 00:39:57,120
Speaker 4: drive stock prices and interest rates, et cetera. So we

763
00:39:57,160 --> 00:40:01,279
Speaker 4: struggled with that. The second observation it wasn't really deep

764
00:40:01,360 --> 00:40:05,760
Speaker 4: enough to be publishable or verifiable, is just that markets

765
00:40:05,840 --> 00:40:09,520
Speaker 4: actually wait quite a while for clarity and then act

766
00:40:09,719 --> 00:40:12,480
Speaker 4: as that clarity emerges. And so while I described the

767
00:40:13,040 --> 00:40:15,160
Speaker 4: impulse in the AI world is a little bit sell

768
00:40:15,239 --> 00:40:18,680
Speaker 4: first and ask questions later, in geopolitics it seems to me,

769
00:40:18,760 --> 00:40:21,000
Speaker 4: at least and in jaredmation your world, it's a little

770
00:40:21,040 --> 00:40:24,200
Speaker 4: bit like ask questions first and then sell later. Seems

771
00:40:24,200 --> 00:40:26,239
Speaker 4: to be the dynamic. And Jared, do you agree with that?

772
00:40:26,320 --> 00:40:27,719
Speaker 5: Yeah, I'll make two points on this, and I think

773
00:40:27,719 --> 00:40:30,320
Speaker 5: it depends. It's kind of a tale of two geopolitical stories.

774
00:40:30,360 --> 00:40:33,000
Speaker 5: There's the downside risk part of the story, or the

775
00:40:33,040 --> 00:40:36,000
Speaker 5: downside risk volatility. And what you know, George and I

776
00:40:36,040 --> 00:40:38,600
Speaker 5: always tell clients is when it comes to geopolitics, you

777
00:40:38,600 --> 00:40:40,319
Speaker 5: can't predict what's going to happen on Tuesday or what's

778
00:40:40,320 --> 00:40:41,960
Speaker 5: going to happen on Thursday. And if somebody does that,

779
00:40:41,960 --> 00:40:43,640
Speaker 5: you should kick them out of the room. What you

780
00:40:43,680 --> 00:40:46,600
Speaker 5: can do is say here's the shocks to the system

781
00:40:46,680 --> 00:40:48,880
Speaker 5: that tell you that this thing has gone off script.

782
00:40:49,080 --> 00:40:51,759
Speaker 5: So here's what you should be looking for, and here

783
00:40:51,800 --> 00:40:54,840
Speaker 5: are the key inflection points and the geopolitical time sequence

784
00:40:55,040 --> 00:40:57,040
Speaker 5: that they're likely to happen in. So this happen. This

785
00:40:57,080 --> 00:40:59,560
Speaker 5: occurs a lot in the context of the Middle East

786
00:40:59,600 --> 00:41:01,839
Speaker 5: when people are sort of thinking about, you know, will

787
00:41:01,880 --> 00:41:05,560
Speaker 5: Israel bomb Iran? Like nobody knows, right, but you can

788
00:41:05,600 --> 00:41:08,920
Speaker 5: tell them warning signs that they might look for and

789
00:41:08,960 --> 00:41:13,000
Speaker 5: certain inflection points that increase the likelihood that that might happen.

790
00:41:13,160 --> 00:41:16,000
Speaker 5: So that's the downside risk part. I personally think we

791
00:41:16,080 --> 00:41:19,080
Speaker 5: spend too much time on downside risk volatility.

792
00:41:19,200 --> 00:41:22,080
Speaker 2: There's a more if people listen to geopolitical analysts, they

793
00:41:22,120 --> 00:41:26,160
Speaker 2: would stay uninvested entirely. This is why you got to anyway, Sorry,

794
00:41:26,239 --> 00:41:26,640
Speaker 2: keep going.

795
00:41:26,840 --> 00:41:30,480
Speaker 5: It's just another volatility variable, right, And so let's take

796
00:41:30,480 --> 00:41:33,520
Speaker 5: a more affirmative look at geopolitics. And you know, George

797
00:41:33,520 --> 00:41:37,239
Speaker 5: and I have talked a lot about how geopolitics is

798
00:41:37,560 --> 00:41:43,080
Speaker 5: pushing some pretty attractive economic environments into a situation where

799
00:41:43,120 --> 00:41:45,920
Speaker 5: they're eventually going to trade at a geopolitical premium. So

800
00:41:46,000 --> 00:41:48,480
Speaker 5: let's take India and Japan as an example. So India

801
00:41:48,480 --> 00:41:52,840
Speaker 5: and Japan already very attractive environments for all the reasons

802
00:41:52,880 --> 00:41:55,560
Speaker 5: that I think your listeners understand quite well. But if

803
00:41:55,560 --> 00:41:58,560
Speaker 5: you double click on Japan as an example that geopolitics

804
00:41:58,560 --> 00:41:59,920
Speaker 5: have brought them out of their shell. It used to

805
00:41:59,960 --> 00:42:03,400
Speaker 5: be Japanese investors investing in Japanese companies or Japanese companies

806
00:42:03,920 --> 00:42:07,160
Speaker 5: merging with other Japanese companies. The geopolitics have made them

807
00:42:07,200 --> 00:42:11,320
Speaker 5: much more interconnected around the world. They're also massively increasing

808
00:42:11,360 --> 00:42:13,880
Speaker 5: defense spending relative to what they've done before, which is

809
00:42:13,880 --> 00:42:17,880
Speaker 5: giving them a defense renaissance. They're recognizing that they're going

810
00:42:17,960 --> 00:42:20,640
Speaker 5: to be one of the big beneficiaries of reshoring in

811
00:42:20,680 --> 00:42:23,319
Speaker 5: different parts of the AI value chain and other technology

812
00:42:23,640 --> 00:42:26,239
Speaker 5: value chains, and it's triggering a bunch of reforms in

813
00:42:26,320 --> 00:42:30,040
Speaker 5: how these companies are governed with regards to the value

814
00:42:30,040 --> 00:42:35,160
Speaker 5: that they return to shareholders. So Japan as a result

815
00:42:35,200 --> 00:42:38,799
Speaker 5: of the geopolitics is undergoing a bunch of changes that

816
00:42:39,440 --> 00:42:42,120
Speaker 5: over time are going to create more opportunities for investment.

817
00:42:42,160 --> 00:42:44,600
Speaker 5: So I talk to a lot of strategic investors around

818
00:42:44,600 --> 00:42:46,480
Speaker 5: the world that are pulling money out of Europe and

819
00:42:46,520 --> 00:42:49,799
Speaker 5: they're reallocating the capital towards the US, which they're bullish on,

820
00:42:50,040 --> 00:42:52,320
Speaker 5: but then they're worried they're over allocated towards the US,

821
00:42:52,360 --> 00:42:55,080
Speaker 5: and so where else are they putting capital. They're putting

822
00:42:55,080 --> 00:42:58,040
Speaker 5: capital in places like Japan and India. Why because they

823
00:42:58,120 --> 00:43:01,360
Speaker 5: understand that the geopolitics are making places like Japan and

824
00:43:01,400 --> 00:43:05,919
Speaker 5: India pockets of certainty and predictability amidst a geopolitical moment

825
00:43:05,960 --> 00:43:08,040
Speaker 5: where it feels like there's a lot of uncertainty. But

826
00:43:08,280 --> 00:43:11,279
Speaker 5: if things get worse between the US and China, which

827
00:43:11,320 --> 00:43:14,839
Speaker 5: is the primary reason why you have all this geopolitical volatility,

828
00:43:15,120 --> 00:43:18,279
Speaker 5: it's only going to benefit Japan and India because both

829
00:43:18,320 --> 00:43:21,279
Speaker 5: countries are able to play both sides, and yet the

830
00:43:21,360 --> 00:43:24,160
Speaker 5: US has telegraphed their long term commitment to both. So

831
00:43:24,200 --> 00:43:26,440
Speaker 5: to take as an example with India, US is heavily

832
00:43:26,480 --> 00:43:30,800
Speaker 5: reliant on India for pharmaceutical supply chains. India is highly

833
00:43:30,840 --> 00:43:34,440
Speaker 5: reliant on certain elements from China that they require to

834
00:43:34,480 --> 00:43:37,160
Speaker 5: produce their pharmaceuticals, and they have no interest and are

835
00:43:37,160 --> 00:43:39,719
Speaker 5: not going to diversify from China. So they maintain a

836
00:43:39,760 --> 00:43:43,200
Speaker 5: posture of strategic ambiguity with regards to most of the

837
00:43:43,320 --> 00:43:48,120
Speaker 5: US's ambitions or policies towards China unless it pertains to

838
00:43:48,320 --> 00:43:51,880
Speaker 5: their land disputes with China. And so I think that

839
00:43:51,960 --> 00:43:56,279
Speaker 5: affirmative case for riding the geopolitical volatility towards kind of

840
00:43:56,280 --> 00:43:58,480
Speaker 5: new investment thesis is quite attractive.

841
00:43:58,800 --> 00:44:01,680
Speaker 4: You know, one thing it sharts and remarks around inflection

842
00:44:01,800 --> 00:44:04,360
Speaker 4: points reminds one of the techniques that we use in

843
00:44:04,400 --> 00:44:06,920
Speaker 4: the Golden Sech Global Institute to engage clients is our

844
00:44:06,960 --> 00:44:11,920
Speaker 4: simulations and wargames. We bring together policy makers, corporate leaders,

845
00:44:11,960 --> 00:44:16,719
Speaker 4: and investors. We introduce a scenario, we introduce perturbations to

846
00:44:16,800 --> 00:44:20,440
Speaker 4: that scenario. We ask people to really engage, help make decisions.

847
00:44:20,680 --> 00:44:22,839
Speaker 4: And then at the end of these sessions we get

848
00:44:22,880 --> 00:44:25,080
Speaker 4: to reflect on what we all learned through that game

849
00:44:25,120 --> 00:44:28,959
Speaker 4: turn And that's a place where I've seen investors really

850
00:44:29,000 --> 00:44:31,440
Speaker 4: step back and go like wow, Actually, when you scope

851
00:44:31,440 --> 00:44:33,880
Speaker 4: out and think about all the chain of events we just described,

852
00:44:34,200 --> 00:44:37,759
Speaker 4: I should be more attentive to inflationary impulses or you know,

853
00:44:37,840 --> 00:44:42,040
Speaker 4: allocation across geographies. And so it's actually interesting not to

854
00:44:42,080 --> 00:44:45,520
Speaker 4: get caught up too much in the minutial movements of

855
00:44:46,200 --> 00:44:49,280
Speaker 4: one geopolitic move or not, but then to just scope

856
00:44:49,320 --> 00:44:52,440
Speaker 4: out fifty thousand feet, think about the inflection points, and

857
00:44:52,480 --> 00:44:55,480
Speaker 4: then reason about your portfolio and your investing strategy.

858
00:44:55,840 --> 00:44:57,400
Speaker 3: Can we come play the wargames?

859
00:44:58,719 --> 00:44:59,919
Speaker 2: We want to do a wargames epit.

860
00:45:00,640 --> 00:45:03,560
Speaker 4: That would be gretz a great. It's such a fascinating technique,

861
00:45:03,640 --> 00:45:06,440
Speaker 4: and in an era where we're all a little bit overconferenced,

862
00:45:06,800 --> 00:45:10,640
Speaker 4: the lean forward engaged dimension of wargames with clients really fun.

863
00:45:11,640 --> 00:45:13,799
Speaker 2: We'll make that happen. I hadn't even thought about that.

864
00:45:13,840 --> 00:45:17,359
Speaker 2: With India in the sort of middle between the raw commodities,

865
00:45:17,400 --> 00:45:19,240
Speaker 2: I knew about the role of the supply chain anyway,

866
00:45:19,680 --> 00:45:22,520
Speaker 2: fascinating conversation. We could just keep talking about all this

867
00:45:22,560 --> 00:45:27,360
Speaker 2: stuff for hours. It does feel like I'm not crazy,

868
00:45:27,600 --> 00:45:29,960
Speaker 2: or that we're not crazy, that things are a little

869
00:45:29,960 --> 00:45:35,320
Speaker 2: bit crazier these days, or unprecedented times, interesting times. Jared Cohen,

870
00:45:35,800 --> 00:45:38,279
Speaker 2: George Lee of the Goldman sax Global Institute, thank you

871
00:45:38,320 --> 00:45:39,400
Speaker 2: so much for coming.

872
00:45:39,200 --> 00:45:39,800
Speaker 3: Me from up on.

873
00:45:40,200 --> 00:45:41,719
Speaker 4: Thank you guys. It's great.

874
00:45:54,280 --> 00:45:58,759
Speaker 2: Crazy. I really like that conversation. You know, as I mentioned,

875
00:45:59,040 --> 00:46:02,359
Speaker 2: it always feels, oh, there's a lot going on. These

876
00:46:02,360 --> 00:46:06,399
Speaker 2: are unprecedented times. It's nice to talk to some professionals

877
00:46:06,400 --> 00:46:08,839
Speaker 2: and like, no, you're not going crazy. These are kind

878
00:46:08,840 --> 00:46:10,120
Speaker 2: of unprecedented times.

879
00:46:10,160 --> 00:46:13,240
Speaker 3: It is different right now. Yeah, yes, So two things

880
00:46:13,239 --> 00:46:16,279
Speaker 3: stood out to me from that conversation, and one of

881
00:46:16,280 --> 00:46:20,560
Speaker 3: them is it is truly remarkable just how quickly countries

882
00:46:20,600 --> 00:46:23,200
Speaker 3: are moving at a strategic level when it comes to AI,

883
00:46:23,440 --> 00:46:26,479
Speaker 3: and that everyone seems to agree this is important both

884
00:46:26,719 --> 00:46:31,120
Speaker 3: strategically from a geopolitical perspective for national security, et cetera,

885
00:46:31,280 --> 00:46:36,640
Speaker 3: and also for their respective domestic economies. The second thing

886
00:46:36,680 --> 00:46:40,400
Speaker 3: that I find really interesting, and we've spoke about this before,

887
00:46:40,480 --> 00:46:43,319
Speaker 3: we did that episode with Acquired, but it's the sort

888
00:46:43,320 --> 00:46:49,320
Speaker 3: of intermingling of corporations with political power. So the idea

889
00:46:49,360 --> 00:46:52,040
Speaker 3: that some of the hyper scalers are now in the

890
00:46:52,080 --> 00:46:57,000
Speaker 3: subse cable business too, and subse cables are incredibly important

891
00:46:57,040 --> 00:47:01,239
Speaker 3: to all those strategic AI missions that I just laid out.

892
00:47:01,960 --> 00:47:03,359
Speaker 3: That seems different as well.

893
00:47:03,760 --> 00:47:05,960
Speaker 2: You know what I thought was another interesting thing in

894
00:47:06,239 --> 00:47:10,440
Speaker 2: why it's good to talk to geopolitics people sometimes like

895
00:47:10,480 --> 00:47:12,799
Speaker 2: you and I, when we think about, like, I don't know,

896
00:47:12,840 --> 00:47:15,880
Speaker 2: the last fifteen or twenty years, you know, how do

897
00:47:15,920 --> 00:47:20,440
Speaker 2: we usually segment up we think about the Great Financial Crisis?

898
00:47:20,920 --> 00:47:24,719
Speaker 2: The COVID shock, the recession that happened for about ten

899
00:47:24,719 --> 00:47:27,239
Speaker 2: minutes and twenty and then the boom that turned really hot. Right,

900
00:47:27,719 --> 00:47:32,040
Speaker 2: when you talk to geopolitics people, it's the war on Terror,

901
00:47:32,120 --> 00:47:34,359
Speaker 2: and which never comes up, but the idea of the

902
00:47:34,360 --> 00:47:38,000
Speaker 2: War on Terror being this very significant sort of economic

903
00:47:38,120 --> 00:47:42,440
Speaker 2: story of impairing the economic ambitions for a long time.

904
00:47:42,600 --> 00:47:45,600
Speaker 3: The war on Terror in finance land is the era

905
00:47:45,760 --> 00:47:47,440
Speaker 3: of Greenspan imbalances.

906
00:47:47,560 --> 00:47:50,239
Speaker 2: Yeah right, but the idea of like this was a

907
00:47:50,280 --> 00:47:53,719
Speaker 2: fetter on the economic ambitions of golf states, which are

908
00:47:53,719 --> 00:47:57,000
Speaker 2: now so huge and not really something I think much about.

909
00:47:57,400 --> 00:48:00,600
Speaker 2: And then this idea of COVID, which again we usually

910
00:48:00,640 --> 00:48:04,239
Speaker 2: talk about from a sort of economic standpoint. We've done

911
00:48:04,239 --> 00:48:07,480
Speaker 2: a million episodes on that as marking the sort of

912
00:48:07,520 --> 00:48:09,920
Speaker 2: starting gun of what we now call, you know, great

913
00:48:09,960 --> 00:48:13,920
Speaker 2: power competition and their idea of geopolitical swing states. So

914
00:48:14,000 --> 00:48:17,600
Speaker 2: I like the people coming at it from a different perspective.

915
00:48:18,239 --> 00:48:21,440
Speaker 2: Break up ears of history in a way that's distinct

916
00:48:21,480 --> 00:48:23,520
Speaker 2: from the way econ and market people do.

917
00:48:23,760 --> 00:48:26,719
Speaker 3: Absolutely, and I do want to go into Goldman to

918
00:48:26,760 --> 00:48:29,239
Speaker 3: play those war games. And I've always been curious, like

919
00:48:29,480 --> 00:48:31,160
Speaker 3: no I know how to actually work.

920
00:48:31,239 --> 00:48:31,359
Speaker 4: Well.

921
00:48:31,360 --> 00:48:33,200
Speaker 2: I want to play war games, and I also want

922
00:48:33,239 --> 00:48:35,799
Speaker 2: to do the ones like with the actual board or

923
00:48:35,840 --> 00:48:37,719
Speaker 2: like with the board games, or like they roll the

924
00:48:37,760 --> 00:48:39,880
Speaker 2: dice and it's like, okay, you have a seventy percent

925
00:48:39,960 --> 00:48:43,600
Speaker 2: chance of your amphibious mission actually working. Do you actually

926
00:48:43,600 --> 00:48:43,880
Speaker 2: do that?

927
00:48:44,400 --> 00:48:46,120
Speaker 3: I want to wait, does that mean you're going to

928
00:48:46,160 --> 00:48:47,920
Speaker 3: go to one of those board game clubs with me?

929
00:48:48,400 --> 00:48:52,080
Speaker 2: No, Tracy, I'm not going to know you want to.

930
00:48:52,360 --> 00:48:55,040
Speaker 2: I want to do like a serious one with like researchers.

931
00:48:55,120 --> 00:48:58,839
Speaker 2: I'm not going. I'm sorry, I'm not too cool. That's

932
00:48:58,840 --> 00:49:01,480
Speaker 2: what you're saying, playing like you know, Settlers of Katan

933
00:49:01,560 --> 00:49:03,239
Speaker 2: and all that stuff. And then the one other thing

934
00:49:03,320 --> 00:49:08,720
Speaker 2: that really, I'm sorry, you just angered bunch of our listeners.

935
00:49:08,719 --> 00:49:10,080
Speaker 2: I'm sorry, I love you all.

936
00:49:10,640 --> 00:49:11,040
Speaker 3: Sorry.

937
00:49:11,320 --> 00:49:13,640
Speaker 2: The one other thing that I just think is like

938
00:49:13,680 --> 00:49:18,880
Speaker 2: a stunning word to hear. Jared used the word evaporate

939
00:49:19,280 --> 00:49:23,680
Speaker 2: to talk about the sort of status of Europe, which is,

940
00:49:23,840 --> 00:49:26,000
Speaker 2: you know, one of the richest areas of the world,

941
00:49:26,080 --> 00:49:29,600
Speaker 2: and you know it's Europe, and to hear the word

942
00:49:29,640 --> 00:49:33,480
Speaker 2: like evaporates, like actually, you know, there's no sign that

943
00:49:33,520 --> 00:49:36,960
Speaker 2: the bariss has gotten too far, which he described really

944
00:49:37,000 --> 00:49:42,520
Speaker 2: well due to the nature of the parliamentary dynamics in Europe.

945
00:49:43,080 --> 00:49:47,120
Speaker 3: It's bleak, it is extreme, that kind of word. But

946
00:49:47,320 --> 00:49:49,799
Speaker 3: on the other hand, I think everyone would agree we're

947
00:49:49,840 --> 00:49:52,759
Speaker 3: sort of living in an era of extremes. So here

948
00:49:52,800 --> 00:49:55,279
Speaker 3: we are on that happy note. Shall we leave it there?

949
00:49:55,360 --> 00:49:56,080
Speaker 2: Let's leave it there.

950
00:49:56,239 --> 00:49:58,840
Speaker 3: This has been another episode of the All Thoughts podcast.

951
00:49:58,960 --> 00:50:02,200
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy Alloway.

952
00:50:01,960 --> 00:50:04,800
Speaker 2: And I'm Jill Wisenthal. You can follow me at the Stalwart.

953
00:50:05,239 --> 00:50:08,600
Speaker 2: Follow our producers Kerman Rodriguez at Kerman Ermann dash Ol

954
00:50:08,600 --> 00:50:12,279
Speaker 2: Bennett at Dashbot, and kill Brooks at Kilbrooks. More odd

955
00:50:12,280 --> 00:50:15,080
Speaker 2: Lots content, go to Bloomberg dot com slash odd Lots,

956
00:50:15,080 --> 00:50:17,640
Speaker 2: where we have a daily newsletter and a blog. You

957
00:50:17,680 --> 00:50:19,959
Speaker 2: can find all of our episodes and you can chat

958
00:50:19,960 --> 00:50:24,160
Speaker 2: about all of these topics, including geopolitics, there's and defense

959
00:50:24,200 --> 00:50:26,880
Speaker 2: and AI. There's so much in there in our discord

960
00:50:26,920 --> 00:50:29,560
Speaker 2: where our listeners are chatting twenty four to seven. Check

961
00:50:29,560 --> 00:50:32,200
Speaker 2: that out at discord dot gg slash od loots.

962
00:50:32,520 --> 00:50:34,680
Speaker 3: And if you enjoy odd Lots, if you think that

963
00:50:34,800 --> 00:50:36,960
Speaker 3: Joe should actually go and play risk with me in

964
00:50:37,040 --> 00:50:39,480
Speaker 3: a Board Game Cafe. Then please leave us a positive

965
00:50:39,520 --> 00:50:43,080
Speaker 3: review on your favorite podcast platform. And remember, if you

966
00:50:43,120 --> 00:50:45,880
Speaker 3: are a Bloomberg subscriber, you can listen to all of

967
00:50:45,920 --> 00:50:49,000
Speaker 3: our episodes absolutely ad free. All you need to do

968
00:50:49,120 --> 00:50:52,240
Speaker 3: is find the Bloomberg channel on Apple Podcasts and follow

969
00:50:52,239 --> 00:51:11,400
Speaker 3: the instructions there. Thanks for listening in