Personable Markets: Louis-Vincent Gave on Trump-Xi Meet, ChatGPT v DeepSeek, China-India-Russia Deal

Hello and welcome to Personable, a podcast focused on speaking to the world's best, enabling you to become the best that you can be. This is episode 5 of Personal Markets, in which every week I speak to a hedge manager, VC, or investment banker on real-time, real-world market news. Today, I'm honored to be joined by Louis Vong. Louie is the CEO and co-founder of Gavcow. He's actually a second-time guest on Personable, which is one of his biggest accolades. He was telling me before the podcast, I'm only kidding. He's also a graduate from Duke University with a BA in economics, history, and Chinese, and studied Mandarin at Nanjing University. I'm incredibly excited to speak to you today, Louie. I wanted to get started by asking you if you could take me through the current relationship of the USA and China.

How much time do you have? Thanks for having me back, Harvey. It's, uh, it's, it's great to be back. Congrats on your 95th episode. Um, it's, uh, yeah, it's exciting to be here. Well, so look, books can be written about, books have been written and will continue to be written about the US-China relationship. It's obviously a super important relationship. The two biggest economic powers in the world, bar none, and it's a relationship that's in a constant state of flux.

I think the relationship started to deteriorate very markedly around 2018. This is when the US imposed a semiconductor embargo on China. This is when all of a sudden companies like Huawei, like ZTE, were told, you can no longer buy the high-end US chips. And this came as a big shock to Chinese policymakers. And since then, I think they've done everything they could to try to immunize their economy from potential other US embargos. Because if the US can embargo semiconductors, it can embargo any number of things. So, China has really spent the past seven years trying to become self-sufficient and resilient in pretty much every single industrial vertical. And today, I think that goal, I think the leadership feels that that goal has been pretty much achieved. You know, aside from very high-end semiconductors, China is basically self-sufficient in everything now. And I think this means that now China feels more comfortable pushing back against the US.

You saw this very clearly in April when, you know, you had Liberation Day and the US bashes everybody with big tariffs. Most countries essentially folded under the pressure. It was definitely the case of the European Union. It was the case of Canada, Mexico, India, etc. China was pretty much the only country that stood up to the US and said, "Look, if you want us to have a trade war, let's do it." And if you want to increase the embargo on semiconductors, we'll embargo your access to rare earths and to magnets. And all of a sudden, the US realized that yes, you know, they could put pressure on China, but actually China could put pressure on them because without magnets, without rare earths, very quickly, the plants at General Motors would go idle, and the ability of the US to keep producing weapons would also be, at least the very high-end weapons, your sort of high-precision missiles and the like, would be deeply, deeply compromised.

And so now, I think you've sort of reached a sort of steady equilibrium between China, or maybe you could call it unsteady, but at least some kind of equilibrium, some kind of truce between China and the US, where they realize that they can both trip each other up, but that if they do, it's going to be very negative for both of them and for the whole world. And so this is really the backdrop that brings you to the meeting that's coming up at the end of October between President Xi and President Trump. A meeting that'll take place in Seoul at the APEC meeting, and which should open the door for President Trump to do a state visit of China in 2026. And I think once you get that state visit, you know, hopefully the relationship will be set on a better footing.

Yeah, I think particularly with your point about the China's, the US and what happened in 2018 in terms of the restrictions on the chips, I almost, I mean, quite obviously looking back, it seemed like a benefit for China in order to, you know, go about getting that having that competitive pressure in order to develop themselves in terms of like the future and how the US sort of competes both with China and the rest of the world, particularly with Liberation Day earlier this year in April, in which Trump, you know, imposed all those tariffs on all of those countries, allies and enemies alike. Those tariffs hit those economies and, you know, had major implications across a variety of industries as the impact on China in 2018, in which they've kind of, you know, moved away and being less more self-sufficient, they've been more independent compared to other countries that were more dependent on the US and vice versa. With the backdrop of China, you know, wanting to compete with the US, how does that sort of go moving forward? Will the US have as much power over China and other countries? Is the USA losing its dominance? How will the USA continue to interact with other countries around the world with the backdrop of China being able to evolve and, you know, go away from its dependence on the USA? Will other countries do the same or not?

So I think, you know, your first starting point should be that in the whole competition between nations, the US really starts with pocket aces. The US, of course, is protected by two oceans. It has a river system that allows goods to be moved around all across the country, almost all across the country, and like two-thirds of the country at very low costs. It is self-sufficient in pretty much any major commodity that matters, whether you think of energy, whether you think of food, and so on and so forth. If you tie in, frankly, the rest of the Americas and most notably Canada, the US is totally self-sufficient on all important commodities. So, so the US has comparative advantages that are tremendous. And then on top of this, you can add, you know, the dominance in technology, the cultural dominance, the fact that, you know, English is the lingua franca around the world, and that the US has some of the world's best universities, etc. So, all this to say, you can never write off the US. It literally has pocket aces.

And against that, you know, China's attempt to sort of move up the ladder, China starts from like rock bottom. Like, you have to remember that in the early '70s, i.e., when I was born, not that long ago, people were literally starving in China. Like, people were dying of hunger. And, you know, it is extremely, extremely impressive what China has managed to achieve in a couple of generations. Literally lifted itself from its own bootstraps through the sheer force of hard work and an improvement in human capital such as the world has never seen. You know, when you mentioned that I went to Nanjing University, when I went to Nanjing University, China was graduating 350,000 university students a year. China this year will graduate 12 million university students. You know, you've never seen in one generation such an improvement in human capital.

And so, to your question, you know, what does that all mean for global trade and for, like, the reality? I think that the past 70 years have seen the fastest growth in global trade. You know, here you are dialing in from Durham, from Duke University. You can, you know, right now probably go to Whole Foods and buy strawberries that are being made in Chile, and oranges that come from California, and cheese that comes from France, and any number of things. And this has meant an improvement in lifestyles all around the world. This trade has meant an improvement in lifestyles such as the world has ever seen. And now the reality is, China today is getting a bigger and bigger piece of that pie. But the US still has a massive piece of that pie. Maybe not for goods. So you go to Walmart, you're like, "Oh my god, nothing's made here anymore." But for services, you know, the US is by far the biggest exporter of services. Like, bar none, really. When you think, of course, you know, here you are, British, studying at Duke University, that's an export for the United States. You know, your parents are sending a, your dad sending a check every month or every semester. That's an export for the United States, as is the fact that, you know, here we are, recording this on Riverside. You mentioned that you used Google to narrow down all my speeches in a way that you could digest without having to deal with hours and hours of listening to my monotonous voice. So lots. And, you know, there's the reality is, do we live in a world where trade is going to continue expanding, or are we going to put barriers?

And on this front, you know, I think there was a lot to worry about vis-à-vis the US-China relationship. I'm actually more optimistic today than I was a few months ago. I think, like I said, the relationship is finding an even keel. This doesn't mean that tomorrow you will get the opportunity to buy a BYD car for $10,000. But that opportunity to buy the BYD car is now available to somebody in Chile or in Saudi Arabia or in South Africa, in a way that it wasn't five years ago. You were living in South Africa, you wanted to buy a car, the starting car was probably $20,000, whether it was a Peugeot or a Volkswagen. Now it's $10,000. Now you can buy a BYD for $10,000. And that BYD, by the way, is probably better than the Peugeot you were buying five years ago.

So, I guess the point I'm trying to make is, you know, for all the fears of contracting trade and conflicting blocks, etc., the reality is global trade continues to expand. It's just expanding in parts of the world that few people care about, whether it be South Africa, whether it be Indonesia, whether it be Colombia. It is expanding. Yes, a growing part of that trade is Chinese. And yes, as we move forward, less and less of that trade will be denominated in US dollars, but these are like slowly moving trends. It doesn't mean that we have a crisis around the corner.

I think it's very interesting the way you describe that because I think from my own brief learning of Chinese and USA histories and how they sort of interact with each other, I kind of expected that, you know, one day, call it 2050, China would overtake the US. It would own all its land, own all its services, own all its goods. And I think that's also how the media often portrays it with China being the enemy, this sort of, you know, this sort of independence away from the US and sort of, you know, taking up ground, you know, growing in economic growth and, you know, taking the jobs, etc. But, you know, as sort of contrary to April earlier this year with Liberation Day, it actually seems in recent months that Trump and China have got much closer together. I mean, even looking at the TikTok deal, in which 80% of TikTok is going to be owned by USA entities, there's sort of been an arrangement in which both China and the US are starting to come together more versus this, you know, friend and foe sort of relationship that was there before. I also think it's interesting. I was looking at like pharmaceutical companies, and a lot of essential medicines also come from China. It's like if you cut off trade between the US and China, there's X% of essential medicines that were needed in the US would not be in China. Would we wouldn't be able to get them from China? On top of that, even looking at, you know, going back earlier this year, despite Apple investing hundreds of billions into the US, not just from a where do you get materials standpoint, but Apple, the advancement in technology and manufacturing in specialization of specific tools for Apple devices is in China. And so as I've learned more about the relationship, sure, there are reasons they want to beat each other in terms of defense and in terms of advancing their economies, and China more in goods and services, and the US with, well, China more with goods, sorry, and the US more with services. But it also seems there's sort of this relationship with them working together as well. What do you think is sort of like the backdrop of this upcoming meeting with the US, you know, imposing the 100k amount for H-1B visas, which is, you know, largely impacting a lot of Chinese people over in the US. On top of that, as you mentioned, China now has some of the most university graduates in the world, you mentioned 12 million, the essential pharmaceuticals still coming from China, and also the TikTok deal. What's the relationship? Is it, you know, they're both trying? And also, what's going on with Taiwan with China with President Xi also wanting the US to say, you know, this is your land. What, what's sort of going on here? Are they all just trying to put their cards on the table in order for that deal? Like, how is this relationship, what's going to happen in the next month or so leading up to that deal?

Okay, so there's a lot, a lot to unpack here. So let me, let me, let me first start off with an observation as someone who's been in and out of China for 30 years, that in the Western media, China is always doing one of two things. It's either imploding, or it's about to take over the world. And there's no in between. There's no in between. And sometimes, by the way, you get the same, you get the same two arguments in the same article. The two arguments in the same article. It's imploding, but it's about to take over the world. It's this deadly, deadly threat that we need to worry about. So, so yeah, just one word of caution. And by the way, I think somehow it's only China. You never see articles about Brazil or about, you know, Britain or about anybody about how it's either imploding or about to take over the world. It's, we have a sort of very, very, we, the Western world, and especially the Western media, have a very binary outlook, very Machiavellian outlook, all black or all white.

One drives clicks. Oh, for sure. It drives clicks. And look, I think deep down, we have, as Europeans, like it's part of our DNA to have this sort of fear of the yellow peril, like, you know, going back to the Middle Ages, the hordes that came in from the East, the Goths, the Visigoths, etc., the Asiatic people that would come in through the steppes and, you know, lay Europe to waste. It's embedded deep in our DNA. And so it almost feeds the whole, "Oh, China is going to take over the world," feeds into a sort of ancestral fear. If you go back to the 19th, early 20th century, you know, the portrayals of China were, it was always yellow peril, all the time. The portrayal of China in the movies up until not that long ago, you know, the Fu Manchu characters with, you know, like plotting away and so, it's again, it's deeply, deeply embedded in our Western DNA to look at at China with a lot of fear and apprehension. And, you know, Napoleon himself said, "Let China sleep, for when she awakes, she'll take over the world," and all that stuff. So it's, um, anyway, deeply, deeply embedded.

Now, to your other questions. You know, I think that the TikTok thing is interesting because it's, it seems to be a huge issue in the US. And I think it's probably a huge issue with, frankly, people of your generation because you guys are big users of TikTok. It's really not that big a deal here. And, you know, Trump decided to make it a big deal. Trump decided, look, they've got to sell this, or we're going to shut it down. And Xi Jinping was like, "Yeah, fine. I don't care. Shut it down." Because, you know, you look at ByteDance, it's not even a quarter of their revenue. TikTok USA is not even a quarter of their revenue. And ByteDance is a company that's more than majority owned by US VCs anyway. So, you know, when the US turns around and says, "Hey, we're going to shut down TikTok," like that is absolutely zero skin off of Xi Jinping's back. It's like, yeah, what do I care?

And so the US decided to like make a big deal out of TikTok. And this is now a way, essentially, for China to give something to the US because, you know, Trump sort of fought himself into a corner on this one because if he does shut down TikTok, your entire generation of people in the US are going to be really, really pissed off. Like, politically speaking, this would be extremely, extremely negative for President Trump to shut down TikTok. So he now needs to find a solution. And, you know, for Xi Jinping to give him a compromise on this is a pretty easy give because again, it's no skin off his back. It means that, you know, the shareholders of TikTok, again, like, basically, I think I'm quoting from memory, but more than half is US VC firms, and a quarter is essentially the founders and the employees. So, you know, it's like these guys are the ones who essentially get the shaft when they move to spin off TikTok for a US entity. You know, again, for Xi Jinping, doesn't care. Question is, what does he get on the other side?

Now, I think if you're Xi Jinping, there are a number of things that you want from the United States. And the beauty for Trump is that none of them you write on a piece of paper. None of them you do an agreement with. But the first thing he wants, I think, is, you know, having the Seventh Pacific Fleet literally parked right outside your maritime border is a pain in the neck. And so he wants that removed. Number one. Number two, he wants the sale of high-end precision missiles to Taiwan to stop. So, if he can turn to his own Politburo and say, "Look, I sat down with Trump, and the Seventh Pacific Fleet is no longer going to be parked right on our front yard, and they're going to stop selling high-end precision missiles to Taiwan, and they're going to stop sending politicians over to visit," which, by the way, they have, like, since Pelosi came over, there have been no visits. You know, for Xi, that's a win vis-à-vis his own Politburo. So, so that works out well for him.

And, you know, then the other wins, of course, would be the other big wins would be getting, lightening up the semiconductor sanctions. Number one. I think the other big win for him would be if they got rid of some of the tariffs. And here, the obvious thing they can get rid of. China right now has an extra 20% because of the fentanyl tariff, basically. You know, Trump came in on the very first day, said, "Look, China is not enough to do, not doing enough to control the exports of the fentanyl precursors into the US." Going back to your point on the impact of Chinese medicine, China is not doing enough to sell those to block those precursors. Ergo, you know, Trump could turn around tomorrow and say, "Okay, China's done a great job. We're, you know, we're getting rid of the fentanyl things." Then China moves from 50% to 30%, and then it's fine. So there are pockets of agreement.

Now, what does Trump need aside from the TikTok deal? You know, what does Trump want aside from the TikTok deal? You know, I think what would be nice, what he didn't mention during the campaign, but which has since fallen off seemingly, is the idea of China investing in the United States. You know, during the on the campaign trail, when he was still the candidate, Trump said, "I want BYD to open factories in Michigan, and I want, you know, Li Auto to open factories in Tennessee, and Longhorn Machinery to open tractor factories in Iowa." You know, this has now completely fallen by the wayside, but I think this would be the kind of thing that Trump could then claim a win. It's like, you know, if he cuts the ribbon at a BYD factory in Michigan that creates, I don't know, 20,000 jobs, you can say, "Hey, I brought this here," which for him is good. I think the other thing they're really looking for now is frankly guarantees on the rare earths and the magnets because very clearly they've now identified that this is a key weakness that they didn't perhaps, I mean, I think they knew they had it, but they didn't realize the extent to which they had this weakness. So, all this to say, there's lots of ground for potential agreements, for common ground, now that the temperature has come down a little bit. Yeah, I think we're in pretty good stead.

Thank you for breaking down all those topics. I didn't realize how many I was throwing at you, but you managed to break those down very well. So, thank you for doing that. A massive story, obviously, it's not even like a niche little topic that I've researched, is AI, right? And what is both one of the biggest upheavals of both replacing jobs and inventing new ones, but also has become both a buzzword that is actually having both real-world impact now and in the future. You know, looking at the likes of Nvidia, looking at Oracle, looking at startups and how they're being backed by Y Combinator, it seems that anything and everything is either either falls into two categories: it's either in AI, or it's not in AI. And that's become such a big thing over the past two or three years. I had kind of three key topics that I wanted to ask with reference to AI. The first one I wanted to ask is, with AI, is the amount of growth, is the amount of upheaval that we're seeing with the bets being placed on Nvidia, Y Combinator-backed companies, both private and public companies? Is the impact going to be as big as we think it will be? And why is that any different from the likes of NFTs and, you know, the likes of that from 2021? Secondly, do you think that chatbots and large language models and AI, do you think that there will be one model that has a global impact, will be used in China, the USA, and beyond? Or that we will see the rise in regional models? For example, with the likes of Google or ChatGPT in the US, but also looking at DeepSeek just being used for China, and even with, you know, individual companies getting their own chatbots and large language models designed. And lastly, looking at the Fed and looking at, you know, key economic institutes both in the US and beyond. The two key indicators for the Fed are obviously both inflation and unemployment. But as I've noticed in recruiting, with a lot of my friends applying to consultancy firms, AI has already had an immediate impact in reducing the number of junior jobs, even at these high-end, highly skilled consultancy jobs. So I would expect AI to take a lot away, a lot of jobs in the future. You also have the likes of Optimus from Tesla. So there might be more robots and more AI doing jobs which we would often see as boosting the economy. So do you think that AI will lead to a change in key indicators for the Fed and major institutions? So, yeah, will AI be as big as we think it will be, or not? Do you think that these will be one model replaces or regional? And do you think that AI will change the key indicators that we look at for the success of an economy?

So, again, let's unpack there. So, um, look, I think that, you know, you made the point, are we in a bubble like 2021? What's the difference between AI and NFTs? There's, I like to say that there's always two kinds of bubbles. You have bubbles in unproductive assets, i.e., your NFTs. And then you have bubbles in productive assets. And think railroads in the 19th century, think broadband in the late '90s, early 2000s. The markets sometimes get very excited about an idea and make massive investments, and the returns on these investments may be either slower to appear, these returns on investments may be disappointing at first, or whatever, but the returns are still there at some point. And, you know, maybe we put a wrong valuation on these assets. And if at some point, maybe the assets need to change hands, which is what happened with the broadband in the late '90s, which is what happened with the railroads, but deep down, you still end up with a valuable asset. So, the NFT was a very small bubble in the whole scheme of things, but it was a completely useless bubble. You know, like bidding millions for pictures of monkeys made absolutely no sense. And, you know, once it stopped, it's not like you're doing anything more with the monkey than you were doing before.

Now, the big question on AI is, of course, how productive a bubble is this going to be? Now, to be very clear, I think right now the market has gone, has leaned way, way too far above its skis. It is, it's gotten way too excited about the prospect of future returns coming from AI. You mentioned Nvidia. You know, three years ago, Nvidia was a $300 billion company. Today, it's a $4.5 trillion company. That's $4.2 trillion of wealth creation in less than three years. This is unprecedented in the history of capitalism. You've never seen any company generate this much value in this little time. Now, of course, you could say, yes, but what Nvidia does is truly, truly exceptional. It's breaking into the future. It's got chips that nobody else can design, so on and so forth. But here, this is where it gets interesting.

And to your second question, do we have one model? Do we have several models? You know, when DeepSeek occurred in January of this year, it was a super important, profound shift because, if nothing else, it told us that you can actually develop AI solutions without spending hundreds of billions of dollars in the most high-end of chips. Essentially, you know, maybe the way we can conceive of it is, Nvidia produces Ferraris. But do you need a Ferrari to get to work? Can a Toyota do the trick? Now, of course, I'd rather get to work in a Ferrari, no doubt about it. It's nicer. But, you know, if all I have is a Toyota, which is the situation that China's in today, then I'll work with that.

And that brings me to your point on the one model versus several models, etc. I think what's happened is that in the US, in the AI space in the US, you've ultimately had companies that benefited from unlimited funding and unlimited computing capacity, i.e., the best Nvidia chips. And with this, you know, what Microsoft and Google and Facebook and OpenAI have all done is they've tried to build closed-end models. It's like, here we are, we're going to throw money at this. We're going to hire the best AI engineers. We're going to get the best chips. We're going to build the best AI models. And if we have the best AI model, then people will come to us, and we will be the sole favorite solution. China, meanwhile, didn't have that option because it didn't have unlimited funding and it didn't have unlimited computing capacity. What China does have, which the US incidentally does not have, is essentially unlimited electricity at a very, very low cost. And I think this is a super important point. If you go back to 20 years ago, China was producing half the amount of electricity that the US was. Today, China produces more than twice as much electricity.

So when you look at AI, one of the first questions we should ask ourselves is, what's going to be the constraint on AI's growth going forward? If you think it's computing capacity, then you think, okay, then the winners will be closed-end systems built in the US. I don't know which one yet, but it'll be one of those. It'll be either Microsoft, OpenAI, it'll be Google, etc. Or alternatively, if you think, no, no, the constraint is going to be access to cheap electricity, then China actually has the advantage. And China has gone on a completely different route for its open AI high. Where China's actually gone down the path of an open-ended system. It's funny because the US is supposed to be the open society. But it is the place where you have the closed AI. And China is supposed to be this, you know, communist regime where the government tracks everything and where everything is super tight and super closed. But when it comes to AI, China is the one with the open-ended solution. The way DeepSeek developed, essentially, is through an open-ended model with thousands of software engineers that just contributed patches here, there, and everywhere.

And so again, it's a little bit like the debate, you know, you're too young for this, but going back 20 years ago, the debate or 30 years ago between, say, Microsoft, which was a closed-end system, and Linux, which was open-ended, and Android ended up spawning out of Linux. Well, today, this is the debate. You have US closed-ended system and China open-ended system. And to answer your question, you know, which one will win? I think again, it's, you know, what do you think wins? Is it a Ferrari or is it a Toyota Land Cruiser that wins? Well, it depends on what you're trying to do. If you've got a nice smooth road, you want a Ferrari. If you're living in Africa, a Ferrari is going to do fairly little for you given the beat-up roads. What you want is a Toyota Land Cruiser. Now, China is obviously the Toyota Land Cruiser. And China's open AI solution is to turn to countries like Indonesia or Pakistan, Kenya, wherever else and say, "Hey, you want AI solutions? We've got them for you, and they're essentially free."

So I think, you know, I think it will go in many, many different directions. If you're cost-conscious, you'll go the Chinese route. If you ultimately want a solution with all the bells and whistles and all the options in the car, the heated seats, the this, the that, but most importantly, the tightest security, then you'll have to go with the US solution. So let's say you're JP Morgan or you're General Motors, you're a big US corporation. You're never going to go for the Chinese solution. You're always going to go for the expensive US solution. But you're a college student sitting in the US, like, maybe I'll just use DeepSeek. I don't want to pay however much a month. So, so I think to answer your question, I don't think that it will aggregate to one model. And I think that's part of the problem today with the markets. The markets are sort of pricing this as if we will move to one model and there will be one ultimate winner, and I can't afford to miss it because this will be the next, just like Microsoft dominated PCs, there'll be one winner to dominate them all. And like Amazon dominated e-commerce, and Netflix dominates video on demand, there'll be one winner to take it all. And I'm very doubtful that that is the case.

Now, to the next point, you know, what's the impact of all of this on, well, on employment, etc.? It means that we're going to have a labor market that shifts dramatically. No, no doubt about it. But, you know, I often say this to one of your teammates on your rugby team, that when I went to school, roughly half my friends from when I went to Duke, where you are now, roughly half my friends do jobs that did not exist when we went to Duke. Like, you know, these jobs just came along as the internet was built out, as the media landscape changed, etc. So roughly half my friends do jobs that they couldn't even have conceived of when we went to Duke. Now, of course, if you happen to be someone who invented one of those jobs, then you've hit it out of the park. But there's no doubt that AI is indeed going to change dramatically the landscape, as you point out. You know, the consulting firms won't need as many grunts anymore, nor will the law firms, nor will the law firms, nor will the investment banks, and so on and so forth. And yeah, it's the labor, this evolution of the labor market may mean quite a tough four or five years.

Yeah, thank you for for touching on those points. I really like your example with regard to the Toyota versus the Ferrari, in which there's a world that not just due to tariffs and legislation, that these models can only exist in the US or China, but also because, you know, one's more high-end, one wants more security, one might be better at this thing, but one might be cheaper, one might be more open source, other people can add to it, you know, you can adapt it for your firm, etc., etc. I actually think when I first heard about ChatGPT, as I think with any big major innovation, the human mind automatically goes to, okay, this is the base case for what we have right now. What are all the possibilities that this could lead to? You know, when Steve Jobs first announced the iPod or the iPhone or the iMac, the automatic thing of both the users and the investors is, what can it do next? You know, both as well as Elon Musk's Neuralink, you know, the minute he announces that, it's like everyone's going to have chips in their brain, and it's going to take over the world. And I think that, you know, whilst there is still a chance of superintelligence, and that's, you know, some thought down the line, it's not like it's going to have an impact today, right now, and going to take over every industry. Something I think is very interesting on the point of like regional large language models is ChatGPT announced a partnership, I think a year ago, with a guy called Johnny Ive, who actually helped design the iPhone, and they're trying to build a new consumer device for people with the integration of ChatGPT and large language models. And I actually think that's really interesting because a lot of people that I was speaking to in the investment world when all these large language models came out, a lot of what they thought or a misconception they had was that consumers would automatically switch to a faster, more efficient, or cheaper model. But even with myself, right, in which I might use ChatGPT, I might use Grok, I might use, you know, whatever the name is of the Google latest AI or whatever. I actually find with myself personally, I keep coming back to ChatGPT because I like the user interface. It's more habitual. It's the same with an iPhone, right? You have an Android which might be more technologically advanced, might have features that are five years ahead, but you still keep coming back to it because it's more habitual. And I wonder if the same thing will sort of be for large language models. I wanted to also mention that I've been very interested in sort of VC and looking at private markets recently and looking at Y Combinator and where they're sort of investing. A lot of their focus has been, you know, one on AI, but also in these full-stack models in which these people can come in and actually replace entire law firms, entire investment banks, entire consulting firms, and offer that full model. So they're placing a big bet on AI replacing everything. So it'll be interesting to whether this is kind of a tool that people use additively to their work, whether it will replace just the juniors, or also the senior people, and what the result will be there. Um, I kind of just added that 'cause I thought it was good to add my perspective, but no real question on that point.

Something I found very interesting from listening to some of your prior podcasts was, and please correct me if I've misquoted you, was that a lot of the US's growth wasn't just because of their expertise, knowledge, and know-how, but actually because of their advances in energy and having electricity to be able to drive through so much advancement. With China now having double the amount of electricity as you just described compared to the US, alongside that President Trump has ended a lot of subsidies in the US for renewables and kind of, you know, focused more on drilling again and, you know, focusing on non-renewables. What do you think will be the outcome of that, of China focusing more on renewables, more renewable energy, the US focusing more on non-renewable energy, China having double the rate of energy of the US? Will that lead to China outpacing the US? What will be the relationship between those two with that?

So, look, my starting point in a lot of my research is that economic activity is as energy transformed. In fact, you could say really that there's kind of five big building blocks to creating growth. One of them is the cost of energy. The other is the cost of labor. The third is the cost of land. A fourth is the cost of capital. And your fifth is the cost of government. So when you're an entrepreneur, when you're building, trying to build anything, these are the really the five big inputs that you have to contend with. And by the way, the cost of government takes many forms. You know, one way, of course, is taxation, but the other cost of government is through regulation. You know, if the government keeps throwing regulation your way, keeps adding up the cost. So you think cost of land, cost of labor, cost of capital, cost of energy, and cost of government.

Now, I would argue that today, when you look at China, you know, China has a cost of labor that has come up a lot in the past 20 years, but it still remains below that of the United States. But, you know, the cost of labor now in China is roughly the same as you'll find in Spain. It's really not, you know, the days of, you know, cheap Chinese labor are well behind us, which is why, you know, you've seen Chinese businesses move very rapidly up the value chain in terms of automation. For your listeners who have time, you know, they should go to YouTube and just type in, you know, show me dark factory or BYD automation. Like, you have videos on these factories that are absolutely mind-blowing. You know, there's a factory just outside Beijing, a Xiaomi factory. So Xiaomi produces cars and produces phones. And there's a, they have a phone factory that I think turns out, I think, three or four million phones a year where there are literally no employees. The factory is, it's called a dark factory because they don't need to have lights on because the machines obviously can work in the dark. The joke in China is that the factory of the future will have a guard and a German shepherd, and the guard is there to feed the German shepherd, and the German shepherd is there to bite the man in case he wants to touch the machines.

So, so you have, you know, as labor costs come up, the industrial robotization of China has also moved up very, very quickly, which thus means the cost of energy becomes ever more important. You know, the more like these machines, again, go to YouTube, check out the BYD factories, the Xiaomi factories, or whatever else, like these are highly, highly energy-intensive factories. So yes, having a cheap cost of energy matters tremendously. Now, the US had a super cheap cost of energy, much cheaper than everybody else for the past 15 years, thanks to the shale revolution. This, you know, was a huge boon on many fronts. First, of course, for industry, you know, having a cheap cost of energy is good. But for the consumer, the fact that, you know, electricity bills plummeted, that gasoline bills plummeted, etc. This meant that the Fed could maintain a very easy monetary policy for very long, for a very long time, because there was no inflation. So the Fed could print money aggressively, that money would end up in higher asset prices, which would end up boosting growth, and you get into a very virtuous cycle.

Now, the reality is that this virtuous cycle is coming to an end in the United States. Unfortunately, when you look at the energy equation in the United States, really, you've had very little investment in the overall energy infrastructure in the US, really since since the shale, you know, a bunch of the shale plays started going bust, and you had massive consolidation in shale from essentially 2013 to 2018. And, you know, and during that period, let's not kid ourselves that regulations kept making it harder and harder for people to deploy capital in the energy space. It was the whole ESG thing. You know, investing in carbon was, you know, if you were investing in carbon, you definitely didn't say so at dinner parties because you wore it a little bit as a badge of shame. And so this brings you to today, where, you know, US oil production is peaking. You look at a field like the Bakken in North Dakota, it's now producing roughly 300,000 barrels less than it was five years ago at its peak. Most fields in the US seem to be peaking. And this is occurring just at a time when now suddenly AI is going to draw, draw massively onto energy. And so if you're the US and you've got that energy equation today, you could say, okay, well, the increase of, you know, the demand in energy from AI means that the consumer is going to have to pay higher electricity bills, you know, whole supply and demand thing. So the consumer is going to have to pay supply, higher electricity bills. I think politically, that's very dangerous. That's very dangerous. So a lot of people, you know, low-end consumers will say, well, hold on. Why am I paying higher electricity bills so that, you know, the Jeff Bezos and the Bill Gates and the Mark Zuckerberg and

Elon Musk of this world can buy themselves another yacht, rocket, uh plane, whatever it is. Um, you know, why? Why do I? These guys are making huge bets on AI, and I'm having to pay higher electricity. How does this work, kind of thing? So that's your first option. Um, your your second option is to say, okay, let's let's curtail this AI thing and let China run away with it. But, you know, politically, that's that's not possible.

Your third option is to say, well, look, let's let's move the AI, a lot of the data centers and whatever else to the Middle East. Uh, they have cheap energy there, um, so we can move it to the UAE, to Saudi, to Qatar. That was essentially Trump's visit, President Trump's visit, in uh, earlier this year. Uh, the risk you take, of course, is if AI really is this big thing of the future, do you want to outsource and put in one of the most geopolitically unstable parts of the world, uh, all your data centers?

Or the fourth is you have to find a way to produce a lot more electricity very quickly, like not in 10 years' time, like with nuclear, that that'll take 10 to 20 years, but literally in the next few quarters. Um, and uh, and to do it cheaply. Uh, and I think this is where the US is heading, because that's the the politically smart thing to do. Um, and the way you do it is you go back to coal. You just burn a ton, a ton of coal. And I think that was essentially what Trump signaled at the UN last week when he came to the US, to the UN, and said, "You know what? All this climate change thing is a hoax. All you guys who fell for it are bozos. Uh, we're not falling for it, and we're going to proceed." Uh, you read between the lines, what he was saying is we need a whole lot more electricity, and we're going to get it from coal. Um, it, for me, that's as clear as day. Um, and so if the US wants to compete with China, and of course it wants to compete with China. Um, China spent 20 years building up their electricity infrastructure. The US does not have 20 years. The US has a year, maybe two. Uh, and the only option on the table is is coal.

I think, um, your point on whether to put it into the Middle East, I kind of have two thoughts. One, with regard to LLMs and also going back to that TikTok point, I think something that's been very obvious in my age. I mean, they they call Gen Z, uh, one of the first digitally native generations, in which we've grown up with technology around us. I mean, even like the first iPad, iPhone, it's probably only around like 8, 6, 7, 8 years old. And so, you know, they're very much still in the early phases of development. And something I find very interesting with ChatGPT is unlike typical social media platforms like Instagram, Facebook, even TikTok, you can actually pay for a better version of ChatGPT. And so, it's kind of being viewed as more of a service in which you can use AI for Excel, Excel, for schoolwork, for exams to actually help you. But a big part of it that I don't think many consu Sorry, did you want to add something?

I was going to say I'm starting to feel like this is sponsored by ChatGPT. No, no, I feel like it. Yeah, that's too, uh, when the podcast gets a little bigger, maybe. Um, but well, this is this is more of a critique. This next bit, it's more of a critique. Um, but what I was going to say about, um, ChatGPT is a part that people haven't really thought about is that we are also giving them our data. And I think people my age have realized that a lot more with social media in terms of us being the product. And I've actually seen a lot of people say that they would rather China have our data because they don't trust people in the US having their data. But it's with ChatGPT, a big part of the business model that people haven't really thought about as much is that all of this data, I mean, going to a slightly, um, less nice topic. I think it's like a two-digit percent, 10% or more of people that commit suicide in the US have spoken to ChatGPT before they actually go and commit suicide. On top of that, you've got people, all of their schoolwork, all of their business and confidential data are getting put on ChatGPT. All of their trade ideas, you know, you even look at Citadel Securities with their relationship with Robin Hood, in which they're getting all of that trade data. You know, this massive data pool. So, I think there's also a point of, you know, to what extent is it just getting the best model and best trained, but it's also who has the data. And so, I think that's a really important question moving forward.

I also was speaking to someone the other day who was saying that banks are actually going to be a very key, um, set of, you know, uh, set of groups and industry that's going to be very pivotal in AI moving forward because they control all of the data in the financial system, which, you know, ChatGPT or Grok or whatever can't just get by scraping X and Reddit to find that information. So that's going to be very interesting moving forward. In the, um, conscious of time, I've got a few like bigger topics I want to delve into, and I know that they're, um, you know, worthy of talking about for longer periods of time, but if all right with you, I wanted to go through some more short answer questions on big topics. Um, the first one being, when you're looking at your investment portfolios and your strategies, are you thinking, just to make it very, very simple, are you still looking at companies that work with AI and are putting that at the forefront, or do you think this is an opportunity to look at things that aren't using AI?

I think the latter, to be honest. So, uh, my starting point is that asset prices are really driven by the interaction of inflation and economic activity. And this gives you four investment scenarios. Um, you can have a deflationary bust, a deflationary boom, an inflationary boom, or an inflationary bust. Um, in an environment that is broadly deflationary, you want to be very exposed to technology, uh, because technology is is itself a deflationary force, but it helps you to keep tabs with the deflationary pressures in an economy. Uh, I tend to believe that we have now moved structurally into an inflationary environment. Uh, and I believe that because the policy settings, pretty much everywhere around the world, are pedal to the metal in terms of fiscal policy, in terms of monetary policy. Um, I think there's more and more questioning of fiat currencies, etc. And so, yes, you know, everything AI has has ripped higher, but it's not the only thing that has ripped higher this year. Um, actually, if you look at the past quarter, tech was still the best performing sector, and consu and, um, and, um, communications was second, but third was now energy, which which hasn't happened in a very long ter, in a very long time. Um, you're seeing mining stocks start to rip higher. You're seeing, um, a lot, you're starting, you know, emerging market debt, emerging market equities outperform developed market equities everywhere you care to look within the markets, you're getting more and more signal that the market is pricing in a reflationary environment. Um, and so, yes, I could go out and buy, you know, Nvidia at whatever it is, 30 times sales on the on the promise that we remain in a deflationary environment. Um, or I can go out and buy a lot of, you know, very, very attractively valued assets that now have just as good a positive momentum, um, and that correspond better to my macro take in the world right now. So, um, I feel, given the the the depth of the opportunity sets that I find in China, that I find across emerging markets, uh, both debt and equity, um, that I find in the commodity space, that I find in the industrial space, that I find in the financial space, I, you know, I don't feel a need right now to take on a lot of risk and buy very expensive things, uh, uh, and essentially make the bet that AI, uh, will completely change the world, because that's the bet that you're making. You know, when you're when you're buying an Nvidia at today's valuations, you're making a bet that AI will be a huge, huge success, and that Nvidia will essentially remain the only chip maker to participate in this. That's what you're doing. And maybe that is the right bet. Um, but I know that historically, buying really, really expensive stuff, it can work for six months, it can work for a year. Uh, but then invariably, it hits you in the face, and when it does, you think, why? You know, I knew better than to buy stuff that was so expensive without, uh, without spreading fear.

I was actually chatting to a friend about this two days ago, and I was saying, if Sam Altman said that superintelligence wasn't possible for 10 years, I feel like Nvidia and all of these companies would lose about half their market cap within a day, and there'd sort of been like this mass ripple amongst the world, 'cause I feel like there's this big notion right now that people aren't just betting on the, you know, on the base case or even best case, but something that's far superior to the best case, in which everything about everyone's lives completely going to change.

Yeah, I think that's right. I'll, I'll go one step further than you, actually. I'll say, look, you look at Nvidia's history. Um, it's, it's, obviously an amazing company, but, um, it, it has a history of going down 75% or more every 5 years. Um, it's, it's done this time and time again. Um, it, uh, it rides, you know, it rode the the video game bubble very well, and then it rode the the crypto bubble very well, and now it's riding the AI bubble very well. Um, and then every now and then, you know, it goes down 75%. Now, in the past, when it was a hundred billion dollar company, it went down 75%. That meant, you know, you, you had 75 billion of capital destruction. The big difference today is that it's trillion. Yeah. That's right. It's more or less the GDP of the UK. It's a 4 and a half trillion dollar company. So if it goes down 75% again, um, that's going to take a bite. By the way, another asset, just as an aside, that goes down 75% every 3 to 5 years is crypto. Um, and crypto is also a $4 trillion, um, asset class today. So, and by the way, crypto and NASDAQ seem to be somewhat highly correlated, probably because it's owned by the same people. So, if Nvidia goes down 75%, I'm pretty sure crypto will go down 75% as well. So you could be sitting on six, 7 trillion of capital destruction in a New York second. This could occur literally over 6 weeks. Um, in the past, it has, um, except that when it did, it wasn't six or seven trillion of market cap wipeout.

Something, I mean, you've tied in all of these topics very nicely. I keep coming back to Liberation Day, because for me, that's not directly in the investing world. That was kind of like a big event, particularly in the last year. But something that kind of occurred was it made people look deeper into the valuations of the Magnificent 7 and made them go, actually, is they've achieved incredible growth over the past 5 years. You know, even maybe taking out, you know, Tesla and Apple for this year. I mean, Tesla now with Elon Musk's pay package has done a little bit better. But taking out those two, it, you know, the Magnificent 7 have done incredibly well, but in terms of valuations, particularly compared to China, they can be seen as pretty overvalued, but yet they've still kind of read on and done incredibly well. And then if you look at how big they are compared to the rest of the S&P 500, they're both have driven a lot of that growth, but they're also so big in comparison to the lot of the others. There's the question of whether that growth will continue. But then it made people think about investing both in China and in the UK. Um, you know, on that point, with China being pretty undervalued, but now there's a lot of political uncertainty in the UK. What will be the sort of, you know, if you were advising investors over the next not just 6 to 12 months, but more 5 to 10 years, what do you think will be the outcome of the Mag 7? Do you think there will still be this incredible growth from them? Do you think there will be other comp, other companies like mining doing really well? And do you think people should be having a more globalized approach with a bit of money in the UK, China, um, South America, US? Should they just be focusing on China? What would be your rhetoric and focus on that?

So, I'm going to answer your, I'm going to make like a Jesuit priest and answer your question with another question. Uh, and to I would say, you know, what do you think is the big macro trend that's going to reshape the world for the coming years? Now, if you live in the Western world today, and we've just spoken for for an hour on AI, that's the macro trend that you hear about all day, every day, um, that, you know, you're already adjusting to in your daily life. You mentioned how you use ChatGPT and you come back to it, etc. So that's, that's one macro trend, and I would say that's a macro trend that is likely today very well priced into the market. Um, um, but there's other potential macro trends out there. Um, for me, uh, sitting where I am sitting in Hong Kong, you can see the harbor behind me. Um, you know, one of the more interesting developments of the past few months is how China and India seem to be committed to repairing their relationship. A relationship that's been, you know, really a bad relationship for 50 years, uh, or or more. Um, now we can question whether that commitment is for real or not. But if it is for real, then what you have is a possibility where Russia, which is good friends to both China and India. Uh, Russia produces the world's cheapest commodities. China produces the world's cheapest capital goods and cheapest consumer goods, and also benefits from the cheapest cost of capital. And India needs capital and has the world's cheapest labor. Now, you match those three things together: cheap capital, cheap commodities, cheap labor. Um, you have the making for a potential explosive boom, and a boom of epic, epic proportion. Now, here's the fun bit. Is you take the top 30 companies by market capitalization in the world. Out of your top 30, 24 are American. Six, six are foreign. One of these is Saudi Aramco. One of these is TSMC. One of these is Samsung Electronics. One of these is Alibaba. One of these is Tencent. And the last one is ASML. Um, now, so these are your top 30 companies. How many of these companies are going to participate in the, uh, in this boom that you see unfolding in the economic integration between China, Russia, and India? And the answer is very few. Alibaba will benefit, probably Tencent may. Saudi Aramco may, Samsung probably will as well. Uh, but there, it's only a handful that will really benefit from this this unfolding boom. Um, and so I think, I actually think this integration is the most important macro trend for for the coming years. Um, and it's one that's absolutely not priced into the market. Uh, it's not priced in the commodities market. It's not priced into the the the value of a lot of shares. It's not priced into the bond markets. It's, it's not priced anywhere. So there, there's many, many different ways to, uh, to play it. Um, but yes, having a a portfolio that's concentrated massively to the United States, because, you know, today you buy the world MSCI, you, you're essentially buying 70% United States. You're buying what has worked for the past 15 years. You're buying the tech boom of the past 15 years. And again, if you think the the tech boom of the past 15 years was just a stepping stone for for the next excitement of the next 10, then you're fine. Just keep buying the S&P 500 and go to bed, and you know, you don't have to overthink it. Um, if you think, no, no, no, the world is going to change in front of our very eyes. We're going to see an explosion in trade, but an explosion in trade that is not centered around the US, that is not centered around the US dollar. We're going to see an witness an explosion in infrastructure spending and capital spending, but none of that will be happening in the United States. Then, um, then yes, you need to be exposed to the Chinese market, to the Indian market, to the British market, uh, to to lots of other markets out there.

I wrote down, and I'm going to just ask you, uh, three large topics, um, before we close out. Um, and I, I can recall now, I forgot this, but I can recall the last time we did the podcast, I had a series of topics, and before I'd even, for the listeners, I hadn't shared these topics with Louis beforehand, but I had these list of topics, and then in his answer, he answered every question that I had afterwards. And I kid you not, of four of the five final topics I had, um, one was trade, one was social media, which you didn't bring up, but then literally exactly what you said about, I don't know if you can see this, but on Russia, China, it's backwards, but Russia, China, and India. I wrote down exactly what you said. Uh, with reference to those three, crypto, and gold. So, that's impressive on your part, being able to predict that.

Um, I want to ask, I'm a mind reader, apparently. Yeah, you're a mind reader. I, I want to, I think that that crypto, gold, and even Nvidia point you you said is really interesting in terms of looking historically at the past, because I think when they're doing so well and it's so big, people have that question of, is it too big to fail? You know, exactly what you said about the biggest 10 companies in the world. You look back historically, and you look over two decades, there might be one or two companies that over two decades are the same, but for the most part, they change. So why is 2025 going to be any different with those, you know, with those companies doing well, when you've got like a five or 10 year reference point versus 100 years, 200 years, and even a thousand years? Um, if you look at it, you know, from a broader sense, on that crypto, gold perspective, I saw something very interesting on a podcast called Amplify Me, uh, which is a podcast I looked, I like to listen to out of the UK. Again, not sponsored by them, but something they said very interesting, um, with regard to allocation of capital. When you look at both cryptocurrency and gold, you know, both of those have boomed within the last few years. You know, Bitcoin's over $100,000. Gold has, you know, 6x within the past few years. And so there was the point of investing in them just to invest in them. But now there's this sort of point where people feel as both a form of hedge with, you know, fiat currencies being less trusted with what the US is doing with its relationships to other economies over the world, all over the world, but also in terms of a hedge in terms of actually getting gains because they've gone up so much, and in terms of the US economy being so overvalued, well, you know, theoretically overvalued compared to China and Europe. What do you think is the, what does the future look like for crypto and gold? Do you think it's wise for investors just to say, "Okay, 1% of our allocation is going to be in gold and crypto just to be exposed to it, or by looking historically with it being so overvalued, is this a stupid thing to do, even though it's such a small amount of the portfolio compared to other things?"

So, look, 1% really doesn't move the needle. Um, so, uh, now you could say for something like crypto that has a very high volatility, uh, maybe 1%, sure, why not? Uh, for gold, you buy 1% of gold, it's like, eh, like, why even bother? Um, I would say unless, unless you have, you know, 10% that it's you're you're buying gold just to say you have some at that point. Um, now, um, now to your point, you know, look, uh, you know, what we were just discussing, a nightmare scenario where Nvidia loses 75% and, and, um, um, what's this, uh, and crypto loses 75%, something that seems to occur on a regular basis. Yes. To to your question, are they too big to fail? You know, how does the Fed respond to this? You know, how does, uh, how do they, you know, what happens? And I think what happens is the Fed eases, throws money into the system, you get easier fiscal policy in the United States. Um, and yeah, gold, gold and crypto probably take another leg up. Unless, unless, and this is a a big caveat, uh, unless policy options in the US end up being constrained, then when you think through how do policy options in the United States get constrained, there's only one way you get there, and it's, uh, if energy prices go up. Um, so all this to say that in a world in which energy prices stay muted, um, I think you can remain go bullish gold, you can remain bullish crypto, you can bullish remain bullish a lot of risk assets. Um, but if, for whatever reason, tomorrow oil prices start to move up, and maybe this reason is what we just discussed, you know, the demand for electricity going up, and energy prices get get sort of pulled higher. If we move into a world where energy prices start to move up structurally, uh, then all of a sudden policymakers are in a very tight spot, and their ability to add liquidity into a downturn, which is what every investor's been used to now for the past 25 years, really since the the Mexican crisis. Uh, it's like, oh, something bad happens, Fed cuts, Fed adds liquidity, you know, just buy risk. Um, that whole model starts to break down. Um, now, there was a, it looked like it was starting to break down in '22, but the US had a had a sort of Trump card, no pun intended, because it was Biden, but, um, they had, they could unleash their strategic petroleum reserves. So when Russia invaded Ukraine, you'll remember all oil, all oil shot up to over $100, and Biden turned around and unleashed the strategic petroleum reserve, which brought all back down, and then everything was fine. Um, the US strategic petroleum reserve is now empty. Um, now, on the flip side, you know, we don't know how much oil China's been stockpiling, but it's been probably stockpiling a lot, uh, in the past 10 years. So if oil prices did, you know, shoot up, it's likely that China would probably, you know, back off. And China is the biggest importer in the world, so, but China could back off, and that could ease ease prices lower. But all this to say that, um, I think we're, I look, we're in a structural bull market on oil. Um, you know, crypto, I have more doubts on, but I, I won't bore, uh, readers with that. But gold, we're on a structural bull market for gold. And that structural bull market for gold, I think continues until you start to see oil break above $85. Um, once you start to see oil break above $85, you have to start getting worried, not just about, not just about oil, and not just about gold, but about pretty much every asset out there. And so I tend to believe, and I've argued this, that, you know, today, the proper diversification in portfolios is actually energy positions. And there's lots of ways to express this, whether it's energy stocks, whether it's out-of-the-money call options on on oil. Um, you know, lots, lots and different ways to to play to play this theme. But, um, you know, more, I would say more than having oil, more than having gold or crypto, investors should have energy. Um, because that's the true diversification for whatever equities they own. Um, you know, we now live in a world where oil, crypto, sorry, gold, crypto, and stocks are all pretty correlated.

Growing up in the UK, particularly, I was born in 2004, so I'm only 21 years old, and kind of growing up there, the UK was kind of seen as one of the financial epicenters of the world, and arguably to an extent, it still is. But having a GDP of only about 4 trillion compared to the US, which is more than 30 trillion, it seems very minute in comparison. And then on top of that, if you look at the people that actually have the wealth in the UK, I think under the Labour government, there's something like a millionaire leaves to Dubai or leaves to another country every 11 seconds. So, there's kind of been this mass exodus of wealth. Alongside that, looking over the past few years, there's been a lot of D-listings, also people not choosing to IPO in the UK and choosing to delist and go onto the New York Stock Exchange. And so, with the US being arguably, I might say, the biggest and best economy in the world, in particular stock market, it cannot be said that just because it's big now, that there will be, you know, in 20, 30, 40, 50 years' time, that it will necessarily be like that in the future. The reason I bring that up is with what you were saying with regard to China, India, and Russia. If there is a situation in which there is more money there, more electricity, more power there, you know, with the AI revolution and everything alongside, there is a world in which it is more efficient, there's more money in those countries. And so potentially people would delist from the US over to those countries. The reason I mention that is there was also, there's also been a big transition in which if I went back maybe 20 years ago, a lot of big private companies, their goal to get more liquidity would be to either get go through an M&A transaction or to IPO. And an IPO was usually seen as a way they can get a load of money, they can get, you know, real-time thoughts from investors. But now, when you look at the likes of SpaceX, when you look at ChatGPT, to bring it up for the 50,000th time, and all of these other companies, there there's other platforms that allow investors to get access to these investments, also using the likes of SPVs. So a lot of VCs and PE firms are able to enter as well. From your own investing landscape, have you started to, I mean, I'm not sure maybe you do already. Have you started to look more towards private markets as well? Do you think hedge fund managers and portfolio managers should take private markets just as seriously as public-facing markets, or do you think they should be left to just more PE and VC focused investing vehicles?

A lot of hedge funds, a lot of funds do get involved in private markets. Um, we, we do not. Our mandates are 100% liquid. Um, so we're, we, we know we don't play in that game. Um, it's, um, I think essentially it's a, it's very much a different skill set than than listed equity investing. I mean, there's obviously some overlaps, but, uh, it's also a different skill set. Um, one that I'm not going to pretend that that we have. Uh, I think to be, you know, to get involved in privates, it's, it's a lot about you. There's a good bit of networking and and, you know, just, uh, getting along with, uh, you know, essentially building out a strong, strong network to to to to get a look into some of these deals. And, um, so it's not, it's not what we do. I can understand why other people do it, but, you know, for me, there's only so many hours in the day, and, um, the idea that I'm going to spend any hours of my day trying to network, I think gives me the gives me the hives. So, um, I'm, I'm happiest when I'm on my desk and when I'm reading, or when I'm, uh, uh, looking at my screens. So, or, you know, so, so no. Uh, so, no, we don't do it.

Yeah, I think that question more came to me not because it's not been done before, but more because I think the size of the companies getting so big that it's less about networking, but even as a contradiction to that own point, there is still an extent to which even with Elon Musk's SpaceX, you still need to be in the know of who's running that special purpose vehicle to actually go and invest in that company. The large bigger point, um, I wanted to ask was with regard to social media. You know, you've built up your own following on X of around 30,000 people. I'd call that a cult-like following. You know, even when we did our podcast last time, you shared it out. You know, everything you get out there, like Louis has posted a new podcast, goes and checks it out. I think GameStop was the tidal wave impact in which people, you know, more institutional investors suddenly saw that retail not only has a big impact in terms of, you know, 'cause, you know, going back historically, they proportionately had a lesser impact on the markets, but with GameStop, in order to actually make that short squeeze happen, the kind of impact in which they're all able to come together without a serious legal implication, I think shows that retail investors need to be taken more seriously. We've obviously got things like Wall Street Bets on Reddit, but also a lot of people on X as well who are finding a lot of trades. Um, and lastly, something linking to that point is there's this new gambling platform, Kalshi, also not a sponsor, in which you can basically bet on bet on anything. And when the presidential elections were happening in 2024, there were a lot of people betting on, you know, did they think that Trump or Biden would win? Um, and actually, when, you know, initially, because that's when it when it got really big, and when that kind of transition happened over time, the Supreme Court actually legalized Kalshi to enable investments. And now what's actually happened is people using Kalshi, it's basically you can bet on anything. So you can say, I think my dog will beat a cat and crossing the road, or whatever, and then people can bet. But it's giving real-time. Have you heard of Kalshi?

Um, I just want to, I have but I haven't used it. You have? Yeah. So the reason I bring that up is this weekend, you know, in terms of the football, the NFL coming back, it's obviously historically been the likes of FanDuel and DraftKings that have got the majority of that, you know, betting influence. But because of how Kalshi is run in its actual betting system, in which, you know, only FanDuel and DraftKings only legalized, I think in like 21 states, um, in the US, Kalshi is actually legalized in all 50 states, and you don't have to be 21 to use it. I, I use that example not to focus on the specificity of that thing itself, but looking at X, looking at Reddit, looking at the likes of Kalshi, looking at retail investing from a more holistic scope, what do you think will be the sort of, you know, what's going to be the outcome of this in 5 to 10 years, in which the ordinary person is having a bigger impact on the financial markets?

I think what we've witnessed, uh, is really the growth, and you, you know, through the Kalshi example, of an increasing gambling culture. Um, and of course, this is what we saw with GameStop as well. Uh, and I would say, look, to me, this this goes hand in hand with the rise of inflation that, uh, that we are going through. As our currencies get debased, as inflation goes up, you know, I like to say that, uh, only two things, uh, well, when you get inflation, two things go down very quickly. Uh, one of them is bond prices, and the other is public morals. Um, inflation saps away all public morals that might be, um, you saw this, of course, during Weimar Republic, in Germany. Um, and I think to a large extent, we're seeing this today across the Western world. Um, and you have signs of it everywhere. One of them is the gambling, the other is the OnlyFans. Um, the, um, as, as a society, inflation is one of the most pernicious things that, uh, that can occur. It, it loosens the bonds. Uh, the other thing that happens with inflation is a rise in in public corruption, um, which I think you, you see pretty much everywhere. A friend of mine writes a Substack, um, a friend of mine called Lrub, um, calls this the golden age of grift, and, and you see it everywhere. No, no, it's not a sponsor either, but I do recommend, uh, I do recommend his, uh, his Substack. Uh, I need sponsors. This is my, this is my calling from Louis Vard. I need a sponsor. Uh, so anyways, um, I, I do think, you know, we've gamified the the markets, and this is, you know, fun on the way up, and, and all great, and, but the reality is, is bare markets still exist, and, and when the bare markets come around, uh, unfortunately, a a lot of people will be, will be nursing wounds.

I want to ask you one final question, and that is, what is a question that you're often not asked enough, um, in the current market landscape, and is there anything that we haven't mentioned during this podcast that you think would be important to mention coming up to this week ahead and closing into the year with China, USA, Europe, you know, you kind of take this question any direction that you want to take it?

Yeah, look, for me, look, the most important question is the biggest asset class in the world is actually the bond markets. You know, we spend a lot of time talking equities and commodities and whatever else, but the most important asset class by far is is bond markets. And everybody's pensions, uh, is more or less invested, uh, a lot in into bonds, and we have policymakers that are actively trying to destroy the value in in the bond markets, and, you know, that's, that's what is happening here. Um, so concretely, you know, what, what, what does this mean? It means, you know, the pensioners won't get paid. Um, and so politically, what, what will that mean, when, you know, we're, we're essentially spoiling the pensioners through pensions. We're spoiling the pensioners through, uh, you know, through launching funds that promise returns that likely won't be delivered, whether it's in real estate, and VC, and private equity, whatever else. Um, and how do you immunize your portfolio from the fact that you're literally going to have trillions and trillions of dollars destroyed in, uh, in the fixed income markets? We've already had trillions of dollars destroyed in the fixed income market. We're probably just at the start of a 20-year bare market.

Any more thing to add on? That's a big. That's a big thing to close out the podcast. 20-year bare market. Why do you think that? That's it. You're closing on that. I'm closing on that. Well, I guess you've, you've set yourself up for another personal interview then. You've, you've done it to yourself. I don't even have to have to ask. Louis had to run, but it was an absolute pleasure to have him on the podcast. We spoke all about China, both whether the US is going to be the focus of growth moving forward, but also whether to look to invest both in the UK and China. I think it'll be particularly interesting whether we see one large language model sort of take over as the future comes and kind of be the solution to everything, or whether you think there'll be more regional-based models, both with DeepSeek in China, but also with ChatGPT and OpenAI in the US, and whether this be regional, also to what extent banks will develop their own models based on their own data, as they don't just give the data off to other providers. It was an absolute pleasure to have Louis on the podcast, as always, and for him to share his incredible knowledge. If you like this episode, please make sure to like, comment, and subscribe. We're trying to get Personable to 10,000 subscribers before the end of the year. As I mentioned, we're doing these markets episodes every Monday. So, if you like these, please make sure to let me know in the comments and also who you'd like to hear from in the future. This has been Personable. My name is Harry Breen Smith. I hope you enjoy, and I will see you in the next episode.