Why Iran Is Trump’s Greatest TACO. Plus, Is Elon’s TeraFab ‘Bullshit’? - Bits + Bips

Transcript

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All right, everybody. Welcome back. Um I'm your host Austin Campbell, uh high scholar of Zero Knowledge Consulting. And with me today are Ram Ahluwalia, Meister of Wealth, leader of Lumida, and Chris Perkins, Golden Hand of CoinFund. We're going to start today with a segment we're calling the Iran off-ramp, question mark. Um so, what happened this morning? Trump announced that the US and Iran have had, quote, "very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East." End quote. And is postponing all strikes on Iranian power plants and energy infrastructure for 5 days.

Uh this came just hours before the 48-hour ultimatum to Iran to reopen the Strait of Hormuz or see its energy infrastructure destroyed. Iran >> [clears throat] >> had warned any such strike would trigger decisive and devastating retaliation across the region. So, this de-escalation or excuse me, this de-escalation was notable for markets. We had futures ripping, going from being in the red to in the green before the open. Oil crashed, dropping below $90 a barrel.

Uh gold came back down. Bitcoin surged, up from the weekend low of 68,200 to 200 to above, I think, 71K around the highs. And to frame this, uh Lyn Alden has talked about the flywheel of chaos framework, where in her March 2026 newsletter, she framed the Iran conflict as a potential toxic combo, calling for sustained energy disruptions that cascade into consumer spending displacement that forces both liquidation of Treasury reserves and quite frankly just reduction in economic activity that forces people like the Fed into a stagflationary trap. The base case there is a gradual print phase with

balance sheet expansion and a, quote, "big print of 2 plus trillion if necessary." Um the key risk, though, is if the strait stays closed for months. This appears to be moving back right now. So, what I want to start with Ram, you've been watching the market all day. What is the market making of this? Does it think it's a real off-ramp? Does it think it's a head fake? Like, what what does it need to see to unwind the war concerns?

Well, the market's got a lot of indecision. It closed very close to where it opened. That's happened a lot you know, over the last few weeks. A lot of the action's overnight. Uh you know, oil dropped about 8 to 10 points, depending on what you're measuring, then it stopped. So, markets are repricing information quickly. Uh you know, there are parts of the market where the storm has moved on, including technology areas. Like, there's legitimate value out there. And we've been accumulating some names in those pockets. And quality names that long-term investors would want to own. I mean, they're stepping in there. So, we're seeing that, too.

Uh it really is quite extraordinary, though. It is really extraordinary like history unfolding. You know, Trump said that he has, quote, "15 points of negotiation" that they've established. The Iranians denied that. Then Trump denied the denial of the Iranians. And there was an individual named in the parliament that they're working with. And there's no agreement on the most important terms around who will control the strait. Trump said, "We'll both control it and then maybe we'll just control it." And there's no agreement on the uranium and what happens there and maybe we'll go there.

And Well, so those are not part of the 15 points, clearly. Those would be the most essential points of these 15 points, one would think. Yeah, so Trump Trump is doing the great taco, the taco of all tacos. This is like the burrito supreme. And he is doing it with confidence and chutzpah. And just looking straight to the camera with no flinching and just winging it. I mean, it it's it's an it's incredible. This is incredible. The books that will come out of this, the movies, the you know, we're we're living in we're living in history here. We have the Trump put. The Trump put is here.

We've seen the Trump put. You know, Trump does not want markets to crash. And he stepped in after I think Bussen had a a pretty weak interview and he looked tired and haggard yesterday on a Meet the Press interview. So, it's in the hands of the IRGC, also in the hands of remote field commanders that might make decisions independent from the IRGC, and the parliament and members of parliament. There's reporting that in Pakistan there's a meeting with the US delegation and Iranian delegation that's set up in the coming weeks that you've got a number of countries, including Turkey and Saudi Arabia and

others, attempting to influence Iran. There are some tankers that have moved through the strait, including one from Saudi. And Saudi and Iran are rivals, by the way. So, that's that's a meaningful signal. And there's still a lot more to to see here. Will insurance be offered to these carriers now? Um a lot's in the hands of Iran. A lot is in the hands of Iran now. And you know, it's a the news [clears throat] cycle has flipped entirely from Epstein 2 weeks ago to now it's like, get the price of oil down.

And Trump is doing the the the greatest taco of his career right now. So, we'll see. We'll see what happens. As we observe Trump starting to say, what is the right way to say this? Things being directly contradicted by the Iranians at times and confirmed at other times, back to something that we've been discussing previously, do you think what we're seeing here is a fracturing of the Iranian regime? Are we seeing multiple voices starting to emerge inside Iran, where the reason we're having this fragmented of a conversation is that they are no longer speaking with one voice, especially as

we've been, for lack of a better way to put it, just bombing the hell out of them? Look, no no one really knows, right? But, you know, you have the IRGC, apparently the hardliners are in control now. Then you've got the parliament. And then you've also got the junior level staff that, quote unquote, don't want to go back don't want to go into work. I can understand why why. And then Trump earlier said, "We took out group one and then group two." I mean, it is extraordinary. And you're negotiating in Twitter, right? And the Iranian foreign minister last night said the Strait of Hormuz is not blocked.

And it looked like that was a white flag coming from Iran. And Trump responded to that with this alleged 48-hour discussion. And you know, the interesting comment Trump made in those remarks this morning on the tarmac, he said, quote unquote, "If this works, some in the middle." You could almost see a glimpse of light. It it strikes me as a gambit. Trump saw this comment from the foreign minister, put together a story around a mutual de-escalation. They reached out to us.

And it strikes me as a as a gambit. 5-day cessation of hostilities. Meanwhile, there's a uh Marines on the way. There's a 5-day timeline. It's a threat of future hammer. And uh you know, the the Iranians have a shot to create some goodwill with their neighbors. Uh they also can punish the US by keeping oil prices high. All right, really really interesting things over the weekend. I think the first thing that caught me, uh Austin, was the timing.

And so, Trump shows up and he's like, "Hey, 48 hours or I'm going to blow up all of your infrastructure." The first thing I thought about is like, wait a second, 48 hours is like on a Monday night, which would be like right after this episode was filmed. That makes no sense because he never does anything when the markets are, you know, generally open. And I would say that during the week they're generally open. So, I thought that was a little bit weird. Um and so, it's not surprising to me that the 5-day extension puts us back in when all markets are closed except for hyper liquid in crypto, right? That's when he likes to make his moves.

And and he tries to to be like somewhat less disruptive. Ram, to your point, one of the really interesting things here is that within 5 days, like the 31st MEU, Marine Expeditionary Unit, which has a battalion of Marines and artillery battery, that will be closer to getting on station. I think the 11th MEU is coming in as well. So, you have like two battalions of Marines. The thing about Marines is that they they don't love like doing what I did when I was in Iraq and like trying to like, you know, please people and teach them about democracy. They're really good at like taking taking territory, particularly amphibious like they're they're they're what they do is they do amphibious landings.

They've been planning this for 50 years. Don't forget that the Marines barracks were bombed by Hezbollah, which is an Iranian agent. So, like the Marine Corps has been waiting for this for a while. Um they're not afraid of a fight. I don't know if they're going to be deployed or not, but like everything's kind of coming together for the weekend. It'll be a very interesting weekend from a geopolitical front. But from an economic front, you know, Ron, you mentioned that Besant was like looking a little bit haggard. The reason for that is the tenure, right? He freaks out. Like what is he obsessed with? The tenure. Tenure like I think they can tolerate Brent oil going higher cuz it's like an overseas measure. You know, WTI seemed somewhat more contained here on shore. But when the tenure goes like all

bets are off. That's when Besant really gets uncomfortable, you know, and so I think that was part of the stress there. And so where are we right now? Um you know, you mentioned like Trump said maybe I'll control it with the Ayatollah. What does that project? It's like he doesn't care about regime change, right? Like he doesn't care. He wants somebody who's strong, who makes them no longer be a pain, who doesn't have, you know, he put out his 15 points. But, you know, he's not there to like, you know, facilitate democracy. He wants the Venezuela model. I heard him say that again yesterday, but Venezuela's working great. Why can't it work here? That's the end goal.

But what we need is we need that straight to open one way or another. It's hurting fertilizer. It's hurting oil. Um and and and it's really embarrassing. Like at at some point it's going to be embarrassing because hey, why does this country have so much power over the world? How come they're in control? And I think we're in a position I I don't think I think the Gulf states are realizing we have a really big problem here. If the US just pulls out and and we've done this over our history, we've just said like, you know, we've had enough.

Bye. Good luck, guys. Um and I and I and I think they're actually trying to move closer to the US right now. Because the status quo and what they've seen the Iranians can do without a nuclear weapon is very scary. If they had a nuclear weapon, then they would essentially have control of the straight forever. And we're seeing what that happens. So, like the status quo is is over. Like things have to change. And I think that has to the only way through this is if there's a permanent or nothing is permanent in this world, but you have to have a a stability and freedom of navigation return to the Strait of Hormuz one way or another. I I think that's what we have to see.

Um >> You're saying that as your policy objective or your read of Trump's true policy objective? I think that there need How do you declare victory here? You you need to deal with the nuclear side of things. And by the way, the Israelis are not going anywhere. That's their neighborhood. They're not going to stop until nuclear uh the nuclear issue is taken care of. But across the globe, I think I think the political and the military objective needs to be you know, freedom of navigation in the Strait of Hormuz. And the US will play a role. I don't know what, but that has to be the goal.

Uh I don't see any any way around it because right now like you have one country that's been really, you know, destroyed holding up the global economy. Now, the other thing that's really weird, you talked about this, was with um their speaker of par- parliament. And he rocks up and he's just like um you know, talking about he's going after everyone with treasury bills. Uh we should talk about this because I think everyone in Iran would love to own treasury bills as stable coin older um owners. I think that would be great. I think the people love stable coins, particularly Tether. Um spoke to a student from Libya recently and he's just like, yeah, like Tether's saved my family. It's incredible. So, I thought that was interesting.

But the other thing I've been thinking about is that like if you want to know the truth, you generally follow markets. That's the closest thing you can get to the truth. You know, everyone's going to say whatever they want to say. It's very hard to cut through what truth is unless you look at markets. Markets have responded favorably to this concept that Trump is saying, "Oh, we've de-escalated and we're meeting. We're having these meetings." Um at first the press is like, "What the hell are you talking about? What meetings? Who are you talking to?" But my gut tells me that they're probably talking to somebody because the financial markets are reading it that way, I think. And then you saw this recent reporting that our boy who is Mr.

Treasury, the speaker of parliament um in Iran, it does sound like he may have boarded a private jet to to to initiate some conversations. Is that true or not? I don't know, but I do know that markets are responding generally favorably and and I and I I tend to believe markets when it's very hard to cut through everything else. Well, I want to pile in on the markets point and say the interesting call it [clears throat] market regime has been parts are responding favorably. Parts are falling apart a little bit. If you look at the Asian economies overnight, I think we're still pricing some degree of oil disruption. I also don't I also don't think the tenure is loving life right now or the 30-year as we look at it. And what's fascinating to

me about this is I think reading between the lines of market signals, again like thinking like a trader in this context, what the market is telling us is that the worst-case scenarios appear to be off the table, e.g. the straight stays closed forever like Iran goes full nuclear, etc. But that the best-case scenarios are also off the table. That is to say that there's a very quick resolution of this. We don't have some sort of inflationary shock, call it moving through the snake. And I think that comes back to the point of I agree Trump's probably talking to somebody in Iran, but does Iran even know who Iran needs to be talking to?

>> Who is Who is Iran, right? Like that's that's the problem. What What do you guys take of like Have you been watching uh BTC gold ratio? I have. Um the colossal beating that Bitcoin took on the end of that is now going the other way as we move into this year. I feel like there's two separate threads going there. One, to go back to sort of what Lynn Alden was saying, if we do think there's going to be a significant expansion of money supply, Bitcoin has historically been one of the early detectors. And so Bitcoin starting to go back up is something I think everybody should be keeping an eye on.

But the second point is that a lot of the people who've been hoarding gold are now the exact same people who'd be under pressure from energy. And so if you don't want to sell treasuries to get aggressive with the United States, what would you sell right now? Ron, I'm curious what you're making of this divergence between Bitcoin and gold and what's going on with the long rates. >> [clears throat] >> Well, yeah, gold had an extraordinary sell-off uh along with the commodity complex overall.

Um it put an incredible wick today. I wouldn't be surprised if we've seen the lows uh in gold. I wouldn't be surprised if we've seen the highs in gold, too, though. Um you know, a lot a lot of crowded momentum was hiding in gold because it was one of the few categories I was working along with silver and a few others. I think that just got washed out. That's where where the hot ball liquidity went. They said, "Okay, this is working. Let's camp out there." They did the same thing with Micron. Both of those uh gave way. So, that's how I look at that. Uh it's uh you know, on on the East Asian countries, these are most sensitive to oil from the Strait of Hormuz. You know, South Korea was down several points

yesterday uh or our morning uh and now it's up five points and Japan is up, too. So, I think markets are legitimately in a point of indecision. They're trying to discount what's happening next. It's a period of high volatility and uncertainty. So, where does the hot ball money go next Ron? You know, I think the move is to you know, you don't have to read every tea leaf, right? You can wait.

Just get small. Go after high conviction opportunities that where you have legitimate value presented in front of you that you can pick up and say this will be a good investment one or two years from now. And we we're doing that like in information technology. We picked up Nvidia. It was at 5 trillion valuation in October. It's 4.3 now. We picked up a bit of meta. There's software companies that have 5 to 8% free cash for yield. Their sales are still going up. Progressive, you know, these incredible insurance companies that are growing double-digit revenue EPS growth.

Uh you know, there's the the Morningstar's of the world, rock-solid businesses like S&P Global and you know, there's a number of these high-quality businesses that are just that are very cheap. They're also economically resilient. So, you know, there's a lot of uncertainty ahead. We might be transitioning into an inflation regime. We had the PPI print come out last week. It was at 0.7 versus 0.3 expectation. And you're looking at all sorts of commodities moving higher. So, owning quality businesses at a reasonable price makes a lot of sense to me.

I think that's what institutions are starting to do. Many of those names I mentioned actually have been moving higher over the last week, unlike the overall S&P. So, they're starting to lead the market um of this. But it's still too early to say for many other categories though. It's still too early to say for many of these categories that depend on the price of oil. Airlines have been doing well despite oil being in the the high you know, 80s too. So this this needs more time to process. This needs more time. This is a process. It's not an not an event. We have to see exactly what does Iran do this week.

And part of what I've been looking at on that front cuz we keep coming back to the energy price thing is we essentially have from call it April 2025 zero net jobs and rising energy costs going on right now. And I think the last time in the United States we legitimately had this as a backdrop was probably the 1970s. Right? Where you had the stagflation era. And that was one of asset prices and economic fortunes just whipping back and forth. Right? Like everybody jokes you've got bulls and bears, but that was a kangaroo market. Right? Where you're going to go up and back down, up and back down, up and back down. And Ram, as you're talking about cyclical rotations between various sectors, the energy

sensitivity, if that's going to bounce around as we're trying to find the political sort of solution, I think to sort of move to the next topic, doesn't this put the Fed in a very hard spot? Because to look at what is going on there, the Fed kind of has what's the right way to say this? It's an impossible task going on right now, a split. Where if you look at March FOMC, rates are held steady, but the dot plot is a massively wide internal split. Right?

Seven out of 19, I believe, wanted zero in terms of 2026 cuts, while five wanted 50 basis points or more. So you're seeing the Fed start to go like this. And I think that would depend, are you looking more at CPI or are you looking more at unemployment? Because being fair to them with regard to the dual mandate, they are again, reminding everybody, the mission of the Federal Reserve is price stability and full employment. And in a time like these, they are pulling in opposite directions. So when you see this kind of divergence from the Fed itself, what we're seeing here is we're in a very difficult economic situation where both sides are legitimately having

an impact. As a result, Powell is warning higher energy prices are going to push up overall inflation. It's too soon to know the full effect on consumers, but he said inflation, quote, "isn't coming down as much as hoped." Um inflation projections are now 2.7% for headline and core up from 2.4 in November. Gas prices are $3.84 a gallon nationwide. Right? There's some outliers like California, but those are more local problems. Um crude is coming back down, which appears to be helpful, but let's see how long it stays there. And Goldman, for instance, raised their Brent forecast to $110 average for March-April.

Uh Powell also, interestingly, noted that tariffs are now keeping inflation elevated. Like we're having a double squeeze thanks to the supply side. So I guess my first question, which I'll I'll put to both of you is we've got seven hawks, we've got five doves, and they are diverging in opinion. Uh can we tell anything from the dot plot? Does the Fed itself even know where it's going to be 3 months from now? I I I think the policies overall are inflationary. The the divergence just shows a greater volatility. What's not inflationary?

You have war, $200 billion in spending requests, that's inflationary. TSMC is raising prices, that's inflationary. Micron is passing $250 price point increases on to Apple iPhone. I got a record utility bill last month. That's inflationary. Wheat, fertilizer, corn, that's going up, that's inflationary. Like a 3% handle on CPI is quite possible. So that's the bear case for the market, by the way. Like inflation is just toxic for bonds and and equities.

So it's uh I I I do think inflation is going to be higher for longer. Nothing here is disinflationary. The productivity growth is the best story on the disinflation front, but I don't think it's enough. I mean, look, we're obviously seeing energy prices rock like like, you know, in in in the interim skyrocketing. Um but look, this I think this is going to end. This geopolitical mess is going to end one way or another. So it feels somewhat transitory against a backdrop of this new AI economy that is fundamentally disinflationary.

Right? So I think they're in a conundrum for sure. I I was messing around um with the uh Trueflation stats. And like, if you look at Trueflation, and I know we're we're good friends with Stefan here, it really hasn't adjusted yet. Um so are are we missing the forest through the trees? And you know, against this backdrop, I mean, we saw what Elon put out over the weekend and his massive plans, you know, going into space, driving AI, driving incredible innovation. Um and and if the if the AI dream comes true, it's going to be highly disinflationary. So I mean, there's

there's a case to be made that this is transitory uh energy shocks that that are against the backdrop of a much bigger disinflationary wave. I mean, so I'll potentially take the other side of that on two points. I agree with you about Trueflation's current numbers. But if you look at where the market is pricing inflation, it is not like this month, it is on a forward basis. Right? Like the energy disruption causes this supply chain sort of breakdown. The other part is as we look at where the inflation will be experienced, I think the United States is probably the least impacted in terms of a Strait of Hormuz disruption. Right? Like again, not saying that I think this is a good thing

for the world in general, but the US has both more native energy supplies and more call it local supply in our neighborhood, especially with Venezuela somewhat unlocked now, compared to many others. If you're looking at where problems should be in terms of their reliance upon oil from the Strait of Hormuz Japan Korea, the Philippines, Australia, to a lesser extent than China. They've got maybe more diverse sources, but they're and there I think we're seeing more flashing red indicators, which to me leads to more of that chain of effects coming down the road. I think in the United States we'll get the least of that damage.

And when it does arrive here, it will arrive on a delay because it's coming through the energy shock in other places. Another important point is the fertilizer one, which I believe we raised earlier in terms of inflation. You'll only see the impact of that after growing season, or at least as soon as the market starts to realize, "Oh, it's a bigger problem than we thought if fertilizer doesn't get where it's supposed to go." But as we look at food inflation, again, like Chris, you know this one well, the US is very food secure from a production standpoint. Maybe corn gets implicated as a crop, but we just switch to soybeans or something else. The growth capacity of the US breadbasket is world-class.

The people who are going to get hurt by this are like Africa, Southeast Asia, India, China, where food prices are going to go way up. So I guess I to put the question back to you and Ram, is Trueflation the thing we should be watching for inflation right now, or should we be looking at, call it, Asian stock indices? Does the Does the Fed care about the those global impacts? I mean, that's the US Fed, right? And I think you're right that the impact on the US is going to be delayed because overseas I think in Thailand, people were asked not to go to work because energy prices were so high.

Asia's getting pounded, you know, countries around the world are getting pounded. The difference between 1970 and now in this country is that we're energy independent now. And that's providing that insulation. We have a security um our geography provides security with with the two oceans. We have uh energy security now. And to your point, we make a lot of uh our agriculture business, which is actually one of the most tech forward businesses. If you ever get a chance, it's like insane how technology focused these people are. Uh also self-sufficient. So like, isn't this all just America first in the end, anyway? Um which is plays right into the Trump's plan.

Yeah, I I I'm not sure the 1970s analogy makes the most sense. There's some echoes of it, for sure. There echoes of it. But the the US economy is far less energy sensitive. You know, Chris brought up energy independence. There's also fuel efficiency, the big part of it. Just the the diversification of energy, the alternative energy sources, we get a lot more output per unit of energy than we ever did before. So that's a big change. There also echoes of 2022. You had fertilizer and potash prices increase because of the Russian invasion of Ukraine.

And Ukraine's like the breadbasket for Europe. So you're seeing some of that happen here. The biggest driver of inflation is going to be Iran because that strait not only transmits energy, but also the components, the precursors for for fertilizer. So, that's another thing to watch. Um the AI still needs time still needs time, you're right. People are spending apparently engineering salaries on tokens now. That's what I'm reading now. People spending $150,000 per engineer on tokens. I don't think that's everybody, but that's what some of these AI >> If you're not spending that, you're you're not doing your job. If you're not spending uh $150,000 >> they're saying. That's the new That's the message, but we'll see. I don't know. Inflation

Inflation is a legitimate risk though. I mean the the tenure has backed up and you know, trueflation is mostly focused on goods rather than services and we're a services economy. So, you know, consumers going to look at the utility bill and food prices have already gone up and these inflation pressures were brewing even before this Iran conflict. So, it's a you know, it's a real risk to uh you know, be mindful of. Yeah, to pile in on that point, too, Chris and like what we were talking about with regard to does the Fed care about Asia? I think the answer has to be yes because of how interconnected the global

economy is now. Right, I think the last time we just totally punted on Asia and acted like they didn't matter was what the late 1990s and that caused the currency crisis over there. But like post-2008 with dollar swap lines and everything that's gone on from a monetary standpoint, I think we do have to care. One for that point. Two, if you look at the hawkish plots of the people either saying no cuts or even hikes, they're also looking later in the year. So, I think there is some belief from the Fed side that hey, if we see this train coming towards us, we probably should not be cutting into that, right? And then ending up in a place where we're just going to have to

massively hike after the fact. I think it all comes back around to what we were talking about of the Fed genuinely doesn't know where to go from here. Like they are trying to for lack of a better way to put it, do this live. And it's not obvious to me that they're going to go up. It's not obvious to me that they're going to go down because I don't think it's obvious to them, right? Like it's the running joke on Wall Street if you can't front-run the guy who doesn't know what he's going to do. And I feel like that's what we're observing with the Fed right here. So, Yeah. You know, the the back end of the oil futures curve have moved up materially higher.

By the way, this So, markets are expecting higher for longer here. This week is going to be pivotal. All right, we'll see what Iran says. The ball is is truly in their court now. If they fire anything at any tanker, oil prices shoot up and asset prices drop. If no missiles are fired this week, then asset prices can recover. Yeah. And let's not forget that mean the damage to the Qatari gas fields is going to take years to repair. So, we're already dealing with a a state that's that's been a market that's been impacted for a long time.

And you're right, both of these sides want ball control and there's a they can do little things to take that ball control. It's going to be very interesting. Isn't Trump giving it to them though? He's pretending to have it. He's pretending to have it. I just saw a meme that Iran's uh propaganda team issued. They They showed a picture of a car with two steering wheels with Trump speaking on top and Trump saying both of us are steering for moves and then the meme has two steering wheels and uh uh I think Trump is he's letting uh he's he's giving Iran an off-ramp and he wants it.

Yeah. I would think that the I would think the IRGC doesn't want more bombs to drop down on them and wants to survive. I would think that that's the path that they want to pursue. That's what he telegraphed when he said that I told them and I will control it, right? That that they will retain. I just uh there's this little country called Israel that may not find that palatable and unless they yeah. And Saudi Arabia. Like one of the things, I know we had mentioned this earlier, one of the things I'm not sure markets are fully pricing in is the shift in call it political belief within the Gulf region itself.

All of the people who previously were tolerating and placating the Iranians just got hit with missiles by the Iranians. I'm not so sure like Israel obviously has their own reasons, but are all of Saudi Arabia, you know, Oman, the UAE, Turkey willing to go back to the way things were after what Iran just did? I'm not so certain that's true. So, part of what I worry about here is that the I know Trump is saying we and the Iranians will control it, but let's be honest, they are not the only chefs in the kitchen at this point given what has transpired.

Yep. All right. Yeah, I think that Israel will tow the line with Trump though. I mean, it seems like they they got a strike on that energy plant, the second one that wasn't authorized by Trump. And Trump said, "Hey, don't do that anymore." And Netanyahu said they wouldn't. We'll see. But it looked like a like last call at the bar. They're like, "Okay, let's get a strike in there before they expected a drop in hostilities. We're now entering what is it, week four now?

And the time tail the timetable that Trump initially laid out was like four to five weeks. So, and there there's a Trump put. There's a Trump put. It really comes down to Iran. You know, they used the language of uh respect. He said, "Hey, look, we We need to respect us." Same language China used. And what looked like a mutual escalation tit-for-tat, that eventually went away. So, Trump is trying to do that here. He's he's going to talk he's going to just talk his way through it.

And that's what Trump does. The great taco. It's This is the great the greatest taco we've we're going to see from Trump. All right. Well, on that note, I have bad news for our audience, which is that our next sponsor does not in fact sell tacos, but we do have to do one more ad and then we're going to be back to talk about AI. So, we'll do that and we'll be right back. Step into a new era of wealth. Discover Nexo, the premier digital wealth platform. Manage your crypto portfolio with confidence and control. Receive interest on your digital assets. Borrow against them without selling. Trade a wide range of cryptocurrencies, all in one platform.

Now available in the US with 30 days of exclusive privileges for new clients. Experience Wealth Club Premier. Access enhanced interest rates, reduced borrowing costs, and crypto cashback on swaps. Get started today at nexo.com/unchained. >> before we continue with today's episode, Bits N' Bips now has its own dedicated home. We're spinning off from Unchained and launching a standalone podcast and YouTube channel focused on the Fed, macro, AI, and how it all collides with crypto. If you want to keep up with our weekly live [music] streams and macro meets crypto breakdowns, make sure you're following Bits N' Bips directly.

[music] We won't start publishing until March, but getting set up now means you'll be ready on day one. You can [music] find the new Bits N' Bips channels at unchainedcrypto.com/bitsnbips. You [music] can also find us by searching Bits N' Bips on YouTube, Apple Podcasts, Spotify, or wherever you listen. All right, everybody. Welcome back. Um we've titled our next segment AI eats everything because what's going on is the tech titans continue to go all in on AI. So, Elon Musk unveiled a project he's calling Terrafab, which is a 25 billion chip fabrication facility in Austin Texas

which is a joint venture between Tesla, SpaceX, and xAI. Um he's targeting 2 nanometer process technology and he wants 80% of compute directed towards orbital AI satellites, 20% ground-based. No production timeline was given on that one. Uh Jeff Bezos is raising a hundred billion for project Prometheus to buy manufacturing companies and transform them with AI. The targets allegedly include semiconductors, aerospace, and defense. There've been meetings with Middle Eastern and Singaporean asset managers.

Excuse [clears throat] me. Mark Zuckerberg is building a personal AI CEO agent to bypass management layers at Meta, retrieving information that normally flow through multiple levels of employees. This is part of a broader push to make Meta's 78,000 person org quote AI native. And as a result, AI is eating jobs. It's even eating jobs in crypto where there were major job cuts at Algorand, Gemini, crypto.com, OP Labs, PIP Labs, Messari, and more. Um Gemini said AI is now too powerful not to use at Gemini and compared non-adoption to quote showing up at work with a typewriter.

Um recruiter Dan Esco pushed back saying, "I see no real indication the layoffs have anything to do with AI workforce replacement at scale, but rather saying it's an excuse and sector contraction has been the problem with job postings having fallen 80% year-over-year to about 6.5 per day. So, where we are now is we have a lot of these things being discussed. We have AI being given as a reason for many of the job cuts, and we have people making these physical infrastructure bets. But, I'll start with this one. So, Elon Musk and Terafab. Is this a real semiconductor

strategy? Is this part of Elon's rollout for the SpaceX IPO? Like, at where on a scale of real to not real, where do we put this thing? I call [ __ ] Whole thing is [ __ ] Okay, so you need 20 to 25 billion dollars to start a fab. A fab is one of the most complex technologies human beings have ever created second to the pyramids. TSM has invested 100 billions of dollars to figure this out. Um Tesla doesn't have the cash flow either to pull this off.

They uh have not figured this into the capex planning for next year, too. They generate Tesla does about 3 to 6 billion dollars in free cash flow. There's a range there because their Tesla auto sales are dropping quite a bit. I like the products, but I think they're phenomenal products. So, I'm I'm a believer in autonomous driving. I believe Tesla's got the edge in the in the US. I'm calling a spade a spade here. But, you need to finance investment with either operations or by diluting your shareholders. They're not going to sell 20 billion dollars uh on the market. Unlike uh Google, Tesla doesn't have a alternative way to compete to get lower cost

GPUs. So, I don't think this is going to go anywhere. Uh Elon's also the only one talking about data centers in space. I've listened to quite a few credible people say that it doesn't make any sense. The technology's not there. Jensen, the CEO of Nvidia himself, has said that, including people from SemiAnalysis, which covers the category. So, it it seems like Elon's just trying to sell more of the future. Tesla stock's been down 25% in the last one or two months. I think I I had a short on it until this morning, by the way. I'll probably be short again after a rally. So, full disclosure there.

Uh again, big believer in the technology, big believer in what Elon's done for human innovation, right? Uh but, I I don't think this goes anywhere. It's not real. On the AI side, I feel like this whole I have to fire all these people uh because of AI, um it's kind of just this um it gives companies an excuse to restructure um without having to like really explain the the true reason why they're want to restructure. It has very little to do with AI. It's an opportunity uh and an excuse. That's just the truth um and that's the case if your business model's not working.

Uh I'm not talking about any of those companies in specific, but you can say, "Oh, AI's coming. I'm going to fire my workforce and restructure." Right? It's just very clean. It's It's a beautiful excuse. Um I think that no surprise to anyone on this call, this opportunity really tells me why I'm so excited about crypto. Uh all this noise, all this chasing the hot new toy, and we'll get into Elon here in a second. But, I I literally just came back from downtown in New York City, where the CTO of DTCC was talking about how they're going to tokenize 200 trillion dollars in assets.

Like, come on. Um and and that's happening in real time, where we have DAS in New York this week. Every institutional's piling in. I could sense the energy in the room. There's standing room only, right? And so, like this makes me more excited to to be part of crypto, which is going to be totally integrated with AI going forward in whatever way, shape, and form it takes. Um I think Ram, it's hard to bet against bet against Elon over the years. Maybe you can do it on a on in a very, you know, different, I guess, windows, perhaps, and make money. But, I mean, this is the greatest entrepreneur and founder, you know, of within generations. Um So, I love the fact that he's thinking big.

As I as I watched his presentation over the weekend, there's a couple other cool like little Easter eggs that jumped out at me. Talking about how he's going to how he's how he thinks that new breakthroughs in physics are going to unlock other things. He said quantum without saying quantum. And so, those are the three technologies that I that I think about, AI, crypto, and then quantum. It sounds like he's starting to get his hand on the quantum side as well. Um You know, where do we go from here? It's also very much part of what we talked about previously, onshoring, onshoring, building chip capabilities onshore, resiliency. You know, is this our 1970s moment for for energy? Uh maybe we we need to onshore chips. Um and and if if Elon can do it, who else

is if it's not him. So, um too early to tell if it's going to be successful or not. Um for me, gets me very excited about um so many different things, so many different breakthroughs. There's going to be when you put all this money at AI that we're seeing, there's going to be innovations and breakthroughs that are going to like that are going to be second derivative and be incredible. Um that's what I'm looking for. Hopefully, some amazing startup founders come out of it. Um but again, I like this is a crypto macro show. I get excited about crypto more and more I hear about all this.

So, I'll hop in here. Go ahead. Go ahead. Go ahead. Just Just briefly, a few things. So, net engineers are being hired, not fired, in aggregate. If you look across the entire ecosystem. So, you're not seeing software engineer displacement from AI. That's one. Second, the companies that are laying off the most engineers are spending the most money on Nvidia, and they're issuing debt to finance their cash flows. That's Oracle and Amazon and Meta. This is all about free cash flow. They got to figure out a way to pay the bills.

Uh so, yeah, this is not about AI displacing uh human talent. That's not happening yet. So, I'll say the part of this that did catch my eye and was super interesting to me is actually what Bezos is up to. Cuz I know one of the topics Ram, you've talked about on here before, is where will the value accrual from AI ultimately reside in the market? Does it reside with the model companies or does it reside elsewhere? And so, as I look at what's going on here, if you have a guy who built one of, call it, the two biggest manufacturing behemoths out there, which was Amazon, right? In terms of operations, logistics, supply chains, moving goods

from A to B. Maybe the other one recently being Apple, which is fundamentally a hardware company itself. And he's looking at this saying, "Act- The place I think will have the value accrual is applying AI to manufacturing companies that are stuck previous generation regimes." That's a super interesting signal to me. Because remember, his original insight back in the day was, "Wait a minute. Why don't I apply the AI to this fragment or it's not AI, the internet in that case, to this fragmented sort of idiosyncratic, not particularly efficient market called books,

right? And brought Amazon into the world to massively compress margins and improve things in that space. Is he looking to run that playbook again on manufacturing writ large with AI? That becomes a question to me as he's unveiling this sort of thing. So, Chris, you're an investor in early stage companies. Ram, you're an investor in later stage stuff. Is this a sign that the value accrual of AI is not going to go to the model companies, but rather to the people implementing it to improve their own margins?

Yeah, I mean, like the benefits are there. It's the users, the end users. The the venture capital firms are subsidizing the real economy. Financial services firms are benefiting. Uh we had someone on our team use Claude co-work to prefill 20 sub docs with a command, the basic command. Like, those are the people that we're all benefiting. Claude is losing money. They're handing value to end consumer because they're gaining so much share from OpenAI. People are court-cutting OpenAI and switching over to Claude. We've done the same. And so, it's all this venture capital money is is subsidizing the real economy. It's not this esoteric innovation like some transformation in biotechnology.

It is basic day-to-day workflow automation, research. We're using it in our investment processes every single day. I'm sure everyone is. It's uh speed of memo generation, investment proposal generation. So, that's where the value capture is. You know, in capitalism, the consumer wins. Same thing is happening here. I'd say on on the on the early stage venture side, you know, we always are looking at the intersection of crypto and AI.

And you know, this this space has a lot of promise. Um projects like uh BitTensor um and and others. Um one thing that we're watching is, you know, things like payments. And, you know, we had Coinbase launch this XF02 protocol standard. And Stripe released its equivalent, NPP. We haven't seen that take off just yet, either either one of those. Um and one of the things crypto has struggled with for a long time is, you know, it's not if you build it, they will come. I think there's some of that going on in AI as well. And so, really looking to see, you know, some of that real product market fit at that intersection. You know, I think it's going to happen. I think agentic

payments is going to be big. We haven't seen that evidence yet. Um but that's something that I'm I'm I'm really really focusing on. All right. So, if we're agreeing, and Ram, I agree with you that the history of capitalism has been the greatest benefits ultimately get delivered to the end consumer on that front. That like largely a factual statement. And that at least some of these announcements from firms that are in some ways call it presaging other concerns or like avoiding the real reason for the layoffs.

Do we think Zuckerberg building an AI agent to skip the org chart is going to be a leading indicator for people in middle management both at Meta and perhaps writ large that your days are numbered because if like Ram, to take your example, if you're eliminating a lot of the busy work, you're freeing up those employees to call it manage the work that is being done there and then communicate directly about that sort of thing. Are we going to be compressing org charts, eliminating the middle management people, and eliminating a lot of the repetitive work and leaving the people who are architecting and designing? Is that the source of these layoffs? Yeah. Yeah, well, you know, one just orient the audience. I thought that

headline coming out that Zuckerberg wanted to create an AI executive to help him do his job is amazing. Like Zuck wants to create an AI robot to run Meta. We already have a robot running Meta. So, this is more evidence that we live in a simulation. Uh but yeah, look, I think uh you're going to see the more of the menial tasks go away. That's always the history of this stuff, right? The the toll booth collector gets disrupted. The the switchboard operator gets disrupted. They move on to a higher value-added, more meaningful, more satisfying uh work life. You know, this someone in intensive care unit who every 30 minutes must rotate a body.

That person's going to get a higher quality of life and it's going to lower the cost of care and delivery. It's a menial thankless chore that's essential. Uh so, uh I I I don't think you're going to see this massive disruption. Like who whose road map is going to suddenly evaporate? Have you ever seen technology come be on a road map and say, "Okay, we're good now. We wrapped up the road map. We shipped our product. We are good to go." There's always new innovation. Uh so, you know, you will still have humans playing the role of setting vision, AI accountability, AI supervision, uh quality assurance, uh listening to the customer. Those types of roles will and work functions

will take up more of the time. Chris, what do you think? Is this bad news for middle management at Meta? Uh you know, honestly, people are resilient and I I don't bet against people. They tend to adapt very thoughtfully to innovation and technology. When I was growing up, we didn't have like influencers. Um now that's that's a thing. Um so, uh I think Ram's right. You'll you'll have menial tasks, you know, maybe travel agents, but then it all comes back, right? And it comes back in a different form. We're super high touch. You know, the people will want that human connection. They want that super high touch person-to-person feeling for

certain types of things. Once you get rid of it, um I I I'm not fussed, but people are super adaptive. The economy will shift. Um birth rate's going down anyway, so it's going to reach a natural stasis. Um and I think it's going to be very complimentary to our civilization going forward. Yeah, and what's interesting to me is the skill sets that it pushes forward because I have a friend, for instance, who's a founder in the AI space, um working on a product that does signals actually for supply chain disruption. So, wow has that been timely lately, by the way.

Echo Labs, if you're in that space. But we were just talking today and she was telling me, "I don't think I'm the best engineer in the world, but the job now is becoming more about architecture, more about high-touch customer service, more about understanding how to communicate and deliver things for your end clients." And she was saying, "This favors me. If it was just a fair game of engineering skills, I'd have gotten my ass beat by some 12-year-old in China." Right, to paraphrase. And I think the one thing we're not going to be able to replicate with AI is human interaction. Right? Like even if you have a robot doing your menial tasks, can it replicate the actual act of interacting with another human being?

Put differently, how soon will the three of us be replaced by AI to do this podcast? Well, Yeah, and then what and then what do you study, right? Do you study computer science like the last generation, you know, needed to do? Do you study humanities now to be more effective in the workforce? You know, I think the easy answer is, "Oh, now you got to be humanities major because they know how to think." I think that's [ __ ] I think you just have to be a critical thinker in whatever discipline that you want, and that will help you inform in how to best partner in your discipline with the AI. Uh I'm not too concerned about particular discipline losing out.

I do get worried about, you know, this decline in population and just replacing more and more people with robots. It's easier to have more conflict and war when you've got robots that are soldiers. There's no real cost. And uh I you know, I I I hope we vector toward a society where you continue to have humans in the loop. But if if you're having more of this automated lethality lethality, then the cost of conflict declines. You know, so that that's my concern.

Like when you have population growth, you have more people that have a stake in the system. You know, people in China don't want to see their only child go to war, for example. But Lindsey Graham, who's uh a boomer, loves seemingly lots of different wars. Uh you know, he's not someone with kids that he's going to see presumably con- conduct those kinds of wars. So, you know, that's the downside from from all of this is you know, you you lose the you you lose the cost of the side. You know, there's a there's a period where Mark Zuckerberg, he made sure to harvest, hunt, or kill all of his food. He had a direct visceral connection with everything he consu- consumed, right?

So, if he was going to have chicken, he took the chicken and he he uh killed the chicken. I'm not saying people should do that, but you're going to see more me- mechanistic societies like that evolve where why wouldn't you just con- con- continue conflict if the cost of it is measured in $8,000 robots at scale. I wouldn't that increase the likelihood of actors like China then investing in robots uh engaging in conflict also. So, you know, I think that's the that's a risk, a real risk that we need to consider.

So, that's the inflationary angle for AI then Ram? That's the That's the sign angle of it. I'll go back and forth on it. I'm on the side like humans make for terrible politicians, right? You most of them you can't trust. They don't follow through with they say. You know, Trump was elected office on a campaign of disinflation, uh you know, deregulation, and no wars. And you've got economic populism, and you've got you know, two conflicts out there. So, AI might have more accountability, uh but I do think you need better humans. You know, you still need to have human supervision

of uh of these AIs. And uh you know, we'll see what happens. I think in the midterms, the Dems have a real shot of taking not just the House, but I think on Polymarket, the Senate was 50/50. I think Americans want something that neither the left or the right are offering right now, which is something that is uh it was a type of policy mix that Trump was offering when he ran for office, but delivered by a different personality. You're seeing the same thing, Ram, Donny in New York, too, right? Like ran on affordability. First thing he's doing is trying to spend more and raise taxes.

Back to your point on accountability, like neither party is doing a very good job of that. I will say I am highly [snorts] skeptical of the Polymarket Senate odds because when you drill down into that and start looking under the hood, you're predicting Democratic victories in places like Alaska and Texas in Senate races, which the for those who have not looked, go look at the Senate map of where the elections actually are. I feel like that one's very much vibes and wish casting. Like the left has been convinced that Texas is within reach for what, like four Senate elections in a row, and they've just gotten absolutely punched in the face every single time. So, I think part of what we're revealing here, Ram, to your point, is dissatisfaction

with the status quo. I don't think it necessarily means things flip. I think what's getting interesting to me, and like I have students in classes, so I see the onward march of this. And if you're a politician and you're listening to this, pay attention. Both political parties are becoming increasingly unpopular over time, which opens the door for much more radical change than you might expect. Like if you're an incumbent in either party, lots of people really don't like you. Yeah. Yeah, look, if you're a renegade in your own party, you're also more popular. Look at Fetterman on the Democratic side, or look at like Anna Paulina, who's advancing disclosure on issues like UAPs, or Thomas Massie, who's leading on Epstein disclosure.

Like those folks are renegades in their own parties, but they're gaining more funding and more uh national recognition. All right. Well, on that note, because we are slowly cruising towards the finish line, I will hit Chris with this one for our lightning round. Chris, if you were betting on Polymarket, Republicans or Democrats for the Senate? I think Republicans still. Um I'm I'm with Chris too on that thing. I I think once the the things settle with the war, you get oil down a little bit, gas prices come down, you get the Clarity Act, um which I'm excited about, maybe just me, which I think is happening now. I'm up

like from 51% to I'm around 55%. I think it happens. We had some I knew this interest thing was going to get sorted completely. Um now it's just a matter of the horse trading as we get to the finish line, which could go in either direction, but I think the Republicans stay in the Senate. I probably House goes to the the Democrats. All right. So, >> Yeah, good. There you go. We're three for three on that prediction, which is dangerous. Um so on that note, we will end here for today. So, thank you for joining us for this episode of Bits and Bips. We'll be back in 1 week to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone.