E66: $FB's big drop, Rogan/Spotify mess, Xi/Putin meetup & supply chain issues with Ryan Petersen

So I'm really worried that we're going to find out in six months or in some time period in the future here, that people have ordered way too many goods, that these companies expected demand to stay high and keep booming. ... At some point, consumers start going to restaurants and start traveling a lot more. You get pre-COVID consumption patterns, and all these companies get stuck with way too much inventory, that they paid way too much to ship and get delivered and they can't sell it. And so I'd be very worried for like, middle market kind of retail, direct to consumer ecom, these types of businesses that aren't very sophisticated in demand planning and end up with way too much inventory.

And so it seems like the bigger companies who have influence were able to manage through it. These smaller companies, to your point, who really do rely on many actors in the supply chain have been really thrown left and right that they probably don't know where demand really is.

But it will reduce the supply of shipping capacity and slow everything down another 30 percent. That takes place January 1st, 2023 It's getting very little attention, but to my view, it's going to be massively disruptive if we slow everything down, reduce the capacity of the network that much further. Prices are going to go to the moon.

One is that when they talked about usage kind of flattening and starting to decay, what they're really talking about is TikTok. And I think what we learned is that TikTok is an enormous threat and a huge competitive force now in the consumer social app ecosystem. ... The second is that Facebook is fundamentally an app that sits inside of an ecosystem that is subject to the rules of the platform owner, and that's Apple and Google. And so this IDFA change, so the change in how you can track advertisers, Facebook said is going to have a $10 billion impact in 2022

Well, they're losing $10 billion a year now because of this one permissions change that Apple has made, right? Because they're completely dependent on Apple's operating system for a big portion of their revenue. So, what is their defense against that? I mean, they're really pretty helpless.

But Facebook always knew. And as we just discovered, that was always going to be a weak point for them because they were dependent upon hardware devices that were going to let them do that tracking across apps and across sites.

It says a majority of voters, 55% say COVID should be treated as an endemic disease, while a majority of Democrats say it should be continued to be treated as an emergency. ... The Monmouth poll just came out where 89% of Republicans, 71% of of independents say that it's time we accept COVID is here to stay and we need to get on with our lives. ... So the reality is that the rest of the country, I think, has moved on. It's ready to move on.

You know what? If you go to the ski slopes, there is nobody with a mask on and nobody's enforcing it and no restaurants. And this is in Democratic country. Everybody has moved on at this point.

Yeah, I mean, it's a bubble move. Because, look, when you're in an up market and the market is super frothy, we had in hindsight last year was a giant asset bubble funded by all this liquidity coming out of the Fed and the federal government. So yeah, in a bubble like that, all investors care about is the growth story. And so Facebook went all in on this story around Metaverse ... They lost 6 billion last year. They lost 10 billion this year. So the losses are escalating. ... But Facebook basically took themselves out of the sort of the market leader bucket and put themselves in the growth bucket.

Have you played the games where you like move continuously through space? And like when you do that, it's like you're going to throw up. I mean, I'm not sure that this notion that that becomes the new computing modality is like a fair and true notion. ... it may end up becoming kind of a niche entertainment device, almost like a Nintendo Switch where there's a, you know, a mode when you're using it. But I'm not sure it replaces traditional static two dimensional computing in front of you. The jury's still out.

In all of these things, when you build hardware, I think you can take a lot of parallels from what happened in the PC space. ... The value created to the application layer, to the operating system, and the people that can actually build ecosystems are typically the ones that win, and the people that already have an ecosystem and all they have to do is port somebody from, you know, platform A to platform B, has a meaningful advantage over somebody that has to convince you to come to a new platform altogether. ... If you play that out in VR, what you really need is just a bag full of cash because if you give developers a subsidized incentive to build for your platform, they'll do it. So then, again, if you rank the companies, you just need to look at how much cash do they have because those with the most cash have it.

It's a great point you bring up because they also started investing in their own chipset. And I think all of that chipset innovation gives them a dramatic advantage in having smaller batteries and more processing power in a headset. If it does work, which what chips does, what chip asset does Facebook have? None.

One thing I'll say in defense of Facebook is I think that all of this anti-trust scrutiny is a little bit ridiculous today, and it looks pretty ridiculous. ... It seems that capitalism is pretty much working as intended because if you looked at Google's results, if you looked at Snap's results, at Pinterest's results, at Amazon's results, there is a vibrant and growing advertising ecosystem. By no means could you claim that Facebook has any real monopoly on that, number one. ... And so anybody that thinks that Facebook is a monopoly today, I think is a little misguided. ... And so trying to legislate them as a monopoly in that ecosystem is insane today.

Yeah, look, who should get regulated on antitrust grounds? Apple. You know, Apple is, and maybe Google. Why? Well, they're the big monopolists. I mean, they control the operating system. ... There are real antitrust concerns with those three companies, the Facebook way less so. And yet they get the brunt of the attacks.

And so the result will actually show up down the road when all of a sudden they miss revenue three, four quarters down the road. And that's why I've been saying for a couple of shows now that the biggest thing I'm concerned about is when the revenue shortfalls start to hit the companies that are dependent on these supply chains. ... And just this quarter with the quarterly earnings, we're now seeing that the company yesterday that reported called Ingredion, their big food ingredients company, and they just reported how supply chain problems have now backed up to affect. And the stock was down like 10%, 11% yesterday.

That's an enormous capital problem that these companies now all of a sudden will face, right? So like, the next step beyond all of the supply chain issues could be, and I think Sacks has been talking about this a lot, like a pretty bad recession if these companies have all this inventory and they don't know how to get working capital.

And, you know, we know that inflation is a huge problem. The Fed now is raising rates or projecting raising rates very quickly, which is creating. ... It's a very blunt instrument. It could cause a downturn or recession. So that's the big problem.

I mean, you could have rewritten that press release as you know, we will, we want to try to destroy US hegemony and replace it with ourselves.

This is the beginning of the end of US cultural and economic influence globally, or dominance, rather influence globally. And I think that it's, you know, something that we've talked about quite a lot. You know, I mentioned in the prediction episode that I thought that Putin was going to play a major role this year. ... he's clearly not just, you know, out for his own interests, but he's going to play a really important role in China's rise to economic and cultural dominance.

Taiwan is a much more complicated situation. I do think we have a vital national interest there.

So I think there is good news where part of the strategic vital interests for Taiwan is because they have critical resources that we need, and we depend on, and specifically those are semiconductors. We have now, I think, allocated 50, $100 billion of capital, of CapEx across a bunch of companies that have committed to building domestic capability.

And you know, what was PayPal doing? I wrote a story for Barry Weiss, for her substack about how PayPal was taking the lead in financial deplatforming. They were working with the ADL and the SPLC to kick to identify groups to kick off their platform. So that's what management was spending their cycles on figuring out how not to grow, how to kick people off their platform and trying to figure out how to get more people on it. ... You can waste your management cycles on stuff like that. Now their stock is down 25%.

Flexport already made this technology. We could 10x the throughput of one of these ports overnight ... We already have this tech. So it's a matter of implementation, deployment, and how do you get around a lot of people that don't really want to see better running ports. And it's pretty sad to sit where I sit.

So in other words, when you control an operating system and then there's developers or other, you know, downstream players on that ecosystem, you have to treat them fairly. You can't privilege your own policy to then dominate vertical after vertical.

Well, I think the trade did what it was supposed to do, which is in a period of a lot of volatility. I saw an opportunity to, you know, just reduce my risk exposure. ... And the best way that I figured out how to do that was to do the spread trade. And so, you know, what I saw at the time was that there is one business above all others that I think is immune amongst big tech from any sort of real long-term issues, and that's Microsoft. ... The second safest company is Google. And the reason is that Google has the best of both worlds. ... And I just kind of wanted to create a spread between those who were the most inoculated to those that were the most at risk. As it turned out, Netflix puked it up. Facebook puked it up.

And so, you know, in November of last year, I was trying to figure out what I could do to shield myself. And the reason I wanted to shield myself was because I saw Elon and Jeff in part selling

He is the biggest figure in independent journalism. He gets 11 million viewers every week. ... And the same week, we saw that Tucker Carlson now gets more young Democrats listening to his show than CNN and MSNBC. And I'm telling you, this is the reason why.

but also I saw that clearly we were going to go through a period where that high growth tech was going to trade down. So I sold some of that high growth tech ... And what he said was when you see a drawdown, meaning when the markets go down, it'll affect high growth tech first. It ended up touching a bunch of other areas. Second, like biotech. But he said this key thing, which is Big Tech will be the last to crack. But when they do, they are going to get shot.

There's $17 billion allocated to ports. I went and read it and I couldn't find any money that was going to be spent on building ports. It was like, study this. ... it's like things like, oh, each state must create our supply chain readiness report about it's like, what are you talking about? ... But like to then create studies and consultants, I don't know that any of it's going to hit the ground and shovel.

There's a term in Washington, which is called the Christmas tree bill. And the infrastructure bill is an example of that, which is this is not a directed shot on goal. What this is is a random tree that you go and hang little things on top of. ... And so to your point, the fact that Ryan can say there's 17 billion dollars allocated to something like ports, but it's unclear to him who's an expert in the space where that money goes and how it's spent gives us zero chance of figuring this out.

I think that politicians are using the threat of regulation to try and drive the speech policies they want on these social networks. That's what's really going on. ... Because the people in Washington are trying to coerce Facebook into controlling what they call misinformation, which is really just speech they don't like. And that is highly inappropriate.

And in all these cases, from Google to YouTube to Twitter and now to Spotify, the idea of being just an access, a platform for access is proving to be wrong. All of them are de facto publishers. They ultimately have to make decisions about what they do and don't let on the platform. ... And now they're finding that there is no way to avoid being treated like a publisher. And a publisher has someone that's called an editor and an editor decides what is and isn't put on that publishing platform, as has always been the case in old media.

In my view, that would be a shame if we we have the best companies in the world who need to be able to source raw materials, components, finished goods anywhere on planet Earth. And we should have a modern infrastructure that makes that possible instead of being like, oh, we can't trade with the rest of the world. So we're going to become like self-sufficient. ... But you're right. That might be an end result is people can't rely on these supply chains and start saying, hey, let's manufacture at home or let's manufacture in Latin America. Let's manufacture closer to home. To my perspective, that would be a shame.

And so we have to make sure we follow through on that and that's successful. And the reason is that it gives us optionality. ... And so we have to invest in the United States. So the solution to all of these things is we cannot be overly dependent on any one country, any one shipping lane, any one product, any one natural resource. You just can't do that anymore.