AI Kill Switches, Apple's New Foldable iPhone, & Interest Rates

0:00Welcome to Digital Currents, brought to you by Moring Creek Digital, I'm Xavier Segura. Each episode we spotlight the topics and people changing the tech industry, with the focus on AI, blockchain, chips, and big data. Thanks for listening and please make sure to subscribe if you like what you hear. And remember, stay current. Mark, happy Friday, happy week 2. We were just commenting in the green room that we just were thinking the digital current's audience that had been responding well in the couple weeks, although we don't do it for it's more happy when they do come in. Absolutely, and I'm glad you started off on a happy note because we are recording this

1:03on a very somber day, 25th anniversary of 9-11. So condolences to all those impacted directly, all of us were impacted and it changed the world forever. But, you know, prayer out to all of those in memorial. But, you know, and we kind of got the memo on the blue, you know, it's a little, you're a little dookie, minds a little more in Notre Dame. And it's, and I'm wearing the Notre Dame shirt because I, my granddaughter made me this cool bracelet, right? I love that. I love that. And I, but her kit was more California dreaming, so I ended up with UCLA. Blue and gold instead of Notre Dame, blue and gold. So I think I'm going to this weekend ask her to make me an orange one for Bitcoin orange. So I do have the orange, all the way orange pants on today. And I went back, I know people are sick of seeing it, but I went back to the rollercoaster

2:07sock game. You know, we have been stuck at this same level since August 21st. Got it going up and down and up and down between 77 and 80. I think we touched 81. We touched, you know, 76. But we've been stuck in this range and I don't know how long it's going to go. And the flip side of that is, you were getting closer and closer and closer to October 5th. And it's funny. There's some other guys on the internet that I banter with, shall we say. And a couple of them are just incensed. They're like, how can you actually believe that some random date matters? Like, look, cycles are real. I know people don't want to believe that. And it's not just Bitcoin cycles, but economic cycles and business cycles and industry cycles. And it's because humans are going to human.

3:08And so it doesn't have to be exactly October 5th. But I still feel it's kind of like the weight of today, right? Celebrating this bad day, not celebrating, but remembering, remembering. This definitely not celebrating. Remembering this bad day, the weight of that, it hangs on you, right? During the day, you know, you have memories of a friend or somebody you knew or somebody who lost somebody. You know, I have a coworker that, you know, lost your brother. And there was a guy that I knew from UNC. And so that's heavy. And Bitcoin feels heavy. And it just feels heavy. You know, we got a Boolean. We got that run from 62 to 77 in like 11 minutes. It wasn't 11 minutes, but it was a couple of days. And since then, you know, we got so overbought.

4:09And again, all the rocket ship emojis were out again and we're going to the moon. And but now we're kind of, it just feels heavy. And I'm not saying it's going to crash. And I'm not saying we have to have another flush or the October 5th has to be the final bottom. But just, you know, it was a conference last two days with a bunch of RAs. And people were saying, you know, what do you do? I give you the same advice all the time. I don't, I think we're out of the distributive phase that started last October. But we haven't started the accumulation phase. Now, when that starts, you know, I saw a lot of things this week, people saying, ah, you know, we're going to the upper bound now is 438,000. All right. Can you draw lines on a chart? You can make them say whatever you want. But that's a fur piece from where we are, right?

5:16Yeah.

6:55Yeah. But, you know, it's, it's amazing. It has been a, you know, tough week, a heavy, heavy week. The markets felt heavy all week. Things were selling off. But, and I didn't see what happened, but literally as, as we were setting up and going on air here, probably Donald said something, but oil prices down 4%, market shot up 1%, um, a lot of the tech related stuff up significantly more than that. Now, classic Friday activity. Now, it's usually Friday at like 345, you know, five minutes after Don Jr. puts on a big

7:56trade. Well, somebody related to Don Jr. puts on a big trade. Um, or whoever is part of that, you know, buy the, what is it? True social. You get to buy the true social ahead of the release. And now the latest one is he's going to send us all 5 grand if we vote Republican. Like really? Hey. I'm going to take the under. I'm going to take the under that I get a check for 5. So we'll take the polymarket bet. And that's one thing to mark. We started looking at some of the prediction markets. Um, that's, that's the other like larger crypto story. And even in some of the news aggregation sites that I get some of the news from, from our show, there is always a piece about, uh, some polymarket bet at the, at the very bottom. It's usually pretty topical. So for around, you know, football season, it'll be, you know, this is a nut or the other team. Uh, and of course, it tends to also have politics where we, we, we see some people are getting excluded from the platform, including former disgraced, uh, politicians, which I think is,

9:00you know, very, very telling of how, you know, easily those, those markets have been manipulated. Um, and then of course, you know, as we kind of think about what's, what's been happening more, more deeply in, in our market, Mark, I wanted to get your, your thoughts on the hardware piece. Actually, I was just talking with Tim before we, before we jumped on our producer. So Apple has released this new tech, but it's not really new, Mark. It's, it's one of these times two. So it goes out further. Um, and obviously we've seen that already happen with, with Samsung, uh, it's 2000 bucks. So it's basically, I, you know, what would be an expensive computer at that point, it's called a spadeus bed using a beautiful 500, you know, 2000. And you know, my prediction on this is you're going to have a lot of the Apple heads flock to this as they tend to do. Um, but this is a pretty seismic shift because Steve Jobs would be rolling over in his grave in terms of the changes that, uh, have happened.

10:04It's so, it's so ugly. It's so non functional. Like it's glass everywhere. How are you going to protect it? People are going to drop it. It's going to shatter. Um, it's, I, and, you know, the back, like this would never happen if Steve Jobs who are alive, right? There's no way it would bolt out. And it just, it just wouldn't. And, and the, and now the new one, it's like, it's like this high. I mean, it's, it's super high. And it's just, and then I love the meme of the alien hands because to actually hold it, right? To hold it. Your fingers would have to be super long. And it's, they literally Photoshopped the picture of someone's hand. And, and I'm like, there's no hand.

11:06I mean, maybe Tony Robbins hand, maybe, you know, or he, Kima Lajuan's hand or something. But it's for athletes. There's, there's, yeah, it's made for, it's made for basketball players. Um, and, and, and large inspirational speakers. But, right, normal people. I mean, there's just no way that's going in, in your hand. So I, I get the idea, you know, it's a, a tablet, you know, phone tablet, but now it has more of a kind of phone factor because it folds in half and opens up like, okay, but I don't, I, maybe I'm just old and like, if you're going to have a flip phone, have a flip phone, right? You know, clamshell folds in half, fixing your pocket. Great. Um, if you're going to have a smartphone, have a smartphone, if you're going to have a tablet, but I just don't, I don't, I don't see this working.

12:09And I think somebody pointed out that the fold, like the Samsung's fold seems engineered pretty well, at least so far. It hadn't been a lot of, you know, that weird shadowing or the light. Um, at least, and maybe this was, again, maybe this is Photoshop too or AI. It appeared that the, um, the engineering of the Apple wasn't as good, uh, that there was a little bit of like glow behind the, the fold or something. So well, I mean, you've probably also been seeing that immediately Samsung, uh, took opportunity to fight back with some kind of cheeky ads, uh, directed at the Apple, uh, loyalists. Um, and then the reaction has been a little bit mixed by the markets because, you know, and the announcement was made, it Apple shares dropped, uh, a little bit and they've since kind of recovered. But you mentioned the point about you're not seeing any kind of like normal person, uh, interacting with this phone.

13:10Well, how, how does this strike you mark for normal? It starts at $2,000, but it can go as much as $3,200, which certainly would not, uh, align with what a normal purchase, uh, would look like. But I think it's going to have the same fate as their, uh, the, uh, the market. Our headset, right? Say it. The, the, the Apple heads, you know, or the, the official and autos are, are going to pay up for it. And then they're going to realize, oh my god, I spent all this money and it's not that good. And, and, and look, I've never, I've never used the Apple headset because it's so expensive. I didn't even want to try it in case I might like it. I'm not, I'm just not going to pay that much money. My Oculus is fine. And I don't even use my Oculus that much. I mean, I occasionally use it, but, um, I just, I, I had the, it was engine, but, you know, sports season, football, back and, and we're all excited.

14:12And, you know, there's this whole question about, you know, USC opened up and there's no one. I mean, not no one, but, but very few people in the stands. And I'm like, well, why is that? Yeah. And I'm like, well, part of it is if I'm like, my dad used to be a really big football fan. And we have goad games and I asked him the other day, I said, you know, Notre Dame's coming here to Chapel Hill. And he, do you want to go? He's like, hmm, now, big screen, living room, refrigerator, not out in the sun. I mean, I like, okay. I mean, I, I, and I can't argue, right? More replays. Um, and, and I think that's part of it. Right? I think the experience, but, but what, what they promised us was going to be the, the front row seat, three, you know, you put a camera at midfield, 360, and then you can put on your headset and it's like you're sitting in that seat. They could charge me a decent amount of money for that, right?

15:14To be 50 R line for big games that I don't really want to travel to. Um, I would pay for that. If too many people paid for that, would the, the stands be empty? And anyway, and then you go down the next iteration, which I, I really don't think this is going to happen. Maybe it will, but I, I don't think so is, or is just going to replace all players with robots. And I do, I, would I really watch that? And someone argue, well, you don't know those people, right? They're not your friends, right? They're just, they're just athletes on the field. Why, why couldn't they be robots? I mean, I guess, but, I don't know. In my case, Mark, you'd have to think that the big winner would be Fox because they have had a robot in football. Amen. At least one year. You know what? That is, that is a good point. That is, that is exactly right. They have had the robot, the robot players for a long time.

16:17And, and you know, what was the, there was in the Super Bowl, there was the alternative where they did like the anime characters or something, like in real time, Peyton and Eli were announcing it. I, so, so they've tried, but I think like 11 people watched and, right, exactly. And look, we've all seen the movie of, you know, the robot boxing thing. It was actually a pretty good movie. I did like it. Iron something, I can't remember. But it's good. And, and maybe I just like the actor, but, but, you know, but we've seen those and, you know, maybe, but not yet, definitely not. Yeah. And the one, the one that you know, it's bugging me is this, this feeding of the nonsense AI videos. So the clearly AI videos, right. But he wants pushing them as if they're real videos of robots making other robots.

17:22Like, that's, that's, that's not actually what's happening. And that, it bothers me that we don't have something that says this was created by AI. Because there's so much stuff that you see, it looks almost real, but you're like, there's something off and is it, is it? And I think I said this on one of the shows couple weeks goes, you know, at least once or twice a week, someone in the family will, will put something on the family thread. And our 15 year olds, I guess that's, that's AI. Like he can see it immediately. But, you know, I've been fooled many, many times and I just hate it. I, I want it to say this is not real. So it's getting harder and harder to distinguish and blur that line mark. And it speaks to the idea about policy always lagging behind technology. And as we've seen, this is a story that was covered in, in tech crunch, where we know that like,

18:23you have that kind of expectation that when you see reviews online, it's like, well, who's actually posting this? Yes. It's the tails usually, right? Like people who were just amazed at what they got or people that were amazed at what they didn't get. Right. And so it's sort of very, very polarized. Now there is an AI solution for that. So AI is making it easier to fill forms and file complaints around public services around the world that have been seeing huge jumps in applications and other requests. So we had some numbers and it was, you know, just crazy amounts of jumps like, did you know, Mark, that the CFTC saw 5x growth in complaints over the same period from year, year over year? Well, and what's so ridiculous about that is you're leading the witness, right? Yeah. I mean, oh, here's a complaint already created for you. Why don't you submit it? Those aren't my thoughts. Those are your thoughts. And who's programming those thoughts?

19:23In fact, I'm at the point where I'm, well, let's start with the, we have to go sinister Saturday because, of course, you know, of where we're. And the most sinister is, is all of these people at the top of these, these AI companies and the VCs are all saying, we're all going to die. I mean, there was one yesterday by a guy I actually thought I liked wrote this long thread about, I hate this is bad news, but, but, you know, I've talked to a lot of people and I've been around and, and yep, we're all going to die. Like, that is, it's just, it's just, one is irresponsible to, it's fear, mongering and clickbaiting. And I don't know if I even believe that he believes it. And, and it's, it's pissing me off. So that's the first thing. But, right. What's the worst thing about it? Why? Why would people be creating this fear of AGI and, and, and the,

20:29AI and it's going to kill us all. Why else? Because, oh, well, but we have the solution. So if you just give us all of your trust and, and just give up all your liberties and, and, and we'll protect it's kind of like what happened after 9-11, right? I mean, oh, just, just give up all your, and let us surveil you all the time and, and you'll be a patriot. Remember, and we're going to come back to the name of acts because they, they did put a new clarity act up for, up for vote, I think next week. But, the, my point is my, have you heard of this show silos? Of course, on Apple TV. So Apple TV is slept on for shows, but they make incredible shows like Ted Lasso and, oh, my God, Ted Lasso. So good. Although I'll tell you what, this new season of, of Lasso, I'm not, I'm not getting it. I'm like, they're trying so hard to put all this stuff.

21:34I like to give me the comedy. I, I enjoyed the comedy. I, I don't, and, and I like the inspirational stuff from Ted, but I don't need all the other social commentary and, and, and, and, and, and, and, I just, I'd give me comedy. I, that's what I want. That's what I want. Anyway, but, but silos, I've really washed it. My wife is, where I've does needle point and she's, I don't know how she can do this, but she can needle point and she needs something on the background. So she kind of has one eye on the TV and one eye on the needle point. And so I've been in the room when this show is on a handful of times. And, but I was, I was there the other night and, there's this, so there's the, you know, the mess. If you haven't seen the show, there's this trillionaire, which is clearly Elon Musk. And, and he's concerned that the world's going to end. And so everyone has to go in these silos. And so, but there's two classes of silos.

22:36There's the silos for him and his, his bodies. And then there's the silos for everybody else. And they're kind of crappy, but, but whatever. So, and if you come out, they kill you. So it's, it's kind of a bad, bad thing. But, long story short, is there's this one where the elites are about to flood the silo and kill all the people because they're rebellious. Like, well, who decided they're rebellious? I mean, okay. And this woman is talking to the algorithm, right? The big, all knowing, all seeing AI. And it's a freaking human on the other side. And then it disguises his voice as if it's the algorithm. And I'm like, oh my god, that is exactly what they're doing. And I'm like, is this prescriptive programming, right? Is this, is this not like fiction? This is like, we're telling you what we're going to do.

23:38And I don't want to go into silo. Like, right now, Sam, guys, Elon, no interest. And going into silo. So don't trigger the bomb. Don't, you know, create this trillionaire opportunity for yourself. So, and we also, I, I, I'm a little freaked out about it, actually. Yeah, it's fine that you should mention that mark because it does hit the, uh, the front page of, of the Wall Street Journal. And, you know, you got to wonder if this is life imitating art or the other way around because there was, um, basically this is prompted by, uh, a former employee of Enthropic, uh, basically sounding off the alarm bells, saying that A models could destroy civilization. Uh, and so when you have that kind of alarmist activity, uh, it creates a lot of, you know, call the action or at least call to click on the article, which, which I did happily, actually.

24:39Um, and then kind of look to see, you know, what, what's really behind there? When we think about Enthropic in particular, Mark, if you recall, they were caught up in a lot of controversy lately with, uh, Department of Defense or Department of War. And the idea behind that was, uh, autonomous weaponry and mass surveillance of US citizens, of which they said, you know, we're not going to allow that. They held their ground and that didn't occur, at least with Enthropic. Chad GBT was happy to oblige, might I add? Um, and I think that that's kind of the point, right? Is that there are so many outlets for our data to be consumed by large companies because we are willingly or unknowingly, I think first, I'm not only now willing to give that up. And that kind of creates this, this challenge here. And I think one of the interesting pieces of the article was that there was this call for a new federal, federal regulatory agency, Charlotte energy and nuclear, uh, you know, energy and airplane that would have so called kill switches that could shut down AI systems when they behave dangerously.

25:42So I think of, um, you know, we love our moves on the show, uh, Ultron, uh, the rise of Ultron with, um, Rob Donand Jr. And on the rest of the cast, uh, in, in the Marvel Cinematic Universe, uh, same, same idea. It's very hard to have a kill switch in that sort of way. Maybe you could have like an EMP, but that would cause much more devastation. Uh, and, and, and again, what they're really saying is, we need to be in charge of all the switches, not just because, right? Oh, well, first we need an agency just to oversee the nuclear to make sure that they don't trigger a nuclear. And well, but then it, you know, the electric grid, we need to control the electric grid. So, and, you know, it was interesting. I was at this conference and I was, I was talking this guy. Interesting. Um, he's a ex intelligence officer. There's nothing wrong with that.

26:42But, and really interesting guy. And now he's building a business around tiny houses, which, you know, on the surface is awesome. Right? Here's a crazy stat. There are 150 million jobs in the United States. Okay. Big number 105 of the 150 make $30 or less an hour. Two thirds of the jobs in this country make less than $30 an hour. So rent is becoming increasingly unaffordable. So it's got these, you know, tiny houses to replace, you know, apartment, multifamily. And it sounds great. And I was like, all in. And then I kind of looked and it's like, well, they're gated. They got flock cameras. I'm going, are these communities or these internment camps?

27:50Are we trying to round up people and put them in a place where literally we could push a switch and lock them in or lock them out? And we're going to surveil them 100% of the time in exchange for low rent. And, and I, and maybe it's all just a coincidence that he was an intelligence officer. Now he's doing this. I mean, it just, I kind of have a hard moment. I hope I'm wrong. I hope I'm just going down the sinister Saturday path for no good reason. But, but there was a, there was a picture there. And again, this is my personal pet peeve and my family's tired to hear me. Right. Everything's gray. All the buildings are gray. All the cars are gray. Everything's gray. And there was a picture of these row houses, little, little houses with cyber trucks in front of them. And all the houses were gray. So at least this guy, his houses are pastel colors.

28:51He said, my wife likes pastel. So we're doing a path like, okay, thank you for that. They're not just all gray and black and white. But there was this picture and it was, it was dystopian. Like I, I don't want all the cars to be the same. I don't want all the houses to be the same. I don't want people to be. Surfs. Basically you're creating surfdom again. And dependent, and here's the thing. You're dependent on government assistance to enable you to have affordable rent or affordable food. Like, like these, you know, stores in New York where you can, you can buy food. Like, that's never going to work. But anyway, well, if we want to continue, I think when we feel sinister, we just roll into that until it passes because we just need to flush that from our system. And I wanted to mention that the term we're talking about for, for AI and how it's, you know, led towards,

29:58let's say filling out more forms and the government side more reviews. There's a term for that. It's called a agenteic flooding, which I think is the perfect way to describe that. And, you know, if you want to go even more sinister, Mark, we'll take a little bit of a pivot here and talk about the odds for a September rate hike, which continue to look even more likely. So on Wall Street Journal, we now have the likelihood of a hike at 87%. So we are going to find out next week. And we'll talk about it next week in detail. But I think, you know, a lot of decisions sort of get made on what this could impact for, for the economy. And when you have things like, you know, the way that we're seeing with our level of, of inflation, which is still, still elevated. But then when you are also elevating fuel prices, well, then that likelihood just continues to skyrocket. So it was up, I think 72% yesterday and then 87% today probably from here.

31:03Here's the problem with this, right? Clearly, the incumbent power, right? I don't even use left and right anymore, Democrats or publics, just in and out, right? In power, you're in power. If you're out of power, you want to be in power. So the in crowd is definitely concerned. And they should be, right? Because there is a perfect inverse correlation, you know, the X for the X. There's a perfect inverse correlation between gasoline prices and presidential popularity, which then leaks into incumbent party popularity. And so that's been going the wrong way. You have the secretary of the treasury who said, I'm going to lower interest rates because our debt is so big and our interest burden is so big. That was at 4% and now we're 5. Okay, that's not going so well. Most humans don't like war.

32:06There are a few that do, but most don't. And so we got one of those, you know, more bombings today on the pipeline. So, so that's a problem. And so you got all these things conspiring against the incumbents. And the other thing they said was, oh, I'm going to appoint a dove because J. Powell, you know, doves J turned into hawkish Jerome again. And so we had to get rid of him because he was incompetent. And we had to bring in this, this, this, you know, very dovish Kevin, who now is talking hawkish. And now everybody is assuming he's going to raise rates because inflation is persistent. And the problem with the inflation being persistent is not going away. Inflation is a demographic phenomenon.

33:07When you have a lot of young people, you have higher inflation because young people are not productive. And it doesn't mean they're not nice people. They're just not educated. They're not trained. They're not experienced. And so when the boomers were young, my brother and sister, and when we were young, we had high inflation in the 70s. And then we became older. And inflation went down for 30 years. Now our kids, the echo boomers, right, which is actually bigger than the boomers, 83 million people, echo boomers, they're young. And so we're going to be stuck in this persistently higher inflation and probably persistently higher rates. And that's not like the end of the world, unlike the AI doomsayers, but it does create a problem given the debt load that we have. And so Scott, you know, I'm calm Scott, because I know him, right, Mr. Besson, said, I'm the house.

34:16Really? I mean, that's what you want to say. You want to say, I'm buying all nobody else wants our bonds. And I read a tweet this morning over coffee that there was a woman. She was at a conference and your or she reports, she's a reporter. She was at a conference, Bloomberg thing and 500 people and pretty intelligent, you know, financial types. Not that all finished types are intelligent, but these were assuming they went there to be educated. They're intelligent types. And she said, how many people would buy a treasury bonds? She said 10, 10 out of 500. And it was probably a pretty interesting indicator of maybe we should buy a little bit, but, but that isn't going to work. If Warsh actually does pull the trigger and hike, which we've never had a hike. At this level of economic activity, sub two percent, there was an open, this quarter is going to be great.

35:22Maybe that's what you said about fourth quarter. You said fourth quarter is going to be 5% last year and it ended up at one and a half. And then you said first quarter was going to be 4% and it ended up at one and a half and said, second quarter is going to be great. I don't remember what the number was, but now third quarter is going to be 5%. We'll see. Maybe. And even if it is, it's really just accounting gimmickery around spending for data centers. Again, back to this. Again, sinister, you want to get sinister? If your goal is to lock the populace in a digital prison, well, you'd need computing power. So let's fund a small number of people in charge of computing power and let's get them all kinds of benefits, like accelerate depreciation, extended life and let's make them all super rich. And then they could be in the right silo when the rest of y'all go in in the wrong silo.

36:27Again, I'm opting out of the silo. I don't want to be in a silo. Yeah. And I think if we can take the cues from anybody, let's go all the way back to you and I, Mark, our students of history, you know, called the great, the great depression, right? The big one in the 30s. You know, a lot of people leading up to that were at some level. What's been really helpful with the US is geography, right? The fact that we live in this awesome country that provides so much for us, whether it's the citizensry and all of the economic output that comes out from the people or what comes out from the ground, it's a country of vast resources, right? But what we saw in the 30s was it was not an island, right? No matter how far away it was from Europe. So what happens overseas ultimately impacts us. And what wouldn't we see, Mark, on Thursday from the European Central Bank, a raise in interest rates. So 25% basis height on Thursday. Because in the end, we've covered this a lot where, you know, before empires were built, not on chips, but on chips.

37:33Now they're built on chips. But what gives us chips? Ships. And what does ships use diesel? And so diesel is $6.00. The gallon. And so rising energy prices is going to be one critical piece of driving inflation, which is why you and I just cannot really get enough of criticizing when we see CPI numbers that exclude some of the most important indexes of Yeah, energy prices. Hey, look, if I don't put gas in your car, I'm food, heater cool your house, buy food at the grocery store, buy medicine, go to the hospital, pay for tuition. There's no inflation. If you don't do any of those things, then there's no inflation. In fact, there's deflation because your big screen TVs keep getting cheaper. But unfortunately, most of the citizenry does do all of those things. And this is, like, this has been a myth, rather, you know, shadow stats does this, right? They track CPI as if it, you know, were calculated the way it used to be calculated before the 90s when they changed everything.

38:40Because what's interesting about CPI is it's tied to transfer payments, Medicare, Medicaid, things like that, so security. So they're trying to keep it low. Imagine that. I mean, CPI is as low as they can fudge it. Yet we all know the reality. I say I use the Chapel Hill taco index five years ago. I could go to the taco place down the street for $10. Just me, right? And the tacos are fine, but that was when I was actually getting a real drink instead of just water. A year ago, it was tacos and just water and it was 20 bucks, including tax and tip. Fine. The other day was $24. $24. And it's not New York City. It's not London. It's not Istanbul. It's maybe cheaper in Istanbul, but it's, it's, it's Chapel Hill, North Carolina.

39:42And the tacos are good, but they're not, they're not $24. Good. And you say, well, Mark, why don't you eat something else? I like, I do most days, I just buy rotisserie chicken for $6.99 and I just eat it. And in fact, everyone, people, people see me outside, could I eat outside down Starbucks? And people like, you're just eating a chicken. I'm like, yeah, it's cheap. It's easy. I like it. Leave me alone. But they're just incensed and I'm like, hack and I'm chicken. So, but occasionally I go to the taco place and pay four times as much or three times as much. And it's sad. And what's really sad is, and I don't mean this in a breakodacious way at all. I mean, I can afford that because I worked hard. I got lucky, whatever. Born in the right place, I had good parents, you know, got a good education. Lucky. But there are a lot of people.

40:43I can't pay $24 for lunch. And I know then they don't pay $24. But that's not right or fair or good. And so I'm, I'm struggling with, well, I've been struggling for a long time. We have crappy leadership. It's a technical term. It's actually worse than crappy, but I won't use that on air. We have crappy leadership. We got to do something. We got to vote them out or we got to, we got a, you know, lobby for, you know, term limits or something or I don't know. It's, it's an intransition problem. I get it. And me talking about it isn't going to fix it. But it does. When I think at least the people that listen to our show are going to be more informed about just some of the inputs that, you know, real people use whether they're, you know, at their taco stand trying to figure out a way to stress the dollar or just sitting across an ICT table, which will do every Monday and figure out how to make those investment dollars stretch further and get a desired return.

41:48And so, you know, one of those, one of those ways I'd say that, you know, great, great flation is real as we're starting to see, you know, September roll back around. But so is evaluation. Teen in the broader investment community. The news is the evaluations continue to climb. So we've seen a couple of the big boys just raised some some rounds. So Harvey company is, is this AI legal darlings. So they raised 15, they raised it at 15.6 billion valuation. They have an ARR of above 400 millions. That's 39 X for those doing the quick math. And this is a really fast raise because just recently, they had an 11 billion valuation, which was in March where there is 200 million and a few months before that mark that was, oh, 8 billion in December. So that chart is looking exactly up into the right.

42:49So they're not alone in this. There was also cognition that raised to billion at a 40 billion valuation. They really double the 26 billion mark in May. And then positron raised 875 million at a 5 billion valuation six months after being valued at at one billion. Of course, Mark, I can't we can't forget our own IR labs, which also raised this, this most recent round where they took in, I believe 650 million above, you know, the 2026 figure. And then the initial 150 million above the 650 that they that they tacked in. So there's a lot there. What that basically means is that there is there's still money that's getting put to work in these systems. And look, well, some of these companies fail and struggle undoubtedly. That's why we have markets in the first place. Well, some of them succeed and, you know, lead to the next C change undoubtedly. And I think, you know, in the end, we're going to have a chance to be a part of that, whether it's choosing to or not buying the latest iPhone for 2000 or $3,000 or, you know, if you are a, you know, practitioner, actually, one of my, one of my neighbors across the street.

44:03Also, also a lawyer and in the job interview, Mark, they asked him, what is your proactive use of AI tools? Right. And so he could just say, well, you know, I bought a secondary of Harvey. I'm sure he did. And to that point, you know, as there's a great stat the other day said, if you didn't buy the first iPhone and you took that $399 and put it in Apple stock, you'd have half a million. Ma, I come on. And I have to go back and double check that that that's right. But it's a big number. And it's a big number. Right. So yeah, maybe one thing also, Mark, and in addition to evaluation that want to go back to the you were mentioning was, yeah, we might have a new clarity measure, a new clarity kind of at vote. So, you know, best and presented to the Senate on the 9th to advance the bill had to the, you know, the 15th procedural vote.

45:03But it's not looking as likely to to be passed by, you know, by those in the know, you're going to need, you know, obviously 60, 60 votes and you've got three Republican seats. And so it's, it's looking a little bit hazy. But I think it's one of those things to where there's where there's smoke, there's fire. It seems like inevitably something will get pushed. And we'll just continue to detail because it's going to be further and further. I think ultimately from what would, you know, bridge the right type of reform and governance. We probably need in our system. But we did, you know, for those that are curious, we've done a lot of webinars and conversations about clarity. It's now kind of shifted a little bit. So we'll kind of see or report if it passes great. We'll talk about it. But the odds are looking relatively low at this point. Wouldn't you say, Mark? Hey, you know, it's interesting. We were previewing a lot for our next week's show. But, but this week's shows has been good and lots, lots of good stuff to talk about. And absolutely.

46:04So at this time, we'll kind of shift through what we always, what we always talk about. Where if the pictures worth a thousand words chart is worth a million, this point where we always thank those that are checking us out on YouTube, the reward for looking at us is being able to turn at the end for the chart of the week. I will share my screen, Mark, as always. I'll give the overview and we can comment a little bit about, you know, what, what we are, what we are seeing in the market. And so this is a very interesting corollary to the topic and the stories that we had last week. So last week was all about how energy was a constraint and how new data centers were just flooding the Texas pipeline. And in the end, they had to be cold and it wasn't just in Texas. It was in Ohio, it was in Pennsylvania. And so, you know, what that ultimately did to demand and ultimately, how that's going to get reflected in prices.

47:05And I thought that some of these charts were a little bit interesting because they were kind of counterintuitive to some of the narratives about kind of some of the prices in AI. So I will present them as I always do, Mark, and get some of your thoughts. I will share this screen. Let me know when that comes up. So the first one here is kind of a corollary to the last part that we had last week, which we were talking about some of the firms on the AI budgets. AI budgets were soaring. Right? And so this idea that, you know, not just one third of the firms, but it was like two thirds of the firms were already over budget for the AI pacing. And so what this chart is showing is the rising cost per employee in AI. So basically per employee spend on AI fell 10%. For the time one percent of firms. And I thought that was pretty interesting because on the chart from last week, we saw that

48:06it was only just the 5% of firms actually came in below their forecast on AI. So this is showing that for the very tipping top that their AI spend is actually dropping. Now I think with this, it's a little bit of a mini chart crime, Mark. And I'd love to hear your thoughts because there is not enough detail on this for me to really extract. Is that because they have, you know, how are you adjusting for layoffs in this? How are you adjusting for industry? So wouldn't this be something like that? And it's a short period of time, right? You're only talking about seven, eight months of data. So, but the trend is ridiculous, right? To go from, you know, $1,000 or maybe even a sub-thousand, $6,700 per employee per month, up to, you know, almost 8,000 before dropping down a little bit. And think about that. That's $100,000 a year per employee to have better search and, you know, some facilitated

49:17writing. That seems like just a bad investment. I mean, these tools are good, right? But I just, I can't imagine getting enough productivity and or benefit for that level of spend. I mean, I really can't. And I think if you actually went in and monitored the usage, at least some portion, and I don't know what the portion is, is like personal stuff. Like, you know, hey, I'm going on a bike trip, you know, where should I go? I mean, okay, that's not a good use of corporate resources, but I know it's happening. And I, well, I still love the tools, right? And it used them every day. And I'm still proud of the fact that I've never paid one penny for any of these. And I've told the story that, you know, Kimi now, when I ask at the first time, it says,

50:21oh, too many people are using it upgrade. Like, nope, not upgrading. And I have to hit refresh. And there's this, no, you got upgrade. I hit refresh. And by about the third or fourth time, it'll give me the answer. And so, okay, that's annoying, but I'm still not going to upgrade. I'm just not going to pay them. And if they really get bad and say, no, you're just not going to get an answer, I just go to deep seek or another model. So. And we all know the problem with the hallucinations. So I get it. And like what Harvey's doing is interesting, right? Replacing paralegals in terms of doing research. But the problem we've seen is, well, what if it just makes up a law case because it can't find the case you want? That's bad. That's legal in our practice. And I think, so they'll figure it out and they'll make it better. And I think a company like that where it's a specific task that's trying to be automated

51:25is good or like, you know, our company Blitzy that's automating code renovation or modernization. Yeah. I think I have some mistakes and some problems. Yeah, but the nice thing about writing code, you get to test it. Does it work or not work? And same thing with, you know, if you're writing a contract, there's a smell test. Now do you need a human in the loop? I think you do. And I'm experiencing this right now with, you know, I used a model to draft a legal document. I mean, it's not super fancy or important legal document, but it's a legal document. And I need a lawyer to now look at it and say, yeah, this is good enough or it's not good enough. And I think the human in the loop, hopefully with all systems, is a big part of this.

52:26And I think what this chart is really showing us is more is not always better. Exactly. And that's a good way to work because the second one we have a two for today is something that also I was a little bit surprised to see as far as, you know, what do, what do the token prices represent in this whole mix? So I'm going to go to the next chart here. And we can have that as well. Just quick. Okay, great. Let's share once more. And as I'm pulling that up, Mark, your idea of having a human in the loop is exactly, I'll shout out my wife who's also an attorney. That's one of her biggest fears is like, if you have the AI model right, 95% of the time, which would be a very strong confidence interval.

53:27She's like, I cannot take that 5% that's wrong because my mind. No, yeah, it's too much legal risk. Yeah, it's like, would if you're going to do a surgery on someone's gallbladder and you ask the AM model, where do I cut? It better be 100% right, right? Not 99, not 98. And I, I just don't know that that you can get that accuracy. Maybe you can. Some of the, like intuitive surgical and some of the surgery bots are pretty darn accurate. There's soda, grape skins and stuff. So we'll get there. But I just think that the catastrophic error factor is still meaningful. Yeah. And I think that kind of dovetails a bit into the fall in AI token prices as of related to kind of the stories from last week where you had all of these, and sorry for the smaller text here, Mark, let me know if you need to read them out.

54:30But the idea is that all this backlog of data centers that were starting not just in Texas, but also in Ohio and in Pennsylvania. And the idea that the demand will come, just build these buildings and tap into our grid and the demand is going to come. And so we see kind of the fall in token price. I think that was a little bit more agonial to the convention that people are just search and search and search. There's a degree of, to your point about, well, you're preferring for the free models which are also less powerful, but it could be perfectly suited for how you are using it. Yeah, look, I mean, I think that the issue here is somehow people have convinced themselves that compute is not a commodity. It is a commodity. And how do you win in a commodity business? Do you either provide the same product for less, or you provide a better grade like if you're mining copper, right?

55:32And if you can get 99.99% copper, you can sell it for one price, but you can get 99.99 percent, you can sell it for a better price. So either you have to improve the models and charge people more, or what will happen is what we're seeing happen is people will innovate and say, well, I can give you the same for way less like the Chinese models. Oh, so now 60% of people are using the Chinese models, shocking, not shocking. And so if you build something better, then you might win them back. But I don't believe, and we'll see how it happens, but I don't believe that brute force is better. brute force is just more, and having more GPU power and using more electricity and more water and more memory to do the same thing seems like a bad trade, which is why I think the logical people are saying, no, I'll just go to these better, faster cheaper.

56:35And that iteration will just keep happening because innovation, it's what drives everything. It's like, if you think about how much it costs to extract oil out of the ground, right? That number is a big number, because it's way down there, and you got a frat, you know, the underlying, but technology keeps getting better and better and better. And so it keeps getting cheaper and cheaper. And you know, the real price of oil is not really that high when you take out the inflation component. So I, I just think this, the more compute power you have, the more tokens are available, there will be increasing demand to use them. That's the Jevons paradox. If you make things cheap, people will use more of them. Of course they will. But at some point, you have to say, okay, when you're on work time, you cannot do a search for your vacation.

57:36If you want to do that on your own time, do it on your own time and pay for your own tokens. And then you know what? If tokens, because when you're working, when you're at work, the tokens are free. When you're at home, it's like cell phone minutes. If, if, in the old days, when you had to pay a lot for your cell phone minutes, you talked less. And then when it was unlimited, you use it a lot. And, but you still have to pay a certain amount. So anyway, I think the people who think this is somehow not a commodity, they're not mistaken. And this chart shows, it's a commodity. And that trend is your friend if you pay for tokens, because it's going basically to zero. It will eventually go. And it's a pretty interesting look at this mark, because you know, on the chart, we've got Anthropic, OpenAI and overall. And they're kind of all moving together as a category in similar prices, in some cases, less than they were at the start of this year. And we look at all of the other rising costs in this year.

58:39Also some of these spikes seem to also happen around the releases of new models, which makes some sense, because those are the most compute and tensile. If you offer more better services, you can charge it. It's like features on a new car. If you give me adaptive cruise control, I'll pay you a little more. If you don't, I won't. Exactly. And I think maybe this could go, you know, to do another analogy, which you give a great one about the cell phone minutes. It reminds me also of data coverage in roaming costs. Yes. Right? Probably the idea of having a 5G versus an edge connection. I can envision a world where we have, you know, a unilateral OpenAI or Anthropic-powered base level of general intelligence, right? And you can access that anywhere in the country. Yeah. But then if you get to the coast or you get towards more advanced loads, you know, then it's going to be a more of a premium feature where you need more of that power. Yep. I guess we'll just wrap up on there. So I think we stir it off quite sinister and dark as that's where our hearts were.

59:41And then eventually the mood lifted and we kind of got some of that out there and I'll close on kind of an optimistic tone, although I myself mark and not optimistic about Michigan's chances. This Saturday's biggest improvement is week one to week two, but we look terrible in week one. Hi. I wish you luck. You know, we don't like the Sooners in this house because half of our family are Sooners and half of Oklahoma State. So we're pretty anti-Sooner. And Notre Dame and the Sooners have a long heated rivalry, so which we have the better of. But good luck to you guys. My Irish get to play the owls of rice. So I almost went to rice instead of Notre Dame. It's a funny story actually, but I didn't. So I feel for the owls that it will not be pretty. But you know, at least they got a nice welcome. We treat visiting fans really, really well. We might not treat visiting teams really well, but we treat the visiting fans really

1:00:42well. So anyone who's up at ND this weekend, enjoy and go Irish. Excellent. So we'll end it there and we'll thank our listeners as always for tuning in week after week. Please make sure to check us out wherever you podcast or on YouTube. A lot of folks are engaging with us that way. We want to thank you guys as always and remind you to stay current. Thank you for joining us this week on digital currents. Check out our links to our website and social media in the show's description box. Please make sure to subscribe if you like what you hear. And remember, stay current. This podcast should not be construed as investment advice nor solicitation for the celebrity security advisor or other service. Investment themes and ideas discussed may be owned by funds managed by the hosting podcast guests. Any conflicts at the time of production have been mentioned by the host but are subject to change. Listen to should consult their personal financial advisors before making any investment decisions.