SpaceX IPO, Defense Tech Stocks, & American Energy Dominance | Morgan Brennan

[0:00] But I think space is the place a little
[0:01] bit of pun intended there because again
[0:03] if you want to realize this AI
[0:05] revolution fully, if you want to think
[0:07] about nextgen technologies and sort of
[0:09] where the next frontier is in terms of
[0:11] industrial production and national
[0:13] security and all the different things
[0:15] that make, you know, a country and a
[0:18] species great like it's the higher
[0:20] ground. It's going to be space.
[0:21] >> What's going on, guys? Today we've got a
[0:23] very special treat. We have Morgan
[0:24] Brennan. She is the anchor of CNBC's hit
[0:27] show Morning Call. And in this
[0:28] conversation, we talk about the SpaceX
[0:30] IPO, what's going on in defense tech,
[0:32] why space has become an investable asset
[0:34] class, how America has taken back energy
[0:37] dominance, what is going on with
[0:38] spectrum, and why is it all of a sudden
[0:40] the hottest commodity in AI, and then
[0:42] she gives us her thoughts on the
[0:43] intersection of private business and the
[0:45] government and how they're allocating
[0:46] capital and what it can mean for your
[0:47] portfolio. Here's my latest conversation
[0:49] with Morgan Brennan. Morgan, let's start
[0:51] with the SpaceX IPO. This is probably
[0:53] one of the most anticipated IPOs in
[0:55] history. It's definitely going to be the
[0:56] largest one. What are you hearing from
[0:57] people in terms of things investors
[0:59] should be paying attention to?
[1:00] >> Yeah. Well, I think it's on track for
[1:01] June 12th IPO listing day. That's as of
[1:04] right now, um, according to what I have
[1:06] heard and what I have seen. And you're
[1:07] looking at the largest public offering
[1:10] in the history of the world, both on and
[1:12] off the planet. And it's SpaceX. It's,
[1:14] you know, there's something for everyone
[1:16] here. It is a new tech company. Um, and
[1:18] if you thought Tesla was a situation
[1:21] where you're, you know, buying the
[1:24] founder and holding for the vision and
[1:27] the future, SpaceX is that on steroids.
[1:29] >> Now, a lot of folks, I think they've
[1:31] been talking about this total
[1:32] addressable market slide. And the space
[1:35] component of it is pretty small. The
[1:36] more you get into the enterprise AI or
[1:38] the orbital data centers, kind of things
[1:40] that are in the future, the more excited
[1:42] people get. Uh, Elon's not dumb. He's
[1:44] very good at doing this and he is really
[1:47] pinning this not don't judge us on what
[1:48] we've already done, judge us on my
[1:50] ability to execute what we're going to
[1:51] do in the future. Are people buying it?
[1:54] >> I mean certainly on the secondary market
[1:56] that's been the case. I mean there's
[1:57] been so much excitement, exuberance for
[2:00] years by the way for SpaceX. Um anytime
[2:04] you've had any kind of you know uh
[2:06] shares offered on the secondary market
[2:08] they've just been snapped up and then
[2:09] some. Um, so I expect that you're going
[2:12] to see a similar type of exuberance when
[2:13] this does come to market and starts
[2:15] trading on the NASDAQ um, next month.
[2:18] 28.5 trillion. That's trillion with a T.
[2:21] That's a total addressable market
[2:23] according to the perspectus. I mean
[2:24] there you it raises eyebrows. You can
[2:26] debate whether it's a real number or
[2:28] not, but to your point, I mean, the vast
[2:29] majority of that enterprise AI, but you
[2:31] need to realize the space component of
[2:34] this, the infrastructure component of
[2:36] this, those AI data centers in space,
[2:37] which is going to be a hard problem uh
[2:39] to fix. That's going to take, you know,
[2:41] Elon's saying two to three years. Others
[2:42] are going to say it's going to take
[2:43] longer. At some point, it will
[2:44] eventually happen, but it's probably
[2:45] years down the road um to actually get
[2:48] to realize all of that. Right now, the
[2:50] AI business itself is still the smallest
[2:52] business at SpaceX. It's really Starlink
[2:55] and what Starlink enables which is
[2:56] connectivity which a lot of people I
[2:58] don't think realize you need to have
[3:00] full and continuous connectivity to
[3:02] fully realize any kind of AI era or
[3:04] revolution.
[3:05] >> Now Elon obviously has other businesses
[3:07] most notably Tesla. Uh Dan Ives was in
[3:09] here a few weeks ago and he says that
[3:11] there's Dan Ives.
[3:12] >> Yeah. He says there's an 80% odds that
[3:14] Tesla and SpaceX merge by the end of
[3:17] 2027. Do you think that's possible?
[3:20] >> I'm listen I don't know if it's by the
[3:21] end of 2027. Obviously, you have this
[3:23] dual class structure at SpaceX. It's
[3:25] going to give Elon a tremendous amount
[3:28] of control over the state of the
[3:30] company. Dan is not the only person, and
[3:32] I hear a lot of investors, longtime
[3:34] investors at SpaceX, who think this is
[3:36] something that will inevitably happen.
[3:37] And when you think about, I would say
[3:39] the Musk Empire overall, all of them
[3:41] sort of get us to the same end point,
[3:43] which is humanity as an interplanetary,
[3:46] multilanetary species. every single one
[3:48] of the companies has some sort of part
[3:51] piece aspect to it that gets us there.
[3:54] >> Now, I think that SpaceX going public,
[3:56] uh, a lot of people are still going to
[3:57] call it a space company even if AI is a
[3:59] big part of it or orbital data centers,
[4:01] etc. They're going to look at this as
[4:02] space. Uh, it seems like space as a
[4:04] theme is now almost becoming its own
[4:06] asset class and you've been covering
[4:07] this for a while.
[4:08] >> I know. just having this conversation,
[4:09] especially just seeing like the NASDAQ
[4:11] and, you know, some of the other other
[4:12] indexes change rules around like, you
[4:14] know, what it's going to be to add some
[4:16] of these companies as they do come to
[4:17] market, whether it's a SpaceX or an
[4:18] OpenAI, Anthropic, etc. Um, where is a
[4:22] SpaceX going to sit in the S&P 500? What
[4:24] sector does it fall under? I mean, these
[4:25] are the types of questions that we
[4:26] haven't had to think about before
[4:28] because we haven't seen a space company
[4:30] that's actually come to market, let
[4:32] alone I mean, any company that's come to
[4:33] market at what could be a $2 trillion
[4:35] valuation, right? ultimately. Um, so
[4:38] yeah, it raises a lot of questions, but
[4:40] I think space is the place a little bit
[4:42] of pun intended there. Um, because
[4:44] again, if you want to realize this AI
[4:46] revolution fully, um, if you want to
[4:48] think about nextgen technologies and
[4:50] sort of where the next frontier is in
[4:52] terms of industrial
[4:54] production and national security and all
[4:57] the different things that make, you
[4:59] know, a country and a species great,
[5:02] like it's the higher ground. it's going
[5:04] to be space whether it's you know orbit
[5:07] whether it's the moon or ultimately
[5:08] perhaps potentially Mars that feels like
[5:11] it's still a ways away.
[5:12] >> What's interesting to me is the
[5:13] narrative has constantly evolved. So if
[5:15] you really go back like maybe the first
[5:17] commercial use of space was GPS and it's
[5:19] obviously been incredibly impactful.
[5:21] Then we really started thinking about
[5:23] like how do we go out right so let's go
[5:24] visit the moon let's go settle on Mars
[5:26] etc. Now there's a lot more conversation
[5:29] about like what can we do in space to
[5:30] benefit back to uh earth and the first
[5:32] time I heard this was Varta uh these
[5:34] guys want to do the pharmaceutical
[5:35] manufacturing in space
[5:36] >> they're doing great stuff and quickly
[5:38] >> I'm an investor I'm very happy with what
[5:39] they are doing they're doing fantastic
[5:41] job um but I think that the orbital data
[5:43] centers Starlink right now you're
[5:45] starting to get more and more things of
[5:46] like what can we put in space to bring
[5:48] back to earth and so do you think that
[5:50] that diminishes some of the like desire
[5:52] to go to Mars or the moon base or you
[5:55] know some of these things where it was
[5:56] like go out and now a lot of the
[5:58] conversation and the investment case is
[6:00] really what can we do in space to bring
[6:01] back to earth. You know, I actually
[6:03] think that if you look at the history of
[6:05] space, whether it's government funded
[6:07] space programs like Apollo or even now
[6:09] this commercial era of um you know,
[6:11] space exploration and in space
[6:13] manufacturing, which is one of the
[6:14] things you're touching on with Varta and
[6:15] some of the other stuff that's starting
[6:16] to arise here, even the idea of
[6:18] colonizing the moon and having a
[6:19] permanent lunar outpost, which NASA just
[6:21] this week is expected to unveil more of
[6:23] its plans around this $20 billion
[6:25] investment and how they're going to
[6:25] bring in commercial entities to help
[6:27] build this out and realize this all of
[6:29] it through the history of the US, we'll
[6:33] say, being on the forefront of of all of
[6:35] this, of the space activity. Um, and and
[6:38] really, I think, for humans in general,
[6:39] has been about how you benefit humanity
[6:42] back on Earth. And we wouldn't have
[6:43] iPhones. We wouldn't even have
[6:44] semiconductors if it wasn't for space
[6:46] and some of these programs that date
[6:47] back many decades. GPS is a great
[6:50] example of this. But I think at the end
[6:51] of the day, I mean, in space
[6:52] manufacturing, you think about what's
[6:54] what it's going to unlock in terms of,
[6:56] you know, pharmaceutical innovations and
[6:59] medical innovations. Just the idea of
[7:00] being able to 3D print organs using your
[7:03] own stem cells, bring them back to
[7:05] Earth, and you don't have to worry about
[7:06] whether your body is going to take the
[7:08] liver transplant. Like, this is on the
[7:10] horizon. It's coming much sooner than
[7:12] people realize. Um, and there is a huge
[7:15] business and investor case around all of
[7:17] it and unlocking all of it. And I think
[7:19] that's a key piece of this SpaceX story
[7:21] is space. What SpaceX has done to drive
[7:23] down launch costs and allow more of
[7:25] these companies to access space to do
[7:27] more of these things to benefit
[7:28] humanity. that is the moat at SpaceX
[7:30] even if it's not a big part of the
[7:31] valuation today.
[7:32] >> What I find fascinating is also the
[7:34] government's very involved in this. So
[7:35] obviously the the critics will yell and
[7:37] scream and say SpaceX was built with
[7:38] government funding which put aside the
[7:40] kind of absurdity of that claim but they
[7:42] definitely did get grants and they've
[7:43] won money from NASA or the government
[7:46] etc. Uh but more importantly is take
[7:48] Varta as another example. When they were
[7:50] waiting to bring back the very first
[7:51] capsule, they kind of got stuck out
[7:53] there for a little bit, right? And they
[7:54] were waiting for the approval to then
[7:56] re-enter. And so it does
[7:58] >> it's a wild story with the regulators.
[7:59] The FAA didn't know how to handle it
[8:00] because they'd never seen anything like
[8:02] that before.
[8:02] >> Yeah. And so like to me it's kind of
[8:04] this interesting thing of like you have
[8:05] private enterprise that is driving all
[8:07] this innovation. It's obviously very
[8:09] helpful for the United States and for
[8:10] the cost of this entire industry, but at
[8:12] the same time, you still have the
[8:13] government and, you know, there's an
[8:14] element of like the government wants
[8:16] things not to collide in space. They
[8:17] want to make sure that you're doing
[8:18] things the right way. If you're
[8:19] re-entering, they want to make sure you
[8:21] know where it's going to land and that
[8:22] it's safe and and kind of adheres to
[8:24] regulation. But private enterprise and
[8:26] the speed of innovation with like
[8:27] government bureaucracy seems to kind of
[8:29] be a mismatch that all of these
[8:31] companies are trying to navigate.
[8:33] >> I think that's very true. It does seem
[8:35] like regulators are moving and moving
[8:37] more quickly. And that doesn't matter
[8:38] what your politics are or the
[8:40] administration that's in place. We've
[8:41] been, you know, seeing this pick up and
[8:43] um gain momentum in terms of how
[8:45] regulators are leaning into and I would
[8:48] just say government in general leaning
[8:50] into and partnering with and working
[8:52] with uh a lot of these commercial space
[8:54] companies to realize this future. I
[8:56] mean, great example of this is was it
[8:58] Trump won? You had low Earth orbit, you
[9:01] know, moves to commercialize low Earth
[9:03] orbit to unlock all of this investment
[9:05] into low Earth orbit and start for
[9:07] companies to start building out, you
[9:08] know, commercial space stations because
[9:09] we know the International Space Station
[9:10] is going to get retired hopefully by the
[9:12] end of this decade because it's aging
[9:14] out. Um, and create all this capacity to
[9:16] do things like inspace manufacturing
[9:18] that benefits people on Earth. Um, that
[9:20] wasn't happening 10 years ago, 15 years
[9:23] ago. Um, and now it is and now it's
[9:24] happening very quickly. And now you're
[9:26] starting to see it even now with NASA
[9:28] with Jared Isaacman at the helm uh at
[9:30] NASA who was a commercial a private
[9:32] astronaut and you know entrepreneur
[9:34] himself um starting to put a similar
[9:37] business plan I'd say public private
[9:39] partnership sort of ethos in place for
[9:41] this idea of lunar colonization. So I
[9:44] think it's coming. I think it's
[9:45] happening. It's gaining some momentum.
[9:47] And now I think you unlock Wall Street,
[9:49] right? SpaceX IPO, but even you see this
[9:52] rerating happening with like space
[9:54] companies that are already publicly
[9:55] traded. It does feel like people are
[9:58] seizing onto the moment and there's
[9:59] plenty of capital there and that wasn't
[10:00] the case even just a couple of years
[10:02] ago.
[10:02] >> I have a lot of friends who have
[10:04] invested in SpaceX. This is going to be
[10:06] good.
[10:07] >> Maybe the greatest wealth creation event
[10:09] in Silicon Valley history or at least in
[10:11] modern history.
[10:12] >> I think so. um you know $2 trillion that
[10:15] is going to uh either on paper or
[10:17] literally in cash be handed to a bunch
[10:19] of technology investors. What are people
[10:22] saying the ramifications of that is? I
[10:23] mean that's feels pretty powerful.
[10:25] >> Well, and I think that's interesting
[10:26] too, right? Because there's a couple
[10:28] things I would say there. I think first
[10:30] is that you know they've adopted this
[10:31] very unusual lock up period process um
[10:34] which is going to enable a SpaceX to you
[10:37] know enter the NASDAQ index and do some
[10:39] of these other things and sort of you
[10:40] know have have the breath of its
[10:42] valuation be realized in a much more
[10:44] meaningful way across the market more
[10:45] broadly. Um, but it's going to also
[10:47] allow a lot of these early investors and
[10:50] employees to if certain milestones are
[10:52] are are hit and the stock price hits
[10:54] certain, you know, points along the way
[10:56] to be able to realize some of that
[10:57] wealth, not just, you know, on paper,
[11:00] but in reality. Um, and you've had a lot
[11:02] of folks who have been along for the
[11:03] ride with a lot of blood, sweat, and
[11:04] tears within SpaceX, a lot of brilliant
[11:06] minds. Um, and by the way, a lot of
[11:08] those companies, similar story at
[11:09] Palanteer, but a lot of those company, a
[11:12] lot of those people um, go out and we've
[11:14] already seen it over the last call it I
[11:16] don't know 10 years or so, they're going
[11:18] to go out and they're going to start
[11:19] their own companies.
[11:20] >> And I almost think about them as like
[11:22] constellation. It's a constellation of
[11:24] startups that are orbiting SpaceX
[11:26] >> by engineers who have come out of SpaceX
[11:28] or the likes thereof. They know what's
[11:30] coming in terms of the technological
[11:32] capability and what something like a
[11:33] Starship is going to enable and bring
[11:34] online. And so they're creating that
[11:36] next wave of companies and technologies
[11:40] and innovations that are going to be
[11:42] necessary to meet that moment. And so I
[11:45] think I suspect you're going to see more
[11:46] of that wealth creation go into more of
[11:49] those types of entrepreneurial endeavors
[11:50] too.
[11:51] >> What's fascinating to me is there's like
[11:52] a direct impact and an indirect impact.
[11:54] So if you think of direct like Tom
[11:55] Mueller with Pulse Space, right? If you
[11:57] look at indirect, Blue Origin obviously
[11:59] is trying to compete with SpaceX. I
[12:01] think kind of drafting off of the same
[12:02] idea. But then you even look at things
[12:04] like maybe Anderil who kind of takes a
[12:05] little bit of SpaceX, a little bit of
[12:06] Palunteer and says, "Hey, why don't we
[12:08] go do hardware for defense and it's
[12:10] possible now because venture capitalist
[12:11] will fund it etc. Y like
[12:14] >> it is pretty profound how this one
[12:16] company not only is it going to enrich a
[12:17] lot of people but it has kicked off an
[12:20] entire new cycle of innovation in the
[12:22] United States, right?
[12:23] >> It has kicked off an entire new cycle.
[12:25] If it wasn't for SpaceX, if it wasn't
[12:26] for Palanteer, um you wouldn't have
[12:29] Andreal, you wouldn't have this sort and
[12:30] and and these new waves of defense tech
[12:33] companies and startups that are in the
[12:35] market and that are, you know, that
[12:37] investors are excited to part, you know,
[12:39] participate in funding rounds for and
[12:41] that are coming, you know, coming to the
[12:43] public markets in their own way, in
[12:45] their own right as well here, either
[12:46] currently or in the next couple of
[12:48] years, depending on the company and
[12:49] technology you're talking about. You
[12:50] also wouldn't have to go back to this
[12:52] idea of regulators and government, you
[12:54] know, partnerships. You wouldn't have
[12:56] governments getting involved in the
[12:58] midst of all the conflicts we've seen,
[13:00] including most recently this, you know,
[13:01] Iran war. um and leaning in and thinking
[13:04] differently about their acquisition
[13:05] processes and how they're um bringing
[13:09] more weapons and technologies and
[13:10] capabilities online if it wasn't for
[13:12] those startups in the first place
[13:15] saying, "Hey, you have a problem you
[13:17] don't even really realize that you need
[13:18] to solve, but we're going to like invest
[13:20] our own money. we're going to present it
[13:21] to you and then leave it to you, the
[13:25] officials to, you know, the the
[13:26] government to think differently about
[13:29] how you're going to acquire this and
[13:30] test it out on the battlefield in a, you
[13:32] know, quicker, more effective, more
[13:33] affordable way. And so that process
[13:35] actually, like they call it the valley
[13:36] of death, but it was a very painful
[13:38] process for a couple of years. It's
[13:39] still kind of painful to work for the
[13:40] government, particularly I think on the
[13:41] DO side. Um, but it's not as painful as
[13:45] it was. Those companies couldn't have
[13:46] existed 10, 20 years ago. I mean, you
[13:48] needed a SpaceX to come in essentially
[13:51] and sue the government, sue the Air
[13:53] Force to be able to compete for a
[13:57] contract. That's what happened with
[13:59] SpaceX. That's how they were able to get
[14:00] a tow hold in and start being able to,
[14:02] you know, win government contracts. It's
[14:03] a pretty wild story.
[14:04] >> Now, what I find interesting is I would
[14:06] make the argument that Peter Teal is the
[14:08] single most consequential person when it
[14:10] comes to national defense over the last
[14:11] 20 years in America. I'll explain in a
[14:13] second, but I may even take it I think
[14:15] I'm picking up what you're putting down.
[14:16] I may even take it a step further and
[14:18] say he's the most consequential person
[14:19] in America, period. Because if you look
[14:22] at it, he wrote the $10 million check to
[14:23] SpaceX that pretty much kept them in
[14:25] business if not, you know, made sure
[14:26] that they were successful. Palunteer
[14:28] literally comes out of his office. He's
[14:30] one of the co-founders. And Deril also
[14:32] same thing. The lineage of those three
[14:35] companies when you start getting into
[14:36] all the engineers who have left and
[14:37] taken the funding and and all that
[14:39] stuff. Then you have he was pretty much
[14:41] the only Silicon Valley, you know, kind
[14:43] of uh heavyweight who got behind Trump
[14:46] in the first term and end up Trump
[14:47] becomes president. JD Vance is a direct
[14:50] mentee of uh Teal. He ends up being the
[14:53] vice president. You sort of put all this
[14:54] together. Is that like a fair way to
[14:56] view this is that he is way more
[14:58] impactful and much more consequential to
[15:00] America than maybe people give him
[15:01] credit for?
[15:02] >> I think that's a very fair assessment. I
[15:05] think it's a very fair assessment. And I
[15:06] think when you look at where I talk
[15:10] about this a lot. I've said this to you
[15:11] before. Um I sort of see it as a
[15:13] triangle right now. We're in this moment
[15:14] as a triangle and it is you know there's
[15:17] the money bucket. It's investment. It's
[15:19] business. It's capital. Um there is the
[15:24] technology bucket and sort of where all
[15:26] you know where all of those capabilities
[15:27] and innovations are and are headed and
[15:30] then there's this policy bucket and how
[15:31] that interacts with the government or
[15:32] doesn't interact with the government and
[15:33] what that enables. And to me, the
[15:36] triangle, it's like we're somewhere in
[15:37] the middle. Everything's converging
[15:39] right now. And it's a moment where if
[15:40] you really want to understand the moment
[15:42] we're in and you really want to
[15:43] understand how to navigate it, how to
[15:45] cut through the nonsense or or the noise
[15:48] of politics and the politicization of
[15:50] everything and actually just focus on
[15:53] what it means to invest, follow the
[15:56] money, or sort of understand where
[15:58] technology is going and and and the path
[15:59] it'll take to get there. Like, you need
[16:01] to understand all those three things
[16:02] together. Um, and so yeah, I think
[16:04] that's a very fair assessment for
[16:05] somebody like Peter Teal. Um, because
[16:06] he's been very much on the forefront of
[16:08] this and has been not so different than
[16:09] Elon Musk, right? Like very um,
[16:12] long-term thinking in terms of and very
[16:14] much on the frontier in terms of, you
[16:15] know, uh, uh, laying the groundwork for
[16:17] where this could go in this moment that
[16:18] we find ourselves in. Now, you talk
[16:20] about something like
[16:20] re-industrialization. Um, defense tech,
[16:23] defense in general, national security in
[16:26] general is ground zero for how that
[16:28] plays out. You wouldn't have steel
[16:30] tariffs and aluminum tariffs in place
[16:32] for example if those didn't directly re
[16:36] you know didn't directly feed into this
[16:38] idea of resuscitating an American you
[16:42] know metal supply chain which is
[16:44] absolutely necessary to I don't know
[16:46] build ships for the navy which we don't
[16:48] have enough of.
[16:49] >> Mhm. What's fascinating about the steel
[16:51] tariffs you go back to 2018 is that it
[16:53] wasn't so much like hey we can't build
[16:55] this here. It was just that we had less
[16:56] than 50% utilization of the existing
[16:58] capacity. And so I put in the tariffs in
[17:00] place. The goal was to get it over 80%.
[17:02] It pretty much happened almost
[17:03] overnight. And so it was almost this
[17:05] like global competition game of like we
[17:07] have the capacity to do this here but
[17:08] because other countries are subsidizing
[17:10] the steel then that makes us
[17:12] uncompetitive on a global stage. And
[17:14] >> not other countries mainly China.
[17:17] >> Yes.
[17:17] >> Mainly China whether it's direct or
[17:19] indirect. Well, what what I find
[17:20] fascinating about it is if you go back
[17:22] to 2018, it was steel, solar panels, and
[17:25] washer machines. I mean, those were the
[17:27] three things. And Trump kind of it was
[17:28] almost like a a test run of the tariffs.
[17:31] And then once he realized the impact,
[17:33] and you know, people always got very
[17:35] upset when he first came out with the
[17:36] tariffs in uh 2025, but I went back and
[17:38] I looked, every single one of those
[17:40] items was cheaper in the United States
[17:42] within 18 months. So you had the tariffs
[17:44] go in place and made the United States
[17:46] more competitive, production
[17:47] domestically went up and the prices went
[17:49] down. And I think that he took that. Now
[17:51] should he have taken that and said,
[17:52] "Okay, let's just do it for every single
[17:54] thing and not be as much surgical." I
[17:56] think the jury is still out on that. But
[17:58] it does feel like Teal, Elon, many of
[18:01] the people who were coming from private
[18:03] industry were very much involved in
[18:06] that. Even if they didn't have official
[18:07] roles in the government, they were kind
[18:09] of in his ear saying, "Look, we can do
[18:10] this in America." And that feels like
[18:12] probably one of the biggest, you know,
[18:14] zero to one moments over the last, I
[18:16] don't know, 15 years where we just
[18:17] decided, hey, we don't have to
[18:19] constantly buy into this narrative that
[18:21] only China can do it.
[18:23] >> Yes. I would say yes. I would also say,
[18:26] you know, as somebody who's covered the
[18:28] industrial side of the economy and
[18:29] manufacturing at CNBC for 12 years now,
[18:32] before it was like fun and exciting and
[18:34] cool, which I feel like it's having its
[18:35] moment now. It is fun and exciting and
[18:36] cool. Um
[18:39] uh I mean I I would sit and have with a
[18:41] former CEO of Harley-Davidson. I would
[18:43] have multiple conversations over the
[18:44] course of years about where they're like
[18:46] we're having to open up another
[18:48] manufacturing site in I can't remember
[18:50] it was Indonesia somewhere somewhere in
[18:52] um East Asia because of the tariffs. So
[18:55] we have to you know produce locally so
[18:56] we can sell into these markets d and
[18:59] those markets those countries benefited.
[19:02] Um, and so it was one of these things
[19:03] where it was like I'm not saying
[19:05] tariff's good or tariff's bad, but I'm
[19:07] just saying much more nuanced situation.
[19:10] Um, and it depends on what what how
[19:12] you're defining success and what you
[19:13] want the outcome to be. And so this idea
[19:15] of like, oh, you know, tariffs are just
[19:18] blanket bad. They're the worst thing
[19:19] ever. No tariffs. Tariffs are bad. It's
[19:21] like, well, if they were so bad, then
[19:23] why are so many countries implementing
[19:26] them in certain ways to protect their
[19:28] own industries or foster their own
[19:30] manufacturing? you know, and industrial
[19:33] activity, etc. Um, and so I you can
[19:36] argue both sides of it, but this idea
[19:38] that it's, you know, that it's black and
[19:40] white is nonsense. And to your point,
[19:42] and you're seeing this now, right? Um,
[19:44] including with just in the macro data,
[19:46] like the US is h is handling everything
[19:48] we're seeing with a spike in energy
[19:50] prices and supply chain shocks much
[19:51] better and may not feel like that for
[19:53] consumers who are like, you know,
[19:54] filling up at the pump for Memorial Day
[19:55] weekend, but in general, the US is
[19:57] handling it much better than most of the
[19:59] rest of the world. Now, some of that's
[20:00] oil and gas, so we can get into that.
[20:03] But I think the other piece of it is
[20:04] what you are seeing with AI
[20:05] infrastructure buildout. It's what
[20:07] you're seeing with defense spending um
[20:09] and how that's starting to percolate.
[20:11] It's what you're seeing with just this
[20:12] re recnaance, this per this emerging
[20:16] renaissance. And we're seeing in the
[20:17] data around manufacturing activity in
[20:19] general. I mean, even housing, if you
[20:20] look at the freight flows, is starting
[20:22] to show signs of um a rebound, like slow
[20:26] steady, but it's starting to show up
[20:28] there. the industrial side of the
[20:29] economy um is what is booing the US
[20:32] right now and I suspect that's going to
[20:33] continue and that's with things like
[20:35] tariffs in place which are whether and
[20:37] you know pushing for investments in the
[20:38] US etc. It is stoking this idea of
[20:42] resupply chain resilience and
[20:43] re-industrialization. It's happening.
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[22:09] If you're talking to someone who knows
[22:11] nothing about the re-industrial
[22:12] movement, they haven't been paying
[22:13] attention whatsoever, like what would
[22:15] your analysis be in terms of what is
[22:17] occurring and how are we doing so far
[22:18] against the goals that we have?
[22:20] >> Oh gosh,
[22:23] that's a good question. I'm not sure I
[22:25] have an answer to that yet. Um,
[22:28] >> but do you think it's going well?
[22:29] >> I I would say it's taking root and I I
[22:32] would say it's probably taking root
[22:33] faster than I would have anticipated and
[22:35] that's despite again elevated energy
[22:38] prices right now and elevated prices for
[22:40] some other things. I mean memory chips
[22:41] are obviously getting a lot of
[22:42] attention. You think about memory chips
[22:44] affect most, you know, things that are
[22:47] manufactured or, you know, goods that,
[22:48] you know, consumers are going to be
[22:50] touching, but they also affect things
[22:51] like, I don't know, patron missile
[22:52] systems and um and we see those types of
[22:54] price spikes and the inflationary
[22:56] impacts of that. I would not be
[22:58] expecting to see the data as strong as
[23:01] it is around some of these parts of the
[23:04] economy. But I think a lot of that is
[23:05] the groundwork that was laid in the
[23:07] first year of the the second Trump
[23:10] administration. But also to be quite
[23:12] frank, a lot of this industrial policy,
[23:14] there are certain things including some
[23:16] of these tariffs that carried over
[23:18] regardless of politics uh carried over
[23:21] from the first Trump administration into
[23:23] the Biden administration and now you
[23:25] know have been turbocharged in this
[23:27] administration.
[23:28] >> When you look at things uh in that
[23:30] re-industrialization, some of it I think
[23:32] is like what is the end company? What is
[23:34] the end product? But also there's a ton
[23:36] obviously we're going through a
[23:37] commodity bull market right now. There's
[23:39] tons of work now being done on um
[23:41] there's a guy that I know who literally
[23:42] looked at creatine is not made in the
[23:45] United States and so we need to go and
[23:46] start need to make it now. Why is it not
[23:48] made in the United States? And there is
[23:49] some chemical compound that the United
[23:51] States does not manufacture anymore. And
[23:53] so he's focused on that right now. The
[23:55] reason why that's important is because
[23:56] it's in almost every single other
[23:58] product. And so the United States was
[23:59] basically outsourcing this thing. He
[24:01] literally came from kind of like the bro
[24:03] science world of I want creatine made in
[24:05] America and he figured this out. That to
[24:08] me feels very different than just like,
[24:09] hey, let's set up, you know, a factory
[24:12] and let's just start manufacturing cars
[24:14] or, you know, whatever the thing is.
[24:15] >> And so it does feel like we've almost
[24:17] gotten more intelligent and much more
[24:19] nuanced about what are the pain points
[24:20] that America is facing and how do we
[24:22] solve the actual, you know, uh, kind of
[24:25] um, furthest thing that is really from a
[24:28] first principles thinking standpoint
[24:29] more so than just like, oh, well, we can
[24:31] make a car in Mexico or we can make it
[24:32] in the United States. Let's just make it
[24:33] in the United States.
[24:34] >> That's almost like too elementary of an
[24:36] analysis. And I think a lot of that
[24:37] happens online, but the companies
[24:39] themselves are looking very surgically
[24:41] at what is the rare earth or what is the
[24:43] thing that is the smallest unit of
[24:46] account that we can go and bring back to
[24:48] America and then that everything is
[24:49] downstream of it.
[24:50] >> Yeah. No, I think that's very true and
[24:51] again the rare earth is a good example
[24:53] of that. I was with the interior
[24:54] secretary Doug Bergam um earlier this
[24:57] month and and one of the points he was
[24:59] making was about the rare earths and we
[25:00] were in Alaska. We were traveling in
[25:02] Alaska and you know we're focused on oil
[25:03] and gas production because Alaska is for
[25:06] the first time in decades starting to
[25:07] see this renaissance this return to
[25:10] growth of oil output uh in real time
[25:13] right now. But the other thing that
[25:14] Alaska offers is all of this mining
[25:16] capability as well. And um Alaska is
[25:20] very big. It's very vast. you don't
[25:22] actually have to do very much on the
[25:23] surface to apparently this is what I've
[25:25] been told to uh you know apparently
[25:27] access quite a bit of you know the
[25:30] mineral deposits that are available in
[25:34] Alaska but so we were we were there we
[25:36] were traveling we were seeing all of
[25:37] that and one of the points that he was
[25:38] making to me was that with the rare
[25:39] earth export restrictions that China was
[25:41] threatening in the midst of the trade
[25:42] war stuff and you know post liberation
[25:44] day last year that if they had halted
[25:46] those exports that with the automakers
[25:48] alone um you would have seen a shutdown
[25:50] down
[25:51] >> uh in car manufacturing it's something
[25:53] like 2 weeks
[25:54] >> and we don't use that much in terms of
[25:57] rare earths and you know it's rare
[25:59] earths are actually not that rare and
[26:01] Elon Musk likes to say that but like the
[26:02] refining process is you know a certain
[26:04] thing and then producing them into
[26:06] magnets and we it's it's it's an
[26:09] innovation a capability that the US
[26:11] spearheaded and then basically
[26:14] retreated from 30 years ago and then
[26:16] China swooped in and took over and
[26:17] basically now dominates that market. Now
[26:19] the US including with the government is
[26:20] trying to fund it and restart it here in
[26:23] the US. But it's it's a national
[26:24] security matter. Case in point we saw
[26:26] with China and continue to see with
[26:28] China right now. Um but then also what
[26:30] happens when you layer American
[26:31] ingenuity on top of that? All of a
[26:33] sudden you have a refining refringing
[26:34] process that maybe is not so dirty and
[26:36] maybe is cleaner and maybe is more
[26:38] productive. And then what happens when
[26:39] you layer AI on top of that and what
[26:41] does that add to the entire process and
[26:44] conversation right now too? So I think
[26:45] you're right. I think it's um I think
[26:47] it's it's very surgical. It's very
[26:50] determined and it's very um
[26:55] it's very it's very specific to the
[26:57] situation and what what the market calls
[26:59] for and why.
[27:00] >> One of the biggest changes in investing
[27:02] is there's a new asset management firm.
[27:04] It's called White House Asset
[27:05] Management. Uh they like to allocate
[27:07] capital. They buy stocks. They seem to
[27:08] go up after they buy them. Um and I
[27:11] think that it's somewhat of a meme on
[27:12] the internet of just like just buy what
[27:13] the White House is buying. you know the
[27:14] the president will make it go up. Um but
[27:17] I do think that this is new but it's not
[27:20] new right the government has
[27:21] participated in private markets in the
[27:23] past but this seems like it is much much
[27:26] more one enthusiastic much larger but
[27:29] also it is very focused it on less on
[27:31] like bailing out companies and more on
[27:33] like offensively saying we need this for
[27:36] national security or we need this to
[27:37] become an industry in the United States
[27:39] let's go actually use our capital and
[27:41] our um you know kind of human uh
[27:43] abilities and sometimes even business
[27:45] development to go help this business.
[27:47] What are you hearing people talk about
[27:49] in terms of like the White House
[27:50] allocating capital to these businesses?
[27:53] >> So, I think from my own conversations
[27:56] both on and off camera within the
[27:58] administration, I think there is a very
[28:00] clear explicit mission um to
[28:05] have taxpayers share on the upside.
[28:08] Um, that being said, it depends on the
[28:12] industry, it depends on the company, it
[28:14] depends on the deal, it depends on what
[28:16] the deal requires. Um, and so like
[28:19] Intel's obviously a great example and
[28:20] sort of the glaring example and the
[28:21] stocks been parabolic over the last call
[28:23] it month, two months. Um, and certainly
[28:25] taxpayers are seeing incredible returns
[28:28] on paper in the midst of all of this.
[28:30] But Intel was also not in a good place
[28:33] and had received a lot of money um
[28:35] through chips act as well as from the
[28:36] Pentagon. And so there's a national
[28:38] security element to it as well. And it
[28:40] it was and continues to be a turnaround
[28:42] story. So it's a very specific thing.
[28:43] Whereas you have other companies that
[28:45] have received chips act funding. I think
[28:46] about like a micron for example. Um
[28:49] you're not going to necessarily see that
[28:50] type of equity stake taken. Um in rare
[28:53] earths I think it's a little bit that
[28:55] feels like it's been a little bit of the
[28:56] wild west. There's some companies that
[28:58] are very legit and doing incredible
[28:59] things and have the capabilities and
[29:00] there's some companies that are
[29:02] promising a lot but like have yet to
[29:04] deliver and we'll see what happens with
[29:05] all of that. But obviously rare earths
[29:06] is going back to the conversation we
[29:09] just had is sort of like there's a time
[29:10] is of the essence aspect to it as well.
[29:13] Um so I think it sort of depends. The
[29:15] other thing I would say and I think
[29:16] sometimes this gets me missed and I'm
[29:19] sure you know this as well if not better
[29:20] than I do is how many Wall Street folks
[29:24] are in this administration
[29:26] >> where the purse strings are concerned. I
[29:28] think about like OSC at department of
[29:29] war right office strategic capital.
[29:31] They're you know inking all kinds of
[29:33] deals. These are all like hedge fund
[29:35] guys and like you speak to anybody they
[29:38] are dealmakers and they are rigorous.
[29:40] They review the books are rigorous and
[29:42] um and by the way they're hiring like
[29:45] like last I've heard they're hiring they
[29:46] can't get enough people in there because
[29:47] there's so much that they're looking at
[29:49] and they're combing through everything.
[29:50] Um and so I've spoken to executives at
[29:54] companies that have done some deals with
[29:55] some of these types of entities and
[29:57] they're like this is the hardest deal
[29:58] I've ever had to do um because of how
[30:00] thorough and rigorous they were. And I
[30:02] think sometimes that's missing from the
[30:04] conversation in part because sometimes
[30:05] these are the folks maybe because they
[30:07] are former hedge fund folks and they
[30:08] weren't like really they were media shy
[30:10] when they were in those roles too, but
[30:12] they're not really going out and and
[30:13] telling those stories. But they're
[30:14] happening behind closed doors. They
[30:15] absolutely are happening behind closed
[30:17] doors. But I think this idea of like
[30:18] doing out money to companies is like
[30:20] long existed. Um this idea of doing so
[30:25] in a way that taxpayers are going to see
[30:27] some sort of upside if there's upside to
[30:28] be realized I think is a little bit
[30:30] newer and more interesting. You could
[30:32] certainly debate the pros and cons of
[30:33] it. It's definitely different, I think,
[30:35] in a lot of ways than what we've seen
[30:36] because usually typically in the past
[30:37] it's been like around bailouts and
[30:39] things like that um or wartime efforts,
[30:41] but it's really fascinating. It really
[30:44] speaks to, I think, sort of this
[30:45] convergence of Wall Street and Main
[30:46] Street as kind of, you know, the story
[30:50] for everybody for the public in general
[30:52] right now.
[30:53] >> I know uh at least one person that has
[30:55] actually gone to OSC and I know another
[30:57] person,
[30:57] >> see, case in point,
[30:59] >> the one person I know that went is very
[31:00] young. um in his early in his career and
[31:03] he basically was working at investment
[31:04] bank and he was like this sounds awesome
[31:06] why would I not want to go and travel
[31:08] around the world and do you know it
[31:09] basically was the pitch of joining the
[31:11] military you know 15 years ago is now
[31:13] like join OSC get to allocate capital
[31:15] build your professional resume etc that
[31:18] to me was like okay young person wants
[31:19] to very quickly accelerate their career
[31:21] makes sense then I was talking to
[31:23] somebody who's one of the leading
[31:24] investment bankers at one of the I don't
[31:26] know top three investment banks somebody
[31:28] that everyone would know and he was
[31:30] like, "Yeah, I I think I I want to go."
[31:33] And I it was the quality of the person
[31:36] that I was just blown away. And I was
[31:37] like, "Why?" And he pretty much was
[31:39] like, "It's a combination of I'd meet a
[31:41] lot of great people. I'd get to do very
[31:43] interesting deals. I'd accelerate my
[31:45] career, but also I feel a duty to the
[31:48] country. I feel like this is a way to
[31:50] serve. I don't want to ever be a
[31:51] politician, but this is like an
[31:52] interesting way to do it." And so, I do
[31:54] think there's this weird element of as
[31:56] you get more private sector folks in
[31:57] there, most people, they don't want to
[31:59] be a politician. They don't want to go
[32:00] and get attacked in, you know, some uh
[32:02] uh race or debate or whatever. But they
[32:05] do feel like it'd be cool to go work in
[32:07] the government for a short period of
[32:08] time. Maybe it's a year or two years,
[32:09] whatever. And so I do think that whether
[32:11] it was Elon or maybe it's even Trump and
[32:14] his administration, they somehow have
[32:15] made it cool to go work in the
[32:16] government.
[32:17] >> Yeah. And it's interesting. It's a good
[32:19] point. And I think you saw it last year,
[32:20] too. I I covered this um myself cuz I
[32:24] you know I do a lot with uh on the
[32:26] military and national security side but
[32:27] like the army swore in you know special
[32:30] lieutenant colonels that were tech
[32:32] executives. So Greg Brockman from OpenAI
[32:34] and Sham Sankar from you know Palunteer
[32:37] and a number of others and um and
[32:39] they're serving in these special roles
[32:41] within the army to bring their AI and
[32:44] their technological prowess to the army
[32:46] like serving x amount of you know hours
[32:48] per year da da da. So there's like I I
[32:51] think about Josh L Josh Wolf at Lux T
[32:54] has talked about this for many years and
[32:55] at least prior to what we're seeing now
[32:58] and that was this idea that you know we
[33:00] were um basically I'm going to use the
[33:03] word bare market that's not the term he
[33:05] used um but that you know we were seeing
[33:07] a darth a death a death in the
[33:09] willingness of talent to serve in this
[33:12] country that had become very uncool and
[33:14] that like the best and brightest were
[33:16] not looking to serve. Um, and I think
[33:19] that the pendulum has swung on that,
[33:21] >> which is really fascinating. And I think
[33:23] that's also fascinating to to the point
[33:24] that you're making. It's like maybe you
[33:25] don't want to be in politics, you want
[33:26] to be a politician, but that there are
[33:28] other ways to do it. And so I wonder if
[33:30] this is the start of something.
[33:31] >> There is something also about um there's
[33:33] obviously a very large rise in uh
[33:36] specifically conservatism among young
[33:38] men in college or like right after
[33:40] graduation. And that's probably always
[33:42] been there. I think maybe they're just
[33:43] like a little bit more willing to be out
[33:45] there. Um, but what I think is
[33:47] fascinating is I'm 37 years old. I was
[33:50] in the army. There is a very low chance
[33:52] that I could go back and I could
[33:55] probably do basic training again pretty
[33:56] easily. I probably could do some of the
[33:58] specialized training, but the like
[33:59] day-to-day grind of being on deployments
[34:02] and going out and doing all this stuff
[34:04] like my I just know my body. My body
[34:06] would recover much slower at 37 than it
[34:08] did at 20. And so you start to look at
[34:11] some of these tech executives like, you
[34:12] know, maybe there's a couple, but most
[34:13] of them are not 22 years old. M
[34:15] >> they are later in their career as well.
[34:17] And so like they kind of missed the
[34:18] window of military service whether they
[34:20] served or not. And so now it is like I
[34:22] have to use my brain not my body.
[34:24] >> Yeah.
[34:25] >> And again if you don't want to be a
[34:26] politician then this is kind of like the
[34:28] only path right and so I just think that
[34:30] that's where you're seeing so much
[34:31] interest is people they do have this
[34:33] like patriotic component to them. It's
[34:35] just where what is the outlet now? how
[34:37] it has become we'll use your
[34:38] professional skills in the government
[34:41] still go do deals build a you know
[34:43] rolodex of contacts and accelerate your
[34:45] career it's kind of like the perfect
[34:46] pitch right
[34:47] >> yeah definitely and I think you also
[34:48] need private sector to participate too
[34:50] right so like you need to know that
[34:51] you're going to go in you're going to
[34:52] take a pay cut but that maybe you're
[34:54] going to come out and there's going to
[34:55] be some sort of incentive or your job's
[34:57] still going to be there for you or
[34:58] whatever whatever too so I think that
[35:00] piece has to be there as well um and I
[35:02] think some companies have been better at
[35:04] doing that than others but that also
[35:05] seems like it's starting to click into
[35:07] place too. Also, it's kind of
[35:08] interesting to see how many of these,
[35:10] going back to OC as an example, like how
[35:12] many of these deals that are getting
[35:13] struck with the government, and I don't
[35:14] know that this is getting talked about
[35:16] enough either. Um, for the government to
[35:19] do the deal, they want to see that
[35:20] private capitals got skin in the game,
[35:22] too.
[35:22] >> And I think, you know, enter JP Morgan,
[35:25] right? Um, with their security and
[35:27] resiliency, you know, uh, initiative
[35:30] that is like taken off gang busters
[35:32] since it was launched, I think
[35:33] officially, what the end of last year.
[35:34] Um, and they're not the only ones. What
[35:36] are they saying they're going to do?
[35:38] >> They're they're investing in they're
[35:40] investing in companies, startups, deals,
[35:43] um you know, anything that sort of falls
[35:46] into that category of national security
[35:49] or resiliency or um sort of making
[35:52] America great again. Um I mean, they're
[35:54] not using that phrase. That phrase has
[35:56] got its own political connotation, but
[35:58] just this idea of, you know,
[36:00] strengthening and um
[36:04] competitive the US. It's a pro America
[36:06] approach
[36:07] >> and and extending beyond that too,
[36:08] right? So I think there's like depending
[36:10] on the company and depending on the
[36:11] project like you know what it means for
[36:13] allies etc. Um and it's not just JPM I
[36:16] think you know others are and other you
[36:18] know methods of private capitalist on
[36:20] the venture side banking side are also
[36:22] like looking to do this and do more of
[36:23] this but they've obviously been very
[36:24] outfront and sort of you know stepped
[36:26] into it in a very big way. I'll actually
[36:28] be with Jamie Diamond. Um, I'm going to
[36:30] be interviewing him later this week at
[36:32] the Reagan National Economic Forum. And
[36:34] this is going to be one of the things
[36:35] that we talk about because he was
[36:36] hinting at the possibility of this a
[36:37] year ago when he and I met at the same
[36:39] conference and he was saying, you know,
[36:41] don't stockpile Bitcoin, stockpile
[36:43] bullets, and made a lot of news talking
[36:46] about all of that.
[36:47] >> Well, what's interesting to me is a lot
[36:48] of these big banks, they have veteran
[36:50] programs where they're hiring veterans
[36:52] coming out of the military. They've been
[36:53] doing that for years. And so, uh, they
[36:55] talked about a little bit, but it maybe
[36:56] wasn't like the first thing on the front
[36:57] door that they would they would lead
[36:59] with. But one of the actual most telling
[37:01] things, I think, in the shift on Wall
[37:03] Street culturally, in JP Morgan's new
[37:06] building, there's a massive American
[37:08] flag in the middle of the building. And
[37:10] I don't think anyone was ever not
[37:12] patriotic. I just think that the flag in
[37:15] particular for a period of time over the
[37:18] last maybe decade started to be very
[37:20] polarizing
[37:22] >> and it kind of feels like a bunch of
[37:23] these banks just said we're just going
[37:25] to do the thing we think is right. Not
[37:26] everyone's going to agree with us but
[37:28] like we think that it's important to be
[37:29] pro America. We think it's important to
[37:30] allocate capital to these things. We're
[37:32] going to put a flag in our headquarters.
[37:33] And when I say flag it's not like a
[37:34] little thing on the wall is a massive
[37:36] flag and a flag pole in the building.
[37:38] And so when you look at that you start
[37:40] to say like well maybe that's actually
[37:41] what America needs. forget politics,
[37:43] forget anything else. It's like we need
[37:45] public and private enterprises working
[37:47] together to accelerate this stuff and it
[37:49] finally seems like maybe that's
[37:50] happening.
[37:51] >> Yeah, it does seem like that's happening
[37:52] and we we'll see what it means in terms
[37:54] of knock-on effects for the economy,
[37:56] right? Um, and again, it sort of goes
[37:58] back to what I was just, you know, what
[37:59] I was saying earlier, which is like if
[38:00] you look at some of this macro data,
[38:02] this macroeconomic data, um, and you
[38:05] peel away the layers of uncertainty
[38:06] around, you know, consumers and high gas
[38:08] prices and yes, and, you know, inflation
[38:10] starting to ripple through and being
[38:11] sticky at this 3 to 4% rate potentially,
[38:14] blah, blah, blah. I mean, even if you
[38:15] look like beyond that, the e like
[38:18] economic growth itself seems to be
[38:19] pretty strong and pretty solid. The
[38:21] question of course is at what point do
[38:23] you start to see demand destruction from
[38:24] higher energy prices, etc. But I don't
[38:27] think we're there yet. And certainly if
[38:29] we get a resolution, which perhaps it
[38:30] seems like it's happening some form or
[38:33] fashion here. Um or at least not
[38:36] escalating, then I don't see how that
[38:39] doesn't continue to be the story.
[38:41] >> Somebody recently said to me, "We keep
[38:43] calling it a war, but we're not really
[38:44] we're not dropping missiles and they're
[38:46] not dro, you know, shooting out drones
[38:47] anymore. It's kind of like a stalemate
[38:49] in the street."
[38:50] >> Yeah. It's a ceasefire. It's a
[38:51] >> It's kind of weird, right? Um but but
[38:53] still we call it a war now.
[38:56] Given that the strait has become
[38:58] headline news every single day and
[38:59] people are pontificating on are our
[39:01] ships going are they not? We've seen
[39:02] people send their analysts to literally
[39:04] smuggle themselves on a boat and see you
[39:06] know what's going on. Uh Seronic is
[39:08] another business that I think is pretty
[39:09] interesting where it's got the defense
[39:11] angle but it's also this like AI
[39:13] autonomous uh ship. And so it feels like
[39:16] again um if you go back I I went I
[39:18] looked this morning a couple years ago I
[39:20] tweeted and I said well China's building
[39:22] all these ships here in America we're
[39:24] not. I would love to find someone who
[39:26] wants to build ships and I'll fund it.
[39:28] The number one thing in the comments,
[39:30] Jones Act, we cannot do it in America.
[39:32] We cannot do it in America, whatever.
[39:33] And I went and I found a bunch of people
[39:34] and they were looking at electric. That
[39:36] was like the big thing is can we make
[39:37] electric ships or electric uh things?
[39:39] And the most interesting company that
[39:40] came out of the whole exercise was an
[39:42] electric barge and they wanted to
[39:44] basically put it down the Mississippi.
[39:46] Okay, fine. May maybe that's valuable,
[39:47] maybe it's not. I have no clue. Have
[39:48] they been successful? Have they not? I
[39:50] haven't tracked the company. Seronic
[39:52] sounds way cooler. way more important,
[39:55] right? And obviously a much bigger leap
[39:58] from an innovation standpoint to you
[39:59] actually have autonomous ships that now
[40:01] we can essentially do what Palanteer and
[40:03] Andrew have been doing in the land and
[40:05] uh in the air, but now do in the ocean.
[40:07] And so I know you spent a lot of time
[40:08] with that company. What are people
[40:09] saying about them?
[40:10] >> I mean, they're moving so quickly.
[40:12] They're moving so quickly. Um and
[40:14] they've raised huh a boatload of
[40:16] capital. Um but they're moving
[40:18] incredibly quickly and um and and
[40:22] they're not the only ones either.
[40:23] there's sort of a whole flurry of
[40:25] startups that are focused on um you know
[40:28] sea-based autonomy and sort of this next
[40:30] generation next next generation of um
[40:34] you know ship building and and uh
[40:37] military vessels. Um and so they're sort
[40:40] of on the forefront of it but there is
[40:41] there is a broader ecosystem here that
[40:43] is building out within defense tech. Uh,
[40:45] and when you think about something like,
[40:47] you know, hunting for mines in the
[40:48] street of Hormuse, like why are you
[40:50] going to put, you know, servicemen and
[40:52] women in harm's way when you can have an
[40:53] autonomous ship or vessel or submarine
[40:55] or something like that, you know, go go
[40:56] and do it. So, I think we're seeing in
[40:58] real time, whether it is this conflict,
[41:01] ceasefire, whatever you want to call it,
[41:03] in the Middle East, um or even what
[41:05] continues to go on in Russia and
[41:06] Ukraine, um you're seeing in real time
[41:09] how autonomy and AI are changing and
[41:12] affecting the battlefield and how
[41:14] they're also simultaneously taking
[41:16] people out of harm's way and giving the
[41:19] US an upper hand and allies an upper
[41:22] hand in a way that um I think is very
[41:24] very meaningful for the future and sort
[41:26] of gives you a better stronger sense of
[41:28] why AI is dual use technology will never
[41:31] not be and B because of that is a
[41:34] geopolitical arms race with China.
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[44:08] I always think about uh the use of these
[44:10] technologies like there's the hey don't
[44:11] put service members in harm's way and I
[44:13] think that's a very valiant you know
[44:14] argument and I think people kind of uh
[44:16] it resonates with them but also the
[44:18] technology is more accurate than the
[44:19] human eye. Like I remember we used to do
[44:21] night route clearance in Iraq in 2008
[44:24] 2009 and our ability to determine
[44:26] whether it was an IED or a pile of trash
[44:29] was not very good. And so what you did
[44:31] is you just drove over it and you hoped
[44:33] it didn't explode. And that was the
[44:34] vehicles were built to sustain the blow.
[44:36] And that was kind of the you know on the
[44:38] ground truth is that's not what they
[44:40] trained you to do. But in reality that
[44:42] was the solution is we cannot stop for
[44:44] every piece of trash on this road or we
[44:45] will never complete the mission. So just
[44:47] drive over it.
[44:48] >> Wow. Now I think back like wait a minute
[44:50] with the technology today you could tell
[44:52] the heat signature you could easily use
[44:53] AI to identify this stuff you probably
[44:55] could even use some sort of time lapse
[44:57] from drones overhead you know all of
[44:59] these technologies forget keeping the
[45:01] human safe it's actually like you would
[45:02] just become more accurate in identifying
[45:04] it self-driving cars same thing like the
[45:06] best argument for self-driving cars has
[45:08] nothing to do with drivers has to do
[45:09] with the safety of the passenger and if
[45:11] it's safer for people well guess what
[45:13] people put their kids in those cars
[45:15] people will get in those cars themselves
[45:16] and so it does feel like The old
[45:19] argument is almost this like uh we're
[45:21] protecting you know uh service members
[45:24] etc. Now the defense companies are
[45:25] really making like an offensive argument
[45:27] like no we're just more lethal, we're
[45:28] more effective. We are cheaper you know
[45:30] everything is about the value that is
[45:32] provided not here's the thing that we're
[45:34] saving. Do you see that in when you're
[45:35] talking to these executives?
[45:36] >> Yeah and I think you know and I think
[45:38] there's like a flip side to like there's
[45:39] always an argument and counterargument
[45:41] to everything. So like on the flip side,
[45:42] saving lives, um becoming on the other
[45:46] side of it, lethal, more targeted, more
[45:48] effective. Um the other piece of that
[45:51] argument then becomes, okay, if we're if
[45:53] we're moving towards robot, you know,
[45:55] robot armies and you know, an automated
[45:59] battlefield future, what does that mean
[46:01] for the sanctity of human life overall?
[46:03] So like I've heard those debates, too,
[46:04] and I can see how you can go there or,
[46:06] you know, folks can go there. Um, but
[46:11] I don't know. I
[46:13] >> I mean I Iran is probably the first war
[46:16] in human history where humans did not go
[46:19] on the battlefield,
[46:21] right? And again, like what is your
[46:22] definition?
[46:22] >> I mean, we did we were boots on the
[46:23] ground in Iran, if you want to call it
[46:26] that.
[46:27] >> That's the thing. It's like what is your
[46:28] definition of on the battlefield? Right?
[46:29] If we went and we saved the pilot that
[46:32] was down, right? Okay, fine. Some people
[46:34] will say that that disqualifies, but
[46:36] like in the actual combat of the
[46:38] battlefield,
[46:39] >> drone, the drones, the autonomy,
[46:41] everything that's beenated off of
[46:42] aircraft carriers like Yes.
[46:44] >> And I would argue that the other side as
[46:46] well, right? It's not like they have,
[46:47] you know, they don't have guys with
[46:49] AK-47s lined up in the desert trying to
[46:51] shoot stuff, right? I mean, they they
[46:52] have
[46:53] >> look even now look what's going on even,
[46:55] you know, with um critical
[46:57] infrastructure in the region and like
[46:58] the threat that drones pose from Iran.
[47:01] So, yes, 100%. I would say I would say
[47:03] the Ukraine war is where we really saw
[47:06] saw you know drone warfare blossom but
[47:08] much more of a groundbased sort of
[47:10] traditional war where you're seeing that
[47:12] type of autonomy and that type of
[47:14] technology deployed. To your point in
[47:16] Iran it's it's a different situation. Um
[47:18] and so yeah is it triggering more
[47:21] spending more fielding of more
[47:24] technologies
[47:26] for the future? Yes. um does all of this
[47:29] sort of put us in a race for better or
[47:32] worse and a it's really a race to ensure
[47:35] deterrence against China which is
[47:36] obviously also working on its own dual
[47:38] use capability AI and drones etc. Yes.
[47:42] Um, so it's it's it's
[47:45] that's where that's where we're headed
[47:47] for sure. And some and a company like
[47:48] Seronic and some of these other defense
[47:50] tech companies become, you know, and
[47:51] that's the reason why the ones that are
[47:53] going public right now, even the smaller
[47:54] companies are less known companies um
[47:57] are seeing just like huge debuts um on
[48:00] >> well they're good, right? They can build
[48:02] the technology and they can do the
[48:03] business side. I think that's one of the
[48:04] things that uh as I've learned more and
[48:06] more about these industries over the
[48:07] years that people don't really
[48:08] appreciate is that usually the teams
[48:10] that are really good at building the
[48:11] technology are not really good at
[48:13] scaling the business and doing the BD
[48:14] and selling to the government and doing
[48:15] all that kind of stuff. Right. Good
[48:17] point.
[48:17] >> And so um we're investors in a company
[48:19] called Andis and like their whole thing
[48:21] is just outsource all the R&D to let
[48:23] these other startups create the
[48:26] technology. Once it works we know that
[48:27] they're not going to be able to sell the
[48:28] government. we'll just buy the company
[48:30] and then we're really good at doing all
[48:31] the commercial, you know, business
[48:32] development, uh, government contracting,
[48:34] etc. It's working so far. Let's see if
[48:36] they continue. But like it's almost like
[48:39] private enterprise realized you need a
[48:41] translation layer. The best
[48:42] technologists are not the best
[48:44] salespeople to the government and vice
[48:45] versa. But to me, like an Anderil,
[48:48] they're great at both. Palanteer is
[48:50] great at both, right? And so you sort of
[48:52] see the Seronic is great at both. And so
[48:53] like it's almost like they're more
[48:55] special because they're good at both the
[48:57] technology and the business side.
[48:59] There's just not that many of those.
[49:00] >> Well, and I think it also gets at the
[49:02] heart of sort of what you're seeing in
[49:03] general when it comes to where the
[49:05] future of warfare is concerned, but also
[49:07] just this convergence going back to my
[49:08] triangle, just the convergence of like,
[49:10] you know, capital, technology, and
[49:13] policy. And that is just how many
[49:15] companies and startups are now dual use
[49:18] companies. even if they're working in
[49:20] autonomous driving like they're working
[49:22] or you think about like EV talls right
[49:25] um they're also working with the
[49:26] government because they can sort of you
[49:28] know fasttrack testing the technology
[49:31] and sort of get that stamp of approval
[49:32] that you know you know gold star stamp
[49:35] of approval by working with the military
[49:38] um with all this autonomous technology
[49:39] um in all these different types of
[49:41] vehicles and basically get it ready for
[49:43] prime time for consumer use in a
[49:45] mainstream way as well. Um, and so I
[49:48] think this idea of fielding commercial
[49:50] technologies, which the Pentagon has
[49:52] really leaned in leaned into an
[49:53] aggressive way, and drones are another
[49:55] good example of this. This idea of like
[49:56] how do you mass manufacture something
[49:58] and do it at affordable rates and do it
[50:00] in a way that you can sell products, you
[50:03] know, commercially, but also be able to
[50:06] sell to the government um to then drive
[50:08] down costs, create more competition, and
[50:12] ensure that there's supply chain
[50:14] resilience. um that is that is very much
[50:17] the focus and the name of the game. So
[50:18] whether it's on the self-driving side,
[50:20] by the way, ship building, I didn't even
[50:22] touch on this with you. Ship building, I
[50:23] mean, this is a huge this idea of
[50:25] bringing commercial ship building back
[50:27] to the US. Huge, huge, huge initiative.
[50:30] Um, passion project even um within this
[50:33] administration. And it starts with
[50:36] military ship building. It starts with a
[50:38] company like Seronic. Um, you know,
[50:40] building and sort of using AI in the
[50:41] factories to
[50:43] create ships more quickly and then being
[50:46] able to repurpose that for commercial
[50:49] use as well. And if that happens, when
[50:51] that happens, everybody wins, right?
[50:53] Because you now have more jobs, you have
[50:56] more manufacturing capability, more
[50:57] economic output, but you also have this
[50:59] resilient supply chain because you're
[51:01] going to be selling into a commercial
[51:03] marketplace as well as selling into the
[51:05] government. and this idea of being able
[51:06] to have overlap. It's almost like
[51:07] planes, right? Like you see this certain
[51:09] types, you know, models of planes that
[51:10] Boeing makes, for example. Um, and
[51:13] that's what they're trying to do with
[51:14] ship building. So, it it makes sense
[51:16] when you think about it that way because
[51:18] ultimately you're going to drive down
[51:19] costs. You're going to boost competition
[51:22] um and you're going to create a base, an
[51:25] industrial base that, um, is not so
[51:28] fragile, which is what we've seen, and
[51:29] which has been such a big problem on the
[51:31] military side. And arguably just when
[51:34] you think about what's happened to
[51:35] manufacturing in America in general in
[51:36] the last couple decades,
[51:37] >> you've mentioned that spectrum.
[51:39] >> That makes sense, right?
[51:40] >> Makes complete sense. Makes complete
[51:41] sense. Uh spectrum is the hottest
[51:43] commodity in the AI arms race.
[51:45] >> Oh,
[51:46] >> what does that mean?
[51:47] >> Spectrum, the thing you can't touch or
[51:50] see or taste. Um, and that is actually
[51:52] owned or controlled by the government.
[51:54] um and is you know sold out to companies
[51:58] in some cases with a lot of involvement
[52:00] from lawmakers because there national
[52:02] security implications to that too. But
[52:04] spectrum is basically what enables
[52:05] connectivity right and spectrum I think
[52:08] is its own sort of commodity race right
[52:12] now. I mean case in point you talk about
[52:14] Star we're bringing this full circle you
[52:15] talk about Starlink and um you talk
[52:18] about the connect connectivity there. I
[52:20] mean, SpaceX did their deals to buy
[52:22] spectrum from the company formerly known
[52:24] as Dish, now known as Echoar, uh, in
[52:26] part to be able to enable more
[52:28] connectivity for people using Starlink
[52:30] and companies using Starlink and the
[52:32] military using Starlink. Um, you look at
[52:35] Global Star, which has, you know, a big
[52:38] has had a big partnership with Apple
[52:39] over the last couple of years getting
[52:41] purchased by Amazon as they're, you
[52:43] know, rolling out their Starling
[52:44] competitor LEO as well. Um, you can't
[52:47] have you can't have full autonomy. You
[52:52] can't have full AI capability unless you
[52:55] have the connections as well. It's not
[52:57] just about the energy to run the
[52:58] compute. It's also about the connection
[53:01] to be able to do this continuously. Um,
[53:04] and Spectrum is what enables that. But
[53:05] as you see more things like more drone
[53:07] warfare, more autonomous warfare, um
[53:09] you've also seen some of these fights
[53:11] brewing in Washington around what
[53:13] spectrum is going to be put up for
[53:16] auction to the private sector and what
[53:18] spectrum is going to be held on to by
[53:20] the government right now as well because
[53:22] all of that connectivity that's enabled
[53:24] by spectrum is in higher and higher
[53:27] demand right now. And by the way, that's
[53:28] just from a US standpoint. It's a
[53:30] totally different thing when you when
[53:31] you when you go out into like
[53:33] international realm. What I always find
[53:35] interesting about Starlink is uh I
[53:36] worked at Facebook and at the time we
[53:38] had internet.org or and they were
[53:40] competing with Google who was trying to
[53:41] do the hot air balloons and you know
[53:43] float them across whatever and little
[53:45] did we all know everyone was operating
[53:47] within the constraint of like you have
[53:48] to do something within the atmosphere
[53:50] and then Elon's just like why don't I
[53:51] just put a satellite exact same idea
[53:53] just different approach to it and you
[53:55] know gang busters and so on one hand you
[53:57] know Facebook Google etc they were all
[53:59] correct and trying to beam the internet
[54:00] down to people it's just that the tools
[54:03] they were using were not the right tools
[54:05] or the right approach and then here
[54:06] comes Elon not a new idea uh he's got
[54:09] this competitive advantage of the launch
[54:10] cost. Next thing you know, he's got, you
[54:12] know, a significant business in
[54:13] Starling. It's pretty interesting.
[54:15] >> Yeah. I want to be clear, there's been
[54:16] communications, satellites,
[54:18] constellations operating for a very long
[54:20] time. Um and but most of them, if not
[54:24] all of them, have been geocynchronous
[54:25] orbit. And at the time, I think when
[54:29] they started building out Starlink,
[54:30] there was sort of the sense of, you
[54:31] know, it's very hard to do this from
[54:32] lower Earth orbit. There's all these
[54:33] challenges. There's all these, you know,
[54:35] headaches associated with it. And in
[54:37] typical SpaceX fashion, they said,
[54:39] "Okay, we're going to design an
[54:40] engineer. We're going to think about
[54:42] this differently. We're going to bring
[54:43] down the cost of launch to be able to
[54:44] put thousands and tens of thousands of
[54:47] satellites in low Earth orbit to give
[54:48] everybody continuous connectivity. Um,
[54:51] and all of these things that couldn't
[54:52] exist and didn't exist before." And they
[54:54] kind of cracked the code on that. And
[54:56] now you're seeing this huge
[54:57] proliferation. And it's interesting
[54:59] because rocket companies, look at Rocket
[55:01] Lab, I think. Oh gosh, I wish I had my
[55:03] phone on me. I was looking at the market
[55:05] cap earlier today and my head almost
[55:07] exploded. I I was like I mean the
[55:09] stock's up thousands of percents in the
[55:12] last two years. I mean you want to talk
[55:14] about a rerating in the space sector. Uh
[55:17] but it's because the cost of launch has
[55:21] come down but the demand for the
[55:23] companies that can launch has just gone
[55:26] through the roof
[55:27] >> and like they just can't keep pace with
[55:28] everybody that wants to put something in
[55:30] orbit right now.
[55:31] >> Um there just aren't enough rockets.
[55:32] there isn't enough capability and
[55:34] capacity to do it. And um I mean I think
[55:36] the FCC is mulling through something
[55:38] like I think it's like hundreds of
[55:39] thousands of sat you know applications
[55:42] for what could be hundreds of thousands
[55:44] of satellites over the coming years. I
[55:46] mean it it's the numbers are nuts.
[55:48] >> Mhm.
[55:48] >> Uh in terms of how much how many
[55:50] different companies and governments are
[55:53] trying to put up in orbit right now that
[55:55] wasn't possible when launch costs were
[55:57] double, triple, quadruple where they are
[55:58] now. I think the space industry is a
[56:00] great example of what's going on just
[56:02] across American technology sectors,
[56:04] right? Whether you see it in DNA
[56:05] sequencing, self-driving, humanoid
[56:07] robots, space, you know, all
[56:09] interconnected.
[56:10] >> Yes. Yeah. Yeah. But but also I think
[56:12] that um the rise of private market
[56:14] returns has really sucked in a lot of
[56:16] capital. Once you get that capital, you
[56:17] get the entrepreneurs obviously here you
[56:18] go. Now I think the big question is like
[56:21] can the public market stomach all of
[56:24] this coming public? Because you know we
[56:26] everyone's talking about SpaceX,
[56:28] Anthropic and Open AI, but like what
[56:30] about Stripe? What about some of these
[56:32] others? Now they're not trillion dollar
[56:33] IPOs, but they may be a couple hundred
[56:36] billion. And so when Anderil decides to
[56:39] go, when Stripe, you know, I mean
[56:40] there's a lot of private market large
[56:44] company supply that if an IPO window
[56:47] really does open,
[56:49] that's a lot for the public market to
[56:50] swallow, right?
[56:52] >> It is. I guess I could ask you your
[56:53] thoughts on that. Um, it does feel like
[56:56] everybody I speak to has a different
[56:57] opinion about this right now. Um, it
[56:59] certainly seems like there's a sense out
[57:02] there that the markets are easily going
[57:04] to absorb a SpaceX IPO and maybe even an
[57:06] OpenAI IPO or anthropic behind it
[57:10] because there just so much demand and
[57:11] there's also just so much capital
[57:12] sitting on the sidelines right now
[57:13] still. Um, but I don't know about that
[57:16] because you do see this race with a lot
[57:18] of smaller companies trying to file and
[57:20] trying to get out before that, you know,
[57:23] before all of that really hits the
[57:25] market or at least that's what I've
[57:26] heard from a number of investment
[57:27] bankers. Um, I don't know. What do you
[57:31] think?
[57:32] >> I'm watching.
[57:34] I'm just going to watch. Look, it could
[57:36] >> two of us. I guess
[57:37] >> it it
[57:38] >> I see both sides to it. My guess is that
[57:41] people drastically underestimate the
[57:42] retail demand for the th those three
[57:44] names in particular, but also I think
[57:47] people underestimate just if you've been
[57:49] a SpaceX investor, you may have been
[57:51] locked up now in some cases 25 years, 20
[57:54] years, 18 years, 15 years.
[57:57] >> I don't care how much you are up or how
[58:00] much you think the future of that
[58:01] company is going to continue to
[58:03] appreciate. there are very few both
[58:05] individuals and also asset managers who
[58:08] are going to be able to resist the
[58:10] temptation to sell and so you know it's
[58:13] like yeah there's a lot of retail demand
[58:15] but I this is a lot of liquidity you're
[58:17] going to hit $2 trillion for people and
[58:18] you're going to tell them don't don't
[58:19] touch it
[58:22] no I look I think it's fair um and it's
[58:24] fair I think you're also going to have a
[58:25] lot of force buying with some of the
[58:27] changes you know with in you know index
[58:29] additions and things like that Um,
[58:33] we'll see. We'll see what we'll see what
[58:35] happens. Um, but I do think to your
[58:38] point, I'm so happy we've gotten past
[58:40] those stupid phrases like dumb money and
[58:42] smart money. I feel like the pandem you
[58:44] know, it's like sometimes the greatest
[58:45] gifts come from the most poorly in come
[58:47] the most poorly wrapped packages. And I
[58:48] think one of the gifts of the pandemic
[58:49] was really the fact that like you had
[58:52] you've had this retail investor
[58:54] revolution. And I think especially when
[58:56] you talk about some of these new tech
[58:57] companies, defense tech or commercial
[58:59] space or like I mean people say quantum
[59:02] or nuclear like I just go down the list.
[59:04] Um we'll say like new tech, frontier
[59:07] tech, whatever. Um the retail investors
[59:10] have been much
[59:12] faster to educate themselves and to un
[59:16] to make it a point to understand the
[59:17] thesis around these companies and sort
[59:19] of what's coming with them. And same
[59:21] with crypto.
[59:22] >> They're they're smart. Yeah. No, they're
[59:24] smart and they're rich. That's why
[59:26] people I was having a conversation
[59:27] literally this morning with somebody
[59:28] who's very intelligent. He's an asset
[59:30] manager and he was telling me that, you
[59:31] know, retail investors don't have a lot
[59:33] of money. And I was telling them, look,
[59:34] we we have a product uh CFO Sylvia that
[59:37] we have people come in and they actually
[59:39] are verifying their assets. I can't tell
[59:40] who it is, but we can see the
[59:42] portfolios. So, when you anonymize and
[59:44] aggregate it across the space, you can
[59:45] see the average net worth of people is
[59:47] $2 half million average. So you say okay
[59:49] well some of them people are below but
[59:51] there's people who are joining a fintech
[59:52] product that have you know 100 plus
[59:54] million dollar net worth again that
[59:57] doesn't mean that they're controlling
[59:58] all of it themselves maybe they give
[59:59] some to a financial adviser maybe some
[60:01] of it's in real estate you know whatever
[60:02] the thing is but these people are not
[60:05] dumb and they are not not rich and so
[60:08] you look at it from that perspective you
[60:10] say yeah no wonder there is so much
[60:12] activity in public markets is like these
[60:13] people need a place to put their capital
[60:15] >> yeah it makes a lot of sense
[60:16] >> all right where can we send some people
[60:17] to find you on the Oh,
[60:21] uh, X Morgan,
[60:22] >> you're not used to being on the other
[60:24] side of the microphone.
[60:25] >> I'm really not. You can tell. Uh, I'm on
[60:27] LinkedIn, I'm on X, I'm on Instagram.
[60:30] >> All right. Well, you did a great job.
[60:31] Hopefully,
[60:32] >> we didn't even get to Alaska, by the
[60:33] way, and oil and energy. What I will say
[60:35] is you go to places in Alaska where
[60:37] there's no infrastructure and there's no
[60:39] roads, there's Starlink.
[60:40] >> Interesting. So, that So, it all is
[60:42] interconnected.
[60:43] >> It is. It really is.
[60:45] >> Did a great job. Thank you so much.
[60:46] We'll do it again in the future. Thanks.