Jul 14, 2022 · 1h 24m · allin
E87: Emerging markets, Sri Lanka, 9.1% CPI, market sentiment, NASA's Webb telescope & more
Chamath Palihapitiya · 27m spoken David Friedberg · 20m spoken Jason Calacanis · 18m spoken David Sacks · 8m spoken All-In Theme Vocalist · 9s spoken
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Episode 87 of the All-In Podcast provides an in-depth analysis of emerging market debt crises with a focus on Sri Lanka, domestic macroeconomic pressures driven by 9.1% CPI inflation, changing venture capital market sentiment, NASA's James Webb Space Telescope breakthroughs, and personal updates from the hosts.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 99.4% of the talking time here. How this is scored →
The hosts as informed peer 7.3 Guest teaching 1.7 Guest disagreement 2.1 The hosts pushing back 2.1
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:21:43 Sacks predicts Western alliance fracture over energy crisis
Sacks forcefully attacks Western foreign policy as hypocritical virtue signaling and predicts the alliance will crumble under winter energy shortages.
Hardest push from the hosts ▶ 1:20:42 JCal challenges critique of Biden economy by bringing up TrumpJCal directly challenges Chamath and Sacks by pointing out that Biden inherited a disrupted pandemic economy and arguing Trump would have spent even more money.
Biggest teaching moment ▶ 1:06:35 Friedberg educates on spectroscopy and space telescope utilityFriedberg corrects the popular misconception that space telescopes exist to take pretty visual pictures, detailing how spectrographs reveal chemical composition and universe physics.
The host holds their own ▶ 48:38 Chamath's breakdown of overstated corporate earnings (the 'E' in P/E)Chamath demonstrates deep macro financial acumen by systematically explaining how tough 2021 comparisons, rising input costs, and USD strength make S&P earnings expectations unrealistic.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Overview of Emerging and Frontier Market Pressures | 5 | 1 | 1 | 1 | Calacanis presents an overview of market classifications and macroeconomic pressures impacting emerging and frontier markets. | |
| Macro Analysis of Global Debt and Capital Flight | 8 | 2 | 1 | 1 | Friedberg delivers a structured macro analysis of global debt structure, interest rate yield differentials, and dollar capital flight. | |
| Sri Lanka's Economic History vs. Singapore and Jamaica | 8 | 2 | 2 | 2 | Palihapitiya compares Sri Lanka's historical trajectory with Singapore and Jamaica, citing governance choices and structural economic failures. | |
| The Organic Farming Disaster and Davos ESG Policies | 7 | 2 | 3 | 3 | Sacks and Palihapitiya critique the enforcement of organic farming and ESG mandates on Sri Lanka by international institutions. | |
| Chamath's Sri Lanka Experience and the Singapore Model | 8 | 2 | 4 | 4 | Palihapitiya details his experience attempting to deploy Google Loon in Sri Lanka and debates governance principles alongside Sacks and Calacanis. | |
| Contagion Risks, Sovereign Defaults, and Geopolitics | 7 | 2 | 2 | 2 | Friedberg highlights contagion risks, potential sovereign defaults across developing nations, and geopolitical realignments. | |
| US CPI Print Analysis: 9.1% Inflation and Fed Hikes | 7 | 2 | 3 | 3 | The group breaks down the 9.1% CPI print, comparing core inflation against energy metrics and central bank rate actions. | |
| Market Psychology, P/E Ratios, and Corporate Earnings | 8 | 2 | 2 | 2 | Palihapitiya analyzes market valuation mechanics, the Taylor rule equilibrium rate, and potential downside risks to corporate earnings. | |
| Market Sentiment and Venture Capital Investment Strategies | 7 | 2 | 2 | 2 | Friedberg and Sacks detail changing institutional investor sentiment, deal pacing adjustments, and private market investment strategies. | |
| Chamath Palihapitiya's Investment in ProKidney and Sector Diligence | 8 | 1 | 1 | 1 | Palihapitiya outlines the diligence process behind his investment in ProKidney and explains the biological mechanism of cellular kidney therapy. | |
| The Scientific and Technological Significance of NASA's Webb Telescope | 9 | 1 | 1 | 1 | Friedberg presents a detailed scientific overview of the James Webb Space Telescope, explaining spectrographs and infrared space imaging. | |
| David Friedberg Adopts Rescued Beagle and Advocates Against Animal Testing | 6 | 1 | 2 | 2 | Friedberg discusses adopting a laboratory rescue beagle and calls for regulatory reform around animal testing guidance. | |
| Political Dynamics, Inflation, and the European Energy Crisis | 7 | 2 | 4 | 3 | Sacks and Palihapitiya evaluate executive branch economic experience data and predict European political strains driven by winter energy shortages. |
Statements from this episode (25)
Calacanis: China recorded 6% GDP growth in 2019 versus US 2.1%
“China, for example, 2019, six percent growth us in 2019, 2.1% growth.”
Calacanis: Investors are pulling capital out of emerging and frontier markets
“The developing market investors have stopped investing in emerging markets and frontier markets, as you might suspect during a downturn. And they're even pulling money out.”
Friedberg: Total global debt has reached approximately $300 trillion
“There's about 300 trillion dollars of global debt.”
Friedberg: Emerging markets hold roughly $100 trillion in debt
“About a hundred trillion of that debt globally is in emerging markets.”
Friedberg: Emerging market debt dropped roughly 20% in recent months
“We've seen in the last couple of months a decline of emerging market debt of about 20%.”
Chamath: Singapore GDP reached $360B in 2022 compared to Sri Lanka's $80B
“Jamaica's GDP is about thirteen billion. Singapore's GDP has grown to about three hundred and sixty billion and Sri Lanka's GDP is eighty billion.”
Chamath: Sri Lanka spent 2.5x more on defense than during wartime
“They spent two and a half times more on defense as of last year than they did when they were in war time.”
Chamath: Sri Lanka's organic fertilizer mandate cut large farm yields by 20-30%
“The problem with going organic and organic fertilizer was all of the small farms shut down, all of the large farms had 20 to 30% crop yield reductions, the prices of food went crazy,”
Sacks: Sri Lanka fertilizer ban reduced agricultural production by one-third
“In April of last year, the Sri Lankan government banned the importation of chemical fertilizers and pesticides used in farming. They, again, went with this idea they thought they could encourage organic farming. So, the result of that was that overall producti…”
Chamath: Sri Lanka printed 1.65T rupees, triggering record post-independence inflation
“In the next two years, the central bank printed 1.65 trillion rupees, right? So 16 and a half times that first number. And then as a result, what they saw was the highest inflation in post independence history.”
Chamath abandoned Google Loon Sri Lanka project due to political infighting
“I went there and I offered to bring Google Loon, myself and Google. We offered to bring internet access to the entire country, like guaranteed internet access. This was like five years ago. And we set up an entity and the government tried to do the right thing…”
Sacks: Sri Lanka had a 98 ESG score, beating Sweden and US
“He mentions that Sri Lanka has a near perfect score of 98, higher than Sweden, which is 96, and the U.S. Is a 51.”
Friedberg: China will likely become primary backer of distressed frontier markets
“And as you point out, China will likely end up becoming the savior and supporter, particularly where they have infrastructure investments and interests.”
Chamath: Record 19 developing nations have sovereign debt at distressed levels
“There are now a record 19 developing countries with sovereign debt trading at distress levels. 19. And two that have already defaulted.”
Chamath: El Salvador, Ghana, and Pakistan are next closest to sovereign default
“If you if you look at bond prices, the three countries that are the next closest to defaulting. So Russia has defaulted, but that was more a vagary of, you know, foreign currency controls that, that didn't allow them to pay. But Sri Lanka has officially defaul…”
Chamath: US CPI inflation could reach mid-to-high 9s or 10%
“I wouldn't be surprised if at some point we print a mid to high nines, maybe even a 10 handle at some point getting there.”
Calacanis: US mortgage rates will probably hit 6% to 7% by year-end
“So we're going to see mortgage rates probably go six, seven percent towards the end of the year.”
Sacks: Coatue poll found two-thirds of founders planned to accelerate during downturn
“What KOTU did is they polled all the founders in the audience. The poll results showed that on the one hand, everyone in the audience understood that we were headed for a big downturn and economic conditions and fundraising are going to be much tougher. On the…”
Sacks: Fed will 100% solve inflation by raising interest rates high enough
“We are 100% going to solve this inflation problem. Why do I say that? Because Price levels are fully within the power of the Fed. They just have to raise interest rates high enough.”
Chamath: S&P 500 earnings estimates are wrong and heading down
“I'm going to still maintain that the E is wrong. The earnings are wrong for most of these companies.”
Friedberg: Capital activity will start coming back in Q3 2022
“I do think that capital activity is going to start to come back this quarter where people are going to start to think about what to do rather than pull everything out because of the massive shift that's happened in the past couple of quarters.”
Sacks: Crossover investor pullback creates growth opportunity for smaller VC firms
“I think the fact that Tiger and the other kind of crossover investors, the fact they've pulled back way back from venture markets gives smaller firms like us an opportunity to do growth deals.”
Chamath wrote a $125M check for ProKidney
“And so, yeah, we took a, you know, half a billion dollar shot. I wrote a hundred and twenty-five million dollar check.”