Transcripts
Erik: Joining me now is Matt Barrie, CEO of Freelancer.com. Matt, it's great to get you on the show, I want to talk about artificial intelligence. It's a topic that I've been aware of literally, since I was a teenager. I got my start in life, sneaking into the Artificial Intelligence Laboratory at MIT in the 1970s. So, needless to say, a long time ago. AI has been progressing very, very slowly. Since then, steadily slowly, then all of a sudden, about a year ago, something happened. And the progress has been absolutely mind boggling. What's going on?
Matt: Well, there's a few things going on. And certainly the last 6 to 12 months have been a wild ride. Probably start off, before we get into the underlying technology, is talking about some of the practical applications and kind of what's blown up there. You know, if you fast forward back, as recently as August 2022, last year, you're an illustrator, you're going along fine businesses as usual, you're getting commissions to do art, and a software tool and a stable diffusion gets released. Now, I, like many other people download several diffusion when it first came out. And this is a software package that will take a text string and turn it into an image or an illustration. And you download it, you play around with it for a few hours typing in various text strings and tweak a few parameters and you'd kind of get out the other side, some dream like sort of images, part Picasso, part Salvador Dali, you could kind of see that that image, somewhat looked like the string you'd put in as the input.
But it was nothing really more than the toy at that point in time. You'd play with it for three or four hours, you'd maybe get something that looks a bit artistic, and you'd go ok, that's interesting, but let's move on. Fast forward, two and a half months later, and another tool came out called Midjourney. And this time, you would type in a text string, and something magical would happen. You would get highly artistic, almost photorealistic images come out the other side of anything you type in, anything. And all of a sudden, the entire design world changed. And subsequent releases came out of this tooling and it's been absolutely incredible. You can type in, my niece can type in any sentence now and get out a hyper realistic high resolution image of anything. And this is like an atom bomb dropping on the design industry and subsequent evolutions of things like Adobe Firefly. And you can now take a graphical image of someone's face, which is in two dimensions. and you can twist it and turn it around and see the back of the head, even though the back of the head was never captured, in any photograph ever. You can take an image of a scene and you can zoom out of it. And the AI will infill in full photo realism, as you continue to zoom for as long as you like. Something crossed, what I call the uncanny valley, where, this is a concept in computer science, where if a human sees a picture of another human, and it's very, very primitive, you've got very low affinity with that image, then over time, as the quality of that picture of a human improves or might be a robot, something in the physical world is the quality of the representation of a human improves, we build affinity, then it gets to a point where it becomes very unsettling. For example, in a horror movie, you see obviously something that's quite fake, but it looks like a human but not quite a human. And then you have like this big trough where the human brain feels very much at ease when it sees a picture of that human because it's kind of close to a human, but it's not actually a human. And then when you come out the other side of that uncanny valley, where you look at an image and it's photorealistic. And you know, it's human, it's real, and you build that affinity back up again. And something has happened in design where the AI was producing images that kind of look okay, not great, what have you and then all of a sudden leapt forward and we're hyper realistic. And illustrators are, they're scratching their heads going, do I have a job still, because the software now can illustrate as good as any illustrator out there can take a photo is, you know, representation of a photo as good as any photographer out there in the world. And there are serious questions about what the future is of the design industry. And this sort of leap that's happening in artificial intelligence is happening not just in images, it's happening in all sorts of other modes of communication. For example, text and chat. I'm sure many of your listeners have already played with chatGPT, right? ChatGPT is a chatbot where you type in a sentence and it will chat to you and you can ask him to write an essay for you. You can ask it to solve the problem for you, and something happened.
Also around the same time, where it went from a toy where you would ask him a question, you know, like write me a poem about a particular topic, and it wouldn't rhyme or it wouldn't really make too much sense because it was trying an interesting little novel toy, to something now where you can get chatGPT to write at a level that exceeds probably the average human by substantial amount. It can write for you a stock purchase agreement for a series a stock subscription, or financing that's happening, you can get it to answer questions that are at the level of university students would face in their assessments. It's now passing the top 1% and verb on the graduate recruitment exam, which is to get into college in the US. It's in the top 7% of the LSAT, it can pass the bar exam to become a practicing lawyer. And it's doing this in leaps and bounds across all ranges of human endeavor. And it's doing it in a way which is really magical and incomprehensible, unpredictable to the inventors that we've been working on the AI and frankly, quite shocking,
Erik: Joining me now is Uranium Insider Newsletter founder and publisher Justin Huhn. Justin prepared a slide deck for this week's interview; you'll find the download link in your research roundup email. If you don't have a research roundup email, just go to our homepage, MacroVoices.com, click the red button above Justin's picture that says "Looking for the downloads." Justin, it's so exciting for me to get you back on the show. The last time I interviewed you, I was just beginning my own journey of education around all things nuclear. I didn't frankly know what the hell I was talking about, as some of our listeners politely and others not so politely let me know now I think I know enough to be dangerous. So hopefully, I won't embarrass myself too much at this interview, but I'm super excited.
I've been following your newsletter quite closely for many months now, starting to build my positions in uranium and other nuclear technologies, and very excited about this future. So I want to get an update. Last time I talked to you, I was kind of talking long-term nuclear renaissance stuff, what I see on the horizon long-term, and you were saying, "Look, it doesn't even matter whether that comes true or not. There's this specific setup that was bullish in the uranium market, regardless of whether there's a policy change or a nuclear renaissance, or any of that. It just has to do with fuel cycles and so forth." So as I see on your first slide here, on page one of your deck, you're talking about the Renaissance. Has anything changed in terms of there being a setup that is independent of that? And if so, or if not, how does the Renaissance angle come into it? And when are we going to start to see the market discount that? Because, boy, I don't think we've really realized what's coming in.
Justin: Sure. Yeah, you bring up good points, Erik. And thanks for having me back. I'm looking forward to talking with you again. And you're right, our last chat, we kind of did a 30,000-foot view of the broader picture, the broader thesis, longer-term vision, etc. And you're absolutely right, some of the exciting developments for nuclear in the future of nuclear in terms of new countries pledging to build new nuclear, countries expanding on nuclear, carbon neutrality goals, net zero goals, etc., etc. The advancement of SMR (small modular reactors), advanced nuclear reactors, these are all very exciting for me. They're most exciting for just the abundance for humanity in the future kind of level, not necessarily from an investing standpoint, because none of these new major build-out plans going out into the 2030s, nor the potential snowballing adoption of small modular reactors have any effect whatsoever on the short to near kind of midterm investing thesis. So Erik, if you actually just model out existing nuclear reactors, nuclear reactors under construction that will be grid-connected in the next five years or so, and you look at demand based on that alone, with no other demand from future builds, we're going to see a significant supply shortfall and therefore pressure on rising prices. And that's really kind of the fundamental basis for this as a commodity investment: looking at the supply and demand picture. What does that look like for the next 5-6-7 years? And I can tell you, it looks extremely bullish for the commodity.
Erik: Joining me now is Eurodollar University founder Jeff Snider. Regular listeners already know Jeff is famous for his slide decks. New listeners, you're not going to want to miss it. So be sure to download the slide deck, you'll find the download link in your research roundup email. If you don't have a research roundup email, just go to our homepage macrovoices.com. Look for the red button above Jeff's picture that says looking for the downloads. Jeff, before we dive into the slide deck, which is largely about inflation, I want to come back to one of our previous conversations where you told us that prices were going up and they were going to continue to go up and there was going to be no inflation. And that, of course confused a lot of people. There's a few folks in our audience who know exactly what you're talking about. It's this distinction between consumer price inflation and monetary inflation. What's the difference but more importantly, why should we care about anything other than the price inflation, which is what affects the you know, how much money you got left in your wallet?
Jeff: Yeah, I mean, that's a great question to start with because the last part first, consumer price inflation as we define it as a supply shock, which we'll get into here in a minute, versus the monetary variety, which is really legitimate inflation, they look very different. Yes, the end result is the same in the short run. But how they work out in the long run could not be different. That's what we'll talk about today that when you have a supply shock situation, what mostly happens through historical examples is what you see is consumer prices will surge, the skyrocket right out of the gate, and they'll go way up there, which is you know, most people don't care. They understand they're becoming poor by the day but they'll surge really quickly and they'll stick around high rates of consumer price increases for you know, quite some time usually it's multiple months, maybe even a couple of years. But then, regardless of what happens in monetary policy, the Federal Reserve or Central Bank's, consumer prices will begin to slowly decelerate, and decelerate and decelerate, so that over time, and this is usually a multi-year process, all on their own consumer prices will reach a new equilibrium, they won't go back to where they were before the supply shock, but the consumer price increases will stop so that at least we reach a different stable equilibrium as far as prices go.
Whereas monetary inflation, which is real inflation works very differently. And that's where you get into sustained increases and sustained advances in consumer prices that go on year after year after year after year, like we saw in the 1960s and 1970s. The distinction we need to make here is that the supply shock version is not because of money printing or bank credit or anything of that kind of nature. It's instead, as the name implies, a shock to the economy that causes some imbalance between supply and demand, like we saw in 2020, where the only way to adjust and reconcile those imbalances is through prices. Where is the other type real genuine inflation is from a sustained increase in either money supply or credit supply to the economy. So in the modern economy, that's the banking system like we saw in the 1960s and 1970s. So it's a difference in where it comes from. And ultimately, it's a difference in how it ends and how it gets resolved.
Erik: Joining me now is Lyn Alden Investment Strategy founder, Lyn Alden. Lyn prepared a slide deck to accompany this week's interview. You'll find the download link in your research roundup email. If you don't have a research roundup email, just go to our homepage macrovoices.com. Click the red button that says looking for the downloads above Lyn's picture. Lyn, it's been way too long. It's great to get you back on the show. I want to start just by looking at your slide deck. You're talking about valuations. Boy, it seems to me like something's going on that with breath that seems unusual. And I haven't looked at it closely enough, but it just seems, particularly AI stocks and some of these things are just to the moon. Well it's creating, I think an illusion that everybody thinks that the market is off to the races. It's not the whole market, is it?
Lyn: Yeah and first of all, thanks for having me back Erik. Always happy to be here. And yeah, we're definitely seeing some big divergences in the equity market, both in terms of risk on and risk off, but also in terms of growth and value. And so for example, on the first deck there, I show Apple versus CVS. And these are just kind of two examples of large cap stocks out there. The funny thing is that analysts consensus forward earnings estimates are actually not that different between the two companies. They both had like a period of kind of two year earnings stagnation here, they both have kind of slow forward growth. Basically, they're both at the end of the day kind of value stocks, that they're not exactly fast growers. But we see Apple trading at well over 30 times earnings and has surged much higher this year. And all of it was valuation based. Whereas we look at a lot of the, you know, kind of either the cyclical value or even the defensive value. A lot of these companies are just trading at like high single digit price-to-earnings ratios. Kind of completely left for dead, totally kind of uninterested by the market. And, we can kind of go through sector by sector and see that some of them do have headwinds. For example, healthcare has been facing some regulatory headwinds, for example, but a lot of that is just, basically, there's so much risk-on condition focused in the tech sector, that a lot of other areas, especially defensive value like healthcare has just been completely left for dead.
Erik: Joining me now is Dr. Anas Alhajji, managing partner at Energy Outlook Advisors and noted keynote speaker on energy markets. Anas, it's great to get you back on the show. I'm really excited to get an update for you on your outlook on energy markets. For the benefit of any new listeners who may have missed our prior interview. Anas basically has nailed this market saying to us look, don't get too excited even though I think Anas and I agree very much in the longer term, about a bullish outlook. Anas said don't get too excited in the first half of 2023, it's not time yet. If we're gonna have a big bull run and crude oil, it's not coming until the second half. So far, that's definitely proven right. So Anas, I'm just can't wait to get you back on for an update. You nailed that call, what comes next? Is it time for this market to finally turn up? Why didn't Chinese reopening recreate demand as everyone expected it to and what should we expect next?
Anas: Thank you very much Erik. it's always a pleasure to be on MacroVoices. It was clear from the beginning. If we look at how countries open after locked down that we are going to have an increase a sharp increase simply because of the transportation sector. But for the rest of the economy to pick up, it takes time. So aside from all the ills of the Chinese economy, it is just the fact that these things take time. So the idea that we open up tomorrow, and everything is back to normal, it's not what happened. So we expected that we have increase in consumption because of the transportation sector. And then the economy will kind of improve little by little over time. So we're not that excited about China. But the issue that some analysts basically fell into the trap of the Chinese government did after reopening. As you know, because of the long period of the lockdown many students and of course, they are in the10s of millions got locked away from their families. And the same for soldiers and policemen and others. So they stayed away from their families for a very long time. When the government opened up, they literally chartered 1000s of planes and buses, etc., to move those people so they can visit their families. Some people look at that as look, this is back to normal. And this is what the trend is, but it was a one time thing. And then we'll go back to normal on the transportation sector. But for the rest of the economy, it's not that much. And we ended up with a situation now. And now since you mentioned that we nailed it on 2023. Today, we published the report on a first look at 2024. And we pointed out two issues that we overlooked in our outlook for 2023. And I think the both lessons that we learned from this are lessons for everyone. So we were really bullish on the fourth quarter of 2023. That's our view. We are still bullish, but not as bullish as before. Why? Because we never expected the Chinese to build their inventories the way they did in the last three months. Which is very dangerous because we've seen them doing this before. And we've seen them releasing this as oil prices go up.
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