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- [00:03]
A
Happy Labor Day. The markets are closed. So we've got a special episode for you to kick off. September. Now, this is a big month. We've got a Fed rate cut widely expected. Tick tock, the deadline looms for a deal or going dark in America and government stakes in public companies. Will we see More in this fourth quarter for Monday, September 1st, it's Brew Markets Daily and I'm Ann Berry. It's been a busy summer for government activity when it comes to cutting deals and let's go through a couple of them. In July, shares in MP Materials, the rare earths mining company, ripped after the Pentagon bought a 15% stake in it for $400 million. MP stock is up over 360% year to date as a result. And then in August, shares in intel soaring after sustained declines beforehand when the White house announced a 9.9% government stake funded by $8.9 billion of CHIPS act money. That's the bipart and pot for bringing semiconductor manufacturing into the United States. Now some have asked, are these the first steps towards creating a US Sovereign wealth fund? Well, in February, the White House issued a statement saying, quote, it is in the interest of the American people that the federal government establish a sovereign wealth fund to promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations and promote United States economic and strategic leadership internationally. So what is a sovereign wealth fund? Well, it's a state owned investment fund comprised of money often derived from a country's surplus reserves. So famous examples of these are in the Middle east and Norway with funds coming from oil and gas exports and investments made to help those economies diversify into other sectors like technology. Now, some sovereign wealth funds have been incredibly successful. Take a look at Singapore's for example. But the idea for one in the US has had a mixed response here with some in favor pointing to international examples of success and others asking, well, what are the details? Who would the pro, what would the profits be used for and who gets to decide? One cynic is Kevin O', Leary, otherwise known as Shark Tank's Mr. Wonderful. And he has been a vocal critic of President Trump's push for that investment in intel shares, even while he has been in favor of other White House policies. Well, we recently sat down with Kevin on this topic. Plus, what next for TikTok? He is trying to buy it after all, where he's investing and what he thinks of Elon Musk. Let's listen back. Talk to us about what you think about this concept that President Trump has put out there of a US Sovereign wealth.
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B
I actually don't think that will happen. And I'll tell you what. Two reasons. Number one, I don't think Congress will ever go for that on a bipartisan basis.
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A
Do you think it should? What do you think of it as?
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B
I don't. I don't like governments picking winners and losers. They haven't been very good at it ever. Administrations change every four years or eight years, potentially, which is in the context of sovereign wealth, very short period of time. Sovereign wealth funds work when the mandate is singular. Let me give you an example, a good example. I would argue back in the 70s, two countries with the same amount of, of available energy started sovereign wealth funds, Norway and Canada, almost to the day they started together, almost to the same number of barrels available in the ground. Millions and millions and billions of barrels. You think about Alberta, Canada and Norway offshore development. Who are the richest people on earth today? Norwegians. Because the mandate of their sovereign wealth fund was singular. They did not allow government after government to touch it. It was only put in place for the people where the principal was retained and remained. And they would invest it and spend the dividends or the interest. But the core principle, which kept growing based on the royalties they charged on their oil output, went from millions to billions on its way to trillions. Canada allowed their governments, multiple governments. I'm not blaming any one government to piss it all away, mostly on social programs, which never were effective at all. They have nothing compared to what the Norwegians have. So take an analogy, because I love the point you brought up. Let's talk about the anwr, which is almost equivalent to what the Canadians and Norwegians started with, which have never been tapped in the U.S. it's in Alaska. If Trump decided to, and he could, he could open up the ANWR and say we're going to charge a 16% royalty. But the only mandate, the only use of those proceeds is to pay down national debt.
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A
I was literally going to go to pay down national debt because you've talked a lot about the fact the United States needs to delever.
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B
That's it. And so there you would have a Norway play where the current administration would give a gift to the future because they would write it into law. And I think you can get Congress to agree to this. Put it in that the ANWR could only be used, the proceeds of the ANWR from the government's royalty perspective to pay down national debt, including what is being brought in by tariffs or perceived to be being brought in. You could actually get a hold of this problem and start to. We're going to increase it by 3 trillion. So this would actually start to get you more towards a balanced budget. But Canada and Norway is a great example. Very poor management of the federal government there. And the last decade it's decimated the country. I mean, 25% of the population there is at the poverty line when only a decade ago 10% were. That's the idiot king. But he's gone. And so you have to start thinking about the potential of the post Trudeau years, what could be done with all the power they have. And that's why I'm being very optimistic.
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A
What about just on this note, taking TikTok and dropping it into something like a sovereign wealth fund with the proceeds over time, with the return over time used to pay down national debt?
- [06:28]
B
Well, you opened a really big can of worms with TikTok because TikTok has now become a pawn in the China US negotiations. Let me give you the lay of the land as of today because, you know, I'm one of the many syndicate members trying to buy it. There's all kinds of people trying to buy this.
- [06:45]
A
Yeah, tell us about that. Yeah.
- [06:47]
B
Okay, so if you'd asked me two weeks ago, what's going to happen to TikTok, is it going to go dark on September 17th at midnight, I would have said no, it's just going to get punted down the road again because it's part of an overall China package. I don't believe that anymore. What's happened is the tone or the tolerance of the lawmakers that put this law in place almost a year ago, along with an $850 billion penalty, we've reached the end of the road. And the reason you would know that is if you listen to the signal coming out of Ludnick, who calls it straight in the last 48 hours, he said, look, when asked, is TikTok part of the package with China? Because China actually has a separate negotiating team that is working on all the other countries. So we have all other countries and then just China. Different team. They have the Ludnik signal is we've chopped TikTok out of the equation. We're more concerned about an overall package with China that may or may not include TikTok. It's just a small fraction. And the reason that's probably true is from Chi's perspective, it's a really interesting dilemma because if you look at bytedance, who owns bytedance is basically controlled by Chi because he's got the golden share. Although there are many international shareholders of ByteDance, and it's been one of the greatest investments in the last 10 years ever. But today it faces a serious problem.
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A
Including, by the way, some blue chip US institutional investors well aware we don't talk about quite so often.
- [08:28]
B
Yeah, we know who everybody is on this deal because everybody's been working on it for over a year. So here's the problem. If tomorrow morning or September 17th at midnight, TikTok goes dark and you're a ByteDance shareholder, you don't give a damn, it's only 8.2% of the market cap. Does Xi give a damn? No, he doesn't care. He didn't care when they turned it off in India. And if you are a shareholder, bytedance, you didn't care. The market cap kept going up after the India shut down four or five years ago, whenever it was. But there's a new problem, and this is a nasty problem. And I'm not sure how it's going to get resolved. If it gets turned off in the US September 17, it doesn't mean it's not for sale, it doesn't mean it couldn't be sold later. But obviously the asset value starts to diminish as all these accounts leave it and go to other platforms. But there's another issue, and I don't know how to calculate this. Nobody does. The minute it gets shut down in the US Canada will follow suit. Small market, 2.5% of world GDP, but market cap 8.5% gone. Then Canada add another 2%. Then if all of a sudden you're seeing that in a Nordic country or in Europe and you say, wait a second, why'd the US Turn it off? Maybe it really is spyware. And slowly, country by country, they start to shut it off, because I don't think it's going to have that big an impact. You know, maybe for five days people are talking about it, but after that in India, four days later, they didn't give a damn. And all of a sudden you're a ByteDance shareholder saying, what is happening? It's a domino effect of click, click, click, click, click countries just shutting you off. And where does it end up? Where it started in China. Well, that's not worth anything compared to what a global network like TikTok is today. So I don't know how you fix this problem, because this is not a decision Trump gets to make. If Xi doesn't want to sell it, he's just not going to sell it, period. And I don't think he gives a rodent's rear end. He just doesn't care. And I think the market has woken up in the last three or four days and said, whoa. That's why Ludnick is saying, maybe we just shut it down, we just turned it off. And that's not good news for me because I want to buy it, but it doesn't matter what I want. It doesn't matter what any of the syndicate buyers want. If Xi doesn't want to play ball, we're talking days. September 17th is not that far away. So TikTok is back in the news and now you understand the nuance of it, the je ne sais quoi of the TikTok dilemma.
- [11:18]
A
So if I start seeing disclosures that Kevin O' Leary is buying Meta stock, I know that your conviction that TikTok.
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B
Switch well, I'm disclosing what I'm doing right now. I represent quite a bit of buying digital, buying every week across 50 plus companies. And all we care about is the lowest customer acquisition cost. But we are definitely diversifying our risk. Now we are starting to do contracts elsewhere just to make sure that we're just not naked in the wind September 17th. And I'm not the only guy doing this. I mean the beneficiaries right now are definitely Meta. They are definitely, you know, even Meta's Instagram as well. But Google, Remnant cable television. There's all kinds of ways that we can now go acquire customers that do not involve TikTok. I would say to anybody that's got their entire revenue stream tied to TikTok, I would wake up and smell the clock because it's coming. And I would say right now your chances of being lit up the 18th of September are 50. 50.
- [12:26]
A
More of that. Interview with Kevin O' Leary in a moment. But first, if you want to explore investing, check out public.com Brew Markets Daily is sponsored by Public, the platform for those who take investing seriously. Public combines a wide range of asset classes with the tools you need to build and manage your wealth, whether it's with stocks, options, bonds or crypto. If you have questions about your investments, Public has Alpha, an AI powered research assistant that can help you find the answers you're looking for. Our producer John May have even convinced his waiter to sign up for Public over the weekend.
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C
That's right, Ann. I was out to dinner and the service was so efficient. It reminded me of when I signed up for Public. My pasta came out almost as quickly as my brokerage account was funded. When I signed up For Public, which was four minutes flat.
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A
And you told the waiter his speed reminded you of Publix.
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B
Yeah.
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C
And he was intrigued.
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A
Well, get started at public.com brewmarkets. That's public.com brewmarkets paid for by Public Investing.
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C
Full disclosures and podcast description.
- [13:23]
A
And now back to our conversation with Kevin o' Leary from earlier this summer. Can we talk about another. Another company that always seems to be at the top of people's minds? It's a public one, and that's Tesla.
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B
Yeah.
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A
You've talked about Elon Musk quite a bit. You've referred to him as the world's biggest industrialist. Right? Now, you've drawn comparisons in some ways with Steve Jobs. You've been a CEO. You are a CEO, successful CEO. The question I have for you is, is he getting pulled in too many different directions? Does Elon Musk need to do what some of his Tesla shareholders want and start focusing?
- [13:57]
B
Well, for anybody else, I'd say yes, but not for him, because you have the history of executional skills, you know, the successes of so many different mandates, diverse mandates, whether it be SpaceX or Starlink or Tesla or some of the robotic projects he's involved in. Even this restaurant he lit up in LA looks like it's gonna be wildly successful.
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A
Yeah, the Hollywood Diner, you know, it's.
- [14:22]
B
Sort of like anybody else couldn't do it, but he can. But I've also learned something else recently that I hadn't thought about in able to do the things that he does. It's not his real talent is choosing the people that have these mandates at the head of these companies. Because I've recently been involved in discussing some mutual opportunities with some of these companies and our companies. His guys are not normal guys. And I mean that. There's women involved, too. SpaceX CEO is a woman. She's unbelievable. I mean. But his team are not normal bureaucracies. They don't work the traditional way a large company works. They are given very short mandates. Could be 90 days, could be 180 days to get a massive project done. And they don't let anything get in the way. And if you can't work at their pace, they'll just roll over you. So it's not quite. I mean, I've done business with a lot of companies and a lot of large companies, and I've never seen anything like this. And the reason he's going to win, in my view, and why I think investing in his companies, as long as he's keeping this mandate in place, is for Lack of better words, they don't around.
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A
Yeah, they just do it.
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B
They just do it. And they tell the governments that they're going to work with. If you can't keep pace with us, we're just not going to work with you. We're going to go somewhere else. And it's almost refreshing to see this because I work with a lot of governments and a lot of mandates in a lot of countries, whether it's in Europe or in the UAE or whatever. I've never quite seen anything like this. And the only reason I'm confident that it works is it has worked and you can see the results. That's why I'm kind of disappointed he's not doing the Doge thing still. I mean, if they'd let him continue to just doge it with the government, it would have been good. I mean, I know there's a lot of controversy and all that, but.
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A
If.
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B
You saw it and see it the way I see it, under the covers, so to speak, these guys, you know, it's like that. I've said this analogy before, that famous line in the movie. Who are those guys? Like, they just keep riding over the sand dunes coming at you. They're just amazing. And so I say, I think Tesla's going to be. I'm an investor. I mean, I just sit back and wait. I think there's a lot of robotic technologies, taxis. I don't focus on any one quarter. And I really don't look at the stock because the roller coaster is insane. But I bought that stock before it even split because my son was an intern there.
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A
What do you think about the possibility that Musk just consolidates that portfolio more and more and just merges more of these companies together? I read Walter Isaacs, Walter Isaacson's book on. Did you read the book on.
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B
Yes, I did. I know Isaacson. Yeah, yeah, definitely.
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A
And I tore through it. And there was just one chapter in there which really struck me because, you know, I've been a CEO of business where Elon grabs his engineers and his fixes from his different companies and will sometimes just sort of drop them into one of the sibling businesses to go fix something because it, you know, suits their skill set. If he's doing that anyway. And this apparently happened at Twitter, you know, it happened at SpaceX. Would you be open as a Tesla shareholder, to perhaps just consolidating all of these under one sort of Musk holding company and it's publicly traded, and just let all that synergy happen anyway?
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B
Yeah, I mean, if you own Tesla stock. It's an Elon you trust because you shouldn't own it if you're questioning his mandates. I mean you just shouldn't.
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A
And the deputies aren't enough. So you just said he hires great people.
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B
He hires, yeah, but I think his real talent is in hiring people. That's my personal opinion, having met some of the people. My goodness. But I've said that already. I think the idea, the reason I think that a consolidation will occur at some point is all of these businesses require, and this goes back to our original conversation, data centers. They all do, they all require massive amounts of compute power and AI and data centers. And to me the most economic way to do this is to consolidate these businesses together because they're all in one way or another, LinkedIn and drive them out of. I mean the guy that builds the biggest data centers is going to win. I mean amongst actually countries that have the biggest data centers are going to win in wars, but in industrial design or whatever, in AI or in execution of all these different technologies, whether it be SpaceX or it ends up being Tesla. Tesla is actually a giant data gathering business. That's what these cars are running around, providing data back to the mother and providing high resolution and the charging stations too.
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A
It's data on other people, of course, of course.
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B
But I mean it's. But you need massive data centers for that. And so I think if you're elon, you say I'm going to consolidate everything and I'm going to spend a ton of money on capex on data centers and that'll be my competitive advantage.
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A
Interesting. Yeah, interesting. Grab that scale.
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B
Well, it depends how much it's power. Data centers are power contracts. There is no power in America. So it's very, very, very, very hard. We're 15 years away from small nuke power stations. They're so far away. So it's really about stranded NAT Gas now. That's what I'm focusing on.
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A
I was going to ask, so are you investing?
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B
Yeah, I invest in stranded NAT Gas contracts and access to pipelines and partnerships with pipeline operators, NAT Gas and two cycle turbines and the technology around converting NAT gas to electric, the lowest. It's the path of least resistance for the next decade.
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A
So it's fascinating, Kevin, because you've, you've made a couple of allusions in this conversation to private investments that you're doing. Right. You've just described it for the NAT Gas contracts, you've described it for some of the data centers that you're working towards building. Out on Shark Tank, Right. You're known for investing in young private companies. On the other hand, you're also very famous for your comments around investing in ETFs to your point, you know, in ocean.
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B
Well that's a diversification strategy.
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A
Yeah, but, but which do you to those who have the option of doing both, Right. There's passive investing which is a diversification to the public equities. But it feels as though where you light up is talking about these businesses where you actually have control or hyper influence because it's private, you're owning very high percentages of it. You know, you're not just trading the shares. Talk to us about your preference.
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B
Yeah, I don't really invest in PE funds because I trust my own executional skills in allocating capital and finding people to Dr. Mandates. I've done that my whole life. So people always say, but why don't you put it into my fund, a 2 and 20 PE fund. I said, well I'm actually going to compete with your fund and I'm okay to do with that or I'll partner with your fund, I'll do some projects with you. But when it comes, if I two years ago said as I did, I need to be in the data center business, I just found the very best people in the data center business and I would put my team up against any giant funds team. I mean I really would.
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A
Why do they work for you, Kevin? Is it because you're famous? Is it because you paid?
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B
No, no. I mean we have.
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A
How do you hire these people?
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B
No, because I'm not greedy. I share upside, a lot of it with my teams. I want them to be filthy rich. And we don't work nine to five. I mean that's not how we work. We're project based. I have remarkable talents working for me. Incredible people. We work eight days a week, we do stuff and we're doing it because we want to. And I'm a multisectoral investor. I have watch insurance and I have data centers and I've got a whole team now working on a new asset class that I've decided to look at very closely. You know what I like? I like to look at fund flows globally and I watch for a couple of years, particularly on alternative assets where I've made a lot of money in my life. I love the stock market, but I'm always intrigued where does capital go when it's looking for a longer term return or outcome. And I've been in all kinds of asset classes, contemporary art, modern art. Watches, as you know. And one that really intrigued me in the last few years, I've been watching sports cards.
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A
Oh, collectibles, Collectibles.
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B
And just indexing their momentum of capital and the prices that are clearing at. And what I like to do is look at public data, scrape public data. AI can help you do this now. And look at which cards actually appreciate. And remarkably, in that sector, it is very similar to contemporary art, where if you're going to put. You always say to yourself, well, I don't want to spend too much money on contemporary art. I'm going to buy a $25,000 Warhol print or a $50,000 print of Chagall or something that is actually a mistake. The returns are abysmal in those, you got to step up and buy a $40 million Pollock, and there you're gonna get a return because it's a very unique, thin market. But that art seems to be desirable perpetually.
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A
And the scarcity's so profound at that point.
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B
Yeah, it's very akin to the highest returns I've made on watches have been on watches like PIs, Uniques from FP Journe or Audemars Piguet or certain Pateks that are very, very hard to get, or one of Tudors, part of the Rolex family, or, you know, very, very rare rolexes. They represent 80 or 90% of the market cap of my collection, which is huge.
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A
Kevin o', Leary, thank you for joining. That's all for today's brew Markets Daily.
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C
Brew Markets Daily is hosted by Anne Barry and produced by John Crateau, Tarek Abdelatif and Emily Milian. Our technical director is Uchena Waugh, and the president of Morning Brew, Inc. Is Devin Emery. If you'd like to get in touch, send an email or Voice memo to brewmarketshoworningbrew.com Wake up tomorrow with the Morning.
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A
Brew newsletter and tune in to Neil and Toby on Morning Brew Daily. See you back here tomorrow, same time, same place.