Odd Lots Podcast Summary: "Nick Denton's Big Bet Against the United States"

Release Date: March 31, 2025
Host: Joe Weisenthal and Tracy Alloway
Guest: Nick Denton, Founder of Gawker and Creator of Futura Chiado

Introduction

In this episode of Bloomberg's Odd Lots podcast, hosts Joe Weisenthal and Tracy Alloway engage in a profound conversation with Nick Denton, renowned journalist and founder of the Gawker family of websites. Denton shares his insights on the shifting global economic landscape, his strategic bets against the United States, and the evolving role of artificial intelligence (AI) in trading.

Economic Anxiety Among the Wealthy

Timestamp: [02:13] - [03:06]

The discussion kicks off with Joe Weisenthal probing into the current sentiments among the wealthy, especially in light of recent U.S. policies such as mass tariffs and attempts to reduce the dollar's global dominance. Tracy Alloway references a New York Fed survey indicating significant anxiety even among the highest pay brackets:

Tracy Alloway [02:35]: "They're getting worried for all the reasons you just laid out."

This anxiety stems from uncertainties in global trade and the potential erosion of the dollar's supremacy, prompting even affluent individuals to reassess their economic positions.

Nick Denton's Political Ideology and Global Perspective

Timestamp: [05:07] - [06:22]

Joe introduces Nick Denton by highlighting his transition from financial journalism to founding Futura Chiado, a hybrid venture merging journalism and trading. An intriguing question about Denton's political ideology reveals his nuanced stance:

Nick Denton [06:08]: "I'm probably an authoritarian, growth-oriented follower of Lee Kuan Yew and to a lesser extent, but not Deng Xiaoping."

Tracy succinctly captures this view:

Tracy Alloway [06:22]: "Benevolent authoritarianism."

Denton's perspective underscores a preference for strong, centralized leadership focused on economic growth, drawing inspiration from leaders like Lee Kuan Yew.

The Decline of the American Empire

Timestamp: [06:49] - [08:29]

Denton draws a parallel between the fall of the Soviet Union and the current trajectory of the United States, albeit noting the differences in subtlety and duration:

Nick Denton [07:21]: "The American empire is definitely more subtle and been around twice as long."

He highlights key incidents undermining U.S. global standing, such as strained relations with allies like Denmark and Poland, exemplifying the erosion of longstanding alliances:

Nick Denton [08:29]: "If you want glory, should you look outside the US borders these days?"

These developments signify a shifting balance of power and the waning influence of the U.S. on the global stage.

Strategic Portfolio Diversification and AI in Trading

Timestamp: [09:25] - [15:49]

Denton reveals his strategic shift away from U.S. assets, now heavily invested in China and Southeast Asia:

Nick Denton [09:35]: "Now it's pretty much for stocks that are 100% China and Southeast Asia."

He discusses leveraging AI to analyze and trade within the electric car market, particularly focusing on companies like BYD and Xiaomi:

Nick Denton [14:14]: "I'm actually using AI to trade or to research for trade."

Denton emphasizes the accelerated pace of market changes driven by AI, enabling more sophisticated trading strategies that were previously unattainable.

US-China Economic Rivalry: Tesla vs. BYD and Xiaomi vs. Apple

Timestamp: [19:51] - [34:02]

A significant portion of the conversation centers on the intense competition between U.S. and Chinese tech giants. Denton argues that Chinese companies like BYD and Xiaomi have outpaced Tesla and Apple in various aspects, from quality to pricing:

Nick Denton [20:02]: "In terms of a product battle, in terms of features and in terms of marketing, in terms of price point, the Chinese have won."

He critiques Tesla's vulnerabilities, citing production issues and the overreliance on international markets:

Nick Denton [26:02]: "If Musk was really feeling it, he'd have an entry. There's no way that Optimus is going to go up against however many hundred robot competitors there are in China."

Denton also touches upon the precarious position of U.S. tech giants due to their dependence on Chinese supply chains, making them susceptible to geopolitical tensions and supply disruptions.

Political Risks and Asset Repricing

Timestamp: [23:37] - [35:41]

The conversation delves into the intricacies of valuing political risk in trading. Denton highlights how geopolitical shifts can lead to significant asset repricing, especially for companies deeply intertwined with international dynamics:

Nick Denton [23:37]: "It's a multidimensional approach. So I mean, I assume that the earnings forecasts are priced into the stock already."

He discusses the potential downfall of influential figures like Elon Musk, attributing it to their inability to navigate the complex web of global alliances and public perceptions:

Nick Denton [25:11]: "Every single thing that he does, every single pitch in front of the White House is turning off both natural Tesla buyers and the big blue cities."

Denton's analysis underscores the fragility of asset valuations in the face of evolving political landscapes and public sentiment.

Europe's Shifting Alliances and Technological Lag

Timestamp: [34:02] - [37:26]

Tracy Alloway brings attention to Europe's perceived lag behind China in technological advancements. Denton responds by critiquing Europe's prolonged austerity measures and contrasting them with the U.S.'s continuous economic reinflation:

Nick Denton [36:02]: "The United States has basically avoided austerity at every possible juncture."

He warns of a potential realignment of European nations towards China, given the fractured state of transatlantic relations and rising nationalism:

Nick Denton [37:22]: "The United States has kind of lost Germany already."

The Role of AI in Accelerating Market Changes

Timestamp: [14:03] - [20:02]

Denton elaborates on his use of AI to gain a competitive edge in trading, particularly in analyzing the electric vehicle (EV) market. By harnessing AI, he projects future sales and identifies leading companies, enabling informed trading decisions:

Nick Denton [15:49]: "I started actually doing a simple analysis of the electric car market, projecting forward BYD and Tesla sales to 2030..."

He posits that AI-driven research accelerates market understanding and capitalizes on opportunities that traditional methods might overlook.

Concluding Reflections: The Future of the American Economy

Timestamp: [39:48] - [43:11]

As the conversation winds down, Joe and Tracy reflect on the episode's grim outlook, highlighting the vast industrial divide between the U.S. and China, the erosion of global alliances, and the pervasive influence of financialization on the American economy.

Joe Weisenthal [40:03]: "The most valuable company in the existence of the United States could go up like that with a couple of decrees."

Denton reiterates his skepticism about America's ability to disentangle itself from its entrenched financial systems, warning of continued economic vulnerabilities.

Key Takeaways

• Shift in Global Power: The United States' subtle decline as a global economic leader parallels the fall of the Soviet Union, but in a more prolonged and nuanced manner.

• US-China Rivalry: Chinese tech giants like BYD and Xiaomi are outpacing their American counterparts, challenging the dominance of companies like Tesla and Apple.

• Strategic Diversification: Denton's personal investment strategy reflects a broader trend of shifting capital towards China and Southeast Asia, leveraging AI for informed trading.

• Political Risks: Geopolitical tensions and shifting alliances pose significant risks to asset valuations and the stability of global tech giants.

• AI's Role in Trading: AI is accelerating market analysis and trading strategies, enabling quicker adaptations to evolving economic landscapes.

• Future of the American Economy: The entrenched financialization and continued economic reinflation in the U.S. may hinder its ability to compete effectively on the global stage.

Notable Quotes

• Nick Denton on American Empire's Subtle Decline:

  "[07:21] 'The American empire is definitely more subtle and been around twice as long.'"

• Denton on Chinese Companies Outpacing Tesla:

  "[20:02] 'In terms of a product battle, in terms of features and in terms of marketing, in terms of price point, the Chinese have won.'"

• On AI's Impact on Trading:

  "[15:49] '...you can get pretty robust answers pretty quickly. Answers that then lead you to make trades that maybe you wouldn't have had the confidence to make otherwise.'"

• Denton Critique of Elon Musk:

  "[25:11] '...the international markets are plainly being torched by Elon Musk himself with all of the PR and propaganda that he puts out...'"

• On Europe's Economic Stagnation:

  "[36:02] 'The United States has basically avoided austerity at every possible juncture.'"

Conclusion

In this thought-provoking episode, Nick Denton presents a compelling narrative of the shifting economic tides, emphasizing the rise of China as a formidable economic powerhouse and the challenges facing the United States. His insights into the interplay between politics, technology, and trading strategies offer listeners a deep dive into the complexities of the modern global economy.

For those interested in understanding the undercurrents shaping today's financial and political landscapes, this episode provides valuable perspectives and anticipates future trends that could redefine global power dynamics.