A (3:08)

There was a brief period because what happened was that a tweet came out about an hour after the Financial Times reported that Saudi Arabia had approached Tesla wanting to make an investment into the company. Tesla had basically said, thanks, but no thanks. Saudi Arabia had then just simply bought up a very large multibillion dollar stake in the company. And so at that point everyone had Saudis top of mind. The stock was already up 5% just on the FT news about the Saudis. And everyone just thought, well, obviously if he secured funding and no banks know anything about it, because no banks do know anything about it, then the funding must be coming from Saudi. Except that eventually a few people bothered to be able to get through to Saudi Arabia on the phone and the Saudi was like, yeah, we don't know anything about it either.

B (3:58)

It's kind of hard to prove a negative at this point. So it's possible that funding does exist somewhere. Neither Elon Musk, nor the company, nor the board.

A (4:06)

It's Satoshi Nakamoto.

C (4:09)

Yes, clearly it's notable.

B (4:10)

The statement put out yesterday by the independent directors on the board said that in discussions with Musk they had, quote, addressed the funding, which is quite a bit different from having secured it. And there's, you know, it's Elon Musk, let's just sort of put on the table, is a sui generous CEO and Tesla is a sui generous company. Yet there's a very serious underlying question here. We know the SEC is already making phone calls asking in fact whether the funding was secured. Because when you're a CEO of a company and these are material market information moving events, this is not just a tweet. This is, this is a significant piece of disclosure. And if it turns out, and to be clear, we don't know if it turns out there is no funding that's problematic in a securities violation and it.

A (4:48)

Could actually be criminal, possibly, potentially.

C (4:51)

It would be hard to prove. But yes, to actually charge him would be, I think, a little bit more complicated than it looks on the surface because you'd have to improve, you'd have to prove intent in a way that would be challenging. But yes, this could certainly cause significant issue.

A (5:05)

Weirdly, not that hard. I mean, six weeks ago, Elon Musk put out a tweet saying the shorts have three weeks to get out of their positions before they get burned to death in a hellfire. Or words to that effect. His statement explicitly referred to these short sellers who he's been waging war with for well over A year now. And he clearly wants this transaction mainly because he wants to see all of the shorts in extreme pain. And sending out a tweet like that is certainly bad for anyone who has a short position in the stock. And that could in and of itself just be good enough reason for him to send out that tweet.

C (5:51)

Certainly. I mean it also, at least for a certain period of time, pushed the price of the stock above the strike price for two of the convertible bonds.

A (6:02)

What does that mean in English?

C (6:03)

Oh, so if you have a convertible.

A (6:04)

Bond, I mean, what does it matter whether the stock is.

C (6:08)

So if it continued to be above that price, that means that that amount of debt which is on their balance sheet could be converted into equity. So then about $2.3 billion of debt would no longer be debt, it would be equity. They wouldn't have to pay it back.

A (6:19)

And that's good because Tesla has too much debt already. Its bonds are rated junk and trade at very high yields. And that's one of the reasons why is very skeptical that the funding is secured. Because most of the time when you talk about taking a company public, funding means debt funding. But there's literally no way that anyone's going to walk up to Tesla with $50 billion of new debt and say, of course we'll, we'll lend you the money.

C (6:45)

I mean, in public, in a normal lbo, one of the main things you look for is generating cash generation. That is one of the, that is the most important thing. And Tesla doesn't generate cash. They have a lot of capex and investment needs. They would be the worst LBO candidate possible.

B (7:01)

It's worth going back to your question, which is why now the shorts argument is plausible. Musk's ostensible argument is that it's the one you hear a lot from public company CEOs, which is markets are short termists. We're driven to make profits and quarterly numbers. We don't get to invest in the long term. It's bad for society.

A (7:19)

Also in Musk's case, he's like, I run a private company called SpaceX, which is worth, what is it, $25 billion or something. It's doing very well and it's much nicer being private than being public.

B (7:30)

It's nicer for him. The question though for Musk is, you know, you hear people make that complaint and it's an argument worth making. And yet he runs Musk the least like a short termist company that you could imagine. If you're also public, they don't Give guidance. He regularly misses numbers. He gives short shrift to analysts on calls. It's not as if, it's not as if he's actually going to escape the.

A (7:51)

Thing he's complaining about. It's pressure from the market.

C (7:53)

No, he's actually really benefited from being a public company. He's gotten very inexpensive financing. The debt financing he's been able to get has been at a much lower yield than you would anticipate considering his finances. Because of the equity price and because of the equity story.

A (8:06)

Right. Because what happens is that people buying the debt, even if they look at the free cash flow and go, there's a very good chance you won't be able to pay me back. If they were, if it was a private company, that's all they'd look at and then they'd walk away. Because it's a public company with a $50 billion valuation, they ultimately feel there's that big equity cushion which will protect them from default. That ultimately he will always be able to sell new stock or sell a stake in the. To a strategic rival or something and that. And that he will be able to repay his bonds. But as you say, it's much harder to do that as a private company.

C (8:41)

Right. And this idea that there's so much pressure in public markets and that you do have to meet all these, you know, short term requirements, there's actually not a tremendous amount of evidence in the markets that that actually is true. You know, most companies don't put out guidance. You have companies like Amazon and Netflix that for years, you know, have been supported by the markets. I mean, Amazon, now of course they're profitable, but for years they weren't and the market supported them. And I think Tesla, even itself, the markets have supported it. Seems to me though, this is a sign of poor corporate governance, potentially at Tesla, which would get even worse if this were a private.

A (9:13)

Well, we know that Tesla has poor corporate governance and that the board will do whatever Elon asks them to do. I mean, you know, one of my favorite factoids about the Tesla board is that James Murdoch is on it, which I think is like, I mean, talk about like doing whatever the controlling shareholder wants to do. He's got a lot of practice in that. So, yeah, so if you're saying that Tesla has weak corporate governance, I think we can all agree to that. I do want to talk a little bit about the mechanics of what Musk is proposing because what he has done inadvertently or possibly deliberately is send every investment bank in America scrambling to try and work out how do you convert public shareholders into private shareholders? Because that's Musk's big idea is that if you own stock in Tesla today, you can continue to own stock in Tesla once it goes private. You just own stock in a private company rather than a public company. And everyone is scratching their heads trying to work out whether that's remotely possible. And we are listening to this wonderful thing called stub equity, which like no one had remembered. Like it was a vague term that people vaguely remembered from like 15 or 20 years ago. And everyone's like, can it be done?

C (10:29)

Yeah. I mean, pre crisis, this was where stub equity was talked about in a number of private equity deals, which essentially allows public shareholders to then get a minority position in the private company, so then they can continue to benefit as potentially the company grows or if the company is sold. But this is not something that's been done a lot and it certainly hasn't been done at this size.

B (10:53)

And regardless of the mechanics, which not my expertise as a non corporate finance expert, there's good questions about whether the existing shareholders would want to or even could convert to if that conversion is even possible. If you're a large institutional shareholder, for example, there are limitations often on whether you can put money into private vehicles. And if you're an individual shareholder, unless you're just a worshiper of the church of Tesla, you might just take the 20% premium and take the money and go home.

A (11:19)

Or you might not. Because the fact is that the overwhelming majority of Tesla longs are true believers. It's very rare to find Tesla longs who are not true believers. And they would, you know, and if Elon wants to go private, they're going to be like, oh, well, that's what Elon wants. And also it means they get to own shares in a private company, which is this cool and trendy thing to do these days.

C (11:40)

But as Matthew noted, and it is true that certain investors actually have restrictions on that. And also going back to the point about what it means for Tesla to be a private company now, what are you talking about? As a shareholder, you're going to have far less liquidity, you're going to have even fewer disclosures, and you're going to have probably even worse corporate governance. And if you're thinking you want this investment to be very profitable long term, those aren't good things.

A (12:02)

Well, I don't know. I mean, I don't think the government would change that much. I don't think the disclosure would change that much because it would still have.

B (12:09)

Because There isn't any right now.

A (12:10)

Well, no, I mean the quarterly reports would keep on coming because they need to file those for the public debt. And if you believe that, you know, owning private companies is a way to make lots of money, which a lot of people do believe these days, maybe you'd be into it. The one thing that Tesla has going for it, which has always been something going against it in the past, but is now actually conceivably an advantage, is that it has never been part of the S&P 500. And so you don't have the situation where a large part of your shareholding Is S&P 500 index funds who would be forced to sell because it's not in the index to begin with.

B (12:51)

Can I raise just amid all this skepticism and uncertainty, just one sort of counter programming note, which is it's the reason why we're talking about Tesla. I think we sometimes need to stop and just remember that from nothing one guy built a car company, which you're not supposed to be able to do anymore, that's now valued at more than Fiat and GM, I believe put together, which is an extraordinary achievement regardless of whether this thing has long term sustainability. It's a rare and amazing thing and worth noting.

A (13:18)

I'm going to bump up my number because it's germane to this discussion, which is that Morgan Stanley put out a valuation note on Alphabet this week saying this is what Google is worth and then they placed a $175 billion valuation on Waymo. Waymo is the self driving car subsidiary of Alphabet, has never made a penny in revenues. It certainly hasn't made a car. And 175 billion is more than Tesla and Uber combined. So in that sense, maybe taking it private at $80 billion is not so.

C (14:04)

Stupid if those valuations are justified.

A (14:09)

Let's talk about geopolitical tensions and trade tensions and major sanctions and all the rest of it. Ambassadors turned out of countries, all in response to a single tweet from Christia Freeland, who used to be my boss and is now the Foreign Minister of Canada. And she wrote on August 2nd at 10:46am, a kind of tweet that you expect from the Canadian Foreign Minister, which she said, very alarmed to learn that Sama Badawi, Raif Badawi's sister, has been imprisoned in Saudi Arabia. Canada stands together with the Bedawi family in this difficult time and we continue to strongly call for the release of both Rife and Samar Bedawi. So Rife and Samar Bedawi have been fighting for basic women's rights and civil rights in Saudi Arabia. The Crown Prince of Saudi Arabia has been making noises about moving in that direction, but has also been a bit of a strongman and has been locking people up and has been very unreliable. Anna, what did he do in response to this tweet?

C (15:21)

So he responded by essentially saying that all trade and foreign investment in Canada was going to be stopped. He's going to be selling Canadian assets. He's going to be calling back, I believe, Saudi students from Canada. He's going to be stopping flights between Saudi Arabia and Canada. So this would be actually significant sanctions. Now, having said that, Canadian exports to Canada, sorry, Canadian exports to Saudi Arabia are very, very small.

A (15:50)

But he kicked out the Canadian ambassador to Saudi Arabia, and he basically did exactly what he tried to do to Qatar, like, in terms of, like, isolating it. Now, obviously, Saudi has a lot more control over Qatar than it does over Canada, but he's really taking this very seriously.

C (16:11)

Yeah, I mean, he. I think people think it's odd when you hear about him and people say, oh, you know, he's this reformer and he's allowing women to drive and. Right. But the whole point is that what he's trying to do is he's trying to make it very clear that what he's doing is just, you know, his beneficence. He's not actually giving in to calls for more democracy or access to, like, real civil society or actual human rights calls from actual Saudi citizens. It's very important to him that he not be seen as doing that.

A (16:41)

Why?

C (16:42)

Because part of the way that he is able to maintain the amount of wealth and power he has is because they have an authoritarian state with complete control, no democracy, and access to a tremendous amount of wealth.

B (16:57)

Right.

A (16:57)

So the idea is that if women can drive in Saudi Arabia, it's not because women should be allowed to drive. It's just because Mohammed bin Sultan is generous enough to allow that.

C (17:09)

Exactly.

B (17:10)

I would make a slightly more generous strategic point on his behalf, which would be that. And this came up with the planned, and now not so planned, Aramco ipo, the idea that Saudi was too dependent, obviously, on oil revenues. And a couple of years ago, when the price of oil was much lower, the plan was to diversify the economy. And by diversifying the economy, it meant both different sources of income, but also modernizing it. And when you have more than half your population essentially incapable of work because you can't get there, because you can't drive, you can make a case there was an economic impairment to loosening the laws on women driving. Among the other changes he's made, which is to essentially try to slowly, bit by bit, liberalize the economy to a.

C (17:54)

Certain extent, although he hasn't said anything about guardianship laws, which I think you could argue are probably even a bigger deal than driving. And yes, he has spoken quite a bit about diversifying the economy. He has made some real changes in terms of reducing subsidies, increasing taxes, pushing out foreign workers and trying to make force everyone to hire Saudi citizens. But he's also imprisoned many wealthy people and essentially stole their money.

A (18:22)

He and indeed the Lebanese Prime Minister.

C (18:25)

Who had released essentially a hostage video. You know, this is, and it's not surprising then that we're actually seeing far less investment in Saudi Arabia. You're seeing a lot of companies push back now and say, you know, why are you going to invest in this idea of some 32 year old who's amassed total power, has no one controlling him and, you know, next year could decide that now he's going to expropriate your assets.

B (18:48)

Can we, can we be mean about Canada just for one second? Just because it's possible? But I also think that's partly what's going on here. This is the, this is the international relations equivalent of the prison bus. When you just pick a guy to beat up to show that you're in charge, they can, without much cost, kick out all the Canadian, you know, recall the Saudi investments from Canada and kick out the Canadian. And it sends a signal to everybody else that, yes, we're open for business, but like only so far.

A (19:14)

So in terms of the signals being sent here, the reason they can pick on Canada without cost is only because the Trump administration has these like big hearts in its eyes whenever it looks at Saudi Arabia and will do nothing to stand up for their closest and dearest ally.

B (19:32)

And the British. And the British too, to be clear who gave similar milquetoast statements. There is a interesting irony here, which is not just Trump, but the Obama guys too, pushed the Saudis a lot to stand up and become a regional power, mostly as a bulwark to Iran. In the same way they wanted other regional powers to take control of their neighborhoods, now the Saudis are taking control of their neighborhood. It doesn't quite look as pretty as I think they would have imagined.

A (19:54)

So my favorite lens to view this story through was Dan Dresdner's idea that sanctions are a kind of veblen good that what we saw when Saudi Arabians. Well, basically MBS the prince spent 470 million or whatever it was on a. Leonardo da Vinci was basically, the more money you spend, the greater the value you get from it. And he's basically saying, look, I can afford to throw away hundreds of millions of dollars on the painting because that's how rich and powerful I am. And this is a little bit like that. No normal country can afford to isolate Canada, to impose sanctions on it. It just makes no economic sense. And what MBS is doing is saying, like, I am so rich and powerful, I can do things that make no economic sense.

C (20:50)

Right. And he could also be the essentially domestic population when you're talking about what he did in expropriating assets. Partly he needed the money, but partly that also played really well domestically.

B (21:02)

And true, too, at the same time, he's taking away many of the subsidies that propped up things like fuel prices and food prices for a long time. I think it's hard to kind of draw a close connection here, but I think Aramco has something to do with this, certainly contextually, where all evidence seems to be that what would have been the world's biggest IPO that would have injected billions of dollars into Saudi sovereign wealth funds that would have allowed them to invest in things other than oil production. If it's going to happen, no one quite knows where or how or when. And absent that infusion of cash, unless they can find a different way of doing it, which is possible, it raises questions about the entire modernization plan and its funding, which has to be a little bit to do with him flexing his muscles in this way.

A (21:47)

I think it's also a win for Canada there, and I think it's a win for this whole idea of feminist foreign policy, which started in Sweden and then got picked up by Canada and is now becoming increasingly popular, because it's actually, as Annie, you said, it doesn't actually cost Canada much in the way of real money, but it makes them look as though they're standing up for important principles and feminism around the world and women's rights around the world in a way that few other countries are willing to do. It's a good look for them.

C (22:21)

No, I completely agree.

A (22:23)

So, on the subject of feminists and powerful women, Indra Nooyi, who was The CEO of PepsiCo Forever, basically is no longer the CEO of PepsiCo. She's standing down. And as nearly always happens, when a female CEO stands down, the number of female CEOs goes down because, predictably enough, she was replaced by a man. But we'll come to that. Feminist angle in a second. But I think PepsiCo as a company and what she did there is super interesting.

C (23:01)

I completely agree. I mean, I think she was really a, you know, she took a lot of risks. She kind of saw that consumers were moving away from sugary beverages, from unhealthy foods. And even though she had a lot of pressure not to do it, she spent a lot of money on research and shifting towards more nutritious options.

B (23:25)

Only with the exception that American, well, people, but Americans in particular like salt and they like fat. And the problem she found repeatedly is that you can make a new brand. It might be a 50 million, $50 million business. It's never going to be like, like Frito Lay lays is a 12, 13, $14 billion business. Because when it comes down to it, those are still, that's still what people buy. They're not growing. And at some point when you're a large packaged goods company, you hit those laws of large numbers where you produce things that many people buy. You can't squeeze much more growth out of them and the growth is in the smaller businesses. And, but that's not a $50 million, for example, flat earth chip, which was a short lived Pepsi fruit and vegetable chip with a terrible name. You know, that's not, if it grows to $50 million, that's not going to make a difference to the bottom line. It will take up a vast amount of management time.

C (24:15)

Right. But she's also focused on not, she was focused on saying it's not that we're going to put no attention on our core brands. Some people argue she should have put more attention. But you know, she had that whole idea of, you know, you have good for you and you have fun for you. You have both of these things. However, they can see North American market that when she came in, they were, you know, North American sales were declining. They needed to do something different. And I think she has been on the forefront in a way that now we have seen other companies starting to emulate a little bit.

B (24:46)

I think that's true. I think if you ask them, well, this will be a controversial point, but evidence suggests that they pushed, pulled back a little bit from the good for you part of the business. Pepsi would say they haven't. They still care as much as they always did. But I think the, and this is true not just of Pepsi, this is true of Kraft and Mondelez and Campbell's and other similar packaged good companies with large venerable brands of significance. They have a very hard time breaking into these new markets.

A (25:12)

And even if they do like Pepsi owns this bottled water called Life Water, which Taffy Akhner famously described as water without vowels. And I think Matthew, you're absolutely right that you know, however fast you can grow water without vowels, it's never gonna be a Pepsi.

B (25:36)

Right? And you can have for example, Mac and cheese, which is bright yellow and tastes fabulous, full of additives and colorings. Probably not anymore. But you're never gonna compete with the slightly dimmer yellow, creamier looking, fancy, organic, tofu free, quinoa based, you know, flat earth bran on the fancy shelf.

C (25:55)

Although, just to say, I mean, but us consumers in particular are, have been moving away from packaged foods in general and towards more kind of prepared foods at grocery stores. And where they have seen more growth in packaged foods have been in the emerging markets. Whether that's good or bad is a whole other separate thing. But you know, there has been this focus on saying, look, we're not going to really develop and evolve as a company if we just keep doing exactly what we've been doing. So we probably should be doing a little bit of something else while we still are selling a lot of our core products, especially in other markets.

A (26:28)

And this is, and this is, I think the key thing that Nuyi did was, I mean, one of the reasons she was chosen in the first place is because she's Indian, she grew up in Chennai, she had this very strong focus on emerging markets in particular in general and on India in particular. And as Matthew says, if you are shrinking in North America, if your opportunities for growth in North America come from tiny little brands which are not going to move the needle, and if you are a public company who, and you want to show actual growth in your company rather than just growth in the share price by doing stock buybacks or something stupid like that, then what you do is you start investing in India. I mean, it makes, that's the big bet. And that I think has worked, right?

C (27:14)

Yeah, I was just saying. And the person who's going to be taking over from her, that has been his focus were I believe Latam, Africa and maybe Middle East.

B (27:26)

It makes sense strategically. The problem I think many of these guys face, and Unilever is a good example of this because it's a global company, is you end up not just competing with new, exciting American brands, competing for supermarket shelf space, but every country has a startup, healthy local brand. And so you end up being having your anchor ankles bitten in every single country in the world by similar startups that you similarly can't compete with. Because what you have is large, you know, large brands with consumer salience, but not with that sort of newfangled sheen.

A (27:58)

Do you think that the era of global CPG brands is coming to an end?

B (28:05)

It's really hard. I mean, put it this way, whoever figures it out will make for a great business school study, case study. It's an extraordinary, difficult problem where you have extraordinary. You have popular brands that make lots of money, but it's hard to see where the growth comes from.

A (28:19)

And just in terms of the whole feminist take, there are fewer Fortune 500 CEOs now than there have been for some years where, like, America is moving in the wrong direction on that metric. This is yet another little data point. Andrew Osorkin had a column basically saying that when women find themselves in a CEO position, they find it actually harder than men do to promote women because they feel, they worry that they're going to be seen to be biased towards women and that there are just these for systemic reasons. Why getting up from that kind of 25 to 35 level of Fortune 500 CEOs who are women, which we've had for a while, getting significantly above that is going to be harder than anyone thought.

C (29:15)

Yeah. I don't think it's because women don't want to promote other women, though. I really don't believe that.

A (29:22)

So what's stopping? What. What stopped the growth? Why has it stopped rising?

C (29:25)

Because we don't. We still have a pipeline issue. We have a pipeline issue at every level. Whether you're talking about entry level to middle management and especially higher middle management. You have fewer women at each level. We're, as a, as a, as companies, as a culture, we're not doing a good job of promoting women. And as a consequence, it's not surprising that when you're looking to say who is going to be the next CEO, you don't have as many women to choose from. And that's not because women can't be CEOs. That's not because women are doing something wrong. It's because we don't have a lot of structures in place to make that possible.

A (29:55)

So I get. No, I guess what my question is is just in terms of the trend here, I mean, the pipeline issue is not new. Why isn't the pipeline growing? Why aren't we seeing an increase, even if it's a small increase in the number of senior women?

C (30:14)

Because as of recently, we haven't really been doing that much to change the pipeline. I mean, the biggest issues continue to have to do with often women's childcare responsibilities. And that hasn't changed, you know, and so when you're going back and forth between, you know, three more here, three fewer there, you're talking about really small numbers. So I don't know if we can really say, like we have a trend going in one. We're just kind of stagnant.

B (30:35)

Those, the headline numbers are useful because they tell you something. They're sort of unhelpful in some ways too. I think I'm agreeing vociferously, but saying it differently, which is that it's outcome, not process. And more interesting, perhaps more important, is to look at, say for example, the fact that a majority of college students these days are women and suggesting therefore that people entering the workforce are going to be similarly broken down that way. And these are generation long changes. It's not going to happen because you have a few more, as Anna was saying, a few more here and a few more there. Those numbers are going to jerk around a lot given. Given how few people we're talking about.

A (31:10)

Let's have a numbers round and I'm gonna have a China number just because it's fun. 3. 3. And this comes from your paper.

C (31:22)

I know what this is.

B (31:23)

This is a mystical Chinese number.

C (31:24)

I know exactly what it is.

B (31:25)

A lucky Chinese number.

C (31:26)

Does it have to be?

B (31:26)

This is from your Chinese food for us.

A (31:28)

This is a piglets number.

C (31:29)

All right.

A (31:30)

Yeah, yeah. Three is the number of piglets on the 2019 year of the pig. Official Chinese stamp that. It is a very cute stamp, I have to say. And there's a mummy pig and a daddy pig and three little baby piglets. And Anna, you can tell me why this is important.

C (31:49)

It's important because that suggests that maybe they're going to be moving from allowing people to have two children to three or more. And there actually is, I believe, precedents for this. Apparently there was some other. I don't know if it was a stamp or something else where it was.

B (32:01)

Also a stamp, but it was also an animal. I forget which one. Which went from one to two.

C (32:05)

Right. And then they changed the one child policy.

B (32:07)

China is an extraordinary country. Like in so many ways. It's sophisticated and modern and complicated, but the fact that you can, you can guess future social policy through the distribution of postage stamps is sort of amazing.

C (32:19)

Although to be fair, we've been talking about major corporate policy and foreign policy being done by tweet, so.

A (32:24)

So yeah, I will go out on a limb here and say that if China abolished all control over how many kids you're allowed to have tomorrow, it would have effectively zero effects on the birth rate.

C (32:36)

Oh, no, it's continuing to. If anything, it'll probably just go down.

B (32:39)

Yeah. The problem this is there's a serious underpinning here, which is China has two problems. One, local officials are still being pretty draconian about how many, how many kids the Chinese can have, even if the rules allow for more flexibility. And also, not unlike Japan, China faces, because of the one child policy, a huge demographic problem. In a few years time, will there be too many old people and not enough young people earning money to keep them?

A (33:03)

What's your number?

B (33:04)

My number, also from my own, it's not a newspaper, it's a News organization, is 49.7. And that number is from last year. It was the first time, probably not ever, we're not going back to the Republic, but the first time since numbers were counted that Americans reaching for an alcoholic beverage chose something other than beer, meaning more than 50% chose wine or spirits.

A (33:29)

So 49.7 is the, the number of beer drinkers. The number of beer drinkers, which is still a plurality.

B (33:34)

It's a lot, but it's less than half. And not so long ago, it was closer to 60%. This is, this is the land of beer drinkers, which is no longer a land of beer drinkers. And that number's only going south. And it tells us two things. It tells us that not unlike the Pepsi conversation, tastes are changing. Mass brands are struggling. It's Bud Light and Coors Light and Molson Light are the ones that are seeing market share crumble. And secondarily, it tells us a lot about how America's changing. Younger people, especially Gen Z and millennials, just simply drink less across the board. And African Americans and Hispanics tend to drink more spirits and wine, and women drink wine than white men, who are the typical beer drinkers. And we know there are fewer of them around. And the CEO of AB InBev, which is, I believe the world's biggest brewer, had a great quote where he said, the big things are declining, the smaller things are growing.

A (34:26)

It's just like Pepsi. Yeah.

C (34:29)

Yes. And as a millennial who's never had a beard in her life, I'll say yes. I'm representatives. Okay, My number is 1%. So my number is because over the past few weeks, there's been a lot of discussion about the second quarter GDP numbers in the US the 4.1%, and people talking about whether that is sustainable or whether we're going to go to 3% and people will often point to the export number, which was obviously inflated because you had all of these soybeans being shipped to front run the tariffs. But what I found far fewer people were bringing up was the inventory decline, which took off 1% of GDP, which almost entirely offset that increase in exports. Now, when you have that type of decline in inventory, you expect an inventory snapback in the second half of the year. So we should see a nice bump from inventories, which doesn't mean we're going to be at 4% growth. And Donald Trump's idiotic trade war could do a lot of things. But I just think when you're thinking about what's going to happen moving forward with gdp, that's important.

A (35:26)

I think what's going to happen moving forward with GDP is that the 4.1% preliminary GDP figure is going to be revised down. Because these things almost always mean revert and whenever you see a figure which seems improbably high or improbably low, invariably it winds up getting revised in the more realistic direction.

C (35:45)

Agreed. But inventories still have to be built back up.

A (35:49)

Okay, I think that's it for us this week, unless you are a Slate plus subscriber, in which case you get to listen to us talk about robot pizza. And honestly, who doesn't want to talk about robot pizza otherwise? Thank you for listening to Slate Money. Thank you to Max Jacobs for producing Keep the Emails coming. It is slatemoneyleep.com and we we'll talk to you next week on Sleep Money.