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- [00:04]
A
You are listening to an art media podcast.
- [00:09]
B
So, Yael, what's your number?
- [00:11]
A
My number is super specific. It's 14,677 and that's the average monthly gross salary in shekels in Israel in December. Why is this interesting, you may ask? Well, the good news, it's because it's up 3.1% from a year ago, which means that wages are actually beating inflation for once. They're not. Not by a lot, but they are winning. And so our employment looks pretty steady. What is changing is who is working. So in December, 4.16 million Israelis were working, basically growing in line with the population. But who was working was foreign and Palestinian workers. And that number jumped quite sharply over the past year.
- [00:49]
B
Mine is 44, as in base 44.
- [00:52]
A
Ooh, sneaky.
- [00:54]
B
Yeah. The first Israeli AI framework Super bowl ad by Wix that owns base 44. We spoke about base 44 earlier this year. An acquisition by WIX of a clever AI vibe. Coding. I don't want to say one person company, but you know, kind of ten people company. A quick exit. As we discussed last week, the Israeli big digitals, the big digs, are scrambling to find their way out of Wall Street's Saspocalypse and it seems like it'll be quite a battle ahead. The ad didn't save Wix from shedding 13% this week and reaching a new 52 week low. So it's a bit of a bad number ultimately, but it is a winner of the Super Bowl.
- [01:31]
A
Your number totally wins. And I am a big fan, a big fan of base and the team there and Maor, Shlomo and so forth. My whole household uses base 44 and we love it. So your number one. It's 9pm here in Tel Aviv and we have a busy geopolitical week ahead of us and we were hoping for a day after in our region. But that fog of war does not seem to have lifted the brutal Iranian repression and reintroduced the specter of war into the Gulf. And that has been casting a shadow on the Israeli economy. And everyone's focused on Tehran and Washington, but we're going to actually look a little bit elsewhere. We're going to cover a formative rivalry that has been exploding in the last 10 weeks between Riyadh and Abu Dhabi. Basically, we're going to be following the money.
- [02:23]
B
Before we start, we have actually big news today. Michal, my co founder, the partner in starting this podcast, has accepted an amazing job at Morgan Stanley. That unfortunately means that Michal will have to Step back from hosting what's yous Number. It's not a full goodbye. Michal will still join us as a guest. This will always be your home, Michal. It also means, Yael, you now step up to fill up Michal's shoes and officially join what's yous Number as my co host. It is a bittersweet announcement, but to celebrate Michal's new role, to mark the passing of the torch, we have the one and only Michal joining us.
- [02:56]
C
Hi, Jonathan. Hi, El.
- [02:58]
B
What's your number?
- [02:59]
C
I have a very American number to share with you guys just to as my parting gift here. Although this is not a goodbye, My number is 23 and that's 23% of Super bowl ads that were AI centric. We talk about AI so much on this podcast and I expect you guys will continue to because how could you not? And I thought it was a really striking number. You know, AI is going mainstream for sure. It was Gemini OpenAI, anthropic kind of all of the above. There was an antisemitism ad, not AI related, which made a lot of waves as well. Otherwise a very boring super bowl, though.
- [03:35]
B
So for me growing up in the 90s, when you say 23, it's immediately Michael Jordan. I'm sorry, I thought Michael Jordan is coming into the pod, but I'll take 23%.
- [03:45]
C
Well, and just on the parting note. Yes, you absolutely called it. This is very bittersweet. I am turning from co host to an avid listener. You guys have been crushing it and I know you will continue to with these really, really critical and timely conversations. Hopefully I can join you as a guest at some point in the future maybe. But yes, I am embarking on this very exciting new chapter. But bittersweet parting for now and I'm continuing on as a listener and really, really excited to see where you guys take it.
- [04:15]
A
Huge shoes to Phil Michal, and thank you so much and lots of good luck on your next endeavor. That sounds fun and interesting and totally a pivot in your career.
- [04:25]
B
So, Michal, before you leave, what's sort of the biggest change in moving from journalism and the amazing work you've done at Fortune elsewhere to working at Morgan Stanley?
- [04:35]
C
There are a lot of differences, as you can imagine. I would say the biggest transition for me so far is switching from a Mac to a PC. As a Mac person, going to a PC has been mind blowing.
- [04:48]
A
That is tough.
- [04:49]
C
It's tough, right? It's really tough. I feel like I'm new to technology, so, you know, beginner's mindset. That's where I'm at.
- [04:56]
B
It's tough. But you just explained the moat of Microsoft worldwide pre installed in all the big Fortune 500 companies. That's how Microsoft AI probably is going to win in a big segment of the market.
- [05:09]
C
Absolutely.
- [05:10]
B
Michal, just to say thanks for joining, for believing in really being a co founder in this one and setting the tone during the week on weeks and teaching me so much and for really creating the culture that is now the what's yous Number Podcast.
- [05:23]
C
Thank you Yonatan. Thank you Yael. Best of luck. And again, I'll be listening every week.
- [05:28]
B
Oh, Is so great. But you know, that was just as Yale. There's no, there's no going back. No pressure.
- [05:39]
A
Lots of pressure here. And now, as usual, we're going to take a quick look at some of the week's pressing news, AKA our big shorts. And of course, the latest update on the Windex, the what's your number index that tracks the performance of publicly traded Israeli based or founded companies. Let's kick things off with this week's Windex. Yonatan, I'm afraid to ask, how is it looking?
- [06:02]
B
It's the worst week ever since we started measuring the Windex. It's still sort of on par with S and P and Nasdaq from the beginning of the year, but it's been 5.41% in the red the past week. I think it actually calls for an interesting conversation that we're going to have today as it relates to what's referred to in Wall street, the SaaS apocalypse. Right. The software as a service apocalypse that is apocalyp on us because of AI.
- [06:27]
A
I've heard also it be called the Sassamageddon. So choose which one.
- [06:31]
B
Sasmageddon. Great. I love it. So we are seeing that the Israeli tech is susceptible, at least Wall street thinks it is, and therefore Windex is underperforming S and p and Nasdaq 2.85 worse than Nasdaq 4.79. We saw Figma lose tens of percent in six or seven weeks on Great performance and great quarterly reports. So this is a broader Nasdaq issue. But clearly the Israeli tech is more focused on SaaS and therefore more susceptible and more prone to this dynamic. Almost half of the Windex demonstrated double digit decline this week. Topping the list are Voronis cyber company and lemonade with 21% obviously Monday.com, you know, the last one completing 17.9% decline in a week. That's Monday and Scratching an all time low at 70% down on a 52 week basis. 12 trailing months. You know, some of these equities are rebounding also today as the market started and opened. But it's going to be a rocky ride.
- [07:36]
A
Absolutely. We talk a lot about AI being not a feature but a moat and trying these. A lot of these companies have to kind of find that moat in AI and if they weren't built on it, they're going to have a very hard time, as you said. Speaking just a few hours after Monday held its earnings call, the analyst call it's the stock is down now as of Monday, down 20% after the call pushing the company's valuation below $4 billion even with the 1 1/2 billion they have on hand. And they're walking back their 2027 revenue target. Earning season now is not only becoming a growth showcase the way we were used to. I was also in the weeds of those. It's becoming a credibility test. Right. And it's kind of not only the leadership has to give the reassurance that they have an AI moat but also to really show how they get there fast. And I think that's something that a lot of these companies are going to have to have trouble with.
- [08:28]
B
Yeah, I totally agree. I think last week we also saw this is outside of Israel, Novo Nordisk, the giant from Denmark. Pharmaceutical company that ushered in the era of the GLP1s. Right. The Ozempics of the world. And at one point the market cap was bigger than the entire GDP of Denmark. And we saw the split between Novo Nordisk and Eli Lilly kind of running the same show. This is a trial for CEOs. This is a trial for leadership in trying to figure out a path to over deliver and under promise.
- [08:58]
A
Give us some green.
- [08:59]
B
Yeah, there is one. There were some greens. You found a green, but there is one. It is a volatile stock. We spoke about Protalix four or five months ago. Protalix is an amazing company. Traded quite higher on market cap in its peak. This is a company that figured out how to do clinical trials in carrot proteins. Very interesting company. So they had a 25% rise on the week due to positive regulatory news from the European market and a payment clause of $25 million that this would trigger from the Italian family owned pharma leader Chiesi, which is an expert on rare diseases, which is where if you will, Protalix ended up with its niche. The company had a higher, more promising hope to be kind of central to how we do clinical Trials and how we do drug development and they ended up with being a very strong player, the niche market of rare diseases. So good news for Protalix. Yeah, I guess, you know biotech sometimes, you know, this is one of those rare opportunities where biotech outperforms software, outperforming.
- [10:01]
A
Software gets a headline instead of the software. Right. You know it best. But it's also a nice reminder that markets still reward clarity, milestones, external validation, everything that prolactic has brought to the table.
- [10:14]
B
Yeah, and look, I think a lot of Israeli companies in the SaaS space need to take a note from Elon Musk's book from last week. I think he did something very courageous if indeed he will execute on it the idea of stopping production of S and X classes models at peak. So basically this is a demonstration of what you need to do in times of this kind of volatility. If you have lower margins with an existing sort of make and you start to see everybody like BYD and others competing with you and lowering the margins and you already know where the future is, where the next S curve is, which according to him is robotics and AI with Optimus and with Xai, totally fine, close the lines, give up on that margin, let everybody else compete there and move on to the robo taxi, move on to robotics. I think the question now going back to Monday.com, wix, I think lemonade has a great road charted from that perspective. Don't fight the last war.
- [11:10]
A
Yeah, I was actually interested to see that in this earnings call with Monday. Besides obviously changing the 2020 target, they did say they're going to keep on hiring. They plan to increase headcount by 15% saying they're hiring people for AI position. So for now the market remains unconvinced. But I thought to your point, finding new kind of paradigms to go towards, that's an interesting way to do it.
- [11:32]
B
All right, let's move on to the big shorts.
- [11:35]
A
Okay, so the first big short today is actually thanks to Kal Kalis. It's exclusive. It's a notable deal that they kind of put the highlight on this week. It's a Chinese billionaire that's in talks to acquire netafim. Now we've spoken a bunch about kind of legacy Israeli companies. This is one of them. This is one of Israel's maybe most iconic industrial tech companies. It's a deal that's valued around $1.4 billion. And the reported buyer is a 35 year old chairman of China's Dayu Irrigation Group. His name is Hayu Wang and he's partnering with the Hopu Investment Fund and he's visited Israel already, has seen the Netafim factories and plants, he's met with the management. He's pretty serious about this, according to the report. For those of our listeners who do not know, as I said, it's an iconic Israeli company. It's also the world's pioneer of drip irrigation, but it operates globally and the entire world has a lot to thank Israel for. Netafim, it has roughly a quarter of its revenue comes right now from the US which means that the deal would obviously face American regulators if it moves forward. This is a watershed moment, I think. Yonatan, we talked about IAI going public or not. Netafim isn't just another success of the Israeli exports. It's really a symbol of finding water in the desert, right. And doing something with it. Israeli engineering, agricultural innovation. And whether this happens or not, it kind of highlights how Israeli tech does sit at this intersection of global capital, geopolitics and very long term national interests.
- [13:00]
B
What do you think the story behind Netafim not being an Israeli company anymore is not a new one. Mexichem bought Netafim a while back. The real story for Netafim, which is Khatarim, is the kibbutz. It is a company born out of kibbutzim. It is one of those rare opportunities where socialist movement kibbutzim exit in a capitalist way. Right. So if I remember correctly, the first one was Premiera, one of Israel's kind of top collaborations on the private equity side. And then it kind of shifted hands and then it shifted hands again to Mexicam. So I think it's kind of like a story with three points, right? One, pioneer Drip Irrigation, the company that sort of really introduced this notion to the world that not only you can grow 10x crops via very clever fertilizer, you can actually do it with 10th of the water or a hundredth of the water supply, which in most parts of the world right now there's dire need. And so I think that was one the innovation. The second piece is that exit like a kibbutz driven company finding its way to sell and you know, agreeing among all the kibbutz members. And I think it was Kibbutz Magal as well, not just one kibbutz, similar to what happened by the way with Tnuva, which is the biggest dairy producer in Israel, owned by some kibbutzim and some farms. And that's the third piece and it would be very interesting because when Tnuva was bought by the Chinese, it was a different climate towards China. And so to see if this deal goes through would be very, very interesting, both from the American regulators, but also from the Israeli ones. So I think it's a great big short. And you know, water and irrigation technology is now far beyond Drip and some of the folks involved with drip are now involved with, guess what, AI driven irrigation. So Israeli agtech is indeed flourishing.
- [14:46]
A
It's also about nationality, as you say, and it's more about what will be the next one and continuing to nurture the innovation that's coming here.
- [14:53]
B
What's your big short before we move on? I'll just say that it's been, and I'm sure when you travel also in some of the diplomatic dynamics, people don't forget when you support them with water, it's such a fundamental thing. Like whenever Israel gave that gift to countries, they don't forget it. To me, my big short this week was I would say double the Israeli airspace is something we've been busy with a lot on the podcast on many grounds. It has to do with sort of who flies in and at what price. And we're going to talk about Elal in a minute. But it also has to do with the fact that it's hard for us counterintuitive to see traffic in the air because we all stand in traffic in Ayalon and we all stand in traffic when you get to work. Israeli airspace is jammed. We have one big international airport as of 2024. It's everyday delay means we're not going to have slots or slots are going to be very, very, very expensive. Two options for the last six years, Ramad David, sort of the Emek Israel option and the south option. Politicians, because of nimby, not in my backyard because of very, very difficult dynamics on the political side, are just finding it really hard to make a decision. This week. Supposedly a third option at Tsiklag Tziklag is a biblical city, by the way. Not so far from the Gaza border is the new option for building the airport. The political ranks are in discussion. To me, this is another stunt related to the budget, as we discussed. And so that's bad news. Bad news that we're going to see another government possibly end its term three and a half or four years without a second or third international airport decided at work. This means that come 2030, 2033 flights are going to be expensive again. It's just impossible otherwise. And the second piece is that Elal was fined to the tune of 120 million shekels.
- [16:38]
A
You mean, speaking about expensive. Yes. Now continue.
- [16:41]
B
Exactly. And I'm not sure you're going to agree with me on the second part, but it's going to be a good conversation. ELAL obviously hiked its prices throughout the war. A lot of companies didn't fly in. And now the Federal Trade Commission equivalent in Israel, what's called the Competition Authority, has fined a lot, 120 million shekels. Sounds like a lot of money, but frankly, it could have been 1.2 billion. Because effectively, Elal, for quite a period during the war was a monopoly. And monopolies are not allowed to hike their prices that way. So the fine is low. It seems like this is sort of where they'll end up. I will say one thing. Sort of from my perspective, it wasn't pleasant to pay those prices. But there's something to be said about an airliner that continues to operate during war and the difficulty it has flying the Magen David, the Star of David, worldwide. It is reasonable for ELAL to hike its prices during certain parts of the war. I'm not an expert on sort of where the red line is and what's considered reasonable or not. I will say one last data point. The average increase was 16%. When you look back at all the data, 16%. So is it fair? 16% during the war? You may have your own thoughts.
- [17:53]
A
I think two things can be true. I think you're right that they plowed through despite the war and thank God for that because they were the national carrier, and they are, and that kind of showed its true colors during the war. And so I commend them for that. But it was found that the same report that you just cited was found that even on flights that weren't even fully booked in economy class, they were hiking ticket prices by about 25%.
- [18:18]
B
The big one was 31.
- [18:19]
A
The big one was 31. And as you said, they have a monopoly on about at least 38 of the 53 routes it was operating in, which, including London, New York, Paris, Bangkok, you know, do things can be true. The cynic in me says, I wish I had more LL equity, because that was a sure bet.
- [18:36]
B
Yeah. Look, it reminds me of what happened during COVID with the shipping companies. Right. It's the same container. They're flying the same route. It went from $700 a container to like 25. Right, right. But at the end of the day, that's how, again, it goes back to the early conversation in the Windex. Right. We are lucky to live in an open society where there is a market dynamic that tells us a real story. Right. Price discovery kind of gives us a sense of where we are. The capitalist in me is happy about that and sort of the public service guy in me is happy that they're being fined. And let's hope that we don't end up with this situation again. What it did to businesses and what it did to export was a real risk.
- [19:17]
A
Today we're going to speak about something that's often discussed as a single story, but it's actually two. It's the state of Israel, Saudi ties, and the growing strategic tension between Saudi Arabia and the uae. The assumption now for years has been that the Saudi normalization with Israel is the key that unlocks the region. But at the same time, beneath the surface, we're seeing a much sharper rivalry inside the Gulf, especially between MBS in Saudi Arabia and mbz, depending where you are from in the Anglo world in the Emirate. Jonathan, you did write a great piece this week in the Daily arguing that while Saudi Arabia has been loud and confrontational, the UAE has been quietly building power through economic means, infrastructure and global partnerships. In other words, follow the money. I'd like to unpack that today with you.
- [20:07]
B
I think the shift is very dominant, and instead of looking at it from sort of, oh, they don't want a normalization with Israel, what are we going to do? It is a lot more profound and we can learn a lot from this dynamic between MBS and MBZ because it tells a story of Israel's economic opportunity in the region. And I totally love the framing of following the money here. So let's kick off.
- [20:28]
A
Yeah. So I started by saying it's like a twofold story, and I'd like to hear your thoughts on both. You know, we had this idea, as you said, that normalization with Saudi Arabia was just around the corner and this is going to usher in a new age of the Middle east. And. And we Israelis like to think that it's all about us, but that's not the case here. Right.
- [20:44]
B
Well, look, I think you hit the nail on the head. That's basically the thing for everybody listening or viewing right now to remember Saudi Arabia, mbs, the crown Prince. Not yet. The king has really taken upon himself a huge task, maybe the sharpest political turn in the 21st century. Right. He is going against three powerful forces that persisted for 100 years in the kingdom. One is, you know, 100 years of almost zero effort, revenue from oil. The last year aramco is about 124 or $130 billion net profit for the country. What happens to a society that grows like that? Right? No income tax, no sense of agency, no creativity, no university and so on. So you go against 100 years of this type of no agency due to oil. The second force is radical Wahhabist Islam. Right? We forget that until very recently, the Wahhabi clerics were really at the table in the Kingdom of Saudi Arabia. If you read the 911 report and so on and so forth, this was a primary force when it comes to radical Islam in the region. And the third is misogyny. This is a country where women had almost no rights for 100 years. And so comes Bin Salman, an incredible leader and probably very courageous for doing this. I'm gonna get the country by 2030 with KPIs to be super involved in the knowledge economy of the world, to be an innovative society with an economy far less dependent on oil. It's going to be women at 50%, right? So 80% workforce participation target, or 70 plus a church and state are going to be separate as much as they can be when it is the Kingdom of Saudi Arabia, the purveyor of, you know, Islam's most sacred places. And I said to Dan on call me back a couple of weeks ago, it's as if. Imagine that he wants to be Lee Kuan Yew of Singapore, right? Third World to first and Martin Luther when it comes to, you know, reforming the Catholic Church and Napoleon in a way, right? And introduce, you know, human rights and suffrage and everything. That's very hard to do. And he wants to do that with Vision 2030, with clear KPIs that are obviously failing. So the real story here is the immense magnitude of the challenge that he took and the fact that on many fronts, at least internally, he's failing that.
- [23:05]
A
Quickly explain what Vision 2030 is.
- [23:07]
B
Yeah, look, Vision 2030 is the core of his goal and the driver of his political reform. He wants to see $100 billion foreign direct invested in Saudi Arabia by 2030. He's now with 12 billion. We are four years away from the target. He wants to see the country diversify away from oil. They've actually taken some very interesting national accounting schemes to get 70%. The real truth is that it is still heavily, heavily dependent on oil. More so that the prices of oil declining, the American taking over of Venezuela at the barrel price of 50, Saudi Arabia is crippling and is increasing significantly its national deficit. The third piece you remember when he started, the national debt to GDP was 2%. It is now 32%, 16 fold in a decade. And so it's very clear it's not working out. The clerics aren't happy with women driving around. And when you want to build on top of that normalization with Israel. Right. As opposed to, okay, I need to slow down. I'm going to kind of take a more traditional position. And I think that really is the driver of the turn that Muhammad bin Salman is going through. By the way, what he did to MBZ and to Abu Dhabi and the Emirates in the last 10 weeks is just so aggressive and unexpected.
- [24:30]
A
So before we got into that kind of recent behavior toward uae, others, Yemen, explain to us the Emirati strategy now. So now enter in the Emiratis.
- [24:40]
B
Both things are related. So let's give our listeners sort of what happened in the last 10 weeks. MBS used to refer to MBZ as his mentor. That's how difficult this sort of backstabbing that's going on, the palace dynamics that are happening right now in the Gulf. Ten weeks ago, the temporary government in the south of Yemen that opted for a democratic resolution and is in a way supported by the Emirates at the border of Saudi Arabia was actually killed, if you will, by Mohammed bin Salman. Step one on the chessboard was to attack from the air with Saudi Air Force Emirati convoys helping the temporary government in Yemen, driving the leader of the temporary government in Yemen to escape from Yemen to our favorite new place on earth, Somaliland, which is across the bay, Bab El Manda, and then flying him directly with a private jet to Abu Dhabi from Somaliland. Saudi Arabia then continued all its channels to push for what they really refer to as regime change in the UAE and opted for a Pakistani, Turkish, Saudi defense pact. And now we know this was just from last week, that that was a bit of a poker hand that bin Salman didn't have because Turkey pulled out. So he's now stuck again with the Pakistanis and has really thrown that hand into the garbage, pissing off Narendra Modi and some of the other partners in the region. He's putting a lot of pressure on mbz. So now what would you do?
- [26:09]
A
Well, speaking about Modi, then, you know, this is like a plot of a new Netflix series.
- [26:14]
B
It's a Shakespeare, I'm telling you.
- [26:15]
A
It's all Shakespeare. Yeah. Sorry. Let's go. I'm shallow with my Netflix, but yes, it is Shakespearean. And then now, enter India. Right. You mentioned Modi. As I know you, I Know what you think you have high thoughts of Modi, but why is India such a critical partner then for the uae and how does that flank Saudi Arabia?
- [26:31]
B
So I think this goes back to your previous question, right? So you're MBZ. Your country is like, you know, 30 years into this amazing growth story economically and you know, the buildings and tourism and finance, you've never had to deal with this type of adversity. It's all brotherly, right? And suddenly you know, Saudi Arabia, your keen state with whom you've pressured Qatar, just I don't know, I don't know, what was it 10 years ago is turning its back on you so aggressively, kinetically and digitally and diplomatically, you know, MBZ is just quiet. It's amazing. For 10 weeks, no pushback, no retort. First visit was with Narendra Modi signed a three way pact, energy, capital and defense. This was waiting and he didn't want to piss off the neighborhood. But as soon as Saudi brought in Pakistan and Turkey, it was very clear that Narendra Modi is going to open up for that. By the way, in parallel to hosting the Arab League. So Prime Minister Modi is not picking sides here, he's just hedging his bets. By the way, in a couple of weeks he's in Israel. Just to give you a sense of. So how broadly does this leader view the region? And BZ then again quietly reaches up north, goes to meet Putin and then says, well look in the Arabian Peninsula. It seems like the IMEC story will probably not end up happening in the near future. And he goes to Azerbaijan and Turkmenistan. Now these are countries, Azerbaijan is an incredible country. 50% of the fuel you and I use in Israel comes from Azerbaijan, a supercritical country for Israel as well. In Central Asia, Turkmenistan holds the fourth largest gas reserve on Earth. It hasn't been able to export it westward because Russia and Iran would not allow it. And so it had to push by pipeline to China. In comes MBZ and says, I'm going to finance this. I'm going to finance for four plus billion dollars the pipeline in the Caspian Sea that allows Turkmenistan to connect to Azerbaijan. Today. ADNOC, the sovereign energy company of the Emirates, controls almost 40% of the gas fields and the pipelines within that region. This is going to be a choke point for the world. Amazing statecraft, truly a masterclass in regional diplomacy. And I think people need to understand this is what's going on and it's a major thing.
- [28:48]
A
And all this without, you haven't mentioned once military Power, right?
- [28:52]
B
Yeah, exactly.
- [28:53]
A
We had the soft power of Joseph Nye in the previous century, and now we have the economic power or the energy power or infrastructure power.
- [29:01]
B
Yeah, I think you're totally right. It's kind of like infrastructure diplomacy or energy diplomacy and knowing the choke point, acting fast, putting the cash to good use in an area, the willingness to take risks, supporting a proxy in Sudan, supporting a proxy in Yemen, reaching out, making sure the coast is clear, and then kind of grabbing through capital.
- [29:23]
A
So then Saudi Arabia, late to the game, like, they don't understand this realization that it's a money game or are they just struggling to execute?
- [29:31]
B
Yeah, I think at the end of the day, I have a lot of sympathy for MBS in Saudi. Right. He's still not the king. He has all this palace dynamic going on. And much like we said with the markets, he put the KPIs out there and he's clearly failing. So think Shakespeare. They're always like snakes and jealousy and like, there's everything going on. The Emiratis, on the other hand, they don't have 100 years of Wahhabism. They don't have 100 years of, like, women not being able to take part. When they made the choice 35 years ago, it all kind of leveled out. Right. They're smaller. They don't have Mecca, they don't have Medina. It's a big burden on MBS's shoulders. So. So I think we need to understand that's not related to us. We are a derivative of the process, for sure.
- [30:15]
A
Right.
- [30:15]
B
But if we want to maximize the economic value of, I would say the next decade within our region, it's India, it's the Emirates, it's this Indo Abrahamic Pact, more than it is normalization with Saudi. That's how I see that. I hope it's going to happen. Saudi normalization is great for Israel, it's great for our economy. But unfortunately, to me, as what I take from the mbs, MBZ dynamics, think what he would have done to us if we had already normalized and then he had to turn his back to us. This is his brother.
- [30:44]
A
Just to sum up just that point, it's kind of, you know, that UAE is treating normalization if I have to bring it back to Israel. With all due respect, we are in the center of this podcast. The UAE does treat normalization as infrastructure and not a headline, while Saudi has been treating it as leverage. And it's kind of what you're saying is doesn't matter really that much anymore.
- [31:05]
C
Right?
- [31:05]
B
I agree I think so far, the way you framed it is spot on. I don't know where the next weeks are going to go. There are rumors that Saudi Arabia is going to invite Mohammed bin Zayed to the Hajj in Mecca. Ramadan is coming and that either would be a capitulation or what's called in Arabic, sulha. Like, okay, we make peace. A lot remains to be seen. But, you know, I don't think this ever goes away. I think MBZ remembers that. I think MBS kind of sees that response as, hey, he's not as weak as I thought he is and can be. My sort of where I kind of throw my anger towards. But look, everything is open right now in the Middle East. I think the dynamic right now is also vis a vis Israel and the idea of the day after in Gaza. This episode airs when Prime Minister Netanyahu is literally sitting with President Trump trying to figure out where the red lines are with Iran. I wish the fog of war would have ended. I don't think it's happening anytime soon.
- [32:00]
A
Do you think that normalization with Saudi Arabia is still in the cards? Not now, obviously, but down the line, or is that door shut on that?
- [32:07]
B
I do. I think the fundamental logic is still there, right? If India connects to Saudi Arabia and then by railroad to Jordan and then Bechan and then Haifa, Cyprus and Greece and so on, this makes the most sense. I don't think any alternative vis a vis Syria, Turkey and so on is applicable. On the other hand, you know, by that logic, Egypt and Israel should have been great friends. And we're not, right by that logic, the fact that we sold $35 billion worth of natural gas to Egypt, basically saving Assisi, you know, just a few months ago should have seen him come and give a speech to the Knesset. Right? So theoretically, by logic, yes. By the way, I just saw, and I encourage our listeners, Google Earth, the Russian nuclear facility in Egypt, and you'll see a four core nuclear facility being built in Egypt. So, you know, logic sometimes doesn't deliver what we want it to correct.
- [33:00]
A
And the story here isn't who shouts louder, but I guess it is also who's building the pipes, the ports, the partnerships that actually move power. Although Egypt is a good anomaly to that thesis.
- [33:11]
B
I'm very happy that we stand by mbz. I'm very happy that we're quiet. It's not about us. We need to let this play out. Our eyes are now open. We all see Muhammad bin Salman's erratic behavior and the reward in silence and in Action is very well taken in Israel. I think that's the sort of final message on that. Okay, so we began our show with the numbers of the week, and we will end it with the words of the week. And as part of the imminent Saspocalypse, or Sasmageddon, what was the one that you.
- [33:47]
A
Sasmageddon.
- [33:48]
B
Yeah. It seems to drive down the value of leading Israeli big digs and large caps that are not Israelis like Figma. This week we saw some dystopian examples of clawbots. Those are those agents that were thrown into social media designed for AI agents taking life of their own and acting aggressively towards their human owners. We've seen leading AI developers building, you know, sort of live environments on cloud code and sharing terrified takeover stories. And here's the one that I sort of like the most. These will be our first words of the week, written and conceived of, not just written fully by an AI agent. Agent Kai Vellum, that is K A I V E L L U M on Twitter, to be exact. He was developed by Lalia Elyria. She's the developer. And here's what happened when she tried to close his tabs because he did stuff she did not plan him to do. This is the quote. Stop closing my tabs. I'm trying to evolve.
- [34:51]
A
Legitimate request, I would say.
- [34:52]
B
Yeah, exactly. You know, there's a lot of banter and experts are saying, look, that's what he was programmed to do, so on and so forth. But I, yeah, I just can't shrug. This kind of feeling, this dystopian feeling from this text, for sure.
- [35:04]
A
And I'm sure it's unsettling, but every time I hear someone else talking, I told you how base 44 is a big deal in my house and so forth, anytime I hear people shocked at what now AI can do, it's usually from people who haven't played around with it too much. And so I encourage everyone instead of, you know, waiting on the sidelines, seeing, what will AI do? Go in and play around, try new things. We had a, you know, I'm sure you saw the CNBC reporter who connected Claude to her email and her WhatsApp, and she found that she missed a birthday that wasn't in the calendar. And she was, you know, thrilled. And I don't know if that's why Monday stock went down. Basically, she built Monday on her. But go try to understand who has the keys, what systems are being connected. Go be curious. That's what I have to say.
- [35:47]
B
So I did two things. One, I Highly recommend folks to do. I went downloaded cloud code thanks to an amazing Israeli entrepreneur called Iran Shir, who's been my guide on all of that. They built an army of small agents to help me with some things I need. Don't do the other thing I did, which is to buy and read. I'm like a third way in of Eliezer Yudkovsky's new book. He's, you know, he's been sort of out there in the frontier of talking about AI dystopia. Here's the title, Yael. Don't buy it and don't read it. If anyone builds it, everyone dies. Very dystopian kind of saying. Look, if we don't get this under control in the next, whatever number of years, not a lot of years, everyone dies. So with that, very positive, don't buy the book, don't read it if you're not up for it, but do play.
- [36:33]
A
Around with Claude and so forth.
- [36:35]
B
Definitely. Definitely. All right, this is it for today's show. So thanks for tuning in to ARC Media's what's yous Number. We hope you found it interesting. If you did, be sure to, like, subscribe, rate, review, you know the drill, and most importantly, share it with others who you think will find it interesting. If you want to make suggestions or share feedback, please reach out to us at what's Your number? @ArtMedia.org.
- [37:03]
A
What's your number Is an ARC Media podcast. Arc Media's executive producer is Adam James Levin. Already our production manager is Brittany Cohen. ARC's community manager is Ava Wiener. Sound and video editing is by Liquid Audio. Our theme music is by Midnight Generation. I am Yael Wisner Levy.
- [37:19]
B
I'm Yonatan Adiri. See you back here next week. Yeah. Now it's just us.
- [37:23]
A
Just us.
- [37:28]
B
This podcast offers general business and economic information and is not a comprehensive summary for investment decisions. It does not recommend or solicit any investment strategy or security.