Trump-Xi Summit, Space Data Center Debate, Inflation Up | Diet TBPN

The big news this week, and I'm sure what everyone will be focused on, is of course, on the COVID of The Wall Street Journal. That's the Trump-Xi Jinping summit that's happening in Beijing. Trump and Xi Jinping vie for wins at summit. They're duking it out. And Trump brought— they both brought a big crew with them. A team. Yeah. Trump brought—

geopolitics.

A couple, couple—

Team sport.

Couple political people that we won't even care about, but the business leaders are what is particularly interesting. So we got Elon Musk from Tesla, Tim Cook from Apple, Jensen from NVIDIA, Kelly Ortberg from Boeing. A little flex there 'cause Boeing has been able to maintain the lead in manufacturing large planes for a very long time. DJI has not been able to scale up and make a 747. What's going on over there? David Solomon from Goldman Sachs, Stephen Schwarzman from Blackstone, Larry Fink from BlackRock, Jane Fraser from Citi, and Dina Powell McCormick from Meta. So we should read through the stakes of the Trump-Xi Jinping summit in The Wall Street Journal from the Wall Street Journal editorial board.

Let's get into the more important stuff.

Yeah, please.

Do you think Jensen was always coming on the trip? Right. There's been some speculation he got on. He got on the plane in Alaska.

Oh yeah.

Was that just the most convenient place for him to get on or was he a late addition?

I don't know. Why would he have been a late addition? I don't know. It seems—

well, because there was, there was reporting earlier this week.

He runs the largest company in America.

I know, but, but there have been statements made from what I saw that he wasn't going.

I don't know. Yes. Well, so Trump had a Truth Social post that said CNBC incorrectly reported that the great Jensen Huang of Nvidia was not invited. But then he corrected it. He said he did invite him.

I don't know. These schedules move around. It's got to be really, really difficult if you're the leader of the biggest company company in the world to move things around and commit to this?

I don't know. But what's more important for Jensen and his objectives?

No, of course, it's critical importance. But at the same time, there might have just been other moving pieces of like, okay, when can he go? Where will he arrive from? Where will he get picked up from?

I don't know.

These things always shift. I don't have a good thesis. Other than the fact that that is the company that has maybe the most tension between the trade deals with China, like Apple obviously does a ton of business in China, but has been much less of a focus in the chip sanctions. And so having Jensen there is a little bit more of a discussion point. What do you think?

I mean, I think on China, like the Nvidia stuff seems like pretty fine now, but stable. But yeah, but Meta, I think has like some conflict, right? Because I mean, Manus. Yeah, maybe it's like not that big of an acquisition.

Yeah.

Unlike market cap wise.

But yeah, yeah.

They're blocking it.

A lot of these things, you know, we always say in the, in the context of Silicon Valley, it's like a $2 billion deal or a company that's doing 40 billion in revenue. And then you get over there and the stakes are like, you know, a trillion-dollar oil market or like all the rare earths in the world. And it's your geopolitical conflict, which is obviously a much bigger deal. And so there might be more reporting that comes out about Jensen's goals there, what actually happened, how he found his way onto Air Force One. But that was confirmed by Elon Musk, right? He said that, Elon, Jensen, and Trump were all on Air Force One together flying over. I certainly wouldn't want to get there. I would want to arrive on the cool plane. Can we play the video? Trump arrives in Beijing with Elon Musk and Jensen in tow. I guess the rest of the business leaders came separately. Their arrival with— are those—

Can we get sound?

—your leaders or something? I don't know what— they seem to be waving— oh, flags. They're waving flags. That makes sense. Well, there they go walking down the red carpet. Air Force One is truly stately. There's, it's so disappointing that the economics of the airline industry didn't just get bigger and bigger. And so you find yourself very rarely on 747s unless you're flying across the world, because they do have such a presence and they're spacious inside. But we have been, you know, cramped down into the 737 for pretty much everything.

Are there videos where they give a proper tour of Air Force One, or is it kind of locked down? Down.

I think they've done tours. I mean, there are several Air Force Ones, I believe, that are on display at presidential libraries. And so you can go and tour them. There might be one at the Smithsonian. I'm not exactly sure, but I'm pretty sure you can go walk around old ones. Take note. I wouldn't be surprised if they keep the current spec like somewhat secretive. There we go. This is very grainy footage. It looks like, oh, maybe it's just the middle. It reminds me of Dune. Dune, Arrakis. That's Taiwan though. Anyway, let's go through Jensen's pack list. He was having trouble thinking of what was he going to bring. Of course, he landed on just a ton of leather jackets. The back— and even the sneakers, I feel like, are pretty iconic. Yeah, like the uniform is really starting to compound where it used to just be the jacket. Soon we will know the exact brand and specs of the, of the pants as well as the shoes, and the whole Jensen uniform will be out in full force.

Yeah, the clothing industry doesn't want you to know this, but wearing— just getting a few pieces of clothes that you like and then wearing them until they fall apart is incredibly underrated. Not saying that's what Jensen's doing, but it's pretty funny. I tend to wear almost the exact same thing every day, and so sometimes people on the team will come in and be like, oh, we're matching today. Every day you dress like this, you will match with me. Yeah, that's right.

That's right. There's obviously a personal brand benefit to adopting a uniform. We've seen it with Jensen, Steve Jobs with the black turtleneck, Palmer Luckey with the Hawaiian shirt. Big news from Anderlecht today. New round, Series— are they running out of letters? Series H? H. Series H. 51, 61 billion, something like that. Fantastic progress. You adopt the uniform, you become more iconic, you become more recognizable outside of your face, and that builds your personal brand, your lore, and it helps you sort of differentiate and stand out, right? The flip side, the thing you got to watch out for is that if you are always dressed exactly the same and you never switch your wardrobe, clips of you saying something a decade ago can go viral. And if you're not— if you're aging gracefully, it will look like you said them just yesterday. And that can be a big problem if, say, you're an AI CEO who a decade ago is reading some sci-fi and thinking like, man, there's something to this Terminator thing. And then maybe in the past decade you've done a lot of work, you've investigated the systems, you have a more informed position and opinion. Well, the old video of you still looks like you today. And so there might be something to leveling up the wardrobe and changing the wardrobe over time that actually creates more distance between, oh, well, clearly that was—

So this is an indirect way of saying you want Jensen to be in a leather sort of like, you know, sort of trench coat eventually, like flowing robes.

Well, the easiest thing to do is go bald. That's what Jeff Bezos did. He was saying some crazy stuff back when he was building Amazon in the '90s, and he's changed his opinion. It will be very evident from new clips that, oh, that's an old one because it's very iconic, his older look. Now his new look, he looks transformed. He looks very different.

I don't think Jensen has to go bald, but he can do the the Bezos playbook, which is just get like, get really jacked.

Get really jacked. So as he gets more jacked, you'll just see, oh yeah, there's—

I mean, he's looking like 320 lean right there. There you go.

Like, that must be pretty decent. 320. Jensen at 320 would be electric. Uh, well, he's, uh, we have a video of the Air Force One Golden Palace. Okay, pull it up. What is the Golden Palace?

That's the—

is that what they call the interior these days?

The Air Force One that was gifted by Qatar.

Okay. And that one is never going to be in use, but going to go straight to the library, I think. Is that the idea or is it going to get flown around? Well, let's, let's watch the—

Presumably it's going to be used. Golden Palace.

Really particular aesthetics here.

It looks like a normal 747 on the outside. Looks like a yacht.

I feel like, isn't there a big— there's a big swing in fuel efficiency based on the color of the plane. If you paint your plane black because you think it looks cool, it will attract more heat and you will burn a lot more fuel. And so most companies go with white. Spirit Airlines went yellow. I don't know if that had anything to do with their downfall, but you would think, is there a chance? Is there some weird economic logic where if you painted gold, the gold will reflect the sunlight and increase fuel efficiency?

Well, unfortunately, the exterior is not going to reflect the sun. Well, so you should wrap your plane in like a mirror-like surface.

Yeah, maybe. But yeah, I don't know if that actually— That would probably reflect the most. That would probably reflect the most, right? Mirrored plane. There are some silver bombers and jets that are in service across the United States Air Force. I can't call upon it right now.

This really is a sky yacht. Chessboard.

You think anybody's played chess on there?

4D chess. Yeah, the whole plane is actually used for 4D chess, Sean.

4D chess. AI is being put to good use visualizing Xi Jinping, Donald Trump, Elon Musk, and Tim Cook having a beer and I guess a cigarette as well in China somewhere. And then look who pulled up. If you scroll down, Jensen coming in from the back, looking pretty good, looking pretty good. Maybe not 320 lean, but he's certainly up there. Let's go through The Wall Street Journal's report and what the editorial board had to say about the stakes of this summit. What's actually at stake? So the United States wants stability. 'But Chinese Communist leader has larger ambitions,' says the Wall Street Journal's editorial board. 'President Trump visits Chinese President Xi Jinping in Beijing on Thursday, and the pre-meeting US spin is a search for stability,' in quotes. 'It's a nice idea, as long as Mr. Trump doesn't think personal rapport can overcome Mr. Xi Jinping's anti-American purposes,' says the Wall Street Journal. The agenda ranges from trade to technology to Iran. On trade, the best outcome may be ratifying the status quo, a truce on tariffs with a promise from Beijing not to hold the world's rare earth supply hostage. Again, the markets, business leaders, no one wants chaos. Everyone can work around a tariff plan if it's going to stay in place for a long time.

It is really funny for Trump to be coming in and being like, look, guys, all I'm asking for is a little stability here. Yes. I just want stability. Yeah. I want calmness. Yes.

I don't want any conflict. Yes. Didn't he famously call himself a stable genius? That he— stability has been part of his brand for a long time. At least the one that he projects. Mr. Xi Jinping, on the other hand, China's weak economy is incentive for him to cooperate, and he'll hope to placate Mr. Trump with promises of buying more farm goods. We talked about this. Previously, more aircraft and other things. But Mr. Xi Jinping has made that promise before, and US farmers have never regained their lost market share in China. Rare earths ransom offer. The rare earths ransom offer may be more US advanced chip exports to China. Xi Jinping views artificial intelligence as a decisive theater in Beijing's competition with the United States, and he is trailing, though not by much, maybe 6 months by most people's estimates. The administration wants to talk with Beijing about AI guardrails and by all means keep the phone lines open, but don't expect much from AI arms control. And the best deterrent is US dominance on models and computing power. Beijing will be happy to make pronouncements about responsible stewardship and then pursue its own interests with little regard for norms or laws. Beijing is engaging in, quote, industrial-scale theft of American AI models. The Trump administration warned this year. And don't forget the Justice Department's indictment this year of a technology executive and associates allegedly running a sophisticated operation to divert high-end chips to China. That was Supermicro. Supermicro. Yeah, they were doing the heater. What was it?

The hair dryer? Yeah, they were putting the fake shipping labels on there.

Fake shipping labels. Noticeably absent from this trip are the key leaders of the top AI labs. I mean, Elon Musk is there. Yes. And Jensen is there, obviously deeply involved in AI, as are many of the other folks, Dina Powell McCormick at Meta. But you don't have Demis from Google, you don't have Sundar from Google DeepMind, you don't have Dario from Anthropic or Sam Altman from OpenAI. And each one of those leaders has their own complicated relationships with the federal government and the Trump administration. So it's not shocking that they aren't there, but it does feel like there's a little bit of a disconnect between the conversation that's happening in Silicon Valley and the conversation that's happening on the global geopolitical stage at the highest levels. And so if you were looking for answers to some of the biggest questions posed about how superintelligence will play out in the global stage, the AI 2027 scenario, the China Wakes Up scenario, you're gonna have to keep waiting because that's not really what this, this is about. It's about maybe a little bit of semiconductor supply chain details and export restrictions, but not answering the big questions about what a US-China relationship looks like in a post-AGI world, a post-ASI world, a post, you know, a fast takeoff scenario.

OTP says, why is Meta there at all? Good question. All Meta. Platform products have been banned for quite a long time. I don't think that will change. But they have this Manas thing. I think it might just be to show some friendliness. Yeah, some presence there. Again, I'd be shocked if there's any time between Xi and Trump that gets dedicated to Manas because like $2 billion is really a rounding error when you look at all of these other issues.

But, but it is a big question for both economies, not not only can American companies acquire Chinese companies that have relocated to Singapore and have sort of moved out, like how strict will China be around maintaining talent and restricting exports of whole companies and technologies? There, even like a single sentence on it from this talk will clearly resound throughout the industry. And so the Venus flytrap that Xi Jinping is setting for Mr. Trump is on Taiwan. Xi Jinping wants veto power over arms sales from the United States to Taiwan, and he is pressing for the United States to formally oppose Taiwanese independence as opposed to the current posture of not supporting it. Xi Jinping will argue the tweak is of no great consequence to Americans and stoke— and stroke Mr. Trump's ego that he can bring peace to one more troubled region. Yet that change would disrupt decades of US policy that, for all its delicate diplomatic wording, has held the peace. Taiwan is not the aggressor in the Taiwan Strait, Xi Jinping fiction that opposing independence would indulge. Mr. Trump may not care about Taiwan's freedom or its example that a prosperous Chinese democracy is possible, But the president doesn't want a crisis on his watch, which would be an economic and geopolitical catastrophe. That's 100% accurate.

He would never want an economic geopolitical catastrophe. No. On his watch.

Xi Jinping will be looking to see if Mr. Trump suggests he won't defend Taiwan in the clutch. Trump's diplomacy is above all personal, and no one can predict what he'll do in the room. Japan and others in the region are watching with anxiety, a reminder that U.S. support for Taipei is an interest that informs America's alliances around the world. One mistake would be not stopping in Tokyo to advance Beijing— in advance of Beijing as a signal of solidarity with Japan. Trump has said he'll bring up the case of political prisoner Jimmy Lai, but Xi Jinping won't move to release the 78-year-old publisher who was convicted of bogus charges in Hong Kong unless he believes Trump's request is more than a token gesture. The US wants China's help on Iran, and it would be an improvement if China at least stopped actively helping the enemy. Retired Navy Rear Admiral Mark Montgomery suggested last week that Mr. Trump should ask Xi Jinping directly if he's helping Iran with intelligence. And the Wall Street Journal goes on to say, the larger context for this summit is that the CCP continues to be the main financier and industrial base for the world's bad actors, from Russia to Iran to North Korea. The first Trump administration understood China as a strategic adversary— military, economic, and ideological. The second Trump admin is searching for détente. The— and Mr. Trump is the chief dove. This has some merit if America spends the interlude diversifying its rare earth supply chain and passing a $1.5 trillion defense budget to rearm, says the Wall Street Journal editorial board.

Anyway, yeah, a lot of people are speculating that there's already been significant deals that have been made and that this whole thing is ceremonial, because if you bring If you make this, you know, huge trip and you bring all these leaders of industry and then you don't come away with some significant progress, like it just feels like an even bigger L.

In somewhat related news, Anthropic has granted Mythos access to 3 major Japanese banks. Japan's 3 megabanks are set to gain access to Claude Mythos, the powerful artificial intelligence model developed by US startup Anthropic, as soon as the end of May. The banks MUFG Bank, Sumitomo Mitsui Banking Corp, and Mizuho Bank were likely informed of the move by the US Treasury Secretary Scott Bessen in a meeting in Japan on Tuesday. This will mark the first time that a company from the East Asian nation has been granted access to Mythos. The AI model, which can discover and exploit software security flaws far faster than earlier tech, had been restricted to just 50 or so corporates and organizations worldwide. Including US firms, US banks, and UK government organizations. So this isn't the first international expansion since the UK did have access, but now Japan does. Japanese Prime Minister Sanae Takeuchi had instructed cabinet members to ramp up efforts to find cybersecurity weaknesses in Japan's infrastructure and minimize risks posed by cutting-edge AI models like Mythos. Access to Mythos was likely mentioned in her meeting with Besant on Tuesday. And so Chris McGuire says tonight the Secretary of the Treasury is personally vetting and approving each company that gets access to the most advanced US AI model because the risks of the model being misused to hurt US national security are so high. Also tonight, Jensen Huang is flying on Air Force One with President Trump to Beijing to sell China the AI chips it will use to develop its own Mythos-level AI model as soon as possible. The administration's AI policy remains inconsistent and incoherent, It is impossible to justify these two approaches simultaneously. And yeah, I'm still sympathetic to the export control take. At the same time, I feel like there's a larger negotiation that's going on, so I can sort of see both sides. But the interesting question that I've been noodling on that I haven't fully gotten to the bottom of is, you know, Dario has said that, you know, the open source community China is maybe 6 months behind Mythos. And that seems to fall in line with the progress that we're seeing from all the American labs. And so the interesting question is, what would the mythos moment look like in China? Because in America, there was a showdown with the Department of War and Dario going back and forth and Emil Michael. And there was threat of a supply chain designation, which it doesn't feel like ever really went anywhere because The business is still cooking and it's available on all the hyperscaler clouds and the models being granted to Japan. And so it feels like the administration has backed off of that. But it was a really tense moment and it did call into question all these, all these debates around what rules and what authority should rest with the private sector versus the government. And America handled it in sort of a democratic way, loosely, sort of evaluating the technology, having the option to sort of nationalize. And there's this bigger discussion around that. But in China, we've seen many times where tech companies have gotten really big and it feels like the, the CCP is applying pressure to the CEOs. And Highflyer is the company behind Deepseek is in a very unique position where The founder has an immense amount of control and, you know, no matter what you think of the—

He invested $2 billion of his own money in a really low dilution round.

Yeah, and I'm pretty sure he's a solo founder who like owns probably like majority control, at least majority voting control, if not majority economic control. And that's wildly different than Anthropic where Dario had like 15 co-founders, tons of dilution from different funding rounds. And we had talked about the SPV thing yesterday. There are lots of people on the cap table. Anthropic is going the way of a typical American company where there are lots of different stakeholders. They might be a public company soon, which means the government has more oversight as the SEC controls a lot of what they will do. And so you're in this odd scenario where you could have a similar level of technology deployed in China, from a very closely held private company that is up against a much more aggressive government. If DeepSeq is able to catch up, there's some evidence that China's on a slightly shallower growth trajectory. But still, if you take Dario's claim of 6 months, even if you extend that to a year, something is going to happen there where China is going to have their own mythos moment and what that looks like and what we learn about it, I think is going to be dramatic and interesting. And also it's just, it's just odd that like there's this backdrop of all this stuff that's happening in AI in America and then there's going to be, you know, talks over like, you guys want to buy more Apples? Tyler, do you have any, any thoughts on this? Am I directionally correct on the timeline or, you know? Yeah, I mean, it seems like something's going to happen.

Like there's the graph that shows that. Open source is increasingly getting like further and further away from your models. But yeah, I don't know. It's just like so hard to tell like what's actually going on in China. Like what? Yeah, like what happens when the CCP starts to, to have, you know, more control over a company? Like what does it actually look like? Yeah.

In instantiation, can they continue to be pro-competition if they need to consolidate all of the Blackwells that are coming into the country into one data center that's networked together that can actually train a Mythos-level model? Right. That's, uh, that's, that's a big question.

SpaceX, Google are in talks to launch data centers in orbit. Deal between the two tech titans would give a boost to SpaceX business ahead of a historic public listing. Google is in talks for a rocket launch deal as the search giant expands its own efforts to put orbital data centers in space. Launch deal would put the two companies in partnership as they gear up to compete on orbital data centers, an unproven technology that SpaceX which SpaceX CEO Elon Musk has said is the next frontier for his rocket company. Google is also in discussions about a potential deal with other rocket launch companies. They got to at least have a stocking horse.

How are we not talking about blimp data centers yet? I know. Sergey Brin has a blimp company. Bezos has a rocket launch company. There's a very logical line from AWS to space data centers through Blue Origin. But we gotta put some GPUs on the blimps. We gotta start mass manufacturing the blimps. This could be the thing. I mean, there's no nimbyism in the middle of the Pacific Ocean if there's just a bunch of blimp data centers floating around in a circle.

Well, I think if you're already in the ocean, you should go down as well. You know, Atlantis mapping. Cooling. Yeah, like I feel like none of the ocean guys that are working on ocean robotics are thinking about like putting ocean at the bottom of the ocean.

Yeah, I mean, it feels easier than, than a space data center. The space is free, the land is free, you don't run into the regulatory stuff. Energy, a little bit tricky down there. Geothermal? Geothermal, maybe? I don't know.

No, there's, there's oil and natural gas reserves on the—

you have to bring oxygen there because how do you burn the oil and the natural gas? Big water, big, uh, diving bell tube. Yeah, scuba, scuba tanks or something.

Anyway, speculative technology has been at the center of SpaceX's pitch to investors ahead of planned IPO this summer, which is anticipated to be the largest IPO of all time. Last year, Google announced its own plans to launch prototype satellites by 2027 as part of a moonshot initiative called Project Suncatcher. It's working with another company, Planet Labs— That's a cool name. —to build those satellites, tiny racks of machines, and have them in satellites, test them out, and then start scaling from there, says Sundar. There's no doubt to me that a decade or so away, we'll be viewing it as a more normal way to build data centers. A little bit of an interesting timeline there. Elon's like, I thought we were saying 10 days. There's no doubt to me that a decade or so away, we'll be viewing it as a more normal way. A decade or so away.

He's being a little cautious in his language on his timelines.

But Google was an early investor in SpaceX, and now at some point— 1% of the company. Yeah, not bad. Um, the other, the other funny dynamic from SpaceX's dealmaking recently is given that the OpenAI Startup Fund was, uh, an early investor in, I believe, Cursor's seed round. True. $8 million round. OpenAI, at least the Startup Fund, will have some meaningful exposure to SpaceX.

Yeah, SpaceX, an OpenAI-backed company. That's the way people will introduce it. OpenAI-backed SpaceX IPO.

Yeah, I thought it was, it was quite interesting having that happen while the whole trial was going on.

Everyone owns everything. Everyone has diversified into every, every company at this point. Basically, we can flip over to the other financial news that's making headlines on the COVID of The Wall Street Journal. Inflation accelerated 3.8% last month. Not good news. Joe Weisenthal has a couple posts, but one is just man. And he says the headline, US April producer prices rose 6% year over year. The estimate was 4.8%. So obviously, the closure of the Strait of Hormuz is having an effect. We were talking about Diet Cokes. You would think that the caffeine doesn't come from the Middle East, the delicious caramel flavor or whatever else they put in this. It does not come from the Middle East. Aluminum, actually, there are smelters in the Middle East. Aluminum is in shorter supply because of the closure of the Strait of Hormuz. And so, Diet Coke is rapidly going out of stock. And so, you need to load up if you're prepared.

How many you got? 4 or 5 pallets?

I have not actually gotten any. I'm not stockpiling Diet Coke yet, but who knows, maybe prices go up. That's what inflation represents. And Wall Street is is getting more anxious about it. So we can read through this. Surging energy prices have pushed investors' inflation expectations to multi-year highs. Tuesday's hot readout on consumer prices is intensifying Wall Street's anxiety about inflation. Even before the latest release of the Consumer Price Index, inflation expectations had been climbing. A potential trouble spot in the market where stocks have largely shrugged off the US-Iran conflict and the resulting energy shock. And so investors bet on inflation by buying and selling both ordinary US Treasuries and those that hedge the risk of inflation called TIPS, Treasury Inflation Protected Securities. The gaps between the yields of those two types of bonds known as the breakeven rate recently hit the highest level since October of 2022, according to Federal Reserve data, suggesting that investors expect annual inflation to average around 2.7% over the next 5 years. Now, that's not entirely doom and gloom, but the risk here is that the AI boom, the GDP numbers are sort of concentrated in AI, CapEx, and data centers. It's not evenly distributed. The real economy is only growing at 0.1% while the real economy is suffering from 2.7% inflation over the next 5 years. That's a recipe for stagflation, stagnation plus inflation, a very rough thing for any economy to go through and something that the market and the economy and the politicians should be focused on.

In some ways, who knows how history will view Powell, but he landed the plane. He did. And then we get war in the Middle East. And now Kevin Warsh in some ways looks like he'll have just as tough of a job.

Potentially, potentially. Leave us 5 stars on Apple Podcasts and Spotify. Sign up for the newsletter at tbpn.com. And we will see you tomorrow at 11 AM Pacific sharp. We love you. Goodbye. Goodbye.