Kook's Weekly by TheKOOKReport

bubble. And so the literally the last thing people want to talk about is oil. And I remember this Jim Grant cartoon, Jim Grant is a really prolific writer. I don't know if people really follow him anymore, but he was an old barren's writer and then he started this newsletter called The Grant's Interest Rate Observer, which was really must read for all sort of value investor event guys that kind of I rolled with in New York at that time. And I remember this cartoon, he always have a cartoon every month of this guy and it says, who needs oil? We have the internet which of course was satirical. And this was of course when oil was like $10, ex-on-traded like death and people really thought like who needs this stuff? We have global crossing and we have the internet. And if you were really prescient you would have realized that China entering the WTO was going to unleash this monster of capital investment and consumption and sort of shame on me. I was in China in 1997 in Shanghai when at that point there was most cranes of anywhere in the world and I was a teenager at the time, but you should have you could have been able to put one and one together and realize like their demand for aggregate oil steel, everything is going to be absolutely doerfying anything we could have possibly thought about. And so a lot of times these ground works are really set and they're in what we could call the tooling phase. And so very early where all of the signs are there if you're very focused on it, but the knock-on effects and the broad realization of what's happening has yet to come. And so the dye was cast for Chinese oil consumption far far in advance of even things like when Hurricane Katrina hit which I remember vividly in oil I think went to like 30 bucks or something and people were going crazy. I think you know this isn't this is wild and unsustainable. And then sure enough in 2007 or eight when some group blew up you had oil go to like 148 or something. And you know the world just didn't have enough and like Met Cole things like that. The price impact came far later than what was visible in the tooling phase which is really where the quote unquote experts would have picked up on something or people really focused on an early trend. And so people are like you're talking too much man we're here to talk about ASTS here you talk about Met Cole but the fuck is Met Cole you know it's like they're in the wrong call here. Yeah I'm going somewhere guys. And so when you have something like a presidential directive this is something which philosophically I can kind of actually disagree with I really don't like it when government puts their thumb on the scale because it usually relates in a lot of distortions but in many instances the government wants a distortion the government wants to have a crazy supply impact because there's something they want. They want something that is requiring more than a price signal to get it done faster. And so here similar to the US government wanting low mortgage rates the US government is putting their thumb on the scale saying we are going to make it an unfair fight to have more not less space capacity. And it's interesting because you know we could easily say it or not us because we're obviously all really into this stuff but the general person could go like well space I don't get it like what's the space economy really not seen the bigger picture. And I was reading this book by Mark Pinkis last week and he he also kind of said these like I never really understood the space opportunity was space X and things like that. He's a consumer internet guy and in fact he didn't see the bigger picture. And I was watching this movie when I was flying back from Europe first man and it was great movie by the way I would Ryan Gosling who was I think he was Neil Armstrong chronically the Apollo 11 mission. And you can kind of see you know all the I was in the 60s but all the debate on like is this the right use of government money what are we doing just sending some bros up to space for what. And Ryan Gosling made the argument as an actor of this really sets the stage of being able to see things we couldn't see before. You know this is a science project now but this is going to have industrial unlock later and look what it look what happened down the line you know the government program gave rise to and really enabled things like space X and blue origin and all the others to come after and we're only at the very very beginning of the commercialization of space as we know it. I certainly am not a futurist capable of really understanding what what will unfurl from this point on but what I can see is really kind of what's out in front of me I can see no further than you know the distance of my hand to my face and what I can see is the telecommunication opportunity that that was always very clear what's become more clear although hazy not clear I cite looking at this far is the AI data centers in space because to me I go well look right now space is kind of an electricity problem and what is needing an electricity solution will telecom because you're creating our signals and then compute okay those are two things that need a lot of electricity they can be saw in this space great but there's going to be a lot of other things I don't know that I'm on the camp of like space pharmaceuticals and things like that I just don't know so when the government puts its finger on the scale like that what what's going to happen if history is a guide is it's going to cause undue flows of liquidity and this is really what's important is to be ahead of the puck so to speak of where liquidity is going to go where is the price signal that is being created and get in front of it because if the hot ball of money is going to slosh somewhere be there because it's awesome when that happens and so that's exactly what happened in the financial crisis before it was a financial crisis is the government put their thumb on the scale artificially created a price signal around mortgage rates and then more money than anyone could have possibly comprehended win into it and you know let's skip over the result and crash and stuff like that but this is why the government pricing was is really important so let's see what I was going to talk about next the next thing was some comments from a SpaceX expert call interview which is actually interesting there was a teagus call that came out I thought it was fascinating the person was very transparent one kind of punchline is that SpaceX just system systemically has dismissed as TSTS as a competitor they just never thought or think that the company is going to get the manufacturing capabilities to get the constellation up and so they sort of dismissed it as a cool science project but surely no one can have the industrial capacity of SpaceX therefore we're not going to take them seriously for all we know SpaceX could still be right there's still a lot to prove by ast space mobile but it is interesting to see the ways in which asts is dismissed by its largest competitors when you also then think about what's up a competitive response they were planning and when they were planning it and if it was sufficiently long enough a go to be a real challenge today or tomorrow and I think the short answer is they did not anticipate asts and the result and the response was inadequate but they really kind of talk about how asts just all of a sudden as they would say in Spanish did repent they first onto the scene and then all of a sudden they could do it and the telecoms had dismissed this and then all of a sudden they could do it but then they were like whoa whoa whoa is this a threat or an opportunity and as they kind of waffle it on that all of a sudden SpaceX rose their hand and said colony colony and the M&O's called on SpaceX or SpaceX what do you have to say for yourself SpaceX stands up in the crowded room it goes I'm a threat and the M&O's went oh yes yes what do you want to say the STS is like well we actually have technology that works as way better and seamless and we're going to work with you and be super friendly and not hold you hostage with massive upfront payments and we created the category it's going to be huge and we're not going to disrupt your business pretty cool so a category creator but then the acceleration of the category adoption was because the most threatening company that could possibly enter the scene SpaceX then overtly win and told all of the would be customers that no in fact they will not partner with the would be customers they are in fact going to challenge and disrupt them which then promptly causes every M&O to throw all of their weight behind a STS massively facilitating rapid adoption but more importantly or equally importantly these are the same M&O's the control all of the spectrum standards so guess which spectrum standards they are going to support by consensus and guess which ones they are going to try to stymie a STS has an easy pass and SpaceX is going to be paying with pennies on an i95 toll booth in a storm that's kind of funny and so the chessboard here really kind of is summarized by what a mpn man is dad and he's just went you know fluff the best thing that ever happened to a STS was SpaceX entering as a competitor because that move on the chessboard totally changed the behavior of the M&Os it created urgency it created consensus it resulted in action and so that competitive chessboard is funny is the thing that caused most people the most anxiety in fact was the accelerant that ultimately likely is going to be the cause of the company's success and you really couldn't have ever anticipated that you know for me honest but that's sort of my current thinking and so then we got some more tidbits with this and so really at the end of the day a STS is a friend with benefits to the M&Os whereas SpaceX is just an over jerk and so SpaceX is used to have a monopoly power the funny thing about monopolist is they don't transition very well into non-monopoly markets because they know like a bully only one course of action and so you always need to understand an opponent that only really has one playbook and i'm trying to think because i do remember in my repertoire of memories which seem to fade every day some CEOs i've dealt with at first you know they really kind of beat you up in the outmaneuver you and then as you kind of go through cycles with them this happens in private markets where there's truly no escape like you're stuck with them that you kind of realize they only have one playbook sort of histrionics ultimatum fake ultimatum you know just blah blah blah whatever whatever the playbook is but sometimes you can realize that someone only has one ammo it becomes very easy to beat someone when you realize that they have one playbook but no fallback SpaceX has one playbook which is we're SpaceX this is what we want who the hell are you no not only are we going to disintermediate you and we're going to tell you we're going to do that but in the interim give us all your money and the SpaceX guy literally said that and so said that is what they do and SpaceX was evaluated by Verizon AT&T and Vodafone they talked to all of them and they went with a sts because quote a sts has a much more friendly approach in the revenue share models and seems to be more of a partner than a competitive threat Gwen and Elon talking in their earnings call about going after M&O customers proves that out now SpaceX is seen as a threat it I think makes it harder for SpaceX to enter these partnerships agreements with the M&O's now go figure when the two trillion dollar market cap companies says they're going to go after and starts to make fun of the legacy incumbents do you think those legacy incumbents are so stupid to then hand over their businesses to SpaceX no of course not and so the path from here gets really exciting because we know that our competitive position this isn't just about technology it's about commercial modes we know that our commercial mode is very resilient because these M&Os are probably going to you know really do anything in their power to not partner with SpaceX so absolutely that who else do they have but a sts no one so my just reiterates and we'll get to it in a minute this reiterates why my very very strong belief is that T-Mobile is going to drop SpaceX and go to a sts and that's sort of the pressure release I really a have absolutely no idea when that will happen but be when it happens I have no idea what the stock price response is going to be but I really hope it's one of those days where the stock is up like 50 to 70 percent just so that we can all do a trade parade and be really happy on the internet for a brief moment in time and so partnering with a sts is the logical choice and then I really recommend people reading all the things that and payments and other people have shared in the last week which I've linked out it just gives you a better picture of what it's like from the M&Os to deal with SpaceX being asked to do upfront payments to give guaranteed payment per sub things like that versus a sts never mind the technology differences but a sts doing revenue shares so it's really kind of like a free option for the M&O it's not being held hostage and so then what happens of course vote a phone Portugal announces pioneering agreement with satellite connect