You're listening to Strictly Business Podcast with Lindsay Williams.
JSC has closed its doors for another day, so it's time for the five o'clock shadow.
And as always on a Thursday, I speak to Viv Govender from Ransuisse in
Johannesburg.
No David Shapiro at the moment.
He might join us in a minute.
Well, we'll see.
But Viv, I want to talk about tech earnings in the United States.
We had some bad earnings.
They weren't bad, but they were less good, if you like, as the market expected.
from Alphabet.
What do you attribute this to?
Is it because they're spending too much on research and development on artificial
intelligence?
Well, I mean, we're talking about 75 billion.
Microsoft is talking 80 billion in Azure.
I think it's the same kind of number of 75 billion or so for Meta.
It's pretty much known this is the kind of money you need to spend to be a part of
this AI game, despite the stuff we've seen from DeepSeek,
you know, the Chinese model that was supposedly trained for...
six million dollars or so which wasn't really the kids it's it's it's a they're
taking one item from deep seek and converting it to
the entire bill for a place like amazon or a place like you know apple or you know in
this case alphabet uh and that's not
a fair comparison but that being said i i do think the market is to some extent a
bit nervous about some of
these uh ai expenditures this is by far the largest infrastructure spend of
anything anywhere in history
uh bigger than for instance those u.s space program bigger than building the you
know u.s power grid or the highway system
uh you know on a per year basis this is by far the biggest spend and even one of
these companies like microsoft is spending more in a given year
than was taken to go to space in any given year so yeah it is a huge amount of risk
that being said alphabets results themselves
we're not looking that terrible uh you know if you look at for
instance there what's happening in youtube etc it still looks reasonably good And if
you compare that with YouTube to
Netflix, which came out results, the market tended to like that.
I mean, you could argue that in terms of like eyeballs, in terms of the business
model,
YouTube actually has a better business model and bigger exposure than Netflix
does.
More people spend more time on YouTube than do on Netflix.
And unlike Netflix, which has to go and pay up front for its content, YouTube only
pays for the people that actually make content that people want to watch.
Okay, just one question.
Do you think that people, and I say people, I mean the companies, have the
fear of missing out?
In other words, they have to spend tens of billions in order to keep up in case they
fall behind?
Or do you think these vast amounts of money, in anyone's language, is justified?
Look, I mean, the price here is, I mean, people are not, I remember a couple of
years ago, Vladimir Putin, you know,
said that the country that controls AI controls the future.
and that is literally what you're paying for here uh you are you're playing for
literally humanity's uh future
uh the country that gets to ai of course uh like artificial you know intelligence
or artificial data whatever you call it um
that would have an advantage that is going to be almost insurmountable okay uh
and how does it compare to basically spending money on like you know search or
spending money on like you know um
video or whatever it may be uh this is really something that that's just
spectacular
and what uh people like last year of last year were talking about the fact that oh
um you know it was these models are hitting a
peak there's there's a uh a wall in terms of a capability uh and some people still
believe that
to be true but if you looked at the last two months or so uh there's
there's a famous uh recent example and it's in the new york times about a thing
called humanity's last exam
so some people were saying that ai is getting so good so quickly that we
aren't able to evaluate how good it is anymore because we can't ask the questions
because we're too dumb to ask questions they're going to test it to its ability so
they
basically got some of the world's experts physicists biologists chemists you know uh
literally people whatever it may be and developed an exam that
they thought was humanity's like you know hardest exam ever and like no human can
score anything on this exam you'd have to be maybe a specialist
might score one or two of the physics questions right they wouldn't have any
chance on the biology questions and
about two weeks ago the best ai system was scoring around about five percent
Last week, the best AI system scored 20 plus percent.
But isn't that making, there's the whole argument, and it's a very, very corny
argument.
It's making you more lazy.
But on the other hand, someone like David Shapiro, who's not with us today, would
say, actually, no, it's making you think more.
It's making you more aware of reality.
Where do you stand on this one?
I'm with the early camp.
In other words, I believe that it is making you more lazy.
And I'll tell you why.
is because I get messages from my son, and it's not the same son of a year ago.
He's sending me messages with words that he would never normally use.
He said the word agonizing the other day, and I know he's never used that before.
It's because he said, how do I send this message to my dad?
I want to tell him this, this, this, and this, and it comes up with something.
I know it's AI generated.
I'm a little bit skeptical still, even though I know in the future it will be the
future.
Look, I mean, here's a couple of things.
Models are improving so quickly that, like I said,
the wall definitely does not exist anymore because the models are improving at a rate
that's better than we thought they would be
going at.
And not just improving in terms of ability, improving in terms of cost.
DeepSeek, like I said, exaggerates how cheap it is,
but it's definitely cheaper than comparable models were at least a couple
of weeks ago.
When I say a couple of weeks, I'm just like it's a couple of years.
So that's the thing, dude.
do note that the next thing is that you know as a as a teaching device uh students
are have been shown to
have huge huge improvements in ability uh if they are taught by ai systems because
the ai system is infinitely patient
able to go over answers you know multiple times uh
and so as a teaching device and not just for like students at high school i've seen
like evidence that you know uh physicists
are we talking like people at phd plus level you know it was like senior
researchers out there
uh when you want to study an area of physics that's not quite the area but
close enough to the area so you're talking at a very expert level we'll go to
ai and ask you questions these models are able to teach you at the highest level
that beyond what you
get at a master's course let me say at the top university in just about any field in
the world okay uh so
yes it can make you lazier but if you were self-motivated you now have the ability to
learn anything you want to learn uh being taught by
what is equivalent to a a world-class expert uh you know who's infinitely
patient and so we're able to do
it whenever you want to do it so you can be lazy or you can basically take
advantage of it uh to become accepted is this a good
thing for the for the corporate world is it a good thing for the
the world outside the corporate world as well the socio-economic world is it is it
beneficial that people can
now become so so clever and if they've got the best ai app on their phone or on their
laptop or
whatever uh they can do these things do you not think that it's starting to become
slightly dystopian look i think that uh i
i personally uh there's a thing called p doom to the probability of doom
effectively the world ending you know what i mean
yes and my
p doom is not zero uh i i says and and in fact not only is my pd not zero if you
look at ai
experts around the world and look at the guys that are optimistic right they have
they have an average p doom that means
this thing destroys the world at about 10 and these are the optimistic ones right
the pessimistic ones have
the chance of this thing destroying the world like 99.9999 you know what i mean
there's there's people out there who have studied this thing
for years who don't just think this is you know a danger they think that developing
it is a guarantee that it
ends everything uh uh so there
is there is definitely that dystopia uh but until that happens until we see that
happen
there's going to be other dangers you mentioned the fact of job losses you
mentioned the fact of you know people you know being kind of
getting lazy and stuff may be there's to get into depth here and i don't want to
get too technical but there's three levels of training
the stuff that you talk to think about when you talk about gpt right gpt4 you
think of the first two levels there's a third level that came out in the last
little while and that level is basically reinforcement learning where you have a
set outcome like where you can have a definable outcome Yeah.
And that's what these new reasoning models are about.
So people think, oh, this is just a stochastic palette where it just reflects
what's already being taught to it by some people's writing or whatever.
That's the old school stuff.
The old school, I mean, a few months ago.
The newer stuff, basically, these reasoning models are using another level
beyond that,
which is basically a read for the bloody based on actual real world examples.
And if you think about what is things that are actually easily definable answers,
like you don't know if a painting is a good or bad painting just upfront.
One thing you do know is a bad thing is how many Twitter followers do you have?
Or how much money do you make?
Or are you able to basically convince people to buy this product and not
advertise to them?
And there's a thing called Character AI.
I don't know if you've heard of that.
It's an AI program that basically you can download it where you can go talk to AI
personas.
The average period of time that people spend, the session they spend on this
thing, is two hours.
Two hours periods.
when last you talked to somebody besides me for two hours uh lindsey i don't think
i've ever spoken to anyone for two hours in my whole
life she got a cat that comes in occasionally a stray cat and it sits on my
lap and i talk to it while i'm watching television
or reading a book or whatever and
that's maximum 25 minutes two hours no viv it's beyond the play average average two
hours so probably there's people doing three four five hours after that average
the average time on these two hours
And what I'm saying is that it's not so much, oh yeah, it's impressive.
This thing is a machine that's basically designed to go after and hack anything
that's definable.
What's more definable than the amount of hours that you can spend on something?
And so this thing is actually being trained to make sure you spend more and
more time talking to it.
It's almost like, you know, the world's...
ultimately what do they get out of that i mean they're getting advertising revenue
are they getting kudos what what is what do they get out of
someone talking to it for two hours i mean yeah but it's just it's like a
subscription service or whatever and this is the most recent
stuff this is the order stuff and you're going to be doing the same things i mean
it's going to get uh um again and not to be like you know
too risque there's a website called holy france right and they basically have a
situation service like that these ladies or men in some cases are
using the same kind of thing
to to basically hack their their clients and again the same process is working here
where this thing is
talking to you as if it's that particular person and these people are basically
spending you know tons of money just to talk to
a robot let's basically figure out a way to hack into their minds to get to spend
more time and
more money i don't want my mind to be hacked into quite
honestly my mind is is fine on its own i mean it could be better but i don't want
it to be hacked into viv
I'm just going to give you a couple of things here from a completely different
world, which is things that get dug out of the ground.
Anglo-American Platinum today came out with its trading statement for the 12
months ended December,
and the share price fell by, or has fallen, by 4%.
Then I look at Kumba Iron Ore, part of the Anglo stable, came out also with an
update,
down 3.6%.
But Anglo-American PLC production report for the fourth quarter.
ended December.
Okay, it's a quarterly one rather than a yearly one.
Up five and a quarter percent.
I know it's not really your field, but you have to, I'm afraid I'm going to insist
that you comment upon it.
What do you make of South African companies or companies that are listed on
the JSC that are digging things out of the ground?
They're all over the place at the moment.
Yeah, look, I do think that firstly, platinum is a sector you don't want to be
in at the moment.
i mean you see what's happening uh with waymo uh really a driverless taxi
operating in wild in the
us yeah uh taking market share away from places like uber and and uh i think in it
went from zero to like 22
percent market share taking about 12 away from uber and about 10 or so away from
lift in a period of a year in san francisco uh
that is an electric vehicle all these all these driverless vehicles are going to be
electric vehicles without uh it was the internal combustion engine we're going to
see a
huge drop in demand for uh you know platinum uh it's almost i always talk
about it think of it as almost expensive for oil
uh it's it's that's what it's used for primarily and china is going to be just as
bad if not worse uh in terms of
uh what's happening there so platinum i would say is is an issue with ino we know
what's happening with regards to the iron or sector at the moment
uh you know especially in china but uh though it goes with regards to uh you know
anglos
uh copper is going to be hugely in demand i think copper is a big thing going
forward uh these electric vehicles about copper if
they get the robots going which i i am a lot more confident in the next two or
three years we're going to see the robots uh you know coming into play in a bigger
way than you
would think uh that requires copper and of course if you've taken all these electric
vehicles
electric robots to do their thing electricity generation transmission all
those factors are going to come into play and again copper is
going to be hugely in demand uh you know it was also uh you know
looking at the the situation globally uh some of the re-industrialization happening
around the world i do think
is going to um affect uh demand for raw materials and i think anglos and other
commodity producers are probably going to be
from that in a very big way so you buy anglos the the entity rather than the um
subdivisions of it
i.e anglo-american platinum i've always honestly have a very strong opinion in
particular in the commodity i prefer divide
to buy the diversified miners because they almost are trading into the commodities
because they know more about what the commodity demand is than any individual
stock
so unless i have a strong opinion about you know a particular commodity like gold
or something i tend to buy the diversified miners Okay,
let's have a look at some markets now before we end our discussion on politics.
So I want you to get your head around US politics just briefly while I give the
market action.
Dollar-Rand is 1854.
British Pound against the Rand 2302.
Euro-Rand is 1923.
Euro-Dollar is 10370.
Not much movement there.
British Pound 124.15.
There's a bit of movement there with the pound falling by just about half a
percent.
The gold price, which you mentioned, has fallen.
It's given up all of yesterday's gains.
It's down $27 to $2,845.
A record high yesterday, actually.
If we look at other commodities and the all-important energy complex, we've got
Brent crude oil down 0.3%
to $74.39 and West Texas crude $70.75 per barrel,
also down around 0.4%.
Excuse me.
And not much else going on.
The S&P 500 is churning around.
6,100, that's the futures market, which is up 0.2%.
The US 10-year Treasury bond yield is 4.43%. The yield has been coming down over
the last couple of days.
The South African 10-year is 10.67%.
Of course, we've got the State of the Nation address tonight.
Maybe it'll be affected by what Ramaphosa says, but I doubt it.
And Bitcoin is just below 98,000, down around about 0.4%.
And if I give you a couple of indices here, before we get on to politics,
let's have a look now at the all-share.
All-share on the JSC, 87,222, up 0.7%, and the top 40, up 0.9%,
at 79,274.
and obviously components within that, but we need not go into them because it's been
a fairly quiet day.
Tell me about Donald Trump and his pronouncements, Viv.
I was shocked over the last 36 hours.
I would say that you as a reasonable and intelligent man would have been as well.
About what?
I suppose there's about five different subjects.
What was it?
Well, you know, the Gaza story is obviously the most shocking, standing next
to Netanyahu.
And Netanyahu, I don't know if the smile that he had on his face was this man's
ridiculous or
I'm so lucky that he's in the White House.
I don't know what it was.
But come on now.
Netanyahu, it would be Donald Trump, comes across as the reasonable person, comes
across as the dove,
as the less war boggery.
Yeah, that is true.
Look, I mean, with Trump, I think the same thing that applied to the last term
applies again in that he's not a.
extremely competent person.
I heard Van Jones, who is a very smart commentator from CNN, speak about it.
And he was saying, how does Donald Trump understand he's probably smarter than you
or me?
How do I know that he's the most powerful man in the world?
And he achieved that the second time around.
I can't do that.
You can't do that.
There's some talent there that is there.
So let us ignore that fact.
Is he good at actually running things?
I don't think so.
So he's very good at becoming prime editor's president or
politically and in a genius in a way that i am not and 99.99 the population is not
but he's not very competent when it
comes to actually running things the person that is competent around things and
has been proven to be so is elon musk uh just that today it came out news
came out that he's now i think double the profit of twitter from before he bought it
okay uh
he's he's an operator of note and the thing that's really going to affect the us
i think is what musk is doing and not so much what trump is doing
because trump or the tariffs was had to tell us the weekend and then had them
taken away you know a couple hours after the market opened on uh
this week uh so he's back and forth he doesn't really push anything forward
there's no real change it's going to be
like build the wall it's going to be like you know the muslim band it's going to be
like what's happened with regards to birth and decision he'll
push some stuff through some of it might or might not go through that it doesn't
really matter elon musk is going to end the department of
education elon musk has ended the usaid elon musk is changing
the way the u.s does its payment system and it's going to revolutionize it uh that
i think is the real uh story
here i don't know if you hear the story about what he's done with the u.s payment
system okay so well i
know that he's taken over the the the personal details of um many many thousands
of people uh
actually millions millions of people i don't know if that's a good thing or a bad
thing i mean you seem to think that it's a good thing you seem to be on the
musk side I don't think it's a good thing or bad thing.
I think it's going to be done.
I think that's the difference between Musk and Trump.
Trump will say stuff and not get it done.
Musk is going to do stuff.
Whether it's a good or bad thing, I understand it's going to be done.
But what he did, he brought in a 19-year-old.
one night okay there's six of them between 19 and 24 years old and they're not even
college graduates
they're high school graduates viv yeah high school graduates so and you would
think okay that's ridiculous but understand
like um people between the ages of 19 and 24 have done most of the big things in the
world
including like conquer the world with alexander the great including i think the
average age of the
person that took people on the moon was like 27 years old so he's he's putting
young very smart people in there whether or not
i mean usaid taking that out the pep fight as a south african is a is a disaster for
that to have been
temporarily even suspended there's people whose lives depend on usaid okay um that's
it's a bad thing
but is it going to actually be done at the end yes because musk operates you know
efficiently and operates competently
maybe not for the best uh ends but he's going to do it i think that's the
difference i
think the us the part of education is probably going to go next and along with a
number of other divisions.
The CIA, every single person at the CIA,
many people which are responsible for the security of the United States of America,
and therefore by association with the world,
have been offered an eight-month severance package if they sign the form by, I think,
close of business tonight or tomorrow.
What is that?
And the FBI as well.
Well, not so much the FBI.
That's a different story because of January the 6th.
But how can you get rid of the CIA?
That is wrong to me.
It's all federal agencies, all federal employees across the entire US.
So if you're a federal employee in the US, I think they did it even for the traffic
controllers, which I think after the last week was not a good idea.
And I think they've resorted to that one.
So the traffic controller can't leave.
But if you work in any other federal department, you can basically get out with
an eight-month package.
And, you know, the threat is get out now with eight months of...
pay or get out maybe in a month two's time with nothing you know and that's that's
the case there such as the cia is every
single federal agency with a couple small exceptions uh the fbi thing i think is is
even more significant because in
the fbi i think around about a third of the fbi or 40 the fbi's total workforce
were
in some way or another involved in the uh january 6 prosecutions if it gets out of
all of them he's going to be 40 of the workforce of
the fbi that is pretty significant
and the people that he's putting in charge uh the difference between this generation
this this term and the last term is not trump trump's the same person
it's just that people last time around want to change things spotted trump and
said if we get in power with
trump we could actually change things and the people he's bringing along with him uh
unlike the last time around arms in many cases much more competent and much more
driven much more ideologically driven and
what's going to happen is not what trump says It's what the people he brings across
are going to do.
And I think that's the difference.
And Musk is just one of them.
But I think a number of the other people he's brought across are going to change
the way the U.S.
operates.
And this is, I think, going to be the most significant presidency in the U.S.
since FDR, which is almost 100 years ago.
You say significant.
You don't say good or bad.
No, no, I'm saying significant.
I'm not saying good or bad.
I think it's likely this might change happening very quickly.
No one, even if you have a thousand IQ in the book.
greatest heart of the world he's going to be able to pull it off without significant
negative consequences it's too complicated machine it's too it's too it's
too you know difficult to understand how it all works and what the implications are
uh so this amount of change is going to cause
negative consequences how bad i don't know exactly but
it is going to change the way the u.s after donald trump and for donald trump is
going to be the u.s before and after fdr fdr
for those that don't know significantly changed the way the u.s works social
security etc were all implemented under FDR.
The New Deal in the US was all under FDR.
And that's what Trump is going to do.
He's going to change the US for the next century.
The most important...
Of course, I can't believe this.
I mean, change for the next century.
That's quite a statement.
Yeah, I mean, you don't destroy things like the way the system...
He's going to change the payment system of the US.
They're not going to go back to the old system once it's done.
He's going to change things like DEI and stuff in universities.
He's going to...
outlaw things he's going to executive orders they're going to change things you
already see google and facebook come out and eliminate the di uh
they have to because they've been told to do so by by trump at the inauguration or
in the drinks after the inauguration
it's going to take you for apparently it's going to take you many many more years to
ever bring those things back to the level they were before trump okay
it's going to change the department of education to restate that after four years
uh maybe after eight or ten years twelve years
if Vance becomes the president after this year, that's going to change.
the way the US works.
This kind of fundamental change, it's very difficult to build up these institutions
again after they've been destroyed.
And so I do think these FBI agents that are fired, they can't come back after four
years and get back into their jobs the way they were.
I think what you're seeing here is something that could be accidental
brilliance via Donald Trump,
or it could be a complete and utter disaster.
I wonder which one it will be.
If we are speaking in three and three quarters years' time, Viv, I wonder who
will win.
Do you think he'll win?
Do you think it will be a changemaker for a century?
Or do you think it will be a changemaker for a century which has plunged the world
into darkness?
Look, I think there's some of the things he's done.
Like for instance, USAID, which is this organization that basically does things
like feed people but also promotes U.S.
values across the world, etc.
It's brutal.
it's a 50 billion dollar a year uh enterprise there's lives that depend on it
in africa and i'm not saying that
like you know flippantly you take that away without thinking about it properly
which these guys cannot think about properly because it's going to happen too
quickly
and you will not have one or two people dying you will have millions
or millions die okay that's the other thing when you change the fbi you take
maybe a quarter of the fbi to put him to the fbi out
when you go and offer this many people I think there's already 40,000 people that
have taken the deal with regards to the federal agencies for early retirement,
probably more by the end of the period.
We take that many people out of these institutions and you take away things like
the Department of Education.
Yes, there are arguments that the Department of Education is not exactly
what you think it is, but it does do good things like the Pell Grads and whatnot.
And, you know, promote education for poorer people and so on.
You do all these things here.
You won't know the outcome in three and a half years.
You won't know the outcome in 30 years time.
when you see what the full impact is going to be.
And that is the impact it's going to have.
Obama's presidency, Biden's presidency, George W.
Bush's presidency, they had momentary impacts, but they weren't changing the
fundamental structure of the country.
Trump, not through his own use of things here, because he's been used as a tool for
people like Musk and so on,
is going to have an impact that's going to last decades.
And we will only know the outcome decades from now.
Maybe even months from now, who knows?
Viv, thank you very much for your...
Always incredible insight.
Viv Govender is from Rennes, Swiss, in Johannesburg.
And that was the 5 o'clock shadow.
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