Taco Tuesday

Hello listeners. Welcome to another episode of Geopolitical Cousins. We recorded this around Wednesday, April 8th, 6 p.m. Central Time. Marco's on the road in Canada. I'm on the road in Texas, but we made the time to record you a podcast.

Email me at Jacob at Jacobshapiro.com if you have any questions, comments, concerns about the podcast, anything else. Otherwise, no housekeeping notes from me. It's crazy out there. This will publish tomorrow, so who knows what happens between now and then. Uh, but I think it'll stay pretty current. Cheers.

All right, cousin. Um you told us that we need we both needed to prepare uh two things that were not Iran related uh on the podcast. So I take it that you are finally getting sick of this war. How about it?

Well I actually got some feedback from uh from a really good friend uh who will only be referred to as G Diddy for privacy reasons. Um no relation to P Diddy. Uh the name also the nickname precedes the revelations of Buff Daddy's indiscretions. So it's not correlated with that. Uh anyways, G. Diddy and I were talking and he said, you need to let your cousin Jacob cook on Ethiopia. That's literally what he requested.

Yes. Yes. GDD is actually yeah, he's South African. He's very, very knowledgeable of geopolitics. He lets his children listen to this crazy shit, despite my many, many swear words. Um, and they're becoming little tiny geopolitical uh, you know, gurus themselves. So shout out to them. They know who they are. Um and so he wanted he requested that we pivot a little bit away from Iran.

talk about other issues. Uh I know obviously the hordes of degenerates who r use geopolitical cousins the way meth heads use meth. Are going to want us to talk about Iran, so we obviously have to give the people what they want to do. Yeah, yeah, yeah. I thought you were joking when you said it was Ethiopia, so I picked other stuff. We can talk about Ethiopia. I

have to. Like it's up to you. Like well we can we can leave that for next week. You know, you can like Well, no, but it's it's funny you say that because I really don't know that much about Ethiopia because people really don't like care about Ethiopia that much, but it's always been of interest to me.

And I did an episode on my solo podcast with a journalist who's been on the ground in Ethiopia. Uh I mean he's he's since gotten out, but like last month he was on the ground, he was filing some reports for them. I just wanted to talk to him about it. And um It's actually interesting. Like I've gotten so much feedback on that episode. Like I got one listener. She knows who she is. Thank you so much.

who loved the episode so much that she just like she sources coffee from Ethiopia. She sent me coffee in the mail cause as a thank you for the episode. I've gotten multiple emails like this was such a great episode. We want more on Ethiopia. We want more on this. So apparently it's it's uh hitting some

That's cool. That's good to know that that's what listeners are doing for you. Because I've never gotten coffee. I've never gotten Iranian, like jasmine, you know, tea. Like nothing. Okay, that's cool. That's good to know. Okay. Okay. We know who the family is. We don't. Your sponsors, the Houthis, are trying to get the cot product to you. It's just blocked up in the Red Sea right now. It's a little bit difficult. You got to give them a little. I believe it's illegal, but yes. Um Uh fine, fine.

Is it is caught illegal in the United States? I believe we can ask AI, but uh I believe it is a a controlled substance. Hmm. Uh this is I mean Houtis now are are abandoning this ship. Uh they're abandoning the Marcos ship. Marcos should know. Uh yes, COD is illegal in the United States. It is uh classified as scheduled one controlled substance because it contains Cathanine, cathinone, my bad, I don't know, a stimulant with a high potential for abuse. Well Thank you.

I guess I will shelve my uh cot import business idea that I was I guess I should have checked first uh the regular And I think we might have to return the money for that sponsorship deal deal with uh with uh Kat Cola, I guess. Yeah. It's actually a really great idea. Okay. Okay. Well we we will s we will spend some time on other stuff. But yes, let's give the people what they want and let's also talk about the big thing because

Uh, you know, if the Strait were open, I think I would indulge myself in talking about this, but it doesn't seem like the Strait of Hormoose is open. It was what, uh four ships I think got through today, or at least so far. That was the reporting that I saw. A drone hit the the pipeline in Saudi Arabia. There are these reports that Abacaik is on fire. Hope I pronounced that correctly. The Israelis.

hit Beirut with a terrible attack. I mean two fifty plus dead, a thousand injured, and more people in the rubble. Um And uh apparently, you know, s uh Whitkoff and Jared and Vance are gonna be negotiating with the Iranians who have said three of our conditions have already been broken and we're gonna stop letting ships through. So I I don't know where you wanna start, cousin. Like we got we got the taco.

Uh we got it a couple of weeks later than I thought we were gonna get. And I'm not sure that anyone's eating the taco, but what's uh what's your take right now? You know, um I think that I don't really care about the ceasefire. You know, that that would be my take on this. I mean there's two ways to look at this. One is uh geopolitical, like purely geopolitically speaking.

I think it's highly unlikely that any ceasefire keeps Iran and Israel from occasionally bursting into episodes. Of kinetic activity of war. You know, if you don't want to call it war, at least like some kinetic confrontation. Think about Azerbaijan and Armenia. You know, before the definitive

assault by Azerbaijan that uh returned Nagorno Karabach to Azerbaijan in twenty twenty. Before that, uh and you will remember this from when we were at Stratford, every single year, I think around December, there were always like twenty people dead. Right? Every single year. And and that's just I think we're now in a world where I think Iran and Israel

I it's really difficult for me to see how they don't uh just have constant attacks against one another. You know, Israel is going to deploy what IDF has called uh you know mowing the grass. Strategy, which used to be the strategy in Lebanon and Syria.

You kind of have to mow the grass every six months or twelve months or eighteen months. You have to fire some rockets at Hezbollah. Um, I think they're gonna do that with Iran. I think the US may very well do the same. In fact, President Trump has said that a ceasefire I think he said that either last I mean, at some point he I remember the White House basically saying I mean he said a lot of things. I know I've

He's he's all over the place. I mean I I've been on stage for the last three hours. For all I know we're back to civilizational destruction. But what he did say is that any negotiation uh you know, like US retains the right to blow up some nuclear facility if you guys start, you know Enriching uranium again. So I think that that's why I think this obsession with whether the ceasefire is holding just ignores geopolitical reality, which is that very rarely do ceasefires like hold. Cool.

for a very long time in any conflict, uh South Korea, North Korea, just constant shelling, fifty, sixty, seventy years after the war ended, uh, there are bouts of violence across the contact line. Um, I'm struggling to see You know, like I guess India and Pakistan, you could say they have wars intermittently and then the ceasefire sort of holds, but even that is a bad example. Uh India and China. No, because they just had a done.

Yeah, India and China you had a situation between the two of them where like machetis were used or whatever the hell it was that was used in that Oh that that's more sophisticated than I thought. I thought they were just punching each other with clubs, but uh machete is sophistication.

But so I think the focus on the ceasefire, first of all, from a geopolitical perspective, is is overdone. From a market perspective, I also think it's overdone because, you know, four ships is not actually that little. All you need is two VLCCs to transit, and that's four million barrels a day, which for the next three months, all the world needs is like four to five million barrels to go through hormones. That's all we really need.

And I find it extremely unlikely that the Iranians are now going to close the straits. It's funny to me that you lead off with like the the straits are closed. They haven't been closed for two weeks. We've had about Sixty we've had actually the pickup in ship traffic reached eighty over the last uh two two days. So I have this at my fingertips because you can go to bca research.com, you can go to our Hormuz dashboard. And so, you know, we've had ships transit the strait before.

We actually had a ceasefire. So let me let me actually give you the exact numbers. So this is from yesterday, unfortunately. So uh we still don't have numbers for today. But we had f almost forty ships on March seventh. We had over thirty-five March sixth. Obviously the regular traffic is like a thousand, eight hundred, eight hundred to a thousand. But we've been going in a positive direction even before the ceasefire. So then like why is that?

You know, and that's because I think that Iranians are under immense pressure from the rest of the world. Forget America and Israel. Like that's obvious. but you've got pressure from their allies, their friends, you know, to actually let ships through. Iran has proceeded with the tolling mechanism, regardless of the ceasefire. I mean that idea came up before the ceasefire.

And so I think that the return of shipping to Strait of Hermuz is actually not correlated with a ceasefire. I mean, ceasefire obviously would make it easier. But Iran is already proceeding. IRGC has a Delaware LLC, they've got an online website. You send him an email, you say the ship is going through, you paid a two million dollar.

Fine for each ship, you know, in Bitcoin or whatever it is that they're accepting, Yuan, Remimbi, and then ships go through. So what I would actually throw back at you. Yeah. What if the ceasefire doesn't hold? Would that then negate the trend line before the ceasefire, where Iran was steadily increasing the ship traffic? Yeah, I mean this is the I would think yes. I mean I'm looking at your BCA research dashboard right now and you've got two different

Graph. Uh I see the seven day rolling average depending on when it starts. I mean, there has been an uptick in in traffic, but it it's not particularly big. For sure. I if the Iranians if the Iranians are gonna close it again, which they said they would, I mean that was one of the things that came out

earlier this morning, I mean it was Iranian um what was it? It was farce news, I think. Yeah, yeah, yeah. That said that after two transited the strait that they were going to be closing it again because of the violations of the ceasefire. Then two more went through.

then uh the speaker of the parliament came out and said, Okay, these three s these three things of bit uh aspects of the ceasefire have been violated. Negotiations are continuing. But yes, because I I would take the opposite side of you here. I would say that The reason the ceasefire matters is because if the ceasefire doesn't hold in a way that is acceptable to Iran,

then yes, they can close the Strait of Hormuz. And then it goes to the I I I actually was like thinking what you would say to this in the podcast and I could hear your voice in my head being like Jacob The global economy is not going to put up with Iran closing the Strait of Hormuz because Israel is bombing Beirut. That's right. With all apologies to Beirut and it's horrible what's happening in Beirut. Like what a lovely city and uh yeah, I don't even want to get into that. But like um

Like nobody's gonna tolerate that. The Chinese are gonna be like, Okay, this is the Israelis hitting Lebanon. Let's get real here, folks. Like we're we're doing real things. But the the flip side of that is I mean, the Iranians have made Lebanon part of this, and Hezbollah's th one of their last standing proxies. So I think it's a good thing. It seems like they're pushing for it.

I don't I don't give a shit what Tehran says about no, I mean I just don't. And and neither do their partners who are gonna be paying two million dollars for VLCCs to go through. Like if uh like you know. There's just no like look, everyone listening to this, obviously I can be wrong, but I'm I'm like, I don't think we live in a world. Were the fate of Like southern Beirut suburbs. is going to determine whether South Korea has LNG. Like guys, like let's bump the brakes on that.

What's happening in Lebanon is not the first time. I mean, this is the most intense, but like, yeah, absolutely, Iran is going to sell Hezbollah and Lebanon and the Shias of Lebanon for the sake of making money off of transit. That's just like you know. I guess we have a different view and we'll see what happens, but

Well I I don't feel s I I honestly I d I don't feel strongly. I just I feel like the the ceasefire is very, very tenuous. I feel like it I agree with that. I don't feel like it made a lot of sense. For Iran to do it.

Like if they felt like they were gonna get major concessions from the United States, fine, you try it out. But I don't think they're gonna get what they want from the United States going forward. And it really like maybe the Lebanon issue is almost a red herring because The the first problem that the Speaker of the Parliament talks about in his problem with the violations of the ceasefire is that there's noncompliance with it and that there is no trust.

that there's a deep historical distrust towards the United States for its repeated violations of all forms of commitments. And no matter what you think about the Iranian regime, and I'm on record, this is a particularly ugly regime, they're right.

The United States has not been consistent about any of its commitments when it comes to Iran, so why should they take any of this seriously? It seems to me that, like, okay, they can agree to if the Chinese were really pressuring them, okay, they give it a word. But if the United States turns around and breaks the ceasefire, and if the Israelis continue doing what they're doing, the Iranians go back to the Chinese and say, okay, well, you're gonna meet with them in a couple weeks.

Why don't you tell them to behave? We tried. We had a good faith effort here, but they're not letting us we'll make sure you get your oil. Like you pay us our fees. We'll make sure that your ships go through. Wait, wait. Then I no longer care about the the war. If they're letting their ships through. I I don't know. I I I've

I feel like I'm on my back feet'cause I don't know how to parse your math about if if if four ships get through we're good. Like that math doesn't feel right to me, but you know, with my feelings and four dollars and fifty cents I can get a cup of terrible coffee at Starbucks.

Twenty million barrels a day of transit the straight up from Five million are going through Yanbu on the Red Sea, where no the Houthis can't really interject it. And yes, pipelines get hit, but they could. No, they can't. Yeah. It's too far. It's too far. Yeah. Saudi Arabia can interdict those draws. So you gotta open Google Maps, you gotta see where Yombu is. It's one thing to hit.

a ship off the coast of Yemen where there is no interdiction distance. It's another to hit. Yombu is like more than halfway to Aqaba and uh in Suez. So uh then there's a pipeline. Yes, pipelines can be hit by drones, but as Ukrainians showed in Russia, it's actually very difficult to hit pipelines with drones because they get repaired. So they just stop doing it and focused on refineries, where there's a lot more moving parts.

Rip like fixing a pipeline is relatively easy. So you've got five million of twenty diverted to the Red Sea. And then you have um enough global reserves to make up another. uh five million for the next three months. So that now we're at 10 out of 20. Done. Covered. And then you've got floating storage for at least another two, three weeks, which does another four or five million.

Which means that two VLCCs with four million barrels in together, VLCC stands for very large crude carrier, each one carries two million. uh that will make up that 20 million. Now we do lose four million, five million in floating storage in the next couple of weeks. So that two ships needs to become four ships by the end of April. It has to become four.

you know, at least four very large crude carriers. Um and the reality is that if you combine Iranian and Iraqi oil output through the Strait of Hormuz, that is five million barrels. More or less.

Well what about the other part of this, which is um where the Saudis and the Emirates are at because Are the Saudis gonna allow like tolls to be paid on the ships that are coming to get Saudi? What and I I mean, I know that this is, you know, this is April eighth, it's like six thirty PM central time. But I mean, Iranian state TV over the last couple of hours has been talking about high chance that the UAE actually participated in strikes on Iranian facilities.

Um, and maybe the UAE like Israel is trying to play a spoiling role and where the Gulf states go into this. Oman is also part of this as well. So, like, I mean, I I feel like what you're gonna say is there's not a chance that The Saudis and the Imratis take their oil and go home because they're not willing to accommodate themselves to an Iranian toll tolling regime. But that's also a risk, isn't it? Well, first of all, like I can see um Yeah, I mean like it's not up to them, right?

Because once you load the crude onto a very large crude carrier, the operator of that vessel and the person to whom that oil is destined, those are two different entities, neither one of which has to be Saudi. so it can be

No, but you but y but you think they're gonna allow a carrier to be loaded with Saudi crew to pay that toll down the road? I think I would guess that the Saudis would just be like, fine, you don't get our oil until you figure this out. I We're not doing I mean that's a lot of revenue for a country that got very ambitious, you know, industrialization targets, number one. Number two, again.

Yeah, but this is existential stuff, cousin. This is not like you know, that this is the only uh lever the Saudis have. I'm sorry, but I interrupted. No, I mean like you also would piss off the people you're selling this crude to, like, hey, I'm the user of this drug. What I do with it once I get it in my possession is up to me. And I get it in my possession at the point that you load. The crude carrier.

Once you load it, it's like if I end up giving Iran two million Bitcoin, like you don't have to be privy to those conversations. This is my problem with this idea. Will America abide by the toll? Will Saudi Arabia abide by the toll? Well The only way for them to not abide by it is to sink the very large cruise carriers, or if you're Saudi Arabia, just to accept that you're not going to make money.

You know, and I don't see that happening, but it will be interesting. Like, hey, I'm I'm open for it, you know. It could happen. Look, all I'm saying, let's go back to the ceasefire importance. I think, yeah, ceasefire is of course important. I mean, markets obviously moved huge, you know, oil prices collapsed, blah, blah, blah. Markets skyrocketed.

Collapse. They're there. I didn't see what they were at. They went down fourteen, fifteen percent. They were still above a hundred, like let's No, no, that's why that's well, I mean they can't go to sixty. You know, that they they can't go back to sixty. That's not gonna happen. Um, shorting oil at this point, I think, is kind of silly. By the way, in the best case scenario, oil goes down to seventy five. on Brent. You know, we're not gonna go back down to sixty on Brent.

So if you're if you're sitting here trying to short oil now, I think that's silly because there's still a chance that it goes to 200, you know. Absolutely. Even if I'm in the sanguine camp, like guys, pump the brakes. We're not gonna have World War Three. We're not gonna be eating each other like cannibals because we don't have energy. Like I don't think any of that happens. Uh I wouldn't really I don't think the risk reward favors shorting oil, but at the same time, I do think that.

We are ignoring what happened before the ceasefire. And before the ceasefire, the Iranian regime seemed to be pretty okay with Israel blasting Lebanon because they kept loading vessels and sending them through Hormuz. I mean that that again in very small numbers, but why even do it? Why in small numbers? Just let's go. There's a thousand vessels anchored in the Persian Gulf right now, Jacob. A thousand.

Bomb them. Yep. Bomb every single one of them. Why are you being a chicken? If you're Iran, like let's go. You got a thousand drones. Let's go, baby. You know exactly where they are. You know, the Russians are providing you with a satellite imagery. You can go in Bloomberg Terminal, for God's sakes, if you're in Tehran, find out exactly where they are, bomb them. So why are they not doing that? Why are they instead setting up

A tall booth mechanism. You know, to me, it just doesn't seem like a regime that's willing to go all the way. And let me explain why that's the case. We already had an episode on this podcast, I think it was called Math. Like I did, you know. I I forgot what the name of the episode was, but it we can find it. Look, Iran has to be tough. I agree with you, but it's not one or a zero.

You know, like not none of these things are one or a zero. If you close the Straits of Hormuz because Israel is for the 70th time invading Lebanon. Like, yeah, you will eventually lose the leverage. Why will you lose the leverage? Eventually, eventually, the world will open the Strait of Remoose. So you're like if you're sitting in Tehran right now, if you close the Strait of Hormuz fully, in three, four or five months, there is a hundred vessels.

of a joint global flotilla making sure the VLCs go through. There is a fiscal package in every country in the world to subsidize maritime insurance, which will go up in price. There is Ukrainian engineers putting in drone interdiction efforts. And you're being bombed during these three to four months, by the way, while you're closed with with

So why would you do that? Why would you lose leverage over time? Eventually, you can lose the leverage. So instead, just cash in, cash in through a tolling mechanism. I think it just makes the most sense. The counter to this, and I know you're not going to use it because you don't agree with this. the counter is that they are religious zealots who really, really care about their co sectarian Shia Lebanese, which is complete fucking nonsense because they haven't cared about them

in any significant way for a very long time. And it's nonsense because we all know IRGC makes deals. They control forty percent of the Iranian economy. And they've been making backhanded deals with America. with Russia, with also I mean, hell, in 1980 to survive a s uh Saddam Hussein attack, they made deals with Israel. So I don't that's the only conner one would have, which is that this war has radicalized him. Um and therefore

Yeah, no, I I'm not gonna make that argument. Although I I think you're overstating like Iran's lack of support for Hezbollah, but I I functionally agree with what you're talking about. I actually think the counterpoint is

Something like using the Strait of Horror moves. Like that lever is strongest as a threat. Once you have to pull the lever, you only get to shoot that bullet once. Like you're not pulling that you're not putting that bullet back in the chamber. And there's a limited amount of time

that it's actually worthwhile because you're already seeing this talk about, okay, well new pipeline infrastructure and we don't wanna be dependent on the straight and form moves. I've I think our biggest difference is I don't think this international flotilla thing that you're talking about is realistic. And I don't think anybody's gonna force Iran to open up the Strait of Hormuz on a short timeline. But Iran's bigger problem is, okay, we've shot the bullet.

We need to cash in on it and keep people going through the Strait of Hormuz because if this doesn't stabilize at some point, there is going to be a massive amount of capex so that nobody has to go through the Strait of Hormuz anymore. So that you can deal with your counterparties directly, and then the toll doesn't mean anything. Um so you ha it's like threading a needle. If Iran wants a tolling mechanism, there is

a finite amount of time if they can'cause they have to show not just that they can shut down the trade of four moves, to your point. They have to show that shipping can go through with stability. Wait, I I I have a pie chart or reason. I I'm focusing on the flotilla because that's what happened in the eighties and it absolutely can happen, but you're right, that's a six-month project. Your pipeline point is an 18-month project.

Yeah. So if both of those are off in the distance, and if you're listening to the two of us, you're like, but wait a minute, but that means they have leverage for the next four months. Yes, but if they abuse it, they will accelerate the other development. Well and and this is why I'm worried about the next couple of weeks, because even if I grant I I think you were a little hyperbolic about the relationship between Iran and Hezbollah, but functionally I think you're right.

But even if we grant the hyperbolic language, like I think that Iran was willing to offer the ceasefire so that they look more reasonable, but that they are totally willing to shut it down for another couple of weeks if they don't see what they want. out of the United States. And then I think you also have powers like Israel, maybe like the Emirates, we'll see if some of these reporting is true, which don't want the deal at all.

who either, you know, from Israel's point of view, they have other objectives. The Emratis might not be okay with this Tolly mechanism or with Iran being in the in that position and they want to play a spoiler role. And so maybe it's not even up to Tehran and Waj. Maybe these parties are gonna try and bring folks in. And I could totally see a resumption for a couple of weeks. Now, if this is if this is three months from now and if the Iranians are still doing this three months from now.

Then you're right. Then it's gonna be Mad Max style stuff. And I I think what that Cannibals. Becomes is not I think it's operation warp speed to no longer depend on the Middle East. And when once you decide that there's a sunken cost. markets and capex, all of this can move fairly quickly once it becomes that existential. And I think it can happen quicker than maybe people are thinking down the road. You think it's a flotilla. I'd be

I I actually tell clients it's gonna be Capex. Like China will be able to do these pipelines in a day. You know, by the way, this is very easy. It's desert, it's flat. It's not like trying to get Russian natural gas from Yamal to China, which will never happen. No, it's it it's defending them and keeping them online is gonna be

Uh it's again you can you can repair pipelines much faster than refineries. That's what Russians have proven to Ukrainians. That's why Ukrainians don't do pipeline attacks that much anymore. But one thing I will say to you is the Capix thing is very important. I think I completely agree next two weeks. There could be um back and forth, obviously. Um I think that if it's just two weeks though. The markets and the economy can move on.

You know, this is the issue. This is why this is why the market reaction was what it was. Because if if these two sides are offering ceasefires to each other, if they're starting to set up toll mechanisms, like the market can sniff out. It's sniffing out. What I said earlier, if you're so badass, if you care about the Shias in Lebanon so much, then destroy the thousand ships in the Persian Gulf. Let's go. And if if you know, so I'm I'm

I'm criticizing Tehran for not having the balls, but I'll do the same to Trump. Like, bro, put 500,000 troops. And that's what the market is starting to sniff out. It's sniffing out that both sides are not willing to go all the way. They just aren't. President Trump sent eight thousand troops. What what's that gonna do? Invade Santa Monica, California? Come on, man. You know, like that's not enough.

No, he he just gave a masterclass on tacoing. I mean, he was literally talking about civilizational genocide and then within twenty-four hours. And a and of course like the the imagery of him with the rabbit on on the what was that, the White House I don't know, I don't know what was going on. That's really good. I'm kicking myself for not literally recommending to my clients that they go long all risk assets after that tweet came out.

Because once you like literally swerve from being a politician, an elected official to being like Tupac on Hit Them Up, like that was Tupac's Hit Hem Up. Just, you know, White House style. Make make sure my 4-4 make all their kids don't grow, whatever the the line is. You know, like he was out there rapping hit them up. By the way, if you don't know this reference, please go on YouTube and listen to Hit Hit Him Up.

one of the most angriest rap songs ever. And you're like, at that point, you're like, come on, bro, like we all know that's just not gonna you're not gonna nuke you're on, man. Um but yeah, so one thing that I would say to you is that I I think I emphasize Lebanon a lot less than you do. I emphasize Israel a lot less. If America reduces the base of missile strikes and attacks on Iran.

You know, I think that's going to be very difficult for Iran to ignore. That I mean, because America could dial up this. So I ran the numbers, by the way. I looked at the data, uh, military strike packages. I don't know how many people are aware of this. I think very few. But the US is responsible for only twenty percent daily attacks against Iran. The other 80% is Israel. So, you know, uh one of our listeners made fun of me for, you know, getting all excited about American B fifty twos.

And he was saying like, ah, you know, America is not that powerful. It's like, my point is that Iran is not stupid. It understands that America could dial up the pressure massively. So far, for the last month and eight days, it's Israel. Now, Israel does not have strategic bombers. It's using tactical fighter jets. It has very low payload on those jets. You know, you can't carry the heavy stuff.

The point that I'm trying to make here is that you have to be an idiot to be sitting in Tehran and think this is the bet America's best shot. So it's not just the Capex that you emphasize, although it's part of my pie chart too, I agree with you. It's not just the flotilla. Which I emphasize. It's also the other side of the equation, which is punitive attacks, which could be dialed up.

And so, you know, like why just it this is like and by the way, this is true in any life, like any relationship you have. Let's say you have leverage on your boss. Let's say your daughter has leverage on you as a father. At some point, you can abuse that leverage. You know, you don't if if you overuse it.

You lose it. And that's, I think, why I agree with your two-week time horizon for how much Iran can mess around. But like if this goes into months, they're gonna lose that leverage. And that's why, by the way, everyone listening to this who thinks that Jacob and I somehow misunderstand the need for Iran to be tough. That's not that's not an issue at all. And don't forget, I've I've been alarmist of this war since January sixth.

Yeah. We have a podcast titled Chuck Norris Premium, where I'm pounding the table. Iran's gonna get attacked and it's gonna be a big deal. The po the Yeah, and I'm I'm yawning I'm yawning like Russell Westbrook trying to get into the ballgame in that episode. Not my final

Listen, it doesn't matter. Like my point, I'm just saying, like, look, I'm not just ignoring the the the risks. It's just that now that it's happened, now that it's happened, now that we're here, you know, it's been a month and a half, six weeks. And I think that from this point onwards, Iran really risks. Like if I was advising

the the you know Khamenee Jr., I'd be like, listen, you've got another two weeks as as brother Jacob says. Cousin Jacob is right, bro. You know, you listen to the sermon the June, my friend. We know wars. You got two weeks more and then you're done. You know, you no longer have really the leverage on this. You're going to start pissing people off. Now, one thing I want to say, I emphasize China a lot. I just wanted to be very clear. It's not just about oil.

You know, everybody here understands there's a lot of fertilizer. You've emphasized the fertilizer role in this conflict because you are an expert on many things, but soft commodities is one. Two, helium. Helium is used for semiconductor production. It's it's curious to me that a lot of the people out there who think that China's enjoying this

They emphasize China's storage of oil, like, oh, they've got enough. But guys, China needs that helium too. China needs to fertilize. You think China's cool with food prices rising in China? You think that China's cool with not being able to build semiconductors? You think China's cool with South Korea and Taiwan not getting the LNG necessary to produce semiconductors that goes into China's critical AI race against the United States of America? Like

China's in the same boat as every one of us. And they're going to be sitting there saying, like, whoa, what? You're doing what? Because of who in Lebanon? Hell no. We're going to go to Saudi Arabia and we're going to build them those pipelines to Yonbu. Yeah, the the the only thing I would I would push back on a little bit is um I don't think the Iranians can

can live in a world where the Israelis are gonna treat Iran itself like the Gaza Strip. Like that's not gonna work for them. And I actually think from the point of view of of Iran, agreeing to a ceasefire like this actually helps them a little bit because they can point the finger and say, hey, it's not us that is closing the Strait of Hormoes right now. We agreed in good faith to a ceasefire and this actor is over here doing all these crazy things.

And now you've got the flotilla or the world or everybody else going to the Israelis and saying to them, Okay, enough. Enough is enough. You're not gonna do this anymore. Now President Trump did this to Israel last year.

uh in that first, you know, Israel Iran war. He's not done it quite yet, but most of the reporting suggests that Israel was not a part of these ceasefire negotiations. But I actually is it two weeks, is it four weeks? I think Iran actually buys itself some time here because it's showing

Hey, we're willing to negotiate. We're even willing to negotiate with the United States, which has broken every single agreement we've had with them going forward. But these are the things that we want. And if we don't get the things that we want, We can shut down the Strait of Hormuz longer, and hey, China, you're mad about it? Okay, go for it. Hey, United States, you're mad about it, tell Israel to stop. And Israel, very powerful, doing lots of things.

Like Israel is not omnipotent. Like they can be brought to heal uh Yeah. President Trump already did it once. There's three billion people who are going to start feeling the effects of higher food prices. Three billion. Pakistan, India, and China all have varying degrees of friendly relations with Iran. I just gotta tell you, man, that's just not gonna happen over Israel. I think the I think what Iran is saying Is we're gonna keep bombing Israel.

And ninety-nine percent of humans on the planet are totally cool with that. You know? So that's that's how this gets resolved. I don't see why they have to close the Straits of Ramuz. They can just have a war with Israel and they can continue for 60 years. And by the way, anyone listening to this who thinks I'm Being silly. This is how the Middle East has operated for decades. I know I keep referring to Iran Iraq war.

But study their war. Iran was far more existentially threatened than by Israeli fighter jets carrying low yielding weapons. Come on, let's be serious. Yeah, Israelis great intelligence, Bossad is cool, but what? They killed the head of state? Wow, soft clap.

Saddam Hussein killed a million Iranians, come on, and launched a ground invasion of Iran. So I would argue that Saddam Hussein in the nineteen eighties was Exponentially more existentially a risk than Israelis F sixteens lobbing some cruise missiles at Iran. And so and so and yet and yet in the nineteen eighties, as you yourself showed in a chart, I keep reselling to everyone. Despite that, oil prices didn't react to Iran-Iraq war, other than in 1980, because Iran stuck to doing what?

Targeting? Crude carriers. The docked in Iraqi ports. They had to they had to sequester the conflict into a theater that was acceptable. Because if Iran went to its consumers of that oil and said, Hey, Iraq is being mean to us, you don't get your oil.

half of the world would have been pissed at them. Just like again today. If they go and they're like, hey man, the Israelis are are being mean to us, you know what China's gonna say, brother, Israelis have been mean to you for six thousand fucking years. Like no, hell no, you're not gonna get your semiconductors to go into your drones. And for everyone out there who thinks Iranians manufacture drones, every single thing inside that drone is produced in Korea or China.

You know, there are ways that China can make life very difficult for Iran, and so can the rest of the world, without the flotilla, as you said, or even CapEx. Yeah. I I th I think you're you're uh undercutting Iran's uh manufacturing capacity a little bit there, but I I don't have the I'll have to do that. Iran has semiconductor capacity. I mean a drone is the same.

It can produce a lot of drone. Yeah, yeah. I mean I I think well, I don't know. I I'll have to do a little I'm I wouldn't be as flippant there as Keep talking. But you know what's interesting? Uh when some Russian drone Yeah, like this was part of the American propaganda during the Russian-Ukraine war. Like uh the Biden administration tried to say that China was supplying Russia with military stuff because their drones had Chinese components.

And it's like, dude, American drones have Chinese components. You know what I mean? Like, I'm not saying anything crazy here. Like, all drones have Chinese components inside of them. Yeah, and and apparently US components. Apparently a large percentage of these are actually traced to the United States because you know, all these things are tr like trade is like water. It will find the cracks, it will go through like nothing is gonna be completely legalized.

Bless Iran. I know they have like a domestically plu produced vehicle, I think, you know. Like obviously very sophisticated country. I'm not you know, it's a civilization, you know, all this stuff. But like, come on, like you can't build a drone without Chinese components. I mean It's just the world we live in, you know. And by the way, by the way, look at the trade uh trade deficit chart. Iran is the third largest supplier of crude to China.

But it has a trade deficit with it. Why do you think that is so? Because it has to import everything from China that makes it an advanced industrial economy. so yeah yeah i mean

Let me let me zoom out the aperture a second here, because it sounds to me like what you're saying is that in twelve months from now we won't In twelve months from now, we won't really be worried about this. And also and tell me if this is too far, that nothing has fundamentally changed. Is that is that a fair characteristic? I think we need a whole podcast. We promised listeners at the beginning of this

That we would talk about something other than Iran. But I think our next episode can just be like, let's not talk about the here and now, let's talk about the long term. And then we can maybe both bring like five items. I I think there's a ton that has changed. The United States of America has shown that it's not necessarily that concerned about its role as a hegemon.

Like, you know, like so that has changed. Your point about Capex, like, yeah, Hormuz is gonna matter less. We're not gonna transit 20. million barrels a day. All sorts of things have changed. Um I do think things have changed, but I do also think that history of the Middle East is very clear. This is why we keep re referencing Dune. Spice must flow. That's not supernatural. It's not It's a product.

of constraints. Uh it's very difficult for one single country in the region to just say, Well, we're not gonna let this energy go through. Because Israelis are mean. It's like you're you got three billion human beings on the other side, including Muslims, your fellow Muslims. in Pakistan, in Bangladesh, who are gonna be like brothers, like hell no. I have starving people here. You know, so that's the dynamic that I think um will in twelve months

enforce itself. And what I would say, Jacob, this is why I don't want to talk about a ceasefire. Most conflicts continue. But they stop mattering to the rest of the world very quickly. And Russia-Ukraine is the best example of this. Eventually we did get the wheat out. Eventually we all found out that the Russian oil embargo was kind of a PR. You know, did Russia really get its oil embargoed? I mean, g Russian oil found its way to the market.

No, I I'm with you. L let's do a whole episode on the long on the long term impact and we'll both bring things that are that are ready. Um okay. Well, last last word then on on so what what do we need to tell the listeners now going forward? Because as you can probably hear from me, like I'm not convinced this is over. I think this has got a few more weeks to run. I think everybody is celebrating way too prematurely here. Um

I think there that there does have to be an end point at some point for Iran. You you sort of heard there, but I would I would be very careful in just booking that this thing is over. It it feels to me like we have more room to run here. That that's my takeaway. What's your I guess uh my takeaway is that I I don't care about the ceasefire. You know, I think there's dynamics operating that are going to move this conflict into a theatre of war that allows for transit of energy.

That's what's happened in every conflict in the Middle East. And this one is not going to be different in that way. So uh I agree with you though on everything you said. I don't think the ceasefire is uh I mean it might hold. At least between US and Iran. But like I I don't think the ceasefire is is how this conflict ends. And I actually don't think that Iran Israel conflict can ever end.

As long as the Islamic Republic is in place. I think they are now in open war and they will remain in open war for as long as the Islamic Republic exists.

Yeah, it's gonna be really it's gonna be really difficult for the Netanyahu government to metabolize some kind of US Iran agreement with the Islamic Republic staying in power. Um it'll be interesting to see. What Israel is the right thing? But listen, but but there are ways for Iran to fight Israel without having Bangladeshis starve to death.

You know, right? I mean we agree with that. They can just hurl missiles at Israel and that will just be the world we live in. And quite frankly, at this point, after Israeli invasion of Lebanon and basically signaling they're going to annex. between like a third and a fifth of Lebanon, again

Sorry to say this, but 99% of humans on the planet Earth are going to be okay with that outcome of this war, where Israel and Iran just hurl missiles at each other. It's like, look, you two guys don't like each other. Go right ahead. Give me my helium.

Yeah, I mean the the Israelis have have changed the reporting that has changed that they're not going to annex all the way to the Latani. But I mean the strikes in Beirut. I mean, they were pretty awful today because then I don't you know, Israel's gonna say that, you know, Hezbollah was hiding in with the civilians. I mean, this isn't your normal southern suburb. I mean, they were attacking downtown Beirut um in a pretty intense and vicious way. I mean, I I posted a

a meme of Daenerys stormborn, you know, going to see the ashes of King's Landing after she's eviscerated it all. Eviscerate's the wrong word, but you know what I mean. Uh incinerated it all. Uh i i Israel's kind of flirting with that. I mean, I I I get why, but it's um yeah, it it was just pretty stark, right, I gotta say. Well, I mean anyway. We didn't talk about the US at all, by the way, uh today, you know, which is which is I think interesting. Um

Well, I almost you know, I almost I and maybe I still will send this. I have not had the balls to hit to really write this out and send this, but I really wanna write like a thousand word or two thousand word essay that is like why I'm no longer covering President Trump. 'Cause I I just I just

What what is there to say at this point? Like it's all just a joke to him and uh and put your T D S like anybody who comes in with T D S, like go put it somewhere else. Like I really don't have time for it. He's just not that important. Like he he is He is manipulating the media cycle. He wants everyone to ignore the fact that his approval rating on the economy is thirty-one percent and that he's messing up all over the place.

Um, and it's just like all all those tweets, it was it was just nonsensical. It was asinating and by covering him constantly and making every single day an episode of the reality T V show, you're just giving him oxygen.

And then he continues doing it as well. So I almost just don't want to cover him anymore. I'm not gonna c I don't wanna cover his tweets. I don't wanna cover what he says. I will only address what the United States actually does in practice. And I will now like fastidiously avoid mentioning the man That's what we do on this show, though. Well I want the clicks and people will click on it if you want to say something about

No, I I disagree with you. I think on this on this podcast we do that. We we do focus on like the material reality that's before us.

And look, the material reality before us is that there's eight. One, two, three, four, five, six, seven, eight. Arlik Burke class destroyers with ages systems in the Persian Gulf. Eight. Out of seventy-four that the United States of America has, there's only eight of them in the Persian Gulf. And he's amassing. We don't have videos, so people don't see giant quotation, amassing 8,000 troops.

You know, I was playing basketball with my crew and one dude is like, bro, oil's going to 200. And I'm like, why? He's like A buddy in eighty second just got like had to sign an NDA. I'm like, all right, bro, do you know how many people are in the fucking eighty second airborne? He's gonna invade Iran with ten thousand people? Pump the brakes. Like what are you guys talking about? That's what I mean. You know, like so his statements and his tweets.

I I understand your frustration. Oh, I gotta say it's kinda fun to call rigdem, but like I understand your s frustration. It's just that if we did focus on the material reality, I think we would have had a higher probability of this at least Trump Trumpian Taco. What army are you going to

use to turn Iran into Stone Age because it's not in the Middle East right now. Like it's not there. And if e if Israel is doing eighty to seventy percent of the strikes on Iran, I question your commitment to this operation from the beginning. By the way, this data is unfortunately not publicly available. You have to pay for it. So um, you know, what I'm actually talking about here is data that unfortunately is behind a paywall. Um

But yeah, I mean, like we know who's striking what targets in Iran and it's it's it's not the US, it's mainly Israel. So Well, and it also just goes to the fact that like the US like I think this is a massive own goal for the US. I think this is a net loss for the US in the long run.

And the US will be fine because the US is super powerful and it can metabolize these losses. And there will be like there will be inflation and there will be economic problems. And I think the midterms are gonna be terrible. But nobody's life in the United States of America is materially impacted. By basically a failed military opportunity. in Iran. Uh as long as it ends. I mean, you know, like

Right. I mean, that's where the Strait of Courmuz could come to, of course, bite, you know, uh America in the butt too. Like, so if you and I are wrong, because you know, you and I are not like actually that different. Like you say two weeks. I say whatever. I I I I feel very uncertain. Like if if anybody's listening to this and trying to peg down like where I am, I'm trying to pin myself down where I am. I'm not sure where I am. There is so much uncertainty and so much that is unclear.

I'm trying to just like look at what's coming in, maximum flexibility, maximum option optionality, be open to the fact that, you know, tomorrow. The tooth fairy could give a presentation with Donald Trump at the White House. We've got a whole new reality. Like I like I don't it is

I I I don't have strong certainty on anything. I I I will say I have strong certainty on where we're going three to five years from now, and Trump just accelerates all those things. Like none of that would be a good idea. Talk about that. Yeah.

I'll put I'll put my view in that. Which will confuse everyone who's not an investor, which is fine. I think there's an eight there's sixty-five percent probability that Brent or oil prices are at seventy dollars in a month. Six. twenty five percent probability. Mm-hmm. And there's thirty five percent probability they're at two hundred dollars. So, what would you do with the information I just gave you? And I'll tell you what you would do. You would definitely not short oil.

Yeah. You see what I mean? Because yeah, yeah, I think I think I'm sanguine. Fine. You know, Marco's whistling past the graveyard as he always does, he always fades. But the issue is that there is no really value. There's not a lot of value. Let me there's not no value, but there's not a lot of value in that view. Because the the view that this all goes off the cliff.

Is not linear. Like even though I think probability is lower, it's still very high. And the cost to the global economy and to the market and to your daily life, if you're listening to this and you're not an investor, you're like, well, how would this impact me? Cannibalism. Mad Max, the original series with Mel Gibson, okay, when he was the Hollywood Darling. Mad Max, the Road Warrior. That's the one you gotta watch. That's what we're talking about.

Okay, what are your what are your two things that you brought up? I'm gonna do one and then you gotta do one. Uh unfortunately I feel like you probably picked this one as well. Um Oh I don't know we'll see. I'm pretty idiosyncratic. But this one this one was pretty big. Uh uh, so we had the KMT chairwoman.

I did not pick this. Go for it. Awesome. Chang Li Wun. So um She um she's actually um recently appointed chairwoman after the loss, of course, by the KMT in the election last year. She uh is has taken over uh KMT, which is the opposition party in Taiwan, which has been in previous election cycles accused accused of trying to cozy up to China. And she just said, Cool, I'm gonna double click on that baby. And she went to China. So why is this important?

It's important because one of the things we're gonna have to talk about in the next episode when talk about the long-term consequences of Iran fiasco is if you're like relying on America to like protect you, you know, how do you feel? You know, America just kinda went along with an Israeli plan and was like, Yeah, we're gonna leave now, you guys figure the shit out, you know, like

There's a toll in the Strait of Hormuz, like, can we do a joint Delaware LLC so we share the profits? You know? So if you're Taiwan, like Let me give my philosophy to folks a little bit. I believe that politicians, you know, I I do a job that Jacob does. We both come from the school of Stratford and the school of George Friedman, which is that politicians are effectively cockroaches.

And I don't mean that in a negative way. I just mean that they're used for social experiments in a laboratory. You're supposed to study them, you're not supposed to talk to them. So I believe that emphasizing intelligence. and source collection, that's mostly bullshit. It doesn't actually work. On occasion it does. On occasion it does. And I obviously have contacts all over the world and blah, blah, blah, blah, blah. But I actually find them find him very

Very useless. They're often talking their book. Often there are single use sources. I mean, I wrote a whole book just on this. Like talking to people, it's very difficult to find alpha in that. Behavior of politicians is extremely important. You have to study that behavior the way you would cockroaches in a lab or mice in a lab. And when I see the chairwoman of the Taiwanese opposition party going to to China, I'm going to assume

That she did some research before she did. Because here's the truth about politicians all of them, whether you like them or you don't. You know who they are? You know what they are. You know what they're really good at? You know what they're actually professionals at? Only one thing. Getting elected. That's what they're doing. That is what they're good at.

And then staying in power. And even in an authoritarian regime, you gotta have some buy-in. You can't just kill everyone. Okay, fine. There's countries where you can, you know, hashtag North Korea. But for the most part, you gotta really be sensitive to anything a politician says and does, because unless you're just a moron. They probably did some research on it. And so I think this is hugely important, Jacob. I think that KMT's got some.

Focus group study in there saying that the median Taiwanese voter is kind of sick and tired of DPP's assertiveness and aggression towards China. And I do think this is very important. I think you we could see a tectonic shift in Taiwanese politics because effectively, and I mean look, if I was living in Taiwan, just as a you know, to to put my own human bias. I'd be like, hey, you know what I don't want to be over the next five years?

You're like, Marco, do you want to be independent? Do you want to be a part of China? I'd be like, I'll tell you what I don't want to be as a Taiwanese. I don't want to be Ukraine. I don't want to be your chessboard upon which you play this stupid game of chess. I want to avoid that. And I'm not sure that the current ruling party, the DPP, is the best way to avoid that.

Yeah, that that's interesting. I mean most of the pol and I'm sure we will get Taiwanese listeners who will push back on this. Um they're a very um they're a very articulate and loud bunch. Um but I mean most of the polling I've seen out of Taiwan is pretty consistent that the Taiwanese just want the status quo and those who want

you know, an embrace of China are relatively low, and those that want independence are relatively low. And I I think to your point, um, there may be fatigue with the DBP. It's also, you know, one of the last things that happened in the most recent round of elections was the emergence Of a potential third party. in China. Maybe supporting them. Thank you.

And China And that's what's in China's interest, ultimately. Like it's not China's I don't think China is under the misapprehension that Taiwan will wake up one morning and say, We will join you, but if Taiwanese politics become messy enough and disjointed enough that there is

pragmatism there and room for back and forth and nobody can really assert themselves. Like that's all really that's all really China wants, I think, in the long term uh view of it. But yeah, I I think it's a really interesting visit to call out. I had not given it the the thought that it was just said I just wanna also emphasize what you just said. The third party emergence is why DPP is still in power.

That's seventy percent of the vote, or maybe it was sixty. It doesn't really matter. I don't think DPP got to forty this time around. The point is. some sixty five percent of the vote is split. And and that vote clearly does want the status quo. I mean, nobody really in Taiwan other than the very old people want reunification with China. And that's like the hardcore KMT Kwam McDong. You know, they believe they yeah, let's reunify on our terms, you know? Uh that's not what this is about.

Do you do you think US actions in Iran Or with Greenland or any of these other things that the Trump administration has done change what the media and voter in Taiwan thinks about. I think so. Uh you can actually see uh so the poll you're referencing is the pole I've used in my research too, and you can see there was a shot of uh enthusiasm for a more assertive, sovereign perspective in Taiwan after the Hong Kong violence. Yep. And and it's definitely been

Also th there was also a big increase, like uh what was it, ninety five, ninety six? Cornell was involved somehow. There was a Taiwanese leader who was coming and the Chinese got upset. But yeah, anyway. But yeah, so like uh and then the pandemic too, you know, the Taiwanese saw how China was handling the pandemic and it was like, Whoa, we don't want to live in that kind of a you know place.

But then Ukraine in 22 really changed and it's been moving the other way. So yeah, I I do think the Taiwanese people are educated, informed, and are watching what's happening in the world. The Hong Kong experience, granted it was nearby, mattered for them. Ukraine experience mattered for them. And I think that was happening with the examples you suggested is important as well. Yeah. Yeah.

Um okay. Yeah, that's interesting. Um Well thank Well yeah, that th that that was not that was not the one I chose. That's cool. It's um the it's it's good.

Though I I had a couple of different candidates here and and Ethiopia was not one of them. And I I didn't pick Ethiopia in part because like it's basically the same backyard and like the Emirates are running around there and things have been a little quiet now. So it it is something to watch about and I'm not particularly an expert on. But the one

I I've had a couple of different things that popped up on my radar th this week that were interesting. But the one that I thought was maybe most interesting, I don't know if you saw this.

Um, German power prices on Eastern Monday um fell into negative territory due to a surge in renewable energy. It was a combination of unusually weak demand and they just had a lot of renewables, like a lot of solar and wind. Um like the the solar one had to be curtailed to keep the system stable. That's how much we're talking about. And battery capacity is pretty low yet. So the Germans don't have a way to capture that excess electricity. So it doesn't really help that much.

Um but I just thought it was interesting because even as we're talking about oil could be two hundred a barrel, thirty five percent chance, and Europe is super exposed to all of this. I just I I even I just finished speaking at an event and some

l I I hope he's listening. Some Luxembourg dairy farmer wanted to corner me afterwards and talk about his negative views on the European Union and how much better his life is uh running a dairy in Texas than it is gonna be in Luxembourg. And by the way, he's probably right about that'cause of the way that the European Union has gone after

farmers. Uh but anyway, um neither here nor there. Um but I just feel like I s I hear so much doom and gloom about Europe. But like if Germany's able to produce that kind of energy off of renewables, um Great, call the Chinese, make a deal, get some battery capacity. There's a nice, you know, give and take here. Let's get some battery capacity going.

Um and like that's not like building new nuclear reactors or anything else like that. You could like reasonably I mean, you're not gonna power the grid entirely by that, but if you can take

you know, huge chunks of time where you're being powered by that and store that power with batteries. That China has the technology and China's really good at it. I mean, that's a that's a perfect EU China lineup and a different way for the EU to look at the world and the different way that they're looking at the Middle East. So I just You know, I I one of my longer term takes and I think you agree with this is that energy is probably deflationary.

by the time we get to the middle of the next decade. It's like hard to wrap our brains around that right now with all the headlines right now. Um so I'm always looking for for those little factoids and I thought that was a good one. I on on honorable mention I had

uh the president of Ecuador talking about welcoming US troops to help front uh confront the security crisis in his country. Um and I also saw uh did you um I mean this isn't like big news. I should have known this already. Um But apparently like Indian port

are much more efficient than they were before. They're actually the becoming one of the world's fastest ports in the world, according to the World Bank's logistics performance index report. The whole thing with India is that their logistics and their infrastructure suck.

Um, but their turnaround time in ports is now better than Singapore's, better than the UAE's, better than Germany's. So I that made me stop for a second and think, huh, is India finally like getting good at infrastructure? Now that doesn't the highways and the and the railways that's social doesn't mean anything there. Yeah. I thought that was like that was on my list.

That's that's yeah, I did not see that. Um that is really interesting. I had uh two other items that you know I we didn't really talk about the shakeup in the drop cabinet.

Like I love the way you're like, Yeah, and we want. No, no, we can't. That's fine. Let's talk about... You tell me, like if you want to. I mean, I thought um it was interesting. How how how long is Kristol Meth Rumsfeld gonna be Krystal Meth Rumsfeld? That's what I mean. Uh I mean it it wasn't that big of a shakeup. I mean I think Pam Bomb the uh departure is more domestic politics than anything else, obviously. Um but uh you know there was this

Very like mysterious Axios report, as they all are. Uh, and by the way, just to be clear, Axios gets things wrong. For those of you who like study the inside baseball of DC, there's this like myth that they're always on point with the Trump administration. I mean, they are, but it's sometimes they're not. You know, so like I've I've seen Oxio's reports turn out to be wrong. Anyways, side note, uh they did um say that more, there will be more shakeup.

So it is interesting to see who that might be. Yeah, I mean Trump has been fairly consistent so far with his cabinet members. In his first term, I mean, this was uh he liked to he liked to rinse and repeat. So um and yeah, I mean he's he's probably gonna be looking for some people to blame for this failed military operation in Iran. And like I said, like I mean, the polling on this is incredible. His approval rating on the economy in the latest poll that I saw was 31%. That is garbage.

That's worse than what Biden was dealing with in the in the 2022 inflation crisis. So he can appear with as many Easter bunnies as he wants to on the White House lawn. If if thirty-one percent of Americans approve him on the economy and everybody else is against him. Like, this is gonna get really bumpy for him really quickly. We should spend some time on that. Um I think we might as well spend it now. I mean

Uh polymarket is saying that there's now almost fifty or maybe even above fifty percent chance that Democrats carry I mean you can check uh we can check what it is, but like it's it's been surging that they're gonna carry the Senate. Um, that was not supposed to happen. You know, Democrats flipping the house, yes. Then there you had a couple of situations, Wisconsin Supreme Court, uh, I think election it was.

That was confusing, but sure. And then there was another election in Virginia or Georgia. I think Georgia, where you know, like the Democrats are gaining massively, like they're making 20, 30 percent gains. in districts that Trump carried by like 30, 40%. They're they're still losing, but they're losing by very small margins. That puts a lot of states that are up for election into contention. That we're not supposed to be in contention. So let's just uh bring that up here.

Um in terms of the election itself. So the obvious thing is that we're going to do and I... And I also just think that like th there's a power vacuum emerging in US politics and I don't know who's gonna fill it. If you told me it's a right wing populist who takes over Trump, cool. There's left wing populists, AOC and Mamdanis who were there waiting on the wings. There are your moderates

who are in the middle who might be able to claim it. But I think there's going to be a power vacuum here after the midterms, and it's gonna be really interesting to see what US politics churns out, because it could be A Reaganite figure. It could be like somebody who is completely off the walls. It could be everything in between. Like, I don't think that Trump's.

monopoly on the attention for politics in the country is going to last that much longer. It's on I think it's on life support. And you wouldn't know it because the media is covering every single tweet and breath and thing. Like it's the most important thing in the universe. And it's like

Th this is the death rattle of his presidency. Like he cannot keep going like this. He can shoot whoever he wants on Fifth Avenue. He can't manage the economy into the ground and have a 31% approval rating on the economy. Look, look, I think we l let's put it aside because that's more of a twenty eight question that you're bringing up.

You know. I'm gonna just go through a list of states that were not supposed to be in play. Um and these are uh by the way, I'm going by uh I don't know if uh listeners, if you wanna really be informed about US politics, Cook Political Report is great. Amy Walter is the one that focuses on these races. And so she rates them as lean Republican, lean Democrat, solid Republican, solid Democrat. So I'm not going to go into solid states just to give Republicans some credit.

But you've got Alaska. So Alaska leans Republican, but in the last election, uh basically Republican uh candidate won by fifty-three point nine percent of the vote. Given some of the stuff that we're seeing where re where Democrats are winning uh swings of twenty, thirty percent, like Alaska's now in place. Like Alaska could have a Democratic senator in uh 2026 or January 27. The next one I want to bring up is Georgia, which is a toss-up.

Oh, sorry, no, no, never mind. That's a Democrat, uh, Florida. So Florida has an election, um, and it's going to pit basically, um you know. It's going to pit Ashley Moody? Wait, what is this? So she is yeah, she was appointed. Um, because Marco Rubio resigned to be the Secretary of State. Got it. Okay. I didn't even know who she was, but there you go.

Hey man, I've been spending a lot of time with the Middle East. Give you a break. But yeah, so uh Ashley mm so you've got somebody who nobody basically knows at all. Uh in Florida. She was attorney general. Great. Blah, blah, blah. And um, you know, like Trump just lost Mar-a-Lago to a Democratic candidate in the special election. So yeah, I'm gonna I'm gonna just say that Florida is now not solid Republican. I think that's up um also um in in potential

situation. Then you got Iowa. Tends to be very strongly Republican, but Joni Ernst uh is retiring and in the last election, fifty-one point seventy four percent voted for. Um, for her. So this is now also, I think, a toss up. Maine, Susan Collins is gonna fight for her life. I mean, that's obvious.

Uh, then you've got uh Mississippi. Well, I think that's solid. Uh let's see, Ohio. John Husted appointed lean Republican. I mean,'cause J D Vance became the vice president, obviously. So that's another problem. Um, and then uh the final one is Texas, where uh Tel Rico is absolutely crushing it and Jorn Cornyn, um, you know, if he ends up being the candidate, I mean, he only won with 53.5% of the vote.

So I just picked Texas, one, Ohio, two. Oh sorry, I forgot to say North Carolina, where Tom Tillis is retiring, and quite frankly, is you know, like more Democrat than Democrat. So that's

He should run for president. I keep on forgetting to call his staff and tell them to listen to the other. He's he's he's one of those moderates down the middle who could make some noise. I think they're not there are not a whole lot of them who have the receipts for like being sane in the current environment. He's actually

Oh no, I think he he doesn't just have a receipt to be the president. He has a receipt to be uh a cousin on our podcast. I think he actually has more humor than you and me. All right, so Texas is one, Ohio is two, North Carolina is three, uh you've got uh I'm gonna, you know, I'm gonna say Montana is four. You've got Maine is five, Iowa six. Uh Florida seven, Alaska eight. Massacre is the only way to describe what I just put together.

I think CNN needs to call you and and say it's time to put these other guys out to pasture. Let's put you in front of the board, uh hitting the little countries on on election day. I don't really fucking do that. I mean, I just I just like openly admitted I don't know who Ashley Moody is. And she is the senator from Florida. I'm sorry, Senator Moody. That's right. Uh apologize.

Apologies. No, and by the way, I also just want to correct you on something. Um, you absolutely can generate alpha by talking to politicians, especially if you short oil four hours before a ceasefire deal is announced twenty four hours after you threaten civilizational genocide against. Fair, fair. I just

Just that that's correct. If you are yes, you have insider information of that quality. Yes, that's true. Uh okay, so um wait, did we did we miss something? Were we supposed to bring did I was I supposed to bring another one? Oh yeah, I did. I had another one. Very quickly. What what are Or close what what c close us out on.

I will close you on this. Um, one of our longtime listeners, um oh by the way, before I do this, one one listener sent me a uh a a tweet. A good friend of mine works for a hedge fund. We will not say who he is, but he keeps trying to get on the pod.

And he his contribution was really good. He forwarded to me a great tweet. So this is an excellent tweet. Uh the original uh guy who wrote it is at the main wonk. Maine as in the state main, the main wonk. And the tweet is: Mavericks got more for Luca Doncic than Trump got from Iran. That's true. And then it was like, Yeah, but if Cooper Flag is part of that deal, you know? So then he he proposed that maybe we should modify that and say that the Clippers got more for uh

No wait, sorry, how does this work? Yeah, the clippers got more for shy. Wait one second, one second, let me set this up, Jacob. The Clippers got more for Shai Gilgas Alexander, uh two-time MVP, Danil Galinari. Their 2022 first-round pick, their 24 first-round pick, their 26 first-round pick, their my Miami first-round pick. Uh, and then three more swap picks. For Paul George. They got more for that. They got Paul George back than Trump got for the deal later on.

Yeah, I mean it's it's objectively true. I will read a tweet from Trump, March sixth, twenty twenty six. Quote, there will be no deal with Iran except unconditional surrender. After that, and the selection of a great and acceptable leader, we and many of our wonderful partners and very brave allies and are many of our wonderful and very brave allies and partners.

Will work tirelessly to bring Iran back from the brink of dungeon. Iran will have a gr great future. Make Iran great again. Thank you for your attention to this matter. Instead he's gonna go tell NATO that he's gonna This is Nico Harrison saying that defense wins championships. And you got yourself a 6'11 power forward who hasn't played more than 55 games. since the pandemic.

It's it's even more nuanced than that because defense does win championships, but if you're going to achieve defense by a acquiring a guy who refuses to play the position that he should play and can't stay healthy, you're not net going to have any defense. I use Davis, A D, I use him when I want to scold my children.

You know, stop dragging your ass, pick up your stuff, let's go. You're being A D. You know, like anyways, uh the last thing, another listeners of ours uh did want to say, we should talk about anthropic. It's releasing a new uh model. I will say that I am starting to change my view really on on some of the AI stuff.

Um, in terms that I I do th like look, winners and losers, we're not gonna talk markets. That's not what I'm talking about. I just do think that from a predictivity perspective, I am starting to see like real Real application, you know, we we show a lot of charts at BCA research that show how businesses are struggling to adopt AI.

Uh, I think that survey data is not great. It's choppy, it goes up and down. And the reality is that I think everyone is using massive doses of AI and it is increasing productivity. So I think that that's something we should also dedicate a whole episode to at some point.

I'm glad you said that. We should devote a whole episode to it and I will tell you that I That's the Claude has changed my life, my analytical life over the past six. Same. Claude is awesome. Like I I I I got somebody to hold my hand through some stuff and to set up some things and I've been playing and doing some stuff and it is like

It is wow. And and I I always sort of knew it was. I'd actually been since the beginning of the year meaning to sit down and like really do some stuff with it. And just, I mean, it's been Venezuela to Greenland to Iran, but I was finally like enough of this. Like I need to play with it. And um and yeah, like it there's a whole conversation to be had there. But yes, I agree with you completely. And it's it's like changing the way I do my workflow in a

Yeah, absolutely. Same. Um, and I'm a Luddite. So boom, there you go. Well, that's one of the amazing things about it. Like you can like I mean, I'm I'm I don't I'm not a Luddite, but like Like you don't have to know how to code in order to do things that require coding. Like that in and of itself is pretty cool. But also just oh yeah. I mean, we'll we'll do a whole entire episode on it. It's it's pretty, it's pretty well.

Yeah, uh one thing I like about I just wanna say this at the end, like Claude knows like they're really good at this, you know, like they really did this. I I asked Claude to make a chart, you know. And it wasn't like I mean, it was kind of like a counter like you'd you gotta be an expert at what we do to ask Law to make this chart. But it spits back and it goes like

Wow, that was a really intuitive and like contra that was like a really counterintuitive like correlation. I'm really glad you asked me that question. I was like, oh gee, thanks. I'm like, no, it's a robot. It's making you feel good so you keep using it

Yeah, there was that tweet. Somewhere out there, an idiot is being told by an LLM right now that they're dead. I actually told So actually, my my AI assistant is named Sally, and I told Sally, under no circumstances are you to compliment me on anything. Okay. I don't want to hear I asked Claude to call me the omnipresent authority figure.

Just so I've the exact opposite. But you know what? We're self-aware, so it's okay. It's okay. But that's what that's what Claude calls me every morning. He's like, you know, or look at me, he's saying he. It says, good morning, omnipresent authority figure. Now for those of you who don't know what the reference is, you gotta Google it. It's very nuanced and geeky. And so it is ironic and it's a joke, but that's what I made a calling. So there you go.

I mean, you know, when when I was student council president in high school, I tried to get them to change the title from president to emperor in my first meeting. It did not go particularly well. So I I enjoy that you're uh living your best life. Well I still have a job. Thanks, Blood.

Hey, w we're gonna have job like my engagement with Sally over the p last couple of weeks convinced me all the more so that I'm gonna have a great job and for a long time. Like it it can't do it without me, but it is like supercharging. Well we could talk about Like really meaningful. We talk about that on the next next time we talk about AI. But before that, one final question. Does does your wife know you call it Sally?

Uh I don't know if she knows that I call my AI assistant Sally now, but I've like my car is Sally. My favorite pool cue is named Sally. Like Sally is just my stand in name for inanimate objects in my life that I'm close to. So if Megan is listening to this, like she knows she I saved Colin. I'm just saying she knows, like Sally is my standard, has always been my standard since

I don't know what it is about Sally like when I get a dog eventually w I I've I'm I've promised I'm not getting a dog until all of my children are have diapers, but when I get a dog eventually, her name will also be Sally. Like this is a recurrence. All right. Fine. Fine. All right. Alright, we'll talk to y'all later.