Peter Tchir: America’s ‘Pre-War World’ and Its Investing Playbook
Summary
Investment Theme: The podcast discusses a shift from a post-war to a pre-war world, emphasizing the importance of production for security, including rare earths, critical minerals, and chips, as the new ESG.
Market Outlook: The conversation highlights the potential for higher market multiples due to increased efficiency and the strategic importance of self-sufficiency in critical industries.
Geopolitical Insights: The discussion covers geopolitical tensions, particularly between the US and China, focusing on tariffs, rare earth minerals, and the strategic importance of maintaining a competitive edge in technology and manufacturing.
Opportunities: Investment opportunities are identified in companies involved in critical minerals, chips, and sectors that align with the US government's strategic goals, such as Intel and large-cap energy companies.
Technological Impact: The role of AI and its potential to drive market efficiency and higher stock multiples is explored, with a focus on the need for increased electricity production to support technological advancements.
Crypto and Stablecoins: The podcast discusses the geopolitical implications of stablecoins in exporting the US dollar and the potential for crypto to play a significant role in the future economy, with a focus on Ethereum and Bitcoin.
Energy and Nuclear Power: The importance of nuclear power as a long-term solution for energy needs is emphasized, alongside solar energy as a short-term bridge, highlighting the need for a diverse energy strategy.
Key Takeaways: The overall investment perspective suggests focusing on sectors that align with national security priorities and technological advancements, while being aware of geopolitical risks and opportunities.
Transcript
We may have moved from a post-war world to a pre-war world. Production for security. So they want rarers, critical minerals, chips. This production for security might be the new ESG. You're going to see much higher multiples for the entire stock market. Every company in the US should trade at a higher multiple because they can be more efficient. And I think that becomes the next wave. [Music] Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Ladies and gentlemen, welcome back to Wealthon. And my name is Chris Perkins. I'm the president of Coin Fund. And today I am with one of the greatest minds in macro, Peter Cheer, who is the head of macro strategy at Academy Securities. Uh a veteran of the fixed income trenches and and someone who really has a differentiated view on geopolitical impacts on macro uh Academy Securities. I'm actually a U member of the advisory board. They um they really have an incredible advisory board of generals and admirals with very very uh amazing geopolitical insights. So with that, Peter, welcome to the show. >> Hey, thanks a lot for having me. >> I mean, there's so much going on right now. Uh your your perspective couldn't be more timely, but maybe we could just start with a little bit of background uh around uh who you are. >> Yeah, sure. My background uh is more traditional than many of my colleagues at Academy Securities, but I started in Wall Street uh mid90s. I started in the credit derivatives area, did a lot of structured products, wound up then trading high yield cash and CDS, and ultimately actually helped create the CDX suite of indices. So I was on the credit side, not the big short ABX side, though I did trade some of that. Um, and then wound up developing a business working with large asset managers, helping them kind of, you know, on their risk profile, largely fixed income oriented, but went beyond that. and then joined academy almost eight years ago where not only do I get to talk to asset managers, I actually spend about half my time talking to corporations and increasingly I'm spending some of my time with the large municipal issuers and really helping every independent navigate this macro landscape with kind of my fixed income and trading background and also layering in a lot of what Academy Securities does on the geopolitical front. So I think it's been pretty interesting especially around China where I think we've kind of led the street in terms of our view. >> Yeah, I mean there's so much going on. I'll also note that is it true that you were the all-time leading point holder uh on Waterloo as a place kicker. Is that right? >> I was it lasted, you know, a number of years. I think I'm still like number four or something like that. So, not bad, but >> you're getting better. It was kind of fun when it happened. >> All right, so let's get into it. As you said, I mean, there's so much going on right now. You got Trump running around the Middle East trying to put an end to the Gaza the Gaza uh issue and and the war going down there with Israel. You have China. Um Trump tweets out on Friday night uh that hey we're putting 100% tariffs on China you the 24-hour markets that I work in crypto you know crash they've come back a little bit um I mean you've got stuff going on all over the place you have the government shutdown maybe where are we in the cycle what's going on in the macro picture let's start high level and like we'll work our way down >> sure so I'll start one thing I think is kind of positive I think kind of the initiative of peace through strength where you know the Trump administration really wants to reestablish lish, you know, this peace through strength. And that really requires deterrence. And, you know, I think what we've been talking about here at Academy, it's uncomfortable for some, is that you really only deter people if you show a willingness to use your capabilities. And we did that with the Iran attack. And now we're starting to talk about giving Ukraine more weaponry. So, I don't know if there's a direct link from our attack on Iran's nuclear facilities to the um events today where the hostages were exchanged, but I think there probably is a fairly degree of link linkage where you use that force, people become a bit scared of you. Again, I think that's what now we're trying to do on Putin. So, I think it's uncomfortable some people to watch kind of the military buildup and the potential use of military forces and the risk to our soldiers. Having said that, it's really the only way to reestablish deterrence after years, if not decades, of probably being very conservative and drawing lines in the sand that we didn't pass. So, I think there's progress being made there. I actually like what Trump is now doing in terms of putting pressure on Putin. So, I think that could, you know, he follows the same sort of playback. Hey, we tried to be nice, now we push back. Let's go from there. So, that's kind of, you know, the piece through strength. I think that's going well. I think the markets are getting maybe this taco trade a little bit wrong today. M >> yes we backed off a little bit but when I look at this set of tariffs to me it's really different it's much more along the lines we thought we were going to go into the whole tariff war one Trump seems to be trying to work with the rest of the world right when he spoke on Friday when he's talked right he's kind of trying to get the rest of the world to go with us a little bit so you know if you go back to liberation day where it was a broad swath of tariffs against everyone or is Canada Mexico this is very specific the other thing though that I think is different is I think this time China's pushing a little bit every single point of time we've done with tariffs since the Trump administration. It is Trump and his administration initiating something and then ultimately backing down, changing it. This time I really do think it is China pushing on these rare earths and critical minerals where they understand they potentially have an advantage here. And what I think might have compelled them is, you know, at Academy, we've been talking about production for security. We've been hoping it would have happened long ago. We thought the chips act helped a little bit in that front, but very little. Um there were so many strings attached to that chips money. But you started seeing all these investments whether it's Intel, MP, um, LAC, so the lithium company, you getting these investments. I think China might be seeing, hey, the US is finally trying to, you know, do something about rarest and critical minerals. Maybe we need to use our leverage while we can. So I I think Trump backed down a little bit, but this one feels very different to me. Normally, it's him escalating and kind of everyone kind of freaks out and then he backs down. I think this time we were pushed into it and I'm not sure that China isn't willing to push the envelope. M so you talked about taco and I think that means Trump always chickens out where essentially people wait for him to say something crazy um and then market tanks and then he caves and so for some they're like hey just you know buy on that dip every single time because he's going to cave but but you're saying right now those days are potentially over particularly visa v China c can you unpack that what does that mean >> yeah so you know one thing we always try and do is okay what should what would China be doing or if I was China and I'm trying to win this trade war. I'm trying to do something. What would I be doing? And their biggest negotiating point is the rare earth and critical minerals. And you know, it's not the rarest and critical minerals themselves. It's the processed and refined versions of those. Basically, the world seated refining and processing to China. It's a dirty process. It um you know, it it's definitely energy intensive, but they control about 90% of that. And I keep coming back to you know the CEO of Whirlpool I think said one thing that resonated to me during COVID and he was like a washing machine that's not n that's only 99% done is not done and so I think when we think of these rarest and critical minerals it's fairly easy to dismiss them but they are often crucial components and without those components we can't build weapon systems we have trouble making certain types of chips there's all these things that go together so I think China's playing that card against us or against China we've held the chips card, right? We Nvidia chips are the best in the world at AI. We have other good chip designs. China has want Chinese companies have wanted our chips. And my sense is, and this is a guess, and I think it's a big risky bet by China. They are starting to prepare to be okay, let's say we're cut off from Nvidia chips. Let's try and make our own chips. You know, to some degree, necessity is the mother of invention. China's willing to do that. They certainly had success with Huawei. You look at BYD automobiles, not the same not not as difficult as making a you know high quality semiconductor, but BYYD is everywhere. So I would not be surprised that China's saying, "Hey, this might be as good a time as any to push the US because we have a big advantage in these rarest and critical minerals and we're willing to take the shot on chips." This October, Wealthian's putting the spotlight on silver with expert interviews, deep analysis, and a special in-depth report from our partners at SCP Resource Finance. To receive this report and other exclusive benefits, you can sign up to become an accredited investor with Wealthon at wealth.com/acredited or by finding the link in the description below. Speaking of silver, Wealthon will be on the ground in Toronto for the SCP Resource Finance second global silver conference happening on Thursday, October 23rd. Legendary investor Eric Sprat headlines the event alongside 15 silver mining companies presenting their top projects. It's a must attend for anyone serious about investing in silver. Tickets, both in person and virtual, are now available. Find out more in the description below. What's what's harder to do? Um, build out a rare earth mineral capability like China's done. And to your point, we have plenty of rare earths in the United States. We just don't have the facilities to refine them, right? So, is it is it easier to build that out or is it easier to build out Nvidia, which is, you know, the chips that are needed? Who's going to win? >> Right. I I think it's much easier to build out that rarest and critical minerals processing, right? Because we don't even have to find the rarest and critical minerals. We can go I'm sure countries that produce cobalt, lithium, we will be able to buy some if we want. So to me, it's much more about regulatory. It's going to be a 3 to sevenyear process. It's not going to happen overnight. It's going to be a lot about deregulation. So I think once we start on that path, I mean, you know, just today JP Morgan announced they want to put 1.5 trillion into, you know, basically what we've been calling production for security. So they want to rarest, critical minerals, chips. Um, you know, to me, you know, I'm going to say this half jokingly, but I think it might be true. This production for security might be the new ESG. Remember everything had to be ESG 5 years ago and now all those right and now everyone's like hey what do we actually need to produce to be reasonably self-sufficient and even if you think about sustainability right the and you know ESG well how can you be sustainable if you don't make the things that you need like electricity um like the lithium dioxide and even from governance it's kind of crappy governance not to have those things so I I I think we're going to see a lot of growth there I think it's far harder to build out a good chip techn technology. >> Got it. So the thesis then is the new ESG is the is the decoupling. It's how do you prov how do you de how do you end up with that resiliency that where you're self you're self-sufficient and and and and and you don't rely on others. That's the new ESG. That's that's pretty interesting. >> Yeah. Right. Where and maybe you don't have to be 100% self but you have to have a good solid baseline and maybe you start working with your allies. And what's really interesting, I've seen a lot of articles out of Europe, who was clearly the leader in ESG and, you know, most focused on it, talking about really questioning why did we focus so much on, you know, carbon emissions when China just grew their carbon emissions. So basically, we hurt our carbon emissions, hurt our cost of electricity, and gave it all to China, and China's still polluting the world. So I I think there's a big rethink. >> But you mentioned allies, and I thought that, you know, as part of the self-sufficiency, the idea is to have less reliance on allies. How does that play out? Is it more just a transactional type relationship? >> Yeah. And I think less doesn't mean none. So we kind of, you know, at liberation day felt like we were going at it completely alone. And the reality is there are competitive advantages, right? Canada, for example, has a lot of potach, right? So it's going to be a very difficult way for us to create a pod ash industry. Do we even need to do that? So I think there's some softening of that tone. And maybe we need to be 60% self-sufficient or 70%, but we can rely on allies for 30 to 40%. Again, I don't think you want to be overly dependent, but I think we can go back to kind of a little bit of circle where that trade makes sense. And we are starting, I think, to try and pull the world away from China again, which I thought was the right strategy going forward. We didn't really follow that initially, but just as tone seems much different towards the rest of the world. >> Got it. So, we're talking about rare earth and minerals. Um, what about manufacturing capabilities? Is is that going to end up 100% back in the States? Is that the end goal here? >> Um, you know, I I think that's less important. I think if you kind of have these key components and you can make the high-end things that you need that's critical right I think chips right that is high-end I think two of the things that I think are slowly seeping into the administration I think Besson is really really good at this is >> trade as we look you know Trump was focused on trade balances which only includes goods and I think he has a lot of people reminding hey we dominate in services we provide services especially technology services the globe so it's not that bad and if you put any sort of metric on profitability we are probably blowing away most countries, right? I think we probably make more profit and what little we sell to China than vice versa. >> So, I I think there's going to be a little bit more thought through this and it's going to be the high-end things that we need to do, the things that maybe are robotic, but things that and clearly for our military, I think that has to be brought back much more here where all the component pieces are actually here and we have full supply chains. >> Yeah, I remember building businesses in China. It's you don't make money. It's impossible to make money when you're a US company trying to build in China. very very difficult. So, so how do you play? Yeah, go ahead. >> No, I I think that's true. And I think you know a lot of companies were already pulling out of China. Where they were pulling to was um and I think right now what we're dealing with unfortunately on this global scale is it's easy to think of China circa 2005 kind of a maker of cheap goods with not a lot of IP. And the China we're competing with in 2025 has become very sophisticated at manufacturing. They've done it for 20 30 years. we gave it to them >> and they have a lot of IP. I think a lot of it was acquired illegally, but they have the IP. So, I think when we're thinking about that competition with China, it's important to remember we're competing with not an equal, but someone who is much different than what we kind of have, you know, >> intuitively in our mindset or at least I have sometimes. >> So then how do you play against that backdrop? How do you play these markets if you're an investor? >> You know, I I think you still wind up liking companies like Intel, right? And just you know I think we people spend too much time trying to think what they would do if they were in charge and well we know who's in charge right it's the president uh Trump and what does he like to do one thing he likes to do is win right so we the country invested 10% in intel he doesn't want that to go down I suspect he is going to be either softly or more aggressively suggesting people hey you need to use Intel you need to do these things right so I think he will try and grow that business there may be other investments I think he's going to look for a partner in biotech and pharma where they can do the same sort of thing. And I honestly think you're supposed to now, you know, the the big kind of uh trade has been a lot of these small cap whether it's uranium, lithium. I think you want to start going back and looking at some of the big cap energy companies, right? These companies and the large cap, they're experts at extracting minerals and resources from the ground globally. I think they get looped into this a little bit more. And you know, this sounds weird and it's probably a bit early. I think solar has been left for dead. And I think any sort of real plan involves nuclear, it involves, you know, clean coal, it involves natural gas, but I think it has to involve solar. And as he goes through, I think he'll pivot and realize, hey, if I need to get electricity up and running, I need solar. So that could be something that's interesting. >> So the thesis that you're saying is double down on any country and any company the US is investing in and try to figure out what else is strategic uh, you know, for that resiliency that that that the government craves. get get into that sector and good things happen. anything that you can see is if you think what should we have for national security and what do we need and those companies so again some of the big uh engineering firms will probably do very well right because someone's going to have to build these projects >> and I think it's still a bit early I'd start looking for these companies overseas too I think everyone's starting to realize this and part of it comes full circle to whether it was initially Bitcoin mining or crypto mining and now you got the AI surge in EV the demand for electricity usage is increasing in the US for the first time ever you're seeing those prices and you I was in England, got in a fight with someone, you know, very senior person and maybe fight's not quite the right word, >> but they were adamant that England can compete in AI without having their own domestic electricity production. I'm like, that's just insane. You are going to be at a competitive disadvantage. You need to produce electricity cheaply to get that data center and AI. So, that kind of all folds together to a really nice thing here, but I think other countries will slowly get the joke. So, you know, some say that AI is going to be one of the biggest deflationary um inputs to the econ the economy has ever seen. Um how do you see obviously AI is driving that insatiable need for energy? But how else are you seeing AI fitting into this this macro picture here and going forward? you know, one side I won't spend much time on, but I think on the military side and, you know, geopolitics, you know, the we're always at a bit of a disadvantage because, you know, our enemies will use cyber probably more aggressively than we will. They will use AI to try and shape and influence our culture probably in ways that we wouldn't necessarily do in theirs. So, I think that's something we got to be very vigilant on. And, you know, some of the generals and admirals often talk about, you know, moving to autonomous weapons. We will probably always be slightly slower and more careful on what we allow an autonomous weapon system to do versus Chinese or Russians where, you know, we value life. We value our own lives, but we are also cautious about civilians. And I'm not sure that would be the case. I think in our real world, it's just really interesting. I think it's opening up a whole new landscape trying to figure out how to use agents, how agents communicate to each other. And but it also, you know, every step of the way it increases new issues, new problems. Um, and I think the most difficult thing we're trying to see is what I'm seeing in businesses is people are finding uses for it on a pretty small scale where someone can glance over quickly and say, "Yeah, that looks okay." And so instead of spending an hour typing something, it took me five minutes. >> Yeah. >> I'm finding it more difficult for people to kind of give up control to decisions where they don't really understand how AI said we should build this plant there. And I think there's this ongoing concern, well, if we build the plant there and it turns out right or incorrect, why didn't we see it coming? And you know, we as humans, we all make wrong mistakes, right? There's our history's littered with wrong mistakes, but we go through a process and we're comfortable. Oh, well, at least we took these steps to make that wrong mistake and here's why it turned out wrong. >> So, that's going to be, I think, the tricky part in the evolution of AI to really kind of drive >> business efficiency. >> Yeah, I hear you. But at the same time, I feel like these are growing pains. Like the pace of change and the like the amount of the these outputs are improving so fast. Like you know, a lot of us who use chat GPT, you check your work. It feels like it keeps getting better. And so like I don't know. I feel like once this thing matures, you know, we're going to be more and more comfortable. Like early days of the internet, you know, you would never put your credit card on there. Like you get ripped off. Now you do it all the time. It's like nothing. So I don't know. As it matures, I mean, isn't that going to change? I I think so though I think FSD might still be like a good analogy where there is I think it's going to be held to a higher standard. So right you know people unfortunately get in accidents all the time. People unfortunately kill each other in car accidents and yet FSD I think is going to be held to a higher standard before it's kind of turned loose. I'm not sure that's the right thing to do but I feel that you'll have the same thing where the techn is here but there's some >> reluctance. I don't know what will break it and eventually it'll be probably just like you know you start seeing the Whamos or you know the Tesla robo taxis some company will just let it run wild and be super successful and everyone will throw in the towel on the restrictions and let it go. >> But I I that to me I think that's the one thing there's this higher standard I think it's being held to. >> But as an investor isn't that isn't that the opportunity right? I think humans by their nature are very very scared of technology. They're scared to death of it because they don't quite understand it. They can't quite figure it out. And if you can overcome that natural fear that most humans have, I mean from an investment perspective, I mean there in lies the opportunity. No. >> Yeah. And I think as you said and I think I'm kind of there with you is that I think as it really takes hold. You're going to see much higher multiples for the entire stock market. Right. It's I think the you know hyperscalers they've already reaped a lot of the benefits, right? They are trading at very high multiples. They're trading as though they're going to sell lots of this going forward. >> Yeah. What we haven't seen is this real belief that every company in the US should trade at a higher multiple because they can be more efficient. And I think that becomes the next wave, right? People start really adopting it, using it, and seeing those efficiencies. They're cutting costs, they're cutting, you know, lead times, they're doing all sorts of things. And then I think you'll actually see a much higher multiple for the overall market. And, you know, I think when you look at some of these equal weighted indices that have underperformed the market weighted because so much has acred to the um hyperscalers, you'll find it coming from those. And again, I think you're going to find it in small companies. The innovators are out there. And I think that's the one beauty of what the US does really well compared to China. We let people innovate, try and find the next big thing and rise from nowhere. When I think we're competing with China, I think why they'll have difficulty competing with us in AI. They tend to be very linear. They put their marching orders in >> and if they get it at all wrong, they wind up going back to square one. >> Got it. Yeah. I was watching Andrew Ross Sorcin last night on 60 Minutes and he's talking about his new book um that talks about uh the Great Depression. Uh he he's worried about bubbles forming. A lot of people are talking about bubbles um and they're like, "Hey, you know, we're seeing this democratization of of markets that happened back in 1929 and and but it sounds like you have the opposite view that you think this technology is going to unleash additional value and we're not we haven't seen uh the top yet. We're still going up from a stock market perspective. Is that right? >> Yeah, I think so. I think to me the biggest risk to the only way I think we have problems is if we don't build out electricity fast enough to meet the demand and either we see the business elsewhere or electricity prices go so high that individuals feel really pressured by that. So I'm actually more worried about the electricity cost I think than the human job cost. I think people will figure it out. People will adapt. There will be job losses in some fields. There'll be new things created. Um you know and you know as everyone every simple person figures out aentic AI or something to book their travel some smart people are going to figure out hey some really high-end customers want to be handheld and there you know there's always opportunity right for white glove service for you know that sort of treatment. So again I think people are going to figure it out. There'll be interesting opportunities. >> Yeah. Yeah, I mean look, I went to the Naval Academy. You know, your company is very much very close to the Naval Academy as well. Uh you grow up when when you go to a school like that just so enamored with the opportunity around nuclear power and against this backdrop of of deregulation. I have to think that nuclear is the future. I mean that that's it. That's that's the way we solve for this. You mentioned solar. Solar is wonderful and I'm sure it's going to help, but isn't nuclear the bottom line? Yeah. >> Yeah. Yeah. So, I think nuclear is the big one and the only unfortunate thing I think that's like a 5 to 15year sort of buildup. >> Um, and you know, I'm very comfortable with it. One of the clients we met, it's a large energy producer. They do some nukes and China continues to invite them over to conferences and stuff. So, they're like, well, you know, China still wants this. And you know, unfortunately, you can probably find it, you know, on Twitter, the internet, anywhere quickly. If you look at the number of nukes being built, I think China's at 25 plus. We're at two or three. And I think if you look and you know Elon Musk tweets about the solar all the time. So to me solar is the thing that gets us through the next three to seven years >> while we build a core of that and there'll be a mix of gasoline and other fire things that do you know in the near term but I think it's got to be a whole broad package and it's got to be thought through and I definitely own some nuke companies. I own some uranium companies because I think that has to be a part of it. One of Can I tell you one interesting anecdote about the nukes? Because I know >> you know you and the Navy use it and I think actually I'll tell you two funny things. There was once you think it was Hawaii was complaining when they were looking at you know moving away from fossil fuels. Oh we don't want nukes. I'm like well you have a nuclear reactor there probably somewhere in your vicinity all the time. Like nukes especially small scale nukes have proven themselves very very good. Um, and then we were talking to the person, they ran a county in Florida and every year the county would want to shut down the nuclear plant that they still had and this person would point out that it's been fully paid for. It costs about 0.001 cent per kilowatt hour and then say, "Oh, we should keep this new plant." So, I I think I'm not sure how the green energy crowd lost nukes. To me, yes, there's, you know, some dirty uranium, but that feels so much more manageable. And you even go back to Three-Mile Island, right? The worst nuclear disaster in US history. It was a bad technology at the time. It was situated awfully. Like you would never situate something above water that's flowing into main major cities and yet there was not a single death resulted from that. So even our worst thing hasn't been and the technology is so much better and I think you're going to see these smallcale nuclear projects. Uh that to me it has to be the way. >> Again it's this theme of people being scared of technologies without even really understanding them. So pivoting a little bit, I remember I was talking to my buddy Christian Carlo, uh former chairman of the C CFTC, and after FTX went down, we used to always talk about this is the three-mile island incident for crypto. You know, we could be facing, you know, be regulated out of existence in crypto. Who knows what's going to happen? And I think honestly that that almost happened. Um but now we have a new administration that's come in and said, "We're going to make the United States the crypto capital of the planet." Um, we talked a little bit about AI, its role in this in the new economy. What are your thoughts about crypto? What role does it have to play going forward? Are you bullish on it? >> Yeah, I think you know, one with this administration in particular, right, they are clearly all in on it. They love it. I think the stable coins are going to be a big part. So, I think you want to be invested in the technologies that will drive the stable coins. I think it's a huge opportunity for again it's kind of the one way that the US can approach other country you know not other countries actually individuals in other countries as hey here's you know some outlet out of your country's you know economic system you can participate in US dollars you can do things so I think stable coins is going to be a big part of it I think from there we will you know see a lot of different use cases I think as the technology develops I you know I'm still probably more that it's the technology that is most interesting I'm not You know, I like Bitcoin. I think you want to own Bitcoin. I think you want to especially own Ethereum right now as it's, you know, could be a base for a lot of technology maybe Saul. Um, and you do not want to bet against this administration. So, you know, you got to again keep coming back to this. I think it feels like with President Trump, but once he's decided to do something, is making progress on it, he is going to try and win. So, you want to see that through. I think you want to, you know, play with it. I think it'll be interesting to see what happens. You know, as you pointed out on Friday, the crypto market responded very bizarrely to the announcements. You know, it was down, but like there's a huge, you know, downbe, you know, I think there'll be room as, you know, US entities get more involved that maybe you don't see things that look kind of weird like that and that it becomes a more transparent and more, you know, you might still get large moves, but they'll seem more, >> you know, I don't know, normal, I guess, something that we're used to seeing in other markets >> than the shoes trade. So, yeah, I like it. I go ahead. No, no. I was going to say like this volatility that we saw, I think it's because it's a super immature industry. Most of these tokens are less than five years old. We don't even have futures and just normal products that allow you to hedge risk and and kind of address some of that massive volatility. I mean, if you can't hedge, if you have no hedging instruments because like a guy like Gary Gendler forbid them, um that's what happens. Like this is what you get. And so I do think it's a part of the maturity of the industry now that you have this regulatory foundation that allows you to innovate, it's going to be very helpful. >> Yeah. And I also think as you're moving to get it to more adopted by larger institutions by large individual there there always seems to me there's an element that's driven by kind of the for lack of a better word the yo bet right these people take super leverage positions because they only have $10,000 or 100 and they want and they want to be millionaires tomorrow and those seem to be the ones that get stopped out you know again I think you've managed risk professionally I've managed it you know you see some of these stopouts and like who's running such large positions in something that volatile with such tight stops. It makes no sense to me. So, um, you know, I I think you'll see better behavior as it becomes more and more professional and that small group becomes a tiny fraction of the market. >> Yeah, we call them DGENs in our space. But I want to go back to stable coins because I don't think people realize how big a deal stable coins are from a geopolitical perspective. Um, you know, essentially what we're doing is we're this allows us to more easily export the green back. So once these things are minted, anyone with an internet can either buy them, sell them, move them anywhere in the world instantaneously. My thesis has always been that this is going to crowd out a lot of local uh monetary policy because if you're in the developing world, would you rather have the local monetary money or would you rather have dollars? I think it depends. Like in many cases, you're going to want to hedge against that against some some, you know, hyperinflationary local currency that's going to have geopolitical consequence. How how do you see that evolving, Peter? >> Yeah, I think there's going to be a clear battle where countries like China, probably Russia, try and crack down on their citizens, try and restrict use, you know, and I I think a lot of countries would like to do that. I'm not sure that they have the capability to stop that. So, I think there's going to be, you know, kind of this push back where they'll make it illegal. They'll say things that make it difficult, but people will be able to get around those. China to me is probably the hardest one because China clearly spend so much time controlling their own internet that will it be will people in China be able to you know use kind of these more public p stable coins easily? I don't know. But yeah, I think there's going to be pressure. I think you're going to probably wind up seeing Europe try and develop something alternative. I think they're going to realize that this we've seen some euro strength recently and there's been a bit more adoption of the euro. But if their people are given this opportunity, will they keep in the euro? will they start using this as a hedge? So, you know, I think it's going to change this nature and it's I don't know how it'll all play out. Um, but the one thing I I think we can say is this is kind of the end I think it's been the end of the US ability to use, you know, sanctions and dollars strictly to, you know, hold people accountable like and I think maybe stable coins re reinvigorate some of that because you can now track it, right? You can now put pressure on things, you can do it, right? whereas, you know, a dollar based economy. And again, I I just keep, you know, I I've always said in the currency world, I don't think there's ever a chance that, you know, the one is going to become a reserve currency. >> Me, the dollar is the worldwide web. Everyone goes to it. And the one's kind of like the dark web. You know, it's there. You probably don't want to go on it, but if you have to, I guess you can. So, I I think this creates that opportunity to create this investment, create more stable investment. Um, and as more people do this, it will allow people to filter in and out of cryptocurrencies much easier than now. and much less costly. I think that's been the one thing >> I still see on the side is cryptocurrencies for all the hope and you know it still seems relatively expensive to transact. >> Yeah 100%. The other thing that these stable coins will do is they will force buying of treasuries short-term treasuries likely most um at scale this could result in lower uh front-end rates. Um, do you think that that's something that Bessence's done on purpose and he's going to be like, "Listen, I'm going to come with these policies because I'm going to rest control of the short end of the curve." Um, and and like how does that play out? Do we keep is that a way of keeping uh rates in check? Yeah, I think it's uh could be a huge benefit and I think you know he's certainly paid attention to it and it kind of amazed me and we talked about this years ago how few people were paying attention to Tether or to Circle and the amount of you know money that they had to be buying at, you know, to fund that. I think Circle was kind of the most transparent. It was really interesting to me. You know, there's a Black Rockck ETF that they own. You can take a look and see what they have. Um so you know it's clear that it's out there and as you see this growth it will you know gravitate towards that it could graduate towards commercial paper I think it will help not just treasure T- bill yields maybe people get more comfortable um at you know various ends so it it will be and that's the thing that cracks me up though is like it's been such an obvious market I think Caner was the first one to figure it out really trading with u tether right they they adopted that and understood hey here you have a huge client that in their case particularly wasn't even necessarily well received by the universe. So why not do business with them? I think Circle is cleaner and easier to work with. But to me, that's going to be the sort of thing you're going to see this immense transparency. You're going to know what people are buying or you're going to be able to guess pretty clearly because that was always one of the questions about Tether. Hey, you you can't really see their balance sheet. But, you know, I think Circle has broke that and I'm sure that a bunch of the stable coins that come out will again try and be very transparent. There's no reason not to be. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. >> Yeah. So, Peter, you are immersed every single day in geopolitical briefs from people in the know, you know, the who's who of admirals and generals. Um, are what keeps you awake at night? Is it the geopolitical side of of things or is it something else? You talked about energy as something that was concerning. What are the key risks that people need to be on the lookout for? >> You know, I think it's this ongoing competition with China and you know, we were way ahead of this. I think back in 2018, General Bob Walsh, he actually worked with Trump 1.0 to define China as a strategic competitor and we are talking about a lot of these issues >> when no one else is talking about them. And you know, we kind of been ahead and I think that remains the thing. It's you know, you as a Navy person probably know this better than I do, but we've lost the shipping industry, right? We don't make ships anymore. We can't refuel. We can't refit our fleet. We're having trouble even, you know, just doing the maintenance we have. There's talk that we might have to use South Korea. So, I think we're along the right path when we kind of think about this production for security. The two things that worry me, I guess really with this kind of friction with China. I think we've got this ingenuity which is good that works for us. We've got this flexibility which is good for us. On the other hand, when Xi tells people to do something, they will do it and they will suffer through it. As soon as we say something, one third of the people think it's the best idea ever. One third think it's the worst idea ever. And the one/3's trying to muddle their way through whether it's a good idea or bad idea, only being hearing from the two sides that tell them it's either the best thing or worst thing. So I think our ability to manage this and fight through a longer term hiccup is problematic. And whether we will have the fortitude and the attention span, right? Hey, this is not going to be, hey, victory, mission accomplished. this is going to be years and years of dedication, focus. It's going to have to last past this administration to be successful. So, that to me is my worry. And I would say, and I I think this fits in reasonably well, but Spider Marks has been talking a lot now, and I've kind of started paraphrasing a little bit, that we may have moved from a post-war world to a pre-war world, and that we've kind of moved for the first time. >> And to me, the one thing that's good about that is people will make sacrifices, I think, if they think we're in a pre-war world, right? Yeah, >> if I'm told I'm doing something and maybe there has to be this plant near me because of competition with China, maybe I'm more willing to do that. Maybe I'm more willing to deal with some short-term inflation if there's a longer term goal in sight. So, it'll be interesting to see how that plays out. But I I really feel Spider's on to something when we talk that we've kind of vastened the glow of this post-war economy that really took an extra boost with the peace dividend post the Soviet Union and now we have to be in reality. Hey, this is not a safe world out there. We have to prepare for it and deter it. >> Wow. Everything is cyclical and um that's, you know, I know Spider as well and guy is brilliant. Um I hope he doesn't hear me say that, but um gosh, that that that that really characterizes it, doesn't it? That we're in a pre-World a prewar world. And so, you know, that's why you're seeing the administration moving so aggressively to shore up its resources, to shore up its manufacturing capabilities, etc. Wow. Do do you think that that pre-world uh world culminates with the invasion of Taiwan? >> You know, I I I think if we're successful, it doesn't result in the invasion. I think we get to the point that we are able to deter. Um I do think there's a real risk to Taiwan that over time, the US cares less about it. I Taiwan's probably the biggest >> indirect loser from our focus on making chips and things like that. like their ability right now they are so crucial to us >> and I think they're pretty crucial to China. So as even as China builds up their chip industry then I think the >> propensity for them to say hey Taiwan here's the deal we'll offer you now. We don't know what this deal will look like 5 years from now and we don't know what your buddies in the US are doing. They might care about you less. So I I still think it's going to be more of a political assumption if it happens at all. But, you know, again, and I do think if we're losing, which if we're beating China, you kind of want to beat them slowly because if you start beating them badly economically, that's when they do something to really deflect. >> Totally. Um, and and from their perspective, they have been they were embarrassed um for 100 years. Uh because they fell behind in technology and they're making sure that that never happens again. Um, now you talked about this pre-war environment. Is is there any way to stop to to to kind of skip over the next cycle and and and avoid war or do you think it's an inevitability? >> You know, I I think it comes down to one, I think Europe's going to play a huge role, right? Do they really start building up their military? Does NATO kind of rebuild itself as a true alliance, right? It kind of became >> very not aggressive. It wasn't postured for defense. Um, so yeah, I think we can get there, but it's only going to be by really having people believe we are big enough and strong enough and willing to use our capabilities that you don't want to, you know, cross that line. And I I think we're not there right now. I'm not sure that China is ready to cross that line. >> But that's probably more because they saw Russia's, you know, fiasco and G is worried about failing than he is necessarily about our, you know, global response to him. But yeah, I think that's what we have to do. And you know, we're going to have to figure out a lot of things. Um, you know, we're somehow eventually we're going to have to figure out how to work with Africa. Africa is the source of so many of these rarest critical minerals. There's so much opportunity there. I believe it's predicted by 2050. One or two of the African nations will certainly be the top, you know, in terms of population potentially, even certainly surpassing China. And yet, we don't seem to have a strategy there. and half of, you know, big chunks of Africa seem to be in strife at civil war. Um, you I I don't have any idea how to do anything about that. But I think that's also going to be a real hot spot. >> Yeah. >> Unliterally, unfortunately, >> the economist just published an article talking about how the the age of some of those leaders is so advanced. If you have you have leaders in the 80s and 90s, that's not going to last forever. That turnover always leads in strife. And when I turn when I talk to my old classmates that are now colonels, generals, admirals, Africa seems to be the battleground with China. Like that's where we're going head-to-head every single day. So, um, sounds like it's a very strategic area. >> Yeah. And I do think I will say I think this administration is maybe better prepared to deal with that. And again, I I'm hesitate to say some of this because I understand why we put so many constraints. We'd go to these countries and say, "Well, we want to deal with you, but you have to do this, this, this, and that for us to be comfortable dealing with you." And they're like, "Well, I don't want to do this, this, and that, and China doesn't care, so we're just going to deal with China." >> And I know we want to impose kind of our belief system on people, and I understand why we want to do that, but I think that's been a big negative in that region. >> I think China screwed up a lot of their projects. China's annoyed a lot of the people there. So there's a huge opportunity for us, but I think we're going to have to go in a little bit differently and more transactional, >> right? So I mean, we've been speaking about risks and threats for the last few minutes and sounds like it's a scary world, but you know, previous to that, you were saying that you're bullish and so um you know, again, how do you think about against all those risks? We talked about some ways to play the market. Any other thoughts on how to play the market, you know, in the cycle that we're in here and now? No, again look what the administration seems to own and make sure you own a chunk of that because I do think there's going to be ongoing support. I think look for you know I think what are these countries we're going to develop relationships. I think again there are other countries stocks have run up and you but you want to pick more individual. I I honestly think in the next you know few months we're going to see you know these kind of ESG type you know ETFs develop everywhere except for what we've been talking about on this show. How do you participate in crypto in those countries? How do you participate in electricity production? So, kind of, you know, I don't want to say the anti-ESG, but those I think will be the opportunities. How do you grow along that? And then I think figure out how to incorporate, you know, AI into your daily ritual into your businesses. How do you >> how do you be prepared for the next twist, right? >> Again, I do believe there's a lot of growth there. >> I feel like some of the leaders have a lot of that fully priced in. >> So, what are we missing? What's the next thing that in two years everyone's going to be like, "Oh, we should have seen that coming and let's see that coming in advance." >> In hindsight, it's always so obvious. And the other thing that I realized is that no matter what, I always end up in the tail. One way, shape, or form, you end up in that tail scenario. You know, to the positive or to the negative, you always end up in the tail. >> Uh Peter, >> I always uh you know, people talk about if you bought, you know, Apple at $1 and kept it to what it was 5,000. I'm like, "Yeah, I've had some of those stocks, but I usually sell half of it at $2, another quarter at $4, and by $10, I'm out." So, you know, it's hard to be greedy enough maybe sometimes. So, maybe that's what we should add is make sure you're greedy enough on these transformational technologies. >> Yeah. So, Peter, as we come to the end of this, um would be really helpful to really maybe talk a little bit about Academy Securities. Um you know, what you guys do, what you know, what content you provide and how you differentiate. >> Yeah, perfect. So, we've got, you know, my background is, as we've talked about, really kind of from the markets and fixed income credit side. And we now have over 30 retired generals, admirals, um, a few people from the CIA, though never quite sure about the CIA people because what they can tell you or can't tell you. Um, but I think it's really interesting. So, they have their perspective and many, you know, some actually became generals while, you know, being in the reserves, so they ran businesses. So, they bring a lot of acumen. They sit on a lot of different boards. They see a lot of different things. Um, and we get lucky sometimes. You know, one of our people, uh, Lesie Beavers, she had been the CIO of Department of Defense, so had a lot of really good insights there. Currently, General Tat's kind of taken a step back from us because he's currently under secretary of war, but someone that we know we talk to. So, I I think you get a good feel for what's going on. And I again, I think overall, we always have to talk about the risk. It's kind of that you if you don't prepare for the downside, >> but I think there's a lot of optimism. I think we see a lot of opportunity. I think, you know, we are going to have drones that impress the world in three to five years and they're not necessarily going to come from some of the big players, but there these things are being cultivated. There's a lot going on behind the scenes. So, I think they bring those skills and what we're finding is when we talk to corporations or investors, hey, we're really interested in this country or this project. We can bring a certain, you know, thing to bear. What I think has been really interesting and kind of I figured you I learned this early on, but if you're talking about a country, you know, a lot of the Wall Street experts who know people in those countries, they all went to Oxbridge together, the Ivy's together, and they tend to think one way. And our generals and admirals, by the time you reach that level, you're a half a politician. So they know the, you know, the military leaders in those countries and a lot of those countries, the military leaders are very influential in the politics. If not, they many become politicians themselves. So I think we bring a slightly different flavor and hey here's the color we're hearing from our sources on the ground and it may not necessarily mesh with the official story and you might not want to base it completely on our view but I think it's an intelligent and interesting way to think about it and again we kind of do this red team blue team type stuff. So we're always what would the other side do and I think you know I we always call the devil's advocate but same idea right what should the other side be doing I think it helps us frame this um so it's really interesting it lets you understand a lot and I think it's become increasingly important where and it's been a great benefit to me they are not political they were all apolitical certainly while serving and generally apolitical >> while not serving >> but that they bring an insight that gets lost in the noise of today's like I would say the worst thing I see in the world right now to me is never has it been so easy to get access to good and useful information and never have so few people cared to do it. >> So we're sitting on this golden opportunity, right? We can gro anything. We can chat GBT. We cl and get answers that are pretty reasonable and 90% of the population still seems to pass on Twitter headlines or, you know, Facebook headlines without reading anything. And that to me is a scary disconnect. we have all this information. You know, growing up, if you bet, oh, who hit 400 or, you know, 322 in what year? You couldn't find the answer. Now you can find the answer and people don't bother. And I I that scares me is we don't seem to be good at using the technology. Um, and maybe that's what we should be teaching in high school is technology use, how to use these things, how to make a Twitter or something like that or Tik Tok effective. Um it is kind of weird like you've talked about we have all these opportunities and there seems such a just lack of interest in using them. >> Yeah. Yeah. Really interesting. Just Yeah. There's so much information at our fingertips and very few people even realize it and it's really democratized I think a lot of access to everything finance and beyond. So hey >> yeah I think you know for people who've used it it's helped me develop through Twitter my network of people that I can reach out to. So again, there are people who you would have never have had an idea how you can contact, but if you send a few interesting things, they may respond and you can develop an actual dialogue. So if you use it, >> it's amazing. >> Awesome. Any last thoughts today, sir? No, I think unless you wanted to, you know, one thing that we both worked on a little bit is the idea of, you know, the uh crypto privateeers and using them as a way to uh try and, you know, protect ourselves because I don't think the official, you know, we're not prepared to do that. It's just not in the nature of the services that we currently have. Maybe in five years we'll have a cyber division or something that's really prepared to do this. But I feel right now we might have this sort of opportunity where we can empower some of the people who figured these technologies out to use them most effectively to protect us in ways that we currently aren't. >> Yeah. So Peter and I worked on some content together. We um you know we see an increasingly digital world and if you go back into the constitution there's a way uh that I mean what happened we essentially won the revolutionary war because we allowed private citizens to fight create a navy essentially and fight British commerce essentially eliminating the will to fight in London at the time and so our founders loved it so much they put the concept in the constitution people don't even realize it it's sitting there in article one and so Peter and I have been thinking about how do we leverage our history to restore for a lot of security um to the future because we've have many of our adversaries are waging war every single day on our companies. Um you know there again I was watching 60 Minutes and there's a whole segment on that as well you know um so yeah I I think that may be something that we should focus on the next episode. Peter, what do you think? >> Perfect. Yeah. No, and again it kind of fits some of our theme too about you know actual deterrence, right? We have to do these things and you know everyone knows North Korea is doing it. Why aren't we doing anything about it? Like we know our enemies are doing this. That feels like the next step in terms of this overall global battle is making sure people aren't cheating us. >> Well, yeah. And how can people connect with you, Peter? >> Um, you can reach me on Twitter at tfmkts or you can look me up at academyurities.com. Um, and feel free to reach out through me. >> Amazing. So, uh, gosh, man, I learned so much in this episode. You know, we learned about how deterrence through strength makes sense. We learned about how getting in front of the administration as you're starting to put through your investment thesis because the the government's moving and and and you should too. Um we learned about this now this pre-war mentality environment mentality and I think that's a new paradigm for me. It makes a ton of sense. Um but gosh, amazing thoughts today. Really enjoyed the conversation, Peter, and I hope to have you back on again soon. >> Thanks very much. And one thing we did not talk about much was bonds is I'm not worried about them. So I I don't know that they're going to be the best investment ever, but I I'm not worried about the deficit and inflation getting out of control. So I didn't spend much time trying to argue the case for bonds, but I think, you know, to the extent you've got an income part of your portfolio, I'm not, you know, you can be fine there. >> Got it. What percentage of portfolio should be crypto going forward? >> You know, I think right now you can be at the more aggressive end. It's going to depend on your own tolerance, but I would be kind of at the max and maybe increase what I would have thought the max is. Um, and I would be less in money markets. I'd be more aggressively either in the longer end of the yield curve, some in crypto. Um, you know, I lean towards ETH right now. I just think that's kind of the I feel that has the most potential maximum upside um in that and I am unfortunately doing it through ETFs just because um you know, I work for Wall Street so it's easier to do things through a broker dealer because it all has to be monitored. >> Oh, we have to >> we have to >> Yeah, you don't get you don't get yield in the ETF. So, I mean it's going to come eventually. >> That is the shame. That's the problem. So, you can capture the price move, but you can't get the full benefits. But again, I could probably have a whole another topic. I know you know the digital treasury asset company to me, you're going to see a whole range of things that do what ETFs did for stocks, which was democratize it, but also give access access to products that you couldn't get otherwise. I think you're going to see a whole range of new products that give us full access to cryptocurrencies in the ways that we're meant to. And that will be that next growth area. But sorry, now I'm babbling on. No, no, but but you love the digital asset treasuries which which makes me Peter. What makes me the most happy is we've been speaking about this subject for a very long time and you seem finally redpilled. I love it. >> Well, I will say I like the digital ass that are doing something that's interesting that gives you access to something. I don't like those that just buy a single thing and trade at a premium. So, some of that's going away, but I think there's huge opportunity. Again, not every single trade is going to work, but we're headed the right direction, I think, in what people are trying to accomplish with these. >> Amen. Well, hey man, thanks for coming on. Uh we'll have you back on on again soon and uh have a great day. >> You too. Thanks again, Chris. >> Cheers. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [Music]
Peter Tchir: America’s ‘Pre-War World’ and Its Investing Playbook
Summary
Transcript
We may have moved from a post-war world to a pre-war world. Production for security. So they want rarers, critical minerals, chips. This production for security might be the new ESG. You're going to see much higher multiples for the entire stock market. Every company in the US should trade at a higher multiple because they can be more efficient. And I think that becomes the next wave. [Music] Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Ladies and gentlemen, welcome back to Wealthon. And my name is Chris Perkins. I'm the president of Coin Fund. And today I am with one of the greatest minds in macro, Peter Cheer, who is the head of macro strategy at Academy Securities. Uh a veteran of the fixed income trenches and and someone who really has a differentiated view on geopolitical impacts on macro uh Academy Securities. I'm actually a U member of the advisory board. They um they really have an incredible advisory board of generals and admirals with very very uh amazing geopolitical insights. So with that, Peter, welcome to the show. >> Hey, thanks a lot for having me. >> I mean, there's so much going on right now. Uh your your perspective couldn't be more timely, but maybe we could just start with a little bit of background uh around uh who you are. >> Yeah, sure. My background uh is more traditional than many of my colleagues at Academy Securities, but I started in Wall Street uh mid90s. I started in the credit derivatives area, did a lot of structured products, wound up then trading high yield cash and CDS, and ultimately actually helped create the CDX suite of indices. So I was on the credit side, not the big short ABX side, though I did trade some of that. Um, and then wound up developing a business working with large asset managers, helping them kind of, you know, on their risk profile, largely fixed income oriented, but went beyond that. and then joined academy almost eight years ago where not only do I get to talk to asset managers, I actually spend about half my time talking to corporations and increasingly I'm spending some of my time with the large municipal issuers and really helping every independent navigate this macro landscape with kind of my fixed income and trading background and also layering in a lot of what Academy Securities does on the geopolitical front. So I think it's been pretty interesting especially around China where I think we've kind of led the street in terms of our view. >> Yeah, I mean there's so much going on. I'll also note that is it true that you were the all-time leading point holder uh on Waterloo as a place kicker. Is that right? >> I was it lasted, you know, a number of years. I think I'm still like number four or something like that. So, not bad, but >> you're getting better. It was kind of fun when it happened. >> All right, so let's get into it. As you said, I mean, there's so much going on right now. You got Trump running around the Middle East trying to put an end to the Gaza the Gaza uh issue and and the war going down there with Israel. You have China. Um Trump tweets out on Friday night uh that hey we're putting 100% tariffs on China you the 24-hour markets that I work in crypto you know crash they've come back a little bit um I mean you've got stuff going on all over the place you have the government shutdown maybe where are we in the cycle what's going on in the macro picture let's start high level and like we'll work our way down >> sure so I'll start one thing I think is kind of positive I think kind of the initiative of peace through strength where you know the Trump administration really wants to reestablish lish, you know, this peace through strength. And that really requires deterrence. And, you know, I think what we've been talking about here at Academy, it's uncomfortable for some, is that you really only deter people if you show a willingness to use your capabilities. And we did that with the Iran attack. And now we're starting to talk about giving Ukraine more weaponry. So, I don't know if there's a direct link from our attack on Iran's nuclear facilities to the um events today where the hostages were exchanged, but I think there probably is a fairly degree of link linkage where you use that force, people become a bit scared of you. Again, I think that's what now we're trying to do on Putin. So, I think it's uncomfortable some people to watch kind of the military buildup and the potential use of military forces and the risk to our soldiers. Having said that, it's really the only way to reestablish deterrence after years, if not decades, of probably being very conservative and drawing lines in the sand that we didn't pass. So, I think there's progress being made there. I actually like what Trump is now doing in terms of putting pressure on Putin. So, I think that could, you know, he follows the same sort of playback. Hey, we tried to be nice, now we push back. Let's go from there. So, that's kind of, you know, the piece through strength. I think that's going well. I think the markets are getting maybe this taco trade a little bit wrong today. M >> yes we backed off a little bit but when I look at this set of tariffs to me it's really different it's much more along the lines we thought we were going to go into the whole tariff war one Trump seems to be trying to work with the rest of the world right when he spoke on Friday when he's talked right he's kind of trying to get the rest of the world to go with us a little bit so you know if you go back to liberation day where it was a broad swath of tariffs against everyone or is Canada Mexico this is very specific the other thing though that I think is different is I think this time China's pushing a little bit every single point of time we've done with tariffs since the Trump administration. It is Trump and his administration initiating something and then ultimately backing down, changing it. This time I really do think it is China pushing on these rare earths and critical minerals where they understand they potentially have an advantage here. And what I think might have compelled them is, you know, at Academy, we've been talking about production for security. We've been hoping it would have happened long ago. We thought the chips act helped a little bit in that front, but very little. Um there were so many strings attached to that chips money. But you started seeing all these investments whether it's Intel, MP, um, LAC, so the lithium company, you getting these investments. I think China might be seeing, hey, the US is finally trying to, you know, do something about rarest and critical minerals. Maybe we need to use our leverage while we can. So I I think Trump backed down a little bit, but this one feels very different to me. Normally, it's him escalating and kind of everyone kind of freaks out and then he backs down. I think this time we were pushed into it and I'm not sure that China isn't willing to push the envelope. M so you talked about taco and I think that means Trump always chickens out where essentially people wait for him to say something crazy um and then market tanks and then he caves and so for some they're like hey just you know buy on that dip every single time because he's going to cave but but you're saying right now those days are potentially over particularly visa v China c can you unpack that what does that mean >> yeah so you know one thing we always try and do is okay what should what would China be doing or if I was China and I'm trying to win this trade war. I'm trying to do something. What would I be doing? And their biggest negotiating point is the rare earth and critical minerals. And you know, it's not the rarest and critical minerals themselves. It's the processed and refined versions of those. Basically, the world seated refining and processing to China. It's a dirty process. It um you know, it it's definitely energy intensive, but they control about 90% of that. And I keep coming back to you know the CEO of Whirlpool I think said one thing that resonated to me during COVID and he was like a washing machine that's not n that's only 99% done is not done and so I think when we think of these rarest and critical minerals it's fairly easy to dismiss them but they are often crucial components and without those components we can't build weapon systems we have trouble making certain types of chips there's all these things that go together so I think China's playing that card against us or against China we've held the chips card, right? We Nvidia chips are the best in the world at AI. We have other good chip designs. China has want Chinese companies have wanted our chips. And my sense is, and this is a guess, and I think it's a big risky bet by China. They are starting to prepare to be okay, let's say we're cut off from Nvidia chips. Let's try and make our own chips. You know, to some degree, necessity is the mother of invention. China's willing to do that. They certainly had success with Huawei. You look at BYD automobiles, not the same not not as difficult as making a you know high quality semiconductor, but BYYD is everywhere. So I would not be surprised that China's saying, "Hey, this might be as good a time as any to push the US because we have a big advantage in these rarest and critical minerals and we're willing to take the shot on chips." This October, Wealthian's putting the spotlight on silver with expert interviews, deep analysis, and a special in-depth report from our partners at SCP Resource Finance. To receive this report and other exclusive benefits, you can sign up to become an accredited investor with Wealthon at wealth.com/acredited or by finding the link in the description below. Speaking of silver, Wealthon will be on the ground in Toronto for the SCP Resource Finance second global silver conference happening on Thursday, October 23rd. Legendary investor Eric Sprat headlines the event alongside 15 silver mining companies presenting their top projects. It's a must attend for anyone serious about investing in silver. Tickets, both in person and virtual, are now available. Find out more in the description below. What's what's harder to do? Um, build out a rare earth mineral capability like China's done. And to your point, we have plenty of rare earths in the United States. We just don't have the facilities to refine them, right? So, is it is it easier to build that out or is it easier to build out Nvidia, which is, you know, the chips that are needed? Who's going to win? >> Right. I I think it's much easier to build out that rarest and critical minerals processing, right? Because we don't even have to find the rarest and critical minerals. We can go I'm sure countries that produce cobalt, lithium, we will be able to buy some if we want. So to me, it's much more about regulatory. It's going to be a 3 to sevenyear process. It's not going to happen overnight. It's going to be a lot about deregulation. So I think once we start on that path, I mean, you know, just today JP Morgan announced they want to put 1.5 trillion into, you know, basically what we've been calling production for security. So they want to rarest, critical minerals, chips. Um, you know, to me, you know, I'm going to say this half jokingly, but I think it might be true. This production for security might be the new ESG. Remember everything had to be ESG 5 years ago and now all those right and now everyone's like hey what do we actually need to produce to be reasonably self-sufficient and even if you think about sustainability right the and you know ESG well how can you be sustainable if you don't make the things that you need like electricity um like the lithium dioxide and even from governance it's kind of crappy governance not to have those things so I I I think we're going to see a lot of growth there I think it's far harder to build out a good chip techn technology. >> Got it. So the thesis then is the new ESG is the is the decoupling. It's how do you prov how do you de how do you end up with that resiliency that where you're self you're self-sufficient and and and and and you don't rely on others. That's the new ESG. That's that's pretty interesting. >> Yeah. Right. Where and maybe you don't have to be 100% self but you have to have a good solid baseline and maybe you start working with your allies. And what's really interesting, I've seen a lot of articles out of Europe, who was clearly the leader in ESG and, you know, most focused on it, talking about really questioning why did we focus so much on, you know, carbon emissions when China just grew their carbon emissions. So basically, we hurt our carbon emissions, hurt our cost of electricity, and gave it all to China, and China's still polluting the world. So I I think there's a big rethink. >> But you mentioned allies, and I thought that, you know, as part of the self-sufficiency, the idea is to have less reliance on allies. How does that play out? Is it more just a transactional type relationship? >> Yeah. And I think less doesn't mean none. So we kind of, you know, at liberation day felt like we were going at it completely alone. And the reality is there are competitive advantages, right? Canada, for example, has a lot of potach, right? So it's going to be a very difficult way for us to create a pod ash industry. Do we even need to do that? So I think there's some softening of that tone. And maybe we need to be 60% self-sufficient or 70%, but we can rely on allies for 30 to 40%. Again, I don't think you want to be overly dependent, but I think we can go back to kind of a little bit of circle where that trade makes sense. And we are starting, I think, to try and pull the world away from China again, which I thought was the right strategy going forward. We didn't really follow that initially, but just as tone seems much different towards the rest of the world. >> Got it. So, we're talking about rare earth and minerals. Um, what about manufacturing capabilities? Is is that going to end up 100% back in the States? Is that the end goal here? >> Um, you know, I I think that's less important. I think if you kind of have these key components and you can make the high-end things that you need that's critical right I think chips right that is high-end I think two of the things that I think are slowly seeping into the administration I think Besson is really really good at this is >> trade as we look you know Trump was focused on trade balances which only includes goods and I think he has a lot of people reminding hey we dominate in services we provide services especially technology services the globe so it's not that bad and if you put any sort of metric on profitability we are probably blowing away most countries, right? I think we probably make more profit and what little we sell to China than vice versa. >> So, I I think there's going to be a little bit more thought through this and it's going to be the high-end things that we need to do, the things that maybe are robotic, but things that and clearly for our military, I think that has to be brought back much more here where all the component pieces are actually here and we have full supply chains. >> Yeah, I remember building businesses in China. It's you don't make money. It's impossible to make money when you're a US company trying to build in China. very very difficult. So, so how do you play? Yeah, go ahead. >> No, I I think that's true. And I think you know a lot of companies were already pulling out of China. Where they were pulling to was um and I think right now what we're dealing with unfortunately on this global scale is it's easy to think of China circa 2005 kind of a maker of cheap goods with not a lot of IP. And the China we're competing with in 2025 has become very sophisticated at manufacturing. They've done it for 20 30 years. we gave it to them >> and they have a lot of IP. I think a lot of it was acquired illegally, but they have the IP. So, I think when we're thinking about that competition with China, it's important to remember we're competing with not an equal, but someone who is much different than what we kind of have, you know, >> intuitively in our mindset or at least I have sometimes. >> So then how do you play against that backdrop? How do you play these markets if you're an investor? >> You know, I I think you still wind up liking companies like Intel, right? And just you know I think we people spend too much time trying to think what they would do if they were in charge and well we know who's in charge right it's the president uh Trump and what does he like to do one thing he likes to do is win right so we the country invested 10% in intel he doesn't want that to go down I suspect he is going to be either softly or more aggressively suggesting people hey you need to use Intel you need to do these things right so I think he will try and grow that business there may be other investments I think he's going to look for a partner in biotech and pharma where they can do the same sort of thing. And I honestly think you're supposed to now, you know, the the big kind of uh trade has been a lot of these small cap whether it's uranium, lithium. I think you want to start going back and looking at some of the big cap energy companies, right? These companies and the large cap, they're experts at extracting minerals and resources from the ground globally. I think they get looped into this a little bit more. And you know, this sounds weird and it's probably a bit early. I think solar has been left for dead. And I think any sort of real plan involves nuclear, it involves, you know, clean coal, it involves natural gas, but I think it has to involve solar. And as he goes through, I think he'll pivot and realize, hey, if I need to get electricity up and running, I need solar. So that could be something that's interesting. >> So the thesis that you're saying is double down on any country and any company the US is investing in and try to figure out what else is strategic uh, you know, for that resiliency that that that the government craves. get get into that sector and good things happen. anything that you can see is if you think what should we have for national security and what do we need and those companies so again some of the big uh engineering firms will probably do very well right because someone's going to have to build these projects >> and I think it's still a bit early I'd start looking for these companies overseas too I think everyone's starting to realize this and part of it comes full circle to whether it was initially Bitcoin mining or crypto mining and now you got the AI surge in EV the demand for electricity usage is increasing in the US for the first time ever you're seeing those prices and you I was in England, got in a fight with someone, you know, very senior person and maybe fight's not quite the right word, >> but they were adamant that England can compete in AI without having their own domestic electricity production. I'm like, that's just insane. You are going to be at a competitive disadvantage. You need to produce electricity cheaply to get that data center and AI. So, that kind of all folds together to a really nice thing here, but I think other countries will slowly get the joke. So, you know, some say that AI is going to be one of the biggest deflationary um inputs to the econ the economy has ever seen. Um how do you see obviously AI is driving that insatiable need for energy? But how else are you seeing AI fitting into this this macro picture here and going forward? you know, one side I won't spend much time on, but I think on the military side and, you know, geopolitics, you know, the we're always at a bit of a disadvantage because, you know, our enemies will use cyber probably more aggressively than we will. They will use AI to try and shape and influence our culture probably in ways that we wouldn't necessarily do in theirs. So, I think that's something we got to be very vigilant on. And, you know, some of the generals and admirals often talk about, you know, moving to autonomous weapons. We will probably always be slightly slower and more careful on what we allow an autonomous weapon system to do versus Chinese or Russians where, you know, we value life. We value our own lives, but we are also cautious about civilians. And I'm not sure that would be the case. I think in our real world, it's just really interesting. I think it's opening up a whole new landscape trying to figure out how to use agents, how agents communicate to each other. And but it also, you know, every step of the way it increases new issues, new problems. Um, and I think the most difficult thing we're trying to see is what I'm seeing in businesses is people are finding uses for it on a pretty small scale where someone can glance over quickly and say, "Yeah, that looks okay." And so instead of spending an hour typing something, it took me five minutes. >> Yeah. >> I'm finding it more difficult for people to kind of give up control to decisions where they don't really understand how AI said we should build this plant there. And I think there's this ongoing concern, well, if we build the plant there and it turns out right or incorrect, why didn't we see it coming? And you know, we as humans, we all make wrong mistakes, right? There's our history's littered with wrong mistakes, but we go through a process and we're comfortable. Oh, well, at least we took these steps to make that wrong mistake and here's why it turned out wrong. >> So, that's going to be, I think, the tricky part in the evolution of AI to really kind of drive >> business efficiency. >> Yeah, I hear you. But at the same time, I feel like these are growing pains. Like the pace of change and the like the amount of the these outputs are improving so fast. Like you know, a lot of us who use chat GPT, you check your work. It feels like it keeps getting better. And so like I don't know. I feel like once this thing matures, you know, we're going to be more and more comfortable. Like early days of the internet, you know, you would never put your credit card on there. Like you get ripped off. Now you do it all the time. It's like nothing. So I don't know. As it matures, I mean, isn't that going to change? I I think so though I think FSD might still be like a good analogy where there is I think it's going to be held to a higher standard. So right you know people unfortunately get in accidents all the time. People unfortunately kill each other in car accidents and yet FSD I think is going to be held to a higher standard before it's kind of turned loose. I'm not sure that's the right thing to do but I feel that you'll have the same thing where the techn is here but there's some >> reluctance. I don't know what will break it and eventually it'll be probably just like you know you start seeing the Whamos or you know the Tesla robo taxis some company will just let it run wild and be super successful and everyone will throw in the towel on the restrictions and let it go. >> But I I that to me I think that's the one thing there's this higher standard I think it's being held to. >> But as an investor isn't that isn't that the opportunity right? I think humans by their nature are very very scared of technology. They're scared to death of it because they don't quite understand it. They can't quite figure it out. And if you can overcome that natural fear that most humans have, I mean from an investment perspective, I mean there in lies the opportunity. No. >> Yeah. And I think as you said and I think I'm kind of there with you is that I think as it really takes hold. You're going to see much higher multiples for the entire stock market. Right. It's I think the you know hyperscalers they've already reaped a lot of the benefits, right? They are trading at very high multiples. They're trading as though they're going to sell lots of this going forward. >> Yeah. What we haven't seen is this real belief that every company in the US should trade at a higher multiple because they can be more efficient. And I think that becomes the next wave, right? People start really adopting it, using it, and seeing those efficiencies. They're cutting costs, they're cutting, you know, lead times, they're doing all sorts of things. And then I think you'll actually see a much higher multiple for the overall market. And, you know, I think when you look at some of these equal weighted indices that have underperformed the market weighted because so much has acred to the um hyperscalers, you'll find it coming from those. And again, I think you're going to find it in small companies. The innovators are out there. And I think that's the one beauty of what the US does really well compared to China. We let people innovate, try and find the next big thing and rise from nowhere. When I think we're competing with China, I think why they'll have difficulty competing with us in AI. They tend to be very linear. They put their marching orders in >> and if they get it at all wrong, they wind up going back to square one. >> Got it. Yeah. I was watching Andrew Ross Sorcin last night on 60 Minutes and he's talking about his new book um that talks about uh the Great Depression. Uh he he's worried about bubbles forming. A lot of people are talking about bubbles um and they're like, "Hey, you know, we're seeing this democratization of of markets that happened back in 1929 and and but it sounds like you have the opposite view that you think this technology is going to unleash additional value and we're not we haven't seen uh the top yet. We're still going up from a stock market perspective. Is that right? >> Yeah, I think so. I think to me the biggest risk to the only way I think we have problems is if we don't build out electricity fast enough to meet the demand and either we see the business elsewhere or electricity prices go so high that individuals feel really pressured by that. So I'm actually more worried about the electricity cost I think than the human job cost. I think people will figure it out. People will adapt. There will be job losses in some fields. There'll be new things created. Um you know and you know as everyone every simple person figures out aentic AI or something to book their travel some smart people are going to figure out hey some really high-end customers want to be handheld and there you know there's always opportunity right for white glove service for you know that sort of treatment. So again I think people are going to figure it out. There'll be interesting opportunities. >> Yeah. Yeah, I mean look, I went to the Naval Academy. You know, your company is very much very close to the Naval Academy as well. Uh you grow up when when you go to a school like that just so enamored with the opportunity around nuclear power and against this backdrop of of deregulation. I have to think that nuclear is the future. I mean that that's it. That's that's the way we solve for this. You mentioned solar. Solar is wonderful and I'm sure it's going to help, but isn't nuclear the bottom line? Yeah. >> Yeah. Yeah. So, I think nuclear is the big one and the only unfortunate thing I think that's like a 5 to 15year sort of buildup. >> Um, and you know, I'm very comfortable with it. One of the clients we met, it's a large energy producer. They do some nukes and China continues to invite them over to conferences and stuff. So, they're like, well, you know, China still wants this. And you know, unfortunately, you can probably find it, you know, on Twitter, the internet, anywhere quickly. If you look at the number of nukes being built, I think China's at 25 plus. We're at two or three. And I think if you look and you know Elon Musk tweets about the solar all the time. So to me solar is the thing that gets us through the next three to seven years >> while we build a core of that and there'll be a mix of gasoline and other fire things that do you know in the near term but I think it's got to be a whole broad package and it's got to be thought through and I definitely own some nuke companies. I own some uranium companies because I think that has to be a part of it. One of Can I tell you one interesting anecdote about the nukes? Because I know >> you know you and the Navy use it and I think actually I'll tell you two funny things. There was once you think it was Hawaii was complaining when they were looking at you know moving away from fossil fuels. Oh we don't want nukes. I'm like well you have a nuclear reactor there probably somewhere in your vicinity all the time. Like nukes especially small scale nukes have proven themselves very very good. Um, and then we were talking to the person, they ran a county in Florida and every year the county would want to shut down the nuclear plant that they still had and this person would point out that it's been fully paid for. It costs about 0.001 cent per kilowatt hour and then say, "Oh, we should keep this new plant." So, I I think I'm not sure how the green energy crowd lost nukes. To me, yes, there's, you know, some dirty uranium, but that feels so much more manageable. And you even go back to Three-Mile Island, right? The worst nuclear disaster in US history. It was a bad technology at the time. It was situated awfully. Like you would never situate something above water that's flowing into main major cities and yet there was not a single death resulted from that. So even our worst thing hasn't been and the technology is so much better and I think you're going to see these smallcale nuclear projects. Uh that to me it has to be the way. >> Again it's this theme of people being scared of technologies without even really understanding them. So pivoting a little bit, I remember I was talking to my buddy Christian Carlo, uh former chairman of the C CFTC, and after FTX went down, we used to always talk about this is the three-mile island incident for crypto. You know, we could be facing, you know, be regulated out of existence in crypto. Who knows what's going to happen? And I think honestly that that almost happened. Um but now we have a new administration that's come in and said, "We're going to make the United States the crypto capital of the planet." Um, we talked a little bit about AI, its role in this in the new economy. What are your thoughts about crypto? What role does it have to play going forward? Are you bullish on it? >> Yeah, I think you know, one with this administration in particular, right, they are clearly all in on it. They love it. I think the stable coins are going to be a big part. So, I think you want to be invested in the technologies that will drive the stable coins. I think it's a huge opportunity for again it's kind of the one way that the US can approach other country you know not other countries actually individuals in other countries as hey here's you know some outlet out of your country's you know economic system you can participate in US dollars you can do things so I think stable coins is going to be a big part of it I think from there we will you know see a lot of different use cases I think as the technology develops I you know I'm still probably more that it's the technology that is most interesting I'm not You know, I like Bitcoin. I think you want to own Bitcoin. I think you want to especially own Ethereum right now as it's, you know, could be a base for a lot of technology maybe Saul. Um, and you do not want to bet against this administration. So, you know, you got to again keep coming back to this. I think it feels like with President Trump, but once he's decided to do something, is making progress on it, he is going to try and win. So, you want to see that through. I think you want to, you know, play with it. I think it'll be interesting to see what happens. You know, as you pointed out on Friday, the crypto market responded very bizarrely to the announcements. You know, it was down, but like there's a huge, you know, downbe, you know, I think there'll be room as, you know, US entities get more involved that maybe you don't see things that look kind of weird like that and that it becomes a more transparent and more, you know, you might still get large moves, but they'll seem more, >> you know, I don't know, normal, I guess, something that we're used to seeing in other markets >> than the shoes trade. So, yeah, I like it. I go ahead. No, no. I was going to say like this volatility that we saw, I think it's because it's a super immature industry. Most of these tokens are less than five years old. We don't even have futures and just normal products that allow you to hedge risk and and kind of address some of that massive volatility. I mean, if you can't hedge, if you have no hedging instruments because like a guy like Gary Gendler forbid them, um that's what happens. Like this is what you get. And so I do think it's a part of the maturity of the industry now that you have this regulatory foundation that allows you to innovate, it's going to be very helpful. >> Yeah. And I also think as you're moving to get it to more adopted by larger institutions by large individual there there always seems to me there's an element that's driven by kind of the for lack of a better word the yo bet right these people take super leverage positions because they only have $10,000 or 100 and they want and they want to be millionaires tomorrow and those seem to be the ones that get stopped out you know again I think you've managed risk professionally I've managed it you know you see some of these stopouts and like who's running such large positions in something that volatile with such tight stops. It makes no sense to me. So, um, you know, I I think you'll see better behavior as it becomes more and more professional and that small group becomes a tiny fraction of the market. >> Yeah, we call them DGENs in our space. But I want to go back to stable coins because I don't think people realize how big a deal stable coins are from a geopolitical perspective. Um, you know, essentially what we're doing is we're this allows us to more easily export the green back. So once these things are minted, anyone with an internet can either buy them, sell them, move them anywhere in the world instantaneously. My thesis has always been that this is going to crowd out a lot of local uh monetary policy because if you're in the developing world, would you rather have the local monetary money or would you rather have dollars? I think it depends. Like in many cases, you're going to want to hedge against that against some some, you know, hyperinflationary local currency that's going to have geopolitical consequence. How how do you see that evolving, Peter? >> Yeah, I think there's going to be a clear battle where countries like China, probably Russia, try and crack down on their citizens, try and restrict use, you know, and I I think a lot of countries would like to do that. I'm not sure that they have the capability to stop that. So, I think there's going to be, you know, kind of this push back where they'll make it illegal. They'll say things that make it difficult, but people will be able to get around those. China to me is probably the hardest one because China clearly spend so much time controlling their own internet that will it be will people in China be able to you know use kind of these more public p stable coins easily? I don't know. But yeah, I think there's going to be pressure. I think you're going to probably wind up seeing Europe try and develop something alternative. I think they're going to realize that this we've seen some euro strength recently and there's been a bit more adoption of the euro. But if their people are given this opportunity, will they keep in the euro? will they start using this as a hedge? So, you know, I think it's going to change this nature and it's I don't know how it'll all play out. Um, but the one thing I I think we can say is this is kind of the end I think it's been the end of the US ability to use, you know, sanctions and dollars strictly to, you know, hold people accountable like and I think maybe stable coins re reinvigorate some of that because you can now track it, right? You can now put pressure on things, you can do it, right? whereas, you know, a dollar based economy. And again, I I just keep, you know, I I've always said in the currency world, I don't think there's ever a chance that, you know, the one is going to become a reserve currency. >> Me, the dollar is the worldwide web. Everyone goes to it. And the one's kind of like the dark web. You know, it's there. You probably don't want to go on it, but if you have to, I guess you can. So, I I think this creates that opportunity to create this investment, create more stable investment. Um, and as more people do this, it will allow people to filter in and out of cryptocurrencies much easier than now. and much less costly. I think that's been the one thing >> I still see on the side is cryptocurrencies for all the hope and you know it still seems relatively expensive to transact. >> Yeah 100%. The other thing that these stable coins will do is they will force buying of treasuries short-term treasuries likely most um at scale this could result in lower uh front-end rates. Um, do you think that that's something that Bessence's done on purpose and he's going to be like, "Listen, I'm going to come with these policies because I'm going to rest control of the short end of the curve." Um, and and like how does that play out? Do we keep is that a way of keeping uh rates in check? Yeah, I think it's uh could be a huge benefit and I think you know he's certainly paid attention to it and it kind of amazed me and we talked about this years ago how few people were paying attention to Tether or to Circle and the amount of you know money that they had to be buying at, you know, to fund that. I think Circle was kind of the most transparent. It was really interesting to me. You know, there's a Black Rockck ETF that they own. You can take a look and see what they have. Um so you know it's clear that it's out there and as you see this growth it will you know gravitate towards that it could graduate towards commercial paper I think it will help not just treasure T- bill yields maybe people get more comfortable um at you know various ends so it it will be and that's the thing that cracks me up though is like it's been such an obvious market I think Caner was the first one to figure it out really trading with u tether right they they adopted that and understood hey here you have a huge client that in their case particularly wasn't even necessarily well received by the universe. So why not do business with them? I think Circle is cleaner and easier to work with. But to me, that's going to be the sort of thing you're going to see this immense transparency. You're going to know what people are buying or you're going to be able to guess pretty clearly because that was always one of the questions about Tether. Hey, you you can't really see their balance sheet. But, you know, I think Circle has broke that and I'm sure that a bunch of the stable coins that come out will again try and be very transparent. There's no reason not to be. If you're looking for a simple, secure way to invest and own physical gold and silver, visit our sister company, Hardass Assets Alliance, at hardassetsalliance.com. That's hardassallalliance.com. >> Yeah. So, Peter, you are immersed every single day in geopolitical briefs from people in the know, you know, the who's who of admirals and generals. Um, are what keeps you awake at night? Is it the geopolitical side of of things or is it something else? You talked about energy as something that was concerning. What are the key risks that people need to be on the lookout for? >> You know, I think it's this ongoing competition with China and you know, we were way ahead of this. I think back in 2018, General Bob Walsh, he actually worked with Trump 1.0 to define China as a strategic competitor and we are talking about a lot of these issues >> when no one else is talking about them. And you know, we kind of been ahead and I think that remains the thing. It's you know, you as a Navy person probably know this better than I do, but we've lost the shipping industry, right? We don't make ships anymore. We can't refuel. We can't refit our fleet. We're having trouble even, you know, just doing the maintenance we have. There's talk that we might have to use South Korea. So, I think we're along the right path when we kind of think about this production for security. The two things that worry me, I guess really with this kind of friction with China. I think we've got this ingenuity which is good that works for us. We've got this flexibility which is good for us. On the other hand, when Xi tells people to do something, they will do it and they will suffer through it. As soon as we say something, one third of the people think it's the best idea ever. One third think it's the worst idea ever. And the one/3's trying to muddle their way through whether it's a good idea or bad idea, only being hearing from the two sides that tell them it's either the best thing or worst thing. So I think our ability to manage this and fight through a longer term hiccup is problematic. And whether we will have the fortitude and the attention span, right? Hey, this is not going to be, hey, victory, mission accomplished. this is going to be years and years of dedication, focus. It's going to have to last past this administration to be successful. So, that to me is my worry. And I would say, and I I think this fits in reasonably well, but Spider Marks has been talking a lot now, and I've kind of started paraphrasing a little bit, that we may have moved from a post-war world to a pre-war world, and that we've kind of moved for the first time. >> And to me, the one thing that's good about that is people will make sacrifices, I think, if they think we're in a pre-war world, right? Yeah, >> if I'm told I'm doing something and maybe there has to be this plant near me because of competition with China, maybe I'm more willing to do that. Maybe I'm more willing to deal with some short-term inflation if there's a longer term goal in sight. So, it'll be interesting to see how that plays out. But I I really feel Spider's on to something when we talk that we've kind of vastened the glow of this post-war economy that really took an extra boost with the peace dividend post the Soviet Union and now we have to be in reality. Hey, this is not a safe world out there. We have to prepare for it and deter it. >> Wow. Everything is cyclical and um that's, you know, I know Spider as well and guy is brilliant. Um I hope he doesn't hear me say that, but um gosh, that that that that really characterizes it, doesn't it? That we're in a pre-World a prewar world. And so, you know, that's why you're seeing the administration moving so aggressively to shore up its resources, to shore up its manufacturing capabilities, etc. Wow. Do do you think that that pre-world uh world culminates with the invasion of Taiwan? >> You know, I I I think if we're successful, it doesn't result in the invasion. I think we get to the point that we are able to deter. Um I do think there's a real risk to Taiwan that over time, the US cares less about it. I Taiwan's probably the biggest >> indirect loser from our focus on making chips and things like that. like their ability right now they are so crucial to us >> and I think they're pretty crucial to China. So as even as China builds up their chip industry then I think the >> propensity for them to say hey Taiwan here's the deal we'll offer you now. We don't know what this deal will look like 5 years from now and we don't know what your buddies in the US are doing. They might care about you less. So I I still think it's going to be more of a political assumption if it happens at all. But, you know, again, and I do think if we're losing, which if we're beating China, you kind of want to beat them slowly because if you start beating them badly economically, that's when they do something to really deflect. >> Totally. Um, and and from their perspective, they have been they were embarrassed um for 100 years. Uh because they fell behind in technology and they're making sure that that never happens again. Um, now you talked about this pre-war environment. Is is there any way to stop to to to kind of skip over the next cycle and and and avoid war or do you think it's an inevitability? >> You know, I I think it comes down to one, I think Europe's going to play a huge role, right? Do they really start building up their military? Does NATO kind of rebuild itself as a true alliance, right? It kind of became >> very not aggressive. It wasn't postured for defense. Um, so yeah, I think we can get there, but it's only going to be by really having people believe we are big enough and strong enough and willing to use our capabilities that you don't want to, you know, cross that line. And I I think we're not there right now. I'm not sure that China is ready to cross that line. >> But that's probably more because they saw Russia's, you know, fiasco and G is worried about failing than he is necessarily about our, you know, global response to him. But yeah, I think that's what we have to do. And you know, we're going to have to figure out a lot of things. Um, you know, we're somehow eventually we're going to have to figure out how to work with Africa. Africa is the source of so many of these rarest critical minerals. There's so much opportunity there. I believe it's predicted by 2050. One or two of the African nations will certainly be the top, you know, in terms of population potentially, even certainly surpassing China. And yet, we don't seem to have a strategy there. and half of, you know, big chunks of Africa seem to be in strife at civil war. Um, you I I don't have any idea how to do anything about that. But I think that's also going to be a real hot spot. >> Yeah. >> Unliterally, unfortunately, >> the economist just published an article talking about how the the age of some of those leaders is so advanced. If you have you have leaders in the 80s and 90s, that's not going to last forever. That turnover always leads in strife. And when I turn when I talk to my old classmates that are now colonels, generals, admirals, Africa seems to be the battleground with China. Like that's where we're going head-to-head every single day. So, um, sounds like it's a very strategic area. >> Yeah. And I do think I will say I think this administration is maybe better prepared to deal with that. And again, I I'm hesitate to say some of this because I understand why we put so many constraints. We'd go to these countries and say, "Well, we want to deal with you, but you have to do this, this, this, and that for us to be comfortable dealing with you." And they're like, "Well, I don't want to do this, this, and that, and China doesn't care, so we're just going to deal with China." >> And I know we want to impose kind of our belief system on people, and I understand why we want to do that, but I think that's been a big negative in that region. >> I think China screwed up a lot of their projects. China's annoyed a lot of the people there. So there's a huge opportunity for us, but I think we're going to have to go in a little bit differently and more transactional, >> right? So I mean, we've been speaking about risks and threats for the last few minutes and sounds like it's a scary world, but you know, previous to that, you were saying that you're bullish and so um you know, again, how do you think about against all those risks? We talked about some ways to play the market. Any other thoughts on how to play the market, you know, in the cycle that we're in here and now? No, again look what the administration seems to own and make sure you own a chunk of that because I do think there's going to be ongoing support. I think look for you know I think what are these countries we're going to develop relationships. I think again there are other countries stocks have run up and you but you want to pick more individual. I I honestly think in the next you know few months we're going to see you know these kind of ESG type you know ETFs develop everywhere except for what we've been talking about on this show. How do you participate in crypto in those countries? How do you participate in electricity production? So, kind of, you know, I don't want to say the anti-ESG, but those I think will be the opportunities. How do you grow along that? And then I think figure out how to incorporate, you know, AI into your daily ritual into your businesses. How do you >> how do you be prepared for the next twist, right? >> Again, I do believe there's a lot of growth there. >> I feel like some of the leaders have a lot of that fully priced in. >> So, what are we missing? What's the next thing that in two years everyone's going to be like, "Oh, we should have seen that coming and let's see that coming in advance." >> In hindsight, it's always so obvious. And the other thing that I realized is that no matter what, I always end up in the tail. One way, shape, or form, you end up in that tail scenario. You know, to the positive or to the negative, you always end up in the tail. >> Uh Peter, >> I always uh you know, people talk about if you bought, you know, Apple at $1 and kept it to what it was 5,000. I'm like, "Yeah, I've had some of those stocks, but I usually sell half of it at $2, another quarter at $4, and by $10, I'm out." So, you know, it's hard to be greedy enough maybe sometimes. So, maybe that's what we should add is make sure you're greedy enough on these transformational technologies. >> Yeah. So, Peter, as we come to the end of this, um would be really helpful to really maybe talk a little bit about Academy Securities. Um you know, what you guys do, what you know, what content you provide and how you differentiate. >> Yeah, perfect. So, we've got, you know, my background is, as we've talked about, really kind of from the markets and fixed income credit side. And we now have over 30 retired generals, admirals, um, a few people from the CIA, though never quite sure about the CIA people because what they can tell you or can't tell you. Um, but I think it's really interesting. So, they have their perspective and many, you know, some actually became generals while, you know, being in the reserves, so they ran businesses. So, they bring a lot of acumen. They sit on a lot of different boards. They see a lot of different things. Um, and we get lucky sometimes. You know, one of our people, uh, Lesie Beavers, she had been the CIO of Department of Defense, so had a lot of really good insights there. Currently, General Tat's kind of taken a step back from us because he's currently under secretary of war, but someone that we know we talk to. So, I I think you get a good feel for what's going on. And I again, I think overall, we always have to talk about the risk. It's kind of that you if you don't prepare for the downside, >> but I think there's a lot of optimism. I think we see a lot of opportunity. I think, you know, we are going to have drones that impress the world in three to five years and they're not necessarily going to come from some of the big players, but there these things are being cultivated. There's a lot going on behind the scenes. So, I think they bring those skills and what we're finding is when we talk to corporations or investors, hey, we're really interested in this country or this project. We can bring a certain, you know, thing to bear. What I think has been really interesting and kind of I figured you I learned this early on, but if you're talking about a country, you know, a lot of the Wall Street experts who know people in those countries, they all went to Oxbridge together, the Ivy's together, and they tend to think one way. And our generals and admirals, by the time you reach that level, you're a half a politician. So they know the, you know, the military leaders in those countries and a lot of those countries, the military leaders are very influential in the politics. If not, they many become politicians themselves. So I think we bring a slightly different flavor and hey here's the color we're hearing from our sources on the ground and it may not necessarily mesh with the official story and you might not want to base it completely on our view but I think it's an intelligent and interesting way to think about it and again we kind of do this red team blue team type stuff. So we're always what would the other side do and I think you know I we always call the devil's advocate but same idea right what should the other side be doing I think it helps us frame this um so it's really interesting it lets you understand a lot and I think it's become increasingly important where and it's been a great benefit to me they are not political they were all apolitical certainly while serving and generally apolitical >> while not serving >> but that they bring an insight that gets lost in the noise of today's like I would say the worst thing I see in the world right now to me is never has it been so easy to get access to good and useful information and never have so few people cared to do it. >> So we're sitting on this golden opportunity, right? We can gro anything. We can chat GBT. We cl and get answers that are pretty reasonable and 90% of the population still seems to pass on Twitter headlines or, you know, Facebook headlines without reading anything. And that to me is a scary disconnect. we have all this information. You know, growing up, if you bet, oh, who hit 400 or, you know, 322 in what year? You couldn't find the answer. Now you can find the answer and people don't bother. And I I that scares me is we don't seem to be good at using the technology. Um, and maybe that's what we should be teaching in high school is technology use, how to use these things, how to make a Twitter or something like that or Tik Tok effective. Um it is kind of weird like you've talked about we have all these opportunities and there seems such a just lack of interest in using them. >> Yeah. Yeah. Really interesting. Just Yeah. There's so much information at our fingertips and very few people even realize it and it's really democratized I think a lot of access to everything finance and beyond. So hey >> yeah I think you know for people who've used it it's helped me develop through Twitter my network of people that I can reach out to. So again, there are people who you would have never have had an idea how you can contact, but if you send a few interesting things, they may respond and you can develop an actual dialogue. So if you use it, >> it's amazing. >> Awesome. Any last thoughts today, sir? No, I think unless you wanted to, you know, one thing that we both worked on a little bit is the idea of, you know, the uh crypto privateeers and using them as a way to uh try and, you know, protect ourselves because I don't think the official, you know, we're not prepared to do that. It's just not in the nature of the services that we currently have. Maybe in five years we'll have a cyber division or something that's really prepared to do this. But I feel right now we might have this sort of opportunity where we can empower some of the people who figured these technologies out to use them most effectively to protect us in ways that we currently aren't. >> Yeah. So Peter and I worked on some content together. We um you know we see an increasingly digital world and if you go back into the constitution there's a way uh that I mean what happened we essentially won the revolutionary war because we allowed private citizens to fight create a navy essentially and fight British commerce essentially eliminating the will to fight in London at the time and so our founders loved it so much they put the concept in the constitution people don't even realize it it's sitting there in article one and so Peter and I have been thinking about how do we leverage our history to restore for a lot of security um to the future because we've have many of our adversaries are waging war every single day on our companies. Um you know there again I was watching 60 Minutes and there's a whole segment on that as well you know um so yeah I I think that may be something that we should focus on the next episode. Peter, what do you think? >> Perfect. Yeah. No, and again it kind of fits some of our theme too about you know actual deterrence, right? We have to do these things and you know everyone knows North Korea is doing it. Why aren't we doing anything about it? Like we know our enemies are doing this. That feels like the next step in terms of this overall global battle is making sure people aren't cheating us. >> Well, yeah. And how can people connect with you, Peter? >> Um, you can reach me on Twitter at tfmkts or you can look me up at academyurities.com. Um, and feel free to reach out through me. >> Amazing. So, uh, gosh, man, I learned so much in this episode. You know, we learned about how deterrence through strength makes sense. We learned about how getting in front of the administration as you're starting to put through your investment thesis because the the government's moving and and and you should too. Um we learned about this now this pre-war mentality environment mentality and I think that's a new paradigm for me. It makes a ton of sense. Um but gosh, amazing thoughts today. Really enjoyed the conversation, Peter, and I hope to have you back on again soon. >> Thanks very much. And one thing we did not talk about much was bonds is I'm not worried about them. So I I don't know that they're going to be the best investment ever, but I I'm not worried about the deficit and inflation getting out of control. So I didn't spend much time trying to argue the case for bonds, but I think, you know, to the extent you've got an income part of your portfolio, I'm not, you know, you can be fine there. >> Got it. What percentage of portfolio should be crypto going forward? >> You know, I think right now you can be at the more aggressive end. It's going to depend on your own tolerance, but I would be kind of at the max and maybe increase what I would have thought the max is. Um, and I would be less in money markets. I'd be more aggressively either in the longer end of the yield curve, some in crypto. Um, you know, I lean towards ETH right now. I just think that's kind of the I feel that has the most potential maximum upside um in that and I am unfortunately doing it through ETFs just because um you know, I work for Wall Street so it's easier to do things through a broker dealer because it all has to be monitored. >> Oh, we have to >> we have to >> Yeah, you don't get you don't get yield in the ETF. So, I mean it's going to come eventually. >> That is the shame. That's the problem. So, you can capture the price move, but you can't get the full benefits. But again, I could probably have a whole another topic. I know you know the digital treasury asset company to me, you're going to see a whole range of things that do what ETFs did for stocks, which was democratize it, but also give access access to products that you couldn't get otherwise. I think you're going to see a whole range of new products that give us full access to cryptocurrencies in the ways that we're meant to. And that will be that next growth area. But sorry, now I'm babbling on. No, no, but but you love the digital asset treasuries which which makes me Peter. What makes me the most happy is we've been speaking about this subject for a very long time and you seem finally redpilled. I love it. >> Well, I will say I like the digital ass that are doing something that's interesting that gives you access to something. I don't like those that just buy a single thing and trade at a premium. So, some of that's going away, but I think there's huge opportunity. Again, not every single trade is going to work, but we're headed the right direction, I think, in what people are trying to accomplish with these. >> Amen. Well, hey man, thanks for coming on. Uh we'll have you back on on again soon and uh have a great day. >> You too. Thanks again, Chris. >> Cheers. >> Don't forget to sign up for a free portfolio review with one of our endorsed investment partners at wealthon.comfree. With markets hitting all-time highs, now is a great time to stress test your strategy and be prepared for what comes next. Thank you all for watching. We'll see you again next time. [Music]