Geopolitical Shifts: The podcast discusses the ongoing geopolitical tension between the Western dollar-based financial system and the global south, highlighting China's efforts to challenge Western leadership through initiatives like the Shanghai Cooperation Organization.
Energy Market Dynamics: Russia's energy sector is crucial for the BRICS block, with significant developments like the Power of Siberia 2 pipeline redirecting natural gas from Europe to China, indicating a shift in global energy alliances.
Tariff and Sanction Implications: The effectiveness of US tariffs and sanctions against BRICS nations, particularly India and Russia, is questioned, suggesting these measures may backfire and strengthen alliances within the BRICS nations.
Market Reactions: Despite geopolitical tensions and potential tariff escalations, global markets, including oil, are not currently pricing in significant geopolitical risk, indicating a belief in stable supply and demand dynamics.
Federal Reserve and Political Influence: The podcast suggests a potential erosion of the Federal Reserve's independence due to political pressures, with implications for US monetary policy and global liquidity.
European Energy and Auto Industry Challenges: Norway's energy policies and the EU's green transition pose challenges for Europe's energy stability, while the German auto industry faces existential threats due to geopolitical and economic shifts.
Future of BRICS and Global Economy: The potential for a unified BRICS to escape the Western dollar system could reshape global economic dynamics, with gold playing a central role in new reserve asset frameworks.
Transcript
The next battle then World War II, which is a a fight between the sort of western dollar-based financial system and the global south, Russia has defeated the West's economic war against it. Thoroughly defeated the West's economic war against it. And we think India will too. The war in Ukraine will be settled militarily and 6 to9 months things are going to look um very different than they do today. The war is lost. This is effectively the beginning of the end of the independence of the Federal Reserve. the EU will break up before the Germans allow their auto industry to be completely destroyed by Brussels. >> Major new developments are happening around the world geopolitically. Uh China just hosted its largest ever Shanghai Corporation Organization Summit with 20 world leaders including Xi Jinping and the major BRICS nations. Uh Xiinping unveiled the global governance initiative as a direct challenge to Western leadership. Meanwhile, Norway's coalition government broke up over EU energy policies with next week's election potentially becoming a referendum on energy sovereignty. We'll talk about how these issues will affect not just energy markets, but global markets overall. Duneberg is our guest today. He is the headwriter of the Doomberg Substack and as you can see, I'm not wearing a suit and that's because I am on vacation right now. Uh but I'm happy to be joined by Duneberg even when I'm currently out of the office. Welcome back to the show, Doomber. Good to see you, >> David. Great to see you my friend. >> So Xiinping skipped a brick summit in July but at the same time he sent his uh premier to attend. Now last week he hosted basically his own version of the brick summit world leaders in Shanghai for the Shanghai corporation organization. So what do you make of the fact that he skipped bricks but basically hosted his own? Yeah, I wouldn't read too much into um him skipping the bricks summit, although this the Shanghai Cooperation uh organization meeting was indeed historic and I think you framed it um quite well in that it is a direct challenge to the the uh rules-based international order as the sort of G7 countries would characterize it. Ultimately, we think it's just the next battle in World War II, which is a a fight between the sort of Western dollar-based financial system and the global south. And it's it wasn't just the SEO meeting. I think you you also have to take into context the parade that came right on the heels of that meeting. Um the 80y year anniversary of the end of World War II on the day that China celebrates it. was, must be said, a an an incredibly impressive parade, a sobering one, hopefully a wake-up call to um Western leaders. China is perennially underestimated in the West and those who have competed with and been in and around China for the past 20 years could see this writing on the wall coming very quickly. And I think um any honest appraisal of what transpired especially in the parade would say that um the western powers have a lot of catching up to do and one wonders whether they have the capacity to do that. Um not only did um you know a new global governance framework uh be announced at the SEO by Xiin Ping as you correctly stated also you know what appears to be an alternative to um the World Bank um is being developed that what we're seeing is a bifurcation of the world between US Britain Europe Canada Australia Japan South Korea for now those two countries um and the 7 billion people that make up the global south. And I I think um anybody who denies what was on display um kind of has their head in the sand. David, I you know, it was it was a truly historic week, a sobering one, and one that will have uh reverberating consequences for decades to come. >> How much is the energy sector in Russia going to be uh of importance relative to this block? In other words, will we see going back to your bifurcation point? Will we see scale producers from the US and potentially even OPEC facing even more pressure as potentially the east moves away from the OPEC region and US shale producers towards Russia more in the future? Is that possible? Yeah, major major announcement um at the SEO which is the binding legal agreement to build the power of Siberia 2 which effectively diverts natural gas that used to flow to Europe permanently to China through Mongolia. This is a project long long on the drawing board. Um some wondered whether it would not get done at all. Russia's energy is critical for that block but it is not alone. Um Iran is now a bricks member. Brazil, of course, the bee in bricks is quickly becoming an energy superpower as well. It's um oil production exceeding 4 million barrels a day. Um and so the the big earthquake in going into and coming out of that conference we think is that the west has lost India. And um the upcoming Doomberg pro talk for September is called losing India the geopolitical and energy consequ con consequences of a unified bricks. Um I think Trump is getting very bad advice on sanctions and tariffs. Um tariffs are an effective tool uh on the economic front for the US to use against countries where the US has military bases. If you notice, all of the deals have been cut with countries over which the US effectively has escalation dominance. As a tool of geopolitical force against the BRICS countries, it's backfiring. And they can sanction Russia as much as they want. It just doesn't work. We've been ringing this bell since April of 2022. So, it's it's a bipartisan indictment on our part. Biden was catastrophically wrong to do it. And Trump is even more so because he has less of an excuse. He has Biden's history to look up to to realize that this isn't going to work. And so it's no coincidence to us that the heaviest tariffs are against Brazil and India. This is a war against bricks. Um and India has decided to call Trump's bluff to absorb the tariffs to get even closer to Russia. As you probably know, India has a long-standing relationship with Russia. It buys many of its weapons from Russia. And um India maintains that the Biden administration secretly asked them to buy Russian oil to minimize disruptions um uh on the global oil markets in the aftermath of the outbreak of the war in Ukraine. And so the whiplash of American foreign policy that India is going through and and again the insults coming from certain Trump administration officials towards Modi and India are not going to have the effect that they think they do. And we think the most important moment of the SEO was when Putin and Modi got into the limousine together. And reports say they spent as much as 50 minutes talking um in the car. And you might wonder why they get in these limos. Well, they're extraordinarily protected from a eavesdropping perspective. And it allows world leaders like when Putin was in Alaska um getting in with Trump to speak um openly with the assurance that you know foreign intelligence agencies aren't listening in. Um >> well what do you think they talked about? I mean nobody knows. Let's speculate here. What's the deal of the agenda? I think if India is going to cut its ties with the US, um it could probably learn a thing or two for how Russia absorbed those blows for one and um I also suspect that Putin may have been mediating between China and India because they have long-standing border disputes that are a result of predominantly although not entirely of the manner in which you know um India was granted its independence from the British and the sloppy way in which certain borders were drawn and to the extent that Putin can um mediate between Modi and Xi Jinping. This is in Russia's significant interest of course because that block of Russia, China, India, North Korea is pretty powerful um both economically, population-wise, and militarily especially Russia, China, North Korea and Iran as we've seen uh in in the past few months. And so, um, if you actually watch the military parade, it was quite impressive. Um, and frankly, downright scary. >> The markets, the stock markets don't seem to, uh, be worried about the prospect of an escalation of tariffs. So, I'll ask you my next question, which is whether or not we will see an escalation of tariffs. As you alluded to earlier, uh, India got tariffs by the order of 50% by the US after buying Russian oil as punishment. And so my question is, if more question if more countries start buying Russian oil, will Trump escalate the tariffs and then we'll see retaliation and then we're back to liberation day 2.0. Look, access to the US market is important to many countries. Um the US was India's largest export destination, for example. Some 19 or 20% of its exports went to the US. But it's not existential. it is not worth your sovereignty. And if you read the Indian um papers, you know, um the propaganda coming out of India is wildly anti-Trump and wildly anti-American. And I think this is a seismic shift. Um by the way, Trump is catastrophically wrong on trying to get people to stop buying Russian oil. Again, we've been making this point since 2022. So if you're a big Trump fan, you know, at least give us credit for being consistent. The US Navy should be escorting every Russian oil tanker to market to drive the price of oil down as low as possible, preferably below Putin's break even price so he cannot make any profits on his oil sales. Sanctioning Russian oil is only going to cause global oil prices to skyrocket, which is only going to have Russia make higher profits on the oil that does get to the market. This is an insane policy. Um, it's backwards. It doesn't work and nobody's going to listen to him. So ultimately, there's only so much you can do with tariffs and sanctions. Russia has defeated the West's economic war against it. Thoroughly defeated the West's economic war against it. And we think India will too. Whatever India loses, China, Russia will just pick up the slack. That's a very powerful block. Um 7 billion people. Um and by the way, it's not like the things that India sends us we don't need. Do we want pharmaceuticals, you know, um for example? So look um it is a significant game-changing bifurcation of the world that has been accelerated by Trump overestimating his hand. Trump always assumes he has escalation dominance in any negotiation even when he doesn't and this is a flaw of his. I give him full credit for other aspects of his policy but in this case he's just dead wrong and we have to call it like we see it. >> Perhaps we'll see a little more stability on the war front in the east. fewer skirmishes between India and China perhaps. >> Yeah, I think Putin was probably trying to get a a grand settlement between the two because that would pave the way for an enormous amount of collaboration and it would cement cement the unity of bricks. >> And by the way, I mean, I I don't want to, you know, I'm no expert in the area, but it seems to be quite a solvable problem. um you know these these areas have been decades um uh under dispute and uh a few compromises on both sides that they could sell to their respective uh populations would seem in order. The real question now is sort of Pakistan India. We know with interest that Pakistan was there too. Um and so I know there's a lot of um hard feelings in India about the way Trump has been claiming credit for the ceasefire. Again, you you pick up on this if you read the Indian propaganda. Um and so we shall see. But it was I I I I'm afraid a very historic week, a consequential one as as and it's it's totally appropriate that this is how you open this conversation. Perhaps NU is basing India's 5-year growth plans on the Soviet one, perhaps modeling off of China as well. Maybe this has been going on for longer than we think. You have any thoughts on that? >> Yeah, well, look, I mean, I think Modi had high hopes for Trump 2.0. He was one of the first global leaders to visit Trump. Um, but I just think the tariffs um and the the the way in which the war between India and Pakistan was resolved have left a very bitter pill with Modi. um you know and and they're specifically applying tariffs against products that are uh really important to Mod's political base for example. So it's impossible for Modi not to believe that he is getting specific targeted um treatment you know by the the Trump administration and he's already called their bluff. again um a couple of points of GDP a point and a half of GDP which is what I believe the totality of um India's exports to the US is worth to that country is not going to cause a country to sacrifice its sovereignty and India with given its history and how hard it fought to get that sovereignty is not about to give it up regardless of who is demanding it and so I just think it's a a catastrophic error and one that is just really amazing to watch um happen in real time. >> Let's shift gears now and talk about oil itself. Tremendous volatility in June. This was when the uh Iran Israel situation escalated and then the US directly bombed Iranian um uh nuclear sites. Uh the the price didn't stay high for very long. I'll let you just comment on what happened that particular week and then we can look forward. >> Yeah. I think that big red bar that you see after um the tensions arose. Yeah, that that's when the market figured out that the US bombing of Iran's nuclear facilities was mostly theater and that uh that you know we have some pretty controversial views on that war, but ultimately Iran um showed itself quite capable of penetrating Israeli air defense systems with powerful missiles. And so um the oil market called this correctly from really the beginning. And oil traders of course who have all all manner of tools and capabilities that well exceed ours um were counting the tankers that were leaving and seeing very little in the way of disruption and and a very little chance that that allimportant straight would be closed. Um and so I think um the moment news of the quote unquote strike um broke on a a Saturday night, we call it the Saturday night live strike um which is the deadest of dead zones on television. Like we you could tell that Trump just wanted to get this over with and and claim some kind of a face saving uh tactical victory and move on and and the oil markets nailed it. I mean it it they they opened that Sunday kind of a a sucker bet getting everybody in thinking that um the strike was real and oil jumped a little bit and then it just faded all the way um back down to basically pre-war levels um as you can see on that chart there. So the oil markets right now are not pricing in um significant um geopolitical risk. You know our our equilibrium price for oil is around $56 a barrel. It's it's 6364 on your screen right now. Um that's that's not much in the way of geopolitical risk. >> Well, do you agree with the uh way markets are pricing in risk? >> Yeah, I think so. Um I think Trump's sanctions threats against Russian oil are a bluff that are going to be called. And so if there was a world where the millions of barrels a day that Russia puts onto the export markets were truly in jeopardy, you wouldn't see oil down here. Um, and you certainly would wouldn't see Brent where it is. Um, you know, because in a world where oil explodes, we think Trump will limit exports and West Texas Intermediate WTI might actually go down because of an inability to export that grade. Um, and so, you know, when we look across our market indicators, we have a few sort of pair trades that we look at for stress and, um, they're all screaming well supplied physical markets with very minimal geopolitical risk. Today >> I heard the opinion that oil has a potential 100% upside from here due to the fact that um uh the the demand for oil uh will continue to exceed supply output. Uh and the refining capabilities of the US are not going to be up to par to what it needs to be in order to meet this demand. Even if shale production increases under Trump, the US doesn't have the refining capability. And so there's going to be this continued crunch. the illusion of US oil and energy independence is just that an illusion. Uh what's your view on that? >> I just think that's dead wrong. Um as you know um so first of all if we have an inability to refine oil, oil gets cheaper and refined products get more expensive because oil can't be refined. Sits around. Oil is worthless until it gets to a refinery. So in a world where the world lost its ability to refine oil, the the price of crude would go down and the price of gasoline and jet fuel and and diesel would go way up. Um there's an enormous amount of oil all over the world. Um and there's engines switching to NGL's and natural gas and the price of NGL's and especially natural gas in North America is a drag on the price of crude oil. Plus everywhere we look, we're seeing an enormous amount of supply coming back online. OPEC getting back up to historical levels. Um Guyana, which had a really important under reportported election earlier this week. Um the incumbent president was elected overwhelmingly to a second term, which it it bodess well for the supply of oil. Argentina and the Vakam shale is beginning to reach its its um you know bend in the exponential in the growth. And all of this noise about Venezuela has the potential to unlock 3 to four million barrels a day of oil too over the next decade. Um if the US executes a color re revolution/regime change control uh you know regime change operation sorry in Venezuela. Venezuela used to produce four 4 and a.5 million barrels a day. It produces just about one. Now it has a the largest hydrocarbon resource base in the world. It's roughly on par with what Canada has and it should be producing what Canada does. And Canada produces 5 five and a half million barrel barrels a day of oil and a huge amount of natural gas. And we wrote a piece on all this called blooming flower. Once you have the super majors assembling in an area that tends to be an anchor uh from which growth comes uh in various different spokes and Venezuela's huge prize. It's no coincidence to us that US Navy Armada is assembling. The cover story of course is that um this is all about the drug cartels. The drug cartels are heavily involved in the oil trade um in Mexico and Venezuela. So there's a lot of overlap um between a anti-drug cartel war in a war over oil and gas. >> Yeah. And I read the news uh the US just scuttled a Venezuelan drug boat uh recently this week uh and there was uproar over that. I I want to shift gears now and talk about Ukraine, Russia. Prior to the summit in China, uh the Shanghai Corporation organization. Prior to that, we had Zalinski meeting with Trump and then before that Putin meeting with Trump. Again, the oil markets not moving too much on either of these summits. Perhaps not pricing in much change immediately in regards to the Ukraine war. What do you think is happening on that front? Look, I as we're talking yet another summit of the coalition of the willing in Paris was going on today and we seem to be right back at square one. Europeans demanding that they're going to be able to put their soldiers into Ukraine. Russia, of course, the whole point of the war in Ukraine from Russia's perspective was to prevent NATO uh and Ukraine marrying up and the presence of troops from NATO countries will be treated as belligerents and heavily targeted by Russians. um this war will be ended militarily. Um Zalinski and Putin are too far apart and no amount of cajoling or exaggerating about how close things are by Trump and their team is is going to um is going to close that gap. Um if Europe wants to fight the Russians, um I suppose they can do so. Um Trump should let them and should not actually get the US involved in such a war. Um but the Russians have made very clear what their what their demands are and ultimately this when when two sides are so far apart um the resolution will come from raw power and so there will be a military solution to this war is our view. It won't it doesn't look like it will go very well for NATO or Ukraine. We believe the war is lost. Um losing wars is hard as we're seeing. There's a huge amount of denial. Um, I would characterize the position of the the sort of European elite and we could talk about them, the Mcron and the Stars and the Vanderlanes as delusional. And if you look at their popularity ratings and the stability of their governments, how many of them are going to be on the scene anytime soon, you know, for much longer. Um, I saw that Macron's approval rating is down to 15%. Is the government is about to have a vote of confidence on the budget on Monday. That that looks likely to fail. That will likely trigger new elections. Starmer wildly unpopular. Many serious analysts now wondering whether Britain is on the the brink of a of a civil war. Um Starmer I believe is the least popular prime minister in the history of Britain. Um all across Western Europe we're seeing this rightward tilt/s sovereigntist movement backlash against Brussels and Brussels is in denial. I mean, Vanderlane is is truly one of the least capable politicians I've ever had the displeasure of listening to. Um, audibly incompetent, no idea what she's talking about. Um, and so I don't know how long this can go on. It it is quite the circus. Um, amazing to see. And so ultimately, um, for your original question, um, the war in Ukraine will be settled, um, militarily and 6 to9 months things are going to look, um, very different than they do today. What do you mean settled militarily? It started militarily. It progressed militarily. How is it going to be any different when you end it militarily? >> Well, there's there's two ways to end a war. Negotiated peace or total defeat, right? >> But you said there's already defeat. >> Well, I think the war is lost. >> There's a difference between a war's loss and total defeat. >> I see. >> So, a lost war is one that is unwinable. >> Um, and likely to be lost completely if continued. Um, we believe the war was lost when Ukraine's 2023 counteroffensive was widely acknowledged to have failed um in December of 2023. We said as much in April of 2024 in one of our doom zoom presentations called um walking into the abyss. Um and so the rest is sort of grinding attrition which the Russians have a long history of being quite good at. They're a much larger economy. their military-industrial complex is much much larger than Ukraine's, much larger than all of NATO's at this point, which the head of NATO readily admits. Um, and so, um, when a war is settled militarily, peace terms are dictated, not negotiated. >> Yeah. >> Um, that that's what I meant. >> Okay. But you don't you don't see any possibility of NATO actually putting troops in the ground at this point or the West or the Europeans for that matter. What you were just talking about, >> we we've been on this, you know, escalator ride. Um, up and down, up and down, up and down since Trump came into office. No, because NATO won't do it unless there's a ceasefire and they have US backing. The Russians have outright rejected such talk and the US is unwilling to meaningfully backs stop um uh other countries sending troops into a hot war. Um and so no, it's it's the point of all of this um coalition of willing is is to disrupt the peace process, to disrupt the rash between the US and Russia. Frankly, for whatever reason, Trump has allowed them to do that. He's getting very bad advice on this and also on tariffs and sanctions. Um, in our view, >> yeah, in September, Trump did not end the war in Ukraine on day one, like you said he would. But I think people have forgotten about that. But Hillary Clinton didn't forget about that. In fact, she recently said that she would nominate Trump for the Nobel Peace Prize if he ends the war in Ukraine without seceding territory to Russia. I'm not sure she's mocking him at this point, but anyway, what's the likelihood of this happening? Well, less than zero. >> Okay. >> I mean, what does this imply that if Russia keeps Crimea, for example, then Trump would be undeserving of the Nobel Peace Prize? Um, Solinski is still talking as though Ukraine is going to reoccupy Crimea, David. Um, which the Russians have been, >> you know, um, calling their own since 2014 and have had 11 years to fortify. Like, in what universe is that even plausible? When I say delusional, this is what I mean. um like in what universe is Ukraine going to reoccupy Crimea? Um I note with interest that um Trump's envoy Steve Woodoff has said as much. Um this is this is delusion. Um now if you see a a leadership change in Ukraine or significant, you know, further breakthroughs on the battlefield that cause real panic in the West, things could change. >> But what we're seeing right now, it's it's like um it's like um Groundhog Day. You look Mcronone is at a podium talking about sending French troops into Ukraine so long as there's a ceasefire and the US backs them. Like this has been rejected by all parties for months. And yet they keep saying the same thing over and over again expecting a different result. And so the Russians will view all of this as unserious and continue with what the Russians do, march from east to west with a grinding war of attrition. >> So to what extent is the Ukraine front still relevant for the oil markets at this point? >> Um not really all that relevant. Um, >> it's super relevant for Hungary and Slovakia, I suppose, because of the attacks on the old pipelines, but from a global perspective, that's not really all that important. Um, the molecules have been rerouted and um, they will continue to flow. If the things were any different, we'd see a wildly different chart than the one you showed earlier in the oil space. >> Yeah, it's also in Trump's best interest, I suppose, to, this is just a remark by myself, to to keep things under control. so not to uh disrupt or disturb the oil markets because he does want the Federal Reserve to lower rates. The Fed may or may not be looking at the oil markets. I'll let you comment on that and we're speaking right ahead of a Fed meeting in about a week and a half and markets are pricing in pretty much a certainty of a cut by next week. Um I'll let you comment on the dynamics between the Fed, oil, and Trump. Yeah, oil is certainly an input into the Fed's traditional models, although I don't think that's what's driving the decision-m at the moment. It is a raw political power struggle between the administration and the Federal Reserve. >> Um, we think the Lisa Cook affair is just the opening salvo in a lawfare campaign that will be used. You know, there's a fascinating and scary book called Three Felonies a Day. I'm not sure if you've ever heard of it, but it argues that the average American professional commits unknowingly at least three felonies a day. And if you go looking for a felony in Duneberg's life or David Lynn's life, uh, an aggressive prosecutor will be able to stitch one together. For example, any misdemeanor that that involves a bank can be upcharged to a felony, which is how the US government took down the the poker websites >> um back in the day. Um, and so, and it's also how they charge Trump with his felonies. Um, you know, anything that involves the banking system and breaks any law of consequence, you know, even if it's just a misdemeanor, can be upcharged as bank fraud. And so, if you go looking to charge somebody, you'll find felonies. Now, I happen to have read the documents in in the Cook affair, and it's pretty blatant. Um it would seem everybody has their day in court of course but when you're at the the governor at the board of Federal Reserve you know leaving yourself open to accusations of mortgage fraud would seem an unwise thing to do but again it's very clear that Paul is you know um the uh head of the housing uh you know Trump secretary of housing um is going after her and with the stated purpose to eject her from the board to put a far more friendly fed governor to Trump's ambitions. with regards to interest rates. That's very clear. Anybody who denies that is just not living in reality. But again, that's a dangerous precedent. Um, as we we've saying like once you start arresting former presidents, it's really hard to stop. And the US started arresting former presidents in 2023. And so, of course, now we're seeing um the revenge. And so, this becomes um kind of a dangerous precedent. Um, and and I think this is effectively the beginning of the end of the independence of the Federal Reserve. Some might argue that's a good thing, that there should not be an apolitical Federal Reserve, but some would argue there should not be a Federal Reserve at all. Um, and certainly not one that's out of reach from sort of executive um oversight. So, we shall see. It is fascinating times. You know, Trump is unique. I saw a tweet. I wish I could attribute it. Um, made me chuckle. 300 years from now, Trump will be viewed as a mythical figure that nobody believed actually existed. You know, he's just such a different political animal that it is kind of amazing and difficult to chronicle him in real time as a content creator. >> Okay. Well, on the Fed, if they do go ahead with what the markets are anticipating, which is the Fed cuts, the first cut by September, perhaps even another one by the end of the year, what's going to happen to uh US uh money supply, the global liquidity system? markets by markets I mean gold, Bitcoin, stock market indices are already pricing in a dramatic increase in liquidity which is why alltime highs we're seeing this week for gold I suppose. Uh now can we just comment on um on that front and whether or not uh uh you know the the markets are pricing in a correct assumption here which is that the economy will continue chugging along just fine. >> Yeah, I think it's a riskon moment for sure. I think the market might also be pricing in that once Trump gets his grip on the Fed, yield curve control can't be that far behind. I do think gold is also pricing in a unified bricks. Um in a world where a unified brick succeeds in escaping the westernbased dollar system, um gold is going to have to play a critical role in um the neutral reserve assets uh used for the settlement of imbalances in international trade. And so I think we're seeing a lot of signs for the market of um you know if Trump is going to execute he needs the Fed to um control the long bond um until growth materializes. You know I think that's Trump's grand gambit which is make America great again. Yes, we have to print our way through the friction of the transition but once we get to the other side we'll outgrow it which is what Besset has been saying on CNBC. And I think markets would be wise to price um price in that the president is likely to achieve achieve his objectives. >> Okay. Moving on to Norway. You recently wrote a piece and I'll just share this on my screen here. You recently wrote a piece about that Norway and the significance of Norway for the global energy uh markets. Here I'll just put this on the screen. This is from your Substack. Rounding swimmers while Norway risk going down with Europe's sinking energy ships. So I'll literally explain what that means. With the 1959 discovery of the giant groin natural gas fields in the Netherlands, interest in the hydrocarbon potential of the North Sea rose dramatically. Experts have previously doubted the prospects, but suddenly a rush for resources was on. Now, uh, recent election in Norway, what does this have to do with the global energy supply? Uh, I'll let you comment on this. >> Yeah, Norway is probably the best in the world at managing abundant energy resources. it it has been funneling excess revenues to a sovereign wealth fund that now has almost 2 trillion in it uh for a country as small as Norway that makes them one of the richest countries in the world. Norway also has a huge hydroelectric dam system that can in theory at least act as a battery um for Europe's uh energy grid which is of course um stuffed with intermittent wind and solar and in in great need of excess storage. But in reality, um, Norway's hydroele electricity was not designed for this. And if you scroll down, I'll show you a fascinating chart that they had electricity prices in Norway. Norway is building these large, you know, multi-gawatt interconnectors between itself and Britain and Denmark and so on. Um, and and that has basically connected what was once an incredibly stable, incredibly afford, scroll down even further. um an incredibly affordable, incredibly abundant electricity supply into uh into one of the most volatile ones, which is the European Union. I'm sorry, you're not locked in as paid. So, um I'll I'll send it to you after we get off, David. Um and so what we're seeing is now electricity prices are skyrocketing in Norway and volatility is hitting Norway and there's a a revolt um against um the EU using Norway's hydroele electricity for their own purposes at the expense of the citizens of Norway. There's an election coming this week. on a lot of topics. One of this is just one of them. The government actually failed on this very topic in January. Um and we'll see depending on the election outcomes. It could be that Norway cuts ties uh its energy ties with the EU. Um we don't think that's our base case, but it's certainly something to watch. Um ultimately, we suspect that Brussels will get its way. Uh but we shall see. It's a fascinating little side story to an election that um otherwise might not be on people's radars. >> Yeah. Any direct impact on crude prices? um not so much on crude. Um Norway is runs a very disciplined um ship in that regard. Um we're more thinking about the prospects of um you know grid issues in Europe. If the stabilization uh you know input from Norway gets suddenly removed if the if the electric if the hydroelectric rug gets pulled from under Europe um they could be in a pretty precarious situation. Especially Britain. Um Britain has a a new cable that connects it to Norway um since 2021. And in the absence of that large interconnector cable, it would have experienced rolling blackouts or brownouts or even a grid collapse by now. >> Well, what's your reaction to Europe's green transition and how that may impact its relationship with Norway, which has up until now been arguably the most um reliable energy partner for Europe. >> Yeah. No, I think it risks a lot, which is why, you know, when Brussels wants an election to go a certain way, they have an uncanny ability to put their thumb on the scale, and we suspect that will happen here. And as we said in the article, um I think Poly Market has it at 80% that the incumbent uh Labor Party uh prime minister will be u reelected. And so um small chance that that doesn't happen. And and if that doesn't happen, there could be big reverberations, but ultimately we think the people of Norway will be sacrificed to the grinding um you know catastrophe that is Brussels. And then that's rather unfortunate. You know Norway is not actually a member of the EU. um they kept their own currency but they were in the European Economic um alliance or whatever they call it the EA and they have um tied their um green energy ship to Europe and so it it's not even clear how they would be able to get out of these deals legally but there is a move of foot within Norwegian domestic politics to at least give it a try. Uh just segueing here to the last segment just out of personal interest. Um I follow the car market. Recently Mercedes reported 50% decrease in net profits for the last fiscal year. Uh the European car industry is kind of in trouble. They're still producing large combustion engines for the American market, but they're drilling that segment down for the European market. Um Brussels is pushing for a full uh zero trans, you know, zero as you know, zero um carbon emissions future while the auto industry is backing off from its EV promises because EV sales are just not good enough to sustain a business pretty much. And uh what we're going to see in the next coming years may be very interesting for the automotive industry, especially in Europe. What are your thoughts on that? >> Look, I think the German auto sector is a proxy for the decay of European geopolitical power and economic might. I think you're correct to finger that. >> Um, the old model was cheap energy from Russia, cheap labor from Eastern Europe, and strong export markets to the US and China. Well, China now has a a far superior auto industry to the Germans. Um, they have a huge lead in electric vehicles for sure and batteries. And the US is throwing up tariffs. Um, and their energy is gone. And so like the entire business model that propped up the German automakers and by proxy the German economy and by proxy the western European economy has been those each leg of that that stool has been cut off. It's not like they've lost just one, they've lost them all. And in fact the power of Siberia too getting the go-ahad permanently impairs Russ uh German heavy industry including the automakers. um you don't replace land, you know, uh uh pipeline natural gas um steadily supplied at cheap prices with LG and expect to be able to compete. >> Um and so I just think we too were wrote about Volkswagen and the German auto industry a couple of months ago. It is a is a huge canary in the coal mine for the decline of of Western Europe as a power. And so um we expect significant pain ahead um not just for the Germans but none of the big automakers Japanese, Korean, American, European are capitalized to only compete domestically and China BYD and all of the other domestic automakers are just producing vehicles on a scale for a cost that is just unbelievable. >> But they're tariffed to the moon though, right? And so they can't be, you know, used in Europe and US. >> Sure. But I mean the global south 7 billion people. I mean there's only again tariffs. General Motors is is is not capitalized to only compete in the US, right? And so neither is Volkswagen, you know, neither is uh >> Yes. Yes. And so I I if if the cheap really beautiful, you know, plug-in hybrid electric vehicles that China's cranking out for $10,000 um $12,000 um if they roll up Brazil, Indonesia, you know, uh India, all the big players of what's going to be left for um for the big automakers except for their home markets. Um well what is the future of the car going to look like in 1015 years if assuming the zero emissions targets are still maintained by governments but at the same time automakers are backing away from EV only sales models because EV sales are down uh what what does that mean for what the car will look like in 105 years? >> I think a car will look like it currently does in 10 to 15 years. um not much will change but I do think the growth is going to go to the Chinese automakers and um >> so the car makers will just absorb I guess >> they'll go or >> bankrupt or maybe like fines and then they'll pass a rising cost to consumers. >> Well, I mean the the the US and the Germans are not going to put their automakers out of business in the name of net zero. We're already seeing a backtracking on that. Um, so I think all all of that's going to go away, >> which is why I think the auto market, but like when I say bankrupt, I mean the the equity will be wiped out and they'll be recapitalized and jobs will be saved and, you know, all of that stuff. Um, but it's the the future doesn't bode well, but the Germans of the tip of that sphere for all the reasons that that I just said. >> Yeah. I mean I I don't I don't I don't I don't know how this is going to play out but I I would imagine the automakers especially in Europe are too powerful to allow uh this zero emission target to continue uh without fundamental changes to demand for EVs. Right. I mean they're going to lobby this back to non-existence. >> I I think the EU will break up before the Germans allow their auto industry to be completely destroyed by Brussels. >> EU will break up. Sorry, we have to end on this. What do you What do you mean? I mean, like there's enough stresses within the EU system now, like if Brussels is demanding that Germany essentially end its auto industry, >> one wonders whether the political revolt in Germany might lead to a new government that decides that it wants to get out of the EU. We're already seeing Hungary, Slovakia at the periphery, um, French debt crisis burgeoning. Um, you know, there's a lot of stress right now within the EU system. Um, we'll see. >> Excellent. Thank you very much, Jim B. Appreciate your thoughts as always. What are you working on right now? The Doomberg sub. Give us a teaser. Tell us where we can find you. >> And look, I Well, you can find everything at duneberg.com. But I I remember once watching a beautiful video of you playing the piano, which tells me that you are a a man, a man of class, a man of class and sophistication. And I I wanted to plug something a little different. Um, one of the Dubber co-founders and the editor-inchief has started her own passion project on Substack called Classics Read Aloud. You can imagine from the title >> what that means. Um, classics read aloud.substack.com. Check it out. Um, she just launched this week. It's really, really great stuff. Produced with Duneberg quality and Doomberg passion. Um, but this is clearly, you know, one of her strong passions in life, the old classic, short stories, novels, nollas. A little different than what we do, of course, but just shows you the breadth and depth of the Doomberg team. Classics read aloud.substack.com. David, check it out. >> Is this it? >> That's it. >> Wow. What kind of What kind of So, is it What kind of stories are, you know, can we expect here? >> You have to click and find out. She just launched her first one. She's got another one coming out um on Friday. I think she's going to do a Monday, Friday, Wednesday. They're about 40 minutes. Um, there you go. Good for you. Thank you, sir. Um, anyway, it was great, David. Great to talk to you again. Duneberg.com for all of our energy stuff. Um, and looking forward to coming back on later. >> Yeah, we'll see you soon. Thank you very much, Dunberg. And thank you for watching. Don't forget to follow Duneberg and uh plastic spread out links down below. We'll see you next time. Take care.
BRICS Readies 'Next Battle In WW3'; Ultimate Gameplan Revealed | Doomberg
Summary
Transcript
The next battle then World War II, which is a a fight between the sort of western dollar-based financial system and the global south, Russia has defeated the West's economic war against it. Thoroughly defeated the West's economic war against it. And we think India will too. The war in Ukraine will be settled militarily and 6 to9 months things are going to look um very different than they do today. The war is lost. This is effectively the beginning of the end of the independence of the Federal Reserve. the EU will break up before the Germans allow their auto industry to be completely destroyed by Brussels. >> Major new developments are happening around the world geopolitically. Uh China just hosted its largest ever Shanghai Corporation Organization Summit with 20 world leaders including Xi Jinping and the major BRICS nations. Uh Xiinping unveiled the global governance initiative as a direct challenge to Western leadership. Meanwhile, Norway's coalition government broke up over EU energy policies with next week's election potentially becoming a referendum on energy sovereignty. We'll talk about how these issues will affect not just energy markets, but global markets overall. Duneberg is our guest today. He is the headwriter of the Doomberg Substack and as you can see, I'm not wearing a suit and that's because I am on vacation right now. Uh but I'm happy to be joined by Duneberg even when I'm currently out of the office. Welcome back to the show, Doomber. Good to see you, >> David. Great to see you my friend. >> So Xiinping skipped a brick summit in July but at the same time he sent his uh premier to attend. Now last week he hosted basically his own version of the brick summit world leaders in Shanghai for the Shanghai corporation organization. So what do you make of the fact that he skipped bricks but basically hosted his own? Yeah, I wouldn't read too much into um him skipping the bricks summit, although this the Shanghai Cooperation uh organization meeting was indeed historic and I think you framed it um quite well in that it is a direct challenge to the the uh rules-based international order as the sort of G7 countries would characterize it. Ultimately, we think it's just the next battle in World War II, which is a a fight between the sort of Western dollar-based financial system and the global south. And it's it wasn't just the SEO meeting. I think you you also have to take into context the parade that came right on the heels of that meeting. Um the 80y year anniversary of the end of World War II on the day that China celebrates it. was, must be said, a an an incredibly impressive parade, a sobering one, hopefully a wake-up call to um Western leaders. China is perennially underestimated in the West and those who have competed with and been in and around China for the past 20 years could see this writing on the wall coming very quickly. And I think um any honest appraisal of what transpired especially in the parade would say that um the western powers have a lot of catching up to do and one wonders whether they have the capacity to do that. Um not only did um you know a new global governance framework uh be announced at the SEO by Xiin Ping as you correctly stated also you know what appears to be an alternative to um the World Bank um is being developed that what we're seeing is a bifurcation of the world between US Britain Europe Canada Australia Japan South Korea for now those two countries um and the 7 billion people that make up the global south. And I I think um anybody who denies what was on display um kind of has their head in the sand. David, I you know, it was it was a truly historic week, a sobering one, and one that will have uh reverberating consequences for decades to come. >> How much is the energy sector in Russia going to be uh of importance relative to this block? In other words, will we see going back to your bifurcation point? Will we see scale producers from the US and potentially even OPEC facing even more pressure as potentially the east moves away from the OPEC region and US shale producers towards Russia more in the future? Is that possible? Yeah, major major announcement um at the SEO which is the binding legal agreement to build the power of Siberia 2 which effectively diverts natural gas that used to flow to Europe permanently to China through Mongolia. This is a project long long on the drawing board. Um some wondered whether it would not get done at all. Russia's energy is critical for that block but it is not alone. Um Iran is now a bricks member. Brazil, of course, the bee in bricks is quickly becoming an energy superpower as well. It's um oil production exceeding 4 million barrels a day. Um and so the the big earthquake in going into and coming out of that conference we think is that the west has lost India. And um the upcoming Doomberg pro talk for September is called losing India the geopolitical and energy consequ con consequences of a unified bricks. Um I think Trump is getting very bad advice on sanctions and tariffs. Um tariffs are an effective tool uh on the economic front for the US to use against countries where the US has military bases. If you notice, all of the deals have been cut with countries over which the US effectively has escalation dominance. As a tool of geopolitical force against the BRICS countries, it's backfiring. And they can sanction Russia as much as they want. It just doesn't work. We've been ringing this bell since April of 2022. So, it's it's a bipartisan indictment on our part. Biden was catastrophically wrong to do it. And Trump is even more so because he has less of an excuse. He has Biden's history to look up to to realize that this isn't going to work. And so it's no coincidence to us that the heaviest tariffs are against Brazil and India. This is a war against bricks. Um and India has decided to call Trump's bluff to absorb the tariffs to get even closer to Russia. As you probably know, India has a long-standing relationship with Russia. It buys many of its weapons from Russia. And um India maintains that the Biden administration secretly asked them to buy Russian oil to minimize disruptions um uh on the global oil markets in the aftermath of the outbreak of the war in Ukraine. And so the whiplash of American foreign policy that India is going through and and again the insults coming from certain Trump administration officials towards Modi and India are not going to have the effect that they think they do. And we think the most important moment of the SEO was when Putin and Modi got into the limousine together. And reports say they spent as much as 50 minutes talking um in the car. And you might wonder why they get in these limos. Well, they're extraordinarily protected from a eavesdropping perspective. And it allows world leaders like when Putin was in Alaska um getting in with Trump to speak um openly with the assurance that you know foreign intelligence agencies aren't listening in. Um >> well what do you think they talked about? I mean nobody knows. Let's speculate here. What's the deal of the agenda? I think if India is going to cut its ties with the US, um it could probably learn a thing or two for how Russia absorbed those blows for one and um I also suspect that Putin may have been mediating between China and India because they have long-standing border disputes that are a result of predominantly although not entirely of the manner in which you know um India was granted its independence from the British and the sloppy way in which certain borders were drawn and to the extent that Putin can um mediate between Modi and Xi Jinping. This is in Russia's significant interest of course because that block of Russia, China, India, North Korea is pretty powerful um both economically, population-wise, and militarily especially Russia, China, North Korea and Iran as we've seen uh in in the past few months. And so, um, if you actually watch the military parade, it was quite impressive. Um, and frankly, downright scary. >> The markets, the stock markets don't seem to, uh, be worried about the prospect of an escalation of tariffs. So, I'll ask you my next question, which is whether or not we will see an escalation of tariffs. As you alluded to earlier, uh, India got tariffs by the order of 50% by the US after buying Russian oil as punishment. And so my question is, if more question if more countries start buying Russian oil, will Trump escalate the tariffs and then we'll see retaliation and then we're back to liberation day 2.0. Look, access to the US market is important to many countries. Um the US was India's largest export destination, for example. Some 19 or 20% of its exports went to the US. But it's not existential. it is not worth your sovereignty. And if you read the Indian um papers, you know, um the propaganda coming out of India is wildly anti-Trump and wildly anti-American. And I think this is a seismic shift. Um by the way, Trump is catastrophically wrong on trying to get people to stop buying Russian oil. Again, we've been making this point since 2022. So if you're a big Trump fan, you know, at least give us credit for being consistent. The US Navy should be escorting every Russian oil tanker to market to drive the price of oil down as low as possible, preferably below Putin's break even price so he cannot make any profits on his oil sales. Sanctioning Russian oil is only going to cause global oil prices to skyrocket, which is only going to have Russia make higher profits on the oil that does get to the market. This is an insane policy. Um, it's backwards. It doesn't work and nobody's going to listen to him. So ultimately, there's only so much you can do with tariffs and sanctions. Russia has defeated the West's economic war against it. Thoroughly defeated the West's economic war against it. And we think India will too. Whatever India loses, China, Russia will just pick up the slack. That's a very powerful block. Um 7 billion people. Um and by the way, it's not like the things that India sends us we don't need. Do we want pharmaceuticals, you know, um for example? So look um it is a significant game-changing bifurcation of the world that has been accelerated by Trump overestimating his hand. Trump always assumes he has escalation dominance in any negotiation even when he doesn't and this is a flaw of his. I give him full credit for other aspects of his policy but in this case he's just dead wrong and we have to call it like we see it. >> Perhaps we'll see a little more stability on the war front in the east. fewer skirmishes between India and China perhaps. >> Yeah, I think Putin was probably trying to get a a grand settlement between the two because that would pave the way for an enormous amount of collaboration and it would cement cement the unity of bricks. >> And by the way, I mean, I I don't want to, you know, I'm no expert in the area, but it seems to be quite a solvable problem. um you know these these areas have been decades um uh under dispute and uh a few compromises on both sides that they could sell to their respective uh populations would seem in order. The real question now is sort of Pakistan India. We know with interest that Pakistan was there too. Um and so I know there's a lot of um hard feelings in India about the way Trump has been claiming credit for the ceasefire. Again, you you pick up on this if you read the Indian propaganda. Um and so we shall see. But it was I I I I'm afraid a very historic week, a consequential one as as and it's it's totally appropriate that this is how you open this conversation. Perhaps NU is basing India's 5-year growth plans on the Soviet one, perhaps modeling off of China as well. Maybe this has been going on for longer than we think. You have any thoughts on that? >> Yeah, well, look, I mean, I think Modi had high hopes for Trump 2.0. He was one of the first global leaders to visit Trump. Um, but I just think the tariffs um and the the the way in which the war between India and Pakistan was resolved have left a very bitter pill with Modi. um you know and and they're specifically applying tariffs against products that are uh really important to Mod's political base for example. So it's impossible for Modi not to believe that he is getting specific targeted um treatment you know by the the Trump administration and he's already called their bluff. again um a couple of points of GDP a point and a half of GDP which is what I believe the totality of um India's exports to the US is worth to that country is not going to cause a country to sacrifice its sovereignty and India with given its history and how hard it fought to get that sovereignty is not about to give it up regardless of who is demanding it and so I just think it's a a catastrophic error and one that is just really amazing to watch um happen in real time. >> Let's shift gears now and talk about oil itself. Tremendous volatility in June. This was when the uh Iran Israel situation escalated and then the US directly bombed Iranian um uh nuclear sites. Uh the the price didn't stay high for very long. I'll let you just comment on what happened that particular week and then we can look forward. >> Yeah. I think that big red bar that you see after um the tensions arose. Yeah, that that's when the market figured out that the US bombing of Iran's nuclear facilities was mostly theater and that uh that you know we have some pretty controversial views on that war, but ultimately Iran um showed itself quite capable of penetrating Israeli air defense systems with powerful missiles. And so um the oil market called this correctly from really the beginning. And oil traders of course who have all all manner of tools and capabilities that well exceed ours um were counting the tankers that were leaving and seeing very little in the way of disruption and and a very little chance that that allimportant straight would be closed. Um and so I think um the moment news of the quote unquote strike um broke on a a Saturday night, we call it the Saturday night live strike um which is the deadest of dead zones on television. Like we you could tell that Trump just wanted to get this over with and and claim some kind of a face saving uh tactical victory and move on and and the oil markets nailed it. I mean it it they they opened that Sunday kind of a a sucker bet getting everybody in thinking that um the strike was real and oil jumped a little bit and then it just faded all the way um back down to basically pre-war levels um as you can see on that chart there. So the oil markets right now are not pricing in um significant um geopolitical risk. You know our our equilibrium price for oil is around $56 a barrel. It's it's 6364 on your screen right now. Um that's that's not much in the way of geopolitical risk. >> Well, do you agree with the uh way markets are pricing in risk? >> Yeah, I think so. Um I think Trump's sanctions threats against Russian oil are a bluff that are going to be called. And so if there was a world where the millions of barrels a day that Russia puts onto the export markets were truly in jeopardy, you wouldn't see oil down here. Um, and you certainly would wouldn't see Brent where it is. Um, you know, because in a world where oil explodes, we think Trump will limit exports and West Texas Intermediate WTI might actually go down because of an inability to export that grade. Um, and so, you know, when we look across our market indicators, we have a few sort of pair trades that we look at for stress and, um, they're all screaming well supplied physical markets with very minimal geopolitical risk. Today >> I heard the opinion that oil has a potential 100% upside from here due to the fact that um uh the the demand for oil uh will continue to exceed supply output. Uh and the refining capabilities of the US are not going to be up to par to what it needs to be in order to meet this demand. Even if shale production increases under Trump, the US doesn't have the refining capability. And so there's going to be this continued crunch. the illusion of US oil and energy independence is just that an illusion. Uh what's your view on that? >> I just think that's dead wrong. Um as you know um so first of all if we have an inability to refine oil, oil gets cheaper and refined products get more expensive because oil can't be refined. Sits around. Oil is worthless until it gets to a refinery. So in a world where the world lost its ability to refine oil, the the price of crude would go down and the price of gasoline and jet fuel and and diesel would go way up. Um there's an enormous amount of oil all over the world. Um and there's engines switching to NGL's and natural gas and the price of NGL's and especially natural gas in North America is a drag on the price of crude oil. Plus everywhere we look, we're seeing an enormous amount of supply coming back online. OPEC getting back up to historical levels. Um Guyana, which had a really important under reportported election earlier this week. Um the incumbent president was elected overwhelmingly to a second term, which it it bodess well for the supply of oil. Argentina and the Vakam shale is beginning to reach its its um you know bend in the exponential in the growth. And all of this noise about Venezuela has the potential to unlock 3 to four million barrels a day of oil too over the next decade. Um if the US executes a color re revolution/regime change control uh you know regime change operation sorry in Venezuela. Venezuela used to produce four 4 and a.5 million barrels a day. It produces just about one. Now it has a the largest hydrocarbon resource base in the world. It's roughly on par with what Canada has and it should be producing what Canada does. And Canada produces 5 five and a half million barrel barrels a day of oil and a huge amount of natural gas. And we wrote a piece on all this called blooming flower. Once you have the super majors assembling in an area that tends to be an anchor uh from which growth comes uh in various different spokes and Venezuela's huge prize. It's no coincidence to us that US Navy Armada is assembling. The cover story of course is that um this is all about the drug cartels. The drug cartels are heavily involved in the oil trade um in Mexico and Venezuela. So there's a lot of overlap um between a anti-drug cartel war in a war over oil and gas. >> Yeah. And I read the news uh the US just scuttled a Venezuelan drug boat uh recently this week uh and there was uproar over that. I I want to shift gears now and talk about Ukraine, Russia. Prior to the summit in China, uh the Shanghai Corporation organization. Prior to that, we had Zalinski meeting with Trump and then before that Putin meeting with Trump. Again, the oil markets not moving too much on either of these summits. Perhaps not pricing in much change immediately in regards to the Ukraine war. What do you think is happening on that front? Look, I as we're talking yet another summit of the coalition of the willing in Paris was going on today and we seem to be right back at square one. Europeans demanding that they're going to be able to put their soldiers into Ukraine. Russia, of course, the whole point of the war in Ukraine from Russia's perspective was to prevent NATO uh and Ukraine marrying up and the presence of troops from NATO countries will be treated as belligerents and heavily targeted by Russians. um this war will be ended militarily. Um Zalinski and Putin are too far apart and no amount of cajoling or exaggerating about how close things are by Trump and their team is is going to um is going to close that gap. Um if Europe wants to fight the Russians, um I suppose they can do so. Um Trump should let them and should not actually get the US involved in such a war. Um but the Russians have made very clear what their what their demands are and ultimately this when when two sides are so far apart um the resolution will come from raw power and so there will be a military solution to this war is our view. It won't it doesn't look like it will go very well for NATO or Ukraine. We believe the war is lost. Um losing wars is hard as we're seeing. There's a huge amount of denial. Um, I would characterize the position of the the sort of European elite and we could talk about them, the Mcron and the Stars and the Vanderlanes as delusional. And if you look at their popularity ratings and the stability of their governments, how many of them are going to be on the scene anytime soon, you know, for much longer. Um, I saw that Macron's approval rating is down to 15%. Is the government is about to have a vote of confidence on the budget on Monday. That that looks likely to fail. That will likely trigger new elections. Starmer wildly unpopular. Many serious analysts now wondering whether Britain is on the the brink of a of a civil war. Um Starmer I believe is the least popular prime minister in the history of Britain. Um all across Western Europe we're seeing this rightward tilt/s sovereigntist movement backlash against Brussels and Brussels is in denial. I mean, Vanderlane is is truly one of the least capable politicians I've ever had the displeasure of listening to. Um, audibly incompetent, no idea what she's talking about. Um, and so I don't know how long this can go on. It it is quite the circus. Um, amazing to see. And so ultimately, um, for your original question, um, the war in Ukraine will be settled, um, militarily and 6 to9 months things are going to look, um, very different than they do today. What do you mean settled militarily? It started militarily. It progressed militarily. How is it going to be any different when you end it militarily? >> Well, there's there's two ways to end a war. Negotiated peace or total defeat, right? >> But you said there's already defeat. >> Well, I think the war is lost. >> There's a difference between a war's loss and total defeat. >> I see. >> So, a lost war is one that is unwinable. >> Um, and likely to be lost completely if continued. Um, we believe the war was lost when Ukraine's 2023 counteroffensive was widely acknowledged to have failed um in December of 2023. We said as much in April of 2024 in one of our doom zoom presentations called um walking into the abyss. Um and so the rest is sort of grinding attrition which the Russians have a long history of being quite good at. They're a much larger economy. their military-industrial complex is much much larger than Ukraine's, much larger than all of NATO's at this point, which the head of NATO readily admits. Um, and so, um, when a war is settled militarily, peace terms are dictated, not negotiated. >> Yeah. >> Um, that that's what I meant. >> Okay. But you don't you don't see any possibility of NATO actually putting troops in the ground at this point or the West or the Europeans for that matter. What you were just talking about, >> we we've been on this, you know, escalator ride. Um, up and down, up and down, up and down since Trump came into office. No, because NATO won't do it unless there's a ceasefire and they have US backing. The Russians have outright rejected such talk and the US is unwilling to meaningfully backs stop um uh other countries sending troops into a hot war. Um and so no, it's it's the point of all of this um coalition of willing is is to disrupt the peace process, to disrupt the rash between the US and Russia. Frankly, for whatever reason, Trump has allowed them to do that. He's getting very bad advice on this and also on tariffs and sanctions. Um, in our view, >> yeah, in September, Trump did not end the war in Ukraine on day one, like you said he would. But I think people have forgotten about that. But Hillary Clinton didn't forget about that. In fact, she recently said that she would nominate Trump for the Nobel Peace Prize if he ends the war in Ukraine without seceding territory to Russia. I'm not sure she's mocking him at this point, but anyway, what's the likelihood of this happening? Well, less than zero. >> Okay. >> I mean, what does this imply that if Russia keeps Crimea, for example, then Trump would be undeserving of the Nobel Peace Prize? Um, Solinski is still talking as though Ukraine is going to reoccupy Crimea, David. Um, which the Russians have been, >> you know, um, calling their own since 2014 and have had 11 years to fortify. Like, in what universe is that even plausible? When I say delusional, this is what I mean. um like in what universe is Ukraine going to reoccupy Crimea? Um I note with interest that um Trump's envoy Steve Woodoff has said as much. Um this is this is delusion. Um now if you see a a leadership change in Ukraine or significant, you know, further breakthroughs on the battlefield that cause real panic in the West, things could change. >> But what we're seeing right now, it's it's like um it's like um Groundhog Day. You look Mcronone is at a podium talking about sending French troops into Ukraine so long as there's a ceasefire and the US backs them. Like this has been rejected by all parties for months. And yet they keep saying the same thing over and over again expecting a different result. And so the Russians will view all of this as unserious and continue with what the Russians do, march from east to west with a grinding war of attrition. >> So to what extent is the Ukraine front still relevant for the oil markets at this point? >> Um not really all that relevant. Um, >> it's super relevant for Hungary and Slovakia, I suppose, because of the attacks on the old pipelines, but from a global perspective, that's not really all that important. Um, the molecules have been rerouted and um, they will continue to flow. If the things were any different, we'd see a wildly different chart than the one you showed earlier in the oil space. >> Yeah, it's also in Trump's best interest, I suppose, to, this is just a remark by myself, to to keep things under control. so not to uh disrupt or disturb the oil markets because he does want the Federal Reserve to lower rates. The Fed may or may not be looking at the oil markets. I'll let you comment on that and we're speaking right ahead of a Fed meeting in about a week and a half and markets are pricing in pretty much a certainty of a cut by next week. Um I'll let you comment on the dynamics between the Fed, oil, and Trump. Yeah, oil is certainly an input into the Fed's traditional models, although I don't think that's what's driving the decision-m at the moment. It is a raw political power struggle between the administration and the Federal Reserve. >> Um, we think the Lisa Cook affair is just the opening salvo in a lawfare campaign that will be used. You know, there's a fascinating and scary book called Three Felonies a Day. I'm not sure if you've ever heard of it, but it argues that the average American professional commits unknowingly at least three felonies a day. And if you go looking for a felony in Duneberg's life or David Lynn's life, uh, an aggressive prosecutor will be able to stitch one together. For example, any misdemeanor that that involves a bank can be upcharged to a felony, which is how the US government took down the the poker websites >> um back in the day. Um, and so, and it's also how they charge Trump with his felonies. Um, you know, anything that involves the banking system and breaks any law of consequence, you know, even if it's just a misdemeanor, can be upcharged as bank fraud. And so, if you go looking to charge somebody, you'll find felonies. Now, I happen to have read the documents in in the Cook affair, and it's pretty blatant. Um it would seem everybody has their day in court of course but when you're at the the governor at the board of Federal Reserve you know leaving yourself open to accusations of mortgage fraud would seem an unwise thing to do but again it's very clear that Paul is you know um the uh head of the housing uh you know Trump secretary of housing um is going after her and with the stated purpose to eject her from the board to put a far more friendly fed governor to Trump's ambitions. with regards to interest rates. That's very clear. Anybody who denies that is just not living in reality. But again, that's a dangerous precedent. Um, as we we've saying like once you start arresting former presidents, it's really hard to stop. And the US started arresting former presidents in 2023. And so, of course, now we're seeing um the revenge. And so, this becomes um kind of a dangerous precedent. Um, and and I think this is effectively the beginning of the end of the independence of the Federal Reserve. Some might argue that's a good thing, that there should not be an apolitical Federal Reserve, but some would argue there should not be a Federal Reserve at all. Um, and certainly not one that's out of reach from sort of executive um oversight. So, we shall see. It is fascinating times. You know, Trump is unique. I saw a tweet. I wish I could attribute it. Um, made me chuckle. 300 years from now, Trump will be viewed as a mythical figure that nobody believed actually existed. You know, he's just such a different political animal that it is kind of amazing and difficult to chronicle him in real time as a content creator. >> Okay. Well, on the Fed, if they do go ahead with what the markets are anticipating, which is the Fed cuts, the first cut by September, perhaps even another one by the end of the year, what's going to happen to uh US uh money supply, the global liquidity system? markets by markets I mean gold, Bitcoin, stock market indices are already pricing in a dramatic increase in liquidity which is why alltime highs we're seeing this week for gold I suppose. Uh now can we just comment on um on that front and whether or not uh uh you know the the markets are pricing in a correct assumption here which is that the economy will continue chugging along just fine. >> Yeah, I think it's a riskon moment for sure. I think the market might also be pricing in that once Trump gets his grip on the Fed, yield curve control can't be that far behind. I do think gold is also pricing in a unified bricks. Um in a world where a unified brick succeeds in escaping the westernbased dollar system, um gold is going to have to play a critical role in um the neutral reserve assets uh used for the settlement of imbalances in international trade. And so I think we're seeing a lot of signs for the market of um you know if Trump is going to execute he needs the Fed to um control the long bond um until growth materializes. You know I think that's Trump's grand gambit which is make America great again. Yes, we have to print our way through the friction of the transition but once we get to the other side we'll outgrow it which is what Besset has been saying on CNBC. And I think markets would be wise to price um price in that the president is likely to achieve achieve his objectives. >> Okay. Moving on to Norway. You recently wrote a piece and I'll just share this on my screen here. You recently wrote a piece about that Norway and the significance of Norway for the global energy uh markets. Here I'll just put this on the screen. This is from your Substack. Rounding swimmers while Norway risk going down with Europe's sinking energy ships. So I'll literally explain what that means. With the 1959 discovery of the giant groin natural gas fields in the Netherlands, interest in the hydrocarbon potential of the North Sea rose dramatically. Experts have previously doubted the prospects, but suddenly a rush for resources was on. Now, uh, recent election in Norway, what does this have to do with the global energy supply? Uh, I'll let you comment on this. >> Yeah, Norway is probably the best in the world at managing abundant energy resources. it it has been funneling excess revenues to a sovereign wealth fund that now has almost 2 trillion in it uh for a country as small as Norway that makes them one of the richest countries in the world. Norway also has a huge hydroelectric dam system that can in theory at least act as a battery um for Europe's uh energy grid which is of course um stuffed with intermittent wind and solar and in in great need of excess storage. But in reality, um, Norway's hydroele electricity was not designed for this. And if you scroll down, I'll show you a fascinating chart that they had electricity prices in Norway. Norway is building these large, you know, multi-gawatt interconnectors between itself and Britain and Denmark and so on. Um, and and that has basically connected what was once an incredibly stable, incredibly afford, scroll down even further. um an incredibly affordable, incredibly abundant electricity supply into uh into one of the most volatile ones, which is the European Union. I'm sorry, you're not locked in as paid. So, um I'll I'll send it to you after we get off, David. Um and so what we're seeing is now electricity prices are skyrocketing in Norway and volatility is hitting Norway and there's a a revolt um against um the EU using Norway's hydroele electricity for their own purposes at the expense of the citizens of Norway. There's an election coming this week. on a lot of topics. One of this is just one of them. The government actually failed on this very topic in January. Um and we'll see depending on the election outcomes. It could be that Norway cuts ties uh its energy ties with the EU. Um we don't think that's our base case, but it's certainly something to watch. Um ultimately, we suspect that Brussels will get its way. Uh but we shall see. It's a fascinating little side story to an election that um otherwise might not be on people's radars. >> Yeah. Any direct impact on crude prices? um not so much on crude. Um Norway is runs a very disciplined um ship in that regard. Um we're more thinking about the prospects of um you know grid issues in Europe. If the stabilization uh you know input from Norway gets suddenly removed if the if the electric if the hydroelectric rug gets pulled from under Europe um they could be in a pretty precarious situation. Especially Britain. Um Britain has a a new cable that connects it to Norway um since 2021. And in the absence of that large interconnector cable, it would have experienced rolling blackouts or brownouts or even a grid collapse by now. >> Well, what's your reaction to Europe's green transition and how that may impact its relationship with Norway, which has up until now been arguably the most um reliable energy partner for Europe. >> Yeah. No, I think it risks a lot, which is why, you know, when Brussels wants an election to go a certain way, they have an uncanny ability to put their thumb on the scale, and we suspect that will happen here. And as we said in the article, um I think Poly Market has it at 80% that the incumbent uh Labor Party uh prime minister will be u reelected. And so um small chance that that doesn't happen. And and if that doesn't happen, there could be big reverberations, but ultimately we think the people of Norway will be sacrificed to the grinding um you know catastrophe that is Brussels. And then that's rather unfortunate. You know Norway is not actually a member of the EU. um they kept their own currency but they were in the European Economic um alliance or whatever they call it the EA and they have um tied their um green energy ship to Europe and so it it's not even clear how they would be able to get out of these deals legally but there is a move of foot within Norwegian domestic politics to at least give it a try. Uh just segueing here to the last segment just out of personal interest. Um I follow the car market. Recently Mercedes reported 50% decrease in net profits for the last fiscal year. Uh the European car industry is kind of in trouble. They're still producing large combustion engines for the American market, but they're drilling that segment down for the European market. Um Brussels is pushing for a full uh zero trans, you know, zero as you know, zero um carbon emissions future while the auto industry is backing off from its EV promises because EV sales are just not good enough to sustain a business pretty much. And uh what we're going to see in the next coming years may be very interesting for the automotive industry, especially in Europe. What are your thoughts on that? >> Look, I think the German auto sector is a proxy for the decay of European geopolitical power and economic might. I think you're correct to finger that. >> Um, the old model was cheap energy from Russia, cheap labor from Eastern Europe, and strong export markets to the US and China. Well, China now has a a far superior auto industry to the Germans. Um, they have a huge lead in electric vehicles for sure and batteries. And the US is throwing up tariffs. Um, and their energy is gone. And so like the entire business model that propped up the German automakers and by proxy the German economy and by proxy the western European economy has been those each leg of that that stool has been cut off. It's not like they've lost just one, they've lost them all. And in fact the power of Siberia too getting the go-ahad permanently impairs Russ uh German heavy industry including the automakers. um you don't replace land, you know, uh uh pipeline natural gas um steadily supplied at cheap prices with LG and expect to be able to compete. >> Um and so I just think we too were wrote about Volkswagen and the German auto industry a couple of months ago. It is a is a huge canary in the coal mine for the decline of of Western Europe as a power. And so um we expect significant pain ahead um not just for the Germans but none of the big automakers Japanese, Korean, American, European are capitalized to only compete domestically and China BYD and all of the other domestic automakers are just producing vehicles on a scale for a cost that is just unbelievable. >> But they're tariffed to the moon though, right? And so they can't be, you know, used in Europe and US. >> Sure. But I mean the global south 7 billion people. I mean there's only again tariffs. General Motors is is is not capitalized to only compete in the US, right? And so neither is Volkswagen, you know, neither is uh >> Yes. Yes. And so I I if if the cheap really beautiful, you know, plug-in hybrid electric vehicles that China's cranking out for $10,000 um $12,000 um if they roll up Brazil, Indonesia, you know, uh India, all the big players of what's going to be left for um for the big automakers except for their home markets. Um well what is the future of the car going to look like in 1015 years if assuming the zero emissions targets are still maintained by governments but at the same time automakers are backing away from EV only sales models because EV sales are down uh what what does that mean for what the car will look like in 105 years? >> I think a car will look like it currently does in 10 to 15 years. um not much will change but I do think the growth is going to go to the Chinese automakers and um >> so the car makers will just absorb I guess >> they'll go or >> bankrupt or maybe like fines and then they'll pass a rising cost to consumers. >> Well, I mean the the the US and the Germans are not going to put their automakers out of business in the name of net zero. We're already seeing a backtracking on that. Um, so I think all all of that's going to go away, >> which is why I think the auto market, but like when I say bankrupt, I mean the the equity will be wiped out and they'll be recapitalized and jobs will be saved and, you know, all of that stuff. Um, but it's the the future doesn't bode well, but the Germans of the tip of that sphere for all the reasons that that I just said. >> Yeah. I mean I I don't I don't I don't I don't know how this is going to play out but I I would imagine the automakers especially in Europe are too powerful to allow uh this zero emission target to continue uh without fundamental changes to demand for EVs. Right. I mean they're going to lobby this back to non-existence. >> I I think the EU will break up before the Germans allow their auto industry to be completely destroyed by Brussels. >> EU will break up. Sorry, we have to end on this. What do you What do you mean? I mean, like there's enough stresses within the EU system now, like if Brussels is demanding that Germany essentially end its auto industry, >> one wonders whether the political revolt in Germany might lead to a new government that decides that it wants to get out of the EU. We're already seeing Hungary, Slovakia at the periphery, um, French debt crisis burgeoning. Um, you know, there's a lot of stress right now within the EU system. Um, we'll see. >> Excellent. Thank you very much, Jim B. Appreciate your thoughts as always. What are you working on right now? The Doomberg sub. Give us a teaser. Tell us where we can find you. >> And look, I Well, you can find everything at duneberg.com. But I I remember once watching a beautiful video of you playing the piano, which tells me that you are a a man, a man of class, a man of class and sophistication. And I I wanted to plug something a little different. Um, one of the Dubber co-founders and the editor-inchief has started her own passion project on Substack called Classics Read Aloud. You can imagine from the title >> what that means. Um, classics read aloud.substack.com. Check it out. Um, she just launched this week. It's really, really great stuff. Produced with Duneberg quality and Doomberg passion. Um, but this is clearly, you know, one of her strong passions in life, the old classic, short stories, novels, nollas. A little different than what we do, of course, but just shows you the breadth and depth of the Doomberg team. Classics read aloud.substack.com. David, check it out. >> Is this it? >> That's it. >> Wow. What kind of What kind of So, is it What kind of stories are, you know, can we expect here? >> You have to click and find out. She just launched her first one. She's got another one coming out um on Friday. I think she's going to do a Monday, Friday, Wednesday. They're about 40 minutes. Um, there you go. Good for you. Thank you, sir. Um, anyway, it was great, David. Great to talk to you again. Duneberg.com for all of our energy stuff. Um, and looking forward to coming back on later. >> Yeah, we'll see you soon. Thank you very much, Dunberg. And thank you for watching. Don't forget to follow Duneberg and uh plastic spread out links down below. We'll see you next time. Take care.