Geopolitical Shift: Jacob Shapiro discusses the transition from a unipolar world dominated by the U.S. to a multipolar world with rising and falling great powers, impacting global investments.
Investment Strategy: Shapiro emphasizes the importance of focusing on rising powers like Mexico, Brazil, Turkey, and India, which have the potential to become regional economic centers in a multipolar world.
U.S. Economic Policy: The current U.S. administration's policies are accelerating the shift to a multipolar world, with implications for trade and economic stability, suggesting a need for diversified investment strategies.
China's Economic Challenges: Despite challenges such as wealth inequality and demographic issues, Shapiro remains cautiously optimistic about China's ability to maintain its economic strength and regional influence.
Market Dynamics: The podcast highlights the potential for international markets to outperform U.S. markets, with a focus on countries that can integrate vertically and manage geopolitical risks effectively.
Technology and Energy: The role of technology and energy transitions is crucial in shaping geopolitical landscapes, with countries capable of producing cheap energy likely to lead in technological innovations.
Investment Opportunities: Shapiro identifies opportunities in hard assets like gold and Bitcoin, as well as in emerging markets, as part of a strategy to hedge against U.S. economic uncertainties.
Transcript
Hit it. It's Friday, September 5th, 2025, episode 273. I'm Patrick Szna. And I'm Kevin Mureer. This week, we welcome Bespoke Group's head of research, Jacob Shapiro. We have a wide-ranging discussion about the end of the unipolar world, what it means for your investments, and where Jacob sees the best opportunities going forward. And then this week, Patrick is back from a well-deserved vacation. And there are tons of market developments where we need the crayon interpretations. >> And folks, stick around. I'm uh well, I I'd like to say that Danny hop on and tell them what beer I'm drinking. But um you know, we talked about this, Kevin. >> I was going to say, Patrick, you've already fallen down. You fallen down. We But you did plan. >> You did too. We were supposed to get back into the routine of this and we dropped the ball. Okay. Next week. Next week. Next week. Makes me next week. Makes me. >> All right, Danny, you got to you got to give us the at least a three-day heads up to figure this out. All right. Uh Kev, give us some side effects here, buddy. >> Nothing in this podcast should be viewed as investment advice. Listeners should consult an investment professional before making any decisions regarding topics mentioned in the show. Side effects of too much huddle may include the Powell pivot psychosis, >> the rate cut complacency complex. >> Yeah. And the jobs miss meltdown disorder. Well, well, you know, it didn't look like that at the morning, but uh anyway, we'll talk about when we get to talking charts. Let's get the guest on here, buddy. >> All right. It's our great pleasure to welcome to the show, Jacob Shapiro, the director of research at the Bispoke Group. Jacob, thanks for taking the time. >> Uh it's my pleasure, Kevin, and thanks for having me. It's really nice to meet you. >> I I'm looking forward to this. Uh originally, I I think what caught my eye was this terrific piece that you wrote about Europe, and we're going to get to that. and and since you wrote that piece, there's been a ton of other developments on the kind of geopolitical investment front that we can talk about. But before we do that, why don't you tell people a little bit about yourself? Let's get to know you a little. Um, did you grow up always thinking you were going to be, you know, a geopolitical analyst? >> Not at all. I thought I was going to be an academic and my undergraduate training, my my undergraduate degree is in Middle Eastern studies. >> Okay. >> Um, but I I was interested in medieval Islamic philosophy. So I was translating the Quran and translating you know uh Iban Rush and Aerois and and from Arabic into English and trying to think about how Plato made his way to the Renaissance via the Arabs and um I graduated into the 2008 financial crisis and I didn't want to go straight to grad school and for a while I was waiting tables at a Cajun restaurant and then I filed an internship application for this company called Stratfor which advertised as a global intelligence company and I went to Stratfor as an intern. I worked there for three months mostly making coffee for other people and nobody really listening to me and then the Arab Spring kicked off and remarkably even though Stratfor was a global intelligence company they didn't have anyone on staff who spoke Arabic and suddenly knowing something about the Quran and being able to think about religious um you know tropes in on the Arab street and how that was intersecting with protest and things like that. I went from making coffee to being asked well what's going to happen with Mubarak and what's going to happen with Syria and I never really looked back. I did have a a quarter life crisis where I went back and got a masters and thought I'd get a doctorate. I lasted through the end of my masters and then came straight back um to the geopolitical consulting world. And that's the second part of my journey was I did largely geopolitical risk consulting for 10 years mostly for um um companies or writing you know analyses for public consumption. And about right after the pandemic, um there was a registered investment adviser that reached out to me and said, "Hey, we really like what you're doing and we think that geopolitics is going to be really important from an investment perspective. Will you come and sort of pitch your analysis more at an investment angle?" And that was in 2020 and I never looked back. Um and it turned out that the the work that I was doing was really really valuable um for different investors. and I I now have joined the bespoke group and and thinking about geopolitics through the lens of research that helps investment decisions um is where I've landed. And I have to tell you also it's it's been liberating for me because for the 10 years I was doing consulting, you can write the greatest report in the history of of human civilization, but no matter what you do, it's really hard to objectively measure whether you were right or not. Did you get a forecast right? Did you have the right timeline? Can you argue that you did get it right even though it wasn't correct? In investing, it's very, very simple. It's did the trade work or not? >> Did did the decision result in a good outcome or not? And it strips away the ideology. It strips away the politics. It it strips away the ambiguity of analysis. So I have really come to appreciate the discipline that the market gives me because I can do my analysis. Then I get an immediate feedback mechanism for whether I'm right or not and it makes me sort of that much stronger. So yeah, it was a very path from medieval Islamic scholar to global geopolitics expert. Um, that's that's fascinating. And I, you know, I remember, you know, I'm much older than you and I remember listening to George Freeman in terms of his analysis and he was kind of at the forefront of geopolitics being introduced to the markets. Would you would you agree? He's probably one of the kind of first pioneers in that. >> There are two godfathers of geopolitics in the United States. There's Ian Bremer and there's George Freriedman. And I can't remember who made this uh metaphor first, but it's the perfect one. Uh Ian Bremer is the Marvel version of geopolitics and George is the DC Comics version of geopolitics. Um and Ian really cut his teeth on Wall Street and with energy companies and George uh cut his teeth on large-scale subscriptions to you know people around the world who were just buying an individual subscription and then much more niche related sort of intelligence related things. But it's the two of them that were at the core of it. And anybody who is doing geopolitics for real in the United States comes from one of those two people. Like there's nobody else out there, I think, who who really has emerged without at least crossing paths or owing a big debt um to the two of them. >> Um I do uh I can't help but talk about George Freeman. You're probably going to want to skip this responding to this, but I'm still waiting for the coming war from with Japan. >> Do you know that book? And George would, of course I do. George would tell George George was my like George was my mentor. Like I helped start geopolitical futures with him. Like he was the one that that taught me the ropes. George and my father were best friends in grad school at Cornell um back in the day. So like George is like I have a very very like um warm and fond appreciation for George in my heart. And I wouldn't be the analyst I am today without George. So if you ask George uh you know when is that coming war with Japan? He would say well it's I just got the timing wrong. like the war could still uh the war could still technically be coming and to George's credit I you know the the coming war with Japan was a you know the title was was incendiary it was made to to sell books but the coming war with Japan in some ways is my favorite book of his because it lays out his methodology so even if the call was not necessarily correct like all the different tools that George taught me how to use they're worked out in the in the coming war with Japan the best sellers that came later um are really for popular consumption the coming war with Japan is where you should go if you're if you're a nerd and you want to learn how to do these things. And just the the second thing I would say is, and this is to George's credit, like if if you asked George, and I've asked George before, you know, what the biggest blind spots for his uh for his prognost prognostications were in the 90s and 2000s, I think he would tell you it was um September 11th and the rise of jihadism in the Muslim world. That was a dynamic that really wasn't on his bingo card and really reshaped um you know, American foreign policy, the the role of liberalism in the world. um the coming war with Japan like uh the title is incendiary but the actual tone is actually quite good and quite nuanced. >> Okay. Well, why don't we take a moment and step back and why don't you tell us about your philosophy of of the world and how it's developed over the past couple of decades. Why don't we start with 9/11, how it changed the world, and then how you see it developing from a geopolitical stage and then what we'll do is we'll eventually get to the current environment and what you see there and how that affects our investments. >> That sounds great. So the the first thing I would say and and here I would refer your listeners to Philip Tetllock who um I don't know if you've heard of him in his book super forecasters but Tetllock did a study where he was trying to figure out is there anything that makes political forecasters more accurate than others and the only thing he could really find I'm I'm grossly oversimplifying his his point but the only thing he could really find that was statistically relevant was this division that he makes between foxes and hedgehogs and hedgehogs are somebody who knows one thing and repeats it over and over and over again. And um and foxes are people who change their minds constantly. And one of the things that he found was that hedgehogs get more play in the media or even in briefing rooms because they can be very compelling. They can simplify things down to one thing and they can make you feel, oh, this is the thing. I'm confident that this is the truth. I can move forward with this insight. And even as they're wrong over and over and over again, they keep getting listened to because they have that confidence and they can be understandable. The hardest thing for an intellectual fox or an analytical fox is to communicate without completely confusing the person that he's talking to because a fox could say one day this is what I think is most probable and then gets a new data point and says I was wrong. It's the exact complete opposite. And if you're dealing with somebody who's trying to get a media hit or if you're even briefing somebody who's in high executive office, they don't want a 360 degree change or a 180 degree change. They want some level of consistency. Um, so I'm a I'm an an an analytical and intellectual fox. Okay. >> And I think my my greatest uh skill, if you will, is that I'm able to be a fox without hopefully completely overwhelming the person that is listening to me. I can simplify it enough that I can communicate my ideas without, you know, trading what I think is an allegiance to understanding that things are dynamic and changeable. And that's what politics is. The moment you try to do analysis and say this is true, you're already done. like politics is constantly evolving. It's an act of extreme hubris to sit down like the piece you mentioned that I wrote about Europe. The idea that I could sit down and write a piece three or four weeks ago and it would be the end all of what's going on with the geopolitics of Europe and the United States, it is such an act of fundamental hubris because 500 different things could happen after I write that piece that completely invalidated. So, you have to have the confidence that, okay, I can take the snapshot now, but hey, if I'm wrong two weeks from now, I'm you're you're going to hear it from me first. I'm going to be the one that tells you it first. Let me give you a practical example actually of what I'm talking about. Um, and in my early days when we were trying to figure out investing in geopolitics, um, I did not think Russia was going to invade Ukraine. I thought that it was all a bluff. I was talking to analyst friends in Moscow who were telling me it was a bluff. That was a mistake to listen to them. But so for some of our clients, we had small positions in Russian equities because they we thought they looked undervalued and we thought the market was pricing an invasion that we didn't think was going to come. And I remember very vividly, you might remember this too, when Vladimir Putin called his National Security Council together and they made a big to-do of it. They broadcast it everywhere and they were talking about how Zilinski is a fascist and they have to restore Russian values to Ukraine and things like that. And I called a meeting of our team and I said, "Sell it all now." And the team didn't want to do it. They were like, "Well, let's see how it plays over the next couple of days. Like, maybe you're overreacting." And I said, "No, no, no. I was wrong. It's broken. Get out now because if you don't get out now, I'm not sure you're going to be able to get out." So, we got out with a very, very small loss. And four or five days later, Russian market shut down. You couldn't have gotten out if you wanted to. So, I'm not happy that I got the the invasion call wrong, but I was very proud that I was able to see in real time, crap, I messed that up, and we need to fix it very, very quickly. So, that's >> You were like when you said sell it all. That's all I could think about the the scene in Wall Street. Sell it all. >> Sell it all. When when the when the analytical take is broken, you have to swallow your pride and say, "I was wrong." And it's a really hard thing um for people to do. So, I come from like that's my analytical background. And I think in some ways my superpower is being able to see when I'm wrong and not taking these things personally. I only care if I'm getting things right. And then the the bigger macro thing that I would say um and people who hear me that I'm I'm convinced that they're sick of me saying this and I'm also a contrarian and people are beginning to agree with this take. So I have this innate instinct to be like oh I have to change the take. >> I know that. >> But from from roughly 1990 until I would say Russia's invasion of Ukraine, I think we were living in a unipolar world. I think the United States was the unquestioned political, economic, cultural, military power in the world. Full stop. the buck literally stopped with us and I think we have now shifted from a unipolar world to a multipolar world one in which we have rising and falling great powers all across the world different and shifting coalitions um I am by the way not saying that we're headed towards a USChina competition I think the consensus view is that we're headed towards another bipolar world with a second colar with a second cold war with the US and its allies on one side China on the other side that's a possibility and it's a scenario I take seriously but that's not what I model. For me, it's not the 1930s or 1940s. It's not the 1960s or 1970s. I look to the 1890s for the closest historical an historical analog to what we're talking about. I think we're in the very, very early stages of this. The United States is still the most powerful and richest country in the world. It just can't dictate its terms like it was able to in the late 1990s and even in the early 2000s. And I think you can see that in the way that some countries are reacting to heavy-handed US trade policy. And you can see that in the way that some countries are moving away from the dollar and thinking about how they can futurep proof their financial security with a mercurial uh United States. So at the very very top level the macro view that doesn't change for me is we're moving from unipolar to multipolar. And most of my time as an analyst is spent thinking about how am I wrong about this? Are there what is the signal that the multipolar world is not emerging? That it is going to be the US versus China or it's going to be complete anarchy. Um but but that's my my overall view. I think we're headed towards multipolarity. I think we're in the early stages of it. And I think the current administration, ironically, is accelerating that shift. Um I you know, things that I thought were going to happen in the mid 2030s, they're happening now. And they're happening now as a result of US government policy. And I try to be very very objective in what I'm talking about. You can make a pro or con case for that. Is it good that our politicians are bringing the crisis forward so that we can deal with it now? Is it better that they kick the can down the road and buy us more time? I don't know. That's a question beyond my pay grade. But I think the objective fact is they're bringing the crisis forward. They're bringing the acceleration of this multipolar trend forward. And I think people are not ready for that. I think people have gotten used to the notion that the United States is the most powerful country in the world and that the dollar is the reserve currency and that ultimately, you know, things are going to flow based on decisions in Washington. I think all that is changing beneath us. So, I couldn't agree with you more about the Trump speeding up things that previously felt like they were way off in the distance. One example I give is I've been thinking to myself, oh, the, you know, eventually if there's inflation for long enough, we're going to see a situation where they start fudging the numbers. I thought that was going to be 5 years, 10 years down the road. I didn't think it would be five months into his term where he's, you know, firing the BLS person. And I'm just thinking, for example, about YCC in terms of yield curve control. I thought, "Oh, this is going to be something that is going to take, you know, maybe record wides in the yield curve before they do it." Now I'm thinking, geez, it might happen next year. Like, it might be sooner rather than later. Um, one of the things that I wanted to just ask you about is that you have this great podcast, Geopolitical Cousins, with your your pal Marco Papich. Uh we'll talk about that later. But one of the things that he said and I guess you guys echo this and part of the reason why you might call yourselves geopolitical cousins. He says in a world of multipolarity there are no real friends or enemies. There are just interests. And that's what Marco talked about. Do you agree with that? Could you explain that in terms of how it's shaping, you know, maybe expand on how you're thinking about all the different trades and the different uh how you see the world. >> Yeah, foreign relations are much more transactional. But uh as much as I love uh he's my cousin by choice, as much as I as much as I love cousin Marco, you can go back to George Washington for this take. Go back to George Washington's, you know, farewell address. He talks about how the United States should not have permanent allies. Um that it is not the United States's business to go about intervening in other places around the world. That the United States needs to protect its interests. And the United States uh existed that way. That was US basically primary US foreign policy with some exceptions for Latin America, an exception in World War I. Um but until World War II, United States policy was to be isolationist. We did not have a huge military until the buildout in World War I and especially in World War II. And the thing that happened with World War II is we woke up at the end of World War II and realized suddenly we were the last one standing and we were the most powerful. And in I think a good faith effort to create a more peaceful and prosperous world. Um it was you know Franklin Delano Roosevelt was the architect but then you know administrations of both parties continued to build it. We built this liberal international order with the idea being that there were certain rules that all countries had to follow. And chief among them was we want trade. We want people to be able to trade more because that's going to lead to more prosperity. And if you don't agree with that, if you're on the other side of that, then the United States will intervene or you will have to join in with the Soviets and get their crappy cars and their crappy political infrastructure and everything else. And the United States won the Cold War. It defeats the Soviet Union in 1990. And again, nobody's left standing. If you look at the world in the 1990s, there's no country that can even come close to holding a candle to US power. So there are a few holdouts that don't go along with it. You know, we can name them probably on one hand. Iran, North Korea, Cuba, Venezuela. That's probably the list right there. There might be a few others that I'm forgetting. So you have some outliers, but most everybody else in the world starts listening to Third Eye Blind and starts trading with the United States and eventually wants an iPhone and eventually want everybody wants to come to the United States and the United States is is finally this shining um this shining uh beacon on the hill that it always thought it was going to be for itself. As you switch to a multipolar world, what's happening is some of those countries and China is the perfect example. In the 1990s, it was completely in China's interests to trade more with the United States and to have a good relationship with the United States. As China became more wealthy and more prosperous and started to get into the middle income trap, well, the things that the United States wanted from it in the trading relationship didn't make sense to China so much. And so, China is saying, "Well, actually, we want to do things. We we want to reset the rules a little bit here. We think we've earned a bigger seat at the table. We think that things should protect some of our interests going forward. And the United States is not the United States of George Washington. It's not even the United States of FDR, which it took Japan literally bombing Pearl Harbor to get the US into the war. You for years FDR wanted to get into the war. He couldn't do it because public opinion was so against it. Uh but you know, for 30, 40, 50 years, we have an entire foreign policy establishment and a cultural sense that we are the most powerful, that everybody wants to be like us. um that the ideals of America are exceptional and that everybody should embrace them. And in a multi-polar world um where interests, as Marco points out, are more important than those relationships, in some ways alliances become a burden because instead of expending resources on yourself, you have to go expend resources on protecting all of your allies. This, by the way, is one of the reasons that the Chinese have no allies. Their only defense treaty security relationship is with North Korea, and they didn't even really want that. That's a hangover from the Korean War and and really an anacronism from the Cold War. But they don't want permanent security relationships. They have their hands full with what they currently have. And if you're the United States and you're realizing, huh, our economic power and the threat of military force does not create the same type of subservience is the wrong word, but doesn't go doesn't go as far as it used to. and you want to expend resources to start say manufacturing things in the United States again or making sure that you control the commanding heights of the technology economy. Well, suddenly you can see how maybe supporting um these allies as part of this liberal international world order which no longer seems to exist and which is being challenged more and more by these revisionist powers daily. You can see how overextending those alliances becomes a bit of a burden. A great example of this is NATO. NATO was an alliance led by the United States to resist the Soviet Union. It did a wonderful job of doing that. I forget how many countries were in NATO originally. I think it was 12 or 13, but you know, somebody can go to Wikipedia and check me on that. NATO makes no sense today because the Soviet Union doesn't exist anymore and it's extended to 27 and 28 members, including extremely small states in the Balkans like Montenegro, I believe, wants NATO membership or recently got it. Um, that doesn't make any sense. It's like what is what does having these countries in the alliance do if the goal is to resist a country the Soviet Union which doesn't even exist anymore. So there is this kind of alliance overhang and as and as things shift in a multipolar world you want to be able to be a little bit more transactional and that's one of the reasons why I would encourage listeners to go back and look at the 1890s look at the different foreign relationships that happened at that time period. It was a time of actually increasing trade. It was but it was also a time of immense competition all around the world and countries that at one you know like for instance the United Kingdom and France mortal enemies in the 19th century uh and in the 18th century suddenly they were on the same side of things uh because they saw the rise of Germany and they saw the rise of these other things they realized had they had to put bygones to be bygones. The Ottomans aligning with with the Germans and with some of these others as part of um the central powers that eventually fight um World War I. So all of these shifting things that depend on, you know, different interests at one time and all of that as a result of the fact that there wasn't one country that was calling the shots or not one country that was setting the rules and that's the type of environment we're in today. >> Do you think that this was um a trend that was in the making regardless of Trump and he just accelerated it or he was even kind of the chosen one based upon the fact that we were headed this way? or is this something like if let's just imagine we have a shift back to the Democrats in three or four years uh will we go back to that um you know unipolar world and and will we ever return to that or is this something we should put in the rearview mirror and it was headed this way anyways >> I feel like I've been a little long-winded so let me be a little succinct here we're not going back I'm not certain about that many things because I'm the fox I can tell you the one thing I'm absolutely certain of we're not going back. So we might get a new unipolar order in 10 or 15 years based on how things develop. But the idea that we're going backwards, that's a recipe for disaster. That's the wrong mental model to think about. I I don't think there's going there's no going back at all to that sort of previous view. It's interesting to date sort of when multipolarity began to arise. Um I was still banging the drum for a unipolar world until about 2017. And I'll tell you what changed my mind. I was invited to, and I'll probably never get invited again, but I was invited to a conference in Moscow at McGee, which is um basically the think tank for the Russian Ministry of Foreign Affairs. I was the token American that they wanted to have there as a whipping boy. Um, and you know, I was listening to all these analysts from all these other different countries and ones that were more aligned with Russia than with the United States. And as I was sitting there listening, I was realizing uh these countries care much less about what the United States thinks and wants than what I assumed. And these uh a lot of these countries whether we're talking about India, Iran, China, um South Africa, uh Turkey, like these countries are thinking very very differently. And it was around 2017, this was actually a break I made with um with George. I was with George at the time at geopolitical futures. And George, I think continues to think that the United States is the supreme power in the world and that it's going through a period of domestic political strife, but will come out stronger on the other end. Maybe so. But here today, I think the world is incredibly multipolar. Um that was a fairly out there um take to make in 2017 and cousin Marco and I uh are bonded by the trauma of being told for years of how wrong and stupid we were in 2017 2018. Um I would not date the beginning of multipolarity or the clear signal that multiplarity uh is back with Donald Trump. Um that moment in 2016 I think was much more about wealth inequality in the United States and populism in American politics. The two most popular candidates were Donald Trump and Bernie Sanders. And if Bernie had been actually put on the ballot, if the Democrats had been able to swallow that, I actually think Bernie might have won. But I think that was much more about US domestic politics. I think it was very clear that we were in a multipolar world when COVID broke out because COVID was a disease, a virus that comes for all of us, no matter what our creed, sexual orientation, nationality, language. CO doesn't care. It's going to infect you. And it's, you know, for a small percentage of the population going to be deadly and for most of us a really big pain in the ass if you'll pardon my French. And instead of, you know, in previous iter you would expect in a unipolar world with a liberal international order that we would all bond together and say, let us sort of like on Independence Day the movie like let's fight this thing that is coming for all of us together. Let's share resources. Let's figure out how to get vaccines out there. Let's share personal protective equipment. That's not what happened at all. It started with China not telling people about what was really going on. Then China started hoarding all of the protective equipment that we needed for medicine, a lot of which is now manufactured in China. When the West when the West realized what was going on, um it immediately started uh you know turning up the research machine to figuring out a vaccine but didn't want to share that with other countries. Didn't want to eradicate it globally. It was very much no no we have to take care of ourselves. we're not going to take care of some of these others. And by the way, we're going to punish others for not doing things with us. You might remember this was the time of the phase one USChina trade deal. And the vaccine politics and the co politics actually got in the way of the US and China working on trade. It looked like we we were actually on a good trajectory to some kind of understanding with China, at least on trade, authored by the first uh Trump administration. So for me, the real beginning of the break was CO and the nail in the coffin was Russia invading Ukraine. Um I I think you could still argue after CO, okay, this is an exogenous force. It's people were scared, but ultimately the world is going to come back when things turn back on. And when the world came back on, what did we get? We got the biggest land conflict in Europe since World War II because Russia thought it could just go into Kev and conquer a country. That tells you we're in a multipolar world because Russia thought it could do that. And the United States, I mean, it's it's easy to forget this now because Ukraine has defended itself so well and the United States and the Europeans helped prop them up. Um, the initial US response to Russia invading Ukraine was to evacuate the embassies, was to get out. We didn't think they had a prayer of standing up to them. The Germans uh uh agreed to send 10,000 helmets, you know, military helmets to the Ukrainian people to help. They weren't talking about anti-tank missiles and rockets and drones and things like that. Like everybody thought it was a fade accomplete. Um so just the fact that you had Russia thinking it could do that and you had the West not willing to stand up to Russia against that to being willing to say ah okay like Ukraine not so important as part of our liberal international order. Like Russia is just going to have to take that and that's really sad. Let's go back to business. Like that's when I think it was incontrovertible. But I I would say COVID um and Russia's invasion of Ukraine are the big multipolar markers for me. For me, Donald Trump's election and his first term were part of another thing. Now, his second term is a different story. Um the foreign policies that the US is pushing right now, we can talk about this more if you want. Um would be very home would be very at home in sort of US imperial foreign policy from the early 1900s. And I think one of the reasons we're seeing so much friction um in US policy and US relations with the world is that President Trump is trying to govern like William McKinley or Teddy Roosevelt. And he doesn't have the cards. He's he's holding empty cards. It's basically all bluffs. And his bluff is getting called all around the world. And when the bluff isn't getting called, it's people ingratiating themselves to him so that they can get short-term deals, but in the background preparing um for a world in which they don't want to be so closely dependent on or aligned with the United States. >> Okay. We'll get to that. Um, let's just though before let's just take one step back before we get off of the multipolar world. Um, are there any investment >> changes that that come directly from this move from a unipolar to a multipolar world that you can think about like what you know understanding that affects you that your portfolio construction or how you think about markets in the following ways. Yeah, it's it's if you were a geopolitical analyst from the 1990s to 2015 2020, it was actually a fairly boring job because if you were a good analyst for 30 years, your answer should have been by American or by American allies or at least by countries that are aligned um with the US-led trading regime. So it should have been buy US if you if you want to get you know a little unorthodox buy Germany or buy China and then go play golf to lunch don't worry about it too much don't worry when you get a dot bubble or some of these other things those are buying opportunities very clear that the United States is going to do well allies of the United States are going to do well places where manufacturing is going at the behest of the United States all those things are going to do well um I don't think you can think that way anymore um I think that we're primed for international outperforming US domestic here going forward I don't think US allies are necessarily the best place to be thinking I now I'm thinking about rising powers that can be vertically integrated economic regional centers of power in their own right so for me some of the most interesting countries to think about investing um in China is is difficult it's sort of a different animal but you know for when I wake up in the morning I'm looking at the newspapers of Mexico Brazil Turkey and India every single morning for me those are some of the force hinge states and maybe not all of them will realize their potential maybe none of them will maybe the multipolar paradigm is off but those are four countries that have the requisite level of size and ability to vertically integrate that I think can perform extremely well um in a multi-olar world and then this is something that I've come to you know really in the last year or two we talked about the Trump administration accelerating things um you know I have been a a Bitcoin skeptic for most of my career and one of my partners at bespoke group Matt Mcccleintoch always jokes with me that everybody buys Bitcoin at the price they deserve. Well, the price that this geopolitical analyst deserved was 110,000. And it was 110,000 because we were seeing things out of the United States, whether it was, you've already alluded to it, firing the BLS commissioner. Um, you know, bullying the Federal Reserve into lower into lowering rates. Um, half-hazard and completely volatile US trade policy. um gold completely outperforming not just the US dollar but the S&P 500 B anything else like all of these dynamics happening then also just the widening US debt which is completely impossible to ignore right now there's no politician or party in the United States that cares at all about fiscal conservatism if you are a fiscal conservative the only president you should admire since Eisenhower is Bill Clinton and usually the Republicans have been the worst offenders um so you put all those things together and the polit the politicization of of US financial strength. You've got somebody like me who's saying, "Well, suddenly Bitcoin looks pretty good. Suddenly, I'm thinking about gold and Singapore dollar and Swiss Frank and hard assets like real estate or American farmland." Um whereas before like those weren't things that I would want to park my money there, get much bigger returns some of the other um some of the other areas that you would be. So yes, at that very top level, the shift from unipolarity to multiparity has an absolutely massive impact on portfolio construction. It's it's a complete and total paradigm shift. >> Okay, that's great stuff. Now, let's talk go back to what you had mentioned there about basically Trump's bluffs being called and talk a little bit about how you see the current environment and what's happening. And uh you said that Trump doesn't have any of the cards and that's almost the opposite of what they're telling everyone. Like how do you square that? >> Uh don't listen to them. I don't listen to any Don't listen to any politicians. You also shouldn't have listened to Biden when he said inflation was under control and that he was going to get g. You know, I haven't listened to a pol the only politician in my lifetime who I think tells the truth a majority of the time. I'm not saying I agree with him. I actually disagree with about 60% of the things that comes out of his mouth. But the only politician in my lifetime that I think is actually telling the truth is Bernie Sanders. That's the list. I don't think anybody else is telling the truth any amount of time. So, I wouldn't take um what Donald Trump or Joe Biden or Barack Obama or George what any of them like tune it out like listen to what the data is telling you. Um so, and I think there the other metaphor that I've used to describe this with the United States is I think that the way that the US is um enacting policy is going to lead to a form of radiation sickness. If you're exposed to a high dose of radiation um you get sick initially, but then you start to get better. It looks like you're improving and that you've kicked it. But the problem is that radiation damages the underlying cellular structure. And so over a longer period of time, you your cells won't be able to replicate or if they do are able to replicate, you'll get higher incidencies of of cancer and things like that. Your your body has been fundamentally damaged. That I think is what we're looking at with the United States. I think many people, especially those with Trump derangement syndrome, thought he was going to announce tariffs and boom, inflation was going to be 10% and everything was going to be terrible. No, that's not the way this is going to work. I think actually he did the initial sort of onslaught of policy markets didn't really blink. I mean we had you know the draw down in April but we're doing incredibly well when you think about it on the year considering everything that's gone on and it looked for a period of time like things were going well. But now you start to look underneath the hood and you see the jobs reports going in the wrong direction. You see, particularly concerning for me, electricity prices uh increasing massively across the board in the United States and Trump's own Department of Energy saying that the status quo is completely unrealistic and that we're looking at 30 to 60% increases in electricity prices for the average American. Um, you're looking at manufacturing contraction in the United States, which is the exact opposite of what you would expect with the Make America Great policies. Again, you're looking at Robert F. Kennedy Jr. basically eviscerating the US lead um in technology and health around the world. We are seeding that to China and other countries around the world because of the crazy ideas of this guy who's uh in charge of of all these other different things. And then you get the immigration problem too. One of the great US strengths, one of our great superpowers is our ability to assimilate immigrants. Uh you don't get the teeming masses from Central America and South. They're not trying to go to China. They're not trying to go to Japan. They're coming to the United States because they think they can have a better life in the United States. And we've turned around on this sort of nivist anti-immigration phenomenon even as our birth rates have rapidly declined, especially since co. And so it's unclear about whether we're going to continue to add both, you know, immigrants who are doing the labor that nobody wants to do in the United States or those top really really smart people and researchers from around the world who used to come to US universities and then stay here and now are saying like maybe I'll go home or maybe I'll go to a Chinese university or maybe I'll go somewhere else. So you put all those things together, it's not going to be an immediate impact, but I think um the Trump administration will try and make us think that everything is great and they'll put lipstick on the pig. And honestly, I think I think it'll probably be a good year or two probably. I mean, we're getting some concerning data right now, but my expectation is that things will probably bounce along the way they need to be, but that the long-term impact of some of these things are going to make the United States less competitive. Uh, and it's going to again accelerate um that notion of looking towards places internationally, like international is being spurred to growth by the way that the United States is dealing with some of these countries. Um and that I think you know on that five 10 year time horizon like that's it's as clear as day to me right now. >> Okay. So in in terms of let's go back to the markets. Do you think that that this is just a function of them you know continuing a trend that has gone on for a while and like you see the tick data and money still seems to be flowing into the US which I don't understand. and and they're still even though international stocks are doing terrific and outperforming the US, they're still everyone's focused on the US. And it's it's just it's it's kind of shocking to me that all these things that you mentioned, they make complete sense, but yet nobody's talking about it. Nobody believes very few believe it. And I was wondering how you reconcile that. Is that just markets can be inefficient for longer than you expect? >> Yeah. Yeah. Well, there's a couple different things there. The first is, you know, the the the Fcott Fitzgerald quote, which probably gets overused, but you know, the the the true mark of intelligence is being to hold two contradictory ideas in your mind at the same time and continue to function. Um, and this is where, you know, when I say a multipolar world is emerging, often people hear, oh, the United States is in decline, terminal decline. I don't. I think the United States is going to be one of the most powerful and prosperous nations in this multipolar world that I'm talking about. I'm just saying we're not going to be omnipotent anymore and we're going to have to have some real important policy decisions and political decisions. And I think that's coming. By the way, if you look at lots of polling of the US electorate, nobody likes this government and nobody likes the Biden government either. Nixon's silent majority is out there sitting waiting for somebody saying to talk some sense to them and to give them good policy. And we've been here before in US politics. Usually what has to happen to get there is the economy has to basically roll over. This happened in 1970s with stagflation. It happened in the 1920s, Roaring 20s. It also, by the way, happened in the 1850s. Hopefully, we can avoid the movie that happened at the end of the 1850s. And I think we're probably going to get there. It would be nice if US politics was more forward thinking than that. But we're a democracy. We argue with each other about which bathroom we're going to go into until things actually get really difficult and then we're going to make changes. So, I think that's probably what happens with the United States. Um, and it's also like money is coming in and money is coming out. Um I think what's changing is where money is coming from and who's interested in it. So there are countries or people like uh and I think the the breakdown in US India relations that the Trump administration has authored might have a huge impact on how Indians are thinking about the United States or about some of those um flows in general. But you've got Americans um who are looking to get out of the United States even as you have folks from other countries that are looking to come into the United States because the grass in some sense is always greener. So even as some Americans say, "Hey, Europe looks pretty good right now. I care about quality of life." If you're somebody who's in Turkey or uh Brazil or South Africa, US market looks pretty good. If you're in China and you don't want to be part of Xi Jinping's purges and his capital controls and everything else, you probably want to get as much of your money out of China as you possibly can because the realities of what China is going to have to do are far more grim than what the United States is going to have to go go through as well. So again, it's it's not that capital flows to the United States are going to stop entirely. And it's not that the United States is not going to continue to be a very very important and very very prosperous power. It's just that it's not going to be these hion days of the last 35 years that we've gotten used to. And there will be sectors and countries that will outperform. And there will be parts of this, by the way, that the United States will probably do incredibly well with. Um the United States is blessed with um you know, immense energy reserves. Now, there's problems with the grid that we can go into if you want, but most countries would kill to have the level of self-sufficiency that we have when it comes to energy commodities or agricultural commodities or some of these other things. Most leaders in the world would trade their situation for America's problems in a heartbeat because America's problems are much easier to solve. It's about getting people to agree with each other and stop squabbling. Not about say like China which is we just don't have enough land to grow food for the people or a you know another country like Turkey which until recently when it has some big offshore natural gas discoveries. We don't have the energy here. We don't like Russia. We're mortal enemies with Russia but we have to import energy resources from Russia. So we can't just give them the middle finger and move on. Um which goes back to our conversation about interests uh versus alliances. So that's how I would square it up. Like don't don't take from what I'm saying in the shift from unipolarity to multiparity that the US is in terminal decline. Just take from what I'm saying that I think there are really really inter interesting international opportunities that are out there. And I think that on a five 10 year time horizon you want to be exposed to those international opportunities and you want to be very picky and choosy about what parts of the US market you want to be involved with because some of it might be too frothy. some of it we might be in decline and then other parts of it might be rising. >> All right. So, you mentioned um China and you said that right there that you should be looking at international uh other markets and I take it that you're probably not going to be uh a bull on China and you highlighted some challenges they face right now. It seems to be that a lot of folks are getting back on the China bull bandwagon and I was wondering what you think there and if you could highlight the long-term concerns you have about them. Yeah, I don't know that I'm a China bull, but relative to most geopolitical analysts, I'm actually pretty optimistic about China. And I wouldn't bet against China. That doesn't mean I would bet for it necessarily, but I certainly would not bet against it. Um, you know, people have been saying that China was going to collapse in on itself since literally the 1970s. U you know, Peter Xihan has been out there saying that China is going to be is going to collapse from the inside since I worked with him at Strathb in 2010. sort of like the coming war with Japan sort of model. >> Um I don't think we can um overstate how big the problem China is facing. So China has it's supposed to be a communist country. It's a communist country in all but name. It's an incredibly unequal country in terms of wealth. The coastal cities that have enriched themselves in this period of globalization are some of the most cutting edge cities in the entire world. They make American cities look terrible by comparison. But you go into China's interior, you've got hundreds of millions of people who are still living on seven to10 dollars a day or something like that and whose livelihoods I mean might as well be peasants from the 1970s and the 1980s. And the difficult thing that China has to do is it has to redistribute that wealth from the coast to the interior without a the folks on the coast coming for she's head because they don't want to give up their money and b without doing it too slowly such that the peasants rise up and say we want new leadership because people are we're not enjoying the same benefits that the rest of the Chinese population is enjoying. And that is I think why Xi Jinping has claimed dictatorial powers for himself because he knows that this isn't going to work in the old sort of you know 30 year from 1990 to when he was elected or chosen in 2012 2013. Uh you can't just reform and open up and build things in China like you've got problems in terms of wealth inequality and communism is becoming delegitimized and you have to inject a sense of national pride into China and a new mission into China if you're going to pull off these things. Um, no country has really pulled this off. Um, you know, Japan is maybe the best example of a country that did it and their way of doing it was their lost decades after the 1990s and the collapse of um, Chinese stock mobile real estate crisis and China starting at a much poorer base than Japan was in the 1990s. Um, so it's an incredible feat that that Xiinping and the Chinese Communist Party has in front of it. Okay, that sounds all bad. The stuff that's good is you still got a country of a billion people. This is also the world's factory. They are the ones that know how to make things. We don't make things in the United States anymore. Uh the stroller that I that I, you know, ride my infant to daycare in, made in China. The children's books that I read to my kids at night, made in China. The ibuprofen that I give my daughter for her ear infections, active ingredients, sourced from China. China makes all of these different products. It's incredibly powerful from that point of view. They have the knowhow. The second is I know that people love to drone on about Chinese demographics and it's true. Their fertility rates suck and they're not going to be able to attract immigrants, but go back to what I said about that inequality. We have hundreds of millions of people here living on something like 7 to$10 a day. If you can make those people middle class, you don't need babies. All of those people will start buying air conditioning units and phones and strollers and all these other things. And the Chinese Communist Party wants those people to be buying made in Chinese goods, whether it's cars or the strollers or everything else. And then the other big cultural change that China has to engender in its people and this is in some ways becoming the hardest for it to do. Um, you know, the Chinese people remember the chaos of the Mao regime and they remember the civil wars and all the things that came before it. And so rightfully so, they don't trust stock markets. They don't trust bond markets. They don't trust the economy itself. They want to hide their money under a mattress or they want to buy their fifth or sixth condo in a ghost city. Uh, and the Chinese government is trying to get the animal spirits of the average Chinese consumer to get out from underneath your bed. Go buy something from a a company that was made in China. Don't buy another condo. Go play the Chinese stock market. We're going to have all these rules. So, the Chinese stocks are going to do a lot better. And if you could get Chinese, like the average Chinese person investing in Chinese markets, well, then you could like really have you're off to the races. If you look at the performance of Indian markets over the past couple of years, the reason they keep on going up even though you know western observers are skeptical about it and maybe it's a bubble, it's because Indians themselves are buying stocks. Every rupee that they have is going to the stock market. So even as international observers are like this looks a little long in the tooth. You've got a billion people coming online who want to buy stocks who have got the stock bug. If you could do that in China, >> yeah, >> I mean you're off you're off to the races. So um I can make the case for China collapse and Chinese degradation. I but I for me everything they've accomplished so far um I wouldn't underestimate them and I think that they have more I think they have more going for them um than most people recognize and if they can metabolize these challenges and if they can get through them then I think you really are looking at China not as a not as the global hegeimon they don't want to be the global hegeimon but as the dominant player in East Asia as the you know the middle kingdom where everybody has to come and and give tribute where they are the ones that are calling the shots yeah I think that's a very very realistic um phenomena on and it's it's as simple as things like you know who's going to make air conditioning units that are going to go into places like Japan and South Korea and India they're probably going to be made in China who's going to be making all of these products uh for the rest of the world as as you know even even as demographics in the west are slowing down we still got lots of people coming online in Africa and other places like those products are going to be made in China and then if you get those Chinese people consuming those products as well things are going to go well and then the last thing I would just say and this in some ways is a signpost for China Chinese history is fairly cyclical and you notice that strong central governments in China when this when it starts to get away from them. It becomes very obvious. There's an old um I think it's the Tang dynasty an old quote that is you know the emperor is um the emp the emperor is far and the or I'm sorry the the hills are high and the emperor is far away. the idea that central authority is far away and you get local warlords or local regions or local military, you know, leaders who are who are calling the shots, that's not the direction that China is going in. You're getting more centralization. You're getting more central control in the Chinese Communist Party. So, if I get a signpost that says there really are true challenges to Xi Jinping's rule, the Chinese Communist Party is starting to come uh come apart at the seams. If we start talking about regional leaders in China that are pushing policies that are maybe not in lock step with what the central government does, okay, then I'm sitting up in my chair and I'm doing a maya to pet Peter Xan and saying, "Ah, I guess you were just a little bit early." But what I see is Xi Jinping collecting more and more and more power and it's working like people are not defying the Chinese government even in that real estate crisis that they had in the last couple of years. Yes, there were some blips and there were some protests that were pretty scary, but they solved it. People went back to work. People went back to paying their mortgages and the Chinese Communist Party has become even stronger. So, the stronger the central government becomes, the more I think we're at the beginning of a Chinese dynasty, not at the end of it. >> Jacob, I could talk to you all day, but we're going to have to bring this to a close. So, why don't we end on some positive things? You mentioned um Brazil, uh Turkey, uh what were the other ones that you liked? There was four countries, Mexico, India. >> Why don't you give us kind of a quick these are why I like these. This is, you know, an interesting opportunity on all four. >> Yeah, Mexico is fairly simple. Um, and I just did a very long report about nearshoring in Mexico. The way that the United States is prosecuting it trade war means that Mexico is going to be the big winner. The only reason that the United States can push its trade war with China is because we have a country of 100 million plus people with very willing, very cheap, and very skilled labor to our southern border. Um, we are not going to start making clothes and manufacturing things in the United States again. It's just not going to happen. I'll come back on your show and eat my computer if we start doing those things. But they they will be made in Mexico. And so Mexico uh in some ways um Mexico got screwed by globalization because NAFTA was supposed to be this great thing for Mexico. It was it it increased Mexican prosperity. It also caused a lot of wealth inequality. But then China came in and nobody could compete with China. And so a lot of the business that should have been going to Mexico from the United States just went to China because China had 10x the population. Had a government that was much more controlled and organized and said, "Hey, we're going to set up a special economic zone. They're going to build your iPhones for cheap. If anything goes wrong, we have a goolog for people to go to." Whereas Mexico is dealing with cartels, dealing with the informal economy and everything else. So in a world that's unipolar and all you care about is low labor costs, China's going to win. In a world that is multipolar, where you care about politics and political risk and where Chinese labor has become more expensive, well suddenly Mexico looks much more uh impressive by comparison. So I think Mexico is going to be the big winner in this reorganization of US trade ties and I think we're going to see a lot more US companies that are going to be engaging with Mexico, particularly the border towns, the border towns that have become prey to all these cartels and things like that. massive economic opportunity for them. People go join cartels and do those things because they have no other opportunities. If you give them opportunities, the cartels are going to want those opportunities. First of all, that means there's more money for them to extort. They're going to want more stability because if you chop people's heads off, the money's not going to be there and ultimately I think they're going to be moved by money. So, I'm optimistic about um Mexico. There are problems with Mexico, but let's let's stick on the optimism. Um India, I think, is a fairly simple case and India I'm I'm honestly pretty ambivalent about. I cannot make up my mind if India is the next great rising power or if they're just going to collapse in on themselves. Um, and I think the positive argument that you have to make for India, I I don't think people realize this. India is such a poor country. We've got a GDP per capita in India that is roughly the same GDP per capita as Haiti. Um, one of the poorest and most backward countries in the entire world except India is a billion plus people. um with a government that has been centralizing things and been uh not perfectly but getting rid of bureaucracy and red tape and making it easier to do business. You've got lots of cheap labor. If we were going to continue the unipolar trend if we hadn't had COVID and Russian invasion of Ukraine and Trump and everything else, India would be the next China and they still can be in a version of that. It's not going to look exactly as it did during the era of globalization but they're just starting from such a low base and they are so large that you know the math is just going to say okay like probably India is going to do is is going to do well in that sense now they have tons of other problems they have water problems they have you know what happens after Modi what uh poverty you know the it's nice that they have this size but that also means a billion people who need to get richer and need to have money and who need to eat like the then there's the monsoon cycle and we could go into all those things but that's the positive case for India Turkey, I think, is one of the ones that I'm I'm most proud of and most in front of. I've been banging on the table with Turkey 2018. And if you look at performance of Turkey since 2018, it's been great. And that's because Western media overindexed on the crazy crazy things Erdogan was saying about interest rate policy and ignoring what was actually happening uh in Turkish domestic politics. And same sort of thing as you had higher inflation in Turkey, you had Turkish um investors moving away from fixed income and just buying up Turkish equities because that was the only way that they could keep place with inflation. And so the Turkish stock market is literally levitating while Bloomberg and the and the FT are, oh my god, can you believe the Turkish lera and what President Erdogan is saying about the Turkish, okay, but like Turkish stocks are going up to the moon. And not only are markets doing that, Turkish manufacturing companies are stealing market share from European companies. The freezer that I had to replace my freezer with just a month ago, made in Turkey, like they're making high-end things. Think about the drone warfare that Ukraine is prosecuting against Russia. Uh it's Turkey that makes the drones. It's Turkey that's at the forefront of that and they've been putting to bed some of their other issues. You know, they're putting to bed the Kurdish issue. They're expanding into Syria. The fall of Assad was huge for Turkey. You just traded a Russian ally at your southern border for a nominal Turkish ally that's going to think about Turkish interests and Iraq. We don't have to go down the Israeli Palestinian rabbit hole. But often when I'm asked about that and people say, "Well, what's the biggest threat to Israel? Is it Iran and the nuclear weapon?" No, it's Turkey because Turkey is the is the regional hegeimon of this region and Turkey is rising in that sense and I think it's been showing us that it's rising in that sense. And then last um Brazil um I don't think De Gaul actually said this but he's reputed to have said it and it's so good. He's um he's reputed to have said that um Brazil is the country of the future and always will be. Um and there is some there is some element of that to Brazil. I also think of of all the countries in the world um I think Brazil is the most similar to the United States. I almost think about the uh Brazil as if if the United States had not had the civil war. I think it would look a lot like Brazil does today. But I I see signals that Brazil is changing. Um I see that they are finally doing things boring things like reforming tax policy or like encouraging entrepreneurship. Um you know before you could just sit and fix income in Brazil and you'd be fine. No, they want to start building vertically and and they want to have integration. They want to make things in Brazil and they're starting to do that and they are sitting on um like the United States tremendous energy reserves, tremendous agricultural reserves. Uh the US farmers biggest problem is not China today, it's Brazil because they've become the lowcost producer of corn and soybeans and they're coming for wheat next. Um, so in that sense, if you could get Brazil as more of a regional leader and if they could extend um their power and influence to the Pacific, which is possible because a lot of these Latin American states are weak and need that kind of leadership, suddenly you have an Americanstyle um political formation in South America that can have some of the same benefits I think um the United States could have. So very optimistic about Brazil in that sense and I think there are a lot of opportunities there. So yeah, there's there's four gems in the rough for you. >> Okay. And before we go, I I just I'd like to end with I've asked you a lot of questions and you talked to a lot of investors throughout the world. What would be in terms of from an investment point of view, a question that I didn't ask that I really should have? >> H a question that you that you should have asked that you didn't. >> Um >> like what's at the top of your mind that that you know, we've talked about a lot of different things. Is there something I missed that, you know, is an issue that I really should have been delving into a little more? >> Uh, the thing that we didn't touch on and it's hard to touch on it is um, you know, the role of technology and specifically artificial intelligence and how that is going to work into all these things. And, you know, I'm a geopolitics analyst. I'm not an artificial intelligence um, expert or a technology expert, but technology really does matter when it comes to the future of geopolitics. Um, and this is where energy also comes into the conversation as well. And it's another area where I really like the metaphor of the 1890s because in the 1890s two things happen. We move from coal to oil and we move from coal to oil because Winston Churchill as first Lord of the Admiral T says okay the British Navy should have oil fire chips not coal fire chips. And then things change geopolitically and then you also have the rise of electricity. And so those two things spur incredible amounts of innovation and growth and prosperity. Um I sort of view what's happening with artificial intelligence um in a very similar light and it's dovetailing with another energy transition. It's not going to be onetoone. It's not coal to oil but it's oil to solar, nuclear, wind, renewables, geothermal technology that hasn't been invented yet. So you have this massive competition for with countries which countries can drive down the cost of energy the most. And then in those particular markets, can you start to innovate on things like artificial intelligence and can you have these use cases? Um this is for example why you know we talked about four really big countries. Another country that I'm incredibly optimistic about despite um pessimism for most about its politics and even from its own people is Chile. And I'm really optimistic about Chile because they have the most solar potential in the world. They have the most wind potential in the world and they have some of the greatest geothermal potential in the world. They don't have to lift a finger to have some of the cheapest energy you could possibly have. And the thing about artificial intelligence and data centers and robotics and IoT is that it consumes a lot of energy. So the countries that are able to produce a lot of energy in a secure way at a very cheap rate, they're the ones who are going to be able to innovate on these technologies and create use cases that we probably can't even think of. Um, so we didn't we didn't touch on the role of technology with these things, but as that's another sort of subset of how I'm thinking about the world. Whereas before we would have said it's the United States. The United States is the cutting edge of technology. If you want the best biotech, the best coding, the best robotics, it all goes to the United States. That's not true anymore. We're still the leader in some things. Um, but you start looking around at countries that either have that energy mix that is attractive or who are making things or who are doing making advances in biotech. That's a really interesting place where I think we're going where technology starts to overlap with um with geopolitics. >> Jacob, I realized that you know one thing I did miss was I mentioned the fact that I originally kind of was brought to you your writing was brought to my attention from this eur European piece and we didn't even talk about Europe but it's getting too late and we're going to have to just you know you'll have to promise to come back so we can talk about Europe and talk about that great piece. Um before we do though, uh we're going to end with uh what I call the Traers Desert Island. And for those who don't know, there's a a show on BBC called Desert Island where they ask celebrities their top 10 albums that they would take onto a desert island. We do the trader version where we ask the top three albums or top three bands and then also a trader that can be from any time period over through history that's going to help you sit there and trade from the desert island. So, let's start with your three bands or three albums. What would you pick? >> I love this question. Uh, I probably got to come up with 10 on the spot. My three albums are number one, the White Album. Um, number two, Led Zeppelin 4. And number three, uh, is the O Brother where Art Thou soundtrack. I think I'd be okay if I had those three. >> The third one, I'm going to go I haven't heard that, but I'm going to go listen to that. And by the way, >> I love you. No, sorry. No, I was gonna say, by the way, you're a millennial, but you're not really with those first two picks. >> Well, I'm a geriatric. >> I'm a I'm a geriatric millennial whose parents educated him well in music. So, uh, yeah, I'll >> say brother, >> well, I love I love folk music and I love oldtimey Americana music and I love all the different artists that are on the O Brother soundtrack. like Gillian Welch and Allison Krauss are at the top of the mountain for me and so like I probably would have given you a Gillian Welch album or something like that but if I only have three oh brother are there they're all on that album so I can at least get you know some American folksy stuff and a lot of different artists there so that's why >> that that is terrific okay and we're going to end with the trader that would help you sit there and trade who would you pick >> well the the selferving pick is uh our chief investment officer at the bespoke group uh Robert Larity uh obviously because he's the best trader I think in the business and I'm I'm I'm only half kidding. I've been working with Rob for five years now and I think you know he he would you know it's funny. I don't know if he would say you said I'm not allowed to Oh, no. I don't think you uh uh uh >> he said you can't pick the three that been the previous picks is what I said. >> Well, and and I think Rob would would tell you because Rob is really the one who schooled me in these things. Like he would probably go with Jesse Livermore or with um Paul Tudtor Jones. And we often joke on my podcast about Paul Tudtor Jones and you know a fellow Southerner I sort of have a soft spot for for Paul Tudtor Jones. But I'll actually besides talking up Rob in a joking way, I'll give you a really unorthodox pick which comes from my own background and probably somebody you've never heard of and somebody who is not a trader because as you can probably tell even though I work um in investments now like I'm not a trader. I'm somebody who sets long-term horizons. And you know, if you left if you left me to my own devices, if I didn't have guys like Rob around me who are really good at trading and about translating my big picture ideas into actual shorter trades that can make a lot of money. I'm just a guy who wants to see the trends unfold. I want to buy things and then hold them because I have that high level conviction of trends over time and I think things are going to evolve. And I come by that honestly because I think he's my great great or great greatgrandfather. His name was Mark uh Mark Monroe. Everybody called him Pat. He was from Quincy, Florida. He was a banker in Quincy, Florida. And in the 1920s, he realized at the height of the Great Depression that even as people were poor and couldn't afford anything, they were still buying Coca-Cola. And so he told everyone in his family and him he also he himself to buy Coca-Cola stock hand over fists even in the the apex of the Great Depression. He was a banker too. So he would even issue loans uh based if you had Coca-Cola stock as collateral. That was how strongly he felt about it. And for a while the town that he was in, Quincy, Florida, uh was one of the had one of the largest percentages of millionaires in the world because all these people listened to him. And but this is before Warren Buffett figured out Coca-Cola. Right. Right. >> I know this story. I've read about this town. And that was your great great-grandfather or something. >> It it absolutely was. So I'm Jacob Shapiro, but my mom was Anne Monroe. And so Pat Monroe goes all the way all the way back there. And so I I pick him because that's, you know, like I said, our chief investment officer, he's the he's going to tell you the the pros and cons of all the different traders, I'm the geopolitical guy. So what I want to do is I want to have a really really high conviction in one thing that I know is going to be true over time. So rather than somebody who's on the desert island because I'm not going to have a whole lot of access, I just want somebody who's going to be like, you know what, this is going to work. have some patience and then go listen to Led Zeppelin 4 for the 500 bajillionth time because that's all you have to do with yourself. So there there's my very unorthodox >> Oh, that's great. That's a great pick. All right, before we let you go, Jacob, why don't you tell us about first of all, let's start with your firm and then we'll end with your Substack. So, tell us a little bit more about your firm. Uh you mentioned your chief investment officer. Tell us a little bit about it, who you serve and how people that are the appropriate people can get in contact with you. Yeah, I wear many hats, but my primary hat is as director of research at the bespoke group. Um, we are, for lack of a better word, a multif family office. We struggle with that because you say the word family office and I feel like it conjures an image that isn't particularly what we are, but we work with a high net worth families and individuals around the world. And for some of them it's about everything from you know legal planning, legacy issues, even custody of cryptocurrencies right into custom uh you know uh portfolio construction, real estate property management, the whole nine yards. And then also some people just they don't need all that but they just want access to our uh bespoke or custom investment strategy. So we have a class of client even in the multif family office um that does that. So that's that's what I do as my day job and I'm director of research there. So some days it's the macro point of view. Some days Rob is coming to me and saying, "Hey, uh we're long this Turkish uh mining company. There's some change in Turkish mining laws. Can you please look at this and tell me if this thing is about to go belly up?" Like it's a really dynamic um place to be. Um and then in addition to that, um >> wait, before you go off that, why don't you tell people exactly how they can find uh that if they have interest because you have a name that is a little tricky because there's another bespoke group out there. So, let's just make sure that people go to the right one because I know I struggled with what when I was looking you up. >> Yeah. And it wasn't a problem, I think, when we originally started. But anyway, so it's if if you want to find us, you go to bespokegroup.io. That's our website. Um, and we're the multifamil family office sort of version. There's also an investment company out there. So, that's not us, but bespokegroup.io is the place to find bespoke. >> Okay. Now, let's move on to your Substack, which is where I've recently came across you. >> Yeah. Well, so you know, I'm putting out, you know, I'm doing lots of research and I try to put out some content in general. So, um, I publish things for free on interubjectively transmissible. You can just look up Jacob Shapiro Substack and it'll pop up because that's a mouthful of a name. Um, it come it actually comes from my father was a political science professor. Surprise, surprise. And he used to describe um, uh, his that term interjectively transmissible was what he told his polyai kid 101 kids on day one. He said the entire point of learning political sciences political science is to learn the things that are true between us and that was what he described as interubjectively transmissible. So things that are true no matter what your objective or subjective point of view is. And then um you know the the substack really also is deeply connected with geopolitical cousins that podcast I do with Marco and my own podcast the Jacob Shapiro podcast. So, if you're looking for content from me, but you're like, "Hey, I don't want the the bag of watches you're selling over at the multif family office." Like, there's there's plenty of stuff um and content you can engage with on that school. >> Oh, I didn't realize that you have also your own podcast. So, we have geopolitical cousins where you talk with our friend Marco Papage from BCA now. And that's you guys do that on a fairly regular basis. And then you have your own podcast. I Where do I find that? I didn't know this one. >> That's same place. And it's just the Jacob Shapiro podcast. We played with some other clever names before, but nobody could ever find it. So just Jacob Shapiro podcast. Yeah, Marco originally started coming on my podcast like once every quarter and we finally looked at each other and said, "This is really good." So we split it off and made it its own feed. And then my own podcast, honestly, I'm I'm I'm tickled that people listen to it. It started as I was just recording conversations for my own research purposes and I was putting them out there because I thought they were useful. It's usually me talking to sometimes it's subject matter experts in geopolitics, but it's really whatever I'm interested in. like one of my best friends from Cornell recently wrote a book about the death penalty in the United States. We had him on. We talked about his research and things like that. So, it's really just a grabag of whatever is interesting to me on a on a regular basis. So, >> one of my best friends actually tells me that he loves to put on my podcast to fall asleep because apparently the douls tones of my bass just just hit it right the right way. So, if you're having trouble sleeping, let me recommend to you my podcast. Is that is that a good advertisement? >> That's a great pitch. I love it. Jacob, I've had so much fun. I really appreciate you coming on. You'll have to come on back on and we'll do the Europe discussion. Uh, thank you very much for your time. >> Anytime. And maybe we get cousin on also next time because he's he's even more bold up on Europe than I am. We can get the the whole gang together. >> That's right. Thanks again. >> All right, Patrick, it's time for talking charts. Everyone's missed you. >> Oh, you know what? What a day to come back with a huddle right on the jobs number. Listen, we took the summer off like uh it was it was all fun and games, but now we're down to some serious business and we got to pull out the crayons and uh and take a dive into this here. Uh what uh what first of all let's just here pull up the jobs numbers, right? Okay. So by the way I don't know was there revision to previous >> the revision was actually in line like there was no problems from that perspective like okay as as there was most people know last month that was the big thing was that the revisions were huge this time the revisions were in essence like inconsequential like they're just irrelevant. So, so, uh, the non-farm, uh, employment change came in at 22,000, which was a huge miss. And you can see like on the chart, like other than that one, uh, November 2024 number uh, along the election period, uh, there really has not been a bad uh, non-farm employment change number like this in a long time. And the last time we had a miss was in 2021 where it was like negative, I meant. And so like we're borderline turning. And the the other thing to observe is that the unemployment rate ticked up to uh 4.3. And the one thing that when you go back through history and look at uh when unemployment rates uh stops being sideways and starts trending, rarely is there just one bad print. it tends to uh especially when it breaks key levels, it tends to be a feedback mechanism where you get numerous months over and over again um of bad thing like it's entirely possible that the jobs numbers have um you know are starting to indicate uh I don't want to say the rword but uh definitely uh definitely they're starting to deteriorate. What's your interpretation of it all? >> I'm with you. I can't disagree with any of that. The the jobs numbers are looking bad. The real question is with all of the immigration kurfuffle or changes that are occurring, are these numbers um needing to be viewed in a slightly different way? And I know you had James Biano on that podcast you cheat with me on and he's been highlighting the fact that uh very much the immigration is affecting that. And so no longer will you know what was it ended up being 22,000 jobs created >> and in the past that would be terrible and in this environment it might not be quite as bad as before. >> I don't I don't buy that. I'll explain why. Like ultimately uh population growth and uh and immigration are actually a major driver of growth and uh and that's when things are good and immigration's coming in. We never say those numbers have to be parred down because immigration was high. In the end, when you cut off immigration, it is actually impacting growth. And >> well, so I'm not going to disagree with you there, Patrick. And that was kind of my point was that it might not be as bad as as previous times, but it's still not a good thing and it's still not showing that the economy is growing. So, I think we're going to agree there. >> So, so let's talk about the impact. Uh obviously we're going to look at the sulfur futures here in a second, but this the big thing was here was that even yesterday there was a zero probability of a 50 basis point cut on the September meeting. There was zero. It was all 95 96% going for 25 basis point cut and right after this jobs number a 14% odds suddenly popped in for a 50 basis point cut. Now, I'm in still on balance of probabilities that they're going to do one cut, but we now have uh uh the highest part of the uh bell curve distribution that there's going to be three rate cuts this year. They're basically whether it's 50 basis points on the first one uh or whether it's just one cut sequentially in each of the last three Fed meetings uh the markets have suddenly priced in three cuts and uh and um and clearly there is uh Powell's going to have to make a full dovish pivot here. I remember just uh a month ago how he was saying like inflation has to be the focus and every and just amazing how in one month uh Powell has so clearly pivoted. Yeah. And uh I'm I was just pulling it up on my Bloomberg Bloomberg here trying to figure out if the terminal rate has changed because you are correct that a lot of those cuts were brought forward meaning that they are pricing in more and I was trying to figure out if they actually had changed the terminal rate today. Oh yeah, like it looks like it's all been brought brought higher. Even the even like here like I have the uh so for December 2026 which we're looking at rates at the end of next year which you know rate cuts can rate cut cycles can last multiple years but you know looking at that the potential of the end of 2026 is a reasonable measure of where rates are roughly going to be at the end of the cut cycle. Uh I mean we clearly had a jump from the 977 level to 97 uh16. So they're pricing in almost a full extra uh rate cut in one go. >> So I had pulled up the so for one month futures which I didn't even realize that they traded until a little while ago recently. One of my subscribers pointed that out and I thought it was terrific insight. Um and before the kind of the lowest contract uh for the next few years was the September 26 and it was trading at 9687. So that would have been like 3 and 1 eth was the previous um uh kind of terminal rate. >> Uh no I did that backwards. No I did do it right. Three and an eighth is correct. Yeah. And uh and now it's trading at 97. So it's gone down to three. So we're in essence there. But that is as the economy weakens, that is the real question. Will that terminal rate change? Meaning, we all know that as the economy weakens, we're going to get um a lot of those rate hikes brought forward, >> but the real question is, will they expect the Fed to lower rates to a a lower absolute level? >> Yeah. And and I don't know like part of me wonders if three is too um too high >> and then we on this rate cutting cycle we might get lower than >> I think I'm 100% in that camp. At least what my view is is that it's as absolutely asymmetrically skewed in your favor to be um in the sulfur futures market for an upside move because in in my mind the Fed is not going to suddenly pivot and pull next year or at least not pull all of next year's rate cuts out of the market. I I view the downside risk uh here is simply that you know that they may come become more neutral at some point and the it's something is pulled out of the sofur futures and maybe we have let's say a 50 basis point pullback but I think that you know they could we could be pricing at the end of next year a 2% rate it doesn't mean we'll get there but the sulfur futures might trade there when traders start to uh anticipate something especially if there's a bunch of more bad data and so I continue this one of my it's you know I I wasn't a short-term rates trader years ago and you you converted me and listen you happy >> you and Alex I I am I'm happy being a trader like >> yeah because not only that you owning the TLT you know you haven't lost but you haven't really made anything >> the curve is steepened and that's what >> listen we'll talk about the long bonds in a moment >> okay but but that's what we warned about is the fact that the curve was steepening and therefore you could be all bearish on the economy expecting lower rates and the long end might not do anything. And that's exactly what it's done over the last year. You basically just earned your coupon. There's been no excitement there. You haven't done well. >> Not yet. Anyway, we'll uh well we'll um we'll we'll talk about that in a second. But um point is is that uh the sofa futures were huge movers today. I I would argue uh that the bond market and the the currency markets were the big reactions to the jobs numbers. Now the stock market, we'll talk about this in a second, but definitely the the big move 100% uh was in the rates markets and the dollar and second in my opinion. Now, but what's but look at this. All right, I know uh like for instance, Jim Biano was talking about a trade that is near and dear to your heart over the last several years. And I want to emphasize that this is a theme that you've had and it's a very big picture theme, but that's inflation is going to be much stickier, much higher, and and the long bond is um uh not going to be as easil uh is not going to be a safe haven the way everyone expects. Uh that's been a big theme. But let's just talk technicals here for a moment. What uh what's really evident here is is that the 10-year bond is breaking out in a big way. uh like th this is not only did we have that big move on last uh month's jobs uh but it did a classic flagging Fibonacci retracement down to its 50-day moving average uh held that support like a flag and blasted off now back to um the liberation day highs. Uh we have at this point a bond market that is actually basing at the 10-year and now the now the 10-year has been much stronger than the 30-year. I'm sure that there there that's makes a lot of real estate guys and other people happy because uh that's uh obviously the 10 years is the most important interest rate benchmark in um in in the whole world. Uh but >> well except they borrow like most corporations or whatever borrow at the longest 10 and very few people borrow at 30 but one you know element that does borrow at or one cohort that does borrow at 30 is mortgages. So, I'm not quite sure, but you said it makes the retail it makes >> Yeah, but doesn't the mortgage rate interest rates still benchmarked against the 10 even though they're 30-year terms. >> You're right. Because of the Yes, you're you're correct that it trades more like the 10. You're right. >> Okay. But the point here, look at this breakout candle on the 30-year. >> Yeah. Listen, >> like like first of all, I get it. I get it that being in this being in the sofa futures, I get it. That's been a great thing. But I'm just talking about this reaction to the jobs numbers. they have legitimately um turned the bond market. Now uh what I always look for in the markets is when they transition from a bare phase into uh a basing what we what I call an accumulation cycle but a basing formation and then you look from where it potentially is breaking out. Now one day does not make a new trend and therefore I'm not ready to make a bold call that this is all upside from here. But when you have a a basic a 8 plus month basing formation that established itself and then you have a breakout of a a multimonth consolidation technically there is room for these things to go and uh and at this moment you know I don't think you have to be I don't think you have to ruin your long-term bare thesis on bonds and uh because this is not a macro macro call. This is a short to intermediate technical call, right? So, this is not about uh trying to change a a big macro fundamental thesis. But when you have a a bare market decline of this magnitude, if we have a a shoot above this weekly 50week moving average, uh can bonds uh during a period where we're heading toward the rword uh uh you know gravitate back to highs where they were in 2024. Like this is not like we're going back to 2021 and 22 levels. Uh like this is simply going to the top end of this range. Uh I uh one day it doesn't make a new trend, but you got to watch this because this could have been the spark that starts some sort of a squeeze in the bonds. And we're gonna find out whether or not this gets a feedback mechanism that that gets this going 120 123 back to like liberation day highs or something like this in the next little while. Any comment on this? I hate to say this. I actually agree with you and I and I will say something else. Um I am I have less steepener almost zero and I am the least short bonds I've been in a long long long time. My number one rule is that when >> I feel like we're in a confession number you're >> when is when I start having positions that the that podcast you cheat on me with is is recommending I have to unwind them. So, and that was just >> No. And kidding aside, I I I think that there's a lot of negatives out there in terms of people very very excited about the possibility of Zimbabwe and hyperinflation and yada yada yada. And um I I tend to be more in the camp that the economy is rolling over and so therefore it's it's it's tough for me to be really super bearish bonds. Um one of our you know listener I mean our one of our guests the fan favorite Cuppy I think he's been doing this publicly so I don't think I'm outing him. uh he's long bonds and he keeps telling me, you know, he goes on to Twitter and talks about this and everyone tells him, you know, sorry you don't get it and you don't understand and and the kind of his main point is that the bearishness out there is just so pervasive that it's the surprise is going to be the other way. >> And I'm and I'm not disagreeing. I you know, for me, I can't bring myself to go long these things like you do. Um I am long >> through bull call spreads. So, the thing is is that I I you can get some very nice asymmetric bull call spreads. We opened up a uh a 90 95 TLT for like a buck. Like, you know, like you you outlay a small risk, have a 4:1 payoff ratio, you know, like you're not you're not taking crazy risk on a a long-term play that bonds are super bullish. You're not going for yield and other things. You're you're just playing the fact that they could counter trend, right? Yeah. So >> I I still think though that the front end is going to be a better place to play and I'll continue to say that >> the bull steepener is the way to like is the I think the bull steepener is more important than the uh at this moment and therefore the um the short rates are going to move uh much more on a a basis point B uh basis right like all right so let's go to the dollar because this is the second place where there was a huge move now I was uh watching this sideways consolid validation developing and I was uh in my traditional form speculating on whether this would have a bullish breakout above the 50-day and squeeze everyone out. But this um this uh uh jobs numbers crushed that uh speculation almost immediately. Not a single close above the 50-day moving average uh at all on the dollar index. to remain down there. And this news basically broke the dollar to that lower low. And um to me uh that's uh that's important to to watch like the the euro was on the verge of a breakdown below 116 and and quickly caught the reversal. But the one that you know it's near and dear to your heart, the US dollar yen uh it based since April. It's been in a consolidation and it uh did a retracement back to the 50-day moving average which was about a 50% retracement. It really was highly vulnerable technically for a US dollar squeeze up to 152 153. And look what the jobs numbers did to it right back down to the lows. this uh and and the question here is is that uh is this entire US dollar yen move uh this consolidation over because of this? Now what do I mean by that? Well, when we sw step step back on a weekly chart and you you see the bigger kind of uh topping formation that the US dollar yen put in back over here. Well, uh what we had was essentially a market that did a 50% retracement here like the US uh in terms of a a a quick rally back to this 150 151. If this at this 50week moving average is failing and we have any breakdown move then uh the next uh symmetrical move actually sends this thing down to like 132 like we could even head right back to 2023 lows near uh 130 and so on. Now, I'm not already calling for that, but I'm saying that this is such a important moment on this on this chart because uh if this follows through on today's breakdown and we break down below the you know June Jul it's a July August lows and as a clear indication that uh uh the the yen is rallying and the US dollar is breaking down again. You know, technically there's room for this to go another full leg. Uh, and that would completely crush all my hopes and dreams of a US dollar squeeze. Uh, and now again, you know, like we talked about, one day doesn't make a new trend. And we're recording this just hours after this move has started. So, I'm not ready to make any bold calls. What I'm trying to do is explain that if this started a chain reaction of a new trend and we saw these things get in motion, you can't ignore these kind of pivots. Um, and uh, and you know, every this has been such a dead market. Nobody's been interested for months because it's >> Speak for yourself. Speak for yourself. >> Well, well, you know, I guess you like watching paint dry because this thing is literally not moved. >> No, you're right. Right. And so, so like people are interested when the thing is moving. >> Yeah, you're right. >> And and it's it hasn't been moving. And the thing is is that is it about to become interesting? And this is a I'm I'm very curious uh if if that ends up playing out that >> much like our podcast. Is this about to be ever be is this ever going to become interesting. Um by the way, while you're away, um can you pull up the DXY because the Currency Whisperer sent me a note and it was early in August, so I'm not really sure uh what where he stands now. I'm pretty sure I know because he's longer term like me, but he says, "However, if the DXY uh product I despise, more on that later. I'm not sure why he despises it. Probably because there's too much euro." >> Yeah, too much euro. Absolutely. It's not really reflective of a basket. >> He says it if it takes out 97. So, where are we now? >> 97 and a half. >> Okay. He says if it takes out 97 and then 96.37, I guess that's the lower end of the that's the lows. Then we're going back to 90. >> Exact. Hey, did you read my email? Cuz that's literally what he wrote. >> Dude, look at the chart. I can tell you exactly what he's seeing. Like look, if if this if this is the uh the midpoint of this thing, then uh any technical measured move is right back down to those lows. Right. There you go. So So like uh if it gives out those lows, this is but this is exactly in line with that yen call I was talking because the yen would have to be making the move to 130. the the euro would have to be heading to 120 to 125 in order for the Dixie to make this kind of a move, right? And so this is all kind of all in one uh thing like you have to watch and but now I can't think of a more bullish thing for gold though. But let's let's actually S&P >> Okay, you want to go to gold or do you want to go to S&P? >> No, no, let's let's get the S&P because look, the market is so important. We have to like get it to the market, but obviously gold is going to be uh important to talk about here in a second. S&P 500 prairie dogged. Did it prairie dog? Well, it look it basically well I on an intraday basis it prairie dogged not on a daily closing basis but this morning's reaction in the pre-market gapped it to a all-time high and it faded. Now this is something I like to not ignore. I like to pay attention to >> Can you zoom in there? So the last old >> Absolutely. I'll put on a 4 hour a 4 hour trip here. >> Oh, it did. Prairie dog. >> Right. >> Wow. >> And uh and >> no, by by the way, you didn't mention it. >> A noble animal. >> It is a noble animal. And and so, you know, to me uh this is this is uh something you don't want to ignore because we've seen numerous uh this happened. Like notice where the previous high was here and what the market did. it temporarily broke to a higher high, you know, then look at this high and temporarily broke to a higher high. It's a it's a part of what technically is uh if I'll just zoom in a little bit, it's a it's a rising wedge formation technically. Uh and a rising wedge formation is often seen at the uh uh near top uh tops of markets. uh and that's uh where uh the market is transitioning from uh a bull phase to distribution which is that every rally is sold into. So in other words, it's still a bull trend. It's still always showing 52- week highs. So every uh every um uh you know retail that's looking at their >> Okay. Okay. Okay. I know. Listen, I'm going to call it the way it is. Listen, any retail that looks at his the market value of their portfolio still sees that they're up 35% on the year or off the April lows, they don't see the fact that the market is losing momentum up along the top side and smart money is selling into strength where they're basically doing all of their active distribution up along the highs. And you can't see it when all you care about is your uh market value, right? When you're looking at the market value portfolio, it looks like you're still making tons of money and this is a major bull, but this is a a very heavy market that's being sold into an envy rally. And therefore, while we have not yet technically seen a breakdown candle that has marked the beginning of a new bear decline, we have not seen a trigger that has said the new selloff has begun. But uh I can't think of a worse asymmetry in a market than we are at this moment where when you compare the upside potential of this market to the downside risk, it is so massively skewed against you. And if you are not hedged up here, you shouldn't be like this. You should be lightening up. You should be doing anything and everything other than buying more here. >> Wow. Did you go to like university for the month you were away? because you came back so much smarter. That was >> calling people calling >> the retail gimps, right? >> No, no, but honestly, that was some you articulated that so well and I am 100% in your camp. I am not going to tarnish that at all by saying anything except bravo. Okay, it's uh it's a it's one of these periods where you know the maybe the market even uh you know there are a number of technical measured moves that actually target 6600 and in my mind there is nothing stopping this market from at some point upticking up to 6600 right like uh this so by no means are we saying it's all downside from here just go and load the boat short just yet. But, you know, especially if if we see and this is the big tell for me. If we see a bearish engulfing candle by the end of today, which is is that it wipes out all of yesterday's rally and where is one big red down and it engulfs it. That is um you that is a pattern that uh is common along a top. Got it. and uh and it hasn't yet engulfed the previous day. So, we can't say we just saw a bearish engulfing candle, but that's the thing to watch into the close. If we end up, you know, down 80 90 points by the end of the day, that's uh that's going to make the weekend a pretty uh anxious uh kind of period to to watch how this kind of plays out. one way or another uh the S&P here uh it's really at uh at at a very fragile moment and uh I you know you have to be very careful here on >> okay so >> now you wanted to talk gold >> yeah no first NASDAQ showed some short a short-term relative strength relative to the S&P here uh you know obviously uh Google had a extraordinary move a couple of little things uh ran this like Google continues contin to keep plugging along with that massive gap on that positive news. Uh but the a big one to continue to watch is that this is the first day Nvidia closed below its 50-day moving average since the April uh the March April selloff. >> Did you see the news about AVG uh AVGO and Open I open AI? >> No. >> So Open AI is going to make a a series of chips with them. I think that's the shot across the battle. I don't usually trade individual stocks, but I went and leaned into the short side of Nvidia for the first time in a long, long time. >> You'd be proud of me. >> You're about to get you. You are about to get some hate mail, sir. They are You can email it Kevin Macro big picture trading. Um, >> anyway, he's the one who thinks you're a Um, all right. So, so, uh, what's it called? Uh, anyway, the the bottom line here is is that, uh, the, uh, the the will Nvidia here start something that takes all the momentum out of the Mag 7s. Notice the Mag 7s did break to higher highs. Uh, and it'll be very interesting to see whether they can uh uh um whether Nvidia ruins the party for for the for the Mag 7's bouncing in the short term. Now, let's move on to what you wanted to talk about. That's gold. >> All right. 42 bucks again really is building. Now, uh what um what a interesting retracement. Now, I'm going to go specifically to this December contract because the the gap on the uh contract role was deceiving. But it literally has been coiling up in a four plus month a horizontal triangle f pattern and horizontal triangle patterns are tricky because some to one and this is where the skeptics of technical analysis will always come out. Is that a double top or is that a a a triangle formation? Right? Like you're basically there you can uh the in the eye of the beholder you can uh geometrically put whatever shape you want on it and and make a thesis based on that. Uh but what we do what let's break gold down in the most simple form which is uh it uh basically has remained in primary bull trend this entire time. I'm just going to put 200 day moving average on here and uh I want to highlight like for instance uh here I'll put it on but we have not even gone to retest the 200 day moving average there's a primary bull that was going on in gold and what was amazing was that whether you go to this threemonth consolidation whether you go to this sideways triangle consolidation that took about 3 months uh or you take this fourmonth one. What's amazing is gold has consistently done the pattern of instead of correcting backwards and doing a retracement where it gives back half of its gains in a typical 50% retracement, which is incredibly common in the stock markets um for it to do, but rather each time the consolidation has been rather sideways before the next bull breakout. It's amazing, but it's been repetitively happening over and over again over the last two years. uh and this breakout again sets in motion a new move. Now uh when you have this big of a horizontal triangle formation um then uh the rules of symmetry come in which is like like that old saying there's a saying in technical analysis that flags and and pennants and stuff fly at half mass which is mass which is basically this becomes the midpoint of the next rally. So, if you measure out the length of another $900 rally, we're going straight to 4,000 just based on that rule, which is essentially that if the the rally now is of the same length of the previous rally, you uh we're we're going for the 4,000. And from a time measurement perspective, that would that measures out to sometime by October. Uh and so, we'll see whether there's follow through here. But, uh, a 300 plus dollar, another 10% upside on gold toward the 4,000 mark is the technical move. >> Um, it feels kind of frothy to me, Patrick. >> Okay. >> We used We used We used to talk about this and even when we were bullish, there weren't that many folks. Now all of a sudden there's like crazy $5,000 targets, all >> you know, the blowoff top. You're you're pulling a a a um Jim Rogers here where >> Oh, listen. I I am fully aware that after calling for the $1,000 upw week that I won't stick with it and won't be long for the thousand up week. It It's the way of my life. It's like I've accepted my fate in life. Um but it's just I I see the the enthusiasm and it just scares me. >> Kev, >> I'm not saying I'm short. I'm still long, but I'm like I'm just saying, >> you know what? >> Yeah. I I want you to come to the dark side because because the option SKs uh on on gold continue to give very very rich premiums for very far out in the money strikes on gold. And while you will can't do at a zero cost, you can do incredible asymmetric collars on gold where you can buy let's say a put option a$100 or $200 uh below where it is and offset a huge chunk of that cost going $500 higher. you know, you can you can build uh some great hedges in there which then allows eventually I know that the retail guy is going to get cleaned on a pullback and uh but you have it hedged out. >> That's what happens to gimps. And for those who want to know more about this strategy, please contact big picture.com. >> Shameless plug. Thank you, sir. You're you're a >> Anyways, I listen, we want to we want to keep it tight, so I'm going to let you have the last word there. Is there anything else you wanted to chat about? >> No, no, listen. Well, listen, uh the one thing I do believe has gotten way too frothy is the gold miners. And what I'm curious about is is that even if gold does go to 4,000, will the gold miners run full parabolic or will the gold miners at some point diverge and that where they have already uh kind of reached their upper targets? Like when we go to a a weekly chart, uh we have literally right now hit the resistance of the all-time high. >> Yep. >> Um >> right. Like like literally we're trading at the price we were in 2011 2012. >> So I actually have been more bullish on the gold miners than the gold. >> You have you wrote great articles on that. Anyone anyone who wants to get those kind of calls can subscribe where Kevin at at the macroourist.com I did I did sell a whole bunch this week. I'm like cuz it's getting too frothy. This is getting >> for members for members we bought the $65 protective put. >> There we go. >> Like we basically uh came in there and said it. We're gonna spend two bucks on a a protective put because, you know, when you make eight bucks in a in a week and a half, you can give two of back to just uh continue to see whether there's more upside and lock in the sale price, right? Uh it's uh anyway. >> Okay. What else did you want to talk about? >> Crude oil. >> This OPEC, right? >> Uh look, this um let's let's put back the 50-day moving average. The uh crude oil attempted to close above its 50-day complete rejection was a very shortterm 50% retracement. Right now, the failure of this uh if it breaks that low, it's going back to double bottom retest that April May low down around 58 bucks. It's disappointing. But what is interesting is that energy stocks don't seem to give a uh like what we're seeing is well okay fine as a last few days things like the XLE have been giving some back but we have seen actual accumulation in energy stocks and generally they have been being bull in this environment and I find it really interesting that uh that uh oil and energy stocks are diverging this way what do you make of that >> I don't make anything of it you are paying more attention than me but I did want to ask you a question because for the first time in a long while I'm thinking about going long that gas >> and it's just >> so I was wondering if you could give us your uh you know crayon magic on let's do the strip so you like to trade this UNL which is terrific I love this thing >> so here's here's my take on this uh we are finished uh a symmetrical move which is basically uh so we're now oversold enough and we're going seasonally into the winter months we pass the the uh the uh term structure roll down and stuff like that that but this is a strip so that doesn't matter in terms of uh of that but what I want to simply highlight is is that last time we saw the bottom it still took four months and the rally didn't start till December uh this while we probably are very close to low I would argue $7 probably will not be violated on the bottom end of the range but I won't be shocked if you're still grinding for a couple months waiting for uh the the basing formation to finish before but on an asymmetry basis that we're much closer to the bottom very a small amount of risk to the downside but what I would the way I would play is that you only buy a small amount that you're willing to hold through a sideways range and then wait for actual technical breakdowns to double down on it when the trend becomes your friend. I like to go all in real early and then just sweat it out and complain for three months >> then then then do it because three months you might be waiting but it's a good level. >> Okay. Thanks a lot. >> Yeah. The other thing is is that just uranium like uh finally the U308 uh started upticking and the SPR physical has finally started to move stayed above its 50 days. Stayed above the 50% retracement about to break to a higher high. Um while the uranium stocks seem very rich and expensive and have run too much it really just looks like the beginning of the uranium trade. That's all I've got. We're >> okay. That's great. Thanks for tuning in everyone. Um, Patrick, where can they find more of this great announce? >> You've already given me the pitch. It's big. >> Come on, give it again. Give it again. >> Bigpicturetrain.com. You can follow. Check out my YouTube channel where I every single day cut back on the uh the cigar smoking. And I just walked all over. I'm trying to plug that. It's Patrick Sesna. It's not It's not >> underscore Szna. >> Underscore Surzna. For those who are don't know how to spell it, it's ceas. >> You were look, you had to read that, right? >> No, I didn't. No, I didn't. I'm not like like you with the Ron Burgundy. Okay. And if you want to go check out my letter, go to macroource.com. Listen, folks, it's great to have you back. Um, bull market, bare market, we're just happy to spend some time together on this crazy ride. Now, stick around for a real quick after show. >> All right, Danny boy. Danny. So, we're going to make you the star of this, buddy. >> So, I I can tell that you're no no longer at home. Tell us where you are, what you're doing >> today. I Today, Matthew, I am going to a rave. >> Matthew? >> Yeah. Have you never watched that show? Is it an English thing? >> I was like, did I screwed up his name and I was like, oh, is he like doing a g like >> he's going to a rave. I love it. This is the way rolls in Portugal, right? Like, you know, it's like you what you do is you you load up the laptop right in the parking lot of the rave. >> Is that where you are? >> Are you in the parking lot? >> I'm in the van, but I'm >> He's ready to go party. Like, he is ready. Like, drop the mic here. He's going straight to >> I have something embarrassing to tell you guys. >> Oh, tell me. Um, so I'm born 1970 and raves became popular what? >> So you've never >> mid 90s like or maybe early 90s. >> So I've never been to a rave. >> Come on over. I'll take some videos for you. >> Take some videos cuz I have no desire to be the 54 year old idiot that's like, you know, >> listen, >> all you have to do Yeah. You have to you have to put on the heart-shaped glasses like uh Jeff Bezos and uh just get have a have a a young girl uh beside your side and then you're you're right. >> Anyways, not not a chance. Not going to happen. But I am looking forward to your videos, buddy. And we have to go do uh some other things. So, we'll call it a night. Uh absolutely. Have a great time, Danny. Send us videos. Take care, everybody. >> Everyone, everyone. Cheers.
FOXES & HEDGEHOGS (Guest: Jacob Shapiro)
Summary
Transcript
Hit it. It's Friday, September 5th, 2025, episode 273. I'm Patrick Szna. And I'm Kevin Mureer. This week, we welcome Bespoke Group's head of research, Jacob Shapiro. We have a wide-ranging discussion about the end of the unipolar world, what it means for your investments, and where Jacob sees the best opportunities going forward. And then this week, Patrick is back from a well-deserved vacation. And there are tons of market developments where we need the crayon interpretations. >> And folks, stick around. I'm uh well, I I'd like to say that Danny hop on and tell them what beer I'm drinking. But um you know, we talked about this, Kevin. >> I was going to say, Patrick, you've already fallen down. You fallen down. We But you did plan. >> You did too. We were supposed to get back into the routine of this and we dropped the ball. Okay. Next week. Next week. Next week. Makes me next week. Makes me. >> All right, Danny, you got to you got to give us the at least a three-day heads up to figure this out. All right. Uh Kev, give us some side effects here, buddy. >> Nothing in this podcast should be viewed as investment advice. Listeners should consult an investment professional before making any decisions regarding topics mentioned in the show. Side effects of too much huddle may include the Powell pivot psychosis, >> the rate cut complacency complex. >> Yeah. And the jobs miss meltdown disorder. Well, well, you know, it didn't look like that at the morning, but uh anyway, we'll talk about when we get to talking charts. Let's get the guest on here, buddy. >> All right. It's our great pleasure to welcome to the show, Jacob Shapiro, the director of research at the Bispoke Group. Jacob, thanks for taking the time. >> Uh it's my pleasure, Kevin, and thanks for having me. It's really nice to meet you. >> I I'm looking forward to this. Uh originally, I I think what caught my eye was this terrific piece that you wrote about Europe, and we're going to get to that. and and since you wrote that piece, there's been a ton of other developments on the kind of geopolitical investment front that we can talk about. But before we do that, why don't you tell people a little bit about yourself? Let's get to know you a little. Um, did you grow up always thinking you were going to be, you know, a geopolitical analyst? >> Not at all. I thought I was going to be an academic and my undergraduate training, my my undergraduate degree is in Middle Eastern studies. >> Okay. >> Um, but I I was interested in medieval Islamic philosophy. So I was translating the Quran and translating you know uh Iban Rush and Aerois and and from Arabic into English and trying to think about how Plato made his way to the Renaissance via the Arabs and um I graduated into the 2008 financial crisis and I didn't want to go straight to grad school and for a while I was waiting tables at a Cajun restaurant and then I filed an internship application for this company called Stratfor which advertised as a global intelligence company and I went to Stratfor as an intern. I worked there for three months mostly making coffee for other people and nobody really listening to me and then the Arab Spring kicked off and remarkably even though Stratfor was a global intelligence company they didn't have anyone on staff who spoke Arabic and suddenly knowing something about the Quran and being able to think about religious um you know tropes in on the Arab street and how that was intersecting with protest and things like that. I went from making coffee to being asked well what's going to happen with Mubarak and what's going to happen with Syria and I never really looked back. I did have a a quarter life crisis where I went back and got a masters and thought I'd get a doctorate. I lasted through the end of my masters and then came straight back um to the geopolitical consulting world. And that's the second part of my journey was I did largely geopolitical risk consulting for 10 years mostly for um um companies or writing you know analyses for public consumption. And about right after the pandemic, um there was a registered investment adviser that reached out to me and said, "Hey, we really like what you're doing and we think that geopolitics is going to be really important from an investment perspective. Will you come and sort of pitch your analysis more at an investment angle?" And that was in 2020 and I never looked back. Um and it turned out that the the work that I was doing was really really valuable um for different investors. and I I now have joined the bespoke group and and thinking about geopolitics through the lens of research that helps investment decisions um is where I've landed. And I have to tell you also it's it's been liberating for me because for the 10 years I was doing consulting, you can write the greatest report in the history of of human civilization, but no matter what you do, it's really hard to objectively measure whether you were right or not. Did you get a forecast right? Did you have the right timeline? Can you argue that you did get it right even though it wasn't correct? In investing, it's very, very simple. It's did the trade work or not? >> Did did the decision result in a good outcome or not? And it strips away the ideology. It strips away the politics. It it strips away the ambiguity of analysis. So I have really come to appreciate the discipline that the market gives me because I can do my analysis. Then I get an immediate feedback mechanism for whether I'm right or not and it makes me sort of that much stronger. So yeah, it was a very path from medieval Islamic scholar to global geopolitics expert. Um, that's that's fascinating. And I, you know, I remember, you know, I'm much older than you and I remember listening to George Freeman in terms of his analysis and he was kind of at the forefront of geopolitics being introduced to the markets. Would you would you agree? He's probably one of the kind of first pioneers in that. >> There are two godfathers of geopolitics in the United States. There's Ian Bremer and there's George Freriedman. And I can't remember who made this uh metaphor first, but it's the perfect one. Uh Ian Bremer is the Marvel version of geopolitics and George is the DC Comics version of geopolitics. Um and Ian really cut his teeth on Wall Street and with energy companies and George uh cut his teeth on large-scale subscriptions to you know people around the world who were just buying an individual subscription and then much more niche related sort of intelligence related things. But it's the two of them that were at the core of it. And anybody who is doing geopolitics for real in the United States comes from one of those two people. Like there's nobody else out there, I think, who who really has emerged without at least crossing paths or owing a big debt um to the two of them. >> Um I do uh I can't help but talk about George Freeman. You're probably going to want to skip this responding to this, but I'm still waiting for the coming war from with Japan. >> Do you know that book? And George would, of course I do. George would tell George George was my like George was my mentor. Like I helped start geopolitical futures with him. Like he was the one that that taught me the ropes. George and my father were best friends in grad school at Cornell um back in the day. So like George is like I have a very very like um warm and fond appreciation for George in my heart. And I wouldn't be the analyst I am today without George. So if you ask George uh you know when is that coming war with Japan? He would say well it's I just got the timing wrong. like the war could still uh the war could still technically be coming and to George's credit I you know the the coming war with Japan was a you know the title was was incendiary it was made to to sell books but the coming war with Japan in some ways is my favorite book of his because it lays out his methodology so even if the call was not necessarily correct like all the different tools that George taught me how to use they're worked out in the in the coming war with Japan the best sellers that came later um are really for popular consumption the coming war with Japan is where you should go if you're if you're a nerd and you want to learn how to do these things. And just the the second thing I would say is, and this is to George's credit, like if if you asked George, and I've asked George before, you know, what the biggest blind spots for his uh for his prognost prognostications were in the 90s and 2000s, I think he would tell you it was um September 11th and the rise of jihadism in the Muslim world. That was a dynamic that really wasn't on his bingo card and really reshaped um you know, American foreign policy, the the role of liberalism in the world. um the coming war with Japan like uh the title is incendiary but the actual tone is actually quite good and quite nuanced. >> Okay. Well, why don't we take a moment and step back and why don't you tell us about your philosophy of of the world and how it's developed over the past couple of decades. Why don't we start with 9/11, how it changed the world, and then how you see it developing from a geopolitical stage and then what we'll do is we'll eventually get to the current environment and what you see there and how that affects our investments. >> That sounds great. So the the first thing I would say and and here I would refer your listeners to Philip Tetllock who um I don't know if you've heard of him in his book super forecasters but Tetllock did a study where he was trying to figure out is there anything that makes political forecasters more accurate than others and the only thing he could really find I'm I'm grossly oversimplifying his his point but the only thing he could really find that was statistically relevant was this division that he makes between foxes and hedgehogs and hedgehogs are somebody who knows one thing and repeats it over and over and over again. And um and foxes are people who change their minds constantly. And one of the things that he found was that hedgehogs get more play in the media or even in briefing rooms because they can be very compelling. They can simplify things down to one thing and they can make you feel, oh, this is the thing. I'm confident that this is the truth. I can move forward with this insight. And even as they're wrong over and over and over again, they keep getting listened to because they have that confidence and they can be understandable. The hardest thing for an intellectual fox or an analytical fox is to communicate without completely confusing the person that he's talking to because a fox could say one day this is what I think is most probable and then gets a new data point and says I was wrong. It's the exact complete opposite. And if you're dealing with somebody who's trying to get a media hit or if you're even briefing somebody who's in high executive office, they don't want a 360 degree change or a 180 degree change. They want some level of consistency. Um, so I'm a I'm an an an analytical and intellectual fox. Okay. >> And I think my my greatest uh skill, if you will, is that I'm able to be a fox without hopefully completely overwhelming the person that is listening to me. I can simplify it enough that I can communicate my ideas without, you know, trading what I think is an allegiance to understanding that things are dynamic and changeable. And that's what politics is. The moment you try to do analysis and say this is true, you're already done. like politics is constantly evolving. It's an act of extreme hubris to sit down like the piece you mentioned that I wrote about Europe. The idea that I could sit down and write a piece three or four weeks ago and it would be the end all of what's going on with the geopolitics of Europe and the United States, it is such an act of fundamental hubris because 500 different things could happen after I write that piece that completely invalidated. So, you have to have the confidence that, okay, I can take the snapshot now, but hey, if I'm wrong two weeks from now, I'm you're you're going to hear it from me first. I'm going to be the one that tells you it first. Let me give you a practical example actually of what I'm talking about. Um, and in my early days when we were trying to figure out investing in geopolitics, um, I did not think Russia was going to invade Ukraine. I thought that it was all a bluff. I was talking to analyst friends in Moscow who were telling me it was a bluff. That was a mistake to listen to them. But so for some of our clients, we had small positions in Russian equities because they we thought they looked undervalued and we thought the market was pricing an invasion that we didn't think was going to come. And I remember very vividly, you might remember this too, when Vladimir Putin called his National Security Council together and they made a big to-do of it. They broadcast it everywhere and they were talking about how Zilinski is a fascist and they have to restore Russian values to Ukraine and things like that. And I called a meeting of our team and I said, "Sell it all now." And the team didn't want to do it. They were like, "Well, let's see how it plays over the next couple of days. Like, maybe you're overreacting." And I said, "No, no, no. I was wrong. It's broken. Get out now because if you don't get out now, I'm not sure you're going to be able to get out." So, we got out with a very, very small loss. And four or five days later, Russian market shut down. You couldn't have gotten out if you wanted to. So, I'm not happy that I got the the invasion call wrong, but I was very proud that I was able to see in real time, crap, I messed that up, and we need to fix it very, very quickly. So, that's >> You were like when you said sell it all. That's all I could think about the the scene in Wall Street. Sell it all. >> Sell it all. When when the when the analytical take is broken, you have to swallow your pride and say, "I was wrong." And it's a really hard thing um for people to do. So, I come from like that's my analytical background. And I think in some ways my superpower is being able to see when I'm wrong and not taking these things personally. I only care if I'm getting things right. And then the the bigger macro thing that I would say um and people who hear me that I'm I'm convinced that they're sick of me saying this and I'm also a contrarian and people are beginning to agree with this take. So I have this innate instinct to be like oh I have to change the take. >> I know that. >> But from from roughly 1990 until I would say Russia's invasion of Ukraine, I think we were living in a unipolar world. I think the United States was the unquestioned political, economic, cultural, military power in the world. Full stop. the buck literally stopped with us and I think we have now shifted from a unipolar world to a multipolar world one in which we have rising and falling great powers all across the world different and shifting coalitions um I am by the way not saying that we're headed towards a USChina competition I think the consensus view is that we're headed towards another bipolar world with a second colar with a second cold war with the US and its allies on one side China on the other side that's a possibility and it's a scenario I take seriously but that's not what I model. For me, it's not the 1930s or 1940s. It's not the 1960s or 1970s. I look to the 1890s for the closest historical an historical analog to what we're talking about. I think we're in the very, very early stages of this. The United States is still the most powerful and richest country in the world. It just can't dictate its terms like it was able to in the late 1990s and even in the early 2000s. And I think you can see that in the way that some countries are reacting to heavy-handed US trade policy. And you can see that in the way that some countries are moving away from the dollar and thinking about how they can futurep proof their financial security with a mercurial uh United States. So at the very very top level the macro view that doesn't change for me is we're moving from unipolar to multipolar. And most of my time as an analyst is spent thinking about how am I wrong about this? Are there what is the signal that the multipolar world is not emerging? That it is going to be the US versus China or it's going to be complete anarchy. Um but but that's my my overall view. I think we're headed towards multipolarity. I think we're in the early stages of it. And I think the current administration, ironically, is accelerating that shift. Um I you know, things that I thought were going to happen in the mid 2030s, they're happening now. And they're happening now as a result of US government policy. And I try to be very very objective in what I'm talking about. You can make a pro or con case for that. Is it good that our politicians are bringing the crisis forward so that we can deal with it now? Is it better that they kick the can down the road and buy us more time? I don't know. That's a question beyond my pay grade. But I think the objective fact is they're bringing the crisis forward. They're bringing the acceleration of this multipolar trend forward. And I think people are not ready for that. I think people have gotten used to the notion that the United States is the most powerful country in the world and that the dollar is the reserve currency and that ultimately, you know, things are going to flow based on decisions in Washington. I think all that is changing beneath us. So, I couldn't agree with you more about the Trump speeding up things that previously felt like they were way off in the distance. One example I give is I've been thinking to myself, oh, the, you know, eventually if there's inflation for long enough, we're going to see a situation where they start fudging the numbers. I thought that was going to be 5 years, 10 years down the road. I didn't think it would be five months into his term where he's, you know, firing the BLS person. And I'm just thinking, for example, about YCC in terms of yield curve control. I thought, "Oh, this is going to be something that is going to take, you know, maybe record wides in the yield curve before they do it." Now I'm thinking, geez, it might happen next year. Like, it might be sooner rather than later. Um, one of the things that I wanted to just ask you about is that you have this great podcast, Geopolitical Cousins, with your your pal Marco Papich. Uh we'll talk about that later. But one of the things that he said and I guess you guys echo this and part of the reason why you might call yourselves geopolitical cousins. He says in a world of multipolarity there are no real friends or enemies. There are just interests. And that's what Marco talked about. Do you agree with that? Could you explain that in terms of how it's shaping, you know, maybe expand on how you're thinking about all the different trades and the different uh how you see the world. >> Yeah, foreign relations are much more transactional. But uh as much as I love uh he's my cousin by choice, as much as I as much as I love cousin Marco, you can go back to George Washington for this take. Go back to George Washington's, you know, farewell address. He talks about how the United States should not have permanent allies. Um that it is not the United States's business to go about intervening in other places around the world. That the United States needs to protect its interests. And the United States uh existed that way. That was US basically primary US foreign policy with some exceptions for Latin America, an exception in World War I. Um but until World War II, United States policy was to be isolationist. We did not have a huge military until the buildout in World War I and especially in World War II. And the thing that happened with World War II is we woke up at the end of World War II and realized suddenly we were the last one standing and we were the most powerful. And in I think a good faith effort to create a more peaceful and prosperous world. Um it was you know Franklin Delano Roosevelt was the architect but then you know administrations of both parties continued to build it. We built this liberal international order with the idea being that there were certain rules that all countries had to follow. And chief among them was we want trade. We want people to be able to trade more because that's going to lead to more prosperity. And if you don't agree with that, if you're on the other side of that, then the United States will intervene or you will have to join in with the Soviets and get their crappy cars and their crappy political infrastructure and everything else. And the United States won the Cold War. It defeats the Soviet Union in 1990. And again, nobody's left standing. If you look at the world in the 1990s, there's no country that can even come close to holding a candle to US power. So there are a few holdouts that don't go along with it. You know, we can name them probably on one hand. Iran, North Korea, Cuba, Venezuela. That's probably the list right there. There might be a few others that I'm forgetting. So you have some outliers, but most everybody else in the world starts listening to Third Eye Blind and starts trading with the United States and eventually wants an iPhone and eventually want everybody wants to come to the United States and the United States is is finally this shining um this shining uh beacon on the hill that it always thought it was going to be for itself. As you switch to a multipolar world, what's happening is some of those countries and China is the perfect example. In the 1990s, it was completely in China's interests to trade more with the United States and to have a good relationship with the United States. As China became more wealthy and more prosperous and started to get into the middle income trap, well, the things that the United States wanted from it in the trading relationship didn't make sense to China so much. And so, China is saying, "Well, actually, we want to do things. We we want to reset the rules a little bit here. We think we've earned a bigger seat at the table. We think that things should protect some of our interests going forward. And the United States is not the United States of George Washington. It's not even the United States of FDR, which it took Japan literally bombing Pearl Harbor to get the US into the war. You for years FDR wanted to get into the war. He couldn't do it because public opinion was so against it. Uh but you know, for 30, 40, 50 years, we have an entire foreign policy establishment and a cultural sense that we are the most powerful, that everybody wants to be like us. um that the ideals of America are exceptional and that everybody should embrace them. And in a multi-polar world um where interests, as Marco points out, are more important than those relationships, in some ways alliances become a burden because instead of expending resources on yourself, you have to go expend resources on protecting all of your allies. This, by the way, is one of the reasons that the Chinese have no allies. Their only defense treaty security relationship is with North Korea, and they didn't even really want that. That's a hangover from the Korean War and and really an anacronism from the Cold War. But they don't want permanent security relationships. They have their hands full with what they currently have. And if you're the United States and you're realizing, huh, our economic power and the threat of military force does not create the same type of subservience is the wrong word, but doesn't go doesn't go as far as it used to. and you want to expend resources to start say manufacturing things in the United States again or making sure that you control the commanding heights of the technology economy. Well, suddenly you can see how maybe supporting um these allies as part of this liberal international world order which no longer seems to exist and which is being challenged more and more by these revisionist powers daily. You can see how overextending those alliances becomes a bit of a burden. A great example of this is NATO. NATO was an alliance led by the United States to resist the Soviet Union. It did a wonderful job of doing that. I forget how many countries were in NATO originally. I think it was 12 or 13, but you know, somebody can go to Wikipedia and check me on that. NATO makes no sense today because the Soviet Union doesn't exist anymore and it's extended to 27 and 28 members, including extremely small states in the Balkans like Montenegro, I believe, wants NATO membership or recently got it. Um, that doesn't make any sense. It's like what is what does having these countries in the alliance do if the goal is to resist a country the Soviet Union which doesn't even exist anymore. So there is this kind of alliance overhang and as and as things shift in a multipolar world you want to be able to be a little bit more transactional and that's one of the reasons why I would encourage listeners to go back and look at the 1890s look at the different foreign relationships that happened at that time period. It was a time of actually increasing trade. It was but it was also a time of immense competition all around the world and countries that at one you know like for instance the United Kingdom and France mortal enemies in the 19th century uh and in the 18th century suddenly they were on the same side of things uh because they saw the rise of Germany and they saw the rise of these other things they realized had they had to put bygones to be bygones. The Ottomans aligning with with the Germans and with some of these others as part of um the central powers that eventually fight um World War I. So all of these shifting things that depend on, you know, different interests at one time and all of that as a result of the fact that there wasn't one country that was calling the shots or not one country that was setting the rules and that's the type of environment we're in today. >> Do you think that this was um a trend that was in the making regardless of Trump and he just accelerated it or he was even kind of the chosen one based upon the fact that we were headed this way? or is this something like if let's just imagine we have a shift back to the Democrats in three or four years uh will we go back to that um you know unipolar world and and will we ever return to that or is this something we should put in the rearview mirror and it was headed this way anyways >> I feel like I've been a little long-winded so let me be a little succinct here we're not going back I'm not certain about that many things because I'm the fox I can tell you the one thing I'm absolutely certain of we're not going back. So we might get a new unipolar order in 10 or 15 years based on how things develop. But the idea that we're going backwards, that's a recipe for disaster. That's the wrong mental model to think about. I I don't think there's going there's no going back at all to that sort of previous view. It's interesting to date sort of when multipolarity began to arise. Um I was still banging the drum for a unipolar world until about 2017. And I'll tell you what changed my mind. I was invited to, and I'll probably never get invited again, but I was invited to a conference in Moscow at McGee, which is um basically the think tank for the Russian Ministry of Foreign Affairs. I was the token American that they wanted to have there as a whipping boy. Um, and you know, I was listening to all these analysts from all these other different countries and ones that were more aligned with Russia than with the United States. And as I was sitting there listening, I was realizing uh these countries care much less about what the United States thinks and wants than what I assumed. And these uh a lot of these countries whether we're talking about India, Iran, China, um South Africa, uh Turkey, like these countries are thinking very very differently. And it was around 2017, this was actually a break I made with um with George. I was with George at the time at geopolitical futures. And George, I think continues to think that the United States is the supreme power in the world and that it's going through a period of domestic political strife, but will come out stronger on the other end. Maybe so. But here today, I think the world is incredibly multipolar. Um that was a fairly out there um take to make in 2017 and cousin Marco and I uh are bonded by the trauma of being told for years of how wrong and stupid we were in 2017 2018. Um I would not date the beginning of multipolarity or the clear signal that multiplarity uh is back with Donald Trump. Um that moment in 2016 I think was much more about wealth inequality in the United States and populism in American politics. The two most popular candidates were Donald Trump and Bernie Sanders. And if Bernie had been actually put on the ballot, if the Democrats had been able to swallow that, I actually think Bernie might have won. But I think that was much more about US domestic politics. I think it was very clear that we were in a multipolar world when COVID broke out because COVID was a disease, a virus that comes for all of us, no matter what our creed, sexual orientation, nationality, language. CO doesn't care. It's going to infect you. And it's, you know, for a small percentage of the population going to be deadly and for most of us a really big pain in the ass if you'll pardon my French. And instead of, you know, in previous iter you would expect in a unipolar world with a liberal international order that we would all bond together and say, let us sort of like on Independence Day the movie like let's fight this thing that is coming for all of us together. Let's share resources. Let's figure out how to get vaccines out there. Let's share personal protective equipment. That's not what happened at all. It started with China not telling people about what was really going on. Then China started hoarding all of the protective equipment that we needed for medicine, a lot of which is now manufactured in China. When the West when the West realized what was going on, um it immediately started uh you know turning up the research machine to figuring out a vaccine but didn't want to share that with other countries. Didn't want to eradicate it globally. It was very much no no we have to take care of ourselves. we're not going to take care of some of these others. And by the way, we're going to punish others for not doing things with us. You might remember this was the time of the phase one USChina trade deal. And the vaccine politics and the co politics actually got in the way of the US and China working on trade. It looked like we we were actually on a good trajectory to some kind of understanding with China, at least on trade, authored by the first uh Trump administration. So for me, the real beginning of the break was CO and the nail in the coffin was Russia invading Ukraine. Um I I think you could still argue after CO, okay, this is an exogenous force. It's people were scared, but ultimately the world is going to come back when things turn back on. And when the world came back on, what did we get? We got the biggest land conflict in Europe since World War II because Russia thought it could just go into Kev and conquer a country. That tells you we're in a multipolar world because Russia thought it could do that. And the United States, I mean, it's it's easy to forget this now because Ukraine has defended itself so well and the United States and the Europeans helped prop them up. Um, the initial US response to Russia invading Ukraine was to evacuate the embassies, was to get out. We didn't think they had a prayer of standing up to them. The Germans uh uh agreed to send 10,000 helmets, you know, military helmets to the Ukrainian people to help. They weren't talking about anti-tank missiles and rockets and drones and things like that. Like everybody thought it was a fade accomplete. Um so just the fact that you had Russia thinking it could do that and you had the West not willing to stand up to Russia against that to being willing to say ah okay like Ukraine not so important as part of our liberal international order. Like Russia is just going to have to take that and that's really sad. Let's go back to business. Like that's when I think it was incontrovertible. But I I would say COVID um and Russia's invasion of Ukraine are the big multipolar markers for me. For me, Donald Trump's election and his first term were part of another thing. Now, his second term is a different story. Um the foreign policies that the US is pushing right now, we can talk about this more if you want. Um would be very home would be very at home in sort of US imperial foreign policy from the early 1900s. And I think one of the reasons we're seeing so much friction um in US policy and US relations with the world is that President Trump is trying to govern like William McKinley or Teddy Roosevelt. And he doesn't have the cards. He's he's holding empty cards. It's basically all bluffs. And his bluff is getting called all around the world. And when the bluff isn't getting called, it's people ingratiating themselves to him so that they can get short-term deals, but in the background preparing um for a world in which they don't want to be so closely dependent on or aligned with the United States. >> Okay. We'll get to that. Um, let's just though before let's just take one step back before we get off of the multipolar world. Um, are there any investment >> changes that that come directly from this move from a unipolar to a multipolar world that you can think about like what you know understanding that affects you that your portfolio construction or how you think about markets in the following ways. Yeah, it's it's if you were a geopolitical analyst from the 1990s to 2015 2020, it was actually a fairly boring job because if you were a good analyst for 30 years, your answer should have been by American or by American allies or at least by countries that are aligned um with the US-led trading regime. So it should have been buy US if you if you want to get you know a little unorthodox buy Germany or buy China and then go play golf to lunch don't worry about it too much don't worry when you get a dot bubble or some of these other things those are buying opportunities very clear that the United States is going to do well allies of the United States are going to do well places where manufacturing is going at the behest of the United States all those things are going to do well um I don't think you can think that way anymore um I think that we're primed for international outperforming US domestic here going forward I don't think US allies are necessarily the best place to be thinking I now I'm thinking about rising powers that can be vertically integrated economic regional centers of power in their own right so for me some of the most interesting countries to think about investing um in China is is difficult it's sort of a different animal but you know for when I wake up in the morning I'm looking at the newspapers of Mexico Brazil Turkey and India every single morning for me those are some of the force hinge states and maybe not all of them will realize their potential maybe none of them will maybe the multipolar paradigm is off but those are four countries that have the requisite level of size and ability to vertically integrate that I think can perform extremely well um in a multi-olar world and then this is something that I've come to you know really in the last year or two we talked about the Trump administration accelerating things um you know I have been a a Bitcoin skeptic for most of my career and one of my partners at bespoke group Matt Mcccleintoch always jokes with me that everybody buys Bitcoin at the price they deserve. Well, the price that this geopolitical analyst deserved was 110,000. And it was 110,000 because we were seeing things out of the United States, whether it was, you've already alluded to it, firing the BLS commissioner. Um, you know, bullying the Federal Reserve into lower into lowering rates. Um, half-hazard and completely volatile US trade policy. um gold completely outperforming not just the US dollar but the S&P 500 B anything else like all of these dynamics happening then also just the widening US debt which is completely impossible to ignore right now there's no politician or party in the United States that cares at all about fiscal conservatism if you are a fiscal conservative the only president you should admire since Eisenhower is Bill Clinton and usually the Republicans have been the worst offenders um so you put all those things together and the polit the politicization of of US financial strength. You've got somebody like me who's saying, "Well, suddenly Bitcoin looks pretty good. Suddenly, I'm thinking about gold and Singapore dollar and Swiss Frank and hard assets like real estate or American farmland." Um whereas before like those weren't things that I would want to park my money there, get much bigger returns some of the other um some of the other areas that you would be. So yes, at that very top level, the shift from unipolarity to multiparity has an absolutely massive impact on portfolio construction. It's it's a complete and total paradigm shift. >> Okay, that's great stuff. Now, let's talk go back to what you had mentioned there about basically Trump's bluffs being called and talk a little bit about how you see the current environment and what's happening. And uh you said that Trump doesn't have any of the cards and that's almost the opposite of what they're telling everyone. Like how do you square that? >> Uh don't listen to them. I don't listen to any Don't listen to any politicians. You also shouldn't have listened to Biden when he said inflation was under control and that he was going to get g. You know, I haven't listened to a pol the only politician in my lifetime who I think tells the truth a majority of the time. I'm not saying I agree with him. I actually disagree with about 60% of the things that comes out of his mouth. But the only politician in my lifetime that I think is actually telling the truth is Bernie Sanders. That's the list. I don't think anybody else is telling the truth any amount of time. So, I wouldn't take um what Donald Trump or Joe Biden or Barack Obama or George what any of them like tune it out like listen to what the data is telling you. Um so, and I think there the other metaphor that I've used to describe this with the United States is I think that the way that the US is um enacting policy is going to lead to a form of radiation sickness. If you're exposed to a high dose of radiation um you get sick initially, but then you start to get better. It looks like you're improving and that you've kicked it. But the problem is that radiation damages the underlying cellular structure. And so over a longer period of time, you your cells won't be able to replicate or if they do are able to replicate, you'll get higher incidencies of of cancer and things like that. Your your body has been fundamentally damaged. That I think is what we're looking at with the United States. I think many people, especially those with Trump derangement syndrome, thought he was going to announce tariffs and boom, inflation was going to be 10% and everything was going to be terrible. No, that's not the way this is going to work. I think actually he did the initial sort of onslaught of policy markets didn't really blink. I mean we had you know the draw down in April but we're doing incredibly well when you think about it on the year considering everything that's gone on and it looked for a period of time like things were going well. But now you start to look underneath the hood and you see the jobs reports going in the wrong direction. You see, particularly concerning for me, electricity prices uh increasing massively across the board in the United States and Trump's own Department of Energy saying that the status quo is completely unrealistic and that we're looking at 30 to 60% increases in electricity prices for the average American. Um, you're looking at manufacturing contraction in the United States, which is the exact opposite of what you would expect with the Make America Great policies. Again, you're looking at Robert F. Kennedy Jr. basically eviscerating the US lead um in technology and health around the world. We are seeding that to China and other countries around the world because of the crazy ideas of this guy who's uh in charge of of all these other different things. And then you get the immigration problem too. One of the great US strengths, one of our great superpowers is our ability to assimilate immigrants. Uh you don't get the teeming masses from Central America and South. They're not trying to go to China. They're not trying to go to Japan. They're coming to the United States because they think they can have a better life in the United States. And we've turned around on this sort of nivist anti-immigration phenomenon even as our birth rates have rapidly declined, especially since co. And so it's unclear about whether we're going to continue to add both, you know, immigrants who are doing the labor that nobody wants to do in the United States or those top really really smart people and researchers from around the world who used to come to US universities and then stay here and now are saying like maybe I'll go home or maybe I'll go to a Chinese university or maybe I'll go somewhere else. So you put all those things together, it's not going to be an immediate impact, but I think um the Trump administration will try and make us think that everything is great and they'll put lipstick on the pig. And honestly, I think I think it'll probably be a good year or two probably. I mean, we're getting some concerning data right now, but my expectation is that things will probably bounce along the way they need to be, but that the long-term impact of some of these things are going to make the United States less competitive. Uh, and it's going to again accelerate um that notion of looking towards places internationally, like international is being spurred to growth by the way that the United States is dealing with some of these countries. Um and that I think you know on that five 10 year time horizon like that's it's as clear as day to me right now. >> Okay. So in in terms of let's go back to the markets. Do you think that that this is just a function of them you know continuing a trend that has gone on for a while and like you see the tick data and money still seems to be flowing into the US which I don't understand. and and they're still even though international stocks are doing terrific and outperforming the US, they're still everyone's focused on the US. And it's it's just it's it's kind of shocking to me that all these things that you mentioned, they make complete sense, but yet nobody's talking about it. Nobody believes very few believe it. And I was wondering how you reconcile that. Is that just markets can be inefficient for longer than you expect? >> Yeah. Yeah. Well, there's a couple different things there. The first is, you know, the the the Fcott Fitzgerald quote, which probably gets overused, but you know, the the the true mark of intelligence is being to hold two contradictory ideas in your mind at the same time and continue to function. Um, and this is where, you know, when I say a multipolar world is emerging, often people hear, oh, the United States is in decline, terminal decline. I don't. I think the United States is going to be one of the most powerful and prosperous nations in this multipolar world that I'm talking about. I'm just saying we're not going to be omnipotent anymore and we're going to have to have some real important policy decisions and political decisions. And I think that's coming. By the way, if you look at lots of polling of the US electorate, nobody likes this government and nobody likes the Biden government either. Nixon's silent majority is out there sitting waiting for somebody saying to talk some sense to them and to give them good policy. And we've been here before in US politics. Usually what has to happen to get there is the economy has to basically roll over. This happened in 1970s with stagflation. It happened in the 1920s, Roaring 20s. It also, by the way, happened in the 1850s. Hopefully, we can avoid the movie that happened at the end of the 1850s. And I think we're probably going to get there. It would be nice if US politics was more forward thinking than that. But we're a democracy. We argue with each other about which bathroom we're going to go into until things actually get really difficult and then we're going to make changes. So, I think that's probably what happens with the United States. Um, and it's also like money is coming in and money is coming out. Um I think what's changing is where money is coming from and who's interested in it. So there are countries or people like uh and I think the the breakdown in US India relations that the Trump administration has authored might have a huge impact on how Indians are thinking about the United States or about some of those um flows in general. But you've got Americans um who are looking to get out of the United States even as you have folks from other countries that are looking to come into the United States because the grass in some sense is always greener. So even as some Americans say, "Hey, Europe looks pretty good right now. I care about quality of life." If you're somebody who's in Turkey or uh Brazil or South Africa, US market looks pretty good. If you're in China and you don't want to be part of Xi Jinping's purges and his capital controls and everything else, you probably want to get as much of your money out of China as you possibly can because the realities of what China is going to have to do are far more grim than what the United States is going to have to go go through as well. So again, it's it's not that capital flows to the United States are going to stop entirely. And it's not that the United States is not going to continue to be a very very important and very very prosperous power. It's just that it's not going to be these hion days of the last 35 years that we've gotten used to. And there will be sectors and countries that will outperform. And there will be parts of this, by the way, that the United States will probably do incredibly well with. Um the United States is blessed with um you know, immense energy reserves. Now, there's problems with the grid that we can go into if you want, but most countries would kill to have the level of self-sufficiency that we have when it comes to energy commodities or agricultural commodities or some of these other things. Most leaders in the world would trade their situation for America's problems in a heartbeat because America's problems are much easier to solve. It's about getting people to agree with each other and stop squabbling. Not about say like China which is we just don't have enough land to grow food for the people or a you know another country like Turkey which until recently when it has some big offshore natural gas discoveries. We don't have the energy here. We don't like Russia. We're mortal enemies with Russia but we have to import energy resources from Russia. So we can't just give them the middle finger and move on. Um which goes back to our conversation about interests uh versus alliances. So that's how I would square it up. Like don't don't take from what I'm saying in the shift from unipolarity to multiparity that the US is in terminal decline. Just take from what I'm saying that I think there are really really inter interesting international opportunities that are out there. And I think that on a five 10 year time horizon you want to be exposed to those international opportunities and you want to be very picky and choosy about what parts of the US market you want to be involved with because some of it might be too frothy. some of it we might be in decline and then other parts of it might be rising. >> All right. So, you mentioned um China and you said that right there that you should be looking at international uh other markets and I take it that you're probably not going to be uh a bull on China and you highlighted some challenges they face right now. It seems to be that a lot of folks are getting back on the China bull bandwagon and I was wondering what you think there and if you could highlight the long-term concerns you have about them. Yeah, I don't know that I'm a China bull, but relative to most geopolitical analysts, I'm actually pretty optimistic about China. And I wouldn't bet against China. That doesn't mean I would bet for it necessarily, but I certainly would not bet against it. Um, you know, people have been saying that China was going to collapse in on itself since literally the 1970s. U you know, Peter Xihan has been out there saying that China is going to be is going to collapse from the inside since I worked with him at Strathb in 2010. sort of like the coming war with Japan sort of model. >> Um I don't think we can um overstate how big the problem China is facing. So China has it's supposed to be a communist country. It's a communist country in all but name. It's an incredibly unequal country in terms of wealth. The coastal cities that have enriched themselves in this period of globalization are some of the most cutting edge cities in the entire world. They make American cities look terrible by comparison. But you go into China's interior, you've got hundreds of millions of people who are still living on seven to10 dollars a day or something like that and whose livelihoods I mean might as well be peasants from the 1970s and the 1980s. And the difficult thing that China has to do is it has to redistribute that wealth from the coast to the interior without a the folks on the coast coming for she's head because they don't want to give up their money and b without doing it too slowly such that the peasants rise up and say we want new leadership because people are we're not enjoying the same benefits that the rest of the Chinese population is enjoying. And that is I think why Xi Jinping has claimed dictatorial powers for himself because he knows that this isn't going to work in the old sort of you know 30 year from 1990 to when he was elected or chosen in 2012 2013. Uh you can't just reform and open up and build things in China like you've got problems in terms of wealth inequality and communism is becoming delegitimized and you have to inject a sense of national pride into China and a new mission into China if you're going to pull off these things. Um, no country has really pulled this off. Um, you know, Japan is maybe the best example of a country that did it and their way of doing it was their lost decades after the 1990s and the collapse of um, Chinese stock mobile real estate crisis and China starting at a much poorer base than Japan was in the 1990s. Um, so it's an incredible feat that that Xiinping and the Chinese Communist Party has in front of it. Okay, that sounds all bad. The stuff that's good is you still got a country of a billion people. This is also the world's factory. They are the ones that know how to make things. We don't make things in the United States anymore. Uh the stroller that I that I, you know, ride my infant to daycare in, made in China. The children's books that I read to my kids at night, made in China. The ibuprofen that I give my daughter for her ear infections, active ingredients, sourced from China. China makes all of these different products. It's incredibly powerful from that point of view. They have the knowhow. The second is I know that people love to drone on about Chinese demographics and it's true. Their fertility rates suck and they're not going to be able to attract immigrants, but go back to what I said about that inequality. We have hundreds of millions of people here living on something like 7 to$10 a day. If you can make those people middle class, you don't need babies. All of those people will start buying air conditioning units and phones and strollers and all these other things. And the Chinese Communist Party wants those people to be buying made in Chinese goods, whether it's cars or the strollers or everything else. And then the other big cultural change that China has to engender in its people and this is in some ways becoming the hardest for it to do. Um, you know, the Chinese people remember the chaos of the Mao regime and they remember the civil wars and all the things that came before it. And so rightfully so, they don't trust stock markets. They don't trust bond markets. They don't trust the economy itself. They want to hide their money under a mattress or they want to buy their fifth or sixth condo in a ghost city. Uh, and the Chinese government is trying to get the animal spirits of the average Chinese consumer to get out from underneath your bed. Go buy something from a a company that was made in China. Don't buy another condo. Go play the Chinese stock market. We're going to have all these rules. So, the Chinese stocks are going to do a lot better. And if you could get Chinese, like the average Chinese person investing in Chinese markets, well, then you could like really have you're off to the races. If you look at the performance of Indian markets over the past couple of years, the reason they keep on going up even though you know western observers are skeptical about it and maybe it's a bubble, it's because Indians themselves are buying stocks. Every rupee that they have is going to the stock market. So even as international observers are like this looks a little long in the tooth. You've got a billion people coming online who want to buy stocks who have got the stock bug. If you could do that in China, >> yeah, >> I mean you're off you're off to the races. So um I can make the case for China collapse and Chinese degradation. I but I for me everything they've accomplished so far um I wouldn't underestimate them and I think that they have more I think they have more going for them um than most people recognize and if they can metabolize these challenges and if they can get through them then I think you really are looking at China not as a not as the global hegeimon they don't want to be the global hegeimon but as the dominant player in East Asia as the you know the middle kingdom where everybody has to come and and give tribute where they are the ones that are calling the shots yeah I think that's a very very realistic um phenomena on and it's it's as simple as things like you know who's going to make air conditioning units that are going to go into places like Japan and South Korea and India they're probably going to be made in China who's going to be making all of these products uh for the rest of the world as as you know even even as demographics in the west are slowing down we still got lots of people coming online in Africa and other places like those products are going to be made in China and then if you get those Chinese people consuming those products as well things are going to go well and then the last thing I would just say and this in some ways is a signpost for China Chinese history is fairly cyclical and you notice that strong central governments in China when this when it starts to get away from them. It becomes very obvious. There's an old um I think it's the Tang dynasty an old quote that is you know the emperor is um the emp the emperor is far and the or I'm sorry the the hills are high and the emperor is far away. the idea that central authority is far away and you get local warlords or local regions or local military, you know, leaders who are who are calling the shots, that's not the direction that China is going in. You're getting more centralization. You're getting more central control in the Chinese Communist Party. So, if I get a signpost that says there really are true challenges to Xi Jinping's rule, the Chinese Communist Party is starting to come uh come apart at the seams. If we start talking about regional leaders in China that are pushing policies that are maybe not in lock step with what the central government does, okay, then I'm sitting up in my chair and I'm doing a maya to pet Peter Xan and saying, "Ah, I guess you were just a little bit early." But what I see is Xi Jinping collecting more and more and more power and it's working like people are not defying the Chinese government even in that real estate crisis that they had in the last couple of years. Yes, there were some blips and there were some protests that were pretty scary, but they solved it. People went back to work. People went back to paying their mortgages and the Chinese Communist Party has become even stronger. So, the stronger the central government becomes, the more I think we're at the beginning of a Chinese dynasty, not at the end of it. >> Jacob, I could talk to you all day, but we're going to have to bring this to a close. So, why don't we end on some positive things? You mentioned um Brazil, uh Turkey, uh what were the other ones that you liked? There was four countries, Mexico, India. >> Why don't you give us kind of a quick these are why I like these. This is, you know, an interesting opportunity on all four. >> Yeah, Mexico is fairly simple. Um, and I just did a very long report about nearshoring in Mexico. The way that the United States is prosecuting it trade war means that Mexico is going to be the big winner. The only reason that the United States can push its trade war with China is because we have a country of 100 million plus people with very willing, very cheap, and very skilled labor to our southern border. Um, we are not going to start making clothes and manufacturing things in the United States again. It's just not going to happen. I'll come back on your show and eat my computer if we start doing those things. But they they will be made in Mexico. And so Mexico uh in some ways um Mexico got screwed by globalization because NAFTA was supposed to be this great thing for Mexico. It was it it increased Mexican prosperity. It also caused a lot of wealth inequality. But then China came in and nobody could compete with China. And so a lot of the business that should have been going to Mexico from the United States just went to China because China had 10x the population. Had a government that was much more controlled and organized and said, "Hey, we're going to set up a special economic zone. They're going to build your iPhones for cheap. If anything goes wrong, we have a goolog for people to go to." Whereas Mexico is dealing with cartels, dealing with the informal economy and everything else. So in a world that's unipolar and all you care about is low labor costs, China's going to win. In a world that is multipolar, where you care about politics and political risk and where Chinese labor has become more expensive, well suddenly Mexico looks much more uh impressive by comparison. So I think Mexico is going to be the big winner in this reorganization of US trade ties and I think we're going to see a lot more US companies that are going to be engaging with Mexico, particularly the border towns, the border towns that have become prey to all these cartels and things like that. massive economic opportunity for them. People go join cartels and do those things because they have no other opportunities. If you give them opportunities, the cartels are going to want those opportunities. First of all, that means there's more money for them to extort. They're going to want more stability because if you chop people's heads off, the money's not going to be there and ultimately I think they're going to be moved by money. So, I'm optimistic about um Mexico. There are problems with Mexico, but let's let's stick on the optimism. Um India, I think, is a fairly simple case and India I'm I'm honestly pretty ambivalent about. I cannot make up my mind if India is the next great rising power or if they're just going to collapse in on themselves. Um, and I think the positive argument that you have to make for India, I I don't think people realize this. India is such a poor country. We've got a GDP per capita in India that is roughly the same GDP per capita as Haiti. Um, one of the poorest and most backward countries in the entire world except India is a billion plus people. um with a government that has been centralizing things and been uh not perfectly but getting rid of bureaucracy and red tape and making it easier to do business. You've got lots of cheap labor. If we were going to continue the unipolar trend if we hadn't had COVID and Russian invasion of Ukraine and Trump and everything else, India would be the next China and they still can be in a version of that. It's not going to look exactly as it did during the era of globalization but they're just starting from such a low base and they are so large that you know the math is just going to say okay like probably India is going to do is is going to do well in that sense now they have tons of other problems they have water problems they have you know what happens after Modi what uh poverty you know the it's nice that they have this size but that also means a billion people who need to get richer and need to have money and who need to eat like the then there's the monsoon cycle and we could go into all those things but that's the positive case for India Turkey, I think, is one of the ones that I'm I'm most proud of and most in front of. I've been banging on the table with Turkey 2018. And if you look at performance of Turkey since 2018, it's been great. And that's because Western media overindexed on the crazy crazy things Erdogan was saying about interest rate policy and ignoring what was actually happening uh in Turkish domestic politics. And same sort of thing as you had higher inflation in Turkey, you had Turkish um investors moving away from fixed income and just buying up Turkish equities because that was the only way that they could keep place with inflation. And so the Turkish stock market is literally levitating while Bloomberg and the and the FT are, oh my god, can you believe the Turkish lera and what President Erdogan is saying about the Turkish, okay, but like Turkish stocks are going up to the moon. And not only are markets doing that, Turkish manufacturing companies are stealing market share from European companies. The freezer that I had to replace my freezer with just a month ago, made in Turkey, like they're making high-end things. Think about the drone warfare that Ukraine is prosecuting against Russia. Uh it's Turkey that makes the drones. It's Turkey that's at the forefront of that and they've been putting to bed some of their other issues. You know, they're putting to bed the Kurdish issue. They're expanding into Syria. The fall of Assad was huge for Turkey. You just traded a Russian ally at your southern border for a nominal Turkish ally that's going to think about Turkish interests and Iraq. We don't have to go down the Israeli Palestinian rabbit hole. But often when I'm asked about that and people say, "Well, what's the biggest threat to Israel? Is it Iran and the nuclear weapon?" No, it's Turkey because Turkey is the is the regional hegeimon of this region and Turkey is rising in that sense and I think it's been showing us that it's rising in that sense. And then last um Brazil um I don't think De Gaul actually said this but he's reputed to have said it and it's so good. He's um he's reputed to have said that um Brazil is the country of the future and always will be. Um and there is some there is some element of that to Brazil. I also think of of all the countries in the world um I think Brazil is the most similar to the United States. I almost think about the uh Brazil as if if the United States had not had the civil war. I think it would look a lot like Brazil does today. But I I see signals that Brazil is changing. Um I see that they are finally doing things boring things like reforming tax policy or like encouraging entrepreneurship. Um you know before you could just sit and fix income in Brazil and you'd be fine. No, they want to start building vertically and and they want to have integration. They want to make things in Brazil and they're starting to do that and they are sitting on um like the United States tremendous energy reserves, tremendous agricultural reserves. Uh the US farmers biggest problem is not China today, it's Brazil because they've become the lowcost producer of corn and soybeans and they're coming for wheat next. Um, so in that sense, if you could get Brazil as more of a regional leader and if they could extend um their power and influence to the Pacific, which is possible because a lot of these Latin American states are weak and need that kind of leadership, suddenly you have an Americanstyle um political formation in South America that can have some of the same benefits I think um the United States could have. So very optimistic about Brazil in that sense and I think there are a lot of opportunities there. So yeah, there's there's four gems in the rough for you. >> Okay. And before we go, I I just I'd like to end with I've asked you a lot of questions and you talked to a lot of investors throughout the world. What would be in terms of from an investment point of view, a question that I didn't ask that I really should have? >> H a question that you that you should have asked that you didn't. >> Um >> like what's at the top of your mind that that you know, we've talked about a lot of different things. Is there something I missed that, you know, is an issue that I really should have been delving into a little more? >> Uh, the thing that we didn't touch on and it's hard to touch on it is um, you know, the role of technology and specifically artificial intelligence and how that is going to work into all these things. And, you know, I'm a geopolitics analyst. I'm not an artificial intelligence um, expert or a technology expert, but technology really does matter when it comes to the future of geopolitics. Um, and this is where energy also comes into the conversation as well. And it's another area where I really like the metaphor of the 1890s because in the 1890s two things happen. We move from coal to oil and we move from coal to oil because Winston Churchill as first Lord of the Admiral T says okay the British Navy should have oil fire chips not coal fire chips. And then things change geopolitically and then you also have the rise of electricity. And so those two things spur incredible amounts of innovation and growth and prosperity. Um I sort of view what's happening with artificial intelligence um in a very similar light and it's dovetailing with another energy transition. It's not going to be onetoone. It's not coal to oil but it's oil to solar, nuclear, wind, renewables, geothermal technology that hasn't been invented yet. So you have this massive competition for with countries which countries can drive down the cost of energy the most. And then in those particular markets, can you start to innovate on things like artificial intelligence and can you have these use cases? Um this is for example why you know we talked about four really big countries. Another country that I'm incredibly optimistic about despite um pessimism for most about its politics and even from its own people is Chile. And I'm really optimistic about Chile because they have the most solar potential in the world. They have the most wind potential in the world and they have some of the greatest geothermal potential in the world. They don't have to lift a finger to have some of the cheapest energy you could possibly have. And the thing about artificial intelligence and data centers and robotics and IoT is that it consumes a lot of energy. So the countries that are able to produce a lot of energy in a secure way at a very cheap rate, they're the ones who are going to be able to innovate on these technologies and create use cases that we probably can't even think of. Um, so we didn't we didn't touch on the role of technology with these things, but as that's another sort of subset of how I'm thinking about the world. Whereas before we would have said it's the United States. The United States is the cutting edge of technology. If you want the best biotech, the best coding, the best robotics, it all goes to the United States. That's not true anymore. We're still the leader in some things. Um, but you start looking around at countries that either have that energy mix that is attractive or who are making things or who are doing making advances in biotech. That's a really interesting place where I think we're going where technology starts to overlap with um with geopolitics. >> Jacob, I realized that you know one thing I did miss was I mentioned the fact that I originally kind of was brought to you your writing was brought to my attention from this eur European piece and we didn't even talk about Europe but it's getting too late and we're going to have to just you know you'll have to promise to come back so we can talk about Europe and talk about that great piece. Um before we do though, uh we're going to end with uh what I call the Traers Desert Island. And for those who don't know, there's a a show on BBC called Desert Island where they ask celebrities their top 10 albums that they would take onto a desert island. We do the trader version where we ask the top three albums or top three bands and then also a trader that can be from any time period over through history that's going to help you sit there and trade from the desert island. So, let's start with your three bands or three albums. What would you pick? >> I love this question. Uh, I probably got to come up with 10 on the spot. My three albums are number one, the White Album. Um, number two, Led Zeppelin 4. And number three, uh, is the O Brother where Art Thou soundtrack. I think I'd be okay if I had those three. >> The third one, I'm going to go I haven't heard that, but I'm going to go listen to that. And by the way, >> I love you. No, sorry. No, I was gonna say, by the way, you're a millennial, but you're not really with those first two picks. >> Well, I'm a geriatric. >> I'm a I'm a geriatric millennial whose parents educated him well in music. So, uh, yeah, I'll >> say brother, >> well, I love I love folk music and I love oldtimey Americana music and I love all the different artists that are on the O Brother soundtrack. like Gillian Welch and Allison Krauss are at the top of the mountain for me and so like I probably would have given you a Gillian Welch album or something like that but if I only have three oh brother are there they're all on that album so I can at least get you know some American folksy stuff and a lot of different artists there so that's why >> that that is terrific okay and we're going to end with the trader that would help you sit there and trade who would you pick >> well the the selferving pick is uh our chief investment officer at the bespoke group uh Robert Larity uh obviously because he's the best trader I think in the business and I'm I'm I'm only half kidding. I've been working with Rob for five years now and I think you know he he would you know it's funny. I don't know if he would say you said I'm not allowed to Oh, no. I don't think you uh uh uh >> he said you can't pick the three that been the previous picks is what I said. >> Well, and and I think Rob would would tell you because Rob is really the one who schooled me in these things. Like he would probably go with Jesse Livermore or with um Paul Tudtor Jones. And we often joke on my podcast about Paul Tudtor Jones and you know a fellow Southerner I sort of have a soft spot for for Paul Tudtor Jones. But I'll actually besides talking up Rob in a joking way, I'll give you a really unorthodox pick which comes from my own background and probably somebody you've never heard of and somebody who is not a trader because as you can probably tell even though I work um in investments now like I'm not a trader. I'm somebody who sets long-term horizons. And you know, if you left if you left me to my own devices, if I didn't have guys like Rob around me who are really good at trading and about translating my big picture ideas into actual shorter trades that can make a lot of money. I'm just a guy who wants to see the trends unfold. I want to buy things and then hold them because I have that high level conviction of trends over time and I think things are going to evolve. And I come by that honestly because I think he's my great great or great greatgrandfather. His name was Mark uh Mark Monroe. Everybody called him Pat. He was from Quincy, Florida. He was a banker in Quincy, Florida. And in the 1920s, he realized at the height of the Great Depression that even as people were poor and couldn't afford anything, they were still buying Coca-Cola. And so he told everyone in his family and him he also he himself to buy Coca-Cola stock hand over fists even in the the apex of the Great Depression. He was a banker too. So he would even issue loans uh based if you had Coca-Cola stock as collateral. That was how strongly he felt about it. And for a while the town that he was in, Quincy, Florida, uh was one of the had one of the largest percentages of millionaires in the world because all these people listened to him. And but this is before Warren Buffett figured out Coca-Cola. Right. Right. >> I know this story. I've read about this town. And that was your great great-grandfather or something. >> It it absolutely was. So I'm Jacob Shapiro, but my mom was Anne Monroe. And so Pat Monroe goes all the way all the way back there. And so I I pick him because that's, you know, like I said, our chief investment officer, he's the he's going to tell you the the pros and cons of all the different traders, I'm the geopolitical guy. So what I want to do is I want to have a really really high conviction in one thing that I know is going to be true over time. So rather than somebody who's on the desert island because I'm not going to have a whole lot of access, I just want somebody who's going to be like, you know what, this is going to work. have some patience and then go listen to Led Zeppelin 4 for the 500 bajillionth time because that's all you have to do with yourself. So there there's my very unorthodox >> Oh, that's great. That's a great pick. All right, before we let you go, Jacob, why don't you tell us about first of all, let's start with your firm and then we'll end with your Substack. So, tell us a little bit more about your firm. Uh you mentioned your chief investment officer. Tell us a little bit about it, who you serve and how people that are the appropriate people can get in contact with you. Yeah, I wear many hats, but my primary hat is as director of research at the bespoke group. Um, we are, for lack of a better word, a multif family office. We struggle with that because you say the word family office and I feel like it conjures an image that isn't particularly what we are, but we work with a high net worth families and individuals around the world. And for some of them it's about everything from you know legal planning, legacy issues, even custody of cryptocurrencies right into custom uh you know uh portfolio construction, real estate property management, the whole nine yards. And then also some people just they don't need all that but they just want access to our uh bespoke or custom investment strategy. So we have a class of client even in the multif family office um that does that. So that's that's what I do as my day job and I'm director of research there. So some days it's the macro point of view. Some days Rob is coming to me and saying, "Hey, uh we're long this Turkish uh mining company. There's some change in Turkish mining laws. Can you please look at this and tell me if this thing is about to go belly up?" Like it's a really dynamic um place to be. Um and then in addition to that, um >> wait, before you go off that, why don't you tell people exactly how they can find uh that if they have interest because you have a name that is a little tricky because there's another bespoke group out there. So, let's just make sure that people go to the right one because I know I struggled with what when I was looking you up. >> Yeah. And it wasn't a problem, I think, when we originally started. But anyway, so it's if if you want to find us, you go to bespokegroup.io. That's our website. Um, and we're the multifamil family office sort of version. There's also an investment company out there. So, that's not us, but bespokegroup.io is the place to find bespoke. >> Okay. Now, let's move on to your Substack, which is where I've recently came across you. >> Yeah. Well, so you know, I'm putting out, you know, I'm doing lots of research and I try to put out some content in general. So, um, I publish things for free on interubjectively transmissible. You can just look up Jacob Shapiro Substack and it'll pop up because that's a mouthful of a name. Um, it come it actually comes from my father was a political science professor. Surprise, surprise. And he used to describe um, uh, his that term interjectively transmissible was what he told his polyai kid 101 kids on day one. He said the entire point of learning political sciences political science is to learn the things that are true between us and that was what he described as interubjectively transmissible. So things that are true no matter what your objective or subjective point of view is. And then um you know the the substack really also is deeply connected with geopolitical cousins that podcast I do with Marco and my own podcast the Jacob Shapiro podcast. So, if you're looking for content from me, but you're like, "Hey, I don't want the the bag of watches you're selling over at the multif family office." Like, there's there's plenty of stuff um and content you can engage with on that school. >> Oh, I didn't realize that you have also your own podcast. So, we have geopolitical cousins where you talk with our friend Marco Papage from BCA now. And that's you guys do that on a fairly regular basis. And then you have your own podcast. I Where do I find that? I didn't know this one. >> That's same place. And it's just the Jacob Shapiro podcast. We played with some other clever names before, but nobody could ever find it. So just Jacob Shapiro podcast. Yeah, Marco originally started coming on my podcast like once every quarter and we finally looked at each other and said, "This is really good." So we split it off and made it its own feed. And then my own podcast, honestly, I'm I'm I'm tickled that people listen to it. It started as I was just recording conversations for my own research purposes and I was putting them out there because I thought they were useful. It's usually me talking to sometimes it's subject matter experts in geopolitics, but it's really whatever I'm interested in. like one of my best friends from Cornell recently wrote a book about the death penalty in the United States. We had him on. We talked about his research and things like that. So, it's really just a grabag of whatever is interesting to me on a on a regular basis. So, >> one of my best friends actually tells me that he loves to put on my podcast to fall asleep because apparently the douls tones of my bass just just hit it right the right way. So, if you're having trouble sleeping, let me recommend to you my podcast. Is that is that a good advertisement? >> That's a great pitch. I love it. Jacob, I've had so much fun. I really appreciate you coming on. You'll have to come on back on and we'll do the Europe discussion. Uh, thank you very much for your time. >> Anytime. And maybe we get cousin on also next time because he's he's even more bold up on Europe than I am. We can get the the whole gang together. >> That's right. Thanks again. >> All right, Patrick, it's time for talking charts. Everyone's missed you. >> Oh, you know what? What a day to come back with a huddle right on the jobs number. Listen, we took the summer off like uh it was it was all fun and games, but now we're down to some serious business and we got to pull out the crayons and uh and take a dive into this here. Uh what uh what first of all let's just here pull up the jobs numbers, right? Okay. So by the way I don't know was there revision to previous >> the revision was actually in line like there was no problems from that perspective like okay as as there was most people know last month that was the big thing was that the revisions were huge this time the revisions were in essence like inconsequential like they're just irrelevant. So, so, uh, the non-farm, uh, employment change came in at 22,000, which was a huge miss. And you can see like on the chart, like other than that one, uh, November 2024 number uh, along the election period, uh, there really has not been a bad uh, non-farm employment change number like this in a long time. And the last time we had a miss was in 2021 where it was like negative, I meant. And so like we're borderline turning. And the the other thing to observe is that the unemployment rate ticked up to uh 4.3. And the one thing that when you go back through history and look at uh when unemployment rates uh stops being sideways and starts trending, rarely is there just one bad print. it tends to uh especially when it breaks key levels, it tends to be a feedback mechanism where you get numerous months over and over again um of bad thing like it's entirely possible that the jobs numbers have um you know are starting to indicate uh I don't want to say the rword but uh definitely uh definitely they're starting to deteriorate. What's your interpretation of it all? >> I'm with you. I can't disagree with any of that. The the jobs numbers are looking bad. The real question is with all of the immigration kurfuffle or changes that are occurring, are these numbers um needing to be viewed in a slightly different way? And I know you had James Biano on that podcast you cheat with me on and he's been highlighting the fact that uh very much the immigration is affecting that. And so no longer will you know what was it ended up being 22,000 jobs created >> and in the past that would be terrible and in this environment it might not be quite as bad as before. >> I don't I don't buy that. I'll explain why. Like ultimately uh population growth and uh and immigration are actually a major driver of growth and uh and that's when things are good and immigration's coming in. We never say those numbers have to be parred down because immigration was high. In the end, when you cut off immigration, it is actually impacting growth. And >> well, so I'm not going to disagree with you there, Patrick. And that was kind of my point was that it might not be as bad as as previous times, but it's still not a good thing and it's still not showing that the economy is growing. So, I think we're going to agree there. >> So, so let's talk about the impact. Uh obviously we're going to look at the sulfur futures here in a second, but this the big thing was here was that even yesterday there was a zero probability of a 50 basis point cut on the September meeting. There was zero. It was all 95 96% going for 25 basis point cut and right after this jobs number a 14% odds suddenly popped in for a 50 basis point cut. Now, I'm in still on balance of probabilities that they're going to do one cut, but we now have uh uh the highest part of the uh bell curve distribution that there's going to be three rate cuts this year. They're basically whether it's 50 basis points on the first one uh or whether it's just one cut sequentially in each of the last three Fed meetings uh the markets have suddenly priced in three cuts and uh and um and clearly there is uh Powell's going to have to make a full dovish pivot here. I remember just uh a month ago how he was saying like inflation has to be the focus and every and just amazing how in one month uh Powell has so clearly pivoted. Yeah. And uh I'm I was just pulling it up on my Bloomberg Bloomberg here trying to figure out if the terminal rate has changed because you are correct that a lot of those cuts were brought forward meaning that they are pricing in more and I was trying to figure out if they actually had changed the terminal rate today. Oh yeah, like it looks like it's all been brought brought higher. Even the even like here like I have the uh so for December 2026 which we're looking at rates at the end of next year which you know rate cuts can rate cut cycles can last multiple years but you know looking at that the potential of the end of 2026 is a reasonable measure of where rates are roughly going to be at the end of the cut cycle. Uh I mean we clearly had a jump from the 977 level to 97 uh16. So they're pricing in almost a full extra uh rate cut in one go. >> So I had pulled up the so for one month futures which I didn't even realize that they traded until a little while ago recently. One of my subscribers pointed that out and I thought it was terrific insight. Um and before the kind of the lowest contract uh for the next few years was the September 26 and it was trading at 9687. So that would have been like 3 and 1 eth was the previous um uh kind of terminal rate. >> Uh no I did that backwards. No I did do it right. Three and an eighth is correct. Yeah. And uh and now it's trading at 97. So it's gone down to three. So we're in essence there. But that is as the economy weakens, that is the real question. Will that terminal rate change? Meaning, we all know that as the economy weakens, we're going to get um a lot of those rate hikes brought forward, >> but the real question is, will they expect the Fed to lower rates to a a lower absolute level? >> Yeah. And and I don't know like part of me wonders if three is too um too high >> and then we on this rate cutting cycle we might get lower than >> I think I'm 100% in that camp. At least what my view is is that it's as absolutely asymmetrically skewed in your favor to be um in the sulfur futures market for an upside move because in in my mind the Fed is not going to suddenly pivot and pull next year or at least not pull all of next year's rate cuts out of the market. I I view the downside risk uh here is simply that you know that they may come become more neutral at some point and the it's something is pulled out of the sofur futures and maybe we have let's say a 50 basis point pullback but I think that you know they could we could be pricing at the end of next year a 2% rate it doesn't mean we'll get there but the sulfur futures might trade there when traders start to uh anticipate something especially if there's a bunch of more bad data and so I continue this one of my it's you know I I wasn't a short-term rates trader years ago and you you converted me and listen you happy >> you and Alex I I am I'm happy being a trader like >> yeah because not only that you owning the TLT you know you haven't lost but you haven't really made anything >> the curve is steepened and that's what >> listen we'll talk about the long bonds in a moment >> okay but but that's what we warned about is the fact that the curve was steepening and therefore you could be all bearish on the economy expecting lower rates and the long end might not do anything. And that's exactly what it's done over the last year. You basically just earned your coupon. There's been no excitement there. You haven't done well. >> Not yet. Anyway, we'll uh well we'll um we'll we'll talk about that in a second. But um point is is that uh the sofa futures were huge movers today. I I would argue uh that the bond market and the the currency markets were the big reactions to the jobs numbers. Now the stock market, we'll talk about this in a second, but definitely the the big move 100% uh was in the rates markets and the dollar and second in my opinion. Now, but what's but look at this. All right, I know uh like for instance, Jim Biano was talking about a trade that is near and dear to your heart over the last several years. And I want to emphasize that this is a theme that you've had and it's a very big picture theme, but that's inflation is going to be much stickier, much higher, and and the long bond is um uh not going to be as easil uh is not going to be a safe haven the way everyone expects. Uh that's been a big theme. But let's just talk technicals here for a moment. What uh what's really evident here is is that the 10-year bond is breaking out in a big way. uh like th this is not only did we have that big move on last uh month's jobs uh but it did a classic flagging Fibonacci retracement down to its 50-day moving average uh held that support like a flag and blasted off now back to um the liberation day highs. Uh we have at this point a bond market that is actually basing at the 10-year and now the now the 10-year has been much stronger than the 30-year. I'm sure that there there that's makes a lot of real estate guys and other people happy because uh that's uh obviously the 10 years is the most important interest rate benchmark in um in in the whole world. Uh but >> well except they borrow like most corporations or whatever borrow at the longest 10 and very few people borrow at 30 but one you know element that does borrow at or one cohort that does borrow at 30 is mortgages. So, I'm not quite sure, but you said it makes the retail it makes >> Yeah, but doesn't the mortgage rate interest rates still benchmarked against the 10 even though they're 30-year terms. >> You're right. Because of the Yes, you're you're correct that it trades more like the 10. You're right. >> Okay. But the point here, look at this breakout candle on the 30-year. >> Yeah. Listen, >> like like first of all, I get it. I get it that being in this being in the sofa futures, I get it. That's been a great thing. But I'm just talking about this reaction to the jobs numbers. they have legitimately um turned the bond market. Now uh what I always look for in the markets is when they transition from a bare phase into uh a basing what we what I call an accumulation cycle but a basing formation and then you look from where it potentially is breaking out. Now one day does not make a new trend and therefore I'm not ready to make a bold call that this is all upside from here. But when you have a a basic a 8 plus month basing formation that established itself and then you have a breakout of a a multimonth consolidation technically there is room for these things to go and uh and at this moment you know I don't think you have to be I don't think you have to ruin your long-term bare thesis on bonds and uh because this is not a macro macro call. This is a short to intermediate technical call, right? So, this is not about uh trying to change a a big macro fundamental thesis. But when you have a a bare market decline of this magnitude, if we have a a shoot above this weekly 50week moving average, uh can bonds uh during a period where we're heading toward the rword uh uh you know gravitate back to highs where they were in 2024. Like this is not like we're going back to 2021 and 22 levels. Uh like this is simply going to the top end of this range. Uh I uh one day it doesn't make a new trend, but you got to watch this because this could have been the spark that starts some sort of a squeeze in the bonds. And we're gonna find out whether or not this gets a feedback mechanism that that gets this going 120 123 back to like liberation day highs or something like this in the next little while. Any comment on this? I hate to say this. I actually agree with you and I and I will say something else. Um I am I have less steepener almost zero and I am the least short bonds I've been in a long long long time. My number one rule is that when >> I feel like we're in a confession number you're >> when is when I start having positions that the that podcast you cheat on me with is is recommending I have to unwind them. So, and that was just >> No. And kidding aside, I I I think that there's a lot of negatives out there in terms of people very very excited about the possibility of Zimbabwe and hyperinflation and yada yada yada. And um I I tend to be more in the camp that the economy is rolling over and so therefore it's it's it's tough for me to be really super bearish bonds. Um one of our you know listener I mean our one of our guests the fan favorite Cuppy I think he's been doing this publicly so I don't think I'm outing him. uh he's long bonds and he keeps telling me, you know, he goes on to Twitter and talks about this and everyone tells him, you know, sorry you don't get it and you don't understand and and the kind of his main point is that the bearishness out there is just so pervasive that it's the surprise is going to be the other way. >> And I'm and I'm not disagreeing. I you know, for me, I can't bring myself to go long these things like you do. Um I am long >> through bull call spreads. So, the thing is is that I I you can get some very nice asymmetric bull call spreads. We opened up a uh a 90 95 TLT for like a buck. Like, you know, like you you outlay a small risk, have a 4:1 payoff ratio, you know, like you're not you're not taking crazy risk on a a long-term play that bonds are super bullish. You're not going for yield and other things. You're you're just playing the fact that they could counter trend, right? Yeah. So >> I I still think though that the front end is going to be a better place to play and I'll continue to say that >> the bull steepener is the way to like is the I think the bull steepener is more important than the uh at this moment and therefore the um the short rates are going to move uh much more on a a basis point B uh basis right like all right so let's go to the dollar because this is the second place where there was a huge move now I was uh watching this sideways consolid validation developing and I was uh in my traditional form speculating on whether this would have a bullish breakout above the 50-day and squeeze everyone out. But this um this uh uh jobs numbers crushed that uh speculation almost immediately. Not a single close above the 50-day moving average uh at all on the dollar index. to remain down there. And this news basically broke the dollar to that lower low. And um to me uh that's uh that's important to to watch like the the euro was on the verge of a breakdown below 116 and and quickly caught the reversal. But the one that you know it's near and dear to your heart, the US dollar yen uh it based since April. It's been in a consolidation and it uh did a retracement back to the 50-day moving average which was about a 50% retracement. It really was highly vulnerable technically for a US dollar squeeze up to 152 153. And look what the jobs numbers did to it right back down to the lows. this uh and and the question here is is that uh is this entire US dollar yen move uh this consolidation over because of this? Now what do I mean by that? Well, when we sw step step back on a weekly chart and you you see the bigger kind of uh topping formation that the US dollar yen put in back over here. Well, uh what we had was essentially a market that did a 50% retracement here like the US uh in terms of a a a quick rally back to this 150 151. If this at this 50week moving average is failing and we have any breakdown move then uh the next uh symmetrical move actually sends this thing down to like 132 like we could even head right back to 2023 lows near uh 130 and so on. Now, I'm not already calling for that, but I'm saying that this is such a important moment on this on this chart because uh if this follows through on today's breakdown and we break down below the you know June Jul it's a July August lows and as a clear indication that uh uh the the yen is rallying and the US dollar is breaking down again. You know, technically there's room for this to go another full leg. Uh, and that would completely crush all my hopes and dreams of a US dollar squeeze. Uh, and now again, you know, like we talked about, one day doesn't make a new trend. And we're recording this just hours after this move has started. So, I'm not ready to make any bold calls. What I'm trying to do is explain that if this started a chain reaction of a new trend and we saw these things get in motion, you can't ignore these kind of pivots. Um, and uh, and you know, every this has been such a dead market. Nobody's been interested for months because it's >> Speak for yourself. Speak for yourself. >> Well, well, you know, I guess you like watching paint dry because this thing is literally not moved. >> No, you're right. Right. And so, so like people are interested when the thing is moving. >> Yeah, you're right. >> And and it's it hasn't been moving. And the thing is is that is it about to become interesting? And this is a I'm I'm very curious uh if if that ends up playing out that >> much like our podcast. Is this about to be ever be is this ever going to become interesting. Um by the way, while you're away, um can you pull up the DXY because the Currency Whisperer sent me a note and it was early in August, so I'm not really sure uh what where he stands now. I'm pretty sure I know because he's longer term like me, but he says, "However, if the DXY uh product I despise, more on that later. I'm not sure why he despises it. Probably because there's too much euro." >> Yeah, too much euro. Absolutely. It's not really reflective of a basket. >> He says it if it takes out 97. So, where are we now? >> 97 and a half. >> Okay. He says if it takes out 97 and then 96.37, I guess that's the lower end of the that's the lows. Then we're going back to 90. >> Exact. Hey, did you read my email? Cuz that's literally what he wrote. >> Dude, look at the chart. I can tell you exactly what he's seeing. Like look, if if this if this is the uh the midpoint of this thing, then uh any technical measured move is right back down to those lows. Right. There you go. So So like uh if it gives out those lows, this is but this is exactly in line with that yen call I was talking because the yen would have to be making the move to 130. the the euro would have to be heading to 120 to 125 in order for the Dixie to make this kind of a move, right? And so this is all kind of all in one uh thing like you have to watch and but now I can't think of a more bullish thing for gold though. But let's let's actually S&P >> Okay, you want to go to gold or do you want to go to S&P? >> No, no, let's let's get the S&P because look, the market is so important. We have to like get it to the market, but obviously gold is going to be uh important to talk about here in a second. S&P 500 prairie dogged. Did it prairie dog? Well, it look it basically well I on an intraday basis it prairie dogged not on a daily closing basis but this morning's reaction in the pre-market gapped it to a all-time high and it faded. Now this is something I like to not ignore. I like to pay attention to >> Can you zoom in there? So the last old >> Absolutely. I'll put on a 4 hour a 4 hour trip here. >> Oh, it did. Prairie dog. >> Right. >> Wow. >> And uh and >> no, by by the way, you didn't mention it. >> A noble animal. >> It is a noble animal. And and so, you know, to me uh this is this is uh something you don't want to ignore because we've seen numerous uh this happened. Like notice where the previous high was here and what the market did. it temporarily broke to a higher high, you know, then look at this high and temporarily broke to a higher high. It's a it's a part of what technically is uh if I'll just zoom in a little bit, it's a it's a rising wedge formation technically. Uh and a rising wedge formation is often seen at the uh uh near top uh tops of markets. uh and that's uh where uh the market is transitioning from uh a bull phase to distribution which is that every rally is sold into. So in other words, it's still a bull trend. It's still always showing 52- week highs. So every uh every um uh you know retail that's looking at their >> Okay. Okay. Okay. I know. Listen, I'm going to call it the way it is. Listen, any retail that looks at his the market value of their portfolio still sees that they're up 35% on the year or off the April lows, they don't see the fact that the market is losing momentum up along the top side and smart money is selling into strength where they're basically doing all of their active distribution up along the highs. And you can't see it when all you care about is your uh market value, right? When you're looking at the market value portfolio, it looks like you're still making tons of money and this is a major bull, but this is a a very heavy market that's being sold into an envy rally. And therefore, while we have not yet technically seen a breakdown candle that has marked the beginning of a new bear decline, we have not seen a trigger that has said the new selloff has begun. But uh I can't think of a worse asymmetry in a market than we are at this moment where when you compare the upside potential of this market to the downside risk, it is so massively skewed against you. And if you are not hedged up here, you shouldn't be like this. You should be lightening up. You should be doing anything and everything other than buying more here. >> Wow. Did you go to like university for the month you were away? because you came back so much smarter. That was >> calling people calling >> the retail gimps, right? >> No, no, but honestly, that was some you articulated that so well and I am 100% in your camp. I am not going to tarnish that at all by saying anything except bravo. Okay, it's uh it's a it's one of these periods where you know the maybe the market even uh you know there are a number of technical measured moves that actually target 6600 and in my mind there is nothing stopping this market from at some point upticking up to 6600 right like uh this so by no means are we saying it's all downside from here just go and load the boat short just yet. But, you know, especially if if we see and this is the big tell for me. If we see a bearish engulfing candle by the end of today, which is is that it wipes out all of yesterday's rally and where is one big red down and it engulfs it. That is um you that is a pattern that uh is common along a top. Got it. and uh and it hasn't yet engulfed the previous day. So, we can't say we just saw a bearish engulfing candle, but that's the thing to watch into the close. If we end up, you know, down 80 90 points by the end of the day, that's uh that's going to make the weekend a pretty uh anxious uh kind of period to to watch how this kind of plays out. one way or another uh the S&P here uh it's really at uh at at a very fragile moment and uh I you know you have to be very careful here on >> okay so >> now you wanted to talk gold >> yeah no first NASDAQ showed some short a short-term relative strength relative to the S&P here uh you know obviously uh Google had a extraordinary move a couple of little things uh ran this like Google continues contin to keep plugging along with that massive gap on that positive news. Uh but the a big one to continue to watch is that this is the first day Nvidia closed below its 50-day moving average since the April uh the March April selloff. >> Did you see the news about AVG uh AVGO and Open I open AI? >> No. >> So Open AI is going to make a a series of chips with them. I think that's the shot across the battle. I don't usually trade individual stocks, but I went and leaned into the short side of Nvidia for the first time in a long, long time. >> You'd be proud of me. >> You're about to get you. You are about to get some hate mail, sir. They are You can email it Kevin Macro big picture trading. Um, >> anyway, he's the one who thinks you're a Um, all right. So, so, uh, what's it called? Uh, anyway, the the bottom line here is is that, uh, the, uh, the the will Nvidia here start something that takes all the momentum out of the Mag 7s. Notice the Mag 7s did break to higher highs. Uh, and it'll be very interesting to see whether they can uh uh um whether Nvidia ruins the party for for the for the Mag 7's bouncing in the short term. Now, let's move on to what you wanted to talk about. That's gold. >> All right. 42 bucks again really is building. Now, uh what um what a interesting retracement. Now, I'm going to go specifically to this December contract because the the gap on the uh contract role was deceiving. But it literally has been coiling up in a four plus month a horizontal triangle f pattern and horizontal triangle patterns are tricky because some to one and this is where the skeptics of technical analysis will always come out. Is that a double top or is that a a a triangle formation? Right? Like you're basically there you can uh the in the eye of the beholder you can uh geometrically put whatever shape you want on it and and make a thesis based on that. Uh but what we do what let's break gold down in the most simple form which is uh it uh basically has remained in primary bull trend this entire time. I'm just going to put 200 day moving average on here and uh I want to highlight like for instance uh here I'll put it on but we have not even gone to retest the 200 day moving average there's a primary bull that was going on in gold and what was amazing was that whether you go to this threemonth consolidation whether you go to this sideways triangle consolidation that took about 3 months uh or you take this fourmonth one. What's amazing is gold has consistently done the pattern of instead of correcting backwards and doing a retracement where it gives back half of its gains in a typical 50% retracement, which is incredibly common in the stock markets um for it to do, but rather each time the consolidation has been rather sideways before the next bull breakout. It's amazing, but it's been repetitively happening over and over again over the last two years. uh and this breakout again sets in motion a new move. Now uh when you have this big of a horizontal triangle formation um then uh the rules of symmetry come in which is like like that old saying there's a saying in technical analysis that flags and and pennants and stuff fly at half mass which is mass which is basically this becomes the midpoint of the next rally. So, if you measure out the length of another $900 rally, we're going straight to 4,000 just based on that rule, which is essentially that if the the rally now is of the same length of the previous rally, you uh we're we're going for the 4,000. And from a time measurement perspective, that would that measures out to sometime by October. Uh and so, we'll see whether there's follow through here. But, uh, a 300 plus dollar, another 10% upside on gold toward the 4,000 mark is the technical move. >> Um, it feels kind of frothy to me, Patrick. >> Okay. >> We used We used We used to talk about this and even when we were bullish, there weren't that many folks. Now all of a sudden there's like crazy $5,000 targets, all >> you know, the blowoff top. You're you're pulling a a a um Jim Rogers here where >> Oh, listen. I I am fully aware that after calling for the $1,000 upw week that I won't stick with it and won't be long for the thousand up week. It It's the way of my life. It's like I've accepted my fate in life. Um but it's just I I see the the enthusiasm and it just scares me. >> Kev, >> I'm not saying I'm short. I'm still long, but I'm like I'm just saying, >> you know what? >> Yeah. I I want you to come to the dark side because because the option SKs uh on on gold continue to give very very rich premiums for very far out in the money strikes on gold. And while you will can't do at a zero cost, you can do incredible asymmetric collars on gold where you can buy let's say a put option a$100 or $200 uh below where it is and offset a huge chunk of that cost going $500 higher. you know, you can you can build uh some great hedges in there which then allows eventually I know that the retail guy is going to get cleaned on a pullback and uh but you have it hedged out. >> That's what happens to gimps. And for those who want to know more about this strategy, please contact big picture.com. >> Shameless plug. Thank you, sir. You're you're a >> Anyways, I listen, we want to we want to keep it tight, so I'm going to let you have the last word there. Is there anything else you wanted to chat about? >> No, no, listen. Well, listen, uh the one thing I do believe has gotten way too frothy is the gold miners. And what I'm curious about is is that even if gold does go to 4,000, will the gold miners run full parabolic or will the gold miners at some point diverge and that where they have already uh kind of reached their upper targets? Like when we go to a a weekly chart, uh we have literally right now hit the resistance of the all-time high. >> Yep. >> Um >> right. Like like literally we're trading at the price we were in 2011 2012. >> So I actually have been more bullish on the gold miners than the gold. >> You have you wrote great articles on that. Anyone anyone who wants to get those kind of calls can subscribe where Kevin at at the macroourist.com I did I did sell a whole bunch this week. I'm like cuz it's getting too frothy. This is getting >> for members for members we bought the $65 protective put. >> There we go. >> Like we basically uh came in there and said it. We're gonna spend two bucks on a a protective put because, you know, when you make eight bucks in a in a week and a half, you can give two of back to just uh continue to see whether there's more upside and lock in the sale price, right? Uh it's uh anyway. >> Okay. What else did you want to talk about? >> Crude oil. >> This OPEC, right? >> Uh look, this um let's let's put back the 50-day moving average. The uh crude oil attempted to close above its 50-day complete rejection was a very shortterm 50% retracement. Right now, the failure of this uh if it breaks that low, it's going back to double bottom retest that April May low down around 58 bucks. It's disappointing. But what is interesting is that energy stocks don't seem to give a uh like what we're seeing is well okay fine as a last few days things like the XLE have been giving some back but we have seen actual accumulation in energy stocks and generally they have been being bull in this environment and I find it really interesting that uh that uh oil and energy stocks are diverging this way what do you make of that >> I don't make anything of it you are paying more attention than me but I did want to ask you a question because for the first time in a long while I'm thinking about going long that gas >> and it's just >> so I was wondering if you could give us your uh you know crayon magic on let's do the strip so you like to trade this UNL which is terrific I love this thing >> so here's here's my take on this uh we are finished uh a symmetrical move which is basically uh so we're now oversold enough and we're going seasonally into the winter months we pass the the uh the uh term structure roll down and stuff like that that but this is a strip so that doesn't matter in terms of uh of that but what I want to simply highlight is is that last time we saw the bottom it still took four months and the rally didn't start till December uh this while we probably are very close to low I would argue $7 probably will not be violated on the bottom end of the range but I won't be shocked if you're still grinding for a couple months waiting for uh the the basing formation to finish before but on an asymmetry basis that we're much closer to the bottom very a small amount of risk to the downside but what I would the way I would play is that you only buy a small amount that you're willing to hold through a sideways range and then wait for actual technical breakdowns to double down on it when the trend becomes your friend. I like to go all in real early and then just sweat it out and complain for three months >> then then then do it because three months you might be waiting but it's a good level. >> Okay. Thanks a lot. >> Yeah. The other thing is is that just uranium like uh finally the U308 uh started upticking and the SPR physical has finally started to move stayed above its 50 days. Stayed above the 50% retracement about to break to a higher high. Um while the uranium stocks seem very rich and expensive and have run too much it really just looks like the beginning of the uranium trade. That's all I've got. We're >> okay. That's great. Thanks for tuning in everyone. Um, Patrick, where can they find more of this great announce? >> You've already given me the pitch. It's big. >> Come on, give it again. Give it again. >> Bigpicturetrain.com. You can follow. Check out my YouTube channel where I every single day cut back on the uh the cigar smoking. And I just walked all over. I'm trying to plug that. It's Patrick Sesna. It's not It's not >> underscore Szna. >> Underscore Surzna. For those who are don't know how to spell it, it's ceas. >> You were look, you had to read that, right? >> No, I didn't. No, I didn't. I'm not like like you with the Ron Burgundy. Okay. And if you want to go check out my letter, go to macroource.com. Listen, folks, it's great to have you back. Um, bull market, bare market, we're just happy to spend some time together on this crazy ride. Now, stick around for a real quick after show. >> All right, Danny boy. Danny. So, we're going to make you the star of this, buddy. >> So, I I can tell that you're no no longer at home. Tell us where you are, what you're doing >> today. I Today, Matthew, I am going to a rave. >> Matthew? >> Yeah. Have you never watched that show? Is it an English thing? >> I was like, did I screwed up his name and I was like, oh, is he like doing a g like >> he's going to a rave. I love it. This is the way rolls in Portugal, right? Like, you know, it's like you what you do is you you load up the laptop right in the parking lot of the rave. >> Is that where you are? >> Are you in the parking lot? >> I'm in the van, but I'm >> He's ready to go party. Like, he is ready. Like, drop the mic here. He's going straight to >> I have something embarrassing to tell you guys. >> Oh, tell me. Um, so I'm born 1970 and raves became popular what? >> So you've never >> mid 90s like or maybe early 90s. >> So I've never been to a rave. >> Come on over. I'll take some videos for you. >> Take some videos cuz I have no desire to be the 54 year old idiot that's like, you know, >> listen, >> all you have to do Yeah. You have to you have to put on the heart-shaped glasses like uh Jeff Bezos and uh just get have a have a a young girl uh beside your side and then you're you're right. >> Anyways, not not a chance. Not going to happen. But I am looking forward to your videos, buddy. And we have to go do uh some other things. So, we'll call it a night. Uh absolutely. Have a great time, Danny. Send us videos. Take care, everybody. >> Everyone, everyone. Cheers.