1 00:00:10,000 --> 00:00:13,720 Speaker 1: Hello, and welcome to another episode of the Odd Thoughts podcast. 2 00:00:13,760 --> 00:00:17,560 Speaker 1: I'm Tracy Alloway and I'm Joe. Joe. What's going on 3 00:00:17,600 --> 00:00:24,720 Speaker 1: in Russia? That is such start and it was more 4 00:00:24,760 --> 00:00:26,840 Speaker 1: than a leading question, like the idea that I would 5 00:00:26,880 --> 00:00:30,680 Speaker 1: be able to like answer that in any meaningful way 6 00:00:30,680 --> 00:00:33,599 Speaker 1: that doesn't make me sound like a complete idiot. I'm 7 00:00:33,640 --> 00:00:35,199 Speaker 1: not trying to set you up to sound like an 8 00:00:35,200 --> 00:00:38,760 Speaker 1: idiot trying. I'm trying to start the podcast with a 9 00:00:38,800 --> 00:00:42,720 Speaker 1: summary of current events. But there was some big news 10 00:00:42,760 --> 00:00:45,519 Speaker 1: out of Russia recently, which was they were calling up 11 00:00:46,000 --> 00:00:49,800 Speaker 1: reservists and basically forcing them to go to Ukraine and 12 00:00:49,920 --> 00:00:52,239 Speaker 1: fight in the war. And the reason I bring it 13 00:00:52,320 --> 00:00:56,440 Speaker 1: up is because it wasn't just big topical geopolitical news, 14 00:00:56,480 --> 00:00:59,280 Speaker 1: but it became a big thing in the market as well. 15 00:00:59,480 --> 00:01:02,520 Speaker 1: We saw a bit of reaction to it, and it 16 00:01:02,640 --> 00:01:07,360 Speaker 1: kind of crystallized in my mind this idea about just 17 00:01:07,600 --> 00:01:11,959 Speaker 1: how hard it is for investors to try to judge 18 00:01:12,000 --> 00:01:15,120 Speaker 1: these geopolitical risks, because on the one hand, I saw 19 00:01:15,160 --> 00:01:17,839 Speaker 1: some people going, you know, this is great for the West. 20 00:01:17,959 --> 00:01:21,280 Speaker 1: It means that Putin is really struggling right now and 21 00:01:21,800 --> 00:01:23,960 Speaker 1: Ukraine is going to win the war and everything's going 22 00:01:24,000 --> 00:01:27,319 Speaker 1: to be fine. And then I saw some commentary basically 23 00:01:27,360 --> 00:01:31,960 Speaker 1: saying this is a massive escalation and if anything, we 24 00:01:32,000 --> 00:01:35,920 Speaker 1: should be seeing risk premia on things like European assets 25 00:01:35,959 --> 00:01:38,960 Speaker 1: and natural resources and grains and things like that actually 26 00:01:38,959 --> 00:01:41,760 Speaker 1: going up. So the fact that there were these two 27 00:01:42,480 --> 00:01:48,640 Speaker 1: extremely different interpretations of the same move just really struck me. Yeah, 28 00:01:48,680 --> 00:01:52,280 Speaker 1: I mean, look, it's so hard to understand like what 29 00:01:52,360 --> 00:01:54,880 Speaker 1: this means for markets. It feels like we're in some 30 00:01:55,000 --> 00:01:58,920 Speaker 1: sort of uncharted territory. And maybe some people will perceive 31 00:01:59,000 --> 00:02:02,600 Speaker 1: that to be positive of that Russia has suffered setbacks 32 00:02:02,880 --> 00:02:06,040 Speaker 1: and its war, that it's laws some territory that it 33 00:02:06,120 --> 00:02:08,920 Speaker 1: had captured in Ukraine. But then others will say, you 34 00:02:08,960 --> 00:02:12,240 Speaker 1: know this, as you say, this is massively increased the risks. 35 00:02:12,320 --> 00:02:14,960 Speaker 1: Vladim Reputin give a speech that was widely perceived to 36 00:02:15,000 --> 00:02:18,120 Speaker 1: be highly bellicost I think it's just a sense of 37 00:02:18,160 --> 00:02:22,160 Speaker 1: like extreme uncertainty and casts and there's already so much 38 00:02:22,200 --> 00:02:25,880 Speaker 1: going on. We're recording this September when there's just so 39 00:02:26,000 --> 00:02:30,120 Speaker 1: much concern about inflation and energy and monetary policy and 40 00:02:30,200 --> 00:02:33,560 Speaker 1: recession and all these other things. And on top of 41 00:02:33,600 --> 00:02:38,480 Speaker 1: the huge geopolitical wild card. Again, I feel like many 42 00:02:38,480 --> 00:02:41,960 Speaker 1: investors are truly swimming and see experiencing things that they 43 00:02:41,960 --> 00:02:44,400 Speaker 1: have never seen in their careers. Right. And it's funny 44 00:02:44,520 --> 00:02:47,480 Speaker 1: kind of how earlier this year, how many investors suddenly 45 00:02:47,520 --> 00:02:50,720 Speaker 1: stood up and declared themselves to be like military experts 46 00:02:50,720 --> 00:02:54,440 Speaker 1: in World War Two, armchair strategists. But even if you 47 00:02:54,480 --> 00:02:58,639 Speaker 1: think you know everything about how a military invasion actually works, 48 00:02:58,639 --> 00:03:02,079 Speaker 1: that doesn't naturally try insulate itself into well, here's my 49 00:03:02,240 --> 00:03:06,239 Speaker 1: investment strategy playing off of that. So in an effort 50 00:03:06,280 --> 00:03:10,079 Speaker 1: to understand exactly what is going on with Russia and Ukraine, 51 00:03:10,240 --> 00:03:13,560 Speaker 1: and also in an effort to understand exactly what it 52 00:03:13,680 --> 00:03:16,400 Speaker 1: might mean for investors, we're going to be speaking with 53 00:03:16,440 --> 00:03:19,920 Speaker 1: Marco Paypitch. He is the partner and chief strategist at 54 00:03:20,160 --> 00:03:23,520 Speaker 1: clock Tower Group. He is also the author of Geopolitical 55 00:03:23,560 --> 00:03:26,960 Speaker 1: Alpha and Investment Framework for Predicting the Future, so he 56 00:03:27,040 --> 00:03:29,960 Speaker 1: basically wrote the book on this topic. Marco, thank you 57 00:03:30,000 --> 00:03:32,560 Speaker 1: so much for coming on all thoughts. It's such a 58 00:03:32,560 --> 00:03:35,240 Speaker 1: pleasure and honor. I love the show, so it's great 59 00:03:35,280 --> 00:03:38,320 Speaker 1: to be on. Thank you. So, maybe just to begin 60 00:03:38,400 --> 00:03:42,160 Speaker 1: with Russia calling up its reservist what was your initial 61 00:03:42,560 --> 00:03:46,680 Speaker 1: take on that. Your interpretation, Well, I mean, I think 62 00:03:46,720 --> 00:03:50,320 Speaker 1: that it's clearly a sign that things have not gone 63 00:03:50,360 --> 00:03:54,640 Speaker 1: well for Russia In Ukraine, Russia has a professionalized military force. 64 00:03:55,320 --> 00:03:59,880 Speaker 1: In thirty years of post Soviet reforms, like thirty years 65 00:04:00,040 --> 00:04:04,880 Speaker 1: of effort to reform, Russian military has focused on deepening 66 00:04:04,880 --> 00:04:08,720 Speaker 1: and strengthening its strategic rocket forces, so nuclear weapons for 67 00:04:08,760 --> 00:04:13,400 Speaker 1: good reason, and creating a professional expeditionary force they can 68 00:04:13,400 --> 00:04:16,720 Speaker 1: fight quick, short wars and it's near abroad, such as 69 00:04:16,760 --> 00:04:20,599 Speaker 1: the Two Georgia intervention as a case in point. And 70 00:04:20,680 --> 00:04:22,960 Speaker 1: so the fact that they now have to like revive 71 00:04:23,320 --> 00:04:27,840 Speaker 1: the third pillar, which they have eroded on purpose and 72 00:04:27,880 --> 00:04:29,800 Speaker 1: for good reason, like we're not gonna need to mobilize 73 00:04:29,839 --> 00:04:32,240 Speaker 1: ever again, we have nukes, No one's gonna attack us. 74 00:04:32,640 --> 00:04:35,479 Speaker 1: The fact that they're now like resorting to something that 75 00:04:35,560 --> 00:04:38,760 Speaker 1: they've actually let follow, that they've not focused on, that 76 00:04:38,839 --> 00:04:41,320 Speaker 1: they've erode it in the effort to strengthen the other 77 00:04:41,360 --> 00:04:43,920 Speaker 1: two parts of their reforms. It that just tells you 78 00:04:43,960 --> 00:04:47,080 Speaker 1: that it is a desperate move and it's not clear 79 00:04:47,080 --> 00:04:49,760 Speaker 1: to me that it's going to effectively escalate the war. 80 00:04:50,160 --> 00:04:53,400 Speaker 1: So my initial reaction was that this is a nothing burger, 81 00:04:54,040 --> 00:04:56,520 Speaker 1: you know, it's a geopolitical nothing burger, if you will, 82 00:04:57,000 --> 00:05:01,119 Speaker 1: because at best, Russia can you let's say, a hundred 83 00:05:01,160 --> 00:05:04,000 Speaker 1: thousand to maybe three hundred thousand troops if they managed 84 00:05:04,040 --> 00:05:07,960 Speaker 1: to get them all activated as rearguard, they can help 85 00:05:08,600 --> 00:05:13,640 Speaker 1: support supply lines, they can defend the rear of Russian forces, 86 00:05:13,680 --> 00:05:16,400 Speaker 1: allowing the veterans in the professionals who have been fighting 87 00:05:16,440 --> 00:05:20,000 Speaker 1: at Ukraine to step up and defend against the Ukrainian offensive. 88 00:05:20,560 --> 00:05:23,480 Speaker 1: I think this gets us faster to an equilibrium, to 89 00:05:23,600 --> 00:05:28,239 Speaker 1: a stasis, to an established line of control. I don't 90 00:05:28,240 --> 00:05:31,640 Speaker 1: think this allows Russia to really effectively widen the conflict 91 00:05:31,640 --> 00:05:36,680 Speaker 1: in Ukraine. So what does this stasis or equilibrium look 92 00:05:36,760 --> 00:05:39,920 Speaker 1: like in your view? So that's a very important question, Joe, 93 00:05:39,960 --> 00:05:42,520 Speaker 1: and I think it's a controversial view that I that 94 00:05:42,600 --> 00:05:46,400 Speaker 1: I hold. But basically, most wars that don't end in 95 00:05:46,440 --> 00:05:50,600 Speaker 1: a capitulation of one side to another end up in 96 00:05:50,640 --> 00:05:53,000 Speaker 1: some form of a stasis where a line of control 97 00:05:53,120 --> 00:05:57,120 Speaker 1: is established. It's a geographical reality where the two forces 98 00:05:57,560 --> 00:06:01,599 Speaker 1: basically establish, you know, a front line that ossifies that 99 00:06:01,760 --> 00:06:05,080 Speaker 1: is well defended. Think about the Korean War, you know, 100 00:06:05,120 --> 00:06:08,039 Speaker 1: the Korean War has not ended. It is still going on. 101 00:06:09,000 --> 00:06:12,200 Speaker 1: There has not been a piece treaty between the two Koreas, 102 00:06:12,560 --> 00:06:15,720 Speaker 1: but the two Koreas are de facto sovereign entities defined 103 00:06:16,120 --> 00:06:18,360 Speaker 1: by a line of control that was established at the 104 00:06:18,480 --> 00:06:21,400 Speaker 1: end of the conflict. The Cyprus conflict, you know, which 105 00:06:21,600 --> 00:06:27,000 Speaker 1: basically pitted the Greek supported Cyprus versus the Turkish supported 106 00:06:27,240 --> 00:06:31,320 Speaker 1: Northern Cypriots, ultimately ended in a line of control, and 107 00:06:31,680 --> 00:06:35,120 Speaker 1: the country Cyprus has a line of control that in 108 00:06:35,240 --> 00:06:39,560 Speaker 1: de facto terms creates the Northern Turkish Cyprus you know, 109 00:06:39,600 --> 00:06:42,800 Speaker 1: which is not recognized but is a political entity that exists. 110 00:06:43,320 --> 00:06:45,719 Speaker 1: Another conflict that basically ended in a line of control. 111 00:06:45,800 --> 00:06:49,480 Speaker 1: The Data and Peace Accord in Bosnia was also concluded, 112 00:06:49,640 --> 00:06:52,560 Speaker 1: and the current you know, split between Republic of Cerpska 113 00:06:52,760 --> 00:06:56,560 Speaker 1: and the Federation the Bosnia Herstago in the Federation of 114 00:06:56,600 --> 00:06:59,960 Speaker 1: the Cross and the Muslims is defined by a line 115 00:07:00,000 --> 00:07:02,599 Speaker 1: of control. And usually what happens at the end of 116 00:07:02,640 --> 00:07:07,320 Speaker 1: the war, as both sides are getting exhausted, they accelerate 117 00:07:08,120 --> 00:07:12,040 Speaker 1: their military maneuvers in an effort because they know what's coming, 118 00:07:12,080 --> 00:07:14,480 Speaker 1: and what's coming is some sort of negotiated ceasefire that 119 00:07:14,520 --> 00:07:17,920 Speaker 1: will establish borders for a long time. So what you 120 00:07:18,000 --> 00:07:20,520 Speaker 1: do is you accelerate offensives. We saw that ahead of 121 00:07:20,520 --> 00:07:23,160 Speaker 1: the dat and Accords and after the Data Accords in Bosnia, 122 00:07:23,400 --> 00:07:25,680 Speaker 1: where the Serbs went on a huge offensive trying to 123 00:07:25,840 --> 00:07:29,520 Speaker 1: establish as much territory as they could before the bargaining began. 124 00:07:30,120 --> 00:07:31,840 Speaker 1: And I think that's what's happening right now. We're in 125 00:07:31,920 --> 00:07:34,160 Speaker 1: the stage where the Ukrainians are trying to get as 126 00:07:34,200 --> 00:07:36,679 Speaker 1: much as they can through their offensive, and the Russians 127 00:07:36,720 --> 00:07:38,720 Speaker 1: are responding by saying, like, we need to halt this 128 00:07:38,840 --> 00:07:42,200 Speaker 1: offensive because when the line of controls is established, we 129 00:07:42,240 --> 00:07:44,880 Speaker 1: need to prove domestically to the Russian population that the 130 00:07:44,920 --> 00:07:47,000 Speaker 1: war was worth it and that we acquired some form 131 00:07:47,280 --> 00:07:50,120 Speaker 1: some territory. So I think that's what's happening right now. 132 00:07:50,960 --> 00:07:53,160 Speaker 1: And a lot of the commentary out there is basically 133 00:07:53,160 --> 00:07:55,920 Speaker 1: saying the war is going to last forever. Now that 134 00:07:56,080 --> 00:07:59,239 Speaker 1: may objectively be true, just so we're clear, Like again, 135 00:07:59,360 --> 00:08:02,560 Speaker 1: Korean War still going on, guys, like it's never been 136 00:08:02,600 --> 00:08:07,040 Speaker 1: They never ended. So while you know, armchair geopolitical strategists 137 00:08:07,080 --> 00:08:10,800 Speaker 1: may be right that this war may continue forever, I 138 00:08:10,800 --> 00:08:14,360 Speaker 1: think the market has stopped caring about this war. Honestly, 139 00:08:14,640 --> 00:08:17,560 Speaker 1: I think like three months ago. Yeah, yeah, I kind 140 00:08:17,600 --> 00:08:19,880 Speaker 1: of agree with that. And this sort of goes back 141 00:08:19,920 --> 00:08:22,760 Speaker 1: to Joe when we were talking about China and the 142 00:08:22,800 --> 00:08:25,800 Speaker 1: idea that in a normal environment, everyone would be talking 143 00:08:25,840 --> 00:08:30,040 Speaker 1: about basically the Chinese economy being well, large parts of 144 00:08:30,080 --> 00:08:34,680 Speaker 1: it being closed, that impacting manufacturing, the housing crisis in China, 145 00:08:35,280 --> 00:08:38,559 Speaker 1: But there's so much going on in developed markets with 146 00:08:38,679 --> 00:08:40,880 Speaker 1: yields and inflation that it just seems to have fallen 147 00:08:40,920 --> 00:08:43,240 Speaker 1: by the wayside. And a similar thing with Russia. Even 148 00:08:43,280 --> 00:08:47,240 Speaker 1: though these two very big developments China and Russia are 149 00:08:47,360 --> 00:08:51,679 Speaker 1: arguably driving the inflation situation, I would argue that China 150 00:08:51,880 --> 00:08:54,520 Speaker 1: is very relevant still from a macro perspective. I mean, 151 00:08:54,520 --> 00:08:57,559 Speaker 1: one of the reasons I've been shorten commodities since May 152 00:08:57,600 --> 00:09:00,400 Speaker 1: is China. You know, we have a very barshue of China. 153 00:09:00,640 --> 00:09:04,400 Speaker 1: But Russia. I think the Russian involvement in this war 154 00:09:04,720 --> 00:09:07,520 Speaker 1: has led to some of the most fantastical and I 155 00:09:07,559 --> 00:09:11,320 Speaker 1: would argue idiotic cell side research I've ever read in 156 00:09:11,360 --> 00:09:13,600 Speaker 1: my life. I mean, look, this is this is a 157 00:09:13,600 --> 00:09:16,640 Speaker 1: profound moment in world history. I don't want to understate that. 158 00:09:17,400 --> 00:09:20,800 Speaker 1: But the argument that this war is going to cause 159 00:09:20,840 --> 00:09:24,280 Speaker 1: some servi calamity in the commodity markets has been epically wrong. 160 00:09:24,320 --> 00:09:27,320 Speaker 1: I mean, look at the chart of like Brent in wheat, 161 00:09:28,080 --> 00:09:30,440 Speaker 1: they are down to pre war levels. I mean, Brent 162 00:09:30,559 --> 00:09:33,760 Speaker 1: has fallen now about four or five in September twenty three, 163 00:09:33,920 --> 00:09:36,080 Speaker 1: just as the date check. So people know, but you know, 164 00:09:36,440 --> 00:09:38,760 Speaker 1: there are far more important things going on in the 165 00:09:38,800 --> 00:09:42,280 Speaker 1: world than the Russia Ukraine conflict for the macro, like 166 00:09:42,320 --> 00:09:45,440 Speaker 1: the big macro assets, namely what the FED is doing. 167 00:09:45,640 --> 00:09:47,920 Speaker 1: And of course I would argue China to the slowdown 168 00:09:47,920 --> 00:09:50,520 Speaker 1: in the US economy and so on. So I think 169 00:09:51,800 --> 00:09:54,440 Speaker 1: one of the biggest mistakes I think that a lot 170 00:09:54,520 --> 00:09:57,720 Speaker 1: of cell side research did at the beginning of this 171 00:09:57,800 --> 00:10:02,640 Speaker 1: war is imply apply loss of commodities out of Russia, 172 00:10:03,920 --> 00:10:06,440 Speaker 1: and that had to do with the EU oil embargo. 173 00:10:07,400 --> 00:10:10,360 Speaker 1: Very quickly after the EU oil embargo was imposed in Russia, 174 00:10:10,400 --> 00:10:12,640 Speaker 1: it became clear to me at least that it was 175 00:10:12,640 --> 00:10:16,480 Speaker 1: a PR effort. Like the EU embargo against Russia, the 176 00:10:16,520 --> 00:10:20,520 Speaker 1: Western embargo against oil is a PR effort. It is 177 00:10:20,559 --> 00:10:26,000 Speaker 1: not a genuine effort to remove Russia's oil revenue. Why 178 00:10:26,000 --> 00:10:28,520 Speaker 1: do I say that because when the U S imposed 179 00:10:28,679 --> 00:10:32,800 Speaker 1: sancial against Iran, it also imposed secondary sanctions which are 180 00:10:32,880 --> 00:10:35,240 Speaker 1: very effective. So if you're a Chinese or an Indian 181 00:10:35,440 --> 00:10:38,600 Speaker 1: company wanted to buy Iranian crude, you are at risk 182 00:10:38,720 --> 00:10:42,120 Speaker 1: of running a file of the US Justice Department with Russia. 183 00:10:42,160 --> 00:10:44,480 Speaker 1: That was like maybe debated for a week and then 184 00:10:44,480 --> 00:10:46,319 Speaker 1: everybody was kind of like, yeah, let's not do that. 185 00:10:46,480 --> 00:10:50,920 Speaker 1: Why because the oil embargo against Russia is designed, with 186 00:10:51,000 --> 00:10:54,080 Speaker 1: its six month implementation phase to literally allow Russia to 187 00:10:54,080 --> 00:10:58,240 Speaker 1: find other customers literally, and that's happened beautifully. There's no 188 00:10:58,360 --> 00:11:00,280 Speaker 1: loss of supply at the Russia. There might be at 189 00:11:00,280 --> 00:11:02,880 Speaker 1: the end of the year maybe five thousand, three hundred 190 00:11:02,880 --> 00:11:06,040 Speaker 1: thousand barrels, but that's it. And given the demand problems 191 00:11:06,040 --> 00:11:08,840 Speaker 1: with China and US slowdown, like who cares about that? 192 00:11:09,440 --> 00:11:12,600 Speaker 1: So there's there was a huge overstated risk of like 193 00:11:12,640 --> 00:11:15,760 Speaker 1: the shuttings of production of Russia, problems with logistics. None 194 00:11:15,800 --> 00:11:18,480 Speaker 1: of that has happened. And the reason is that, you know, 195 00:11:18,520 --> 00:11:20,640 Speaker 1: at the end of the day, Manuel Macron and Schultz 196 00:11:20,679 --> 00:11:22,920 Speaker 1: and the other leaders of Europe simply wants to be 197 00:11:23,000 --> 00:11:25,200 Speaker 1: able to say, at the end of the year, we're 198 00:11:25,240 --> 00:11:28,000 Speaker 1: not importing any more oil from Russia. The fact that 199 00:11:28,120 --> 00:11:32,319 Speaker 1: China and India are gorging themselves, bathing themselves in Russian 200 00:11:32,360 --> 00:11:36,600 Speaker 1: crude is not like a bug. It's a feature of 201 00:11:36,640 --> 00:11:39,440 Speaker 1: the sanctions. And so that's the first issue that I 202 00:11:39,480 --> 00:11:42,880 Speaker 1: think overstated the relevance of the conflict. The other one 203 00:11:42,920 --> 00:11:46,880 Speaker 1: is the idea that Russians have an existential that that 204 00:11:47,040 --> 00:11:50,240 Speaker 1: Ukraine is somehow existential to Russia, you know, and that 205 00:11:50,360 --> 00:11:53,360 Speaker 1: and that comes from reading some of the President Putin's 206 00:11:53,440 --> 00:11:55,760 Speaker 1: essays and so on, and I would argue that it isn't. 207 00:11:56,200 --> 00:11:59,160 Speaker 1: And but this is more than the philosophical question, because 208 00:11:59,160 --> 00:12:01,040 Speaker 1: if you're an investor and you think that Ukraine is 209 00:12:01,080 --> 00:12:04,000 Speaker 1: existential to Russia, then you think they will double, triple, 210 00:12:04,080 --> 00:12:07,559 Speaker 1: quadruple down on the conflict. But if you understand that 211 00:12:07,960 --> 00:12:11,040 Speaker 1: Ukraine and the war in Ukraine is merely a way 212 00:12:11,080 --> 00:12:15,640 Speaker 1: to export domestic political angst abroad, if that is your perception, 213 00:12:15,840 --> 00:12:19,880 Speaker 1: then yeah, this conflict could very well taper off interstasis 214 00:12:20,800 --> 00:12:23,560 Speaker 1: and you know, just be one of many conflicts that 215 00:12:23,640 --> 00:12:41,800 Speaker 1: we're going to experience in this new era of geopolitical multiplarity. 216 00:12:45,160 --> 00:12:48,880 Speaker 1: You mentioned that several commodities are actually lower than they 217 00:12:48,880 --> 00:12:50,640 Speaker 1: were at the beginning of the war, and oil is 218 00:12:50,800 --> 00:12:53,800 Speaker 1: more or less there, and wheat has come off a lot. 219 00:12:54,120 --> 00:12:57,520 Speaker 1: The one other thing, though, that does feel very central 220 00:12:57,600 --> 00:13:00,560 Speaker 1: and very central to macro is what happened with the 221 00:13:00,600 --> 00:13:03,720 Speaker 1: future of natural gas. And we know that supplies have 222 00:13:03,800 --> 00:13:07,280 Speaker 1: been diminished, right, I believe between the pipeline has been 223 00:13:07,320 --> 00:13:11,080 Speaker 1: curtailed and electricity prices, gas prices in Europe are insane, 224 00:13:11,480 --> 00:13:14,320 Speaker 1: and we've been talking a lot about how they're going 225 00:13:14,360 --> 00:13:16,000 Speaker 1: to get through the winter and how what's going to 226 00:13:16,080 --> 00:13:18,560 Speaker 1: happen in the following winter and so forth. What do 227 00:13:18,600 --> 00:13:21,160 Speaker 1: you see on the natural gas front? And do you 228 00:13:21,200 --> 00:13:23,000 Speaker 1: see you know, the thing I've been thinking about is 229 00:13:23,360 --> 00:13:26,080 Speaker 1: this sort of re orientation of the world such that 230 00:13:26,160 --> 00:13:29,199 Speaker 1: in the future it seems likely that Europe will continue 231 00:13:29,240 --> 00:13:31,400 Speaker 1: to get a lot more of its gas from the 232 00:13:31,480 --> 00:13:35,640 Speaker 1: United States. It seems like a pretty big significant restructuring 233 00:13:35,679 --> 00:13:38,320 Speaker 1: of world energy flows. So there's I think three things 234 00:13:38,320 --> 00:13:40,199 Speaker 1: that we need to discuss here. First is the short 235 00:13:40,320 --> 00:13:43,200 Speaker 1: term price of natural gas. You know, in the short term, 236 00:13:44,080 --> 00:13:48,200 Speaker 1: Europe has had to find alternatives to Russian natural gas, 237 00:13:48,480 --> 00:13:52,080 Speaker 1: and those alternatives have been extremely expensive, and that has 238 00:13:52,160 --> 00:13:55,240 Speaker 1: driven up the prices. We all understand that. Um, there's 239 00:13:55,240 --> 00:13:57,040 Speaker 1: a couple of things that is interesting to me. First 240 00:13:57,040 --> 00:13:59,559 Speaker 1: of all, if the war in Ukraine was so existential 241 00:13:59,600 --> 00:14:02,079 Speaker 1: to Press and Putin, why did he not cut off 242 00:14:02,160 --> 00:14:05,439 Speaker 1: natural gas early, you know, in March or April. Why 243 00:14:05,440 --> 00:14:08,320 Speaker 1: did he wait until the late summer to really do that. 244 00:14:08,440 --> 00:14:11,520 Speaker 1: It seems like an error, or maybe it seems like 245 00:14:11,559 --> 00:14:14,160 Speaker 1: an effort to maintain a relationship with Europe so that 246 00:14:14,280 --> 00:14:18,320 Speaker 1: you can't turn the pipes back on once you proclaim victory. However, 247 00:14:18,360 --> 00:14:22,320 Speaker 1: modified those goals maybe later on. The second thing that 248 00:14:22,400 --> 00:14:26,080 Speaker 1: I think President Putin didn't expect is the slowdown in China. 249 00:14:26,320 --> 00:14:29,640 Speaker 1: The slowdown in China allowed there to be sufficient amount 250 00:14:29,640 --> 00:14:32,560 Speaker 1: of lergy cargoes floating around for for Europe to to 251 00:14:32,760 --> 00:14:36,200 Speaker 1: kind of grab you know. That was another miscalculation. Now, 252 00:14:36,360 --> 00:14:39,440 Speaker 1: the short term spikey natural gas prices is currently being 253 00:14:39,480 --> 00:14:42,520 Speaker 1: extrapolated by a lot of investors into other assets, such 254 00:14:42,560 --> 00:14:44,800 Speaker 1: as euro which is a parody, although that's for other 255 00:14:44,840 --> 00:14:47,720 Speaker 1: reasons to the Fed hawkishness and so on, but like 256 00:14:47,760 --> 00:14:49,600 Speaker 1: the EU is a good example. Or for example, if 257 00:14:49,640 --> 00:14:53,760 Speaker 1: you look at eurostock six hundred industrial sector relative to 258 00:14:53,920 --> 00:14:58,160 Speaker 1: SMP five hundred industrials. They're at like decade lows, you know. 259 00:14:58,240 --> 00:15:01,120 Speaker 1: I mean, basically the industrial is nation is being priced 260 00:15:01,160 --> 00:15:05,000 Speaker 1: in as investors extrapolate current natural gas prices into the future. 261 00:15:05,040 --> 00:15:09,000 Speaker 1: I think that's like stupid, you know, because the current 262 00:15:09,200 --> 00:15:13,280 Speaker 1: increase in natural crisis natural gas prices in Europe is unsustainable. 263 00:15:13,680 --> 00:15:16,720 Speaker 1: It's a short term issue, and it's unsustainable for a 264 00:15:16,760 --> 00:15:19,360 Speaker 1: number of reasons. First of all, if the Ukraine War 265 00:15:19,960 --> 00:15:24,240 Speaker 1: entered stasis, if it ossifies along a line of control, 266 00:15:25,040 --> 00:15:28,840 Speaker 1: it is no longer in Russia's interest or Europe's interest too, 267 00:15:29,280 --> 00:15:31,800 Speaker 1: for from Russian perspective, not make the money off of 268 00:15:31,880 --> 00:15:35,320 Speaker 1: natural gas, from Europe's perspective, to continue to shoot itself 269 00:15:35,320 --> 00:15:39,320 Speaker 1: in the knee by not accepting Russian natural gas. So 270 00:15:39,480 --> 00:15:42,560 Speaker 1: once the war ossifies, which I think is coming within months, 271 00:15:43,600 --> 00:15:47,840 Speaker 1: there is going to be an incentive to resolve this 272 00:15:47,840 --> 00:15:51,040 Speaker 1: this impasse. And so that's the first issue. The second, 273 00:15:51,080 --> 00:15:54,960 Speaker 1: more longer term issue is what happens, as you mentioned, Joe, 274 00:15:55,200 --> 00:15:57,960 Speaker 1: as America becomes more involved in the l en G trade. 275 00:15:58,400 --> 00:16:02,120 Speaker 1: Presumably the US is going to export natural gas in 276 00:16:02,240 --> 00:16:05,160 Speaker 1: order to benefit from a global price of natural gas, 277 00:16:05,160 --> 00:16:08,920 Speaker 1: which is extremely higher in the domestic price. By the way, 278 00:16:09,000 --> 00:16:13,360 Speaker 1: Russia has fifty bcm of lergy capacity coming online in 279 00:16:13,400 --> 00:16:15,760 Speaker 1: a couple of years, which is ironic because it means 280 00:16:15,800 --> 00:16:19,280 Speaker 1: Russia will be sending those cargoes to European ports, even 281 00:16:19,320 --> 00:16:21,280 Speaker 1: though it won't be sending it through pipelines. I mean, 282 00:16:21,320 --> 00:16:23,280 Speaker 1: this is kind of like the cynical view of what's 283 00:16:23,280 --> 00:16:24,920 Speaker 1: going to happen over the next couple of years. But 284 00:16:24,960 --> 00:16:27,640 Speaker 1: why is this important? It's really important because if you're 285 00:16:27,640 --> 00:16:30,560 Speaker 1: an investor right now betting on the industrialization of Europe, 286 00:16:31,200 --> 00:16:33,120 Speaker 1: don't you realize what's going to happen in the next 287 00:16:33,160 --> 00:16:35,840 Speaker 1: couple of years. What's gonna happen in the next couple 288 00:16:35,840 --> 00:16:38,400 Speaker 1: of years is we're going to get the Brent price 289 00:16:38,480 --> 00:16:43,160 Speaker 1: of of natural gas. We're gonna have a global price 290 00:16:43,200 --> 00:16:46,000 Speaker 1: of natural gas, which will be the len G globally 291 00:16:46,040 --> 00:16:50,320 Speaker 1: traded price, which will raise costs domestically in the US. 292 00:16:50,840 --> 00:16:53,760 Speaker 1: It won't lower them, it will raise them, and that's 293 00:16:53,760 --> 00:16:56,840 Speaker 1: going to be a disadvantage to American industry, not European. 294 00:16:57,160 --> 00:17:02,000 Speaker 1: European prices of natural gas will start to approach and 295 00:17:02,040 --> 00:17:05,000 Speaker 1: approximate that of the US and vice versa, which will 296 00:17:05,080 --> 00:17:08,359 Speaker 1: be a headwind to US manufacturing. And the final issue 297 00:17:08,359 --> 00:17:09,960 Speaker 1: that I would point out is something that a lot 298 00:17:10,000 --> 00:17:13,840 Speaker 1: of again investors are ignoring. Europe has had higher electricity 299 00:17:13,840 --> 00:17:17,480 Speaker 1: prices for industrial users for two decades, Like I have 300 00:17:17,520 --> 00:17:20,360 Speaker 1: a chart of that. This is obvious, and yet Germany 301 00:17:20,400 --> 00:17:24,000 Speaker 1: has not lost any export share, nor has America gained 302 00:17:24,160 --> 00:17:28,000 Speaker 1: export share. So undwind that for a second. For the 303 00:17:28,040 --> 00:17:30,920 Speaker 1: last two decades, thanks to the Shaale Revolution, the United 304 00:17:30,960 --> 00:17:34,280 Speaker 1: States has had a price advantage on electricity and natural gas. 305 00:17:34,800 --> 00:17:38,040 Speaker 1: It's done nothing with that price advantage. Nothing, It's gained 306 00:17:38,119 --> 00:17:42,639 Speaker 1: no competitiveness. So why would you extrapolate the current crisis, 307 00:17:42,640 --> 00:17:45,879 Speaker 1: which as I say, is temporary, into the future and 308 00:17:45,960 --> 00:17:49,360 Speaker 1: somehow beat against the European industry. Now, obviously there are 309 00:17:49,359 --> 00:17:52,000 Speaker 1: certain industries you know, that are going to move to 310 00:17:52,080 --> 00:17:54,440 Speaker 1: the US, those that use natural gas as a feat stock. 311 00:17:54,840 --> 00:17:56,119 Speaker 1: And you know, we can sit here and be like, 312 00:17:56,160 --> 00:17:59,800 Speaker 1: oh my god, you know, like European fertilizer sector is done. 313 00:18:00,320 --> 00:18:03,400 Speaker 1: Let's short Europe. I mean, you know, sure there will 314 00:18:03,440 --> 00:18:05,800 Speaker 1: be parts of the industrial capacity of Europe they will 315 00:18:05,800 --> 00:18:07,879 Speaker 1: have to move because natural gas is a feed stock. 316 00:18:08,400 --> 00:18:11,560 Speaker 1: But I'm not betting against European industry. Because of this crisis. 317 00:18:11,560 --> 00:18:13,800 Speaker 1: In fact, I love the valuation. If you're a long 318 00:18:13,880 --> 00:18:18,920 Speaker 1: term investor, you plow every time you have into European industry, 319 00:18:19,000 --> 00:18:22,280 Speaker 1: especially because Wall Street Journal has, you know, an article 320 00:18:22,400 --> 00:18:25,040 Speaker 1: yesterday saying like Europe is the industrializing, this is in 321 00:18:25,119 --> 00:18:28,680 Speaker 1: the price guys, And I think it's completely an unsophisticated 322 00:18:28,760 --> 00:18:33,439 Speaker 1: view extrapolating linearly a current crisis into the future, which 323 00:18:33,560 --> 00:18:37,040 Speaker 1: makes no sense. So maybe just to back up for 324 00:18:37,080 --> 00:18:41,639 Speaker 1: a second, how should investors be approaching geopolitical risk and 325 00:18:41,800 --> 00:18:45,360 Speaker 1: conflict in general? And then secondly, is there something about 326 00:18:45,400 --> 00:18:48,960 Speaker 1: the Russia Ukraine conflict that makes it different because it 327 00:18:49,080 --> 00:18:54,439 Speaker 1: involves so many commodities and inputs. Yeah, So to to 328 00:18:54,480 --> 00:18:56,359 Speaker 1: answer the first question, there's a couple of things. First 329 00:18:56,359 --> 00:18:58,840 Speaker 1: of all, you know, there's there's a concept that I 330 00:18:58,880 --> 00:19:01,879 Speaker 1: call geopolitical alf which is when the market miss prices 331 00:19:02,000 --> 00:19:04,359 Speaker 1: risks either to the observative onside, and then you know 332 00:19:04,400 --> 00:19:08,280 Speaker 1: you can profit by generating returns. But there's also geopolitical data, 333 00:19:08,359 --> 00:19:11,320 Speaker 1: which is understanding the long term trends and trying to 334 00:19:11,359 --> 00:19:16,000 Speaker 1: figure out how to write them. In case of Ukraine, 335 00:19:16,560 --> 00:19:21,760 Speaker 1: what I would say is that investors confuse objective measure 336 00:19:21,840 --> 00:19:26,880 Speaker 1: of geopolitical risk with the market's interpretation of it. So 337 00:19:27,440 --> 00:19:31,359 Speaker 1: let's assume that the objective measure of geopolitical risk is 338 00:19:31,400 --> 00:19:35,600 Speaker 1: an oppera case G. This measure, you know, which we're 339 00:19:35,800 --> 00:19:40,240 Speaker 1: theoretically talking about here, can basically stay elevated. But if 340 00:19:40,280 --> 00:19:43,199 Speaker 1: it no longer moves up, if it's not increasing, if 341 00:19:43,240 --> 00:19:47,159 Speaker 1: it's just elevated, the lower case G, which is the 342 00:19:47,160 --> 00:19:50,480 Speaker 1: geopolitical risk premium associated with assets, is going to collapse 343 00:19:51,040 --> 00:19:53,680 Speaker 1: because lower case G is a derivative of upper KASSEG. 344 00:19:54,440 --> 00:19:57,520 Speaker 1: Now let's apply that to Ukraine. You can conflict happens 345 00:19:57,560 --> 00:20:02,040 Speaker 1: catches most investors off card on everyone but most the 346 00:20:02,040 --> 00:20:05,719 Speaker 1: opperac case G goes up their stock of nuclear exchanges. 347 00:20:06,480 --> 00:20:09,080 Speaker 1: Right now, there's a Ukrainian offensive, there's a mobilization. You 348 00:20:09,080 --> 00:20:12,080 Speaker 1: could argue that opera case G the objective measure of 349 00:20:12,160 --> 00:20:15,560 Speaker 1: geopolitical risk, the actual reality on the ground, the political 350 00:20:15,680 --> 00:20:20,640 Speaker 1: geopolitical reality is still elevated, but it hasn't really increased 351 00:20:20,680 --> 00:20:24,200 Speaker 1: as a risk. Why because on March twenty five, Russians 352 00:20:24,280 --> 00:20:28,760 Speaker 1: withdrew from all of northern Ukraine because they have been ineffective. 353 00:20:29,520 --> 00:20:32,880 Speaker 1: Investors are starting to realize there's material constraints to Russia 354 00:20:33,320 --> 00:20:36,639 Speaker 1: in effectively pursuing this war. I think there will also 355 00:20:36,720 --> 00:20:39,439 Speaker 1: be proof that Ukrainian offensive will be halted due to 356 00:20:39,560 --> 00:20:43,679 Speaker 1: their own constraints. So the lower case G, which is 357 00:20:43,680 --> 00:20:46,879 Speaker 1: the derivative of geopolitical risk, the geopolitical risk premium that 358 00:20:46,920 --> 00:20:50,560 Speaker 1: the markets are pricing on assets, starts to collapse even 359 00:20:50,640 --> 00:20:54,840 Speaker 1: if operacase geo objective measure is flat but still elevated. 360 00:20:55,160 --> 00:20:56,800 Speaker 1: So that's the first thing that I think is important 361 00:20:56,800 --> 00:20:59,879 Speaker 1: for investors to realize. We're now in this multipolar world. 362 00:21:00,000 --> 00:21:02,520 Speaker 1: We're gonna have a lot more wars between you know, 363 00:21:02,600 --> 00:21:05,840 Speaker 1: regional powers. This is what political science teaches us in 364 00:21:05,880 --> 00:21:08,520 Speaker 1: a world would know one or two bullies to kind 365 00:21:08,520 --> 00:21:11,560 Speaker 1: of keep everyone in line to every country for itself. 366 00:21:11,600 --> 00:21:14,560 Speaker 1: This is a very late nineteenth century, early twentieth century 367 00:21:14,640 --> 00:21:17,879 Speaker 1: kind of a world. And in this world, investors have 368 00:21:18,000 --> 00:21:21,960 Speaker 1: to become comfortable with this concept, which is that, yes, 369 00:21:21,960 --> 00:21:23,960 Speaker 1: the war may still be going on. The news may 370 00:21:24,040 --> 00:21:27,520 Speaker 1: still show refugees and civilian casualties and and a lot 371 00:21:27,560 --> 00:21:31,280 Speaker 1: of bad stuff, but the market desensitizes and doesn't care 372 00:21:31,400 --> 00:21:36,359 Speaker 1: unless new information somehow meaningfully raises objective geopolitical risk. That's 373 00:21:36,400 --> 00:21:37,840 Speaker 1: the first thing. The second thing that I think we 374 00:21:37,920 --> 00:21:40,719 Speaker 1: need to think about in terms of commodities. Yes, this 375 00:21:40,760 --> 00:21:42,840 Speaker 1: is a different war, Tracey. Had totally agree with you, 376 00:21:43,240 --> 00:21:45,680 Speaker 1: And my biggest fear when the war started was that 377 00:21:45,880 --> 00:21:48,680 Speaker 1: Russia would play the role of OPEC from nineteen seventy three. 378 00:21:49,600 --> 00:21:51,960 Speaker 1: So in the initial phases of the war, I was 379 00:21:52,040 --> 00:21:56,639 Speaker 1: bullish oil, and then basically by May they refused to 380 00:21:56,800 --> 00:21:59,920 Speaker 1: curtail their all exports. So I think that the EU 381 00:22:00,000 --> 00:22:02,960 Speaker 1: oil embargo, the Western oil embargo, is a forest. I 382 00:22:03,000 --> 00:22:05,680 Speaker 1: think it's a pr effort, and so I faded that 383 00:22:05,800 --> 00:22:08,720 Speaker 1: from day one. But I was concerned that Russia would 384 00:22:08,720 --> 00:22:11,520 Speaker 1: actually then aggregate its own oil supply. And by the way, 385 00:22:11,560 --> 00:22:13,439 Speaker 1: it would kind of make sense. They can probably make 386 00:22:13,520 --> 00:22:16,800 Speaker 1: money on the price even if they're volume declines. Why 387 00:22:16,840 --> 00:22:19,879 Speaker 1: not why not curtailed two million barrels? If I was 388 00:22:19,960 --> 00:22:22,440 Speaker 1: running Russia, if I was advising President Putin, that would 389 00:22:22,440 --> 00:22:24,520 Speaker 1: have been like, Hey, you know, why don't we just 390 00:22:24,600 --> 00:22:26,920 Speaker 1: threaten it. Why don't we cut the million here, two 391 00:22:26,960 --> 00:22:30,040 Speaker 1: million there? Now they haven't done it, and I think 392 00:22:30,080 --> 00:22:35,480 Speaker 1: that that suggests there are constraints to curtailing your exports 393 00:22:35,480 --> 00:22:37,640 Speaker 1: that OPEC did not have in the nineteen seventy three 394 00:22:38,119 --> 00:22:39,840 Speaker 1: and so I doubt that they're going to pull that 395 00:22:39,920 --> 00:22:43,840 Speaker 1: lever going forward. What are those constraints, Well, OPEC wasn't 396 00:22:44,000 --> 00:22:46,520 Speaker 1: fighting against Israel in the Young Kippur War. It was 397 00:22:46,600 --> 00:22:49,640 Speaker 1: Egypt in Syria. So a lot of the open countries 398 00:22:50,040 --> 00:22:52,760 Speaker 1: that were on the sidelines, they had surpluses and they 399 00:22:52,800 --> 00:22:56,280 Speaker 1: have access revenue, and they could curtail all exports. Russia 400 00:22:56,359 --> 00:22:59,720 Speaker 1: is prosecuting award. It's very expensive. You know, the United 401 00:22:59,760 --> 00:23:02,320 Speaker 1: States of America, fighting a much simpler war in Iraq 402 00:23:02,400 --> 00:23:04,240 Speaker 1: in two thousand three and two thousand four, spent like 403 00:23:04,240 --> 00:23:07,000 Speaker 1: two billion dollars in those two wars, more or less 404 00:23:07,160 --> 00:23:10,320 Speaker 1: in the first two years. Russia is probably spending more 405 00:23:10,440 --> 00:23:13,399 Speaker 1: if we associate the economic costs of sanctions. Nobody's sanctioned 406 00:23:13,400 --> 00:23:15,160 Speaker 1: the US in two thousand three and two thousand four, 407 00:23:15,240 --> 00:23:19,159 Speaker 1: you know, like Russia. This is an expensive war for Russia. 408 00:23:19,359 --> 00:23:21,720 Speaker 1: So that's the first issue. That's why I don't think 409 00:23:22,000 --> 00:23:24,360 Speaker 1: I don't think they will curtail their own oil exports. 410 00:23:24,640 --> 00:23:26,560 Speaker 1: The second issue is that they don't want to anchor 411 00:23:26,600 --> 00:23:28,800 Speaker 1: their own allies like India and China, who I'm sure 412 00:23:28,920 --> 00:23:31,639 Speaker 1: told President Putin in shangha In in Uzbekistan at the 413 00:23:32,040 --> 00:23:35,720 Speaker 1: recent Shanghai Corporation Organization meeting, like, hey, you can do 414 00:23:35,720 --> 00:23:38,600 Speaker 1: whatever you want in Ukraine, but do not curtail all exports. 415 00:23:39,000 --> 00:23:40,760 Speaker 1: And the third issue is that I think Russians and 416 00:23:40,880 --> 00:23:44,040 Speaker 1: just stand that if they do curtail they're all exports, 417 00:23:44,160 --> 00:23:46,640 Speaker 1: Saudi Arabia, which has been playing nice with them, will 418 00:23:46,680 --> 00:23:50,000 Speaker 1: take their market share at that point. I think there's 419 00:23:50,040 --> 00:23:53,960 Speaker 1: also internal elite isssues. You know, I'm not sure that 420 00:23:54,320 --> 00:23:58,880 Speaker 1: Mr Igor Sechion, who runs the energy clique in Russia, 421 00:23:59,000 --> 00:24:02,000 Speaker 1: is cool with leaving money on the table so that 422 00:24:02,040 --> 00:24:04,640 Speaker 1: Putin can pursue his war in Ukraine. I think there 423 00:24:04,640 --> 00:24:07,280 Speaker 1: are problems also within the Kremlin of this issue. But 424 00:24:07,280 --> 00:24:10,800 Speaker 1: the fact of the matter is that Russia has not 425 00:24:11,200 --> 00:24:15,840 Speaker 1: been willing to curtail globally relevant commodities. Now Europe is 426 00:24:15,840 --> 00:24:18,160 Speaker 1: a different question. They've done it to Europe, but that's 427 00:24:18,200 --> 00:24:23,240 Speaker 1: a sequestered com commodity. The Yamal Peninsula natural gas is 428 00:24:23,280 --> 00:24:26,320 Speaker 1: sequestered in the Yamal Peninsula and the only delivery mechanism 429 00:24:26,400 --> 00:24:29,600 Speaker 1: for that hundred bcm of natural gas is pipelines. To Europe, 430 00:24:29,640 --> 00:24:32,439 Speaker 1: So it matters for Europe, it doesn't really matter for 431 00:24:32,440 --> 00:24:37,240 Speaker 1: the world oil exports. Russia has refused to curttail, and 432 00:24:37,400 --> 00:24:40,720 Speaker 1: you know, it's September. They haven't done it for now 433 00:24:40,760 --> 00:24:43,840 Speaker 1: what seven months. I think that tells you they won't 434 00:24:43,840 --> 00:24:47,720 Speaker 1: do it. You know, you mentioned just how expensive this 435 00:24:47,800 --> 00:24:50,760 Speaker 1: war has been so far for Putin, and you also 436 00:24:50,800 --> 00:24:53,520 Speaker 1: mentioned that a lot of people were caught off guard 437 00:24:53,640 --> 00:24:56,800 Speaker 1: by Russia actually invading Ukraine this year. And I think 438 00:24:57,280 --> 00:24:59,000 Speaker 1: you correct me if I'm wrong, but I think you 439 00:24:59,040 --> 00:25:02,840 Speaker 1: were one of those people who had assigned a relatively 440 00:25:02,880 --> 00:25:06,480 Speaker 1: low probability to the possibility of a full blown invasion. 441 00:25:06,920 --> 00:25:10,960 Speaker 1: Could you maybe walk us through, like what exactly did 442 00:25:11,040 --> 00:25:14,840 Speaker 1: people get wrong? Because I think, you know, a lot 443 00:25:14,920 --> 00:25:18,000 Speaker 1: of the hypothesis seems to have been correct, like Putin 444 00:25:18,080 --> 00:25:21,199 Speaker 1: has a lot to lose if Russia actually invades, and 445 00:25:21,240 --> 00:25:25,080 Speaker 1: it's going to be very expensive and a difficult military conflict, 446 00:25:25,200 --> 00:25:28,280 Speaker 1: and Russia is going to grow even more isolated. So 447 00:25:28,320 --> 00:25:31,159 Speaker 1: all of those were right, but they don't seem to 448 00:25:31,200 --> 00:25:36,679 Speaker 1: actually have inhibited Putin's behavior. Yeah, so my framework for 449 00:25:36,680 --> 00:25:41,600 Speaker 1: forecasting geopolitics focuses on material constraints and um I wrote 450 00:25:41,600 --> 00:25:44,920 Speaker 1: a whole book on that, and uh, you know, my 451 00:25:44,920 --> 00:25:47,520 Speaker 1: my message to investors is this isn't a full proof method. 452 00:25:47,560 --> 00:25:50,000 Speaker 1: I mean, you're not going to be right, but it 453 00:25:50,000 --> 00:25:53,520 Speaker 1: allows you to start with something that is meaningful, objective, 454 00:25:53,640 --> 00:25:57,359 Speaker 1: and measurable. So instead of starting trying to like throw 455 00:25:57,440 --> 00:26:03,399 Speaker 1: darts at the board of policymaker preferences, talking to you know, 456 00:26:03,640 --> 00:26:08,240 Speaker 1: consultants who presumably have insights into the inner workings of 457 00:26:08,240 --> 00:26:11,840 Speaker 1: the mind of people like Putin or she, start with 458 00:26:11,920 --> 00:26:15,040 Speaker 1: something that you, as an investor can actually like do yourself, 459 00:26:15,320 --> 00:26:18,680 Speaker 1: which is, look at the material constraints to the policymakers, 460 00:26:18,720 --> 00:26:22,640 Speaker 1: and policymakers will most of the time pursue a path 461 00:26:22,680 --> 00:26:26,320 Speaker 1: of least resistance, political path of least resistance like water 462 00:26:26,400 --> 00:26:30,119 Speaker 1: coming down the hill. That's basically the framework Employe. Now 463 00:26:30,119 --> 00:26:34,560 Speaker 1: occasionally policy makers say, well cool, thanks for that framework, Marco, 464 00:26:34,720 --> 00:26:37,359 Speaker 1: but I'm going to pursue my preferences. So I I 465 00:26:37,400 --> 00:26:41,400 Speaker 1: signed fifty percent probability to conflict in in Ukraine, I said, look, 466 00:26:41,400 --> 00:26:43,480 Speaker 1: it's it's I hate doing fifty fifty, but this is 467 00:26:43,480 --> 00:26:46,320 Speaker 1: a close call. Maybe Putin does it, maybe he doesn't. 468 00:26:46,720 --> 00:26:49,160 Speaker 1: But if he does, here's how it's going to play out, 469 00:26:50,240 --> 00:26:52,040 Speaker 1: and that part here's how it's going to play out, 470 00:26:52,119 --> 00:26:55,800 Speaker 1: has played out basically exactly as I expected. Like And 471 00:26:55,880 --> 00:26:57,680 Speaker 1: one of the reasons that I said that this would 472 00:26:57,800 --> 00:27:00,639 Speaker 1: be really bad idea for a president and Putin is 473 00:27:00,680 --> 00:27:04,920 Speaker 1: that Russia doesn't have a military that can successfully execute 474 00:27:04,960 --> 00:27:07,439 Speaker 1: this kind of operation. So, you know, like there's an 475 00:27:07,440 --> 00:27:11,280 Speaker 1: objective fact Russian military sucks, like sorry, but it does. 476 00:27:11,640 --> 00:27:14,720 Speaker 1: It has no evidence over the last twenty years of 477 00:27:14,760 --> 00:27:17,560 Speaker 1: being successful. Its intervention in Syria was a very high 478 00:27:17,760 --> 00:27:20,120 Speaker 1: r o I because they did it smartly. They sent 479 00:27:20,200 --> 00:27:23,600 Speaker 1: some Suhois like you know, four year airplanes to help 480 00:27:23,960 --> 00:27:26,160 Speaker 1: phar al Assad and that was it. Two thousand and eight. 481 00:27:26,200 --> 00:27:28,919 Speaker 1: In Georgia, they were attacking a country that like doesn't 482 00:27:28,920 --> 00:27:32,160 Speaker 1: have any you know, mechanized armor. So they've been very 483 00:27:32,200 --> 00:27:34,679 Speaker 1: smart in how they were deploying their military. Over the 484 00:27:34,720 --> 00:27:37,880 Speaker 1: last twenty years, Putin has been very risk converse high 485 00:27:37,920 --> 00:27:40,760 Speaker 1: geopolitical r o I. And so the idea that he 486 00:27:40,840 --> 00:27:44,320 Speaker 1: would invade a country three times the size of Iraq 487 00:27:44,400 --> 00:27:47,480 Speaker 1: would double the population and we'd know and with a 488 00:27:47,600 --> 00:27:53,000 Speaker 1: very hostile a view towards Russian invasion, unlike Iraq, by 489 00:27:53,000 --> 00:27:55,800 Speaker 1: the way where seventy of the population was either Shia 490 00:27:56,040 --> 00:27:59,879 Speaker 1: or occurred and was therefore quite welcoming to the initial 491 00:28:00,359 --> 00:28:04,680 Speaker 1: American invasion. The point was the constraints were massive on 492 00:28:04,680 --> 00:28:07,760 Speaker 1: on Putin. Now, obviously, in this particular case, the reason 493 00:28:07,800 --> 00:28:11,520 Speaker 1: I got the decision wrong is because I write investment 494 00:28:11,520 --> 00:28:13,960 Speaker 1: research on the beach in Santa Monica, and President Putin 495 00:28:14,119 --> 00:28:17,000 Speaker 1: is the president of Russian Federation, so he gets to 496 00:28:17,040 --> 00:28:20,560 Speaker 1: decide what he does. Um. But the value in the 497 00:28:20,680 --> 00:28:25,840 Speaker 1: constraint framework is that as an investor, if you get 498 00:28:25,840 --> 00:28:28,960 Speaker 1: the initial decision by policy maker wrong, your framework is 499 00:28:28,960 --> 00:28:31,520 Speaker 1: still useful. You don't have to adjust it. You just 500 00:28:31,520 --> 00:28:34,439 Speaker 1: say like, okay, well, prossmakers ignored it. There may be 501 00:28:34,520 --> 00:28:37,199 Speaker 1: unaware of their constraints. They're about to find out what 502 00:28:37,240 --> 00:28:41,200 Speaker 1: those constraints are. And so the last seven months has 503 00:28:41,280 --> 00:28:47,680 Speaker 1: been President Putin and Russian leadership becoming intimately aware of 504 00:28:47,760 --> 00:28:53,280 Speaker 1: the material constraints as they have articulated themselves in objective reality. 505 00:28:53,600 --> 00:28:56,080 Speaker 1: And it's been a beautiful thing to watch because it 506 00:28:56,200 --> 00:29:00,200 Speaker 1: shows the benefit of having a framework in thinking about politics. Yeah, 507 00:29:00,200 --> 00:29:02,080 Speaker 1: you get the initial thing maybe wrong, you know, And 508 00:29:02,120 --> 00:29:04,120 Speaker 1: it's not like I was yellowing and going like long 509 00:29:04,240 --> 00:29:06,440 Speaker 1: ruble by the way, I mean I had a hedge on, 510 00:29:06,920 --> 00:29:09,480 Speaker 1: you know, like my recommendation was go long wheat and gold. 511 00:29:09,960 --> 00:29:12,400 Speaker 1: You know, I think those would outperform if there's an intervention. 512 00:29:12,480 --> 00:29:15,120 Speaker 1: Gold was wrong, Wheat was kind of right. Um. But 513 00:29:15,200 --> 00:29:18,800 Speaker 1: the point is, like then when it happens, you have 514 00:29:18,960 --> 00:29:24,000 Speaker 1: a view of how the reality will develop given the constraints, 515 00:29:24,120 --> 00:29:26,560 Speaker 1: unless you got the constraints wrong obviously, in which case, 516 00:29:26,600 --> 00:29:29,320 Speaker 1: you know, like half of Ukraine would not be conquered 517 00:29:29,320 --> 00:29:32,959 Speaker 1: by Russia if the constraint framework had really failed me. 518 00:29:33,520 --> 00:29:36,480 Speaker 1: So that's that's a really interesting lesson, I think for 519 00:29:36,640 --> 00:29:40,680 Speaker 1: myself and for anyone who wants to use a systematic 520 00:29:40,680 --> 00:29:44,960 Speaker 1: approach to politics and geopolitics. It's not about getting events right. 521 00:29:45,200 --> 00:29:48,320 Speaker 1: It's about getting the markets right. And you can still 522 00:29:48,360 --> 00:29:50,520 Speaker 1: double down on your view if you get the constraints right. 523 00:29:50,560 --> 00:29:54,360 Speaker 1: In fact, the market will become even more stretched and 524 00:29:54,640 --> 00:30:13,760 Speaker 1: the alpha opportunities will be even greater. I want to 525 00:30:13,800 --> 00:30:17,360 Speaker 1: go back to what potential stasis looks like, and you 526 00:30:17,400 --> 00:30:20,360 Speaker 1: mentioned that, you know, in your view, a big part 527 00:30:20,400 --> 00:30:22,920 Speaker 1: of Putin's motivation at this point has been the sort 528 00:30:22,960 --> 00:30:27,600 Speaker 1: of export of domestic political angst and that the mobilization, 529 00:30:27,720 --> 00:30:30,160 Speaker 1: which has got a lot of headlines, is partly out 530 00:30:30,160 --> 00:30:33,720 Speaker 1: of an impulse to show that something is being accomplished. 531 00:30:34,360 --> 00:30:37,400 Speaker 1: What is it? What is uh stasis look like or 532 00:30:37,440 --> 00:30:41,440 Speaker 1: what type of stasis is acceptable from Zelenski's point of view, 533 00:30:41,440 --> 00:30:44,400 Speaker 1: because of course he's also had rhetoric about not seating 534 00:30:44,760 --> 00:30:49,440 Speaker 1: any territory, any ground whatsoever. But obviously some parts of 535 00:30:49,840 --> 00:30:52,960 Speaker 1: Ukraine are in fact controlled and likely to stay controlled, 536 00:30:53,000 --> 00:30:55,600 Speaker 1: it would seem by Russia. What does what is sort 537 00:30:55,600 --> 00:30:59,880 Speaker 1: of a reacceptable stasis from the Ukrainian perspective, Well, we 538 00:31:00,080 --> 00:31:02,800 Speaker 1: know what the acceptable stasis is from the Russian perspective, 539 00:31:02,840 --> 00:31:05,320 Speaker 1: because they told us to March twenty five. On March 540 00:31:05,400 --> 00:31:08,440 Speaker 1: twenty five, the Russian Defense Ministry proclaimed victory, which was 541 00:31:08,480 --> 00:31:12,719 Speaker 1: of course like a joke because they, you know, they 542 00:31:12,760 --> 00:31:16,320 Speaker 1: got their butt handed to them in northern Ukraine. They 543 00:31:16,400 --> 00:31:20,560 Speaker 1: withdrew from Kharkiev, Shernikiev and Kiev. More or less, they 544 00:31:20,720 --> 00:31:23,240 Speaker 1: retained some territories in her Kiv which they've not lost. 545 00:31:23,920 --> 00:31:26,880 Speaker 1: So they we drew from those northern parts of Ukraine, 546 00:31:26,920 --> 00:31:29,560 Speaker 1: they abandoned the assaulting Kiev, and they basically said, oh, 547 00:31:29,600 --> 00:31:31,880 Speaker 1: you silly Westerners, you guys thought we were trying to 548 00:31:31,920 --> 00:31:34,600 Speaker 1: get to Kiev. F that was all a ruse, you know, 549 00:31:34,720 --> 00:31:37,320 Speaker 1: like we got you. And then they told us that 550 00:31:37,360 --> 00:31:39,760 Speaker 1: they're not going to focus on dom Bas, which are 551 00:31:39,800 --> 00:31:43,120 Speaker 1: the oblasts of Luhansk in Donetsk, and then the land 552 00:31:43,120 --> 00:31:47,560 Speaker 1: bridge to Crimea, which are the oblasts of Herson and Zaparigia. 553 00:31:47,920 --> 00:31:51,160 Speaker 1: So that's it. Like their goals now are not the 554 00:31:51,320 --> 00:31:55,640 Speaker 1: Nazification of Ukraine, whatever that means. It's not conquering everything 555 00:31:55,680 --> 00:31:58,160 Speaker 1: east of the Naper as many people thought, because they 556 00:31:58,160 --> 00:32:00,960 Speaker 1: were doing the Spincer maneuver, which is the yoddic. Ukraine's 557 00:32:00,960 --> 00:32:03,080 Speaker 1: the size of Western Europe. Russia tried to do a 558 00:32:03,120 --> 00:32:07,000 Speaker 1: Pencer maneuver with two hundred thousand troops. It's it's like 559 00:32:07,040 --> 00:32:09,480 Speaker 1: it's like they never played risk, you know, like my 560 00:32:09,640 --> 00:32:14,440 Speaker 1: kids know not to spread your troops out across different countries. 561 00:32:14,520 --> 00:32:16,959 Speaker 1: You everybody in my household knows, when you get your 562 00:32:17,000 --> 00:32:20,480 Speaker 1: big reinforcement push, you make one line of attack and 563 00:32:20,600 --> 00:32:23,600 Speaker 1: you like sweep through it. But apparently, you know, Putting 564 00:32:23,600 --> 00:32:25,360 Speaker 1: in his generals thought that it would be cool for 565 00:32:25,440 --> 00:32:29,440 Speaker 1: Russian TV if they had you know, airborne invasion and 566 00:32:29,560 --> 00:32:32,520 Speaker 1: like they had an amphibious assault, and it was all 567 00:32:32,560 --> 00:32:36,680 Speaker 1: like very much like it was like Brockheimer produced invasion. 568 00:32:36,680 --> 00:32:38,880 Speaker 1: It was. It was quite ridiculous and it will go 569 00:32:38,920 --> 00:32:41,400 Speaker 1: in the annals of history as I think one of 570 00:32:41,440 --> 00:32:45,000 Speaker 1: the biggest military blunders ever. But look, the point is cool, 571 00:32:45,200 --> 00:32:47,880 Speaker 1: they readjusted what they want and we know what the 572 00:32:47,960 --> 00:32:51,000 Speaker 1: Russians not wants. Um Now the problem for them politically 573 00:32:51,440 --> 00:32:55,320 Speaker 1: is Donetsk. If you look at the map of conquered territory, 574 00:32:55,440 --> 00:32:59,680 Speaker 1: there's still a very large chunk of the Oblast of 575 00:32:59,760 --> 00:33:02,800 Speaker 1: don Netsk, not the city, but the oblast of Venaska 576 00:33:02,880 --> 00:33:05,480 Speaker 1: is held by Ukrainians. And I think the only reason 577 00:33:05,520 --> 00:33:09,560 Speaker 1: President Putin has not raised the Mission Accomplished banner. The 578 00:33:09,600 --> 00:33:11,880 Speaker 1: only reason he hasn't done that is that that is 579 00:33:11,920 --> 00:33:15,120 Speaker 1: a source spot in the geography of what they have conquered. 580 00:33:15,240 --> 00:33:17,400 Speaker 1: That's a delay, you know. And throughout the summer they've 581 00:33:17,400 --> 00:33:20,160 Speaker 1: failed to deal with this like the territory, and I 582 00:33:20,160 --> 00:33:22,440 Speaker 1: don't know if they ever will. They might have to 583 00:33:22,440 --> 00:33:26,000 Speaker 1: proclaim victory with half of this oblast, which is an embarrassment. 584 00:33:26,040 --> 00:33:29,200 Speaker 1: By the way, Donatsk is surrounded by Russia. It's populated 585 00:33:29,240 --> 00:33:32,400 Speaker 1: by ethnic Russians, not majority but like a good chunk 586 00:33:32,440 --> 00:33:35,480 Speaker 1: of it. And so the fact that they've been incapable 587 00:33:35,640 --> 00:33:40,360 Speaker 1: of winning in the oblast of Donatsk is beyond mind boggling. 588 00:33:40,360 --> 00:33:44,080 Speaker 1: It's it's it's stupendous that Russia can't do this. But 589 00:33:44,280 --> 00:33:46,400 Speaker 1: going back to your point, Joe, which is important, what 590 00:33:46,480 --> 00:33:50,400 Speaker 1: does Ukraine want? Well, Ukraine wants a lot. I think 591 00:33:50,400 --> 00:33:52,880 Speaker 1: the Ukraine wants the recovery of all of its territories, 592 00:33:52,880 --> 00:33:56,280 Speaker 1: including Crimeum. But you know, I want rock hard abs 593 00:33:56,920 --> 00:33:59,160 Speaker 1: and I'm working really hard to get them, but it's 594 00:33:59,200 --> 00:34:03,520 Speaker 1: not gonna happen. And so constraints are far more important 595 00:34:03,680 --> 00:34:06,760 Speaker 1: than preferences. And I know it's not politically correct to 596 00:34:06,760 --> 00:34:09,960 Speaker 1: say this, because you know, we're all obviously like this 597 00:34:10,040 --> 00:34:12,320 Speaker 1: is the West, we all have a pro Ukrainian bias. 598 00:34:12,719 --> 00:34:14,200 Speaker 1: But the fact of the matter is that I don't 599 00:34:14,200 --> 00:34:19,080 Speaker 1: think anyone really cares what President Jilenski wants. And I 600 00:34:19,080 --> 00:34:21,840 Speaker 1: think Jilenski would agree with me because he's been asking 601 00:34:22,239 --> 00:34:26,120 Speaker 1: for main battle thanks for the past seven months. The 602 00:34:26,239 --> 00:34:29,920 Speaker 1: Ukrainian offensive has been effective, but it's been effective. Note 603 00:34:30,120 --> 00:34:33,160 Speaker 1: note where it's been effective in the part of Ukraine 604 00:34:33,440 --> 00:34:38,399 Speaker 1: where Russians have not really stated they want her kid. 605 00:34:38,480 --> 00:34:41,440 Speaker 1: Her kid was logistically important, you know, they've kind of 606 00:34:41,480 --> 00:34:44,040 Speaker 1: gone back and forth whether that's their goal. It's not 607 00:34:44,120 --> 00:34:47,920 Speaker 1: part of dom bas and so that's the part that 608 00:34:48,080 --> 00:34:50,399 Speaker 1: Ukrainian offensive has been very successful in. But I would 609 00:34:50,480 --> 00:34:53,960 Speaker 1: argue that's the part that Russians have cared the least 610 00:34:54,000 --> 00:34:57,960 Speaker 1: about of the four all blasts they've already conquered. And 611 00:34:58,040 --> 00:35:01,600 Speaker 1: so I think that what's how opening is the West 612 00:35:01,800 --> 00:35:07,239 Speaker 1: has given Ukraine in sufficient weapons to defend itself very effectively, 613 00:35:07,320 --> 00:35:10,560 Speaker 1: to pursue a limited offensive. But if the West really 614 00:35:10,600 --> 00:35:14,400 Speaker 1: wanted Ukraine to reconquer all of the parts of Ukraine, 615 00:35:14,719 --> 00:35:16,799 Speaker 1: then two things would happen. They would have been given 616 00:35:16,840 --> 00:35:20,120 Speaker 1: tanks seven months ago, which Germany has not done. Germany 617 00:35:20,120 --> 00:35:22,839 Speaker 1: has asked Spain not to give leopards that Spain has 618 00:35:22,920 --> 00:35:27,000 Speaker 1: to Ukraine. The US is equivocating on this issue, even 619 00:35:27,080 --> 00:35:30,960 Speaker 1: when it comes to Abraham's main battle tanks. And second, 620 00:35:31,440 --> 00:35:36,640 Speaker 1: much bigger help on air force, particularly ground assault aircraft. 621 00:35:36,680 --> 00:35:39,520 Speaker 1: So you have some retired generals, for example, suggest why 622 00:35:39,520 --> 00:35:42,040 Speaker 1: don't we give Ukraine E ten war hawks? That would 623 00:35:42,080 --> 00:35:45,359 Speaker 1: make a really big difference. Ukraine doesn't have those two things. 624 00:35:45,440 --> 00:35:47,719 Speaker 1: So I would argue that what Zilanski wants is kind 625 00:35:47,719 --> 00:35:50,919 Speaker 1: of irrelevant because his constraints are that he doesn't have 626 00:35:51,200 --> 00:35:55,000 Speaker 1: the military necessary to conquer parts of Ukraine where the 627 00:35:55,080 --> 00:35:59,040 Speaker 1: Russians are entrenched, and that's by design. That's by design 628 00:35:59,120 --> 00:36:06,719 Speaker 1: because Europeans ultimately are very concerned about Ukrainians sovereignty independence. Genuinely, 629 00:36:06,719 --> 00:36:10,160 Speaker 1: I think European voters and policymakers don't want Ukraine to 630 00:36:10,200 --> 00:36:14,120 Speaker 1: fall to Russia, but they kind of feel that's been accomplished. 631 00:36:15,719 --> 00:36:17,640 Speaker 1: Do you think Europeans are going to be paying these 632 00:36:17,680 --> 00:36:21,720 Speaker 1: natural gas prices eight months from now because of something 633 00:36:21,760 --> 00:36:25,160 Speaker 1: called the nets? Most Europeans can find Donet's gonna map, 634 00:36:25,760 --> 00:36:28,279 Speaker 1: So I would argue the answer is an absolute no. 635 00:36:28,800 --> 00:36:32,640 Speaker 1: And that's what's very relevant for the markets. The idea 636 00:36:32,719 --> 00:36:35,280 Speaker 1: that the West will retain the current level of support 637 00:36:35,440 --> 00:36:38,200 Speaker 1: for Ukraine into the future, so the Ukraine can mop 638 00:36:38,280 --> 00:36:41,080 Speaker 1: up some territories that are effectively the West Virginias and 639 00:36:41,120 --> 00:36:44,760 Speaker 1: no offense to the Mountaineers, but West Virginias of Ukraine, 640 00:36:45,200 --> 00:36:48,080 Speaker 1: I think is a very naive assumption that's not going 641 00:36:48,160 --> 00:36:51,919 Speaker 1: to happen. The West is going to basically implicitly create 642 00:36:51,960 --> 00:36:55,000 Speaker 1: a line of control by not supporting Ukraine enough, and 643 00:36:55,080 --> 00:36:57,959 Speaker 1: that's been the case for seven months. Can I ask 644 00:36:58,000 --> 00:37:01,520 Speaker 1: you to apply your framework to she shouldn't ping and 645 00:37:01,560 --> 00:37:05,319 Speaker 1: the COVID zero policies that China is pursuing, because I 646 00:37:05,320 --> 00:37:08,399 Speaker 1: think this has been sort of a question mark over 647 00:37:08,440 --> 00:37:12,160 Speaker 1: what's going on there, like why exactly are the COVID 648 00:37:12,239 --> 00:37:15,440 Speaker 1: restrictions politically beneficial to she? I know, he made a 649 00:37:15,440 --> 00:37:19,840 Speaker 1: big point about how China cares about people's lives versus 650 00:37:19,840 --> 00:37:22,359 Speaker 1: the West, where they're willing to just let people die 651 00:37:22,400 --> 00:37:24,960 Speaker 1: in order to keep businesses open. So there's that, and 652 00:37:25,120 --> 00:37:27,880 Speaker 1: there's some argument that maybe it helps, you know, fight 653 00:37:28,080 --> 00:37:31,680 Speaker 1: capital outflows and things like that. But what exactly is 654 00:37:31,719 --> 00:37:34,880 Speaker 1: he trying to get here? And what are the material 655 00:37:34,960 --> 00:37:41,360 Speaker 1: constraints that are restricting or maybe even helping him pursue 656 00:37:41,400 --> 00:37:46,080 Speaker 1: those goals. So I think that the political decision was 657 00:37:46,200 --> 00:37:51,279 Speaker 1: not to accept, you know, Western vaccines, and that was 658 00:37:51,320 --> 00:37:56,960 Speaker 1: a decision I guess made. What once you make that decision, 659 00:37:57,320 --> 00:38:02,239 Speaker 1: I'm not sure it's illogical to dose zero covids, you know, 660 00:38:02,320 --> 00:38:06,080 Speaker 1: so once you have taken perhaps an ideological and a 661 00:38:06,120 --> 00:38:10,800 Speaker 1: political decision not to import Western vaccines, which are effective, 662 00:38:11,520 --> 00:38:14,920 Speaker 1: once you've done that. Everything that's followed in China, I 663 00:38:14,960 --> 00:38:19,320 Speaker 1: think you could make a logical, rational explanation for white 664 00:38:19,600 --> 00:38:23,440 Speaker 1: China is doing that. It's population pyramid is heavily weighted 665 00:38:23,480 --> 00:38:26,600 Speaker 1: towards the elderly. It doesn't have the hospital beds per 666 00:38:26,640 --> 00:38:29,720 Speaker 1: capita that it would require to kind of let COVID 667 00:38:29,800 --> 00:38:32,200 Speaker 1: run through the system, and for some reason it has 668 00:38:32,239 --> 00:38:35,280 Speaker 1: been unable to get the elderly to take up the 669 00:38:35,320 --> 00:38:39,359 Speaker 1: booster shots at a percentages necessary to kind of open 670 00:38:39,440 --> 00:38:43,040 Speaker 1: up the economy. So once you you know, like once 671 00:38:43,080 --> 00:38:48,320 Speaker 1: you accept that there was a political decision and ideological decision, 672 00:38:48,560 --> 00:38:51,480 Speaker 1: once you accept that, like everything else that's happened makes sense. 673 00:38:51,560 --> 00:38:53,680 Speaker 1: And that's not a popular view in the West because 674 00:38:53,719 --> 00:38:57,480 Speaker 1: now we've become so anti Chinese in the West so 675 00:38:57,600 --> 00:39:01,520 Speaker 1: thoroughly that everything that happens in China is interpreted as 676 00:39:01,560 --> 00:39:04,279 Speaker 1: some sort of a Maoist coup, you know. And I 677 00:39:04,320 --> 00:39:07,040 Speaker 1: think as an objective observer, and I bathed myself in 678 00:39:07,360 --> 00:39:10,200 Speaker 1: aloof indifference to do my job. I can tell you 679 00:39:10,239 --> 00:39:13,400 Speaker 1: that five years ago, everybody thought China was a friend, 680 00:39:13,520 --> 00:39:16,520 Speaker 1: and now you know, everybody thinks it's evil, and so 681 00:39:16,960 --> 00:39:19,400 Speaker 1: zero COVID policy is seen as some serve a manifestation 682 00:39:19,440 --> 00:39:23,160 Speaker 1: of a maoist policy. But again, there may have been 683 00:39:23,160 --> 00:39:27,000 Speaker 1: an ideological reason not to take Western vaccines. I accept that. 684 00:39:27,280 --> 00:39:29,439 Speaker 1: But once they've done that, once they have a less 685 00:39:29,440 --> 00:39:34,279 Speaker 1: effective vaccine, elderly population, not enough hospital beds, and for 686 00:39:34,360 --> 00:39:37,400 Speaker 1: some bizarre reason they're incapable of getting the elderly in 687 00:39:37,480 --> 00:39:39,799 Speaker 1: China to just take the third and fourth shots, then 688 00:39:39,880 --> 00:39:42,080 Speaker 1: zero COVID policy kind of makes sense. And this is 689 00:39:42,080 --> 00:39:45,280 Speaker 1: an important point because a lot of onshore managers in China. 690 00:39:45,440 --> 00:39:48,160 Speaker 1: You know, I have an office in Shanghai, great analysts, 691 00:39:48,200 --> 00:39:52,080 Speaker 1: they're great team, and we give a really good read 692 00:39:52,560 --> 00:39:54,960 Speaker 1: when we produce research in China. We have I think 693 00:39:55,000 --> 00:39:57,759 Speaker 1: a really great read on onshore managers in China, and 694 00:39:58,040 --> 00:40:01,200 Speaker 1: they've been really hopeful that after the October Congress there 695 00:40:01,200 --> 00:40:03,600 Speaker 1: will be a shift in zero COVID But if you 696 00:40:03,640 --> 00:40:05,960 Speaker 1: take my view, which is that maybe there is a 697 00:40:06,000 --> 00:40:09,360 Speaker 1: public health reason to have zero COVID policy given the 698 00:40:09,360 --> 00:40:13,680 Speaker 1: initial political ideological decisions made two years ago, then it's 699 00:40:13,719 --> 00:40:16,640 Speaker 1: not clear to me that those restrictions will be eased 700 00:40:17,080 --> 00:40:20,400 Speaker 1: as much as many investors thinking. I think the onshore 701 00:40:20,440 --> 00:40:23,240 Speaker 1: sentiment in China is starting to realize this. The shutdown 702 00:40:23,239 --> 00:40:25,680 Speaker 1: of cheng Do, which is a twenty million people city 703 00:40:25,840 --> 00:40:30,440 Speaker 1: recently a couple of weeks ago, has really upset sentiment domestically, 704 00:40:30,520 --> 00:40:32,719 Speaker 1: and I think that, you know, there won't be an 705 00:40:32,719 --> 00:40:35,800 Speaker 1: easy fix after October when it comes to this issue. 706 00:40:36,520 --> 00:40:40,920 Speaker 1: How's how's your call option on Putin not being around 707 00:40:40,960 --> 00:40:42,640 Speaker 1: in twelve months a going? So I think back in 708 00:40:42,680 --> 00:40:44,960 Speaker 1: March you spoke to some of our colleagues on the 709 00:40:45,400 --> 00:40:48,239 Speaker 1: What Goes Up podcast and you said something to the 710 00:40:48,320 --> 00:40:50,680 Speaker 1: fact that you thought that Putin might not be there 711 00:40:50,719 --> 00:40:53,799 Speaker 1: in another twelve months time. Are you still sticking with 712 00:40:53,800 --> 00:40:56,839 Speaker 1: that one? Yes? So what I said was, if I 713 00:40:56,920 --> 00:40:59,800 Speaker 1: was a book, I would set the line at twelve 714 00:40:59,840 --> 00:41:02,680 Speaker 1: month not be taking the under. And then, uh, you 715 00:41:02,680 --> 00:41:05,160 Speaker 1: know you guys in Bloomberg you tweeted it out to 716 00:41:05,920 --> 00:41:09,160 Speaker 1: to the world, and I love one comment, by the way, 717 00:41:09,239 --> 00:41:11,879 Speaker 1: I love Twitter because one genius went like, I give 718 00:41:11,920 --> 00:41:15,120 Speaker 1: Marco Poppage twelve months and I'm taking the under, says 719 00:41:15,239 --> 00:41:18,560 Speaker 1: Russian President Lussim Reputain, you know, and like that was 720 00:41:19,200 --> 00:41:21,560 Speaker 1: that was that was that was awesome. Um So look 721 00:41:21,560 --> 00:41:23,560 Speaker 1: what I would say is that, yeah, I think I mean, 722 00:41:23,719 --> 00:41:26,040 Speaker 1: I might be cashing in on that option, maybe selling 723 00:41:26,040 --> 00:41:29,640 Speaker 1: it to some enthusiast right now, but I'm I'm willing 724 00:41:29,680 --> 00:41:32,200 Speaker 1: to stick with it. I think that Russian history is 725 00:41:32,320 --> 00:41:37,680 Speaker 1: very clear. Russia is terrible at fighting offensive wars. We 726 00:41:37,800 --> 00:41:41,040 Speaker 1: in the West, we have a perception, you know, propagated 727 00:41:41,040 --> 00:41:43,080 Speaker 1: by the Russians themselves, that they are they have a 728 00:41:43,080 --> 00:41:47,560 Speaker 1: glorious military history. And look, let's be objectively clear, Russia 729 00:41:47,680 --> 00:41:50,520 Speaker 1: saved the West in the Second World War. I think 730 00:41:50,560 --> 00:41:53,200 Speaker 1: that that has to be said, like that is something 731 00:41:53,239 --> 00:41:55,480 Speaker 1: that I think Russians can take to the end of 732 00:41:55,520 --> 00:41:58,960 Speaker 1: time that in World War Two they really were, like 733 00:41:59,560 --> 00:42:05,040 Speaker 1: they fall the biggest battles, you know, fair Napoleon attacked Russia. 734 00:42:05,440 --> 00:42:09,719 Speaker 1: It destroyed Napoleon. Fair. But those are situations in which 735 00:42:09,880 --> 00:42:13,360 Speaker 1: somebody attacks Russia and they have such a huge territory 736 00:42:13,400 --> 00:42:15,680 Speaker 1: they can extend the supply lines of their attackers, they 737 00:42:15,680 --> 00:42:18,920 Speaker 1: can attack them. You know. That's that's the benefit of Russia. 738 00:42:18,960 --> 00:42:22,480 Speaker 1: But those benefits are also disadvantages when they pursue offensive 739 00:42:22,520 --> 00:42:25,960 Speaker 1: action because their own supply lines are so stretched and 740 00:42:26,040 --> 00:42:30,320 Speaker 1: huge and logistically becomes a nightmare to support offensive operations. 741 00:42:30,360 --> 00:42:33,839 Speaker 1: And so there have been several major wars in which 742 00:42:33,920 --> 00:42:37,799 Speaker 1: Russia was an attacker and Agrester was on offense, where 743 00:42:37,880 --> 00:42:42,799 Speaker 1: they spectacularly failed, and when they spectacularly failed, the immediate 744 00:42:42,880 --> 00:42:46,280 Speaker 1: reaction was domestic political unrest. So, you know, I assumed 745 00:42:46,320 --> 00:42:48,719 Speaker 1: that President Putin was a student of history. Apparently he's not, 746 00:42:49,600 --> 00:42:52,879 Speaker 1: because what he has done, he has fallen into one 747 00:42:52,880 --> 00:42:56,840 Speaker 1: of these traps. And I think that when policymakers in Russia, 748 00:42:56,840 --> 00:43:00,560 Speaker 1: where leaders of Russia did that, they all ways met 749 00:43:01,160 --> 00:43:04,960 Speaker 1: and sort of untimely end they were either retired like 750 00:43:05,000 --> 00:43:08,640 Speaker 1: Cruise Shift did when he tried to test JFK over 751 00:43:08,680 --> 00:43:12,880 Speaker 1: the Cuban missile crisis, or they had to implement reforms 752 00:43:13,160 --> 00:43:15,919 Speaker 1: as Alexander the second had to do after his father 753 00:43:16,120 --> 00:43:19,720 Speaker 1: failed to win the original Crimean War, or in nineteen 754 00:43:19,719 --> 00:43:23,600 Speaker 1: o five when the Tsar had to implement reforms after 755 00:43:23,640 --> 00:43:27,440 Speaker 1: the nineteen o five revolution in Russia which was sparked 756 00:43:27,520 --> 00:43:31,400 Speaker 1: by the disastrous Japan War, you know, where basically Russia invaded, 757 00:43:31,880 --> 00:43:34,880 Speaker 1: tried to defeat Japan and lost all three of its fleets. 758 00:43:35,640 --> 00:43:37,560 Speaker 1: And then, of course in nineteen seventeen, which is the 759 00:43:37,560 --> 00:43:42,800 Speaker 1: best example, Lenin used secret documents in communication that proved 760 00:43:43,000 --> 00:43:45,880 Speaker 1: that the provisional government, which had overthrown the Tsar, was 761 00:43:45,920 --> 00:43:49,560 Speaker 1: still pursuing World War One for imperial gain, and Leanin 762 00:43:49,600 --> 00:43:54,480 Speaker 1: basically used that as a spark for the eventual Bolshevik Revolution. 763 00:43:54,840 --> 00:43:58,160 Speaker 1: My point is that this repeats in Russia like constantly. 764 00:43:58,239 --> 00:44:03,000 Speaker 1: I can't really point to a war where Russia was 765 00:44:03,040 --> 00:44:06,799 Speaker 1: the aggressor and they won. And I think that's important, 766 00:44:07,040 --> 00:44:10,920 Speaker 1: and I think that that's gonna resonate whether I'm right 767 00:44:10,960 --> 00:44:13,640 Speaker 1: in five months or whether I'm writing two years, We'll see. 768 00:44:13,920 --> 00:44:16,080 Speaker 1: The other thing that I've also been saying is like, look, 769 00:44:16,920 --> 00:44:19,400 Speaker 1: the polling in Russia is kind of weird. You know, 770 00:44:19,480 --> 00:44:21,960 Speaker 1: when Russians are asked if they support President Putin in 771 00:44:21,960 --> 00:44:26,399 Speaker 1: the Russian military about them say yes. But when they're 772 00:44:26,440 --> 00:44:28,160 Speaker 1: asked like how long do you think this war is 773 00:44:28,160 --> 00:44:31,239 Speaker 1: gonna last? This is all from the Livada Center, they 774 00:44:31,280 --> 00:44:33,960 Speaker 1: say less than a year, you know, We're like, so, 775 00:44:34,120 --> 00:44:36,400 Speaker 1: less than a year. And when they're asked do you 776 00:44:36,440 --> 00:44:39,399 Speaker 1: want the conflict to continue or should the negotiations begin 777 00:44:39,520 --> 00:44:43,799 Speaker 1: right now? It's split. And I think that what's going 778 00:44:43,880 --> 00:44:47,400 Speaker 1: to happen as Russians are disappointed on their own forecast 779 00:44:47,440 --> 00:44:50,239 Speaker 1: of how long this is gonna last. The present of 780 00:44:50,280 --> 00:44:52,520 Speaker 1: Russians who want negotiations to begin is going to rise, 781 00:44:53,160 --> 00:44:56,439 Speaker 1: and so domestic politics are a critical constraint to how 782 00:44:56,440 --> 00:45:00,239 Speaker 1: long this war goes. Now, right now, I think Sans 783 00:45:00,280 --> 00:45:04,080 Speaker 1: are experiencing a natural reaction to this conflict. Patriotism is 784 00:45:04,160 --> 00:45:07,719 Speaker 1: high there. They've been labeled pariah's and by the way, 785 00:45:07,880 --> 00:45:11,760 Speaker 1: not just the policymakers. Regular Russians visa free travels gone. 786 00:45:12,239 --> 00:45:15,760 Speaker 1: You know, they can't leave unless it's to Serbia, Georgia, Turkey. 787 00:45:16,000 --> 00:45:19,160 Speaker 1: Right so, if you're a regular Russian, I'm pretty sure, 788 00:45:19,200 --> 00:45:22,000 Speaker 1: even a liberal one, you're pretty angry at the West, 789 00:45:22,040 --> 00:45:24,440 Speaker 1: You're angry at NATO, You're angry at the US. And 790 00:45:24,520 --> 00:45:27,440 Speaker 1: those feelings are going to help President Putin maintain and 791 00:45:27,520 --> 00:45:30,760 Speaker 1: prosecute this war for several more months. But those feelings 792 00:45:30,800 --> 00:45:34,120 Speaker 1: of patriotism dissipate. They always do. They did in the 793 00:45:34,200 --> 00:45:38,360 Speaker 1: US when the US invaded Iraq as well. Those feelings 794 00:45:38,360 --> 00:45:42,440 Speaker 1: of patriotism dissipate as you start doing a balance sheet analysis. 795 00:45:43,000 --> 00:45:46,000 Speaker 1: Has my life improved and what are the gains or 796 00:45:46,120 --> 00:45:50,759 Speaker 1: goals of our conflicting in Ukraine? And right now, all 797 00:45:50,800 --> 00:45:53,320 Speaker 1: I can see is that the goals of Russian and 798 00:45:53,400 --> 00:45:55,759 Speaker 1: Ukraine are to win the West Virginia of Ukraine again. 799 00:45:55,760 --> 00:45:58,040 Speaker 1: And I referred to West Virginia because you know, don 800 00:45:58,120 --> 00:46:00,960 Speaker 1: Bus has called like that's it. And if you're a 801 00:46:01,040 --> 00:46:04,080 Speaker 1: Russian in om Scrab Bloody Bolstock or sepiors Brick in Moscow, 802 00:46:04,120 --> 00:46:05,920 Speaker 1: at some point six months from now, you're gonna be like, 803 00:46:05,920 --> 00:46:09,040 Speaker 1: wait a minute, what what is this war about. I 804 00:46:09,080 --> 00:46:12,319 Speaker 1: can't travel, you know, like there's like I have to 805 00:46:12,360 --> 00:46:16,680 Speaker 1: buy a car without like anti lock breaking system. I 806 00:46:16,680 --> 00:46:19,400 Speaker 1: can't fly air flocked planes anymore because they're not safe 807 00:46:19,440 --> 00:46:22,000 Speaker 1: because we don't have replacement parts. I have to drive 808 00:46:22,080 --> 00:46:24,799 Speaker 1: from O Scoop bloody voll Stock. Yeah, I gotta take 809 00:46:24,840 --> 00:46:28,000 Speaker 1: the Translaborian railway. You know, these are the things that 810 00:46:28,040 --> 00:46:30,120 Speaker 1: I think Russias are gonna start asking themselves over next 811 00:46:30,160 --> 00:46:32,880 Speaker 1: six months. And that's why I do think that time 812 00:46:32,920 --> 00:46:35,279 Speaker 1: is running out for the Kremlin to get out of 813 00:46:35,320 --> 00:46:39,200 Speaker 1: this very very dangerous situation. All right, Marco, we're gonna 814 00:46:39,239 --> 00:46:41,200 Speaker 1: have to leave it there. But thank you so much 815 00:46:41,239 --> 00:46:42,960 Speaker 1: for coming on all the lots. I'm glad we could 816 00:46:42,960 --> 00:46:47,040 Speaker 1: finally do this conversation. And it's been a really interesting discussion. 817 00:46:47,080 --> 00:46:49,200 Speaker 1: So thank you. Yeah, that was great, Marco, thank you 818 00:46:49,239 --> 00:47:04,120 Speaker 1: so much. Thank you Tracy, thank you Joe. This just 819 00:47:04,239 --> 00:47:06,759 Speaker 1: proves my point that it's impossible to have a conversation 820 00:47:06,760 --> 00:47:09,920 Speaker 1: about Russia without someone bringing up World War Two. And 821 00:47:10,000 --> 00:47:12,200 Speaker 1: also I just feel like there's so many like especially 822 00:47:12,280 --> 00:47:15,720 Speaker 1: like I don't know, veteran market people. I just feel 823 00:47:15,719 --> 00:47:20,920 Speaker 1: like a vendor diagram of like veteran investor person who 824 00:47:20,960 --> 00:47:23,120 Speaker 1: sits on their couches, has watched a lot of World 825 00:47:23,120 --> 00:47:26,680 Speaker 1: War two documentaries has a two circles with a lot 826 00:47:26,719 --> 00:47:29,120 Speaker 1: of overlap. Yeah, but it was I mean, it was 827 00:47:29,200 --> 00:47:32,080 Speaker 1: really nice to get that sort of historical depth from Marco. 828 00:47:32,440 --> 00:47:35,520 Speaker 1: What I would say is I thought his point about 829 00:47:35,560 --> 00:47:39,719 Speaker 1: the war not necessarily coming to a definitive end, but 830 00:47:39,920 --> 00:47:44,080 Speaker 1: sort of the stasis idea that seems realistic. I thought 831 00:47:44,120 --> 00:47:47,040 Speaker 1: that was really interesting too. And it's one of these 832 00:47:47,080 --> 00:47:50,279 Speaker 1: things that it's like people want to look for some end, right, 833 00:47:50,360 --> 00:47:54,360 Speaker 1: or some victory or some capitulation or some side giving 834 00:47:54,440 --> 00:47:57,520 Speaker 1: up white flag or something like that. But I think, 835 00:47:57,640 --> 00:47:59,880 Speaker 1: you know, look around, and he mentioned I think there 836 00:48:00,200 --> 00:48:03,799 Speaker 1: in North Korean war is like an extreme example, but 837 00:48:03,840 --> 00:48:05,680 Speaker 1: I think if you look around the world, you probably 838 00:48:05,719 --> 00:48:09,000 Speaker 1: do see a lot of situations in which wars don't 839 00:48:09,040 --> 00:48:12,680 Speaker 1: really end with a capital e, and there are sort 840 00:48:12,719 --> 00:48:15,840 Speaker 1: of occasional skirmishes, but they're just some sort of like 841 00:48:16,160 --> 00:48:21,400 Speaker 1: permanently contested territory or some new territory that one entity 842 00:48:21,440 --> 00:48:24,759 Speaker 1: doesn't accept but clearly has some sort of political autonomy, 843 00:48:24,800 --> 00:48:27,759 Speaker 1: and that does not seem like an implausible direction that 844 00:48:27,800 --> 00:48:29,719 Speaker 1: this would go well. I mean, even if you look 845 00:48:29,719 --> 00:48:35,080 Speaker 1: at the example of Russia annexing Crimea in I mean, 846 00:48:35,120 --> 00:48:38,880 Speaker 1: that kind of didn't end. There was no definitive like 847 00:48:39,160 --> 00:48:43,040 Speaker 1: endpoint on that. It just kept going and eventually kind 848 00:48:43,080 --> 00:48:46,239 Speaker 1: of morphed into the situation that we have today. You 849 00:48:46,280 --> 00:48:49,280 Speaker 1: know that one that's interesting too. You mentioned that because 850 00:48:49,960 --> 00:48:53,520 Speaker 1: I forget we have had a couple episodes I think 851 00:48:54,239 --> 00:48:58,360 Speaker 1: um talking about how markets got over that really fast 852 00:48:58,480 --> 00:49:02,440 Speaker 1: and didn't even stop, didn't even stop, you know, buying 853 00:49:02,520 --> 00:49:05,960 Speaker 1: sovereign debt or anything of Russia's after that, despite like 854 00:49:06,120 --> 00:49:09,160 Speaker 1: it's clear like impulse to sort of wage offensive war. 855 00:49:09,640 --> 00:49:13,160 Speaker 1: And so to Marco's point, whether it's may be uncomfortable 856 00:49:13,200 --> 00:49:15,720 Speaker 1: for us, but markets can be pretty quick about forgetting 857 00:49:15,719 --> 00:49:18,239 Speaker 1: the past. Yeah, that was the episode with one of 858 00:49:18,239 --> 00:49:21,680 Speaker 1: my favorites mittuk late. But it's true, right, you had 859 00:49:21,760 --> 00:49:25,319 Speaker 1: this act of aggression from a country that, you know, 860 00:49:25,560 --> 00:49:28,680 Speaker 1: traditionally by the West has not been seen as as 861 00:49:28,719 --> 00:49:31,680 Speaker 1: a friendly ally at all. And the most that happened 862 00:49:31,920 --> 00:49:35,879 Speaker 1: was people put in, you know, some some language into 863 00:49:35,960 --> 00:49:39,040 Speaker 1: their bond documents saying like, it's possible that Russia invades 864 00:49:39,080 --> 00:49:42,000 Speaker 1: another country again, They've done it before. And then life 865 00:49:42,040 --> 00:49:45,320 Speaker 1: just continued and the government kept tapping the bond market 866 00:49:45,360 --> 00:49:49,279 Speaker 1: with relatively like little penalty. Yeah, and you know, I 867 00:49:49,360 --> 00:49:52,120 Speaker 1: just just in general, you mentioned history, and you started 868 00:49:52,160 --> 00:49:54,359 Speaker 1: we started with the World War two conversation, and as 869 00:49:54,400 --> 00:49:58,280 Speaker 1: Marco pointed out, you know, theorists of war and geopolitics 870 00:49:58,360 --> 00:50:01,200 Speaker 1: often like to come up with like grand you know, 871 00:50:01,280 --> 00:50:06,760 Speaker 1: sort of psychological or psychohistorical explanations for impulses like how 872 00:50:06,960 --> 00:50:11,960 Speaker 1: crucial this concept Ukraine is in some sort of Russian 873 00:50:12,640 --> 00:50:16,800 Speaker 1: Russian self identification of what it's true content nation should be, 874 00:50:16,920 --> 00:50:18,439 Speaker 1: or something like that. It's not to say that those 875 00:50:18,440 --> 00:50:21,400 Speaker 1: are legitimate or that Putin himself might not have some 876 00:50:21,440 --> 00:50:24,480 Speaker 1: of those same impulses, but those are really hard to 877 00:50:24,560 --> 00:50:27,440 Speaker 1: like grasp. Whereas certain sort of as he puts it, 878 00:50:27,560 --> 00:50:31,920 Speaker 1: the materialist approach, is Russia capable of launching a robust, 879 00:50:31,960 --> 00:50:36,040 Speaker 1: defensive war with stretched supply lines Like these are probably 880 00:50:36,120 --> 00:50:38,960 Speaker 1: good places to start in one's analysis, like things that 881 00:50:39,000 --> 00:50:41,759 Speaker 1: are a bit more concrete and material. Yeah, I think 882 00:50:41,760 --> 00:50:44,320 Speaker 1: that makes sense. All right, Well, we could talk about 883 00:50:44,320 --> 00:50:47,319 Speaker 1: this for a long time, but shall we leave it there? 884 00:50:47,480 --> 00:50:50,600 Speaker 1: Let's leave it there. Okay. This has been another episode 885 00:50:50,719 --> 00:50:53,200 Speaker 1: of the All Thoughts podcast. I'm Tracy Alloway. You can 886 00:50:53,239 --> 00:50:56,080 Speaker 1: follow me on Twitter at Tracy Alloway and I'm Joe 887 00:50:56,120 --> 00:50:59,120 Speaker 1: Wisn't All. You could follow me on Twitter at the Stalwork. 888 00:50:59,440 --> 00:51:02,880 Speaker 1: Follow our us Marco paypage. He's on Twitter at Geo 889 00:51:03,080 --> 00:51:07,239 Speaker 1: Underscore Papa. Follow our producer Kerman Rodriguez at Kerman Arman 890 00:51:07,640 --> 00:51:10,640 Speaker 1: and check out all of our podcasts Bloomberg under the 891 00:51:10,680 --> 00:51:13,160 Speaker 1: handle at podcasts. Thanks for listening.