Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Joe, do you like
Speaker 1: Persian food?
Speaker 2: Yeah, oh yeah, definitely, Yeah.
Speaker 1: I make I'm very proud of this, if I say
Speaker 1: so myself, A mean gourmet SAPSI. I actually don't know
Speaker 1: if I'm pronouncing it wrong, but supposedly it's the Iranian
Speaker 1: national dish, and it's a sort of like beef stew
Speaker 1: with spinach and a bunch of different herbs in it,
Speaker 1: so it's really green, and then with kidney beans. It's delicious.
Speaker 1: And the thing I like about it is you can
Speaker 1: make it and then store it and freeze it and
Speaker 1: it actually gets better over the next week or so.
Speaker 2: This guy is my idea for a restaurant, which is
Speaker 2: just like make food and then put it in the
Speaker 2: fridge for overnight and then cervic cold, because I think
Speaker 2: like everything there, every dish is better like after a
Speaker 2: night in the fridge somehow, like all the flavors come
Speaker 2: out as like, why don't we just make this to
Speaker 2: the default eating I did a dead lae.
Speaker 1: I'm both the most popular trader and most successful trader
Speaker 1: at Citadel. That is going viral. H barges.
Speaker 2: This is an after school special except.
Speaker 1: I've decided I'm going to base my entire personality going
Speaker 1: forward on campaigning for a strategic pork reserve.
Speaker 3: In the US. Black goals.
Speaker 1: These are the important question. Is that robots taking.
Speaker 3: Over the world.
Speaker 2: No, I think that like in a couple of years,
Speaker 2: the AI will do a really good job of making
Speaker 2: the Odd Lots podcast. One day that person will have
Speaker 2: the mandate of heaven.
Speaker 1: How do I get more popular and successful?
Speaker 2: We do have.
Speaker 1: You're listening to lots More where we catch up with
Speaker 1: friends about what's going on right now, because.
Speaker 2: Even when The Odd Lots is over, there's always lots more.
Speaker 1: And we really do have the perfect guest. So I'm
Speaker 1: a big fan of Iranian food. I always wanted to
Speaker 1: go to Iran and I actually try it, yes, and it
Speaker 1: makes me sad that I haven't been able to do it.
Speaker 1: And with you know, recent events, terrible events in Iran.
Speaker 1: We've had anti Islamic Republic protests that have reportedly left
Speaker 1: thousands of people dead. I'm not going to say the
Speaker 1: specific estimate because it's changing all the time, and also
Speaker 1: there's not that much transparency at the moment because the
Speaker 1: government has shut down the entire internet. But it's just sad.
Speaker 2: Look, I know very little about Iran. I also feel
Speaker 2: like in my professional career there are multiple rounds of
Speaker 2: this mm hmm, big protests, etc. Is this the moment
Speaker 2: regime change? And to your point, which you say, like,
Speaker 2: there is very little that I trust when I see
Speaker 2: it reported. Yeah, I am extremely skeptical. Oh, tonight was
Speaker 2: the biggest set of protests we've had in years. There's
Speaker 2: never been a protest. Look at which city this is.
Speaker 2: I'm sure there are well informed people talking about this.
Speaker 2: I don't have the heuristics, So no, generally I don't
Speaker 2: know who is well informed, what is actually signal versus
Speaker 2: what is noised. But obviously yet another sort of extraordinary
Speaker 2: development unfolding here in a mote.
Speaker 1: What have you been hearing?
Speaker 3: So I agree that it's difficult really to tell what
Speaker 3: are the actual facts. For sure, there's been a lot
Speaker 3: of deaths and it's horrible that it's tragic, and it's
Speaker 3: definitely thousands of deaths. But at the same time, you
Speaker 3: know there's complete blackout. What works right now is the
Speaker 3: actually outgoing landline calls, but with limited time. So, for example,
Speaker 3: my one of my analysts, who is actually in London.
Speaker 3: At the moment, he's able to speak to his parents
Speaker 3: when they call him, and then the call gets interrupted
Speaker 3: quite quickly, but at least he can hear from them.
Speaker 3: We weren't actually sure for quite some time whether the
Speaker 3: stock market was working or not because of the blackout,
Speaker 3: because it was not possible to even to read any
Speaker 3: news from the official news agencies in Iran. So everything
Speaker 3: was down, including from what I've read, including even like
Speaker 3: the internal domestic like an internet network in Iran that
Speaker 3: is that is very controlled. This was also down. Even
Speaker 3: ATM stopped working for a moment, I think, just like
Speaker 3: a one day brief moment. Cash transfers for working bank transfers.
Speaker 3: Apparently the local you know uber equivalent called snap was
Speaker 3: working all the time. However, GPS was not working for police,
Speaker 3: it was difficult to locate the driver and so on.
Speaker 3: So exactly what you said, it's difficult to understand exactly
Speaker 3: what is going on.
Speaker 1: So this is of course much of Voutel. He is
Speaker 1: the CEO of Amtalon Capital, which is a fund that
Speaker 1: specializes in Iranian equities, and there aren't that many of
Speaker 1: those around.
Speaker 2: I don't even know if there's a second one yeah.
Speaker 1: So we enjoy talking to him, and he has really
Speaker 1: good insights into what is actually happening on the ground
Speaker 1: in Iran. The first question I should ask directly is
Speaker 1: is your team okay? Are they safe and well? The
Speaker 1: people that you actually have in the country.
Speaker 3: Thank you for asking about that, Tracy. Have we have
Speaker 3: a local team in Tehran, part of which is actually
Speaker 3: in London at the moment. Now. Analysts who are in
Speaker 3: Tehrank who were in Iran, they left their round a
Speaker 3: few days ago when the protests were getting more intense
Speaker 3: too smaller cities to their hometowns, So the last time
Speaker 3: we've heard from them was a couple of days ago.
Speaker 3: At that time they were in a safe place. So
Speaker 3: I believe they're all fine.
Speaker 2: I mean, just your intuition. Let's actually set aside the
Speaker 2: question of like, is this a moment where the regime
Speaker 2: would get toppled or something like that. Let's tell it,
Speaker 2: does this feel either quantitatively or qualitatively different from various
Speaker 2: episodes over the last two decades in which suddenly the
Speaker 2: Internet is looking at fairly blurry videos of Iranian protesters
Speaker 2: and asking does this feel different somehow?
Speaker 3: Yes, it definitely does. Okay, So First of all, obviously
Speaker 3: looking at the history it teaches you not to get
Speaker 3: excited or to I don't know, hopeful for any meaningful changes. However,
Speaker 3: it does feel different and maybe maybe two things could
Speaker 3: be interesting here. First of all, as you said Joe
Speaker 3: at the beginning, it's not the first protest, it's you know,
Speaker 3: another protest over the years. And if you look at
Speaker 3: comparable situations, for example, Poland police is always close to
Speaker 3: my heart. I'm Polish originally, and Poland when we were
Speaker 3: trying to get rid of the Soviet Union, it took
Speaker 3: nine years and every year there was a massive protest.
Speaker 3: This protest you know, died and then you know, with
Speaker 3: very brutal reaction from the government. Then the next year
Speaker 3: there was another protest. In the meantime there was martial
Speaker 3: law with you know, military on the streets and so on.
Speaker 3: But finally many things came together and there was a
Speaker 3: tipping point at which everything collapsed, although it didn't collapse
Speaker 3: actually was it was a negotiated transition to a different regime.
Speaker 3: So you know, the establishment got an off rount to
Speaker 3: move on and it was a peaceful, negotiated transition. Similar
Speaker 3: in South Africa, based on what I know. I mean
Speaker 3: it was you know, happening in the eighties and then
Speaker 3: in the nineth these they were actual changes in Iran.
Speaker 3: The situation is different because for many reasons, demographics have changed.
Speaker 3: So now you have I believe, around ninety three million people,
Speaker 3: out of which fifty million is between you know, fifteen
Speaker 3: and forty nine years old, like the active part of
Speaker 3: the population, and there are many more young people who
Speaker 3: are educated, who have you know, access to internet, have
Speaker 3: their own aspirations and they don't believe they can achieve
Speaker 3: those aspirations in the current environment. And they also look
Speaker 3: at their parents and they think that they just wasted
Speaker 3: the whole generation, you know, waiting and doing nothing. So
Speaker 3: this makes them more angry and also like more decisive
Speaker 3: and confrontational. That's why I think it's you know, the
Speaker 3: protests were so intense and so widespread. Another reason another
Speaker 3: thing that's changed is like you remember a few years
Speaker 3: ago three twenty twenty two, there were twenty three there
Speaker 3: were protests around social freedoms after an I random girl,
Speaker 3: Mazamini died and this was driven by basically by social
Speaker 3: freedoms and mainly involved young people. Right now is driven
Speaker 3: by economic difficulties. And this is this touches every every
Speaker 3: single household in Iran.
Speaker 1: Yeah, I wanted to ask you about precisely this because
Speaker 1: the I don't want to say the cause of the
Speaker 1: recent unrest, but certainly one of the sparks seems to
Speaker 1: have been a further collapse in the currency, even higher inflation.
Speaker 1: And wasn't there something about a bank as well, a
Speaker 1: bank that was going bust supposedly with ties to the regime.
Speaker 1: How much did financial stress play into the current round
Speaker 1: of civil unrest, Well.
Speaker 3: One hundred percent, this was the main cost. Look, the
Speaker 3: protests started on the Grand Bazaar in Tehrans. So these bazaris,
Speaker 3: I mean people who operate the bazaars, many of them
Speaker 3: run like multimillion dollar revenue companies. There are actually it's
Speaker 3: like this massive shopping made with tens of thousands of
Speaker 3: you know, smaller or bigger traders there, and they need
Speaker 3: stability to just you know, do business, right, so protesting
Speaker 3: revolution like if this is the last thing they would
Speaker 3: think about. But they are in a situation you know
Speaker 3: where many of them are importers. To import, you need
Speaker 3: to be able to obtain a hard currency to just
Speaker 3: pay your supplier from via town China. Whoever, it's impossible
Speaker 3: to obtain to access heart currency or there's not enough
Speaker 3: of it, and that's obviously because of sanctions. Because of sanctions,
Speaker 3: exports of Iran just went down. Iran is exporting oil
Speaker 3: only to China, so Chinese dictating all the terms, including
Speaker 3: big discounts in the price that they're paying, but also
Speaker 3: the terms of the payment. You know, the China is
Speaker 3: paying A big part of their payments are in yu
Speaker 3: one and they and they arrive in bank accounts in
Speaker 3: some Chinese bands, so we run, you know, the only
Speaker 3: thing that Iran can do with it is to buy
Speaker 3: some Chinese goods. And what you run needs is to
Speaker 3: pay for essential goods like you know, some food products
Speaker 3: or some medical products that they need to import it
Speaker 3: at any cost. And once they allocate all their hard
Speaker 3: currency reserves to those essential products, there is not much
Speaker 3: left for other businesses. So this is one thing that
Speaker 3: is difficult to run a business. When you cannot obtain currency.
Speaker 3: You have you know, inflation running wild. But on the
Speaker 3: other hand, your consumers are losing their purchasing power at
Speaker 3: an extraordinary pace, so no one is buying. Basically, right,
Speaker 3: you have to spend on you know, eggs, milk and
Speaker 3: bread probably you know, more than ten percent of your
Speaker 3: average monthly salary. So it looks really difficult on the
Speaker 3: economic side.
Speaker 1: Can I ask very quickly, do you have a sense
Speaker 1: of what the current exchangery actually is, because you know,
Speaker 1: this is one of the few currencies in the world
Speaker 1: that we cannot look up on a Bloomberg terminal.
Speaker 3: Yeah, it's around one point five million real per one dollar,
Speaker 3: which means it went down around n twenty seven ninety
Speaker 3: eight percent over the last decade, and around fifty almost
Speaker 3: fifty percent since before the war with Israel last year,
Speaker 3: so over the last seven months. So it's really it's
Speaker 3: really falling fast. Oh and one more thing you asked
Speaker 3: about the bank. Yes, actually there was a bank collapsing
Speaker 3: in Iran just a few months ago. I mean, they
Speaker 3: formally recognized that it should be nationalized. And it's extraordinary
Speaker 3: because the size of the collapse, it was so big
Speaker 3: that it actually affected the budget of the country, the
Speaker 3: country budget for this year, so they had to reduce
Speaker 3: subsidies and just change you know, the expenditures of the
Speaker 3: budget to make room for the amount that they had
Speaker 3: to think. It was like five billion dollars that they
Speaker 3: had to put into this bank so that it doesn't
Speaker 3: you know, collapse. It was basically, and it's another it's
Speaker 3: another example that you know makes people angry obviously because
Speaker 3: it's it's it was a huge example of corruption. So
Speaker 3: you know, there was a local, well connected entrepreneur who
Speaker 3: was running a few construction companies and it wasn't the
Speaker 3: case that you know, he called a few banks and
Speaker 3: f for some preferential loans. Now he set up a
Speaker 3: bank offered the highest interest rates on the market. So
Speaker 3: many people just put their deposits into this bank, and
Speaker 3: then he was using those deposits to make loans to
Speaker 3: his own companies. I think it was like a majority
Speaker 3: of the loans where to his own companies. He built
Speaker 3: the biggest shopping mall in the in the region, which
Speaker 3: was you know, a crazy idea from the beginning, and
Speaker 3: many things like this, right, so another example of phonism
Speaker 3: and corruption.
Speaker 1: This is the shopping mall that's like as big as
Speaker 1: the Pentagoners, yeah.
Speaker 2: Twice as big. I read the journal article, twice as
Speaker 2: big as the Pentagon. This luxury shopping mall in Iran
Speaker 2: suffering from massive hyperinflation and all sorts. But I have
Speaker 2: to say, starting your own bank to fund your construction
Speaker 2: company a kind of a brilliant idea. B. This is
Speaker 2: why bank supervision and various things is important. Actually, this
Speaker 2: it's surreal to me, the reality of here is a
Speaker 2: country that right now, is it the fact of information
Speaker 2: black hole you mentioned, we don't know if the stock
Speaker 2: market is trading. Here's a country on Earth and right
Speaker 2: now where we are in New York or where you
Speaker 2: are in London, we can't even answer the simple question
Speaker 2: is the stock market functioning right now?
Speaker 3: Yeah? Exactly. So all the stories that I that I
Speaker 3: hear is that the way people were able to communicate
Speaker 3: is because someone had access to a starlink corpor reading
Speaker 3: in Iran, or someone's friend was working at a hospital
Speaker 3: and hospital had some access to either the White Internet
Speaker 3: or some of these local networks. So that's why I also,
Speaker 3: it's not possible for the country to keep the black
Speaker 3: out at this scale and intensity for too not because
Speaker 3: you know, the whole economy stops right Actually, the administration
Speaker 3: of the countries is not possible right without without internet.
Speaker 3: So it's it was it was sharp intense, but it
Speaker 3: has to be short term because otherwise, you know, the
Speaker 3: country will just stop.
Speaker 1: What happens to your portfolio in this particular scenario, your investments.
Speaker 3: So the stock market seems to have been stable over
Speaker 3: the last week. I don't see the exact numbers yet
Speaker 3: in terms of, for example, liquidity, and I and I
Speaker 3: suspect that you know, there was not much going on
Speaker 3: because I'm not sure if even local investors had a
Speaker 3: chance to were able to put orders online. Right maybe
Speaker 3: maybe it was all school, you know, calling your broker
Speaker 3: or going to your broker. So it was stable, so
Speaker 3: nothing Actually actually it went up by four percent and
Speaker 3: the currency was stable to the currency is easier to
Speaker 3: manipulate by by the central bank using some reserves, especially
Speaker 3: when when there's low liquidity. So I think, what would
Speaker 3: be more interesting in the next few weeks. So, for example,
Speaker 3: what happened last year after the war when there was
Speaker 3: a war between Iran and Israel in June, the stock
Speaker 3: market was shut down for around two weeks. After it reopened,
Speaker 3: the prices didn't change much, but then local investors, mainly
Speaker 3: retail investors, this retail driven market started selling because they
Speaker 3: didn't have access to their funds, so they started selling
Speaker 3: at any price just to get money out. And there
Speaker 3: was a massive selling pressure that lasted from July until September.
Speaker 3: And when the buyer saw a selling pressure like this,
Speaker 3: so every day you can see the queue of unfilled
Speaker 3: orders building up that will go to the next day
Speaker 3: and the next day and the next day. So people
Speaker 3: just stopped buying as well, obviously, so the market went
Speaker 3: down like irrespective of you know which saws wood quality,
Speaker 3: would valuation whatever, just a massive sell off which lasted
Speaker 3: two three months, and then it rebounded. So it went
Speaker 3: down like in dollar terms from let's say index of
Speaker 3: I don't know, three hundred sixty to two hundred and thirty. Yes,
Speaker 3: I'm if I'm looking at this correctly, so let's say
Speaker 3: thirty six percent in dollar terms in just two and
Speaker 3: a half months. The selling pressure then was exhausted. All
Speaker 3: the sending, all the sales were absorbed. Valuations went down
Speaker 3: to the one of the I think very close levels
Speaker 3: to the like all time lows in the history of
Speaker 3: the of the Iran and stock market, which is around
Speaker 3: twenty years old. So you know, it's always cheap, right,
Speaker 3: but this time it went you know below three times
Speaker 3: net turnings and median media for the market, right, so
Speaker 3: you could probably find stocks, you know, two times earnings.
Speaker 3: Then it rebounded, but it's still around, you know, like
Speaker 3: three and a half times earnings. So valuations are very
Speaker 3: much still driven by war. So everything is priced for war, right,
Speaker 3: So that's that's the sentiment hasn't really recovered after the
Speaker 3: last war, and now we had protests, so everything in
Speaker 3: Iran is price for war basically.
Speaker 2: You know, in the news, obviously we hear I think
Speaker 2: we get a better grasp and again I plead a
Speaker 2: lot of ignorance. That's not something I have a lot
Speaker 2: of familiarity with. But what the protesters want and you
Speaker 2: hear about young people and wanting more freedoms, can you
Speaker 2: give a sort of I don't know, political economy breakdown
Speaker 2: of like you know, you don't hear about the people
Speaker 2: who obviously don't want regime change generally speaking, they we
Speaker 2: don't know much about them or who they are, who
Speaker 2: are the sort of different factions socioeconomically that and how
Speaker 2: they allocate to either side sort of I guess a
Speaker 2: class understanding of the tensions.
Speaker 3: So there's a big group of young people and young
Speaker 3: people want freedom and opportunities and like fair rules in
Speaker 3: the economy. Basically there are older people, adults in larger
Speaker 3: cities which are more liberal. Definitely run they run is
Speaker 3: a big city, it's like twelve million people altogether, and
Speaker 3: their run. Life in the run looks different to most
Speaker 3: other cities in Iran, with you know, women no longer
Speaker 3: wearing hg J apps. It's much more open, it's much
Speaker 3: more liberal. But also there's a big group of people
Speaker 3: who are very very religious and they support the government
Speaker 3: that is also there is a religious government. So the
Speaker 3: concept of Islamic Republic is very close close to their
Speaker 3: part and they support it and as part of their
Speaker 3: religion and part of their traditions. So in terms of
Speaker 3: you know, how they observe religious holidays, you know, going
Speaker 3: to mosque, dressing in a certain way and so on.
Speaker 3: And now how does this split, I would say that
Speaker 3: probably between ten and thirty percent is the religious part.
Speaker 3: Ten like very religious and just listening to the to
Speaker 3: the prayer and you know, whatever political advice comes from
Speaker 3: the mosque. And so one of the afard of the
Speaker 3: society just being religious and supporting the Islamic Republic as
Speaker 3: a religious state. Just a small note that it's an
Speaker 3: Islamic republic, but very tolerant of other religions. I mean,
Speaker 3: all the churches work normally there, from Jewish to Christian
Speaker 3: to the Austrian. You know, everyone is doing his own
Speaker 3: thing in terms of religion in Iran and it's okay.
Speaker 3: And the rest are people who want a modern, open
Speaker 3: state with the young, including the young people who want
Speaker 3: it fast basically and want to be able to follow
Speaker 3: their dreams and aspirations. So that would be the breakdown.
Speaker 1: So I should just say we're recording this on January fifteenth.
Speaker 1: The headlines are coming pretty fast nowadays, so who knows
Speaker 1: what will happen by the time we publish this episode
Speaker 1: in just twenty four hours or so. But the latest
Speaker 1: headline is that tensions seem to have eased a little
Speaker 1: bit with the US because the Iranian government said they're
Speaker 1: not going to kill any more people, told Trump they're
Speaker 1: not going to execute more people. How should we interpret that?
Speaker 1: Is this all over or do you expect some unrest
Speaker 1: to continue?
Speaker 3: Well, it's hard to predict. It's very unpredictable. I mean,
Speaker 3: unrest is difficult to predict. The dynamics around the unrest.
Speaker 3: Then you know, the government of Iran is difficult to predict.
Speaker 3: But you know the government of the US is difficult
Speaker 3: to predict because you know right now, yesterday today, yesterday
Speaker 3: you had news, you had news that President Trump was
Speaker 3: saying that, yes he got information that you know, killing stopped.
Speaker 3: So this is what he was, you know, what he
Speaker 3: wanted to achieve. So it looks better. The day before
Speaker 3: everyone thought that, you know, they are getting ready to
Speaker 3: strike Iran. So I think those things can change in
Speaker 3: twenty four hours. So it's just impossible to predict. The
Speaker 3: only thing I would I would say is that because
Speaker 3: it does feel different this time, the scale of the
Speaker 3: protests and the reasons of the protest, and also the
Speaker 3: government just comes and you know, their way out of
Speaker 3: the problem. It's the financial situation is really tough. But
Speaker 3: some changes are likely. I'm not saying that in the
Speaker 3: next few days or weeks. Maybe it will take months,
Speaker 3: but I think it's just moving this direction. So there
Speaker 3: are some changes that are like here, and many scenarios
Speaker 3: are possible. I mean, look at Venezuela. There was no
Speaker 3: rigion change there, right, I mean, there was a like again,
Speaker 3: negotiated solution with you know, Maduro taken out and the
Speaker 3: rest of the government and establishment just same place, but
Speaker 3: they have to cooperate, right, So there's probably more than
Speaker 3: one scenario possible for the future.
Speaker 1: What a world we live in where civil unrest is
Speaker 1: becoming a major investment theme. Thank you Macha for coming
Speaker 1: on lots More. Really appreciate another update from you.
Speaker 3: Thank you for having me.
Speaker 2: Lots More is produced by Carmen Rodriguez and dash Ol Bennett,
Speaker 2: with help from Moses Onam and kel Brooks.
Speaker 1: Our sound engineer is Blake Maples.
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