1 00:00:12,720 --> 00:00:16,400 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:16,440 --> 00:00:18,600 Speaker 1: My name is Mike Reagan. I'm a senior editor at 3 00:00:18,600 --> 00:00:23,840 Speaker 1: Bloomberg and Mboda across asset reporter with Bloomberg, and this 4 00:00:23,960 --> 00:00:26,840 Speaker 1: week on the show, Well, it can feel awkward and 5 00:00:27,080 --> 00:00:29,960 Speaker 1: a little heartless to talk about markets at times like this, 6 00:00:30,040 --> 00:00:33,920 Speaker 1: when innocent lives are being lost, families are being torn apart, 7 00:00:34,080 --> 00:00:37,360 Speaker 1: and young people's futures are being destroyed by the violence 8 00:00:37,400 --> 00:00:40,880 Speaker 1: in Ukraine. And we get that. So let's just start 9 00:00:40,920 --> 00:00:45,199 Speaker 1: off with a heartfelt wish for peace. As Albert Einstein 10 00:00:45,240 --> 00:00:47,960 Speaker 1: once said, peace cannot be kept by force. It can 11 00:00:47,960 --> 00:00:51,880 Speaker 1: only be achieved by understanding. So we want to first 12 00:00:51,880 --> 00:00:54,680 Speaker 1: try to understand what caused this war and what might 13 00:00:54,720 --> 00:00:57,639 Speaker 1: bring it to an end and when, and then we'll 14 00:00:57,640 --> 00:01:00,720 Speaker 1: get into what it means for markets. After all, with 15 00:01:00,800 --> 00:01:04,080 Speaker 1: crude oil surging and the ruble crashing, as the US 16 00:01:04,160 --> 00:01:07,039 Speaker 1: and Europe leverage the financial system as their best weapon 17 00:01:07,120 --> 00:01:10,720 Speaker 1: to confront Vladimir Putin, markets and finance actually are an 18 00:01:10,720 --> 00:01:14,119 Speaker 1: important element of this situation and maybe even the best 19 00:01:14,120 --> 00:01:17,280 Speaker 1: hope to bring about peace. This week's guest is an 20 00:01:17,280 --> 00:01:20,520 Speaker 1: expert on both geo politics and markets, and he's gonna 21 00:01:20,560 --> 00:01:24,400 Speaker 1: help us make sense of this tragedy unfolding before our eyes. Yeah, 22 00:01:24,400 --> 00:01:28,160 Speaker 1: I want to welcome Marco. He's the chief strategist at 23 00:01:28,160 --> 00:01:30,280 Speaker 1: the clock Tour Group and he's the author of the 24 00:01:30,319 --> 00:01:33,560 Speaker 1: book Geopolitical Alpha, and Marco, I want to welcome you 25 00:01:33,600 --> 00:01:36,160 Speaker 1: to the show. Thank you so much for Dona and Mike. 26 00:01:36,200 --> 00:01:38,720 Speaker 1: It's it's such a pleasure to be back. Unfortunately under 27 00:01:38,720 --> 00:01:44,480 Speaker 1: these circumstances, but you know it is the professional we chose. Yeah, yeah, Well, 28 00:01:44,560 --> 00:01:47,200 Speaker 1: we appreciate your time. Marco. It's a good week to 29 00:01:47,240 --> 00:01:50,960 Speaker 1: have you. Um And if anyone's curious about Marco's background 30 00:01:51,040 --> 00:01:53,840 Speaker 1: and what his firm, clock Tower Group does, I would 31 00:01:53,880 --> 00:01:56,360 Speaker 1: say you could go back to the podcast from February 32 00:01:56,400 --> 00:01:59,400 Speaker 1: of last year. We got into exactly what clock Tower 33 00:01:59,480 --> 00:02:02,640 Speaker 1: is all about out and Marco's background. So today we 34 00:02:02,680 --> 00:02:04,840 Speaker 1: just want to get right into it. And uh, Mark, 35 00:02:04,880 --> 00:02:06,520 Speaker 1: I wanted to ask you about your last note. Now, 36 00:02:06,560 --> 00:02:10,160 Speaker 1: I've got respect for a strategist who admits they're wrong 37 00:02:10,280 --> 00:02:12,679 Speaker 1: from time to time, and I noticed in your note, 38 00:02:12,680 --> 00:02:15,440 Speaker 1: you know you would assigned a very low probability of 39 00:02:15,480 --> 00:02:19,160 Speaker 1: a full blown invasion of Russia. And I bring this 40 00:02:19,360 --> 00:02:21,760 Speaker 1: up not to heckle you, but because I think it's 41 00:02:21,760 --> 00:02:26,119 Speaker 1: an important point because you're not You're not the only 42 00:02:26,160 --> 00:02:28,919 Speaker 1: one though a lot of people, a lot of smart people, 43 00:02:28,919 --> 00:02:31,720 Speaker 1: people that know this stuff the best, I think, would 44 00:02:31,720 --> 00:02:34,359 Speaker 1: have agreed with you. You know, the sort of storyline 45 00:02:34,840 --> 00:02:38,480 Speaker 1: for many experts was that Russia could be bluffing, or 46 00:02:38,760 --> 00:02:42,040 Speaker 1: they could only be interested in those regions of the 47 00:02:42,080 --> 00:02:44,640 Speaker 1: east of Ukraine that they have sort of already in 48 00:02:44,680 --> 00:02:47,280 Speaker 1: control of. But I think it's important to sort of 49 00:02:47,480 --> 00:02:50,320 Speaker 1: try to figure out what everyone got wrong right now, 50 00:02:50,400 --> 00:02:52,600 Speaker 1: especially because you know, you hear all the pundits now 51 00:02:52,639 --> 00:02:57,440 Speaker 1: talking about Vladimir Putin and wondering and saying, he's not 52 00:02:57,480 --> 00:02:59,160 Speaker 1: the guy we thought he was. He's not the guy 53 00:02:59,200 --> 00:03:02,280 Speaker 1: he used to be. There there's concerns about, you know, 54 00:03:02,639 --> 00:03:05,760 Speaker 1: whether he's mentally fit or or even some kind of 55 00:03:05,760 --> 00:03:10,240 Speaker 1: physical ailments that's affecting his decisions. But I'm curious what 56 00:03:10,280 --> 00:03:13,520 Speaker 1: your perspective is. What did everyone get wrong about thinking 57 00:03:13,560 --> 00:03:16,280 Speaker 1: this was most likely a bluff? So I'll tell you 58 00:03:16,320 --> 00:03:19,799 Speaker 1: what I got wrong. You know, my framework is based 59 00:03:19,840 --> 00:03:23,240 Speaker 1: on material constraints the policy makers, and I call it 60 00:03:23,280 --> 00:03:26,760 Speaker 1: a framework on purpose, right, because not a theory it's 61 00:03:26,800 --> 00:03:29,480 Speaker 1: not a method, it's a framework that allows investors to 62 00:03:29,520 --> 00:03:33,079 Speaker 1: have some sort of a set of probabilities. Some center 63 00:03:33,200 --> 00:03:36,080 Speaker 1: is parabous sense of where we are, what's the path 64 00:03:36,160 --> 00:03:39,760 Speaker 1: of the least resistance you know, uh, to policy maker 65 00:03:39,800 --> 00:03:43,480 Speaker 1: action and in the in this particular case. Um. Actually, 66 00:03:43,480 --> 00:03:47,600 Speaker 1: what's what's interesting is that the set of constraints that 67 00:03:47,760 --> 00:03:52,720 Speaker 1: I elucidated in my research is absolutely acting itself out. 68 00:03:52,720 --> 00:03:56,480 Speaker 1: It's manifesting in reality as we speak, uh. And it's 69 00:03:56,480 --> 00:03:59,960 Speaker 1: manifesting itself in a couple of ways. Ukrainians are fighting really, 70 00:04:00,160 --> 00:04:04,240 Speaker 1: really hard. It is an absolute like fallacy that there 71 00:04:04,240 --> 00:04:08,680 Speaker 1: are pro Russians and any spot of Ukraine left, they 72 00:04:08,680 --> 00:04:11,880 Speaker 1: are in Donetskonsk, in Crimea, so Putin has already kind 73 00:04:11,880 --> 00:04:14,200 Speaker 1: of you know, annexed him. The second is that Russian 74 00:04:14,240 --> 00:04:18,479 Speaker 1: military has not had any experience fighting real wars. And 75 00:04:18,600 --> 00:04:22,440 Speaker 1: third is that Ukraine is a very logistically difficult place 76 00:04:22,520 --> 00:04:25,560 Speaker 1: to invade. So those those constraints are manifesting itself. And 77 00:04:25,560 --> 00:04:27,640 Speaker 1: and so I guess what I'm saying is, you know, 78 00:04:27,839 --> 00:04:30,719 Speaker 1: it's still very very valuable to be focused on the 79 00:04:30,760 --> 00:04:35,880 Speaker 1: material reality, because if policymaker, you're trying to predict ignores 80 00:04:35,960 --> 00:04:38,000 Speaker 1: the constraints you laid out. Then you were right in 81 00:04:38,040 --> 00:04:40,839 Speaker 1: how you laid it out. Then you can chart a 82 00:04:41,040 --> 00:04:45,880 Speaker 1: path forward once they have surprised you with their decision making. Now, 83 00:04:45,960 --> 00:04:47,960 Speaker 1: why did we all get it wrong? I think, um, 84 00:04:48,480 --> 00:04:52,000 Speaker 1: I think what we misunderstood as two things. One, Putin's 85 00:04:52,120 --> 00:04:54,520 Speaker 1: r o I on geopolitical events has been very high. 86 00:04:54,520 --> 00:04:56,960 Speaker 1: He's been very very cautious empirically. I can prove this 87 00:04:57,000 --> 00:05:00,080 Speaker 1: with his previous actions. And the second I think is 88 00:05:00,120 --> 00:05:02,680 Speaker 1: that it's not clear that we did get it wrong. 89 00:05:02,720 --> 00:05:04,000 Speaker 1: And what I mean by that is that there is 90 00:05:04,000 --> 00:05:06,320 Speaker 1: still an off ramp where this becomes a Georgia two 91 00:05:06,360 --> 00:05:09,799 Speaker 1: thousand eight scenario, where in that initial stage of the attack, 92 00:05:10,040 --> 00:05:13,360 Speaker 1: it looks like a wide occupation and an attack against 93 00:05:13,400 --> 00:05:16,400 Speaker 1: the entire country, but it's actually going to end up 94 00:05:16,440 --> 00:05:19,480 Speaker 1: being much more limited, where he withdraws from a lot 95 00:05:19,520 --> 00:05:21,320 Speaker 1: of the areas and focuses on what he wants. That's 96 00:05:21,320 --> 00:05:23,280 Speaker 1: what happening to thousand in Georgia. And so that's something 97 00:05:23,279 --> 00:05:25,080 Speaker 1: that I would just add, like, let's see how this 98 00:05:25,160 --> 00:05:28,600 Speaker 1: play out, especially as pain continues to be exerted in 99 00:05:28,680 --> 00:05:33,000 Speaker 1: Russian military, Russian economy and politics. Marco can I actually 100 00:05:33,120 --> 00:05:36,320 Speaker 1: ask you to start with a really basic question. And 101 00:05:36,520 --> 00:05:38,799 Speaker 1: I've read a ton about this, and I'm really interested 102 00:05:38,839 --> 00:05:41,520 Speaker 1: in this, and I'm struck by how many theories there are, 103 00:05:41,600 --> 00:05:45,480 Speaker 1: But what is your theory for the why the invasion happened? 104 00:05:45,480 --> 00:05:48,159 Speaker 1: Can you maybe lay out some of the factors, whether 105 00:05:48,240 --> 00:05:51,640 Speaker 1: it's you know, we've heard a lot about thwarting NATO 106 00:05:51,920 --> 00:05:55,800 Speaker 1: or putin sphere, of being so close to a democratically 107 00:05:55,839 --> 00:06:00,200 Speaker 1: elected country or etcetera. What is top of mind for you? 108 00:06:00,200 --> 00:06:02,400 Speaker 1: You know, I think all of those are very good theories. 109 00:06:02,440 --> 00:06:04,839 Speaker 1: I mean, to me, the fundamental issue here is that 110 00:06:05,080 --> 00:06:09,360 Speaker 1: Russian policy, over over hundreds of years has been colored 111 00:06:09,400 --> 00:06:14,080 Speaker 1: by deep paranoia of vulnerability. And it's really born out 112 00:06:14,120 --> 00:06:18,960 Speaker 1: of history which is bloody. Many many, many people and 113 00:06:19,120 --> 00:06:21,719 Speaker 1: leaders have tried to conquer Russian and knock it out. 114 00:06:22,320 --> 00:06:26,240 Speaker 1: And the second is a really vulnerable geographical position. And 115 00:06:26,320 --> 00:06:28,000 Speaker 1: that's something that you know, I'm not the only one 116 00:06:28,040 --> 00:06:31,120 Speaker 1: that has mentioned that, but this is this is imprinted 117 00:06:31,240 --> 00:06:35,760 Speaker 1: on Russian psyche. Especially if you come to rule Russia, 118 00:06:36,240 --> 00:06:38,560 Speaker 1: you come to learn the lessons of its history, which 119 00:06:38,560 --> 00:06:43,120 Speaker 1: is that leaders who took geographical and security of Russia 120 00:06:43,720 --> 00:06:47,919 Speaker 1: lightly are not remembered with glory, and so those that 121 00:06:48,000 --> 00:06:51,599 Speaker 1: take it seriously, you know, they try to secure Russian 122 00:06:51,600 --> 00:06:53,599 Speaker 1: and the biggest problem right now for Russia is that 123 00:06:53,600 --> 00:06:56,440 Speaker 1: when you look at its western borders, the fact of 124 00:06:56,480 --> 00:06:59,479 Speaker 1: the matter is that it's it's vulnerable, it's exposed, and 125 00:06:59,520 --> 00:07:02,359 Speaker 1: so has tried to explain this to the West for 126 00:07:02,400 --> 00:07:05,039 Speaker 1: a very long time. I do think the West didn't 127 00:07:05,040 --> 00:07:07,400 Speaker 1: really listen to it seriously. And I think what you 128 00:07:07,440 --> 00:07:10,440 Speaker 1: saw over the last twelve months especially is a ramping 129 00:07:10,520 --> 00:07:12,760 Speaker 1: up in rhetoric, not so much from Paris in Berlin, 130 00:07:13,040 --> 00:07:17,000 Speaker 1: but specifically from Washington, d C. On Ukrainian membership NATO. 131 00:07:17,800 --> 00:07:19,760 Speaker 1: You know, and now now listen, like you know, I'm 132 00:07:19,800 --> 00:07:22,520 Speaker 1: not here to tell you that this is like America's 133 00:07:22,520 --> 00:07:26,800 Speaker 1: fault in Putin his crossing an international border. He didn't 134 00:07:26,840 --> 00:07:29,160 Speaker 1: have to do that. But the rhetoric out of the 135 00:07:29,240 --> 00:07:32,200 Speaker 1: US has been much more stringent. There was also, you know, 136 00:07:32,280 --> 00:07:36,240 Speaker 1: the U s sent lethal weapon to Ukraine, and you know, 137 00:07:36,280 --> 00:07:39,000 Speaker 1: there was things that US has said that we're really interesting. 138 00:07:39,000 --> 00:07:42,840 Speaker 1: For example, territorial disputes between Ukraine and Russia do not 139 00:07:42,880 --> 00:07:46,200 Speaker 1: preclude Ukraine's membership to Tornado. That's something the White House 140 00:07:46,200 --> 00:07:48,360 Speaker 1: said recently. And the truth is, like, of course it does. 141 00:07:49,320 --> 00:07:52,680 Speaker 1: In fact, Croatia and Slovenia like they had a dispute 142 00:07:52,760 --> 00:07:55,040 Speaker 1: and Gratia wasn't allowed to get in too NATO until 143 00:07:55,040 --> 00:07:57,200 Speaker 1: it resolved that territorial dispute. There was a silly one 144 00:07:57,240 --> 00:07:59,240 Speaker 1: in the on the coast. But the point is that 145 00:07:59,400 --> 00:08:01,880 Speaker 1: US was just kind of writing checks. It doesn't have 146 00:08:01,920 --> 00:08:05,200 Speaker 1: any intention of cashion. I think Putin called, you know, 147 00:08:05,280 --> 00:08:07,560 Speaker 1: kind of America's bluff and think what he What I 148 00:08:07,600 --> 00:08:09,960 Speaker 1: think he's doing though, is I don't think that the 149 00:08:10,040 --> 00:08:13,200 Speaker 1: Kremlin is trying to annex. We can talk about how 150 00:08:13,600 --> 00:08:15,480 Speaker 1: ludicrous that would be. And this is where my point 151 00:08:15,480 --> 00:08:18,280 Speaker 1: of material constraints really hits in. I think what he's 152 00:08:18,320 --> 00:08:23,040 Speaker 1: trying to signal to Kiev in stark terms is how 153 00:08:23,080 --> 00:08:26,280 Speaker 1: alone they really are and how no one's coming to 154 00:08:26,360 --> 00:08:30,080 Speaker 1: save them. And that's something that Lensky President Jelenski said 155 00:08:30,120 --> 00:08:31,960 Speaker 1: at the very onset of the war. He said, we 156 00:08:31,960 --> 00:08:35,680 Speaker 1: will offer neutrality. We now know the truth. I'm fair rephrasing, 157 00:08:35,760 --> 00:08:37,800 Speaker 1: but he basically said, look, no one's coming to save us. 158 00:08:37,920 --> 00:08:40,760 Speaker 1: There is no NATO membership and offer we do need 159 00:08:40,840 --> 00:08:43,280 Speaker 1: to offer Russian neutrality. I think that's an offer that 160 00:08:43,360 --> 00:08:46,920 Speaker 1: Putin would take to actually declare victory, raise the mission 161 00:08:46,920 --> 00:09:00,040 Speaker 1: accomplished banner and move on. Mark. Could you think the 162 00:09:00,040 --> 00:09:03,360 Speaker 1: the sanctions, uh that have been imposed? You know, it's 163 00:09:03,400 --> 00:09:07,200 Speaker 1: a long list. Obviously, the major banks, almost all the 164 00:09:07,240 --> 00:09:11,720 Speaker 1: major banks kicked off the Swift international bank messaging system, 165 00:09:11,920 --> 00:09:17,080 Speaker 1: basically isolating Russia's financial system from the rest of the world. Um, 166 00:09:17,240 --> 00:09:22,160 Speaker 1: the assets seizures, the central bank assets being seized around 167 00:09:22,200 --> 00:09:24,480 Speaker 1: the world, on and on and on, threats to the 168 00:09:24,520 --> 00:09:28,640 Speaker 1: oligarch's yachts and property around the world. Are these enough 169 00:09:28,679 --> 00:09:33,400 Speaker 1: to influence Prutent's behavior and to sort of piggyback on that. 170 00:09:33,440 --> 00:09:35,920 Speaker 1: I think there's a lot of speculation in the West 171 00:09:36,000 --> 00:09:39,000 Speaker 1: that they possibly could be enough to tugger some sort 172 00:09:39,000 --> 00:09:43,160 Speaker 1: of coup or some sort of overthrow of Putin as leader. 173 00:09:44,000 --> 00:09:45,760 Speaker 1: How do you see all that playing out? Are the 174 00:09:45,800 --> 00:09:50,960 Speaker 1: sanctions gonna be enough to influence his behavior? Even topple him? Hey, listen, 175 00:09:50,960 --> 00:09:55,240 Speaker 1: I don't shy for making calls. I I I couched 176 00:09:55,280 --> 00:09:58,720 Speaker 1: him me probabilities, you know, And I always always offer 177 00:09:58,800 --> 00:10:01,080 Speaker 1: hedges to my positions. I would say that I give 178 00:10:01,120 --> 00:10:04,679 Speaker 1: Prutin twelve months, and I'm taking the under When policymakers 179 00:10:04,760 --> 00:10:09,880 Speaker 1: make extraordinarily bad decisions that ignore their material constraints, they 180 00:10:09,880 --> 00:10:13,600 Speaker 1: get punished. And listen, I'm just a guy, okay. I mean, 181 00:10:13,800 --> 00:10:16,280 Speaker 1: you know, me and Ville Donna were from the same region. 182 00:10:16,440 --> 00:10:19,000 Speaker 1: We grew up with this kind of stuff, unfortune. So 183 00:10:19,080 --> 00:10:20,920 Speaker 1: I've been following this kind of stuff since I was 184 00:10:20,960 --> 00:10:23,800 Speaker 1: sixty years old. So I have a lot of experience 185 00:10:23,920 --> 00:10:27,680 Speaker 1: analyzing wars, not just professional and I will say this 186 00:10:27,760 --> 00:10:30,960 Speaker 1: to you. I'm just a guy sitting on Santa Monica 187 00:10:31,000 --> 00:10:35,320 Speaker 1: Beach doing my research for investors. And I called the 188 00:10:35,360 --> 00:10:39,959 Speaker 1: material constraints to Russia perfectly, So how the heck that 189 00:10:40,240 --> 00:10:45,560 Speaker 1: Vladimi Reprutin not do the same? That is an egregious, 190 00:10:45,840 --> 00:10:49,880 Speaker 1: egregious mistake by a policy maker. And I mean that objectively. 191 00:10:49,920 --> 00:10:51,839 Speaker 1: I'm not even mentioning the civilian that's and all that 192 00:10:51,880 --> 00:10:54,640 Speaker 1: other stuff in the pariah status for Russia. Leave that aside. 193 00:10:55,000 --> 00:10:58,680 Speaker 1: The forty mile convoy. The forty mile convoy, that's not 194 00:10:58,720 --> 00:11:01,760 Speaker 1: a sign of Russian power, that's a sign of Russian weakness. 195 00:11:01,800 --> 00:11:03,640 Speaker 1: They can't move that thing. That thing is more backed 196 00:11:03,720 --> 00:11:06,240 Speaker 1: up than I thirty five from Waco to Dallas, it 197 00:11:06,320 --> 00:11:08,960 Speaker 1: might be less lethal, to be quite frank with you, 198 00:11:09,559 --> 00:11:11,600 Speaker 1: I mean, I mean, if you are a country with 199 00:11:12,200 --> 00:11:16,839 Speaker 1: a modicum of look down capability for your air force, 200 00:11:16,920 --> 00:11:18,760 Speaker 1: like if you have fighter jets that can shoot down, 201 00:11:18,840 --> 00:11:21,720 Speaker 1: which is rare, but if you have them right now, 202 00:11:21,760 --> 00:11:23,640 Speaker 1: the message you're getting from this conflict is you can 203 00:11:23,679 --> 00:11:28,160 Speaker 1: defeat two Russians in the war, like Belgium can defeat 204 00:11:28,640 --> 00:11:31,240 Speaker 1: Russia in the war right now. And so that's where Mike, 205 00:11:31,360 --> 00:11:34,560 Speaker 1: that's why I'm so um, you know, adamant that this 206 00:11:34,559 --> 00:11:36,760 Speaker 1: this mistake will be punished not by like a coup, 207 00:11:36,880 --> 00:11:39,040 Speaker 1: not by something, but it will be punished by the 208 00:11:39,160 --> 00:11:42,640 Speaker 1: material reality. One thing that I would mention is, you know, 209 00:11:42,640 --> 00:11:46,120 Speaker 1: speaking of the Balkan Wars, I mean Slobano Milosh very 210 00:11:46,160 --> 00:11:49,360 Speaker 1: similar mistakes that he made throughout the crises, and he 211 00:11:49,440 --> 00:11:52,800 Speaker 1: kept he kept coming to the negotiating table. The data 212 00:11:52,800 --> 00:11:54,960 Speaker 1: and accords are a good example of how you know 213 00:11:55,080 --> 00:11:58,920 Speaker 1: that happened, um, And obviously domestically in Serbia he had 214 00:11:58,920 --> 00:12:01,280 Speaker 1: to declare victory, uh and say, oh, we got what 215 00:12:01,320 --> 00:12:05,000 Speaker 1: we wanted. But the point is that don't confuse madness, 216 00:12:05,000 --> 00:12:09,600 Speaker 1: temporary madness with permanent you know, um lunacy, and so 217 00:12:09,679 --> 00:12:11,760 Speaker 1: I do think that the constraints are going to act 218 00:12:12,080 --> 00:12:14,480 Speaker 1: over the next couple of weeks, and at some point 219 00:12:14,480 --> 00:12:16,080 Speaker 1: I think there is an off ramp. Now, am I 220 00:12:16,120 --> 00:12:18,800 Speaker 1: sanguine on the market, No, I do think that this 221 00:12:19,000 --> 00:12:21,240 Speaker 1: conflict could be different than others, and I do think 222 00:12:21,280 --> 00:12:26,520 Speaker 1: there's a considerable still downside risk. Mike mentioned the slew 223 00:12:26,559 --> 00:12:30,760 Speaker 1: of sanctions that the West has already announced against Russia. 224 00:12:30,960 --> 00:12:33,960 Speaker 1: One thing I really haven't heard much about is what 225 00:12:34,240 --> 00:12:38,199 Speaker 1: other sanctions or what else the West and allies can 226 00:12:38,240 --> 00:12:41,800 Speaker 1: deploy against Russia. What else is left to do? Well? 227 00:12:41,800 --> 00:12:45,040 Speaker 1: The Swift sanctions have been applied very tepidally, you know, 228 00:12:45,160 --> 00:12:48,959 Speaker 1: because basically the Germans, the Italians, a lot of the 229 00:12:49,000 --> 00:12:52,720 Speaker 1: importers don't want to curtail their ability to transact with 230 00:12:52,920 --> 00:12:56,280 Speaker 1: Russian financial entities due to the energy section. So I 231 00:12:56,320 --> 00:12:58,840 Speaker 1: think that, you know, a permanent expulsion of all financial 232 00:12:58,840 --> 00:13:02,800 Speaker 1: institutions of from Swift would be a game change. So 233 00:13:02,840 --> 00:13:06,040 Speaker 1: that's the first. The second is just an actual embarko 234 00:13:06,360 --> 00:13:09,160 Speaker 1: on Russian exports and energy. I don't see that happening, 235 00:13:09,320 --> 00:13:14,440 Speaker 1: but I worry that if it takes longer for President 236 00:13:14,440 --> 00:13:18,480 Speaker 1: putin to realize his constraints. If he takes longer, it 237 00:13:18,600 --> 00:13:22,320 Speaker 1: might be Russia that self imposes. Actually, it's exports, you know. 238 00:13:22,320 --> 00:13:26,800 Speaker 1: So you're talking palladium, global production, you're talking potash, Russian 239 00:13:26,840 --> 00:13:31,120 Speaker 1: Bellarus together for masure. The Bello is put on its 240 00:13:31,120 --> 00:13:33,480 Speaker 1: exports a couple of weeks ago because of sanctions. So 241 00:13:34,440 --> 00:13:37,840 Speaker 1: that's a really significant hits to already climbing food prices. 242 00:13:38,400 --> 00:13:40,880 Speaker 1: Uh and then obviously things like aluminum, nickel, and so on. 243 00:13:40,960 --> 00:13:43,480 Speaker 1: So I think that that's what I fear Bill Donna, 244 00:13:43,480 --> 00:13:45,959 Speaker 1: and I fear that that it mutates into the seventy 245 00:13:46,040 --> 00:13:48,719 Speaker 1: three young people war scenario. So you know, if you 246 00:13:48,760 --> 00:13:50,760 Speaker 1: look at my book, I have this fancy table of 247 00:13:50,800 --> 00:13:53,000 Speaker 1: every every conflict is the Second World War, and like 248 00:13:53,040 --> 00:13:55,840 Speaker 1: the message of the table is by on the side 249 00:13:55,880 --> 00:13:58,960 Speaker 1: of the cannon's empirically proven, you know. And I've seen 250 00:13:59,000 --> 00:14:01,480 Speaker 1: that table like star people are quoting me like, oh, 251 00:14:01,600 --> 00:14:03,839 Speaker 1: you know, Marco Poppy, she loves this, you know, like buying, 252 00:14:04,080 --> 00:14:07,160 Speaker 1: and I'm like, whoa, whoa, whoa. The one war in 253 00:14:07,240 --> 00:14:11,640 Speaker 1: that table that didn't it wasn't an opportunity to buy 254 00:14:12,000 --> 00:14:14,280 Speaker 1: was nineteen seventy three poor and if you think about 255 00:14:14,320 --> 00:14:16,559 Speaker 1: the macro context we're in today, and then it's kind 256 00:14:16,559 --> 00:14:19,200 Speaker 1: of similar. You know, these are events that are basically 257 00:14:19,680 --> 00:14:22,480 Speaker 1: inflationary cherries on top of like a Sunday. You know, 258 00:14:22,560 --> 00:14:25,960 Speaker 1: it's it's it's just we're in this very complicated mac environment. 259 00:14:26,280 --> 00:14:30,120 Speaker 1: I was already barished on US assets and US equities 260 00:14:30,160 --> 00:14:32,880 Speaker 1: in particulars is December. I'm not sure that I want 261 00:14:32,880 --> 00:14:36,920 Speaker 1: to not buy because Russian you preinter going to war? Right? Well, 262 00:14:37,000 --> 00:14:42,760 Speaker 1: I think about that, that notion of material and resource constraints, um, 263 00:14:42,800 --> 00:14:46,040 Speaker 1: and it works both ways obviously too. If if prudent 264 00:14:46,080 --> 00:14:48,560 Speaker 1: were to turn the whale and gas off to Europe, 265 00:14:49,280 --> 00:14:52,320 Speaker 1: I mean, who knows what Brent Crude would do. I'm 266 00:14:52,360 --> 00:14:55,000 Speaker 1: probably of barrel. I would guess we'd be looking at 267 00:14:55,400 --> 00:14:58,600 Speaker 1: surgeon gasoline prices. So how do you do do view 268 00:14:58,640 --> 00:15:01,320 Speaker 1: the constraints on the other side? Uh? If he were 269 00:15:01,320 --> 00:15:04,760 Speaker 1: to do something like that, I mean, is that it 270 00:15:04,800 --> 00:15:07,360 Speaker 1: would be enough to sort of cause the US and 271 00:15:07,440 --> 00:15:10,320 Speaker 1: EU to back off a little bit? Do you think, Well, 272 00:15:10,320 --> 00:15:11,960 Speaker 1: I think it's already causing them to back off a 273 00:15:11,960 --> 00:15:14,360 Speaker 1: little bit and create his ofference. Uh. And I think 274 00:15:14,400 --> 00:15:16,440 Speaker 1: that you know, it all depends on what it is 275 00:15:16,440 --> 00:15:20,880 Speaker 1: that the intention of President putinist. Now the problem is that, 276 00:15:21,560 --> 00:15:25,200 Speaker 1: you know, my suspicion, and maybe this is colored by 277 00:15:25,240 --> 00:15:28,920 Speaker 1: my failure to predict a full invasion, but my suspicion 278 00:15:29,320 --> 00:15:32,840 Speaker 1: is that he made this decision last minute, you know. 279 00:15:32,960 --> 00:15:36,280 Speaker 1: And that's a worrying point because it's also suggests that, 280 00:15:36,400 --> 00:15:39,360 Speaker 1: you know, there's like an element of irrationality. So if 281 00:15:39,480 --> 00:15:41,960 Speaker 1: if he's just looking to have a punitive war campaign 282 00:15:41,960 --> 00:15:44,280 Speaker 1: against you, Praine, like in Georgia in two thousand and eight, 283 00:15:44,280 --> 00:15:46,760 Speaker 1: and I keep referring to Georgia just through like reminded 284 00:15:46,760 --> 00:15:49,680 Speaker 1: listeners what happened in Georgia is that for five six 285 00:15:49,760 --> 00:15:52,680 Speaker 1: days you didn't know if it was a full invasion 286 00:15:53,200 --> 00:15:56,280 Speaker 1: or just the punitive campaign where Russians then retreated to 287 00:15:56,280 --> 00:15:59,200 Speaker 1: self possession and a positive So my point about two 288 00:15:59,520 --> 00:16:01,840 Speaker 1: eight peril is that we're still there, you know, Mike, 289 00:16:01,920 --> 00:16:04,880 Speaker 1: like this could still be a Georgia type of scenario 290 00:16:05,080 --> 00:16:08,440 Speaker 1: where it's a punitive campaign punished Kiev for alerting with 291 00:16:08,480 --> 00:16:11,000 Speaker 1: the US, and that we're drawing into the regions of 292 00:16:11,120 --> 00:16:15,320 Speaker 1: Ukraine that Russia basically ostensibly already controls the netic Premia. 293 00:16:15,680 --> 00:16:17,960 Speaker 1: And so my point is that A lot of the 294 00:16:18,080 --> 00:16:21,520 Speaker 1: decision making by the leadership in Russia suggested they had 295 00:16:21,520 --> 00:16:25,160 Speaker 1: a last minute decision to flip this into some sort 296 00:16:25,160 --> 00:16:28,000 Speaker 1: of a punitive campaign. If it just remains a punitive 297 00:16:28,080 --> 00:16:31,000 Speaker 1: campaign they withdraw, then you have a number of off 298 00:16:31,080 --> 00:16:36,400 Speaker 1: rams if it becomes a complete destruction of like Ukrainian 299 00:16:36,440 --> 00:16:40,880 Speaker 1: civilian infrastructure with the intention to occupy. First of all, 300 00:16:41,320 --> 00:16:45,160 Speaker 1: I think Russia will break itself against Ukraine as a state. 301 00:16:45,720 --> 00:16:47,440 Speaker 1: I mean, this is the end of Russia in that case, 302 00:16:47,520 --> 00:16:51,560 Speaker 1: ISSI as a power because it will be extremely expensive 303 00:16:51,600 --> 00:16:54,560 Speaker 1: and costly to Moscow to to exert this. I mean 304 00:16:54,960 --> 00:16:58,680 Speaker 1: US struggle with Iraq. Iraqi is smaller, less population in 305 00:16:58,840 --> 00:17:01,680 Speaker 1: US had more troops. So that's the first issue. The 306 00:17:01,680 --> 00:17:04,680 Speaker 1: second issue is that then I can see your scenario 307 00:17:05,080 --> 00:17:08,439 Speaker 1: where we go all out and actually start embargoing energy, 308 00:17:08,600 --> 00:17:10,960 Speaker 1: you know, if this becomes a war of occupation. But 309 00:17:11,040 --> 00:17:13,560 Speaker 1: to me, the probability of that still is very low. 310 00:17:13,760 --> 00:17:16,399 Speaker 1: I still am not ready to skew probabilities more towards 311 00:17:16,440 --> 00:17:19,480 Speaker 1: a full occupation. UM I would say eight twenty in 312 00:17:19,560 --> 00:17:23,760 Speaker 1: favor of the Georgia punitive campaign scenario. How about you know, 313 00:17:23,800 --> 00:17:28,159 Speaker 1: there's obviously tons of speculation on the other weapons uh 314 00:17:28,359 --> 00:17:33,880 Speaker 1: in Putin's holster, uh cyber warfare and god forbid nuclear weapons. 315 00:17:34,080 --> 00:17:38,880 Speaker 1: Um any probabilities on on him unleashing either of those. Yeah, 316 00:17:38,920 --> 00:17:40,520 Speaker 1: I mean, I've I've heard that some people are talking 317 00:17:40,520 --> 00:17:43,760 Speaker 1: about this seriously. I don't see what tactical nuclear weapons 318 00:17:43,760 --> 00:17:47,840 Speaker 1: and kine accomplish. I also cybersecurity, you know it's a 319 00:17:47,880 --> 00:17:50,720 Speaker 1: big deal. I know that cybersecurity stocks are doing great 320 00:17:51,080 --> 00:17:54,040 Speaker 1: blah blah blah, and everyone's in the cybersecurity train. But listen, 321 00:17:54,600 --> 00:18:01,160 Speaker 1: cybersecurity doesn't control air space. Cybersecurity doesn't royal ground troops 322 00:18:01,800 --> 00:18:06,080 Speaker 1: like what. This war is much more classical than people thought. 323 00:18:06,800 --> 00:18:09,199 Speaker 1: This is a very, very much classical issue. So I 324 00:18:09,240 --> 00:18:11,960 Speaker 1: think the cybersecurity issues just don't consider me too much. 325 00:18:12,359 --> 00:18:14,240 Speaker 1: There might be might go back and forth. I'm not 326 00:18:14,240 --> 00:18:17,160 Speaker 1: saying Russia doesn't attack the US and US attack to Russia, 327 00:18:17,240 --> 00:18:20,919 Speaker 1: but this is about controlling ground with with men with 328 00:18:21,000 --> 00:18:25,040 Speaker 1: guns and controlling airspace above them. It's a much more 329 00:18:25,080 --> 00:18:28,639 Speaker 1: of a classic conflict that people thought would happen, So 330 00:18:28,720 --> 00:18:31,400 Speaker 1: I think that's really important. I don't think Russia uses 331 00:18:31,480 --> 00:18:34,159 Speaker 1: nuclear weapons. I don't see white Wood and and in fact, 332 00:18:34,480 --> 00:18:40,200 Speaker 1: you know, I think that the logic of destroying Ukraine 333 00:18:40,280 --> 00:18:44,280 Speaker 1: further is also kind of weak, and in fact, the 334 00:18:44,359 --> 00:18:46,720 Speaker 1: more they destroy Ukraine, the more likely it is that 335 00:18:46,840 --> 00:18:49,600 Speaker 1: this is a punitive pain, because what's the point of 336 00:18:49,640 --> 00:18:53,240 Speaker 1: occupying and holding a country you destroyed. What about what's 337 00:18:53,240 --> 00:18:56,680 Speaker 1: going on within Russia itself? We had a Bloomberg story 338 00:18:56,720 --> 00:18:59,560 Speaker 1: that said there's a lot of resignation among the population 339 00:18:59,640 --> 00:19:03,560 Speaker 1: about the economic hardships that they're going to be facing. 340 00:19:03,640 --> 00:19:05,879 Speaker 1: So what sense can you give us about what the 341 00:19:05,960 --> 00:19:08,919 Speaker 1: sentiment is like within Russia itself and how does that 342 00:19:09,000 --> 00:19:13,480 Speaker 1: play a part in putents thinking? That's such a critical question, 343 00:19:13,560 --> 00:19:15,240 Speaker 1: Bill Donna. I mean that is that is what we 344 00:19:15,280 --> 00:19:17,600 Speaker 1: need to focus on. I think we have investors have 345 00:19:17,680 --> 00:19:20,320 Speaker 1: to focus on the streets of Moscow and St. Petersburg. 346 00:19:20,600 --> 00:19:22,560 Speaker 1: It's difficult to get good information though, But what I 347 00:19:22,560 --> 00:19:26,199 Speaker 1: would say to you is is this, every authoritarian regime 348 00:19:26,359 --> 00:19:29,440 Speaker 1: has a social contract. We don't live in medieval times, 349 00:19:29,440 --> 00:19:32,600 Speaker 1: so you can just like kill scores of people, and 350 00:19:32,600 --> 00:19:34,960 Speaker 1: a throitary regime like Russia does not do that. I'd 351 00:19:34,960 --> 00:19:37,359 Speaker 1: be sure they repressed the public, but it's not like 352 00:19:37,400 --> 00:19:40,800 Speaker 1: they have They're running Goulas, they're not. So what is 353 00:19:40,840 --> 00:19:45,000 Speaker 1: the social contract that allows Vladimir Putin to retain power 354 00:19:45,359 --> 00:19:49,240 Speaker 1: with the median Russian accepting that that rule? What's the 355 00:19:49,280 --> 00:19:52,160 Speaker 1: trade off? It's not the same as Chinese communist parties 356 00:19:52,160 --> 00:19:55,879 Speaker 1: see Chinese communist parties. Social contract which citizens is simple, 357 00:19:56,400 --> 00:19:59,240 Speaker 1: we will deliver the Chinese dream to you. You don't 358 00:19:59,240 --> 00:20:01,760 Speaker 1: ask us for a and that's worth And they've done it. 359 00:20:01,800 --> 00:20:04,879 Speaker 1: They've delivered the Chinese street. In the case of Russia, 360 00:20:04,960 --> 00:20:09,479 Speaker 1: it's not about economic progresses. Were a terrible time for Russia. 361 00:20:09,520 --> 00:20:13,040 Speaker 1: I mean, you had mafia running the streets of major cities, 362 00:20:13,080 --> 00:20:16,159 Speaker 1: You had PhDs in physics, you know, living in dumpsters. 363 00:20:16,200 --> 00:20:20,679 Speaker 1: You had complete chaos, complete collapse of economy and currency. 364 00:20:21,440 --> 00:20:24,919 Speaker 1: And so the social contract in Russia is very simple. 365 00:20:25,520 --> 00:20:30,480 Speaker 1: Russian public expects its leaders to provide stability, not necessarily 366 00:20:30,680 --> 00:20:33,639 Speaker 1: economic growth and potential, but stability, like you know, like 367 00:20:33,800 --> 00:20:37,320 Speaker 1: get Russia off of its economic needs and its geopolitical 368 00:20:37,359 --> 00:20:40,760 Speaker 1: needs that it was at especially NATO bomb one of 369 00:20:40,760 --> 00:20:44,080 Speaker 1: its allies in serving Prutin has for the most part 370 00:20:44,160 --> 00:20:47,239 Speaker 1: delivered on that stability. And the problem right now vill 371 00:20:47,280 --> 00:20:50,320 Speaker 1: Dona is he's breaking a social contract, and he's breaking 372 00:20:50,320 --> 00:20:53,800 Speaker 1: the social contract for unclear purposes. And this is why, 373 00:20:53,840 --> 00:20:56,040 Speaker 1: by the way, a lot of Russian watchers didn't expect 374 00:20:56,040 --> 00:20:58,240 Speaker 1: the full invasion. You know, we expected some sort of 375 00:20:58,359 --> 00:21:00,760 Speaker 1: limited incursion because the mass stick lead. There was no 376 00:21:00,840 --> 00:21:04,080 Speaker 1: prep There's no prep The media and Russia did not 377 00:21:04,119 --> 00:21:06,560 Speaker 1: talk about like ethnic lensing of Russians or this, or 378 00:21:06,560 --> 00:21:10,119 Speaker 1: that they were making fun of Biden for being hysterical, right, 379 00:21:10,200 --> 00:21:13,280 Speaker 1: that was the narrative. They did not at all. Putin 380 00:21:13,359 --> 00:21:17,760 Speaker 1: pulled the rug under his military, his propagandist, his his 381 00:21:17,880 --> 00:21:21,120 Speaker 1: central bank that didn't prepare for this, his diplomats, who 382 00:21:21,359 --> 00:21:24,520 Speaker 1: gave Chinese diplomats all sorts of stories that they didn't deliver. 383 00:21:25,320 --> 00:21:28,720 Speaker 1: This was so sudden and surprising that the collapse of 384 00:21:28,760 --> 00:21:32,639 Speaker 1: stability in Russia relative to the gains for the Russian 385 00:21:32,680 --> 00:21:35,560 Speaker 1: state from doing this in Ukraine is such a skewed 386 00:21:35,680 --> 00:21:40,080 Speaker 1: ratio that there will be serious consequences for the political 387 00:21:40,080 --> 00:21:42,800 Speaker 1: hold of power of Lavenot. And again, I can't, I 388 00:21:42,840 --> 00:21:45,639 Speaker 1: can't just stop comparing it. Maybe you know, I'm from Belgrade, 389 00:21:46,160 --> 00:21:48,560 Speaker 1: but I can't stop comparing it. Too slow and milosh 390 00:21:49,280 --> 00:21:54,160 Speaker 1: like a NATO bombing of of Belgrade. You know, for 391 00:21:54,160 --> 00:21:57,800 Speaker 1: for like a minute it unified, serves against the West, 392 00:21:58,520 --> 00:22:01,439 Speaker 1: and then six months later he was in trouble, I 393 00:22:01,440 --> 00:22:04,640 Speaker 1: mean in the serious trouble, and finally the country revolted. 394 00:22:05,080 --> 00:22:07,160 Speaker 1: And one thing I will say is like Russians will 395 00:22:07,200 --> 00:22:10,880 Speaker 1: not be cowed. This is a country with a deep history, 396 00:22:11,520 --> 00:22:16,760 Speaker 1: deep history of failing in military aggressive tactics. We all, 397 00:22:16,800 --> 00:22:19,640 Speaker 1: as in the West, we think Russia is a has 398 00:22:19,720 --> 00:22:22,480 Speaker 1: a has an incredible military history. It does if you 399 00:22:22,520 --> 00:22:25,160 Speaker 1: attack it, But when they're on offense, they lose more 400 00:22:25,160 --> 00:22:28,480 Speaker 1: than they win. And when they lose, there is a revolt, 401 00:22:28,960 --> 00:22:31,600 Speaker 1: there is a revolution, there is a cud tough and 402 00:22:31,680 --> 00:22:34,800 Speaker 1: it's shocking to me that someone has steeped in history. 403 00:22:34,880 --> 00:22:38,879 Speaker 1: Is Vladimir just forgot that? I still think of Molossovitch, 404 00:22:39,000 --> 00:22:41,159 Speaker 1: of of all that being not too long ago. But 405 00:22:41,200 --> 00:22:43,240 Speaker 1: I guess as as I get older, it's it's it's 406 00:22:43,240 --> 00:22:46,040 Speaker 1: longer than I realized. But um, you know, and you 407 00:22:46,080 --> 00:22:49,960 Speaker 1: look at that Bosnia, Serbia recovered from that, maybe not 408 00:22:50,359 --> 00:22:54,080 Speaker 1: thriving so much, but doing pretty well. You know, as 409 00:22:54,160 --> 00:22:56,639 Speaker 1: nations these days, is there a chance for that in 410 00:22:56,680 --> 00:23:02,840 Speaker 1: a sort of postputent Russia or is is Russia, uninvestable, unapproachable, 411 00:23:02,920 --> 00:23:04,920 Speaker 1: untouchable for the rest of the world. Say for the 412 00:23:04,960 --> 00:23:07,520 Speaker 1: rest of our lifetime, do you think well, I would 413 00:23:07,560 --> 00:23:10,600 Speaker 1: say that it's difficult for us to like kind of 414 00:23:10,600 --> 00:23:12,800 Speaker 1: make a call now something that hasn't happened, you know, 415 00:23:12,880 --> 00:23:15,080 Speaker 1: so as a caveat. But I'm about to answer your question. 416 00:23:15,080 --> 00:23:18,679 Speaker 1: Don't worry, Mike, I haven't heard a question. I don't answer. 417 00:23:20,200 --> 00:23:22,960 Speaker 1: That's why we love you on this show. Listen. Of 418 00:23:23,040 --> 00:23:26,680 Speaker 1: course it's is investing. Of course, of course Russia is investable. 419 00:23:26,680 --> 00:23:28,080 Speaker 1: And I'll tell you why. If you look at the 420 00:23:28,080 --> 00:23:32,000 Speaker 1: performance of Russian equities relative to end it really hit 421 00:23:32,080 --> 00:23:34,760 Speaker 1: bought him in two thousand and eleven, and that was 422 00:23:34,880 --> 00:23:39,520 Speaker 1: pre pre elections, when Medvedev and Putin had this very callous, 423 00:23:39,640 --> 00:23:42,760 Speaker 1: very arrogant press conference where they basically said they were 424 00:23:42,760 --> 00:23:45,560 Speaker 1: going to switch roles and everyone was like, you know, 425 00:23:45,600 --> 00:23:50,119 Speaker 1: a lot of like internationalist investor davos Man type of 426 00:23:50,119 --> 00:23:53,040 Speaker 1: people were hoping that Medvedev and Kudrain, you know, Coudrain 427 00:23:53,160 --> 00:23:55,720 Speaker 1: is like the poster child of everyone who wants to invest, 428 00:23:55,880 --> 00:23:57,760 Speaker 1: that they would take over, that Putin would just kind 429 00:23:57,760 --> 00:23:59,840 Speaker 1: of like be there. And in two thousand and eleven 430 00:24:00,000 --> 00:24:02,960 Speaker 1: everybody realized that wasn't the case, and Russian assets have 431 00:24:03,040 --> 00:24:06,919 Speaker 1: never actually recovered since then, since that press conference actually 432 00:24:06,960 --> 00:24:10,199 Speaker 1: that they had together on this weird stage. Well, I 433 00:24:10,200 --> 00:24:12,120 Speaker 1: guess what I'm saying is that, yeah, I mean, if 434 00:24:12,160 --> 00:24:15,720 Speaker 1: you have some sort of a change intact and in 435 00:24:15,800 --> 00:24:18,199 Speaker 1: relationship with the West, of course, I do think that 436 00:24:18,240 --> 00:24:21,119 Speaker 1: there will be a potential to invest in Russia. The 437 00:24:21,160 --> 00:24:24,000 Speaker 1: problem is that from here to there, you know, we 438 00:24:24,040 --> 00:24:27,160 Speaker 1: could have appropriation. So should you buy Russian equities now? 439 00:24:27,560 --> 00:24:29,800 Speaker 1: Given this kind of hope that there is some sort 440 00:24:29,800 --> 00:24:32,800 Speaker 1: of a you know, change in in leadership or Putin's 441 00:24:32,800 --> 00:24:35,199 Speaker 1: retirement like cruise Ship got retired after he messed up 442 00:24:35,240 --> 00:24:37,720 Speaker 1: the Cuban missile crisis. Like, I don't think so. I mean, 443 00:24:37,760 --> 00:24:41,320 Speaker 1: it's this is a very volatile situation. I would actually 444 00:24:41,320 --> 00:24:44,240 Speaker 1: propose a different view. I actually think that what's happening 445 00:24:44,240 --> 00:24:49,960 Speaker 1: in Ukraine is extremely obviously terrifying, but also heartening. We're 446 00:24:50,000 --> 00:24:53,080 Speaker 1: doing we're watching something we haven't seen in a long time. 447 00:24:53,680 --> 00:24:57,719 Speaker 1: We're watching a birth of a new national identity, you know. 448 00:24:57,840 --> 00:25:02,680 Speaker 1: And Ukraine's biggest challenge has been the post Soviet Union collapse. 449 00:25:03,119 --> 00:25:06,199 Speaker 1: Its leaders have been corrupt, they've been incompetent, and not 450 00:25:06,280 --> 00:25:08,720 Speaker 1: just pro Russian. Let's just be very clear here, like 451 00:25:08,880 --> 00:25:12,720 Speaker 1: the pro West ones were sometimes most corrupt, most incompon 452 00:25:12,960 --> 00:25:16,600 Speaker 1: the origins revolution gave us some really, really nasty characters 453 00:25:16,640 --> 00:25:18,800 Speaker 1: that didn't go anywhere. So the point is that what 454 00:25:18,840 --> 00:25:21,879 Speaker 1: we're seeing now in Ukraine though, is a birth of 455 00:25:22,000 --> 00:25:25,280 Speaker 1: a truly like self aware nation, and I think that 456 00:25:25,280 --> 00:25:28,600 Speaker 1: that might be actually a very interesting investment opportunity over 457 00:25:28,640 --> 00:25:31,160 Speaker 1: the next um, over the next decade, you know, provided 458 00:25:31,200 --> 00:25:34,000 Speaker 1: that you know, they fight off this attack and have 459 00:25:34,240 --> 00:25:37,960 Speaker 1: some independence going forward. It's a large country, it is 460 00:25:38,000 --> 00:25:41,359 Speaker 1: in Europe um, and a lot of potential exists in 461 00:25:41,359 --> 00:25:45,680 Speaker 1: that country. We've heard from Biden and also from EU 462 00:25:45,760 --> 00:25:48,119 Speaker 1: officials about how we're all going to have to face 463 00:25:48,359 --> 00:25:52,520 Speaker 1: the some of the burdens that come with higher gas 464 00:25:52,560 --> 00:25:55,280 Speaker 1: prices and some of the other reverberations that we're going 465 00:25:55,320 --> 00:25:57,800 Speaker 1: to be seeing in the weeks and months to come. 466 00:25:57,840 --> 00:26:00,640 Speaker 1: So what can you tell us about how this might 467 00:26:00,680 --> 00:26:05,240 Speaker 1: impact growth here in the US and and and abroad 468 00:26:05,280 --> 00:26:07,760 Speaker 1: as well in Europe as well, you know, Alana, that's 469 00:26:07,840 --> 00:26:10,520 Speaker 1: that's the number one question with the folks that I 470 00:26:10,640 --> 00:26:13,840 Speaker 1: talked on the daily basis, whether they are institutional investors 471 00:26:13,880 --> 00:26:16,600 Speaker 1: like large pension funds and pools, the capital or hedge funds. 472 00:26:16,600 --> 00:26:19,159 Speaker 1: And there's a range of outlooks out there. I mean, 473 00:26:19,160 --> 00:26:21,080 Speaker 1: I'll give you mine. My view is that I worry 474 00:26:21,080 --> 00:26:24,080 Speaker 1: about the young por scenario. As I said again, you 475 00:26:24,119 --> 00:26:26,359 Speaker 1: know that's that's a nightmare scenario. We get into a 476 00:26:26,400 --> 00:26:29,040 Speaker 1: staculation review. And by the way, think about why this 477 00:26:29,119 --> 00:26:31,320 Speaker 1: is so difficult. Like if the fet just says, look, 478 00:26:31,400 --> 00:26:34,760 Speaker 1: we're gonna deal with inflation, we get a reception. Okay. 479 00:26:34,880 --> 00:26:37,520 Speaker 1: If the feed says, like it's caused by Putin, so 480 00:26:37,520 --> 00:26:41,000 Speaker 1: we're not gonna We're gonna step back, like okay, what 481 00:26:41,080 --> 00:26:43,119 Speaker 1: does that do to asset prices? I don't know, Like, 482 00:26:43,160 --> 00:26:45,600 Speaker 1: I'm not sure that's positive for asset prices. Either inflation 483 00:26:45,720 --> 00:26:49,119 Speaker 1: is basically un anchored and central banks lose credibility. The 484 00:26:49,119 --> 00:26:52,400 Speaker 1: Epean Central Bank really has only one mandate and they 485 00:26:52,400 --> 00:26:54,520 Speaker 1: are now backing off from them mandate. What does that 486 00:26:54,600 --> 00:26:56,640 Speaker 1: do to the bond market? What does that do to acquities? 487 00:26:56,720 --> 00:26:58,600 Speaker 1: I I don't know. I just know that I like 488 00:26:58,680 --> 00:27:01,960 Speaker 1: commodities in that world. But in terms of the actual impact, 489 00:27:02,440 --> 00:27:05,479 Speaker 1: there are differentiated impacts. I mean, obviously Europe is going 490 00:27:05,480 --> 00:27:08,960 Speaker 1: to be far more affected by what's going on in Ukraine. 491 00:27:09,040 --> 00:27:11,440 Speaker 1: In the US, US has a couple of things going 492 00:27:11,480 --> 00:27:15,280 Speaker 1: for it. So my dear friend Georgie Vissor, he has 493 00:27:15,359 --> 00:27:17,800 Speaker 1: great webinars. I don't know if you guys watching, really 494 00:27:17,800 --> 00:27:21,119 Speaker 1: worth watching. He has made a point that net worth 495 00:27:21,320 --> 00:27:23,480 Speaker 1: in the US is so high right now because of 496 00:27:23,520 --> 00:27:27,480 Speaker 1: the Stimulu checks. If you plot oil prices relative to networth, 497 00:27:27,800 --> 00:27:30,880 Speaker 1: it's they're like the lowest they've ever been. So Americans 498 00:27:30,960 --> 00:27:34,239 Speaker 1: do have the ability to imper higher costs. And then 499 00:27:34,240 --> 00:27:36,480 Speaker 1: on top of that, you have something else that's interesting. 500 00:27:37,040 --> 00:27:39,440 Speaker 1: And that's something else is that we just went through 501 00:27:39,480 --> 00:27:43,200 Speaker 1: two years of working from home. Our ways of life 502 00:27:43,240 --> 00:27:45,919 Speaker 1: and work have altered, and it's not clear to me 503 00:27:46,000 --> 00:27:49,960 Speaker 1: that an increase in all prices would necessarily impact the 504 00:27:50,000 --> 00:27:52,840 Speaker 1: American economy as in the past. So the whole like 505 00:27:53,160 --> 00:27:56,200 Speaker 1: idea that like a ten percent increase in all prices 506 00:27:56,240 --> 00:27:58,680 Speaker 1: impacts the GDP as a certain percent, like we should 507 00:27:58,760 --> 00:28:00,480 Speaker 1: throw all of that out the window. We don't know. 508 00:28:00,960 --> 00:28:03,760 Speaker 1: In the US the impact will be much much lower, 509 00:28:03,880 --> 00:28:08,360 Speaker 1: which also explains geopolitical position of US. That's why mccron 510 00:28:08,520 --> 00:28:12,240 Speaker 1: is going to to Moscow. That's why Germany is hold 511 00:28:12,440 --> 00:28:16,359 Speaker 1: holding back swift sanctions because the impact to Europe is 512 00:28:16,440 --> 00:28:20,280 Speaker 1: much higher. US has much much lower risk tolerance, whereas 513 00:28:20,320 --> 00:28:23,560 Speaker 1: the US doesn't care effectively. US can be much more 514 00:28:23,640 --> 00:28:27,639 Speaker 1: macare valiant, much more meaner to Russia, as supportive of 515 00:28:27,760 --> 00:28:33,280 Speaker 1: Ukraine because the macroeconomic implications are lower. Plus you know, hey, 516 00:28:33,320 --> 00:28:36,199 Speaker 1: if inflation goes up and the FED can't fight it, 517 00:28:36,600 --> 00:28:39,440 Speaker 1: Biden has an excuse. Now, it's not Automa bill prices 518 00:28:39,440 --> 00:28:42,120 Speaker 1: that are driving CPI hied, it's a lot of reputin. 519 00:28:57,040 --> 00:28:59,240 Speaker 1: You know, bark I wanted to you mentioned commodities. I 520 00:28:59,280 --> 00:29:03,320 Speaker 1: wanted to roll in a little bit on wheat in particular. Um. 521 00:29:03,400 --> 00:29:05,960 Speaker 1: You know, you made a interesting point in one of 522 00:29:05,960 --> 00:29:09,080 Speaker 1: your recent notes that wheat is actually outperformed crude oil 523 00:29:09,200 --> 00:29:11,880 Speaker 1: during all of this. And you know, I'm an older guy. 524 00:29:11,880 --> 00:29:14,520 Speaker 1: I remember living through the gas shortages in the US 525 00:29:14,800 --> 00:29:16,560 Speaker 1: UH when you had to wait two hours to get 526 00:29:16,760 --> 00:29:19,360 Speaker 1: uh fill your your tank with gas and and maybe 527 00:29:19,360 --> 00:29:21,720 Speaker 1: you couldn't get it and you canceled a trip or something. 528 00:29:21,760 --> 00:29:24,120 Speaker 1: But a shortage of wheat is a is a much 529 00:29:24,160 --> 00:29:27,560 Speaker 1: more serious scenario. I think, how are you thinking about week? 530 00:29:27,600 --> 00:29:30,280 Speaker 1: I mean wheat the you know, obviously springs coming up. 531 00:29:30,880 --> 00:29:34,080 Speaker 1: Ukraine is a big producer of wheat, exports to both 532 00:29:34,800 --> 00:29:38,480 Speaker 1: Europe and Russia. And I'm curious how you're thinking of 533 00:29:38,800 --> 00:29:42,240 Speaker 1: it a from a sort of a shortage standpoint, you know, uh, 534 00:29:42,560 --> 00:29:46,960 Speaker 1: is there a risk of a shortage in Europe or 535 00:29:47,080 --> 00:29:49,680 Speaker 1: is there enough producers worldwide to sort of, you know, 536 00:29:49,800 --> 00:29:53,040 Speaker 1: plant some extra acres and pick up the slack. But 537 00:29:53,120 --> 00:29:56,600 Speaker 1: also as an investment, you know, I think you sort 538 00:29:56,600 --> 00:29:59,520 Speaker 1: of advised it as a hedge in this situation. It 539 00:29:59,560 --> 00:30:02,320 Speaker 1: seems to me like possibly a risky investment if there 540 00:30:02,360 --> 00:30:05,280 Speaker 1: are shortages, if there is a sort of government backlash 541 00:30:05,360 --> 00:30:08,040 Speaker 1: to that and potential price caps that that sort of 542 00:30:08,080 --> 00:30:10,520 Speaker 1: thing is. Is that a possibility do you think? I know, 543 00:30:10,560 --> 00:30:12,800 Speaker 1: I asked you about ten questions there, but yeah, no, 544 00:30:12,920 --> 00:30:15,520 Speaker 1: for sure, it is risky if it goes too high 545 00:30:15,520 --> 00:30:17,080 Speaker 1: there there could be all sorts of things. I mean, 546 00:30:17,400 --> 00:30:20,640 Speaker 1: I think there's other ways to play this, bulk carriers, 547 00:30:20,720 --> 00:30:23,960 Speaker 1: there's like shipping implications for anytime there's a dislocation that 548 00:30:24,000 --> 00:30:26,280 Speaker 1: we could play as well. I think we were headed 549 00:30:26,280 --> 00:30:29,800 Speaker 1: towards of food crisis Anyways, this is a really big 550 00:30:29,880 --> 00:30:32,480 Speaker 1: jubilical issue. I've been talking about this for twelve months 551 00:30:32,520 --> 00:30:35,040 Speaker 1: before Ukraine Russia became an issue. And that's because you know, 552 00:30:35,120 --> 00:30:39,040 Speaker 1: natural guess prices went up, cost of nitrates and fertilizer 553 00:30:39,080 --> 00:30:41,480 Speaker 1: went up. On top of that, you have this PoTA 554 00:30:41,640 --> 00:30:44,480 Speaker 1: situation in Belarus, which happened because of U S sanctions. 555 00:30:44,840 --> 00:30:47,840 Speaker 1: Now you've got what's going on here. So fertilizer costs 556 00:30:48,200 --> 00:30:52,120 Speaker 1: going through the roof, and you have actual potential curtailment 557 00:30:52,960 --> 00:30:56,920 Speaker 1: of shipping it and supplying because Ukrainians its continues, they 558 00:30:57,000 --> 00:30:59,120 Speaker 1: might not be able to harvest the week. You know, 559 00:30:59,120 --> 00:31:02,040 Speaker 1: who knows what happened and and so you know, if 560 00:31:02,040 --> 00:31:04,280 Speaker 1: you look around the world, you see Brazil or India 561 00:31:04,320 --> 00:31:07,360 Speaker 1: and there kind of being very careful in how they 562 00:31:07,720 --> 00:31:09,719 Speaker 1: react to this crisis. I think one of the reasons 563 00:31:09,760 --> 00:31:12,280 Speaker 1: is because of this, they want to make sure that 564 00:31:12,360 --> 00:31:17,600 Speaker 1: Russia prioritizes, especially India, fertilizer exports to India. UM. So 565 00:31:17,720 --> 00:31:19,840 Speaker 1: you know, Motives is playing a very important to you 566 00:31:19,920 --> 00:31:22,120 Speaker 1: a political game here. He can't just you know, do 567 00:31:22,160 --> 00:31:25,880 Speaker 1: what America wants. And and that's because countries like India, 568 00:31:26,200 --> 00:31:30,200 Speaker 1: North Africa obviously all of Africa, also some in Latin America. 569 00:31:30,840 --> 00:31:34,640 Speaker 1: Their food share of the CPI is much higher than 570 00:31:34,680 --> 00:31:36,800 Speaker 1: it is in the US Europe. And those are going 571 00:31:36,840 --> 00:31:39,320 Speaker 1: to be the countries that suffered this. US Europe. They're 572 00:31:39,320 --> 00:31:42,360 Speaker 1: gonna be fine. They're produced enough food. They don't really 573 00:31:42,440 --> 00:31:46,520 Speaker 1: need exports from Russia and Ukraine. It's really other countries. 574 00:31:46,560 --> 00:31:49,800 Speaker 1: And another one that I didn't mention is China. I'm speculating, 575 00:31:49,920 --> 00:31:51,720 Speaker 1: but you know again, I'm just gonna give you my 576 00:31:51,800 --> 00:31:57,640 Speaker 1: irrationally confident, hyperbolic view, and it's that. Look, I guarantee 577 00:31:57,680 --> 00:32:00,080 Speaker 1: Putin didn't tell sheet what's going on? That that that 578 00:32:00,560 --> 00:32:04,160 Speaker 1: beatings at the Olympics when set on the table, Well, look, 579 00:32:04,200 --> 00:32:06,360 Speaker 1: I mean like the endless friendship or whatever, it was, 580 00:32:06,400 --> 00:32:08,880 Speaker 1: the bottomless pit of love that they kind of. First 581 00:32:08,880 --> 00:32:11,800 Speaker 1: of all, I get so many emails from investors like Marco. 582 00:32:11,960 --> 00:32:13,800 Speaker 1: This is a sign I'm like of what, like, give 583 00:32:13,840 --> 00:32:16,880 Speaker 1: me a clause in this deal, in this treaty, unless 584 00:32:16,920 --> 00:32:18,800 Speaker 1: there's some secret annex I don't know about, like in 585 00:32:18,880 --> 00:32:20,560 Speaker 1: the first of al War, Like this was just like 586 00:32:20,600 --> 00:32:22,640 Speaker 1: a love fest, got it? We love each other, we 587 00:32:22,680 --> 00:32:25,520 Speaker 1: hate NATO? Got it? Okay? God bless you. That's the world. 588 00:32:25,720 --> 00:32:29,040 Speaker 1: But here's the problem with that. China does import food. 589 00:32:29,280 --> 00:32:32,920 Speaker 1: Food prices are gonna matter one. Two, China's pushing on 590 00:32:32,960 --> 00:32:35,880 Speaker 1: a string domestically. Look at the January TSF numbers, you know, 591 00:32:36,000 --> 00:32:38,760 Speaker 1: total social financing. They barely got it up. And they 592 00:32:38,760 --> 00:32:40,400 Speaker 1: only got it up because in the last week of 593 00:32:40,520 --> 00:32:44,600 Speaker 1: January they went all old school stimulus with S and lgfps, 594 00:32:44,680 --> 00:32:47,560 Speaker 1: Like the private sector in China can no longer be 595 00:32:47,640 --> 00:32:51,160 Speaker 1: leveraged off. Household debt is percent of disposable income in 596 00:32:51,320 --> 00:32:54,440 Speaker 1: China's hired in the US. So China staring at like 597 00:32:54,680 --> 00:32:57,400 Speaker 1: another global recession, and we've got political risks at home, 598 00:32:57,720 --> 00:33:00,400 Speaker 1: higher food prices, higher energy prices, and on top of that, 599 00:33:00,440 --> 00:33:02,280 Speaker 1: you didn't tell us ahead of time so that we 600 00:33:02,320 --> 00:33:05,720 Speaker 1: can extract our citizens from Ukraine, you know, I mean, 601 00:33:05,760 --> 00:33:08,080 Speaker 1: you remember at the beginning of this crisis when the 602 00:33:08,360 --> 00:33:11,120 Speaker 1: Chinese were saying, put a little Chinese flags on cars 603 00:33:11,120 --> 00:33:13,600 Speaker 1: so people can identify you as Chinese, which, by the way, 604 00:33:13,600 --> 00:33:16,680 Speaker 1: I'm not sure that's a good thing if Ukrainians think 605 00:33:16,760 --> 00:33:18,440 Speaker 1: that you were on the Russian side. But like, let's 606 00:33:18,480 --> 00:33:20,720 Speaker 1: leave that aside. The point here is that I think 607 00:33:20,760 --> 00:33:24,040 Speaker 1: that the Putain did not tell Chinese what's going on, 608 00:33:24,080 --> 00:33:27,240 Speaker 1: and I think that they are the Chinese economy, other 609 00:33:27,240 --> 00:33:29,440 Speaker 1: than Russia, might be I might have the most to 610 00:33:29,520 --> 00:33:32,680 Speaker 1: lose in this situation. I wonder what you make of 611 00:33:32,720 --> 00:33:36,000 Speaker 1: the argument that we're in a stag relationary environment or 612 00:33:36,080 --> 00:33:39,360 Speaker 1: headed towards one because of all of the rising prices. 613 00:33:39,360 --> 00:33:41,960 Speaker 1: And I've I've seen a ton of notes come into 614 00:33:41,960 --> 00:33:45,440 Speaker 1: my inbox over the past week arguing that potentially we 615 00:33:45,480 --> 00:33:47,920 Speaker 1: could be headed for a stag flationary environment, and some 616 00:33:48,000 --> 00:33:51,720 Speaker 1: people saying we're already and what it's already here? Yeah, 617 00:33:51,760 --> 00:33:54,120 Speaker 1: I was gonna write one of those notes to probably. 618 00:33:56,240 --> 00:33:59,360 Speaker 1: I mean, that's the kipor example, right, I mean that's 619 00:33:59,400 --> 00:34:01,640 Speaker 1: the view of some of the very large asset managers 620 00:34:01,680 --> 00:34:04,040 Speaker 1: out there in the world. Oil presses go up two 621 00:34:04,320 --> 00:34:07,120 Speaker 1: D fifty and we have a recession. Every recession has 622 00:34:07,120 --> 00:34:09,799 Speaker 1: been preceded by doubling in oil prices. Um, you know, 623 00:34:09,960 --> 00:34:12,080 Speaker 1: something that we kind of forget, not just the yellow 624 00:34:12,080 --> 00:34:14,680 Speaker 1: curb in version, but also doubling the oil presses. I 625 00:34:14,680 --> 00:34:19,000 Speaker 1: think the risk is there, but the risk of positioning 626 00:34:19,080 --> 00:34:23,120 Speaker 1: yourself for a recession is also enormous, you know, because 627 00:34:23,120 --> 00:34:24,960 Speaker 1: what do you do then you buy ten your yields? 628 00:34:25,000 --> 00:34:26,759 Speaker 1: I mean you do you buy ten your bonds? You 629 00:34:26,840 --> 00:34:29,840 Speaker 1: buy you're going to cash. What happens if this is 630 00:34:29,880 --> 00:34:32,759 Speaker 1: a Georgia scenario. What happens if this is a very 631 00:34:32,800 --> 00:34:34,919 Speaker 1: short term like and by the way, in short terms 632 00:34:34,920 --> 00:34:39,080 Speaker 1: like a month long conflict, terrifying, lots of human destruction, 633 00:34:39,400 --> 00:34:42,520 Speaker 1: lots of pain. But then and offer him. And in 634 00:34:42,600 --> 00:34:46,480 Speaker 1: that situation, with the amount of household network that is 635 00:34:46,600 --> 00:34:49,480 Speaker 1: built up in the US, I'm not sure that you 636 00:34:49,600 --> 00:34:53,840 Speaker 1: necessarily want to be positioned as if you're asset the 637 00:34:53,840 --> 00:34:57,319 Speaker 1: location is expecting in a recession, you know. So that's 638 00:34:57,320 --> 00:35:00,200 Speaker 1: why I would be I would stay very light on 639 00:35:00,239 --> 00:35:02,920 Speaker 1: my feet right now. I would like commodities. I think 640 00:35:02,920 --> 00:35:05,520 Speaker 1: they're the new risk verity. I like to play both 641 00:35:05,640 --> 00:35:11,360 Speaker 1: inflation or just more inflation through a commodity paradigm. But 642 00:35:11,440 --> 00:35:13,600 Speaker 1: I don't want to make any other decisions in terms 643 00:35:13,640 --> 00:35:15,319 Speaker 1: of ascid location right now. I just want to see 644 00:35:15,320 --> 00:35:17,360 Speaker 1: whether we are in that two thousand a Georgia scenario 645 00:35:17,520 --> 00:35:19,839 Speaker 1: or if we're in some new world where you know, 646 00:35:19,880 --> 00:35:21,759 Speaker 1: this last a very long time and then you have 647 00:35:21,800 --> 00:35:25,799 Speaker 1: all these other consequences. They are negative Marco. Uh. You know, 648 00:35:25,840 --> 00:35:30,040 Speaker 1: clock Tower has a lot of interactions with hedge funds obviously, Uh, 649 00:35:30,280 --> 00:35:33,040 Speaker 1: sort of the whole purpose of the firm. I'm curious 650 00:35:33,040 --> 00:35:35,320 Speaker 1: if you're have a sense of what sort of the 651 00:35:36,360 --> 00:35:38,880 Speaker 1: hedge fund community is doing. I mean, someone's buying this 652 00:35:38,960 --> 00:35:42,239 Speaker 1: dip inequities this week. But to me, I almost feel 653 00:35:42,239 --> 00:35:44,680 Speaker 1: like hedge funds can kind of turn into day traders 654 00:35:44,680 --> 00:35:46,960 Speaker 1: in a situation like this, sort of which is good. 655 00:35:47,480 --> 00:35:49,120 Speaker 1: But Mike, that's that's what you have to do. And 656 00:35:49,160 --> 00:35:51,960 Speaker 1: that's my point. You cannot make global asci location decisions 657 00:35:52,040 --> 00:35:54,160 Speaker 1: right now. You've got to be a trader, you know. 658 00:35:54,239 --> 00:35:56,680 Speaker 1: And I've seen this. I've seen real talent in the 659 00:35:56,719 --> 00:36:00,359 Speaker 1: mac community emerge out of the COVID christ this same 660 00:36:00,440 --> 00:36:03,080 Speaker 1: and we truly believe we've seated some of those guys. 661 00:36:03,320 --> 00:36:06,320 Speaker 1: We think they're awesome, and we think that this environment 662 00:36:06,400 --> 00:36:09,759 Speaker 1: is very volatile multipole of world where we will have 663 00:36:09,800 --> 00:36:14,319 Speaker 1: events like this require active hedge fund macro guys to 664 00:36:14,360 --> 00:36:17,400 Speaker 1: do the day trading when this stuff starts happening. But 665 00:36:18,000 --> 00:36:21,480 Speaker 1: what I will say is that I do think that overall, overall, 666 00:36:21,840 --> 00:36:25,879 Speaker 1: the macro community was basically buying tech shorting energy still 667 00:36:26,840 --> 00:36:30,719 Speaker 1: like I don't think like I don't think enough investors 668 00:36:30,840 --> 00:36:33,719 Speaker 1: in the macro sense, Uh, we're ready to give up 669 00:36:33,960 --> 00:36:37,120 Speaker 1: like US tech story. Uh. And I think that's a 670 00:36:37,160 --> 00:36:42,560 Speaker 1: mistake because listen, January selloff had zero to do with Russia. Zero. 671 00:36:43,520 --> 00:36:46,480 Speaker 1: You know, when you see like Latin American effects I performed, 672 00:36:46,960 --> 00:36:50,279 Speaker 1: it's not because people are worried about like emergent market war. 673 00:36:51,160 --> 00:36:55,920 Speaker 1: What January was about was a serious rotation. Now Ukraine 674 00:36:55,960 --> 00:36:59,600 Speaker 1: Russia could be the delta, the delta strain, and what 675 00:36:59,640 --> 00:37:05,960 Speaker 1: I mean by that in March, from November to March one, 676 00:37:05,960 --> 00:37:09,440 Speaker 1: we had this beautiful rotation into basically the reflations trade, 677 00:37:09,560 --> 00:37:13,239 Speaker 1: and then what happens. Delta shows up, China starts doing austerity, 678 00:37:13,320 --> 00:37:16,360 Speaker 1: the ten year yields starts going down, check Out performs 679 00:37:16,680 --> 00:37:20,800 Speaker 1: rest for another like six to eight months. Ukraine Russia 680 00:37:20,880 --> 00:37:23,440 Speaker 1: could play the same role if we settle into some 681 00:37:23,480 --> 00:37:26,120 Speaker 1: sort of a low intensity conflict where that still keeps 682 00:37:26,120 --> 00:37:30,440 Speaker 1: safety having bids up there, the tenure could like rally 683 00:37:30,560 --> 00:37:33,560 Speaker 1: significantly enough to give Tech another six months of use. 684 00:37:34,280 --> 00:37:36,600 Speaker 1: But I fear that this is much more of a 685 00:37:36,719 --> 00:37:40,040 Speaker 1: binary outcome. Either we have an off ramp and put 686 00:37:40,040 --> 00:37:43,919 Speaker 1: in realizes constraints and then the tenure resumes itself off 687 00:37:44,040 --> 00:37:47,319 Speaker 1: and tech gets killed or this is like near World 688 00:37:47,360 --> 00:37:49,880 Speaker 1: War three, and then why the heck are you inequities? Anyways? 689 00:37:50,239 --> 00:37:52,120 Speaker 1: So I don't really see a way in which like 690 00:37:52,239 --> 00:37:54,879 Speaker 1: Nasadack continues throughout perform. I think that's a head fake 691 00:37:54,960 --> 00:37:57,120 Speaker 1: and I wouldn't be following that that kind of an 692 00:37:57,160 --> 00:38:01,440 Speaker 1: investment recommendation. Tien up your st eight jackets. It's time 693 00:38:01,600 --> 00:38:07,080 Speaker 1: for the craziest things we saw in markets this week? Well, 694 00:38:07,160 --> 00:38:11,160 Speaker 1: vol donna um, even in these trying, uncertain times, I 695 00:38:11,160 --> 00:38:14,359 Speaker 1: think we need to stick with our tradition of the 696 00:38:14,360 --> 00:38:17,160 Speaker 1: craziest thing we saw in markets this week? I want 697 00:38:17,200 --> 00:38:19,000 Speaker 1: you to kick it off. What's the craziest thing you saw? 698 00:38:20,000 --> 00:38:23,759 Speaker 1: One of the wildest things was a story from our 699 00:38:23,800 --> 00:38:26,200 Speaker 1: friend Katie Greif felt actually, and as you know, the 700 00:38:26,280 --> 00:38:29,080 Speaker 1: Russian stock market has been closed this week, but there 701 00:38:29,160 --> 00:38:32,840 Speaker 1: was one way for investors to see how Russia centric 702 00:38:32,920 --> 00:38:35,560 Speaker 1: stocks were faring and how they might trade when things 703 00:38:35,760 --> 00:38:40,200 Speaker 1: open back up, and that's through ETFs. So on Monday 704 00:38:40,360 --> 00:38:44,000 Speaker 1: there was a Vanic fund that fell and an i 705 00:38:44,120 --> 00:38:48,759 Speaker 1: SES fund that felt, and those losses have just been 706 00:38:49,160 --> 00:38:52,040 Speaker 1: staggering obviously, but it is just one way to see 707 00:38:52,120 --> 00:38:55,360 Speaker 1: how things might play out once the Russian stock market reopens. 708 00:38:55,480 --> 00:38:57,879 Speaker 1: But to me, the craziest part is they both saw 709 00:38:57,880 --> 00:39:00,759 Speaker 1: a lot of inflows. I believe didn't they They did, 710 00:39:00,840 --> 00:39:03,160 Speaker 1: but I think it was for the creation redemption process 711 00:39:03,480 --> 00:39:05,319 Speaker 1: so people can short it. I don't know. It could 712 00:39:05,360 --> 00:39:09,200 Speaker 1: be yeah, I think, but not not because people were bullish. 713 00:39:09,280 --> 00:39:11,600 Speaker 1: I mean potentially, I think there there have been some 714 00:39:11,680 --> 00:39:14,399 Speaker 1: stories where retail traders are really interested in some of these. 715 00:39:15,160 --> 00:39:18,319 Speaker 1: I saw Eric Beltuna's tweeting about r s UX, one 716 00:39:18,360 --> 00:39:20,520 Speaker 1: of the funds, seeing a lot of interest on the 717 00:39:20,640 --> 00:39:24,319 Speaker 1: tdamer trade website and seeing many more by orders than 718 00:39:24,400 --> 00:39:28,000 Speaker 1: sell orders. But the Reddit crowd is all in on 719 00:39:28,120 --> 00:39:31,800 Speaker 1: they want to buy these Ukrainian war bonds. They I 720 00:39:31,880 --> 00:39:34,200 Speaker 1: saw that story too. I guess how about you, Marker, 721 00:39:34,239 --> 00:39:36,719 Speaker 1: Do you see anything crazy this week? I mean there's 722 00:39:36,760 --> 00:39:40,719 Speaker 1: so many things. I mean, yesterday's ECB burbage and the 723 00:39:40,800 --> 00:39:44,200 Speaker 1: carnage did in the bondo markets in Europe. The crazy 724 00:39:44,320 --> 00:39:46,680 Speaker 1: moves in the bond market to me, has been the 725 00:39:47,040 --> 00:39:50,200 Speaker 1: sort of most like just not you know, it's such 726 00:39:50,239 --> 00:39:52,920 Speaker 1: a macro variable. It's moving to alt it with such 727 00:39:52,920 --> 00:39:54,759 Speaker 1: a vutility. But I'm actually gonna give you something that's 728 00:39:54,920 --> 00:39:57,759 Speaker 1: a little less market. It's more like geopolitical. I think 729 00:39:57,800 --> 00:40:01,320 Speaker 1: the craziest thing that I've seen were those lineups in 730 00:40:01,880 --> 00:40:05,400 Speaker 1: Russian McDonald's to access the A T M S A 731 00:40:05,560 --> 00:40:08,320 Speaker 1: T M machines, because you know, twenty years ago, like 732 00:40:08,520 --> 00:40:10,879 Speaker 1: well no more, when I was like eight years old. 733 00:40:11,200 --> 00:40:14,000 Speaker 1: You know, I stood in those lineups and Communist Yugoslavia 734 00:40:14,200 --> 00:40:19,120 Speaker 1: to get my taste of American originality, of American fool 735 00:40:19,760 --> 00:40:21,880 Speaker 1: And it wasn't for the quality of the food. Like you, 736 00:40:22,000 --> 00:40:24,080 Speaker 1: Phil Dona knows what's up. Like, we got better food 737 00:40:24,400 --> 00:40:26,279 Speaker 1: in the Balkans than a big Mac. But you you 738 00:40:26,640 --> 00:40:29,560 Speaker 1: wanted that big mac for a different reason. And again 739 00:40:29,640 --> 00:40:31,720 Speaker 1: I go back to the point of white Vladimir Putin 740 00:40:31,840 --> 00:40:34,000 Speaker 1: has been popular in Russia. You know, it's not because 741 00:40:34,040 --> 00:40:35,960 Speaker 1: he beats people over the head with the police. It's 742 00:40:35,960 --> 00:40:39,440 Speaker 1: because he's delivered stability. And the fact that now twenty 743 00:40:39,520 --> 00:40:41,759 Speaker 1: years later, you go from waiting in a line to 744 00:40:42,200 --> 00:40:44,400 Speaker 1: to get a taste of a big mac, waiting in 745 00:40:44,440 --> 00:40:48,280 Speaker 1: a line to withdraw cash, that is going to imprint 746 00:40:48,440 --> 00:40:52,480 Speaker 1: on the Russian Psychekee particular set of memories that are 747 00:40:52,520 --> 00:40:56,399 Speaker 1: going to piss people off. Absolutely. I think Vobano only 748 00:40:56,680 --> 00:40:59,880 Speaker 1: eats the impossible burger whopper these days. Is there it? 749 00:41:00,239 --> 00:41:03,080 Speaker 1: I wouldn't even need that one, even I would like, 750 00:41:03,280 --> 00:41:10,360 Speaker 1: is there a cauliflower? But you need it's coming, It's coming. Listen, listen. 751 00:41:10,600 --> 00:41:15,440 Speaker 1: All that stuff is nothing. All right, great stuff. I'll 752 00:41:15,440 --> 00:41:18,080 Speaker 1: give you mine quickly here because we're going on a 753 00:41:18,160 --> 00:41:23,480 Speaker 1: long time. But the fact that Ukraine is soliciting donations 754 00:41:23,800 --> 00:41:27,240 Speaker 1: to its cause via the cryptocurrency market kind of blows 755 00:41:27,360 --> 00:41:32,319 Speaker 1: my mind. They're accepting bitcoin and ethereum. Someone sent them 756 00:41:33,400 --> 00:41:35,320 Speaker 1: on Twitter, at least they claim to send them. I 757 00:41:35,400 --> 00:41:38,240 Speaker 1: think a few million dollars worth of Polka dot the crypto, 758 00:41:39,040 --> 00:41:41,400 Speaker 1: and uh, there are people saying can't you send us 759 00:41:41,560 --> 00:41:43,719 Speaker 1: mint some n f T s and response as if 760 00:41:43,800 --> 00:41:45,720 Speaker 1: like n f T s or the New War bonds. 761 00:41:46,280 --> 00:41:48,840 Speaker 1: I find it crazy. But also Marco, you know, this 762 00:41:49,000 --> 00:41:53,560 Speaker 1: whole week has brought up a lot of discussions about 763 00:41:53,640 --> 00:41:57,600 Speaker 1: the role of the dollar internationally, the potential role of 764 00:41:57,680 --> 00:42:02,640 Speaker 1: crypto in either you know, Russians dodging sanctions or donating 765 00:42:02,680 --> 00:42:06,080 Speaker 1: to Ukraine. And you know, a lot of people believe 766 00:42:06,120 --> 00:42:09,640 Speaker 1: that this was a water shed event as far as 767 00:42:10,160 --> 00:42:13,840 Speaker 1: the financial world order, and that perhaps this is something 768 00:42:14,080 --> 00:42:17,319 Speaker 1: that knocks the dollar off its its pedestal as as 769 00:42:17,360 --> 00:42:20,840 Speaker 1: sort of the the global reserve currency, and you know, 770 00:42:20,960 --> 00:42:25,560 Speaker 1: the the only currency we transact commodity commodities in most commodities. Anyway, 771 00:42:25,760 --> 00:42:27,319 Speaker 1: I'm curious what do you think about that? Is there 772 00:42:27,320 --> 00:42:30,040 Speaker 1: a risk to the dollar from all these sanctions? I 773 00:42:30,120 --> 00:42:33,840 Speaker 1: think philosophically, I'm totally with you. Is crypto going to 774 00:42:33,880 --> 00:42:36,359 Speaker 1: replace it? I don't think so, but I definitely think 775 00:42:36,400 --> 00:42:38,759 Speaker 1: in emerging markets. You know, one of the reasons I 776 00:42:38,960 --> 00:42:42,439 Speaker 1: took crypto seriously is because of emerging markets. When I saw, 777 00:42:42,600 --> 00:42:46,560 Speaker 1: like the Brazilian we're starting to use bitcoin. You know, 778 00:42:46,680 --> 00:42:48,800 Speaker 1: this is when I realized, like, wait, this is serious stuff. 779 00:42:49,280 --> 00:42:51,759 Speaker 1: So I agree with you, but I would actually take 780 00:42:51,880 --> 00:42:54,040 Speaker 1: your question a different direction if I made just really 781 00:42:54,120 --> 00:42:56,960 Speaker 1: quickly I think. I think what's interesting also about this 782 00:42:57,040 --> 00:42:59,759 Speaker 1: war is that there is a generational component to it. 783 00:43:00,520 --> 00:43:02,719 Speaker 1: And what I mean by that is that fundamentally, like 784 00:43:02,800 --> 00:43:07,360 Speaker 1: a lot of reprutin is basically pursuing like boomer foreign pulse. 785 00:43:07,840 --> 00:43:13,239 Speaker 1: The interesting issue is that the metaverse, broadly defined, is 786 00:43:13,400 --> 00:43:18,400 Speaker 1: making it very difficult for a nation state to promote 787 00:43:18,560 --> 00:43:22,640 Speaker 1: a nation state propaganda because people have access to all 788 00:43:22,719 --> 00:43:24,600 Speaker 1: sorts of channels. Now people are kind of riding on 789 00:43:24,680 --> 00:43:26,759 Speaker 1: TikTok because there's a lot of like fake stuff going 790 00:43:26,800 --> 00:43:28,920 Speaker 1: on in TikTok right now, and that's fine, But the 791 00:43:29,000 --> 00:43:32,560 Speaker 1: point is that you can access different viewpoints and a 792 00:43:32,600 --> 00:43:35,480 Speaker 1: lot of people in Russia are same with Ukraine, and 793 00:43:35,640 --> 00:43:39,319 Speaker 1: that's I think creating a really interesting dynamic that none 794 00:43:39,320 --> 00:43:41,160 Speaker 1: of us are really talking about right now. But I 795 00:43:41,200 --> 00:43:43,560 Speaker 1: think it's going to be increasingly more and more difficult 796 00:43:44,000 --> 00:43:50,040 Speaker 1: to create a narrative of irridentism, of nationalism, of revounctionism, 797 00:43:51,160 --> 00:43:54,000 Speaker 1: just like purely from top down, like what happened in 798 00:43:54,040 --> 00:43:56,520 Speaker 1: my country, for example, with Slobano. Milust is controlling the 799 00:43:56,600 --> 00:43:58,520 Speaker 1: media and basically telling everyone like, oh, we need to 800 00:43:58,560 --> 00:44:00,400 Speaker 1: go and defend you know this, us in that, and 801 00:44:00,440 --> 00:44:02,640 Speaker 1: then everyone's like, yeah, let's do that, and then it 802 00:44:02,719 --> 00:44:06,560 Speaker 1: takes a decade of destruction of the economy and politics 803 00:44:06,600 --> 00:44:10,080 Speaker 1: of the country for people to finally revolve. Now it's 804 00:44:10,160 --> 00:44:12,839 Speaker 1: kind of more it's easier. It's easier to just show 805 00:44:12,880 --> 00:44:14,799 Speaker 1: your grandma, like, hey, grandma, maybe you should look at 806 00:44:14,880 --> 00:44:17,480 Speaker 1: this TikTok video to see what's going on, like look 807 00:44:17,520 --> 00:44:21,759 Speaker 1: at his child in Ukraine dying. And that's that's where 808 00:44:21,760 --> 00:44:27,360 Speaker 1: I think that crypto matavers, Web three, starlink, all this 809 00:44:27,520 --> 00:44:31,120 Speaker 1: stuff is having a really interesting and I think potentially 810 00:44:31,280 --> 00:44:36,200 Speaker 1: extremely positive and humane evolution in today's world. I wish 811 00:44:36,280 --> 00:44:38,400 Speaker 1: this stuff existed in the nineties when my country. Well, 812 00:44:38,640 --> 00:44:41,880 Speaker 1: it's the simple fact that everyone has a high definition 813 00:44:41,960 --> 00:44:44,560 Speaker 1: video camera in their pocket right now. You know, I 814 00:44:44,600 --> 00:44:47,040 Speaker 1: always stick back into the nightmares when I was a 815 00:44:47,080 --> 00:44:50,480 Speaker 1: kid that we're well in you know nine four scenario 816 00:44:50,600 --> 00:44:53,640 Speaker 1: where we thought the state would be spying on us constantly, 817 00:44:53,680 --> 00:44:56,200 Speaker 1: and it seems like the reverses being true. That you know, 818 00:44:56,320 --> 00:44:59,320 Speaker 1: the people are holding the the powers to be accountable 819 00:44:59,360 --> 00:45:03,360 Speaker 1: with the uh smartphone. Yeah, and I think the Internet 820 00:45:03,400 --> 00:45:06,200 Speaker 1: in space is a big deal. It's a very very 821 00:45:06,280 --> 00:45:09,400 Speaker 1: big deal because if you can continue to project information 822 00:45:10,280 --> 00:45:14,000 Speaker 1: through pipelines that exists in the air, like that's came 823 00:45:14,120 --> 00:45:17,680 Speaker 1: over for many countries in the world that repress information 824 00:45:17,800 --> 00:45:21,160 Speaker 1: from there from their public I do wonder if Putin 825 00:45:21,280 --> 00:45:23,120 Speaker 1: is going to have something to say to Elon Musk 826 00:45:23,280 --> 00:45:28,879 Speaker 1: someday for sending his his startling satellites over you and listen. 827 00:45:29,040 --> 00:45:31,040 Speaker 1: Those things are the size of a grapefruit, so good 828 00:45:31,080 --> 00:45:36,399 Speaker 1: luck trying to knock them out. So fair enough, fair enough, Marco. UH, 829 00:45:36,800 --> 00:45:40,399 Speaker 1: really fascinating conversation. We appreciate your time so much, UH, 830 00:45:40,600 --> 00:45:42,640 Speaker 1: and I hope we can bring you back again to 831 00:45:43,000 --> 00:45:46,640 Speaker 1: UH to get your download in the future anytime. Guys. 832 00:45:48,600 --> 00:45:50,839 Speaker 1: I really enjoyed it. Build on and Mike, it's an 833 00:45:50,840 --> 00:45:59,560 Speaker 1: honor to be on. Thank you What Comes Up. We'll 834 00:45:59,560 --> 00:46:01,719 Speaker 1: be back now sweet. Until then, you can find us 835 00:46:01,760 --> 00:46:04,759 Speaker 1: on the Bloomberg Terminal website and app or wherever you 836 00:46:04,840 --> 00:46:07,279 Speaker 1: get your podcast. We'd love it if you took the 837 00:46:07,360 --> 00:46:10,000 Speaker 1: time to rate and review the show on Apple Podcasts 838 00:46:10,160 --> 00:46:12,640 Speaker 1: so more listeners can find us. And you can find 839 00:46:12,680 --> 00:46:16,520 Speaker 1: us on Twitter, follow me at Reaganonymous well. Dotta Hirich 840 00:46:16,760 --> 00:46:19,760 Speaker 1: is at the Dotta Hira. You can also follow Bloomberg 841 00:46:19,800 --> 00:46:23,160 Speaker 1: Podcasts at Podcasts and thank you to Charlie Pell to 842 00:46:23,160 --> 00:46:26,840 Speaker 1: Bloomberg Radio. What Goes Up is produced by Laura Carlson. 843 00:46:27,200 --> 00:46:31,280 Speaker 1: The head of Bloomberg Podcasts is Francesco lev Thanks for listening. 844 00:46:31,480 --> 00:46:32,239 Speaker 1: See you next time.