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Mel, here we are. Q1 2026 ends tomorrow.

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And we're here for the quarterly update.

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Yeah, what a quarter.

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Longest first quarter in history, I think.

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Yeah, it's

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one of those quarters where years happen in weeks, I think.

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We'll get into it.

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We were just talking about it before we hit record.

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But I mean, you came out with a video that was pretty open and

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I think vulnerable on Friday talking about your,

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your battles with alcohol. And I thought it was, I was telling you,

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I think it was really admirable of you to put that out and recognize it and

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get it out there in the public.

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Cause I think it's important to not fight those battles by yourself.

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And so I'm happy that you, you did go public with that. And you're on a,

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it seems like on a path to getting cleaner.

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Yeah, I hope so. And I appreciate, you know, I know there's been people that have been supportive and, you know, that means a lot and it helps me.

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Anybody that's known me for any period of time, you know, has known that I have struggled with alcohol pretty much my entire life.

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It was it was kind of one of these, you know, love at first sight things with me where there was no like building into it.

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Like I've always struggled with it.

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And I've had periods of time where I'm sober for years, you know, spent time in AA.

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I have a sponsor.

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So it's something that I've recognized as a battle for me.

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And sometimes I do really well fighting the battle.

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And sometimes I get into weak situations and weak times and weak periods in my life where, you know, I don't do the recovery work I should.

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I start thinking things are, you know, all right. And that's when it, you know, slips into you,

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you know, as they say in the program, you know, it's cunning, baffling and powerful. And,

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you know, while you're not drinking, you know, alcohol's in the garage doing pushups,

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you know, waiting for you to come back. And so basically, you know, what happened to me really

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was I was in a really good place. I would say two, three years ago when my book came out and,

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And, you know, I had really like spent a lot of time on kind of fitness and sobriety during the pandemic, actually.

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And I just kind of slowly started slipping back into it and and thinking that I was all right.

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And when you suffer from this, you know, that's that's a false sense of security.

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It's just something that, you know, does happen to people.

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It's great when people like go into the program and, you know, they have this epiphany moment and some people do.

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the vast majority of people, you know, they struggle a little bit and they don't, you know,

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go to that first meeting and they're sober the rest of their life. It's more of an on and off

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battle. And people have slips, people have relapses, and then people get into bad phases.

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And I got into one of those bad phases recently. And, you know, fortunately, I have the opportunity

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to like check myself and pull myself back right now before any, you know, real damage is done

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other than, you know, making some jerky, stupid posts or, um, embarrassing myself a little bit,

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um, you know, before any serious damage is done. And so I just wanted to say to people that have

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followed me and listen to me, you know, um, if you read a post or you've seen me, you know,

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after a few drinks, you know, on a podcast, you're like, what the hell's up with this guy? Like,

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you know, when I'm, when I'm on the ball, I'm pretty good. And, you know, I've let some things

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slide. And so I would just, you know, apologize to people and say, look, you know, that stuff

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really wasn't me. It wasn't the person that I want to be. It was somebody who's, you know,

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kind of suffering and dealing with alcohol use disorder. And, you know, I'm trying to get better

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and I'm working on it. And like I said, I'm fortunate that, you know, I'm not in this

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kind of rock bottom, lost it all position. You know, I have people that love me, support me and

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understand this. And so I'm going to, you know, get back to the work, get back to focusing on

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on that aspect of my life more than, you know, just the markets and things. But, um, you know,

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it's, uh, it's not easy. It's not easy, but you know, I, I've, I've seen so many people that I

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respect and admire go through, you know, issues with addiction and alcohol. And I think it's,

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it's something that just comes after people, you know, and, and you have it. And, and, and, you

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The only thing you can do is work to get better and acknowledge it and do the best you can because it really is something that – it tears up families, tears up lives all over the world.

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And it's not fun.

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It's not fun.

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It stopped being fun for me a long time ago.

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And that's where I'm at with that.

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No, no, like I said, we've never met in person, but we've been developing this relationship,

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doing these quarterly updates for two, three years now.

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And that care by end, I'm here for you.

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And I'm glad to see that, again, you were wise enough to basically go public and be

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vulnerable and make a public statement like, hey, I'm in a bad spot and I'm looking to

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get a better one.

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If anything, this quarterly update can serve as a step in that direction where we step back, look at what's going on in the markets, in the world, and try to provide people with some signal based off your analysis, which throughout the years has been pretty spot on.

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and some misses here and there, but I think that's why people really love these discussions

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because your perspective is certainly unique and oftentimes correct in retrospect.

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So like we mentioned, it's been a crazy first three months of the year.

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Obviously, the war popping off in the Middle East, we have severely hindered oil and gas

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infrastructure supply chain, which I think many people, particularly on X and I think in the

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circles that we observe are saying it feels like February 2020, pre-COVID, pre-lockdown,

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where the people who are very online, like ourselves, are saying this is not going to be

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a quick and easy fix and people need to prepare. And while most people who are not terminally

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online or a bit oblivious outside of what they're seeing at gas stations right now.

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Yeah, I mean, this this is definitely we've gotten ourselves into a pickle here,

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to say the least. And it's been a little shocking to me, to be honest with you,

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because I've been following this Iran situation closely. And, you know, I'm not calling myself

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some grand, you know, military strategist or expert. But I do follow a lot of people that I

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really respect that have spent their lives doing this type of stuff. I mean, whether it's like a

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Colonel Douglas McGregor or a John Mearsheimer, or, you know, there's a couple favorite shows that I

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like. One's called Daniel Davis Deep Dive by this former lieutenant colonel. And he has a lot of

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great guests, like a, you know, a Ted Postal guy who's worked at MIT his whole life studying like

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missiles and interceptors and like people that really know this stuff. And these aren't the type

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of people that get time on Fox News or CNN, because what they're saying doesn't fit the narrative

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that, you know, the powers that be want out there. But these are the guys that really know what's

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going on. And to these guys, like not that much that's happened is really that surprising,

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other that we actually did what we did.

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Because they were saying when the troop buildup was going on in Iran,

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like, there's not a military solution here.

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Yes, we have the most powerful military on the planet,

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but sometimes there are solutions for which the military isn't the answer, right?

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You think that, hey, I could tie it into my own situation.

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Like, it's like, hey, you know, I've got great willpower.

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I can work hard and do this and do that.

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And it's like you come up against something that willpower is not the solution for.

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You need to find a different solution. And, you know, this this thought process that the U.S. military, we're just going to drop some bombs and we're going to achieve all these objectives was kind of foolhardy from the beginning.

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So I was not actually too worried about it. As recently as when Trump did his State of the Union address, which was just a few days before the attacks began, you had guys like Mearsheimer on there saying, hey, Trump's saying like, if Iran says the magic words, no nukes, you know, this doesn't have to happen.

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And then you had good signals coming out of Oman, like there's negotiations. And so the fact that there's no military solution, that Israel's been trying to talk the U.S. into this for decades, and every president in the Pentagon has basically come to the conclusion this is a bad mission.

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And yeah, we'd like to get rid of the Iranian regime, but the military solution just isn't there.

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I just didn't think it was going to happen.

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And when it did happen, I thought, well, they must have like a rabbit up their sleeve, like a Delce Rodriguez or something.

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They're not going to actually do this, are they?

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And by like the fifth or sixth day and it became clear, like, no, this is just they're going down this route.

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I, for the first time since in December, one of our first quarterly meetings in December

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of 2024, when I was saying, hey, buy puts, raise cash, for the first time I did that.

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And fortunately, this market actually gave you a chance to do this.

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We were still trading like 6,800, 6,850 on the SPY, seven, eight days after this thing

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started.

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I mean, we even went positive on the NASDAQ and the S&P the Monday after the attacks.

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So the market, I think, was kind of in the same kind of general agreement with me, like we're not really going to do this, are we?

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And once it became clear, which for me was like five, six days after the attack started, I think the market generally started to get this maybe the second or third week and then definitely last week.

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You know, people are realizing like there's no easy exit here.

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And every day that goes by, Iran is just getting in the driver's seat more and more.

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And and what's to stop them from truly demanding their goals being met of us getting out of the Gulf, abandoning our bases?

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You know, oil starts trading in yuan.

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They start collecting a toll on the Strait of Hormuz.

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Like because we don't have we don't have leverage with them.

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To use Trump terms, we don't have any cards.

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What are we going to do?

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he sends out a post this morning that makes me wonder if he's lost touch with reality,

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where he's just saying we're going to hit their energy plants and maybe their desalinization

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plants. And it's like, don't you realize that these guys have missiles that can do that exact

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same thing to the entire, you know, GCC where like, they're obviously like 80, 90% dependent

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on desalinization or, you know, talk about like in the beginning, like this BS about, oh, well,

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the reason the straits not open is because people won't give insurance, but it's safe.

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It's like if it was safe, the U.S. Navy would be in there and the oil would be flowing.

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So there's just been this massive, massive propaganda to convince people that there are

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some really good options on the table for the United States. And right now, everyone that I

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know doesn't see them. And I think the best case situation is that somehow we actually do

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sacrifice a lot, like get a bad deal, but at least get out of it. But what I'm worried about

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is the probability that we don't and that, you know, this escalates and continues. And it has

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the potential, I believe, to spiral all the way to the possibility of a nuclear exchange,

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specifically between Israel and Iran. And I think we didn't know Iran had missiles that could

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reach Diego Garcia. And for all we know, since last June, they took that 60% uranium,

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ramped it up to 90%, and they could very well have a nuclear weapon for all we know.

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And so I think that's a big fat, you know, a big tail on the end of the spectrum.

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But the fact that that's even something that I think is a serious scenario people need to consider is a pretty ridiculous place for us to be, given I thought we had a lot of tailwinds heading into this year.

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Yeah. And actually, I was reflecting on our past two conversations.

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And I forget it was the last one or the one before that, but it was right after we went in and exfiltrated Maduro from Venezuela.

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And I asked you, like, what are and that was one of those operations where it was six hours in and out.

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It came pretty clear that it seemed like we wanted ground forces in Venezuela.

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It wasn't going to be some prolonged conflict.

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And I asked you, like, I think you were pretty bullish on the execution of of what happened in Venezuela specifically.

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And I asked you, what are you worried about moving forward?

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And is that something like this boost his confidence to the point where he goes, oh, now we go get Cuba.

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Now we go to Iran. And it seems like that now that scenario is playing out because he is saber rattling at Cuba in parallel as well.

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Yeah, I do. I remember saying that. I remember saying what's worrying me is that he's on a hot streak. And I've been on a hot streak as a trader where it seems like every single thing I touch turns to gold. And you start to start believing your own hype. And you put down a big bet on something and then that big bet is wrong. And it makes those past gains not look that great.

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And I think he had a lot. He was he was rolling up like kind of a string of pretty good victories.

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Like he kind of extricated the U.S. and Israel out of the 12 day war with that strike on Fordow and the other nuclear facilities in Iran.

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No American casualties. Midnight Hammer looked brilliant.

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Then you had, you know, the Maduro raid.

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I mean, things were looking like, hey, he's being able to surgically use military force to achieve kind of a tactical objective with very little cost in lives, frankly, not only to us, but also to our enemies.

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People might die on either side, but in the grand chess game of geopolitics, relatively small casualties or zero on our side in Midnight Hammer and the Maduro raid case.

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And, you know, it's like, hey, if I think he I think he really believed that he could do the same thing.

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And there's a lot of talk about, you know, Mossad, you know, seven in-face meetings between Bibi Netanyahu and Trump.

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since he became president, kind of convincing him away from U.S. intelligence,

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like kind of bringing him on board to we can go in and hit them.

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They're weak. They're ready to collapse.

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And this is really a concern of mine is just this this influence that the Israel lobby

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and that certain contributors to Trump have.

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And I think a lot of people, you know, they kind of know it exists, but they don't I don't think they really understand how pervasive it seems to be in this case with this president in particular.

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I mean, I think you have people that he's putting in key roles like Jared Kushner and Whitcoff.

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And you have to question, are they totally allegiant to the United States?

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And, you know, an example that I would give is like an or an analogy is I'd imagine like let's say you work for a company for like 20 years or I don't know, let's say you still have friends.

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You have maybe some family members that work at this company.

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Let's say it's Apple.

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Then you go to work for Microsoft and you see an opportunity to do something while you're working at Microsoft.

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That's going to cost Microsoft, you know, 20, 30 cents per share off their earnings.

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But you know that if you do that, it's going to cost Microsoft 20 or 30 cents,

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but it's going to save $5 a share off of the earnings of Apple.

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And you think, wow, I've got all these friends.

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I've got these family.

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Maybe I've still got stock options there.

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It's going to be a little bit negative for Microsoft, but it's really going to help out

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Apple.

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So, you know, I'm going to do it.

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If an employee did that, a boss would come in and say, hey, man, you're fired.

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You're making decisions against us because you want to. And I think there are very powerful people in the United States government who somewhat or absolutely do feel that way about Israel, where they see it as almost an extension of the United States, or they feel that it's legitimate to take Israeli national interest into concern when it comes to United States strategic decisions.

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And this is a very serious issue, in my opinion. I mean, this is this is to me, Israel is the greatest danger to the United States from a nation state perspective.

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perspective. And I think the evidence is in what's been happening the last month with us getting

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dragged into a war that's completely not for our national security interests, has a very low

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likelihood of success, and is only hurting the American people, putting our troops at risk,

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possibly driving the global economy into a recession. And I think that the clock is ticking

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for getting us out of this without extreme damage, extreme damage. And I think there's still time

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left to do it and the economy can recover. And that would still actually be my base case. Like

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after all this, I still think we can end up with a pretty good year in financial markets.

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But I think some hard decisions need to be made in the next two, three weeks, next month top.

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And if they not we could start going down a path that just has like you know 35 40 possible declines in say the broader markets written all over it

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And that's probably not even, you know, the worst case scenario.

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Yeah.

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No, I mean, I think, and it's funny because you mentioned you were, he got in a hot streak

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last year.

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And then I went back and read the tape.

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I think it was this quarterly update last year.

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I threw out there, my biggest worry was Israel convincing the Trump administration to go troops on the ground in Iran.

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And when the 12-day war happened in June, I was worried and happy to learn or happy that it was only a 12-day war when they got out.

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But this time around, I was in Florida when the bombs started dropping that Friday night and Saturday morning.

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It was just like, oh, God, here we go.

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Because I don't like once you get into this stuff and again, I think.

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The the scariest thing of the last month is just how the.

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Sort of etiquette of war has been thrown to the wayside, particularly with the targeting of energy infrastructure, refinery infrastructure and the.

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rhetoric around bombing desalination plants. Like once you

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cross those lines, it's very hard to come back from that. I really hope we can

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pull back from the edge as it pertains to that stuff.

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Yeah. I mean, it's, it's, it's been a total disregard. It's not just like crossing over

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the line a little bit. And I mean, you look at, you know, there's things in the UN

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charter and article two and different stuff about, you know, you know, nations should,

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you know, should, should go through every single diplomatic effort available before engaging in

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hostilities and only then like in self-defense and, you know, the only way that is possible to

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kind of wage like a first strike is if there is like an imminent threat. And that's why this word

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imminent is always brought up because it's actually in, you know, international law and it's, it's,

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it's basically, you know, defined and, and, and it's pretty clearly defined and it needs to,

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when they're saying imminent, they're talking about like nuclear bombs are in the air and can't

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be called back. They're not saying like, well, you know, it's possible because I mean, obviously,

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I mean, any country at any point could say it's possible somebody is going to attack us in the

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future. You know, it's very possible that one day China might attack us. It's very possible that one

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day Pakistan might attack India. It's very possible one day North Korea might strike South Korea.

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I mean, all these things are possible threats. And so they define imminent pretty clearly. And, you know, I understand that international law is not anything that can reign in, you know, nation states. I mean, this is like at the end of the day, nation states are living in an anarchical world. Like there is no like true higher power.

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The UN doesn't have, you know, they can, the war courts can put out arrest warrants, but if you can't enforce it, I mean, what is it? But there's a reason why that framework was put in place after World War II in the language of the documents to avoid the scourge of war is why they did it.

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And the idea was, let's put these things in place to try to avoid war at all costs.

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And it just seems like after that hot streak, like it began to start to forget about what war can actually become.

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And it can just be like a video game.

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And they've even put out, you know, videos from the White House, like kind of comparing our strikes to video games, which is really kind of depressing to see.

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And then you saw a post this morning from, yeah, talking about taking out desalinization plants. And I mean, these are all things that are clearly war crimes. I mean, I mean, you Pete Hegstead, no quarter, like they've gone beyond the pale of like tough talk to achieve a goal.

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It's now like they're starting to do some of these things.

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And we've seen Israel do some of these things.

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And the thing that people need to realize, people might say, well, it's war.

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You got to do what you got to do.

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But in this situation, as I mentioned at the top, like Iran has cards to play.

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I mean, they have very good missiles and a lot of missiles.

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And they have these missiles in underground bunkers that even, you know, Moab and bunker

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buster bombs can't get.

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you know, there's no way to destroy them without like sending in boots on the ground. Like they're

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going to have these missiles. We can bomb their power plants. We can bomb their desalinization.

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They're still going to have these accurate missiles. They're still going to have

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targeting information. They probably already have targeting information from the Russians

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and Chinese on all of these vulnerable assets in the region. And you take out like the desalinization

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capacity for Riyadh. And you're talking about a humanitarian crisis with hundreds of thousands

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possibly dead. And I mean, the Gulf Coast countries are like 50% of the people there are

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dual nationals. They're not even citizens of the country. I mean, that entire area could become

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like a ghost town. I mean, everything that's been built up in these places like Abu Dhabi and Dubai

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and Riyadh over the decades to try to create something for themselves post-oil world is being threatened right now.

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I mean, everything is being threatened.

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And with no good military solution on the table that anybody with any brain in their head can see,

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you start to get worried that is this, you know, something that could drive Israel to say,

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look, we need to do what we need to do. And that means a tactical nuke or, you know,

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they're said to probably have around 200 warheads, you know, maybe a mass bombing of Iran. I mean,

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that actually starts to become a possibility, which is absolute madness. And as I said earlier,

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I think there is a chance that Iran has a nuclear weapon as we're speaking. And, you know, some of

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these guys that it's become a joke that Iran is two weeks away from a nuclear weapon for the last

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15 years. But that's been part of their thought out strategy is we're not going to have a nuclear

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weapon. We're going to have all the pieces for a nuclear weapon and we're going to keep it ready

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in case we need one on short notice. We're going to have uranium up to 60% enrichment. We're going

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to have probably bomb designs, warhead designs. They have missiles that can get fitted with nuclear

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warheads so that at any point in time, it's like you have a big jigsaw puzzle on your table and you

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get it 90% complete. And then you just forget about it for five years. Yeah. But in the last

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five years, you've been two more hours of working on it away from completing the jigsaw puzzle.

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It is possible to be two weeks away from a nuclear weapon for the last 10 years. And I think

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they have been anywhere from what I've seen from the experts. Some say that it's as little as two

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to three weeks. And I've seen some people say tops, like six months. And so if they started

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working on this in extra secret, you know, circumstances, you know, after June, after that

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first attack on the nuclear facilities, it's very possible they have one. And obviously our

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intelligence is not perfect because we've seen that they launched a missile at Diego Garcia and

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we had no knowledge that they had ballistic missiles that could be sent that far away from

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Iran. So we're literally dealing with a situation where we might have two nuclear powers in Israel

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and Iran who are seriously considering using those. And I mean, the question is, is why?

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Why have we gotten ourselves into this situation? Iran has been basically at the same posture

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for the last 15 or 20 years.

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And there has been this shift in the United States

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of recognizing that a lot of U.S. foreign policy

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towards Israel is not necessarily in U.S. self-interest.

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And it's been growing, and you can see it in the demographics.

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And you get this sense that like Netanyahu and Superhawks,

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even in the U.S. State Department, like the neocon type people,

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they might have seen this period as the last chance. Like this is it. It's now or never.

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If we're going to do something about Iran, we do it now. And I mean, it could have been a big

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Mossad operation to manipulate Trump, to feed him false intelligence coming from Bibi Netanyahu.

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And then some of the things that Trump says, I mean, he seems to be losing in touch with reality

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at this point, where he's talking about we've achieved regime change, we've won the war.

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And the only thing about Trump is he did go to a church growing up in New York City.

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It was kind of like a positive thinking manifestation type message from this particular

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congregation.

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Like you say things and they become reality.

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And so he does have a tendency to just say what he wants to happen.

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But you almost start worrying, like, is he surrounded by so many yes men?

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Has he been given so much false intelligence fed through Bibi that that he actually doesn't really understand the gravity of the situation?

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And even the way that somebody like Mearsheimer or Colonel McGregor or one of these guys understands.

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And if he doesn't understand that, he could believe that, oh, we can send boots on the ground and we can do this.

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We can take these islands. And I mean, it's just it's just ridiculous.

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It's like Lindsey Graham talking about like, oh, Iwo Jima.

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I mean, Iwo Jima, it's like there were 20,000 Japanese on Iwo Jima and there were 25 plus thousand marine casualties to take that island.

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OK. Iran has a million man army. All right. Use those same percentages. So what do we need? You know, 1.3 million, you know, U.S. casualties. Yeah. Oh, we could suffer that. I mean, the U.S. could do it.

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we could carpet bomb them with nukes. We could raise 200,000 troops and we could mobilize forces

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and spend the next three years losing hundreds of thousands of people. For what? I mean,

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nobody wants it. The cost is way too high. Nobody wants that, obviously. It's ridiculous to even

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consider that. But that's like kind of what it would take to take Iran. And so we've got this

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situation, um, and, and just on Iwo Jima, like, I mean, yeah, it was like six, 7,000 killed,

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like 20,000 casualties. There were like 20,000 Japanese on the Island. And by the end of it,

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um, there were only a few hundred Japanese alive. So over 90% KIAs for, for the Japanese force,

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like that's what Iwo Jima was. So, uh, we don't want to be bringing up Iwo Jima as a, you know,

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some sort of a model for future action.

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No.

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And that's one of the heuristics that I've been using throughout all this is

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like,

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uh,

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if Lindsey Graham is happy,

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I don't think we're going in the right direction.

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No,

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he's horrible.

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I don't know.

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I mean,

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some of these people,

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I mean,

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it's like,

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I don't know.

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It's like general Jack Keene on Fox.

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I mean,

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he works now for something called the Institute of war,

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which is completely funded by like Raytheon,

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Lockheed Martin,

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because,

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you know,

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it's one thing when Lindsey Graham says something or even Pete Hex said,

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but then you see like a four-star general,

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like general Jack Keene or a three-star general,

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this guy,

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Keith Kellogg,

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who actually was the division commander for the 82nd airborne start talking

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about how,

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Oh,

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we'll take casualties,

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but these young kids,

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they know what they're signing up for.

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You know,

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we'll put them in like,

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what are these people thinking?

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Are they,

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are they really insane? I mean, you start to think like these are, these people have some sort of

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psychopathy, like there's something wrong with these people that they're almost giddy about some

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of these strikes or talking about it. Some of the commentary that's come out of Trump, like doing it

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for fun, or I told Pete we were going to wind up the war and he said, oh, that's too bad. Or, I mean,

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Some of some of this language, it's almost unreal that this is coming from the top people in the United States.

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It makes me. I'm not going to say embarrassed, but it definitely makes me regret voting for Donald Trump.

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Now, I wouldn't have voted for Kamala Harris either. I shouldn't have voted for anybody after seeing the behavior from this administration in the last month.

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And I've said this on X, like, I got to admit it, like I was wrong.

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I think a lot of people that voted for Trump feel the same way.

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And that's the other confounding thing about it.

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He's destroying the coalition he spent the last 10 years building up.

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And he's going back to people like Condoleezza Rice, or he's pointing out quotes by like this

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guy, I think his name is Scott Yates, who was the national security advisor for Dick

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Cheney.

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Cheney as like people you need to start listening to again. Condoleezza Rice and Dick Cheney's

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national security advisor. I mean, and this was something that was always a concern of mine. I

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always would say, you know, I'm not a Trump sycophant. There are issues I have with him,

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particularly with his policies and his stance toward Israel. I didn't understand why he didn't

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take the same stance toward Israel that he took towards the Ukraine, which was like, look, this

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isn't our war. Yeah, we want them to do well, but it's not that important to us. And I'm like,

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yeah, because they're a foreign country. And that's the way we should think about Israel.

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This is in George Washington's farewell address, where he says a nation should neither be friend

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nor foe. I think he uses the term an excess of fondness or hatred for another nation,

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for to do so makes that nation to some degree a slave.

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And he's basically nailing it on the head in the farewell address

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that nation states should not have friends,

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what he called an excess of fondness.

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And there continues to be this display of an excess of fondness towards Israel

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and an excess of hatred towards Iran, which does indeed make the United States to some degree a

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slave. And it's not pretty. It's not a good situation to be in. What Washington was thinking

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about was Jefferson being too fond of the French and too hatred towards the English, and John Adams

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being too fond towards the British and too much hatred towards the French. And that was what

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prompted him to say that. But in this situation, we have, you know, kind of the same dynamics

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playing out where there seem to be powerful people in the government, including the president,

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that seem to think that Israeli national interests should be taken into account

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and into the calculus for United States national interests. And that's just not the way it's

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supposed to be, at least if you agree with George Washington.

377
00:35:55,218 --> 00:35:56,958
Yeah, I do agree with him.

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As somebody millennial, mid-30s now, it's hard to admit, I grew up with 9-11, the Iraq,

379
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Afghanistan war, Snowden leaks, the WikiLeaks.

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Part of the reason why I'm in Bitcoin is staunch, anti-interventionistic.

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I think the money printer, the bankers are funding the wars and enabling it.

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And that's part of like a very strong reason why I'm in Bitcoin.

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You know, do what I can to focus on something that takes some of that,

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that power away from these governments and,

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and gets us away from all these conflicts, which have proven.

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That's the other thing is just like we pulled out of Afghanistan, what,

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two, three years ago. Now at this point, it was complete clusterfuck,

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but it was like, all right, we were there for 20, however many years.

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And now we're out and it's like, oh, we're going back to the Middle East.

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And to your point, if things don't deescalate or we don't find a way out of this, in the near term, I think similar to you, I'm convinced that this is going to be a prolonged conflict that costs a lot of lives, a lot of money and disrupts the economy, which is probably something we should get to is like markets, I guess.

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for the audience, like painting the different scenarios and maybe starting with what's the

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extent of the damage that exists today and its effect on markets and what are the different

393
00:37:22,998 --> 00:37:28,758
paths we can go on from here, considering different reactions from the Trump administration.

394
00:37:29,678 --> 00:37:35,138
Yeah, yeah. Let's tie it into the markets and finance. I mean, the one last little point I'd

395
00:37:35,138 --> 00:37:42,638
before I do that is it was it was fascinating to like listen to Joe Kent on on Tucker talking about

396
00:37:42,638 --> 00:37:48,318
what he called sinister forces, possibly forcing Trump's hand and talking. I've seen other people

397
00:37:48,318 --> 00:37:54,238
talking about like possible Mossad threats against like killing Trump's grandchildren and

398
00:37:54,238 --> 00:38:00,878
Epstein file things. And, you know, what do they have on his head? And I think the fact that you

399
00:38:00,878 --> 00:38:05,918
have somebody like Joe Kent, who is the head for the Center for Counterterrorism, like the number

400
00:38:05,918 --> 00:38:12,538
two guy in the intelligence structure, talking about he's worried that sinister forces might

401
00:38:12,538 --> 00:38:17,818
have forced the president of the United States hand. Like, this is pretty scary stuff that we're

402
00:38:17,818 --> 00:38:22,758
in. And I just hope, I just hope that we come out of this. But I just wanted to say, like,

403
00:38:23,098 --> 00:38:27,978
because it's just so confounding to me. Like, why would you do this? This was so obviously a

404
00:38:27,978 --> 00:38:32,718
military disaster waiting to happen. It's not in the interest. It's breaking apart the MAGA

405
00:38:32,718 --> 00:38:38,498
coalition. It's like it's destroying the economy, which it's breaking every promise you made,

406
00:38:38,558 --> 00:38:45,298
no foreign wars, a great economy, lower prices. And let's segue it there with lower prices,

407
00:38:45,298 --> 00:39:02,296
because one thing I always been a proponent of in the last year or two is putting up a chart just showing like CPI overlaid with WTI oil and saying that a lot of people I thought gave way too much credit

408
00:39:02,296 --> 00:39:07,716
to like all the money printing for the massive inflation we had after the pandemic. And I said,

409
00:39:07,716 --> 00:39:15,876
there was also a massive, massive oil spike. There was literally like $150 spike in oil

410
00:39:15,876 --> 00:39:19,576
from the low to the high between 2020 and 2022.

411
00:39:20,036 --> 00:39:23,276
We had like negative $30 a barrel oil.

412
00:39:23,516 --> 00:39:26,576
And at the peak after Ukraine, we were at $120, $130.

413
00:39:27,116 --> 00:39:30,256
That spread, that's like $150 spread.

414
00:39:30,876 --> 00:39:33,176
That's a massive oil spike, $150.

415
00:39:33,796 --> 00:39:36,076
The equivalent would be we were at like 55.

416
00:39:36,316 --> 00:39:38,156
It'd be like oil going to 205.

417
00:39:38,156 --> 00:39:40,816
That was the type of jump we had.

418
00:39:40,816 --> 00:39:50,016
and oil spiking. Oil is the key driver of inflation, in my opinion. It starts off in the

419
00:39:50,016 --> 00:39:58,396
headline. And if it stays some high long, it moves into core. And because it's involved in so much of

420
00:39:58,396 --> 00:40:02,316
the economy, it's the transportation, it's the moving goods, it's in the plastics, it's in the

421
00:40:02,316 --> 00:40:07,676
fertilizers, it's in the gases, it's in everything. And the thing that I was always saying to people,

422
00:40:07,676 --> 00:40:15,196
don't be worried about inflation coming back. Look, oil's $55 a barrel. You don't have to worry

423
00:40:15,196 --> 00:40:24,436
about it. And yeah, there you go. There's WTI. And I wasn't worried about it because oil,

424
00:40:24,896 --> 00:40:30,416
it looked like it could possibly even head to the 40s. And when you inflation adjust that,

425
00:40:30,416 --> 00:40:35,276
I mean, that's about as cheap as we've ever seen oil in the last 30 years. So

426
00:40:35,276 --> 00:40:38,896
So I was like, there's nothing to worry about with inflation.

427
00:40:40,276 --> 00:40:45,176
And so I think what we've seen markets doing is worrying about that.

428
00:40:45,576 --> 00:40:47,356
Then what does that mean?

429
00:40:47,436 --> 00:40:49,316
It means possibly rate hikes.

430
00:40:49,416 --> 00:40:50,096
What does that mean?

431
00:40:50,136 --> 00:40:51,656
It means higher two-year yields.

432
00:40:52,316 --> 00:40:53,736
Now we've got higher bond yields.

433
00:40:53,836 --> 00:40:56,356
Now we have to lower the PEs.

434
00:40:56,356 --> 00:41:01,056
All these things start flowing from this higher oil price, higher for longer.

435
00:41:01,816 --> 00:41:13,256
And one of the things I said at the beginning of this war was it would almost be better to have like a spike to 150 and like a quick end of this war come than like something that can be drawn out.

436
00:41:13,256 --> 00:41:25,496
And we're we're we are in a situation where one of the possible situations is like this drawn out conflict, like maybe some boots on the ground, but it's a lot more of this missiles back and forth.

437
00:41:25,496 --> 00:41:33,356
and the economy doesn't completely shut down or go to $200 a barrel because Iran is letting

438
00:41:33,356 --> 00:41:38,436
China tankers go through and stuff like this. And so instead of having some sort of a resolution

439
00:41:38,436 --> 00:41:45,276
anytime soon, we get this long drawn out conflict where oil just hovers between say 90 and 150.

440
00:41:45,936 --> 00:41:52,276
And you do that and you are going to start getting 6%, 7% inflation down the road.

441
00:41:52,276 --> 00:42:00,336
And then you add on to that, you know, the already slowing labor picture and all of these

442
00:42:00,336 --> 00:42:02,216
AI concerns that people have had.

443
00:42:02,356 --> 00:42:09,336
And you do actually wind up getting into that 1970s stagflation situation, which I thought

444
00:42:09,336 --> 00:42:14,936
would be impossible for us to get into because oil was so well behaved and we were oversupplied

445
00:42:14,936 --> 00:42:17,876
in the United States as the world's biggest producer and all of this stuff.

446
00:42:18,316 --> 00:42:21,516
So we've got so many risks on the table for the market.

447
00:42:21,516 --> 00:42:31,916
And I think even the best case scenario, which is this thing wraps up in the next few weeks somehow magically, there's going to be this new premium on oil.

448
00:42:32,236 --> 00:42:43,056
And that's going to be a big headwind that's going to stop Warsh from being able to lower rates as much as I thought at the beginning of the year he was probably going to be able to.

449
00:42:43,056 --> 00:42:57,076
I still think he's going to lower rates because I think the economy, eventually, if the prices are that high for that long, it will start to drive recessionary and create demand destruction and all that stuff eventually.

450
00:42:57,836 --> 00:43:01,196
But by that point, I mean, man, that economy is already going to be wrecked.

451
00:43:01,376 --> 00:43:06,136
And like I said, we're going to be 25%, 30% off the highs in the broad indices.

452
00:43:06,136 --> 00:43:12,876
So I think the marketplace, like the next two to four weeks are extremely critical.

453
00:43:13,056 --> 00:43:28,976
Because if this thing doesn't have a clean off ramp in sight, I think that the markets are just going to inevitably have to really start pricing this in and not just a 10 or 15 percent decline, which is kind of what I'm hoping for.

454
00:43:28,976 --> 00:43:39,076
Something that takes us down to the pre tariff highs, which is around, say, 610, 615 on the SPY, something around 6100.

455
00:43:39,076 --> 00:43:52,136
You know, and if there is no clear off ramp or if there's continued escalation, then I think we're going to have to go down a whole nother level, maybe all the way to the tariff flows.

456
00:43:53,156 --> 00:43:59,396
So, I mean, this set of scenarios, you know, going forward is just not good.

457
00:43:59,396 --> 00:44:05,016
And so from my perspective, what I'm trying to do is hold a lot of cash, hold puts.

458
00:44:05,016 --> 00:44:13,896
I think gold is the one thing that I've added to strategically when it touched the 200 day and got down to 4,100 last week.

459
00:44:15,236 --> 00:44:28,996
Because I think whenever this wraps up, what is going to have to happen is going to be Federal Reserve intervention because we've got the private credit concerns.

460
00:44:28,996 --> 00:44:55,276
I mean, there's so much to unpack in all of this, but I think the main point is, is that when the dust settles, in order to pick up the pieces without a massive recession that collapses tax receipts, that essentially leads to three, four trillion dollar deficits, which then collapses the sovereign bond market, you know, across the developed world.

461
00:44:55,276 --> 00:45:00,056
The only way out of that is going to be massive coordinated global central bank intervention.

462
00:45:00,996 --> 00:45:06,416
And this is going to be the golden opportunity for gold.

463
00:45:06,416 --> 00:45:23,996
And for Bitcoin, it needs to break away from that tight, tight, tight software correlation and really move into its own as a store of value liquidity asset, which it always has been.

464
00:45:23,996 --> 00:45:43,016
But the liquidity is being drawn out of the system right now, especially with higher oil prices. Once we get into that situation where the liquidity is being pumped in again, that's when the gold and Bitcoin, I think, are really going to shine. And I think they're going to have a great year when all this is said and done.

465
00:45:43,016 --> 00:45:49,196
but the path there can either be a hard path or it can be a really,

466
00:45:49,436 --> 00:45:51,436
really hard, horrible path.

467
00:45:51,616 --> 00:45:55,636
And I hope we just have to take the semi hard path and not the,

468
00:45:55,636 --> 00:45:57,496
the disaster path.

469
00:45:58,636 --> 00:46:00,996
Yeah. I mean, it's,

470
00:46:01,116 --> 00:46:06,376
it's hard not to be a doomer these days. Never doom. I'm totally weak.

471
00:46:06,816 --> 00:46:10,836
Especially for me. I'm always Mr. Optimistic. Like, Hey man, it's going to,

472
00:46:10,836 --> 00:46:16,936
That's my default unless I see something structurally changing in the global dynamics of the economy.

473
00:46:17,836 --> 00:46:23,976
Some little attack or a little thing, the markets can work through it.

474
00:46:24,016 --> 00:46:25,336
The Fed can open up a facility.

475
00:46:25,636 --> 00:46:31,256
This can be handled with, yeah, maybe a 5%, 10% correction, but that's going to blow by.

476
00:46:31,356 --> 00:46:32,276
It's going to be V-shaped.

477
00:46:32,996 --> 00:46:35,156
This is not what we're heading into right now.

478
00:46:35,276 --> 00:46:36,396
We're not heading into that.

479
00:46:36,396 --> 00:46:45,676
We're heading into the possibility of something we haven't seen, you know, really since the financial crisis, which it's eerily reminiscent.

480
00:46:46,256 --> 00:46:47,836
I mean, I remember it well.

481
00:46:47,936 --> 00:46:53,356
I remember oil was $150 a barrel back then, you know, after the market peaked.

482
00:46:53,756 --> 00:46:56,396
And there was no war going on.

483
00:46:57,556 --> 00:47:01,456
You know, it was, you know, supply demand.

484
00:47:01,656 --> 00:47:02,716
It was overheating.

485
00:47:02,896 --> 00:47:04,856
It was other things happening.

486
00:47:04,856 --> 00:47:13,016
Um, and you know, what you saw happen during the financial crisis was eventually you saw

487
00:47:13,016 --> 00:47:16,076
gold get hit and you saw gold go down a lot.

488
00:47:16,956 --> 00:47:24,036
And, but then coming out of it, that was when you had that massive precious metal run and

489
00:47:24,036 --> 00:47:30,556
you had gold get over 2000 and you had silver hit 50 in like 2011, I believe it was.

490
00:47:30,556 --> 00:47:49,416
So you had gold go from or like silver go from like, I think at the low in 2007, it was might have been in the single digits. And, you know, a couple of years later, it was 50. So it had one of these massive like 400, you know, percent moves in like 48 months.

491
00:47:49,416 --> 00:48:16,016
And so because of the amount of liquidity that needed to be provided to the system, now obviously Bitcoin wasn't around back then, but my guess is that Bitcoin would have behaved similarly, which is that at the peak of the kind of liquidity squeeze, everything gets sold, everything needs to be delivered, all the margin calls come in, and it doesn't matter if it's the world store of value like gold was, it's going to get hit.

492
00:48:16,016 --> 00:48:38,896
But then coming out of it, that's when the central bank reaction comes in and it winds up, you know, kicking ass and taking names. And I think that's where we're heading. And I hope we're heading there in a much less severe manner than happened during the financial crisis. And I still think that's my base case.

493
00:48:38,896 --> 00:48:49,956
but I don't think we're there yet. I don't think we're bottomed yet. And I think that as far as

494
00:48:49,956 --> 00:48:56,856
gold and Bitcoin, they have given you opportunities to begin to add here. I don't think equities have,

495
00:48:57,116 --> 00:49:04,936
but I think when gold hit the 200 day, that was your chance. And I think Bitcoin, which has been

496
00:49:04,936 --> 00:49:13,396
holding in there, hasn't made a new low for almost two months now, in the 60s with the six

497
00:49:13,396 --> 00:49:20,436
handle on it, let's say, is a chance to begin to accumulate, even though it could have further

498
00:49:20,436 --> 00:49:26,916
declines if this works out poorly. And I believe the same thing with gold, that when we got down

499
00:49:26,916 --> 00:49:32,776
to that 200-day, I wasn't able to pick it up right at the 200-day, but I was able to the next day

500
00:49:32,776 --> 00:49:41,776
add to some of my longer term holdings of gold with the acknowledgement that I might not be

501
00:49:41,776 --> 00:49:46,636
getting the bottom there. There might be one more big leg to drop. And so I think it's very possible

502
00:49:46,636 --> 00:49:53,716
there's one more leg to drop in Bitcoin and gold, but there might not be. I think almost certainly

503
00:49:53,716 --> 00:49:57,796
there's at least one more leg to drop in equities. And we're starting to see that today.

504
00:49:57,796 --> 00:50:05,476
like the market's starting to roll over today. And it's kind of like giving you that clear signal

505
00:50:05,476 --> 00:50:13,036
where we like open up in the morning and a lot of stuff that's been oversold was doing well.

506
00:50:13,416 --> 00:50:18,876
But the big winners, the generals, the microns of the world were getting killed, you know,

507
00:50:19,216 --> 00:50:25,816
after they open. And when they start like dumping the microns because they know that they just need

508
00:50:25,816 --> 00:50:32,196
to get liquidity and they need to delever, it's a pretty easy foreshadow that this is just a

509
00:50:32,196 --> 00:50:39,336
small little bear market bounce. And sure enough, S&P is down 11 right now. I think at one point,

510
00:50:39,396 --> 00:50:46,016
we're up 50 or 60. So we've dropped 70 handles from the open or something. And it's just like

511
00:50:46,016 --> 00:50:52,836
that day after day after day. And what I'm waiting for is that big capitulation moment,

512
00:50:52,836 --> 00:51:11,296
The 90% plus declines on the NYSE advanced decline line. I'm not talking about a down 3% week. I'm talking about a down 3%, 4% day in the S&P. And if Trump moves in boots on the ground or something like that, I mean, it could happen this week.

513
00:51:11,296 --> 00:51:25,756
So I think people need to be ready to deploy some capital because the best times to buy are when the VIX is in the 40s or 50s and you just have to hold your nose and say, there's something here.

514
00:51:26,236 --> 00:51:32,196
But in this case, because this could be structural, I have a lot of cash.

515
00:51:32,276 --> 00:51:34,716
I will not be deploying at all, even if we get there.

516
00:51:34,716 --> 00:51:41,596
I'll just, you know, say, OK, it's time for me to deploy some into equities right here and see and see where we go.

517
00:51:42,616 --> 00:51:45,936
Yeah. I mean, you mentioned private credit. You mentioned AI.

518
00:51:46,236 --> 00:51:47,016
That's one thing.

519
00:51:48,336 --> 00:51:56,476
To trying to view what's happening in the Middle East through your different lenses and private credit and private equities doesn't really fit into it.

520
00:51:56,476 --> 00:52:01,696
but like AI and this idea that many people are putting out there,

521
00:52:01,736 --> 00:52:04,356
which is like what's happening in Iran and the Middle East

522
00:52:04,356 --> 00:52:12,696
is sort of a proxy to choke China off from running away with the AI race

523
00:52:12,696 --> 00:52:17,876
and in a way to sort of curb the speed at which they're executing on the AI side

524
00:52:17,876 --> 00:52:20,096
and to sort of send a message to them,

525
00:52:20,096 --> 00:52:28,276
Like really that being the most important or superpower struggle of the day is China versus the U.S.

526
00:52:28,336 --> 00:52:30,916
Just like a signal to China from the U.S.

527
00:52:30,916 --> 00:52:32,096
Like we had some leverage here.

528
00:52:32,356 --> 00:52:39,256
Obviously, what we're doing in the Middle East is affecting your accessibility to oil and gas to a certain extent.

529
00:52:39,256 --> 00:52:47,416
And then the byproducts, which are heavily integral to the chip process that you need to win this AI race.

530
00:52:47,416 --> 00:53:04,416
And I could see that. And then you roll in private credit here in the U.S. and it's like you're getting two different stories, one of which is it's a systemic risk that is going to have knock on contagion effects similar to the housing crisis in 2008.

531
00:53:04,416 --> 00:53:10,556
2008, then you have others who are saying, well, it's really confined to the BDC, retail

532
00:53:10,556 --> 00:53:16,376
oriented private equity funds that have more finicky investors due to the fact that they're

533
00:53:16,376 --> 00:53:21,736
retail that don't understand long duration private equity funds. And so it's just an

534
00:53:21,736 --> 00:53:28,756
anomaly with this particular product that doesn't have a good product client match in

535
00:53:28,756 --> 00:53:33,816
terms of the duration profile necessary. All this is being

536
00:53:34,416 --> 00:53:48,376
Being said, going back to like there's talks of rates actually going up, the probability of rates going up at the end of the year is beginning to increase dramatically as people are looking out there and looking at the potential inflation on the horizon.

537
00:53:48,376 --> 00:53:56,356
But I actually just recorded with John Arnold, partner, one of my partners at 1031 this morning about the subject.

538
00:53:56,356 --> 00:54:04,116
It's like I don't see them raising rates at all because you either have this mass industrialization that's going to need to support the war effort.

539
00:54:04,116 --> 00:54:12,796
Or if the people who are right about private credit potentially being a contagion event, like they're going to need a bailout.

540
00:54:12,796 --> 00:54:25,576
And you could see the scenario going back to your stagflationary comments from earlier where we get to the fall of this year and inflation's ripping private credits completely.

541
00:54:26,356 --> 00:54:32,596
disintegrating, which is creating these knock-on effects, and the Fed is forced to drop rates to

542
00:54:32,596 --> 00:54:40,096
zero again and inject a bunch of liquidity. Oh, and by the way, AI is advancing at a similar

543
00:54:40,096 --> 00:54:47,056
pace and eating out the labor market at the same time. Yeah, and do yield curve control and do

544
00:54:47,056 --> 00:54:55,376
whatever is necessary because in the 70s, Volcker had that option to raise rates, to crush the

545
00:54:55,376 --> 00:55:02,316
inflation. If we get a situation where we have this big problem in the economy, but we do still

546
00:55:02,316 --> 00:55:07,636
have inflation creeping in, because look, the AI build is going on, right? I mean, there's a lot

547
00:55:07,636 --> 00:55:14,796
of demand for commodities, demand for electricity, then you add in the higher oil prices. So I think

548
00:55:14,796 --> 00:55:23,756
we can have a situation where we have these inflation rates going up, but the Fed just

549
00:55:23,756 --> 00:55:29,316
doesn't have in its toolkit, like raising rates into that type of a situation the way that Volcker

550
00:55:29,316 --> 00:55:36,796
was able to. It will kill, you know, the fiscal receipts of the government. We saw what happened

551
00:55:36,796 --> 00:55:44,756
to the deficit in 2022 because the market went down that whole year and capital gains were not

552
00:55:44,756 --> 00:55:50,136
what was expected. And it hurts states, you know, like California who get a lot of their income from

553
00:55:50,136 --> 00:55:56,056
people exercising options and things like that from, you know, working at Meta or Apple or

554
00:55:56,056 --> 00:56:00,376
whatever, and they got nice gains on those options. They got to fill the state coffers.

555
00:56:01,436 --> 00:56:06,296
You know, all of these tax receipts kind of collapse. And I think that, you know, today,

556
00:56:06,936 --> 00:56:16,356
I'm not sure exactly what the tenure is doing here right now, but, you know, earlier today,

557
00:56:16,356 --> 00:56:24,596
yeah, we had yields coming down. Yields are still down on the day. Because I think what the market

558
00:56:24,596 --> 00:56:30,136
is trying to realize is like, yeah, raising rates isn't going to be an option. There's not going to

559
00:56:30,136 --> 00:56:36,376
be the potential to say, oh, well, we know inflation is up. We know there's probably going to be more

560
00:56:36,376 --> 00:56:42,396
coming. So let's raise rates into it. Because if they do into a weak economy, it's going to collapse

561
00:56:42,396 --> 00:56:47,936
the economy so much that it's going to hurt housing, which is a huge, like, like every,

562
00:56:48,016 --> 00:56:55,496
everything's just to do, to raise rates. It's kind of a weird circular thing where they're like,

563
00:56:55,556 --> 00:56:59,856
okay, we need to raise rates to calm inflation. But if we raise rates, we're going to destroy

564
00:56:59,856 --> 00:57:05,836
so much of the economy. We won't actually manifest that inflation. And it's, it's this

565
00:57:05,836 --> 00:57:10,976
situation where the central bank is just ill-equipped to handle the economic challenges

566
00:57:10,976 --> 00:57:16,256
that it's presented with by using that simple tool of either raising or lowering rates.

567
00:57:16,256 --> 00:57:24,536
And they're going to have to get into tools that haven't really been used since World War II.

568
00:57:24,876 --> 00:57:30,496
You know, when we did do explicit yield curve control and the 10-year was capped back then

569
00:57:30,496 --> 00:57:31,496
at two and a half percent.

570
00:57:32,116 --> 00:57:38,096
And I think we're already seeing foreign holders of treasuries at the lowest levels since 1997.

571
00:57:38,096 --> 00:57:42,956
seven. You know, so what are you going to do with all of this government debt? I mean,

572
00:57:42,956 --> 00:57:46,496
think about all the government debt we're going to have to print. This is going to be the biggest

573
00:57:46,496 --> 00:57:51,956
deficit we've ever seen. I mean, the tariffs are being taken away. A lot of that money is going to

574
00:57:51,956 --> 00:57:58,676
have to be refunded. They've got a $200 billion bill in the works for more military spending.

575
00:57:59,396 --> 00:58:04,496
We've got huge refunds coming from the one big, beautiful bill. We're going to have tax receipts

576
00:58:04,496 --> 00:58:10,016
down because the stock market is down, we are going to have blowout deficits.

577
00:58:10,016 --> 00:58:13,556
We're going to have so much debt rent.

578
00:58:13,556 --> 00:58:26,134
And the foreign buyers are saying why do I want to buy US treasuries They trash And how do you handle that without collapsing the global economy Because it not just the U It going to be the U It going to be the ECB It going to be Japan

579
00:58:26,134 --> 00:58:42,374
And so the only solution is either to allow there to just be a complete collapse and, you know, head into Great Depression 2.0 or take extraordinary measures, you know.

580
00:58:42,374 --> 00:59:12,354
And I think that's going to be QE. It might not happen this year. This might not happen until 2027. But I think at some point, the only way to handle this amount of debt is going to be with money printing, artificially low rates, manipulated, perhaps the need to put in special facilities where the Fed will take in the paper that they lent to the government.

581
00:59:12,374 --> 00:59:16,914
these private credit firms, because the way it gets into the banking system, private credit,

582
00:59:17,914 --> 00:59:22,794
is you might say, oh, well, it's private credit. It was companies like Aries and Blue Owl,

583
00:59:22,794 --> 00:59:27,274
and they just found rich investors or institutions or pension funds, and they took money.

584
00:59:27,914 --> 00:59:34,354
No, a lot of these firms borrowed money from the banks at like 4% to then go invest it with

585
00:59:34,354 --> 00:59:41,734
private credit at 5%. And so it's in the banking system. And I can see them doing what they did

586
00:59:41,734 --> 00:59:46,814
with treasuries. So with treasuries, they said, we got a facility, you give us your treasuries,

587
00:59:47,094 --> 00:59:53,794
we give you dollar for dollar, we treat it at par, because we know those treasuries are eventually

588
00:59:53,794 --> 00:59:58,014
going to get paid back. The problem with private credit is a lot of this isn't going to get paid

589
00:59:58,014 --> 01:00:04,814
back. And so that's just going to be straight up money printing, facilitated by the central bank.

590
01:00:05,354 --> 01:00:11,314
And so all of this is heading at us. And like I said, it's going to be a wild ride. It's going

591
01:00:11,314 --> 01:00:16,974
to be a bumpy ride or it's going to be a completely horrible, disastrous ride. But at the end of it,

592
01:00:17,014 --> 01:00:24,834
when the nuclear dust, as Trump likes to call it, settles, we are going to literally, I think,

593
01:00:24,834 --> 01:00:33,754
have the mother of all liquidity injections. And Bitcoin and gold are what you're going to want to

594
01:00:33,754 --> 01:00:43,214
own heading into that. Yeah. Is this the final gasp of the fiat system? It could be. It could be.

595
01:00:43,734 --> 01:00:47,694
Is this where we have 10 trillion to roll over the next 12 to 18 months or something like that?

596
01:00:48,634 --> 01:00:52,334
Yeah. I mean, we always have that much because so much of it is bills now.

597
01:00:52,334 --> 01:01:03,014
So, I mean, we're just always rolling over bills constantly. It's just unbelievable. And

598
01:01:03,014 --> 01:01:18,794
And the amount of debt that's going to need to come in the next 12 to 24 months, I think we're going to see the largest deficit ever, probably for fiscal year 2026.

599
01:01:18,794 --> 01:01:27,094
Now, we're already halfway through because it starts October 1st, so tomorrow's the midway point of the fiscal year.

600
01:01:27,094 --> 01:01:29,354
but definitely

601
01:01:29,354 --> 01:01:32,774
if not this fiscal year

602
01:01:32,774 --> 01:01:34,614
then fiscal year 2027

603
01:01:34,614 --> 01:01:35,894
which starts in six months

604
01:01:35,894 --> 01:01:38,534
probably setting up for a possibility of a

605
01:01:38,534 --> 01:01:40,514
$3 trillion deficit for the first time

606
01:01:40,514 --> 01:01:41,514
ever if not more

607
01:01:41,514 --> 01:01:43,054
yeah

608
01:01:43,054 --> 01:01:46,254
I mean outside of I mean obviously you want to position

609
01:01:46,254 --> 01:01:48,434
gold and bitcoin in preparation for

610
01:01:48,434 --> 01:01:50,754
the big print right now you're in cash

611
01:01:50,754 --> 01:01:52,434
inputs

612
01:01:52,434 --> 01:01:54,714
looking for

613
01:01:54,714 --> 01:01:56,334
a material

614
01:01:56,334 --> 01:01:58,974
or correction before beginning to tip your toes.

615
01:01:59,774 --> 01:02:01,034
What other advice?

616
01:02:01,134 --> 01:02:02,594
Again, going back to this AI thing too,

617
01:02:02,734 --> 01:02:06,774
because this whole productivity boom

618
01:02:06,774 --> 01:02:08,914
that's really eating into the labor market.

619
01:02:09,114 --> 01:02:12,374
How else do you think people should position

620
01:02:12,374 --> 01:02:13,634
with all of this in mind?

621
01:02:14,774 --> 01:02:17,074
And along with cash inputs,

622
01:02:17,174 --> 01:02:22,194
I'm also in too many absolutely worthless call options as well.

623
01:02:22,814 --> 01:02:24,754
Because just to be fair,

624
01:02:24,754 --> 01:02:28,514
like when this thing started, I'm like, I don't know how this is going to end. It's going to end

625
01:02:28,514 --> 01:02:34,434
either really bad or it's going to be over really soon. And I was like, get out of anything like

626
01:02:34,434 --> 01:02:40,034
sell, raise cash, but to give yourself some exposure one way or the other, buy some nice

627
01:02:40,034 --> 01:02:47,254
calls, like 725 SPY calls for April, but also buy some nice puts like 650 SPY puts for April.

628
01:02:48,554 --> 01:02:53,974
And by getting a combination of those, you're kind of prepared for either outcome. And thank God

629
01:02:53,974 --> 01:03:04,074
I bought those puts because, you know, this thing is just getting, it's getting nasty and it's just not looking pretty.

630
01:03:04,494 --> 01:03:11,434
And it's spreading into the areas of the market that you are going to want to own when this ends.

631
01:03:11,774 --> 01:03:22,394
The hardware names, the things that the AI build out will benefit from, some of the stuff in chips, you know, looking at things like materials.

632
01:03:22,394 --> 01:03:26,694
so I'm still a believer in emerging markets

633
01:03:26,694 --> 01:03:29,614
so these are the types of things

634
01:03:29,614 --> 01:03:31,454
when we hit that bottom

635
01:03:31,454 --> 01:03:34,234
I'm not going to be putting my money into SPY

636
01:03:34,234 --> 01:03:35,794
or whatever on the equity side

637
01:03:35,794 --> 01:03:39,194
it's going to be what are going to be the real big winners

638
01:03:39,194 --> 01:03:40,234
coming out of this

639
01:03:40,234 --> 01:03:43,214
I think you and I have talked before about

640
01:03:43,214 --> 01:03:47,874
our mutual admiration or respect for Jordy Visser's commentary

641
01:03:47,874 --> 01:03:51,294
and his whole thing of you want to own scarcity

642
01:03:51,294 --> 01:03:57,774
forget about abundance right now. And I think, you know, those things that you might have said,

643
01:03:57,854 --> 01:04:02,874
oh, I wish I had bought SanDisk, or I wish I had bought Material Sector, or I wish I had bought,

644
01:04:03,014 --> 01:04:07,754
you know, Lind, a big chemical company or something, which is the biggest weightings in

645
01:04:07,754 --> 01:04:13,414
XLBN materials, or some of these things that just basically had parabolic moves, silver,

646
01:04:14,234 --> 01:04:18,734
gold, Bitcoin, all these things that, you know, you've might have looked at in the last 12 months

647
01:04:18,734 --> 01:04:20,494
and said, oh, I wish I had more of that.

648
01:04:21,694 --> 01:04:23,714
Market's giving you a chance, you know,

649
01:04:23,754 --> 01:04:26,234
and I don't think we're there yet

650
01:04:26,234 --> 01:04:27,914
to jump in with both hands.

651
01:04:28,014 --> 01:04:29,034
I don't even think we're there yet

652
01:04:29,034 --> 01:04:30,254
to jump in with one hand.

653
01:04:30,774 --> 01:04:32,014
I think we're getting close

654
01:04:32,014 --> 01:04:33,834
to where you jump in with one hand

655
01:04:33,834 --> 01:04:37,194
and might be another leg down,

656
01:04:37,794 --> 01:04:38,474
maybe not.

657
01:04:38,974 --> 01:04:41,434
But to me, I'm really paying attention

658
01:04:41,434 --> 01:04:44,314
to the 610, 615 level on the SPY

659
01:04:44,314 --> 01:04:47,494
because that was the pre-tariff high.

660
01:04:48,734 --> 01:05:13,474
And after that, there's another leg down. If you go to the 2022 low and you do a volume-weighted average profile, basically a VWAP going there, you go down another 35, 40 handles on the SPY, something around the 570, 575 range.

661
01:05:13,474 --> 01:05:18,874
think that there's these opportunity points that I think, you know, could be presenting themselves

662
01:05:18,874 --> 01:05:27,534
as soon as this week or this or April, where you're going to get a good opportunity.

663
01:05:28,254 --> 01:05:34,154
But I don't think what you want to do now is think that a bottom is in and think that,

664
01:05:34,154 --> 01:05:40,194
you know, this is the time, this is a great price. You're better off waiting until you get at least

665
01:05:40,194 --> 01:05:46,594
that capitulatory move, and maybe you're not there to grab it that very first day. I mean,

666
01:05:46,594 --> 01:05:52,314
let's go back to the tariffs. What happened? Trump capitulated. You had that capitulatory move

667
01:05:52,314 --> 01:05:59,094
down. You didn't need to buy that. You also didn't need to buy it the day he capitulated,

668
01:05:59,094 --> 01:06:04,414
and we had that 10% up day, because the very next day, the market gave back half of that,

669
01:06:04,514 --> 01:06:09,374
because so much of that was just short-term, short covering, all that. The market came back

670
01:06:09,374 --> 01:06:16,934
and dip back down and you were able to pick stuff up four or 5% off the lows and then see the market

671
01:06:16,934 --> 01:06:22,874
go up, you know, 40% or whatever it did in the next, you know, six months. Or in the cases of

672
01:06:22,874 --> 01:06:29,674
certain companies like NVIDIA, which got down into the 80s, you might have missed it when it was $89

673
01:06:29,674 --> 01:06:36,334
a share, but you were able to buy it easily later that week for 96, right? And see it go to 200.

674
01:06:36,334 --> 01:06:48,594
So, you know, I think this isn't a time to try to be a hero or time the perfect bottom or I think it's just time to sit back and wait.

675
01:06:48,674 --> 01:06:50,334
Sometimes the hardest thing to do is nothing.

676
01:06:50,754 --> 01:06:57,614
And hopefully, you know, you got out of a lot of short term or risky positions.

677
01:06:57,734 --> 01:06:59,614
I mean, I didn't like sell everything or anything.

678
01:06:59,614 --> 01:07:08,074
I have certain long-term things that are in retirement accounts and things that, you know, I never go to zero.

679
01:07:08,554 --> 01:07:17,574
But in my short-term account, like I did pretty much go to zero long exposure, you know, is like tons and tons of cash.

680
01:07:17,654 --> 01:07:19,654
And that's what I'm waiting for.

681
01:07:20,054 --> 01:07:27,774
And, you know, I think that the hardest thing when people try to time markets a little bit is they say, yeah, you might have gotten out.

682
01:07:27,774 --> 01:07:40,474
But when are you going to get back in? And that's why you kind of have to be prepared when those bottoms do come, even if it's not perfectly clear that we're out of the woods to start adding back.

683
01:07:40,474 --> 01:07:46,014
So going back to that tariff day, the day after the Trump tariffs, you see a 10% up move.

684
01:07:46,074 --> 01:07:48,574
And then the next day you see it start going down 5%.

685
01:07:48,574 --> 01:07:50,294
And you're like, oh, wait a minute.

686
01:07:50,434 --> 01:07:51,334
Maybe we're not done.

687
01:07:51,534 --> 01:07:53,774
You know, maybe we're going even lower.

688
01:07:53,774 --> 01:07:58,034
But at that point, that's the hold your nose point where you say, I got to start adding

689
01:07:58,034 --> 01:07:58,274
here.

690
01:07:58,614 --> 01:07:59,594
I could be wrong.

691
01:07:59,834 --> 01:08:01,614
We could be going to new lows.

692
01:08:02,354 --> 01:08:08,794
But, you know, if I sold when SPY was 690 and now it's at 615, I could be wrong.

693
01:08:08,794 --> 01:08:14,414
we could be going to 575 but i've got to start putting some of that money back in because if i

694
01:08:14,414 --> 01:08:20,094
wait until it's perfect and the all clear is happening it's going to be 690 again yeah and

695
01:08:20,094 --> 01:08:27,934
that's like um just sort of like a different uh different train of thought here but like

696
01:08:27,934 --> 01:08:32,574
talking about like the i think the ai trade is on top of everybody's mind and the sort of picks

697
01:08:32,574 --> 01:08:40,134
and shovels around it and bringing it back to the war with the ron like i actually that's like one

698
01:08:40,134 --> 01:08:46,154
thing i'm holding out hope is that the disruption that we're seeing in oil and gas supply chains and

699
01:08:46,154 --> 01:08:52,814
all the byproducts particularly their effect on chip production and sort of forces the ai players

700
01:08:52,814 --> 01:08:57,494
to be like hey we got to stop this because it's slowing us down from doing what we need to do

701
01:08:57,494 --> 01:08:58,754
to win this race.

702
01:08:58,754 --> 01:09:03,434
Like if you were thinking that this was going to slow down China, yes, you may have been

703
01:09:03,434 --> 01:09:07,154
successful to a certain extent, but now we're getting collateral damage.

704
01:09:07,274 --> 01:09:08,434
It's slowing us down too.

705
01:09:08,494 --> 01:09:12,974
And I think we did have a sign of that three weeks ago when David Sachs was on the All

706
01:09:12,974 --> 01:09:16,134
In podcast saying like, hey, we should, we should get out of this ASAP.

707
01:09:16,214 --> 01:09:17,114
Like we shouldn't be in this war.

708
01:09:17,154 --> 01:09:21,834
I was actually surprised that somebody who was in the administration was saying that publicly.

709
01:09:21,834 --> 01:09:27,174
But I think Sachs being as close as he is to the AI industry,

710
01:09:27,394 --> 01:09:31,594
we'll see, look forward and see how this could really throw a wrench in that build out

711
01:09:31,594 --> 01:09:33,334
and winning that race for us here.

712
01:09:33,574 --> 01:09:39,534
Even if you're trying to slow down China, if you believe that line of thinking.

713
01:09:40,074 --> 01:09:50,634
And I would not be shocked if that's ultimately what leads to us dropping out of this war,

714
01:09:50,634 --> 01:09:54,114
the AI hyperscalers and the players and that.

715
01:09:54,234 --> 01:09:56,434
And she's saying, if you continue with this,

716
01:09:56,514 --> 01:09:58,414
we're not going to be able to win this race.

717
01:09:59,414 --> 01:10:03,734
Yeah, it's hurting us on so many fronts.

718
01:10:04,234 --> 01:10:08,854
And if there was a wish list that I could have,

719
01:10:08,874 --> 01:10:11,394
and I don't think there's really any chance of this happening,

720
01:10:11,534 --> 01:10:13,514
I actually think it would be for the US

721
01:10:13,514 --> 01:10:17,214
to give in to Iran's demands and leave the Gulf.

722
01:10:17,214 --> 01:10:20,834
Like, we don't need to be in the Gulf.

723
01:10:21,194 --> 01:10:26,534
We don't need to be having all these bases there and guarding the Strait of Hormuz.

724
01:10:26,774 --> 01:10:31,714
Like, we can be, you know, an energy independent country.

725
01:10:31,854 --> 01:10:33,234
We're not energy independent.

726
01:10:33,414 --> 01:10:39,334
A lot of people like to say that because we technically produce more oil and gas than we need.

727
01:10:39,714 --> 01:10:43,494
But the thing is, we don't produce all the refined products we need.

728
01:10:43,954 --> 01:10:45,754
So we do still need to import.

729
01:10:45,754 --> 01:10:49,814
California gets almost all this gas imported from Asia, right?

730
01:10:49,894 --> 01:10:56,234
I mean, that's why gas is so expensive there, because we don't have the refinery capacity to satisfy our needs.

731
01:10:56,294 --> 01:11:00,534
But we are dependent on foreign refiners to meet our refined product needs.

732
01:11:00,714 --> 01:11:11,774
We export gas, but we're not truly energy independent, because just because you have enough barrels of crude doesn't mean you're energy independent if you can't put it in the gas tank because you can't refine it.

733
01:11:11,774 --> 01:11:21,594
So, you know, if we basically went through something where we said, look, we are going to dial ourselves back from all this Middle East BS.

734
01:11:21,914 --> 01:11:26,634
And on top of that, we're going to dial us back from Europe and NATO.

735
01:11:26,634 --> 01:11:37,134
And we're going to start spending all this money on adding refinery capacity, adding to the electric grid, you know, for the AI build out in the future.

736
01:11:37,694 --> 01:11:40,754
You know, we could be in a really good situation.

737
01:11:40,754 --> 01:11:54,434
And, you know, I it would be like amazing if somehow like Trump or China and Iran all came, Ukraine all came together and just actually had a moment of sanity.

738
01:11:54,434 --> 01:12:01,634
It's not going to happen. But if I had a dream, it'd be it'd be like they just say, look, this is enough is enough.

739
01:12:02,554 --> 01:12:05,654
Ukraine, we're not going to support you anymore. You need to come to a deal.

740
01:12:05,654 --> 01:12:10,214
You need to give up, you know, the eastern one third of your country to Russia.

741
01:12:10,214 --> 01:12:15,154
Russia, you need to stop at it there. We're not going to put them in NATO. Let's get a deal there.

742
01:12:16,114 --> 01:12:20,674
Iran, we're going to pull out of the Strait of Hormuz. And yeah, people would say, oh,

743
01:12:21,054 --> 01:12:27,354
we're leaving Israel out to dry. Look, Israel does have 200 nuclear warheads. And frankly,

744
01:12:27,554 --> 01:12:32,234
it's embarrassing the support that we give to that regime. I mean, it's just embarrassing.

745
01:12:32,234 --> 01:12:39,914
I mean, what they're doing in Lebanon, the actions, I don't even want to get into it.

746
01:12:39,914 --> 01:12:46,334
It's so sickening. So, you know, we need to move away from that. And that's what's the most scary,

747
01:12:46,454 --> 01:12:52,554
depressing thing about this whole situation is this nagging sense that the United States

748
01:12:52,554 --> 01:12:58,914
is essentially, as George Washington said, to some degree, a slave at this point. And we need

749
01:12:58,914 --> 01:13:06,534
to break free. And I think the American people are moving to that. I think the big loser at the end

750
01:13:06,534 --> 01:13:14,514
of all of this is likely going to be Israel, because I think by the time the 2028 election

751
01:13:14,514 --> 01:13:21,634
comes around, that power of the Israeli lobby is not going to be what it once was.

752
01:13:21,714 --> 01:13:25,814
And it's never going to get back to that glory, because I think the American people's eyes

753
01:13:25,814 --> 01:13:27,514
are getting open to the situation.

754
01:13:28,514 --> 01:13:36,514
And, you know, having people like Mike Huckabee, who, you know, literally, you know, and not

755
01:13:36,514 --> 01:13:41,374
only that, but it's this horrible reading of the Bible. And a lot of these evangelicals,

756
01:13:41,374 --> 01:13:51,174
it's not even if you read the chapter and you read what, what's promised it, it's basically said,

757
01:13:51,254 --> 01:13:56,154
yeah, you get this man. If you keep my covenants, if you follow my commandments,

758
01:13:56,614 --> 01:14:01,894
otherwise, I believe the word used is vomit. Otherwise God says he's going to vomit up

759
01:14:01,894 --> 01:14:07,794
the Jews from Israel because, you know, they're not doing what they're supposed to do.

760
01:14:08,234 --> 01:14:12,654
So, you know, they're doing things that are probably making God vomit right now.

761
01:14:12,714 --> 01:14:15,534
I don't want to speak for God, but this is what's happening.

762
01:14:15,534 --> 01:14:22,194
And so that's really who is in an existential crisis, because without U.S. support,

763
01:14:22,874 --> 01:14:24,854
Israel's in a lot of trouble.

764
01:14:24,854 --> 01:14:43,854
And, you know, it's just in that that's the scary part, because desperate people do desperate things. And that's why I said in the beginning, I think there's actually a chance that they get to such a desperate point that they seriously consider using nuclear weapons.

765
01:14:43,854 --> 01:14:50,314
And, you know, God help help us all if they do that. But I am optimistic that we're not going to do that.

766
01:14:50,414 --> 01:14:54,954
That's not my base case. My base case is that eventually saner heads will prevail.

767
01:14:56,714 --> 01:15:02,714
And as crazy as that sounds, it does sometimes happen, happen in the Cuban Missile Crisis.

768
01:15:04,094 --> 01:15:07,594
You know, Trump pulled back from the brink on the tariffs.

769
01:15:07,594 --> 01:15:16,654
I'm hoping that some sense of sanity returns and we avoid that worst case scenario.

770
01:15:16,994 --> 01:15:23,834
But I think you have to at least have that in your kind of tail scenario type situations

771
01:15:23,834 --> 01:15:29,814
of what could be possible and just hope that we help and pray we don't end up there.

772
01:15:31,254 --> 01:15:35,994
I'm certainly praying and hoping that we don't end up there.

773
01:15:37,594 --> 01:15:53,634
Yeah, I mean, I agree. I don't think we should be there. I think the pressure is put on via the Israeli lobby are becoming clear and just look at the polling data, particularly younger generations are saying, I don't like this.

774
01:15:53,634 --> 01:16:03,414
I mean, we talked about it last fall after the national security strategy that was talked about. We were very excited. Let's pull out the Middle East. Let's focus on the Western Hemisphere.

775
01:16:03,414 --> 01:16:22,434
Yeah, we talked about it because those are the things we were hearing. That's the things we were being told was going to happen. We're going to pivot from the Middle East and we're going to pivot from NATO and we're going to focus on the Western Hemisphere and we're going to work on AI and we're going to build out our grid and we're going to get the deficit spending under control.

776
01:16:22,434 --> 01:16:27,794
And I mean, it's it's confounding.

777
01:16:27,934 --> 01:16:28,654
It's confounding.

778
01:16:28,874 --> 01:16:36,954
It's it's it's what makes me wonder if there's something to, you know, Joe Kent's discussion of sinister forces forcing the hand.

779
01:16:37,054 --> 01:16:39,454
I mean, it just makes no sense.

780
01:16:39,794 --> 01:16:40,474
Makes no sense.

781
01:16:41,194 --> 01:16:41,934
It doesn't.

782
01:16:42,034 --> 01:16:42,234
Well.

783
01:16:43,654 --> 01:16:51,854
We'll see if Q2 is as eventful and long as Q1 was and we'll meet here in the summer.

784
01:16:51,854 --> 01:16:57,614
Hopefully in three months, this is past us.

785
01:16:58,174 --> 01:17:02,774
And we're still going to have higher oil prices and we're going to have a tough road to hoe.

786
01:17:02,874 --> 01:17:14,254
But hopefully there's like a path forward and there's this markets, especially Bitcoin and gold market, start seeing, look, there is going to need to be a liquidity injection.

787
01:17:14,254 --> 01:17:21,614
We are going to need to do certain things that are going to make it where this is what you want to own.

788
01:17:21,854 --> 01:17:26,614
And and we're looking back and saying, hey, we got that opportunity.

789
01:17:26,614 --> 01:17:31,954
And now now we can start to see the fruits of the fruits of the risk.

790
01:17:33,094 --> 01:17:35,994
Agreed. Well, until then, stay frosty.

791
01:17:36,414 --> 01:17:39,654
And thank you again for for being vulnerable, opening up.

792
01:17:39,774 --> 01:17:41,874
And I love this check in. It was a great one.

793
01:17:42,854 --> 01:17:44,874
Yeah. Thank you, Mario. Appreciate it.

794
01:17:44,954 --> 01:17:45,854
All right. Peace and love, freaks.