Hi everyone! my name is Mike Levine and I'm the head of research Attendees which is a small Financial technology startup dedicated to Bringing good Market Data and data analytics to Everyday investors I've spoken with Tom a few times before I think this is our third time together. My background personally comes from the world of private credit and private placements institutional. Investments where I worked with fixed income products and developing we call them bespoke Cdos for a variety of clients and now is the head of research I along with a team of professionals from the world of Foreign Exchange financial news and Investments put together a daily newsletter and a news resource for our users that covers topics relating to U.S equities and the U.S economy. And as usual, I'm here with Tom to talk about a variety of subjects geopolitics, macroeconomics, and some of the research that we've been working on.

So Mike Welcome to this third episode of our podcast. We've done two virtual ones now. You're here in flesh. Mike is the head of research for Attendees which sponsors this episode and we'll talk about that in a bit.

Uh, so Mike everybody's talking right now about you know that a controversial video that was done by Peter Zehan about Tesla We'll talk about that and we'll get your input. As a Commodities expert and somewhat of a generalist like Peter Zahan, you guys are in the same swimming pool we want to talk about today: the US dollar, the supposed or not, the mice of the US dollar and the you know the Resurgence of the Brics countries currency. Whatever the that is. And and we're going to talk about microeconomics, recession, stock market crashes, and obviously we'll talk a little bit about attendees and what you guys doing over there.

And before we do, you know I Hate doing sponsorships. It's annoying and it just takes away my attention from the video. But I think sponsorships like this where it's something that you know gives people actual good resource. good information, especially at this market right now is super important.

So I want to give a shout out to attendees? I Think they're providing a free service that gives you a ton of information actual good data. Which is important because there's a lot of bomb information out there and in my personal opinion, this is the best options calculators I've seen and it's free I haven't seen the tool that good. It was free and that most of the paid ones are not as good. Yeah, so yeah.

I mean thank you for shouting us out and you know what what we're doing really is. We're trying to make it. Uh, we're trying to simplify the workflow for your average sort of retail investor guy. Somebody who you know intermediate level maybe has like 10 20, twenty thousand dollars in their portfolio.

They swing trade or day trade and they need reliable Market data to inform their decisions and what we noticed. Um, looking at what's out there already with tools like unusual whales or cheddar flow is they charge you an exorbitant amount of money for basically a a Ux that takes in a very Standard Market data, feed an order book of options and then makes it look pretty and gives you some data and insights onto it. The actual cost of that data is very, very low, but they're charging their users 120 bucks a month for access to it and some sliders and filters and things and we looked at this and we said okay, look, what's the primary objective of our business? Really, we're interested in The Brokerage business and providing, uh, transaction settlement for our customers. And how can we lead up into that and and and help people understand that the reliability of this data is accessible for a lot less than what they're paying.

Really For free For free? Yeah. and as the business scales, it actually becomes even cheaper for us because the entitlements that we have to pay to the exchanges go down and the structure of the market data improves. Um, so really, the more people we get using the free stuff, the better it becomes. Which seems kind of counter-intuitive, but it's really actually how Market data works.

And that's really what all these companies do is. they take in Market data and they redistribute it, they repackage it, they make it look nice and they help people make a decision that's 90 of the business. Make it look nice and presentable. I Mean that's the product of side of things.

It's just right. Yeah exactly. And so you know we have a good team, some folks who help build stock twits back in the day a lot of Engineers from you know all over the place with good experience on iOS Android web and we're really focusing on you guys raise the raised money already a few times. Yeah! so we we just finished wrapping up another round which now especially um was pretty difficult given the the micro senses and the macro of the VC market now.

but we managed to raise a pretty good round and up round and we continue to raise. you know as we move forward to to ensure that you know we have our Pipeline and and we can keep developing. Can you tell me what's the afterman evaluation? Uh I can't share that? Okay I would Define you as a startup because of the stage you are guys at and I think I'm proud to be basically partnered and get paid to promote a product which is the startup and also provides free good information to my audience. They don't have to spend anything yeah and that's like the perfect setup for me.

I wish every sponsorship I did was like this. Yeah I mean it's actually very cool and it's a very unique company and when we and even working with you guys it's so different than other brands. Yeah it's absolutely laid back nobody. We take a very relaxed approach to to everything and except for actually making sure that the product works yeah and you know what we noticed really is like let's say you're an average options Trader You know you might use Cheddar Flow for uh, order book stuff you might execute on E-Trade or or um, you know Fidelity you might go on optionsprofitcalculator.com to run a strategy and then you might have some Homebrew stuff that you cooked up in Excel or in the Jupiter notebook that you use for the rest of your calculations.

you're describing me now. Yeah, I mean you're like a lot of other people, right? I Mean it's a huge market and over the last couple years people have also mistakenly boxed retail investors into like the Robin Hood crowd. But retail is all-encompassing There's a lot of very sophisticated people who are willing to Shell out for good research and good data. And you know we said.

look, we can provide them with a service that bundles it all together. We can eventually give them order execution and it's become sort of a One-Stop shop for qualitative research, data analytics, portfolio analytics. Um, just general decision making. Keeping up with your watch list, monitoring your own portfolio and planning and executing a full trade from start to finish.

I Love how I've seen it over the past year, a lot of long-term investors are using options to actually carrot long-term strategies and I think it's not a tool for specifically just for creators. When you look in the context of attendees, it actually served a very important purpose for long-term investors. Yeah, I mean there. There's been a noticeable shift in trading behavior in the last.

we'll say year, year and a half, especially as you know markets have taken a a more volatile turn. We found out who was swimming naked. Yeah, exactly right. And uh yeah.

I mean the shift has been very noticeable in people's behavior. People are investing or trading more carefully. they're going out to further expirations. You know the data from Robinhood that they release and from the exchanges demonstrates the huge behavioral behavioral shift and how people are making their trading decisions.

Do you like what Robin Hood did to the retail investing landscape I mean yes and no, right? because they you know Robin Hood's been around for a while. people forget that they what was it 2016 2015-ish they they introduced everything, then options came on a little bit after that and I I would say they were definitely instrumental in the explosion of options trading specifically because they advertised you know, commission free trading right? Um, whether or not look I mean pay for order flow as a business has existed for a long time. Well, it's been in certain countries. Yeah, I think an Australia it's banned.

Yeah, but uh, there's a reason. Also, those markets aren't as optimized or well functioning, right? It's sort of two. There's two sides of the coin. On the one hand, Pfaff ensures that market makers are able to do their job and that they make it easier.

It doesn't really make sure that they get a ton of execution on both ends all the time, so then it's It's an easy business for them, it's an easy business regardless. But um, it's also helped secure some monopolies for companies like Susquehanna or Citadel. You know, the two biggest market makers. Um, on the other hand, consider those their biggest client.

Yeah, yeah, that was one of the issues. yeah. but on the other hand, you know it's provided. um, a very efficient Marketplace for Equity options, any kind of exchanges derivatives as well.

Because market makers participate in that business too. and it's helped make. uh, you know the United States the Premier Choice the premier Marketplace for investing your money as a foreigner or you know, a person savings payment for order flow. Did that I mean that? That certainly helped.

Well, that was the case before. PFO if they ever came around the corner, I Think there's a lot of issues with payment for the flow. So Patrick was on my podcast and he was explaining to me why PFF is worth so much money to the market makers and basically said look, it's not really a conspiracy theory aspect of it, it's more of the imagine You have a car dealership right and people come in, they trade in their old car and then you have to pick it up and then you have to wait for a buyer for that old car and it's It's a hassle, right? So imagine if every second two people would come in, why one to sell the car, one to buy the same identical car. Basically, that's kind of your dream job.

As a you know, as a as a car salesman, that's essentially what these guys are doing are bundling everything up and there's a massive amount of yeah, they replace the pit. Yeah, they replace the pit. That's all they did. But the complaint is on.

on the other side is there's a lot of misrepresentation, at least on the side of the way it's advertised. I Don't think we should even be calling it a commission Free trading I Mean there's nothing free, right? Well, you like anything. execution right? Like any tech product the the. The part that makes it free is that you're the you're not the customer right.

Is the business that the data is? Yeah, right, the data products. You're the product. But I think the more more the biggest. The bigger issue here is beyond the fact that data is up for grabs and I don't feel comfortable with that.

That's why I don't use BFF and any of my brokerages. Um, that the other problem is you get the trash execution right. You get very bad execution so like it's not free, you're paying by getting trash execution so you're paying if you're If you're making a huge volume of Trades you know, a few cents here and there adds up over the course course of a year to you know, and their clientele is mainly trading. They're not like long-term investing, so they're like if you're a vape Creator and you're getting trash execution.

That's kind of, you know, like driving Full Throttle Hood Robin Hood knows their market and the reason that they provide you know they can engage in the Pfop business is because they know that their clients, the people who are are using or relying on the execution aren't trading huge volumes. they're not. You know the average Robin Hood balance is like under 10 000 bucks. It was when the market was good I don't know what it is now it's probably a lot lower.

Three? yeah, three or four thousand. everybody does. Maybe right? Yeah, the average, but the average number of Trades is huge. They might do 140 options trades a year, 200 options trades a year.

Which means that every other trading day or every trading day, they're making some kind of decision. But their account balance tells me it's a very low, a low value decision. They might be trading something you know 60 out of the money on a random you know. Middle Market Stock versus is purchasing leaps or engaging some kind of protective strategy like a customer on interactive brokers would go for.

Who cares about execution, right? I Don't think the Robin Hood customer app knows what execution is. Oh, come on or really care, You just said that they're sophisticated. people. Give them a little bit of credit I Think people know they think there's a chance that they get against their home or whoever comes after him.

Is there any chance that they regulate Pfof? harsher? No chance, or even cancel? There's too much lobbying. But he he made a case. He made a whole uh, BRK Paris Made a case for a lot of things. He's made a case for calling cryptocurrencies Commodities Even though he himself said that they weren't, he gave lectures where he promoted some random coins or whatever and and now he's it's lying in front of Congress Saying that you know they should be completely regulated in their assets.

And but his statement, his stance changes every few months. You know, for what's convenient. I Think think it's very foolish to rely on the government now to regulate any kind of financial process. Well, that's too harsh of the statement.

I Mean, have they really done anything well? Look, Does finding Kim Kardashian a million dollars really do anything for anybody? No, we need regulation in financial markets. It would be exponentially worse without regulation, of course. And we're not good at it. but we have good regulation that's in place.

But on the same hand, like what, they haven't added any meaningful regulations since then. If anything, they've Stripped Away some of it. You know they've Stripped Away some of the banking protections they've Stripped Away some of the the trading protections, the the foreign exchange protections, right? All in an effort to make markets supposedly more efficient, right? But can markets really get any more efficient they are now I Don't think so. They're pretty damn efficient unless you're talking about like Djibouti or Nigeria where you know people are prospecting like they were in after the collapse of the Soviet Union for something that's worth 10 percent.

Well, they're still Arbitrage to be made in the markets. obviously the the good player not in U.S markets not in crypto even anymore. So how does the big institutional crowd gets better performance than the retail investors? They don't They don't. I Mean if you look at hedge funds and aggregate, they don't outperform markets.

Well, that's the that's the common, the top. It's like the top five percent of hedge funds actually outperformed. Yeah, so the numbers is basically the longer you go, the the smaller the percentage of other performances. Like if you go above 15 years, it's like five percent.

But but people kind of get confused though because the purpose of a hedge fund isn't our performance. Is this the fees? Well, it's the fees for the manager. I Mean it's also a tax shelter for the investor because they carry the interest right? Yes, the carried interest. And look, if I'm if I have let's say let's explain for a second what it is because some people may not understand when we say carry the interest we mean the biggest scam Yeah, The history of the Internal Revenue code yeah, carry interest is fantastic.

It's basically let's say you're you work at a private Equity Fund and you're like a VP at a private Equity Fund and you sit on a deal team that makes a couple different Investments you you as a individual, benefit very significantly by receiving a bonus that's relative to the percentage that that investment has gained on paper. And this is also part of the Hindenburg's alleged uh complaints against Carl Icann, right? Is that the the way that these businesses Mark Private Investments is they mark them to their model. They don't mark them to the market because there is no Market it's a secondary Market that's very illiquid. You know you can't really sell a 50 million dollar company in five seconds like you can 50.

You know, 10 million dollars of stock in a couple different transactions. So uh, they benefit. They paid everything as capital gains, right? They paid everything as capital gains. And they mark their Investments the way they want them to be valued.

And then you know what Hindenburg has alleged Carl Icann does, which is a great example of manipulating the carried interest rule is that he issues stock to new investors to effectively return. You know to guarantee return as it is, and he him himself owns like 85 percent of outstanding shares in Icann Enterprises and his son owns a bunch of the other shares. So it's like the investors are left with a very, very small pool and then they just sort of Mark their Investments as they see fit and continue to benefit very significantly on this rule. Um, I Think it's a funny rule.

Basically the Internal Revenue code says hey, if this is your business and this is what you do every day, then this is not capital gains. This is actually issues income. This is income you should be taxed based on your bracket, right? Except if you're a very rich and influential guy that works probably in Manhattan Yeah, in that case, no no for you, it's capital gains tax. That's pretty much what it is Exactly No, it's it's a very silly mountains of Articles was written about these things and never change.

I'm not surprised it hasn't changed because you know people. Lobby For all of this, they make sure that those rules don't change at all. Um, but you know, really? coming back to sort of the broader picture of hedge funds, right? The hedge funds are set up in a way that ensures the people who give their their money to that hedge fund don't pay tax consequences because they're all domiciled in Luxembourg or the Cayman Islands. They use Loops or loopholes in our Internal Revenue code to make sure that their money is protected and they issue share classes.

And but they expect to see a certain return on their money. It's not I Work with hedge funds, the investors expect to see it. They they expect to see a certain performance relative to a benchmark and relative to the rest of their money. In most Hitchcocks modes, you don't get paid until you gave them eight percent, right? There's a hurdle, right? Eight percent.

Yeah, they have the high Watermark hurdles or so you don't get paid until you give them eight and I think eight they'll get. They usually get eight which is pretty much they can get you eight depends on the strategy. I think Global SP 500. They can actually just uh, and they have good years.

Look at what happened with the Kathy which is not a hedge fund. but she had one great bet. Yeah, but massive bet on one company that exploded as a status for Humanity money for investors but not for the reasons she said. it doesn't matter.

nobody cares the why they got paid her investors. Here's the thousand dollars, but it didn't happen. I mean look if if I were and if I were at the point where I could be giving money to hedge funds to invest I would care about the underlying thesis of their investment. Do you think she's a good investor? Kathywood? No.

I don't think so. She doesn't have a track record of good Investments of sound. Investments I mean their their analyst team at ARC is like guys who served cocktails on private yachts who became analysts and suddenly decided that Tesla is going to own the insurance industry in the U.S and and make Robo taxis. You know it's not their.

Their Theses in general aren't realistic and look, they're high conviction. There's nothing wrong with being high conviction, but your conviction has to be founded in something. There are good cases of high conviction investors that have performed better. Um, you know there's two hedge funds that come to mind Bill Browder's Hermitage Capital which doesn't exist anymore because he was hunted down by Putin's oligarchs.

um and um, uh, you know a friend of mine um is a portfolio manager at Firebird which is a very small also foreign markets focusing on Russian and small cap US stocks that have had good performance that's sort of replicable over the last decade. Um, but if you look at sort of hedge funds as an aggregate you look at like the hedge fund research indexes Global Macro I think you know I might be pulling this out of nowhere but I think Global Macro returned like five to six percent last year. Um, you know some return like in the negatives you've seen tiger Global blow ups where they're losing like 40 percent in a year. where the market lost 17.

You know, Um, it depends on how you frame out performance. Do you want to be positive every year? Or do you just want to have some buffer with the S P 500 every year? because if you're fishing for a two to three percent buffer in a tax advantaged system, that's okay. That's actually fine. The S P returns seven percent, you get nine, you're better taxes, or the S P loses 17.

You lose 15 and better taxes right? Then there's tax harvesting strategies like Goldman Sachs run the tax harvesting strategy that's very, very good. Like incredibly good where they replicate the S P 500 and they use downturns in the market or in a certain time frame to harvest capital gains losses to offset capital gains tax and tax loss. Harvesting has become a very big business in the last couple years as well, especially with sort of turmoil and uncertainty in how investors are going to be taxed in the future. There's talk of you know, not just income tax increases, but changes to the capital gains code that people are getting concerned about.

How we classify certain assets, How we Mark certain the value of certain assets. Um, so you know the private investment landscape is changing quite a lot. It's actually not something I cover very much on research on the attendees product. Um, because I I like to stick to the equity stories I think they're more valuable for the people who are using the product.

Um, but look I mean you and I have both worked in private markets so we kind of know. we know the deal. We know what it looks like. um I can write books? Yeah, but I will never right I will never do it.

but another guy who did yeah, he wrote a book I can't say which and he changed the names. but I know all the stories. Yeah, yeah, that doesn't surprise me at all. Yeah, it's crazy stuff.

It's a very it's a very tight Market to be in. and look, if you're lucky enough to be an accredited investor and you can throw 250 Grand million bucks into a solid fund that is actually taking money as well I mean a lot of funds are over subscribed. Yeah, so they're not taking money so you're forced to go look for whatever else. um, or fall into one of these like democratized private Equity products which I think are also full of um like Masterworks or I can't remember the name, but there's a couple that do real estate.

Uh, private. Equity investment. So accredited investor. for 15 grand you can buy like half a percent.

You know, like Muscle Works with the art. No liquidity issues. Why? Because it's marked to model, there's no Market you can't look. The reason asset pricing works is because you have two identical assets.

Even in real estate, you can take two just for disclosure. They offer the sponsor in my videos a few times and I said no. No issues with them at all I Just don't like the idea of illiquid Investments Well that's exactly it's super illiquid. But there's also no there's no comps because you can take you know two different Picasso paintings and they appreciate the value differently.

and they sell for different prices at the auction. literally depending on who decided to go to Sotheby's that day because it could be. You know, if not an auction on a Wednesday this is the same deal with, uh, rare luxury cars, right? This is a market I Follow a lot because I'm interested in in classic cars like Patrick you know you could I know what he is. he didn't stand in the Stream I can tell you later.

Yeah, I'd like to know later he has one of the most beautiful cars ever made. I'm not surprised he has good taste. I'll just give you a hint, it's very impractical. Okay, that could be a lot of things.

um but you know, if you look at let's say the the bring a trailer which is a website that's like an eBay for cars specifically. Yep, classic cars. and you look at prices, price histories and just how auctions work because they're they're very liquid. They have a ton of different auctions going if an auction ends on a Wednesday for let's say a a 1979 Porsche 911 a G50 which is a very coveted model.

yeah, a coupe. um, versus an auction that ends on a Saturday afternoon. The auction that ends on a Saturday afternoon for two nearly identical vehicles with similar provenance is going to do 10 to 15 better, right? So and then you take paintings which are not identical are victims of forgery. Uh, complicated markets.

Um, they rely on Expert valuations which is also a very tricky business. Depends on what you know, what kind of art the experts studied and what they like and who their clients are. Um, because if you are a representative at Sotheby's and you sell Basquiat paintings and you have clients who you've built a book with and you sell them Basquiat paintings as they go on the market, you can't go and say well this Basquiat is actually worth 20 less than all the rest because that kills the value by comps of everything else. Yeah, so it's a very inflated Market The prices have to go up.

So in the one sense, you know because prices have to go up. It's kind of an okay business, but it's not okay for just shoving it into a random exchange traded product and selling people very illiquid shares that they can't move on something that they've been promised with a big big asterisk 12. Uh, you know Returns on every year when and one painting is not like the other. I Think it's a dangerous claim I think it's a very dangerous I didn't like it when I had the when I had the initial approach.

That's the one thing I pushed back on before I said no yeah I can't I think I can't blame claims like that even in real estate. especially with a lot of these real estate crowdfunding products. As they say, look, this is going to appreciate 10 to 12 a year. but that relies on you know the the model that they've constructed for this building.

which is that you lease 98 of the units you renovate X number of units you refinance it. Yeah, the stars have to align for that to happen right? Your cap rate hits a certain you know your cap rate has certain Milestones The business itself functions in a certain way. The market is unchanged. You know it's but it's done everywhere.

It's done in in every single market like that. I mean you know you take as everybody, this is totally unrelated. but we can talk about oil right? We can shift into Commodities here. So OPEC released their summer report.

They said travel is going to be really big. oil demand is going to go up. They're projecting oil at like 75 580 a barrel. Um, you know, but production costs and break even costs haven't decreased.

so they have to cut production to lower their cost, but also to increase the price of oil so they break even a little bit better, right? But then you look at a country like I like the term break even a little bit better. Yeah. I Mean look people, people talk about OPEC and everything else. but in reality most members of OPEC are running a break even business.

It's not very profitable for them. The profit comes from refining activities and then the business they get from the other OPEC countries as a result of it. Well, the 80 bucks a barrel they're they're I think they're fine. You'd think so.

But let's dig a Little Deeper Um Azerbaijan a company that produces 650 000 barrels per day of oil. That's their production Target for 2023.. Um, their government sets the break-even price of oil. Their model that determines their Breakeven profits sets oil at 50 a barrel.

The real cost of extraction right now in Azerbaijan is like 72 dollars a barrel. So if they're selling oil at 65 and taking it out at 72, they're losing money. So why are they doing it? Because they have no other economy, they have no other business, they can't do anything else. and so OPEC is effectively just trying to scramble to keep their relationships alive.

So just to keep the foreign foreign currency coming, Yes only. Basically, that's all they can do. That's all they can do. And how many of the OPEC members are like that? Quite a few I mean a lot of the smaller members that produce in that like under 1 million barrels a day range.

There are a lot. A lot of them are like that where they Mark oil at 50 60 a barrel for their Breakeven extraction cost. extraction costs in reality are like 30 higher than that. Um, export levels are not where they need to be.

So the aggregate is that they're effectively in a money losing business. But what they have to do is keep scrambling to Output more and more and more for more volume so that they break even a little bit better. But then OPEC comes in and says look, we know that travel is going to be big this year. We've already seen it with airline numbers.

Um flows through airports or Beyond 2019 levels now. Yep, people are trying traveling again. Airline price ticket inflation actually isn't that bad if you look at it in the aggregate across all popular destinations, Hotel numbers have been really, really good. All the major Hotel companies just released their earnings.

uh, last week or the week before Marriott Hilton Etc They all reported big increases in Revpar, which is revenue per available room of like 20 to 45 percent across the board. So people are staying longer, they're extending their stays, they're focused. We haven't hit summer yet, right? and we haven't even hit summary yet. That's just first quarter earnings look like that.

Yeah, so first quarter earnings In aggregate, they're seeing a 30 increase in revenues and all their available rooms. What's it going to look like in Peak you know. July August September Travel times? it's going to be great. Um, it's You know, hotels are a good business to be in right now, but wouldn't it make sense for them to Output more oil if the demand is going to go up like crazy.

I Mean you can? You can sell a smaller margin, a bigger quantity of of product? Yes, you can. But I think OPEC is also playing a political manipulation game a little bit. They know that the United States is just to with Biden Yeah, just to with Biden You know they there's there were two cases of that failed Spr uh, refill negotiation where you know the Biden Administration basically fumbled fumbled the bag pretty bad. Um, oil is very, very cheap and they wanted it cheaper to refill the Spr and OPEC said no.

And what the administration has done in the United States has been pretty damaging too. Where they've basically blocked permitting. Um, why would they do that though? they have. They have a climate agenda.

Um, they have an agenda. A political and economic agenda where you know they want to push certain things. Um, I'm not going to dive into sort of the Weft conspiracy stuff. Yeah, I think that's you know.

Not really for now. but um, you'd be surprised how many people click on that if I made that. It's a million view. I'm sure everybody clicks.

Yeah, yeah, because that's what people want to see. But you know, the the, the, the, the oil market, and the the oil extraction. Market in the US is actually very interesting because prior to you know, there were murmurings in like 2019 about decreasing permitting. Um, and a lot of companies actually went and got a surplus of permits if there's something like three four thousand unused.

uh, new permits for extraction in the United States right now among all of the major minor players. Um, the problem is that because of just macroeconomic changes again, the cost of extraction also varies like Well to Well so one, well, maybe a lot easier to get oil out of than the other. and that's simply it. And a lot of projects you know might fail down the road, especially for smaller companies that aren't as well capitalized.

They're also relying on, you know, less volatility in the oil markets where we don't have eight percent drops or eight percent increases a week over week. That are kind of pretty correlated with the S P 500 as well. If you just as a corollary, if you look at, you know, week to week or week over week changes and the S P versus WTI Crude, they're pretty inversely correlated. Um, usually when the S P goes up, oil goes.

Yep. So uh, you know, oil markets in the US in general are just kind of tricky. Um, we've had issues exporting gas as well. What about this? PR Though Is this like a real issue? Yeah, totally.

There's how much they're in the hole for. Um I mean it's at I believe as of the last data I looked at it was not like 30 40 capacity. so it's very low. It's the lowest it's ever been.

It's the lowest it's been since the Spr was created and they don't want to fill it up right now because of the higher prices. Yeah, so they're just waiting for the summer when prices are even more expensive. Yeah, basically. And the the bigger problem too is, uh, you know, gas, gasoline and oil are great, but diesel is really the big thing.

Um, yeah. Diesel Powers All industrial activity. Um, you know Powers construction equipment, mining equipment, all the rest. um, all Logistics is powered by Diesel And there were a few cases now where uh, diesel supplies were so constrained.

There was a shortage on the East Coast last fall where literally uh, producers and and Distributors were scrambling to refill diesel tanks and they couldn't in some areas because there just wasn't any diesel because our oil Transportation infrastructure and our crude are our refined products. Transportation Infrastructure is very bad. We rely on railroads and trucks and not pipelines and uh, ships that can move from coast to coast or up and down the coast. But that's a structural issue that has nothing to do with policy, right? It's just the way it is.

Well, but it is. Though it does have it. it does. Maybe like a 50-year policy, Not, it's not this.

I mean when you block the construction of pipelines and then favor truck transportation as a result, that's a policy issue. Why would exactly? So why would they do that? That's a good question. and it's an environmental agenda. How attracts more environmental than the pipeline? They're not.

But a pipeline looks worse on paper. Oh got it. It's look. when you're top when you're trying to convince people, you know what it reminds me.

I had a buddy who would lay it off laid off from a company, used to do accounting for them, laid off and they rehire them as an external subcontractor so he he would cost them more money as an external subcontractor and but they did it because it it's no longer on the salary expenses right? and it looks better for uh, exactly Yeah right. The little things. Yeah, that's exactly what it is. And and you know, when you have, uh, look, people outside of Europe where they stand in the middle of the highway protesting climate don't they don't do that in the U.S really.

And if you ask the average person like in the United States who's living on the middle income and is just concerned about whether or not they're gonna keep their job in the next year if you ask them, hey, how do you think the oil or the gasoline in your tank gets to the gas station you go to? They don't know, They don't care, They don't. They don't care because they know it's just going to happen. or they think it'll just happen. It doesn't magically appear though, right? But they also don't know because they don't see the trucks.

They don't. The oil Ferry comes in it right into the wand and then it fills up the tank. and then there's yeah. There's always gas at the gas station.

It's like the banking system, right? That's the interest Ferry Comes in at night like yeah and everything's okay, right? But the interest Ferry is the Fed open market window. Uh, and there is no oil Ferry because that's just not how commodity. Transportation But wouldn't it make sense to adjust policy right now given the geopolitical disturbances? The instability? Absolutely. But when has any presidential Administration made policies that makes no I Think the come on.

let's not characterize the presidents I Mean at the end of the day, they have to make like massive geopolitical decisions, right? So if the world is on fire energy, Independence is a thing and you have it, you just have to allow it to happen. Why would you block it? Now Having known like the Russia situation, the China situation India is creeping up. All those things are happening around the world. Why would you not? Well, there's a great deal of um, naivety in U.S Policy makers, especially the the bureaucrats have sort of sat in their positions.

The unelected people who've been there for like three administrations, who? they live in this like DC bubble Where? and I've spoken to people like this. They live in this DC bubble where like America is the best and no matter what, people are gonna buy our stuff and you know I was thinking about this on the way over here. um, as it relates to like sanctions and just geopolitical policy in general and dedolarization right? there's I don't remember who, but there was this prominent like Chinese YouTuber who is you know pretends to be like a dissident or whatever living somewhere and he was saying that the D dollarization news is like CCP propaganda or something which I just laughed at because it's so so so plainly ridiculous to me when you have records of like China and Saudi Arabia conducting oil transactions in Renmin B and India conducting transactions with Russia and Rubles, so it's a nice segue for our next topic. But yeah, um, I Wanted to ask you one more question about oil before we move to digitalization because uh, what is the likelihood of the U.S government pivoting like allowing more refineries to be built More and more capex into those I think it would take a new Administration to do it to be honest.

So if let's say Trump comes in next time he'll do it. Yeah, he'll probably do it because he's all about the money, right? He'll do what he did in 2017 where he lifted the moratorium on Federal Land permits for extraction. Um, and he'll allow the permits to renew. So I think he's been on record saying like we got a ton of oil.

Why are we? Why are we not pulling out of the ground? I mean it makes it's a good position to have like oil's not going anywhere. Uh, as an energy source, we need it. You're wearing plastic shoes. Yeah, I'm wearing a plastic fitness band and also plastic shoes.

Um, my buttons are plastic. Everything on this table. Everything on this table is plastic except this glass. Yeah, um.

but that uses oil products to get manufactured anyways. Yep, so like crude is here to stay, it's everywhere. It's not going anywhere, right? There's no removing it from Cars is not going to make any meaningful change to the amount of crude that we use. You think he's going to campaign on that oil thing? Probably.

I Saw Kevin O'leary talking about building a Refinery Did you see that? Is this for real? Can he raise the capital? No, No, he can't So it's a publicity stunt. So one of the problems is in the United States They've also blocked Refinery construction. So one thing that conical Phillips has had to do is instead of building a new Refinery They've basically retrofitted to double the capacity of an existing Refinery. That's the same example of the accounting guy getting fired Exactly right? right? right? So we're not.

We can't build new refineries, but we can make our existing ones a little bit better, which is okay, but it doesn't Actually, it's not the same as as adding refinement capacity right? So he'd rather go and beg and get get humiliated by MBS and the Saudis and the UAE and the OPEC OPEC plus countries is going to beg, get humiliated, and he won't dig up the stuff from his own backyard. I Think what they would. It's mind-boggling I Think what they would rather do is use that as a demonstration that you know the companies that provide oil are not our friends. There's a lot of similarities between Biden and try Trump Foreign policy.

Actually, if you, if you really look deeply into it, um, they're very much pushing the idea of like America first. So the chips Act was a big demonstration of that where we're providing huge subsidies and tax breaks and investment incentives for ship manufacturers to come to the U.S to reduce our Reliance on on foreign semiconductor manufacturing. The sanctions against China are very similar to what Trump was doing. So like the trade, War has continued.

I Think some of that has to do with the politics and the policies of those bureaucrats who've sort of been in the system for a couple different administrations. and some of that I think also just has to do with you know their their understanding or the the people working in that Administration their understanding of where we stand geopolitically and that we're sort of at like an inflection point. But do they understand he got humiliated going to Saudi Arabia They don't care because the objective the objective is I think the humiliation. the more accidental humiliation is when Biden you know had a potty accident in front of the Pope Um You didn't hear about this.

No he poked his pants in the Vatican no you cannot be real bro. two years ago on a visit to the Vatican Biden pooped his pants. How do you know? No really For real. For real for real for real on live TV in Italy and how come nobody said anything they like quickly escorted him out of the room.

He's like we have a situation. How do you know he pooped his pants though? Dude, it's so obvious he put his pants. You're assuming he pooped his back I think I think it was confirmed. Is there evidence of the poopage? I Really I Really think it was confirmed? This is like a year and a half.

Well there's plenty other stuff. I mean he fell asleep many times. Yeah. I am fought tripping over the stairs.

You know they made fun of Trump for for careful down a ramp. You know, carefully walking down that ramp with his slippery leather shoes and then Biden's like falling down the stairs of Air Force One Every day have you seen how he fell from the bicycle? Yeah, that was fantastic. I mean my 82 year old grandfather is more you know, has better balance and is more constitutionally aware than Biden Realistically like how what's the percentage of sound mindedness with Biden do things I think it's very low I think he has good days and bad days? Yeah I think I think like any person of that age, he has good days and bad days. Yeah I think he has great days where he's like up and about and walking around and like his energy and whatever.

and then he has days where he just like doesn't remember anything. and I suspect he might have dementia dementia Yeah, absolutely like early stage dementia yeah or even progressing. no progressing you would have. you would have caught it bro.

but you can. You can see it in how he speaks and sort of how he mumbles yeah and you know I mean Kamala is just high all the time or drunk or something I think she's sipping wine under her desk all day. Uh, she's not that interesting. Nobody cares to pay attention to her, but when you listen to her speak, she sounds drunk.

So how desperate. like. We're getting a little bit into politics here I Don't care how desperate, imagine the desperation that they run him again that they can some. Yeah.

I mean they have nobody else to run. that's the thing, that's how that's But there's no way he can win. He can. like.

how would he survive a debate? I mean he didn't really do debates last time anyways. Well, he has to do like two or three of them. yeah, like mandated, right? So he'll debate. Trump and Trump is going to destroy him.

So how is he going to win? I don't know I don't know I don't know what their what their plan is to be honest. Um, it's but even just from like look from a policy perspective, we kind of got the same guy but who is more in in tune with like the global climate. but is Trump Trump going to run you think or is going to be the sentence? who's going to take that opposite position right? It's hard to tell. Yeah I mean Trump's politics are very like wishy-washy Sometimes he knows how to energize his base and how to.

He's very funny I think he's a very good comedian. Yeah. Trump is very very good at crowd control and telling jokes and understanding his audience and setting narratives. Yeah, and setting.

very, very good narratives. Um, very bombastic. Yeah. and Biden is like a classical politician where he's been involved for 60 years and you know.

and he's also impaired like it's not the same. It's not the same guy, not the same. guy, I mean you listen to him speak even during you watch footage of the Obama It's not the same dude, not the same guy at all. No, he's gone.

man, he's totally gone even then he was kind of. yeah. but but he's if you listen to him speak. you know in the 80s, the 90s when he was in in the senate in this Prime in his prime? Yeah I mean he would look he was a good politician and he was a strong moderate.

uh Biden of 30 years ago I would have voted for Handover fist I mean he's uh he I'm a he was a strong moderate who's calling the shots then if he's not the one bureaucrats how it always is, the people on the Eisenhower building across the street. So basically Victoria Newland Yeah yeah, that's right. New Land and her husband and all the think tanks and the people writing policy papers and people at the UN all that. Yeah, well that's that's just scary.

Yeah, it's very scary and you know they don't really understand I don't think they want to because nobody voted for her. What's good? No, of course not. She's disappointed in the Bush years and uh, she maybe the Clinton years? sorry, she's a Clinton Yep, yeah. um and she's just stuck around floating from Department to Department um with powerful friends and allies and a powerful husband who runs a think tank.

Um, and you know I Don't think they really understand the implications of what they're doing. Um, we have been engaged in a trade war with our key partners and the countries that are responsible for global commodity. Okay, this is interesting. So look the the U.S policy basically has been: we want to sell as many of our bonds as possible to keep dollar reserves high in the world.

Because right? because countries like China come in, they buy treasury Bonds in Rinmond B and we repay them in dollars and so in effect they're holding on to a dollar security. That's the cheat code for the for the U.S economy right? Everybody wants the U.S bonds U.S bonds bonds because it was safe. Yeah, um, still the case today. By the way, even if we get another another downgrade in June still the case and a lot of people forget there was a downgrade.

We went from AAA to double A under Obama. Um, S P downgraded us I think it was 2011. Um, was the last like almost default where we had a big debt ceiling crisis. And do you think this current situation with the debt ceiling impact said at all that demand? Absolutely that instability.

Yeah, they're losing trust even though everybody knows that the game is. basically they're gonna, they're gonna raise the debt ceiling Like yeah, there'll be a last minute standoff like each time the government might. Everybody knows it's a game. Yeah, the government might, shut down for a couple days.

You know, like usual, it happens and then they'll just agree to it like they always do. Yeah, and then they'll build out the postal service and everything will be hunky-dory again. Uh, but but you you think it has an impact I Think it has an impact. especially now because look what what the United States has done over the last 10 years? Um, and even before has basically been look, um, these countries have come to us you know, in their developing or highly developed State and said hey, um, we want to sell, We want to buy your bonds and we want to sell our stuff to your people and we'll give you a small concession of a tariff and we'll be good.

We'll import our we'll export our stuff. Yep, your people will buy it, you'll give US Dollars Everyone's happy. the economy, the global economy keeps working. Yeah, um, there's a degree of Independence that some of these countries have gained as a result of their dollar.

Investments But then at the same time U.S Foreign policy has been. We want you to continue exporting your stuff into our country. but at the same time, we don't want you to get better at doing it than we are. so we're going to sanction you to hell.

But we also want you to keep buying bonds so we can keep giving you dollars. So what the the best analogy I can think of is This By the way, people like if sorry, not people. countries buy bonds because it's it's not. It's not because they like you, it's it's not a popularity contest.

they buy that Bond because it's it's the safest. But if the country that right, it's not about liking the unit. Not nobody likes the US Sure, but if the country that you're buying bonds from makes it harder for you to sell your stuff there four dollars, then why would you want more dollars? They're hurting your business worldwide. So you're talking specifically about China I'm talking about China and Russia yeah China who we sanctioned ever.

So Russia Russia is what we get resources right? The Earth minerals and all that stuff. The stuff that yeah, everything you dig up from the ground comes from Russia and everything that's been built in the factory comes from China. They buy the bonds and we pay them with dollars and we get all this. We also buy their stuff and we sell it here.

Yeah, so that's the system that always works since the last like yeah, 25 years. Basically, um, and what we've you know. Look, this is the simplest analogy thing. is this you but every day before work you go to Starbucks.

It doesn't matter who the Barista is the breeze in the case like the president. The illustration, right? It doesn't matter who the priest is, you always order a cappuccino right? One day you walk in and they poop dispense and so you order a medium and they charge you for a medium but they give you a small and they start doing that over and over again. You say oh, whatever, maybe it's a mistake. No, no big deal.

Then a week of that goes by and you walk in and um, and then the barista takes the lid and Hawks loogie into your cappuccino and gives it to you. And then they expect you to come back and buy more each time. What we're doing is, we are openly disrespecting the development and the political power of nuclear countries. Right countries with thousands of nukes that aren't regulated by treaties because the treaty is 30 years old.

That didn't happen when these countries had nukes. Yep, right, that aren't regulated by agreements that we have negotiated ourselves into or out of. Uh, and we've told them we don't care about your economy, we care about you buying dollars and we think that we're so good and great that you can only sell your stuff to us so you have to buy into our scheme. But the the uh, the effect of globalization is that thanks to the dollar now India can strengthen their own currency and have their own manufacturing.

Yeah, and trade directly with China not using dollars that they have to get from the United States but using the Rinmond B or the rupee. but the US is always will always Well, I don't know, always, but it I can't see like that far to tell you. Well, it's not no longer the biggest Market Sure, like if you, it's the biggest market for everything, right? right? I can't say that either and I can't As long as that's the condition, it's very hard to move away from buying U.S bonds if that's your case. And I Also can't say that the Us will lose Global Reserve currency status I Don't think they will, but there will be a meaningful change in the quantities of those reserves.

like a multi-polar currency world. Yeah, like a multi-polar currency World whether that's bricks. um, who you know. They held a conference in late April where I think it's gonna be 19.

it could be the rupee. I think it would very easily be the rupee because they're like the pleasant mediator. Their setup is so perfect. Yeah, they're geographically, it's great and also they're like kind of friendly and neutral with everyone.

Demographics is phenomenal. really good demographics. Um well then their democracy wealth has been growing. English speaking for the most part.

great education technology systems. Yeah well, they have the problems. the poverty corruption. There's some ethnic ethnic stuff going on.

Yeah, they're very shady. yeah. I Have friends from India and Pakistan they've told me about it. It's complicated.

The situation on the border is always yeah, but like they have the youngest population in the world I think Indian age like 29. they don't have the Aging issue. They're all the major economies the the Legacy major economy and there's a certain certain rule of law is kind of acceptable. Banking system is organized, not huge regulatory risk anymore.

Um, you know modes. no currency exchanges. It's a good setup. India is a very strong economy.

I've named them the next. China I don't know if you saw my video Yeah, I did. Yeah yeah. I said there's a lot of people who have been echoing that exact sentiment.

I mean a couple years ago India was like the hotbed for venture capital investment. Now it's private equity and now soon will be public markets. Um I I Could see a case where U.S companies Fortune 500 companies do what China has done in the US and for listing Indian uh Indian companies as well. uh, rupee-denominated stocks on the Indian exchanges.

Um, you know, look at a company like Tata Yeah, most people in America don't know what the I'm saying like what's they're as big as this. Yeah, they're vag size, they just own tons of companies and then they said they sell everything. Yeah, yeah, yeah, um, they're just not going to compete with the model X right? That's a different product, but it's a different product in a different product. Market Yeah too, which we'll get to in a second.

But you know the the vast majority of U.S Foreign policy has been basically like keeping these countries on the cusp of dollar Reliance and also like pissing them off. basically. so we've done a pretty good job balancing like how much can we anger upset these governments but still make them relying on the dollar. But now because Asia has sort of Eurasia in general has set itself up to be a economic powerhouse on its own that Paradigm is Shifting And so you know people got upset last year when I came on and talked about the war and said that India was going to be great for Russia and they were going to buy all their goods and everyone was going to be happy because they had a fundamental misunderstanding of the India to an extent, trade relationship to an extent.

Um, I mean look. India stepped in immediately, started buying Russian oil Russian Commodities but they're doing it in a way that actually is very smart. I mean that's the one thing why I think India is the best player like to bet on in the next 30 40 years is because even now look at how the end of the situation they're playing ball with Russia they're playing ball with the US in the whole scheme of the these actors right now. in this geopolitical reshuffling game that's going on, they're the only ones who are playing both sides.

even the turkey. Yeah, it's not really okay, okay turkey and India right? Yeah, it's the only country trust in Turkey than there is in India Yeah, exactly. So I'm saying like India has played it to Perfection where they're friends with everybody. Yeah, like I've never seen that Balancing Act done so well.

I mean that they're trading with Russia they're trading with the US Everything is uh, but it's great. Apple is expanding in India Like crazy. Do you think there's a future? In Our Lifetime where there's a complete phase out of manufacturing from China towards like India like the way I predicted my video I Don't think it's going to be a phase out? No. I mean I can't speak 50 years ahead I Don't know.

but um. I think it's realistic that India and China get close to each other in terms of output. Um, obviously there's a g the the geographic issue of space, but China doesn't use a lot of the space they have anyways. I mean it's all very concentrated on these like mega cities that produce everything.

Um and I think you know the relationships that Europe and the United States have set up with Indian companies are better than those that they've set up with Chinese companies. India You know one of the the problems that the United States has tried to like Europe has been a Battleground for foreign Policy for the US and China for the last 10 years. especially with the expansion of Belton Road into Europe. Um.

Italy is a great example of this we're Standing article. Yeah, so um. under Draghi Italy signed a bunch of memorande of understanding with China for the Belton Road initiative where China would make huge technology investments in modernizing Italian ports, helping them with Transportation infrastructure Financial Infrastructure Etc And they signed a bunch of memos and they said yeah, yeah, okay, we'll get to this then. covet happened.

There was lots of trust, you know, sanctions, issues, moving stuff around and sort of the the letters and the memos just sort of fell by the wayside a little bit. Now you've had this change of power. this regime change in Italy um to a far more right-wing government under under Maloney Um, who? Despite you know she's had her kind of, um, what's the word here her sort of false promises, a little bit like every politician. but all in all, I think she's done an okay job so far in her first almost year.

Um, she ran on sort of a more isolationist campaign and said that it's in the best interest of Italy to refocus its economic incentives away from China And so one of the things that uh, one of the big memos that they signed uh in 2019 was for the European Space Agency and like Italian scientific manufacturers to partner with China to develop modules for the new International Space Station that China's working on the new Chinese space station. Um, and in response, the United States sort of came in and diplomatically tried to screw that up a little bit. So the United States sort of recommitted economically to Italy and they said okay, look, we see China's doing this. Let's see what we can do to help you with your ports and everything.

Like the divorced kid yeah, the kid in the divorce yeah, fighting over. that's exactly what it is And so now India now Maloney kind of came out and said a couple days ago we are Italy Italy Sorry, Yeah, yeah, yeah Maloney and Italy said very openly. a couple days ago we are strongly considering exiting our commitments with China for Belton Road Um, which is not surprising at all to me given the amount of infrastructure your work in the United States has committed in Europe Over the last year and a half, Europe has been or the United States has been building very big liquid natural gas ports, receiving ports in Europe all along the coastline, in addition to increasing our and modernizing the um, uh, internet Information Technology infrastructure. So over the last 10 years, Google with the help of the US government has been replacing and improving the fiber lines that run between the US and Europe Um, whereas Europe has not done that with Asia, the US has made big manufacturing commitments um, reduced sanctions, helped bolster the economies, bolster the banking system, and Italy needed it.

Yeah, they needed a lot after the crisis. The thing that this might be the the first kind of, uh, the canary in the coal mine as far as the the failure of the road initiative. Um, because it's been kind of, uh, it's been Rocky Yeah, it's been very shaky. Um, there's a great documentary that your viewers will find on YouTube It's called Empire of Dust.

It was filmed in about 10 years ago like 2010 2011 Something like that where basically this uh Chinese guy who works for the government or like a government office or like a subcontractor basically goes to Africa I Think it's in a Congo to oversee uh Chinese infrastructure developments and investments in the Congo and he's there with his interpreter and a cameraman who's filming sort of his experience there. Um, it's where the uh, it's also tiresome. GIF meme comes from. You've probably seen it.

Um, it's like Chinese guy standing in an orange desert. Oh yeah, it's also tiresome. Yeah, yeah, that's what that's from. Okay, okay.

I never knew. Yeah, it's It's a very, very good documentary. It's about an hour long, hour and a half. What did you find there? Um so Belgium Was in control of the Congo for a long time.

Yeah, and despite the horrors of colonialism and slavery and everything else, they made a lot of big and they built roads. They built railroads, They built, they put electricity in, they built water infrastructure. Um and basically the the Congolese government and the people of the Congo just sort of Let It Go To and Um. over the you know, 50 years since Belgium's involvement in the Congo and you know, but China basically I think sees themselves as a modern Belgium where they're going to come in and create an economically dependent country that relies on their infrastructure investment and their continued financial and physical support to function.

And what they found is that these countries are impossible to work in. It's not just a language barrier, it's a Um. it's a cultural thing. You know, it's a over-reliance on foreign involvement where organizing labor is difficult.

Um, creating the infrastructure for systems to function is difficult, right? Like there's this, you know, a case in the documentary where they're trying to get gravel. They're laying like some kind of water irrigation system or something for this project and they're trying to get gravel to fill