Latest / Merryn Talks Money / In Defense of Donald Trump’s First Five Months

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In Defense of Donald Trump’s First Five Months · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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  Speaker 2: Welcome to Marin Talks Money, the podcast in which people
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  Speaker 2: who know the markets explain the markets and meren Sunset Web.
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  Speaker 2: Today I'm joined by Dr Popper Malgram, founder and CEO
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  Speaker 2: of the Geopolitical Institute and former advisor to President George W. Bush.
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  Speaker 2: Also Helen Thomas, CEO of the macroeconomic consultancy Blonde Money
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  Speaker 2: and former Special advisor at the UK Treasury. You will
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  Speaker 2: remember that we last spoke to these two seven months ago,
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  Speaker 2: very different moment. That was the week when Donald Trump
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  Speaker 2: was elected. So what's changed since then? How are they
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  Speaker 2: feeling about President Trump today? Over the last twelve days alone,
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  Speaker 2: we've seen tensions with Iran escalate, We've seen the ninety
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  Speaker 2: day poors on Tariff's inching towards its end, and possibly
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  Speaker 2: what feels like a complete we think of global supply chains.
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  Speaker 2: So we've brought them back. Tell us how they think
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  Speaker 2: he's doing and help us unpack everything that is going
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  Speaker 2: on and how you should react with your money. Callen
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  Speaker 2: and Pepper. Really good to have you on. Thank you
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  Speaker 2: for coming again.
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  Speaker 3: Thank you, Hello, good to be back.
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  Speaker 2: Okay, there's so much to talk about Let's do it
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  Speaker 2: like this. Let's give Trump a mark out of ten
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  Speaker 2: and take it from there. How well he's doing. Last time,
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  Speaker 2: Just to remind everybody, when we last talked, you two
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  Speaker 2: were both pretty optimistic about the Trump presidency. You are
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  Speaker 2: optimistic about the way tariffs would work out, economy would
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  Speaker 2: work out, possibilities of peace in Ukraine at least, etc. Now,
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  Speaker 2: based on what you thought then and what you think now, Pepper,
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  Speaker 2: what mark would you give President Trump today out of ten?
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  Speaker 4: Okay, So I'm going to give you a number. And
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  Speaker 4: to be clear, I'm basing this on having been an
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  Speaker 4: advisor to a president. So what matters is how is
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  Speaker 4: his electoral base responding to what he's doing? And I
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  Speaker 4: would say he's at a nine. His base love what
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  Speaker 4: they are seeing. They love the whole changing of the
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  Speaker 4: power structure around tariffs, the fact that it's succeeding in
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  Speaker 4: compelling other governments to negotiate with the United States, not
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  Speaker 4: just on trade, but a variety of different issues.
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  Speaker 2: Now, one thing I do want to talk about is
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  Speaker 2: how optimistic you both were seven months ago about the
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  Speaker 2: President's plan to cut government expenditure. Everything we've seen so
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  Speaker 2: far suggests that that simply hasn't happened. No government expenditure
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  Speaker 2: is gone. How do you two see that panning out?
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  Speaker 4: So I think there's a difference between beginning the process
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  Speaker 4: and cutting it and getting it under control. Getting it
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  Speaker 4: out of control is something that will take many decades.
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  Speaker 4: But the commencement of the process has actually gone incredibly well,
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  Speaker 4: So I think massive progress is being made on that front.
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  Speaker 4: In addition, you know, I've recently been in Alberta, for example,
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  Speaker 4: where you know, there's like this separatist move and they're
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  Speaker 4: talking about joining the United States being the fifty first state.
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  Speaker 4: And you know, I've spent a lot of time in
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  Speaker 4: western Canada over the last eighteen months and in the
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  Speaker 4: middle of the US, and people love Trump. It's very
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  Speaker 4: interesting to see how the media reports him, who are
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  Speaker 4: mainly based on the coastlines of the United States or
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  Speaker 4: out of the United States, and their perception is almost
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  Speaker 4: exactly opposite. So we have an extraordinary split and understanding
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  Speaker 4: of what's going on.
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  Speaker 2: If you look at his approval ratings across the board,
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  Speaker 2: they aren't going in the right direction. More people disapprove
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  Speaker 2: of him now than did at the beginning of his time.
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  Speaker 2: That said, if you look at the people who approve
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  Speaker 2: of him, the most recent pule I can find this
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  Speaker 2: is that from Rats and it suggests that nine out
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  Speaker 2: of ten of the people who voted for him still
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  Speaker 2: approve of everything he's doing, but still not quite a ten.
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  Speaker 4: I do think he can gives any president out a ten.
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  Speaker 2: Do you think he's disappointing his base anywhere?
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  Speaker 4: No, They also are very happy with his decisiveness on
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  Speaker 4: the illegal immigration issue. To be clear, you know, in
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  Speaker 4: America we have two very emotional, incendiary issues that we
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  Speaker 4: do not allow any nuance over. One of them is abortion.
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  Speaker 4: So you're either for it or or against it. And
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  Speaker 4: to raise the point of at what point during the
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  Speaker 4: pregnancy are you for it or against it? Is never covered.
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  Speaker 4: It's just black or white. It's the same with immigration.
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  Speaker 4: And actually the issue is not all immigration. Everybody's in
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  Speaker 4: favor of legal immigration. It's the illegal immigration that's the issue.
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  Speaker 4: And so again there's massive opposition in certain locations, and
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  Speaker 4: broadly most of the country is hugely in support of
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  Speaker 4: tightening up on illegal immigration.
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  Speaker 2: Helen, what's your school?
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  Speaker 5: My school is eight, and so I would use them
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  Speaker 5: met trick of is he doing what he said he
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  Speaker 5: would do and what he got a mandate for. I
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  Speaker 5: should say at this point, by the way, because we
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  Speaker 5: all know that people get very emotional about politics, not
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  Speaker 5: just the topics that Pippa was talking about. Look, my
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  Speaker 5: business is there to say what is going to happen?
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  Speaker 5: What does it mean for investments? Doesn't matter what I think,
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  Speaker 5: doesn't matter if I like or I don't like a
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  Speaker 5: person or how they do things. It's just about what's
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  Speaker 5: going to happen. We always say blonde money is a
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  Speaker 5: political but you know, in examples of what he has done,
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  Speaker 5: you know, the India Pakistan resolution, the Iran situation action
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  Speaker 5: was taken and there has clearly been some progress made there.
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  Speaker 5: The DOGE stuff, I think what's important there is a
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  Speaker 5: cultural shift in the government spending agencies. So it's asking
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  Speaker 5: the question why are we spending this? Should government be
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  Speaker 5: spending this? The numbers may still be being spent because
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  Speaker 5: it's a huge behemoth oil tanker to turn around, but
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  Speaker 5: a fundamental overton window, as they say, has been shifted
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  Speaker 5: about what a government should do, who should do it,
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  Speaker 5: and who should make that decision. So actually I think
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  Speaker 5: he's doing what he said out to do. What a
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  Speaker 5: mandate to do. So head out of ten.
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  Speaker 4: You know, Aden, this one thing on this Doge process
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  Speaker 4: that I think is really important because the objective was
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  Speaker 4: not to be able to come in and cut so
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  Speaker 4: much government spending that it would balance the books of
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  Speaker 4: the nation. The issue was mapping, and that is what's happened.
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  Speaker 4: And so I keep saying, basically, artificial intelligence was given
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  Speaker 4: a cabinetcy in this government and AI was ruled out
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  Speaker 4: by Elon, so it gets personified that it was him,
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  Speaker 4: but he's just the execution agent. And what it did was,
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  Speaker 4: for the first time ever allowed us to see what
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  Speaker 4: is the money being spent on. So honestly, I think
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  Speaker 4: the mapping was so valuable.
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  Speaker 2: Okay, so that sounds good for politics, So good for
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  Speaker 2: the future of politics, should we say? But Helen, and
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  Speaker 2: it also suggests that we shouldn't worry quite so much
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  Speaker 2: about a US debt crisis, possibly as we would have
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  Speaker 2: a year or so ago.
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  Speaker 3: I mean, I know you didn't look convinced.
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  Speaker 5: No, I think I just kind of shake my head
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  Speaker 5: a little bit, because what is it, twenty five years
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  Speaker 5: in the markets and everyone's constantly concerned about the US
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  Speaker 5: debt situation. And well, I guess what's in the debt
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  Speaker 5: is the big elephant in the room, in the whole
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  Speaker 5: world after what happened with COVID, because everybody ragged up debt.
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  Speaker 5: Everybody racked up debt. So then it's a relative game.
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  Speaker 5: And what's been quite interesting about the discussion, and particularly
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  Speaker 5: about the dollar, is about how maybe the US is
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  Speaker 5: in a worse position because of this huge pile of debt,
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  Speaker 5: but actually, to my mind, because there is a clear
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  Speaker 5: mandate and a clear plan. Now, you might not agree
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  Speaker 5: with this plan, you may not think it works, you
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  Speaker 5: may not think it's going to deliver growth. But if
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  Speaker 5: you think you can get growth from it, and you
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  Speaker 5: can change the culture and the dynamic of governance spending
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  Speaker 5: then and strength in America, strengthen it defensively, strengthen it economically.
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  Speaker 5: Then actually, in many respects, on a relative basis, the
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  Speaker 5: US is a somewhat better position with that debt pile.
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  Speaker 5: So what's that expression about. You know, my death has
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  Speaker 5: been greatly over exaggerated, or my demise has been exaggerated.
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  Speaker 3: I just feel like we're in that position about the dollar.
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  Speaker 5: Having said that, I do understand why foreign investors may
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  Speaker 5: want to change their hedge ratios.
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  Speaker 3: You know, may up their head ratios.
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  Speaker 5: Fine, but I don't think it means, you know, exit
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  Speaker 5: from US assets forever.
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  Speaker 3: I think that's been overstated.
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  Speaker 4: Actually, I have to agree with you, Helen. This is
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  Speaker 4: really a critical point. If this was a company and
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  Speaker 4: it announced that it was going to radically reassess its
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  Speaker 4: balance sheet, strengthen the value of what it has, diminish
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  Speaker 4: its outbound cash flows, it was a company you'd buy,
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  Speaker 4: be buying the equity. We're just not used to governments
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  Speaker 4: undergoing this kind of radical, you know, transform of its
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  Speaker 4: balance sheet and shifting of the cash flows in a
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  Speaker 4: more positive direction. So it's a painful process. It's awkward
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  Speaker 4: in many ways. But I think that as the US
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  Speaker 4: does this, other voters in other parts of the world
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  Speaker 4: are going to start to demand that their government does
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  Speaker 4: it as well. So I think everyone's making a lot
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  Speaker 4: of noise right now. But you're going to buy a
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  Speaker 4: country that's willing to admit there are problems on its
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  Speaker 4: balance sheet and it's working to fix them quite decisively.
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  Speaker 4: And I think this is going to roll out in
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  Speaker 4: other industrialized economies as well.
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  Speaker 2: One of the old of that rolling out in the UK, Helen,
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  Speaker 2: it's just the most nonsent just thinking about that exactly.
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  Speaker 5: By the way, I was thinking back to when I
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  Speaker 5: went in two thousand and eight and was working in government,
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  Speaker 5: from having worked in banking and coming from an accountancy family. Gosh,
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  Speaker 5: we're really exciting in my family. But I had the
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  Speaker 5: same thing where we started looking at the balance sheet
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  Speaker 5: in this that they have called the d L and
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  Speaker 5: the AME. These are the government terms for spending, and
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  Speaker 5: I was saying, okay, so this is like a balance sheet,
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  Speaker 5: so where's the spending, and no one can tell you.
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  Speaker 5: It's not like a real balance sheet. It's not cash
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  Speaker 5: coming in and now it's not a cruel it's kind
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  Speaker 5: of a made up thing. It's astonishing. It's astonishing. So
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  Speaker 5: that that is, you know, having heard Pipper talk about
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  Speaker 5: what's happening in the US, and I was, you know, geez,
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  Speaker 5: I was only twenty eight in two thousand and eight
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  Speaker 5: asking these questions. You know, I think that that would
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  Speaker 5: be interesting and useful for other governments to learn from
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  Speaker 5: the US in terms of the policy mix. But I
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  Speaker 5: wanted to ask pepperback a question because of course the
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  Speaker 5: US does have the reserve currency privilege, So maybe it
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  Speaker 5: is able to be revolutionary in this way. Of course,
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  Speaker 5: here in the UK we've had our dabbling with trying
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  Speaker 5: to do well. There's trust thought she had her pro
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  Speaker 5: growth policies, she did not have a mandate to do it,
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  Speaker 5: having not won an election. And now we have a
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  Speaker 5: government that is well sort of struggling under the way
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  Speaker 5: to its own contradictions because it didn't really get a
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  Speaker 5: mandate to be the things it's trying to do. We're
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  Speaker 5: talking about welfare rebellion right now in the UK, and
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  Speaker 5: that is just to try and say five billion pounds,
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  Speaker 5: you know, on an economy that you know, spending one
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  Speaker 5: hundred billion a year on interest debt. So is it possible,
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  Speaker 5: pepper to translate it to other countries that don't have
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  Speaker 5: the reserve currency.
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  Speaker 4: Yeah, it does require a political mandate to do it,
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  Speaker 4: and the president did have that because even Democrat voters
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  Speaker 4: wanted to have a better grip on the true state
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  Speaker 4: of public finances. Also, we have a different political structure
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  Speaker 4: in the United States than many nations, so in a
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  Speaker 4: parliamentary system, getting the consensus is I think harder. I
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  Speaker 4: would add into what the president has done in terms
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  Speaker 4: of the ballot sheet is quite revolutionary. Can we talk
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  Speaker 4: about the tariffs for a second.
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  Speaker 2: We can definitely talk about test humor about to come
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  Speaker 2: on to them anyway, say if you want to kick
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  Speaker 2: us off, brilliant.
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  Speaker 4: Okay, And again I would just want to be clear
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  Speaker 4: for listeners. You know, I literally wrote my PhD on
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  Speaker 4: trade policy. I've been what they would call a free
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  Speaker 4: trader my whole life. I'm not coming at this from
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  Speaker 4: a protectionist angle, But what have the tariffs actually accomplished
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  Speaker 4: and what's the structure. So first of all is to
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  Speaker 4: say before nineteen fourteen, all of the revenue into the
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  Speaker 4: US Treasury came from terrafs. It only changed when we
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  Speaker 4: created the Federal Reserve an income tax, So before that
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  Speaker 4: there was no income tax. So the President saying we
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  Speaker 4: could go back and have a little bit more of
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  Speaker 4: our revenue generated by terriffs, and then he can go
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  Speaker 4: to the tax payer and say I'm going to lower
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  Speaker 4: your tax rate because we've got income And that's why
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  Speaker 4: we've gone from having only an internal revenue service to
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  Speaker 4: now we have this new thing called the external revenue service.
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  Speaker 4: So I just want to be clear that's the thought
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  Speaker 4: process behind it. He's not saying all of our revenue
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  Speaker 4: should come from tariffs, but a little bit more than
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  Speaker 4: in the past, and that makes sense given that background. Second,
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  Speaker 4: it's often portrayed as this attack on China in particular,
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  Speaker 4: but what's actually happened is it's really an attack on corporations.
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  Speaker 4: So the message to the big American corporates is the
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  Speaker 4: way you were doing it before is you moved all
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  Speaker 4: the jobs to China, but then you paid the Chinese
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  Speaker 4: workers nothing. You rip them off, then you charged American
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  Speaker 4: consumers of fortune, and then you kept all your profits
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  Speaker 4: offshore and didn't pay any tax on any of it.
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  Speaker 4: None of that is going to be acceptable any longer.
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  Speaker 4: I'm finding workers all over the world really like Trump
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  Speaker 4: because he's re empowering the working class even outside the country.
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  Speaker 4: And so the big corporations as well are now under
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  Speaker 4: the gun because they're like their margins are getting crushed
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  Speaker 4: by this, and they're being told, hey, why aren't you
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  Speaker 4: paying any taxes in the US. And that's huge new
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  Speaker 4: pressure on them to stop keeping all their revenue overseas,
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  Speaker 4: all their profits overseas. So I think that's a different
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  Speaker 4: way of thinking about it.
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  Speaker 2: Okay, So in that sense, you would say that the
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  Speaker 2: tariff negotiations have been a success already, regardless of how
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  Speaker 2: they end, as this ninety day period comes to attend.
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  Speaker 4: Indeed, and not only that, but these are part of
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  Speaker 4: a broader negotiation that has to do with getting the
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  Speaker 4: superpowers aligned in such a way so they're not at
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  Speaker 4: each other's throats. And so the message to the Chinese
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  Speaker 4: leadership has been we can also find a way to
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  Speaker 4: have more Chinese companies come manufacture in the United States.
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  Speaker 4: And people are like, well, that will never happen, But
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  Speaker 4: it's already happened. And the best example is Higher, which
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  Speaker 4: is a white goods company make refrigerators. They started manufacturing
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  Speaker 4: the US in the late nineties, and they became so
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  Speaker 4: successful that they acquired the White Goods Home Electronics division
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  Speaker 4: of GE. They've been running it ever since. Now, by
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  Speaker 4: the way, that implies, they have to cut a deal
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  Speaker 4: on the use of private companies as spying mechanisms for
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  Speaker 4: the intelligence world, because that's where the fight really is. Right,
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  Speaker 4: Why did the US block Huawi. It's not because they
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  Speaker 4: had more competitive product. It's because they viewed it as
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  Speaker 4: an intelligence gathering division of the Chinese government and why
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  Speaker 4: has China blocked Google and Meta in China because they
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  Speaker 4: view it as a spying arm of the government, So
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  Speaker 4: they have to cut a separate deal on what's acceptable
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  Speaker 4: practice when it comes to intelligence gathering. But let companies
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  Speaker 4: compete on purely commercial terms. And I do think that
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  Speaker 4: the Chinese have all said, yeah, actually this does make
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  Speaker 4: sense even for us. So yeah, there's progress here, even
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  Speaker 4: though it's never reported this way.
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  Speaker 2: And Helen, where are you on the tariffs at the moment?
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  Speaker 5: Ah? I mean, I think we are getting towards it
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  Speaker 5: settling where it was going to always settle, which was
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  Speaker 5: this idea of there being like a kind of baseline
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  Speaker 5: ten percent. But what is I think relevant and potentially
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  Speaker 5: there about the tariffs. I mean, if you go back
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  Speaker 5: to the Liberation Day announcement and you look at the
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  Speaker 5: actual White House statement of what they're about, the important
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  Speaker 5: thing is it says, you know, reciprocal tariffs for economic
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  Speaker 5: and national security. It is not a purely just an
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  Speaker 5: economic point here. This is all tied up with defense
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  Speaker 5: being part of the American umbrella. It is a you know,
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  Speaker 5: economic war in terms of rebalancing the powers. As Pippa
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  Speaker 5: has said there and I think that sometimes gets really
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  Speaker 5: lost amongst financial people, and I sometimes find as well,
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  Speaker 5: I wonder, by the way this may be, it's maybe
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  Speaker 5: I don't want to be agist, but I'll happily tell
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  Speaker 5: you I'm forty five, okay, But I think for those
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  Speaker 5: of us who have seen a lot of peace in
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  Speaker 5: our lives, kind of my generation, it is quite hard
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  Speaker 5: to think about this idea that there could be this
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  Speaker 5: war going on between powers that want to undermine one another.
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  Speaker 5: Whereas if you're above that age. Of course, at Trump's age,
• 17:27
  Speaker 5: he has lived to a lot of international conflict. And
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  Speaker 5: when you go I always go back with Trump to
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  Speaker 5: the nineteen eighty seven advert that he took out in
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  Speaker 5: the newspapers where he says, there's nothing wrong with America's
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  Speaker 5: foreign policy, a little backbone can't cure, And if you
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  Speaker 5: read it, it's literally everything he's just done.
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  Speaker 3: Now.
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  Speaker 5: He says, end our deficits, reduce our taxes, and let's
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  Speaker 5: not pay for the defense of nations that can defend themselves.
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  Speaker 5: And it's it's just when people say he's uncertain or
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  Speaker 5: it's unstable, they don't get it. It's been the same
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  Speaker 5: for forty years. So what's key about any big policy
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  Speaker 5: change like this is that it gets done and unimpeded, right,
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  Speaker 5: So that is where I think. Again, if we go
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  Speaker 5: back to my score for Trump, you may not think
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  Speaker 5: it's a plan that works, but the plan is being executed.
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  Speaker 5: So that's why, again I think on the tariff side,
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  Speaker 5: I just feel quite relaxed about it.
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  Speaker 2: It's interesting to hear that you'll that relaxed on tariffs,
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  Speaker 2: because clearly not everybody is. We've seen an awful lot
• 18:23
  Speaker 2: of market reaction or market volatility every time there's been
• 18:27
  Speaker 2: an announcement around tariff's.
• 18:29
  Speaker 5: A lot of that was to do with sorry to
• 18:32
  Speaker 5: be boring gamma in the s and P. Five hundred,
• 18:34
  Speaker 5: which relates to options positions. I don't necessarily want us
• 18:38
  Speaker 5: to bore people with it. Merrin, and a lot of
• 18:39
  Speaker 5: people who listen will understand what this is. Basically, people
• 18:42
  Speaker 5: did not buy insurance on stock markets going down because
• 18:44
  Speaker 5: they've only ever gone up. So when they fell, they
• 18:48
  Speaker 5: really fell, and then when they rallied, they really rallied.
• 18:50
  Speaker 5: But it was a market structure thing is far more
• 18:53
  Speaker 5: than any kind of macro fundamental point.
• 18:56
  Speaker 2: So, Papa, when you look at tariff's I know you're
• 18:58
  Speaker 2: not really just thinking about tre You're thinking about the
• 19:01
  Speaker 2: entire environment of shifting geopolitics. You're thinking about war, and
• 19:04
  Speaker 2: you're thinking about all these changes that everybody else is noticing.
• 19:08
  Speaker 3: Right.
• 19:09
  Speaker 4: I've been describing it as we're in a hot war
• 19:12
  Speaker 4: in cold places, and that means we're in conflict in
• 19:16
  Speaker 4: places you can't see that are very cold. That space
• 19:20
  Speaker 4: that's the high North and the Arctic, that is the
• 19:23
  Speaker 4: high seas above and below the high Seas. So as
• 19:26
  Speaker 4: an example, even this last few days, I just put
• 19:29
  Speaker 4: up a little piece on LinkedIn saying a Chinese satellite
• 19:34
  Speaker 4: zapped one of the Starlink satellites and stopped it from
• 19:38
  Speaker 4: being able to function with only two watts of power,
• 19:42
  Speaker 4: which is like less than a candle. And they did
• 19:44
  Speaker 4: it from sixty five thousand kilometers away. And China's been
• 19:48
  Speaker 4: talking for quite a while about weaponizing their Mega constellation
• 19:53
  Speaker 4: because to zap starlinks. Why. Because Starlink is providing the
• 19:59
  Speaker 4: support that makes it possible for Ukraine to conduct its
• 20:03
  Speaker 4: war with Russia. Without Starlink, Ukraine would be up the Creek.
• 20:08
  Speaker 4: They cannot do either offensive or defensive operations without it.
• 20:12
  Speaker 4: So in that sense, Ukraine is our first true space war,
• 20:16
  Speaker 4: and so China obviously is in a different position there.
• 20:20
  Speaker 4: So they're saying, right, if you're going to weaponize your
• 20:23
  Speaker 4: mega constellation of satellites, we can weaponize ours too.
• 20:27
  Speaker 3: Right.
• 20:27
  Speaker 4: They're not commencing it, they're doing it in response. But
• 20:30
  Speaker 4: the point is we do have conflicts going on between
• 20:34
  Speaker 4: the superpowers, and they do need to be resolved otherwise
• 20:39
  Speaker 4: we will be at risk of something much greater and
• 20:41
  Speaker 4: much more awful than anything that even I in my
• 20:44
  Speaker 4: lifetime have seen.
• 20:46
  Speaker 2: You said, Pepa, last time we talked to you, said
• 20:48
  Speaker 2: that you didn't expect to see much more in the
• 20:50
  Speaker 2: way of ground wars, that all wars would be less hot,
• 20:56
  Speaker 2: that they'd be warm, they'd be in space, they'd be tight.
• 21:00
  Speaker 2: Technology was as opposed to ground wuels. But Ukraine is
• 21:03
  Speaker 2: a ground wuld that's really grinding on. As you say,
• 21:06
  Speaker 2: it's driven by technology, but it's still a ground woul.
• 21:09
  Speaker 4: Well, if we look at what just happened in Iran,
• 21:11
  Speaker 4: it's very fascinating. I wrote a piece on this on LinkedIn,
• 21:15
  Speaker 4: and what was fascinated with People were horrified to realize
• 21:19
  Speaker 4: the level of surveillance that currently exists and they weren't
• 21:23
  Speaker 4: so horrified about the situation with Ron. They were more
• 21:26
  Speaker 4: terrified that The fact is, you can place a warhead
• 21:31
  Speaker 4: on someone's forehead in their bed at three am and
• 21:36
  Speaker 4: not damage any of the neighboring apartments, right Like, this
• 21:41
  Speaker 4: is a level of precision in warfare that we have
• 21:44
  Speaker 4: not seen before. And what makes that possible? The answer
• 21:47
  Speaker 4: is space based assets, satellites, GPS, et cetera. And so
• 21:53
  Speaker 4: suddenly the realization that you can be tracked from space
• 21:57
  Speaker 4: based on facial recognition off of a satellite, based on
• 22:02
  Speaker 4: your walking gate how you walk is actually a massive
• 22:06
  Speaker 4: individual identifier. And frankly, your heartbeat can be detected, and
• 22:12
  Speaker 4: your heartbeat is a highly unique signature, so you don't
• 22:15
  Speaker 4: even need to be carrying around electronics anymore. So if
• 22:18
  Speaker 4: you're someone considered a bad guy by the United States,
• 22:22
  Speaker 4: they know exactly where you are and exactly how to
• 22:25
  Speaker 4: take you out at three am in your own bed.
• 22:28
  Speaker 4: So have we just seen a war? Yes we have,
• 22:32
  Speaker 4: and I called it the hot minute war? And why
• 22:35
  Speaker 4: is it only a hot minute? I mean, it's okay,
• 22:37
  Speaker 4: it's twelve days, but really it's a hot minute because
• 22:39
  Speaker 4: the moment you realize that this is the level of
• 22:42
  Speaker 4: precision in weapons systems. You can't keep fighting that war,
• 22:48
  Speaker 4: You'll stop. And that is exactly what all the parties did. Now,
• 22:51
  Speaker 4: did they set off a bunch of missiles and bombs?
• 22:53
  Speaker 3: Yes.
• 22:54
  Speaker 4: I thought it was fascinating that Trump said yet again,
• 22:57
  Speaker 4: the Iranians called us up to say, we're going to
• 23:00
  Speaker 4: let some missiles off at this time, So get your
• 23:03
  Speaker 4: guys out of the way. We don't want to actually
• 23:05
  Speaker 4: hurt anybody, but we have to from a domestic point
• 23:09
  Speaker 4: of view, show that we're able to respond. And so
• 23:12
  Speaker 4: there's a kind of theatrical element to traditional weapons systems.
• 23:18
  Speaker 4: And I do think that, you know, Ukraine, it's very
• 23:21
  Speaker 4: interesting that it is this sort of meat grinder that
• 23:25
  Speaker 4: carries on when we have such sophisticated capabilities. So why
• 23:29
  Speaker 4: don't we just shut it down? And the answer is,
• 23:31
  Speaker 4: maybe it serves a purpose. And the fact is a
• 23:35
  Speaker 4: lot of people do make a lot of money selling traditional,
• 23:38
  Speaker 4: old fashioned military equipment. And what is Trump doing to
• 23:42
  Speaker 4: that crowd. He's trying to cut off.
• 23:44
  Speaker 3: All their cash flows.
• 23:45
  Speaker 4: So do they need some wars? There's an argument to
• 23:49
  Speaker 4: be made they do.
• 23:50
  Speaker 2: Okay, So there's an overload to worry about him. But
• 23:52
  Speaker 2: from our conversation so far, I'm gathering that neither of
• 23:55
  Speaker 2: you are particularly concerned about US debt. If we look
• 23:58
  Speaker 2: at the US stock market, we see that don't really
• 24:01
  Speaker 2: appear to be particularly worried about anything. Helen, what are
• 24:05
  Speaker 2: you worried about?
• 24:06
  Speaker 3: I would come back to the debt now.
• 24:09
  Speaker 5: I'm not worried about the US being a complete mess
• 24:16
  Speaker 5: of it all falling completely apart. But but it is
• 24:21
  Speaker 5: still going to be a locust. It could maybe be
• 24:23
  Speaker 5: a domino that starts a process that it has much
• 24:25
  Speaker 5: bigger impact elsewhere. Precisely because there is going to be
• 24:28
  Speaker 5: a lot of debt to be issued. Prior administration under
• 24:32
  Speaker 5: Yellen had you know, shortened some of that in terms
• 24:35
  Speaker 5: of the issuance, So you know, that kind of raises
• 24:38
  Speaker 5: its own issues.
• 24:39
  Speaker 3: And I just think death is this is this huge
• 24:42
  Speaker 3: elephant in the room.
• 24:43
  Speaker 5: I mean, I keep watching now, I do a bi
• 24:45
  Speaker 5: weekly of you know what data should we watch?
• 24:47
  Speaker 3: Well, I put bond auctions in there now.
• 24:49
  Speaker 5: It's particularly obviously Japan had been one that people were
• 24:53
  Speaker 5: looking at. I am very concerned about the UK because
• 24:58
  Speaker 5: that is under this government is fast becoming a kind
• 25:03
  Speaker 5: of a doom loop where the government has now got
• 25:08
  Speaker 5: a political constraint on top of a fiscal constraint and
• 25:10
  Speaker 5: will not be able to get out of.
• 25:11
  Speaker 3: Either, and we'll not be able to get the growth.
• 25:14
  Speaker 5: So that's a one element I think that is could
• 25:19
  Speaker 5: cause the destabilization I've been looking for towards the end
• 25:21
  Speaker 5: of the year and then when it comes to stock markets.
• 25:24
  Speaker 5: One thing that will be super interesting is could we
• 25:26
  Speaker 5: go from a Mag seven of tech to a Mag
• 25:28
  Speaker 5: seven of defense? And with that, simply it would maybe
• 25:32
  Speaker 5: be a very sensible rotation. You just heard there from
• 25:35
  Speaker 5: Pipper about what's happening in Germany and in some of
• 25:37
  Speaker 5: these companies that are going to get a huge influx
• 25:39
  Speaker 5: of cash and people are adapting technology into defense technology.
• 25:44
  Speaker 3: But just by pure.
• 25:46
  Speaker 5: Nature flows that might sort of slightly upend the world
• 25:50
  Speaker 5: of one trade everyone into the Max seven.
• 25:52
  Speaker 3: So that's what's on my radar.
• 25:54
  Speaker 4: Yeah, actually I want to talk to that. I think
• 25:58
  Speaker 4: you're you're so insightful. How about this shift into the
• 26:02
  Speaker 4: defense space. I've had a kind of a different approach,
• 26:06
  Speaker 4: which has been probably five years ago. I started saying
• 26:11
  Speaker 4: defense spending was the new quantitative easing because you could
• 26:15
  Speaker 4: throw money into defense in huge amounts and nobody would
• 26:19
  Speaker 4: ask any questions, right, So so it was a way
• 26:22
  Speaker 4: for them to keep doing stimulus without anybody giving pushback.
• 26:30
  Speaker 4: And so we developed these extraordinary weapons systems. But what
• 26:34
  Speaker 4: current events are showing us is that they are not
• 26:38
  Speaker 4: as needed as they were in the past. So, for example,
• 26:42
  Speaker 4: again we come back to today's geopolitical events. Did you notice
• 26:47
  Speaker 4: that the administration swore in the chief technology officers of
• 26:52
  Speaker 4: Palanteer and Meta and several of the biggest tech companies
• 26:57
  Speaker 4: as lieutenant colonels in the US Army. Why why are
• 27:02
  Speaker 4: they deputizing them? Because that whole thing was run by
• 27:06
  Speaker 4: those by those kinds of companies. This was not a
• 27:10
  Speaker 4: traditional defense establishment warfare. This is a shift and Palentteer
• 27:16
  Speaker 4: is fundamentally disintermediating the traditional defense companies. So I would
• 27:24
  Speaker 4: say this is not the time to be putting money
• 27:26
  Speaker 4: into traditional defense companies. They are all getting cut off
• 27:31
  Speaker 4: by the presidents shutting down of many activities in Washington
• 27:36
  Speaker 4: that promoted their interests, and now they're being disintermediated as well,
• 27:41
  Speaker 4: which is why many of them are going to the
• 27:43
  Speaker 4: Europeans and saying we'll make tanks for you. We'll create
• 27:47
  Speaker 4: a European German company that makes tanks because they don't
• 27:50
  Speaker 4: have cash flow coming from anywhere else. But again, do
• 27:54
  Speaker 4: we actually need tanks for modern warfare? Maybe not?
• 27:57
  Speaker 2: Okay, Pepa, this is super interesting. I'm one of the
• 27:59
  Speaker 2: big conversations out there at the moment. What exactly do
• 28:02
  Speaker 2: we mean when we talk about defense. NATO is talking
• 28:05
  Speaker 2: about taking defense spending up to five percent of GDP,
• 28:08
  Speaker 2: But we're not really talking about tanks there are We
• 28:11
  Speaker 2: were talking about power grids. We're talking about dealing with
• 28:14
  Speaker 2: that of cybersecurity and that kind of thing. So the
• 28:16
  Speaker 2: money flowing into defense isn't necessarily going to flow into
• 28:20
  Speaker 2: what we have traditionally thought of as defense.
• 28:24
  Speaker 4: So again when we talk about what is defense, defense
• 28:27
  Speaker 4: is now much wider than our old fashioned thought about
• 28:32
  Speaker 4: what is that what constitutes defense? And now it's you know,
• 28:37
  Speaker 4: power power grids, It's about safety of data, and it's
• 28:42
  Speaker 4: also data processing because who can process the data fastest
• 28:47
  Speaker 4: also wins. So there's a massive race for computational power
• 28:52
  Speaker 4: and for new chips. Then you see particularly the US
• 28:56
  Speaker 4: and China competing for who's making the greatest advances in ships.
• 29:01
  Speaker 4: Willow is, of course, are most sophisticated now. And just
• 29:05
  Speaker 4: to give you an idea, Willow, the Google chip called Willow,
• 29:08
  Speaker 4: can solve a problem that Google estimated would have taken
• 29:12
  Speaker 4: the entire history of our known universe, and it can
• 29:16
  Speaker 4: now solve it in five minutes. So the speed at
• 29:20
  Speaker 4: which computational power is increasing is extraordinary, and that translates
• 29:24
  Speaker 4: directly into lethality of weapons systems. I was recently in
• 29:30
  Speaker 4: Europe with a lot of the very senior political leadership
• 29:33
  Speaker 4: from countries like Germany, Switzerland. They actually speak of this
• 29:39
  Speaker 4: as military Keynesianism. I'm like military Knesianism. You guys think
• 29:44
  Speaker 4: that making tanks is going to create jobs, and they're like, yeah,
• 29:49
  Speaker 4: it will, it'll create jobs, and I'm like, guys, one
• 29:52
  Speaker 4: thing we learned with the Peace divid end is that
• 29:55
  Speaker 4: when you spend money on destructive capability, you slow your economy.
• 30:01
  Speaker 4: If you want to create jobs, build things that are constructive,
• 30:04
  Speaker 4: not destructive, and divert If you want defense, it's not
• 30:09
  Speaker 4: going to come from tanks.
• 30:11
  Speaker 2: Okay, we've done a lot. Yeah, we've talked about dose,
• 30:14
  Speaker 2: We've talked about debt, we've talked about tariff. We've talked
• 30:17
  Speaker 2: about hot waves, we've talked about cold wars, and of
• 30:19
  Speaker 2: course we've talked about defense spending and the sector results.
• 30:22
  Speaker 2: So let's get back to traditional territory here for Marin
• 30:25
  Speaker 2: talks money at least and ask you guys the oldie
• 30:28
  Speaker 2: but gooddy bitcoin or gold pepper.
• 30:32
  Speaker 4: Oh well, I'm at the bitcoin conference that the Bitcoin
• 30:34
  Speaker 4: Policy Institute is holding here in Washington, DC. So look,
• 30:39
  Speaker 4: governments everywhere are going to be adopting bitcoin as a
• 30:42
  Speaker 4: new strategic reserve. So there's no question that it is
• 30:46
  Speaker 4: going to go up in value. And I do think
• 30:48
  Speaker 4: it is a hedge against inflation. It's a hedge against
• 30:52
  Speaker 4: the inclinations of central banks to inflate. It's a way
• 30:55
  Speaker 4: of handcuffing them.
• 30:57
  Speaker 2: Helen gold the bitcoin.
• 31:00
  Speaker 5: Wine, Bitcoin, new technology, safe haven, government debt.
• 31:04
  Speaker 2: There you go, right, One last question for you two.
• 31:07
  Speaker 2: What are you reading at the moment?
• 31:10
  Speaker 3: Oh gosh, do I have the attentions pun to read?
• 31:13
  Speaker 5: I'm actually reading a book about Swinson's book on the
• 31:19
  Speaker 5: endowment at Yale. They talk about long term common interests.
• 31:24
  Speaker 3: That's a five hundred year time horizon. That's fun. I
• 31:27
  Speaker 3: am okay, brilliant.
• 31:29
  Speaker 4: What are you reading, Peppa? I know you read it
• 31:30
  Speaker 4: andlessly I do. You know what I've been reading is
• 31:34
  Speaker 4: I know this sounds so crazy, but the history of
• 31:37
  Speaker 4: Venice and the reason is because of their debt problem.
• 31:42
  Speaker 4: Is they were arbitraging between gold and silver and they
• 31:46
  Speaker 4: got into financial strife. And I've realized they're tremendous parallels
• 31:49
  Speaker 4: to where we are today. So I'm reading a lot
• 31:52
  Speaker 4: about the history of Venetian monetary policy. Fantastic.
• 31:57
  Speaker 3: I thought she was going to talk about Jeff Bezos.
• 31:58
  Speaker 3: Actually so did I.
• 32:00
  Speaker 2: I thought we were going history of history of weddings
• 32:02
  Speaker 2: in Venice, but.
• 32:04
  Speaker 4: No, you know, interesting that they're there.
• 32:07
  Speaker 2: Absolutely okay, brilliant. Thank you so much, both of you.
• 32:11
  Speaker 2: Absolutely fantastic. Thanks for listening to this week's Marin Talks Money.
• 32:19
  Speaker 2: If you like us, share, rate, review, and subscribe wherever
• 32:21
  Speaker 2: you listen to podcasts, and keep sending your questions or
• 32:23
  Speaker 2: comments to Merror Money at Bloomberg dot net. You can
• 32:26
  Speaker 2: also follow me in John on Twitter or x I'm
• 32:28
  Speaker 2: at marinas w and John is John Underscore Steppech. This
• 32:32
  Speaker 2: episode was hosted by me Maren Zumsett Web. It was
• 32:34
  Speaker 2: produced by Someasadi, Moses and Atala Amadi. Sound designed by
• 32:38
  Speaker 2: Black Maples and special thanks of course to doctor Bipa
• 32:41
  Speaker 2: Malgram and to Helen Thomas