Latest / TFTC: A Bitcoin Podcast / #732: The Iran War Escalation with Mel Mattison

Transcript

#732: The Iran War Escalation with Mel Mattison · TFTC: A Bitcoin Podcast

• 0:00
  Mel, here we are. Q1 2026 ends tomorrow.
• 0:04
  And we're here for the quarterly update.
• 0:07
  Yeah, what a quarter.
• 0:10
  Longest first quarter in history, I think.
• 0:12
  Yeah, it's
• 0:15
  one of those quarters where years happen in weeks, I think.
• 0:19
  We'll get into it.
• 0:19
  We were just talking about it before we hit record.
• 0:22
  But I mean, you came out with a video that was pretty open and
• 0:25
  I think vulnerable on Friday talking about your,
• 0:29
  your battles with alcohol. And I thought it was, I was telling you,
• 0:32
  I think it was really admirable of you to put that out and recognize it and
• 0:37
  get it out there in the public.
• 0:39
  Cause I think it's important to not fight those battles by yourself.
• 0:43
  And so I'm happy that you, you did go public with that. And you're on a,
• 0:50
  it seems like on a path to getting cleaner.
• 0:51
  Yeah, I hope so. And I appreciate, you know, I know there's been people that have been supportive and, you know, that means a lot and it helps me.
• 1:05
  Anybody that's known me for any period of time, you know, has known that I have struggled with alcohol pretty much my entire life.
• 1:12
  It was it was kind of one of these, you know, love at first sight things with me where there was no like building into it.
• 1:19
  Like I've always struggled with it.
• 1:21
  And I've had periods of time where I'm sober for years, you know, spent time in AA.
• 1:29
  I have a sponsor.
• 1:31
  So it's something that I've recognized as a battle for me.
• 1:35
  And sometimes I do really well fighting the battle.
• 1:39
  And sometimes I get into weak situations and weak times and weak periods in my life where, you know, I don't do the recovery work I should.
• 1:49
  I start thinking things are, you know, all right. And that's when it, you know, slips into you,
• 1:55
  you know, as they say in the program, you know, it's cunning, baffling and powerful. And,
• 2:00
  you know, while you're not drinking, you know, alcohol's in the garage doing pushups,
• 2:04
  you know, waiting for you to come back. And so basically, you know, what happened to me really
• 2:10
  was I was in a really good place. I would say two, three years ago when my book came out and,
• 2:17
  And, you know, I had really like spent a lot of time on kind of fitness and sobriety during the pandemic, actually.
• 2:23
  And I just kind of slowly started slipping back into it and and thinking that I was all right.
• 2:29
  And when you suffer from this, you know, that's that's a false sense of security.
• 2:34
  It's just something that, you know, does happen to people.
• 2:38
  It's great when people like go into the program and, you know, they have this epiphany moment and some people do.
• 2:47
  the vast majority of people, you know, they struggle a little bit and they don't, you know,
• 2:52
  go to that first meeting and they're sober the rest of their life. It's more of an on and off
• 2:57
  battle. And people have slips, people have relapses, and then people get into bad phases.
• 3:04
  And I got into one of those bad phases recently. And, you know, fortunately, I have the opportunity
• 3:11
  to like check myself and pull myself back right now before any, you know, real damage is done
• 3:18
  other than, you know, making some jerky, stupid posts or, um, embarrassing myself a little bit,
• 3:25
  um, you know, before any serious damage is done. And so I just wanted to say to people that have
• 3:31
  followed me and listen to me, you know, um, if you read a post or you've seen me, you know,
• 3:38
  after a few drinks, you know, on a podcast, you're like, what the hell's up with this guy? Like,
• 3:44
  you know, when I'm, when I'm on the ball, I'm pretty good. And, you know, I've let some things
• 3:52
  slide. And so I would just, you know, apologize to people and say, look, you know, that stuff
• 3:57
  really wasn't me. It wasn't the person that I want to be. It was somebody who's, you know,
• 4:05
  kind of suffering and dealing with alcohol use disorder. And, you know, I'm trying to get better
• 4:11
  and I'm working on it. And like I said, I'm fortunate that, you know, I'm not in this
• 4:17
  kind of rock bottom, lost it all position. You know, I have people that love me, support me and
• 4:24
  understand this. And so I'm going to, you know, get back to the work, get back to focusing on
• 4:31
  on that aspect of my life more than, you know, just the markets and things. But, um, you know,
• 4:38
  it's, uh, it's not easy. It's not easy, but you know, I, I've, I've seen so many people that I
• 4:46
  respect and admire go through, you know, issues with addiction and alcohol. And I think it's,
• 4:53
  it's something that just comes after people, you know, and, and you have it. And, and, and, you
• 4:59
  The only thing you can do is work to get better and acknowledge it and do the best you can because it really is something that – it tears up families, tears up lives all over the world.
• 5:15
  And it's not fun.
• 5:17
  It's not fun.
• 5:18
  It stopped being fun for me a long time ago.
• 5:21
  And that's where I'm at with that.
• 5:24
  No, no, like I said, we've never met in person, but we've been developing this relationship,
• 5:33
  doing these quarterly updates for two, three years now.
• 5:36
  And that care by end, I'm here for you.
• 5:39
  And I'm glad to see that, again, you were wise enough to basically go public and be
• 5:47
  vulnerable and make a public statement like, hey, I'm in a bad spot and I'm looking to
• 5:52
  get a better one.
• 5:54
  If anything, this quarterly update can serve as a step in that direction where we step back, look at what's going on in the markets, in the world, and try to provide people with some signal based off your analysis, which throughout the years has been pretty spot on.
• 6:12
  and some misses here and there, but I think that's why people really love these discussions
• 6:18
  because your perspective is certainly unique and oftentimes correct in retrospect.
• 6:25
  So like we mentioned, it's been a crazy first three months of the year.
• 6:31
  Obviously, the war popping off in the Middle East, we have severely hindered oil and gas
• 6:39
  infrastructure supply chain, which I think many people, particularly on X and I think in the
• 6:45
  circles that we observe are saying it feels like February 2020, pre-COVID, pre-lockdown,
• 6:52
  where the people who are very online, like ourselves, are saying this is not going to be
• 6:59
  a quick and easy fix and people need to prepare. And while most people who are not terminally
• 7:05
  online or a bit oblivious outside of what they're seeing at gas stations right now.
• 7:10
  Yeah, I mean, this this is definitely we've gotten ourselves into a pickle here,
• 7:16
  to say the least. And it's been a little shocking to me, to be honest with you,
• 7:23
  because I've been following this Iran situation closely. And, you know, I'm not calling myself
• 7:29
  some grand, you know, military strategist or expert. But I do follow a lot of people that I
• 7:36
  really respect that have spent their lives doing this type of stuff. I mean, whether it's like a
• 7:40
  Colonel Douglas McGregor or a John Mearsheimer, or, you know, there's a couple favorite shows that I
• 7:46
  like. One's called Daniel Davis Deep Dive by this former lieutenant colonel. And he has a lot of
• 7:52
  great guests, like a, you know, a Ted Postal guy who's worked at MIT his whole life studying like
• 7:59
  missiles and interceptors and like people that really know this stuff. And these aren't the type
• 8:04
  of people that get time on Fox News or CNN, because what they're saying doesn't fit the narrative
• 8:09
  that, you know, the powers that be want out there. But these are the guys that really know what's
• 8:14
  going on. And to these guys, like not that much that's happened is really that surprising,
• 8:20
  other that we actually did what we did.
• 8:23
  Because they were saying when the troop buildup was going on in Iran,
• 8:26
  like, there's not a military solution here.
• 8:29
  Yes, we have the most powerful military on the planet,
• 8:32
  but sometimes there are solutions for which the military isn't the answer, right?
• 8:37
  You think that, hey, I could tie it into my own situation.
• 8:40
  Like, it's like, hey, you know, I've got great willpower.
• 8:43
  I can work hard and do this and do that.
• 8:45
  And it's like you come up against something that willpower is not the solution for.
• 8:49
  You need to find a different solution. And, you know, this this thought process that the U.S. military, we're just going to drop some bombs and we're going to achieve all these objectives was kind of foolhardy from the beginning.
• 9:04
  So I was not actually too worried about it. As recently as when Trump did his State of the Union address, which was just a few days before the attacks began, you had guys like Mearsheimer on there saying, hey, Trump's saying like, if Iran says the magic words, no nukes, you know, this doesn't have to happen.
• 9:21
  And then you had good signals coming out of Oman, like there's negotiations. And so the fact that there's no military solution, that Israel's been trying to talk the U.S. into this for decades, and every president in the Pentagon has basically come to the conclusion this is a bad mission.
• 9:41
  And yeah, we'd like to get rid of the Iranian regime, but the military solution just isn't there.
• 9:47
  I just didn't think it was going to happen.
• 9:49
  And when it did happen, I thought, well, they must have like a rabbit up their sleeve, like a Delce Rodriguez or something.
• 9:56
  They're not going to actually do this, are they?
• 9:59
  And by like the fifth or sixth day and it became clear, like, no, this is just they're going down this route.
• 10:07
  I, for the first time since in December, one of our first quarterly meetings in December
• 10:11
  of 2024, when I was saying, hey, buy puts, raise cash, for the first time I did that.
• 10:18
  And fortunately, this market actually gave you a chance to do this.
• 10:22
  We were still trading like 6,800, 6,850 on the SPY, seven, eight days after this thing
• 10:28
  started.
• 10:29
  I mean, we even went positive on the NASDAQ and the S&P the Monday after the attacks.
• 10:34
  So the market, I think, was kind of in the same kind of general agreement with me, like we're not really going to do this, are we?
• 10:42
  And once it became clear, which for me was like five, six days after the attack started, I think the market generally started to get this maybe the second or third week and then definitely last week.
• 10:55
  You know, people are realizing like there's no easy exit here.
• 10:58
  And every day that goes by, Iran is just getting in the driver's seat more and more.
• 11:05
  And and what's to stop them from truly demanding their goals being met of us getting out of the Gulf, abandoning our bases?
• 11:14
  You know, oil starts trading in yuan.
• 11:16
  They start collecting a toll on the Strait of Hormuz.
• 11:20
  Like because we don't have we don't have leverage with them.
• 11:24
  To use Trump terms, we don't have any cards.
• 11:26
  What are we going to do?
• 11:27
  he sends out a post this morning that makes me wonder if he's lost touch with reality,
• 11:31
  where he's just saying we're going to hit their energy plants and maybe their desalinization
• 11:36
  plants. And it's like, don't you realize that these guys have missiles that can do that exact
• 11:41
  same thing to the entire, you know, GCC where like, they're obviously like 80, 90% dependent
• 11:47
  on desalinization or, you know, talk about like in the beginning, like this BS about, oh, well,
• 11:54
  the reason the straits not open is because people won't give insurance, but it's safe.
• 11:59
  It's like if it was safe, the U.S. Navy would be in there and the oil would be flowing.
• 12:05
  So there's just been this massive, massive propaganda to convince people that there are
• 12:13
  some really good options on the table for the United States. And right now, everyone that I
• 12:19
  know doesn't see them. And I think the best case situation is that somehow we actually do
• 12:25
  sacrifice a lot, like get a bad deal, but at least get out of it. But what I'm worried about
• 12:33
  is the probability that we don't and that, you know, this escalates and continues. And it has
• 12:40
  the potential, I believe, to spiral all the way to the possibility of a nuclear exchange,
• 12:47
  specifically between Israel and Iran. And I think we didn't know Iran had missiles that could
• 12:54
  reach Diego Garcia. And for all we know, since last June, they took that 60% uranium,
• 13:02
  ramped it up to 90%, and they could very well have a nuclear weapon for all we know.
• 13:08
  And so I think that's a big fat, you know, a big tail on the end of the spectrum.
• 13:13
  But the fact that that's even something that I think is a serious scenario people need to consider is a pretty ridiculous place for us to be, given I thought we had a lot of tailwinds heading into this year.
• 13:28
  Yeah. And actually, I was reflecting on our past two conversations.
• 13:34
  And I forget it was the last one or the one before that, but it was right after we went in and exfiltrated Maduro from Venezuela.
• 13:43
  And I asked you, like, what are and that was one of those operations where it was six hours in and out.
• 13:48
  It came pretty clear that it seemed like we wanted ground forces in Venezuela.
• 13:54
  It wasn't going to be some prolonged conflict.
• 13:56
  And I asked you, like, I think you were pretty bullish on the execution of of what happened in Venezuela specifically.
• 14:05
  And I asked you, what are you worried about moving forward?
• 14:08
  And is that something like this boost his confidence to the point where he goes, oh, now we go get Cuba.
• 14:14
  Now we go to Iran. And it seems like that now that scenario is playing out because he is saber rattling at Cuba in parallel as well.
• 14:23
  Yeah, I do. I remember saying that. I remember saying what's worrying me is that he's on a hot streak. And I've been on a hot streak as a trader where it seems like every single thing I touch turns to gold. And you start to start believing your own hype. And you put down a big bet on something and then that big bet is wrong. And it makes those past gains not look that great.
• 14:47
  And I think he had a lot. He was he was rolling up like kind of a string of pretty good victories.
• 14:52
  Like he kind of extricated the U.S. and Israel out of the 12 day war with that strike on Fordow and the other nuclear facilities in Iran.
• 15:02
  No American casualties. Midnight Hammer looked brilliant.
• 15:05
  Then you had, you know, the Maduro raid.
• 15:08
  I mean, things were looking like, hey, he's being able to surgically use military force to achieve kind of a tactical objective with very little cost in lives, frankly, not only to us, but also to our enemies.
• 15:24
  People might die on either side, but in the grand chess game of geopolitics, relatively small casualties or zero on our side in Midnight Hammer and the Maduro raid case.
• 15:39
  And, you know, it's like, hey, if I think he I think he really believed that he could do the same thing.
• 15:45
  And there's a lot of talk about, you know, Mossad, you know, seven in-face meetings between Bibi Netanyahu and Trump.
• 15:52
  since he became president, kind of convincing him away from U.S. intelligence,
• 16:00
  like kind of bringing him on board to we can go in and hit them.
• 16:06
  They're weak. They're ready to collapse.
• 16:09
  And this is really a concern of mine is just this this influence that the Israel lobby
• 16:15
  and that certain contributors to Trump have.
• 16:21
  And I think a lot of people, you know, they kind of know it exists, but they don't I don't think they really understand how pervasive it seems to be in this case with this president in particular.
• 16:37
  I mean, I think you have people that he's putting in key roles like Jared Kushner and Whitcoff.
• 16:44
  And you have to question, are they totally allegiant to the United States?
• 16:50
  And, you know, an example that I would give is like an or an analogy is I'd imagine like let's say you work for a company for like 20 years or I don't know, let's say you still have friends.
• 17:01
  You have maybe some family members that work at this company.
• 17:04
  Let's say it's Apple.
• 17:05
  Then you go to work for Microsoft and you see an opportunity to do something while you're working at Microsoft.
• 17:12
  That's going to cost Microsoft, you know, 20, 30 cents per share off their earnings.
• 17:18
  But you know that if you do that, it's going to cost Microsoft 20 or 30 cents,
• 17:22
  but it's going to save $5 a share off of the earnings of Apple.
• 17:28
  And you think, wow, I've got all these friends.
• 17:30
  I've got these family.
• 17:31
  Maybe I've still got stock options there.
• 17:33
  It's going to be a little bit negative for Microsoft, but it's really going to help out
• 17:37
  Apple.
• 17:38
  So, you know, I'm going to do it.
• 17:41
  If an employee did that, a boss would come in and say, hey, man, you're fired.
• 17:44
  You're making decisions against us because you want to. And I think there are very powerful people in the United States government who somewhat or absolutely do feel that way about Israel, where they see it as almost an extension of the United States, or they feel that it's legitimate to take Israeli national interest into concern when it comes to United States strategic decisions.
• 18:10
  And this is a very serious issue, in my opinion. I mean, this is this is to me, Israel is the greatest danger to the United States from a nation state perspective.
• 18:24
  perspective. And I think the evidence is in what's been happening the last month with us getting
• 18:30
  dragged into a war that's completely not for our national security interests, has a very low
• 18:37
  likelihood of success, and is only hurting the American people, putting our troops at risk,
• 18:45
  possibly driving the global economy into a recession. And I think that the clock is ticking
• 18:52
  for getting us out of this without extreme damage, extreme damage. And I think there's still time
• 19:00
  left to do it and the economy can recover. And that would still actually be my base case. Like
• 19:07
  after all this, I still think we can end up with a pretty good year in financial markets.
• 19:12
  But I think some hard decisions need to be made in the next two, three weeks, next month top.
• 19:18
  And if they not we could start going down a path that just has like you know 35 40 possible declines in say the broader markets written all over it
• 19:33
  And that's probably not even, you know, the worst case scenario.
• 19:39
  Yeah.
• 19:40
  No, I mean, I think, and it's funny because you mentioned you were, he got in a hot streak
• 19:47
  last year.
• 19:47
  And then I went back and read the tape.
• 19:49
  I think it was this quarterly update last year.
• 19:52
  I threw out there, my biggest worry was Israel convincing the Trump administration to go troops on the ground in Iran.
• 19:59
  And when the 12-day war happened in June, I was worried and happy to learn or happy that it was only a 12-day war when they got out.
• 20:08
  But this time around, I was in Florida when the bombs started dropping that Friday night and Saturday morning.
• 20:15
  It was just like, oh, God, here we go.
• 20:17
  Because I don't like once you get into this stuff and again, I think.
• 20:23
  The the scariest thing of the last month is just how the.
• 20:30
  Sort of etiquette of war has been thrown to the wayside, particularly with the targeting of energy infrastructure, refinery infrastructure and the.
• 20:41
  rhetoric around bombing desalination plants. Like once you
• 20:46
  cross those lines, it's very hard to come back from that. I really hope we can
• 20:50
  pull back from the edge as it pertains to that stuff.
• 20:55
  Yeah. I mean, it's, it's, it's been a total disregard. It's not just like crossing over
• 21:01
  the line a little bit. And I mean, you look at, you know, there's things in the UN
• 21:07
  charter and article two and different stuff about, you know, you know, nations should,
• 21:19
  you know, should, should go through every single diplomatic effort available before engaging in
• 21:28
  hostilities and only then like in self-defense and, you know, the only way that is possible to
• 21:38
  kind of wage like a first strike is if there is like an imminent threat. And that's why this word
• 21:44
  imminent is always brought up because it's actually in, you know, international law and it's, it's,
• 21:50
  it's basically, you know, defined and, and, and it's pretty clearly defined and it needs to,
• 21:56
  when they're saying imminent, they're talking about like nuclear bombs are in the air and can't
• 22:02
  be called back. They're not saying like, well, you know, it's possible because I mean, obviously,
• 22:08
  I mean, any country at any point could say it's possible somebody is going to attack us in the
• 22:13
  future. You know, it's very possible that one day China might attack us. It's very possible that one
• 22:19
  day Pakistan might attack India. It's very possible one day North Korea might strike South Korea.
• 22:24
  I mean, all these things are possible threats. And so they define imminent pretty clearly. And, you know, I understand that international law is not anything that can reign in, you know, nation states. I mean, this is like at the end of the day, nation states are living in an anarchical world. Like there is no like true higher power.
• 22:46
  The UN doesn't have, you know, they can, the war courts can put out arrest warrants, but if you can't enforce it, I mean, what is it? But there's a reason why that framework was put in place after World War II in the language of the documents to avoid the scourge of war is why they did it.
• 23:07
  And the idea was, let's put these things in place to try to avoid war at all costs.
• 23:12
  And it just seems like after that hot streak, like it began to start to forget about what war can actually become.
• 23:21
  And it can just be like a video game.
• 23:24
  And they've even put out, you know, videos from the White House, like kind of comparing our strikes to video games, which is really kind of depressing to see.
• 23:33
  And then you saw a post this morning from, yeah, talking about taking out desalinization plants. And I mean, these are all things that are clearly war crimes. I mean, I mean, you Pete Hegstead, no quarter, like they've gone beyond the pale of like tough talk to achieve a goal.
• 23:53
  It's now like they're starting to do some of these things.
• 23:55
  And we've seen Israel do some of these things.
• 23:58
  And the thing that people need to realize, people might say, well, it's war.
• 24:01
  You got to do what you got to do.
• 24:03
  But in this situation, as I mentioned at the top, like Iran has cards to play.
• 24:10
  I mean, they have very good missiles and a lot of missiles.
• 24:14
  And they have these missiles in underground bunkers that even, you know, Moab and bunker
• 24:19
  buster bombs can't get.
• 24:21
  you know, there's no way to destroy them without like sending in boots on the ground. Like they're
• 24:27
  going to have these missiles. We can bomb their power plants. We can bomb their desalinization.
• 24:32
  They're still going to have these accurate missiles. They're still going to have
• 24:35
  targeting information. They probably already have targeting information from the Russians
• 24:39
  and Chinese on all of these vulnerable assets in the region. And you take out like the desalinization
• 24:45
  capacity for Riyadh. And you're talking about a humanitarian crisis with hundreds of thousands
• 24:52
  possibly dead. And I mean, the Gulf Coast countries are like 50% of the people there are
• 24:58
  dual nationals. They're not even citizens of the country. I mean, that entire area could become
• 25:05
  like a ghost town. I mean, everything that's been built up in these places like Abu Dhabi and Dubai
• 25:11
  and Riyadh over the decades to try to create something for themselves post-oil world is being threatened right now.
• 25:21
  I mean, everything is being threatened.
• 25:23
  And with no good military solution on the table that anybody with any brain in their head can see,
• 25:30
  you start to get worried that is this, you know, something that could drive Israel to say,
• 25:40
  look, we need to do what we need to do. And that means a tactical nuke or, you know,
• 25:47
  they're said to probably have around 200 warheads, you know, maybe a mass bombing of Iran. I mean,
• 25:54
  that actually starts to become a possibility, which is absolute madness. And as I said earlier,
• 26:01
  I think there is a chance that Iran has a nuclear weapon as we're speaking. And, you know, some of
• 26:08
  these guys that it's become a joke that Iran is two weeks away from a nuclear weapon for the last
• 26:14
  15 years. But that's been part of their thought out strategy is we're not going to have a nuclear
• 26:20
  weapon. We're going to have all the pieces for a nuclear weapon and we're going to keep it ready
• 26:24
  in case we need one on short notice. We're going to have uranium up to 60% enrichment. We're going
• 26:29
  to have probably bomb designs, warhead designs. They have missiles that can get fitted with nuclear
• 26:35
  warheads so that at any point in time, it's like you have a big jigsaw puzzle on your table and you
• 26:40
  get it 90% complete. And then you just forget about it for five years. Yeah. But in the last
• 26:46
  five years, you've been two more hours of working on it away from completing the jigsaw puzzle.
• 26:51
  It is possible to be two weeks away from a nuclear weapon for the last 10 years. And I think
• 26:56
  they have been anywhere from what I've seen from the experts. Some say that it's as little as two
• 27:02
  to three weeks. And I've seen some people say tops, like six months. And so if they started
• 27:08
  working on this in extra secret, you know, circumstances, you know, after June, after that
• 27:16
  first attack on the nuclear facilities, it's very possible they have one. And obviously our
• 27:22
  intelligence is not perfect because we've seen that they launched a missile at Diego Garcia and
• 27:28
  we had no knowledge that they had ballistic missiles that could be sent that far away from
• 27:34
  Iran. So we're literally dealing with a situation where we might have two nuclear powers in Israel
• 27:40
  and Iran who are seriously considering using those. And I mean, the question is, is why?
• 27:49
  Why have we gotten ourselves into this situation? Iran has been basically at the same posture
• 27:54
  for the last 15 or 20 years.
• 27:58
  And there has been this shift in the United States
• 28:01
  of recognizing that a lot of U.S. foreign policy
• 28:05
  towards Israel is not necessarily in U.S. self-interest.
• 28:09
  And it's been growing, and you can see it in the demographics.
• 28:12
  And you get this sense that like Netanyahu and Superhawks,
• 28:17
  even in the U.S. State Department, like the neocon type people,
• 28:21
  they might have seen this period as the last chance. Like this is it. It's now or never.
• 28:29
  If we're going to do something about Iran, we do it now. And I mean, it could have been a big
• 28:33
  Mossad operation to manipulate Trump, to feed him false intelligence coming from Bibi Netanyahu.
• 28:42
  And then some of the things that Trump says, I mean, he seems to be losing in touch with reality
• 28:49
  at this point, where he's talking about we've achieved regime change, we've won the war.
• 28:56
  And the only thing about Trump is he did go to a church growing up in New York City.
• 29:02
  It was kind of like a positive thinking manifestation type message from this particular
• 29:08
  congregation.
• 29:09
  Like you say things and they become reality.
• 29:13
  And so he does have a tendency to just say what he wants to happen.
• 29:19
  But you almost start worrying, like, is he surrounded by so many yes men?
• 29:24
  Has he been given so much false intelligence fed through Bibi that that he actually doesn't really understand the gravity of the situation?
• 29:35
  And even the way that somebody like Mearsheimer or Colonel McGregor or one of these guys understands.
• 29:42
  And if he doesn't understand that, he could believe that, oh, we can send boots on the ground and we can do this.
• 29:49
  We can take these islands. And I mean, it's just it's just ridiculous.
• 29:53
  It's like Lindsey Graham talking about like, oh, Iwo Jima.
• 29:56
  I mean, Iwo Jima, it's like there were 20,000 Japanese on Iwo Jima and there were 25 plus thousand marine casualties to take that island.
• 30:08
  OK. Iran has a million man army. All right. Use those same percentages. So what do we need? You know, 1.3 million, you know, U.S. casualties. Yeah. Oh, we could suffer that. I mean, the U.S. could do it.
• 30:23
  we could carpet bomb them with nukes. We could raise 200,000 troops and we could mobilize forces
• 30:31
  and spend the next three years losing hundreds of thousands of people. For what? I mean,
• 30:39
  nobody wants it. The cost is way too high. Nobody wants that, obviously. It's ridiculous to even
• 30:46
  consider that. But that's like kind of what it would take to take Iran. And so we've got this
• 30:53
  situation, um, and, and just on Iwo Jima, like, I mean, yeah, it was like six, 7,000 killed,
• 30:59
  like 20,000 casualties. There were like 20,000 Japanese on the Island. And by the end of it,
• 31:06
  um, there were only a few hundred Japanese alive. So over 90% KIAs for, for the Japanese force,
• 31:14
  like that's what Iwo Jima was. So, uh, we don't want to be bringing up Iwo Jima as a, you know,
• 31:22
  some sort of a model for future action.
• 31:25
  No.
• 31:25
  And that's one of the heuristics that I've been using throughout all this is
• 31:28
  like,
• 31:29
  uh,
• 31:30
  if Lindsey Graham is happy,
• 31:32
  I don't think we're going in the right direction.
• 31:34
  No,
• 31:34
  he's horrible.
• 31:34
  I don't know.
• 31:35
  I mean,
• 31:35
  some of these people,
• 31:36
  I mean,
• 31:37
  it's like,
• 31:38
  I don't know.
• 31:39
  It's like general Jack Keene on Fox.
• 31:42
  I mean,
• 31:42
  he works now for something called the Institute of war,
• 31:44
  which is completely funded by like Raytheon,
• 31:47
  Lockheed Martin,
• 31:49
  because,
• 31:49
  you know,
• 31:50
  it's one thing when Lindsey Graham says something or even Pete Hex said,
• 31:54
  but then you see like a four-star general,
• 31:56
  like general Jack Keene or a three-star general,
• 32:00
  this guy,
• 32:01
  Keith Kellogg,
• 32:02
  who actually was the division commander for the 82nd airborne start talking
• 32:07
  about how,
• 32:09
  Oh,
• 32:09
  we'll take casualties,
• 32:10
  but these young kids,
• 32:12
  they know what they're signing up for.
• 32:14
  You know,
• 32:15
  we'll put them in like,
• 32:17
  what are these people thinking?
• 32:18
  Are they,
• 32:19
  are they really insane? I mean, you start to think like these are, these people have some sort of
• 32:25
  psychopathy, like there's something wrong with these people that they're almost giddy about some
• 32:33
  of these strikes or talking about it. Some of the commentary that's come out of Trump, like doing it
• 32:38
  for fun, or I told Pete we were going to wind up the war and he said, oh, that's too bad. Or, I mean,
• 32:45
  Some of some of this language, it's almost unreal that this is coming from the top people in the United States.
• 32:54
  It makes me. I'm not going to say embarrassed, but it definitely makes me regret voting for Donald Trump.
• 33:02
  Now, I wouldn't have voted for Kamala Harris either. I shouldn't have voted for anybody after seeing the behavior from this administration in the last month.
• 33:13
  And I've said this on X, like, I got to admit it, like I was wrong.
• 33:18
  I think a lot of people that voted for Trump feel the same way.
• 33:21
  And that's the other confounding thing about it.
• 33:25
  He's destroying the coalition he spent the last 10 years building up.
• 33:30
  And he's going back to people like Condoleezza Rice, or he's pointing out quotes by like this
• 33:37
  guy, I think his name is Scott Yates, who was the national security advisor for Dick
• 33:41
  Cheney.
• 33:41
  Cheney as like people you need to start listening to again. Condoleezza Rice and Dick Cheney's
• 33:47
  national security advisor. I mean, and this was something that was always a concern of mine. I
• 33:54
  always would say, you know, I'm not a Trump sycophant. There are issues I have with him,
• 33:58
  particularly with his policies and his stance toward Israel. I didn't understand why he didn't
• 34:02
  take the same stance toward Israel that he took towards the Ukraine, which was like, look, this
• 34:09
  isn't our war. Yeah, we want them to do well, but it's not that important to us. And I'm like,
• 34:16
  yeah, because they're a foreign country. And that's the way we should think about Israel.
• 34:20
  This is in George Washington's farewell address, where he says a nation should neither be friend
• 34:27
  nor foe. I think he uses the term an excess of fondness or hatred for another nation,
• 34:35
  for to do so makes that nation to some degree a slave.
• 34:40
  And he's basically nailing it on the head in the farewell address
• 34:45
  that nation states should not have friends,
• 34:50
  what he called an excess of fondness.
• 34:53
  And there continues to be this display of an excess of fondness towards Israel
• 35:00
  and an excess of hatred towards Iran, which does indeed make the United States to some degree a
• 35:07
  slave. And it's not pretty. It's not a good situation to be in. What Washington was thinking
• 35:14
  about was Jefferson being too fond of the French and too hatred towards the English, and John Adams
• 35:20
  being too fond towards the British and too much hatred towards the French. And that was what
• 35:25
  prompted him to say that. But in this situation, we have, you know, kind of the same dynamics
• 35:32
  playing out where there seem to be powerful people in the government, including the president,
• 35:37
  that seem to think that Israeli national interests should be taken into account
• 35:45
  and into the calculus for United States national interests. And that's just not the way it's
• 35:52
  supposed to be, at least if you agree with George Washington.
• 35:55
  Yeah, I do agree with him.
• 35:57
  As somebody millennial, mid-30s now, it's hard to admit, I grew up with 9-11, the Iraq,
• 36:05
  Afghanistan war, Snowden leaks, the WikiLeaks.
• 36:10
  Part of the reason why I'm in Bitcoin is staunch, anti-interventionistic.
• 36:15
  I think the money printer, the bankers are funding the wars and enabling it.
• 36:20
  And that's part of like a very strong reason why I'm in Bitcoin.
• 36:24
  You know, do what I can to focus on something that takes some of that,
• 36:27
  that power away from these governments and,
• 36:30
  and gets us away from all these conflicts, which have proven.
• 36:35
  That's the other thing is just like we pulled out of Afghanistan, what,
• 36:39
  two, three years ago. Now at this point, it was complete clusterfuck,
• 36:43
  but it was like, all right, we were there for 20, however many years.
• 36:46
  And now we're out and it's like, oh, we're going back to the Middle East.
• 36:50
  And to your point, if things don't deescalate or we don't find a way out of this, in the near term, I think similar to you, I'm convinced that this is going to be a prolonged conflict that costs a lot of lives, a lot of money and disrupts the economy, which is probably something we should get to is like markets, I guess.
• 37:09
  for the audience, like painting the different scenarios and maybe starting with what's the
• 37:16
  extent of the damage that exists today and its effect on markets and what are the different
• 37:22
  paths we can go on from here, considering different reactions from the Trump administration.
• 37:29
  Yeah, yeah. Let's tie it into the markets and finance. I mean, the one last little point I'd
• 37:35
  before I do that is it was it was fascinating to like listen to Joe Kent on on Tucker talking about
• 37:42
  what he called sinister forces, possibly forcing Trump's hand and talking. I've seen other people
• 37:48
  talking about like possible Mossad threats against like killing Trump's grandchildren and
• 37:54
  Epstein file things. And, you know, what do they have on his head? And I think the fact that you
• 38:00
  have somebody like Joe Kent, who is the head for the Center for Counterterrorism, like the number
• 38:05
  two guy in the intelligence structure, talking about he's worried that sinister forces might
• 38:12
  have forced the president of the United States hand. Like, this is pretty scary stuff that we're
• 38:17
  in. And I just hope, I just hope that we come out of this. But I just wanted to say, like,
• 38:23
  because it's just so confounding to me. Like, why would you do this? This was so obviously a
• 38:27
  military disaster waiting to happen. It's not in the interest. It's breaking apart the MAGA
• 38:32
  coalition. It's like it's destroying the economy, which it's breaking every promise you made,
• 38:38
  no foreign wars, a great economy, lower prices. And let's segue it there with lower prices,
• 38:45
  because one thing I always been a proponent of in the last year or two is putting up a chart just showing like CPI overlaid with WTI oil and saying that a lot of people I thought gave way too much credit
• 39:02
  to like all the money printing for the massive inflation we had after the pandemic. And I said,
• 39:07
  there was also a massive, massive oil spike. There was literally like $150 spike in oil
• 39:15
  from the low to the high between 2020 and 2022.
• 39:20
  We had like negative $30 a barrel oil.
• 39:23
  And at the peak after Ukraine, we were at $120, $130.
• 39:27
  That spread, that's like $150 spread.
• 39:30
  That's a massive oil spike, $150.
• 39:33
  The equivalent would be we were at like 55.
• 39:36
  It'd be like oil going to 205.
• 39:38
  That was the type of jump we had.
• 39:40
  and oil spiking. Oil is the key driver of inflation, in my opinion. It starts off in the
• 39:50
  headline. And if it stays some high long, it moves into core. And because it's involved in so much of
• 39:58
  the economy, it's the transportation, it's the moving goods, it's in the plastics, it's in the
• 40:02
  fertilizers, it's in the gases, it's in everything. And the thing that I was always saying to people,
• 40:07
  don't be worried about inflation coming back. Look, oil's $55 a barrel. You don't have to worry
• 40:15
  about it. And yeah, there you go. There's WTI. And I wasn't worried about it because oil,
• 40:24
  it looked like it could possibly even head to the 40s. And when you inflation adjust that,
• 40:30
  I mean, that's about as cheap as we've ever seen oil in the last 30 years. So
• 40:35
  So I was like, there's nothing to worry about with inflation.
• 40:40
  And so I think what we've seen markets doing is worrying about that.
• 40:45
  Then what does that mean?
• 40:47
  It means possibly rate hikes.
• 40:49
  What does that mean?
• 40:50
  It means higher two-year yields.
• 40:52
  Now we've got higher bond yields.
• 40:53
  Now we have to lower the PEs.
• 40:56
  All these things start flowing from this higher oil price, higher for longer.
• 41:01
  And one of the things I said at the beginning of this war was it would almost be better to have like a spike to 150 and like a quick end of this war come than like something that can be drawn out.
• 41:13
  And we're we're we are in a situation where one of the possible situations is like this drawn out conflict, like maybe some boots on the ground, but it's a lot more of this missiles back and forth.
• 41:25
  and the economy doesn't completely shut down or go to $200 a barrel because Iran is letting
• 41:33
  China tankers go through and stuff like this. And so instead of having some sort of a resolution
• 41:38
  anytime soon, we get this long drawn out conflict where oil just hovers between say 90 and 150.
• 41:45
  And you do that and you are going to start getting 6%, 7% inflation down the road.
• 41:52
  And then you add on to that, you know, the already slowing labor picture and all of these
• 42:00
  AI concerns that people have had.
• 42:02
  And you do actually wind up getting into that 1970s stagflation situation, which I thought
• 42:09
  would be impossible for us to get into because oil was so well behaved and we were oversupplied
• 42:14
  in the United States as the world's biggest producer and all of this stuff.
• 42:18
  So we've got so many risks on the table for the market.
• 42:21
  And I think even the best case scenario, which is this thing wraps up in the next few weeks somehow magically, there's going to be this new premium on oil.
• 42:32
  And that's going to be a big headwind that's going to stop Warsh from being able to lower rates as much as I thought at the beginning of the year he was probably going to be able to.
• 42:43
  I still think he's going to lower rates because I think the economy, eventually, if the prices are that high for that long, it will start to drive recessionary and create demand destruction and all that stuff eventually.
• 42:57
  But by that point, I mean, man, that economy is already going to be wrecked.
• 43:01
  And like I said, we're going to be 25%, 30% off the highs in the broad indices.
• 43:06
  So I think the marketplace, like the next two to four weeks are extremely critical.
• 43:13
  Because if this thing doesn't have a clean off ramp in sight, I think that the markets are just going to inevitably have to really start pricing this in and not just a 10 or 15 percent decline, which is kind of what I'm hoping for.
• 43:28
  Something that takes us down to the pre tariff highs, which is around, say, 610, 615 on the SPY, something around 6100.
• 43:39
  You know, and if there is no clear off ramp or if there's continued escalation, then I think we're going to have to go down a whole nother level, maybe all the way to the tariff flows.
• 43:53
  So, I mean, this set of scenarios, you know, going forward is just not good.
• 43:59
  And so from my perspective, what I'm trying to do is hold a lot of cash, hold puts.
• 44:05
  I think gold is the one thing that I've added to strategically when it touched the 200 day and got down to 4,100 last week.
• 44:15
  Because I think whenever this wraps up, what is going to have to happen is going to be Federal Reserve intervention because we've got the private credit concerns.
• 44:28
  I mean, there's so much to unpack in all of this, but I think the main point is, is that when the dust settles, in order to pick up the pieces without a massive recession that collapses tax receipts, that essentially leads to three, four trillion dollar deficits, which then collapses the sovereign bond market, you know, across the developed world.
• 44:55
  The only way out of that is going to be massive coordinated global central bank intervention.
• 45:00
  And this is going to be the golden opportunity for gold.
• 45:06
  And for Bitcoin, it needs to break away from that tight, tight, tight software correlation and really move into its own as a store of value liquidity asset, which it always has been.
• 45:23
  But the liquidity is being drawn out of the system right now, especially with higher oil prices. Once we get into that situation where the liquidity is being pumped in again, that's when the gold and Bitcoin, I think, are really going to shine. And I think they're going to have a great year when all this is said and done.
• 45:43
  but the path there can either be a hard path or it can be a really,
• 45:49
  really hard, horrible path.
• 45:51
  And I hope we just have to take the semi hard path and not the,
• 45:55
  the disaster path.
• 45:58
  Yeah. I mean, it's,
• 46:01
  it's hard not to be a doomer these days. Never doom. I'm totally weak.
• 46:06
  Especially for me. I'm always Mr. Optimistic. Like, Hey man, it's going to,
• 46:10
  That's my default unless I see something structurally changing in the global dynamics of the economy.
• 46:17
  Some little attack or a little thing, the markets can work through it.
• 46:24
  The Fed can open up a facility.
• 46:25
  This can be handled with, yeah, maybe a 5%, 10% correction, but that's going to blow by.
• 46:31
  It's going to be V-shaped.
• 46:32
  This is not what we're heading into right now.
• 46:35
  We're not heading into that.
• 46:36
  We're heading into the possibility of something we haven't seen, you know, really since the financial crisis, which it's eerily reminiscent.
• 46:46
  I mean, I remember it well.
• 46:47
  I remember oil was $150 a barrel back then, you know, after the market peaked.
• 46:53
  And there was no war going on.
• 46:57
  You know, it was, you know, supply demand.
• 47:01
  It was overheating.
• 47:02
  It was other things happening.
• 47:04
  Um, and you know, what you saw happen during the financial crisis was eventually you saw
• 47:13
  gold get hit and you saw gold go down a lot.
• 47:16
  And, but then coming out of it, that was when you had that massive precious metal run and
• 47:24
  you had gold get over 2000 and you had silver hit 50 in like 2011, I believe it was.
• 47:30
  So you had gold go from or like silver go from like, I think at the low in 2007, it was might have been in the single digits. And, you know, a couple of years later, it was 50. So it had one of these massive like 400, you know, percent moves in like 48 months.
• 47:49
  And so because of the amount of liquidity that needed to be provided to the system, now obviously Bitcoin wasn't around back then, but my guess is that Bitcoin would have behaved similarly, which is that at the peak of the kind of liquidity squeeze, everything gets sold, everything needs to be delivered, all the margin calls come in, and it doesn't matter if it's the world store of value like gold was, it's going to get hit.
• 48:16
  But then coming out of it, that's when the central bank reaction comes in and it winds up, you know, kicking ass and taking names. And I think that's where we're heading. And I hope we're heading there in a much less severe manner than happened during the financial crisis. And I still think that's my base case.
• 48:38
  but I don't think we're there yet. I don't think we're bottomed yet. And I think that as far as
• 48:49
  gold and Bitcoin, they have given you opportunities to begin to add here. I don't think equities have,
• 48:57
  but I think when gold hit the 200 day, that was your chance. And I think Bitcoin, which has been
• 49:04
  holding in there, hasn't made a new low for almost two months now, in the 60s with the six
• 49:13
  handle on it, let's say, is a chance to begin to accumulate, even though it could have further
• 49:20
  declines if this works out poorly. And I believe the same thing with gold, that when we got down
• 49:26
  to that 200-day, I wasn't able to pick it up right at the 200-day, but I was able to the next day
• 49:32
  add to some of my longer term holdings of gold with the acknowledgement that I might not be
• 49:41
  getting the bottom there. There might be one more big leg to drop. And so I think it's very possible
• 49:46
  there's one more leg to drop in Bitcoin and gold, but there might not be. I think almost certainly
• 49:53
  there's at least one more leg to drop in equities. And we're starting to see that today.
• 49:57
  like the market's starting to roll over today. And it's kind of like giving you that clear signal
• 50:05
  where we like open up in the morning and a lot of stuff that's been oversold was doing well.
• 50:13
  But the big winners, the generals, the microns of the world were getting killed, you know,
• 50:19
  after they open. And when they start like dumping the microns because they know that they just need
• 50:25
  to get liquidity and they need to delever, it's a pretty easy foreshadow that this is just a
• 50:32
  small little bear market bounce. And sure enough, S&P is down 11 right now. I think at one point,
• 50:39
  we're up 50 or 60. So we've dropped 70 handles from the open or something. And it's just like
• 50:46
  that day after day after day. And what I'm waiting for is that big capitulation moment,
• 50:52
  The 90% plus declines on the NYSE advanced decline line. I'm not talking about a down 3% week. I'm talking about a down 3%, 4% day in the S&P. And if Trump moves in boots on the ground or something like that, I mean, it could happen this week.
• 51:11
  So I think people need to be ready to deploy some capital because the best times to buy are when the VIX is in the 40s or 50s and you just have to hold your nose and say, there's something here.
• 51:26
  But in this case, because this could be structural, I have a lot of cash.
• 51:32
  I will not be deploying at all, even if we get there.
• 51:34
  I'll just, you know, say, OK, it's time for me to deploy some into equities right here and see and see where we go.
• 51:42
  Yeah. I mean, you mentioned private credit. You mentioned AI.
• 51:46
  That's one thing.
• 51:48
  To trying to view what's happening in the Middle East through your different lenses and private credit and private equities doesn't really fit into it.
• 51:56
  but like AI and this idea that many people are putting out there,
• 52:01
  which is like what's happening in Iran and the Middle East
• 52:04
  is sort of a proxy to choke China off from running away with the AI race
• 52:12
  and in a way to sort of curb the speed at which they're executing on the AI side
• 52:17
  and to sort of send a message to them,
• 52:20
  Like really that being the most important or superpower struggle of the day is China versus the U.S.
• 52:28
  Just like a signal to China from the U.S.
• 52:30
  Like we had some leverage here.
• 52:32
  Obviously, what we're doing in the Middle East is affecting your accessibility to oil and gas to a certain extent.
• 52:39
  And then the byproducts, which are heavily integral to the chip process that you need to win this AI race.
• 52:47
  And I could see that. And then you roll in private credit here in the U.S. and it's like you're getting two different stories, one of which is it's a systemic risk that is going to have knock on contagion effects similar to the housing crisis in 2008.
• 53:04
  2008, then you have others who are saying, well, it's really confined to the BDC, retail
• 53:10
  oriented private equity funds that have more finicky investors due to the fact that they're
• 53:16
  retail that don't understand long duration private equity funds. And so it's just an
• 53:21
  anomaly with this particular product that doesn't have a good product client match in
• 53:28
  terms of the duration profile necessary. All this is being
• 53:34
  Being said, going back to like there's talks of rates actually going up, the probability of rates going up at the end of the year is beginning to increase dramatically as people are looking out there and looking at the potential inflation on the horizon.
• 53:48
  But I actually just recorded with John Arnold, partner, one of my partners at 1031 this morning about the subject.
• 53:56
  It's like I don't see them raising rates at all because you either have this mass industrialization that's going to need to support the war effort.
• 54:04
  Or if the people who are right about private credit potentially being a contagion event, like they're going to need a bailout.
• 54:12
  And you could see the scenario going back to your stagflationary comments from earlier where we get to the fall of this year and inflation's ripping private credits completely.
• 54:26
  disintegrating, which is creating these knock-on effects, and the Fed is forced to drop rates to
• 54:32
  zero again and inject a bunch of liquidity. Oh, and by the way, AI is advancing at a similar
• 54:40
  pace and eating out the labor market at the same time. Yeah, and do yield curve control and do
• 54:47
  whatever is necessary because in the 70s, Volcker had that option to raise rates, to crush the
• 54:55
  inflation. If we get a situation where we have this big problem in the economy, but we do still
• 55:02
  have inflation creeping in, because look, the AI build is going on, right? I mean, there's a lot
• 55:07
  of demand for commodities, demand for electricity, then you add in the higher oil prices. So I think
• 55:14
  we can have a situation where we have these inflation rates going up, but the Fed just
• 55:23
  doesn't have in its toolkit, like raising rates into that type of a situation the way that Volcker
• 55:29
  was able to. It will kill, you know, the fiscal receipts of the government. We saw what happened
• 55:36
  to the deficit in 2022 because the market went down that whole year and capital gains were not
• 55:44
  what was expected. And it hurts states, you know, like California who get a lot of their income from
• 55:50
  people exercising options and things like that from, you know, working at Meta or Apple or
• 55:56
  whatever, and they got nice gains on those options. They got to fill the state coffers.
• 56:01
  You know, all of these tax receipts kind of collapse. And I think that, you know, today,
• 56:06
  I'm not sure exactly what the tenure is doing here right now, but, you know, earlier today,
• 56:16
  yeah, we had yields coming down. Yields are still down on the day. Because I think what the market
• 56:24
  is trying to realize is like, yeah, raising rates isn't going to be an option. There's not going to
• 56:30
  be the potential to say, oh, well, we know inflation is up. We know there's probably going to be more
• 56:36
  coming. So let's raise rates into it. Because if they do into a weak economy, it's going to collapse
• 56:42
  the economy so much that it's going to hurt housing, which is a huge, like, like every,
• 56:48
  everything's just to do, to raise rates. It's kind of a weird circular thing where they're like,
• 56:55
  okay, we need to raise rates to calm inflation. But if we raise rates, we're going to destroy
• 56:59
  so much of the economy. We won't actually manifest that inflation. And it's, it's this
• 57:05
  situation where the central bank is just ill-equipped to handle the economic challenges
• 57:10
  that it's presented with by using that simple tool of either raising or lowering rates.
• 57:16
  And they're going to have to get into tools that haven't really been used since World War II.
• 57:24
  You know, when we did do explicit yield curve control and the 10-year was capped back then
• 57:30
  at two and a half percent.
• 57:32
  And I think we're already seeing foreign holders of treasuries at the lowest levels since 1997.
• 57:38
  seven. You know, so what are you going to do with all of this government debt? I mean,
• 57:42
  think about all the government debt we're going to have to print. This is going to be the biggest
• 57:46
  deficit we've ever seen. I mean, the tariffs are being taken away. A lot of that money is going to
• 57:51
  have to be refunded. They've got a $200 billion bill in the works for more military spending.
• 57:59
  We've got huge refunds coming from the one big, beautiful bill. We're going to have tax receipts
• 58:04
  down because the stock market is down, we are going to have blowout deficits.
• 58:10
  We're going to have so much debt rent.
• 58:13
  And the foreign buyers are saying why do I want to buy US treasuries They trash And how do you handle that without collapsing the global economy Because it not just the U It going to be the U It going to be the ECB It going to be Japan
• 58:26
  And so the only solution is either to allow there to just be a complete collapse and, you know, head into Great Depression 2.0 or take extraordinary measures, you know.
• 58:42
  And I think that's going to be QE. It might not happen this year. This might not happen until 2027. But I think at some point, the only way to handle this amount of debt is going to be with money printing, artificially low rates, manipulated, perhaps the need to put in special facilities where the Fed will take in the paper that they lent to the government.
• 59:12
  these private credit firms, because the way it gets into the banking system, private credit,
• 59:17
  is you might say, oh, well, it's private credit. It was companies like Aries and Blue Owl,
• 59:22
  and they just found rich investors or institutions or pension funds, and they took money.
• 59:27
  No, a lot of these firms borrowed money from the banks at like 4% to then go invest it with
• 59:34
  private credit at 5%. And so it's in the banking system. And I can see them doing what they did
• 59:41
  with treasuries. So with treasuries, they said, we got a facility, you give us your treasuries,
• 59:47
  we give you dollar for dollar, we treat it at par, because we know those treasuries are eventually
• 59:53
  going to get paid back. The problem with private credit is a lot of this isn't going to get paid
• 59:58
  back. And so that's just going to be straight up money printing, facilitated by the central bank.
• 1:00:05
  And so all of this is heading at us. And like I said, it's going to be a wild ride. It's going
• 1:00:11
  to be a bumpy ride or it's going to be a completely horrible, disastrous ride. But at the end of it,
• 1:00:17
  when the nuclear dust, as Trump likes to call it, settles, we are going to literally, I think,
• 1:00:24
  have the mother of all liquidity injections. And Bitcoin and gold are what you're going to want to
• 1:00:33
  own heading into that. Yeah. Is this the final gasp of the fiat system? It could be. It could be.
• 1:00:43
  Is this where we have 10 trillion to roll over the next 12 to 18 months or something like that?
• 1:00:48
  Yeah. I mean, we always have that much because so much of it is bills now.
• 1:00:52
  So, I mean, we're just always rolling over bills constantly. It's just unbelievable. And
• 1:01:03
  And the amount of debt that's going to need to come in the next 12 to 24 months, I think we're going to see the largest deficit ever, probably for fiscal year 2026.
• 1:01:18
  Now, we're already halfway through because it starts October 1st, so tomorrow's the midway point of the fiscal year.
• 1:01:27
  but definitely
• 1:01:29
  if not this fiscal year
• 1:01:32
  then fiscal year 2027
• 1:01:34
  which starts in six months
• 1:01:35
  probably setting up for a possibility of a
• 1:01:38
  $3 trillion deficit for the first time
• 1:01:40
  ever if not more
• 1:01:41
  yeah
• 1:01:43
  I mean outside of I mean obviously you want to position
• 1:01:46
  gold and bitcoin in preparation for
• 1:01:48
  the big print right now you're in cash
• 1:01:50
  inputs
• 1:01:52
  looking for
• 1:01:54
  a material
• 1:01:56
  or correction before beginning to tip your toes.
• 1:01:59
  What other advice?
• 1:02:01
  Again, going back to this AI thing too,
• 1:02:02
  because this whole productivity boom
• 1:02:06
  that's really eating into the labor market.
• 1:02:09
  How else do you think people should position
• 1:02:12
  with all of this in mind?
• 1:02:14
  And along with cash inputs,
• 1:02:17
  I'm also in too many absolutely worthless call options as well.
• 1:02:22
  Because just to be fair,
• 1:02:24
  like when this thing started, I'm like, I don't know how this is going to end. It's going to end
• 1:02:28
  either really bad or it's going to be over really soon. And I was like, get out of anything like
• 1:02:34
  sell, raise cash, but to give yourself some exposure one way or the other, buy some nice
• 1:02:40
  calls, like 725 SPY calls for April, but also buy some nice puts like 650 SPY puts for April.
• 1:02:48
  And by getting a combination of those, you're kind of prepared for either outcome. And thank God
• 1:02:53
  I bought those puts because, you know, this thing is just getting, it's getting nasty and it's just not looking pretty.
• 1:03:04
  And it's spreading into the areas of the market that you are going to want to own when this ends.
• 1:03:11
  The hardware names, the things that the AI build out will benefit from, some of the stuff in chips, you know, looking at things like materials.
• 1:03:22
  so I'm still a believer in emerging markets
• 1:03:26
  so these are the types of things
• 1:03:29
  when we hit that bottom
• 1:03:31
  I'm not going to be putting my money into SPY
• 1:03:34
  or whatever on the equity side
• 1:03:35
  it's going to be what are going to be the real big winners
• 1:03:39
  coming out of this
• 1:03:40
  I think you and I have talked before about
• 1:03:43
  our mutual admiration or respect for Jordy Visser's commentary
• 1:03:47
  and his whole thing of you want to own scarcity
• 1:03:51
  forget about abundance right now. And I think, you know, those things that you might have said,
• 1:03:57
  oh, I wish I had bought SanDisk, or I wish I had bought Material Sector, or I wish I had bought,
• 1:04:03
  you know, Lind, a big chemical company or something, which is the biggest weightings in
• 1:04:07
  XLBN materials, or some of these things that just basically had parabolic moves, silver,
• 1:04:14
  gold, Bitcoin, all these things that, you know, you've might have looked at in the last 12 months
• 1:04:18
  and said, oh, I wish I had more of that.
• 1:04:21
  Market's giving you a chance, you know,
• 1:04:23
  and I don't think we're there yet
• 1:04:26
  to jump in with both hands.
• 1:04:28
  I don't even think we're there yet
• 1:04:29
  to jump in with one hand.
• 1:04:30
  I think we're getting close
• 1:04:32
  to where you jump in with one hand
• 1:04:33
  and might be another leg down,
• 1:04:37
  maybe not.
• 1:04:38
  But to me, I'm really paying attention
• 1:04:41
  to the 610, 615 level on the SPY
• 1:04:44
  because that was the pre-tariff high.
• 1:04:48
  And after that, there's another leg down. If you go to the 2022 low and you do a volume-weighted average profile, basically a VWAP going there, you go down another 35, 40 handles on the SPY, something around the 570, 575 range.
• 1:05:13
  think that there's these opportunity points that I think, you know, could be presenting themselves
• 1:05:18
  as soon as this week or this or April, where you're going to get a good opportunity.
• 1:05:28
  But I don't think what you want to do now is think that a bottom is in and think that,
• 1:05:34
  you know, this is the time, this is a great price. You're better off waiting until you get at least
• 1:05:40
  that capitulatory move, and maybe you're not there to grab it that very first day. I mean,
• 1:05:46
  let's go back to the tariffs. What happened? Trump capitulated. You had that capitulatory move
• 1:05:52
  down. You didn't need to buy that. You also didn't need to buy it the day he capitulated,
• 1:05:59
  and we had that 10% up day, because the very next day, the market gave back half of that,
• 1:06:04
  because so much of that was just short-term, short covering, all that. The market came back
• 1:06:09
  and dip back down and you were able to pick stuff up four or 5% off the lows and then see the market
• 1:06:16
  go up, you know, 40% or whatever it did in the next, you know, six months. Or in the cases of
• 1:06:22
  certain companies like NVIDIA, which got down into the 80s, you might have missed it when it was $89
• 1:06:29
  a share, but you were able to buy it easily later that week for 96, right? And see it go to 200.
• 1:06:36
  So, you know, I think this isn't a time to try to be a hero or time the perfect bottom or I think it's just time to sit back and wait.
• 1:06:48
  Sometimes the hardest thing to do is nothing.
• 1:06:50
  And hopefully, you know, you got out of a lot of short term or risky positions.
• 1:06:57
  I mean, I didn't like sell everything or anything.
• 1:06:59
  I have certain long-term things that are in retirement accounts and things that, you know, I never go to zero.
• 1:07:08
  But in my short-term account, like I did pretty much go to zero long exposure, you know, is like tons and tons of cash.
• 1:07:17
  And that's what I'm waiting for.
• 1:07:20
  And, you know, I think that the hardest thing when people try to time markets a little bit is they say, yeah, you might have gotten out.
• 1:07:27
  But when are you going to get back in? And that's why you kind of have to be prepared when those bottoms do come, even if it's not perfectly clear that we're out of the woods to start adding back.
• 1:07:40
  So going back to that tariff day, the day after the Trump tariffs, you see a 10% up move.
• 1:07:46
  And then the next day you see it start going down 5%.
• 1:07:48
  And you're like, oh, wait a minute.
• 1:07:50
  Maybe we're not done.
• 1:07:51
  You know, maybe we're going even lower.
• 1:07:53
  But at that point, that's the hold your nose point where you say, I got to start adding
• 1:07:58
  here.
• 1:07:58
  I could be wrong.
• 1:07:59
  We could be going to new lows.
• 1:08:02
  But, you know, if I sold when SPY was 690 and now it's at 615, I could be wrong.
• 1:08:08
  we could be going to 575 but i've got to start putting some of that money back in because if i
• 1:08:14
  wait until it's perfect and the all clear is happening it's going to be 690 again yeah and
• 1:08:20
  that's like um just sort of like a different uh different train of thought here but like
• 1:08:27
  talking about like the i think the ai trade is on top of everybody's mind and the sort of picks
• 1:08:32
  and shovels around it and bringing it back to the war with the ron like i actually that's like one
• 1:08:40
  thing i'm holding out hope is that the disruption that we're seeing in oil and gas supply chains and
• 1:08:46
  all the byproducts particularly their effect on chip production and sort of forces the ai players
• 1:08:52
  to be like hey we got to stop this because it's slowing us down from doing what we need to do
• 1:08:57
  to win this race.
• 1:08:58
  Like if you were thinking that this was going to slow down China, yes, you may have been
• 1:09:03
  successful to a certain extent, but now we're getting collateral damage.
• 1:09:07
  It's slowing us down too.
• 1:09:08
  And I think we did have a sign of that three weeks ago when David Sachs was on the All
• 1:09:12
  In podcast saying like, hey, we should, we should get out of this ASAP.
• 1:09:16
  Like we shouldn't be in this war.
• 1:09:17
  I was actually surprised that somebody who was in the administration was saying that publicly.
• 1:09:21
  But I think Sachs being as close as he is to the AI industry,
• 1:09:27
  we'll see, look forward and see how this could really throw a wrench in that build out
• 1:09:31
  and winning that race for us here.
• 1:09:33
  Even if you're trying to slow down China, if you believe that line of thinking.
• 1:09:40
  And I would not be shocked if that's ultimately what leads to us dropping out of this war,
• 1:09:50
  the AI hyperscalers and the players and that.
• 1:09:54
  And she's saying, if you continue with this,
• 1:09:56
  we're not going to be able to win this race.
• 1:09:59
  Yeah, it's hurting us on so many fronts.
• 1:10:04
  And if there was a wish list that I could have,
• 1:10:08
  and I don't think there's really any chance of this happening,
• 1:10:11
  I actually think it would be for the US
• 1:10:13
  to give in to Iran's demands and leave the Gulf.
• 1:10:17
  Like, we don't need to be in the Gulf.
• 1:10:21
  We don't need to be having all these bases there and guarding the Strait of Hormuz.
• 1:10:26
  Like, we can be, you know, an energy independent country.
• 1:10:31
  We're not energy independent.
• 1:10:33
  A lot of people like to say that because we technically produce more oil and gas than we need.
• 1:10:39
  But the thing is, we don't produce all the refined products we need.
• 1:10:43
  So we do still need to import.
• 1:10:45
  California gets almost all this gas imported from Asia, right?
• 1:10:49
  I mean, that's why gas is so expensive there, because we don't have the refinery capacity to satisfy our needs.
• 1:10:56
  But we are dependent on foreign refiners to meet our refined product needs.
• 1:11:00
  We export gas, but we're not truly energy independent, because just because you have enough barrels of crude doesn't mean you're energy independent if you can't put it in the gas tank because you can't refine it.
• 1:11:11
  So, you know, if we basically went through something where we said, look, we are going to dial ourselves back from all this Middle East BS.
• 1:11:21
  And on top of that, we're going to dial us back from Europe and NATO.
• 1:11:26
  And we're going to start spending all this money on adding refinery capacity, adding to the electric grid, you know, for the AI build out in the future.
• 1:11:37
  You know, we could be in a really good situation.
• 1:11:40
  And, you know, I it would be like amazing if somehow like Trump or China and Iran all came, Ukraine all came together and just actually had a moment of sanity.
• 1:11:54
  It's not going to happen. But if I had a dream, it'd be it'd be like they just say, look, this is enough is enough.
• 1:12:02
  Ukraine, we're not going to support you anymore. You need to come to a deal.
• 1:12:05
  You need to give up, you know, the eastern one third of your country to Russia.
• 1:12:10
  Russia, you need to stop at it there. We're not going to put them in NATO. Let's get a deal there.
• 1:12:16
  Iran, we're going to pull out of the Strait of Hormuz. And yeah, people would say, oh,
• 1:12:21
  we're leaving Israel out to dry. Look, Israel does have 200 nuclear warheads. And frankly,
• 1:12:27
  it's embarrassing the support that we give to that regime. I mean, it's just embarrassing.
• 1:12:32
  I mean, what they're doing in Lebanon, the actions, I don't even want to get into it.
• 1:12:39
  It's so sickening. So, you know, we need to move away from that. And that's what's the most scary,
• 1:12:46
  depressing thing about this whole situation is this nagging sense that the United States
• 1:12:52
  is essentially, as George Washington said, to some degree, a slave at this point. And we need
• 1:12:58
  to break free. And I think the American people are moving to that. I think the big loser at the end
• 1:13:06
  of all of this is likely going to be Israel, because I think by the time the 2028 election
• 1:13:14
  comes around, that power of the Israeli lobby is not going to be what it once was.
• 1:13:21
  And it's never going to get back to that glory, because I think the American people's eyes
• 1:13:25
  are getting open to the situation.
• 1:13:28
  And, you know, having people like Mike Huckabee, who, you know, literally, you know, and not
• 1:13:36
  only that, but it's this horrible reading of the Bible. And a lot of these evangelicals,
• 1:13:41
  it's not even if you read the chapter and you read what, what's promised it, it's basically said,
• 1:13:51
  yeah, you get this man. If you keep my covenants, if you follow my commandments,
• 1:13:56
  otherwise, I believe the word used is vomit. Otherwise God says he's going to vomit up
• 1:14:01
  the Jews from Israel because, you know, they're not doing what they're supposed to do.
• 1:14:08
  So, you know, they're doing things that are probably making God vomit right now.
• 1:14:12
  I don't want to speak for God, but this is what's happening.
• 1:14:15
  And so that's really who is in an existential crisis, because without U.S. support,
• 1:14:22
  Israel's in a lot of trouble.
• 1:14:24
  And, you know, it's just in that that's the scary part, because desperate people do desperate things. And that's why I said in the beginning, I think there's actually a chance that they get to such a desperate point that they seriously consider using nuclear weapons.
• 1:14:43
  And, you know, God help help us all if they do that. But I am optimistic that we're not going to do that.
• 1:14:50
  That's not my base case. My base case is that eventually saner heads will prevail.
• 1:14:56
  And as crazy as that sounds, it does sometimes happen, happen in the Cuban Missile Crisis.
• 1:15:04
  You know, Trump pulled back from the brink on the tariffs.
• 1:15:07
  I'm hoping that some sense of sanity returns and we avoid that worst case scenario.
• 1:15:16
  But I think you have to at least have that in your kind of tail scenario type situations
• 1:15:23
  of what could be possible and just hope that we help and pray we don't end up there.
• 1:15:31
  I'm certainly praying and hoping that we don't end up there.
• 1:15:37
  Yeah, I mean, I agree. I don't think we should be there. I think the pressure is put on via the Israeli lobby are becoming clear and just look at the polling data, particularly younger generations are saying, I don't like this.
• 1:15:53
  I mean, we talked about it last fall after the national security strategy that was talked about. We were very excited. Let's pull out the Middle East. Let's focus on the Western Hemisphere.
• 1:16:03
  Yeah, we talked about it because those are the things we were hearing. That's the things we were being told was going to happen. We're going to pivot from the Middle East and we're going to pivot from NATO and we're going to focus on the Western Hemisphere and we're going to work on AI and we're going to build out our grid and we're going to get the deficit spending under control.
• 1:16:22
  And I mean, it's it's confounding.
• 1:16:27
  It's confounding.
• 1:16:28
  It's it's it's what makes me wonder if there's something to, you know, Joe Kent's discussion of sinister forces forcing the hand.
• 1:16:37
  I mean, it just makes no sense.
• 1:16:39
  Makes no sense.
• 1:16:41
  It doesn't.
• 1:16:42
  Well.
• 1:16:43
  We'll see if Q2 is as eventful and long as Q1 was and we'll meet here in the summer.
• 1:16:51
  Hopefully in three months, this is past us.
• 1:16:58
  And we're still going to have higher oil prices and we're going to have a tough road to hoe.
• 1:17:02
  But hopefully there's like a path forward and there's this markets, especially Bitcoin and gold market, start seeing, look, there is going to need to be a liquidity injection.
• 1:17:14
  We are going to need to do certain things that are going to make it where this is what you want to own.
• 1:17:21
  And and we're looking back and saying, hey, we got that opportunity.
• 1:17:26
  And now now we can start to see the fruits of the fruits of the risk.
• 1:17:33
  Agreed. Well, until then, stay frosty.
• 1:17:36
  And thank you again for for being vulnerable, opening up.
• 1:17:39
  And I love this check in. It was a great one.
• 1:17:42
  Yeah. Thank you, Mario. Appreciate it.
• 1:17:44
  All right. Peace and love, freaks.