Hello, listeners.

Welcome to another episode of the Jacob Shapiro podcast.

Finally back on the podcast is our good cousin Marko Papich.

Back at BCA research.

We went almost 2 hours in this episode.

I was originally going to hold this until next Monday, but we recorded here on Tuesday, October 1, and we're going to push it through just because I'm not sure what's going to happen in the Middle east in the next 36 to 48 hours.

And I think it makes sense to just put it out.

So if you have any questions about anything you hear on the podcast, you can email me at Jacob cognitive investments.

Otherwise, take care of the people that you love.

Cheers and see you out there.

Cousin Marco.

We're both in our homes for once, and we're talking to each other.

How's it going, man?

It's going great.

It's going great, Jacob.

This is a good moment to have this podcast.

Very excited, you know, like yalla.

Let's go.

Let's get it going.

Yallah.

Yallah, yallah.

Well, so we're going to start.

We're going to start with the middle east because as we're recording here, Tuesday, October 4.

It is 1014 central time.

Is that.

Is that 814 Pacific?

You're up early.

You look good for being up at 814.

Iran is threatening an imminent missile attack on Israel.

We'll see exactly where that goes.

I've been waiting for the imminent missile attack since they assassinated Ismail Hania on iranian soil, and nothing has happened.

But I guess going after Hezbollah has finally triggered the Iranians to do something.

Marco, I'll set the stage by saying this.

I, in the last 48 hours, have decided that I need to completely rethink my approach to the Middle east and in particular to Israel.

I had been saying since October 7 that I thought Israel was pursuing tactically brilliant operations for completely unstrategic goals.

It felt like the entire country was going through post traumatic stress disorder, rightfully so, from the October 7 attacks.

But I could not divine any strategy but what they've done to Hezbollah in the last two weeks.

They went after the Houthis in a big way at the end of last week, which I think hasn't gotten enough attention because that signals that they can strike over much longer distances than I thought that they could strike at.

Now they're incursions into southern Lebanon.

I'm beginning to wonder if I was wrong and if there is a method to the madness.

What is your take right now on what Israel's operational goals are, or take the.

Take.

Take the conversation whatever direction you want, but I'm curious what you think about that.

Well, I think the most important thing for us to handle right now is the imminency of the attack.

Iran did retaliate.

It did retaliate against Israel's assassination of Hamas leader in Tehran.

It sent its drones and missiles.

None of them really hit anything.

So I don't see why this ballistic missile strike will be more successful.

The US and Israel are really, really good at intercepting missiles.

So let's see where this goes.

But the point is that there was already an attack in the spring that we had.

We've already gone through this motion and I'm not quite sure or certain why.

For Iran, degradation of Hezbollah is a greater impact than a direct attack on their soil by Israel for the first time in their history, like what happened earlier this year was an exchange of missiles, drones and attacks between Iran and Israel.

For the first time in their history, they've never directly attacked each other.

And so I think the market is overstating the impact on equities.

I don't see it, honestly, I don't see a scenario where us equities, like earnings of us companies, are impacted negatively by what's going on in the Middle east.

That scenario does not exist.

So I would definitely fade what's happening in the market right now on the equity side.

But where I've changed my view is on the oil side.

So for twelve months I've been telling clients there won't be any impact on oil.

I've been wrong, I should have shorted it.

High conviction view, this is not going to be a macro relevant conflict.

It's going to get worse, but it won't have any macro relevance.

And that's been the fact.

Oil is down 20% since October 7.

However, very, very important thing happened over the last week, and it's nowhere near the Middle east.

It's the announcement of chinese stimulus in Beijing, and it's the fact the Fed has decided to front load 100 basis points worth of cuts.

So I do think the macro context for oil has changed.

And so geopolitical risks can be very useful ways to kind of front run what should happen over the next six months.

In other words, oil prices should probably come up from the doldrums.

They're done.

So I would not be fading.

Oil moves right now the way I had been.

In fact, I've gone long oil with the chinese stimulus announcement, the Politburo meeting, which was quite interesting.

So I just wanted to handle the imminency of what's going to happen.

There's going to be iranian retaliation.

Israel is going to retaliate against Iran.

And I do think that where there is a constraint is on Iran.

I think that if Iran retaliates in a way that crosses certain red lines, which you and I can maybe discuss what those are, but if Iran crosses red lines, it will invite american retaliation against them.

And I think at that point they have absolutely nothing.

They have no way to defend themselves, and that will be the end of their nuclear program.

It will be the end of potentially significant amount of infrastructure.

The United States of America has no interest or reason to put boots on the ground in Iran.

Obviously, like I'm saying something that everybody knows, but the reason I say that is that the United States is an unparalleled military force when it can just bomb you from 30,000ft.

It's an act of God as far as you're concerned.

And so Iran would be inviting that kind of retaliation if it crossed certain red lines.

And that's where I don't think that they can really create a dynamic where this conflict gets out of hand.

Now, in Israel, though, I do agree with you.

I mean, it does seem like there's method to the aggressiveness of Israel, but I still don't think strategically it's going to improve israeli security one bit.

So I think that there is absolutely nothing new in what's going on.

This is mowing the grass, if Israelis like to call it.

You know, every six to 18 months, you're going to have to do something like this.

This is just the neighborhood you live in.

And I'm actually extremely concerned long term for Israel because it's a whack a mall.

You know, like you whack Hamas in Hezbollah, but you create new risks, including what's happening in Jordan, for example.

Jordan's stability, I think, is at risk because of everything that's happened and especially what's happening in West Bank.

I also think long term, the most important thing for Israel, the most important thing for Israel has nothing to do with the Middle east.

It has to do with capitalism in the west.

And if Israel loses goodwill in the west, that will definitely deteriorate its security situation over the next 20 years.

There's a lot to unpack there.

We're going to get to China stimulus and fed cuts and the broader macro picture.

A couple things I want to push back on you against.

I disagree with you on Israel's biggest threat being necessarily loss of support from the west.

I mean, they very much depend on the west, but they have shown the ability to find other security patrons.

And this is one of the reasons why the strike on the Houthis is so interesting to me, because you're right that there hasn't been a, an overall direct one to one investment impact from October 7 and all of the things that have been happening since.

But shipping has changed.

There is no legitimate shipping that's going through the Red Sea and the Suez Canal anymore.

And that means we've gotten a reprieve from that, I think, because of low oil prices.

And I have been as wrong as you were about oil.

I am trigger shy now.

I'm not going to say any direction where I'm going to go because I was shocked at how low it's gone, despite everything that's happening.

But shipping is going around Africa now.

It's not going through the Suez, it's not going through the Red Sea.

And low oil prices have covered that up a little bit because it doesn't cost that much.

Once you got the ships in rotation and they were going around, you could kind of fix the problem.

But there has been that impact in general.

But the point I wanted to make before was Israel, I think, does face a long term strategic threat from Turkey, and it's not mowing the grass there.

I also think they've gone a step ahead of mowing the grass.

They're putting the black tarp on the earth and sowing salt in the fields.

I mean, some of these groups will eventually come back again, but I did not think for a moment they had this level of capability to knock out Hezbollah.

They lost in 2006, they couldn't deal with Hezbollah in 2006.

And now we're fast forwarding roughly two decades and suddenly they've decapitated the entire organization.

The other thing I'll just say here is one of the reasons I see method in the madness is because the US Israeli strategic relationship begins in the 1960s and seventies, because the Israelis are important to the US against the Soviets, against the soviet backed arab states in the Middle east, and Israel punches them in the mouth and Kissinger and all their guys are like, ah, this is good.

We have a nice little partner here that we can rely on.

What if the Israelis knock out the Houthis?

Then Israel can go to Washington and be like, hey, you really do need us in the long run.

We're not just some crazy state that's going after the West bank and the Gaza structure were actually a strategic instrument for you, which I think is really interesting.

And the last thing I'll just say about this, and then I'm curious to get your pushback is you're right that Iran responded to the bombing of that embassy.

I believe in Syria.

It has not yet responded for Ismail Hania.

And when it responded to the embassy or the consulate, whatever it was bombing, it did exactly what it's doing now.

It telegraphed it, it told everyone and their mother, hey, we are about to bomb Israel and we're going to bomb over here like with these rockets at these times.

And it was an interesting attack because, yes, it didn't really do any damage to Israel.

I think only a couple missiles or rockets or drones actually landed.

But it cost Israel many millions, if not tens of millions of dollars for all the interceptors that intercepted the iranian rockets and drones.

And these were the crude ones.

These were the lowest of the low.

Iran.

Iran was really just throwing stuff at Israel, in part, I think to impose a cost in part to tell them we have the capability to strike you.

And by the way, we'd like to see where all of these missile defense apparatuses and how effective they are in general.

They're telegraphing it again.

So that tells you already, Iran is not that serious.

If they were really serious, we wouldn't have time to prepare and do a podcast on this.

But one of the things about asymmetric warfare is Iran can make really cheap rockets that can meaningfully impact the israeli economy much easier than Israel can build enough missile defense interceptors to fight back against everything that Iran is pushing over the wall.

And I think that maybe is one of the things that Iran can at least rely on.

But you're also absolutely right that waiting in the wings is the United States.

And Joe Biden's governing like it's the 1990s, and he's not going to accept that for Israel.

So in that sense, Israel's got a friend.

Yeah, I mean, I think that.

Where do we start?

So, yeah, I mean, I thought it was also hilarious the way that Iran attacked Israel.

You could literally follow their drones and flight path, as I joke.

So you're right, it was very telegraphed, the drone attack from Iran to Israel.

I remember reading on like CNN breaking news, it will arrive in 5 hours.

You know, you're like, what?

Sounds ridiculous.

Now, if those drones were launched from Syria, presumably they would have been able to maybe sneak in because there wouldn't have been any way to intercept them over the course of 5 hours, where the Saudis, the Jordanians, the Americans, everybody could have gotten along and done something.

If you launch those drones from Syria, you have, I think a much different result.

But one thing that's interesting to me is that both Hezbollah and Iran have, for the most part, over the last month, really focused on military facilities in Israel as well.

So that's another way in which I think that there was that soccer field disaster where Hezbollah hit field and killed civilians, which launched the latest israeli moves against Lebanon.

But for the most part, Hezbollah has actually been trying to hit military facilities.

And when Iran launched its drones and missiles, they were all targeting military facilities as well, obviously with varying accuracy.

The point I'm making is that there could be indiscriminate attacks against civilians in Israel that would have definitely made this difference.

So I think Iran is definitely trying to toe a line.

It doesn't want to repeat what happened basically in the eighties with the operation praying mantis, where Iran threatened shipping in the Straits of Hormuz and the US in the course of 36, 48 hours, destroyed Iran's navy.

You know, there is no way for Iran to fight against America.

None.

There's no way.

It has no tools.

It's literally like, you know, the Incas versus the conquistadoras, that level of technological difference.

It just is.

It just is.

It just is.

Now where I kind of.

So that's the one now where I think that your view, where I disagree with your view is that Israel's making any long term or even medium term successes.

Drones, missiles, fighter jets are great for power projection, but they don't really make meaningful long term change.

And Israel has no way to occupy and change the reality of the Middle east.

It just doesn't.

I mean, think about what's happening in Lebanon.

I mean, it's degraded Hezbollah massively, but Shias are like 35%, 40% of lebanese population, christians in Lebanon are very pro Shia.

Hezbollah has defended christian villages from Islamic State attacks across the border throughout the last decade.

We're talking cross border attacks from Syria.

Throughout syrian civil war, Hezbollah was a key battlefield, sort of operational unit against the Islamic State.

So unless Israel wants to invade all of Lebanon, which it doesn't have the capability to do, all that's going to happen is Hezbollah is going to withdraw, it's going to lick its wounds, it's going to come back.

So I'm not sure that anything that's happened over the last month really improves long term security of Israel.

Except, Marco, that Hezbollah is dead.

All of the senior commanders, the leaders, they're all gone.

And the same is basically true for Hamas.

Sinwar, the architect attack behind the October 7 attack, apparently has not been seen in weeks.

And the Israelis are considering whether they accidentally knocked him out when they were bombing some facility in Gaza.

So I'm with you that, like, a younger generation will rise up and will probably be even more radicalized.

But the experience that, like, the seasoned fighters and commanders have had, that's gone.

Like, it's just.

I'm not sure.

They have no human capital left.

I'm not.

I'm not sure.

So Hamas, fine, Hamas, you know, Gaza, small enough that Israel can actually invade it physically and actually can flush the pipes, you know, drain the pipes and that.

But Lebanon is big.

Israel is not going to invade all of it.

It's going to invade what it did in 2006.

And so Hezbollah still has troops in Syria who were operational against the Islamic State.

Its senior leadership commanders are, you know, like, suffering abdominal wounds and all the other stuff.

I agree with you with that.

It's definitely deteriorated.

But I.

Hezbollah is not going anywhere.

So, I mean, it's fine.

Like, look, I'm not.

Israel's gonna do what it's doing.

But I do think.

I look at it differently.

I think this is more of a two level game.

And what I mean by that is that there's this concept in political science that no decision of foreign policy is made in a vacuum from domestic politics.

And I think that domestic politics just matters a lot more for Israel right now than strategic, geopolitical foreign policy.

And I think that I kind of buy in with the conventional view.

I think Netanyahu is trying to stay in power.

I think he's trying to figure out how to pivot from the Gaza operations, which have been largely.

I mean, they're going to be unsatisfying in five to ten years from a security perspective, unless Israel's just going to ship everyone off somewhere else.

Yeah.

I mean, another thing that happened this month, and this was something that I think axios had this first.

I apologize if somebody else had it first, but in early September, Israel conducted a precision strike against a weapons facility in Syria where apparently Hezbollah and Iran together were manufacturing the rockets and missiles that Hezbollah was going to use against Israel.

And now Hezbollah can no longer produce those medium range missiles because Israel, and I think there was even a land component of this, too, where they landed some commandos in there to really go and destroy this facility.

This is not the first time, by the way, that Israel has spent time in Syria destroying facilities.

They destroyed a potential nuclear reactor there.

But that's my point.

None of this is new.

We all know the entebbe operation.

So Israel has attacked Iraq, the nuclear facility in Iraq.

It's attacked Syria.

But my point is then this sounds kind of like mowing the grass, and it's just very good at it.

By the way, you don't have to make missiles in Syria, you can make them in Iraq.

The thing is, why isn't Iran doing more?

That's the big question.

Shipping in the Red Sea is over.

I joked when I said I was wrong on oil prices, just to be clear, my point is they won't go high, they won't go up at all.

This will be macro irrelevant.

So I didn't short oil because I didn't think that we were going to have a recession.

Oil prices have declined so much, it almost feels like we had a recession over the last twelve months, which is why I think there's upside now.

But what I'm getting at here is this, why is Iran hesitating?

And one, I think the number one reason is us retaliation.

Ok, fine.

But there's another reason which no one's going to like.

When I say Iran is the one winning, not Israel.

Iran has won the last two years, and it's sitting and it's laughing at what's going on.

Why do I say that?

I say that because in 2021, Saudi Arabia was fighting a war in Yemen with the US against the Houthis.

In 2021, Muqtad al Sadr was going to start a civil war against the iranian backed Shias in Iraq.

And in 2021, the Saudis were still trying to prop up their man in Lebanon and were trying to fight actively against Bashar al Assad.

So the point is that if you think about whats happened over the last three years, the Saudis have withdrawn from Yemen, just said to the Houthis, you want it, have it, keep it.

Fine.

Theyve withdrawn support from Muqtad al Sadr in Iraq.

And so the jewel of the Middle east, which definitely is not Lebanon, it's Iraq.

Iraq is run as a province of Iran.

And Saudis have withdrawn funding for the sunni militant groups in Syria and effectively ceded control of the country to Bashar al Assad, who showed up in Riyadh after October 7 and kissed the crown prince, Mohammed bin Salmandhe.

If you actually see what's going on in the Middle East, Iraq has gained control over massive swaths of territory.

We're sitting here being like, yeah, go Israel.

You push back Hezbollah 30 km away from your border.

I don't see why Iran would risk the gains it's made over the last three years for the sake of its proxy in Lebanon that everybody makes a really big deal about like, oh, Hezbollah is a huge iranian proxy.

It is.

I'm not saying it isn't.

But you know what's better is owning Iraq, a country that produces four to 6 million barrels a day, potentially eight, that is a buffer against Saudi Arabia controlling Syria, which has its own access to ports in the Mediterranean that has russian facilities, and Yemen that controls clearly the Red Sea.

Iran is winning.

If Hezbollah was completely eliminated, I think Tehran would be like, meh, you know, let's trade that for the control of everything else.

And that's what I think has made them hesitate over the last twelve months because they don't want to get Saudi Arabia to actively support the US and Israel, which it hasn't done.

Saudis have been neutral.

Talk of Abraham Accords are completely gone.

The Saudis don't need Israel for anything at all.

They're just saying like, look, we're going to let this play out.

You guys figure it out.

But we're good.

And I think that is a very favorable context for Iran.

Yeah, I was singing your tune up until a couple of days ago and I think I might still be convinced that that is the correct tune to sing.

But I will say just a couple of things and then maybe we can move on to some of the macro context here, which is, I think it's turkey as the one that has to be sitting back and laughing because it seems to me that Iran, okay, they're going to lose.

Hezbollah, their most prominent and probably their strongest proxy in Lebanon, if Hezbollah falls or if Lebanon is a shadow of itself for a couple of years.

Syria really does come into question because Hezbollah played a big role in propping up the Assad regime.

Russia has also got its own problems with Ukraine and Turkey is lurking.

Turkey is waiting to swallow up.

Syria for itself, already has troops of its own in northern Iraq and in Syria as well.

Now the Israelis are not just showing us that they can go after Hezbollah, but that maybe they can go after the Houthis in Yemen.

And if they can get the United States to come on board with that and let's say that they can do to the Houthis what they did to Hezbollah, maybe you can't eliminate them completely, but can you knock out the leadership?

Can you defang them or mow the grass for a six to twelve month period?

Then there's no proxies left, then it's just Iran.

And Iran is just sitting there.

Well, what do we do?

That's nice that we have oil coming out of Iraq, but crude is at what, 70 a barrel?

The Saudis are talking about pumping more to steal back market share.

It feels like we're in March 2020.

Times.

Like there are limits to how important that is.

And then the other question is, Israel showed incredible intelligence capability, which is funny because it was terrible intelligence capabilities on October 7, but incredible intelligence capabilities and identifying exactly where and how to knock out the Hezbollah leaders.

Do they have similar intelligence on iranian leaders?

Do they have similar intelligence on Iran's nuclear program?

Are they going to share that with the United States to go in?

And then before we get to all of that, there's also.

Iranian domestic politics are a mess.

Ibrahim Raisi died in a very suspicious helicopter crash just a couple of months ago.

Where is the IRGC versus the government versus the supreme leader, who might be sick?

So I don't think it's all so rosy from Iran.

One other thing I want to say.

I did not have the balls to go long Israel after October 7, although I wanted to.

I don't get any credit for that, because they didn't actually put the capital to work.

But I will say the Tel Aviv stock exchange is up 90% since October 7.

Yeah.

So that was probably the move if you were thinking that Israel was going to be able to respond.

Yeah, no, I mean, look, it's not all rosy for Iran, for sure.

It's just that this is why you have proxies.

You have proxies not to attack Israel, but to take the israeli attack.

And.

Yeah, I mean, like, look, it's just very difficult to use drones and fighter jets to meaningfully conquer territory over a long period of time or to change the reality on the ground.

And unless Israel is going to invade Yemen, unless Israel is going to invade Syria or Lebanon, most of Lebanon, not just the south, you know, unless it's going to do what it did in Gaza to all of these places, iranian proxies will remain in place.

They'll just be degraded.

They'll be licking their wounds.

And so we aren't really doing anything other than mowing the grass.

From an israeli perspective, this is what.

Is so amazing, though, about what they did to Hezbollah, because, yes, they're talking about incursions and they're in Hezbollah tunnels and things like that, but it looks like they didn't even need to do that.

I agree.

They found all the headquarters, they found all the bunkers.

They blew up their communication systems.

It's like the complete opposite of 2006 when Israel invaded southern Lebanon like it was the 1960s or seventies and your grandparents IDF was going to go in and have war stories for a generation, and instead they got punched in the mouth.

This time Israel is leading with, okay, you're right, like, fighter jets and drones by themselves don't do anything.

But we know where all of you live.

We know how all of you communicate, and we're going to obliterate it all.

I mean, that's powerful.

Okay.

And look, I just don't think that it changes dynamic for the long term.

Let's talk about some long term risks.

Long term risk is not Hezbollah, as you said, it's Turkey.

But I would also argue that for Israel's perspective, it's also Jordan.

I mean, Jordan has a real problem with its hands.

And the long term risk for Israel is, like, I think we get overly, especially in the US, we get overly focused on the mechanisms of war.

So on CNN, you got some general explaining how cool Israel is.

But, like, what's happening in West bank is, like, not cool.

And what I mean by that is that the long term viability of, like, what do you do with the human beings who happen to be arab speaking palestinian in the West bank in the long term, why is this a problem?

It's a problem because that dynamic cannot be solved with drones and missiles.

Israel's got an issue on its hands because Gaza has encouraged domestically, basically, further settlement in the West bank.

And Jordan is an ally.

Like, the fact that Jordan flipped and became an ally of Israel is why Israel is secure.

That is a big, big border, and it has no geography, no geographical barriers.

I mean, Jordan river, I've.

I've lived next to it for four years.

It's not a river.

You know what I mean?

It's not even a stream.

So the big problem I think that Israel has is that these are all just very cool.

Fancy, like, interesting.

Like, oh, my God, they use pagers to kill some Hezbollah people.

Cool.

But what's going to happen ten years from now if more and more Palestinians have to move to Jordan?

Jordan is 75%, 70% palestinian.

They had a civil war in the seventies where the PLO tried to take out the king.

The king cannot be ignorant to what's going on in West bank, which Jordan has basically given up control of to a potential future palestinian state.

And then finally, what happens with Egypt and Turkey?

So, in other words, I don't really think the security situation for Israel has improved.

I still think we're in mowing the grass.

Israel is just really, really good at mowing the grass.

Yeah.

So this is where I agree with you completely.

And I mean, to take it to another depressing level.

I mean, I think what Israel is going to do to the West West bank is exactly what it did to Gaza.

They closed the accounts in Gaza.

They mowed the grass.

They're mowing the grass in Lebanon.

They will mow the grass in the West bank next.

And the uncomfortable answer to your question is they will kick those people out or they will make those cities that are still under palestinian control.

They will either take control of them, they will expel them, they will raise them to the ground.

They've shown us the exact playbook.

And that's going to be horrible for Jordan.

It'll be probably horrible for long term security.

And to the, you know, one of the pieces that you sent me before we got on about how the real existential threat here is, well, what does that do to Israel's soul and to its status as a, you know, aspiring liberal democracy?

Like, I agree with you on all of that.

So.

I know we got other things to talk about, but this is the long term risk to Israel.

Right?

Because you're right.

You're correct.

Israel has had many different allies.

Not all of them have been liberal states.

Soviet Union, of course, helped.

Czechoslovakia was a big exporter of weapons.

Yugoslavia as well.

During that initial forties, fifties phase.

Then France, as we all know, it's been on the wrong side of the United States twice.

In the fifties and in the sixties, the US basically forced Israel to give up gains.

That all makes sense.

It can find other allies.

But my point is it's going to have to find other allies because if it does to West bank what you're describing it to Gaza, that's a break with the west.

Is it?

I mean, it is.

I don't think.

I'm sorry, I don't think any.

And this is not my personal view about this.

I think it's actually horrible and horribly depressing, but nobody gives a shit.

I said this at the very beginning of the conflict and gotten a lot of crap for it and I stick to it.

Nobody cares about the Palestinians.

It's why the palestinian plight is so depressing.

They've been betrayed by their own leaders, they've been betrayed by their arab allies.

They've been betrayed by an israeli population that thinks it's better than all of that.

Nobody cares.

And if what is happening in Gaza has not caused the break with the west, it's not going to be the West bank.

Maybe something else will happen and they'll use the West bank as an excuse.

But like, it's not like nobody cares.

Well, I would say is that it kind of has, though.

It's become more difficult for many countries to send weapons to Israel.

I mean, not the US, not yet, at least.

Just the Germans, although the Spanish as well, Italians.

I mean, there's.

I mean, and Germans.

By the way, the fact that it has caused Germans to rethink is huge, because Germany, of course, because of the second world War and the Holocaust has always been like, we'll support Israel no matter what.

And even the Germans are now thinking, like, maybe not the UK as well.

The destabilization of Jordan will be a big deal if it leads to that.

Yes, the destabilization of Jordan, that's a major geopolitical issue that people will start to intervene on and that will also call into question Egypt.

And that is also a really, really big deal.

This is where I think that, look, there's ways to support Israel.

There's varying degrees of support.

If I was running Israel, it would be my priority number 1234 and five, forget Hamas, forget Hezbollah, to receive ten out of ten on that support.

Right?

Ten out of ten.

I want technology, I want the cutting, I want the latest.

I want endless supply of weapons.

Everything.

Anything that erodes that.

It doesn't have to go to zero, but even if it goes to seven or eight, I think you're in trouble.

And that's why I would say that I do think that there is a constraint over Israel.

There is a sort of ideological constraint.

This, like, Israel is a product of enlightenment.

Like, Zionism, in my view, is nothing different from national movements throughout Europe throughout the 19th century, they gave birth to every other country.

So, like, that line that connects Israel to western civilization and thought, I think, is very, very important, and it suddenly starts acting like a rogue state with ethnic cleansing or apartheid on a large scale, not on sort of like a Gaza scale, but like, large scale.

I do think that that will erode support from the ten out of ten to less than that.

And that, I think, is critical for Israel not to lose, because you don't want to lose the technology that allows Israel to continue to be far more superior than any of its neighbors.

Yeah, I mean, just to point out they have nuclear weapons, so in violation of non proliferation, they've flattened Gaza, they've now invaded southern Lebanon.

Like, if you're ticking, like, you know, aspects of a rogue state.

Like, it's a very organized rogue state, but, like, it has some of the aspects, sorry to say.

I mean, yeah, but, like, most of that has been thus far blessed, right?

It has nuclear weapons.

Because France gave it to them.

So, you know, and that's where, like, none of the fighter jets are built in Israel.

Israel does not have, other than the Iron Dome, which is the bottom layer, all of the other layers of its air defense have been gifted to it by the US.

So technologically speaking, Israel is not capable by itself to maintain the edge over its neighbors.

And that's something that most Israelis don't want to admit.

It's a fact.

So it is something to just keep in mind.

At some point, I do think Israel will be disciplined, and I think we're getting very close to that point.

Why don't we spend 30 minutes on the Middle east for something that I think you and I both think is ultimately not that important for markets.

But from the market perspective, though, I do think equity declined on October 1, which we're in now.

I don't think that makes sense.

I wouldn't be shorting us stocks again, just to reiterate, because of the constraints on both Israel and on Iran.

I think it just doesn't make sense.

I don't even think if they went to war fully, us equities should go down.

I mean, if Israel use nuclear weapons against Iran, I'm not sure I'm shorting us stocks, but I think oil, I have changed my view.

It's been now exactly a year or one week less than a year.

And I do think that at this point, just fading upside moves to oil doesn't really make sense because of where we should probably go next, which is like what's happening in China and the US.

Yeah, let's hit China next because I have not yet talked to you or seen what your take was on the recent stimulus announcement.

We talked about it on the pod with Rob at the end of last week.

And I feel like I incline toward being bullish, China.

But even I'm a little skeptical that they've really made any real changes yet.

Tell me what you're thinking about China stimulus.

So the monetary policy stimulus announcements, I think, came on Monday or Tuesday of last week.

So September 24, I think it was.

And I was just, I didn't even read it.

I was like, okay, like, China is stuck in a secular stagnation.

It's got a liquidity trap.

The private sector is deleveraging.

When the private sector deleveraging.

We learned this in 2010, 1112, you can cut interest rates all you want.

It doesn't do anything.

So more monetary policy solutions are just not the way to go.

And so I just, like, you know, hit snooze went back to sleep, whatever.

And then two days later, you have this shark Polybira meeting.

Polybura doesn't meet in September to discuss economy, like, ever.

And basically this was the highest level, Xi Jinping level.

They take away strategic patients.

That was the term they've used.

They take away any reference to prudence.

They take any reference to provincial debt levels are important to us.

They take all those three strategic patients gone.

Prudence gone, provincial debts gone, and they focus on fiscal.

So they haven't announced anything?

Jacob nothing.

And yet they've announced everything.

China is not about mathematics.

If you're investing in China because you're going to extrapolate linearly, some fancy relationship on a chart on a cartesian plane, you're in the wrong business.

China is about like, oh, my God, that is a policy shift.

So what I call this, I call it a policy bottom.

The statement was so forcefully bullish and so forcefully rhetorically different from what they had said in July at the Politburo, where it was just more of the same.

Moral hazard.

Moral hazard.

So what I think happened, Jacob, is something that happens in every society.

This isn't weird, China being maoist or communist.

Here's the news.

Okay?

This happened in Scandinavia when they had their own real estate bubble.

In Japan, in the US, in Europe, when you have a real estate bubble, the imminent concern of politicians and voters and households and everybody is, oh, my God, we were naughty.

So we have to get our comeuppance.

Moral hazard.

Moral hazard.

Moral hazard.

Remember 2010?

You would turn on Meet the Press and it's like, we're gonna be the next Greece.

You know, the government has to tighten its belt, just like you were doing at home, which is, of course, mathematically stupid.

As Richard Koo, the eminent economist, has discussed, a balance sheet.

Recession requires the public sector to leverage with fiscal spending in order to facilitate faster deleveraging by the private sector.

And so Japan did a start and stop stimulus.

It would always do a stimulus and then get concerned about budget deficits and then start doing tax increases.

The US had the tea party.

We elected a party in the United States that was effectively politicizing self flagellation.

And in Europe, obviously, austerity became like a political fetish, right?

So it's normal to focus on moral hazard after a real estate bubble, because everyone was naughty, the bankers were naughty, the households were naughty, politicians were naughty, everybody was naughty.

And then at some point, which varies with time due to politics.

Politics is like the variable.

The various is you go from moral hazard concerns to political concerns, straight up political concerns, low growth, low inflation.

Macro context is terrible for people in debt because the real rates go higher.

So you get deeper and deeper and deeper into debt.

Doesn't matter that the actual nominal rate is at zero or even negative.

And that's what happens.

And at some point, people just rebel against it.

Even people who voted for austerity rebel against it, as happened in the United States of America, where republican voters, conservative voters, abandoned fiscal conservatism, became like, yeah, let's see, like Trump, and he'll just stimulate.

So I think we've reached that point in China.

I think what's been difficult for China, for us, watching it from outside and for chinese leaders themselves is to know when they reach that point, because they don't have any feedback mechanism through elections.

So they had no way to see a flip from, yeah, let's vote for tea party, Chinese tea Party to, oh, let's vote for a populist in China.

And I think that they're starting to concern that they've crossed that barrier.

And I think that Politburo's communique was so important because it infers that we've reached that point.

Yeah, I agree.

I agree with some of that.

Do you follow this, the sub stack Pekingology?

I haven't followed it until recently, but I just started following it and it's really good.

I would recommend listeners go check it out.

It's now the second thing that I always read about China, Bill Bishop obviously being the first.

And he translated some comments from a couple chinese economists from Saturday, September 28.

So after all of the things that happened that week at a Tsinghua People's bank of China School of Finance forum, and there were a couple of senior economists in China, and for instance, one of them went up there and said, okay, the central bank made the statement.

It was very positive.

The overall direction is very correct.

We like all the positive feedback.

But if the minister of finance was here in front of me, I would ask him, what exactly are you planning to do?

Because you turn the morale around, you've done all these great things, but what are the specific policies?

And he goes and translates all these different people who came up and basically say the same thing.

And I find myself in the same position.

What is actually going to happen here?

One of the biggest reports last week was, okay, they're thinking about injecting a trillion yuan into the biggest state banks, the first time they would have done that since 2008.

That's a Bloomberg report, considering it's not the actual thing we're talking about one time handouts, like ahead of a festival.

But like what?

I just don't see the specifics yet.

So maybe you're right that this is the very, very, very beginning and they're going to search for the policies, but I don't see the real see change quite yet.

At least what I would say to you, you never do.

Right.

And this is why investing is not a science.

Right?

Policy bottom means that we haven't reached the economic bottom.

Like, that's why I call it a policy bottom.

But markets are going to respond to policies, not the economy, number one.

Number two, I'm also waiting to see what they're going to announce after this very forceful Politburo meeting.

And what I would argue is that, Jacob, first couple of things that happened.

I'm going to come back on your show and you're going to be like, this wasn't enough.

Think about, for example, european actions after whatever it takes in 2012, Mario Draghi comes out and says, we'll do whatever it takes.

And there were still disappointments.

There were still Alphabet soup of disappointments.

The point is there was an inflection.

There was a policy inflection from being focused on moral hazard.

Oh, let's not bail out Portugal like that easily, right?

Like, I remember this famous meeting when Merkel and Serko Z come out and they're like, well, but we will, we will bail in the boat holders.

And it was like, no.

You know, like they kept making these own goals.

You go from moral Hazard to whatever it takes.

It's a political hazard now.

And I think we've reached that with this.

We're gonna look back like a year from now and say, that was the moment.

Now what that means for actual investors.

I went long right away on September 26, chinese stocks.

But there's going to be a pullback, no doubt.

This is a tactical trade.

There's going to be disappointments.

The bears are going to come out, shake their fist and say, hey, hey, 2 trillion is nothing.

And we're all going to be like, oh, but the most important thing is, what do policymakers in China do?

Do they react like, well, that's it, moral hazard?

Or they're like, oh, my God, that wasn't enough.

Let's do more.

And I think that we've crossed into the ladder, and a lot of people I respect who focus on China were also shocked.

A lot of people onshore that I talked to in China read that Politburo communique, and right away they were like, this is different from everything we've seen.

Over the last three years, which one of the reasons I can't quite get there yet, because like I said, that's my instinct.

My instinct is always actually to be bullish China, because they have always outdone what all of the external analysts said that they couldn't do.

So I think, like, if you're the last 70, 80 years as a geopolitical analyst, if you took the over on China, yeah, you'd see some pretty huge dips in different periods.

But overall, like, China has done better.

And that's usually where I want to be.

But then the next question here, and this ties us into the US, is, I can't help but shake, you know, the suspicion that if you get a second Trump administration, if you get a Trump victory in November and he starts coming in with the 60% tariffs and things like that, does that dent the investor narrative?

Because the investor narrative is still largely external foreign investors with China, this is not mom and pop chinese citizen.

I mean, the Communist Party would love it if the chinese people are buying stocks.

I don't think they're doing it quite yet.

It is professionalizing.

All right, so why do you have your cousin Marco on your show?

Why do you have me on the show?

But aside from your good looks, I.

Mean, aside from that, why?

Well, because you bathe in indifference and you can tell us what's going to happen next as a result.

Okay, fine.

But really, really, the reason I'm here, the reason you brought me here, as Paul Pierce said, famous jumper, right?

The reason you brought me here, Jacob, is for hyperbole and for fuck and for humor.

Let's.

Let's be honest.

Because, because, because like our favorite basketball player, ISO Joe, I have never seen a turnaround.

Turnaround jumper I don't like.

I will take a shot.

I don't care.

I'm like Kobe, right?

That's.

I take shots.

And so here's my shot.

This is, this is why.

This moment right here is why you brought me.

All right, let's do it.

I'm here.

If Donald Trump wins the election, you buy chinese stocks and don't look back.

My high conviction view, my high conviction view is that Donald Trump is going to do the deal.

He's going to do the deal with China.

He's been telling us this for the last six months, and nobody's paying attention.

So what he's been doing for the last six months on the road is telling everyone who wants to listen that he is going to force China to build factories in the United States.

And nobody paid attention because this is, you know, he's talking to, you know, his supporters across the midwest, who cares?

Blah, blah.

And he's also like selling new watches and talking about new crypto projects.

There you go.

But then he has the convention speech.

Now, the convention speech is probably the most, the only semi scripted speech.

And it was hilarious because it was not scripted.

He ended off going off, I was actually in a CNBC green room waiting to come on the show, discussed the speech, and then they had to tell me it was canceled because he's talked so long.

The CNBC show was over.

And I was like, oh, it was at midnight, you know, I was in there for like an hour.

And they were like, sorry, mister Poppage, you can leave now because like, we don't know when he's gonna end talking.

So here's what I'm getting at this speech.

At this speech, you can go, you can find a transcript.

Control f, tariffs, tariff, whatever, you get only two, only two items.

One is about Iran, where he's actually saying we were going to get a deal.

Let's leave that aside because I think he will get one with Iran as well.

And then the other one was like, he said, I'm going to raise tariffs on China unless they move their ev factories into the United States.

And so that's where the record player should have skipped.

There should have been like a skip, collective skip in the financial industry.

Instead, everyone's ignoring it.

You know, it's hilarious to me, watching these investment banks like Goldman Sachs has like 17 PhDs in economics trying to tell us what 60% tariff is going to do to the us economy.

Why?

Based on what?

I'll tell you what they're basing it on.

There was a Washington Post article that said that three people in the Trump administration confirmed to Washington Post in February of this year that he asked him what would happen if he raised theirs 40%.

And then suddenly everyone is going to raise.

It was like one article, three sources that he goes on to Fox News, he gives Fox News interview in the morning.

So like, you're talking semi caffeinated Trump, and they're like, President Trump, are you going to raise tariffs?

He's like, you know, sure, whatever.

They've been mean to us.

And then off goes Goldman Sachs and Morgan Stanley and JP Morgan.

We're all in the financial industry.

Such nerds.

We're like 60% percent terms.

Let me get my calculator.

Let me see where this goes.

And so no one's actually paying attention to what President Trump has been actually saying, and he's saying, I'm going to be mean, I'm going to be tough, I'm going to breathe fire, and then I'm going to get them to build factories in the Midwest.

Now, if President Biden did the same thing in a campaign speech, Beijing Joe, if Vice President Harris did the same thing, suggested the same.

It's Kao Tao camela.

Boom.

Right?

Very nice.

Thank you.

Trademark.

I like comrade Kamala better, but I'll give you count.

No, because it's related more to China, you know.

Okay, fine.

And my point is also k, right?

K.

Very nice.

I would spell comrade with a k.

That makes it cute.

Oh, there you go.

Fine, fine.

Nice adjustment.

Poetic lessons.

My point is, only Trump can say something like this and not get any flak for it.

Kind of being, well, conciliatory and almost, I don't want to say pro China, but, you know, China will do.

I mean, China will take this deal so fast.

You know, they'll be like, whatever, but they're already, if you look at the FDI chart, this is something fascinating that I think most us policymakers are completely unaware of.

China is the country that's financing american national security priorities.

They have spent the most ever in their history outward FDI this year.

China has basically has a tsunami wave of FDI because it is actually financing american de risking from itself.

China basically said, oh, you don't want made in China.

Hold my beer, I got this.

It's gone around the world financing infrastructure projects to facilitate american de risking from itself.

And so if America suddenly says, well, we don't.

And this is what Trump is doing, I mean, he's smart enough to know that this $70 billion a year that China's spending is going to Vietnam, Mexico, Indonesia and other countries.

And he's just saying, no, no, no, no, you're going to put that into the United States.

We're going to have gillion cherry factories.

And I suspect that he's going to push on them very, very hard and say things like this.

What you did to us in the nineties, in the early two thousands, we're going to do to you.

So we want jvs.

GM is a terrible company.

Doesn't know how to make a car.

Nobody notices in America because everyone loves trucks.

But no self respecting non american would ever own a GM vehicle.

So they're, you know, make a JV, you know, you want BYD cars built in America.

Teach GM how to do it.

And I think the Chinese say, yes, why not?

It's perfect.

So what I'm getting at with this is that I think the Trump is not a factor of downside risk for China.

I think there's massive upside risk to chinese equities, whereas if Harris wins, I think that the trade war effectively continues on the same trajectory and that we can extrapolate that linearly into, I don't know, world war three or something.

But, yeah.

So I want to ask the Kamala question in a second, first of all.

Okay, so Kobe just, just had game seven, his six for 24 performance.

I got 14 rebounds.

Yeah, that's great.

Poor went out for Dakimbe Mutombo, long long in Atlanta Hawk center and someone I met at Atlanta Hawks basketball camp.

So I will do my best, mutumbo, and try to swat away some of these things that you just said.

First of all, Trump has said this on the campaign trail many times.

He's actually recently taken to saying that the tariffs that he talked about before were not enough.

So it might be even higher than 60% and higher than 10% on all the other countries in the world.

So I don't think it's fair to say it's just three wonks talking to a Washington Post reporter.

That that's coming from now.

You're right.

That's the speech where you set your phone.

Well, yeah, but as you said, he went off the script after ten minutes because he wasn't getting the audience that he wanted to.

He had just been, there had just been an attempted assassination attempt.

And the other thing about him is, and this is one place where I think you and I are going to disagree, because I read your great report about him as not a chaos agent.

I've been reading the McMaster book recently, and I think he's up for grabs.

I think it depends who the last person was he talked to and his own contrarian nature.

And I relate to this as a contrarian myself, I think gets in his own way because he'll hear something and he'll want to say that's wrong.

The experts think that I'm going to do the exact opposite, or he'll get somebody in his mind and he'll listen to them for two months, and then he'll decide they're completely wrong and I'm going to go hire John Bolton, and then I'm going to fire this guy, and then I'm going to do this.

So I don't think we exactly know.

I don't even think he knows exactly what his policy is going to be if it's going to be something like Ev's.

I bet China would take that deal in a second, too.

China's over producing EV's, and there's all these doubts about that.

The question to me is, well, there's a two fold question number one.

There was the phase one China trade deal.

China took the deal and then did none of it.

And my, my american farmer listeners all know this because they were supposed to sell all these ag products to China, and they didn't get them there.

Now, if you want to be kind to President Trump and his team, you'll say, well, Covid affected things like Covid completely shut everything down.

It would have been a great trade deal if not for Covid, but we had to deal with that stuff.

So I'm willing to talk about that.

But the last thing I'll just say is, before I turn it over to you to try and dunk on the.

Which, remember, Kobe always wins over Mutumbo.

So I'll be valiant here, and I'll collect my defensive player of the year award.

But I'm expecting that Kobe is going to get the MVP.

Is that, you know, South China Morning Post head out this week that Huawei's trying out new chips so that they don't have to have Nvidia chips anymore.

And the real thing for China is, sure, we'll build ev factories in your, in your little country.

That's fine.

Meanwhile, we are slowly ascending value change.

We are slowly getting more and more self sufficient, and eventually, we will be the middle kingdom again.

We will be the economic center of gravity with all of the tech, the high grounds of tech, blah, blah, blah, blah, blah.

So that's how I would push back against you a little bit, at least in the Trump scenario.

And I want to do the Harris scenario separately, because I think that is actually very important.

Look, I will say I respect General HR McMaster massively.

I've met him.

He's written the blurb on my book.

You know, some.

Some name drop.

Should I get name dropping?

I need to get my broom and sweep up some names that are being dropped over here.

Kobe's just warming up right now.

This is Kobe just flexing.

Kobe's looking down on you like my son.

Good job.

Let's go.

Thank you.

So, look, I mean, General McMaster was there, and I think he experienced the chaos.

But from a very 30,000 foot view, what I see is a bunch of deals done.

And I hate to say it, because I remember before Trump became the president, people told me, have you read Trump's book?

Whatever, because he's a deal maker, Marco.

And I was like, no, he's a chaos agent.

That was my view pre 2016.

He's a chaos agent.

You can't predict Trump.

And then what do we get?

We got a USMCA deal.

We got phase one with China, each one preceded by massive insanity.

Oh, with Korea, we got a Singapore summit.

Shockingly, us president.

I mean, nothing.

Nothing.

And by the way, by the way, Jacob, none of these deals were the greatest deals ever.

No.

I think you've left out his biggest success, which was Operation Warp speed.

I think when we look back at his first term, the ability to do that was amazing.

I agree.

It's just, it wasn't a deal necessarily.

You know, he didn't have to like.

But my point is, like USMCA, you can very easily argue that Canada wiped the floor with the United States trade representative.

Canada won that deal, not us.

If you look at the initial negotiating asks by the us administration, us got none of them.

You know, phase one.

Your point?

Like, by the way, let's say even if China did buy agricultural products for the US, I mean, it's not like that's going to boost productivity in the US.

You know, it's.

No, but I'm just saying you could at least claim a victory that you made a deal with them and they did what they.

All I'm saying is I want to both give credit to President Trump that I don't think he was a chaos agent.

I think his negotiating style is chaotic.

But I also don't want to give him too much credit because I don't think that these deals were necessarily huge wins for the US.

I think that's kind of what I'm getting at.

But the point is that if you think about Navarro, John Bolton, there is a pattern in President Trump.

He takes Navarro to China.

Why?

Because he wants to show the Chinese there's a lot worse things than lighthizer.

He takes John Bolton to Iran.

You know, proverbially.

Why?

Because he wants to show Iranians there's far worse things than Matt Pottinger or Donald Trump.

And so I actually, when I look at Donald Trump, I think he's the only president in recent american history who understands game theory.

He understands how to establish credibility of threats, of us threats, whether they're military threats or whether they're financial.

And so I see that it's not really chaotic.

It produces results and it produces deals that there are not.

Again, I don't want to give too much credit.

I mean, President Trump, if he was here, he would say, Marco, you're wrong.

These are the greatest deals ever done.

No one's ever done deals like this.

And I'll be like, I mean, you know, no, phase one.

All I would say to you is that, yes, I do think Covid mattered, but I think something else mattered.

President Xi and Liu, he made that deal with President Trump and lighthizer, and there was an expectation that certain things would follow.

And then Harris comes, and there's that incredible meeting in Anchorage where basically the US tells the Chinese, we want you not to do this, this, this, and this.

Actually, they don't even tell them what they want to do.

The Biden administration has never given Chinese a list of demands.

So why the hell would Xi Jinping fulfill phase one?

Why?

It's a complete regime shift.

It goes from, your trade is in balance with us.

We have a mercantilist reason to go after you to now this complete fusion of national security with trade, where the Chinese are smart enough to know that there will never be a deal with a democratic president, ever.

Why?

Because it's unfair.

American politics are unfair.

A democratic president will always be seen as Beijing.

Zhou kowtow, Kamala.

And they will never be able to go to China.

Only Nixon can go to China.

And so why would they fulfill phase one?

For what reason?

What are you gonna give us if we fulfill it?

And so that's how I see their unwillingness to fulfill phase one.

I think that the Biden administration has never given China a list of demands for them to fulfill because they're afraid the Chinese will fulfill those demands because they can't sell a deal with China.

Like China could give Taiwan as the 51st state to the United States of America.

I don't think that Joe Biden could sell that to the american public.

So here's what I'm getting at.

What I'm getting at here is that I think that China can satisfy a Trumpian administration, which is far less concerned about waiving national security with trade than Biden is.

Trump doesn't have to show tough.

Let me just hit pause on that, because you had in your explanation there.

I think the key question, so what is Trump going to give China if this scenario comes to pass?

He's elected.

All of the tariff thing was a ruse so that he could punch them in the mouth and get the deal.

China opens the EV factories or whatever else.

Demented things he said in his conventions speech.

What is Trump giving China?

What Trump is giving China is a path to growth.

What Trump is giving China is a sense that the United States of America is not actively.

It's a rival.

We're not friends, we're enemies, we're rivals.

But you do have a path where you can get to your chinese dream.

You can do that you have by.

Selling EV's to the american middle class.

Made in Ohio.

Absolutely.

That's part of it, yes.

You know why?

Because so the Biden administration is effectively lying to Beijing.

You know, there's this view that America has.

We're not trying to de risk from China.

We're a decouple.

We're de risking.

And we're going to do that by doing small gardens with high walls and.

Yeah, like four nanometer chip.

That's a very small garden.

You don't need a four nanometer chip to be a viable middle income country.

You don't like.

Germany doesn't have the ability to produce five nanometer chips.

And Germany is.

Okay, so the problem is that the Biden administration doesn't know where to stop.

And it's imposed 100% tariffs on EV's.

EV's are not a small garden, Jacob.

Okay.

EV is like a national forest.

And telling China it's not allowed to produce EV's, like, for what reason?

Where's the security danger in EV's?

It makes no sense.

It just doesn't.

Nobody can convince me otherwise.

EV is not that technologically advanced like China's.

You can tell the Chinese, like the Europeans have, hey, you need to raise prices of EV's because you've supported them with industrial policy.

That's not fair.

But just saying we're not going to have chinese EV's.

You're telling China there's a million and a half people that work in China in assembly, and there's about 30 million who work in auto manufacturing.

We want them all out of jobs.

We want you to not get to middle income.

That is world war three stuff.

And what Trump is going to give them is like, yeah, you can have your workers work in certain industries.

We can compete with that.

In fact, come on over, teach GM how to make this stuff.

And no, I'm not concerned that you're going to press a button in Beijing and then suburban moms driving a BYD EV are going to become a suicide barber, which is what Congress is currently, by the way, discussing.

US Congress is literally saying software technology in cars that's built in China could one day become like a trojan horse.

And like, all these suburban moms driving groceries are going to mow down people on the streets.

Yeah, that comes from the Trump administration that comes from the attack on Huawei and about thinking that they're going to be trojan horses and bombs and all sorts of other things inside a Huawei kit.

I disagree.

I disagree because Trump went off of Huawei for, like, a company specific attack.

It wasn't like, a broad attack on every sector.

And the second thing is that once phase one was concluded, this is somewhere in some archive.

Trump tweeted, right, in February of 2020, right, as Covid was coming up, one of his last tweets defending his trade deal was, I've got a lot of people putting a lot of things on my table, calling in national security.

I'm sick and tired of it.

American, great, american companies are going to go to China and make money in China.

I don't want, like, all this nonsense.

Everything is a security threat.

And so the point is that there's a mercantilist solution here where America gets to adjust, gets FDI from China, gets blue collar workers assembling GM, bYD, whatever, clones, and then China gets to say to itself, okay, the Americans are enemies.

They don't want us to have, you know, genuinely high tech.

They're not gonna help us on that.

But we are gonna be able to assemble cars.

We are going to be able to.

And assembling cars is very important.

You know, this isn't frivolous.

Why is it important?

Because if you have a car industry, you have a car seat industry, you have a gear industry, you have a door, you have an aluminum industry.

This is why countries like Malaysia or my former homeland of Yugoslavia build crappy cars.

They do it so they can have the tip of the pyramid, and then you have all the other stuff that goes along with it, which is important.

The Biden administration is effectively sending a signal.

There's no small gardens.

It's huge gardens, because we don't know how to stop.

We don't know how to defend making a deal with China domestically.

Politically, Trump is like, hold my beer.

I can do whatever I want.

I can shoot someone on Fifth Avenue.

My supporters will like me.

He's right.

And he can make a deal with China that gives China a flight path so they can continue to grow but continues to punish China if it goes into way too high tech stuff while focusing on getting China to pay for that.

How do you pay for that?

Either buy our soybeans or come into the country and build a factory or do both.

So, yeah, I do think that there's a real serious element here.

The real nut, like the fulcrum, is that I fundamentally think Trump doesn't see national security as tied into every component of the trade relationship as do the Democrats.

And lighthizer, actually, although he's definitely a hawk.

Remember, he was talking about China being mean to America and unfair way before China was seen as a national security threat.

He never tied the two together that intensely, where everything China produces is going to become a trojan horse in a world war three scenario.

Final thing on Huawei.

I think the other reason that Trump is doing this shift is that he is actually very, very smart.

What do I mean by that?

I think that Donald Trump understands that in a multipolar world, you're just not going to get your allies to support you.

So what's America going to do when China starts doing FDI into Vietnam or Malaysia or Indonesia?

What is the US going to do?

EMBARGO everyone on the planet?

That's a diplomatic and economic disaster for the US.

It can't do that.

And I can tell you, Jacob, you travel a lot.

I travel a lot.

I've been to Colombia.

I've been to Malaysia.

I've been to Brazil.

Just now, man, you walk into an electronics store anywhere outside of the west, Apple's got a little tiny counter, and there's Xiaomi, there's Huawei, there's Samsung.

Like the rest of the world just couldn't care less about this stuff.

It just doesn't like Japan and Netherlands are cheating America and destroying California's semiconductor industry by doing so.

So what Trump is basically saying is like, look, I'm not going to do whack a mole and try to fight our allies on this stuff.

You know, I'm not going to do that.

I'm going to force China to come into the US and do the FBI it was going to do in Vietnam, do it here.

And I think the Biden administration and the Harrison administration is going to continue to make a mistake by thinking that they can pursue a trade war against China in a multipolar world.

It's just not going to work.

And the best example of that is that China has abandoned high end semiconductor manufacturing and has effectively decided to come to dominate the 20 to 40 nanometer.

This is the product of the Biden administration's incorrect semiconductor policy, in my view.

They've basically steered China into this kind of legacy chip production.

Guess what the problem with that is?

The problem with that is that legacy chip production is what actually matters for war.

So China is now going to come to dominate all of the production of chips that go into washing machines, cars, tanks, missiles, and.

Yeah, so they're not going to be able to put a chip into this.

Or maybe Huawei is some chip, but, like, this doesn't matter.

It just doesn't matter.

You know, this doesn't matter.

Like, Israel is not beating the crap out of Hezbollah because of, you know, phones.

It's beating them because of pagers.

Well, because of pagers, which goes back to the suburban mom and the software and the ev I'm with.

Well, I'm not sure that Xi Jinping is going to take that deal, even if it's what happens.

But just a few things before we turn to Harris.

The first is that you talked about one of President Trump's last tweets.

One of the last things that he did was he started considering whether to name Vietnam a currency manipulator.

So, yes, like, there was a game of whack a mole that was emerging and probably would have expanded had he stayed in power.

It's not going to work.

Yeah, I didn't say it was going to work.

I'm just saying he's going to try Vietnam.

Look, here's the reason.

It's just, he's not going to try.

Why?

Why?

Because it's going to be very quickly explained to him.

Like, look, Vietnam, Malaysia, Indonesia, if we start targeting them for chinese inward investment, they're going to turn against us.

You know, like Vietnam's 400 year history of fighting China.

Like, nah, you know what?

It actually doesn't matter.

A lot of these countries are going to go to the US and say, like, no, no, no, no.

Our loyalty to you is not, like, based on what?

Love of, like, freedom and liberal progressive values?

No.

F U p m.

This is a family friendly show.

So I'm going to use the acronym.

Oh, it's not.

It's rated explicit.

You can say whatever you want.

Yeah, I mean, fuck, you.

Pay me.

That's what every one of these countries is going to tell the US.

So you can't.

Like, this is why a multipolar global environment is so difficult.

You cannot enforce your own allies.

So, yeah, I mean, I think that.

I think that the Republicans have kind of reached a point where they understand this better than the Democrats.

Yeah.

And the last thing I'll just say here, though, because it's a very compelling take.

I'm not sure I quite buy it, but I.

One of the unintended consequences of Trump's, even if you think that's not what he believed it was, part of his chaotic negotiating style, was if you go back and look at gallup polls or pew polls, right around the time that Trump came into office, older Americans mistrusted China because they still had the memory of the cold war and communism in their heads.

But younger Americans and younger chinese people actually liked each other and thought well of each other.

That has changed.

And one of the reasons why everything is being tied to national security security is because the top level messaging has been China this, China that, China tariffs, China is a threat.

And that's why you're getting like politicians who the one thing everybody can agree on is China is bad to the point where even Gen Z ers who have no other experience of China, even they think China is now a national security.

Trump bears some of the benefit for that.

No, no, listen, listen.

First of all, Trump is the guy who initiated that, but he's the only one who can reverse it.

So I agree.

But here's what I agree with you.

If you look at all the different priorities in this election, you know what's the dead last?

Dead last?

Trade and globalization.

Nobody cares anymore.

It's a solved problem.

It's not an issue.

So what I'm getting at is that everyone's miffed with China in the US, like by the unfavorability of China is the highest it's ever been.

It's peaked and it's coming down.

By the way, the chart has like crested.

So I'm not saying people love China, I agree with you.

It's just that it's peaked.

It's slightly coming down.

But that's not the issue.

People don't like China.

But guess what?

China hasn't been a very good villain for the past four years, since COVID China's been kind of a poor villain.

It's just, it's not carrying the role of the antagonist for a reason, because they're not stupid.

And so the american public, you can't just look at a poll and say, everybody doesn't like China.

You have to ask yourself, how intense is their belief that they don't like China?

Are they willing to incur costs to their pocketbook because they don't like China?

And the answer is no.

And I think Trump can sniff that up.

So that's the first issue.

The second thing I would argue is that the policymakers have run over their skis on this issue.

That's where I think the momentum is there.

But that's where Trump and the Republicans can actually get closer to the median voter on this.

I think the median voter in the US believes that China has been unfair in its trade practices and they're objectively correct.

Like, Lighthizer has made the case for this twelve years ago in a congressional testimony.

So the american public believes that trade with China should be fairer and more beneficial to the US, but it doesn't want world War three.

And that's where I think the Harris campaign will ultimately make a mistake, by overemphasizing the national security component of this, because China hasn't invaded anyone.

Many other countries have.

Over the last two years, China hasn't actually been even in the news for any aggressive military other than exercises.

The Philippines.

I mean, it's like, yeah, violated japanese airspace for the first time.

Japanese defense forces.

I mean, you know, Germany, fluor, like, yeah, look.

Yes, relative.

It's that there's no Russia, Ukraine, Middle east war happening in South China Sea, which I have been at the front of saying there's not going to be.

Because China, as you said, they've gone from Wolf Warrior to puppy warrior.

Like, they're not interested right now.

But they know why they're doing that for a reason.

Right?

Because they don't want to incentivize the creation of a bipolar world.

There's a real logic here.

A bipolar world ends China, like tomorrow.

Yep, I agree with you.

But because they haven't been a good antagonist, I think that you can handle the China threat in different ways, and I think that the Trump administration will pivot to that.

But anyways, look, it's good to disagree, first of all.

Second of all, I think that we will see right away, we'll be able to see the tone.

I think there will be volatility right away.

I think Trump will definitely threaten tariffs and raise tariffs.

But the question to me is going to be, is it a tool of negotiations with a deal at the end, or is it a new phase of US China threats and everything?

That during those four years of the Trump administration shows us that he is a very good game theorist.

He uses these to get deals.

Okay, what if Harris wins?

If Harris wins, we continue on the current trajectory.

There's no change, and national security will continue to be interwoven with economics.

And because only Nixon can go to China, why do we have that adage in the US?

Why is that in the us political consciousness?

Why do we say only Nixon could go to China?

He was an ardent anti communist.

He went to China.

He could.

If Jimmy Carter had gone to China, everybody would have said, of course he did, he's a communist.

So when Nixon went to China politically, he was seen as like, okay, we got it.

Like, he got us a good deal.

Whether he did or did not, it didn't matter.

This is the great tragedy of the Democratic Party.

Like, all of their biggest foreign policy failures of the last, like, hundred years have been because they wanted to be tough on China, the korean war, because Truman wanted to be tough on China, Vietnam, because Johnson wanted to be tough on China, because they had that sort of.

In there.

So I take that point well, I mean, that's it.

That's all I think.

I just don't think there's any, you know, Jake Sullivan made a great speech.

I remember she read at the Brookings Institute.

It's a famous, I think it is the speech of this administration.

I would call it the Sullivan doctrine.

And it's basically maga, but basically translated so the CFR crowd doesn't spit out their cocktail drinks or choke on their canapes.

And effectively, it's economic nationalism.

You know, it's economic nationalism, but couched in the verbiage of, like, foreign policy for the middle class.

And it's extremely important speech because it basically says that the Democratic Party of the United States of America, the center left party of the US, has abandoned any pretense of trying to solve economic and social injustices of the US through domestic policy.

They're just abandoning that effort completely.

They believe polarization is so high, they are not going to try to pursue universal healthcare or universal childcare.

They're just not going to waste time on that anymore.

So they're just going to do what Trump did really well, blame China.

That's effectively what the speech did.

And I think that that means that being anti China has now become inherently a democratic party position that they can't pivot on.

On top of that, I think that you're right.

Democratic Party has a deep insecurity in that.

I think policymakers don't want to appear to be doves, and so they tend to want to show to the national security establishment.

They take these things very seriously.

And so I just think there's no way to solve, and the danger in that is that if these small gardens keep expanding, I think at some point the danger, Jacob, is that China goes, we have no way to get out of this doom loop other than by just abrogating our tie to the US.

And then they overreact.

And that's the prospect theory in political science.

When your prospects for a solution just end, you tend to take very dramatic action.

Think about, for example, oil embargo against Japan leads to Pearl Harbor.

I think eventually we could get to that point.

If the US continues to tie national security and economic relations with China.

Does this mean that if Harris wins, you're closing your long position China equities the next day?

Well, listen, Jacob, I mean, this is such a tactical view, you might close it in a month.

To your point, the next announcement on fiscal is going to disappoint if we use the euro area playbook from the would argue that if I'm advising a pension fund or a sovereign wealth fund, I would tell them that they can play this rally for the next couple of days, which they wouldn't because they're sovereign wealth fund or pension fund.

I would tell them that if Kamala Harris wins the election, you should continue to see China as effectively uninvestable.

It's an interesting take we've gone on for a while, but I can't let you go until we talk about Russia Ukraine for a bit.

What's on your mind with Russia Ukraine?

Our dear friend Matt Gerkin, who is, again, my colleague here at BCA research, he's pointed out, like, look, everyone's focused on Middle east and China and all this stuff, but with the US election going on, the one country that really cares about this is Russia.

So if anyone is going to have an October surprise, the Kremlin really needs one.

And so I would say that, I think pre election.

I agree with Matt.

Who knows what happens?

But I think it's pretty clear the conflict is.

I mean, we've been talking about this, Jacob, for two years.

The borders haven't changed much.

There's a kursk incursion by the Ukrainians, which was, I think, a massive strategic error.

They took some of their best troops into middle of nowhere, hoping the Russians would rebalance.

And the Russians were like, no, we're cool.

You are a western ally, a liberal state that doesn't believe in annexation.

So why would we defend our territory and Kursk have more?

You know, go ahead.

And instead, what Russia did is it tripled down on completing that Donetsk basically in getting what they haven't gotten for ten years now since 2014, which is half of Donetsk.

And so I think that Ukrainians made a mistake.

I think that the other thing that everyone misses, this is kind of like my point that Iran doesn't care about Hezbollah that much, which is, I know, an unorthodox view.

I also have another unorthodox view, which is that you can't give, there's no amount of weapons you can give to Ukraine that will make any difference.

F 16s are a complete waste of time in space.

They can't even get them up into the air.

They did.

A ukrainian hero died in that completely useless action.

And now they're going to have to ground those f 16s.

Why?

Because the S 400s can target them from within russian territory.

Just like this is.

There's just no way to really help Ukraine unless the west fought on its behalf.

But unless you're going into russian territory, unless you're going to conduct suppression of enemy air defense operations, saud operations with wild weasels and all sorts of anti radiation missiles against russian radar installations, Ukraine does not have an air force and never will.

We could give Ukraine 300 f 35s.

It would be useless.

They wouldn't take a single one of them off the ground.

So I think that the logical sort of where this is headed and the reason I say that is I was just in Germany.

There's a new leftist party, BSW, which is basically very anti war.

Forget the Afd.

Obviously they are anti war, too.

Marine le Pen did well in the election in France.

In Europe, there will be a new government in Germany in twelve months time, led by much more conservative CDU.

I've talked to some of the more conservative politicians, ex politicians in Germany.

There's a real sense of them being used by the US in a way like Nord stream was blown up by somebody that is a piece of german real estate, of a german infrastructure that was just wantonly destroyed.

There is a real sense in Europe that this war has gone far enough.

And there's also a sense of that in the US, too.

I mean, you have this dramatic difference between Harris and Trump.

And so I think that it's pretty clear that where we're headed is a frozen conflict, not a peace negotiations that I think unrealistic.

No one's going to force Ukraine to give up its territory.

That's crazy.

Anybody, why would they say yes, but a frozen conflict that allows the west to pivot its aid to Ukraine from aid thats used in the purpose of continuous warfare, which doesnt really help Ukraine to aid thats used in the purpose of creating a model eastern european state that actually acts as a much, much better ballpark against Russia than conflict.

And so what Im talking about is a transition of Ukraine into a west german status.

West Germany was like western example to why west was superior to the east.

Right?

Because East Germany, you had to wait twelve years to get a trombon, a four cylinder car that didn't work in west German.

You had a choice between BMW, Opel, Audi, blah, blah, blah.

That was the sort of great example.

And I think that that's where we're headed.

And I think that, you know, Trump hastens that moment again.

I don't think that Harris would.

I think on the foreign policy side here, I think the US and the UK will probably hold out in supporting the military operations for a little bit longer.

But whether it's two months from now or whether it's 24 months from now, I believe this is where we're headed.

Yeah.

I'm also worried that Ukraine made a pretty large strategic error in going after Kursk.

And the metaphor I've been using is, I don't know if you know this, Mark.

I'm a huge civil war nerd.

And it had a very strange overtone to me of Robert E.

Lee invading the north because the union was just going to come and cut the Mississippi in half and burn its way through, like, all the rest of the population centers.

But, okay, like, Robert E.

Lee was going to try to get into the north and maybe use that victory to get international diplomatic support that could sue peace with the union, and you're going to get an anti war vote.

A lot of things had to go right, and it wasn't going to go right.

And I have that sense.

But the question I have, because I find the scenario that you painted there very compelling.

But does Putin allow that he's going to let western Ukraine become the model, eastern european state backed, I would assume.

It's like a very defensive oriented, almost kind of a mini Israel in terms of its actual defense capabilities.

He's going to let Kiev and all them off the hook, and he's just going to take, as you've said on the podcast before, the West Virginia of Europe for himself and be cool with that.

Like, it doesn't seem to me he's gonna be.

He's gonna take that deal.

I mean, you know, Jacob, I would like to have a six pack, you know, like.

And yet here I am.

I don't have one.

What am I getting with this?

It's like, I think one of the worst myths in western intellectual discourse is the myth of Munich.

You know, we could have done something to Hitler in Munich.

The difference between Hitler and Putin is that Hitler was actually, at least in those early days, militarily competent.

100,000 Germans did not die invading Sudetenland.

The invasion of Poland took, like, three weeks.

You know, so when we think about how Hitler was never satiated and how his ambitions grew, it was because his actions were successful, at least until he decided to invade the Soviet Union.

Putin has been extremely unsuccessful in Ukraine, it's been a disaster.

And so what I would answer to you, Jacob, is that he will have to take what he can.

And I think that the.

The shift, the strategic shift for the west going from trying to support Ukraine's military operations, which are failing, which are not successful, and which are draining Ukraine of human capital.

And by the way, the Ukrainians themselves agree with me, because guess what?

They're not doing volunteering for war.

So it doesn't look to me like it's existential anymore to Ukraine either, because in those early days of 2022, I had neighbors in Santa Monica going to Ukraine to fight for their country, and God bless them, because their country was imperiled from complete destruction in 2024.

It's not like, hey, Donets Kuhansk, life will go on.

And, in fact, it makes Ukraine a much more homogeneous and viable political entity.

To not have parts of Ukraine that are potentially mixed in their loyalty.

It is what it is.

My point is that it does appear to me that at this point, Putin is not really going to care about this.

Jacob, were talking about time horizons of five to 15 years in which Ukraine becomes a viable western entity.

What's going to happen to Putin in five to 15 years?

I don't think he thinks in those time horizons.

I don't think he's Xi Jinping.

I don't think Putin is truly that interested in the future of Russia.

I think he is much, much more petty in his goals.

And I think that even this invasion, and I've said on your podcast, I think we disagree with this, but it's fine.

I think that he did it for domestic political reasons.

I think that this invasion was not strategic.

If it was strategic, where's the invasion of Finland?

Excuse me?

Finland is Stone's throw away from Arkangels and St.

Petersburg.

Where is the invasion of Finland if NATO is such a big deal?

So to me, I think that Putin will just lick his wounds and declare victory.

You know, he'll call his good friend w, say, I need the mission accomplished banner, and he'll proclaim the annexation of Donbas in Crimea as a great, great gain for Russia, which it definitely is not, because ten years from now, when Putin is long gone, what's going to happen is that Ukraine is going to look awesome and Russia is not because of what happened over the last three.

Years before we close Russia, Ukraine.

I have been wrong, and I think a lot of people have been wrong, that we were going to see increases in wheat prices or corn prices or sunflower prices all these commodities that are supposed to come out of Ukraine.

Ukraine we haven't seen, you know, we had an initial spike, but everything has been, everything in the commodity complex has been relatively low.

There's a couple exceptions there.

But do you think that that continues?

Do you have any view on what the next six to twelve months in the Russia Ukraine war does for those specific commodities or the commodity complex in general coming out of the Black Sea?

So, first of all, I would say the Black Sea is extremely unstrategic.

And this is why I said this at the beginning of the conflict.

Black Sea is a, is an internal lake of another lake.

You know, it's completely unstrategic.

Many russian, many ukrainian farms are equidistant to the Baltic as they are to the Black Sea.

And what I think we've seen both in this conflict and in the Red Sea, I mean, your point about shipping being completely changed, fine, fair.

But, like, what tea prices in England went up?

You know, like, I can't tell you, I work for a macro research firm.

I can't tell you, like, what's going on, really.

Like, it hasn't affected anything, except I will say there's a lot to do in shipping, so you can make a lot of money in shipping.

Bulk carrier prices have gone up for sure.

For sure.

But, like, the global economy has not been affected by Ukraine Russia war or Israel Iran war.

And why?

It's because in a multipolar world, you're not taking entire chunks of the planet off the market.

You're taking small parts.

And then we can, we can use technology and infrastructure to create new shipping lanes.

So what's happened is the Baltic has become a real important shipping route.

Russia, as I'm sure you know, because you're much better expert on ports than I am, Russia has just built a new port in the Baltic specifically for its wheat exports, which are booming.

Productivity in Russia has increased as well over the last five years in agricultural output.

And so I think it's a great example, the fact that wheat prices have not gone up or that oil prices have not gone up, although that's also supply.

It also tells you that we're much better at since COVID What Covid has taught us is that the world is actually incredible good in the 21st century in changing supply lines.

So what Ukrainians have done is they've used trains to ship to baltic ports.

They've also used Danube in Romania.

And I think that's a good example of how.

Be very careful of following Twitter.

Remember the neon gas crisis?

I do.

Remember?

I remember you throwing a lot of cold water on that too.

But before we go though, wait, hold on a second.

Are you going to end the podcast right now?

No, no, I was going to ask you one more thing and then talk about basketball, but I was going to actually, you brought the neon thing.

I was going to ask if high purity quartz is the next neon or if you're really worried about the flooding in western North Carolina.

I have no idea.

Sorry, I have not looked at that.

Yeah, I've been looking at it and I'm scared.

Well, before I ask you about the basketball season, just fire up the hot take machine for me and tell me, do you have a hot take on Claudia Schoenbaum and on what mexican governance and trade looks like over the next two to three years?

You know, this is a great.

I need to be disciplined here, right?

Because my whole thing is politics is usually to be fated when macro fundamentals are so good.

You and I have both been, I think, some of the biggest bulls in Latin America for the past five years.

I would say four years.

Five years.

And it's worked.

It's worked until the election in Brazil and Mexico.

So I had this trade on where I was long, Latin America relative to Southeast Asia.

It's like a straight line until the last six months or so.

And it's because of deterioration of fiscal policy and trade policy, pro business, basically policy in Brazil and Mexico.

So I worry about it.

Honestly, Jacob, I worry that in this case, politics is moving against our reasons to be bullish.

Latin America are not about like the debt trap or fiscal adjustment.

It was about the global context, which is bullish for this region.

So I do worry that the judicial reforms make no sense.

I'm not saying this ideologically.

Like Mexico is allowed to do whatever it wants, but directly electing judges to deal with corruption, how is it going to help with a corruption?

Like it's going to make it worse for God's sakes, you know?

Yeah, I mean, there's a problem in the sense that a lot of the judges are from the old pre single party authoritarian regime.

And so if you're a new party regime, you want to get rid of those judges so that you can have your judges in, so they can rubber stamp all the changes that you want to make.

But to your point, that's not going to fix corruption, because now you're just getting judges who are loyal to you.

And by the way, the cartels can maybe now buy judicial appointment.

So, like, there was a corruption problem there, but you're just, you're just moving the deck chairs around on the corruption titanic here.

Yeah, I mean, look, so, so I'm worried about it.

I'm worried about what it flags, you know?

So that's, that's, I think, an issue.

But what I'm excited about though, Jacob, is that I do think that what's happening in Argentina is, is very, very positive in that the charts are looking.

I mean, a lot of things is off the chart.

Adjustment in inflation, the adjustment in the budget deficit is perhaps one of the fastest fiscal adjustments in human history.

Macri failed because of two reasons.

Macri failed because he opened the capital accounts too quickly.

And that's the one thing that millade has not done.

So he said, no, no, no, I'm going to fix it first, then open it up to portfolio flows.

Smart.

The second thing is, Mark refilled, not for any of his reasons.

I mean, growth just slowed down, commodity prices didn't rebound.

And so Argentina was not in a very good macro context.

And so I was very worried for Millie because I did think that odds of recession in the US were rising.

And then you saw what was going on in China and the rest of the world, it just wasn't looking good.

But if the Fed really is cutting 100 basis points, which it is like, in seven weeks, by the way, we should have a whole podcast on the politicization of the Fed, maybe at some point.

Let's leave that aside.

Let's leave that aside.

The Fed is cutting and China is stimulating.

It could be very good for.

Why am I shifting to Argentina?

Because, as you know, best practices in Latin America kind of spread through osmosis.

Bad practices, too.

This is the political science theory of the third wave of democratization.

As an example, like things like Chicago boys, it just spreads like wildfire.

The experiment in Argentina is successful over the next twelve months, I think it's going to be really difficult for Lula and Shinbaum to just ignore what's going on because I was just in Brazil, by the way, just one last thing.

I was just in Brazil.

And what I would say is, it's going to be difficult to ignore because the last thing you want is Argentina beating.

Yeah, I've been very interested in Argentina since Millet was elected.

And I mean, he is absolutely insane.

Like, he's a crazy person, but he's not governing like a crazy person.

And I actually said to a group of people in July, I mean, if any listeners want to take us up on this, maybe Marco and I can be your tour guides.

Like if I was somebody who had a lot of capital, like ultra high net worth, I'm just chilling.

I'd be on the first flight to Buenos Aires, and I'd be buying shit up right now.

Just, you know, take a shot and go there.

Not.

Not investment advice, but if I had won the lottery like that, that's what I would be doing with my time right now.

And definitely something to think about.

Okay, let's talk basketball before you have to go.

We've gone on.

This is like a Joe Rogan level length, which is what we wanted when we booked off the 2 hours.

Marco, I was wrong about basically every prediction I made last year when it came to basketball.

I was wrong about Jason tatum.

Sorry, Jason.

Good job winning the finals or whatever you did.

Wrong about my pelicans, wrong about everything.

So why don't you take the wheel here?

Cause obviously my tactics are not to be trusted.

What did I say?

Did you go back and look at it?

No, because, like, it was this interesting thing where I usurped the hyperbole role, and I was like, Jason Tatum's never gonna be the best player on a championship team.

And I even shocked you.

You were like, oh, no, I can't beat that.

You didn't prepare me for this shit so well.

I mean, you were better than me.

Wait a whole second.

Technically, you were right.

I.

No, they won.

They won the finals.

Good.

He won.

So how are you feeling about the Lakers?

I would not be feeling good, but I think depends.

What's your interest?

You know?

Like, what do you really want in life?

You know, do you want a championship ring, or do you want to just rake in money because of views and clicks?

Because let me tell you, the Lakers are going to dominate the views and clicks of.

They're doing this, as Drake would say, they're doing this entire season for the gram.

This is.

I mean, we should create t shirts, you know, lakers 2025.

We did it for the gram because they're going to lead every story, every ESPN.

They always do anyways.

But you've got LeBron, you've got his son, you know, you've got a podcast personality.

Hey, JJ Reddick.

If JJ Reddick can lead the Lakers, why can't Jacob Shapiro run a small latin american state?

It's true.

Guyana.

Like, let's go.

Like, give us a call, you know, Suriname.

I represented Suriname at a model of the United nations once, by the way.

So I'm qualified.

Let's go.

I will let you be the president.

I'll be the foreign minister.

I just think if JJ Reddick can run the freaking Lakers and his only qualification is that he was a podcast host.

You and I are qualified to run a country.

I can't argue with that.

Although Guyana has a bunch of oil now, so I think we're late on that party.

They've probably got bigger.

Maybe I picked it for a reason, right?

Like, you know, this guy likes his luxuries, so we're not just going to pick a random country.

But look, I think that the Lakers are going to be a show.

It's going to be incredible reality tv.

I hope they record reality tv show out of this.

I'm going to enjoy it.

You can't win championships every year, but at least you have to be entertaining, so that's going to be fun.

I think everyone's, like, overbidding Oklahoma City Thunder, you know, I was not impressed with the way that Luca just completely eviscerated them.

That was weird.

I think the Timberwolves, everyone's writing off Rudy Gobert.

I think they're going to be revitalized by the trade cat for Randall.

I think it's interesting.

I mean, I don't think Randall's your kind of guy, which is cool.

I get it.

There's a lot not to like about him.

I agree.

But I think it spaces the floor a little bit better for them.

I think there's going to be a nice pick and roll game.

I think he fits better with Gobert.

And then what else?

What else is interesting out there?

Well, I think if Embiid, and he probably can't stay healthy, if embiid finishes the season healthy, it seems to me the Sixers are in a very, very good position, but he's probably gonna not be healthy.

You know, what I think is actually the most interesting thing?

I think this season is going to be the season of disgruntlement, you know?

And what I mean by that is like, we've got a lot of stars, really, really incredible stars that are going to be disgruntled.

And so this season will be the season that will set up the next season.

And what I mean by that is like, you've got jokic.

I mean, the Denver Nuggets.

We may not be able to run Suriname or Guyana, but I'm pretty sure we could run the Nuggets better, Dave.

I mean, they could implode as a team.

He's surrounded by, like, you and I could be on that team.

I think that's a really, really big problem.

They have no bench.

They've got Russell Westbrook who I am.

That was crazy.

No, I know.

And I'm like the last person that owns a condo on Westbrook island.

And even I'm like, come on, man, you're going to waste the season of one of the greatest basketball minds in history with Russell Westbrook.

What are you doing?

So there's that.

The only reason Jokic will stain Nuggets is because he doesn't care.

Then you got Luka Doncic.

There's already already news.

I mean, he will look very cute in purple and gold, let me tell you.

Those blonde locks, you know, he's going to look very good as a Laker.

I'm going to call it right here.

I think Lucas a Laker in like two years, time and again.

Why?

Because I think they're going to underachieve.

The Nuggets are going to underachieve.

And then finally Giannis, like, that team is done.

Right, Jacob?

Like, what?

What are they going to do?

Giannis is leaving.

So that's three, like, pyramid guys.

As Simmons talks about them, top 20 players in history of basketball.

And I think that the whole story this year will be that they are not on teams that can compete.

Yeah, and we haven't even said Durant, who every year does this anyway, so.

And I'm sure he won't be very happy on the Phoenix sense, I don't think.

I know.

Oh, and by the way, the comment about running a small country, I mean, you know, this is what Americans used to do.

I'm in the middle of reading the fish that ate the whale.

Like, Americans used to go to small latin american countries and just run them as their filibustering.

Yeah.

I mean, that was like a thing.

I don't know what's going to happen in the NBA, but I'll tell you two things that I hope for.

Number one, I just hope that we get a full Zion season because at the end of last year, he was finally putting it together.

He was giving it to y'all in the playing game.

Like, it felt like it was finally coming together and then boom, hamstring, like, done for the playoffs.

So I just, like, I don't even need to win a playoff series.

I just want to see a full season of Zion.

And he seems to be motivated and healthy and like, listen, I have my hopes.

That was one of the most incredible games I've ever seen.

I mean, he made LeBron James look old.

Like he was small.

He was stunning him.

There was this one moment where he just plowed into LeBron and it was like what LeBron's been doing for 20 years to everyone else, Zion did it.

To him, it was like.

And you could see the face, LeBron's face go like.

Like, you just look tired, you know?

I think the problem, though, Jacob, is, like, for the Pelicans, and I really wish them well because I like the team.

I like everything.

It's like, I love Ingram.

I love Ingram and Randall because I'm such a psychotic Laker fan.

And by the way, if anyone wonders why I'm a Laker fan, it's actually a trick I do with my mind.

The way I stayed neutral and nihilist, and I don't care.

What happens in the world is by having a religiously insane zeal towards being a Laker fan, I put all of my bias into it.

So, for example, I love ex Laker players ball.

Randall Ingram.

I love Ingram.

I love him.

I want him to come back to Lakers.

The problem is, he just doesn't fit.

It doesn't seem to me like he fits with the team.

You know, it's just because Zion can't just be a post op player.

He needs to face up and then use his speed, you know, in that mid range area.

But.

But Ingram is doing the same thing, and so they're both, in a weird way, kind of a point forward ish player, and I just don't think he fits.

I think they just need to give up on it.

Yeah, well, there's a couple things there, and I think they're trying, and I think maybe they were in on the cat trade.

I think maybe that's why the Knicks moved first.

But I will say this, because Zion has been hurt so often for all these years, whenever Zion goes down, Ingram becomes the best guy on the team.

And so Ingram has years of sort of, you're the alpha, even though he's not an alpha personality, and that's not his type of deal.

If Zion can have a full season where he's doing what he did at the end of last season, and Ingram is unquestionably the number two or number three option, we've never actually seen Ingram get to live in the number two option for more than, like, 30 games, because then Zion gets hurt, and Ingram has to come back in, and I think he has the personality type to do that, but it's going to have to be because Zion is there and is overwhelming, and they don't have to tell him, okay, fire it up.

You've got to be the alpha now.

So I agree with you, but there's a glimmer of hope there.

The only other hope I have for the basketball season is not only do I hope the Knicks are good, I hope the Knicks win it all.

I love the story.

I love everything.

I was mad they traded Devincenzo because I loved the whole Villanova story, but I still.

I want the Knicks to, like, run over everybody.

I don't think it'll happen, but that's what I'm rooting for.

What's your prediction?

Finals.

Let's see.

Prediction for the finals.

Like I said, if Embiid's healthy, I think it's the Sixers, but he's not gonna be healthy.

So it's going to be Celtics.

I'm going to go Celtics, wolves, and let's say wolves and seven.

Wow.

Yeah.

You know, like, it's interesting because I.

I thought the same thing, and I think Celtics win.

You know, I think Anthony Edwards is that guy.

I think.

I think this is the coming out party.

I love taking cat off the floor.

I don't care about Randall.

I wouldn't be surprised if they trade him midseason.

I love Dev and Genzo for them.

I love a gritty, in your face, high volume, extremely precise shooter, can play defense next to Edwards with Rudy on the backstop and everything else they got going, I think overall, they lost the talent on the trade, but I think in terms of fit, it's much better.

And they're going to be able to do tons of things that no other team is going to be able to do.

Yeah, that's really interesting.

I like the wolves a lot, and I think Edwards ran out of gas.

I also think that they were over reliant on Conley.

Yeah.

You know, and I just don't think it's gonna matter.

You know, this is.

This is one of those, like, who's MJ's point guard?

First it was Ron Har or, sorry, in the latter years it was Ron Harper, and then in the early years, it was that BJ Armstrong, Don Paxson role.

Harper, he won the Lakers ring.

But, like, you know, like, no one's sitting there, like, being like, man, you know, remember Ron Harper, man?

Like, six foot seven point guard?

So I think, you know, what you do is you just slot anyone next to Edwards, a defender, you know, I think they just need to get a little bit better running offense through him when calmly sitting.

And that's it.

So I agree with you.

All right, well, Marco, that's the one.

Thing we agreed on today.

No, no.

We also agreed on Russia.

I was with you on Russia, Ukraine for the most part.

And I think from a market perspective, we probably agree on most things, but yeah, like, it'll be interesting.

It'll be interesting.

Lots of things going on.

So let's not wait four or five months, however long it was.

Well, maybe we should do a live or next day election reaction podcast, if you.

Let's pencil that in.

Okay.

Next day election.

Let's do that.

I'm done.

I love it.

And hopefully that by the next day the election is decided.

All right.

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