1 00:00:03,120 --> 00:00:03,690 Jacob Shapiro: Hello listeners. 2 00:00:03,690 --> 00:00:06,420 Welcome to another episode of the Jacob Shapiro podcast. 3 00:00:06,540 --> 00:00:07,470 I'm Jacob Shapiro. 4 00:00:07,470 --> 00:00:09,750 Rob Laity joining us for our biweekly chats. 5 00:00:10,140 --> 00:00:14,430 Um, boy, it's been a week, uh, recording Tuesday, June 24th. 6 00:00:14,430 --> 00:00:17,250 This will probably come out I would guess Thursday. 7 00:00:17,520 --> 00:00:20,580 Uh, president Trump has announced the ceasefire between Israel and Iran. 8 00:00:20,580 --> 00:00:23,190 So I've got one more piece to send out, uh, via Substack. 9 00:00:23,190 --> 00:00:25,530 If you have not signed up for my substack, please do so. 10 00:00:25,980 --> 00:00:28,740 Um, and then I'll try and, and take a little bit of a break 11 00:00:28,800 --> 00:00:29,520 'cause I have been running. 12 00:00:30,120 --> 00:00:33,810 Nonstop here for the last 12 days, and you'll probably able be able to get that 13 00:00:33,810 --> 00:00:37,710 sense from the podcast itself because I mean, we, we do some analysis of markets, 14 00:00:38,040 --> 00:00:39,690 uh, and especially of the usan relations. 15 00:00:39,690 --> 00:00:43,320 But the end of the podcast is basically Rob, uh, thank you Rob for, for 16 00:00:43,320 --> 00:00:47,280 being my therapist and letting me talk about, uh, sort of the initial 17 00:00:47,280 --> 00:00:51,480 reflections on what it's meant to be, uh, driving so hard, uh, analytic. 18 00:00:52,185 --> 00:00:55,995 Um, over the past couple of days and ways to think for my, honestly, for myself 19 00:00:55,995 --> 00:00:59,685 about how to maintain mental sanity and if, if, if you guys can take notes 20 00:00:59,685 --> 00:01:01,005 from that, if it's helpful for you. 21 00:01:01,005 --> 00:01:02,145 I, I hope it's helpful for you too. 22 00:01:02,145 --> 00:01:03,555 So, anyway, enough rambling for me. 23 00:01:03,765 --> 00:01:04,995 I hope you enjoy the episode. 24 00:01:04,995 --> 00:01:07,455 I hope that you've appreciated all the analysis. 25 00:01:07,545 --> 00:01:10,185 Uh, I'm taking a little bit of a break at the end of the week, uh, Lord 26 00:01:10,185 --> 00:01:11,625 willing, and the creek don't rise. 27 00:01:11,895 --> 00:01:13,905 Uh, but we'll be back at it, uh, with a vengeance. 28 00:01:13,905 --> 00:01:15,045 Next week I'm sure. 29 00:01:15,045 --> 00:01:19,005 And if, uh, the ceasefire does not hold, I'll be back at it sooner than that. 30 00:01:19,005 --> 00:01:20,655 So take care of the people that you love. 31 00:01:20,655 --> 00:01:21,555 Cheers and see you out there. 32 00:01:28,125 --> 00:01:31,425 Alright, listeners, it is Tuesday, June 24th. 33 00:01:31,425 --> 00:01:34,845 It is 10:18 AM Central Time here in New Orleans. 34 00:01:35,235 --> 00:01:35,775 Um. 35 00:01:36,015 --> 00:01:38,895 Unless something, I mean, I, I don't think we're gonna cover things that are breaking 36 00:01:38,895 --> 00:01:41,925 here, but like, you know, this will probably come out on our normal cadence. 37 00:01:41,925 --> 00:01:43,485 It won't come out in the next 24 hours. 38 00:01:43,485 --> 00:01:47,414 So if some things seem outdated, apologies, they probably will because 39 00:01:47,445 --> 00:01:52,695 the Iran, Israel war, skirmish, whatever, ceasefire, it's all evolving quicker. 40 00:01:53,475 --> 00:01:56,385 Then we could possibly keep in mind, Rob, I don't, I know you said you, it's 41 00:01:56,385 --> 00:01:58,275 been going too fast for you to follow. 42 00:01:58,845 --> 00:01:59,595 Um, in depth. 43 00:01:59,595 --> 00:02:01,335 It's going too fast for me to follow in depth. 44 00:02:01,515 --> 00:02:06,075 The latest thing was getting asked what he thought about Israel and responding. 45 00:02:06,135 --> 00:02:08,565 I mean, I'm basically quoting him almost word for word here. 46 00:02:08,565 --> 00:02:11,475 He said that Israel and Iran don't know what the fuck they're doing, which 47 00:02:11,685 --> 00:02:14,475 that comment could be made for a lot of different people, president Trump. 48 00:02:14,805 --> 00:02:15,765 But I digress. 49 00:02:16,215 --> 00:02:16,815 Um. 50 00:02:17,035 --> 00:02:22,225 Elsewhere in the world, uh, Germany is floating a return to required 51 00:02:22,225 --> 00:02:25,614 conscription in their military because Friedrich Mers thinks that Germany 52 00:02:25,614 --> 00:02:27,325 needs the strongest military in Europe. 53 00:02:27,415 --> 00:02:31,315 Can't say I'm looking forward, uh, to that, uh, sequel. 54 00:02:31,315 --> 00:02:34,765 As much as I'm looking forward to the Dune Messiah, uh, movie that was announced 55 00:02:34,765 --> 00:02:36,535 will be, will be filming in two weeks and. 56 00:02:36,685 --> 00:02:39,265 Timothy Shalam, if you're listening, want you on the podcast. 57 00:02:39,265 --> 00:02:40,495 I've been tweeting at you all week. 58 00:02:40,495 --> 00:02:43,345 You haven't responded to me like you're starting to hurt my feelings here. 59 00:02:43,345 --> 00:02:44,395 Like we really want you on. 60 00:02:44,395 --> 00:02:45,955 I think we could do some good work together. 61 00:02:46,585 --> 00:02:50,065 Um, some drama over us, Japanese relations. 62 00:02:50,065 --> 00:02:51,025 We're gonna get into that. 63 00:02:51,025 --> 00:02:54,085 We're gonna talk about some NATO things and anything else. 64 00:02:54,085 --> 00:02:57,595 But Rob, I, I've been looking forward to chatting with you because during 65 00:02:57,595 --> 00:03:00,805 these moments of crisis, like I don't really have time to, to do much 66 00:03:00,805 --> 00:03:04,435 besides put my head down and try and pump stuff out as much as possible. 67 00:03:04,435 --> 00:03:06,325 And honestly, I want to be embraced. 68 00:03:06,675 --> 00:03:12,075 By the, the sweet caress of the bosom of markets that that beautiful objective 69 00:03:12,075 --> 00:03:15,825 thing that is not blowing anything up, that is just responding with numbers. 70 00:03:15,885 --> 00:03:18,555 Like I just wanna stare at the Matrix for like a good hour. 71 00:03:18,585 --> 00:03:19,635 'cause I'm exhausted. 72 00:03:19,995 --> 00:03:22,335 I haven't been following markets that closely and you haven't been 73 00:03:22,335 --> 00:03:23,355 following the war that closely. 74 00:03:23,385 --> 00:03:25,005 'cause we're both sort of in our foxholes. 75 00:03:25,005 --> 00:03:27,885 So as I peak my head out of the foxhole, now that we have 76 00:03:27,885 --> 00:03:29,325 peace in our time, or at least. 77 00:03:29,325 --> 00:03:30,155 Piece this week. 78 00:03:30,635 --> 00:03:32,675 Uh, any market thoughts from you? 79 00:03:32,675 --> 00:03:36,905 I saw that oil, like did a massive, uh, collapse of, what was it, 80 00:03:36,905 --> 00:03:40,204 10%, um, a couple hours before the ceasefire was announced. 81 00:03:40,204 --> 00:03:42,695 So somehow the oil markets knew before everybody else. 82 00:03:43,115 --> 00:03:46,535 Um, but just curious if there's any other market action that you saw that 83 00:03:46,535 --> 00:03:50,225 was fundamentally interesting or, or told you anything interesting or if it was 84 00:03:50,225 --> 00:03:51,605 really like the market was just like. 85 00:03:51,855 --> 00:03:52,155 Okay. 86 00:03:52,155 --> 00:03:54,075 Like Israel and Iran are pummeling each other. 87 00:03:54,075 --> 00:03:54,885 That's cool. 88 00:03:54,885 --> 00:03:59,385 Like, uh, these, there are no Iranian companies in the s and p 500, so like 89 00:03:59,505 --> 00:04:01,785 it's interesting that the straight of horror moves gets blocked. 90 00:04:01,815 --> 00:04:02,235 Okay. 91 00:04:02,235 --> 00:04:04,305 But like, not a whole, not a whole lot else. 92 00:04:04,305 --> 00:04:06,255 So let, let's go into markets a bit. 93 00:04:06,255 --> 00:04:08,775 I could use like a boring objective sense of what's going 94 00:04:08,775 --> 00:04:09,825 on with the numbers right now. 95 00:04:10,605 --> 00:04:11,685 Not boring, you know what I mean? 96 00:04:12,765 --> 00:04:15,885 Rob Larity: Well, thankfully for people who were, who were uh, sort 97 00:04:15,885 --> 00:04:19,755 of in the whirlwind of events, uh, the truth is pretty boring. 98 00:04:19,964 --> 00:04:25,875 So, um, it's sort of one of those dog in the nighttime, not barking situations 99 00:04:25,875 --> 00:04:30,650 where markets haven't really done much and there is some signal in that. 100 00:04:31,469 --> 00:04:34,349 Um, the fact that Golds did not make a new high. 101 00:04:34,950 --> 00:04:38,580 The fact that Bitcoin, which had been acting very gold like recently 102 00:04:38,609 --> 00:04:45,060 actually sold off, um, on these events and is, you know, sort of in, in 103 00:04:45,060 --> 00:04:48,630 the middle of its near term training range, like all of this suggests that 104 00:04:48,630 --> 00:04:53,219 either markets had sort of priced in a lot of this potential geopolitical 105 00:04:53,219 --> 00:04:55,799 volatility or they just don't view it as. 106 00:04:56,630 --> 00:05:01,430 Anything fundamentally relevant to the big gears. 107 00:05:01,700 --> 00:05:06,590 And that's the way I would think about this, is like in this multipolar world, 108 00:05:06,590 --> 00:05:11,270 there are the gears, you know, the individual areas where within each of 109 00:05:11,270 --> 00:05:14,120 those big and important things do happen. 110 00:05:14,120 --> 00:05:15,140 And we can see this. 111 00:05:15,615 --> 00:05:16,515 In markets. 112 00:05:16,515 --> 00:05:20,055 'cause that is what's reflected in markets when, when something happens 113 00:05:20,055 --> 00:05:24,284 in the White House relevant to fiscal policy in the US that is moving 114 00:05:24,284 --> 00:05:28,094 gold and it's moving Bitcoin and moving these assets and bond yields. 115 00:05:29,235 --> 00:05:34,664 But the, um, you know, the, the frontier regions, we haven't seen 116 00:05:34,664 --> 00:05:36,705 much market response to that. 117 00:05:36,705 --> 00:05:41,175 So I don't know exactly what to make of that other than I think these places 118 00:05:41,175 --> 00:05:43,335 are viewed as sort of marginal to. 119 00:05:44,115 --> 00:05:45,555 So the really important piece. 120 00:05:45,820 --> 00:05:46,240 Jacob Shapiro: Mm-hmm. 121 00:05:47,539 --> 00:05:47,760 Um. 122 00:05:49,469 --> 00:05:52,349 And maybe it's more important to think about the, I mean, like, this is gonna 123 00:05:52,349 --> 00:05:57,210 give people whiplash, but, um, the tariff delay is, is coming up, or the 124 00:05:57,210 --> 00:05:58,739 end of the tariff delay is coming up. 125 00:05:58,739 --> 00:06:01,080 Like, uh, we had the Liberation Day tariffs, then we had 126 00:06:01,080 --> 00:06:02,219 the delay around April 10th. 127 00:06:02,219 --> 00:06:05,789 So technically July 14th is when all of the Liberation Day 128 00:06:05,789 --> 00:06:07,620 tariffs sort of come back on. 129 00:06:07,620 --> 00:06:10,830 And I feel like you can sort of feel the market, or at least, you 130 00:06:10,830 --> 00:06:13,890 know, I, I sort of have in the back of my mind as Israel and, and Iran 131 00:06:13,890 --> 00:06:15,419 are pummeling each other that, uh. 132 00:06:15,615 --> 00:06:16,815 Where are the trade deals? 133 00:06:16,815 --> 00:06:18,285 Like, uh, are the tariffs coming? 134 00:06:18,285 --> 00:06:19,785 Are the tariffs gonna be back on? 135 00:06:19,785 --> 00:06:21,405 Is it just gonna be another extension? 136 00:06:21,825 --> 00:06:25,125 Do you think that the market is like just expecting Trump to 137 00:06:25,125 --> 00:06:26,805 kick the can down the road again? 138 00:06:26,805 --> 00:06:30,045 And that maybe if he, you know, if somebody asks him a taco question on 139 00:06:30,045 --> 00:06:33,615 the wrong morning, like maybe he'll like try and shake things up a little bit? 140 00:06:33,615 --> 00:06:36,045 Or is there anything on the horizon that you're particularly 141 00:06:36,045 --> 00:06:37,185 worried about coming up? 142 00:06:37,185 --> 00:06:39,555 'cause I mean, we do have some cliffs that seem to be coming up. 143 00:06:40,799 --> 00:06:41,039 Rob Larity: Yeah. 144 00:06:41,039 --> 00:06:44,880 And I hate to be Mr. Boring on this call, but I'm not clever 145 00:06:44,880 --> 00:06:46,770 enough to say what's gonna happen. 146 00:06:46,854 --> 00:06:50,340 I, I mean, I don't know anyone who is, as you point out, you'd have 147 00:06:50,340 --> 00:06:54,000 to be eating breakfast with Donald Trump to know what he's going to 148 00:06:54,000 --> 00:06:56,669 do when this, uh, delay is over. 149 00:06:56,760 --> 00:07:00,000 And even if you eat breakfast with him, you know, whoever gets up right 150 00:07:00,000 --> 00:07:02,909 after breakfast is gonna have, you know, a totally different story. 151 00:07:03,150 --> 00:07:03,719 Yeah. 152 00:07:04,500 --> 00:07:06,270 I mean, honestly, like. 153 00:07:06,855 --> 00:07:08,805 Leaving entertainment value aside. 154 00:07:09,495 --> 00:07:11,325 What are we doing here? 155 00:07:11,325 --> 00:07:14,594 How do we think about this from actually taking action? 156 00:07:15,285 --> 00:07:19,065 And it's really getting back to this notion of uncertainty and, and 157 00:07:19,065 --> 00:07:21,045 what effects have already happened. 158 00:07:21,795 --> 00:07:24,885 And I can tell you that the effects that have already happened is we've seen a 159 00:07:24,885 --> 00:07:28,965 massive whiplash in the inventory cycle. 160 00:07:29,505 --> 00:07:33,105 So companies are struggling to figure out what the hell is going on. 161 00:07:33,855 --> 00:07:34,395 Um. 162 00:07:35,085 --> 00:07:38,325 And that uncertainty obviously hasn't gone away because you've had this 163 00:07:38,325 --> 00:07:42,405 moratorium and, uh, the deadline is coming up and no one knows. 164 00:07:42,495 --> 00:07:48,825 So, um, on this kind of constant refrain of the only certainty is uncertainty. 165 00:07:48,854 --> 00:07:54,284 I mean, that's still in play and it's even a more, it's emphasized more now in, in 166 00:07:54,284 --> 00:08:00,344 light of this, uh, recent conflict, um, supply chain managers all over the world, 167 00:08:00,375 --> 00:08:03,765 even if it's unlikely that the straight of four moves would've been closed. 168 00:08:04,065 --> 00:08:08,205 Everyone has had to scramble and figure out what do we do if x, 169 00:08:08,205 --> 00:08:09,855 y, and Z scenarios should happen? 170 00:08:10,725 --> 00:08:14,265 Um, so the, the way to think of this is sort of a, an absorption 171 00:08:14,265 --> 00:08:19,185 of mental capacity, uh, by people who have to make decisions. 172 00:08:19,845 --> 00:08:22,995 And that's bad because we are already straining that with everything that's 173 00:08:22,995 --> 00:08:24,465 gone on in the last six months. 174 00:08:24,465 --> 00:08:28,305 And all the data that's showing that sort of, you know, investment 175 00:08:28,425 --> 00:08:30,585 demand, leading indicators are. 176 00:08:31,200 --> 00:08:35,970 Our weakening, um, residential investment has been not good. 177 00:08:36,450 --> 00:08:38,880 Commercial investment has been really coming off the boil. 178 00:08:39,059 --> 00:08:45,480 The programs, uh, ARPA and the, um, infra infrastructure, uh, uh, 179 00:08:45,480 --> 00:08:50,010 investment and jobs acts programs are sort of, one of them is completely 180 00:08:50,010 --> 00:08:52,830 through the pipe and the other one is really getting through the pipe. 181 00:08:52,830 --> 00:08:54,660 So those tailwinds are, are weakening. 182 00:08:55,650 --> 00:08:56,280 Um. 183 00:08:56,970 --> 00:09:01,590 And you just add all this on, on top of everything else, there's, 184 00:09:01,590 --> 00:09:02,640 it's not a great environment. 185 00:09:03,300 --> 00:09:08,040 Um, especially when you take into account sort of the AI situation 186 00:09:08,610 --> 00:09:13,530 really having been this huge tailwind and now where's it gonna go? 187 00:09:13,530 --> 00:09:15,780 I mean, recent data points have been bullish again, um, 188 00:09:18,300 --> 00:09:19,770 but the risk reward is not great. 189 00:09:20,625 --> 00:09:23,535 You know, you have Larry Ellison coming out last week and saying, we 190 00:09:23,535 --> 00:09:28,485 are going to own and operate more cloud infrastructure than all of our 191 00:09:28,485 --> 00:09:30,615 hyperscaler competitors combined. 192 00:09:30,765 --> 00:09:30,855 Mm-hmm. 193 00:09:31,095 --> 00:09:34,245 Like, does that sound like a comment that someone says at the top of the 194 00:09:34,245 --> 00:09:38,775 cycle or at the bottom of the cycle, you know, like you get data points 195 00:09:38,805 --> 00:09:44,115 like that coming through, but all tolds, you know, it's a time to be 196 00:09:44,115 --> 00:09:48,525 cautious and to pick your spots wisely, and that that hasn't really changed. 197 00:09:49,755 --> 00:09:52,425 Jacob Shapiro: Did you see your boy, uh, Paul Tudor Jones's kind 198 00:09:52,425 --> 00:09:54,405 of out there, comments, well, maybe they're not out there. 199 00:09:54,464 --> 00:09:57,915 His comments on artificial intelligence, he said, um, here, 200 00:09:58,094 --> 00:09:59,354 lemme get the quote in front of me. 201 00:09:59,895 --> 00:10:03,614 Uh, there's a 10% chance in the next 20 years that AI will destroy 202 00:10:03,614 --> 00:10:07,094 50% of humanity knows his quote. 203 00:10:07,785 --> 00:10:12,255 Uh, he also, he also by the way, is saying he thinks that like, uh, that. 204 00:10:13,010 --> 00:10:16,640 President Trump is not gonna deescalate, uh, trade tensions with China at all. 205 00:10:16,670 --> 00:10:19,670 And that like the mark that markets are in for sort of a rude 206 00:10:19,670 --> 00:10:20,960 awakening about US China ties. 207 00:10:20,960 --> 00:10:21,620 I'm not quite sure. 208 00:10:21,620 --> 00:10:23,870 I I agree with that so much, but I, I know you like him. 209 00:10:23,875 --> 00:10:27,740 I, I also wanted to ask, 'cause I feel like everybody before the, the war 210 00:10:27,740 --> 00:10:31,580 started was talking about this and I was arguing about, uh, with Marco about 211 00:10:31,580 --> 00:10:34,880 this every time I did an interview this week, even on Israel, a run, I would 212 00:10:34,880 --> 00:10:38,150 get this question towards the end of the interview about, about the one 213 00:10:38,150 --> 00:10:41,000 big beautiful bill in spending, but also specifically about the deficit. 214 00:10:41,714 --> 00:10:42,405 And about the debt. 215 00:10:42,405 --> 00:10:44,324 And I know we've talked about it a little bit before, but I don't think 216 00:10:44,324 --> 00:10:45,915 we've framed it in quite the way. 217 00:10:45,915 --> 00:10:48,974 I'm about to frame it to you, which is I keep on getting the question 218 00:10:49,364 --> 00:10:52,995 from people who are trying to read positivity into the one big, beautiful 219 00:10:52,995 --> 00:10:56,984 bill saying, look like spending is actually not gonna be that much. 220 00:10:56,984 --> 00:11:00,224 Like they started with 10, they were gonna add 10 to 15 trillion. 221 00:11:00,525 --> 00:11:03,645 They're really just gonna add a couple of trillion and they're 222 00:11:03,645 --> 00:11:05,055 starting to cut entitlements. 223 00:11:05,055 --> 00:11:07,245 And isn't this a sign that actually like. 224 00:11:07,640 --> 00:11:10,670 Um, you know, this is the last gasp of populism, but there's gonna have 225 00:11:10,670 --> 00:11:13,790 to be fiscal conservatism from here, and that's gonna affect everything 226 00:11:13,790 --> 00:11:16,069 from, you know, the dollar to treasury yields, things like that. 227 00:11:16,520 --> 00:11:17,569 That doesn't rain True. 228 00:11:17,660 --> 00:11:18,949 It hasn't rung true for me. 229 00:11:18,949 --> 00:11:21,500 I keep on saying like, okay, like you're, you're still 230 00:11:21,500 --> 00:11:22,850 talking about adding trillions. 231 00:11:22,850 --> 00:11:25,680 I. And if you look at the breakdown of when spending is happening, like 232 00:11:25,680 --> 00:11:28,920 there's gonna be increases in spending up until the end of Trump's second 233 00:11:28,920 --> 00:11:32,340 term, and all the decreases are supposed to happen after he leaves. 234 00:11:32,340 --> 00:11:34,500 And the next president's just gonna be like, yeah, sure. 235 00:11:34,500 --> 00:11:38,190 I'm gonna inherit a plan from Trump and follow that to a t and not spend 236 00:11:38,190 --> 00:11:40,680 money to make my constituents happy. 237 00:11:41,100 --> 00:11:45,030 Um, but I, I do kind of feel like when we're thinking about, I keep on going 238 00:11:45,030 --> 00:11:48,840 back to this metaphor too of, of, of the United States today as sort of where. 239 00:11:49,600 --> 00:11:53,770 Um, the United Kingdom was in the late 17 hundreds, not quite as dire. 240 00:11:53,770 --> 00:11:55,960 It's not like the United States has lost the equivalent. 241 00:11:56,775 --> 00:11:58,845 Of the 13 colonies in a failed war. 242 00:11:58,845 --> 00:12:02,115 And it's not like there's a Napoleonic empire that's rising on the continent 243 00:12:02,115 --> 00:12:03,165 that's directly threatening. 244 00:12:03,495 --> 00:12:07,335 But I like the comparison because it does seem like the UK was over its skis a 245 00:12:07,335 --> 00:12:11,925 little bit and over confident and IT and UK debt like was starting to get, I think 246 00:12:11,955 --> 00:12:14,325 upwards of 200% of GDP at that moment. 247 00:12:14,325 --> 00:12:18,555 And it really metabolized that over the course of the next century after beating 248 00:12:18,555 --> 00:12:20,805 Napoleon and colonizing India and. 249 00:12:21,300 --> 00:12:22,079 And things like that. 250 00:12:22,079 --> 00:12:26,430 So that's a really long-winded way of winding up to how do you approach, like, 251 00:12:26,910 --> 00:12:29,790 like when I'm on my next interview and somebody says, well, don't you think 252 00:12:29,790 --> 00:12:32,699 that the one big beautiful bill is actually more fiscally conservative 253 00:12:32,699 --> 00:12:33,959 than markets we're expecting? 254 00:12:33,959 --> 00:12:36,270 And that like, maybe we've turned a corner on the debt. 255 00:12:36,270 --> 00:12:38,729 And, and how do you work that into some of the things that we're talking about? 256 00:12:39,240 --> 00:12:39,839 I shoot. 257 00:12:40,979 --> 00:12:46,229 Rob Larity: Um, to start with the UK comparison, I think this is 258 00:12:46,229 --> 00:12:48,359 really appropriate and it gets into. 259 00:12:49,005 --> 00:12:53,714 The question that you asked, which is I think the UK was fundamentally different 260 00:12:53,714 --> 00:12:59,474 than the US is today in the sense that the UK was run by hard money elites. 261 00:12:59,895 --> 00:13:04,155 And you know that because after they defeated Napoleon, the next 20 years 262 00:13:04,155 --> 00:13:10,094 were absolutely miserable in the UK because they ran a, a deflationary, like 263 00:13:10,094 --> 00:13:16,604 a fiscal deflationary policy to back the pound and get it back in terms of 264 00:13:16,604 --> 00:13:18,165 gold backing to where it needed to be. 265 00:13:18,750 --> 00:13:22,710 And they just absolutely bit the bullet in terms of growth recession. 266 00:13:23,190 --> 00:13:26,700 Um, it was, it was a miserable time. 267 00:13:26,790 --> 00:13:30,000 And the only reason they could do that was because the people who controlled 268 00:13:30,000 --> 00:13:34,050 the power were, were the elites who had a vested interest in that. 269 00:13:34,980 --> 00:13:37,140 The US is not in that situation today. 270 00:13:37,145 --> 00:13:41,670 The elites are not, um, effectively debtors. 271 00:13:42,210 --> 00:13:45,330 Um, some of them are, but most elites own mostly equity. 272 00:13:45,990 --> 00:13:46,320 Um. 273 00:13:47,145 --> 00:13:49,515 And the incentives are different and they don't have the power, 274 00:13:49,665 --> 00:13:52,035 like as much as you like to think, like, oh, the rich run everything. 275 00:13:52,094 --> 00:13:53,084 Like they really don't. 276 00:13:53,745 --> 00:13:57,344 Um, and you can see this at the ballot box. 277 00:13:57,344 --> 00:14:03,375 There's, there's not a popular mandate to go out and cut spending and balance 278 00:14:03,375 --> 00:14:05,625 budget because there's not been pain. 279 00:14:05,865 --> 00:14:11,025 Like, yes, we had some, uh, inflationary pain in the last few years, which we 280 00:14:11,025 --> 00:14:12,885 haven't experienced for a very long time. 281 00:14:13,425 --> 00:14:15,255 It hasn't really been about. 282 00:14:15,810 --> 00:14:18,390 Runaway budget deficits and inflation because of that. 283 00:14:18,390 --> 00:14:19,890 Like, that's something that's more nascent. 284 00:14:20,490 --> 00:14:23,880 So without that incentive, it's hard to see why. 285 00:14:23,910 --> 00:14:24,209 Okay. 286 00:14:24,209 --> 00:14:28,859 Like some, uh, moving around deck, uh, deck shares on the Titanic of the 287 00:14:29,040 --> 00:14:31,410 one big beautiful bill or whatever. 288 00:14:32,130 --> 00:14:36,660 Um, without a change in those incentives, I don't think I would ever 289 00:14:36,660 --> 00:14:39,630 take this side of the argument that. 290 00:14:40,230 --> 00:14:42,390 Oh, we're moving into fiscal rectitude. 291 00:14:42,510 --> 00:14:45,540 Like, why, why would anyone who's a self-respecting politician 292 00:14:45,540 --> 00:14:46,890 do that in this environment? 293 00:14:46,890 --> 00:14:50,370 You're not gonna be rewarded for it, and if you try it, you'll be booted out. 294 00:14:51,330 --> 00:14:55,950 Um, you know, we were looking, uh, I, I did some work on Japan just to 295 00:14:55,950 --> 00:14:59,790 catch up of what's going on, and I was reading and, and looking at what 296 00:14:59,790 --> 00:15:04,830 happened in 2010 when the DPJ finally came into power for the first time. 297 00:15:05,370 --> 00:15:06,480 You know, ever. 298 00:15:07,214 --> 00:15:10,964 And they came into power on a fiscal conservatism policy. 299 00:15:11,025 --> 00:15:13,365 And they, and the, the leader of the DPJ at the time said, 300 00:15:13,365 --> 00:15:14,714 we don't wanna become Greece. 301 00:15:15,194 --> 00:15:17,474 We're going to raise taxes and balance the budget. 302 00:15:18,045 --> 00:15:19,755 You know, how long they were in power. 303 00:15:20,175 --> 00:15:21,854 And, you know, for a lot of reasons. 304 00:15:22,395 --> 00:15:27,885 But the point is, even, even when it looks like to smart people, oh, 305 00:15:27,890 --> 00:15:30,104 like this is a runaway deficit. 306 00:15:30,435 --> 00:15:32,204 These are like income. 307 00:15:32,595 --> 00:15:37,335 I'm sorry, interest payment levels that are ballooning and gobbling up 308 00:15:37,635 --> 00:15:44,295 X percentage of our budget, um, until you get that feet on the ground, pain 309 00:15:44,295 --> 00:15:48,105 coming out of that, like historically, you just don't see people stepping 310 00:15:48,105 --> 00:15:51,765 in to fix it unless you have an elite driven society where people 311 00:15:51,825 --> 00:15:55,965 are taking a far reaching sort of approach to this and they have the. 312 00:15:56,520 --> 00:16:01,170 Incentives to protect the currency because they have a stake in that currency and 313 00:16:01,170 --> 00:16:02,370 you just don't have any of that today. 314 00:16:02,834 --> 00:16:03,135 Jacob Shapiro: Yeah. 315 00:16:04,005 --> 00:16:06,224 Um, why don't, why don't we back into Japan a little bit? 316 00:16:06,224 --> 00:16:10,155 'cause, um, I think that's also a, a good place to think about what's going on. 317 00:16:10,155 --> 00:16:13,185 And also because this is, I mean, I won't say the media isn't covering it. 318 00:16:13,189 --> 00:16:16,094 I, I actually think the media has done an okay, okay, job here. 319 00:16:16,094 --> 00:16:19,665 But it's not like anybody has the attention to go to, like some of 320 00:16:19,665 --> 00:16:21,645 the more boring things that are happening in the world when you've 321 00:16:21,645 --> 00:16:23,265 got all this kinetic action happening. 322 00:16:23,685 --> 00:16:26,295 Um, but we've been talking about it now for a while. 323 00:16:26,400 --> 00:16:30,569 Um, which is that there are problems in the US um, Japan relationship, like 324 00:16:30,750 --> 00:16:33,780 before the war started, remember that the United States was making progress with 325 00:16:33,780 --> 00:16:36,930 China and London over trade negotiations. 326 00:16:36,930 --> 00:16:38,910 They were making no progress with Japan. 327 00:16:38,910 --> 00:16:41,280 They've had five different consultations with Japan. 328 00:16:42,449 --> 00:16:44,069 I. The Japanese officials have basically said they're no, they're 329 00:16:44,069 --> 00:16:46,290 nowhere close to any common ground. 330 00:16:46,319 --> 00:16:49,920 There was that Wall Street Journal report that you had multiple US officials 331 00:16:49,920 --> 00:16:53,490 literally disagreeing with each, uh, disagreeing with each other in front 332 00:16:53,490 --> 00:16:56,550 of a Japanese trade delegation so that the Japanese aren't even really 333 00:16:56,550 --> 00:16:58,650 clear what the United States wants. 334 00:16:58,890 --> 00:17:01,079 Um, and apparently that's not just related to trade. 335 00:17:01,410 --> 00:17:03,395 Um, so there was supposed to be a two plus two. 336 00:17:04,274 --> 00:17:04,724 Meeting. 337 00:17:04,724 --> 00:17:09,494 So that's meetings of top uh, you know, the, the defense secretary and the, um, 338 00:17:10,155 --> 00:17:13,815 secretary of State in the United States Foreign Foreign Minister in, um, in Japan. 339 00:17:13,815 --> 00:17:15,135 So a two plus two arrangement. 340 00:17:15,194 --> 00:17:17,504 And that meeting was abruptly canceled. 341 00:17:17,504 --> 00:17:18,764 It was supposed to be July 1st. 342 00:17:18,764 --> 00:17:19,905 The Japanese canceled it. 343 00:17:20,264 --> 00:17:22,935 Um, you had Financial Times reporting that at least some of 344 00:17:22,935 --> 00:17:26,984 that was because the United States made a new demand about how much. 345 00:17:27,470 --> 00:17:31,490 Defense spending as a percent of GDP Japan needed to do, asking 346 00:17:31,520 --> 00:17:34,100 Japan to hike it to 3.5% of GDP. 347 00:17:34,100 --> 00:17:38,630 At least that though, apparently, was something that Elbridge Kolby, who's 348 00:17:38,630 --> 00:17:42,800 at the Defense Department, was pushing where it wasn't what Rubio was pushing. 349 00:17:42,800 --> 00:17:44,090 It wasn't what Heg says was pushing. 350 00:17:44,090 --> 00:17:46,370 So again, the Japanese are like, we don't know. 351 00:17:46,370 --> 00:17:48,679 What you want, like you keep on giving us mixed signals. 352 00:17:48,679 --> 00:17:49,550 So they canceled that. 353 00:17:50,090 --> 00:17:54,050 And then, um, there's a NATO summit coming up and President Trump had 354 00:17:54,050 --> 00:17:58,550 been looking for Japan, Australia, New Zealand, maybe South Korea to attend. 355 00:17:58,550 --> 00:18:02,300 Maybe on the sidelines you can feel the US establishment trying to make NATO 356 00:18:02,300 --> 00:18:04,370 from just an anti-Soviet alliance, which. 357 00:18:04,855 --> 00:18:07,465 It doesn't really work anymore because Soviet Union's gone, uh, 358 00:18:07,465 --> 00:18:09,175 into maybe an anti-China alliance. 359 00:18:09,595 --> 00:18:15,145 Um, and Prime Minister Ishiba, uh, abruptly said, I'm not gonna come. 360 00:18:15,175 --> 00:18:18,025 I'm gonna send somebody else in my place, but I'm not really. 361 00:18:18,915 --> 00:18:20,085 Um, we're gonna be there. 362 00:18:20,415 --> 00:18:22,725 Um, and you know, you could say maybe that's nothing. 363 00:18:22,935 --> 00:18:27,105 The foreign ministry in Tokyo cited various circumstances, which I don't 364 00:18:27,105 --> 00:18:28,965 know, to me that's Japanese diplomatic. 365 00:18:28,965 --> 00:18:30,795 Speak for go fuck yourself. 366 00:18:30,795 --> 00:18:31,875 Like, we're not gonna do this. 367 00:18:32,325 --> 00:18:33,975 Uh, but maybe I'm reading too much into it. 368 00:18:34,305 --> 00:18:37,665 Um, but this is arguably, like the US is closest ally in Asia. 369 00:18:38,280 --> 00:18:41,220 It's a country that is completely depen, well, I won't say completely 370 00:18:41,220 --> 00:18:44,430 dependent, but highly dependent on the United States in its security 371 00:18:44,430 --> 00:18:48,284 relationship, has a lot of different trade linkages, um, with the United 372 00:18:48,284 --> 00:18:49,590 States that it can't afford to deal with. 373 00:18:49,590 --> 00:18:52,080 And yet it's made little to no progress on trade. 374 00:18:52,320 --> 00:18:54,660 The security relationship looks like it's unraveling. 375 00:18:54,660 --> 00:18:58,920 Prime Minister Ishiba, uh, sort of, I mean, looks like he doesn't wanna 376 00:18:58,920 --> 00:19:00,330 do anything with President Trump. 377 00:19:00,360 --> 00:19:03,570 And certainly, uh, to, to paraphrase, uh. 378 00:19:03,760 --> 00:19:04,810 Dave Chappelle joke. 379 00:19:04,810 --> 00:19:07,899 I mean, Japan didn't even send PlayStations for this attack on Iran. 380 00:19:07,899 --> 00:19:10,360 They basically like didn't say anything at all. 381 00:19:10,360 --> 00:19:13,689 Uh, juxtaposed that with the uk, which was trying to get out there and show 382 00:19:13,689 --> 00:19:15,010 that maybe they'd be willing to help. 383 00:19:15,010 --> 00:19:19,389 So, um, that, that's the lead in to just say as all these things are happening, 384 00:19:19,389 --> 00:19:23,919 like we've got like real flashing yellow or red signals between the United 385 00:19:23,919 --> 00:19:25,419 States and one of its closest allies. 386 00:19:25,419 --> 00:19:27,040 So what direction do you wanna take that, Rob? 387 00:19:27,250 --> 00:19:29,469 Rob Larity: I think Japan is one of the most interesting places in 388 00:19:29,469 --> 00:19:32,740 the world right now, and I think that even more after having spent. 389 00:19:33,045 --> 00:19:37,395 A day or two really thinking about this and brushing up on what's going on. 390 00:19:38,115 --> 00:19:41,985 And I want to kind of explore an early thesis that could 391 00:19:41,985 --> 00:19:43,245 end up being kind of stupid. 392 00:19:43,905 --> 00:19:45,435 Um, but it's also kind of provocative. 393 00:19:45,465 --> 00:19:48,915 So I, I was really boring before, so I'll be a little more, a 394 00:19:48,915 --> 00:19:50,685 little more, uh, out there here. 395 00:19:52,425 --> 00:19:57,835 But I. I agree the signals between Japan and the US seem to be 396 00:19:57,835 --> 00:19:59,395 more than just the normal noise. 397 00:19:59,395 --> 00:20:04,555 It seems to be some kind of fundamental shift, um, maybe taking place in terms 398 00:20:04,555 --> 00:20:05,875 of the relationship between the two. 399 00:20:05,875 --> 00:20:09,235 And, and this is something we've talked about, you know, for the last four or 400 00:20:09,235 --> 00:20:12,235 five years, like ever since we started talking to each other, this was one 401 00:20:12,265 --> 00:20:13,705 of our big things we were watching. 402 00:20:14,725 --> 00:20:15,835 And, um, 403 00:20:17,935 --> 00:20:21,625 when I look at the numbers in Japan, the thing that really. 404 00:20:22,590 --> 00:20:31,170 Jumps out to me is that Japan's outward investment, not portfolio investment, 405 00:20:31,170 --> 00:20:34,170 but fixed, uh, capital investment. 406 00:20:34,170 --> 00:20:40,350 So FDI has absolutely exploded in the last five or six years. 407 00:20:41,280 --> 00:20:42,150 Absolutely exploded. 408 00:20:42,150 --> 00:20:51,180 I mean, if you look in 2015, Japan had, uh, 150. 409 00:20:52,230 --> 00:20:56,100 Uh, trillion Yen of outward investment. 410 00:20:56,100 --> 00:20:59,790 That's, it's like 1.5 trillion US dollars. 411 00:21:00,510 --> 00:21:05,730 If you were to look today, that's more than doubled in that time. 412 00:21:06,525 --> 00:21:13,485 So, uh, the visual image here is just a giant fire hose of capital leaving 413 00:21:13,485 --> 00:21:16,545 Japan to build factories and facilities. 414 00:21:16,965 --> 00:21:18,105 And I did some work on this. 415 00:21:18,105 --> 00:21:21,435 I mean, a lot of this is going into the US with the battery supply chains 416 00:21:21,435 --> 00:21:24,795 and things like that, but a lot of it is also going into Southeast Asia. 417 00:21:25,485 --> 00:21:28,965 And, um, the numbers that I saw suggested that Japan's outward 418 00:21:28,965 --> 00:21:34,335 investment into Thailand and India in the last few years has each exceeded 419 00:21:34,335 --> 00:21:35,895 its outward investment into China. 420 00:21:37,035 --> 00:21:41,535 Um, which I find really, really interesting because like, here 421 00:21:41,535 --> 00:21:45,975 comes the controversial part, like whenever Japan has felt threatened. 422 00:21:47,055 --> 00:21:48,884 Um, by the United States. 423 00:21:49,155 --> 00:21:53,145 I mean, the last time this happened, if we just rewind the history books, it turned 424 00:21:53,145 --> 00:21:58,095 to Southeast Asian colonies, essentially to overcome its lack of what it has at 425 00:21:58,095 --> 00:22:01,005 home, which is people and energy and food. 426 00:22:02,055 --> 00:22:07,215 And if you look like really behind the boring numbers that 427 00:22:07,215 --> 00:22:10,575 I'm citing, this looks to me like a very similar kind of response. 428 00:22:11,310 --> 00:22:13,380 It's not top down driven, I don't think. 429 00:22:13,380 --> 00:22:15,090 Like I don't know enough about what's going on. 430 00:22:15,090 --> 00:22:18,600 I haven't dug into this from a policy standpoint to see how 431 00:22:18,600 --> 00:22:22,590 intertwined the actual LDP is with businesses that are doing this. 432 00:22:23,220 --> 00:22:27,630 But in any event, Japanese businesses are responding to what's going on 433 00:22:28,260 --> 00:22:30,120 with gusto, and this is accelerating. 434 00:22:30,360 --> 00:22:31,950 Like this isn't just a long-term trend. 435 00:22:31,950 --> 00:22:33,360 This is going exponential. 436 00:22:34,110 --> 00:22:39,300 So the upshot is like everyone always talks about how Japan's GDP, easy to. 437 00:22:40,455 --> 00:22:40,725 Right. 438 00:22:40,725 --> 00:22:48,225 So in 2015, Japan had 4.4 trillion of GDP in US dollars. 439 00:22:49,995 --> 00:22:52,814 Fast forward to 23, it was 4.2 trillion. 440 00:22:53,385 --> 00:22:57,615 So in eight years, GBP went down a little bit according to these 441 00:22:57,615 --> 00:23:03,165 numbers and all in US dollars, GNP, which is national product. 442 00:23:03,195 --> 00:23:07,215 So remember every, no one ever pays attention to GNP 'cause unless you're 443 00:23:07,215 --> 00:23:08,895 looking at a weird country like Ireland. 444 00:23:08,895 --> 00:23:10,455 It's always pretty close. 445 00:23:11,925 --> 00:23:15,585 But that's not the case with Japan, and it's increasingly diverging in a huge way. 446 00:23:16,155 --> 00:23:23,565 So GNP in 15 was 5.4 trillion, so it's 5.4 against 4.4 today. 447 00:23:23,985 --> 00:23:28,965 While GDP has gone down a little bit, GNP has gone from 5.4 to 6.6. 448 00:23:29,445 --> 00:23:33,945 So you've seen over, you know, roughly 20%, uh, growth in 449 00:23:33,945 --> 00:23:36,735 Japan's national products. 450 00:23:36,735 --> 00:23:40,425 So this includes the stuff that Japanese companies are producing not on 451 00:23:40,425 --> 00:23:43,335 Japanese soil in that eight year period. 452 00:23:44,070 --> 00:23:48,720 That is a completely different story than the common narrative 453 00:23:48,780 --> 00:23:50,370 of Japanese stagnation. 454 00:23:50,820 --> 00:23:50,910 Mm-hmm. 455 00:23:51,150 --> 00:23:55,050 Jap Japan is stagnating in, you know, in GDP terms, however you wanna define 456 00:23:55,050 --> 00:23:57,570 that purely on the domestic front. 457 00:23:58,050 --> 00:24:02,820 But this is a really interesting element, and I haven't dug too deep into this, but 458 00:24:02,820 --> 00:24:07,080 if you start teasing out the amount of income that those assets are now throwing 459 00:24:07,080 --> 00:24:10,350 off, it's an extraordinary amount. 460 00:24:10,785 --> 00:24:15,465 Of foreign currency based earnings and how that plays into sort 461 00:24:15,465 --> 00:24:17,265 of the balance sheet set up. 462 00:24:17,685 --> 00:24:21,945 You know, how Japan might intervene into the yen or you might have these 463 00:24:22,185 --> 00:24:26,475 compiling effects where if the yen, uh, begins to strengthen, that could 464 00:24:26,475 --> 00:24:31,245 be a self-reinforcing sort of process because you have this huge, you know, 465 00:24:31,245 --> 00:24:33,345 net positive international position. 466 00:24:34,065 --> 00:24:38,355 Um, there's a lot to tease out here, but that's my sort of initial. 467 00:24:39,450 --> 00:24:43,410 Fun way to think about it is like, is this the Japanese up empire? 468 00:24:43,410 --> 00:24:48,720 Just much nicer and, and not, you know, not with all the slavery and stuff. 469 00:24:50,970 --> 00:24:51,330 Jacob Shapiro: Yeah. 470 00:24:51,750 --> 00:24:54,930 Uh, without all the slavery and stuff, it was by, by the way, go back and if you 471 00:24:54,930 --> 00:24:58,050 go, like, go back and read the history of what Japan was doing even before 472 00:24:58,050 --> 00:25:02,220 like World War ii, like what Japan did on the Korean Peninsula in the 1920s. 473 00:25:02,220 --> 00:25:05,820 And, um, I mean, it's, yeah, it's, it's terrible. 474 00:25:05,820 --> 00:25:06,930 There are apologists for it. 475 00:25:06,930 --> 00:25:10,620 And the same way that Neil Ferguson is an apologist for, uh, the British Empire. 476 00:25:10,620 --> 00:25:14,010 And, and by the way, like, I mean, he has some points like, you know, the 477 00:25:14,010 --> 00:25:18,120 British Empire brought civilization and education and lots of, you know, uh. 478 00:25:18,840 --> 00:25:21,990 Public sanitation, lots of different things that were like really good, but 479 00:25:21,990 --> 00:25:25,530 like at the cost of you need to give up like central parts of your identity. 480 00:25:25,530 --> 00:25:29,670 Like the Japanese literally thought of the, of the Koreans as like lesser 481 00:25:29,670 --> 00:25:32,100 evolved forms of Japanese people. 482 00:25:32,100 --> 00:25:35,070 So they just needed to like evolve really quickly into the Japanese 483 00:25:35,070 --> 00:25:36,150 people that they could become. 484 00:25:36,150 --> 00:25:38,790 So that meant, you know, you don't get to speak the Korean language and you 485 00:25:38,790 --> 00:25:41,430 need to be taught like basics of modern. 486 00:25:41,430 --> 00:25:42,840 So anyway, I'm, I'm going off there. 487 00:25:42,840 --> 00:25:43,290 So do you. 488 00:25:43,800 --> 00:25:45,330 I mean, this is an impossible question to ask. 489 00:25:45,330 --> 00:25:47,670 You're probably just gonna throw it back at me, but I mean, do you think there'd 490 00:25:47,670 --> 00:25:54,060 be problems in the US Japan relationship even if, um, Trump hadn't been elected 491 00:25:54,060 --> 00:25:55,290 and we were seeing some of these things? 492 00:25:55,290 --> 00:25:59,310 I mean, Joe Biden was, uh, the Biden administration was not for that. 493 00:25:59,310 --> 00:26:02,730 Uh, uh, I'm forgetting the steel company's name, but remember they were. 494 00:26:02,735 --> 00:26:06,004 Making a big stink about a Japanese steel company not acquiring US 495 00:26:06,004 --> 00:26:07,564 steel for national security reasons. 496 00:26:07,564 --> 00:26:10,594 And Japan was like, you're supposed to be the liberal internationalist one. 497 00:26:10,594 --> 00:26:11,915 Like, what are you, what are you talking about? 498 00:26:11,915 --> 00:26:14,344 You're worried about not getting your, your steel from us. 499 00:26:14,344 --> 00:26:17,645 So I, I just wonder if maybe some of this US Japan tension was already, 500 00:26:18,064 --> 00:26:22,534 was already baked in and maybe Trump is like, uh, accelerating it 501 00:26:22,534 --> 00:26:24,784 or making it a little more bare. 502 00:26:24,784 --> 00:26:27,935 And I think Ishiba personality and his success so far has 503 00:26:27,935 --> 00:26:29,014 something to do with that too. 504 00:26:29,104 --> 00:26:29,824 But, um. 505 00:26:30,450 --> 00:26:31,380 Yeah, I think it probably, 506 00:26:31,530 --> 00:26:34,830 Rob Larity: I think it probably accelerates it, but this was going 507 00:26:34,830 --> 00:26:41,400 on first, you know, it really started to accelerate during Trump won, 508 00:26:42,000 --> 00:26:43,740 and maybe that was a key factor. 509 00:26:43,740 --> 00:26:48,570 But I mean, my instinct is to say that this is largely bottom up economic 510 00:26:48,870 --> 00:26:52,440 logic at work, that you have Japanese companies that have been historically 511 00:26:52,440 --> 00:26:58,410 sitting on a ton of capital without a strong incentive to invest it. 512 00:26:59,024 --> 00:27:05,085 Something has switched in that incentive structure where now you're seeing really 513 00:27:05,085 --> 00:27:09,735 strong growth in investment even though they've, they've determined that they 514 00:27:09,735 --> 00:27:14,534 can't or don't want to locate that in Japan, whether that's because the 515 00:27:14,534 --> 00:27:18,495 workers aren't available, whether that's because domestic policies just aren't 516 00:27:18,554 --> 00:27:21,554 favorable, you know, whatever it is. 517 00:27:21,554 --> 00:27:24,705 I think it's probably mostly that just kind of. 518 00:27:25,485 --> 00:27:29,715 Seeing the opportunity, seeing in some sense kind of the all clear to 519 00:27:29,715 --> 00:27:33,735 cope, do this and take advantage of it in a way that wasn't there before. 520 00:27:34,485 --> 00:27:37,485 Um, maybe it's a rising confidence by Japanese companies. 521 00:27:37,485 --> 00:27:41,175 I, I don't know exactly, and that's a, an area that I think we have to 522 00:27:41,175 --> 00:27:45,585 really think about more carefully and, and do some additional research. 523 00:27:46,065 --> 00:27:48,765 But I think the two things combine that. 524 00:27:49,620 --> 00:27:53,639 Fear isn't a great accelerant, but fear and greed together are 525 00:27:53,639 --> 00:27:55,260 always gonna be much more powerful. 526 00:27:56,310 --> 00:27:57,780 Jacob Shapiro: I think some of the lessons too, from. 527 00:27:58,784 --> 00:28:01,935 From a lot of the recent conflicts that we've seen in the last six months, 528 00:28:01,935 --> 00:28:06,105 whether it's Ukraine's drone assault on Russian strategic air assets, or 529 00:28:06,105 --> 00:28:09,615 whether it's Israel bombing Iran, even aspects of the India Pakistan war, 530 00:28:10,004 --> 00:28:13,395 like one of the reasons people are not afraid of Japan is they think of Japan 531 00:28:13,395 --> 00:28:15,825 as this, you know, graying population. 532 00:28:15,825 --> 00:28:17,685 Super old demographics are against it. 533 00:28:17,685 --> 00:28:21,855 There's no way they're gonna be able to project force across all of East Asia. 534 00:28:22,534 --> 00:28:23,074 I don't know. 535 00:28:23,074 --> 00:28:26,554 We're seeing that if you've got superior technology and a superior, a 536 00:28:26,554 --> 00:28:30,245 superior level of industrial expertise and things like that, that maybe you 537 00:28:30,245 --> 00:28:32,524 can punch greatly above your weight. 538 00:28:32,524 --> 00:28:34,715 So if Israel can do it, it just did to Iran. 539 00:28:35,104 --> 00:28:37,865 Um, like I don't think Japan is gonna resort to this and there would 540 00:28:37,865 --> 00:28:40,655 have to be a similar cultural sea change in how they're approaching 541 00:28:40,655 --> 00:28:43,895 things if they were gonna have the stick to back up the carrot. 542 00:28:43,925 --> 00:28:46,895 But, um, I think, I think we do have to re. 543 00:28:47,254 --> 00:28:49,865 Reassess some of our assumptions about what is possible from a 544 00:28:49,865 --> 00:28:54,185 security standpoint, because Japan has plenty of resources. 545 00:28:54,185 --> 00:28:58,325 If it really wanted to, to engage in the type of modern strategic warfare 546 00:28:58,325 --> 00:29:01,775 that we're seeing, um, really, I mean, all across Eurasia right now. 547 00:29:03,125 --> 00:29:05,735 Rob Larity: Put another way now in Japan, sends PlayStations. 548 00:29:05,735 --> 00:29:06,275 They could be. 549 00:29:06,945 --> 00:29:09,465 Have wings and be packed with high explosive. 550 00:29:10,125 --> 00:29:13,035 Jacob Shapiro: Seriously, we shouldn't joke so much about that. 551 00:29:14,055 --> 00:29:16,995 Rob Larity: Um, no, but, but just to follow on on what you just said, like 552 00:29:17,265 --> 00:29:21,615 I think that's a good way to think of it is like there's lots of different 553 00:29:21,615 --> 00:29:23,805 forms of capital that a nation has. 554 00:29:23,805 --> 00:29:26,055 There's human capital, which is obvious. 555 00:29:26,355 --> 00:29:30,345 There's financial capital, there's visible capital, but then there's also 556 00:29:30,345 --> 00:29:32,625 kind of intellectual capital and I think. 557 00:29:33,135 --> 00:29:37,004 Just on the e economic side, like what we're seeing is Japan has 558 00:29:37,004 --> 00:29:40,935 this enormous base of intellectual and intangible capital that it's 559 00:29:40,935 --> 00:29:44,205 built up over the last 75 years. 560 00:29:44,745 --> 00:29:49,215 And if you can plug in human capital from other nations that have it, 561 00:29:49,784 --> 00:29:51,254 that's a very powerful engine. 562 00:29:51,945 --> 00:29:55,695 Um, you know, when you're talking about just technology or business 563 00:29:55,695 --> 00:29:59,294 organizations and how they work and how they're run process, process 564 00:29:59,294 --> 00:30:04,740 oriented sort of innovation, um, I. Japan punches well above its weight. 565 00:30:04,800 --> 00:30:09,300 So if you're sitting there thinking about like, oh, their power correlates with 566 00:30:09,300 --> 00:30:13,440 how many human beings were they, like, I think that's the right way to think about 567 00:30:13,440 --> 00:30:16,775 it, is that whole paradigm out of date. 568 00:30:18,870 --> 00:30:22,409 Jacob Shapiro: Yeah, and I mean, Japan has been a sort of small sea conservative 569 00:30:22,440 --> 00:30:27,659 country for, for decades and has really been happy to exist as a wealthy cog 570 00:30:27,659 --> 00:30:30,210 within the US led international order. 571 00:30:30,210 --> 00:30:34,110 So if that order really is gone and gosh, it feels like every single week, like 572 00:30:34,530 --> 00:30:36,300 more aspects of it are disappearing. 573 00:30:36,930 --> 00:30:40,830 Um, yeah, and, and I, and you know, Japan is not used to having its own 574 00:30:41,070 --> 00:30:42,629 sort of independent foreign policy. 575 00:30:42,629 --> 00:30:45,659 It's been a long time since they had to think of these things independently, but. 576 00:30:46,710 --> 00:30:47,730 I mean like that. 577 00:30:47,730 --> 00:30:50,520 That's why these meetings, these meeting cancellations stick out to 578 00:30:50,520 --> 00:30:53,190 me so much because it's not just anger about trade frustration. 579 00:30:53,190 --> 00:30:55,440 It's like, no, no, no, like we're not gonna meet with you if you're gonna 580 00:30:55,440 --> 00:30:58,650 treat us like this, and we're not gonna show up just for the NATO call, just 581 00:30:58,650 --> 00:31:02,010 because you say that you want us there for some of these different things. 582 00:31:04,140 --> 00:31:06,690 Rob Larity: It's kind of interesting, just going back to this notion of 583 00:31:07,200 --> 00:31:08,970 being accountable to an electorate. 584 00:31:10,470 --> 00:31:14,640 Like I would have to go back and check, but my guess would be. 585 00:31:14,985 --> 00:31:20,504 Then a, some majority in Japan was always like fairly skeptical 586 00:31:20,504 --> 00:31:24,975 of the US relationship, at least going back in more recent times. 587 00:31:25,815 --> 00:31:30,044 But Japan, you know, obviously was always very, very tight with Ru regardless. 588 00:31:30,615 --> 00:31:36,284 And now, um, again, I'm quoting from, uh, Tobias's, Tobias Harris's, 589 00:31:36,345 --> 00:31:38,415 uh, Substack, which is very good. 590 00:31:38,565 --> 00:31:39,975 And, and I would definitely recommend it. 591 00:31:39,975 --> 00:31:41,774 Jacob and I are both subscribers. 592 00:31:42,284 --> 00:31:42,345 Um. 593 00:31:43,530 --> 00:31:47,550 He was quoting some of the LA latest poll figures in there and just calling out the 594 00:31:47,550 --> 00:31:52,409 fact that, I mean, there's overwhelming majorities of Japanese that do not want 595 00:31:52,439 --> 00:31:57,899 Japan to give in to the US on this and do not want Japan to follow the US lead 596 00:31:57,929 --> 00:32:03,330 in terms of security policy and trade and all of these issues that are up to grabs. 597 00:32:03,330 --> 00:32:07,139 And, you know, ishiba, one of the, one of the things about having a 598 00:32:07,139 --> 00:32:10,649 weak government, which, like right now it's very, very weak, is. 599 00:32:11,790 --> 00:32:14,460 You ignore that and you're at your peril. 600 00:32:15,570 --> 00:32:16,590 Jacob Shapiro: Yeah, for sure. 601 00:32:17,910 --> 00:32:21,990 Um, well let's, uh, sort of the last thing that we'll we'll talk about today. 602 00:32:21,990 --> 00:32:24,480 So we got some Japan, we talk, we got some market talk. 603 00:32:24,870 --> 00:32:28,695 Um, I do, I do just want to kind of take a step back and I. Let the 604 00:32:28,695 --> 00:32:32,564 listeners inside the, the Wizard of Oz contraption here with you and me. 605 00:32:32,625 --> 00:32:34,995 'cause you and I have not caught up really since the war 606 00:32:34,995 --> 00:32:36,435 started in any meaningful sense. 607 00:32:36,435 --> 00:32:40,004 I mean, we had an investment committee call last week and we batted around 608 00:32:40,004 --> 00:32:42,945 very roughly the notion of, hey, there are these islands of stability in the 609 00:32:42,945 --> 00:32:46,245 world, in Latin America, maybe even Southeast Asia, but the Eurasian land 610 00:32:46,245 --> 00:32:50,415 mass is, is, uh, well it seems like on fire in all these different parts. 611 00:32:50,415 --> 00:32:50,685 Uh. 612 00:32:50,919 --> 00:32:54,850 Uh, mark cousin Marco said, uh, you know, on, on our other podcast there 613 00:32:54,850 --> 00:32:57,370 that, oh, but you have these Garrison states like Ukraine and Israel 614 00:32:57,370 --> 00:32:58,720 and Saudi Arabia that can do well. 615 00:32:58,720 --> 00:33:00,220 And it's like, okay, like that's cool. 616 00:33:00,220 --> 00:33:03,070 I think I'd rather be in Latin America or Singapore, uh, watching 617 00:33:03,070 --> 00:33:06,430 all this from afar rather than having my capital in the garrison state. 618 00:33:06,430 --> 00:33:08,379 But maybe, you know, people have higher risk tolerance. 619 00:33:08,379 --> 00:33:12,550 But, um, the oth the other thing, and I've never actually said these words to myself, 620 00:33:12,550 --> 00:33:13,840 but they really crystallized this week. 621 00:33:13,840 --> 00:33:16,389 'cause I kept on getting this question over and over again. 622 00:33:16,389 --> 00:33:18,010 Like, so how do you trade the war? 623 00:33:18,070 --> 00:33:19,750 Like, what, what are you guys doing? 624 00:33:20,455 --> 00:33:21,355 To trade the war. 625 00:33:21,774 --> 00:33:25,615 And, um, it's not a cop out, it's just to say like, I don't think you can use, 626 00:33:25,915 --> 00:33:27,685 I don't think you can trade geopolitics. 627 00:33:27,685 --> 00:33:32,965 Like maybe there are some asymmetric low probability, but high impact scenarios 628 00:33:32,965 --> 00:33:37,735 that we could create like a very niche strategy around, um, you know, and, and 629 00:33:37,764 --> 00:33:42,415 you and I keep that grab bag of black swan events in our, in our knowledge platform. 630 00:33:42,960 --> 00:33:46,470 You know, like EMPS and solar storms I know is one of your favorites. 631 00:33:46,470 --> 00:33:49,860 And like all, and maybe we create like some really weird positions that you 632 00:33:49,860 --> 00:33:52,410 hold for the long term thinking, you're gonna get explosive growth there. 633 00:33:52,410 --> 00:33:56,070 But I, I think that the question about trading and the way that the 634 00:33:56,070 --> 00:33:59,640 financial media has to link everything, every market, move back to something 635 00:33:59,640 --> 00:34:00,960 that is happening in the world. 636 00:34:01,530 --> 00:34:02,040 Um. 637 00:34:02,865 --> 00:34:03,075 It. 638 00:34:03,075 --> 00:34:05,235 It just doesn't give you actually any real insight. 639 00:34:05,235 --> 00:34:07,755 And I think it's more about like, yes, you have to follow 640 00:34:07,755 --> 00:34:08,685 all these things in real time. 641 00:34:08,715 --> 00:34:11,085 'cause maybe a nuke would've gone off or maybe they would've blocked 642 00:34:11,085 --> 00:34:11,895 the straight of horror moves. 643 00:34:11,895 --> 00:34:15,284 But it was never that likely that that was what, that was what was gonna happen. 644 00:34:15,284 --> 00:34:17,925 And even as the fire has been put out now, or at least there is a 645 00:34:17,925 --> 00:34:21,825 ceasefire, like all these tectonic plates that are shifting beneath us. 646 00:34:21,825 --> 00:34:23,904 They're shifting and they shift slowly. 647 00:34:23,964 --> 00:34:26,514 Like it's not like something's gonna happen and you're gonna 648 00:34:26,514 --> 00:34:30,685 get a 30% jump in your portfolio and then you're off to the races. 649 00:34:30,685 --> 00:34:33,534 But I do think we really need to be on top of like how these plates 650 00:34:33,534 --> 00:34:36,024 are shifting and what directions they go and things like that. 651 00:34:36,024 --> 00:34:38,964 So, I dunno, I'm, I'm playing around with the metaphors there, but what, 652 00:34:38,964 --> 00:34:42,594 what do you think are some lessons for, for people from the war itself and 653 00:34:42,594 --> 00:34:47,245 honestly from the first six months of what feels like a year that has just. 654 00:34:47,255 --> 00:34:49,535 Not let up so far, and I, I don't think it's gonna change. 655 00:34:49,535 --> 00:34:53,585 Like, I don't think we're going towards like a peaceful, more norm normal cadence. 656 00:34:53,585 --> 00:34:54,605 I think this is just how it is. 657 00:34:54,605 --> 00:34:58,565 So I think we need some strategies for the listeners for, besides listening to 658 00:34:58,565 --> 00:35:02,465 you and me, talk about this soberly and invoking, you know, cromwellian metaphors. 659 00:35:02,465 --> 00:35:05,375 Like what, like how are ways that we're thinking about this or how 660 00:35:05,375 --> 00:35:07,295 should people digest this information? 661 00:35:08,940 --> 00:35:12,210 Rob Larity: I really liked the phrase that Sunne Sorenson used in 662 00:35:12,210 --> 00:35:15,090 our investment committee when we were talking about this and he said, 663 00:35:15,660 --> 00:35:17,880 change is a process, not an event. 664 00:35:18,660 --> 00:35:22,980 And um, I think that's the way people misconceive what you do. 665 00:35:23,520 --> 00:35:26,915 People assume, especially in weeks like this, when you're just so busy and. 666 00:35:27,955 --> 00:35:32,730 You, you putting out a lot of analysis, more than usual and doing a lot of 667 00:35:32,730 --> 00:35:36,510 interviews that like, that's your job is like, oh, something blew up. 668 00:35:36,510 --> 00:35:37,890 Let me go analyze it. 669 00:35:37,980 --> 00:35:41,310 Like, like that's not your job at all. 670 00:35:41,340 --> 00:35:48,750 Your job is identifying these big kind of trends, these big, huge rumbling 671 00:35:49,680 --> 00:35:51,600 shifts in the tectonic plates. 672 00:35:51,600 --> 00:35:55,830 And then the events are sort of manifestations of those shifts. 673 00:35:56,160 --> 00:35:59,130 So that you're having a lot of new information, but if you've done your work, 674 00:35:59,730 --> 00:36:03,090 shouldn't usually be some massive shock. 675 00:36:03,870 --> 00:36:11,850 Um, and I, I like, that's what I would suggest is like, don't be reactive if 676 00:36:11,850 --> 00:36:15,555 you're reacting to something and trying to change your portfolio because, oh, 677 00:36:15,900 --> 00:36:18,240 you're trade, like, that's, that's stupid. 678 00:36:18,600 --> 00:36:20,940 You're gonna, you're never gonna have success doing that. 679 00:36:21,360 --> 00:36:22,410 No one can do that. 680 00:36:22,680 --> 00:36:23,610 You're gambling. 681 00:36:23,985 --> 00:36:26,955 It's not a way to manage your business, it's not a way to manage investments. 682 00:36:27,465 --> 00:36:31,335 The way to do it is to anticipate and to zoom out and think 683 00:36:31,335 --> 00:36:32,565 about these broader trends. 684 00:36:32,565 --> 00:36:37,695 Like, like, like you talk about and like that's the research process that you 685 00:36:37,695 --> 00:36:42,555 do is really what are the big things that matter and what are the signposts 686 00:36:42,555 --> 00:36:47,085 around them that we put to identify, okay, is this thesis playing out or not? 687 00:36:47,805 --> 00:36:50,355 And you sort of set that in place and monitor it. 688 00:36:51,390 --> 00:36:55,050 And make decisions on a longer time horizon based on that. 689 00:36:55,140 --> 00:36:56,790 Like that's the only thing that you can do. 690 00:36:56,790 --> 00:37:03,390 Otherwise you're just in the shit storm of media noise and, um, and no one comes out 691 00:37:03,390 --> 00:37:08,040 of that except for people who sell media and clicks and content and hot takes. 692 00:37:08,670 --> 00:37:11,490 Uh, but that's not most of the listeners. 693 00:37:13,020 --> 00:37:13,230 Jacob Shapiro: Yeah. 694 00:37:13,230 --> 00:37:17,055 I did an event, um, God was that only last week in New York City? 695 00:37:17,895 --> 00:37:18,075 Yeah. 696 00:37:18,075 --> 00:37:18,915 Time has no meaning. 697 00:37:19,185 --> 00:37:20,835 Last week in your, it was 12 hours ago. 698 00:37:20,835 --> 00:37:21,075 Jacob. 699 00:37:22,815 --> 00:37:23,535 I'm in a wormhole. 700 00:37:23,535 --> 00:37:25,214 It, I'm here via Tesseract. 701 00:37:25,214 --> 00:37:28,845 After doing an event three minutes ago, uh, no. 702 00:37:28,845 --> 00:37:32,835 I, I, um, I was on this panel at this event last week, so it was last I. 703 00:37:32,960 --> 00:37:34,310 Um, last Tuesday. 704 00:37:34,310 --> 00:37:37,580 And so the war was sort of in its initial stages and you can, you know, bet that, 705 00:37:37,580 --> 00:37:39,080 uh, everybody wanted to talk about this. 706 00:37:39,170 --> 00:37:43,430 And so we were, the, the panel I was on was about navigating global uncertainty 707 00:37:43,430 --> 00:37:44,810 in a time of geopolitical risks. 708 00:37:45,050 --> 00:37:48,080 If I hear the phrase like navigating uncertainty, one more time, I'm gonna. 709 00:37:48,480 --> 00:37:50,370 Self emulate what is left of my hair. 710 00:37:50,580 --> 00:37:52,980 I might just buzz it anyway, by the way, I'm getting tired of it. 711 00:37:52,980 --> 00:37:54,299 But, uh, that's beside the point. 712 00:37:54,299 --> 00:37:56,970 I don't need to talk about my hairstyling choices on the podcast. 713 00:37:57,569 --> 00:38:01,560 Um, but I, I decided to start off when I, when I gave my little five minute 714 00:38:01,560 --> 00:38:04,855 spiel on the panel, I. Um, I said, look, I know we're supposed to be talking 715 00:38:04,855 --> 00:38:07,315 about uncertainty and volatility, but instead I wanna tell you the three 716 00:38:07,315 --> 00:38:09,655 things that I am absolutely certain of. 717 00:38:09,955 --> 00:38:12,415 And then we can talk about like all the crazy things that you want. 718 00:38:12,415 --> 00:38:14,365 But I instead want to give you things that I know. 719 00:38:14,545 --> 00:38:17,995 And the first thing I said was, I think we're moving towards a multipolar order. 720 00:38:17,995 --> 00:38:21,685 I think that this entire conflict shows us that like the United States 721 00:38:21,685 --> 00:38:23,125 didn't want Israel to bomb Iran. 722 00:38:23,125 --> 00:38:25,045 Israel said we're gonna bomb anyway. 723 00:38:25,045 --> 00:38:26,125 The United States like. 724 00:38:26,305 --> 00:38:28,225 Didn't have any allies that joined it in this. 725 00:38:28,225 --> 00:38:31,315 They were also like Russia and, uh, Russia and China stayed on the outs 726 00:38:31,315 --> 00:38:33,625 and were going to stand the outs like this is a multipolar world. 727 00:38:33,895 --> 00:38:34,735 Get used to it. 728 00:38:34,735 --> 00:38:37,105 The upside is there's not gonna be World War iii, even though 729 00:38:37,105 --> 00:38:38,425 the media's gonna sell you that. 730 00:38:38,695 --> 00:38:41,575 The downside is there's gonna be a lot more of these type of events, 731 00:38:41,785 --> 00:38:44,665 so buckle up your seatbelt and like you're just gonna have to get used to 732 00:38:44,665 --> 00:38:46,075 this level of volatility in markets. 733 00:38:46,375 --> 00:38:48,955 The second thing I said to the audience was, unless you are 734 00:38:48,955 --> 00:38:50,965 Iranian or Israeli, or have assets. 735 00:38:51,629 --> 00:38:54,600 In either one of those countries, maybe if you have assets in like a 736 00:38:54,600 --> 00:38:57,810 Cutter or a Bahrain, you know, like maybe we could talk there, but unless 737 00:38:57,810 --> 00:39:01,740 you're directly exposed, um, or you're somebody who's trying to get out of 738 00:39:01,740 --> 00:39:04,740 those countries and thinking about thoughtful ways to structure your wealth 739 00:39:04,740 --> 00:39:07,439 and get out of those countries, this is not gonna have any impact on you. 740 00:39:07,439 --> 00:39:10,080 So I'm not saying, I'm not saying it's unimportant. 741 00:39:10,080 --> 00:39:12,750 I'm not saying don't follow it, but like, if what you're looking for 742 00:39:12,750 --> 00:39:16,169 is insights on how this is going to affect your life, not that much. 743 00:39:16,695 --> 00:39:21,315 And I, and I know that that message needs to be said because, uh, we, we've 744 00:39:21,315 --> 00:39:22,815 talked about this before in the podcast. 745 00:39:22,815 --> 00:39:25,395 My, my sister indicator went off this week. 746 00:39:25,395 --> 00:39:27,825 I hadn't heard from my sister from literally months and I 747 00:39:27,825 --> 00:39:29,924 got a text three days ago. 748 00:39:30,495 --> 00:39:32,085 She gets so much flack on this show. 749 00:39:32,085 --> 00:39:33,865 I. No, I, it's out of a place of love. 750 00:39:33,865 --> 00:39:37,105 I, if she's asking, I know that something is really in the zeitgeist. 751 00:39:37,105 --> 00:39:39,325 Like she's the one that keeps me, like, I'm up here in my 752 00:39:39,325 --> 00:39:43,765 scholarly, pedantic, pretentious tower, and she's like, yo, dude. 753 00:39:43,765 --> 00:39:45,295 Like, uh, real talk. 754 00:39:45,295 --> 00:39:47,215 Like, uh, is anything bad gonna happen here? 755 00:39:47,215 --> 00:39:48,835 Like, do I need to worry about this stuff? 756 00:39:48,835 --> 00:39:49,945 And I was like, no, Leah, like. 757 00:39:49,985 --> 00:39:51,065 Like, it's fine. 758 00:39:51,065 --> 00:39:52,265 Like, I don't think anything's gonna happen. 759 00:39:52,265 --> 00:39:52,895 I think you're fine. 760 00:39:52,895 --> 00:39:56,165 And then she goes off like, I, I wish I had her approach. 761 00:39:56,225 --> 00:39:58,175 Uh, I wish I could move through the world the way that she 762 00:39:58,175 --> 00:39:59,405 does without lack of stress. 763 00:39:59,405 --> 00:40:02,825 Just like, you know, all of this happening and like literally nine days 764 00:40:02,825 --> 00:40:04,895 in, do I need to worry about this? 765 00:40:04,895 --> 00:40:05,255 Like that? 766 00:40:05,255 --> 00:40:07,565 That sounds like a, I wish I could reach that enlightened plane. 767 00:40:07,565 --> 00:40:08,555 So it's not shade at all. 768 00:40:08,555 --> 00:40:09,665 If anything, it's jealousy. 769 00:40:10,265 --> 00:40:10,685 Um. 770 00:40:11,250 --> 00:40:14,339 But point being like I had a bunch of different like messages like 771 00:40:14,339 --> 00:40:16,979 that and it wasn't like, what's this gonna do to my portfolio? 772 00:40:16,979 --> 00:40:19,049 What does this mean for the future of the Iranian regime? 773 00:40:19,049 --> 00:40:21,689 And like, you know, I had the nerds emailing me too, but like I had normal 774 00:40:21,689 --> 00:40:23,759 people just asking me, Hey, am I okay? 775 00:40:24,270 --> 00:40:26,520 Like, can I travel to New York City next week? 776 00:40:26,520 --> 00:40:28,410 And like, is there gonna be a terrorist attack? 777 00:40:28,410 --> 00:40:30,359 Like, can you just like give me a gut check here? 778 00:40:30,720 --> 00:40:31,890 And I said like, yeah, you're fine. 779 00:40:32,235 --> 00:40:34,005 Like I, I know the media's not telling you that way, but 780 00:40:34,005 --> 00:40:34,965 like, I, I think you're fine. 781 00:40:34,965 --> 00:40:38,385 You're no more, you're no more or less at risk than you would be otherwise. 782 00:40:38,385 --> 00:40:41,895 Like I, me here in downtown New Orleans and my coworking space, probably 783 00:40:41,895 --> 00:40:45,555 more at risk of harm than, you know, any American city terrorist attack. 784 00:40:46,035 --> 00:40:47,985 Um, and then the third thing I said, and this goes back to some of the 785 00:40:47,985 --> 00:40:51,435 things we've talked about, this podcast, uh, on this podcast for some time now 786 00:40:51,435 --> 00:40:52,725 and goes back to our good friend eth. 787 00:40:53,440 --> 00:40:56,259 Which is, I'm certain that despite the fact that we're gonna have all this 788 00:40:56,259 --> 00:40:59,770 technological innovation and artificial intelligence and robotics and all the 789 00:40:59,770 --> 00:41:04,029 crazy things that are happening, um, in a really good and positive and meaningful 790 00:41:04,029 --> 00:41:05,980 way, I, I disagree with Paul Tudor Jones. 791 00:41:05,980 --> 00:41:09,279 Like, I think AI and some of these things are gonna change the world for the better. 792 00:41:09,640 --> 00:41:14,020 But no matter how much advances we have in these technologies, I'm certain. 793 00:41:14,340 --> 00:41:17,430 That, um, it hasn't changed our relationship with time and that 794 00:41:17,430 --> 00:41:18,630 we have a limited amount of it. 795 00:41:19,170 --> 00:41:22,770 And that one of the, the distressing things about this media environment 796 00:41:22,770 --> 00:41:25,950 and about like the uncertainty here is that it's stealing your time. 797 00:41:26,460 --> 00:41:27,960 It's stealing your attention. 798 00:41:28,140 --> 00:41:31,830 So instead of focusing on the things that matter to you, or thinking about 799 00:41:31,830 --> 00:41:34,650 the future of your business, or spending quality time with the people that you 800 00:41:34,650 --> 00:41:36,630 love, you've got CNN in the background. 801 00:41:36,630 --> 00:41:39,540 You're taking out your phone and being, oh my God, what did Trump say next? 802 00:41:39,840 --> 00:41:42,750 And I think all of that is conspiring to steal time away from people. 803 00:41:42,750 --> 00:41:45,840 And so I, when I, one of the ways I think you have to be, or one of the 804 00:41:45,840 --> 00:41:49,950 ways I've been trying to tell people to deal with this multipolar world and all 805 00:41:49,950 --> 00:41:53,190 this insanity, and one of the ways I keep myself sane is protect your time. 806 00:41:53,700 --> 00:41:58,170 And you need to erect defenses against the things that wanna steal your time away. 807 00:41:58,259 --> 00:42:01,410 And you should have a very high threshold for what that looks like because it's 808 00:42:01,410 --> 00:42:04,620 not just your job, it's literally the media that's wanting to steal 809 00:42:04,620 --> 00:42:06,240 your time with clicks and attention. 810 00:42:06,240 --> 00:42:08,220 It's literally the click bait. 811 00:42:08,835 --> 00:42:10,905 That is causing you to not be fully present before. 812 00:42:10,905 --> 00:42:13,815 So I know people don't listen to this for like me, like, you know, giving 813 00:42:13,815 --> 00:42:15,435 them life advice or anything like that. 814 00:42:15,435 --> 00:42:17,685 But when I, when I was speaking to that audience, it was just like, what 815 00:42:17,685 --> 00:42:18,915 are the three things I'm certain of? 816 00:42:18,915 --> 00:42:20,595 I'm certain the world is multipolar. 817 00:42:20,805 --> 00:42:25,245 I am certain this conflict is not gonna be World War iii, and I'm certain that all 818 00:42:25,245 --> 00:42:28,035 of this is just another way to waste time. 819 00:42:28,215 --> 00:42:30,585 So stop wasting time and go do something productive with your 820 00:42:30,585 --> 00:42:33,675 time, with your family, or with the cool technologies that are out 821 00:42:33,675 --> 00:42:35,235 there or anything else, like spend. 822 00:42:35,775 --> 00:42:38,445 Spend your time doing that rather than worrying about that. 823 00:42:38,925 --> 00:42:39,405 Um. 824 00:42:39,975 --> 00:42:42,555 And I don't know, I, I feel that way at the end of this particular war 825 00:42:42,555 --> 00:42:45,015 too, which I didn't get to do that 'cause I had to spin out content. 826 00:42:45,015 --> 00:42:49,815 To your point, the way that I attract people to some of what we're doing is when 827 00:42:49,815 --> 00:42:53,715 you get this surge of interest from most people are not normally interested in the 828 00:42:53,715 --> 00:42:56,895 world, and then suddenly the sister index goes off, you wanna make sure that you're 829 00:42:56,895 --> 00:43:00,585 there providing those answers so that they can ask the next follow up question 830 00:43:00,585 --> 00:43:04,365 when something happens and give them an objective sense of what's going on. 831 00:43:04,365 --> 00:43:05,805 So like for me it's game time. 832 00:43:06,195 --> 00:43:07,395 Um, but in some ways my. 833 00:43:07,420 --> 00:43:09,910 My ability to compartmentalize makes it easier. 834 00:43:09,970 --> 00:43:12,820 'cause it's just like, okay, like now we've got a ceasefire. 835 00:43:12,940 --> 00:43:16,450 I'm gonna put the finishing touches on a, on a piece right here that I'm gonna hit 836 00:43:16,450 --> 00:43:18,460 send on as soon as we get off the podcast. 837 00:43:18,460 --> 00:43:21,190 And then I'm gonna take day off, I think. 838 00:43:21,190 --> 00:43:21,970 I think I'm gonna go to the beach. 839 00:43:22,660 --> 00:43:22,960 So 840 00:43:25,390 --> 00:43:28,840 Rob Larity: there's a, I think it's in Liar's Poker where, um. 841 00:43:30,765 --> 00:43:36,975 Michael Lewis was talking about when he was a young analyst, uh, and, 842 00:43:37,335 --> 00:43:41,775 you know, on Wall Street, and he would go to this older guy and like, 843 00:43:41,775 --> 00:43:44,655 there'd be big events all the time and say, well, should I, you know, 844 00:43:44,655 --> 00:43:47,055 what should we doing, buying, selling this, blah, blah, blah, blah, blah. 845 00:43:47,715 --> 00:43:50,595 And the older guy would just say, it's a bull market. 846 00:43:51,855 --> 00:43:55,065 It's a bull market every time it's a bull market. 847 00:43:55,590 --> 00:43:56,370 Just hold on. 848 00:43:57,450 --> 00:43:59,880 And, uh, I was thinking about that. 849 00:43:59,910 --> 00:44:02,400 'cause I think that's, that's the problem. 850 00:44:03,060 --> 00:44:06,990 You know, as you say, like you have to do a lot right now because like everyone 851 00:44:06,990 --> 00:44:12,270 understands a big part of what we're, what you do is drawing attention to the 852 00:44:12,270 --> 00:44:16,710 work that you're doing elsewhere by sort of getting a little into the vortex. 853 00:44:17,610 --> 00:44:19,799 But it's definitely not that way in terms of actually. 854 00:44:20,580 --> 00:44:22,740 What we do from an investment standpoint. 855 00:44:23,190 --> 00:44:26,430 And that doesn't make for good, it doesn't make for good media. 856 00:44:26,850 --> 00:44:28,200 'cause I'm here every week. 857 00:44:28,410 --> 00:44:30,690 It's a multipolar multipolar world. 858 00:44:31,290 --> 00:44:33,420 Still multipolar still happening. 859 00:44:33,420 --> 00:44:33,660 Yep. 860 00:44:33,720 --> 00:44:35,940 All signs are go still going. 861 00:44:36,420 --> 00:44:37,560 What are the implications? 862 00:44:37,560 --> 00:44:38,670 How do you prepare for it? 863 00:44:38,880 --> 00:44:42,630 Like, doesn't change that much, but that's, that's good. 864 00:44:42,750 --> 00:44:45,840 'cause those are the, that's the definition of a big trend. 865 00:44:46,575 --> 00:44:48,465 If we're here five years from now saying the same thing. 866 00:44:49,215 --> 00:44:52,395 Jacob Shapiro: Well, and it used to be like there was a time in American 867 00:44:52,395 --> 00:44:55,635 history where the media played that role, where the media was the touchstone, 868 00:44:55,635 --> 00:44:58,245 where there were only three channels and there was a certain amount of 869 00:44:58,245 --> 00:45:00,885 trust that you had in the people that was telling you what was going on. 870 00:45:00,885 --> 00:45:03,155 And this is what I mean about I. Protecting time. 871 00:45:03,155 --> 00:45:06,305 Like now, things have fractured and we're part of the fractured media environment. 872 00:45:06,305 --> 00:45:09,725 Like we're two bros on a podcast, and I'm beaming on articles on a substack, 873 00:45:09,725 --> 00:45:11,375 so I'm not throwing too much shade on it. 874 00:45:11,825 --> 00:45:14,405 Um, but just to say like, you don't have those touch tones anymore, and 875 00:45:14,405 --> 00:45:17,945 you have all of these different sources and now we have deep fakes and AI and 876 00:45:17,945 --> 00:45:22,265 bots, so it's really hard to distinguish between what's real and what's not real. 877 00:45:22,265 --> 00:45:25,685 But I think it is important to, to have those touchstones and to have 878 00:45:25,685 --> 00:45:28,055 those centers of gravity, whether it's. 879 00:45:28,529 --> 00:45:31,710 You know, your own family or whether it's the sources that you trust or 880 00:45:31,710 --> 00:45:34,740 the ideas that you have about the world, and it's, it's difficult. 881 00:45:34,740 --> 00:45:37,920 You have to be flexible enough to change your ideas about the world as 882 00:45:37,920 --> 00:45:39,420 things around you change, but then. 883 00:45:40,200 --> 00:45:42,930 Also to like put a stake in the ground and be like, but no, I 884 00:45:42,930 --> 00:45:44,009 think this is what's happening. 885 00:45:44,009 --> 00:45:47,490 So when I see all these things happening in the world, like I can digest 886 00:45:47,490 --> 00:45:48,990 them, I can compartmentalize them. 887 00:45:48,990 --> 00:45:52,650 I put a little, I put a little label on a box and I put them in my mental box, 888 00:45:52,650 --> 00:45:56,069 and then I put them on the shelf when it's time to go, uh, do something else. 889 00:45:56,069 --> 00:46:00,000 And I, I think our, I think the way our information diet is structured 890 00:46:00,000 --> 00:46:01,170 right now, it's not like that. 891 00:46:01,170 --> 00:46:01,830 It's just like. 892 00:46:02,395 --> 00:46:07,645 Constant McDonald's being intravenously beamed into our cell phones, um, which 893 00:46:07,645 --> 00:46:09,325 makes its way directly to our brains. 894 00:46:09,325 --> 00:46:12,355 Like the idea that we're gonna have, like those, you know, the glasses and 895 00:46:12,355 --> 00:46:14,995 things like that, that are gonna allow us to see the world through the AI 896 00:46:14,995 --> 00:46:16,945 and the computer, like, God shoot me. 897 00:46:16,945 --> 00:46:18,325 Like, I don't want anything like that. 898 00:46:18,325 --> 00:46:21,715 I, I really just wanna throw out all of my devices for all those reasons. 899 00:46:21,775 --> 00:46:22,080 I don't know. 900 00:46:23,879 --> 00:46:27,390 Rob Larity: Well, I think in our small way we can play that role to some extent. 901 00:46:27,450 --> 00:46:30,629 'cause like what you just described is a media environment where 902 00:46:30,629 --> 00:46:33,930 there was no incentive to generate activity for the sake of activity. 903 00:46:34,740 --> 00:46:34,830 Jacob Shapiro: Mm-hmm. 904 00:46:35,190 --> 00:46:40,260 Rob Larity: And like if people are looking for good sources of information, I. Like, 905 00:46:40,260 --> 00:46:45,000 you don't have to listen to us, but try to replicate the incentive structure of us. 906 00:46:45,000 --> 00:46:46,860 Like we have an incentive to find truth. 907 00:46:47,250 --> 00:46:50,550 And sometimes truth is boring and sometimes truth is, yeah, this isn't 908 00:46:50,550 --> 00:46:51,720 a big deal, don't worry about it. 909 00:46:51,780 --> 00:46:55,350 Like go back, go back Leah and just enjoy your day. 910 00:46:55,530 --> 00:46:57,090 Like nothing to see here. 911 00:46:57,900 --> 00:47:01,050 And that's sort of what the incentive of the media used to be when there 912 00:47:01,050 --> 00:47:04,290 was no, you know, ad model and in competition and stuff like that. 913 00:47:04,320 --> 00:47:09,300 'cause these were well-educated people who had a civic duty to, you know, kind of. 914 00:47:09,780 --> 00:47:12,330 Say it as it is and what they, you know, all that stuff. 915 00:47:13,080 --> 00:47:22,020 Um, so if someone is, is depending on clicks for their paycheck, then be wary. 916 00:47:23,190 --> 00:47:28,110 But thankfully, like, I don't know, my, I think that's probably peaked. 917 00:47:28,140 --> 00:47:31,290 Like, I think there's probably more sources of good analysis of, and 918 00:47:31,290 --> 00:47:34,680 information of people who don't have that incentive and are just doing. 919 00:47:36,000 --> 00:47:38,310 And have an incentive to find truth like us. 920 00:47:38,400 --> 00:47:41,940 I don't know, maybe that's super rose tinted glasses, but, 921 00:47:42,690 --> 00:47:43,500 Jacob Shapiro: um, I don't know. 922 00:47:43,500 --> 00:47:44,520 It's, it's really hard. 923 00:47:44,550 --> 00:47:44,610 Um. 924 00:47:45,420 --> 00:47:49,890 I, I think it's hard because our phones are so embedded in our daily lives, 925 00:47:49,890 --> 00:47:53,520 and even if you want that, like, you know, your phone is constantly pinging 926 00:47:53,520 --> 00:47:57,240 you, whether it's with emails or social media or or things like that. 927 00:47:57,240 --> 00:48:00,840 And even, even somebody like me who like is actively fighting against this 928 00:48:00,840 --> 00:48:03,990 in my life, sometimes I find myself just staring at my phone and I'm 929 00:48:03,990 --> 00:48:05,730 like, what, what am I doing right now? 930 00:48:05,730 --> 00:48:09,330 Like, I've, I've already checked this inbox like 10 times today. 931 00:48:09,330 --> 00:48:10,350 I need to check it again. 932 00:48:10,350 --> 00:48:14,009 I like can't be sitting here in this moment like thinking about something else. 933 00:48:14,009 --> 00:48:17,445 It's like I. Yeah, it, it's there, there's something about the ease 934 00:48:17,445 --> 00:48:21,885 of having it there that, that, um, that makes it difficult. 935 00:48:22,845 --> 00:48:23,625 Rob Larity: You need a Jacob. 936 00:48:23,865 --> 00:48:25,125 I don't, I don't check my phone. 937 00:48:25,485 --> 00:48:28,245 Like I, I barely kept up on what's going on in the last beat. 938 00:48:28,275 --> 00:48:31,726 'cause I know if there's anything I really needed to know that you would let me know. 939 00:48:34,365 --> 00:48:35,145 Jacob Shapiro: Yeah, I need it, Jake. 940 00:48:35,145 --> 00:48:35,384 Okay. 941 00:48:35,384 --> 00:48:38,775 Well, I'm just gonna send all of my articles to chat, GPT, and once, once 942 00:48:38,775 --> 00:48:42,015 AI gets big enough, like I'll just have AI replace me and I'll, I'll 943 00:48:42,015 --> 00:48:43,395 no longer be here doing my thing. 944 00:48:44,205 --> 00:48:44,535 So. 945 00:48:44,625 --> 00:48:44,955 All right. 946 00:48:44,984 --> 00:48:47,685 Well, anything else you wanna tell the listeners, Rob, before we get outta here? 947 00:48:49,095 --> 00:48:50,295 Rob Larity: No, go enjoy your week. 948 00:48:50,384 --> 00:48:51,254 Everything is okay. 949 00:48:52,995 --> 00:48:53,444 Sounds good. 950 00:48:54,075 --> 00:48:54,345 Jacob Shapiro: Cheers. 951 00:48:56,565 --> 00:48:59,415 Thank you so much for listening to the Jacob Shapiro podcast. 952 00:48:59,444 --> 00:49:01,185 Uh, the show is produced and edited. 953 00:49:01,405 --> 00:49:04,615 By Jacob Mian, and it's in, in many ways, the Jacob Show. 954 00:49:04,945 --> 00:49:07,285 Um, if you enjoyed today's episode, please don't forget to 955 00:49:07,285 --> 00:49:09,745 subscribe, rate or leave a review. 956 00:49:09,805 --> 00:49:12,025 It takes just a couple seconds of your time, but it really helps 957 00:49:12,025 --> 00:49:13,195 us also share with a friend. 958 00:49:13,465 --> 00:49:17,005 If you're interested in learning more about hiring me to speak at your 959 00:49:17,005 --> 00:49:20,485 event, or if you wanna learn more about the wealth management services 960 00:49:20,485 --> 00:49:24,145 that uh, I offer through bespoke or cognitive investments, you can find 961 00:49:24,145 --> 00:49:26,425 more information@jacobshapiro.com. 962 00:49:26,425 --> 00:49:30,385 You can also write to me directly at jacob@jacobshapiro.com. 963 00:49:30,890 --> 00:49:33,950 I'm also on, on X for now with the handle Jacob shop. 964 00:49:33,950 --> 00:49:35,690 That's Jacob, SHAP. 965 00:49:35,690 --> 00:49:38,810 No DATs dashes or anything else, but I'm not hard to find. 966 00:49:39,320 --> 00:49:41,030 Um, see you out there.