Hello, listeners.

Welcome to another episode of the Jacob Shapiro Podcast.

Donald Trump is the winner of the 2024 presidential election.

And who better to talk to about this election than cousin Marco Papage from BCA Research.

We've had this on the calendar for weeks and plan to do a long episode talking about it.

Buckle up.

It's a two hour plus episode.

We talk about everything from what happened in the election, what some of Trump's domestic agenda are going to mean for economies and for the economy and for markets.

Marco and I have some disagreements about that.

Dive into geopolitics.

So everything from tariffs and China to the Middle east to the future of Ukraine.

And we close with some thoughts about the future of the United States.

As always, we are trying to stay objective and as Marco said at the end, irreverent.

As we deal with this topic, I know that it creates lots of emotions and I'm sure, I'm sure listeners know I also have emotions about this election.

But it's my job to put the emotions on the shelf and talk about what happened and try and get a sense of what's going on.

So Marco and I try to do that and we hope you enjoy as always.

You can email me@jacobognitive.investments if you have questions about anything.

Otherwise, take care of the people that you love.

Cheers and see you out there.

All right, cousin.

We are, we're back at it.

It's, it's November 6th.

Who do you think is going to win the 2028 election?

Too soon.

Too soon.

We have, we have so much to talk about.

Sorry, go ahead.

Not Kamala Harris.

That's.

That would be my Kamala Harris.

No, probably not Kamala Harris, although she can use the blueprint that Trump just used to roar back to life.

So we're going to talk about everything.

We're going to talk about his agenda, we're going to talk about geopolitical impacts, we're going to talk about long term implications.

I think we're going to do a lot of scenario planning and things like that because there are multiple ways that this could go.

And I think on a few of these scenarios, you and I are on different pages.

But I think the first thing I wanted to ask you, or at least that we should talk about, is that we still don't have a clear definition of the results for the House race.

I mean, so there's a small chance here that the Republicans could pick up the House if some of these things go in their favor.

And it's probably going to be days or even weeks before we get the final turnout on all of the different House races.

So I guess just.

I'm saying this for myself and also for the listeners.

I think in everything that we're talking about, we have to keep in mind that there's a scenario if the Republicans can eke out a small majority in the House versus if the Democrats keep it, because if the Republicans can win the House too.

Suddenly this is a much different kind of conversation.

This is about Trump being able to push through an agenda with relatively little opposition, whereas if the Democrats can hold onto the House, he can say and bluster and try and do lots of things.

But there's a lot of power in the House if the Dems can.

Can push it.

So I thought I'd start there.

Do you have anything to say about.

About the House race itself, Marco?

I mean, yeah, I would be very surprised if the Republicans don't get it.

That's always been my view, by the way.

Like, if Trump wins, I think he wins the House.

And, you know, you see the.

The popular vote has swung pretty strongly to Trump, so it would be very strange for us to have this sort of a pretty definitive victory and then him not be able to hold the House.

Yeah.

Some of the data that I was looking at that I think is important to frame our conversation with.

So Kamala only outperformed Biden in 58 counties.

Apparently in all of the United States, Donald Trump was in the thousands for that number.

If you look at where people shifted Republican versus Democrat, there are only two demographics that I could find where people started voting more Democrat.

It was people over the age of 65 and white college women.

But you go through the rest of the demographics.

White non college men, white non college women, Hispanics, Asians, blacks, young people 18 to 29.

Like, just, I mean, go down the entire demographic list.

I mean, it was just a complete and total sweep from Trump.

And I think both you and I were on the same page.

I think we both thought that Trump was probably going to win, but I was pretty shocked by, by some of those statistics and what that says about the demographics of the United States going forward.

Forward?

Yeah, I think it's, you know, it's a pretty interesting.

I think Trump called it realignment in his victory speech last night.

And, you know, you have to, you have to give it to him.

It is kind of correct.

I mean, especially on the Hispanic vote.

And it's also very interesting how much Democrats and their allies in the media tried to, you know, emphasize how all sorts of comments made by, you know, the comedian ads, Madison Square Garden rally were going to make a difference and none of them made any difference, especially with Hispanics.

So I do think that this is a very important point, that the Democrats are at risk of basically becoming the party if they're not already of the haves.

What is interesting about college educated women?

Well, they have the luxury to make the election about abortion.

And then what is interesting about Those who are 65 years and older?

Well, they probably own their homes.

So they made like, you know, a lot of money over the last four years.

And so all the other demographics that you cite, they don't really have the luxury to be single issue voters.

So when the Democratic Party tries to figure out why did that, why Hispanics voted more for Trump, well, that's because they don't have the luxury to just think about immigration.

And it's, for them, it's more about the economy, it's about opportunity, and it's about those issues where the Republicans basically had a beggar, better campaign.

So, yeah, I think that's a big one.

But I would also not underestimate the importance of candidates.

And this is something that I see the Democratic Party trying to make this election about.

You know, how the African American voter voted, how the Hispanics voted, how, you know, the Arab Americans voted, how Joe Biden was an albatross around Kamala Harris.

It's like, or maybe, or maybe you anointed a candidate with no competition, with no test, despite the fact that we all Knew that in 2019, as I've been saying to my clients, she spent 30 days as the front runner against Biden.

30 days is all it took for the Democratic Party voters to realize that she couldn't put three sentences together.

So maybe it's that simple.

You know, maybe what's really simple here is that the candidate was, you know, very suboptimal.

And when Democrats allow competition, when there is like a free market, go figure, they tend to produce really good candidates.

Barack Obama in 2008 won a coalition very similar to Trump in 2024.

I mean, he outperformed with white voters.

As an example, in 2008, Barack Obama was not the elite's candidate.

In fact, if you remember the primary in 2007, 2008, the Democratic Party kind of tried everything they could to ensure that Hillary Clinton, who was anointed at the time, beats him in that primary.

And he obviously came and won.

And when they do that, they produce a very good candidate.

In 2020, there was a very competitive, obviously primary, and Joe Biden was selected.

And when Kamala Harris was anointed by, like, you know, the sort of establishment elites, they kept comparing her to Joe Biden in 2024.

Well, Joe Biden in 2024 clearly is at the end of his.

You know, I mean, he's past expiration date, clearly.

But in 2020, Joe Biden had exactly what the Democrats needed to defeat Trump in the Midwest.

And the fact that they moved so diametrically to the other side with Harris, it just shows a complete lack of understanding of what matters, what country they're running, you know, So I don't.

I don't want to make this really more about sort of profound things.

It could be very petty.

It could be just like, look, you picked the wrong horse, and that horse underperformed.

Well, I think the 2008 comparison is also very instructive, because I think Hillary probably would have won in 2008 because the Republicans were coming off of the financial crisis and nobody wanted to vote for the incumbent.

You could see that in McCain flailing around at the end and trying Palin and trying all these crazy things.

It was just a layup because people thought that the economy was terrible.

And this, to me, is the crux of the things.

And this is maybe where we get into our conversation about Trump's agenda and what's going to happen and whether this realignment has any legs or whether it's just a disillusioned flash in the pan because things are going to get worse as a result of some of the things that he's going to push through.

In 2008, the economy did suck.

It was the great financial crisis.

It defined an entire generation, how they thought about the global economy, all of the populist and protectionist trade measures that we talk about, in some ways, they were ceded in 2008.

And the great sort of mystery to me in all of this is the economy is good, unemployment is fine.

Like, yes, inflation has cut into things, but it's.

It's balanced with wages going up.

It's balanced with inequality falling for the first time over the past couple of years.

So one of the things I know we want to tackle is how is Trump's domestic agenda going to impact the economy and markets?

But I sort of want to split that into three different categories, because I think we need to talk about how is his agenda going to affect the economy and then how is it going to affect markets?

Because I'm not sure that markets and the economy are on the same page here.

And then the Third thing is, how is it going to impact people's perception?

Because the most confusing thing to me about this race was not that Trump won.

If you look at the polls, and I put this out a couple of weeks ago to some of my readers, it was the economy, stupid.

It was a 9 or 10% clip of people saying that they trusted Trump to run the economy better than Harris.

And that was their top issue in the election, full stop.

That's easy to read.

But the confusing thing about that was the economy wasn't bad.

There wasn't any 2008 financial crisis, inflation come off the boil.

Like all these things were sort of good.

So I'll let you attack that question however you want, but let's maybe start diving into the domestic agenda and that economy's market's perception triumvirate that I'm trying to lay out.

Yeah, no, so what I would say, you know, Jacob, this goes back to why Barack Obama won in 2008.

It goes back to why Trump won in 2016, why Joe Biden won in 2020.

I mean, Joe Biden is, you know, he ran on a pretty populist platform.

Populism just keeps winning in America for the past 20 years.

And so it's not about the last four years of inflation.

I think a lot of Republican strategists and supporters would say, well, it's inflation, it's that simple.

And I would say, yes, you're right, but it's inflation over a very long period of time.

And it's income inequality.

America has an income inequality problem that it just hasn't solved.

And so whoever's the incumbent, whoever is in charge, and they don't solve it, they get basically punished.

I have this chart, I can't share charts, you know, with this particular platform, but what I would show you is I have a chart going back to 1995.

And basically what I do is I anchor everything to 1995 as a hundred, and then I let it run.

So real wages from 1995 to today are at about 130, you know.

Oh, good.

Wow.

Like, it increased like 30% over the course of, you know, 30 years.

And then what I put is what I consider middle class goods.

So childcare and nursery education, medical care services, shelter.

And the CPI, the actual CPI, the actual measured inflation has gone up 230%.

So that by itself is a lot.

But forget CPI.

Who cares about CPI?

When you look at shelter, it's at 270.

When you look at childcare and childcare and medical services, there are 350.

And if you look at education, it's a 400 from 100 to 4X.

You know, so like, the point is it's impossible to be member of the middle class.

You cannot measure it by income because every other, every good that makes you middle class, every service that makes you middle class has gone up 3, 4 times.

Your wages have gone up 30% over the last 30 years, but the cost of being in the middle class has gone up 400%.

Yeah, I 100% agree with you.

But the irony there is that Trump 1.0 was part of that story, cutting the corporate tax rate and pro fiscal policies.

At the end of the cycle, he pushed things out a little bit and then we had Covid at the end of it that really blew things out.

So there is something happening in the perception of the electorate where I think you're absolutely right to talk about the pain of the middle class and that they are looking for solutions, but that they are casting about for solutions with somebody who already tried this and is promising all sorts of different policies that we can talk about.

Like, how is that, Like, I mean, think about what he was talking about.

Literally the day before the election, he was in North Carolina at a rally and he just decided to say, you know, what if the Mexico, if the Mexican government doesn't get control of the border, I'm going to give him 25% tariffs.

And if that doesn't work, it's going to be 50 and then it's going to be 75 and then it's going to be 100.

I thought LeBron and D.

Wade were going to come out and be like, yes, like, it's going to be all the way up.

Like, what would that do?

What would just that do to the US Economy?

Like, I don't know.

Yeah, I mean, of course, like, I'm not saying.

Look, his policy mix right now is, you know, is very interesting and we're obviously going to talk about it.

So your question is, why did the middle class then vote for Trump when he's already kind of tried this?

Tariffs are not going to help you with inflation, I think.

I think the middle class is basically saying, like, look, we want to punish the elites for not taking care of us or taking our interests seriously.

And there were two candidates and only one of them would have punished the elites.

You know, it's that simple.

Somebody once said, I don't know who it is, but I don't want to make it my own statement because I don't like to take credit Somebody once said, like, Trump is just a human middle finger, you know, and so, like, I think that's a really good point.

You know, so, like, he sets elites, he makes them go crazy.

And so if you just can't be middle class and you're just angry, you're just going to cast that vote.

You're not going to sit there and do like, hey, let's do a mathematical calculation of how much 25% terror from Mexico is going to impact my take home pay.

You know, like, nobody's doing that.

This is an emotional sort of look, he's anti elite, he's stalking how elites have done this.

He's right.

Last 30 years have really not been very pleasant for me.

So I'm going to vote for him.

And so obviously he's going to get his comeuppance if he just does what he did in 2016-2020.

On the other hand, it's his last term, so, you know, maybe he won't care.

Yeah, it cuts to the question of whether this is truly a realignment or whether this, like I said, is this just another flash in the pan and the middle is going to be up for grabs again in two years or four years again, and that we're going to get more populist candidates that are coming and a lot will depend on what happens over the next four years.

Well, let's talk about some of his domestic agenda.

So how do you think, and it's hard to read what is true and what is not true in his domestic agenda.

What parts of it are for public consumption, what parts of it are negotiating positions that he's going to draw with foreign countries, but sort of, what do you think are the key proponents of his domestic agenda that he's actually going to push through?

And what is that going to mean for the economy?

That's a great point.

Let's caveat this as you just did.

Politicians say things in order to get elected.

So Trump is no different.

But also they're not myopic, they're not zealots.

When they're faced with new information, they adjust their views.

Right.

Now, if you were to put all of Trump's proposals and he's kept making them more and more populist, more and more profligate throughout the campaign.

He and Kamala Harris were like, trying to outdo one another.

He would say, I'm going to stop taxing tips.

She comes out a couple of weeks later like, I got an idea.

We're not going to tax tips.

It's like, well, he just said that.

And then he's like, oh, yeah, well, I'm not going to tax overtime pay.

And it just kept going, going, going to the point where Kamala Harris at the end was, like, making, you know, a specific proposal for, like, African American men.

You know, it was just like, you know, I was just waiting for a proposal for geopolitical strategists living in Santa Monica.

I was waiting for that one.

Like, what do I get?

So, okay, so you can sit here and you can say, wow, oh, my God, there's going to be so much gravy coming in.

We're not going to take any lessons.

We're just going to keep spending money.

You know, federal Debt is at 37 trillion.

Nobody cares.

I'm not sure about that, because bond yields have just gone from 3.5 to 4.5.

We're up 100 basis points in a blink of an eye because Trump's odds kept rising to win, and then he won.

I think we could be at 5.5%, another 100 basis points from here very quickly.

And that would constitute what Wall street people call a bond market riot.

And we haven't had one in the United States of America since 1994.

That was the last one, and that was the one that caused Clinton to become a centrist.

Clinton wasn't a centrist in 92 when he ran for president.

He was actually an Arkansas governor that came in, disrupted the primary in the Democratic Party.

He won it, and it was like, oh, my God, he's gonna.

He talked about the Cold War dividend.

Like, hey, Cold War's over.

Let's take care of people at home.

And then the bond market was like, nah, you can't.

Debt is too high.

And so then he had to sit down with New Gingrich.

This is where James Carville's quote comes from.

When I die, I don't want to be reincarnated as a ball player or a Hollywood movie star.

I want to come back as the bond market because everyone's afraid of you.

So I think that when we look at his policies right now, Jacob, you know, we're seeing, like, he's going to do all this stuff.

I don't know.

I think that you could have a really significant surprise where Donald Trump actually has to do the painful work of consolidating deficits and debts, and that will be a profoundly different outcome from what the market is currently pricing.

You know, forget like, Bitcoin or Tesla, what the market is telling you right now, there's going to be Growth.

It's going to be awesome.

Small caps are going up.

You know, small caps, America is sort of like, like you're not the Magnificent Seven man.

Small caps are extremely sensitive to rates, to borrowing rates, because they actually borrow.

You know, Google doesn't need any cash or they don't need to borrow.

They're sitting, they're swimming in it.

But small caps do.

And those corporations, if the yields continue to rise, are going to get clobbered.

So I think the market is focused on Trump and his policies and just taking him for what he says.

And I think that there's going to be constraints to that.

And I actually think when Elon Musk starts talking about deficit cuts and some austerity and rationalization, I actually think they're going to have to end up doing more of that that people think.

And that could be very profound.

This is why the House is so important.

And in some ways, if you're Trump, I think you want the Dems to keep the House because then you can just spend the next two years railing on the Democrats in the House and how they're obstructing you from doing all the things that you need to do, rather than saying, okay, you have control over all the levers of government.

Why aren't you doing these things?

But I take your cousin Jacob, this.

Is why the yields are settled at four and a half right now.

You know where they went from four, three to four five, which is a big move for a bond market.

And I think it's because of your point.

You led our interview, our podcast with the House.

It's like, what do you think about the House?

Well, I thought it wasn't really in contention, but it is like Democrats could pull this off.

And so the bond market is saying, like, wait a minute, maybe I shouldn't panic so much because maybe there will be guardrails if the House goes Republican, that there are no guardians, guardrails.

And then the bond market is going to have to do the guardrailing itself, you know, and that's where.

And that's where the, the really vicious move in equities.

Like, everyone's super bullish, like, let's go, it's 2016, baby.

And it's like, well, it's not because in 2016, the 10 year yield was 1.7%.

So when it went up, like, nobody really cared.

Like, meh, you know, you go from 1.7 to 2.5.

Not going to break the bank if it goes from 4.3 to 5.5.

Like, whoa, wait A minute.

Now we're in recession territory, you know, and by the way, the Fed is cutting rates, but the Fed cuts the short end.

Nobody borrows at that rate.

You know, like I don't borrow at the fed funds rate.

We all borrow at the long end.

And so that's why this, this move really matters.

It could be very disruptive to some of these reflation pro growth trades.

Well, and to your point, long end yields are actually going up faster than short end yields.

So the 10 year has gone up, you know, 21 basis points or something like that overnight.

It's the highest since it was in July.

But if you look at 30 year, it's going up even more.

It had its biggest daily jump since March 2020, so since the pandemic.

So you're getting that kind of freak out.

To your point, a riot in the bond market, which, you know, probably not a lot of people are focusing on bond yields, but it's absolutely what they should be focused on.

To your point, the bond market is telling you that, you know, something is up here.

And I, I agree with you.

I think things could go up significantly from here.

What, what do you think about what the Fed is going to have to do here?

I mean, it seems to me they are caught between like a rock and hard place.

Yeah.

So they have to cut now.

They have to this upcoming meeting.

If they don't, they'll be just accused of massive wanton political like interference.

You know, oh, you cut 50 basis points before the election for Harris, but you can't cut now, even though you said you would.

So, yeah, you're right, they're gonna have to cut.

And I think, you know, they're going to have a very difficult time if over the next couple of months, bond yields go up.

Here's a quirk of American politics that makes this worse.

Most other countries, when you win, you win, you assume power right away.

Except in Latin America and in the U.S.

and so now until January 20, if the bond market is reacting to Trump's victory, it's kind of unfair to Trump.

He's not in power.

Why does he calm down the bond market?

He's not in power.

The other quirk of American politics is that he doesn't have a shadow cabinet as you would in Canada or United Kingdom.

So who's the Finance Minister of the United States of America, or as we call it, the Treasury Secretary.

Who is it now?

We assume it's Scott Besant, a Wall street veteran, you know, a really, really smart man who knows how to calm down the bond market.

But is he, you know, this is Donald Trump, man, he could like pick you for Treasury Secretary, you know.

And so the problem is that it, how do you calm down the bond market?

Jay Powell is going to have to basically prove his worth, I think to Donald Trump over the next couple of months.

And I wouldn't be surprised if the Fed ends up helping Trump to anchor the yields through active management of the bond market, which is what we call yield curve control.

But not, not as overt, more something like what the ECB did during the euro area crisis, you know, where they basically said like hey, bond yields don't reflect market fundamentals.

That was the euphemism Mario Draghi used for effectively saying Anglo Saxon traders in New York and London hate Europe.

So I'm going to step in.

And so similarly Jay Powell could do that.

But again I go back to my point about fiscal spending.

Jay Paul is not just going to do that.

Just like Mario Draghi didn't just do that.

Remember what he asked for?

He asked for, hey, can you consolidate your deficit plans?

Can you do structural reforms?

And that's where Elon Musk and Donald Trump are going to have to sit down and they might have to do some homework for Jay and say here's our plan.

And that plan may take out a lot of the promises he made during the campaign in order to calm down the bond yields because ultimately bond yields go too far.

They could actually cause a recession for Trump early in his term.

Is there a world in which the Fed becomes more contrarian and says no, we're data driven and we're not going to cut?

Like you don't think that's possible at all?

I mean that's dangerous game for Jay Powell to play.

But I also don't think the cuts or hikes matter anymore, Jacob, because they've lost control of the long end.

That's why a bond market ride is so dangerous.

You lose control.

You know, what are you going to do?

Like the long end is trading off of the term premium, not growth.

It's trading off of like basically the premium you have to pay to hold a long dated security which has been suppressed so long by qe.

And the only way for them to re regain control of it is to start actively buying the log end.

And so I think that they've just lost control and cuts or hikes, you know, people ask me oh my God, there's meetings coming up.

What do you think about?

I don't just, I just don't care.

The 10 year yield the log.

And as you said, the 30 year mortgage rates, man.

Mortgage rates, they've cut rates.

They promised us 100 basis points of cuts.

Is it easier or harder to buy a house now since they've cut massively harder?

Why?

Because that's the real economy.

The real economy trades off of yields that the Fed doesn't control.

And so I think that, I don't know really how to answer your question other than to say, I don't think that they're going to try to control Trump.

I think they're just going to say like, hey, listen, we can help control the long end, but you got to give us something, you know, like you need to, you need to do deficit shaving.

You need to like, do something about that.

And what I would say here is I know he's a populist and I know he campaigned on $15 trillion of extra deficits and all this stuff, but there is this weird thing coming up that we should talk about, which is this narrative like government is inefficient.

Elon Musk is on board.

There is, I think, an opening.

There's an opening for Republicans to return to their original sort of Republicanism on deficits.

And one of the reasons why the voters voted them in is because inflation.

And voters are not stupid.

They do understand that there's a connection between fiscal spending that didn't go into their pockets anymore.

You know, the 2020 direct stimulus checks are gone, long gone.

Chips act, inflation reduction act.

Like, how does this really benefit me?

What have you really done to curb inflation?

Is basically what the electorate said.

And so I do think, and also I think there was a lot of latent anti government from the pandemic, from government overreach.

I think that played a role as well.

And so I do think that there's this coalescing of potential narratives that would allow Donald Trump to make a pivot towards fiscal consolidation.

Modestly, I'm not talking Tea Party style at all, of course, but, you know, that's what Bill Clinton ultimately did.

I mean, in 94, again, he pivoted away from populism towards centrism.

We today remember Bill Clinton as a laissez faire right wing, honestly, on, on, on the economy.

But he didn't campaign like that.

Bond market hit him upside ahead and then he went to the middle.

I think Trump can probably do the same thing.

I hear you.

I'll push back against you a little bit though, because I think you're right that uncertainty around holding longer term bonds is probably what's happening here.

But the argument that a Trump populist could make back to that when he's sitting down with Elon and telling Elon, shut up, I'm now the President, you have to listen to me, I no longer need you.

He could say, look, I'm just going to make growth go up.

So I'm just going to stimulate the economy and we're going to grow out of it and I'm going to get a bunch of tariffs, so I'm going to get a bunch of revenue from tariffs and I'm going to make sure that China comes here and does a deal with me.

Like we, we are just going to grow this thing the fuck up.

And if you don't like that, Elon, I will give you a special budget just to go to Mars.

Because I got what I needed out of you on X.

Like, I mean I think that's, that's maybe in the cards here now.

I think that probably to your point, like if we're calling this a bond market riot, if you saw that, like the riot would probably become, I don't know what's stronger than a riot, like an all out revolution or something like that.

And then, and then maybe Trump would have to run it back.

But why do you think it's not about trying to boost growth?

Why are you going towards the fiscal, not conservative but you know, reining it in a little bit?

Well, because you know, we have plenty of growth.

That's the difference between 2024 and 2016 and the voters, I mean your question initially was great, right?

You're saying like, hey man, wait, hold time out.

Unemployment is at what growth is it?

What, what the heck is going on?

So clearly, clearly Donald Trump did not get elected to get us more growth in 2016.

I think he was.

In 2016 we had had eight years of a jobless recovery, capex, less recovery, secular stagnation, low growth, disinflation.

Right.

So in 2016 it was very simple, just boost nominal GDP growth.

You good in the market like that in 2024?

I think it's more complicated than that.

And so yeah, I mean I think, I don't think the electorate wants more growth.

They just had all the growth shoved down their throat.

They're swimming in growth.

Growth is not what I think.

I think he's smart enough to know that that's not what he is really elected for.

So I don't think it's going to be that simple.

He's elected well.

And this goes to the question of perception versus the economy and versus markets.

Because if people are dissatisfied with the economy and it's inflation that is upsetting them, he's been brought in to lower prices.

So how, how is what you're talking about going to lead to lowering prices?

Because if we get here two years from now and inflation has popped, I mean, maybe he'll do his weird Trump charisma thing and he'll be able to change perception in ways that are beyond my ability to comprehend.

He's already done that so many times.

But it seems to me that the perception of the electorate and what you talked about earlier was, hey, I can't afford childcare, I can't afford education anymore.

I can't afford to go on vacation, I can't afford a house.

Like, great.

So I can buy an iPhone for $500 and I can have subscriptions to five different streaming platforms so I can sit on my couch and watch it.

Thank you.

Globalization.

Like, I'd like my, like, you know, you start building out that narrative.

I think he's been brought in to cut prices.

I mean, I guess what you're talking about maybe gets you there.

I don't know.

But isn't that the perception thing that he's going to have to work with?

Or is it literally just going to be, I saw somebody on X posting, you know, what Republicans think of the economy versus Democrats.

Maybe we're just going to crisscross and in six weeks, Republicans will be like, this is great.

He, like, is not even in yet and he's already transformed things.

I think some of that will be definitely happening.

That's, that's, that's a fact, my friend.

Like, so look, I think again, I think we're over indexing of 2016, you know, and I think a lot has changed in 2016.

The macro context is completely different.

In 2016, the biggest ill was not enough demand and plenty of supply.

This is just an economic fact.

In 2024, the biggest ill is too much demand and not enough supply.

And so I think that, you know, that's the first issue to just keep in mind, macro context matters.

And so, like, I see all these traders going up, like, you know, small, small caps and the dollar's up, and they're just replaying 2016.

I'm not sure that's correct.

I do think bond yields are going up because they're effectively saying, as they did in 2016, but they're saying this time around, like, in 2016, they never got to a pernicious level.

Now they're already approaching it and they're saying to Donald Trump is like, we don't need growth.

This is, this is not what's needed.

I think he's going to adjust to that reality.

The other reality he's going to adjust to is that, you know, I have this, I think the Cato Institute or somebody put together a list of like a, a survey.

What are the most important issues right now.

And it was 30 answers, I believe.

And trade and globalization was by far the.

At the end, you know, and like, nobody really cares about trade.

Nobody.

Like voters.

This was not an issue at all.

And if they do, to your point, it's about inflation.

And I mean, American voters are not dumb.

They know that if you raise tariffs, you're raising prices.

Like, duh, like, obviously.

And by the way, the total that you can get if you raise tariffs in China to 60%, you're going to get $300 billion in revenue.

Did you know that?

Did you know it's that small?

300 billion.

It's a drop in a bucket.

The Fed bought $400 billion worth of corporate debt in one day during the pandemic.

You know what I mean?

300 billion.

That's how much you're going to raise.

Get out of here.

So what am I getting at here?

I'm getting at the fact that I think Trump can sense that.

He can sense that.

It's just not going to give him any political capital to start a trade war.

And so I actually think that because there's no demand for it.

And I think he's going to leapfrog Democrats and their position, as I think we've discussed before, this is where I have a heretical view.

I think that he's going to make a deal much faster than people think.

And I think that he's going to index on, you know, tariffing companies in order to bring manufacturing back to the US Rather than tariffing countries, which will be a massive change in what a tariff war means.

I mean, from a macro perspective, if you put tariffs on John Deere, you know, you're not going to, like, trade bonds and currency off of that.

And I think the Chinese are going to love that deal because it allows everyone to win without there being a real disruption to the economy.

What I mean is, like, some economist is going to come and say, like, hey, but that's impossible because supply chains can't really be relocated to America.

That's my, by the way, standard voice board of commerce.

And so he's not going to try to move the entire supply chain to the US we don't have workers, but he's going to get to cut a ribbon on a nice $10 billion BYD EV plant.

It's a JV with GM in Ohio.

Everyone's gonna applause and it's gonna, you know, like, it's gonna meaningfully change the lives of some people in Ohio.

That's cool.

But if he shifts to that policy, that type of a trade war, I think that that takes away a lot of the people's concerns about global trade, about emerging markets.

The dollar is reacting now as if he's gonna, like, impose these broad tariffs on everyone.

And I just don't see that happening.

Because what's, what's the, what's the return on that political investment for him?

Yeah, all right, put a pin in that.

I want to come back to that because there's one more thing I want to touch on the domestic economy, and then we'll come back into that.

And the question I'm going to ask you might bleed into it anyway.

Oh, and also, I don't ever strongly disagree with you.

I'm usually playing contrarian.

But there is one thing you said in there that I 100% wholeheartedly disagree with.

You said American voters are not dumb.

Sorry, they're dumb.

All voters are dumb.

This is why the Republic was structured the way that it was.

Weber's definition of charisma, I'll paraphrase here, is that a charismatic politician is somebody who can convince people to vote against their own self interest.

And by that definition, Trump since 2016 has been absolutely brilliant.

Just go back and look at interviewing people around Obamacare in 2016, where they didn't understand that their healthcare came from Obamacare and they were voting for Trump because he was gonna get rid of Obamacare because of all the things with the Tea Party and everything else.

So I think there are people who believe the whole tariff taxes nonsense.

And I can say that because I've been out there listening to them.

So, sorry, American voters, if you think that you're smarter than you are, I think you're stupid.

But so the one question I want to ask you on domestic politics.

Yeah, well, what can I say?

Like, it's.

And by the way, this is not special to America.

This is like most people are not politically informed.

Most people are voting with their guts and things like that.

They're not thinking about these things.

I think as deeply as we are.

And I think that's one of the reasons the information economy and the media gets all of this wrong, because they're not actually indexing on the things that people care about, they're indexing on, oh, I read this book, or I compared this to the Grover Cleveland election, or, oh, I have this fancy poll model.

It's like, no, like, that's not actually what people are thinking about.

But the one thing we haven't touched on, on the domestic economy before we move to our bread and butter, butter of geopolitics and China trade war is immigration.

Because if you look at inflation, like, it seems to me that the most, the one thing that has bothered me the most in the economic data is about labor.

Because, because you have all these migration issues and because you've got the border all clogged up.

And because, because this has become a political football.

Labor rates for all the things that they don't tell to the Bureau of Labor Statistics, whether that's farm workers or the guy who's going to work on your house or all the sort of un, you know, unacknowledged people who actually make the US Economy work like that is drying up.

Us, you know, population growth rates are at their lowest in 120 years.

Like, how do you think about immigration policies and the labor market?

Because that's the one, especially at the lower end of the labor market, where I'm sort of most concerned, because I don't know how you fix that problem anytime soon, especially with what Trump's been talking about.

Yeah, you nailed it.

I mean, there's two things that we basically have talked about now, immigration and fiscal policy.

Those are the two things.

And so, yeah, I think that immigration will clearly, like, if you look at contribution to the labor market, actually, you know, domestic population, like native population, has been flat in terms of its contribution.

It's been migrants who have increased.

That's where the US has had almost all of the labor force growth, which is critical to GDP growth.

It's not just about keeping prices low or wages low, inflation low.

It's also about just growth, Jacob.

You know, like, human beings show up, they do a job, they make money, and then they buy stuff with it, you know, so it's, it's, it's actually generated GDP growth.

So that's that kind of gravy train.

I think there's a gravy train of American exceptionalism where America has just crushed the rest of the world.

And there's like three cars on that train.

One is that America is just awesome.

It's got innovation, entrepreneurship, you know, it's just like, great country.

Like, yeah, mirror.

And by the way, that can't explain why American stocks have done so much better because America's always had that.

It's always been the most pro business country in the world.

It's always been innovation, technology.

So like.

But there is that, right?

So like, it's like a pie chart of reasons why America has outperformed.

A big slice is just America.

But there's two other slices that we just talked about.

One is the fiscal gravy train and the other one is the migrant gravy train.

The U.S.

the United States of America has by far outperformed any country on the planet in terms of how many migrants have just shown up relative to population other than Canada.

And then the fiscal policy, which where America's just gone nuts, you know, and this is juiced up returns in equity markets.

Yes.

In equities.

I can prove it to you with data and charts.

Fiscal policy has correlation to markets.

And I think that if the takeaway from what just happened, and what will happen is that Trump will himself abate the migration gravy train and will be forced to abate the fiscal gravy train due to the bond market, then isn't a takeaway here that the two pillars of American outperformance, what made America different, what made American assets great again over the last eight years, isn't the takeaway that it's actually going to reverse.

That's to me, the big takeaway here is that you should not be long $, you should not be long small caps in the United States of America because the two pillars, engines of growth are actually going to dissipate.

And I wrote about that yesterday before I knew the result.

I mean, I was in the Trump camp, like you said, not massively.

I didn't expect him to win the popular vote, but I expecting him to win handsomely.

So like in the swing states.

And so I was preparing for this and so I was thinking to myself, what do I send to my clients?

What is the big profound beyond the bitcoin move and like, you know, the dollar or whatever, beyond practical trading of the election, what is really, what do we look at 12, 18 months from now and when we look back and say, oh man, I did not expect that.

And I think the big takeaway is like, no, Trump is going to take away the two pillars of American exceptionalism that have allowed assets to outperform.

So yeah, your point is great.

Migration is part of that.

All right.

Well, I think that's a way to back into, back into what's going on in the rest of the world.

Because part of the I would argue that part of the gravy train here is because of the alignment between the United States and China.

You're right that the United States has always been the country of innovation and technology and things like that.

But the United States stopped being the country where things were made 30 years ago, maybe 40, 50 years ago, when they offloaded a lot of it to Japan and Germany before it went to China.

But there's been this symbiotic relationship to where innovation is still happening in the United States and in the countries that are allied with the United States.

And that China gets to assemble lots of these things and steal as much of the intellectual property as they can while they're doing the assembly.

And obviously that relationship started to break down.

I would argue around 2012 with Obama.

Then Xi Jinping comes in in 2013, then Trump comes in with a piece of chocolate cake at Mar a Lago in 2016.

Like, it's a longer story.

It's not just one that belongs solely to Donald Trump, but he has talked on the campaign trail about 60% blanket tariffs against everything that is coming in against China.

And I was trying to sit down myself this morning because I have to give a presentation to a client tomorrow about sort of different scenarios for specifically the US China relationship.

And I mean, the three scenarios that I have.

Tell me, tell me where.

I think I know where you are, but tell me if you can think of more.

The first is, you know, the art of the deal, that this really is all part of a negotiation process where Trump will make some sort of deal with China and will move forward from there.

The second would be full on trade war.

And that would be getting US Allies on board to isolate China and thinking the way really the Biden administration has thought.

And I think how Harris would have governed.

And then I think door number three is just full on isolationism, like just closing up everything and say, no, it's not just China.

It's tariffs against everybody.

And we're going to bring all these things back home.

And I mean what I say, and I'm going to push everything through.

And, you know, sort of that would probably mean a rapid spike in inflation followed by a deflationary crisis.

Anyway, so let's, let's back into the tariffs and let's talk about it in the context of China and also the rest of the world.

Where do you think this is going?

Because Trump has said some pretty, I mean, I don't want to say crazy.

He has said some pretty aggressive things on the campaign trail and hasn't backed off of them and I think you are willing to call his bluff.

Yeah.

So the last one, you know, autarky, you know, he has said on the campaign trail that like I think in the 1920s or whatever or 18th, 19th century, we financed the federal government out of tariffs.

Yeah, Federal government was like three dudes and a horse.

You know what I mean?

Like the White House did like the White House didn't have walls built, you know, like, come on.

One thing that I love about Trump, by the way, is that he loves charts.

You know, as a, as a member of the sell side research community, I find it endearing.

It saved his life.

Like a chart actually saved his life.

If you want to subscribe to my research, very chart heavy, like the tagline should be, it may save your life because it literally saved his.

He'd like tilted his head to look at the chart, to point in the chart.

So anyways, someone's going to show him a chart, Jacob, of how much he can raise through tariffs and how expensive is the US Government.

So like no, I, I don't think that there's.

The autarky is going to happen.

And then I think it's between your first two scenarios and I assign like, like 80% to the first one, that it's the art of the deal.

So why, number one, voters are not really motivated, passionate about China.

I think Americans are miffed about trade with China.

They definitely want it to be improved and more fair and more favorable to the United States of America.

But there isn't an overwhelming anti globalization view.

And you can see that in the polls.

People still believe in free trade.

They think it benefits voters.

They just want it to be fair for Americans.

And it also didn't motivate this election.

Like nobody was talking about TPP as Clinton and Trump.

There was no mentions of nafta.

Like during his convention speech he mentioned tariffs twice.

Twice the word tariff was mentioned twice in like 17 hour speech that he gave.

So just slightly over exaggerating there.

So I think that there's no political gain for being really tough on trade.

They just, it's not 2016.

That's not the narrative.

The third thing is no one's listening to Trump.

Nobody's listening to him at every turn.

Watch the Bloomberg interview that's on YouTube that he did before the election.

Two weeks, two, three weeks before the election.

Watch his entire convention speech, watch a rally, find it on YouTube, watch what he said.

He hasn't been talking about 60% tariffs in nine months.

What he's talking about is specifically tariffing individual companies in order to force them to move production to the US That's a profound change from this.

I'm going to blame.

I'm going to impose 20% tariff on all Japanese goods.

Now he's saying, I'm going to impose tariffs on Japanese companies so they move to the U.S.

that's the 1980s Ronald Reagan solution to the trade.

So that is.

He's already pivoted to this.

And so Goldman Sachs, JP Morgan, my firm, BC Research, we.

We kill thousands of poor, innocent Excel cells in the efforts to compute the mathematical impact of a 60% tariff that we're basing off of a February interview he gave to Fox News where he was barely caffeinated.

You know, and so.

And so the emphasis in every speech he's made since then has been like, no, I'm going to tell byd, you can't build a factory in Mexico, you got to build it in Ohio.

And no one's pushed him on this.

No one's asking him, like, well, wait a minute, so you're okay with Chinese fixed asset investment in the US and the answer is like, yes, yes, I am okay with that.

That's profound.

And it's going to cause the American national security establishment, which is already extremely nervous about Trump, is going to cause them to light themselves a fire.

Because what they've done is that the American military intelligence complex has made, has made this alliance with trade protectionism, so they've basically fused American national security policy with trade.

And so everything is a risk to America.

You know, like, Chinese car software is a risk to America because it will, like some suburban mom driving a minivan becomes like an autonomous drone that mows down the children in the case of a war with China.

You know, like, all sorts of stuff is going through Congress, man.

Jacob, I'm telling you, cousin Jacob, I really feel high conviction of you.

Trump is going to show up, he's going to say like, this is nonsense.

I want Chinese companies sinking tens of billions of dollars to our country.

And listen, I'm going to force them to do JVs.

I'm going to force them to do what they did to us in the 90s and the 2000s.

Oh, you want to come to China?

Give us your ip.

Oh, looks like the Chinese know how to build an ev.

Looks like Detroit doesn't maybe give us that EV technology and then you can sell cars here.

So, yeah, byd, you know, car is going to have to be the GM car.

And so I think that you're going to See a real flip on this because there's just no upside to being a really dramatic.

And one of the things about Trump you have to understand is he's always looking to differentiate himself.

I mean, come on, in his first term, he was doing stuff just to piss off Obama because Obama made fun of him at the press, you know, at the dinner.

So anything that Obama did, anything he had to redo, even though his deal was the same as Obama's deal.

You know what I mean?

So anyways, you think he's going to now be tough on China?

Why?

The Democrats are as tough on China as anybody.

He gets nothing.

He doesn't get differentiated.

He doesn't get any political pat on his back.

The voters are not going to be like, that's why we put you in power.

So I think you're going to see a dramatic shift in this.

And I think we're all way over indexing on it.

And the dollar is shooting up right now and foreign currencies are falling.

Emerging markets are vomiting almost exclusively because of this issue.

And so I do think that that's, that's, that's a fade.

Yeah, I'm taking the other side of this with you.

I mean, I'm open to it being on the scenario list.

But let me throw four things at you that I think, or try to poke four holes in your argument.

The first, I think you're misreading the electorate on China because if you look at most of the polling around China, there's been a massive shift from 2016 to now about how Americans across demographic lines.

So whether it's young people, it used to be that young people liked China and old people didn't like China because of the Cold War and memories of the Cold War and communism.

That's not true anymore.

There's been a massive shift in the US Electorate on being skeptical of China, of China posing a long term security threat.

And that has something that has been pushed through at the top levels of both parties.

It's one of the reasons why the only stuff that gets through Congress is stuff that is framed as this is anti China.

So the CHIPS Act.

Yeah, it was because of China.

Like the things that actually work in government right now are because you can make China the boogeyman.

The second thing on Trump, what he says, I'll push back against you here too because I think you're missing, you know, some of the campaign rallies that he does because as I already referenced, the day before the election, he was saying blanket tariffs on Mexico, 25%.

And if that's enough.

I'm going to push them up.

And there would be other campaign rallies where he would say he would do the China stuff again.

So you're right that he didn't do it at the Bloomberg interview because he was trying to bat his eyelashes at the Bloomberg audience.

But like, you know, no convention too.

At a convention, at the convention he didn't do it.

And in campaign rallies, he's literally telling audiences in Ohio he's going to bring Chinese companies back.

But by the way, the Mexico thing, I agree, that's a great example of where he will continue to use tariffs as a tool of policy.

But for what purpose?

In that particular case, it's immigration.

Yeah, that's what he wants.

But he also, like in those very long like rallies and speeches and things like that, there are always sections on tariffs and he will say if 60% is not enough, we'll do 100% and if that's not enough, we'll go up.

He has said that about China over and over and over again.

Companies, but in companies.

No, I know, on China, in general blanket on China.

Like I got, I got the tape.

We'll go back and watch the tape if you want.

Like he's saying this bullshit.

Okay, we can watch the tapes because I can tell you the two speeches that were very important in televised.

Okay, Bloomberg, fine, you can say, well, that was for the business community.

Fair.

But the convention speech, here's your opportunity to set your agenda.

Right.

It's like the most important speech you're going to make before the election.

And he used the term tariffs twice.

Wanted relation to Iran.

Again, similar to your Mexico example, using tariffs to get non economic outcomes as a tool.

And the other time when he mentioned it on China, the only time he mentioned tariffs in a convention speech, three hour speech, plenty of time to say you're going to raise tariffs on all of China.

And he only used it in conjunction with bringing Chinese factories that are being built in Mexico into the U.S.

but okay, I mean, look, it's fair.

Like, I mean, you know, we'll see.

Like, obviously, no, you got to listen to him going forward.

So I mean, well, and so this is the third point because I think it's really hard to take anything he says that seriously.

I don't know if you read the McMaster book about what it was like to work in that administration.

I don't normally read those tell all books, but I read that one because I have some respect for McMaster and the environment that he described.

I mean it was absolutely Batshit.

And he also, he painted a picture of Trump as much more intelligent than I have ever given Trump credit for, especially in the sense that he sort of describes Trump as a reflexive contrarian.

So if you go to him and say, hey, this is what I want to do from a policy perspective, even if it's exactly what he asked for two days, he's like, nope, I'm going to do it.

Something different, because you're wrong.

I don't trust the experts.

Like, I'm smart.

And he got to the point where he was even trying to couch things to, like, make up for the contrarian nature that Trump has.

And I think you can see that in the unpredictability of his policies the first time around.

And I.

That's one of the reasons why I think that long that, you know, that the long end of the yields are rising because there's uncertainty.

Like, you don't know exactly what this guy is going to do based on what he's saying.

But all of that is fine.

I think actually, like, your points might defeat all of my first three holes.

The fourth one, I think this is the one that I'm most interested in you giving me.

Why you think that this isn't right.

Why on earth does Xi Jinping agree to this?

I don't see any incentive for China to say, sure, dude.

Like, why?

No, that's the easiest one to disagree, actually.

The first one actually is problematic because you're arguing that, like, look, there's a consensus.

Everybody hates China.

And we can look at the Gallup poll.

Like, China is clearly, I think Gallup or Pew, China's, like, just skyrocketed as the, you know, like, in terms of how.

What's the term?

Unfavorability or something?

Unfavorability?

Yeah, it's through the roof.

All I would say about that one, like, I don't have a counter.

I would just say, like, yeah, I think everybody's absolutely miffed about China.

Like, those polls don't measure intensity.

And when Americans are actually asked, what is America's number one enemy?

Their China's actually fallen significantly.

You know why?

Because it's just been a very bad villain.

Like, if we were living in a movie, which we freaking might be, I think China would have been fired by now by the producer.

Like, hey, listen, man, you're not, you know, we hired you as a villain, but you're just.

You're just not cutting it, man.

Like, you're, you're just not carrying the role.

You know, like, hey, Russia, Iran, you Guys are on.

And China's like, oh, man, I tried, you know.

Well, the, the ironic thing there is that Xi Jinping himself fired the people who were doing a good job.

He had his wolf warriors out there for like a year or two and then he was like, hey, guys, this is too much.

But that's exactly it.

But that's exactly it, because China understands that, right?

So they, they, they've bitten more than they can chew.

So look, they drank all the Kool Aid of the Beijing consensus in 2008, nine went too far, and now they're like, oh, oops.

So I think that, like, I completely concede that there's consensus that China's arrival, but the question is, how intense is that and to what extent?

I do think some of the policies that national security establishment and protectionists have come together and there's just try.

They're starting to overshoot.

And one example of this is like TikTok.

You know, Trump is the one that proposed a TikTok ban and during the campaign he reversed it.

And it's very interesting, Jacob, because, listen, why, why?

Like, because one of his donors invests in TikTok?

Come on.

No, to me, to.

Because that's the liberal kind of, you know, Main street media explanation.

It was such an easy thing.

Even if you're going to do your, your donor's bidding, even if you're going to do it, if being tough in Chinese companies is politically good, why would you just not lie during the campaign?

Why not say like, oh yeah, man, I'm going to crush Tick Tock.

You just wait until I become president and then you become president, you forget about it and you shove it in the drawer.

And it's because I think that Trump, the one superpower he has, and I mean, he has a superpower.

Jacob, super pump is his gut, just feels where the median voter is.

He just feels it just feel.

He just knows where they are.

And the media voter, like on the curve is like here, you know, on like trade relations.

The Democrats have gone way over there.

They're like, yeah, we're with you.

China's evil, you know, And Trump is like, I'm going to go right here.

We're going to get closer to.

And that's what he did, by the way, in 2016, by being anti China, anti trade.

You know, the Democrats were way too free traders.

He identified where the media voter was and now he's doing the same thing.

So I think he understands that everybody dislikes China, but just not enough to have like a massive abrogation of all trade with China.

And that, and what I keep telling to my clients is don't forget Robert Lighthizer.

There's a picture of him.

There's a phase one deal still on the USTR website.

You can go to USTR website, and here's a smiling Robert Lighthizer next to Juha and Trump.

Like they're signing it.

These guys signed a deal.

I think he's going to get another deal.

That's definitely that one.

Even though they guess everyone's kind of miffed.

Your final point was.

Sorry, I forgot.

What was the big one?

Well, I'll ask you in a second, but I will just say that the commitment on that deal that you're talking about was $275 billion worth of Chinese imports.

And it came out to about 155.

So there was a deal and China literally stole their lunch money.

And that was the last question.

Why on earth should China do this?

And if China does agree to this, that means they're probably getting the better deal.

So, no, I mean, I kind of did the math on this and yeah, I do think China will probably get the better deal.

Like, let's not, let's not fool ourselves.

I mean, Trump's deals are not the greatest deals ever.

That's what he calls them.

But they're just deals, you know, like the NAFTA deal.

Canada, I would argue Canada wiped the floor with Robert Lighthizer, just crushed him in those negotiations.

Most of the provisions that, by the way, Trump campaigned, he campaigned on these pro union, pro labor provisions, they were Canada's asks, not America's.

Anyways, doesn't matter.

Look, to your point, okay, so why would China agree?

So I've run the math, right?

And moving car assembly to the United States would imperil something like a million jobs in China.

That's it.

So it's, it's an easy deal.

It's a deal that Japan took in the 1980s.

It's an obvious yes.

It's an obvious yes.

Because when you think about cars, you know, the reason countries want to build, like the fact that Malaysia has a car or my former country where I was born, Yugoslavia, had a freaking car, right?

Called Yuga.

The reason.

But every laughs like Malaysia's Proton.

Terrible car, right?

Yeah.

False.

What the car lets you do, even if it's terrible, is it allows you to have.

It's the tip of the pyramid, right?

So you have all these supply chains.

You get to have an industry that makes car seats.

You have the industry that makes Car gears, you have the industry that makes chassis and then you can pair up with other parts of the world and produce those things for them without a label.

The fact that you actually then assemble everything domestically into a vehicle is irrelevant.

You know, for China, it's not irrelevant.

They're trying to actually build nice cars.

So I'm not saying that, but the point is that car assembly, when everything is get put together, is kind of the least relevant part of it.

It's really the supply chain.

It's the entire ecosystem that you've built in order to have a car industry.

And so if the United States of America says, hey, assemble these EVs in Ohio, China's going to be like, no problem.

If that's the price to pay for us to have a car manufacturing ecosystem, that's fine.

Because that car in Ohio, the BYD Slash GM JV that's going to be in Ohio, is still going to have a tailpipe built in China and just shipped to the US but you think.

China is going to do that without asking for a concession?

Because let's say China does that.

What if they say, OK, we'll do that, Mr.

Trump, but we want all the tariffs taken down that have, that have been put up since 2016 or Mr.

Trump, we would like your blessing to take Taiwan.

Will you do that for the car industry?

No, I think I can do it to calm down the tensions with the US because you don't have any ability like what you, the reason you do it, in my view, is so that you don't get more tariffs imposed on you.

I think that you don't think there would be more on all the different industries where China has become a dominant producer, like whether it's solar inputs or whether, whether it's feed or whether it's amino acids and vitamins or tires or toys, like you go down the list, like China makes all these things.

So I'm sure that there will be isolated anecdotal examples where Trump like succumbs to a particular, you know, lobby group.

So I'm not saying that there will be nothing, but yeah, I think that blanket tariffs against China will be taken off the table as a tool going forward.

I'm not saying he's going to lower the current tariffs.

I think China will take that deal.

They will take the deal.

Because you know what China's been doing over the last four years, and you know this as well as I do, they've been moving production to other countries to get under the US tariffs.

2024 was the biggest year in history of China in outward fdi.

And no, not some Communist party led like one belt, one road.

It's all corporates actually just doing FDI abroad because they're going under U.S.

tariffs.

Vietnam, Mexico, I call it enemy shoring.

Right.

It's been happening.

2024 was the biggest year.

It's 80 billion.

Never in Chinese history, even at the height of one belt, one road, have they ever exported that much capital.

And Trump is essentially saying like, wait a minute, I want a piece of that pie.

I want that FDI to the US that's what he's going to get.

What the Chinese are going to get is to continue to spread out their supply chain, which by the way benefits national security of the US If China moves supply chain to Mexico, that is beneficial.

Mexico is a geopolitical ally of the US if there's a war with China, you know, US is seizing those fixed asset investments.

We all know that.

So like all of this is kind of, not to use Xi Jinping's term, but it's kind of win, win.

You know, America gets a national security win because a lot of Chinese supply chain is then distributed across allies.

And China gets a win because they continue to access American market.

And yeah, they'll probably have to pay more than just fdi.

I think they'll have to buy some of, you know, agricultural products and so on.

But I think there is a way in which both sides are satisfied.

China will lose some manufacturing labor.

Yes, yes, they will have to get some people lose their jobs because the plant is now in Ohio.

But it lowers the tensions and it allows both countries to kind of land the plane which otherwise would have taken the two countries into complete bifurcation and decoupling.

That like doesn't stop.

And under Harris, the big risk was your second scenario, not the third.

Right.

The third scenario would have never happened under Harris.

But actually the second scenario leads us there anywhere which is ever raptured intentions on all products.

And that's by the way, not working.

And it's not working because as I've been arguing for four years, American allies are just not going to do it.

You've got Californian semiconductor companies.

There was a great Reuters article about this lobbying the Democratic Party, like, hey, your high tech export controls are hurting our competitiveness because Europeans and the Japanese are not abiding by your rules.

You know, they're cheating, they're lying.

So you need to give us a leg up.

And Trump is going to listen to that.

He's going to listen to the Semiconductor industry and say like no, we are going to send Capex machines to China that produce 20 nanometer chips.

Who cares?

They're chips in washing machines, also cruise missiles.

But you know, like if they don't have 2 to 4 nanometer chips, like who cares?

Like life will go on.

So anyways, in North Korea probably washing machines and cruise missiles can be the same thing.

They just put the washing machine on to increase the load.

Well, okay, so like I'm very skeptical of your argument, but I do think that it is one of the scenarios.

But I think one of the questions then that we have to ask is what does that mean for US allies then?

Because if you're going to do this with China, like one of the reasons you're doing this is because you're mad at Mexico because things have been coming in through Mexico.

You might be mad at India for recently, you know, making up with China.

And maybe India is looking at all of this China outward, FDI and saying we want a part of the pie as well.

Canada, the eu.

Yeah.

So you know, well I think, look.

I mean, look, this is, but this is where my constraint framework comes in.

You know, Donald Trump can wish to be a bird, but he's not.

You know what I mean?

Like he can Wish to add $15 trillion to the deficit, but the bond market is going to say something about that.

And he can wish to have an autarkic economy but like India is going to be like, cool, bro, see you later.

Why?

Because India cannot industrialize thanks to America.

It's not 1950s anymore.

You know this nonsense about Apple being built in India.

Get out of here.

That's just a freaking, we all know that's just a cosmetic like hero project.

The only way for India to industrialize, the only way is by having a good relationship with China because guess what, America doesn't have the iPad.

For the type of industries that Indians can actually participate in, they need low cost, low value, you know, refining dirty stuff.

That's what needs to move to India for them to move up the value.

They're not gonna start making fucking cell phones overnight.

That's not how the world works.

So like yeah, Modi is not dumb.

And then yeah, that's why he's solving the problem.

And yeah, that's why the quad is probably going to fall apart like obviously.

But, but Trump has faced that like American allies are just not following America on all this stuff like ASML and Tokyo Electron.

Again, Reuters article.

Great.

Like a week ago just basically said California has semiconductor capex companies like lam and so on.

And these companies are dying.

They're dying because ASML and Tokyo Electron were gorging on China's 20 nanometer industry push.

You know, China basically decided to give up the high tech and just go into the middle ground, which is very important because our cars, our washing machines use these sort of legacy chips as they're called.

So the point is that America can't push against that.

This isn't about like how smart you are or how like sneaky Jake Sullivan is going to be or how smart Matt Pottinger is going to be designing policy.

This is about massive constraints.

The rest of the world is just going to tell America, sorry, but I'm just not going to abide by your rules.

So what are you going to do?

You're going to like, like take away my dollar financing to France because I'm selling Airbuses to China?

Get out of here.

What the rest of the world is going to tell America is something very simple.

Like, do you want me to fight on your side in World War 3 against China?

Is that what you want me to do?

Cool.

Well then I'm going to need to make some money to pay some taxes to develop cruise missiles to help you in case of that war.

Okay.

And for that I need to sell legacy technology to China.

Sorry, Like, I'm going to have to sell an Airbus.

ASML deduct you're going to have to sell a machine that produces a 40 nanometer legacy chip.

And that's where I think the Harris view has run its course.

Like the Democratic Party view that you can just keep exporting controls and forcing allies to participate in your blanket.

Like, it just, it hasn't worked.

It just hasn't worked.

And I think Trump, what he's realized is that there is another path.

It's like, okay, fine, fine.

I see what China's done.

I see what they've done in reaction to my tariffs.

They're going under them by putting all these buildings and all these factors.

Error.

I'm just going to take that and I'm going to force them to do JVs like they did with us.

It's going to be a fixed asset investment into the U.S.

you know what's important about that phrase?

It's fixed.

I can nationalize it.

I can like grab it.

If China is naughty, that's a, that's not.

You know, the national security hawks in America are so kind of dumb because they're like, oh, it's a security threat because they can put like little cameras and like stuff.

It's like, no, no, no, no, no, no.

It's a threat to China.

I have $10 billion of your stuff in Ohio.

You know, like, I'm gonna seize that if there's a conflict.

If you're naughty on Taiwan and you just sign $30 billion worth of investments in Ohio and Michigan, like, that's mine.

And so that's, that's where I think Trump is going to be a lot more pragmatic and a lot less, like, led by what the Economist or Foreign affairs says, which would be like, no, no, no, all of this has to end.

Well, what is, what does that mean, though, in practical ways for, say, the US Mexico trade relationship, which is arguably the relationship I am most worried about in the context of a second Trump administration?

Because there, the United States has significant leverage, leverage over Mexico.

Mexico has some leverage over the United States, especially in terms of whether it's manufacturing or a lot of U.S.

exports.

If you look state by state, you know, the amount of states that depend more on Mexico than on any other economy in the world, like, it's a really big deal.

So how do you think about, you know, what you're talking about in the context of what would that mean for US Mexico relations?

Do you think that this was all just a big threat and he's going to go into the USMCA renegotiation in 26 and everything's going to be fine?

Or do you think that, like, there actually is problems for a Mexico or, say, a European Union?

I know in Europe, they're running around, you know, lighting their hair on fire because they're afraid of what's next.

Well, China's not really putting factors into the EU other than Hungary.

So I don't think that.

And remember, those factories are not for US Consumption.

They're really for European one.

So Mexico is the one to really focus on from the narrative that we're having here.

And I think your initial question about Mexico is far more important than Chinese FDI to Mexico.

Chinese FDI into Mexico is at all time highs, but it's still like, not like a game changer.

You know, your initial question about Mexico is really about immigration.

So what I would say is, like, I hope Shinbaum has a lot of barbed wire, you know, because, you know, like, she better secure that southern border.

That's what I would say.

I mean, that is her prayer.

National security priority, national economic priority number one.

You know, they, they, they need to build a wall.

They need to arm it, because Trump is going to be tough on Mexico.

Far More because of that point you raised, I think, on China.

Yeah, they're going to lose some factories.

There was, there was a byu.

No, no, no.

But forget about China for a second, though.

Yeah.

So Mexico doesn't have the capability to do what you're talking about.

They can't do that.

So what happens when they can't do that?

And Trump gets mad about the fact that they're not doing that on the campaign trail, he's threatened everything from the deployment of the US Military onto Mexico, Mexican territory, to the tariffs that we've talked about and the US Mexico trade relationship, that's a really, really important relationship for many US Companies.

So I would say that on that issue, I think we're aligned.

In other words, I think that this is an unequivocal, like, negative for Mexico because they're, you know, like, Trump doesn't actually care about East Asian geopolitical security that much.

I mean, he's going to support Taiwan.

Like, I don't think he's going to change that, despite his, like, weird statements in the past.

But for him, like, with China, he's very mercantilist with China.

With Mexico, he has other goals, as you, as you've pointed out.

And I'm not going to disagree with that at all.

So, like, yeah, Mexico better figure out a way to help the US Stem the flow of migration, whether it's, you know, asylum seekers sitting in Mexico, whatever it is.

Because you're like, you're absolutely right.

That is the critical.

And so I think we're in alignment.

Like, if, if the United States of America steals like $30 billion worth of FDI that was going to go to Mexico from China, you know, like, let's say, I think that's unlikely, but that's a lot of money for Mexico.

You know, that's, that's unfortunate.

But your bigger point is that there is something non economic, non trade related where he's going to use tariffs.

And this was my point earlier, like, when he talks about tariffs, he's often talking about them in solving the Iran issue, uranium enrichment, Mexico migration issue.

And so I think Mexico is just in his heights and there's no way.

That's why it's difficult to make a case for like, you know, the Mexican peso, despite the carry and everything else.

Like, it's, it's, it's clearly going to be under the gun.

So you're right.

Well, yeah, and I'll zoom back a little bit.

Like, one of the problems with globalization for most of the rest of the world Was that the countries that did best between 1990 and 2018, whatever you want to date it, as were the United States and China.

And if you get some type of deal between the United States and China going forward, probably the United States and China will be the ones that do the best.

The countries that got left out in that period were your countries, like Mexico, like Brazil.

These were the underperformers and never really realized their potential.

And we've seen in the last couple of years no gdp trade as a percentage of GDP has been going up in Mexico and Brazil and in some of these areas of the periphery.

So doesn't your scenario lend towards a view of not good for those countries, or are you thinking of a world in which actually things are going to be good for them in that scenario?

I think things are going to be amazing for them.

But Mexico is a unique situation because of the points that you're raising.

It's.

It's like Brazil doesn't have this problem.

It, you know, with Brazil, Trump can be mercantilist, he can be transactional.

Brazil can negotiate.

Mexico can't really negotiate with Trump on a purely mercantilist basis because of this immigration issue.

And immigration was a top issue in the election.

So I'm just worried that Mexico is going to have different rules imposed on it.

I mean, Brazil is going to be tough too, because if he really, you know, he ran it up in the rural counties of the United States and Brazil has become the low cost producer for corn and soybeans and is making waves in US agriculture.

So there's also, you know, arguments to be made there as well.

We've gotten an hour and 12 minutes in, Marco, and we haven't talked about Ukraine once.

Maybe we should talk about Ukraine and what this means for them.

Yeah.

So, I mean, you know, I think that the world was going towards some sort of an imposition of a ceasefire anyways.

So if Harrison won, I think initially there would have been one last massive push.

But look, remember when main battle tanks were the big game changer?

Remember the F16s and then F16s and then the Sidewinders and then this thing and, and now it's North Korean troops are going to be the thing that's going to swing it in the opposite direction.

Yeah.

I mean, look, I think, I mean, you know, a lot of liberals who I respect and who are very smart and who are very well informed will argue that the best thing that ever happened was Ukraine war because it's allowing the US to drain Russia's, you Know, power.

And the problem with that view is that if you are looking at the war of attrition, unless we're going to start sending troops to Ukraine, it's clearly impossible to sustain that kind of a strategy.

So when American sort of national security hawk slash, liberal progressives, Harris supporters tells me, like, the Democratic Party has the right view on Ukraine.

It has drained Russian power.

My point is always like, yeah, that's in a past tense view.

You cannot project that into the future because Ukraine is the one that cannot win a war of attrition, you know, and, and what Russia has done is it's managed to kind of turn Ukraine into their Iraq, which is obviously a bad thing, and it will have very bad consequences for them.

See the future.

But what I mean is that it's been able to do it without mobilization.

And so they're reaching into these various kind of ethnically heavy parts of Russia to mobilize troops, convicts, non North Koreans.

It's been able to kind of replenish its troops without impacting the St.

Petersburg and Moscow middle class reliefs.

And so my point about this is the writing is on the wall, man.

European politics are turning against the forever war in Ukraine.

Ukrainian politics are turning against it.

I mean, nobody in the west says this because it's politically incorrect, but Zelensky has been called an authoritarian dictator by the mayor of Kiev, former heavyweight boxing champion Klitschko, who is not pro Russian, you know what I mean?

Like, this guy is pro Western and he's calling the president a dictator for not running the election.

The mobilization bill barely passed in the Ukrainian parliament in the Rada.

So when you put all that together, I think the writing is on the wall, whether Trump wins or not.

Well, I guess there's two questions there.

The first, and this again.

So does Putin take some kind of deal and what does that deal look like?

And then the second question is, is there any chance that a second Trump victory and the flailing of the German government, maybe we'll get a new German government?

Is there any chance that this is the sprint that Macron has been waiting for?

He was out there immediately saying, hey, this is why we need a strong sovereign Europe.

Should we maybe think about doing that?

Like, is there something in there?

Or do you think it's just like Europe?

It's.

It's too late.

It's too little too late.

Like, Russia's going to grind this out as much as they want, and Trump's going to want to make a deal anyway that's not going to be favorable he probably doesn't really care in the end.

He's got bigger fish that he wants to fry, so take that however you want.

Yeah, I mean, I don't know.

I think any fair, any deal is favorable to Europe because if the war ends, the war ends.

You know, what you said first is really the critical point.

Does Putin take the deal?

There's, again, this very kind of a liberal, internationalist view using kind of IR theory here.

Like, well, you can't trust Putin.

He's Hitler.

Munich leads to World War II.

Well, Hitler was kind of good at war.

So I'm not sure that if you make a deal with Putin, he's like, ooh, what's next?

Like, really?

Really?

That's what he's thinking is going to be.

He lost, like, 300,000 human beings, 600,000 casualties in total.

Like, in terms of injuries, like, this is.

This has not.

They're importing butter from the United Arab Emirates because, you know, all those cars, you know, like, what?

Like, come on.

Like, Russia has not benefited from this conflict.

I mean, I'm sorry.

Like, anyone who says otherwise is just so far up.

Putin is.

But they're eating breakfast twice.

You know, like, I mean, come on.

This is, like, ridiculous.

It's just not like, Putin is not going to take from what just happened.

And this is where I kind of disagree with this view.

In Washington, in the Beltway, you cannot make a deal.

Once you make a deal, it'll incentivize Putin to take Finland next.

Okay, so anyways, what are we talking about here?

Putin needs somebody he can talk to, you know, And I mean, like, not to defend the man who, like, invaded a country illegally.

But the truth is, if you label him as a Hitler, like, you're basically saying to everyone, I can't negotiate with him.

And the west has done that.

The west has overly moralized Ukraine.

And I would say that that's my biggest, you know, sort of an objective criticism of the Harris, Biden, Blinken policy.

American allies get blank checks.

American rivals are Hitler.

And it's like, well, the world is unfortunately multipolar and complicated, so you're going to have to get over yourself.

Barack Obama did not run foreign policy like this.

He was far more realist.

I would say that Trump and Obama are actually far more similar.

Trump is just a really mean, uncouth, crazy version of Obama.

But the.

The fact of the matter is, like, you're going to have to sit down with Russia.

It's a nuclear power.

Like, yeah, yeah, you're going to have to Sit down with them and negotiate.

And no, it's not going to be up to Zelensky.

Like, what?

Like, you know, the White House view has been like, well, it's going to be up to Ukraine.

Like, no, no, no.

Ukraine is the client state of the United States of America, and so is Israel, by the way.

They're not allies, they're client states.

And so, no, it's not going to be up to them.

It's going to be up to Washington, D.C.

the taxpayers who pay for their defense, who voted you into power.

You're going to have to go in there and figure stuff out, obviously, defend Ukraine's interest, but it's not going to be up to Zelensky, because if it's after Zelensky, and God bless him, obviously this is his view, obviously you have to respect this.

He wants every square inch of Ukraine back.

Naturally.

Obviously he wants it tomorrow.

That's what he should want.

You know what I mean?

But that's not necessarily what is in America's interest or Europe's interest.

And so I think that one of the problems is that over the last four years, the Democratic Party has swerved away from Obama's realism almost purely to differentiate itself from Trump's realism, which is a mistake.

Trump's realism is perhaps grating and aggravating, but it is just the way you have to conduct foreign policy in a multipolar world.

It's not a unipolar world.

America can't just decide to do humanitarian interactions because that's not the world we live in anymore.

So, long story short, I think that your first question is most important, and I think Putin can talk to a realist.

He did talk to Obama.

He talked to Hillary Clinton.

They tried a reset, by the way, which failed, obviously.

But I think that the problem that if Harris had gotten elected, and even if Harris came to a point where she was like, you know what?

We got to talk.

I don't think Russia would have engaged in those talks because they would have said, well, we can't trust you.

You're going to do orange revolutions.

You want regime change in Russia, you're going to do this and that.

You don't believe in spheres of influence.

As Hillary Clinton famously said, America doesn't believe in sphere of influence, which is the most unipolar hegemonic statements to make.

Well, I'm sorry, but in a multipolar world, eh, Trump believes in spheres of influence.

He definitely does.

And he's totally cool saying, like, Donetsk, Luhansk, yes, 99% of my voters don't know where that is.

So whatever.

Now at this point, everybody always says, but will Ukraine take that deal?

And I just don't understand why a deal has to involve definitive decisions on territories.

I mean, I'm blue in the face saying this.

Plenty of wars have ended without a definitive territorial exchange.

But just like a decision to disagree, you know, let's agree to disagree, let's put a line of control and that's it.

And we can focus on rebuilding Ukraine over the next 10 years because that's actually from a Western perspective and from Kiev's perspective, a sustainable way to regain those territories when 10 years from now, Ukrainian GDP has doubled and Donetsk and Luhansk are stuck in the sphere of influence.

I mean, there's, there's a scenario here where things go badly in Moscow for the regime and 10, 15 years from now, Ukraine regains some of these territories without a shot fire.

Like how, how is it that nobody has presented that plan?

Like instead of shoving $100 billion into Ukraine, so basically we're doing vendor financing for attempt to buy our weapons so they can go die in the front line.

So instead of that, let's give them $100 billion a year for the next 10 years.

Let's see what happens to infrastructure, to innovation, to technology, to migration, to demographics of Ukraine.

And then boom, you know, 10 years from now, what are people, Is a Parisia or Kherson going to say, like, well, that place over there looks awesome, this place here doesn't?

That's an alternative that I think that Trump now brings forward.

And I think that Putin will have to deal with him because at least that he will have more of a sense that, you know, the US will abide by the deal that it signs with him.

Yeah, to your point on Putin and the Munich comparisons, I mean, if he, like Putin, like, go ahead, invade Finland, like see what happens, invade Poland, like see what happens to your country if you decide to go there.

It's not the sort of situation where like Germany was expanding against, you know, neighboring countries that weren't able to fight it.

But the part of the question that I think is more important is what does this mean for Europe?

Because I can imagine perfectly what you're saying about, you know, Trump working with Putin and getting to some sort of deal.

But the only way it works for Kiev to survive 10 years from now, the way that you're talking about is that Europe is going to support Ukraine and is going to have a long term plan for reconstruction and is going to be willing to sort Through Zelensky and whoever else comes afterwards.

And all the corruption that's within Ukraine itself and that requires political will in Europe to say no, like, we are, we are going to stand up this Western Ukrainian rum state into something that can, that can live beyond, like this war in general.

Does that happen?

Because there's a lot of, There's a lot.

I think the consensus view right now on Europe is so pessimistic, and it's always pessimistic.

Bearish.

For years, you and I are like very lonely on Europe island, talking about, like, how great Europe is, but I will say they haven't done enough.

And it's like, if you don't do it now, like, I don't know when you do it.

So are you still.

We're eating those Airbnb costs, man, right now because we've got, you know, you and I, we went in, we renovated a nice Greek style villa, we've got it posted on our Airbnb and no one's coming to our.

No one's coming.

Interest rates are going up, but I still have to build, like, what, what am I doing over here?

You're a pilot, man.

It's a very lowly island, you know, like, we're the only ones basically taking advantage of that Airbnb.

So it's, it's very unfortunate.

But listen, in Europe, there's a very clear, you know, downtrend in support for military, continued military operations.

But I think that Europe already has a plan for Ukraine and it's called EU accession.

You know, I mean, EU accession, just the process itself has benefited Central and Eastern Europe.

Now, yes, countries are souring on this.

You know, the Croatians are like, oh, maybe we shouldn't have entered the eu.

You know, the Romanians in Bulgaria, everyone's like, everyone was pessimistic.

That's because they're Eastern Europeans.

I mean, I'm East European.

I can make fun of it.

Like, it is an unquestionable fact that EU accession is the best thing that's ever happened to Central and Eastern Europe.

Like, anyone who says otherwise, like, is just an old guy who, like, hates the transitions.

Drinking a coffee in a nice coffee bar and saying, like, ah, you know, back when we were a communism, it was so much better.

Get out of here.

Look at GDP per capita.

Look at GDP performance of any country in Eastern Europe.

Those that entered the EU crushed it.

Those that didn't, you know, like, are behind, fell behind.

And so what I would say is that clearly there is a path for Ukraine that is Already created, Jacob.

Like, it's, it's been in operation for 30 years, which is you enter the EU accession program and slowly you fix all sorts of chapters you have to pass.

In Ukraine's case, I do think a simple way, a simple exchange is neutrality.

This is something Zelensky was going to sign when he was under the gun.

And I think that in exchange for neutrality, which, by the way, is defended, it can be a bastion of Western military technology.

Like Israel is.

Israel's not part of NATO, you know what I mean?

Like, but hey, it's very, very powerful.

So, so strong armed neutrality complemented with EU accession, which is already a plan.

Like, they have the playbook.

It's there.

Yeah.

I mean, just to say very quietly, though, like, that plan depends on Ukraine having nuclear weapons, because that's what Israel has.

Yeah.

I mean, like, you know, I mean, that's, that's a very good point.

That is a big difference.

There will always be a threat.

There will always be a threat of Russia coming back.

But you know what?

Look at South Korea, man.

Probably the greatest economic development story in 1950s South Korea and Argentina.

Argentina was, like, wealthier than South Korea, you know, the famous, like, in 1950s.

And look at where South Korea is right now.

And it's constantly living under the gun of now a nuclear rival.

So, you know, like, when people say, well, you can't live like that.

Well, I mean, yeah, Israel, South Korea, here are two countries that have lived under constant threat of existential crisis, and they have produced incredible innovation due to that pressure.

Yeah.

Although, again, like, South Korea, and this might change very, very soon, but what South Korea had was a defense treaty with the United States and US Military bases and promises that the United States would come defend them.

And if that goes away, which might go away under Trump, then South Korea will talk about what they've been talking about very lightly in their domestic media over the last 12 to 18 months, which is, again, nuclear weapons.

So we start talking about nuclear proliferation all over the place, which is also interesting.

You know, at the end of the day, maybe that's where we're headed.

And hey, it's going to be like, it's going to be like, like the Dune, the Dune trilogy, where because of nuclear weapons, we're back to fighting with.

I look forward to getting a banner to put behind your head that says nuclear weapons.

Not such a bad thing.

Marco Papage.

That's the hot.

Let's, let's, let's talk about that for a second, because a lot of clients ask me you know, my thesis has been for the past 12 years, we're in a multipolar world.

In a multipolar world, the frequency of conflict goes up, but not each one of those conflicts is easily grafted onto some sort of a bipolar structure.

So they can sometimes remain relatively constrained.

Like, there's not a simple alliance structure that just immediately shows up.

So a lot of my clients, and you know, like, I refer to 1870-1914 as this like period of multipolarity where we had a lot of technological innovation.

It was a very, very positive kind of a world for investors.

Even though there were wars all over the place, they just weren't between the great powers.

They were proxy wars.

So a lot of my clients ask the obvious follow up question, well, that's cool, but are we in 1880 or 1912 asking for a friend, you know, that coming.

And so my answer has always been like, hey, hey, hey, hey.

I don't know, you know, like, but if it's 1912 and there's nuclear war, not my fault.

But you know what?

Oh, I think we're in 1880.

I'll take your clients.

If your clients want to Hear why it's 1880, I'm happy to give them that answer.

And I think so too.

I think so too.

But let me twist that answer.

What if in 1914, when my brethren in Sarajevo assassinated crown prince of Austria Hungary, what if that moment in summer of 1914 all the great powers had nuclear weapons?

And here's what I think happens.

I think Germany tells Austria Hungary, like, look, man, you should be able to take care of Serbia on your own, right?

Like Russia, United Kingdom and France enthusiastically supports Serbia in the war.

And we obviously kicked Austria, Hungary's ass.

I mean, like it, it becomes a massacre.

By the way, it was they invaded Serbia twice in 1914, 1915, got their asses handed to them and they had to run to daddy, which for Austrians is Germany.

And then they conquered Serbia on the third attempt when Germans showed up.

But what am I getting at?

No one's going to nuclear war over Bosnia Herzegovina.

Like, what?

No way.

Serbia and Austria want to duke it out over Bosnia.

Like, go ahead.

So I think that we are, you know, sometimes it's that simple.

I think that the conflict doesn't become world war.

I think it becomes a regional conflict and eventually Austria, Hungary has to like lick its wounds.

And then there's like a, you know, like some sort of territorial arrangement.

But the point is that we keep thinking that everything has to end in a global war.

But maybe it doesn't.

Well, yeah, let's put that to the test.

And this is the last thing we'll do with our geopolitical tour of the world, because I do want to make sure we talk a little bit about the future of the United States before we close.

But let's put that to the test, because I think we may have a test case in the second Trump administration sitting there in Iran.

In some ways, the Middle east is the most boring thing to me in all of this, but it's also the one that is most active.

And you could definitely envision a Trump policy stance, which is regime change in Iran, and they will have a very strong and foaming at the mouth Israel to support.

Support them and Gulf states that might be interested in that.

And the Iranians, you know, are either close to nukes or maybe could flip a switch and maybe they could have a couple of crude weapons on that point.

So what if that.

What if that happens?

What if you get.

Or do you think that's just completely impossible?

But do you think that there's a world in which Trump decides that getting rid of the regime in Iran is something that he wants to do from a foreign policy perspective?

And we start getting exactly the questions that you're talking about.

Who's willing to use nukes over Iran?

Is Iran willing to fire something off because the regime is a next existential security?

Like, how do you think about that question?

You know, recently, I think it was in that Bloomberg interview or maybe it was in another interview, I'm not sure.

But Trump actually said something that he has never really said openly, which is that he was close to getting a deal on Iran, you know, and that the pressure worked.

So.

And then he also on Passant mentioned like, John Bolton, and he said, like, well, everybody who criticized me for hiring John Bolton, and I think John Bolton is an idiot, he said something like that.

But what they don't understand Trump on that.

What a walrus.

I can't believe he still has a job.

Anyway, sorry, go ahead.

But yeah, but when I go into negotiations with someone and John Bolton's on my side, like, it's such a huge advantage.

And I wouldn't.

I've written this to clients saying that this is how Trump does his job, but I never had confirmation from Trump himself.

A good example is Peter Navarro, too.

So, like, when you go into a meeting with the Chinese, Robert Lighthizer starts looking like a Sinophile next to Peter Navarro, who is the author of a book, Death by China.

So Trump's like use of humans as negotiating chip stacks is interesting, but it reveals that he was.

He hired John Bolton to scare the Iranians into a deal.

He was tough on the Iranians to get a deal.

It's maximum pressure, 101.

This is what he does.

And he does it successfully.

Like he got North Korea at the table, didn't lead to sustainable peace.

But then, you know, he didn't follow through on it.

So anyways, I think that.

I don't think that he will seek regime change in Iran.

You know, I mean, he.

I think he will seek a deal.

And to get the deal, to get that deal, I think we're going to have tensions, serious tensions.

So I've been telling clients for the last 12 months, don't worry about Israel Hamas and Israel Hezbollah.

It's not going to lead to oil price increases.

I'm changing that view now because, you know, I'm very confident that Iran will end up agreeing to a deal.

I think that they have no alternatives to that.

But I don't think the median investor is going to have that confidence because Trump is going to come in and he's going to be very tough day one, and he's going to look like he wants regime change, like he wants to attack them.

But I think he will do that to get a deal from them and they have to give it to America.

They have to give that deal because I don't see what else they do.

I hope you're right about that.

The flip side, I have two sort of rejoinders to that, which is he did try regime change in Venezuela.

Now, he tried it, you know, in a sort of convoluted, it made the Bay of Pigs look, you know, competent by comparison sort of way.

But he did try regime change in Venezuela.

It just fell in his face and he didn't really commit fully to it.

But the second is, you know, I know some folks who were sort of close to North Korea policy at the time that, you know, he was trading all those barbs back and forth with North Korea.

And maybe this proves your point that he's willing to use humans that way and take things to the brink.

And that makes him a better negotiator than all of us.

But I had sort of, at the time, pooh, poohed the idea that the United States was going to go after North Korea, that it was all part of a negotiation.

And I know somebody who told me who was close to policy at the time, like it was a lot closer than you think.

Like we, there were plans there Were things in motion?

Like, there were two aircraft carriers there, like, things were moving in that direction.

And if things had gone a little bit differently, like, we could have woken up in a very different world.

And I've been very sobered by that take for a while because, you know, if the thing that makes me uncomfortable about the type of negotiating tactics that you're talking about is when you get into, you know, when it's really nut crunching time, like when it's time for Kobe to come out, like, like, are you going to see it through?

Is the other side going to freak out and, like, try and punch you in the, in the balls, like Draymond?

Like, it's, it's really like you don't exactly know what's going to happen in that moment, so.

Well, I agree with that.

But remember, that was also the case in 2011 with Obama.

I mean, he was, he was dead set that the trajectory of uranium enrichment couldn't go on.

So something had to happen.

And he basically convinced Iranians he would let Israel in his case.

It was really.

He used Israel, Trump as the bludgeon.

I mean, Trump is going to use himself.

He's not going to.

In the context of North Korea, he used two aircraft carriers and the threat about.

I have the bigger button on my desk, Kim.

Like, it was.

It was.

Yeah, no, exactly.

But, but listen, here's what I would say about that.

That is the only really way this is.

This is the problem.

I think with the read of the four years of Trump presidency, I'll be very honest.

I mean, I wrote to clients in 2016, the biggest risk from Donald Trump is that World War Three could very much, you know, he could lead us into some sort of a.

But he used credible threats really correctly, from a game theoretical perspective.

You know, he just did.

And I think that nobody's giving Trump credit for this.

Nobody.

Everyone just.

I mean, there's been so many articles, Jacob written where it's like, oh, we're lucky we didn't have a World War 3.

And it's like, no, actually, to avoid World War 3, you actually have to have credibility so that your opponents know that you will defend your red lines, that you will not just, you know, like, the United States has lost that in some ways, especially with allies.

You know, like, what.

What credibility does the US have with Israel or even Ukraine?

I mean, they're pretty much running U.S.

policy, and U.S.

opponents just don't know.

Like, they don't know if they're going to be able to talk to the US because number one, US hasn't really threatened them.

And number two, you know, US has painted them as like monsters and evil rogue states.

And that's where Kamala Harris and Joe Biden in a weird way are kind of like neocons in that ideology.

Right.

Ideology matters so much.

So I would say that, you know, Trump's point is like, I've got a big red button.

It's bigger than yours.

I'm going to nuke you.

But I'm a realist and a fair guy, so if you sit down with me, like, we can make a deal.

Yeah.

And it's not going to be a good deal for you probably.

But hey, man, that's, you know, I'm the U.S.

you get a deal.

And that's that combination of like, I'm crazy, I'll bomb you.

But also you can sit down with me and we can, like, we can sit down and negotiate.

That is, that prevents wars, you know, and again, we have a four year track record.

And this is where Trump is, right?

I mean, he didn't start any major conflicts.

He didn't extend any ones that were going on, you know, like, I mean, I don't understand why we, like, I mean, I understand why mainstream media doesn't want to give him credit for that, obviously.

But again, like, I am a data driven analyst.

Pre 2016 election, this was my number one risk of a Trump presidency.

You know, it's like for a policy novice, doesn't know anything about anything.

And his advisor list at the time, like Michael Flynn is, isn't like outright.

His book on Iran was like Islamophobic.

Like, this guy thinks Iran is like super evil.

So, so, you know, those were all.

And then four years of data, you know, what are you gonna, like, you're just gonna keep saying like, oh, well, he got lucky.

Oh, he got lucky.

No, no, no.

Or maybe you don't know what game theory is, you know, or maybe you had never negotiated for anything in your life.

And one thing that I didn't really accept is all the people who said, oh, he's a great negotiator, like real estate.

I was like, really?

Yeah.

Okay, cool.

I mean, hell, like, I guess it carries, I guess it carries it through foreign policy negotiating with plumbers and like contractors, you know, on a site.

I guess it's kind of similar because he did a pretty good job of that.

Yeah.

I mean, it's easy to have, it's easy to be a good negotiator when you have no moral center.

And so you are willing to walk away from something or to destroy something, because you don't give a shit.

If you are looking on YouTube here, you can see there is a bust of Lyndon B.

Johnson right behind my head.

Another great example of a wonderful negotiator because he had that skill where he didn't give a shit.

Like if he wanted something, he was going to drive it all the way there.

And Trump definitely does have that.

But here's the thing, Jacob.

Here's the thing.

I know we're going to talk about the future of America.

This is part.

Why do we have technocrats with PhDs in economics running our interest rates policy?

Is that not unequitable?

Should we not consider climate change and gender issues and income inequality to our interest rate policy?

Should we or should we not have political people like, you know, just like Nancy Pelosi should be the head of the Fed?

You know, why not?

Why have we decided that this realm, the realm of interest rates is for technocrats, but the realm of foreign policy is like, not.

You know, it's like everybody.

Twitter gets a say.

And that's where I would say that there is a skill that we have forgotten about, because we've been in.

Basically, we've been just swimming in the waters of unipolarity for too long.

And I think America has become intoxicated with morality.

Foreign policy and diplomacy is as technocratic and should be as expertise driven as something like setting interest rates.

It's not the realm of Twitter.

Jay Powell is not sitting there looking at what Twitter thinks of his visit to the Middle East.

Yeah, well, I mean, the reason that it is that way, I think, goes back to.

I forget the name of the author, but he won the Pulitzer Prize for it.

The Lords of Finance, the Bankers who Broke the World and how central bankers in the 1900s and in the 1910s were part of the reason that the world descended into World War I, because their policymaking was cravenly political or nepotistic.

And there was this idea that, okay, there should be this independence carved out for central banks or for monetary policy that should be separate from everything else.

I think that's where that idea begins.

And I think you can argue that maybe it's been infected by other things.

But I also, I just want to underscore your point about neocons and.

And I rarely show my own political cards.

I hope that Biden is the last gasp of the neocons, because he certainly is a neocon.

And if I, If I boil down the disagreements you and I have had on this podcast, I think Directionally, you and I are on the same page and we agree on lots of different things here.

It's about whether Trump, you've used the word realist.

The other, you know, leg of US Foreign policy tradition is isolationist.

And I think I take his isolationist tendencies a little bit more seriously than you do because I don't see a realistic, I see somebody who ping pongs back and forth between realism and deep seated isolationism and that he is willing to go down that isolationist rabbit hole than maybe any other US President certainly in our lifetime.

I can't remember the last time you had a truly isolationist figure that was in the White House.

But, but yeah, I mean, that's, let's back in there to the future of the United States.

I don't know if you, I went back and listened to our reaction podcast to the January 6 riots.

I don't know if you remember doing that podcast.

You had some, you had some great lines there.

You called it the cherry on the pop of a cherry on top of a populism Sunday.

You also talked about how you didn't take the riot so seriously because of the relative fat to muscle content of the shamans versus your normal Serbian thugs that would have overthrown different governments.

I really, really enjoyed that.

You also, you also ruled out the possibility of any kind of stab in the back myth that would bring back these forces into our political forefront.

I don't know if you want to call this stab in the back, but I don't know.

What are you thinking about the future of the United States here and what this means?

I mean, Trump just won the election with the most like ethnically diverse coalition, I think, in a long time, other than Obama.

I think Obama 2008 should have been more diverse than this, obviously.

So it's certainly than any Republican president.

I don't know if he beats 2004 George W.

Bush, that would be interesting to see.

But yeah, I mean, like, I think, I think the future of America is, I think, brighter.

You know, and the reason I say that is my biggest concern about the US has been this one chart from Pew Research that I wish Pew Research had not discontinued.

They had this value survey and I love this chart.

And it basically they ask, you know, me and you and other people, they ask things like do you spank your children?

Do you believe the government should help?

You know, like these kind of non political but kind of value questions and then they, they correlate your answers with your demographic profile and then see what across the population of The United States matters for what kind of a human being you are.

What, like, you know, and in the 1980s, it was very difficult to meet someone on the street, like, you know, a white male educated and an African American woman with a PhD, you know, like, and say, oh, this is what I think.

It was very difficult to do that race and education were kind of correlated the most.

But then everything else kind of blended.

And over the course of the last 40 years, the one line that just skyrockets up in importance is party identification.

And I got goosebumps just saying this.

I don't know if our listeners understand the profoundness of that.

It means that in 1980s, if I told you that Jacob is a Democrat, educated, white male, Jewish, who lives in Louisiana, like, you would be.

Thanks.

But I don't know what to do with that.

Like, I don't know what he believes in.

It's difficult.

And that's great.

That's beautiful.

That's what America is like, maybe he's a Democrat, maybe he's conservative, maybe he's not.

Maybe socially, he's actually really, really liberal, but he just votes Republican because, you know, like, he wants his taxes to be low, whatever.

And then in the late 90s and early 2000s, it was like, was he a Democrat or Republican?

He's a Democrat.

Okay, then I know everything about him, like, done.

And that means that our party identification in the US Became more important than any other demographic quality, which means that our party identification ceased to be a party identification.

It became an ethnicity, like serving crot.

It became everything.

Democrats are not just party.

They're an ethnic group.

And you cannot show up at a cocktail party here in Santa Monica and be like, well, I don't know, climate change might have some benefits.

Done.

You're dead.

Get out.

You know, dead.

Well, maybe we shouldn't have really masked kids in schools.

Oh, my God.

You know, like, you're shunned because you are anti tribe.

The tribe believes in tribal totems.

And so what's actually really great about this, this election is the realignment we've seen.

I think now, you know, you may disagree with Trump on a number of things, but the fact that he's been able to expand the Republican Party in really weird ways where people who, like, believe climate change is real, but are like, man, maybe we shouldn't, like, just focus on EVs or, like, you know, like, there's.

There's this realignment going on that makes me very hopeful that we are not ethnic groups as Republican or Democrats.

And obviously, I'M bathing aloof indifference.

So I'm observing all of you as if you're in a petri dish, by the way, just to be very clear.

And so, like, I think to me, that is what's hopeful about this, man.

You know, and I, you know, like, Trump might mess it up.

And by the way, when presidents win giant sweeps and landslides, they tend to mess it up.

The hubris gets to their head.

They're like, I have a mandate, you know, and then they go too far without whatever it is that they want to do.

So I'm not saying about whether he's going to be successful or not.

I'm just saying the fact that he was able to cross traditional party groups and get some of these people on board just makes me hopeful, man, that saying you're a Democrat or Republican may not mean as much as it did four years ago.

And that's good.

Yeah, I think part of what you're.

So I'll engage in your optimism for a bit and then I'll give you the pessimism because you bathe in indifference and I bathe and emotion.

And then we both sort of, you know, dry ourselves off and come and do this.

So I can tap into it a little better than you can sometimes.

But I agree, probably a great image.

But I think you're absolutely right.

When you look at rise of independent people who identify as independence over the past 10, 15 years, that's been rising and that's the chart that I've been using for the last 12 months, which is if there is a silver lining to this.

No matter who wins, a majority of the electorate do not like these candidates, whether it's Trump or Harris.

And yes, Trump won with a landslide.

And yes, it's an incredible political, political comeback.

Generally speaking, people still find him odious.

They just found him better than, you know, a late stage Democratic candidate who didn't run through a primary, who was using all these sorts of things that didn't actually land with the electorate, that couldn't talk about the economy without sounding like a robot, like he beat that person handily.

I do think that there is this large swath of Americans who are sick of the movie that they've been watching for the last 812 years and want something different.

And maybe this next election cycle will be able to see this.

I'm cutting against what you said.

The New York Times had a study a couple weeks ago that was really interesting, tracking where people are moving based on voter preference and people were moving.

It'll be interesting to See how they update, update that data after 24.

But based on the 20 data, people were moving to neighborhoods where people who voted like them were also already there.

And so you were getting this self segregation between Biden voters and Trump voters, which cuts against what you're saying.

I think for me, I think for me, the biggest, you know, the pessimistic question that I would offer is, and I don't think this is controversial, although it will be controversial to anybody who drinks the Trump Kool Aid.

The man tried to overturn a Democratic election result in 2020.

He absolutely tried to do that.

And he had no idea what he was doing.

And also US Institutions are extremely strong and extremely resilient and resisted that attempt.

But he's coming into power now with a lot more power.

He won the popular vote.

He might have the House, he's going to have the Senate, he's going to have the list of mistakes that he made before.

And I absolutely think that he will try to go after the system so that whether it's himself or a handpicked successor, that he can start to mess around with American democracy.

And I think that US Institutions are probably up to the task, but I think they're about to be tested in a meaningful way, in a way that they really haven't been tested before.

The only analogy I can think of in US History is if Huey Long had not been assassinated and had won the Democratic primary and that had become president, maybe we could have had this sort of similar situation.

But we've never had a sitting president who has talked, you know, fairly openly about how he thinks an election was stolen from him when it wasn't, and who actually tried to do things to overturn the results of a Democratic election.

And it'll be really interesting to see what happens over the next four years and whether US Institutions, which have weathered so many different problems, are able to weather this challenge, too.

And then the last thing I'll just say is he's 78 years old.

He's the same age.

You know, my father passed away late last year, same age as Donald Trump.

I know plenty of 78 year olds in my life who are really not that, not all that with it, and at least one, not to be morbid, one of the scenarios that you have to have on your board here is what if the guy has a heart attack in two years?

What if he slips on a banana peel?

And what if we get a President J.D.

vance two years into this experiment and does that upend everything that we've talked about?

Are we all, like, you know, we think everything's going in the Trump direction, and maybe this is the end of Trump and maybe something else is bubbling beneath the surface.

So that is one thing I've been trying to think about, too, and what that means for everything.

So those are my thoughts about America.

You know, one thing I would say is that January 6th, obviously, like, he could have acted much, much better during that.

Like, massively, like, you know, National Guard could have been called much earlier.

I mean, there's their stock that he didn't even call it.

It was actually Pence that called the National Guard, which would actually be unconstitutional.

There's all sorts of, like, things that went massively wrong there.

On the other hand, he did not prosecute Hillary Clinton.

And we might say, well, what would he have prosecuted her for?

But, you know, there's indications that he, she did, you know, commit some, like, you know, like, crimes, you know, like.

And he didn't because it was stupid to prosecute her for that.

Why would you, you know, did she really keep those emails?

Did she use a personal email because she's like, like, nefarious Russian spy?

No, she was just probably, you know, I'm Hillary Clinton.

I can do whatever I want, which is fine, whatever.

I'm not making a judgment.

I'm just saying she probably did break some laws and, you know, he could have prosecuted her for it.

And so I think the Democrats have made a mistake, you know, and they made a mistake.

I mean, clearly they had.

It's.

It's clear.

And then one of the mistakes was to prosecute the former president on some of the charges were pretty, you know, I mean, again, like, did he break the law?

Probably, but.

Well, do you have to prosecute him and try to put him in jail?

Same with, you know, jailing Steve.

Stephen Bann was, you know, again, like, he could have been, like, handled differently.

You know, J.D.

vance made a point.

Eric Holder was held in contempt of Congress.

Like, nobody, I mean, it held by Congress.

It didn't go to court, but nobody even thought of, like, them pursuing Eric Holder for contempt of Congress.

Like, come on, like, why would you, like, he got enough, you know, I'll slap on the wrist, you're in contempt.

Bye bye.

Have, you know, it's all good.

So my point is that it's, you know, when Democrats look at, when the Democratic Party under Biden and Harris looked at Trump, it immediately labeled him as a threat to democracy, you know, and pursue that.

And I do think that that ended up helping Trump because a lot of the charges were just convoluted, you know, campaign financing.

He paid off a porn star.

And then that's actually legal and cool.

You can pay porn stars, apparently, but you need to report it as a campaign.

You know, like, he was just like.

I mean, I could just see someone in Ohio or the Midwest being like, you know, like a Democrat being like, man, I just don't care.

We all know he had sex with a porn star.

We knew that before the 2016 election.

And then what are we.

What is this court case about?

And so I think that, you know, it cuts both ways.

That's what I would say.

And let's observe what Trump does now, because if he goes after his opponents the same way, then I have a very, very.

I would be in your pessimistic camp.

This will not stop.

You know, and then the Democrats, when they come back, they'll be justified in doing it, like, back and forth.

But if.

If he can be magnanimous over the next four years, like, I do think that would be a good point.

And one thing I would say, watching that JD Bands Waltz debate was really endearing.

Like, two Midwest dudes just disagreeing.

When, you know, when J.D.

vance whipped out, like, an online forum that he wanted to talk about, that was such a great moment because it was like, hey, let's talk about policy.

Like, here's this thing.

And Waltz was ready to counter him.

But then the idiotic media, like, silences JD Vance, you know, and it's.

And, like, I, as an observer, was angry at that because I wanted to see Waltz's reactions to J.D.

vance's point.

Like, here are these two Midwest dudes who don't really hold any ill will towards each other, and they were about to engage in a policy debate.

For the first time in the last 20 years of US debates, we're going to have something other than a dude following his opponent weirdly, like a shark, you know, like, we finally.

And so I would say that that makes me hopeful that, you know, like, maybe we have gone crested over this, but it will take a lot out of Trump to prove that.

Yeah, I just want to underline what you said, because what you said really talks about a decline in faith in US Institutions, which has been steady since Gulf of Tonkin and since Nixon's impeachment.

And I think you're absolutely right that the system went after Trump.

We never actually dealt with the things that were important.

What did he do and say to Georgia election officials in 2020?

What was he trying to do?

Was he really Trying to change the vote.

We never had that trial.

We're talking about porn stars.

What did he actually do in helping organize 1-1-6?

Was that treasonous?

Have we ever had that conversation?

No, we're talking about obscure campaign finance things, or like that case in Georgia that got thrown out because it turned out whoever was prosecuting it was sleeping with her assistant or something like that.

Like, and also, like, things not being applied in an equal way on the other side.

So we never actually got down to the hard questions, just like we never got down to the hard questions about Hillary.

Like, what did she actually do?

What was her complicity in Benghazi?

Was there any.

I don't know, because we spent so much time talking about her damn emails.

To quote Bernie Sanders, like, we're not actually sort of doing the things.

And to your point, like, I would be surprised if Trump prosecutes his enemies.

The thing I would be watching for is what is he going to do in state election boards?

Like, is he going to go and try and appoint officials or create structures so that in 28, if the Georgia vote is not looking like it does, and he makes that call that he made in 2020 that somebody is going to pick up that's going to be willing to do his bidding?

That's the nightmare scenario for me.

And I think there's enough, there's enough lack of faith and enough anger in US Institutions.

And to your point, we've watched how political power has been manipulated in all these different ways and unfairly, if you're coming from that point of view, like, maybe there's an opening to screw with the system.

But listen, again, I like to look at America the way somebody would have looked at my homeland of Serbia.

And we joked when we worked together at Stratford for.

We used to, we used to write those pieces kind of like, you know, from that perspective, like, strong man, you know, like, just using these terms.

And so when I look at the United States of America from, like, a very bizarre, I think, objective, nihilist bait in aloof indifference perspective, I see that both parties have engaged in this Trump in a haphazard, far more coopy way.

The Democrats in a far more insidious Southern District of Manhattan kind of way, you know, and so it's like, yeah, but both sides are engaged in this.

And, and the voters, I mean, clearly spoke on November 5th what they kind of thought about that.

Your point?

Voters being stupid and stuff like that.

Like, I think you're right about specific policies, but I think the gut, you know, directionality, like, Tariffs will produce inflation.

I can kind of get that as a voter.

And I think, like, prosecuting Trump for some bizarre thing is political lynching.

I think those are the connections that they have made.

And I, you know, like, I wonder if they take any lessons now.

It's easy for Republicans to be magnanimous after a big victory, right?

So does it really mean anything?

Even if Trump is magnanimous now, does it mean anything?

I think we'll see.

But I think that, you know, at the very least, when I see that debate between the two vice presidents that, you know, a lot of people watched and said, like, wow, that was civil, you know, and there was like this disagreements, but, you know, it was okay.

I think maybe we're moving towards a positive direction.

I think race is important, you know, very important.

And it's very important that Trump has managed to expand his coalition.

Like, let's just pause on that for a second, you know, because 2016, he doubled down on the white vote because mathematically that was the way to go.

Fine.

In 2024, it seems like he did expand his coalition, Harris did better with the white voters.

You know what I mean?

So it's, you know, those kind of are small snippets of optimism.

But I guess I will say I do have a bias.

You know, I do have a political bias, and my political bias is towards optimism.

And it's probably because of where I grew up, you know, like, I mean, like, I saw like real polarization, real ethnic conflict, and like just complete another collapse of society where a country goes from first world, near first world to non in 12 months.

12 months like this.

That's how quickly it happened, you know, And I don't see that happening in the US Because I think we do have these guardrails of professionalism in the U.S.

and so if I can like impart that bias on your listeners, you know, American, like, situation may be terrible relative to itself, but in the broad sweep of global affairs, it's not that bad.

I mean, the French are famous for like every express that gets thrown into a corruption trial.

You know why Nobody.

Nobody on this planet can name the French intelligence agency?

Nobody.

You know why?

Because they change it every four to six, eight years as a new president comes in and cleanses the entire, entire domestic law enforcement, intelligence community in order to put in, and this is France, a nuclear power, a liberal place.

Paris is a wonderful place.

You know, they have freedom of speech, blah, blah, blah, blah, blah.

And yet they go after the presidents every time.

Every time there's a corruption charge.

And they, you know, they go for trial and nobody can tell me what's the CIA equivalent or FBI equivalent in France because they keep reforming them for these reasons.

So, you know, the threshold for, like, collapse of America, I think, is much higher than, I think maybe what both Republicans and Democrats think.

Look, I also.

This is one of the reasons we get along so much, because my bias is also towards opposite optimism.

But let's see what happens over the next four years.

I think American institutions are up to the test, but I don't think there's any denial that they're about to be tested and that Trump is arguably their biggest test in 150 years.

We also agree because we are learned nerds and we're cousins in that way.

And you referenced Max Weber earlier and.

Yeah, I mean, people should read that essay of, you know, legitimate power.

I forgot what the title is, but it's about legitimate authority.

Where does legitimacy comes from?

And your point was that charismatic authority is taking over.

I mean, that is correct.

And that happens in societies when institutions and sort of the legal bureaucratic authority wanes.

And that is not a good thing.

That is not a positive thing.

If you're an investor, you want to invest in countries that are run by legal bureaucratic authorities, because you don't need Jacob Shapiro and Marco Papic in that world at all.

You don't need.

Everything is on paper.

You can just hire a lawyer and you know where the world is going.

And so that.

That would be where I would agree with your pessimism, just the fact that we have charismatic authority taking over.

And again, I know for a lot of listeners who haven't read Weber, this might be like, what are they talking about?

Go read it.

It's like a page and a half essay.

And we are experiencing definitely a tilt towards charismatic authority right everywhere.

I mean, it's not just the United States.

I mean, it really is just about everywhere you turn.

Like, charismatic authority is what.

I mean, can you think of a country in the last year where that hasn't been?

What won the day?

I can't.

Yeah.

I mean, Modi Sheinbaum, I mean, you just sort of go down in Indonesia, Prabowo.

I mean, it's all.

I guess Japan's the only one that's out in the cold because they have this.

I love him, too.

That's probably why he's my favorite leader in the world right now.

Shigeru Ishiba.

We actually have a whole episode about him coming out next week with your boy Tobias.

Not the NBA, Detroit Pistons star.

But he turned me onto this book about the archetypal Japanese hero.

It's a book by Ivan Morris.

And apparently the Japanese have this concept of a hero who.

He's a hero precisely because he failed at everything.

He rises because he believes so passionately about something and then he epically fails.

And so they're looked at as a hero because of their epic failure.

I can't help but think of Joe Biden in the context of that.

Like he worked so hard for everything and got to the pinnacle and then everything just destroyed for him.

Anyway, by the way, how do you think Joe Biden feels right now?

Man, I think he's got to feel a combination to vindicate it.

He probably is sitting there thinking, I would have won this.

And I mean, we'll never know.

But I don't think he's necessarily wrong if people don't care about all the other stuff.

Like, I'm not sure they would have cared about him doing his thing.

I think the economy was more important.

And on the flip side, I mean, he, if he had just walked away and, you know, gotten another Democrat in the door, he would have had this self narrative of I'm the guy who defeated Trump and returned America's soul to herself and I passed the biggest spending deal since the New Deal and now he's going to be the four year aberration between Trump that, you know, tried to build, tried to build a dam against these populist forces and was completely overcome.

So I got to think he's, I gotta think he's pretty glum right this second.

What about you?

I think you nailed it.

Those are the two, those are the two stories, right?

I don't think he could have won.

I think he would have lost even worse because of his mental condition today.

But what's indicated is that he was the right candidate in 2020 and Kamala Harris would have been wrong candidate in 2020 and wrong in 2024, you know, and pushing him out in the way they pushed him out was wrong.

But at the same time he made a mistake that also Ruth Baines Ginsburg made, which is they stayed too long and they imperiled the Democratic Party due to that.

And so those are the two kind of things.

But I think some schadenfreude.

Is that how you say it?

Did I say it correctly?

I think some of that is in there because it's like, hey, you know what?

Because you know what?

You know what was wrong?

What was wrong was the enthusiasm for Harris right after they picked her.

There was this whole like, well, you can't say anything wrong about her because you're politically incorrect and she's the right candidate and Joe Biden is the wrong candidate and she's going to be so much better.

And then, you know, my daughter comes down the stairs, shows me a TikTok video, says Harris is awesome.

I'm like, oh my God, she's going to lose because you don't vote.

And my point was like the Democratic Party just tried to shove this down everyone's throat when the playbook from 2020 was Joe Biden, you know, and unfortunately that playbook for fighting Trump.

And I say unfortunately because yeah, it would be great if it didn't matter who the person was, but is old white dude.

That's what works in the Midwest, you know, and that's why Joe Biden was designed in a lab to beat Trump.

And all the enthusiasm about Harris was just based on like vacuous non objective criteria.

And like this, you know, what CNN called brat energy in an article which was just like, what does that even mean?

Well, it lends some credence to when, when the right is talking about the way that the media eco system is structured because the overnight the media almost was writing Joe Biden out before the decision had even been made.

And then as soon as he was out, they had all the columns ready like, oh Joe, he's giving it to this new heir apparent and now she is rising.

And you know, the media was trying to convince everyone that there was this groundswell of grassroots support and that her rallies were great, they were better than his rallies.

And like all the things that you talked about and it just wasn't true.

And I think you could see that, you know, ultimately the Democratic Party should have listened to the political instincts of the politician that has had the most success in the Democratic Party since 2008, which was Obama.

You could tell the Obamas were not happy with the coronation of Harris, that they wanted the open primary.

This is why we're close, man.

This is why this was like literally my talking point.

Right after you were done.

He hesitated, you know.

Yeah.

Like he hesitated because we all watched Harris in 2019 just completely get obliterated.

One moment in the debate went after Biden for busing became rocketed to double digit support.

And then at the very next debate, I mean, go ahead and look at it, the camera was on her, she was in the middle, right next to Biden, couldn't put two sentences together.

So why was that going to change?

Well, and to your point, like, you know, I just talked about concern about the future of the Republican US Democracy.

There was nothing democratic about the way that Kamala Harris was chosen as the Democratic nominee.

Nothing like.

So, like, you can sort of, if you're trying to look at it from that point of view, like, in some sense, the Democratic Party was also trying to usurp democracy as well.

I don't, I don't want to establish a moral equivalency there, because I do think that the things that Trump did around January 6th, I do think they're unprecedented.

I do think they are worth calling out as unprecedented and teetering on treasonous.

But, like, the Democrats were not exactly the knights of democracy.

Like, they had an incredible opportunity to run an open primary and let the best person rise to the top, and they just did.

I wouldn't listen.

I don't think you have a Democratic prerogative to run a primary Democratic democratically, just to like, I.

It's up to you.

I wouldn't.

I would.

You know, like, J.D.

vance has attacked the Democrats for this a lot.

Like, well, they just anointed her.

Like, that's non.

Democratic.

Hey, listen, man, like, the Constitution doesn't tell parties how to elect candidates.

So if they want to do it through like chicken, I mean, it's fine.

No, since, since what, 1918 and the 17th Amendment?

Was that when it was passed?

Like, when you get direct election in primaries, like, the Constitution did weigh in at a certain point, that's when you get away from the back room.

People chosen in rooms to.

We didn't really do that until the 68.

Right.

But there is, there is constitutional law on the books that says that it should.

It should be that.

But my point is, if you had super electors, you had all sorts of ways to get around, like, populism, you know, and like one vote, one person.

So how you structure your primary is kind of up to you.

And so all I'm saying is that what I would say is that it's up to the Democrats to be, like, imperiled for their choices.

And the reason the primaries matter and the reason the competition matters is that it's a way to have the, you know, free market and competition, have the best challenger rise to the top.

We did it in 2019.

It's not like it was 1980.

It was five years ago, four years ago.

Harris was terrible.

Terrible.

No, no.

Miss me.

Otherwise, like, terrible.

They couldn't put three sentences together.

Well, and I would just say that, like, they repeated the mistake they made in 2015, 2016, which was, if it had just been meritocratic, it would have been Bernie, and I still think Bernie would have wiped the floor with Trump.

And in 2008, Barack Obama almost lost because of machinations of, of the Democratic Party as well.

So each step of the way, every time that the Democratic Party has decided to withhold competition, it's not about democracy.

This is why I want to say I'm okay with it not being Democratic.

I am.

It's up to you.

You do whatever you want.

But we know that when you have competition, it tests the candidate.

And so I'm with Nate Silver.

Nate Silver proposed that they should have had an open convention.

I went even further, said it should have been like the voice.

You know, have the judges and have them tap dance, have them sing, have them recite the Constitution, have them solve mathematical equations, make it fun, make it cool, televise it, make a three day televised event, have voters vote in, have a demo, demo, have a Republican, have Liz Cheney or Mitt Romney or maybe Dick Cheney, because now Democrats apparently like him.

Whatever.

He can be one of the judges that turns around and says, like, ah, you, like, will you invade Iraq?

You know, all that stuff.

It could have been so much more fun and it would have produced, I think, look, if Harris had won that it would have helped Harris, you know, and, and it was just such a myopic way to do this that fed into the Republican narrative that this was not meritocratic and this was about demographics and this was about, you know, certain groups.

And, you know, that's where we got it.

And we now have a really interesting situation where the Republican candidate who was the most associated with white voters in 2016 has that exact opposite against a woman of color.

Just think about that for a second, what that kind of says about the poor choices that the Democrats make.

So, and you know, the problem is that they're starting to blame other, other reasons.

You know, like the blame is now on Joe Biden.

Like that, that's, that's who's going to be thrown under the bus, even though.

Absolutely.

Well, I mean, to your point, about, like, what is Joe thinking today?

Like, the history books will write this as Joe Biden's fault.

Yeah, for sure.

Yeah, he's, he's such a tragic figure.

I have sympathy for him.

I mean, you could just tell that it was something he wanted his whole life and he just, he was past his prime, but he couldn't help himself.

Like, like, like, like you said, like 2008, Joe Biden was Grown in a lab to be the counterweight against Donald Trump.

And that.

That guy just was gone.

He was already going in 2020, and he's certainly gone now, so.

Well, that recipe was still there.

Like, that's.

That's what I don't understand.

That.

That particular recipe of who would have done better against Trump was there and it was just ignored.

All right, well, Marco, anything else we should tell the listeners?

This was a Joe Rogan level episode.

Well, why not?

I mean, he decided a presidency, so maybe we should adopt his model.

Let me say one thing.

I think that way, too.

There's too much focus on short.

So here's a swerve at two hours at 13 minute mark.

Great, great.

All right.

Because this is what we need.

We need more of this.

What I think is interesting is how much emphasis there is on short content.

You know, short content in everything.

Writing, Twitter, podcasts.

Oh, make it 15 minutes.

Make it so that people.

But the truth is, if you have meaningful quality, people will bookmark something you've written online.

Like, there was this amazing Atlantic artist article, clearly written, by the way, by the campaign head of Trump.

Like, clearly as a.

As a hedge against losing.

I don't know if you've read it.

It's.

It's an incredible Atlantic article that basically says a disarray, you know, in the Trump campaign.

And it was like.

I don't know, it was like 10,000 words.

It took me 45 minutes to read.

But it was interesting.

It was.

It was good.

And, you know, you bookmark it, you come back to it.

Same with.

Same with podcasts.

If you have something meaningful to say.

Maybe we don't.

Maybe everyone's lost it.

But I think that long form is not dead.

As everyone runs towards short content, there is actually an opening space for long form.

It just has to be good.

No, I agree 100%.

All of the media companies, and this is true of the newspapers right up into TikTok, they just get.

They monetize on clicks.

And if you want clicks, you do need the shorter content with the catchy titles and the images and things like that.

And there is, you know, when you're thinking about younger generations and how young minds who are growing up now in a social media environment.

You and I didn't grow up with social media.

We grew up with big black floppy disks and all sorts of other things that kids have no clue about.

But so we have, like, our brains developed in such a way that we didn't need that sort of thing.

Whether that's true going Forward as children grow up around all these devices.

I don't know.

I think that's interesting, but I think you're right in the media ecosystem right now, which is where all the most of the big media companies, they profit off of clicks, so they're optimizing for clicks.

But if you can give people the content that they want, if it's good and long, they will absolutely consume it.

The difficult part of that is getting people to find you, because there is so much noise from all the clicks that it's really hard for people to go and look.

And the moment they go online and give a phone number or an email address away, suddenly they're getting advertised for penis pumps and everything else.

So they don't want to do anything online.

They just want to go back to what they're doing before.

And they also like TikTok.

Like, I go through Instagram reels too.

It's kind of fun.

So it's that being able to find people in the marketplace is really different in an environment that is so loud and so optimized for clicks.

But I agree with you 100%.

I mean, this podcast exists entirely because there are people who will put this on for an hour and a half, drive around the Midwest as they're going in their farm or they're in the field or something like that, or they're at their desk on a Friday afternoon, and they want to listen to us.

Although I do have one friend shout out Harrison, who said he only listens to the podcast because the sound of my voice helps him fall asleep.

So there's also that, too, an incredibly soothing voice.

Like, it's.

It's shocking.

Like, I mean, I know you in person.

Who has a better voice on microphone?

Like, you know what I mean?

Like, it's.

It's very soothing.

But before this gets weird, I do want to ask you one final question.

You know, we end.

We do have to end with basketball.

So let's each pick one surprise.

Just one.

One surprise.

After the first.

What is it, two weeks, I think of games.

Well, I'll give you.

So I'm not surprised that the Pelicans are already injured and fumbling everything.

So my optimism is already gone.

But the Suns have shown more life to me than I thought.

They were sort of a hot pick going in, and I was like, really?

Like, I feel like KD is kind of just this, like, perpetually depressed, like, you know, thinking about the blog boys and on his burner accounts, and he's looking pretty good.

And the Suns are the Suns are looking pretty good.

They might be a force to be reckoned with.

What about you?

Well, mine is the Dubs, the Warriors.

I mean, what.

How are they winning?

You know, I mean, but he was, like, injured, you know.

Buddy Hilt has now become like.

I mean, he's going to win six man of the Year.

Like, I'm taking it right here.

Done.

End of story.

Buddy Hill is playing amazing.

He's playmaking.

He's not just a Reggie Miller type.

He's playmaking.

And Draymond Green, man, it's that old man power, you know, like, just, like, just.

He shut down your boy Zion, and it was such a.

It was like a pickup game.

You know, I was watching this game.

It was like one of those pickup games where, you know, a guy of our age with a little bit of a flabbiness just, like, puts that, like, dad strength length into a cut.

Dude in his 20s, and it's just like, nah, man, it just doesn't work.

Basketball's a game of angles.

It's a game of girth.

It's a game of who has a bigger ass sometimes.

And Draymond, man, just like art.

That.

That game was art, you know?

Yeah.

Let it go.

Fame right now shut down.

Thanks for bringing that up.

I'll say that.

You know, Anthony Davis injuring his foot already was also art.

That's.

I'll throw that back at you.

First of all.

That was just.

I was waiting for that and the way he did it, and then he dunked on the next play.

Yeah, yeah.

You know, like, come on, man.

Anyways, did you also see that, that, that.

Did you see that great statistic of top father son scoring combos in league history where it's like, number three is Dell and Steph Curry, number two is Kobe and his dad, I think Joe was his name, and number one is LeBron.

And Bronnie, even though Bronnie has zero points, just because LeBron scored so many points.

Excuse that slander.

You take that back.

He scored two.

Did he?

Oh, mazel good.

He.

He scored, like, to stick that back, right?

Like, come on.

I actually.

I have a lot of respect for him.

He's.

He knows what he is.

He's going to be like, his best uses as a three and D sort of guy.

Like, like, props on him for making.

It as far like the Derek Fisher, you know, like somebody who plays on a team where you don't need a point guard, but you focus all your energy on hitting the open three and play defense.

Like, Derek Fisher made a career out of that.

Yeah, he could.

He could totally.

He could totally do that.

I mean, it must be so hard to be LeBron's son, too.

Can you even imagine, like, the.

Yeah, I mean, he seems like a good kid, so I won't.

I won't throw any shots at him, and he also won't get any shots in the bat.

Anyway.

Sorry.

All right, let's.

Let's get out.

Listen, I have no problem upsetting the Democratic Party, American national security, the Republican Party, but I'm not going after LeBron James, okay?

He runs the media in many ways, so.

Hey, LeBron, you get yours?

King?

Like, go Lakers.

You heard it here first, guys.

LeBron 20, 28.

We will see you.