The Global Economic Fallout: Week 5 Iran War | EYES ON GEOPOLITICS

In this episode, Nick Trickett, an energy market expert, discusses the current geopolitical and economic impacts of the ongoing energy crisis, including oil, natural gas, and renewable energy trends, and their implications for global markets and US policy. Find Nick here: https://sictransitiongloria.substack.com/ https://uk.linkedin.com/in/nicholas-trickett-54b41634 https://x.com/ntrickett16 Support the show on Patreon:⬇️ https://www.patreon.com/TheTeamHouse Subscribe to our new newsletter!!!! https://teamhousepodcast.kit.com/join Find Jon Hackett here:⬇️ Jon's books: https://www.amazon.com/stores/author/B0C5L659N5?ccs_id=e11a2062-f8d3-498e-bfd7-7d2f3869caf6 Linkedin: https://www.linkedin.com/in/thejonathanhackett Twitter: https://x.com/jonathanhackett Check out Mick's new podcast here:⬇️ Apple Podcasts: https://podcasts.apple.com/at/podcast/pub-and-porch-applied-stoicism/id1836955475 Spotify: https://open.spotify.com/show/1k3QPmkAMwnGJxMLDwUSSd?si=n6piIu8XRcag1Z0K43A3bQ Youtube: https://www.youtube.com/@UCd0Hq6QFk8CoTu5j-VU0Ong Find Mick Mulroy here: Fogbow ⬇️ https://fogbow.com/ Lobo Institute ⬇️ https://www.loboinstitute.org/ Twitter ⬇️ https://x.com/mickmulroy?s=21&t=-Ze3F_Ix2vlJ18KFvORTCA LinkedIn ⬇️ https://www.linkedin.com/in/michael-patrick-mulroy-31198b52/ Bluesky ⬇️ https://bsky.app/profile/mickmulroy.bsky.social Mick’s publications ⬇️ https://www.loboinstitute.org/publications/publications-of-michael-mick-patrick-mulroy/ Find Marc P here: https://x.com/Mpolymer Find Andy Milburn here: Twitter ⬇️ https://twitter.com/i/flow/login?redirect_after_login=%2Fandymilburn8 LinkedIn ⬇️ https://www.linkedin.com/in/andrewmilburn2023 Substack ⬇️ https://amilburn.substack.com/ Andy’s book ⬇️ https://www.amazon.com/When-Tempest-Gathers-Mogadishu-Operations Bluesky ⬇️ https://bsky.app/profile/andy-milburn.bsky.social Find Jason Lyons here: LinkedIn ⬇️ https://www.linkedin.com/in/jason-lyons-666873316?u Bluesky ⬇️ https://bsky.app/profile/bgsilverback73.bsky.social "Karl Casey @ White Bat Audio" 00:00 Start 01:24 Current State of the S&P 500 and Market Resilience 02:51 Oil Supply Chain Vulnerabilities and Global Impact 09:36 Shifts in Energy Demand and the Rise of EVs 14:55 Maritime Security and Insurance Implications 17:21 Peak Oil Demand vs. Peak Oil Supply 20:48 Impact on the U. S. Economy and Energy Prices 25:16 Potential Effects of Iran's Economic Reopening 28:41 Long-term Economic Damage and Energy Security 31:12 Strategic Energy Politics and China's Position 34:02 Strategic Partnerships and Global Dynamics 36:10 Impact of Economic Policies on Bond Markets 38:28 The State of the Iranian Economy and Global Oil Supply 39:56 Tracking Economic Indicators and Commodity Markets 42:08 The Future of Russia's Economy and Military Production 48:14 Navigating Economic Uncertainty and Investment Strategies Become a supporter of this podcast: https://www.spreaker.com/podcast/the-team-house--5960890/support https://www.spreaker.com/podcast/the-team-house--5960890/support?utm_source=rss&utm_medium=rss&utm_campaign=rss.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:45Speaker 02

  Hey, everybody. Welcome to another episode of Eyes on Geopolitics. I'm Demetri Kuntakos. I'm here with Jonathan Hackett, Jack Murphy, and Nick Trickett, our very special guest. He's the Associate Director at S&P Global Energy. He knows his stuff, basically, when it comes to this. And we always talk, all of our shows, we talk about, you know, the bullets and the bombs. And like John said before we started, we got to start talking about the beans, too, because it all, you know, you can't talk about one without talking about the other. So I figured, let's have a smart guy come on and like, teach the troglodytes what, you know, what's going on. Besides, it's me and Jack are the troglodytes. John's actually pretty, pretty intelligent. So I'll keep him out of this.

• 1:26Speaker 03

  Depends how many crayons you feed me.

• 1:27Speaker 02

  That's true, too, yeah. He was a Marine for a long time, so don't hold that against him. Yeah, Nick, thanks for coming on. Really appreciate it.

• 1:36Speaker 03

  Yeah, thank you for having me.

• 1:37Speaker 02

  Of course. My first thing, as I was like, we've seen, you know, the S&P for one, like, because there's so many factors that we, you know, we try and judge like what's going on in the economy. The S&P really hasn't taken a huge hit. I think it's down like 6% ish since the war started, which is like, it's at an all-time high. So, you know, the 6% can be gained quickly back. I want, give us kind of a lay of a land of what we should kind of expect in the next coming few weeks.

• 2:08Speaker 03

  Oh, God, that's tough. Okay, so.

• 2:10Speaker 02

  Sorry, I know, it's pretty broad, sorry.

• 2:11Speaker 03

  No, no, it's fine, it's fine. So, I mean, just to start off, just to be clear, like, I think I'm saying it's kind of in a personal capacity, so I'm not going to try to represent like my company's views and all that. But you started by, you know, mentioning the S&P 500 is kind of this way that we think about assessing the relative effects of the crisis. It's incredibly unhelpful. There are a couple of reasons for that. One is equity markets aren't always the real world, right? Like there's that disconnect. But I think the bigger thing to think about here is that a huge portion of the market is concentrated in tech. And that story for now is still relatively resilient. I mean, obviously, there have been sell offs and people are finally cooling on it. But in general, a lot of those gains and the hope that this is going to be short term is sustaining that kind of relatively like surprisingly okay performance, given how scared people are.

• 2:57Speaker 03

  So first, I'd start by just saying the equity market doesn't yet understand what they're in for fully because people can't accept it because it's just really, really, really bad. So I think the easiest way to think of like the scale, you know, we're talking about losing in the range of 10 million barrels a day of oil supply in a market that's kind of consuming somewhere in the range of 102 million barrels a day. And, you know, there's enough inventory on the water or in storage for crude oil specifically that you can manage that for like a bit, you know what I mean? But every single day that that supply is not reaching the market, that's 10 more billion more billion barrels you got to find to source somehow, right? And it's not just the loss of

• 3:38Speaker 03

  the physical supply that matters. And I'm in metals now, so I'm going to speak in generalities as opposed to specific. You know, refineries are not universal, right? They're designed for specific blends of crude oil, like any given crude oil that you see traded, like a benchmark, it's kind of like a way of maintaining quality control. You have a specific brand that blends like specific crude oils from specific oil fields, right? That then gets packaged into this kind of benchmark price. When you start getting interruptions of the kind of delivery of the crude oils that your refineries are optimized for, you know, when you if you buy alternatives that aren't quite what you need, the products that you yield from refining them aren't quite the same in terms of like the balance. So that's one thing, right? So that that so the point is that like the the kind of oil supply chain, for lack of a better word,

• 4:23Speaker 03

  is a bit more fragile and complex than than, you know, we might think over the last five years, given how many shocks we've gone through, where it seems to have been resilient, right?

• 4:31Speaker 03

  The second point is that unlike, say, the 70s, you know, there's also a lot, a lot of natural gas that's been disrupted, liquefied natural gas in particular, from Qatar, but then just that's then that that's a hugely important market because that's that provides, you know, mostly power in this case for like Asia Pacific, but also like, you know, the heating needs and, you know, goes on both Europe and Asia Pacific because the Middle East kind of is this ideal swing supplier in between the two, right? And

• 4:57Speaker 03

  You know, in the seventies, when we had the last oil shocks, yes, the the world, technically speaking, was more dependent on oil because we were less efficient at using it. But, you know, we we didn't use gas the same way. Other other commodities weren't as affected. So, for instance, about ten, somewhere in the range of 10% of the world's aluminum supply right now is affected by what's happening in the trade and commerce. So, you know, the longer this goes on, you know, the likelier it is that, like, Arizona Iced Tea is going to cost like four bucks a can. Unacceptable. Like, it's like that kind of a, and like, and there's already problems there because US tariffs and stupidity with Canada means that we have are having a harder time sourcing aluminum than for imports and all that. So, long story short, you know, it's not just gasoline, the price of the pump, it's a broader energy complex that's affected and that

• 5:39Speaker 03

  power complex that's affected. And so, what what's happening first is, you know, what we're seeing in Asia already is markets basically preparing for just real scarcity. And we already have governments imposing rationing to some extent. You know, we have governments moving to four day work weeks where they can. The EU is telling people now, for example, not to travel as much. And like, that's going to get worse and worse. I mean, the UK, where I know where I'm living, basically, I think yesterday or today, accepted the last kind of cargo of jet fuel from the Middle East that it's going to get. And if you if you so when people talk about the oil price, especially online and like American finance, Twitter, and like, in like, kind of the New York tech bros and Wall Street bros who are thinking that it's going to be okay, they're referring to Brent typically.

• 6:23Speaker 03

  And Brent is the kind of global benchmark crude price because Brent oil, crude oil is like, it's a blend from the North Sea in Europe. It's like your ideal, like platonic ideal of a barrel of oil in terms of the products you get out of it and because of its qualities. But that's a physical market, right? Like, like, like, that that benchmark is referring to physical barrels that are being delivered and priced. And there's there's some other stuff in the US now involved in that. But like, bottom line, that physical market has not been disrupted yet. So that price is not actually accurate to the physical markets elsewhere. If you look in Singapore, the price of oil is basically somewhere between 160, 180 barrels of dollars a barrel already. You know, the price for jet fuel is is still going vertical in Singapore. I think it's higher than 230 dollars a barrel right now.

• 7:08Speaker 03

  And like, and this is, but so, so, so, I mean, we're gonna be flying a lot less the second half of the year if, if, if we don't sort this quickly, right? And that's before you factor in LNG. You have governments across Asia Pacific scrambling to get coal back up, you know, restarting nuclear reactors. You see, you have that conversations kind of Taiwan, South Korea and Japan. You know, because they've relied on LNG, so the liquefied natural gas to kind of keep their, you know, the, the, the lights on, right? And that's disrupted. And then all these things are being felt first in the Asia Pacific, then they'll be felt in Europe and, and kind of emerging markets in Africa in tandem, and then, and then it spreads to the US and the Americas. So it's, it's like a slow rolling wave where we don't really fully see the effects in the US yet, but we will eventually.

• 7:51Speaker 03

  But I mean, if this goes on for a couple more weeks, I mean, we're, we're already in a world where rationing is now a thing that governments have to do. I mean, it's, it's not, the scale of it could be reversed if, if this was to suddenly open tomorrow, but the reality is if, you know, even if the US somehow manages to reach a situation where Iran agrees to just let stuff pass freely, there's gonna be a new premium for all those prices baked in that people will have to pay because they don't know what's gonna happen. And the market's gonna also kind of create a premium for people to just like buy security. You know what I mean? Like to, to, anything you can get your hands on, you want to stockpile right now. And so, yes, I think like we're heading towards like the worst energy crisis the last 60 years. It's kind of, we're already kind of in it, but it's, it's still regional in terms of

• 8:36Speaker 03

  the most obvious effects, but it's kind of spreading. Australia's only got about three weeks of fuel left. You know, like New Zealand's got similar concerns. China's been, China, China has, you know, excess capacity to refine oil and also massive reserves, like, like strategic reserve of oil, and they've been banning exports. So that's kind of crimping some of the supply, not all of it, that they're still sending a little bit out. But all, all, all that's, you know, already happening and we just haven't realized it yet. And so to take, take, take this back to where you opened with the S and P 500.

• 9:10Speaker 03

  You know, if you run out of LNG and you run out of power long enough, you're going to have a lot of semiconductor fabs in the Asia-Pacific that have to, you know, get power somehow. And the government has to decide, do we keep making ships? And up and holding the global economy up, or do we keep people's lights on? And that's, and then on top of that, Qatar provides about a third of the world's helium. And you need helium to make ships. And it's not the gas kind of, I mean, you need liquid helium. And basically, that's, that boils off when it's in storage. So you can't really store it from usually like more six and eight, six to eight weeks is my understanding. That's kind of the inventory you're working with.

• 9:46Speaker 03

  And so, yeah, this is all stuff that like, the market just isn't pricing because everybody's convinced Trump has to back down somehow. And nobody, nobody knows how to price assets in a world where like that level of a shock is happening.

• 9:59Speaker 04

  Nick, I'm curious, like, we have these shocks that we're currently inside of now. What do you think? Like, I'm thinking back to COVID, you know, the shift from in-person work to remote work is an example. What do you think economically will persist after this conflict changes? I see some talk about EVs, perhaps demand might increase, but it's not really increasing. What do you think might be the residue that kind of comes out of this?

• 10:20Speaker 03

  Oh, dude, EV demand is absolutely increasing a lot. It's not, it's not slow. The reason why people don't think it's increasing is because the US is basically an increasingly insular market where people think that the US is the world and don't really pay attention to what's happening elsewhere. I mean, if you look globally,

• 10:37Speaker 03

  like,

• 10:39Speaker 03

  we're basically at a tipping point, right? If you include hybrids and plug in electrics and looking at the kind of range of non-pure combustion engine vehicles, this year is probably the year where a majority of global light vehicle production is already not just purely combustion engine. You know what I mean? And like, in a country like Indonesia, for example, like the market penetration rate for like battery electrics, not even plug-in hybrids, is going to hit like 100% sometime in like 2027 at the current rate. Vietnam is, you know, already, is already probably, is already a majority EV market. China is a majority EV market. And that's the biggest auto market in the world, right? I mean, Japan's been kind of further behind, but I think will probably pick up the pace like, like, the EV story is there. So this shock is, in my opinion, is probably going to accelerate peak oil demand.

• 11:25Speaker 03

  The exact timeline is up and, you know, up for debate, but like, I think, I think significantly faster than, than we were probably assuming, even though I'm also kind of bearish on demand. So I'm probably not the best representative for my industry. So that's locked in. You know, I think renewables are skyrocketing right now, like even in the UK, like demand for solar panels in the last month is up something like over 50%. Because people are just like, look, I need to make sure that I have some kind of power, right? So like, they're just reacting to the shock. If they can afford it, they'll do it. And with solar specifically, also, it's important, I think people have kind of missed this, that like in the last 15, 18 months, two years, you know, it's increased significantly and then there's a real uptick in the last kind of half of last year. But like, people living in emerging markets and

• 12:10Speaker 03

  kind of developing countries in general, they're just going for solar off-grid. It's cheap enough that it is the best option they have. And if they don't have access to reliable power, they'll do it at home. If they can afford it in a more middle class, they'll buy a battery as well. But that's locked in. You know what I mean? Like, obviously, that doesn't solve all the problems like you might have. Like, if you want to build heavy industry, you still need reliable power. So that's still probably natural gas, coal, or something else like that, like nuclear, if you can manage it. But I mean, that's, I think that's a given. So that's probably only going to accelerate because people are going to be so afraid of not having power. And it's just cheap, right? And China has also slack capacity. To produce these things is in a better position to weather the shock that we're undergoing at the moment than most. And on top of that, you

• 12:55Speaker 03

  know, even though clean tech is affected by what's happening in these markets, so for example, like aluminum goes into solar panels, right? But it's a relatively small share of aluminum demand. So and that market is flexible enough that you can probably work around these disruptions to keep making stuff. As long as you can keep the lights on, and the power you need, obviously, for everything. So I think that's a given. Work from home is certainly a possibility, but I don't think it's going to be that affected. I think people will see it more as an emergency measure. And you see governments already using it actually as a way to try to save fuel. But I don't see, I think that's less relevant. I think the bigger thing is simply that we're entering a period of no longer living in a world where we really rely on the US to preserve freedom of navigation. And in that world for energy, because of how interconnected all these

• 13:38Speaker 03

  markets are, everybody's going to want to make their power at home. And it's much more Rational, zu wollen, zu importieren, wie eine clean Technologie aus China und dafür einmal, dann für eine Molekül zu bezahlen, die du jedes Mal auf die Welle aufbringen musst. Und das ist einfach die grundlegende wirtschaftliche Rationale. Es bedeutet nicht, dass die Menschen einfach fossile Brennstoffe wie Kohle aufgeben, ich denke, dass es eine längere Lebenszeit hat, für den peak Demand, den wir erwartet haben, wegen dieser, nur weil sie Gas haben. Aber ich denke nicht, dass Öl und Gas in Zukunft noch komplett zurückkehren werden, weil es ein gewisses expected Demand in der Zukunft ist, weil everybody's gonna wanna basically make power onshore, diversify their options for where they get their energy from, and where they can accelerate processes that use electricity, especially clean tech to basically make replacement molecules.

• 14:23Speaker 03

  So, du benutzt Hydrogen in einem Prozess, statt Naturgas, wo du es kannst, oder du versuchst, Fertilisierstoff zu machen, ohne die Input. Also zum Beispiel, über 40% des Sulfur, das weltweit exportiert wird, wird auf der Straße zu Hormoz. Und ohne diesen Sulfur, macht man Fertilisierstoff viel teurer. Es beeinflusst auch Metalle. Also, weil für einige Metallproduktionstechniken, du benutzt z.B. Lithiumchlorid zu extrahieren, ein Metall aus einem Kasten von Kohle. Und all diese Dinge sind gerade, sind jetzt komponiert. Niemand weiß, wie sie gelangen werden. Aber es ist in einer Welt, wo du, wo du länger nicht mehr, wie, die Menschen halten, ich denke, in den USA zumeist oft über fossile Brennstoffe, es ist wie ein pragmatischer Lösung, du weißt, wir müssen pragmatisch und nicht zu viel an Nutzungsmitteln vertrauen,

• 15:07Speaker 03

  weil es wachstumlich ist. Wie, schau, ich lebe in Europa, wie, offensichtlich, es gibt eine ideologische Komponente zu was falsch mit europäischem Energiepolitik ist, aber ich, aber die Realität ist, dass es wirklich billig war, clean tech installieren zu können. Nutzungsmittel wurden wirklich billig, die Menschen installieren. Und dann wurden die Batterien billiger, und die Menschen begannen, Batterien auf zu verwenden. Der Problem ist, dass dieses Narrativ über die Relabilität von fossilen Brennstoffen ist, du weißt, auf das nur reliable Trade, und wir leben nicht mehr in diesem Welt, also ich denke, dass das in Realzeit stirbt, als eine Vermutung, die die Leute haben.

• 15:39Speaker 04

  I wondered too, you're talking about maritime security. You know, we talked on the show a few times about insurance, how these vessels, even if it was actually safe in the Straits of Hormuz, the insurance companies might still hesitate despite the assurances that they're safe. And I'm curious what you see as the effect of this conflict on insurance long term, especially maritime insurance.

• 15:57Speaker 03

  See, I mean, I'm not like a special spotty stretch, but it's safe to say it's going to bake in a larger premium and it's going to significantly raise the costs of insuring these vessels. You know, this will go from like a tiny tail risk event that people had to insure for, but didn't really affect your overhead to like, you know, insurance, like a payment equal to like 5% of the value of what you're shipping. You know what I mean? Like it's like that level of shock from like a marginal like point, however much percent to that. And at that point, that passes through to consumers. So commodities are going to be more expensive. That's just, I think, going to be a... But I don't think that's a forever thing. I think actually that people are exaggerating the kind of the inflation side of that problem. But I do think that structurally, there's going to be an increase in prices,

• 16:39Speaker 03

  at least for a while, because the market just has to accommodate risks it never had to before. I think of it as kind of whiplash from last year. Like the Trump administration already kind of showed us how crazy they could be. And we just took it at face value that it was mostly talk. But like, I mean, living in Europe, it's like, once Greenland was on the menu, it wasn't like anyone could think, oh, he's just saying that. Like, we had to plan as if that was a possibility. You know what I mean? Like, you had to assume that it was possible. And once you have to assume it's possible, even if it's like less than 1% chance it happens, it just radically changes the way you think about risk.

• 17:10Jack Murphy?

  I think it's fascinating. You know, when we used to talk about peak oil, people were talking about us running out of oil, like the world was just going to run out of oil. And that obviously hasn't happened, but now we're having this conversation. I've never, I mean, I guess I have heard it, but you know, it's interesting to hear you talk about it, the concept of peak oil demand that, it's not that we're running out of fossil fuels. It's just that the dynamics of energy politics are changing so dramatically and the technology.

• 17:38Speaker 03

  Yeah, yeah, I mean, I, as I, people debated, I think, realistically, pre-war, most assumptions probably had demand peaking around 2030 to 2032 as kind of like a safe, cautious, you know, like, like, like, not nodding towards the transition while not, while also making sure the fossil fuel people are happy. That's probably been blown up. I mean, we don't exactly know, but that's probably been blown up because if, you know, one of the, I think, the most difficult parts of the forecasting is for a very long time, it was assumed that developing countries had to kind of pick up the slack for demand because China really drove a lot, a lot of the marginal demand the last quarter century in terms of the growth of imports, you know, and it's China, obviously, that's going electric fastest. They're the ones building EVs, they're, they're exporting them, they're, you know,

• 18:20Speaker 03

  they're putting it on the market. And that kind of assumption collapsed in the last three years because it got so cheap for an emerging market to buy imported EVs. I mean, you could buy like a decent Chinese EV model for $10,000. They're never going to sell that price to you if you live in the US or in Europe.

• 18:37Jack Murphy?

  Ever, yeah.

• 18:38Speaker 03

  Because they can, you know what I mean, they can obviously ask, they can ask for more, but, but you can. And so like, like, these cars are just better tech, they're better experiences to drive and they're cheap. And I think that that, that really disrupted a lot of assumptions about where demand growth would come from because the hope was that, like, once China peaks or matures, whatever the phrase you want to use is, you know, India will pick up the slack and then, you know, Africa over time, even though from a very, very low base will pick up the slack, you know, Latin America might have some more, the Middle East will have more. And that's just like not visibly the case over time.

• 19:08Jack Murphy?

  Yeah, the, the industrial revolution happened unevenly and, and some countries just skipped right over it and got it right into the digital age and they didn't have the same evolution as other countries did.

• 19:20Speaker 03

  Yeah, for, for sure. And, and on top of that, I mean, like, there, there are massive problems with what China's done economically for its kind of global, the global side effects it has for other countries trying to industrialize or, or, you know, manufacture things. I mean, look at the US. But, but that said, like, you know, the, if you think about the way that the current shock is changing the energy market, you know, a lot of the narrative the US has leaned on the last five years was basically like, well, okay, Russia wants to weaponize gas, we'll sell you gas, you know, like Iran wants to close the street, we can sell you, we can sell you hydrocarbons, right? We can sell you oil, gas, whatever. And it's like, why would anyone go for that now? When the, the price could be so wild because, because a guy wakes up, tweets, and then suddenly we're bombing targets. Like, it's just not.

• 20:03Speaker 03

  That's not like a rational strategy. You might, you might rely on it in the short term, but you wouldn't plan for that long term. And so the irony is that like China is that now for like developing countries that are really, really sensitive to price and the cost of imports because they basically have to spend their hard earned kind of foreign currency on imports, right? Like, and so they have to, they have to export something to be able to earn dollars, wherever it is to buy that import. You know, for them, it's more rational to use EVs or to use clean tech because it minimizes the, the money that's outgoing towards, towards buying energy. And so China is like an ideal energy security partner for these countries, not the US. That's, that's just the reality. The US can definitely do stuff that China can't when it comes to like, a lot of financing and specific, specific instruments that Chinese companies can,

• 20:45Speaker 03

  can do, but it's not like the, the way that they typically go about developing. But the reality is that like, like we, we basically seeded the field to China on clean tech. And then we, and then we decided to do something so disastrously short sighted that it make, it makes them like the ideal partner coming out of this conflict for anybody who wants to kind of improve their own energy security.

• 21:07Speaker 02

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• 22:00Speaker 00

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• 23:08Speaker 06

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• 23:40Jack Murphy?

  I think the question that a lot of people who watch this are going to have, of course, is what is the effect this is going to have on America? And I mean, I think you touched on it a bit, but if you could go a little bit more in depth, I mean, my understanding is most of the oil coming from the Persian Gulf ends up in Europe and Asia, not so much the United States. But how is it affecting us? And what do you foresee the effects being in the coming weeks and months?

• 24:04Speaker 03

  Sure. So first off, the idea that like, because the US is an exporter now of crude oil, that it gets kind of insulated is just not true.

• 24:15Speaker 03

  It's comforting. It's true that the scale, obviously, of the price shock might be different because we have a bit more of a buffer and we produce more than we consume. But, you know, just because the crude oil from the Middle East typically goes to the Asia-Pacific or Europe doesn't really, it's still a global market, right? Like, products still have to flow globally. And it's important to also remember that nobody actually consumes crude oil as a consumer. They consume something that's been refined from crude oil.

• 24:40Speaker 03

  You know, so the issue is not so much the barrels of crude, even though they're obviously the key, like, supply choke point. It's like, once you run out of jet fuel in Asia, you gotta go somewhere else to buy it. So you're gonna start buying it from Europe, and then Europe's short, and then Europe has to buy it from the US. So like, our airfare, you know, like, kind of takes up massively, because obviously, jet fuel, I think, is like a quarter of the cost of any given flight. You know, the same thing for gasoline and diesel, right? I mean, gasoline, Americans actually are uniquely sensitive to gasoline prices because Europeans don't drive as much or as far. So like, you know, that has an impact, but it's not felt the same way. I think psychologically, for Americans, when they see, like, you know, gas prices go above, like, $4.50 a gallon, like, it's just like a break glass kind of a moment.

• 25:22Speaker 03

  We're going, that's the world we're living in. I think, you know, it's gonna go significantly higher than that, at least during the kind of initial phases of the shock, like, as it's more deeply felt. But, like, it just takes weeks for that stuff to kind of clear through the system, you know what I mean? So I think, right now, you're already seeing a tick up in, like, California, for example, because California basically imports its products from Asia-Pacific. So that specific market is, like, totally screwed. Like, they are, they're effectively an Asian market in terms of how they get their, like, you know, oil products. You know, it's different in the Gulf, it'll be different in the Northeast, you know, it varies a bit regionally in the US. But, but like, we are all heading for a world where, like, this stuff's really expensive.

• 26:04Speaker 03

  And the flip side is that, you know, the irony is that when you're a major exporter of a good, your economy is actually more exposed to a price shock than if you're just an importer, because also the people producing it are affected by that shock, and that changes their own economics, you know? And think of it this way, like, diesel is a great, is probably the most important lever for how to think about, like, how inflation filters into what you buy every day. Because, like, diesel's used for trucking. You know, it's used for trucking, it's used for power generators at mines and kind of like in other industrial sites, et cetera. And that's going to get significantly more expensive in the next kind of couple of weeks to month, maybe a bit longer in the US. But like that, that will, it'll take you, it'll take time for companies to raise prices to reflect that. But that's immediately going to happen. So you're going to see this kind of price increase be

• 26:49Speaker 03

  slightly delayed because companies will want to delay as long as possible how much they're passing on to their customers, right? Because they'll, they always want to hope for better and they want to kind of not piss people off too much. But like by the time we get to like May, I mean, April, April is when it's a lot of it's going to unfold. But by the time we get to May, I mean, it's going to be felt. You know, you're going to, you're going to visibly see it. It's going to be really expensive to fill up, you know, your gas tank.

• 27:08Speaker 03

  Prices for goods will start going up. And so I, I would not, I think the US is in much better shape when it comes to gas. So the gas price for heating or power in the US will stay relatively low compared to global prices.

• 27:21Speaker 03

  You know, they still can increase because we do export a lot of gas, right? So that's still will actually filter into the system some. So like, I, I would, I would probably say we're not going to see the same kind of level of shortages. You're not, you're not going to see people like being forced to ration and then, and then rioting as if it's COVID lockdowns again. But you are going to see like the, the kind of scale of price increases that like are, are like really, really like bleak politically in the US, but also just socially, people just really, really feel it. And I, I can't really put like a hard number on it, but like I would not be shocked if like national gas prices break $5 to $6, um, to, to $6 a gallon. It's, you know, depending on how bad the shortages get elsewhere. So.

• 28:05Speaker 04

  Nick, I got a question on kind of price efficiencies, like looking at Iran, let's say we solve the Iran problem today. Suddenly Iran is on our side. All the sanctions are removed. What do you think are kind of the global macroeconomic effects of something like that happening? Were all the things that Iran has had as true in the economy for the past 47 years are suddenly dissolved? And I'm sure there would be efficiencies gained, obviously, but do you think there would also be inefficiencies anywhere within the market now that Iran is allowed to play basically unrestrained?

• 28:33Speaker 03

  That's a great question. And I'm unfortunately an Iran specialist, but like, you know, in general, in general terms. So first off, it'll still take a couple of months for, for like the current shock to filter through the system. You know what I mean? So like even if it opened tomorrow, we're still talking about two months of pain, maybe even three months of pain. Um, you know, it might not be as extreme, but it's, it's still kind of bad, that's baked in.

• 28:57Speaker 03

  But if Iran was suddenly allowed to basically freely trade and freely produce and could attract foreign investment and so on, I mean, I mean, you're talking about lower oil prices materially. I mean, expectations are going to obviously come down. So you're probably talking about lower interest rates in terms of people's expectations. So central banks don't feel as much pressure on oil and gas, which is the net positive globally, right? That's probably positive for growth. I mean, Iran makes a lot of steel. It could probably export some of that, but steel is oversupplied globally because of China. There probably are some other metals that could export. I mean, I think it would mostly be like an Iran story, right? I mean, the commodity side would matter, but the thing is, if you think of it this way, like, we were really oversupplied coming into this year without the conflict.

• 29:38Speaker 03

  And so, you know, if that supply all returns to market, then it's a crowded market and Iran can't just necessarily ramp up as easily. I mean, it could, but you know, something tells me that OPEC, we've really pissed at it. Because there's still a level at which you need some price stability, right? Like, and in real terms, because of how high inflation has been in dollar terms in the US, you know, oil is worth like a third less in nominal terms, you know, or sorry, real terms than it was like in 2020. You know what I mean? Like, it's, it's a mess. So 60 bucks today for a barrel is way different than it was in 2020.

• 30:12Speaker 03

  And I mean, that said, the American producers have gotten way more efficient. So, you know, it's not all doom and gloom, but I just think that like, it would more be like an Iran specific story as to how that that change goes. I also, I'm very skeptical of sanctions relief fundamentally changing things because countries, I mean, Russia is a great example. Economies that are sanctioned that heavily for that long, they tend to become more ataric and they have to kind of develop an economic model that is just not necessarily concordant with like exploiting free trade, right? Or you have domestic lobbies, you have to make, you keep happy, you probably want to protect your domestic industries where you can. And and also typically experiencing sanctions is a lot like experiencing a big financial shock.

• 30:55Speaker 03

  Like if you if there's a run in your currency, for instance, the response typically is to just stockpile foreign currency. So you have to export more than you import. You have to have a relatively, you know, conservative kind of fiscal policy for your budget to make sure you're not spending too much, not borrowing too much, because you just want to maintain confidence in your currency at all times. And sanctions have a similar effect, you know what I mean? And that redundancy itself actually leads to lower growth rates and has its own kind of knock on effects that I don't I don't I can't speak to Iran really. I mean, I'm a Russia specialist, but ultimately by training, but I imagine that that those structures can't really be undone very quickly. And there's a lot of political kind of pressure to maintain that system, even if you have sanctions relief.

• 31:37Jack Murphy?

  When do we get to the point where this is going to do permanent damage to the economy? I mean, you kind of made reference to, you know, this is going to change or speed up some of the existing dynamics. But will there come a point where if we reopen the straits even by military force down the line, that it's just too late, it's not really going to matter? Or it won't matter as much?

• 31:58Speaker 03

  I think the damage is actually done structurally because the market will start to price in a premium. Obviously, the scale that premium is up for debate, but it's going to be pretty high for a while. So I mean, oil prices won't be like so, so destructive that the entire global economy goes into recession, which is like the the the flight path we're on right now, you know, in terms of energy, right? But um, but that said, you know, once you've lived through a shock this extreme that no one can make sense of, like, no, no American ally right now is like, oh, we were consulted and this makes sense, right? Um, you really have to basically adopt an economic approach, an energy security approach that's built on resilience. And resilience is expensive. Resilience requires redundancy.

• 32:40Speaker 03

  And it requires a lot of investment into capacity that isn't actually going to be used necessarily. So you basically, you're talking about like a net increase of the share of GDP that energy takes up. By necessity to basically protect yourself from like a future shock like this. And that world is one where we grow more slowly. You know, things are less efficient from like a pure like market perspective. Not that I think that's necessarily always bad. You know, although there's a lot more policy intervention to shape markets. And you have kind of what was already happening really since last 2016. But like last year on trade that kind of got supercharged. You have that applied to energy. You know what I mean? You just have a very, very different like working model going forward for how much money you're going to spend to make sure you feel safe.

• 33:25Speaker 03

  And so in that sense, I think the damage is done. I think that that imposes its own costs that like they're not maybe not as bad or as extreme as like just running out of jet fuel and diesel. But still add up and still ultimately are kind of a net negative. I do think that that'll end up having a more negative impact on the US actually over time than even Europe. Not that I'm super bullish on Europe, though I think people are kind of unnecessarily negative about it. But like the US, a lot of the US growth stories also benefited from being an energy exporter. And that's going to come under threat over time because of this kind of shift in people's behavior as consumers of energy.

• 34:01Jack Murphy?

  You know, another question that I wanted to ask you since we have you here. I've heard from certain people in the, you know, national security space who have told me that they see that what's going on right now, that going after Venezuela, then going after Iran is a way of strategically choking off China's access to energy. That it's this sort of part of a larger strategy arraying against China. And I was wondering if, you know, from your perspective, from someone who studies the economics of global energy trade, does this make sense strategically to you? I mean, does, does that pan out at all?

• 34:44Speaker 03

  I mean, does the Pope shit in the woods?

• 34:47Speaker 03

  Like, I don't think it does. Like, well, it's from Chicago now, so I should probably add, no, but, um, but like, no, like, I, I, I, I think that, like, it's, it's absurd to me that people think that and say that. It is so irrational and hard. It, it's, it's like the 4D chess argument is, we've already seen so many other things that have happened, you know, from, from US policy in the last 15 months that, that just prove that we have no idea what's, what we're doing, what's going on anymore. That I just don't understand how someone can credibly claim this, but setting that aside. Now, first off, the energy shock does hit China, but it hits everybody. And the US caused it. So like, who, who are people gonna blame? Like, the US?

• 35:29Speaker 03

  And there's obviously the Israeli component, but I, but ultimately the US is kind of like backstopping it, right? So this, the US gets the blame for it. The US doesn't escape the damage ultimately, even though the US is a net exporter of oil or gas. It's, it, it doesn't fix the problem that you're still exposed to these global markets. Um, and, you know, China has like the world's largest, uh, strategic inventories of oil. It's, it's not like gonna totally bail them out, but like, for example, you know, to talk to, you know, with, I was in Houston for the work conference, right? Last week and like, you talk to people, like colleagues who are based in China and like, they'll say, people feel calm in Beijing or in Shanghai. You know what I mean? People are not panicking. And if there's any country

• 36:07Speaker 03

  that exists right now that could find a way to engineer its way around this problem, it is literally China and they're doing it, right? Like they, I mean, the entire basis of their energy security approach has been to try to reduce their exposure to, you know, the Strait of Malacca. And they've done it successfully. Right? And I mean, EVs like have taken off, you know, they are electrifying trucks faster than everybody else. So, and trucks obviously consume diesel. They've built high-speed rail that is actually completely, you know, like effective. So people don't fly for all the same trips. Like, there are so many ways in which they are still well-positioned. And on top of that, because they have these, you know, inventories of oil and so on, and they have the capacity to refine lots of oil.

• 36:50Speaker 03

  They can also do things, at least in the near term, to kind of, I'll say medium term, like in terms of months, not like years, that allow them to like offer not bailouts, but help to countries that are struggling, right, or in trouble, if it benefits them politically. And it puts pressure on people to cut deals with them. You know what I mean? Like, if there's one thing that could push the US out of the Asia-Pacific, it's literally doing this, where we basically incentivize everybody to turn around and try to partner with them, because they have to make sure that like people's homes are lit and heated, you know?

• 37:20Speaker 04

  Choose your strategic partner.

• 37:22Speaker 03

  Yeah, so like, you know, so the kind of strategery argument about 4D chess with China, to me, is just dumb. It's like trying to reverse engineer some sort of cause for this insanity, when you literally cannot find like a single win, especially when even the administration's own stated goals, which change every day anyway, have, you know, when they were to reopen the Strait of Hormuz, it's like the Strait was only closed because of what we did. So like, in what world does this make sense as a rational endgame that benefits us, right? So like, like, yeah, like, I mean, fair enough that it is a problem for China, but like, I wouldn't really bet against their ability to like build other stuff to get the power

• 38:06Speaker 03

  they need, and also to act ruthlessly to make sure they get what they need. And obviously Iran has a relatively small share of their actual net imports, or at least the manageable share. People also forget this, there's still like oil going to China. Because if they can control who's transiting the Strait, they can also let stuff through, right? And there are limits to that, but like, if they're gonna let any ships to anywhere through, it's gonna be to China, right? I mean, China's helping them defend themselves right now.

• 38:34Speaker 04

  They're actually earning more in exports currently to China since the war started than before the war started.

• 38:39Speaker 03

  Yep. Yeah, exactly. So like, if, so the other thing is that like, if the argument that this 4D chess is that the Strait is closed, the irony is that that argument would have to assume that the US Navy is the one closed in the Strait, and we're actually not. And we can't even reopen it with the US Navy based off our own assumptions. I mean, you know, if they can fire like a missile at a ship off a technical within 100 miles of the coast, in what universe is a US Navy going to expose itself to fire from three sides from mountain range and like, and actually hold that thing open? Like, it's not gonna happen.

• 39:09Speaker 03

  So.

• 39:11Speaker 04

  But Pete Hexup this morning said that their navy is completely obliterated and they're like 90% destroyed.

• 39:17Speaker 03

  Yeah, and Ukraine ran the Russian Navy out of the Black Sea without a navy. So like, I don't think that that argument like makes sense anymore, you know, like.

• 39:27Speaker 02

  Nick, talk to me a little bit about bond markets. How does this affect bond, like a bond, the bond markets?

• 39:33Speaker 03

  Are you a fan of bonds? Is that a?

• 39:35Speaker 02

  Yeah, like I dabble.

• 39:38Speaker 03

  Rates. At least it's not a polymarket, guys.

• 39:43Speaker 03

  Yeah, well, I'm a US national, so the stuff I can actually buy without massive IRS liabilities in the US is, or it is a nightmare. So like, I end up getting shafted on this stuff over there. But anyway. I mean, rates go up, rates go up initially, obviously. It's, I actually don't think it's a given that that's true later in the year.

• 40:00Speaker 03

  I think the US, the irony is that because the US has more energy that it can produce. But also is like lighting its own labor market on fire over time by deporting, you know, like, like people who aren't here legally unnecessarily and so on.

• 40:13Speaker 03

  You know, you're gonna see like. A higher kind of inflation effect in the US than you would in Europe where the initial effect is incredibly inflationary because the prices skyrocket, but then like, nobody has a job. So then obviously the central banks have to cut rates. So, so the irony is that like, if the damage was more acutely felt faster in the US, rates would actually probably go lower faster. But because it's not, the rates actually stick higher for longer. Whereas in like other parts of the world, you know, what might start with a rate hike. Might end up actually leading to rate cuts late in the year because people realize the, the scale, the shock is so immense that they just need to do it to be able to finance and to pay for. Keeping things alive, you know what I mean? Just like, like keeping companies afloat and so on in, in a, in a crisis situation.

• 40:57Speaker 02

  Good God, Nick. Is there any silver lining in this at all?

• 41:00Speaker 03

  No, dude, this, this, this is the end of burn after reading. Like, that's, that's, that's, this is what we're experiencing right now.

• 41:08Speaker 02

  Oh, my God.

• 41:09Speaker 03

  What did we learn from all of this? Nothing, I guess. Yeah, that's literally it. Like, like it's. From an economic perspective, there is, there's basically no rationale and it's all, it's all downside. You know, so like I.

• 41:23Speaker 03

  You know, I'm sure there's literally a world in which we could see some kind of more positive outcome i- if, you know, a flowering democratic Iran was a reality, but I don't really see that happening, right? And I don't think that even if that was happening, we're still talking about months of issues before this stuff gets uncorked and kind of resolved, assuming that it ends like tomorrow.

• 41:45Speaker 02

  And like the latest out of the White House was that we're thinking about just like declaring victory and leaving, even if the strait is closed. So leave it to somebody else's, you know, somebody else's problem, even though we've destroyed it.

• 41:58Speaker 03

  And that could obviously, I mean, that that could theoretically three, a free up some supply, but like if you're, if you're Tehran, you just won. So you're going to keep pressing. So why wouldn't you?

• 42:08Speaker 02

  They're trying to get, yeah, go ahead. I'm sorry.

• 42:11Speaker 03

  No, I say like, why, why wouldn't you just be like, all right, all right, dude, you, you, you want to cut a deal over harm? It was fine. You better leave Bahrain too.

• 42:17Speaker 02

  Yeah.

• 42:17Speaker 03

  Like.

• 42:18Speaker 02

  Or we want our $2 million toll for every ship that comes through.

• 42:21Speaker 03

  Yeah, but like, but, but like, at that point, like, like, why, why would you stop? I mean, and I know, I know that we had the speaker, whatever recently, just earlier today, say that, you know, they're, they're open to negotiating, but like, he hasn't led negotiations at any point in the process. So like, um, so yeah, I mean, if I'm them, like, I would just keep, I would, I would, I would see this indication that they're winning. And then you just keep pressing your advantage when you're winning in a situation because ultimately their goal is to kick the US out of the Gulf. Like that's the, that's the ballgame, right?

• 42:51Speaker 02

  Thanks. Uh, good God, man.

• 42:55Speaker 03

  You okay?

• 42:56Speaker 02

  Yeah, I'm all right. I'm fine. I'll, I'll make it. My portfolio is fucked. No, just kidding. Um, Jack, do you have anything else? I'm like stunned.

• 43:06Jack Murphy?

  I mean, I think that's about it. Um, what else haven't we covered? That's important to this, to the Persian Gulf.

• 43:12Speaker 02

  I mean, Nick, what are you tracking in terms of economics? You know, I did, just for the record, for everybody to know, I had helium and aluminum and other commodities on my notes to talk to you about, but you brought it up. So just want to make sure everybody knows that.

• 43:26Speaker 03

  I, I mean, it's not as directly affected, but I do keep an eye on copper. I obviously cover that for work, but they basically, the short version of it is basically that a lot of production in the DRC, which is kind of one of the main countries that's driven supply growth the last five years relies on sulfuric acid.

• 43:41Speaker 03

  So if that market gets tight, that can affect production negatively. So it can it can take off copper supply, but also copper is like historically the best commodity to kind of give you a sense of how healthy the economy is doing. And compared to oil, for instance, actually, I think it's actually a little bit down compared to when the conflict started. And I actually think the market doesn't really know how to price it right now, but it's kind of is assuming that the demand destruction is coming. So like, there's, there's, there's already a signal there, right? It might not be a strong one, but it's there. But yeah, I mean, the most important stuff right now is to focus on like the physical markets for oil. So don't just look at brands, look at like what's clearing in Singapore and like, like, you know, different blends, you know what I mean? Like, you have to kind of look market by market.

• 44:24Speaker 03

  Henry Hub is the name of the US kind of natural gas benchmark. Look at the non-US benchmarks for natural gas. So like TTF in Europe, AKM for the LNG contracts going to like Japan and the Asia Pacific. Track that. Helium isn't really transparent. It's a small market. But yeah, aluminum for sure.

• 44:43Speaker 03

  But I mean, the other thing, too, to keep an eye on, to get a sense of like the scale of the, if not the damage, the expected damage, is like, like, look at like the announcements about like EV sales when, you know, solar installations, battery installations, not even in the US, but like even in Europe, in across Africa, you know, in poorer countries in Asia Pacific, like, that's actually a really useful indicator for how much stress people are feeling. And I think that actually is a better way of of understanding how structurally significant the current shock is that like people in the US can take for granted the reliability of fossil fuel, you know, power and so on. But that's not going to be the case for a lot of people in a lot of the world.

• 45:24Jack Murphy?

  Nick, are you still writing on Substack?

• 45:28Speaker 03

  I'm starting it up again slowly. It's just like the last like month was the worst possible time to restart. So I had one piece out and I was like, I was like, oh, do this and then because we're on, it's like, this is not happening right now.

• 45:38Jack Murphy?

  Yeah, you had some really good, really good Russia centered stuff on there, as I recall. Tell people where they can go to find that.

• 45:45Speaker 03

  Yeah. So the the new Substack name is Sick Transition Gloria. So, you know, like, like playing off the Latin phrase, but it's just it's Substack.com. It's going to be a bit more open. So it's going to be some personal stuff. It'll have some stuff on just like metals, but it's, you know, I'm going to make sure that there's Russia content in there and that it kind of comes back to Russia because I am.

• 46:06Jack Murphy?

  But we're all going to also going to get some nightlife.

• 46:10Speaker 03

  Well, I got to promote the book that I'm still finishing, hopefully for late summer on the Russian economy. Awesome.

• 46:18Speaker 02

  Nice.

• 46:18Speaker 03

  And it's called Empire of Austerity. That's with Hearst Publishers. And yeah, I mean, but we'll see exactly when it comes out. I have to go through the kind of last rounds of the editing process at the moment. But it covers the evolution of the kind of political economy of the regime from the 90s up to last year. Through the lens of fiscal policy as like the main character, like the kind of the the original sin, for lack of a better phrase, of like how everything came together.

• 46:44Jack Murphy?

  We want to hit that real quick before we get going, just the Russia stuff?

• 46:48Speaker 02

  I was gonna ask, I was gonna ask a specific question about Russia. Like, I've seen that due to the war, like parts of segments of the economy have like sparked up again, right? Like they're manufacturing and building weapons and stuff like that and shells. Is there, have they built up to the point where there are lobbying, like the government to like keep it going? Because we're making a ton of money and like money's being, you know, injected into certain areas that didn't have it for a long time.

• 47:16Speaker 03

  So the unfortunate answer is yes and no. Um, it's big enough that if you are a military manufacturer, you're obviously saying, give it, keep giving us money. But your costs are increasing so quickly that you're not actually seeing a higher profit necessarily.

• 47:28Speaker 02

  Okay.

• 47:29Speaker 03

  Um, the, the, but the reality is the Russian economy right now is probably already in recession. I mean, it was tech, it was officially officially contracted year on year as of January. But the civilian economy has been in recession basically since the late 2024. And initially it was very mild, you know, I mean, it was more like stagnation, kind of a tiny tick down, but it's speeding up over time.

• 47:50Speaker 03

  And there's no like relief in sight. I mean, the higher oil price isn't really helping them. First off, they've lost 40% of their export capacity for crude oil because Ukrainian strikes on Baltic ports. Whereas, you know, Ukraine Twitter will say, you know, Ukrainian sanctions.

• 48:07Speaker 03

  But like, you know, the, but like, now that Ukraine has its own ballistic missiles, they can do a lot more damage to refineries into these targets. And Russia is also just running out of AD. Like, like the irony is that Russia's size is its biggest liability when it comes to this stuff, right? Ukraine can have a much denser air defense network than Russia can. And so I think that's finally having a bit more of an impact.

• 48:29Speaker 03

  But like, the wartime boom, as people kind of thought of it, was mostly a myth. And it was, it was really the first half of 2023 that people saw their wages grow in real terms because of some kind of quirks of the Russian economy, like with the way the labor market is structured. And so the short version of it, to be nerdy, is that like, in the way that the budget system works, when you have a procurement contract for like a federal project or with like a kind of a state-owned company, typically you're limited to pay 30 to 50% of that contract upfront and the rest is paid on delivery. But in the beginning of 23, because they really had to get mobilization going and getting more, more stuff to the front, they allowed people to pay 90% upfront.

• 49:12Speaker 03

  So you just had this flood of money hit, hit the market all at once, which created this kind of catalytic effect where suddenly all these, you know, all these factory workers see their wages start rising because there's like a lot of demand for their labor. And that spills over, right? And then on top of that, you have the wartime bonuses. So guys get, I mean, literally, if you, if you sign up and serve the front and die at the front.

• 49:31Speaker 07

  I have type 2 diabetes, but I manage it well. It's a little pill with a big story to tell. I take one daily, Jardiance, at each day's start.

• 49:45Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance, emigliflozin, 10 or 25-milligram tablets, are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine and infection in the area between and around the anus and genitals called the perineum. Both may be fatal. Severe allergic reactions, dehydration. Urinary tract or genital yeast infections in men and women and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing or swallowing.

• 50:27Speaker 00

  Tell your doctor about lightheadedness, weakness, fever, pain, tenderness, redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance 10 or 25 milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

• 50:52Speaker 01

  Cash flow crunch? OnDeck's small business line of credit gives your business immediate access to funds, up to $200,000, right when you need it. Cover seasonal dips, manage payroll, restock inventory, or tackle unexpected expenses without missing a beat. With flexible draws, transparent pricing, and control over repayment, get funded quickly and confidently. Apply today at ondeck.com. Funds could be available as soon as tomorrow. Depending on certain loan attributes, your business loan may be issued by OnDeck or Celtic Bank. OnDeck does not lend in North Dakota. All loans and amounts subject to lender approval.

• 51:23Speaker 03

  Your family gets the equivalent of like 35 years of like the average salary pay.

• 51:28Speaker 03

  So you're literally worth more dead than alive in a lot of parts of the country to like your loved ones in terms of how like the way the economy is structured. So they didn't use like mass conscription. They're bribing people to die. That's basically the way that the regime is doing it, right?

• 51:45Speaker 03

  And that has some positive effect because obviously that money goes into people's pockets and they do spend it, but like you can't like you can't escape the fact that like virtually all the production increases in the economy are military since the war began. And you know, you have high inflation domestically from a lack of labor, but and also sanctions, but like increasing like lack of labor. Because every single day more working age men are dying and you're not replacing them. And like, it's not like massive, but they are cracking down a bit on like immigrant labor. So they're squeezing that more because you know, the regime has become a lot more like kind of native is populist in the way that it approaches the rhetoric of these things, even if it acknowledges that it needs them.

• 52:24Speaker 03

  So yeah, I mean, I wouldn't else, I also wouldn't trust official inflation data at this point. Because if you look at what people actually consume and pay for,

• 52:32Speaker 03

  food and staples account for about 40% of the average household's budget.

• 52:39Speaker 03

  The price of food and staples has grown at like twice, three times, sometimes five times the rate of like official inflation in a given year since the war began. You know what I mean? So clearly something's going on there.

• 52:51Speaker 03

  You know, services for like tourism got really expensive because people couldn't fly abroad as easily. So like all the Russian domestic tourism got a lot, a lot pricier. Like it just, you name it. Basically there's, there's, there's a price issue of some kind, even if like officially inflation's not too high because interest rates are really high and they've come down some, but like not enough to meaningfully change the game. I mean, if you're still talking about an interest rate at like between 12 and 15% as low.

• 53:13Speaker 02

  Yeah.

• 53:14Speaker 03

  You know, that's not, that's not good. So, um, so yeah, I mean, I think if you were to lift sanctions tomorrow, Russia would probably still contract economically for several years.

• 53:22Speaker 02

  Yeah. I mean, I want everyone to check out Nick's Substack. I want to put a link in the description as well. And when your book comes out, we'd love to have you back on to deep dive and give it a good push especially.

• 53:35Speaker 02

  Yeah. Of course. Jack, do you have anything? No, no, I think this is great. Thank you, Nick. Yeah. I mean, there's, every time we do a show like this, it's like never good news. It's like never good news. I need, I need like a good news show or something like that. Or just give me some tips or something, Nick, you know?

• 53:52Speaker 03

  I think you got to crowdfund a bunker.

• 53:56Speaker 02

  That's it? Yeah.

• 53:57Speaker 03

  I mean, no, look, I mean, right now cash is king. Like your stocks are probably going to lose value. So you want to have cash to deploy once things kind of settle a bit more. Um, commodities are obviously safe to hold in the sense that they're a hedge. So like if you, if you know what you're, what you're buying, but the problem is that like the scale of demand destruction will be so big late in the year that that's, you can't always, you can't, timing, that's going to be a bit of a mess. You know what I mean? So like you can, so buy, buy an ETF, go ahead, but like it's going to be a bumpy ride.

• 54:27Speaker 02

  So we're short in stuff is what you're saying?

• 54:30Speaker 03

  Yeah. I mean, I would, I would definitely, I go long on food. I mean, think if you, if you, if you like, if you prepare for food prices go up and that's, that, that takes longer to feed into the system because fertilizer obviously is planting season, right? So it takes months, but it shows up. Get ready for that. You know, that's probably safe.

• 54:47Speaker 03

  You know, if you if you have any exposure, maybe a timber reed.

• 54:52Speaker 02

  No shit.

• 54:53Speaker 03

  As people start burning more of the stuff at home. I mean, I'm obviously kind of exaggerating, but like the point is it's gonna be really weird stuff that is like a safe haven in the kind of current shock.

• 55:03Speaker 02

  Good God, man. All right. So the end of days is coming. What happens if the AI bottom falls out while this is going on?

• 55:13Speaker 03

  Well, I mean, when do you want to retire?

• 55:16Speaker 02

  I don't know. I mean, that's so. I mean, I just want Team House revenues to continue to grow. That's what I want.

• 55:21Speaker 03

  Yeah, no, I mean, the AI was already a bubble. Everybody knew it. So the scale of the bubble is debatable, and I don't want to say bubble. I don't necessarily mean catastrophic, because obviously there could be a breakthrough of like sudden productivity gains or whatever that leads to a surge of revenue. But physically, it's really clear that the scale, the data center build, the people are assuming is on shaky ground. It can still literally materialize, but like getting that much power to grid that fast in the US is really hard and not really happening. There is definitely people like over egging the kind of the assumptions about need because there's still going to be efficiency gains. There's still going to be other stuff that kind of shows up.

• 56:04Speaker 03

  But if that bottom falls out, I mean, the S and P 500 is going to take a massive dive. And you know, I think that

• 56:13Speaker 03

  it would really be a reset. On the narrative, maybe not the reality, but at least on the narrative around power and then energy stuff, because a lot of the energy conversation the last two years has been like, how do we physically build like the grid and like the power we need to power these data centers? And you know, if Taiwan, South Korea, and Japan, etc., maybe even China, though I don't China would be different, are making fewer chips later in the year or aren't making chips because they're running out of like energy or like helium or whatever. That also is going to be an issue because like these data centers burn through chips very quickly, right? Like the high end ones. Like if you're talking about the highest end part of the market, it's like a couple of years or whatever that they depreciate.

• 56:52Speaker 03

  So so like it totally changes the way we'd have to think about the next couple of years for the investment plans. And I think that like ironically, that might actually be healthier. You know what I mean? It might actually be a better market in that sense.

• 57:04Speaker 02

  Yeah.

• 57:04Speaker 03

  But but it would definitely take a big chunk out of the S and P 500 and people's kind of, I think, expectations for growth.

• 57:12Speaker 02

  All right. You heard it here first. Short everything, guys. Just about everything. Nick, again, really appreciate it, man.

• 57:21Speaker 03

  Yeah, thank you.

• 57:22Speaker 02

  The link to your Substack is down in the description. So please, everybody, check it out. Everything else, all our stuff is down in the description. Check it out there and we'll see you next time.

• 57:32Speaker 03

  Great. Thank you so much for having me.

• 57:38Jack Murphy?

  Hey, guys. I want to take a moment to tell you about the Team House Podcast Newsletter. If you go and subscribe, it's totally free and what it will do is aggregate all of our data, all of our content that we put out. The things that are on the Team House, on our geopolitics podcast, Eyes On, things that I write journalistically with Sean Naylor on the high side, anything else that we have going on, books we recommend, upcoming guests that we have coming on the show, and also, you know, filtering in some fun stuff in there as well. If you go and check it out, we send it out just once a week. We don't want to spam you guys. It's just a kind of roll up of all of our content on a weekly basis.

• 58:22Jack Murphy?

  You can find our newsletter at teamhousepodcast.kit.com/join. Again, the website for that is teamhousepodcast.kit.com/join. So we hope to see you there. The link will be down in the description.

• 58:39Speaker 07

  I have type 2 diabetes, but I manage it well. It's a little pill with a big story to tell. I take ones daily, Jardiance at each day's start.

• 58:52Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance, emigliflozin, 10 or 25 milligram tablets, are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine and infection in the area between and around the anus and genitals called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing.

• 59:35Speaker 00

  Tell your doctor about lightheadedness, weakness, fever, pain, tenderness, redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance's 10 or 25-milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

• 1:00:00Speaker 01

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• 1:00:48Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance, emigliflozin, 10 or 25-milligram tablets, are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes, and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine and infection in the area between and around the anus and genitals called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing. Tell your doctor.

• 1:01:31Speaker 00

  about lightheadedness, weakness, fever, pain, tenderness, redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance 10 or 25-milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

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• 1:02:46Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance, empecagliflozin, 10- or 25-milligram tablets, are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes, and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine, and infection in the area between and around the anus and genitals called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing.

• 1:03:29Speaker 00

  Tell your doctor about lightheadedness, weakness, fever, pain, tenderness, redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance 10 or 25-milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

• 1:03:54Speaker 01

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• 1:04:31Speaker 07

  I have type 2 diabetes, but I manage it well. It's a little pill with a big story to tell. I take ones daily, Jardiance, at each day's start.

• 1:04:45Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance, emigliflozin 10 or 25-milligram tablets, are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes, and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine, and infection in the area between and around the anus and genitals called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing. Tell your doctor about lightheadedness, weakness, fever, pain, tenderness,

• 1:05:30Speaker 00

  redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance 10 or 25-milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

• 1:05:52Speaker 06

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• 1:06:41Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance Empigliflozin 10 or 25-milligram tablets are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes, and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine, and infection in the area between and around the anus and genitals called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing.

• 1:07:23Speaker 00

  Tell your doctor about lightheadedness, weakness, fever, pain, tenderness, redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance 10 or 25-milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

• 1:07:49Speaker 01

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• 1:08:27Speaker 07

  I have type 2 diabetes, but I manage it well. It's a little pill with a big story to tell. I take ones daily, Jardiance, at each day's start.

• 1:08:40Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance, empagliflozin, 10 or 25-milligram tablets, are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes, and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine and infection in the area between and around the anus and genitals, called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking and tell your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing. Tell your doctor about lightheadedness, weakness,

• 1:09:24Speaker 00

  fever, pain, tenderness, redness, or swelling in the perineum. You may have increased risk for lower limb loss. Call your doctor right away if you have new pain or tenderness, sores, ulcers, or infection in your legs or feet. To learn more about Jardiance 10 or 25-milligram tablets, ask your doctor, visit jardiance.com, or call 1-888-968-6648.

• 1:09:47Speaker 01

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• 1:10:23Speaker 07

  I have type 2 diabetes, but I manage it well. It's a little pill with a big story to tell. I take ones daily, Jardiance, at each day's start.

• 1:10:36Speaker 00

  And for adults with type 2 diabetes and known heart disease, Jardiance can lower the risk of cardiovascular death, too. Prescription Jardiance Empagliflozin 10 or 25-milligram tablets are used to lower blood sugar along with diet and exercise in adults with type 2 diabetes. Jardiance is not for use to lower blood sugar in people with type 1 diabetes, and not for people with type 2 diabetes who have severe kidney disease. Serious side effects include increased ketones in blood or urine and infection in the area between and around the anus and genitals, called the perineum. Both may be fatal. Severe allergic reactions, dehydration, urinary tract or genital yeast infections in men and women, and low blood sugar. Stop taking it till your doctor right away if you have nausea, vomiting, stomach pain, tiredness, rash, swelling, trouble breathing, or swallowing. Tell your doctor about lightheadedness, weakness,

• 1:11:21Speaker 00

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• 1:11:44Speaker 01

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• 1:12:28Speaker 09

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