Hello and welcome to Trader Talk. I'm

your host Kenny Pulkari and today we're

joined by Peter Cheer of Academy

Security's head of macro strategy and

Adil Zaman who's Wall Street alliance

group partner. Gentlemen, thank you for

joining me today. I look forward to this

conversation because we've got a lot to

talk about and let's talk about the

first thing. We'll make it broad about

geopolitics

um and the tensions around the world uh

the shifting dynamics with China, energy

security, domestic security, cyber

security, all these things that are

driving kind of the market action. Give

us a little sense on where you think we

are in here and then we'll take it from

there. Perfect. I'll give that a go.

It's um you know, one it fits my firm

very well. So, Academy Security is a

veteranowned firm. About half the staff

is veterans, but we have 40 retired

generals, admirals, CIA people who form

our geopolitical intelligence group. So,

this has kind of been near and dear to

our heart. And I think

>> that's some geopolitical intelligence

group, but go ahead.

>> It's fun to work with. You know, one of

our generals uh left about a year ago,

General Tada, cuz he's now under

secretary of war for personnel and

readiness. So, it's kind of a pretty

connected group, and I think it's helped

us wade through a lot of this. And I

would say our overriding theme probably

for six years, and it's kind of evolved

over time, is really this competition

with China, right? China as a strategic

competitor was first mentioned in the

2018 National Security Strategy. And I

think we've been more negative on the

relationship than Wall Street. And in

the last year or so, it's devolved or

evolved, I guess, into what we've been

calling prosack or production for

security. It's kind of really national

production for national security and

resiliency. But that's more than a

mouthful. But I think what it is is to

think about a nation a little bit more.

What do you need to function as a

nation? And electricity really high on

that list, right? We need electricity.

We need energy. I think chips, right?

The chip industry crucial to this. And

to me, a lot of this really solidified

in two ways. is one with the development

of AI and data centers which I know

we'll talk about more but all of a

sudden you had this massive demand for

electricity to be competitive you had

people like Bill Gates go from telling

us to eat bugs to like nuclear is a okay

so you've had this dramatic shift I

think in that side of it and then the

other side was the trade negotiation

with China just made it so clear that

they control the processed and refined

rarest and critical minerals it's one of

the few times I've ever really heard the

president correct himself at Davos he

talked about rarest and critical

minerals and said no no they're not rare

the processed and refined versions of

and smelting. So I think as a nation we

have to think ourselves as a human being

what is priority one like air, what's

like water, what's like food and make

sure we're doing those more on our own.

And I think this is actually going

global. It's not just a US phenomena and

it's been going on even in the US for a

while and it's going to accelerate.

>> So are we doing it on our own? You know,

we're making some progress. I would say

Trump 1.0 there were some kind of, you

know, not particularly well thoughtout

efforts in and around tariffs. But I

think one thing that's important is

Biden kept all Trump's tariffs on and

added some tariffs including to solar

panels. He did the chips act, right? He

saw the need to do chips act. We've seen

some other things get done, bipartisan

bills get passed. We're making some

progress. I think one issue is not in my

backyard is still a real deal in the US.

So you're seeing some states embrace it.

Some states say they want this revenue.

>> Not in my backyard with data centers.

>> Data centers, smelting, you name it.

anything that was kind of, you know,

dirty, requires a lot of energy

intensive, you know, maple, you know,

smoke. Um, and so that's I think where

we're seeing this shift. Which states

are ready to do it? We've been talking

to some states, I love the term, you

know, some governors are kind of getting

pitched to by their boards of commerce.

It's time either red carpet or red tape.

And I think you're seeing some states

say, you know what, we will bring out

the red carpet. We want these

businesses. Others are saying red tape.

And I'm a little bit disappointed. I

think President Trump, I expected a

little bit more from him in terms of

deregulation. and unfortunately I think

he just got mired in this war u and it's

taken some of the focus away.

>> Yeah. So I think for us like

globalization is is the is the theme

that's going to be there and what we are

again we we are advising clients is that

make sure that you have your portfolios

take advantage of that u really

important like if you're investing in

the S&P 500 you're hyperfocused in a lot

of the tech companies make sure that you

have that global exposure within

globalization we like countries like

Japan which have gone through a lot of

uh corporate governance changes Mexico

benefits It's from nearshoring. So we

have we are guiding our clients to be

able to have a solid exposure in the

global markets.

>> Are you overweighting

either a sector or a country?

>> So we yeah so we we typically get we we

keep about 15% of our portfolios in the

international markets.

>> Uh we get exposure basically through

ETFs a lot of it. U we would get the

EXUS which would give you the broad

exposure but then we have the Japan ETF

for specific exposure because we like

Japan and then we have the Mexico ETF

for that exposure.

>> Do you have Chinese exposure as well?

>> Yes, we get the Chinese ETF as well. We

think we think it's a it's a for us we

do think that it's a key component of

the global world and we do want to have

some exposure there as well. You know

what I think is interesting for a lot of

people because I have this conversation.

A lot of people think China is in the

developed market world and it's an

emerging market, right? And so people

are always laugh because but it's so

big. I know but it's still an it's

considered an emerging market. It is not

you know when you think about the

developed markets in Asia, it's not

Japan, it's not Australia, it's not

right. But to your point, emerging

markets are actually performing very

well this year.

>> Emerging markets are performing great.

And you know I think that if you look at

it from a historical perspective as well

the outperformance between the US and

international markets tends to go in

cycles and now we're coming out of a

long period of time where the US markets

have outperformed and now international

markets starting from last year have

started to outperform

>> after the tech bubble burst similar

outperformance. I think we're going to

get into a similar type of a cycle now.

>> I'd be happy to add too. I think this,

you know, I believe like really strongly

both in the energy trade and the

international trade. I think, you know,

you look at Canada, right? Canada's

actually taking the opportunity. I think

Trump kind of kicks the hornets's nest,

but they're starting to look at some,

you know, deregulating. Canada 15 years

ago could have been good at LG and

decided to effectively regulate itself

out of business and let the US kind of

dominate North America. They're changing

some of that. And I think in Europe,

you're finally starting to see, I think

BP, Totel, Shell, they're going to be

allowed to, you know, explore and do

more. I think everyone in Europe, you

know, it takes them longer to figure

something out. I think, you know, they

had to get kicked in the teeth five or

six times before Draghy said whatever it

takes. Um, but they're getting closer to

that moment. I think we're

>> European markets are performing very

well this year

>> and they're starting

>> Spain, Italy, they're performing very

well this year. I think they're up

better than 20%. And I think they'll

continue because what you're seeing

again is I think each country is going

through this kind of vertically

integrated nation kind of philosophy a

little bit. And I think when Trump kind

of kicked that hornets's nest on global

trade, he expected well everyone will go

and trade with the US. And I think so

much has gone on. People like yeah you

know what we have to do more. We have to

be more independent with our allies but

let's figure out who those people are

and let's try and do more. You've seen

names like Nokia Ericson as part of a

you know attempt to build up their own

AI industry. So I think this is great

and I love Central South America as well

part of your thesis. Um, and again we'll

come back. I hate to you bring up

national security strategy. They did one

in uh November 2025. It's a really quick

read. You can find it. It's like 32

pages double space. But what I think it

tells you really clear is Central and

South America is going to be a focus

because we have a much cheaper time

protecting sea range, you know, sea

lanes there versus China. And I think

what we've seen a little bit is you've

seen the stick approach, I guess, if you

think about Cuba, Venezuela, and

Colombia, the carrot approach with

Argentina. But I think over the next 5

to 10 years, we're really going to

rebuild that North, Central, South

America pipeline, which Mexico will be a

huge beneficiary and Canada as well, I

think.

>> Yeah. And you you spoke about the energy

space. I think the energy trade has is

also the the biggest way to derisk the

portfolio with the geopolitical tensions

because, you know, energy prices have

shot up. The earnings I mean S&P has

spectacular earnings growth, but if you

look at the energy space, that has

really dominated,

>> right? So having the geopolitical

tensions and we were talking about this

before the show is something that we

have to deal with going forward. What is

the best way for clients to be able our

clients to be able to hedge against that

is to have energy exposure in the

portfolio. So companies like Chevron,

companies like Exxon or you have a

Spider XLE ETF which gives you that

broad exposure, that's a really good way

to add a d-risking element to the

geopolitical tensions.

>> So what do we think about the

geopolitical tensions? Because h do we

think we're closer to the end? Do we

think we're nowhere near the end? You

know that two weeks ago they would told

us, "Oh, we had a deal any day, any

day." This morning we're not anywhere

near a deal. Especially over the

weekend, they come out with the list of

six or seven demands that are really

non-starters. When you talk about when

you talk about kind of where it is. So

where do you think we are in that whole

geopolitical fight? I I think I think

the market has sort of figured out like

initially you know when the war happened

the market came down but I think the

market has sort of figured out that we

can live with this

>> right

>> we can live with the status quo we can

live with some uncertainty

>> as long as other aspects of the economy

are doing well with

>> which is exactly what happened with

Russia Ukraine remember when that first

started creat all kinds of panic now

weeks can go by you don't even talk

about it

>> exactly and that's where you know from

again from our point of view we always

have those conversations where we remind

people that remember about those Russia

Ukraine crisis same thing happened it's

the same playbook I think now the market

has accepted that the the this is here

to stay and that is why you don't see

much movement in the market based on the

geopolitical tensions our base case is

that even if this gets resolved there

could be something else so we should be

prepared for an environment where

geopolitical tensions are going to be

there

>> remains elevated

>> remains elevated remains relevant. But

let me ask you a question. Do we think

that the that the this current

geopolitical situation with uh with

Tyran, Iran, and the US is going to also

be driven by midterm elections because

they know that we're, you know, 11 weeks

away or 8 weeks away from our midterm

elections. And that, you know, if they

keep if they don't make this deal and

they don't let Trump look like he won,

that's a negative for Trump, right? That

the country will get exhausted. American

just says, "I'm done with this. They'll

vote Democrat and then they'll

completely neuter them.

>> And I think that was the idea with the

Trump administration like this is

another thing that we were telling

clients some months back is that they're

going to try and resolve this because

they want positive

>> outcome in the midterm elections. But

the counter side is

>> that Iran also knows that, right? So

they are playing that card as well. And

now it's game on, right? And it's it's

this back and forth which is one day

there's a deal, the other day it's not.

It's it's it it seems to be very

frivolous

>> and I think we're you know with every

day that passes by now we're getting

that much closer to the election and

people are just going to throw their

hands up and say you know I'm frustrated

I'm angry and they're going to vote

that's how they're going to vote.

>> That's how they're going to vote because

you know their affordability is a key

factor. They're feeling the pain at the

pump and you know that that is now we've

started seeing prices creep up as well

>> again and people are getting hurt by

this right and at some point they're

going to say that this wasn't well

thought out and they're going to react

to it and potentially

>> well remember it was supposed to be a

six week conflict now turned into a

sevenmon conflict with no real end in

sight

>> right

>> and you're starting to see that right

you can hear it in even even on the

Republican side there's starting to be

more frustration

>> I think one thing kind of much more

hurtful this time around is we were able

to dampen both in the US and globally

the impact because everyone had

petroleum a strategic petroleum reserve

to release and we're now at levels some

people think you have difficulty

releasing much more without affecting

the structural integrity of these

facilities. So I think that's something

that's really weighing and you can I

think you get a sense when Besson's

trying to argue about this that we have

lost one of our big levers to supply

this keep supply going. So, I think

there's a lot of pressure to kind of

just close our eyes and pretend it's

okay and revisit this six months down

the road.

>> I I thought we were refilling the SPR.

We We haven't done any of it.

>> No, not really. So, when they were

releasing the strategic petroleum

reserve and those they had contracts

with the people who bought it, but they

didn't have to refill it until January

or February. So, they had a pretty long

lead time. So, no, it's down to the

lowest it's been. So, we barely refilled

anything. We certainly never got to

pre-B Biden levels even under Trump

administration in terms of refilling.

Maybe we got back, you know, if it went

from there to to 300, went back to maybe

400 and we're back to 300 or sub 300

right now. And so that to me is a

danger. Asia has the same problem. They

have to release a lot of theirs. China

wasn't on the world market the first

time around because they had a billion

dollars or billion barrels in stockpile.

So I think it's changed a little bit.

There's a little bit more urgency. And

when we talk to people, I think further

down the supply chain, you know, it's

really about LNG, diesel, those are the

things that are starting to scare

people. You're starting to look at some

of the airlines especially maybe not so

much in the US but jet fuel prices are

rising from 30% of cost to 60%. It's

becoming untenable. So I think the world

needs some relief on this.

>> And even if they even if tomorrow we get

a resolution to the war it's going to

take time to rebuild all that

infrastructure to get the supply chains

going again.

>> Yes. But the price of oil will drop

fairly quickly. Right. If if there's a

deal that would be a benefit, right?

>> Yes. So it should come down quickly. And

I would just want to say I think when

we're talking about the you know

geopolitical tensions you know I still

think Russia Ukraine's tactical even

what's going on Iran's tactical the

strategic overriding is still China and

I think it's China's attempt to sell

their products globally like they

shifted from being comfortable with made

in China to made by China 10 years ago.

BYD Automobile I probably hadn't heard

of it until 2020 and now it was just in

Germany it's everywhere and I went check

out one of their showrooms. They're

actually pretty decent looking cars. So,

you know, they are doing that and lately

>> in a million years why buy a Chinese car

in a million years.

>> There we go. I'm Well, I will never use

Chinese comput if I can avoid it. But

yet, all of a sudden, now we're being

fluttered with cheap Chinese comput.

>> I told my kids not to buy Chinese toys

because they always Well,

>> but the problem is everything's made in

China, right? That's the problem.

>> I went on T-Mo once. I felt dirty. Like

I'm like I know they already have my

information, but it's like

>> I just want to say one thing about the

whole oil thing and about the airlines

and all that stuff is that you know the

story that story that uh that was

running around last week about how the

airlines are now using AI

to monitor you. When you go on JetBlue's

website or Delta's website, American

Airlines,

>> they're monitoring your your uh your

address. They're seeing where you live,

what zip code you live in. They're

monitoring things you buy and then

they're adjusting the price that you see

on the on the site. So, you might get

one price, I might get a different price

for the same exact flight if we go at

the same exact time because your your

zip code is, you know, maybe a higher

end than my zip code or you're buying,

you know, you just went out and bought

yourself a Mercedes and I bought, you

know, a Ford. Is that they're going to

look at you and say, "Well, this guy can

pay more, so we should charge him more."

Right? That's an issue with AI for sure

in the airlines. is going to be an issue

with a lot of things because if you have

that kind of demand pricing, it's going

to happen everywhere, right? That's a

whole another conversation about AI. And

so since I went there, let's just talk

about where we are in the AI trade very

much in early stages. Where do you think

we're at?

>> So I think I think as far as AI is

concerned, the first stage was where all

these hyperscalers did extremely well,

>> right?

>> And I think we are now in phase two and

phase three. And phase two is

essentially this 800 billion that is

getting spent. Who's going to receive

it? Right.

>> You saw Caterpillars earning, they did

extremely well

>> now. This

>> has been amazing.

>> It's been amazing. And

>> because it's one of those adjacent

stocks, right? It's not AI, but it is

AI.

>> Exactly. And you know, another

interesting company, John Deere.

>> Yeah.

>> You know what they do? They they

basically their tractors, they've

implemented cameras in there, which

enable them to spray parts of the field

that are infected by weed as opposed to

the whole field.

>> Right. So only spraying where it's

infected, not the whole thing.

>> Exactly. driving cost savings for the

farmers, productivity increases for the

company. So now we are starting to see

these type of things. We are seeing bene

AI enablers which are the infrastructure

company. We are seeing AI beneficiaries

which are companies like John Deere that

are implementing AI into their

businesses and seeing productivity

gains. So I think we are at that phase

right now where this the phase one max 7

underperforming the market significantly

this year

>> phase two and phase three where the

money is going that is where we feel is

is is the next stage

>> right but while even while the mag 7 may

be underperforming I for me that's no

reason necessarily to blow out of all my

mag seven stocks of which I don't own

all seven but I'm not selling my Amazon

and my Apple because it might be

underperforming one year I'm just not

I'm taking advantage in other places.

>> But Kenny, the problem is that a lot a

lot of people what they were doing was

they were listening to the news

>> and then they were just going extremely

heavy in those sectors

>> and now those seven stocks are more than

30% of the S&P 500. So even if you're an

indexer,

>> you're concentrated right and even

within the max 7 now there's

differentiation which one of those are

monetizing AI and which one of them are

not.

>> That's right.

>> You saw that. We saw that in earnings

>> and we saw that in earnings. Meta was

punished. Microsoft was rewarded. So I

think the key is that even within

technology, you have to be we're not

saying blow out of the Mac 7, but we are

saying be more have exposure to other

areas of tech.

>> That's right. And you can't be

formalized, right? You can't be fear of

missing out like like you know you're

not missing out. If you're invested and

you and you've got your you know your

your foot in the water, then you're

participating. You just have to be a

little bit more methodical in how you

allocate it. This is a market where

patience is being rewarded right where

like if you look at the cyber security

stocks right they did extremely poorly

in the beginning of the year past 3

months parabolic moves in crowd strike

palto

>> patience is being rewarded so if you

wait and you could do the same thing

with semiconductors fact of the matter

is the semiconductors have shot up so

quickly that a lot of people missed out

on that completely right and it became

such a large proportion of the S&P 500

in a very short period of time, but you

continuously keep getting pullbacks in

that sector. You got it last year, you

got you're getting it this year. That's

when you dip your toes.

>> That's right.

>> And you get involved.

>> Agreed. You're not chasing it when

they're at their highs. You got to take

advantage. You have to be ready to take

advantage when you see that pullback

happen because the pullback can happen

fairly quickly, right? Because with the

technology allow you s one day, suddenly

you turn around and and it's all up 10%.

Like how'd that happen?

>> Exactly. And you saw you saw that with

SpaceX,

>> right? SpaceX shot up.

>> Yeah.

>> Meta playbook shot down.

>> If you wanted to nibble at it, you might

as well do it at 120. I was waiting for

it to go to below 100. [laughter]

>> I was waiting. Still might get there.

>> Limit orders.

>> Yeah. All right. Listen, let's talk

about uh the bond market just real quick

because we're going to run out of time

here. Is that the bond market and Kevin

Walsh, good job, bad job so far? I know

it's only been what's he been two months

or three months he's been in that

position. Give me your sense. I I like

Kevin Walsh. Give me your sense of what

you think.

>> Yeah, I like him too. I think I think

it's decent. I think reality is we will

as far as rates are concerned, I think

we'll probably remain unchanged for the

rest rest of the year.

>> Um I think it's interesting that money

markets now after you take out taxes,

the net return is not beating inflation.

Right. So I think that for that reason

investors are well served in trying to

lock in high yields by going for bonds.

So I think I think overall it's a decent

job. Fed will probably stay put for the

rest of the year.

>> Is now the time to fall in love with

bonds?

>> I don't know if fall in love with them

right now partly because I think

globally there is this spending going on

as people do defense spending, energy

spending, the hyperscalers. So I I think

there's a overall pressure on yield. So

I think it's going to be difficult to

see the long day bonds come screaming

tighter. On the other hand, I think

you're getting paid for some of that. I

think you're getting paid for some of

the spread risk you're taking in those.

I actually like uh GPZ, which is or GPZ,

I guess, um which is a um ETF that has a

bunch of the alternative asset managers

on the equity side. It got hammered

pretty badly when everyone was scared

about private credit. I think that could

come back. And having said all this, I

think the single most important thing

worse has done so far is create this

data task force. And so I'll even

challenge the one thing that you said is

when you said it's not beating

inflation. Depends what metric of

inflation you're looking at. If you look

at true inflation, it's doing better

than true. So I I think we are stuck

looking at CPI. I think CPI has all

sorts of issues with how it's done, how

it's calculated. Owner's equivalent rent

might be the dumbest thing ever because

at one point, yes, people rented

single-handedly homes, but we pull

onetenth of them and we guess what

someone would rent my home for. That

seems no way when you got Zillow real

time. I think they're going to find

alternative sources and what they will

show almost everything that I look at

that I trust

>> 2020 and 2021 the official CPI and BLS

data heavily understated inflation and

now it's overstating as it's catching up

so I think we have an affordability

problem more than inflation and a big

part of that is our data did not work

well we're making bad decisions based on

bad data I think worse is going to get

people to start thinking about inflation

differently looking at real-time rents

is looking at these things and guess

what the story is nowhere near as scary

and that actually matches my personal

experience 2020 you know when we were

saying we were 6% everything was going

up 20%. Now they're saying it's up 3%. I

don't see that. So I think we're

mismeasuring and making decisions based

on that and worse is going to change

that. I think I think sorry I think I

think one thing that which I agree with

is on is that AI productivity is going

to bring prices down right that is going

to be deflationary and we spoke about

John Deere right so these are the things

that we'll probably see which will

actually be helpful and it takes a

little bit of time for those things to

play out right it's it's it's the second

and the third phase

>> and that'll be interesting to see how

that plays out

>> and inflation was coming down coming

into the start of the war started coming

back down the second we had theou in

place. I think it starts coming down

again. It's the economyy's away from the

AI spend, it's just not that robust and

I think we're priced in the AI spend. So

I I think there's this ability to see

some deflation.

>> Well, far less inflation.

>> Yes. But if energy if this geopolitical

situation in the Middle East continues

and energy shoots higher from here, then

that's going to be kind of, you know,

that's going to be the black swan,

right? That's going to be the one that

gets in the way of that argument,

>> right? That's the one that gets in the

way of everything, I think.

>> Right. it gets annoying and I and I'm

you know a couple of weeks ago I was so

excited to think oil was going to trade

back in the low 60s and now here are

again at 80 you know and if and you know

they just come out with this list of

demands over the weekend which are

non-starters for I think they're

non-starters for the US um it's only

going to push it's got the potential to

push oil higher not lower and you know

tomorrow Wednesday Thursday we're going

to get CPI PPI this week certainly it's

expected a little bit better but that

could be temporary if if oil stays up

here again right we could see that now

start to turn Anyway, gentlemen, listen.

We've run out of time. I've appreciated

this conversation. Maybe we'll circle

back in three or four months to see how

this all panned out. Until the next

time, take good care.

>> [music]