[music]

Hello listeners. Welcome to another

episode of Geopolitical Cousins. Sorry

it has been a minute. Work, travel,

sickness, blah blah blah. You don't want

to hear the excuses. Here's the episode.

Enjoy it. We're back at it at our

regular cadence. Uh cheers and see you

out there.

All right. For for listeners, this will

be their first time hearing uh from

their cousins since uh listening to our

uh episode with Godfather Peter and

Matt. So nice to see you. I haven't seen

Marco in a couple weeks. Marco, it's

it's nice to It's nice to be back, man.

>> I wish I could say that it was because

we were taking vacations, but the truth

is you got strep throat, which is great.

And then um you know, and then I was uh

I was working and traveling, so no real

vacations for us. But that's how it is.

The geopolitics, the geomacro never

sleeps.

>> It never sleeps. Although it also never

changes. It's August 11th and we still

got a Russ Ukraine war. The straight of

Hormuz is still closed. Uh, USMCA is

still in limbo. I mean, has anything

fundamentally changed? Like, I feel like

I'm taking crazy pills. Like, I'm

talking about the same thing over and

over with my clients. I don't know if

you have the a similar experience. It's

like, how how many more times are we

going to parse uh the straight of four

moose? It's like the same thing over and

over again. But, I think that's where we

have to begin. We're recording August

11th. We won't sit on this too long, but

I don't know. I mean, it's it's on

again, off again. the biggest news

yesterday. Did did you see the scoop in

the Washington Post about uh how Trump

said he was on Air Force One and then

like ducked into the catering car or

something like that, got taken to

another plane and then met up with Air

Force One in Britain. And I apparently

he had told like the journalist, "I'm

with you." Like we're we're all going to

go down together. He wasn't with them at

all. He was in the catering car uh going

to side. Uh Pakistan says, "We're close

to a deal. We're we're just this close.

We're at the we're at the last yard

line." Uh maybe you have different data,

but it doesn't look to me like ships are

going through. U there's a new defense

alliance between Turkey, Pakistan, and

Saudi Arabia that was signed last

Friday. There's no operational details.

So my favorite kind of agreement, uh

yes, grand defense alliance to change

the world with no details. Sponsored by

Turkey, uh Pakistan,

um uh and Saudi Arabia. What could go

wrong?

>> Um and I I don't know what else to to

lead into there. What is the price of

oil today? I haven't even looked. That's

how like meaningless all this is. Brent

crude futures at uh hovering around 80

80 a barrel.

>> Yeah, it's not bad. It's it's fine. Uh

>> where do you want to start, cousin?

Well, I think um yeah, I would say that

uh the one thing that has changed um

over the course of the last 30 days is

that the stock market has exploded since

last time we talked about uh all this

stuff. It was rangebound

for much of uh Q2

and then it has exploded. So like what's

what's changed, right? I do think that

uh the kinetic activity we talked about

on our last pod has ended. So that's a

positive. Uh ships are trickling through

hormones. Um it's not a complete like

zero, but it's it's a it's a very slow

trickle. It's the kind of trickle you

leave in the northeast in the winter if

you go for a Christmas vacation

somewhere so that your pipes don't

freeze. That's not very uh optimistic.

Um but kinetic activity has ended. Let's

just be clear on that. That that is

something that's changed. But I think

for the stock market, I think the stock

market has been able to put this into

the back of its mind and focus on

earnings of tech companies which also

exploded which we're not going to talk

about because this isn't for the finance

pros exclusively this bod. Um so I think

what's changed is that for I think like

the third time or maybe the fourth time

now US and Iran have proven yet again

that they're now willing to have total

war.

This is now I think definitively the

case. This is not going to happen. there

will not be a total war. Um, you cannot

bluff being mean at each other this many

times and then step from the brink. Like

people are going to realize that neither

side is willing to take it all the way.

So that's number one. And number two,

um, in the magosphere, you know, I've I

was visiting my uh my my dear dear uncle

and aunt, just like the dearest people

ever. Um, my Serbian uncle is

you know, manga obviously like so I mean

obviously right like come on guys you

know I love him I love him to death he

is

like I don't want to say like a father

to me I just have two dads you know so

this is my dad basically um and uh so I

watched a lot of YouTube clips with my

uncle my Serbian uncle you know just

lots of manga YouTube and so I'm uh read

up on the magosphere Jacob and the

emerging view in the magazare and you've

heard it kind of trickle through some of

the comments from White House as well is

we can wait out Iran, you know, and so

there's this view like there's this view

starting to form in the more like neocon

facing MAGA camp that kinetic activity

is for fools, like war is for fools. We

can just wait them out through

sanctions. Which of course begs the

question, why bomb Iran in the first

place? Was that not the JCPOA approach?

Was that not the Obama approach? Was

that not? You know, we were like, "Oh,

really?" Like, but it wasn't the Trump

J. It wasn't the Trump JCPOA. This is a

better version.

>> Well, well, and I mean, like, and by the

way, just to be clear, it's not the

JCPOA I'm making fun of. It's the

preJCPOA economic sanctions imposed by,

you know, the pinko commie liberal, you

know, um, surrendering Obama

administration. Apparently, we're not

going to take that playbook, you know,

and there's all these YouTube clips. I

mean, I don't know. I watch some

everybody looks like an octogarian um on

TRT, you know, like I don't [ __ ] know

who these people are uh that my uncle

made me sit through, but like basically

they're all like, "Hey, listen. Let me

tell you the real deal. [laughter]

Iran's economy is collapsing." Like,

"Yeah, no [ __ ] It's been collapsing

since 1980s, but sure. Let tell me

more." And it's like, "If we just wait

them out and put sanctions." It's like,

"Yeah, [ __ ] Really? Really?" Uh so

anyways, um why is that important? It's

important, Jacob, because it seems like

that whole like group of humans is now

landing on this like we can wait Iran

out, which of course is like too late,

buddy. Uh should have done that before

they closed the straight of her moves

because Iran can also wait the United

States out. And so um I do think both

sides are basically going to have to let

some ships through to some through some

agreement. That's where I think we find

ourselves now. Again, this is the fourth

time that the the kinetic activity, the

war, the missiles and the drones ramped

up and then ramped down. And I just want

to tell everyone listening to this like

that is an important point. Total wars.

Like when my brethren killed Archduke

France Ferdinand,

there was no [ __ ] landing of the

plane in the ramp up to the World War I.

There was no landing of the plane on

kinetic activity after Germany invaded

Poland. [ __ ] just escalated. So there's

this like professor, I forgot his name,

like uh deescalation

trap or some [ __ ]

Clearly that guy's wrong. [laughter]

Like no, I'm sorry, but like how many

[ __ ] times do Iran and US

go to zero kinetic activity? Do we have

to realize that they're like, you know,

so if you're listening to this and

you're just, you know, you're really

busy with your job and your life and you

don't, you know, you're just using me

and Jacob as like a geopolitical

soundboard, let me teach you something.

When two sides do this kind of herkyjerk

war thing, their heart's not in it,

guys. Your heart's just not in it.

>> It's very convenient that we've landed

on the uh we can wait them out

narrative. Uh especially when all the

interceptors and all of the missiles

that they were using before are

basically run out. They've basically

used down the entire quantity.

>> Well, then that that's not irrelevant at

all. Jacob, look over here. No, no, no,

no, no, no, no, no, no.

>> I know. I know. I'm not I'm not supposed

to say these. I would also just point

out and this is where you and I part I I

agree with you on the on the large scale

thing. I'm going to I'm going to push

back a little bit on the on the notion

that there's zero kinetic activity.

There was a tanker that got hit by

Iranian what was it? Rockets or

missiles? I forget what what it was, but

off off the Gulf of Oman just yesterday

and was burning. So, it's not it's not a

zero. And and there's enough kinetic

activity to put fear in the hearts of

ships captains. And you don't have to

have a whole lot of kinetic activity to

jumble up a lot of what's going on here.

But I I actually think, you know, our

job is to is to go beyond the headlines.

We could, you know, chase our tails with

every single headline here. Um, I think

this is actually I'm landing on this is

net really bad for Iran because the

thing that Iran has learned is not that

the straight of Hormuz gave them

leverage is that the straight of Hormuz

didn't matter that much. It didn't give

them leverage and in two to three years

with all the pipelines that are coming

on. Did you see this thing about China

shipping solar panels to Cuba and bling

breaking the energy blockade there? Like

it's it's not going to matter in a

couple years, guys. It's going to suck.

Okay. Yeah. Go go go go go.

>> Let's double click on that.

I do think they have leverage.

>> Everyone listening take a shot. He's he

he said the double click. So you

>> I did I did

>> so like I think you're right except they

do have leverage right now like Hermus

does matter. I don't want to go down

this rabbit hole that some people have

like oh none of this matters. It does.

The strategic petroleum reserve of the

United States of America is collapsing.

Like clearly we're dipping into our

inventories. I mean if hormuz didn't

matter you wouldn't have to do that.

inventories cannot be rebuilt as you're

draining them. I mean,

>> yeah,

>> duh. Right. Like,

>> and for the LG market and for fertilizer

market and, you know, we've got less

slack. I agree with you. I'm just saying

long term, but yes.

>> Yeah. Yeah. But, but but that's but no,

but that's what I want to double click

on because what you're saying means they

have to make a deal right the [ __ ] now.

Like, let let me just break this down

for everyone listening to this who

thinks Iranians are just a bunch of

radicals who want to nuke Israel and

like

They need to make a deal right now

because what Jacob is saying is that

over time we will build infrastructure

you know like somebody asked me one of

my clients what about helium what about

fertilizer

what about LG and I was like what about

it you can literally either cargo or or

pipe or truck all of that stuff you can

where there's a will there's a way when

Russian natural gas stopped going to

Germany

Germany build

LG import facilities in 3 months. If you

Google any of this stuff and say how

long does it take to build an LG import

facility, whatever number Google spits

at you, you need to divide by three

because of duress and will.

So in 2022, Russia invades Ukraine.

Natural gas from Russia stops going to

Germany and everyone tells me Germany

will freeze to death because it takes

this long to build these alternative

import facilities. The Germans did it in

a quarter of that time. Similarly,

everything you're saying, solar panels

that China is sending to Cuba, China's

building a pipeline for the United Arab

Emirates to avoid or

>> all the pipelines. There was a great

economist graphic of all the pipelines

that are being built right now. It's I

mean it's going to be quick

>> and then you will Google you will google

how long divide by three because it's

not this is duress right so anyways the

point is but but but the reason what

you're saying is important though Jacob

is that means that for Iran they are not

stupid they know this is happening so

they need to now strike while the iron

is hot right they need to that's why

that's why they're backing off from like

bombing Dubai and Abu Dhabi that's why

they're picking on poor Kuwait

you know, they're just sending a message

like, "Hey, we can destroy disselination

facilities, so we'll do it to the most

irrelevant country in the region that

has no pool whatsoever. You know, poor

Kuwait, by the way." Like, they always

get the short end of the stick no matter

what. Like Saddam Hussein's angry at

like the US invades Kuwait, you know,

like I mean, like Iran does the same.

Like, uh, but like, yeah, that's that's

what's happening. And that's why I

think,

you know, the big picture, that's why

the market is moving on from this.

uh because it's been it's seen it's

sniffed out the truth and the truth is

that both sides are kind of bluffing and

both sides lost. What I hate the other

narrative and this is maybe where we

will disagree is that I I I really think

the whole like American defeist

narrative is a little bit too much like

the US you know um I know some uh

Israeli friends of mine were saying like

well you guys lost face this is terrible

should have used ground troops in Iran

blah blah blah and it's like I don't

know like Iran's head of state is like

cowering and hasn't been seen in the

public because Americans can kill him

whenever they want. like I don't think I

think the narrative that the US has lost

is a little overstated.

Um Iran's as you say also lost and I

think both sides like this can be one of

those situations where neither side is

really winning and I think that's how I

would classify this.

>> Yeah. Um saving fa I don't know what

safe means. I mean what or face saving

face saving. I mean we're talking about

a US president who literally hid himself

in a catering truck to get out of the

region. like there's no more face left

anymore. The emperor has no clothes and

we don't care. Nobody cares. Like it's

all it's all just a scoop. It's the

latest scoop in the story. [snorts] Um,

no. I I would I would disagree. Not even

disagree. I I would I would frame it

this way. When we're thinking about the

market narrative, I don't The way I

would trace that narrative is not that

the market has sniffed it out and that

there's nothing to worry about. It's

that AI is overwhelming everything. And

we should probably have a conversation

alongside this with the AI story because

I just think it's more powerful than the

geopolitics of it. And I think the

market is too sanguin here. Um, and one

of the things I've been saying to

clients and I'll I'll say here is that

don't assume that just because um the

first couple of months here didn't go

the way that people like Marco and I

said with the canisters and cannibals

and everything else.

>> Don't assume that it's going to go like

fine then I'll say like I said it. I was

Mad Max, Fury Road, whatever else.

>> I said that wasn't happen.

>> But yeah,

>> just because it didn't happen before

>> doesn't mean it can't happen now because

we're in a fundamentally different macro

context than we were. We've had another

leg up in the AI bubble. We've got no

spare capacity coming out of the Middle

East. We've got um a potentially very

cold winter coming for Europe. It was a

couple years late for poor Vladimir, but

it's it may be coming with the Super El

Nino and everything else. I don't know

if you saw the news about, you know, new

stuff in Libya, so maybe you you get

some oil offline there. I'm just saying

like the the the macro is a little bit

different and this is still a physical

economy. So, we can get into a place 2 3

months from now where this is going on.

It's still minor kinetic activity. It's

open again, it's not open again, there's

a trickle of ships, things like that.

And maybe the AI bubble has popped or

there's some doubt creeping in there or

or we can talk about the carry trade,

like lots lots of other different

things. And the market has much less

slack in supply. I'm I'm not feeling

super comfortable over the short term. I

am the the last thing I would just say

is for the Iranians have to make a deal

right now. Um I think the ship has

already sailed, man. Like I I think it's

done. I don't think making a deal is

going to put Humpty Dumpty back

together. The pipelines are going up.

The renewable investment's going up. The

capex is going up. Like I I think

they're kind of screwed. I think they're

going to be looking at a situation two,

three years from now. Like whatever they

projected was going through the straight

of Hormuz is probably not going through

the straight of Hormuz. and the future

Iranian government. I think that's one

of the reasons you're seeing them close

ranks. If you're looking at recent

appointments around the hardliners, I

think they understand that if this

regime is going to continue to survive

beyond just whatever this conflict is,

it's going to have it's not going to be

particularly pretty. And I maybe you can

also read that into this new Pakistani,

Turkish, Saudi Arabia, whatever thing.

Maybe they're thinking they're going to

have a tougher Iran in their hands or

they're going to have to deal with it

going forward. They're I don't know. I

threw a lot there, but I I would just

push back a little in those ways.

If the ships start going through hormuz

this thing is over. Nobody will care. So

that's my push back on you. I I actually

think tactically I'm super bullish on

the market. Super bullish.

>> Um

>> over what? Over what time horizon?

>> I mean probably until the midterms.

We'll see after midterms what happens.

Um

>> and by the way, I'm not I'm not not

bullish on the market. I'm just saying

I'm worried about commodity markets.

Like oil at 80 a barrel three months

from now. I I don't know. like there's a

lot that could go wrong there that it's

different in the last three months. You

know,

>> I look maybe after midterms, you know,

Trump changes his behavior. I don't I

don't see why he would because it's not

about the midterms in my view. It's

about the inventories. And so, like,

yes, in the long term there will be

alternatives to horm. There aren't any

right now. This is as as hard of a

constraint as there is. And so, and the

pressure on Iran is mounting. Again, as

I've said before, from others as well,

it's not just the US. Um, you know,

Chinese inventories are coming down.

That's their main supplier of everything

that makes them a modern state. They

have to respond to that, too. So, you

know, we don't need 100% of traffic

through Hormuz because pipelines are

already helping move stuff away from it.

So, we really just need about 30 to 40%

of traffic to go through. And I think

that that's going to happen. And it's

going to happen because fundamentally

the one country that will always need

hormuz always is Iran. And that's the

irony. That's where Trump actually from

a tactical perspective did the correct

thing by blocking their traffic. Like

that is correct. Like that was the

correct move. Um I mean you know after a

slew of incorrect moves by taking it to

a conflict you're not willing to fight.

But anyways, the point is that has

forced Iran as well to think, okay, what

do we need to do to get our ships

through?

>> Um,

>> yeah, it's it's also just it's not just

a simple I mean it is on some level, our

ships going through, is oil getting out,

but there's also a nuance here which is

let's say ships are getting out uh but

there's no clarity about is there a

toll, is there not a toll and I don't

want to get into a a conversation about

is like is the toll actually being paid.

I'm just talking about the uncertainty

around it because if you are, you know,

a company that is leasing one of these

ships and you're going through the

straight of Hormuz and maybe you have to

pay a toll, maybe you don't. The IRGC is

sanctioned as a terrorist organization.

Did you pay the toll? Do you have the

legal risk to account for that? Do you

have the insurance to account for that?

Versus the Chinese ship, which is like

the IRGC is saying, "Cool, you're exempt

from any tolls no matter what happens.

Go on through." So, there's a version of

this where, yeah, the straight of Hormuz

is open for Chinese ships and so China

gets

reserve it gets to spread. Yeah, it it's

enough for the market price itself, but

it's also a fundamental shift in how

things are. It doesn't mean like

everything is good. It actually gives

China lots of leverage in interesting

ways. So like I'm just saying like it's

it's not open or shut. It's if it's open

to China, cool. Brent crude overall

stays low. But then we're also in a very

different world versus oh it's an Iran

gets some version of the toll and the

United States gets data centers and the

UAE. I don't know whatever you know.

cocka baby scheme they're cooking up.

You know what I mean? Like

>> that's a great point actually. Let's

talk about this because let's let's

unravel this. So, China's not going to

pay a toll ever. Okay. So, like we can

like obviously and so what that creates

is an incredible business opportunity

for China.

So, China currently is the global center

for refining of every metal on the

planet. Most of the listeners of this kn

know this from uh rare earths. Rare

earths are mined all over the world,

sent to China. But that's actually the

case for nickel. It's case for copper.

It's case for literally everything

everywhere. All China dominates.

>> I I don't Do you know of one that isn't?

I'm pretty sure.

>> Well, nickel.

>> Yeah. Nickel. China's been losing the

market share for refining of nickel

because Indonesia

>> created an export ban and forced China.

>> Yeah. Forced China to build them

refining. But um I know Congo is not

talking

>> which by the way like the World Bank go

if you go back and read like World Bank

and IMF reports about Indonesia in the

2010s. They would just lambaste them

like Indonesia backward. They have no

idea what type of policy they're and by

the way Indonesia is backwards in many

ways. Their their uh their market has

not performed well this year in part

because Proo is indulging his populist

sense and not not his brain. But like

the things that the IMF and the World

Bank were calling out as you know

asinine in 2010s they look pretty good

right now because to your point the

Chinese are saying okay you have you

have the nickel so we're going to have

to build the the factories and the

refining the processing

>> 20 billion 20 billion investment

>> yeah China put 20 billion but but the

point is that China already refineses

everything

like copper from Chile goes to China

gets refined gets sent back to Chile you

know what I mean it's hilarious but the

way you square the circle that we're

talking about right now is China's just

going to have to refine petroleum for

all of Asia. Like that's what's going to

happen. So the way that the

>> already happening

>> it's it's exactly and so Chinese

refineries are going to take this oil

out of the Middle East, Kuwaiti oil,

Bahraini oil. I'm not saying Saudi and

Emirati because Saudi and Imirati oil

will just go via pipelines somewhere

else. And so all the oil that has to go

through Hormuz, which isn't that much

now, it's not 20 million barrels. It

will be like eight. It's Iranian oil.

It's Kuwaiti oil and Bahraini. So the

the three countries that don't have the

ability to pipe it at least right now.

Oh, and Iraqi. Sorry, Iraqi too. That

will just go to China to be refined. And

so I'm just not too worried about these

uncertainties that people bring up is

like, yes, you're you are correct, Jacob

Shapiro. You are absolutely objectively

correct. We're not going back to the

status quo pre-war, of course. But the

status quo post war is like man like I'm

not that excited about this. And then

people are out there like Marco but like

it's the collapse of freedom of

navigation,

you know, it's like what are like where

what like Malaysia Malaysia is going to

crack down on the straits of Mala. And

this is by the way I'm going to go on a

rant here a little bit if you allow me.

>> Go ahead.

>> Okay. Thank you.

>> It's literally why we're here to support

each other's rants. [laughter] So I it's

funny to me because freedom of

navigation

as a concept is [ __ ] Anglosaxon

propaganda

and always has been.

The United Kingdom as an empire created

this concept of freedom of navigation to

justify their empire. So one of the

things they said is like hey free trade

is really important. If you crack down

on free trade we'll literally come in

and burn your summer pals. So, you know,

opium war as an example, China's like,

"Yo, bro, you're selling drugs to my

people. We're going to shut this down."

And the United Kingdom starts the opium

war on the premise that like free trade

is some sort of like sacrosan like

biblical thing that they have to defend.

Part of that was like we have this huge

empire, we have this huge navy, freedom

of navigation is is is an important

public good. And back in the 19th

century, in truth, there were a lot of

pirates out there that somebody had to

clear like barbar pirates, right? The US

Marines, right? Like this is what like,

you know, like sailing through

Indonesian archipelago

was genuinely scary cuz they were

genuine pirates that were going to like

sink your ships. And so the United

Kingdom created this idea that they were

doing something for the public good. In

in fact, they were just enforcing an

empire. And I'm not saying this isn't

some sort of like postc colonial

feminist critique of the United Kingdom.

I'm just [ __ ] stating facts, okay? It

was like, we're giving you freedom of

navigation. All right, brother. You're

like, you know, exploiting the world for

the sake of your empire, and God bless

you for that. God bless United King. And

then after World War II, the United

States just took this propaganda tool

and and resold it. Except in the 21st

century, there are no [ __ ] pirates in

truth. You know, Somali pirates,

Houthis, here and there. But the reality

is this idea that what h just happened

in Hormuz is going to undermine some

central tenant of globalization, that

point is horshit for two reasons. For

two reasons. There are no [ __ ]

pirates anymore. You cannot you cannot

go out, steal gold from a Spanish

gallion and then mo into Jamestown or

New Orleans and go whoring in a tavern.

Like that does not exist today though.

That is not an option for a bunch of

pirates. You can't just be like, "Oh,

let's go take down the Disney Cruise

Liner and then we will moore in New

Orleans and drink and be merry and go to

Jacob's house and listen to him regail

us with stories of geopolitics that like

you as a pirate, you don't have that

[ __ ] option. There are very few

places on planet Earth, usually failed

states like Somalia and Yemen, where you

can hide out. So, first and foremost,

piracy is not an issue. The second is

we're not sailing around the planet

Earth.

Okay. When we were sailing, the prospect

of not using the straight of Malaa was

daunting.

Both because you had to go through the

Indonesian archipelago, which as I just

said was full of pirates, but second of

all, that that did expand the journey.

It did push ships into parts of the map

that were labeled as here be dragons.

Like you know you like for example like

in the 20th century if you had to go

around Latin America that was a problem.

What is it called the the windy 20s or

30s you know once you had to go between

Antarctica and South America that's some

of the worst sailing on planet earth.

That's scary [ __ ] There's like 30 foot

waves down there. I think it's called

the roaring 30s or I don't know. Google

it and you'll find out. The point is

that all of this in the 19th and some

parts of the 20th century was the

problem. Let me be very clear. A VLCC

fully laden does not give a [ __ ] about

30 foot waves. Okay? And the cost

increase, we did the math at BC

Research, hashtagmath.

[laughter]

The added cost of a Swiss

leaving Yonbu and going through Suez

instead of Babal Mandeb is like $4 a

barrel. So, let's pump the brakes. Take

a shot. Pump the brakes. Take a shot.

everyone is not that big. So, what's

funny to me is that all these American

commentators, mainly those who hate

Trump, you know, they're like, "Well,

he's about to make this deal. This deal

undermines freedom of navigation. This

is a big deal." It's like you're

drinking your own Kool-Aid. This

propaganda,

the angle, and I say Anglo-Saxon because

United Kingdom was an empire and a

hgeimon and now it's the US.

>> Mhm.

>> It propagated this propaganda to the

rest of humanity like this [ __ ] matters.

It [ __ ] doesn't. It was propaganda

from the beginning. Although I do

concede that piracy was a big deal and

ship technology, you know, forced you to

really value places like straits of

Malaa

or Straits of Ramuse. But the fact of

the matter is that there's just not that

many choke points on the planet. And so

freedom of navigation is something like

like Malaysia. If if the US Navy leaves

the straight of Malaa and it's left to

China and Malaysia to manage, what truly

is

the negative for America or the West?

Like what? China's going to put a toll

on Mala. China's going to block it. Oh

no, we're going to have to go around

Malika. Like guys, look at a [ __ ]

map.

It's easy to go around Malika. There's

no there's no relevance to the straight

of Mala. It's overstated. and we're like

we're we're drinking propaganda from the

19th century that the Brits made sound

profound like freedom of navigation

matters. So I actually in a bizarre way

I guess I am kind of defending the

actions of the Trump administration

because

by ending up saying like okay fine [ __ ]

it have a toll or whatever let's just

end this crisis so we don't have a

calamitous recession. It's not it's not

that as profound as people think. Do do

you need to go to Austin Regional Clinic

and get your TDSDS checked, cousin?

Because I mean that was I think you

landed you landed the plane exactly uh

like where we should be talking about

that there. I I'll I'll push back in two

ways. Um well, first of all, by the way,

if all that is true, I mean geopolitics

doesn't really matter that much. Like,

okay, cool. Like the choke points don't

matter. Just go around. Like geography

like matters a little bit. But I I would

push back in this way. Number one, um

there are still pirates. Uh the pirates

life is not as uh uh lush as you as you

described it before. Like we're not

singing sea shanties and doing these

things anymore. But I mean I was just

down at the US Mexico border a couple

weeks ago and one of the biggest

problems I heard about was uh you know

people stealing goods on the supply

chains going over the border. Now that's

a land border, not a maritime border. So

I know I'm mixing apples with oranges.

No, that's fine. Don't think Don't think

that there aren't like bandits and

marauders and pirates. Now you're

absolutely right. Captain Jack Sparrow

is not coming to my house after he sinks

a Spanish ship and gets the gallions.

Too bad for that politics.

>> I know it would be really really nice.

Um, and there are parts of the world

where they're around. And this is where

the reason I think your take is nice but

too flippant is because this is where

the Russia Ukraine war and the door to

technology maybe changes things a little

bit because now we're going to start

talking about drones and autonomous

vessels and about things that could

enable, let's not call them pirates,

let's call them cartels. um like you

know drug cartels with major mil uh you

know kinetic force of their own that

they can bring to bear against the

United States that has used a lot of its

ammunition in a fool hearty errand in

the middle of the Muslim world. Um you

know there's a world in which these

things actually do become a little bit

more precarious. So I I would not call

it horseshit. I would say that these

concerns are are there and I would worry

about Malaa and I'd worry about Gibralar

and I'm worried about the Bosperis and

I'm worried about the Panama zero.

>> You can see Trump administration is is

is worried the same way. So, but that's

good. I'm I'm glad you're not like I'm

glad you keep you up at night because it

keeps me up at night.

>> Well, it shouldn't though and it

shouldn't because I'm objectively

correct. Let's use Russia Ukraine as an

example. No, let's use it.

>> Yeah,

>> please

>> remember how everybody said millions of

people in subsaharan Africa will starve

to death because Ukrainian ports in the

Black Sea would not be able to ship

wheat to Africa and other countries.

>> Remember that?

>> I do remember. So, how many people

starved because of the Russia Ukraine

war which has been going on for four

years? Oh, that's correct. Nobody

starved. Why

>> you think nobody starved?

>> Nobody starved.

>> That's a bold I I would have a PhD

student write a dissertation if he could

figure out just how many people went

without food because of Well, it's not

about wheat prices. And it's not like

how how many people became more food

insecure as a result of the Russia

Ukraine war? Zero.

>> Oh, I think it's I think that number is

way above zero. I mean, here we shouting

match where neither one of us have data.

Like I

>> I have data. I have data. It's called

the price. Jacob Shapiro. Price would

have gone up if supply went down. That's

basic economics.

>> Yeah. But these places that you're

talking about are not like they're not

the ones that are paying the market

price for these things. This is I mean

USDA ID is no longer here. Like US aid

was still a thing in 2023.

Like there's lots of food aid programs

and things like that. I mean I think

>> malnutrition

the price is a proxy for answering this

question. Supply goes down global supply

goes down price of wheat would have gone

up and price of wheat did go up

>> on February 2022 and then collapsed by

the end of the year. Why? Why? Why?

because where I'm landing this plane

because Ukrainian wheat was either put

on river barges into Danube

and moved to Romanian ports or was put

on trains and sent to the Baltic Sea.

See, this is what happens in the 21st

century.

We find alternative transportation

routes quickly. So yeah, geography

matters infinitely less today. And

anyone like stuck on this point that

geopolitics is about geography like I I

disagree with that. It's not it's not

anymore. It's less so. Yeah, that is the

profound point I'm saying. Ukraine

Russia war which you yourself brought up

as an example to support your argument

destroys your argument which because we

got all of Ukrainian wheat pretty much

most of it not like 100% of it. I mean,

the the only reason we didn't get all of

it, by the way, is because some of the

Ukrainian farms

were literally war zone, but all the

wheat that was produced by Ukraine was

effectively shipped to the Baltic Sea

via train loads. And that's something we

couldn't have done in the 19th or 20th

century. So, when you bring up the Mala

Strait, you know, why can't you just go

through the Timor Sea? Like, I'm I just

opened up my Google map and I'm looking

at it. There's Malaca Strait. Sick.

Super convenient. You go from the Bay of

Bengal to the South China Sea really

quickly. You can stop over in um what's

it called? Uh Paneang, you know, go to

the Eastern Oriental Hotel. Like let's

go. Like this is amazing, right? But you

don't have to. You can just sail like 3

4 days longer through the Timore Sea and

go up from where Indonesian archipelago

and Australia meet. And my point is that

in 2026 those optionalities are there

just like the Russia Ukraine conflict

didn't like actually cause a problem.

And the other point that I would add

here is that the number of countries

that can maintain control over these

supposedly critical passageways is

infinitely greater than 100 years ago.

So your point was there's still choke

points like the Bosphorus, like the

Gibralar Strait, like Mala. And my point

is like, okay, fine, just let Malaysians

handle it. Now, a 100 years ago, that

would have been a ridiculous statement.

It would you who what were your options

for maintaining control over critical um

you know routes? It was basically United

Kingdom, France,

US,

Spain, Portugal for a glimpse of a

moment, right? Who was who was capable

of like maintaining freedom of

navigation? day. Malaysia is like a

legitimate country. I've been to Koala

Lumpur. Place looks awesome. Malaysia

can like, you know, make sure that if

some ship needs to be like moved, like

they can handle it. They can handle it.

And and that's something that you

couldn't have had 100 years ago. Spain

is a first world country. Like I think

Gibralar will be fine. if Spain and

Morocco have to maintain Gibralar open

like somehow somehow they'll manage to

do it without American [ __ ] navy and

so yeah I I I will just shadow on

geography in this particular case

because I think we're forgetting

technology and we're forgetting um that

the world is not just four countries

anymore. Now your point about drones

though is interesting. Why? because it

gives countries plausible deniability,

you know. So, there are no pirates

really, although I great point on the

land routes. I'm not worried about

pirates. I'm worried about Russia using

drones in a plausible deniability way.

There was a drone cited over Leipig. And

I mean, maybe this steers the

conversation into that because we should

talk about what's going on with Russia

Ukraine. I think that's a much bigger

risk now than Hormuz. Uh but like

Russian drones or drones that are

unidentified

could interrupt shipping in the Baltic

Sea, right? And I do think that that is

a increasing uh risk, but that's a risk

whether the US Navy is um maintaining

freedom of navigation or not. You know,

uh I think that's that's just something

that is going to be now the next form of

quote unquote piracy, but it's actually

not piracy. That's state actors that are

uh with a lot of capability and a lot of

technology using plausible deniability.

>> Well, yeah, let's move to Russia Ukraine

then. I'm glad you're so sanguin on

this. I I think there's there's more to

say about it, but um yeah, I mean, let's

Russia Ukraine we should move to. I

mean, I I also I think another ancillary

and important thing about this is um

Scott Besson's silly reminder note to

himself to to buy five billion yen or

whatever it was, 5 billion USD worth of

Japanese yen in the carry trade and how

rising energy prices is actually

starting to affect markets in that

meaningful way. Selling euros to buy

yen, which gets now into the Russia

Ukraine story. But yeah, let let's

attack it however you want. Where where

do you want to go with Russia Ukraine?

Here again is another conflict where um

like I don't find my narrative with my

clients changing that much over the last

couple of months and it's almost gotten

to the point where it feels I almost

feel stale and I don't know whether

things are just taking their course and

I'm right I have this nagging feeling

that maybe I'm not appreciating the the

level of change. I mean do do you think

anything has meaningfully changed since

May? For me it's Ukraine is putting

pressure on Russia. Russia's trying to

strike back, but Putin doesn't have any

good moves here. The drone technology

continues a pace. You probably saw

Turkey transferring a large amount of

weapons to Ukraine. Like, that's an

interesting wrinkle. You've got the

United States talking about, you know,

giving the Patriots to Ukraine. There's

an interesting wrinkle. But it's all the

same thing. It's all Ukraine going from

strength to strength. Putin trying to

claw on. Um, and we're just waiting for

the oligarchs to say, "You've had enough

playtime, Vladimir. Why don't you go,

you know, to whatever the Russian

version of Elba is and we'll take it

from here, you know.

>> Yeah. No, I think what you just

articulated is really meaningful change

though. Maybe maybe it's you're seeing

that happening made me. But let let me

let me put it this way. Um, everyone

listening to this probably thinks I'm

I've been throughout the Iran US

conflict way too sangquid um or way too

like chill. It'll work itself out. Just

as a little reminder, I did say this was

going to blow up and happen. So, I was

alarmist before it happened. Once it

happened, I'm like, me, the world will

move on.

That's really difficult for people to

like digest. But think about it this

way.

Let me show you what I mean. The war

between Russia and Ukraine has been

going on since 2022. Since February 24,

2022.

How often do you think about it in 2026

or 2025? So, if you're listening to this

and you're like, "Marco, don't you

understand? Hormuz matters?" You know

what matters? Ukrainian [ __ ] wheat

matters to millions of people. Okay? And

it got to the market.

So, wars can happen. People can be

killing each other with missiles and

drones and stuff and you can sit in

Lawrence, Kansas, sipping your coffee

and not give a [ __ ] That happens. Why?

because wars find an equilibrium. It's a

kinetic one, but it's one that doesn't

actually upset somebody sitting in

Bordeaux, France or Naples, Italy or

Shanghai, China. It's like, oh, there's

a war in Ukraine.

So, that's where I think we are getting

with Iran and the US. I don't think

they're going to have a nuclear deal. I

think Iran and US are going to hate each

other for the next six months, six

years, six decades.

But enough ships will go through

straight over Hammuz that your life you

listener to this will move on. So and

then as example of what this looks like

Russia Ukraine war for the last four

years has been this.

I mean let's be again very very clear it

hasn't impacted global economy global

markets or you as a listener of this

podcast at all. It just hasn't. But it's

a tragedy for Ukrainians. I'm not saying

it's not a human tragedy. Of course,

it's still going on. I believe Iran US

conflict is entering such an equilibrium

and have for the last, you know, month

and a half, two months, 3 months,

whatever actually kind of since the

beginning since March 17, 18th when we

saw what Iran can do, what we saw US can

do and there's an equilibrium now. And

then a lot of people are angry when I

say this because they don't their brain

cannot comprehend the idea that a war

enters an equilibrium.

And I find it curious because we've had

one in Ukraine, Russia. And I always

point to my clients, what do you mean it

has to go to a total war or it has to

end? Why have you not been living your

life wherever you are, dear client,

while Ukraine Russia war is going on? So

why am I making this big point? I'm

making this big point to say that I

think that the Russia Ukraine

equilibrium which is an objective fact,

it's a reality that is breaking down.

and it's breaking down because of

everything you said, you know, cousin.

You're you're pointing out like

Ukraine's going from strength to

strength. I think that's that's a bold

statement, you know. Um,

>> yes. And I look forward to the Russian

bots that tell me what an idiot I am on

YouTube after the fact. They're my

favorite. The these antivaxers and these

Russian bots who tell me I'm an idiot

for saying Ukraine is winning. I welcome

all of your hate. Please bring it to me.

Well, here's what what I would say what

I would say is that clearly Ukraine has

a capability in 2026 it didn't have

before.

>> We can map that out. They are uh they

just killed 13 people in Tatarstan,

which is far from Ukraine, by the way.

So, uh and it's bringing the war to the

Russian domestic audience.

And here is some Russian bot will say,

"But Russians are so much better at

killing Ukrainians. Ukrainians only

occasionally kill Russians." Yes, but

Russian pain tolerance is infinitely

lower. The This is why Putin is calling

this a special military operation. He

doesn't want to use the word war. It's

why he didn't mobilize Russian public

since December of 2022, which was the

last mobilization. He's trying to

portray this to the Russian citizens as

something happening outside of Russia

with no real impact on the Russian

society. Why is he doing that? Oh, but

Russians are so tough and they they you

know, well, no, clearly they're not

because their president is trying to

make this appear like, oh, don't worry

about it. It's something happening over

there. And now suddenly Ukraine is

breaking that. At the same time to give

credit to the Russian bots perhaps

one thing Jacob that I would say is that

r if America is running out of

interceptors

missiles Patriots and other assorted

interceptors it does appear like Ukraine

is as well

and that is starting to uh really matter

because Russian aerial attacks are

starting to really hurt Ukraine as well.

Um so but let's leave that aside because

to me the most critical way that Russia

Ukraine is entering a disequilibrium is

this Ukrainian attacks and I fear Jacob

and you didn't mention this but I think

what happened in Leipig Halle airport a

couple of days ago is really important.

I think that Russia is starting to

signal NATO countries that they're going

to attack them.

>> Not in some

>> I mean Russia,

>> not in some sort of

>> not in like we're going to invade

Estonia way,

>> but I do think that what's going to

happen over the next month or two is

some military installation or maybe a

shipment like the one you mentioned,

which I didn't know was happening.

Turkey sending stuff to Ukraine,

you know. Uh I don't know if you

remember this, but in April, I think the

Russian Ministry of Defense or somebody

in Russia published all the drone

manufacturing facilities throughout

Europe and where their locations were

like signaling to NATO and to Europe

like, "Hey, we know where these are."

And I think they're going to have to act

on this. Why? Because I think for

Russia, they need your point about

oligarchs restraining Putin. I think

before something like that happens,

Russia needs to escalate this war. And

I'm not saying they should. I mean, I'm

not giving them advice, but I'm I just,

you know, knowing Putin, I don't think

he's just going to sit down at the

negotiating table and say like, "Okay,

you guys got me." You know, like

>> these drones are a problem. I think

they're going to escalate. It brings us

back to what you talked about at the

beginning, which is one thing that has

changed in the last month is that

there's been a significant uptick in

Russian attacks on Ukrainian

infrastructure and on ships in the Black

Sea. Um, so you know, yes, there's not

going to be millions of people starving

as a result of that. But if like me, you

have exposure to say sunflower prices

and things like that, been a good couple

weeks because uh the Russians are doing

real damage to Ukrainian export

infrastructure. They're causing real

instability and uncertainty and

attacking ships that are in the Black

Sea and it's causing the prices for

things like sunflower um like we like

they're a little bit down today or over

the last couple days but if you look

over the past four to six weeks like up

considerably so to your point like

everybody wants everything to be black

and white this is where opportunity

lies. Um often when I when I talk about

there being optimism in a multipolar

world it's not because we're all going

to hold hands and sing kumbaya. It's

because when Russia and Ukraine reach

some new thing where Russia is trying to

create leverage for itself um as its

back is against the wall, lo and behold,

an opportunity in in the sunflower space

emerges because sunflower prices start

to go up. Like you will see these little

nooks and crannies I think in the global

market uh in general. But yeah, I take

your point there that Russia, whether

it's attacking some installation,

whether it's going after Black Sea

shipments and trying to impact food

prices, um there are things that Russia

can do. And I also take your point on

Ukraine running out of interceptors. I

mean, that's part of what the Turkish

transfer is about. It's part of what

Ukraine getting better about

manufacturing their own drones is all

about. Um, but it's it's going to be

tough. But this goes back to what you've

always said. It's a question of pain

tolerance. And here the Russians are

actually they're more like the United

States than in this realm of the

conflict because the Ukrainians will

endure more than the Russians will

[snorts] uh if the Ukrainians can keep

hitting them. So,

>> yeah.

>> But see, but that's in this equilibrium

though.

>> Yeah. No, I hear you. You know, so I

think the way to think about what's

going on is I think US and Iran is

entering equilibrium.

It's really difficult for anyone

listening to this to accept that term

because people are dying, ships are

being attacked. You brought up the ship

that was attacked yesterday. To me,

that's what it's fine. And by the way,

Greek shippers are going to go through

this uncertainty. You were bringing up

like, oh my god, insurance rates and

this and that. Like why do you think

that Panditanos offered the Denver

Nuggets to buy out Nicola Yokic's

[ __ ] contract of 250 million?

>> I was waiting for that. I can't believe

it took 47 minutes for you to get. I

thought that was going to come up much

earlier, but yeah.

>> Why? Because the guy is full of cash.

And I I I mentioned a couple of months

ago, just wait until the Greek owners of

Greek basketball teams start winning

yearly for the next 10 years. That's

what that's the true implication for the

long term of the Hormuz crisis. So like

there will be shippers that will go

through Iran. US emnity is entering an

equilibrium because both sides have

delineated each other's red lines and

they're not going to paint within the

lines like your kids when they realize

oh I need to paint within the lines. Got

it. That's what they're going to do. And

for anyone telling me like pulling their

hair and being like Marco is an idiot.

How does he get paid to do this job?

Again look at the four years of the

Russia Ukraine conflict. Clearly that

close. Like

>> I got to stick up for you there cuz

there were a couple stupid comments like

that. Hey guys, he does get paid to do

this for a job. Maybe like get out of

your mom's basement and go do something

with yourself rather than comment.

>> This is No, come on. You're making me

blush and [ __ ] Like cousin love. Like

you're like my mom basically, so they

shouldn't take that for

>> you know what I mean? Like you're just

like obviously we just like love each

other.

>> I love the hater rate. I love the hate

mail. But come on. Like yes. Like yes,

we get paid to do this. Amazing. You

don't get paid to do this YouTube

commentator. You want to set a strike,

come on the podcast, like do some work.

>> And by the way, and by the way, by the

way, the block boys, by the way, the

diff, how do you get paid for this? By

saying that I don't give a [ __ ] about

drones and attacks. Sorry, the world is

going to move on. Russia Ukraine

conflict is a great example of how wars

enter equilibria where they're just

stuck. Again, terrible, terrifying. As a

human, I don't want Ukrainian civilians

to be suffering. And yet they have been

for four years and you dear listener

unless you're Ukrainian you kind of

didn't give a [ __ ]

>> because it didn't impact your life right

and so and so Iran US is entering that

but I think that Russia Ukraine is

exiting that and it's exiting because

for Russia the current state of affairs

is no longer acceptable like Ukraine is

painting outside of the lines

because they don't they have the

capability to finally you know strike

like what's that Russian company that's

like Amazon, right? They've been

strucking I mean like

>> yeah the warehouse um

>> like it's so brilliant from a Ukrainian

perspective to hitting like Amazon

warehouses in Russia or

>> wild berries wilder

>> wild berries and it's like why are they

doing that right because they want to

piss off the regular Russian person just

waiting for their like new like wireless

router to arrive and they're like oh

[ __ ] Ukrainian attacks took out the

truck so sorry your shipment will be

delayed by two weeks and it's like

annoying you

And it's like Ukrainians are now

bringing this war to Russia, which I

think breaks the equilibrium. That's why

I'm afraid. So I started off saying like

to me the AI bull story has been

reaffirmed by the earnings results of

data centers in a second. I mean

eventually it will collapse. We can talk

about this blah blah blah. We've got the

Iran US thing which everyone listening

to this thinks is a big deal. I don't.

Sorry. Malika Straits, whatever. Sorry.

But if you want to find something to

really fret about, it's that I think the

Russians have to now respond to what

Ukrainians are doing. And I think when

they do,

it might surprise some people. Now, it

was interesting to me though that you

were saying like have at it Russia, like

do it, you know?

So, it's interesting like your your

reaction is kind of like, well, it

doesn't really matter. I mean, I I think

you're right.

>> Oh, I I think it matters. I'm just

saying like like Well, I want to say two

things. First of all, I think you know

the the Russia Ukraine equilibrium has

never been that stable. There have been

defined phases of this. You know, the

Ukrainian counter uh you know trying to

invade Russia and Russia pushing back

and then the drone thing and and I think

the reason that the the the equilibrium

has not been able to stabilize is

precisely because it's a zero- sum

conflict or it has become a zero- sum

conflict. Um and maybe they'll find a

way out of this, but there's a version

of this where if you lose, you die. Like

if Ukraine loses, Ukraine's sovereignty

or at least a large portion of Ukraine's

sovereignty gets forfeit. Also, there's

a version of this where if Russia loses,

Putin is gone. The regime is gone. There

is some existential issue to this.

That's not going to happen with the US

and Iran. I think you're right. Like

theou uh from June, that is the

equilibrium and we can go back and forth

and take some pot shots and do things

like that. I'm much more interested in

the two five 10-year time horizon of the

future of oil and LNG and and blah blah

blah because I think it's fundamentally

changed some things. But I think you're

right. There's an equilibrium there. And

there's an equilibrium there in part

because if the US loses the war and the

US is going to lose the war, it's not

going to affect any of us. Okay. So,

you're going to pay higher prices at the

pump. Okay. Do you know anyone that

died? Do you know any infrastructure

that blew up? Did your Amazon package

even get delayed three weeks? No. Like

nothing actually happened to you.

Whereas with Russia, Ukraine like

there's an element of of zero sumness to

it. So I agree with you there. My point

on Russia going after I mean it's a very

difficult thing what you're talking

about because they need enough plausible

deniability or the attack has to be weak

enough that it doesn't cause either NATO

or EU countries to sort of kick it into

gear um and go back at Russia in a

meaningful way. Uh but it has to be

serious enough that it allows them to

create leverage. Like I don't know

exactly how you pull that off. I say be

my guest because if you really let

Finland and Poland and some of these

other countries loose, if they like

smell blood in the water and they're

going to go after Russia, this is game

over, man, unless we get to, you know,

nuclear holocaust scenarios and then all

bets are off. I just don't think that

Russia has the capacity to do this and

will bite off more than it can chew. Um,

one did you see the Andy Burnham

proposal um in the UK about uh the UK

offering to extend its nuclear deterrent

to Europe uh in return for uh rejoining

the free market. Um I I thought that was

funny uh besides I was trying to find

the right pun for it. I I landed on

return but I'm not sure that it's

exactly right. U but it but it goes it

goes to this exact point whereas okay

like we know that that's out in the

weeds. Let's say Russia does something

like this. Does that cause them to like

turn to Britain and have them go into

the free market? Do the the French and

the British have a united front and they

say, "Okay, like gloves are off. We're

going to start doing things for the

Ukrainians in ways that we weren't

before." I just it gets I'm not sure

that if I'm Vladimir Putin, what I want

to do is I want to get these European

countries supporting Zilinsky and

Ukraine more. It's much smarter, I

think, to go after the Black Sea and

say, "Okay, I'm going to double the

price of wheat while French wheat is

literally burning in the field because

of the super Elnino heat wave." Like,

that's where I'm going to extract my

pain. I'm going to wait for the cold

winter. Uh, and I'm going to say no more

gas exports unless you give me what I

want and I'll start picking off, you

know, different um uh I don't know,

maybe like encouraging like different

hotspots in the world to no longer have

exports of these things that I know the

Europeans are going to need. that's a

much more um effective strategy if he's

if he is so out of his mind that he

thinks going after Poland or like or any

of these other things is going to work.

I I don't know. I just don't see it. But

hey, I'm not the president of Russia.

So,

>> well, I mean, you know, again, we're not

talking invasion. We're talking couple

of drones keeping, you know, like doing

nasty stuff like at critical junctures.

>> Yeah. But it if it's too nasty and it's

too critical then like the Europeans are

going to go okay you really want to play

like thus far we've been holding Ukraine

back you want to see Ukraine unleashed

like you want the Germans you know the

you were talking about the Germans built

the floating LNG platforms in three

months or whatever it was what if the

Germans are like okay like we will see

if we can turn out interceptors by X

number uh within two months like is that

really the game you want to play if

you're Russia? I I don't I think what

you want I think the game you want to

play is hey Europe this war with Ukraine

is costing you mightily. They're blowing

up our wild berries thing. Okay. Like

your food prices just tripled because we

had to attack Ukraine in the Black Sea.

Can you get this Zalinski guy to stop

please? Because we can do this all day.

Like that makes more sense to me than

hitting a critical juncture point.

>> So you're saying what? Okay. Yeah. I

mean, look, there is a nightmare

scenario that I can like if if Iran and

Russia

have the timmerity to do this. They

could just combine forces, you know,

and say, "Look, the midterms in the US

are coming."

Uh, you mentioned Super El Nino. I think

that is relevant. I think Super Elino

will have a bigger impact on wheat

prices than Russia Ukraine in 2022.

So much more meaningful and sustainable

impact on food supply than

the invasion of Ukraine. By the way,

>> it is certainly looking that way. I

mean, hope, you know, there's still some

time for things to turn, but it's it's

certainly looking that way.

>> Okay. So, then

>> not going to be good.

>> You've got a couple of things going for

you if you're in Moscow and Thran.

Um, why not double click on that? Take

another shot. You know, why not triple

click on it? like you've got this

opportunity to like really make the

world a worse place for the next 3 to 6

months. Um and so that's that will be uh

I'm not saying that's going to happen.

I'm just saying and you know why I don't

think it's going to happen because Iran

does not trust Russia at all. At all.

>> Yeah. But it doesn't have to trust

Russia. This is now take a shot for me.

This is the Dune strategy. He who

controls the spice controls the

universe. So if the Russians and

Iranians want to team up, they don't

even have to trust each other. They just

have to trust each other's interest. If

they really want to do this, they can

just say, "Okay, no more oil, no more

Russian oil, no more Iranian oil. Zeros.

We'll take the losses. Are y'all going

to take the losses?"

>> But the problem it's it's the Paul

Muadib strategy. Like go go go full on.

>> So I hear you 100%. You're completely

right. Um the problem is of course that

both of them sell that oil to China

directly. And this is where like this is

where like the fungeibility of oil

argument, which I bring up all the time

to make fun of people who don't

understand that oil is funible, blah,

blah, blah, actually kind of breaks

down. No, no, no. But they actually

literally sent the barrels to China. So

literally the country they would first

have to [ __ ] is Beijing. And then

China's like, "Okay, well, we're joining

the Americans. You guys suck." You know,

like what? But but but the other reason

that I think that strategy would not

work

is because we just make a deal with Iran

then and Iran will take the deal. So in

other words, that's where the trust

comes in, right? Like the reason that it

matters that Iran and Russia don't trust

each other is that we sit down with IRGC

and are like, "Hey, bro. Okay, fine. You

guys win. What do you want? Let's go

screw Russia together." And they will.

And this is where and this is where I

think what's really hap what really we

need to talk about. We haven't talked

about this at all.

is like why are we in a acrimonious

relationship with Iran? Like and I'm not

saying that like why are we like no no

no no let's let's list all the reasons

why we are we are

>> let's list them

>> and it's like okay nuclear program h

that sucks like you know nuclear

proliferation

not a small thing like I think

objectively speaking if Obama and Trump

are both on the same page with something

we should probably think it's relevant

you know but then but then it's kind of

like what else oh they control Hezbollah

and Lebanon okay and we give a [ __ ]

because the answer is Israel. All right.

They supply Hamas with like, you know,

stuff and we give a [ __ ] because of

Israel. Oh, well, they help the, you

know, the the Houthis in Yemen. It's

like, yeah, okay. Well, actually, okay,

that the answer to that is not Israel.

But like a lot of reasons why the West

collectively has a problem with Iran

comes down to Israel. And this is where

we need to really sit down and talk

about this because the latest Gallup

poll,

the latest Gallup poll updated to I

think uh June or something shows that

more Americans now, not a majority, but

a plurality of Americans

is has a sympathy with uh Palestinians

over Israelis. the delta is like 40%

change in like the last three years. And

so this is where I think that where all

of this is headed

like when you think about the mega

picture is I think that the west just

makes a deal with Iran.

And so that's why if like this idea that

Iran will have some control of Hormuz,

the reason that it's actually digestible

is because who gives a [ __ ] Oh, or

Israel does. Okay. Well, they can take

care of it, you know, like I mean, all

right, like you guys figure it out,

>> but like the US is not going to figure

it out for you

>> because Hezbollah man, what about it?

Hamas, what about it? You guys,

>> this is wonderful. You you you you have

set this up for me so nicely. Um, look,

it has nothing to I mean, yes, like we

can get to the Israel portion of this,

but this is where Americans really need

to go read their history. Uh the reason

that the United and I've spilled

countless pages of digital ink writing

about how there's going to be a US Iran

deal, there's going to be a modus

vendee. Like this doesn't make any

sense. It doesn't make any sense. It's

an anacronism. And it goes back to your

dear old British Empire because the

Brits were were there with the oil in

Iran. They were going to take it out for

themselves as part of the empire. Um

they eventually lost uh control over

Iran. Um, the United States tries to

fill the gap after World War II. The

Iranians elect Muhammad Mased. I'm I'm

condensing a lot of history here very

very tightly. Mased first of all wants

to nationalize Iranian oil resources and

second of all, the US is convinced he

wants to join forces with the Soviets.

So, it's imperial commodity control and

it's cold war Soviet Union is

encroaching on our sphere of influence

in the Middle East. We got to do

something. And so the CIA helps remove

Masedade and in reinstalls the Sha who

has a bloody rule for the next, you

know, 15, 18, whatever years it is. He

sucks. He's really bad. Um, you can go

look at it. And then you get the Iranian

revolution

>> and everything else.

>> All my Persian buddies in LA tell me he

was good. Like what are you [ __ ]

talking about, Jacob?

>> Yeah, was bad.

>> Persian buddies, like just Google the

Savak and then come at me with all of

your hate. I'm I'm here. I'm here for

you. I'm happy to absorb from

>> my bro Bobby who is we call him Bobby

the butcher

play with him every Saturday. Bobby the

Butcher please. All your hates directed

the cousin Jacob. All right.

>> Yes, please. It's it's it's for me and

then let's play basketball afterwards

because this is going to be fun. Uh so

it has nothing to do with like it's not

about Israel. This is an anacronistic

cold war conflict and also an anacronism

of when the British Empire desperately

needed Iranian oil in order to survive.

That is why the West hates Iran. And the

reason it the the ideological conflict

with Iran is so stupid is because all

the reasons that the West has problems

with Iran are not reasons to have

problems with anyone anymore. The

nuclear thing is not a deal. The United

States was just about to, if Trump

hadn't opened his mouth about the

Abraham Accords, was about to give

nuclear tech to Saudi Arabia. Like it

it's not about nukes. It's not about

Israel. It's about reasons that

literally don't exist anymore. We are

just so used to hating them that we have

forgotten the whole reason that we hate

them in the first place. And it makes so

much sense for Western civilization, for

the Anglosaxon empires, everything else

like that to come to co common cause

with the, you know, inheritors of

Persian civilization than it does for

them to be making deals with Saudi

shakes and Amirati guys building data

centers in the desert that don't make

any sense. Like Iran, like the West and

Persia coming together, like makes a ton

of sense. So yeah, there there's my

rant. Go for it.

>> I I love that that I set up your rant

because I agree with all of it.

>> But you can't say it's not about Israel

because

>> it's not.

>> But it is.

>> It's has nothing to do with Israel.

>> Well, well, I mean the way you say like

we've been enemies with Iran for so

long, we don't know anymore why. I think

part of that part of your argument is

Israel. it. We've also been allies of

Israel for so long that we don't know

why we're allies of Israel.

>> That's true. We can do that history,

too. I mean, right right around the time

that we are intervening in Iran and

getting rid of Masedc, we weren't being

nice to Israel. That same Eisenhower

administrations were the ones that told

the Israelis after they conquered the

Suez to [ __ ] off back home or else the

United States was going to get involved.

We only grow into this relationship with

Israel in ' 67 and 73 when Israel proves

itself to be very valuable in the

context of the cold war which is the

reasons that we have a very tight

special relationship with Israel. You

sent me the Federman thing. I mean it is

amazing to me how like US congressmen

don't know their history. The reason the

United States and Israel have a close

relationship has nothing to do with

ideology and religion and shared

cultural values and blah blah blah. It's

because of the Cold War. They were

extremely valuable in the cold war when

Egypt and Syria were aligned with the

Soviet Union as a huge solid and now

like it was just they're they are riding

off off of that like investment in

perpetuity. It's not going to last

forever. For my Israeli listeners, it's

not going to last forever. And and Marco

just gave you some of the data to see

that it's shifting in real time because

people are waking up and saying, "What

have these guys done for us lately? Why

do we need them? Is Straight of Hormuz

open because we're friends with Israel?"

It seems like they're making things

worse, not making things better. I'm I'm

really going.

>> My favorite My favorite is when my

Israeli buddies are like, "You guys are

such you're so weak. You didn't even

commit ground troops to Iran."

I'm like, "Hey, brother." Like, "Go

right ahead, man." Like,

>> go for it, guys.

>> Go ahead. But listen, listen, listen.

First of all, I love your rant. And I

love it because like you're asymptom

like you're being dramatic, right? And I

love it.

>> I am.

>> And I'm being dramatic when I say

geography doesn't matter. [ __ ] you. If I

hear a straight of Mala one more time,

I'm going to tear my shirt to like right

and like I am being asymptomically

correct. Obviously, geography matters

less in 2026 than it did in 1800 when it

comes to these routes because we can go

around them, right? But you're also

right by saying like, whoa, you're going

too dramatic. Where I think you're going

too dramatic on this part, okay, is like

I do culture matters. I do think that

ties between countries matter like Apac

matters.

Like, you know, money matters. Like you

can't ignore that because here's an

example of another country that we were

really close allies of during the cold

war because it did good things for us.

South Africa. The west supported South

Africa throughout the cold war because

South Africa was kind of the tip of the

spear for the west in all sorts of

conflicts in subsaharan Africa right

like in Gola. And then like when Russia

started, Soviet Union started becoming

weaker in the 80s and sort of well the

the whole like uncomfortable reality of

appetite like the US started pulling

support. Today South Africa in its

current iteration is in no way, shape or

form an important ally of the United

States of America. If anything I think

the Trump administration has become

quite antagonistic towards South Africa.

Right.

>> Yeah. Thanks Elon.

>> Yeah. But but what I'm getting at what

I'm getting at is you know to compare

two countries that I think in many ways

are very like heads by the way South

Africa and Israel had great

relationships during the cold war they

were in that way kind of similar tips of

the spear in different parts of the

region right

>> y

>> but the USIsraeli relationship continued

and actually strengthened I think over

the last 25 years and I think that's

something you would have to account for

in your argument so you can't say that

it doesn't matter that like I

the cultural

>> I'll account for it the and this is

where like I think individuals really

matter um South the South Africa had

Nelson Mandela

>> and the Palestinians had Yaser Arafat

and that was the difference if Nelson

Mandela had been Palestinian this would

have been completely different if the

Palestinians had gone nonviolent Gandhi

MLK style uh you know civil disobedience

against Israel rather than uh blowing

people up in universities and things

like that very very different story. Uh

but they did they had Yatser Arafat who

was blowing people up on the one hand

taking aid and getting you know yachts

and villas and Tunisia on the other hand

whereas Nelson Mandela was a really

serious person who read history and

realized he had a moment here to change

things. And I think I mean the

Palestinian story is a tra is a tragedy.

They had their moment and they just they

just bungled it. And I mean they also

were less, you know, the if if the

demographics were as they were today in

1990. Maybe it's also a little bit

different because the Jewish population

in Israel was much stronger. Um there

was more defined political cohesion than

there was in a really sclerotic decay

South African um government. So like

there's also some things there. But I I

would if I was being simplistic like I

would literally just say yeah the reason

cousin is one side had Mandela and one

side had Arafat and one side chose very

poorly. Well, listen, listen. I I agree

with that and I I've made that argument