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- [00:01]
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- [00:29]
Austin Campbell
Hey everyone. Welcome to Bits and Bips, where we explore how crypto and macro collide one basis point at a time. I'm your host, Austin Campbell, High Scholar of Zero Knowledge Consulting, here with my hosts Rahm Alawalia, Master of Wealth, Leader of Lumina, and Chris Perkins, the Golden Hand of Coin Funds. Today we have a very special guest, James Spider Marks. He is currently the Head of Geopolitical Strategy at Academy securities and prior to that had over a 30 year career in the army, including as Senior Intelligence Officer, the LA riots, the Balkans, Korea and Operation Iraqi Freedom. He culminated his career as the Commanding general of the U.S. army Intelligence center and School at Fort Huachuca, Arizona. So before we begin, as always, I have to say nothing. We say here is investment advice. Check unchained crypto.com/bipsandbips for more disclosures. And before we begin, a quick word from one of our sponsors.
- [01:29]
Podcast Producer
Quick note before we get into today's episode, Bits and Bits now has its dedicated feed. We're spinning off from the Unchained feed and moving to a new podcast and YouTube channel. So if you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure to subscribe to Bits Bits directly. We won't publish there until March, but subscribe today so you can be ready for launch. Be sure to subscribe to the new feeds. Well as@unchained crypto.com bitsandb
- [01:55]
Austin Campbell
so there's only one place to begin right now, and that's Iran. Up until recently, the Strait of Hormuz has been effectively closed, though perhaps we're seeing some ship traffic slip through today and we're going to look at everything that's been happening on the ground and we have the perfect guest for that. So I'll start with a little context. So US And Israel led strikes on Iran, killed Supreme Leader Khomeini. Iran retaliated by attempting to close the Strait of Hormuz, warning that ships attempting to pass could be attacked. Tanker traffic was highly disrupted. Oil prices ran up very significantly overnight though have come back down throughout the day As a reminder to everybody, the Strait normally carries about 20, 20% of global oil supply, making it probably the most important energy choke point in the world. The macro chain reaction was large and then has abated. Some much discussion and developments today. So I want to start right there. Before we go any further and ask, and General, I'll start with you. What is going on with the Strait? What is going on with oil supply? What is going on with macro markets as a result?
- [03:12]
General James Spider Marks
Result, yeah. Bear in mind the Straits of Hormuz. We're not physically closed. Iran does not have the capacity to do that, especially now. Look, their navy's at the bottom of the Gulf. They don't have an air force. Their missile inventory, ballistic missile inventory has been attrited considerably. Their ability to mine the Straits of Hormuz and by frame of reference, 20 miles. But only two of those miles are passable for the tanker traffic. So Iran threatens a lot and has said forever. They could. They've got the capacity to shut the Straits of Hormuz. They don't. The United States Navy, frankly, is the only element that I'm aware of that could really do that. So what Iran is doing right now, they are threatening and they can disrupt traffic, and they have. We're seeing that right now. The threat of closure has, has affected the backlog that we see. We have the capacity, and we would use both air as well, you know, maritime as well as air to assure safe passage. That could be done. But those are policy decisions. Look, military folks don't make those decisions. They just turn around when asked and they, they either say yes or they say no, or I can get to yes. Give me some time or give me some additional capabilities. So the Straits of Hormuz are open. You know, also bear in mind we have done some significant damage in Iran to its oil infrastructure. But Carg island has been off limits. Why? Because it's going to continue to pump and it's going to continue to either fill up tankers or it's going to fill up storage capacity ashore. Those are conscious decisions that are being made. We are right now in the fight where we've transitioned from, I would say the, you know, the simultaneity of the attack, the opportunity to decapitate the regime, which happened incredibly rapidly. That then kicked off the campaign we've seen over the course of the week. We are now into what I would call the grind. You've got to work your way mechanistically through the air tasking order inside baseball. We have an ATO one to End list of targets. We're going to service those targets. HVTS High value hvts High value targets. In fact, Ham Son, whichaba has just risen to the top of the HVT list. I mean, he's going to have a crosshairs on him. The first time they've got it, they get an opportunity. So I think it's more a determination of industry as to whether they're willing to accept the risk insurance challenges that are certainly attendant to that. I would imagine that the flow is going to begin here anytime now. I can demure to Chris, as a former Marine Corps yet, albeit Naval Academy graduate, what we do and what we have done at the past is you can line up three destroyers and you can hand those tankers off to each one of the destroyers. The destroyers have the capacity to return fire, pinpoint return fire to provide the coverage. So I would anticipate that this will open up here within the next day or so, and it should.
- [06:17]
Austin Campbell
Chris, what do you think?
- [06:20]
Chris Perkins
No, look, I think this has been a spectacular naval combined arms effort. The naval for our navy has just proven itself again and again. Been very impressed there. I'm looking closely at the Isle of Khark. Now, you mentioned that general controls 90% of Iranian exports. It's been a part of war plans. I mean, it's not something that we overlooked. Everything that we're doing in and around it is, you know, been thought of and planned for Iran. But, but I feel like one of the objectives here is, you know, with this administration, it's, it's the Venezuela playbook. Right. So what is the opportunity that we have now? Like Khomeini's son, he was injured, he was seriously injured. There have been reports he's not really legitimate. He doesn't have, he's not an ayatollah. He's really angry right now because he just lost his wife, his sister. So that was a real like, I would say middle finger to the Trump administration that they appointed him. And so what I think the administration is doing right now is it's looking to repeat the Venezuela playbook. They're looking for somebody with access to force, whether that's a senior general, someone in the IRGC to step up and say, listen, I'm in control, I'm going to be sympathetic to the West. The oil is going to pump administration. We're going to make sure that you get your fair share of it, which has actually been a part of Iranian history. If you look back. And one of the reasons we worked with the UK to put the shah in the first place was around the previous leader's seizure and nationalization of oil. So, you know, geopolitics continue to cycle. What I'm looking for is someone to step up and say, I'm in control, let's have a chat.
- [08:03]
General James Spider Marks
But I don't know, you know, Chris, that's going to be extreme, first of all, extremely hard to do. I think the president's going to walk away from unconditional surrender. That doesn't happen. And without being flippant, who do you surrender to? Khomeini Son is a creature of the irgc. So the IRGC stands to increase its role. In fact, it wouldn't surprise me if in the next couple of years there is no, there is not going to be a popular uprising. There is not going to be anybody who's going to be in that position as either the supreme leader or fill in the blank, prime minister, president, whatever you want to call it in Iran, that's going to be acceptable, acceptable to this administration. So you have to balance all of that. In fact, it wouldn't surprise me if in two years what we have is an increase of a secular type rule and it may be through the IRGC and less a clerical leader in, in Tehran may not wear a turban. It's going to be IRGC and it's going to be that much more secular and it's going to continue to be brutal. The point is, I think that anything other than nukes, ballistic missiles and proxies are, those are the red lines. Anything else beyond that is what I would describe as unnecessarily punitive. So what has taken place so far? We can continue to service targets. And you're going to have to look at the Iranian people and say, did we do enough balls in your court? Do you like, do you like this outcome? Khomeini Son is truly going to be embraced and is going to be very much a tool of, you know, he will respond very responsively and very directly to what the IRGC is, is looking to try to achieve. And there will be no fissures in the IRGC structure. And if there were in artes, that's the conventional military, don't know that that would even be significant and certainly no break in the mois. So where will the opportunities come to have, you know, a platform upon which you can kind of have a successful change in regime? Bear in mind, in 1979, the reason that, you know, the Ayatollah came back from Paris in 1979 because the Shah was. He was losing credibility for a whole bunch of reasons. Uprisings were very present. But what happened? The conventional air force flipped and was supporting the uprising. So there was a platform to achieve additional momentum. Khomeini came back and it worked. He then had to embrace this conventional military, a conventional military who'd been protecting the Shah. The Shah is now gone. He had to create out of this, this whole cloth somebody who's going to protect the revolution and then somebody else who's going to protect the country. So you end up with Artesh, the country, irgc, the revolution. So if the revolution today is now less important, you now have an opportunity. So that's kind of what we're looking at going forward. This is a longer horizon than this year or maybe even into next year.
- [11:09]
Rahm Alawalia
Sorry, go ahead.
- [11:10]
Chris Perkins
You also have the Kurds, right, that are going to be making a move as well. So they may be seeking to undermine the entire country itself and try to re. Establish Kurdistan. So you have that noise as well. But I guess, General, my question would be, at the end of the day, a secular, powerful leader is probably the outcome that the administration would be fine with. And that may not be great for the Iranian people. Maybe it is. I don't know. It depends where you are. I think the question is that, is that the end state? And then what is the time frame to get there? And you're saying it's not happening overnight. How does, how do we get there? And is that, is that the end state?
- [11:48]
General James Spider Marks
Yeah, I think what's going to happen, it's going to take some, it's obviously going to take some time. And some of the steps leading to that will include a consistent application of pressure against the regime as it now exists over the course of time, not the volume and the velocity of what we've seen over the course of the last week.
- [12:07]
Austin Campbell
Right.
- [12:07]
General James Spider Marks
It is not going to be surprising as we transition out of this. Look, and our president has got political pressures he has to deal with. I'm not going to for a second presume that I have a political pulse. But he has to do it about face and look at his base and say, look, this isn't an unending war, albeit unconditional surrender. And having somebody in charge that I approve of kind of seems unending to me because you're not going to get there in the near term. I am confident he's, I am confident, I would say, with a level of high confidence he's getting that input right now. That is going to take some time. And so over the course of time, if targets still are going to pop up, which they will, they will be engaged, further attriting the reputation and the capabilities of the regime. And then, you know, there's a social contract in Iran. You've got the social contract that exists from the top social contract and you have a faith contract. And the hypocrisy coming out of Tehran to the gentleman and the family on the street is it's unimaginably difficult. If I want to live in my faith, I don't want this, this hypocritical leader telling me how I have to do that. If that gets eliminated. I now have eliminated one sore point. Now I can focus in on the social contract which I may not like, but that becomes a little more palatable because he's not in my mosque. And if I can get him out of my mosque, I can now isolate the irgc. That takes time.
- [13:33]
Rahm Alawalia
Well, it's looking like a hereditary monarchy now, which is what the original Ayatollah was campaigning against. What's the relationship between the people and the irgc? Now obviously you've got a Shia population which is like 24%. Is the IRGC viewed as legitimate by a significant portion of the population or is it viewed as like an oppressor? What's the, what's actually the view on the ground?
- [13:58]
General James Spider Marks
Yeah, it's an acceptance that it is present, it is an oppressor. The challenge. I have a brother in law who's Iranian, so he's my source. He's a great source. He says the challenge with the Persians is that very modern society, look, they invented math, right? Just talk to my brother in law, he would tell you they invented math. I call my brother in law Xerxes and he loves that. The. So you know, you've got this very modern society that over the course of 50 years it's now become part of their DNA. I mean they're very submissive. And as he describes it, he says we're a very proud people, but we're not prepared to sacrifice that. You know, they've accepted so much, they've been, this is a bunch of body blows over the course of years and it's very difficult for them to think that there might be some type of possible alternative out there. There could be, as I described, there could be a possibility here. But the IRGC is immensely weakened. But it still exists. It's a control mechanism internally. They're not going to export this. That becomes the major problem. So are The Iranian people 93 million folks, are they prepared to make some type of a, an aggressive. And the reason we did this now is we thought they were in a position to make kind of an aggressive, sustained move. I mean, we had an opportunity, we took it, we decapitated the regime. We did it because we had incredible weapon systems. As Chris indicated, maritime air campaign, unprecedented. It's absolutely phenomenal. But we saw the unrest over the course of the last six weeks, two months, and we thought maybe something's here. Oh, and we now have an opportunity. Let's see if we can accelerate this. Unrest hasn't happened yet. Maybe after the guns don't go silent, but become a little more sustainable over time. There could be an uprising. I don't see that happening in the near term.
- [15:53]
Austin Campbell
Well, I'd like to go back to another conflict I know you're familiar with, which is the Balkans. Right. Because as we look at Iran, I would not describe it as an ethnically homogeneous like country, once you move outside of, call it the center of power. And so as I look at the country and I ask, where would the fissures appear? Where would the cracks appear? I think as Chris brought up, not just the Kurds, but the Azerbaijanis might have something to say about this as well. Because, you know, now that they've been weakened and the balance of power in the region is potentially shifting, this is when other people see opportunity and sometimes make their moves.
- [16:30]
General James Spider Marks
Right.
- [16:31]
Austin Campbell
Do you see a potential end game that looks a little bit more like the dissolution of Yugoslavia where Iran may no longer be the exact same geographic footage footprint and we have some breakaways?
- [16:43]
General James Spider Marks
No. Okay, short, short answer. The longer discussion on all of that is I don't see Chris, Chris mentioned the Kurds. I don't see the Kurds having a significant role. Number one, I don't know that the CIA is in fact going to follow through with this operation. And how we found out about it pisses me off. As a guy who grew up in the intel world, routine leaks like that are U.N. and U.N. you know, it. It is something that needs to be addressed. Okay, that's a long term issue. So we, we've understood, or at least we think there might be some type of an arming of the Kurds as they migrate across. That's what I would describe in military terms as an economy of force. It is not going to significantly alter the dynamics in Tehran. And as this new regime kind of tries to coalesce and come together, and as you've described, it is not homogeneous in Iran nor within the leadership. There are a whole bunch of fissures within there. So the Kurdish operation, if it occurs, if it occurs, is simply a, it's going to a distraction that must be addressed. So it pulls attention, it pulls forces, it pulls resources away. The challenge legitimately in Iran is it, could it dissolve into what you described so accurately in the Balkans? I, I really don't think so. I think that level of the differences among them have either been reconciled or have been tolerated over the course of years. In the Balkans, this was millennia old hatred that emerged and simply erupted because it could, and, and there was no, there were no, there were no boundaries that have been put around it. What we see in the, in the Middle east certainly is you have a new hegemon. It's without doubt it's Israel. So you've got a new hegemon that's not going, that hegemon is going to routinely be involved in what Iran 2.0 or whatever the heck it is, looks
- [18:49]
Rahm Alawalia
like a rising hegemon.
- [18:52]
Chris Perkins
Sorry, go ahead, go ahead and ask a question.
- [18:54]
Rahm Alawalia
Is, is Saudi not a rising hegemon?
- [18:56]
General James Spider Marks
Yes. Regionally, is it? Yes, but Israel is the re, what I would call the regional hegemon. I mean, it's okay. Yeah. I, I don't, and I don't think, and I think what may happen as a result of what we're seeing is the Abraham Accords and Saudi's engagement with Israel going forward. Whether it might be moderated in some way, I don't know. But I don't see that as competition that will bring itself to cataclysmic outcomes like we're seeing right now. Look, Iran, as we know, has just been isolated by its neighbors for the longest time. They're, they just get tired of their ship and they've got the Shia arc heading into Syria. That's going to exist for a while unless somebody can cut that up or address it. We now have the potential with Iran's attack against Turkey, we now have the potential for Article 5, not going to happen. Commonheads will prevail. And Article 5, as we know with NATO, is not everybody get on board and let's go to war. It's, hey everybody, one of our partners is being assaulted here. Do what you can do to help. So it may be writing a note saying hang in there, or it could be, I'm going to send you money or whatever.
- [20:07]
Austin Campbell
I, I appreciate us already taking shots at the British on that note, but to bolster your previous point, there was a rumor today that Lebanon, who's cracking down on a regime partner in Hezbollah was actually reaching out to have intermediation between them and Israel in terms of finding like, call it a livable peace between those two parties as well. So to bolster your point, it is a trend we've been seeing with some of the news items where Israel appears poised to play, call it a more constructive and active diplomatic role alongside some of the neighboring nations in that area. So certainly I think we can all agree Iran's influence in the region has been greatly degraded by what's happened.
- [20:54]
General James Spider Marks
Completely. And then you look at Syria, let's bring Syria into the mix. That's ungoverned space. What does Jelani, what is he trying to achieve? Great opportunity. I mean he came to the White House, great opportunity for him to say, I can help. Hey, Mr. President, I'm on your team, I can help you. And oh by the way, give me a little money and I can help relocate folks from Gaza. Right? You want to move Palestinians, I might be available for you. I mean, I'm totally spitballing here, but with this ungoverned space in Syria, that's a legitimate concern. You talk about the potential essentially new lines being drawn. Syria could be one of those very easily.
- [21:37]
Chris Perkins
We got our strong man there, didn't we? Yeah, he seems to be keeping things under, under control. How the Chinese feeling about this? I mean they get the preponderance of their oil through the, through the Strait of Hormuz. Is this. You've talked often the times I've heard you talk about the pre war world that we're in and that's usually referencing China. Right. So how does this all come together, General?
- [21:57]
General James Spider Marks
Yeah, China's China and gotta throw kind of Russia into the conversation this point. Their, their support of Iran has been kind of muted. Right. All, all we see is, you know, the diplomatic narratives. Obviously there could be support that we maybe are tracking, but it's not going to move the dial again. Iran is still in the position that it's in incredibly weakened. China. China, the problem with China, I mean certainly they got a near term concern, but Russian oil is now back up is kind of the, the savior for this potential problem. I, I understand that it could, it could be where. And China has routinely gone to Russia. Anyway, let's be frank, Russia is a vassal state of China. So I think their problem with oil by itself is good and fine and could find a, a resolution. But you know, China doesn't have partners. China has that. Again, vassals, you know, they, they transact and they have, they have clients. They don't they don't have partners that are going to step up and help resolve or change the dynamic that they have to deal with. China is increasingly isolated because of that.
- [23:05]
Chris Perkins
I mean, you know, Joe, did you follow prediction? Do you follow prediction markets at all?
- [23:13]
General James Spider Marks
I don't. I should.
- [23:14]
Chris Perkins
Yeah. So these are new markets where people, you know, sometimes we've seen, you mentioned that leak. We've seen instances of potential insider information. We really don't know that they're monitoring pizzas out of the Pentagon or whatever. But, you know, it's something that we watch a lot in the crypto space. And right now Polymarket saying that there'll be a ceasefire by March 31 with a 45 chance.
- [23:34]
General James Spider Marks
What's your take? Sooner than that, I would say, yeah, I think it's going to probably be maybe the end of this week. This week. But a ceasefire, I mean, I don't think anybody's going to declaim, you know, proclaim, I got victory, we're gonna have fire. Nobody's gonna say that. So I don't know how, how do you surround, how do you put bounds around that bet, you know, what does that mean? Nobody's gonna say, ceasefire, guns down, let's count our ammo, you know, resupply, bring in food, take the wounded off the battlefield. That's, that's not gonna happen. So I, I don't know, that sounds like, to me, I, I gotta.
- [24:10]
Chris Perkins
Sounds like that's going to be a difficult market to adjudicate. It sounds like, and I apolog one of the problems we have.
- [24:14]
General James Spider Marks
Are you allowed to swear on this? Apologies.
- [24:16]
Austin Campbell
You can say, Chris and I are former traders. The fact that f bombs are not flying on here constantly is a minor miracle.
- [24:23]
General James Spider Marks
I have a, I have a rule every time I speak in public. If I, if I do that, I put a hundred bucks in a job jar that then eventually I take that, I take that jar and I give it to a, a great veteran. Cause so maybe I should just light it up.
- [24:37]
Chris Perkins
Let's go.
- [24:38]
General James Spider Marks
Right? Let's go, man. Send him some money to. I mean that sincerely. I get thank you notes, you know. You know, thank you. I got one of these letters. Thank. I need to find it. Thank you, General, for your check. Don't stop effing doing what you're doing. Sorry, my bride of 50 years is not watching this. Thank goodness.
- [25:07]
Austin Campbell
I was gonna say so on a related note to that, my wife is
- [25:11]
Chris Perkins
Indian
- [25:13]
Austin Campbell
and so one, she would have thrown rocks at us when we said that the Persians invented math. So, Raj, I'M fully aware that you would dispute that claim on behalf of India. Right there before I get.
- [25:23]
Rahm Alawalia
It's always math or chess. Those are the two big debates, but
- [25:28]
Austin Campbell
two in terms of bad habits and swearing and things I've had to atone for. We did have one incident where my 4 year old daughter is on the couch, okay, with her iPad. Something doesn't work and she just puts, puts it down and looks up and goes, fucking iPad. And my wife just head turns and looks straight at me and I'm like,
- [25:49]
General James Spider Marks
that's not her influence. Nope, dad, get it together.
- [25:54]
Austin Campbell
I have the same problem. So. Swearing aloud. So speaking of swearing, oil markets were absolutely swearing up a storm overnight, but the market has called out dramatically, dramatically already today. What do we think? Rahm, I'll start with you because I know you've been following the market and I know you had some views. What do we think the market is taking from this conflict at this point?
- [26:18]
Rahm Alawalia
Right. So the oil futures spiked on the news of Israel bombing a depot there. My view is that you had forced short covering in the futures market and that marked a top and you're not going to see Oil 110 again. I think that's behind us. We'll have to see what Trump says at 5:30pm today. He said this afternoon that we are ahead of the four to five week timeline. We talked about last week, how that was managing expectations low. So he kind of sets up the win. There's a mismatch between what he's saying and what Pete Hegseth is saying. Who's saying, we'll take as long as it takes, but we know who works with the other guy. So I think there's a little more credence to what Trump is saying. My question for the general would be though, is like, why haven't the tanker started moving? I know what you said earlier is, well, anytime now. What have we been waiting for? The Navy's been gone for three days. The tankers aren't moving. And is it enough to have control and provide security, or do you need some compulsion? Because ultimately these tankers have owners and captains. Why haven't they started moving?
- [27:22]
General James Spider Marks
I, I would, it's a great question. I would say it's combination. Whoever owns the tankers, they've got to embrace that risk. And there are huge dollars associated with those risks, number one. And the second thing is the Navy is conducting an air campaign on a, on an incredibly hard target. This is their priority. And I think at some point in the little. I'm thinking Days, once you get into what I described is just walking your way through the ATO and boots are not going on the ground. And I don't think we're going to take car guy with boots. But as you walk your way through that, you now are into some significant muscle memory and you can divert assets and resources elsewhere.
- [28:17]
Rahm Alawalia
Aren't boots on the ground required for one, validating that there's no longer any enriched uranium as reporting to, as opposed to relying on satellites and number two, truly controlling the, the shoreline or on the Strait of Hormuz to protect against speedboats and other kinds of attacks?
- [28:36]
General James Spider Marks
Yeah, you could, you could have boots, but you're not going to put boots in Iran to do that. On the straits. Your question about the straits.
- [28:43]
Rahm Alawalia
Yeah, on the straits. And then the validating the uranium is secure.
- [28:46]
General James Spider Marks
The uranium, you've got it. You got to have people opening up doors, walking inside. That eventually has to happen. Absolutely. And so my point about that is that may not happen for years. And this is where you get into a sustained engagement against HVTS going forward. And you know that, you know, we, we embrace for years the Navy that Chris was in the army that I've been a part of forever. You had Colin Powell that established the rule that if you break it, you own it. And we're gonna, we're gonna stick around, put all the pieces back together with your help. Well, we've reached a point now, we don't care about that. We're just going to break it. And if you get back on that horse and you think this makes sense, we're going to break it again, we're going to kill the horse, we're going to keep doing this. I think that's what we think about the enriched uranium. There will be. Iran at some point is either going to just continue to be hammered, and at some point the Iranian people say, I, I cannot. Enough. Stop, stop, stop, stop.
- [29:45]
Rahm Alawalia
Would Trump want to hand off unfinished business to a future administration, though? Because he's the only president in the modern era that would have the mindset, let's say, to take this kind of action. Would he be willing to have just a loose thread out there as opposed to get the mission done?
- [30:07]
General James Spider Marks
Great, great question again, I can guarantee you every one of Trump's predecessors right now is drinking bourbon and smoking a cigar saying, I wish I'd done this.
- [30:18]
Rahm Alawalia
At the very least, I wish I'd
- [30:20]
General James Spider Marks
done this relative to hero as well. God, why didn't I do that? Well, you chose not to. And then the second question is oh, absolutely not. He's not going to hand this off. I mean, he will declare Mission Accomplished A bad reference. Bad reference. If you recall. Right.
- [30:37]
Rahm Alawalia
That's George W. Bush on the aircraft 43 aircraft carrier.
- [30:41]
General James Spider Marks
Wow. Wow. But he'll, at some point he'll say, we're gonna tie a ribbon on this and Iranian people. You got it? We're here for you. Knock on our door, give us a call. But, but we have won. However, however you want to. Not you, however, the, the political wrapping and all this. Have a nice day. Make it pretty. You can see right through it. But we're not. There's no victory in this. And I think the longer term solution is when does Iran have a leader of some sort that's going to be open to Western engagement? I do think Iran is a business opportunity. It's huge. Look what happened when the Soviet Union collapsed in December. December 91. You know, they struggled for about five years and then boom. I mean, the army that I was a part of, we started training with Russian forces. We, we took a Russian separate airborne brigade to the Balkans working directly for a U.S. army general. And I got to know, I mean, incredible force until they abandoned and went across the river and went to Pristina in Kosovo. So the, the point is, is we could handle Iran if they were willing to allow the west to come in and say, we, we're here to help. We don't care if you have some guy who's incredibly oppressive and you know he's going to crack down on everybody. That's internal control. You guys got to figure that out. But we might be able to set up markets here. Let's go.
- [32:06]
Austin Campbell
I think part of what's interesting about this whole conflict and the pressure that's going to be on whoever takes over for the regime is exactly what you just said, which is you have the balance of having been sanctioned, having been isolated from the world, having been a less than full participant to the global economy. And if you start doing things a very different way, suddenly you could have the helping hand of the richest country in the world pulling you in the other direction. I feel like if we're going to see, call it genuine change in behavior coming out of the regime there, it's probably money talks more than anything else from a long term trajectory.
- [32:43]
General James Spider Marks
Totally agree. And I would say that our president sees it that way. Right.
- [32:48]
Rahm Alawalia
I want to play back. So what you said is other American presidents are looking at this and saying they wish they had done this. So they view this as a win. And what you just defined here. That is a new doctrine that Trump created that others might emulate in the future.
- [33:07]
General James Spider Marks
Yes. Yeah. Oh, absolutely. We are, what we're seeing right now, we're in a period of transition here. The, the roots that are being, that are growing right now are getting deeper and deeper. And regardless of political stripes that follow Trump, we're, we're dealing. I mean, how many more is it now a real possibility for any successor to get involved in inter eventionist type engagements like this? Yeah. Heck yeah.
- [33:38]
Rahm Alawalia
Does that mean anything for North Korea? I mean, they've got to be looking at this.
- [33:41]
General James Spider Marks
Oh, they are.
- [33:42]
Rahm Alawalia
Don't mess with the United States.
- [33:45]
General James Spider Marks
Well, you got it. Big time. Notice what has happened in North Korea since the Russia went to war in Ukraine. There have been no nuclear tests by the North Koreans. And there was a sequence, there was a sequence of those tests starting, I think, in 2004 after we gave tons of money to the north for peace kind of reunification type efforts. And the, and the South Korean president empty Jung won the Nobel, Nobel Peace Prize. And everybody thought, this is wonderful. And we dumped hundreds of millions of dollars in the North. What'd they do two years later? They were popping a nuke, thank you very much. So North Korea has been silent over the course of the last four years in nuke development, but their relationship is so historically interwoven with Russia and China. I would not, I, I, I, I, I think Kim is, Kim is fine doing whatever he's doing. I'm sure he's taking Ozembic. He's a skinny man, but I think he's, I think they're okay, frankly. I mean, there are too many challenges there. And so why would you enter into some type of a provocation there? There's an opportunity for us to now make it very clear that unacceptable behavior won't be tolerated. But we can work around the margins which we have with North Korea forever.
- [35:07]
Chris Perkins
Who's next? In general, North Korea is not as it. Cuba.
- [35:10]
General James Spider Marks
Cuba. Yeah. You had, yeah, absolutely. You had Maduro in December, El Mencho in January, you had Harmony in February, and you got Castro in March. So line them up. All right, I'm trying to be, I'm not trying to be flippant, but I mean, Cuba's next. Cuban. Cuba's next.
- [35:31]
Austin Campbell
So on that note, let me ask about the really hot button geopolitical issue then. And what will be taken from the current conflict is what implications does this have for China and Taiwan?
- [35:45]
General James Spider Marks
China's got some real issues. So the short answer is, and I apologize I got some light I can't fix. You know, it's like an interrogation. It's like an interrogation. Let me, Let me bend down and, and have that. I'll tell you anything. China's got some real. Xi Jinping has got some significant problems, as you've seen. He fired his chairman equivalent, was the only guy who had combat experience, and that combat experience was in Vietnam, 1979, which is punitive exclusively. So his military has got some legitimate challenges, not unlike the Russian military. And so when Russia fell on its face in Ukraine, she turned around, said, okay, dudes, pressure test this thing. Let me know what's happening. And he fired a bunch of guys, didn't like what he saw. That doesn't mean he got more competence in. He certainly got more loyalty in, but I don't know about the competence level. So he is concerned legitimately about that. It's a far different military set, right over 100 miles of open ocean there. He has other tools that the Russians don't have. I mean, he's got isolation tools. He can move in the direction of quarantine. He can be very, very provocative, which he does routinely overflights of, of Taiwanese airspace and territorial waters, etc. But he needs to be very, very cautious. And as we know, the Chinese have a much longer horizon in terms of solving their problems. I don't think he's going to be in a rush to solve this problem because he, you know, first of all, here's going back to a Trump point. You know, he has to balance. She has to balance. Is Trump going to give a about Taiwan or is he gonna go, you know, you know, it's an aberration. What's this one country, two systems things? I don't get it. You're like FIFA. FIFA is a mood ring for the world. You know, they don't invite Taiwan, they invite Chinese Taipei. So what? What's FIFA thinking? This is crazy. Well, most of the world thinks this is crazy. This Taiwan thing's nuts. Solve it. Don't kill anybody, just solve it. It kind of works. But Trump, you know, Trump has given us every sense that he might not. Well, that he doesn't care about Ukraine. He does. He's blaming Zelensky for not being particularly intellectually, you know, adroit about how to solve this thing. That's because Biden caused this problem. It's Biden's problem. Why am I, why do I care about this in terms of Taiwan? This would be a purse to your question earlier. This would be a personal affront to Trump. And so I think he would look at Xi and say, no, no, no, don't. Not while I'm here. Don't. Don't push me. Don't push me.
- [38:25]
Chris Perkins
General, I keep thinking that the submarine attack on the Iranian frigate was very symbolic and a message to China. Why? Because it's really our submarines they don't have an answer for in the street. Is that your take or am I crazy? The intelligence guy?
- [38:40]
General James Spider Marks
No, no, you're exactly correct, Chris. Absolutely correct. The more than China was reading this, but it clearly was a message. Look, we're. If we have a stated policy, we have determined that you're an outlaw nation, and we want to try to adjust that because you're. You're an outlaw nation because you're a threat to your neighbors and globally. We're going to. And we choose to do something about it. This is a holistic approach, so you can't wander around Sri Lanka and think that you're out of bounds. Now you're clearly in bounds, and we got you.
- [39:12]
Rahm Alawalia
So what you're saying is the US Is more secure than has ever been before. Competitors like China are watching the action and saying we've got nothing to contest in terms of capability. They're not attempting to. And that Trump has been successful here. Now, you saw that the defense budget was increased from 1 trillion to 1.5 trillion. There's already incredible dominance in the US military. Raytheon is quadrupling the production of Interceptors. How much of that is truly needed given that the US Occupies tremendous competitive position and our deficits are sky high?
- [39:50]
General James Spider Marks
Yeah, the balancing against deficits is always the challenge, but you don't. You. Deterrence matters. Two things we're seeing in this world where we're shifting, spheres of influence are shifting. And as a result of that, the definition of risk and deterrence matters. We always talk about risk, but I guarantee you most organizations don't really embrace risk. They keep the comfortable kind of position and whatever. This is all about risk. Deterrence only matters and can work if you can exercise influence and you can prevent those with whom you are dealing, friend, enemy, whatever, from exercising influence. That's what readiness is all about. So 1.5 trillion is all about. What else do we need to make?
- [40:33]
Rahm Alawalia
Do you think it's a good investment, or is it over investment? I mean, it seems like what the US Accomplished around Iran and Venezuela is extraordinary. People are going to write documentaries and movies about this. I can't wait for the movie two years from now that comes out around this. No one else can hold a candle. I mean, is a 50% increase, triple, truly necessary or is there other threats, maybe like UAPs? You're seeing a disclosure. Is some of that investment directed towards that? Did you have any insights around, around that that you can share?
- [41:06]
General James Spider Marks
Well, I, I would tell you, nobody's going to know whether this is an effective investment until after the fact. Look, as an intel guy, I got, I got beat up every day because we failed to see the collapse and the cancer of the Soviet Union. And we invested tons of billions of billions of dollars in reconfiguring our military. And as an army guy, the reconfiguration of the army was phenomenal. From Vietnam to what we eventually became about five years after the collapse of the, of the embassy in Saigon. It was an army that I almost didn't recognize. And I'd been through those intervening 10 years. And I thought, my God, look at, we have professionalism at multiple ranks. We're increasing our capabilities to exert power. We have long range fires. There's accuracy, there's mobility. We had none of that in Vietnam. It was a horrible, horrible slog. So this army went, my army went through this amazing transformation and it worked. And then it was validated in Desert Storm. Right? Phenomenal. Then the Soviet Union collapsed and then we get the shit beat out of us. And they said, you didn't you know the Soviet Union was going to collapse? I would. I'm glad we wrote those checks.
- [42:25]
Austin Campbell
You're welcome. All right, well, on, on that note, I am going to pause everybody, because speaking of writing checks, before we run too long, we do have to take a word from our second sponsor here. So we're going to run to that one and when we come back, Chris, you're going to have the lead because. Goodbye, everybody. I have to go teach a class. So now a word from our sponsors.
- [42:46]
General James Spider Marks
Thanks.
- [42:46]
Podcast Producer
Quick note before we continue with today's episode. Bits and Bips now has its own dedicated home. We're spinning off from Unchained and launching a standalone podcast and YouTube channel focused on the Fed macro, AI and how it all collides with crypto. If you want to keep up with our weekly live streams and macro meets crypto breakdowns, make sure you're following Bits and Bips direct. We won't start publishing until March, but getting set up now means you'll be ready on day one. You can find the new Bits and Bips channels at unchained crypto.com bitsandbips. You can also find us by searching bits and bits on YouTube, Apple Podcasts, Spotify or wherever you listen.
- [43:25]
Chris Perkins
So we were talking about letters of mark over the commercial break, which is near and dear to my heart. We have to do a dedicated episode on that one. But as we finish out the Iranian discussion, one thing that's been on my mind is new technologies. We talk about new technologies on the show a lot. We've seen AI on the battlefield. A lot of this, I think, was really the laboratory was in Ukraine. This is the first time we've seen an American use of some of these technologies. We've seen directed energy weapons. We've seen what's called the Lucas Loitering mission. So essentially we took the shahed drones that the Iranians are very good at. We replicated it, made it better, which was like a very low cost munition that people seem to be using. So as you think about the technologies on the battlefield, what has stood out to you that either surprised you or you said, wow, that's amazing, or that's going to be the future?
- [44:12]
General James Spider Marks
Mostly what we're seeing today in terms of the application of AI, in terms of facilitating targeting and being able to get that level precision because our munitions are that precise and our targets are that precise and very difficult to identify, yet there is sufficient, there's sufficient data out there that is being mined so that you end up with a target that gives you a level of confidence that it can be serviced appropriately. That's phenomenal. And then the growth of these, of the unmanned, autonomous unmanned systems is phenomenal in many cases they are not. Many think we could just buy a bunch of drones and that's how we're going to fight every war. We need to look at what's taking place in Ukraine very precisely. Look, this is a frozen conflict. It's frozen. And as a result of that frozen status, drones have become increasingly important because you can't move on that battlefield without being detected and, and then targeted instantaneously. You can't light a cigarette, you can't move back, you can't arm a weapon. People see the movement, you're gone. The reason that's working is because neither the Ukrainians nor the Russians had the capacity, have the capacity present tense, to conduct operational warfare to really achieve maneuver that gives a movement that then allows you to have maneuver. There's a difference here. And to tie tactical successes together and the Ukrainians and the Russians are not going to achieve that in the near term, they've got to inculcate aggregate, understand what the lessons learned are from this conflict. Put that back into their training profile. So the units that are now coming forward have a different capability than those they're replacing because the ones they were replacing are getting hammered. So we need to be able to understand that the growth of these. These unmanned, unattended platforms is significant, but use them to. To enhance what the. What maneuver is required in a ground. In a ground fight.
- [46:29]
Chris Perkins
Got it. And then have you been tracking this argument between Dario, the CEO of Anthropic, and the Department of War?
- [46:36]
General James Spider Marks
Right.
- [46:37]
Chris Perkins
You know.
- [46:39]
General James Spider Marks
Yeah. They just sued Department of War today.
- [46:43]
Chris Perkins
Yeah.
- [46:44]
Rahm Alawalia
Not a great strategy to sue your customers, last I checked.
- [46:49]
Chris Perkins
I know is a very big OpenAI fan
- [46:55]
Rahm Alawalia
of some. Yeah. Reservations around AI but, you know, I'd
- [46:59]
General James Spider Marks
love to hear your reaction.
- [47:00]
Chris Perkins
Yeah, we'd love. Like, how do you think that's going to play out?
- [47:03]
General James Spider Marks
Well, it's being used, and I think the contract terms are. We've got it for. Excuse me, another seven months. Dod, We. DOD has it for another seven months. Yet at the same time, they've said we're going to push away. I don't know how you can do both. I. I simply don't understand how that works yet. Right now it's working with great accuracy and efficacy.
- [47:25]
Chris Perkins
Yeah.
- [47:26]
General James Spider Marks
Why would you not continue with that unless you're.
- [47:30]
Rahm Alawalia
It's on the topic of. Good.
- [47:32]
General James Spider Marks
Good.
- [47:32]
Chris Perkins
Well, I hear you making the case that AI is actually more humanitarian. More humanitarian because you can use the data to be more precise in your lethality.
- [47:42]
General James Spider Marks
Right.
- [47:43]
Chris Perkins
And so it sounds like through that lens, as somebody who's, you know, general officer, you're like, give me these tools. Because they can probably. You know, the big question is around, you know, automated lethality. We're going to get to a point where the bots are much better than us. I mean, they're better in the crypto space and generating yield in certain cases. So why wouldn't you, if hand over the keys to that bot. If they're better at that targeted lethality and minimizing, you know, civilian casualties, you should.
- [48:09]
General James Spider Marks
You're exactly correct. The answer to the question is, of course we're moving in that direction, but, you know, the human is always going to stay in the loop. Chris, you and I, I think, have had this talk. You know, depending upon the. The context and the risks associated with that context, you're either in on or out of the loop. Your. Your call. Your call. So it may be autonomous. And hey, look, I'm alive today because we had an autonomous pro system that did its thing.
- [48:34]
Chris Perkins
Me, too.
- [48:35]
General James Spider Marks
These are alive today. And you go Wonderful.
- [48:39]
Rahm Alawalia
So, General, President Obama was asked on a talk show a few weeks ago whether there are aliens, to which he replied yes. Then Trump on Air Force One said Obama shouldn't have said that. And when asked if there are, he did not deny it. There have been decorated servicemen, current and former, that have testified in front of Congress. There's a subcommittee focused on disclosure. Are there aliens? Blink twice if yes. If you can, just blink. And then that means yes too.
- [49:12]
Chris Perkins
So I'll take.
- [49:13]
General James Spider Marks
I'm under duress right now. I don't know. I don't know about aliens. I do know about ghosts. I. I live in a 250-year-old house. I think there are. Yeah, I think there are.
- [49:24]
Rahm Alawalia
Okay.
- [49:25]
General James Spider Marks
Yeah. Heavy breathing.
- [49:27]
Rahm Alawalia
The veil is thinning.
- [49:28]
General James Spider Marks
Pressure on your chest.
- [49:30]
Chris Perkins
Nice try, Rob. Yeah, Rob, before we wrap up, how
- [49:35]
General James Spider Marks
do you end on that? Let's end on.
- [49:37]
Rahm Alawalia
That's a high note right there. Yeah, you know.
- [49:42]
Chris Perkins
Oh, I want Rob to bring it all together though, from a markets perspective. So like. So, dude, crypto, like we, you and I have, you know, we disagreed a little bit. I'm like, apparently the bull.
- [49:51]
Rahm Alawalia
I'm bullish now. I'm bullish now.
- [49:52]
Chris Perkins
Welcome. Welcome back. I've been there the whole time. Long story short, this market, it's showing that. That we're oversold. I mean, despite this volatility that we're seeing, geopolitical, I mean, crypto has been very strong. And is this, you know, do you think it's time for a breakout?
- [50:08]
Rahm Alawalia
I think you get a tactical bounce opportunity just across animal spirits in general. So Animal spirits describes those assets that respond to fear of missing out and human emotion and all across the board. It's not just digital assets. Look at Rocket Lab today. Look at hims. Look at uranium stocks. They're all rallying. So I think that's what it is. However, I would underscore that there are deeper issues underneath the market, like, enjoy the rally. But these deeper issues are around private credit, capital markets dependency, around the OpenAI and anthropics of the world that have a trillion dollar fantastical revenue they can't
- [50:51]
General James Spider Marks
back,
- [50:54]
Rahm Alawalia
and industrial stocks, which are incredibly expensive, that are overpriced and showing some signs of weakness. There's the tactical view where I'm constructed and the strategic view where I'm a bit more cautious. Add to that midterm area, which is generally more risk, fears of inflation with commodity prices, all the rest.
- [51:12]
Chris Perkins
Yeah, I'm watching midterms as well. One thing that really jumped out at me last week was when the bombs were flying. Trump put out on truth, doubling down on the Clarity act and telling the banks to get their act together, trying to push over this final policy issue. General would trying to get this bill passed for crypto. And he weighed in while the bombs are flying. That again tells me that this is going to get done. I think it's around a 51% chance, but we're in the black. Why? Because if he's got the chips and if he wants to spend them, he's going to spend them and it's going to get done. That could be very, very positive in the space as well, which I'm watching also. I think this could play in either direction right now in prediction markets. Looks like the Democrats are very poised to do much better in the elections than they had. So how this plays out as we approach November is going to be very, very interesting. But look, I think sentiment store remains really, really bad. Fear and greed is really, really bad. On the fear side, fundamentals are improving. Like, you know, the other thing that we've seen this week, I'm down at FIA Boca, which is this double secret TRADFI conference that nobody in crypto knows about, but they kind of do. All the institutions are here. We're seeing dance partners getting together. We're seeing, you know, just this morning we saw Kraken and NASDAQ tie up. Kraken and Deutsche Borsa tied up. Before that, we saw ICE with okx. So, like, we have this institutional building that's going on slowly moving forward, you know, while sentiment remains really bad. I think clarity is looking better by the day. That's not conventional thinking, but I think it is. So generally, I'm with you, Rom. Good setup, but not sure how long it's going to last or how it's going to play out. Plenty of unknowns out there.
- [52:54]
Rahm Alawalia
Agreed.
- [52:56]
Chris Perkins
All right, so any other thoughts, General, before we call it a day?
- [53:00]
General James Spider Marks
I got to tell you, Chris, you described our president in the middle of, in the middle of warfare, although Congress hasn't declared a war. Everybody wants to know, is this a war?
- [53:09]
Rahm Alawalia
Sorry, it's a special military operation.
- [53:13]
General James Spider Marks
Well, you know, frankly, Congress, if you wanted a war, declare it a war. It's your job. It's not. Nobody else can declare war, so stop bitching. But also, you described in the middle of this conflict, he's working on a crypto bill. He also, if you recall, as a, as a former college level NCAA jock, he's working on working with the ncaa. Did you see that? The other day he brought him you know, like, we got to figure out this nil stuff. And I'm going, wow, double tasking. It's amazing. Keep those balls in the air. It's unbelievable.
- [53:45]
Chris Perkins
Yeah, well, he's got a lot to do before his term is over.
- [53:48]
General James Spider Marks
Did you see. Again, I'm off topic. Did you see what they did? The state of Mississippi, if you get nil money, it's not taxable. Ole Miss.
- [53:58]
Chris Perkins
So you're gonna go play for Ole Miss next season, General, or what?
- [54:01]
General James Spider Marks
My grandson's there. You kidding me?
- [54:03]
Chris Perkins
All right.
- [54:04]
General James Spider Marks
On it, brother.
- [54:05]
Chris Perkins
Cool. Rob, any final thoughts today?
- [54:07]
General James Spider Marks
No.
- [54:08]
Rahm Alawalia
Terrific. Thank you so much, General, for joining us. It was. Every minute was truly insightful. Thank you so much.
- [54:12]
General James Spider Marks
Thank you, Chris. Thank you for your friendship partnership. I appreciate the invitation immensely.
- [54:18]
Chris Perkins
Yes, sir. And check out Academy Securities. We're both on the advisory board there, and it's been. It's been great to partner with you, sir. So thanks again.
- [54:25]
General James Spider Marks
Thanks.
- [54:30]
Chris Perkins
Sa.