Chris Perkins (3:39)

Financing. Chris, what's your.

Austin Campbell (3:43)

Take? I got a lot of takes on this one. I'll start by saying that once again, this shows the power of crypto and the power of tokenized products. Why? Because equity markets were fast asleep Saturday morning when Delta Force raided Maduro and took him and his wife executed one of the most seamless, incredible missions in US military history, which I can't wait for us to talk about. That also reaffirms to the world that the US has capabilities that are second to none. And it puts a lot of bad guys back in the box. Right? As you saw how we left Afghanistan, it didn't look great. And now it's like, oh, maybe we got it wrong, guys. So we're going to stay back in our box like we can. We're going to talk a lot about geopolitics today. I can't wait to get Peter's take. Peter spends a lot of his day no longer plays kicking. We'll talk about.

Peter Cher (4:40)

That. But he spends a lot of.

Austin Campbell (4:42)

His day looking at this stuff. But for me, from a macro perspective, it highlighted the point that crypto is awake, traditional markets are asleep. We're not going to be able to go through it. Too many more stresses like this before people are going to be like, wait a second, I'm leaving the traditional markets behind. I'm using tokenized assets because I can risk manage them. I can add risk, I can take away risk in the Middle of the night, on a Saturday, early Saturday morning.

Peter Cher (5:05)

Whatever.

Austin Campbell (5:05)

Right. So that was very, very important. It showed the fundamental strength of bitcoin because again, normally when you have a geopolitical action in low liquid markets, the markets tend to pull back and it's a buying opportunity. Well, guess what? Now markets, we got real time feedback. Wait a second. This is pretty good today. Markets are rallying. So before we get into the details and why, I think this is like such a, I like to say a real politic stroke of genius. Very, very good for, for, for bitcoin. Very good for alt. And we're going to get into it today. I can't wait to do.

Chris Perkins (5:37)

It. Peter, go for.

Peter Cher (5:40)

It. Yeah, I think I agree largely with the takes. I've got a slightly different play on it, I think. And part of it, if you look like bitcoin is clearly outperforming everything else, right. AI those stocks are doing well. And to me, I think it's kind of twofold. One is I think this is a bit of a realization that Trump will get what he wants. So even when you look at markets, the Russell 2000 is outperforming even the AI and you started at the start of the day, right? The Mag 7 were leading, but now you've seen this follow through. So I think this is a little bit of a bet Trump will get what he wants. And that was maybe coming off the table. People were concerned about that. So I think that was a big part of it. And then, you know, when I look at this, I do believe that a lot of the countries that have been trying to get around sanctions first during the days when everyone ignored the sanctions, they were probably taking in some crypto money. And I think there was increased concern that they might be selling some of their crypto as sanctions were taking a bite. And I think this starts taking sanctions off the table. In fact, if anything, it would not surprise me that if you don't hear chatter that maybe the US will seize some of Maduro's crypto to the extent he has it, and that might actually be what we can use to jumpstart the sovereign wealth fund that we've been talking about. So I think that, you know, there's going to be a lot of fights over the assets Maduro has, Venezuela has, but crypto might be one of the easier ones. And again, I think this all ties back to you go back to last spring when we were all excited. Trump was clearly for this. We put in a lot of legislation, but bitcoin kind of faded Maybe this is what jumpstarts that. So I think it's, to me, a little bit twofold is Trump gets what he wants. So that's playing out through the markets. And also maybe this is an ability to see some crypto and. And release the pressure of sanctions and not just here. Right. If you take sanctions off Iran, maybe if something gets resolved there, I think that frees up crypto to really grow again and takes away some potential selling pressure. I don't know how much exists or not, but that's always been a concern of mine in.

Austin Campbell (7:25)

Particular. Hey, Peter, I wanted to add something, and you said he gets what he wants. What does he want most of all right now? He wants his team to crush midterms. And I don't think the timing and the action could have been more perfect. Right. He's an American first president. He shows that the military is back, baby, like it is. It is not to be messed with. Check. There's definitely an immigration thing going on, because if he has his hands in Venezuela, which is, you know, in South America, which is a source of a lot of the illegal.

Peter Cher (7:56)

Immigration.

Austin Campbell (7:57)

Check. Got that. Fentanyl in America still is a big issue. Check. Got that. You know, economy. Right. I'm going to take oil, I'm going to put money back into retail. Right. Check. Amazing. For midterms, rates are going to stay down because inflation is going to stay down. Like, this is all part of the narrative that's building towards midterms, which is very positive for him. Oh, and by the way, what were we talking about before this cycle? We were talking about Epstein. Right. Any word of Epstein in the last news cycle? Absolutely not. That's what he doesn't want to talk about. And so he's recaptured the narrative. And the narrative of Trump having success in midterms is the same thing as crypto having success, because right now, like it or not, those two things are tied. I don't think in reality, it's as partisan as people think about it, but this is a guy who wants to make the US the crypto capital of the planet, and it feeds right into that narrative if he's.

Peter Cher (8:56)

Successful. Can I pile in for one more sec, too? And, you know, we've been talking about this for three or four months, and I think it's taking place is, I believe, everything that's going on with the cartel or the drug trade in Venezuela is really a precursor to going after Mexican cartels. And if you think about kind of from, you know, a very astute political standpoint, right. If we blew up drug boats in the Gulf of America or Gulf of Mexico three months ago, everyone would have screamed, oh my gosh, we cannot do that. So we did it in Venezuela, which is a little bit off everyone's radar screen. People don't have that kind of visceral response. But now we've established this ability to go after drug boats. We've now established this ability to attack within the country facilities to do with the drug trade. I highly suspect that end of Q1, early Q2, we approach Steinbaum in Mexico and say, hey, we want to deal with the cartels, we will help you do it or we will do it on our own. And, and again, it feeds in, I think, perfectly to the midterm election narrative. Right. It goes on. And I do think the immigration, you can't overstate this, I think, is that if we can create a safer country for people to stay, that's where they want to be. If you look at the amount of money that Mexicans in the US send back to Mexico, it's a huge amount. And part of that is because it's where their family is, that's where they want to be. And so I think if you first clean up this and you make it safer working environment, then the flip side of it is, you know, if you cut the head off the snake, which is the cartel in Venezuela, how efficient or good will those Venezuelan drug dealers or, you know, the people who've been committing the crime here be? I think you can push this at both ends. So I think it's a really crucial part of a strategy. And again, it's multi pronged. You get some of the oil, you send a message, you've got Putin now thinking, Zelensky thinking, certainly whatever happens with Cuba next. So I think this has been multifaceted and again is pushing towards an election result. But I think Mexico's cartels are, are next in sights because that will be the big thing for the US and it'll be an awesome thing for Mexico, to be.

Chris Perkins (10:53)

Honest. So on that note, I've also been eyeballing some of the implications of this from a macro perspective. And while bitcoin caught my eye, I think there's a component here also dealing. Chris, as you alluded to, a little bit, with energy. And so look at the things that are jointly exposed to. Though if you look at the bitcoin miner stocks today, like what? Marathon's up like 7%, cipher's up like 12 and a half, so on and so forth throughout the complex, I think you Know, as we look at markets, implications for this, the action in Venezuela appears to have been interpreted as a significant positive, like very constructive for bringing energy prices and commodities prices back down. And to me, I think there are two elements to that. One being very realistic. I think the call it prospect of adding additional significant supply out of Venezuela in the short term is very low. It's going to take a lot of work to get in there and develop oil fields. And I think there are some real questions about how much oil they actually have versus what the Chavez regime was reporting they had, which might be two very different numbers. On the other hand, though, I think to go to the point, Chris, you were making earlier, from a geopolitical standpoint, this has probably taken a lot of concerns about energy disruption off the table. I think there were some people when we started blowing up drug boats off the coast of Venezuela who were very worried about like a long term hot war, destruction of infrastructure. Infrastructure, the United States moving in. Chris, as you noted, like with Afghanistan and Iraq, the playbook was boots on the ground. And here nope. Showed up, grabbed the guy left, right. It's like that old like Panda book, shits and leaves. Right. And so you have a very different operating model. And I think that's part of what markets are reacting to is this new frame of warfare that is like surgical tactical extraction of key figures as opposed to we're going to go there and plant boots on the.

Rahm Aliwali (12:50)

Ground. Love all the points and nodding my head a few quick things. So bitcoin today is much a polling on Trump as it is a price on an asset. Trump's ratings went up after this action that supports markets. That's why high beta is working. That's why bitcoin went up. That's why many other high beta assets went up. That's what, that's what this is primarily about on Venezuela. Ten years ago, Venezuela was about 5% of global oil production. Now it's less than a point. Ten years ago, Venezuela had about 80 active oil rigs. Now they have single low digits. They socialize the means of production, meaning they stole from Chevron and production fell off a cliff and their people went into abject poverty. And now Trump's also got a win with Melee in Argentina. And I think, I think you're right. I think Mexico, you'll see some action there. The question is, what happens with Greenland? I don't know if you saw this. Greenland said if there's some altercation, then that would be the end of NATO. You know, I don't know how Article 5 works in that scenario and who adjudicates that? If the United States is part of the Security Council and, well, it's UN but NATO. I mean, it's complicated, Things are out there, but fundamentally, you know, that's what it's all about. I don't think markets are discounting the NPV of Venezuela in terms of the energy calculus just yet. Natural gas is melting and falling off a cliff. Oil prices are low and staying low. But it really was an incredible move and Chris really did a great job. Just like I find so many areas where you put your finger in the dam and this one thing accomplishes so much. And yeah, I do think it's setting up for the midterms and you start to see this transition from Department of Defense to Department of War that's previewing more things to come. And Greenland is also going to be in the offing. We'll see how that.

Chris Perkins (14:57)

Unfolds. Well, I was going to say let's actually get to the specifics of what happened in Venezuela then to set the table there because I'll be fair and say I don't think we're going to go like kidnap the president of Greenland, but. So what happened was US Forces captured Venezuelan President Maduro in an overnight raid authorized by President Trump. He has been brought to New York City where I am facing federal drug and weapons charges. The operation was primarily aircraft, about 150, dismantling Venezuela's air defenses before a small number of troops moved in on the ground. Current reporting is that no Americans were killed and allegedly Venezuelan casualties are in the tens of people, so approximately 80 currently. Trump has declared that the US will now alternately have influence over, run, have a say in governance on Venezuela. Details unclear. The large focus is on oil and energy production inside of Venezuela. Rodriguez is now sworn in as the interim president, while opposition leader Machado is still calling for recognition of her ally. The UN Security Council is holding an emergency meeting, but exactly as was just stated, the US has veto power there. And like, let's be honest, international law is largely fake and a construct of what people are willing to agree to because enforcing that ultimately is a nation state question. So I don't know how much influence the UN has here, but as I looked at that, and I want to kick this to the group for comments after I frame it this way. The United States over the past call it 40ish years, you know, the, if you will, post Soviet, post Vietnam era has experimented with a couple of different methods of intervention in foreign places. When we either liked or didn't like what was going on. Right. Like, we were tangentially and mildly involved, but sent people to Yugoslavia as it came apart, especially the Bosnia conflict there. We put a lot of people on the ground in Afghanistan and Iraq. We put virtually nobody on the ground in Libya, but weren't directly involved in, like, capture of a leader there. And now we've had a much more precise and targeted strike on Venezuela. So I'm largely looking at this both from a geopolitical context and also a macro markets context. Right. Trump's openly talking about bringing back the Monroe Doctrine and having the US Serve as a scalpel to deal with these interests rather than a sledgehammer. See also what we did with Iran's nuclear arsenal. Like, what do you think this sets up for the next few years geopolitically, and then how will markets react to that, given the change in.

Peter Cher (17:38)

Strategy? Peter, what do you, what do you think? So, you know, great question. I would say one thing, and this is going to depend a little bit, whether you're an investor or where you stand in your corporation or whatever. But I would think one, we got to be very careful when we talk about emerging markets. I think we now have to really start distinguishing by region. I think there's a huge potential for Latin and South American stock markets to do phenomenally well. Right. As you pointed out. Right. We've created the swap lines with Buenos Aires. That's getting lay on our side. We're doing some things there ultimately, depending on if this plays out remotely according to any sort of plan that Trump has. You get Venezuela coming, if we're right about Mexico, you get maybe Cuba to. I think you see this and I do have to say you got to probably be a little bit cautious when you look at that North south alliance or, sorry, the National Security Strategy piece. Right. It really does focus on the Monroe Doctrine, North, south alliance and working on that. And so I think what you're going to see is, and when we talk to corporations, we're saying if you're have a factory in Thailand and Vietnam, you're not really well diversified because those go through the same shipping lanes. You need to be thinking about shipping much more globally and as though there's risk that China may or may not decide to do something to interfere with, with your shipping. So I think you're going to see as this develops, steam for a lot of investment to be done in Central and South America because there we can much easier protect our supply chains. Corporations can be much more assured that we are Careful, right. The US still can project power towards Taiwan, but the tyranny of distance is real. It is more problematic for us to do it there than it is in Central and South America. Chinese navy is nowhere near equipped to get anywhere near Central or South America in a meaningful way. So I think there is a safety there. And what I think we've been calling this whole concept prosec or production for security, where it's going to be things like chips, rare earths, critical minerals, which we haven't talked about much. But that is another part that could be in Venezuela and I think that's actually more interesting than Greenland because on the rare earths and critical minerals, I'm pretty sure if it was really economically viable in Greenland, someone would have figured it out already. I'm much more willing to believe that in Venezuela, as messy as it was, there's been this opportunity and no one's figured out how to do it because they're so corrupt and they don't need rarest and critical minerals when they can survive off of drugs. So I think there could be opportunities there. But I think this is going to spread and the US government kickstarted it. I think it's US capitalism that's going to be the next step. Right. You're going to see investments in this. You're seeing again the crypto companies do well today. I think you're going to see, you know, Intel's continue to do well. You're going to see this US investment we talk to private equity companies are looking at, hey, what sort of mines are out there that people have mining rights that no one's used. All these things that we kind of gave up as we de industrialized, I think come back onshore, some will be on shore, some will be done with our close neighbors. So I think there's, if you're thinking about investing North America into Central and South America is a huge opportunity here. I think Europe's going to be left a little bit in the dust. I'm not sure what they are going to do. I ultimately think companies like BP and Royal Dutch Shell will be phenomenal buys. But probably a year from now, once Europe finally gives up and stops yelling at these companies who can actually provide the electricity they need to produce if they want to do data centers or anything else.

Austin Campbell (20:56)

Useful. That said, I do think we put some of our adversaries back in their box. So if you look at what was going on in Taiwan right before this raid, and I think the weather dictated the raid, so they may have tried to Pull it off a couple of previous, but China was operating and exercising the largest maneuvers versus Taiwan, I think, in history. They were simulating a naval blockade. And so this sends a message to China. And I think this is good for markets because if they're rethinking, hey, maybe it's not a good time to invade Taiwan. The US Military and national security apparatus just slights through Venezuela's national defenses like they were butter. Those national defenses were largely imported for, I believe, Peter, correct me if I'm wrong, Russian and Iranian technology. So we can pretty much go any place, anywhere, anytime. People are thinking twice before messing around. I think a strong America leads to a more stable geopolitical environment, which I think is good for.

Peter Cher (21:58)

Markets. Yeah, and sorry to interrupt to get her pilot, but the other area we've been trying to talk about is Africa. Right. Africa is going to be critical both in terms of the population growth, also in terms of the risk of destabilization because there are so many, you know, homeless, effectively, and, you know, refugees right there. It's a big mess. Russia and China both been involved. I think the fact that Russia has zero response to Venezuela will make countries I think, a little bit more leery about, okay, yeah, if Russia's our buddy, how much does that count? It's kind of like as Iran lost all their proxies, I'm not going to mess maybe with Israel because Iran's not there to protect me. Like I thought. You see a bit that with Russia, and again, there's going to be lots of legal challenges over who gets what in Venezuela. China is going to try and protect that, but China has to really do a good job for their own benefit. Or else I think they could see country after country kind of tip over and say, hey, you know what? China was never as good as we thought. Yeah, they built the project, but didn't last anywhere near as long as we expected. We didn't get the jobs, we didn't get the ip. So I think there's that opportunity. And I've got to be very careful because I think this administration's turning more transactional, particularly in Africa. And why I've got to be careful. I think you say transactional, people are like, oh, that's got negative connotations. I don't think it does necessarily. Right. I think in Africa, our policy was admonishment, oh, we'll give you this, but you have to do this. Well, I'm a dictator. Why would I possibly do that? I don't care. And now all of a sudden, okay, we just want your things. We can have a transactional relationship and I think that gets us a little bit more of a playing field. So to me, like what's going on in Venezuela right now is the first time and we've had this economic friction with China, but it's always kind of been mainland China versus mainland usa. This is the first time we're kind of taking this fight to Venezuela and we're going to see how Venezuela responds, how the neighbors respond. It's very different. It's almost to me like when we had with the Soviet Union, there were all sorts of hotspots and it was never the US versus the Soviet Union directly. But we had our proxies, we had who we were supplying. We are testing out our things. So I think Venezuela has always been a bit of a microcosm. I think Russia's kind of fallen down, looks very weak. I think they're getting taken out of the global equation, which would be good in Africa where they still have a pretty strong foothold. And also I want to see where India comes out in this because India is this kind of potentially emerging superpower. They're very involved in that region. They've been very.

Rahm Aliwali (24:16)

Quiet. I would share a few observations. One is I wouldn't underestimate Europe or investing in Europe. I agree with the points around Mexico and Brazil. I think Latin America is very promising. I think Mexico's a beneficiary of French shoring and Mexico is an ally to the US as an alternative to China production. But if you look at say Europe, you've got international banks in Europe that are doing extremely well. Deutsche bank has yet this up 130% in a year. HSPC is up 70%. This is a, these are boring, decades old banks. In Europe, the MAG7 names are up about 20% in a year, about the same rate as the S and P. They're no longer outrunning other names in the S and P. So I think international names actually can do quite well. And this rotation from these Max 7 names to other areas really started with the Trump tariff war last year. It also created a bid for alternatives to bonds like gold. I don't think that trend changes because the value in these names and the earnings growth is still attractive. South Korea is interesting. Japan is.

Chris Perkins (25:32)

Interesting. All right, so I'll, I'll pile in here and say on that front one, to get to the previous theme and how I think it connects to what Rahm just said. Europe is a very interesting pivot point for me as the Trump administration does openly become more transactional. And I agree transactional is neither good nor bad. It kind of depends how you do it. It's just a thing. Europe is kind of caught between a rock and a hard place here because you have to ask the question of what do they have to offer to the United States in the current configuration of Europe. That is to say, they don't have a lot of tech, they don't have a lot of exports that we really, really want. They've been kind of antagonistic towards us politically in a way that I think people don't understand. Like, if you're not paying attention to the drama between the eu, the UK and the United States over free speech, where Ofcom in the UK and some of the EU people attempted to reach over here and tell American platforms how Americans were allowed to speak to Americans on speech, you've really missed some geopolitical fault lines emerging to between the United States and Europe. So as the US Pivots towards a more Western hemispheric strategy, I'm just not sure what the utility of Europe as an ally is in the eyes of the Trump administration. And again, that's not a statement of like good or bad, that's functional analysis. And that for me makes me significantly more skeptical about investing in Europe right now. Because if you think about Trump and tariffs and rewarding allies and punishing enemies, Europe could very much be on the receiving end of some pretty ugly stuff if they continue with the antagonist him over Tekken speech. And then again, you know, as Peter said earlier, they're not producing a lot themselves. So I think that leads us to Greenland real.

Rahm Aliwali (27:20)

Quick. Everything Trump has punished is up. China's up 35% beating the S and P. Europe suck. Brazil is up. Gold is up. Everything. The thing that's not up, even, even bonds actually went up too.

Peter Cher (27:33)

Bonds.

Chris Perkins (27:35)

So hey, when everything's up, it's.

Rahm Aliwali (27:39)

Just inflation rocks not printed is up. That, you know, the printer goes.

Peter Cher (27:44)

Up. I don't, I want to read.

Rahm Aliwali (27:47)

Too much into like Trump this, Trump that. And in terms of if you're the enemy of Trump, then things go down.

Chris Perkins (27:51)

It's. I, I'm a little more skeptical specifically on Europe there though I actually agree with you about a lot of the rest of that. Europe, I think is uniquely vulnerable in this one because of their geopolitical situation. That is to say, if Trump slaps large tariffs on Europe are more likely starts retaliating in kind for things like fines on US tech companies, I think that could get really disruptive Like, I'll remind everybody, the Granite act in Wyoming allows for U.S. companies to sue EU regulators for overreach and essentially seize assets on that basis. If things like that continue rolling, that's going to be very general agree.

Rahm Aliwali (28:30)

Like their pockets, like even France is being the United States, by the.

Peter Cher (28:32)

Way.

Rahm Aliwali (28:33)

Way. For some perspective, France. Let that sink in for a.

Chris Perkins (28:36)

Moment. I mean, that may have been a statement of starting point for France. Come.

Peter Cher (28:40)

Back. I think, you know, it's hard to look at these indices, too. I, I tend to look at the European indices. They do tend to be heavily concentrated. Their banks, their banks have underperformed for a while and again, their banks were all excited about the potential for growth, the potential for rearming. You know, the one thing I can't go over right now about Europe and why I'm a little bit more skeptical coming for this year is I think Europe had one job to do in terms of Russia and Ukraine. They were supposed to seize Russia's frozen reserves. If they wanted to play a meaningful part, the only thing they could do is seize Russia's reserves and use that money to pay for U.S. weapons. I think that might have changed the story with Trump where he said, okay, you seized 100 billion of. They chose not to. In the end, they couldn't get there. And I think even right now, you see it again as they're trying to figure out what to say to Trump about there's Macron talks, but no one has any power. There's no single person power. I think that's one reason he even likes Ukraine. At least you've got Stormer, who's like, in charge of it. There's no one in charge of the eu. I think they struggle with that. I think they were supposed to try and seize Russia's frozen reserves. They tried to get there, they could not get there. They add nothing now to the war effort there. And I keep coming back to this concept of production for security. I think it's going to replace esg. It's kind of the evolution of esg. We were, if you think about Maslow's hierarchy of needs, we were kind of altruistic on what sustainable meant, but that was really based on the fact that we felt we had everything we needed from China to a large degree. You start ripping that away and you realize your foundations crumbled. So for Maslow's hierarchy of beads, you got to go back to that base layer and produce those things, shelter. And that's what I think the US Is doing. We're there. I think US Capitalism is starting to see that that will drive American companies. And I think somewhere six months to a year down the road, Europe's going to realize it too. Europe's going to take longer because ESG was much more embedded into their thought process. But I had a fight with, you know, Baroness who was actually the House of Lords last summer, and she was like, oh, Europe, London or the UK is going to lead the way in Europe on data centers and AI like you don't produce your own electricity. It's impossible. It's an unrealistic goal. And she's like, well, we get most of our electricity from France. Okay, well what happens if France needs their electricity, as we saw a couple years ago? I think everyone's going to go back to having to produce some basic level. And once Europe starts seeing that, then I think they can really rip and do very well again. But I think they haven't seen that yet. I think you're seeing a bit of that in Canada, where Canada is starting to realize this. And I think this was a big wake up call for the tar sands and things in Canada. They'll still do fine, but okay, we better get on board with this. And I think you're seeing Australia, right, negotiating deals with the US So people are trying to figure out how do we become part of this production for security. And you know, you still look to me at Europe, they're still blowing up the remnants of nuclear reactors and still kind of trying to rely on wind, despite pretty obvious things like this doesn't really work. This was a bad strategy that's failed. How do we get ourselves over? And look at Northern Europe, the Hibernia oil fields. It's like they get criticized, like, why would you use those? That's awful. This is horrible. You need those things. So I think we need to see this mentality. I think the US is leading the way. I think this is part of a multi year investment thesis at a policy level. And even within the US I think you're going to create very different dynamics state to state. Some states will embrace this, some states will fight it tooth and nail. I think Europe's going to have to figure this out again. BYD automobiles, right? It sells more auto evs in Germany than Volkswagen. And Volkswagen turned their entire business model to EVs. Like you kind of want to do face plant after face plant when you read some of these things. And Europe doesn't seem to have hit realization, whereas Trump has. And that's why I'm kind of very much on board for.

Austin Campbell (32:16)

This. So I'm going to chime in on Europe and then I'm going to pull it back to Venezuela. Let's remind ourselves of the way Germany treated bitcoin. I think they seized 50,000 bitcoin, they dumped it as soon as possible when Bitcoin was 50,000 and then it took off. There's a lot of folks who believe that Venezuela has a pretty big potential of bitcoin. And if the US does lay claim to it, I will tell you one thing that this administration's not going to do. They're not going to dump it. Right. And I think that's an additional tailwind for the asset class because it could be the way forward to create and incubate the Bitcoin strategic reserve. And again, totally different than what the Europeans have done in the past, particularly the Germans. Just another tailwind for the situation that's.

Chris Perkins (33:03)

Unfolding. All right, so before we go even further into that, we are going to take a break, hear from our sponsor once more, and then I have some thoughts on the next steps down after the Venezuela thing. But for now let's hop over to the.

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Chris Perkins (34:18)

More. So welcome back everybody. I want to start with a provocative question here based on one of the themes that we've been talking about a few times on this show, which is if the United States is now more involved in Venezuela, we're going to have a hand in the economy, we're going to be investing there, we're going to be dealing more heavily in that region. What are the odds that Venezuela dollarizes as a result of this event, especially being driven by US Dollar stable.

Rahm Aliwali (34:45)

Coins? That's a great Question. Well, gotta be thinking about.

Chris Perkins (34:53)

That, right? Well, okay, so the most popular stablecoin in south and Latin America right now is tether. So let's remind everybody of that. But there will be many other options coming. I'm more suggesting that if we're thinking about projection of US power among our allies, giving them access to dollars, especially in incredibly liquid and very easily usable way, is one of those things that you would expect to see more of on average over time. So if we're buying more Venezuelan energy, if we are investing in projects down there, if we are building economic partnerships, does that seem like a logical.

Rahm Aliwali (35:33)

Step? And oil is priced in dollars still and be the interest of that to continue to happen. So you would need new policy and leadership that's on board with that, right? The current leadership. The same one thing to mark Rubio and hex up is like, hey, I'll get you what you guys need. And then saying to the domestic constituency that Maduro is still the President, even though he's being arraigned right now. So you need, you need a few things to line up, but there's a path to that that certainly has to be in the, on the intention set, if not explicit. It will be very.

Austin Campbell (36:12)

Soon. Yeah, I mean, when I was in Iraq, I watched the currency turnover almost overnight. Like, it's not hard to switch out one currency, an old currency for a new currency. It happens quicker than you could imagine. I do think no matter what, you were going to see more adoption of US Dollar stablecoins even more than you had seen. This is a natural phenomenon that's going to happen across the developing world when given the choice. I mean, I think this is one of the next battlegrounds. If, if you're a dictator in any developing country, you want to hold on to that power and control of your local currency, but you're going to soon lose it. And so there's going to be wars that are fought over stablecoins. I'm sure of it. I think this is going to undoubtedly accelerate the use and utility across Venezuela of US dollar stablecoins. I mean, there's, I don't think US Dollar stable coins are going to go down in use and size. I don't, I don't see that happening. What worries me about the whole situation is, look, I was in a war where it quickly faded. It transitioned from we got rid of Saddam and then a pretty massive insurgency broke out. How do we make sure that as good as this seems right now, it could turn very negative if things deteriorate? There's an insurgency, then you're going to see violence and then even more immigration problems. So I'm watching really, really closely having been through this before, how stability is going to be maintained. So yeah, man, super interesting on the stable coins, Austin. I think you're right. Watch them.

Peter Cher (37:45)

Grow. Yeah. And I would point out, I think Venezuela actually does sell a lot of oil to China directly in Chinese currency. So again, if you're trying to break China's back, we know we've had clients who've had to try and negotiate contracts in Renminbi in Argentina. Again, I think if you go to Buenos Aires, the two tallest buildings right now have Chinese bank names at the top. So they've infiltrated it. They've locked in their currency to some of these. So I think again, we provided these swap lines. I suspect we could do the same sort of thing in Argentina where you really push hard to get adoption of stablecoin to become a dollarize. And yet it's going to be more friction with China. And the one thing I think Chris is right, my biggest risk to all of this is that China starts getting frustrated and decides that they want to pull the plug on the rare earths and critical minerals, not the extracted ones, but the actual process refined ones. And say, you know what, those licenses we've been talking about, we're going to slow this down because I think that is their biggest leverage over the US Right now. It's not attacking Taiwan or something like that. It is holding back on shipping us the process and refined rarers and critical minerals. So I'm watching for a downside to all of this. It's signs that. And China won't be, you know, outright about it. Right. All of a sudden you'll start hearing a week or two now no one's getting their licenses approved. Then you'll get some noise from China because they slow play everything right. They're not going to. They'll agree to buy our soybeans. They won't do it. So I think the only thing that China really has leverage on against us is that process and refined rare earths and critical minerals and that's where they might choose to use it. If they feel like they're losing rapidly and seeing their global prominence, you know, devour. I think that's their only real leverage. So that to me, I'm watching and that would be bad for, you know, U.S. stocks, at least the big ones. But it would be great for those pro set companies because that would create that real urgency to get these companies up and running faster than we thought.

Austin Campbell (39:34)

Before. Peter, Sorry, just a question. That issue on rare earths, that's perishable, right? I mean, across the board. The type of refining that's needed is coming online across the globe. How much time do you think we need until that's no longer a.

Peter Cher (39:51)

Dependency? I think it's realistically two to four years to get enough that you're kind of. And these things just take time to get on board. I do know when we talk to the administration, their focus is on getting the refining and processing more than extraction. We've had some companies that do both and I think it's an urgency. It's just hard. It's even getting some of the deregulation. And part of the problem is I think even this administration, which is way better organized than Trump 1.0, has way more people. We're still relatively short staffed and we're doing things on so many fronts that I just don't know that this gets done quick enough. It's occurring. Other countries are looking at it, but I think you can get some semblance of it done within a couple years. But I think to really be able to kind of, you know, pound your chest against China, it's a three to five year sort of situation. I hope I'm wrong, but that's kind of the number that keeps coming.

Chris Perkins (40:44)

To mind, isn't that three to five years? And what's the best way to say this? Normal times, though, like, I feel like with the rare earth thing, that's a bullet you can fire once because as soon as you do it, people are going to build alternate supply chains. They don't go back to what they were doing to some extent. I would remind everybody that all of these, hey, we're pricing oil and renminbi type things are because we pulled the plug on Russia with the sanctions, with swift. And you can't put that genie back in the bottle. And so I, I worry with that, that like that is a bullet you fire once and ironically by firing it, you might make your opponent stronger in the long run as opposed to.

Peter Cher (41:23)

Weaker. That's why I think they haven't done it yet. I think their balancing act is they know that's their leverage and their concern is that they're behind us on data centers and AI. So I think that's what they're balancing. Do they need us more for data centers and AI growth right now than we need them for rare earths and critical minerals? And I think that's, I think we're both sitting There knowing we're going to come to the table again in a year and a half, two years, and the friction is only going to increase. And whoever comes to the table better prepared wins. And they're trying hard on data centers and AI. They're ahead of us on electricity production, which I don't think gets enough attention. Elon Musk certainly tweets about that every single day and he's probably not wrong about that since anything that attached he spends that much time on is probably well thought out. On the other hand, we have to build out that rare earth critical minerals. I do think it would become a little bit more convenient if we re embrace Canada, Australia. There's some signs of that, I think. Again, one of our General Spider Marks, he's great, he's on CNN all the time, but he's been talking about that we're in a pre world, pre war world and we've never really been in a pre war world. We kind of were, we were surprised by World War I to some degree. Shockingly, we were surprised by World War II. But since World War II we kind of lived in a post war environment. Everyone was set up to be post war. How do we deal with that? And then the collapse of the Soviet Union was almost this peace dividend. And I think if he's right and we do move to this pre war environment, you get two things out of that. I think you get a sense of urgency, which we haven't had. Right. We've been talking about rare earth's critical minerals. We've been talking about chips for five years, 10 years. There's an urgency and maybe, and I think this is more important, there's a, you know, a willingness to sacrifice yourself for the greater good. And weirdly, I think the sacrifice the US would have to make collectively is less regulation that we say. All these things that we thought would be really nice. They're not must haves having lithium dioxide, having, you know, refined cobalt, having antinomy are necessary. And that's what we have to do here. And I think that might be the sacrifice that gets made is. And clearly MAGA and Trump is on board with that. Parts of the country are not on board with that at all. But I feel that that momentum and maybe that would be again, to me the trigger was these Chinese negotiations where everyone kind of finally woke up and said, wow, we really are at the mercy of these people in terms of rarest and critical minerals. So all of a sudden there's that to me it was a triggering point. It was the negotiations, maybe they played their hand too hard. And I do know there are companies looking at what patents we've been sitting on that we haven't been using. A lot can be done. And again, I think the administration can, if they focus on it when they start procurement process, they can enforce like hey, it has to have X percent US deal within two years or something and we'll pay more for that. So there's a lot that can be done. Again, I think part of it is going to come down to we need to win the. Sorry, the Trump party needs to win the midterms if Prosec is really going to carry on and take on this life of its own. I think if they lose, it becomes a bit more.

Austin Campbell (44:23)

Erratic. So cobalt stablecoins take away the regulation. Let's.

Chris Perkins (44:27)

Go. Well, I was going to say I'm not so sure this is a Trump priority. Right. So much is now becoming in some ways a bipartisan priority. You've seen a similar thing on the Democratic side with the abundance movement where a lot of people are now calling for, look, we can't just look at regulations as what were we trying to achieve. We have to actually evaluate the trade offs that happen in the real world for these things. Because like saving two beetles is not worth not building a hospital and then having hundreds to thousands of people die.

Peter Cher (44:57)

Right. And that's spot on. And I think I will. And we get asked this question, you know, will Prosec just die? And part of go back, you know, Biden created the CHIPS act. So Biden actually tried to take some steps. This hasn't been Biden saw some of this coming. I'm not sure there were some issues with how the CHIP act and what they were trying to do, but this is just gaining momentum. So I do think it largely goes on. The sense of urgency that I'm kind of hoping for probably requires a midterm win, but maybe.

Chris Perkins (45:23)

Not. I mean I'll go back to like almost like the Bill Clinton thing. If it's the economy, stupid. In this case it's affordability. Stupid. Right. Like if you look at I know people are going to get confused by this comparison, but Zoran Mamdani and Trump are actually very similar. Similar in some ways in that they laser focused on an issue that was important to people and started hammering on it. And I'm not endorsing the policies, but I am talking about the media approach and what they tapped into, which is to say affordability is going to become a bigger issue. So I think there is overlap between many People in the Democratic Party and the pro sec elements of the Republican Party on that exact issue for related but not identical reasons. And hopefully that stops being like a partisan point of contention because, like, good example, we need rare earth minerals to build enough electronic devices so that we can build enough houses and cars that people have places to live and things to drive. Like, all of this is interconnected.

Peter Cher (46:22)

Yeah. And I think electricity is going to be this. Electricity prices are going to be the single biggest election issue. Not in the midterms necessarily, though. It's already becoming that. But certainly, you know, by the next presidential election, I think, yeah, it's nice that we have cheap oil and all that, but more and more it's electrons that are driving this economy and people are seeing those prices go up, they're seeing brownouts. That to me. So, again, in my portfolio, I love anything kind of associated with electricity production. And I do think even Trump's going to give up on fighting solar. I think solar is going to be a key element of this. I would not bet on wind. I think he hates wind. And I got a bunch of questions about wind myself. I've had fewer questions about solar. I think you're going to see solar and battery become part of this. Because if we are going to build out the electricity we need for the data centers, for the AI, for crypto, it's going to require all of these things and it's going to create, you know, we need a backbone. And solar is probably the only thing we can kind of get up and scale in one to two years. You know, we can get some of the others coal. One problem is, again, through some of the ESG stuff, I think G Verona might be the only company in the world that really makes gas turbines. Like, so, yes, they can do it, but they have this massive wait list. They're trying to make more, but again, to turn the factory on, to make those or get people, it just takes time. And I think we finally see the light. And I used to joke all the time that. And it was a joke because you couldn't be too serious because people get mad at you. But the joke was always that we had this vision of sustainability and no plan on how to get there. China had no vision of sustainability whatsoever and a really good plan to own everything that we might need. And that's where we are at. And now we're finally starting to try and correct.

Austin Campbell (47:56)

That. Peter, you didn't mention nuclear. Is there a reason for.

Peter Cher (47:59)

That? Oh, no, no, sorry. Nuclear is part of that. And I think Nuclear fusions again my portfolio I like some of the SMRs, I like what we've already seen done where we're going to start trying to install small nuclear reactors potentially on army bases because we again that takes away a lot of the regulatory issues. Right. The army has pretty much free will to do what they want. I keep hearing noise, I'm not sure how to play out that some of the by the navy has certain ability to have nuclear reactors in places that couldn't be otherwise. Maybe they can use that. I think yeah, nuclear is a big part of my portfolio. I think nuclear is that that so you kind of almost need to me everything to start today. Solar starts coming online quicker. Then you get the coal, natural gas fired, things come on and then you get the nuclear coming on and in 10 years nuclear form is the backbone of our power. But you need everything, but you kind of need to start everything today. It's you know I keep saying and I think it's a Japanese saying, I hope it's a Japanese saying or else I've been embarrassing myself. But you know, it's person, you know, looks a tree and it's like, you know, when's the best time to plant a tree? A hundred years ago or today. And I think we're finally at least at the today thing, right? We can all bitch and moan what we should have done 10 years ago or 20 years ago in terms of deindustrialization but we're finally turning that corner and we will put all this to work. And I think you're going to see fusion potentially play a role. And you know I did say this on TV and I got a bit of trouble but you know, I was trying to highlight the difference. I think you mentioned, I think I mentioned that if we saw a place to build a fusion reactor and there are some species of frog that we might wipe out, we might spend years worrying about what to do. And if China saw the same thing, well, those frogs would be gone and there'd be no hesitation. I'm not sure what's necessarily better for society but if we're in competition with them, we're going to have to think more.

Chris Perkins (49:41)

Aggressively. Well, I would also say that goes back to the balancing test part of regulations because you know, like I have tons of family and health care and you see a lot of things in that space that are intended to like solve a specific discrete problem but without incorporating trade offs could actually do significantly more damage than the problem. And to me here I think what a lot of this process will drive, like, back to highly increasing electricity prices is going to enrage everybody is some people will jump on the bandwagon of when we need to make all the AI companies stop and people should stop using computers and stop washing your clothes and so on and so forth. But the reality is that's a politically losing position over time. Everybody else is going to start looking, Peter, at exactly what you said and asking, wait a minute, how do we build more energy quickly? And that's not to say just put it up anywhere and it damn the tradeoffs. But that is to say, you know, are five frogs really important? You know, as opposed to, like, not having blackouts in California? Hospitals shutting down, I think becomes a much more, like, salient question. What's interesting to me and sort of something I think people forget as they look at the United States map, a lot of the federal lands that could be, oh, I don't know, converted into military bases for these purposes are out west, which are also some of the governments Trump is fighting with. So is this going to become a political.

Peter Cher (51:02)

Flashpoint? You think we'll do a better job? Oh, sorry, go.

Rahm Aliwali (51:07)

Ahead. I'll be brief. Look, I wouldn't underestimate AI not becoming a political issue. AI is not popular. Social media is not popular. Big technology companies are not popular. The threat of job loss from that is an easy political issue. There are politicians advancing arguments along those lines. Not in my backyard is a big issue. State and local politics is a big issue. You can't build in California houses and rooftops that make any rational sense. So what's in the interest of the nation doesn't always translate, align with what's required on the ground to actually get projects executed and then the electoral makeup of.

Peter Cher (51:54)

That. And I do think over time, we might be a little bit more thoughtful on where we build some of the data centers and AI. And I think, okay, there's some low latency stuff that has to be near the populated areas or near where the fiber is. So that's going to keep. But I think some of it doesn't need to be low latency. And I could see a day where you have something that almost looks like oil rigs, right? You get shipped to wherever the energy is, and you work your data center three weeks, then you get shipped out because there's really no reason to transport the energy as far right. That's the Saudi's kind of biggest draw, right? Is they're like, energy is expensive to move across the globe, data is cheap. They want to become a data center. Capital of the world. They got the influence of Trump. Nvidia wants to sell them chips. I don't love that idea personally, but it's growing. But I think we could see a little bit more thought in the US of where low latency versus high latency, you know, things that can accept a higher latency, where they're built, where they're done. I do think you're also going to see a shift where, where's fresh waters, where's some of the things that we need? I think kind of in this build out, we kind of everything's been going south for a long time. I think you're seeing some evidence that some of these businesses are going to go back to the traditional manufacturing base as you realize that cheap electricity, just potentially their access to fresh water, those things can actually make a difference. So I think you're seeing some of that turn a little bit and you're also starting to realize, wow, it's bad that in the winter, you know, you can't build for three months. But it's just as bad in the summer when you can't build for three months because it's 110 degrees and humid. So I think we might see some demographic shifts. There's going to be opportunities, I think, in this country as we adapt to this manufacturing and where it does and which counties or states are more, you know, willing to do it. But yeah, I think there's a lot of friction over the data centers, the AI, how it's being used, where it's impacting hiring and the electricity usage. So having explanations for that, I think it's too new of a problem to be a big midterm issue. But I do see that developing into a huge issue by the next presidential.

Chris Perkins (53:53)

Election. You also just gave Detroit the roadmap to becoming the economic center of America again, if anybody was.

Peter Cher (53:59)

Listening, there we.

Chris Perkins (54:02)

Go. So, all right, final question and then I think we're going to run out of time for today. What does this mean for some of the other satellite states like Cuba, which we mentioned earlier? Like, as we look at this playbook and as we look at second and third order effects, we've just talked through the energy and onshore effects. But let's zoom back out from the United States again. What should other nation states, friends and foes be taking from this action and what do we think next? Dominoes, if any, to fall.

Rahm Aliwali (54:33)

Are. Do you hear Rubio refer to the Cuban leadership as senile and incompetent? I think that was an accurate statement. It's True. First of all, it's.

Chris Perkins (54:42)

True. Yeah. He may just be trolling, because that's.

Rahm Aliwali (54:46)

Not. Let's add one other premise to this. It would be politically popular in the swing state of.

Austin Campbell (54:53)

Florida. Yeah, look, I, I think there's a. There's a battle that that's being waged between the left and the right. You know, like we talked about. Argentina looks like it's doing. Things are going pretty well right now from an economic perspective. Chile's now turned right. Colombia is left. And so I think there's a lot of noise coming, you know, via Colombia very shortly if that's not sorted. Obviously, a lot of drug. A lot of illegal drugs coming in, illicit drugs coming from that place, Mexico we talked about earlier. And then, like Cuba, if we're going to make America great again, there was a time when there were a lot of casinos down there. So let's see what.

Rahm Aliwali (55:32)

Happens. There was also a Bay of.

Austin Campbell (55:34)

Pigs. There was also a Bay of.

Chris Perkins (55:36)

Pigs. How.

Peter Cher (55:38)

Many. The US has had some trouble in terms of regime change and accomplishing what they want. And I think at the flip side of this is everything we're talking about, I think, has been very pro US and what US Is looking to do. At the same time, I think every country is talking to other countries, trying to figure out, okay, if the US Is going to behave differently and our assumption of the US has changed. How should we behave differently? What do we need to do around that? Obviously, everyone's going to still want to do some business with the US And China continues to obviously talk to countries. And listen, I think when you go across the globe, everyone's got a degree of frustration with China, but I think the US Frustration is much higher because the US Is the only one that's kind of losing something. Like the US Was sole superpower, now we're competing for sole superpower. I am Canadian, so I guess we'll say we fairly loosely there, but I think other countries don't quite see it that way. Okay, well, now there was one superpower, now there's two superpowers. And who do we trust more? Who do we want to deal with? And I think the US has, again, a lot of what we've accomplished, or Trump has accomplished, I think makes sense how he's done about it, has turned some heads. So I think there's a clear path of what the US Is trying to do. I think countries are trying to adapt to that, but they're also trying to figure out, okay, if the US Is not dependable, if we don't understand where the US is going. I think that's probably my biggest concern to some degree is I think there were things that 20 years ago were inviolate that they sat above whoever was president and they were going to be the same election to election and maybe there'd be some tiny shifts, but people knew where the US stood 20 years going forward and now it feels like everything's becoming more and more open to this four year cycle where we've done so much. You know this goes back to I think Carter and Obama. You know, there's been an exponential growth in executive orders right there. There's been this ship and I think countries are now finally just realizing maybe we have to think much more about this. And again, I think you just looked at what happened with Hamas, Israel, right. All of a sudden Biden would say one thing if he was in Detroit, say something else. Wherever they were, right. It was all about trying to get reelected. I think that's something that the US is going to have to figure out how to address. And unfortunately right now social media and things actually mainstream media is the worst. I think financial media is actually the best because financial media is trying to help decision makers make decisions. And I can tell you when we were getting in some hate mail early on during Liberation Day trying to explain this, our CEO tried to figure out what do we write, what do we say. We figured our audience is decision makers at a corporate level and investment level. They want our opinion. Here's why we think this will happen and here's what it think it means if it happens. And I think financial media does a much better job because it's not just clicks, it's about helping people make good decisions. And I would include shows like this in financial media whereas anything that's just pure clickbait and trying to. All it does is destroy and make it very difficult to come to decisions. So I think people have to pay attention to financial media for all their news because that's where you're getting, I think, a better mix of unvarnished.

Austin Campbell (58:37)

Truth. Yeah. Hey Ram, you mentioned the Bay of Pigs. This Maduro raid is the anti bay. I.

Chris Perkins (58:43)

Agree. No, I.

Austin Campbell (58:43)

Agree. I mean it shows how incredible the incredible capabilities and power projection we have pulled away from the pack and everyone's taking notice of that right now. And so I think that's going to have a very strong stabilizing force that's going to be very, very positive. For Mars.

Rahm Aliwali (59:02)

Markets. Yeah, for the, for the background. Bay of Pigs was a botched invasion of Cuba, primarily With amphibious forces left under jfk. It was a major failure and a major embarrassment. And you're right, this is the opposite of that. This is air power, this is combined force operations. This is intelligence. This satellite is, it's. Yeah, the US is, is playing the game at a different.

Chris Perkins (59:26)

Level. I, I would suggest, and I guess we can close on this note to put a like sort of capstone on what Chris was saying. These may be the first like real engagements, you know, over the past yearish between this and Iran of what modern, modern warfare is going to look like where we've moved away from boots on the ground, everybody line up and shoot at each other in World War I to like maneuver warfare in World War II, but still with large formations of like humans and tanks rolling around to now, even if you look at the front line in Ukraine and Russia, that's being dominated by drone warfare and counter drone warfare tactics right now on the ground. And now we've moved just straight to like zip in, zip out, very like intelligence, like you know, a computational power driven operation. So it, this is unleashing like new forces. And I agree the US is leading for now, but as Chris said, things can also change quickly. So. And as we stated at the start, none of that was investment advice. But thank you very much for joining us for this episode of Bits and Bips. We'll be back in one week to discuss more about how the worlds of crypto and macro are colliding. Until then, everyone, and also Peter in particular, thank you very much for joining us. We really appreciate the thoughts.