Transcripts

Erik:    Joining me now is Vincent Deluard, who heads up Macro Strategy for Stone X. Vincent, I can't believe it's been four years since we had you on the show, it's great to have you back. listeners. Vincent has shared with us some really excellent research. It's the stuff you normally have to pay for. It's linked in your Research Roundup email. We're going to talk about three separate Stone X Intelligence Reports. Vincent, let's just start with the big picture of, you made the call, as did several of our other favorite guests, our mutual friend Louis Gave called the secular inflation several years ago, as you did. Everybody else was saying it's transitory, it's just going to be short term pandemic effects. You were the guy to say, no, the pandemic is the catalyst that's going to bring about a secular inflation. Seems like you and Louis and number of other smart people are being proven right. Let's just get the big picture update. What's happening with inflation, or do you still have that view that this is the beginning of a secular inflation? Because, look, we're just having what seems like the end of a wave. A lot of people are saying it's ending.

Vincent:   Yes, thank you. It's a pleasure to be back here, and thank you for the introduction. The secular call would not be a secular call if we were to change it, just because one measure of inflation, and I'll stress that the CPI is a measure of inflation with certain biases, certain choices, but it's not inflation itself, has come down to levels that are still far above what we had before. So yes, inflation is a process, not an event, and it typically occurs in waves. So seeing some cyclicality in inflation, like that little signing pattern that we are seeing is actually what you would expect. And that's what you see in the past. If you think about the 70s, you had these three ascending waves, right? 1971, 1973, 1979. If you think about the 50s, you had one on the US mobilized. Another one during the war, and then another one after the Korean War. I've actually went all the way back, using Bank of England data, back to the Middle Ages, to test this hypothesis that inflation indeed is a wave like pattern. So the notion that would have a kind of one and done is very, I wouldn't say unprecedented, because I haven't data on all countries. I could say it would be certainly the minority to see a single wave, and then we just go back to the old world. One thing I wanted to rebound upon is also, when you mentioned COVID was a trigger, I think that was, that's factually correct, but I think it's the response from COVID that was the trigger. COVID itself was neither inflationary nor deflationary. I mean, events are somewhat neutral. You could have made a case that COVID was going to be deflationary, if we had not responded to it, if we just had basically, dramatically cut out consumption of commodities. Oil prices were negative. It could have been deflationary. And actually, it was in China when we had completely different response. COVID was deflationary shock. What was inflationary after COVID was the response, the fact that we blew up the deficit. I mean, the deficit increased more than it did during World War II, after COVID. And contrary to World War II, we did not normalize after that. This is a balanced inflationary, this is the policy function, the reaction from the Fed, from the fiscal authorities. This is what creates inflation, and this is what makes me think that is going to come back, not because of some external shock. I obviously cannot predict shock. You know, in 1979 it was the Iranian revolution that triggered it. 1973 was the OPEC gold embargo. There is going to be another shock, and the response to that shock will be inflationary.

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Erik:    Joining me now is best-selling author and former US presidential advisor, Dr. Pippa Malmgren. Pippa, let's start by informing our listeners we are recording very early on Wednesday morning, just a few hours before former President Trump was reported to have basically won the presidential election in a massive red sweep, with Republicans taking control of the White House and the Senate. The House of Representatives still looks like a little bit early to call decisively, but it appears there's a good chance that Republicans will take both chambers of Congress and the White House. So, the big question is, okay, does that actually mean that this race is over? Or is this just the beginning and we're headed for a mountain of lawfare and so forth? Give us the roadmap of what lays ahead. Do we have to worry about unfaithful electors and refusals to certify results and so forth? Or is this a done deal?

Pippa: So, it's hard to see the lawfare happening given the breadth of this vote return. I mean, this is a sweep by any measure. Now, the media is not going to call it a landslide, but it sort of is a landslide, so that makes it much harder to fight this thing. So, we might get pockets of that, but I don't think that we're going to get what would have happened if the vote had been a lot tighter. And this is the important point. I think, you know, I was up all night, I woke up this morning, early to do this call with you. I think this is much bigger than politics. This is a cultural moment. This is a transformation in our understanding of the whole power structure of the country. So, for example, it is also that the media just got thrown out of office, in the sense that the media did not report this groundswell. The media across the board basically said that Trump was a bad guy, and the policies were all wrong, and refused to report the most important person, I think, in this whole election, which is Bobby Kennedy, who has played an extraordinary part in producing the outcome that we've just seen, but he was completely silenced and dismissed. And so, I think, for example, we got to dig into this, this is why Jeff Bezos at the Washington Post announced that they're not going to endorse a candidate. It wasn't just about that. It was knowing that the minute they announced that, a whole bunch of the staff members would be very upset and they would resign, which is exactly what happened. So now he doesn't have to fire them. And why would he want to fire them? Because, look, he's a tech bro, so he's got access to all the data. He sees this coming as do all the tech bros, and that is partly why they joined with Trump. And he realizes I don't have the team at the Washington Post that can report what's going to happen, because they're so heavily biased against this group of people, they literally won't be able to write the story. So how do you clean out the newsroom to make space for people who can? If you fire them, you got to pay them. If they resign, you don't have to pay anybody. And so, I think Bezos is already telling us the media was wrong footed about this. So that's just one element of the sort of culture aspect of what we're talking about. So, I don't think this is just a political result. This is something much more profound. Does that make sense?

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Erik:      Joining me now is 42 Macro founder, Darius Dale. Darius, as always, has prepared a fantastic slide deck to accompany this interview. It is the full slide deck which is normally sent out to Darius’ paying subscribers. Accordingly, we do need to redact some of those pages, otherwise those paying subscribers would throw a fit. So, you'll notice that only the slides that we discuss in this interview will be visible in the slide deck that you can download. If you want the whole deck, you'll have to follow up with Darius at 42macro.com. Darius, great to have you back on the show. Obviously, first topic’s got to be, we're recording on Tuesday, seven days before election day in the United States. What should we think about that as investors?

Darius:   Appreciate you having me, Erik, thanks again for thanks for the opportunity, my friend. So obviously, the markets are starting to run away. The probability of a Republican controlled government, as you see here on slide 85 of our latest Macro Scouting Report, we show the Polymarket odds. Now, we all know the Polymarket is manipulated by a few whales, but those whales are choosing to manipulate the market in favor of Donald Trump and a Republican sweep. So Republican sweep for a reason, likely for data driven reasons based on polling, based on early voting results. And so, it's really clear, and from our perspective, that the asset markets both factor leadership within the stock market and also the broader rates and currencies markets are really moving in the direction of the implications of Donald Trump's policies.

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Erik:    Joining me now is Santiago Capital founder, Brent Johnson. Brent prepared a slide deck to accompany today's interview. Registered users will find the download link in your Research Roundup email. If you don't have a Research Roundup email, just go to our home page macrovoices.com, click the red button above Brent's picture that says, looking for the downloads. Brent, it's great to get you back on the show. Something you and I have been talking about for years is the long-term plight of the US dollar, and particularly, whether or not any realistic threat is posed to it by the alliance of nations known as the BRICS: Brazil, Russia, India, China. I Think it originally was South America there, but there's been quite a few kind of BRICS+ that have been added to that other countries joining that kind of anti-US dollar bloc. It was laughed off in the finance community when it first began. How's that headed? What's that story look like? Is it something that we need to worry about?

Brent: Well, it's something that I've always followed, and I've always found interesting. But I am probably, to be fair, one of the people that have somewhat laughed not at the BRICS themselves, but at the people who think that just because the BRICS countries get together once a year, throw a big party and talk about doing a lot of things, that that automatically means that the dollar is done, and the days of American hegemony are over. One of the things I like to point out is that, for everybody that thinks that the BRICS are going to launch this currency in some kind of a basket of their currencies, maybe add some gold or oil to it, you can do that right now. Go buy all five of their currencies, buy some gold, buy some oil, and you've got the BRICS basket. The problem with that, while gold has done phenomenally well, oil has kind of gone sideways for several years, and the BRICS currencies have all fallen 50% or more versus the US dollar, with the exception of the yuan, which has only fallen a little bit, and that's because it's a pegged currency. So, I think people get a little overzealous in the rise of the BRICS, mainly because I think many people want to see the fall of the American empire. It's definitely an area that needs to be taken seriously and looked at. But just because there's a headline that says they are thinking about doing something, doesn't automatically mean they're going to be able to successfully do it.

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Erik:    Joining me now is Dr Anas Alhajji, former chief economist for NGP energy management and founder of Energy Outlook Advisors. Anas, it's great to get you back on the show. I want to start by crediting you. When we first spoke just after October 7 last year, just after the Gaza attacks, I was convinced that we were about to see a huge blowout to the upside in oil prices. And you very correctly and presciently corrected me and said, look, it's not 1973, it's a different situation, in that situation, which is what everybody was drawing analogs to at the time. You had all of the other Arab states wanting to get behind Iran. This is a situation which is opposite. You nailed that call. I didn't listen to your advice. Lost money on the trade by not heeding the master. So, I won't repeat that mistake. It's a year later. Give us the update. How should we be thinking about the Middle East, where it could be headed from here and what it will mean for energy markets.

Anas:  We had a situation in recent weeks, basically, where we had a rumor that Israel was going to retaliate for the Iranian attack by attacking its oil facilities, and prices started going up. And then at the end of last week, someone asked President Biden about the situation and whether Israel will attack the oil facilities of Iran, and President Biden basically made the statement, kind of a strange statement, he said, we are discussing it. The market, and many analysts understood it as it's a green light from the United States, and probably the United States will even participate in an attack on Iran. Our view from that, when I say our I'm talking about me and my colleagues at Energy Outlook Advisors, we thought that the market misunderstood what President Biden said. He meant we are discussing it. It means that we are trying to tell the Israelis not to do it. So, we've seen prices going up to $80, then we have the anniversary of the October 7 on Monday. And everyone was expecting something to happen, but prices went up, and then they went down by 5% on Tuesday. Went down a little yesterday, and now they are going up by about 3%. What happened is, why we have this rise on Monday and this rise again, etc., that someone asked Kamala Harris about Netanyahu, whether he is an ally or not, and Harris basically tried to avoid the question. That gives the impression to the market that Netanyahu is a leech and the United States has little influence over him, and therefore he can do whatever he wants, and therefore the Iranian oil facilities are still under threat, no matter what. The other issue we have, basically, the hurricane, just the news of the hurricane, basically kind of make traders on the edge. We have some companies that withdrew workers from certain platforms in the Gulf of Mexico. And then we have, of course, no gasoline in many counties in Florida right now. We have major chaos, etc. So, all of these combined led to the increase in oil prices today.

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