June 18, 2025 • 45 mins
The huge political and economic shifts taking place amid US President Donald Trump's global trade war, turmoil in the Middle East and the ongoing Russia-Ukraine conflict is putting geopolitical risk front and center of investment decisions. JPMorgan, for instance, has just launched a Center for Geopolitics, as companies become more reluctant to simply rely on business models and financial experience.
Marko Papic, chief strategist at BCA Research, an independent research group founded in 1949, joins John Lee and Katia Dmitrieva to give his take on the consequences of such significant global changes and how investors can best navigate these turbulent and uncertain times.
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Episode Transcript
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Speaker 1 (00:00):
Geopolitics has increasingly made its way from academic and government
circles to boardrooms and investor portfolios. Advisors and economists have
always had to factor in political risk to some extent,
but the past decade of trade disruptions, conflict, and a
COVID pandemic have prompted a lot more attention to this area.
Speaker 2 (00:22):
JP Morgan recently launched its Geopolitical Unit, and CEO Jamie
Diamond issued a warning that geopolitical risks are currently the
most important to watch, and we're seeing that play out
in real time with President Trump's trade war fracturing global
commerce along strategic lines.
Speaker 1 (00:42):
You're listening to Asia Centric from Bloomberg Intelligence and Kadidum
Treva in Hong.
Speaker 2 (00:47):
Kong, and I'm John Lee also in Hong Kong, and today.
Speaker 1 (00:50):
We're talking geopolitics for investors, the emerging world order, the
biggest risks ahead, and perhaps areas of opportunity. Helping us
to unpack all of this is Marco Pappitch. She's Strategistic
BCA Research. It's an independent research firm. He's also author
of Geopolitical Alpha, so the perfect person to kind of
(01:12):
walk us through all this.
Speaker 3 (01:12):
Welcome Marco It's such a pleasure to be here with you, Katya,
and also John. John and I were colleagues before, and
so it's nice to be on the same podcast with
you as well.
Speaker 2 (01:23):
Marca, it's great to.
Speaker 1 (01:24):
See you again reunited. Shortly after recording this episode, Israel
launch strikes on Iran. Iran retaliated, and the two countries
have been exchanging missiles ever since. President Trump has found
the flames, calling on Iran's unconditional surrender and threatening the
(01:44):
country's leader. It seems things are only escalating. There's a
human tragedy here with civilian casualties and the risk that
this conflict widens. And for investors trying to navigate this landscape,
uncertainty just waste a whole lot. More So, I called
Marco again to get his thoughts. Marco, how should investors
(02:07):
be navigating this? One would assume you know long oil,
But how are you thinking about this?
Speaker 3 (02:12):
Yeah? I think that oil prices did not really have
any premium regarding this situation. And the risk now, of course,
is that Iran retaliates in a way that's relevant to
global supply of oil. Now that that's going to have
to be more than just Iranian supply being taken offline,
either by Israel or by the US, or by Iran itself.
(02:36):
It really requires Iran to cross the rubicon of retaliation
and try to interdict oil transitting through the Straits of
Hormuz or directly attacking energy facilities in Saudi Arabia, Ua
and elsewhere. So really the catalyst for a significant increase
in oil prices from here has to be Iran itself
(02:59):
deciding to retaliate outside of the tunnel of what has
effectively been acceptable retaliation from the perspective of the market,
which is retaliating against Israel.
Speaker 1 (03:11):
Can you walk through some of the potential outcomes here
and what you think as an analyst is most likely
to happen.
Speaker 3 (03:18):
So there's a couple of scenarios that can happen. One
is let's say the current trajectory continues, Israel and Iran
attack each other. Eventually Israel declared's victory, declares its operation over.
Remember Benjamin Atnaku did say that this was going to
last about two weeks and that the purpose of this
is to degrade Iran's nuclear program sufficiently set it back
(03:41):
by a lot. That's successful. I mean it's being accomplished.
Even if a FOURDO facility is not completely destroyed, there's
other ways to imperil to the centrifuges inside of it,
And of course other components of the nuclear program, including
its human capital in terms of scientists, have already been impacted.
So that's one in which case, you know, oil prices
(04:01):
are not really going to go up much more, and
you know, obviously this becomes kind of a geopolitical nothing burger.
The second is that US does get involved, particularly by
attacking Foordo. At that point, Iranian leadership has to make
a decision do they start attacking global supply of oil
or would they simply retaliate against the American military basis,
(04:24):
which carries with its other risks as well, but I
think less so than going all the way. And then
finally there's that third scenario in which Iran goes all
the way, responds either to American attack against Florida or
some sort of a wider American campaign against energy facilities,
nuclear facilities in Iran, and tries to interdict the straits
of Remus. What are the probabilities of all of these?
(04:47):
I think the last one, where Iran attacks straits of Rumus.
I think the probability of that is somewhere around twenty percent. Now,
why so low? You know, why so low when the
regime seems so backed up against the wall. Were two reasons.
First of all, we have forty six years of empirical
data for forty six years during which Islamic Republic of
(05:08):
Iran existed. They've only really attempted to ever so slightly
interdict shipping through the Straits of Romus once, and that
was by mining the straits very tentatively. One of the
mines ended up hitting an American naval vessel in nineteen
eighty eight, and this led to the Operation Praying Mantis,
where the United States of America absolutely decimated Iran's navy
(05:31):
and attack their energy facilities in karg Island. So, in
other words, the reason Iran has never done this other
than that one time is because it's such a one
or a zero. It's such an asymmetric tool. Once you
do it, you invite overwhelming American response against you, and
that's very dangerous for Iran because there's no really way
(05:54):
for them to defend themselves against the US. So what
this means for investors is that it's very dangerous to
go against the current momentum. I think oil prices have
more room to rise from here, but ultimately it's a
temporary rise because Iran cannot permanently close the straits for
moose and once they pull that card, once they pull
their card, they'll invite retaliation from the US with such
(06:16):
an overwhelming force that they would not be able to
close the straits for a prolonged period of time, in
which case any move in all prices. Almost the higher
the AILL prices go, the shorter they can stay up
there because Iran loses its capacity to really affect anything.
Their military will be degraded massively.
Speaker 1 (06:36):
I'm just pulling up where oil prices are right those.
Speaker 3 (06:41):
Second seventy five I think Brent.
Speaker 1 (06:43):
Yeah, seventy five. So we see Brent at seventy five
today Wednesday morning. Where could we go from here?
Speaker 3 (06:51):
Well, I think that we can easily be at eighty,
very easily. We could be at eighty dollars, eighty five
dollars sort of. From here to eighty five dollars, you
don't need something straordinary to happen. But for us to
go over one hundred dollars, I think it will require
Iran to clearly start attacking outside of Israel, outside of
(07:11):
US military bases. For oil to get to one hundred
dollars and above, you would have to have Iran start
attacking shipping in the Straits of Muz, interdicting shipping, perhaps
attacking Saudi oil facilities. Again, there's a reason they haven't
done that since well, really nineteen eighty eight, but even
then it was very tentative. There's a reason that the Hutis,
(07:34):
who are aligned with Iran, have not attacked Saudi Arabia
over the past two years. Since October seventh attack on Israel,
Houtis have been very active in the Red Sea, but
they have not sent any of their drones north because
Iran and Saudi Arabia also have a detent that's worked
really well for both of them. So a lot would
have to change. And of course, at this point, you know,
(07:57):
most investors are commentators simply say, well, Mark, there's a
lot going on. I mean, like there's regime change in Iran,
to which I would say, there's really only one case
I can think of of regime change from the air.
You know, you can't land in F sixteen in Iran
and impose regime change. That's not going to happen. Israel
is not going to cause regime change in Iran. The
(08:20):
only time that air strikes caused a regime change was
actually in my home country of Serbia. Nineteen ninety nine.
NATO attacks Serbia for three months. Eighteen months later there
were protests on the streets and Slovana Milosho, which was overthrown.
You could argue that that was connected to the air campaign,
but it's very difficult to create regime change when there
(08:42):
is no revolutionary group on the ground that you're actually helping,
and when the regime is very very comfortable shooting people
in the streets. You know, I don't think that the
Iranian regime feels as backed up against the wall as
perhaps some commentators have, which would prompt them to say, okay, well,
(09:02):
then in this case, let's pull out the nuclear option
and I excuse upun Obviously it's not a very good one,
but for Iran it is the nuclear card. If they
end up choosing to interdict shipping through the straits or removes,
it will be as if they were attacked by nuclear weapons.
Because the a S symmetry between Iranian and American military capabilities.
(09:26):
The golf is huge, and we know this now because
we've seen how far behind Israel they are. Their order
of magnitude even more behind the US because one thing
Israel doesn't have is strategic strike capacity. They're attacking Iran
with fighter jets. The US has strategic strike which means
that they can deliver a lot more payload per flight
(09:47):
in the US case.
Speaker 1 (09:50):
Marco, is there anything else we should be thinking about here?
Speaker 3 (09:54):
Well? I think a couple of things. One, how much
munition does Israel have to keep the conflict going? We
know how much munition Iran has. He has somewhere between
two thousand and three thousand ballistic missiles. It's probably down
a quarter or a fifth of that supply, So maybe
Iran has enough ballistic missiles for another five to ten days.
(10:16):
But how many ground attack missiles does Israel have? Because
you have to understand, Israel does not prepare itself to
affect regime change in a country of ninety one million
people's that's not what Israeli Air Force is designed to do.
And so when Prime Minister Natanyahu said that this operation
would last two weeks, I don't think he just pulled
(10:37):
that number of thin air. I think that he based
it on the ability of Israel to you know, continue
the operations based on their munitions, and so I do
think at some point the United States of America will
have a pretty significant lever where they can direct where
this goes by basically telling Israel, look, this is sufficient.
So that's the first thing I would say. The second
(10:58):
thing that I would say is just a big picture
takeaway from this is you know, where's Russia, where's China. Yeah,
we've now listened for two and a half years about
this sort of fear mongering that the West is behind,
that the West is critically low on munitions, that Javelin
supply has run out. What we found out over the
(11:19):
last five days is that basically Russian surface to our missiles,
the S three hundreds are trash, not very effective. And
that was like the big thing that Iran had, it
had the sophisticated Russian surface to our missile system that
apparently is trash. And then the second thing we found
out is that China really like, there is no China block,
(11:42):
There is no part of the world that's allied with China,
because you know, China is supporting Russia. The way that
India is supporting Russia. They're buying oil. They haven't supplied
Russia with military. Anybody who says differently is just not
saying the truth. China supporting Russia with electronics. If you
(12:03):
open up a Russian drone, you'll find a lot of
Chinese components in it. But if you open up a
Ukrainian drone, you will find a lot of Chinese components
in it. So this is nonsense. And finally, here's Iran,
which is supposedly in some sort of a Chinese sphere
of influence, and there's absolutely no help coming from China.
And so that brings up the question, you know, is
the world really descending into a Cold War? Is this
(12:27):
really a bipolar world when this supposed access between China, Iran,
and Russia is you know, it doesn't really come close
to any of the other axes that we've seen over
the past one hundred years.
Speaker 1 (12:40):
Yeah, it's a good point, and it lends itself to
this idea of entering multipolarity as opposed to going back
to the Cold War era exactly.
Speaker 3 (12:48):
In fact, you could argue that China in the US
are on some level even aligned in this particular situation
in fact, if Iran were to cross that redline that
I'm saying is, you know, kind of their nuclear option,
which would be to interdict shipping. The country that they
would be hurting, perhaps the most is actually China, because
(13:12):
China sources its energy from the Middle East, which then
begs a very interesting question. You know, it's a geopolitical paradox.
American taxpayers in American Navy are protecting China's access to
critical natural resources in the Prussian Gulf, and so in
a way, by being very firm against Iran and by
(13:34):
warning Iran not to strike shipping in the Straits or Fromoos,
the United States is protecting China, and so I'm not
you know, it's a very strange situation where the two
superpowers that are apparently, you know, sort of dividing the
world into two on some issues, including important ones, are
quite aligned.
Speaker 1 (13:55):
Yeah, there's like e ven diagram and we're kind of
in the middle right now.
Speaker 3 (13:58):
Yes, that's a great way to put it.
Speaker 2 (14:01):
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(14:24):
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Speaker 1 (14:28):
Now back to the recorded episode, Marco, we've been hearing
a lot of our geopolitics japing Morgan open this arm.
Bloomberg has a geoeconomics unit as well. I guess, just
for listeners, if we can take a bit of a
step back, how is this analysis unique or different from
perhaps what an investment advisor or an economist would normally
(14:50):
do because they also look at current events and politics.
Speaker 3 (14:54):
Well, yes, buddy, look at them as exogenous factors. I
think that's the difference. If you're an economist, you believe
that economics is going to help you predict inflation and growth,
and then with those two variables, for the most part,
you can determine act allocation on a pretty wide variety
of time horizons. Somebody who is focused on geopolitics in
(15:16):
the markets believes that geopolitics is not exogenous. In fact,
it in many ways underpins the very growth in inflation forecasts,
and in fact, you cannot just use economics, which first
and foremost is not a science. It's not a natural science,
it's not physics. It is a social science as much
as any other social science. It's just a little bit
(15:38):
more quantitative, and so effectively, you take politics in geopolitics
seriously as inputs, not as surprises that upend your model.
Speaker 1 (15:51):
So they're not external risks, they're kind of the core
of what you're looking at. So how would the outcome,
I guess be different, Like, is there an example of
that where an economist might look at things like GDP
CPI and say, oh, while the external factor is perhaps
trade frictions versus what something like, what you would do?
Speaker 3 (16:10):
I think the pandemic is probably the easiest way for
me to explain the difference. You know, economists have been dumbfounded,
confounded by the resiliency of both acid prices, the stock market,
the rally, but also of the economy, and anyone who
takes politics seriously is not because we effectively swung the
political zeitgeist, swung away from prudence, from orthodoxy, from what
(16:36):
we have dubbed the Washington consensus. We swung very hard
to something else. And that happened pre pandemic. By the way,
that happened before the pandemic. Austerity led to secular stignation.
Secular stignation low growth and low inflation was not an
economic phenomenon. It was a political phenomenon because household balance
(16:57):
sheet repair was made more difficult bi austerity that prolonged
the pain that led to anti establishment political outcomes such
as Brexit and Donald Trump. And then what happened was
that fiscal policy became a lot more pro cyclical. And
we got the first taste of that in twenty seventeen
with the unfunded tax cut, and then the pandemic hit,
(17:19):
and then really the wheels came off, and the fiscal
policy that occurred in twenty twenty twenty twenty one was
meaningfully different from every other fiscal policy that we've had,
really maybe in history. And so a lot of the
Microsoft Excel models were basically telling you that there was
going to be a pendulum swing the other way with
fyscal thrust becoming negative. But actually that never happened because
(17:42):
that fiscal policy remained on the balance sheet of households,
It remained in the multiples of various companies and it
suppressed savings trade due to psychological sociological effect and ultimately
led to where we are today, higher nominalo GDP growth,
higher inflation, also less precautionary spending, more yolo ing, and
(18:04):
so on and so on. So that's I think the
best thing is now, Marco.
Speaker 2 (18:07):
The traditional approach by investors when they look at geopolitical
risk has been to bring in like an ex politician,
an ex government official, to try to get some you know,
inside scoop on what's happening with geopolitics. But you take
a quite a different approach. You take a constraints based mythology.
Could you go through that with us?
Speaker 3 (18:28):
Well, I have a lot of respect for Jamie Diamond.
You know, he's the CEO of course of JP Morgan,
and he's, you know, all power to him. However, I
think that the new unit that they're setting up over
there does not actually add much to analysis, you know,
just create well yeah, I mean creating an exogenous unit
(18:49):
like an Institute of Geopolitics is just going to produce
some glossy PDFs that we're all going to read with
really fancy diagrams. Doesn't mean that JP Morgan as a
financial institution as an investor, institution is going to adopt
geopolitics at the very core. And this is why John,
I focus on a framework that doesn't require you to
(19:09):
wheel in a past expiration date policy maker into your boardroom.
You know, this is very, very critical because geopolitics and
politics is too important to be outsourced. You're basically outsourcing
your fiduciary duty. It's your job to analyze politics in geopolitics.
It's not somebody else's job because they don't know your portfolio,
(19:32):
they don't know where you're exposed, they don't have time
in that one hour they're going to spend with you
to do this, and so you need to learn how
to analyze it yourself. And so yes, I generally dismiss
the usefulness of politicians, ex policy makers, ex members of
the state department or whatever. You would not hire an
ex CEO of a telco company to analyze telcos. You
(19:57):
would train an analyst on how to analyze telcos, just
like you wouldn't really take a quarterly CEO, you know,
presentation seriously. I mean they're going to be selling their book. Obviously. Similarly,
we don't sit around and like take what policy makers
say as given. I think that there's value, there's value
(20:17):
in expanding our horizons listening to a lot of different viewpoints.
But notice that most of the hiring at these institutions.
When financial institutions decide to create a little pet project
of a like institute for geopolitics, notice that the hirings
are almost exclusively out of the Western realm. So how
is that going to help you analyze China? Why don't
(20:40):
you have ex Chinese premiers or vice premiers as members
of these institutions. Why don't you have a former prime
minister of a mid level power like Indonesia or Malaysia.
In India, it's almost exclusively former politicians in the West.
And I think that's not helpful at all.
Speaker 1 (20:57):
So you're basically saying that these kinds of analyzes should
really be made at the core of a bank or
financial firm, like it needs to be integrated into all
of the investment or economic kind of research functions.
Speaker 3 (21:18):
So Katcha, I think you've nailed it. I mean, you
asked at the beginning, what is the difference between my
approach and that of everybody else, like economists or people
who are much more focused on traditional tools and I
would say that my approach is the one that investors
have used throughout human history. Everybody else is using an
anomaly that's only worked for the last forty years. In
(21:41):
other words, most investors throughout history have incorporated geopolitics and
politics at the very beginning of their assembly line. It's
only after the nineteen eighties where two things happened. One
Cold War started to freight, Soviet unions started to lose.
I mean that was what gorbe which have effectively said like, look,
(22:01):
we give up. And then also les I fair capitalism one.
The Margaret Thatcher and the Ronald Reagan revolution gave us
this kind of like les a fair view of the world.
And those were two things that combined together on domestic
political front and geopolitical front to make us believe that
to be a professional investor, you don't have to know
(22:22):
what the Senate does in America. That you don't have
to know why Romania wants to be in NATO, that
you don't have to know the geopolitical significance of Malaysia.
You know, you can just be ignorant of these things
that you can be a professional investor. You just get
your CFA, maybe you go back and get your MBA.
You're good. Don't worry about any of this other stuff
(22:44):
that's nonsense, you know. And so that's the difference. Like
the fundamental difference is that if you actually look at history,
most astute observers of markets were actually quite geopolitical, you know.
I mean, I think about, for example, people like George
Soros when he broke the Bank of England. Guess what
(23:04):
he didn't do. He didn't waste money trying to break
other central banks in Europe because he knew that the
Bundesbank would support these other banks but would not shell
out to cash for the British pound, because hey, that's
up to the Brits. The Rothschilds now Ferguson, of course,
one of the prost pre eminent historians we have today.
(23:26):
His PhD dissertation was about how Rothschilds became the family
that they are, and it had to do with their
correct read of Napoleonic warfare and when to basically lend
borrow based off of that conflict. So geopolitics and politics
has always been part of our arsenal. We just have
stopped using it, and I think it's time for us
(23:48):
to take it seriously again, not outsource it to retired
policymakers or policymakers who have to be in the private
sector for four years because they lost an election.
Speaker 2 (23:58):
So Marco, how is your approach, hoped you in navigating
US tariffs and in particular deciding whether Trump will implement
his tariffs or not.
Speaker 3 (24:07):
Well, first of all, what is the framework, right John?
I mean just to you mentioned it, you hinted at
it material constraints. I mean, very quickly, I couldn't care
less what politicians say. I couldn't care less what they
believe in or what they want.
Speaker 1 (24:19):
So like the constant stream of truth social posts.
Speaker 3 (24:23):
Yes, the cost is stream of through social posts. But
also this is important because a lot of consultants in
the political risk space will sell you their access to policymakers. Yeah,
you know, go look at my rollodex. You should wheel
me into your boardroom because you know, I know these people,
and the truth is that can sometimes be useful. But
you don't have a lot of time. You know. Look,
(24:43):
if I had all the time in the world and
all the resources in the world, I would be the CIA,
and then I would tap your phones and I would
know exactly what you're going to do. But because most
investors don't have those resources, I would say none of
us have that. We need a shortcut. And so what
is the shortcut? The shortcut is a framework that I've
developed over many, many years, and it harkens back to
(25:04):
like pure geopolitical analysis that I learned in political risk industry.
So it's not just like I invented it like sitting
around smelling flowers one day. It has to do with
this very quick notion that preferences of policy makers are
optional and they're subject to material constraints. This is true
in life too. You both have many preferences, but they're optional.
You can or you don't have to act on those preferences,
(25:26):
and they're bound by the material reality in which you live.
But material constraints are neither optional nor are they subject
to preferences. For example, I'm a forty three year old
father of three. I would love to dunk. You know,
I would love to dunky basketball.
Speaker 2 (25:44):
Yeah, we remember you liked VNBA.
Speaker 3 (25:46):
That is my preference. That is my preference. However, the
material constraint is that I can't wish away the fact
that I am six foot one, forty three year old
with an acl repaired NI. Those are realities, and so
it doesn't matter what your preference is, it's always the best.
That's right. How does this help me with something like Trump?
(26:06):
You just ignore the preferences and the question what does
he want? I don't care? Is the correct answer. It
is more what can he accomplish given the array of
material constraints. And one thing that I think is interesting
is we as a financial industry, we in finance, us,
all of us, you, John, you caught your knee, We're
actually more than qualified to assess using a data driven
(26:31):
approach how powerful these material constraints are. So we don't
actually need all these expulse makers to come into our
office and say like, well you know what, No, I
don't need you. I know how bond yield works and
how vicious it is as a constraint on policy maker behavior.
Speaker 1 (26:49):
Well, let's dive into some of those constraints you just
mentioned the bond yield. Are there other constraints like the
things that would be just a wall that Trump cannot
blast through? Because the thing with President Trump is that
he kind of goes past or blasts through a lot
of constraints. Right, He creates a new reality. So I
(27:10):
wonder if you can talk about some of those very
real constraints. I think last time we spoke you mentioned elections,
for example, and voters inflation. So what are some of
those elements.
Speaker 3 (27:21):
I So, one slight disagreement with Chikatia I would have
is that he always hints that he's going to blast
through them, or he does for a very temporary period
of time. President Trump is really good in making you
think that he doesn't care. Like that's his genius, right.
So April second is a great example. He's got Secretary
of Lutnik holding a plastic bulletin board that was produced
(27:43):
by Chad GPT. You know where they like taxes and penguins.
A lot of my clients email me or call me
and they're like Marco, like what constraints these guys are
putting tariffs and penguins. They don't seem to care about anything.
So he's very good at that. But in terms of
what are the constraints, I think first and foremost is
the bond market. Bond yields never responded to any of
this volatility in a way that I think they would
(28:03):
have hoped. You know, this is a Bloomberg Podcast, So
we don't really have to discuss that in depth. Everybody
understands how bond yields work. But I think an interesting
part of all of this is that in any game
theoretical confrontation between two sides, such as let's say China
US and trade or Europe US and trade, it's not
(28:24):
just about who's more powerful, it's also who has risk tolerance.
And I think that what most commentators just don't understand
is how little pain tolerance, risk tolerance American households have.
They don't want the trade war. This is definitive. You
can go to Ipsos, you can go to Reuter's, you
can go to Gallop. They're all very very clear that
(28:45):
out of all the issues that matter to voters, trade, tariffs,
globalization is the least important. They don't want President Trump
to focus on it by a wide margin. And the
second issue is that the sentiment towards trade and globalization
has massively increased positively in the US over the last
ten years, and I would argue President Trump in many
(29:07):
ways is to thank for that. And we can discuss
how so, what I'm saying here is that the biggest
constraint for President Trump is the median voter. If you're
offside of the median voter, you're going to be absolutely
crushed in elections, whether it's midterms, whether it's twenty twenty eight,
so three years from now. And I don't think he's
completely immune to this. The United States of America is
(29:28):
not a kingdom. He's not a king. He has many
stakeholders around him who have invested a lot in his presidency,
and so I think that he's bound by what the
median voter wants, and the median voter does not want
global trading system to be reshaped overnight. It doesn't mean
that President Trump's gut is in the wrong place. By
the way, I do think the US current account deficit
(29:49):
is way too large, but it's not going to be
corrected over six months through egregiously painful recession or trade policy.
He's going to basically negotiate deals.
Speaker 1 (30:02):
I want to get it over to John because I
know he wants to ask you a question about taco,
but I want to add just just a really quick
follow up. So you said it means that he'll have
to negotiate for deals. So is that the implication?
Speaker 2 (30:16):
Then?
Speaker 1 (30:16):
If if Trump faces the constraint of the median voter. Then
he'll have to come to the table and negotiate by
lateral deals, and the tariffs will likely not be as
high as Liberation Day tariffs.
Speaker 3 (30:29):
I think likely is a poor adjective. There's no chance. Really,
tariffs have no chance to be as high as Liberation Day.
But but notice how very few of us discussed that
ten percent across the board tariff. We just don't mention
it anymore. And that is kind of the genius of
President Trump. To be fair to him, He's made us,
(30:50):
the markets, corporates, CEOs swallow a ten percent across the
board tariff. So I do think that that will stay,
and then individual deals with individual countries would lower other
tariffs except sectoral ones. I think sectoral ones will stay
as well. So I think investors are probably going to
have to plan for like a twelve and a half
percent Like if I was a casino and I was
(31:10):
setting a line, you know, and you can take over
or under bets, I would say twelve and a half
percent across the board tariff, which is still in a
massive increase in tariffs for the US. But you shouldn't
think of it as some sort of a reshaping of
global order. You should think of it as President Trump
imposing taxes on American households, because he's effectively imposing a
vat on consumption, Which goes to my point that I
(31:33):
think the fiscal gravy train in the US is over
and there's a hangover phase coming. And that's one example
in which we're getting something that most investors did not expect.
Speaker 2 (31:44):
Yeah, and as Kati alluded to, I am dying to
ask you this question. Now. I love how the finance
industry comes up with these creative phrases and acronyms. The
beginning of this year was all about American exceptionalism and
why you should be overweight US financial assets. Then there
was like sell America trade when the tariffs came out. Now,
the latest creative one is the Taco trade. And for
(32:06):
those who don't know, it stands for Trump always chickens out. Now,
this is this idea that investors should buy on weakness
on the assumption that Trump will back down, and which
would lead to a rebound in asset prices. And you
saw that with China as well. What do you think
of this trade markat.
Speaker 3 (32:24):
Well, I think it's a pejorative term, you know, because
I don't think he's chickening out. He's just producing a
negotiated deal to his critics. Looks vacuous, you know, empty.
But fourteen months ago I presented that same strategy to
my clients. I just call it the seven steps of
maximum pressure. I'll shorten it for you, guys. This is
(32:46):
a thirty minute show. You know. The first step in
my seven steps is that President Trump always asks for
the moon and he wants you to pay for the
escalator to the moon. And then six later he settles
to the roof of his house and he'll bring the ladder.
So is that chickening out? Well, no, because it's marginally positive.
Speaker 2 (33:10):
He gets to go to the roof of his house
out of the negotiation tactics.
Speaker 3 (33:13):
You see, he gets to the roof of his house.
He wasn't able to get to the roof of his house.
Now he can. You know, he can sleep up there.
It's cooler, you can watch the stars at night, you
can watch the moon that you suggested you were going
to get. So I don't think it's chickening out. It's
just this is empirically backed. President Trump is not someone
driven by preferences. He's actually quite I think, unanchored by
(33:37):
his preferences. He's willing to try out based on material constraints,
what's the maximum he can get from the rest of
the world. And so that's how he's negotiated with North Korea,
That's how he negotiated USMCA, he negotiated Phase one deal,
he negotiated a rarer deal with Ukraine, the fentanyl tariffs
against Canada and Mexico, and now, yes, reciprocal tarifts do.
(34:01):
There's no surprise here. But I don't like saying chickening
out because chickening out would mean going back to day one.
And the truth is that he does get a deal
done is just only marginally positive for the US. It's
not like, you know, necessarily revolutionary.
Speaker 1 (34:18):
Speaking of the rest of the world, you have this
interesting view that we're entering a multi polar world, and
in one of your recent research notes, you mentioned that
a lot of your clients seem to think we're entering
a new phase of the world where it's going to
be bipolar. In other words, it's China and the US.
But you say that's wrong, and this kind of global
(34:40):
ordering goes back to I guess Kennith Waltz and the
Theory of International Politics, which is kind of this seminal text,
probably one of the most important texts and international relations.
But I want to ask you, why is it wrong
to think that we're entering a bipolar world? Why is
the case now that we're entering multipolar state? I saw
(35:01):
you pull a book out of your stack behind you.
Speaker 3 (35:04):
Yeah, well, I think that No. Kenth Walltz is a great,
great deep reference. Gotcha. I would say a much more
readable and more updated view would be Mursheimer John Murshcheimer.
Professor Murchscheimer is known for some of the controversies. He
has very interesting views on Ukraine and so on. But
he is actually the father of what we call offensive realism.
(35:25):
And he wrote the book The Tragedy of Great Power Politics.
And at the end of this book, you know, which
is very readable. I would definitely encourage everyone to read it.
He talks about these three different worlds that exist. There
are three different ways that power is distributed on planet.
Unipolar world is something we're very familiar with because we
(35:45):
lived in it from nineteen eighty five. I would argue
to sometimes in twenty ten and then a bipolar world.
Of course everybody remembers because that's what the Cold War was.
So here's China coming along, and so pretty much everybody
in the United States of America, but I would say
Western world broadly speaking, believes that, of course it's going
to be a bipolar world again, We're going to have
round two. But the reality is that if you actually
(36:08):
look at history, multipolarity, which is kind of a free
for all no one's in charge, is the most likely outcome.
So in Meersheimer's work, he goes back to seventeen ninety
two and he argues that basically a multipolar world was
in effect for about seventy five percent of that time,
(36:29):
and so it is sort of mathematically incorrect to assume
that the world is just going to there's like a
gravitational poll that will take us to a bipolar world.
And everybody thinks that the world we're in right now
where it's sort of not clear who's in charge or
what the two spheres are. Everybody all my clients, like
sort of sovereig wealth funds and pension funds. They keep
telling me, Marco, we need you to do an Excel
(36:51):
spreadsheet and put all the countries into two different rubrics.
Tell us how does the world split up? And I'm like,
it may not. Out of ten years in human history,
eighty out of one hundred years, the world just remained messy,
you know, and it was kind of a free for all.
So we should probably given just simple probabilistic math, expected
(37:15):
to stay like this.
Speaker 2 (37:16):
And Marco, if you put this into investing, most asset
owners are still heavily overweight US assets. So if we
move to a more of a multi polar world, we
also see this in terms of the flow. Do you
think the weighting of US will come down in things
like NSCI world.
Speaker 3 (37:35):
So now we come full circle and we made fun
of President Trump a little bit. But here is where
President Trump is actually not misaligned, and I think he
gets a lot of criticism. So why do I answer
your question by referring to the president? Because you can
think of geopolitics and macroeconomics as hardware and software. So
(37:59):
I would say that the planet Earth has bought some
new hardware. Geopolitics is hardware. It is the world we
live in, and we have abandoned the unipolar hardware. We've
installed a you motherboard. It's a multipolar one. But We're
still running an old operating system on this hardware, and
(38:20):
it's the unipolar operating system. We haven't upgraded, we haven't
downloaded and installed a new one. Why do I say that, Well,
because America has this enormous current account deficit. And this
is where President Trump talks about trade imbalanced current account imbalances. Okay,
the reason it doesn't make sense for America to be
(38:40):
a consumer of last resort is because it's no longer
America's world. Why should it, you know, when it's a
unipolar world and no country dares challenge the hegemon with
preponderance of power. Of course, you're going to let the
Chinese send whatever product they want because you're in charge.
(39:01):
And eventually China will be Wisconsin, which is kind of
what everybody thought in the nineteen nineties. But the challenge
is that once the world becomes multipolar, it's not that
America is mean, it's that America is no longer magnanimous.
It has to be more machiavellian. It has to think
a little bit more seriously about who accesses American markets.
(39:24):
And so President Trump is not incorrect to focus on
narrowing that current account deficit. However, and this goes back
to that amphitheater we all sat in when we were
nineteen years old. What is the flip side of a
current account. It's the capital account. So if America successfully
(39:45):
narrows its current account deficit, and I don't think it's
going to get into surplus ever, and President Trump doesn't
want that, but as this enormous current account deficit narrows
over the next five years, capital account surplus has to
come down. So America hasn't just been a consumer of
last resort. And this is where President Trump and his
various economists who work for him, like Steven mirran I,
(40:08):
would take issue with them. They keep indexing on the
current account deficit, but they don't talk enough about the
capital account surplus of America, which is a benefit. America
is like the world's sovereign wealth fund. Everybody sells to
America takes the money they make reinvested in America. I mean,
there's benefits to that. The problem over the next five
(40:28):
years is that as American current account deficit narrows due
to this software update for the new hardware, I do
think they'll be capital lot flows. This isn't the end
of America. It's not the end of exceptionalism, it's not
the end of innovation. It's just a transitionary period during Yes,
I want to be on the way to American assets,
that's it, yep.
Speaker 2 (40:48):
And at the fringes, they'll be less demandful of, say
American treasuries.
Speaker 3 (40:52):
Naturally, because in a multipolar world, John right, it's not
that America loses reserve currency status. And by the way,
the United Kingdom, the British pound remained both reserve currency
and was used in financial transaction even as the United
Kingdom actually had a current account surplus. So America doesn't
(41:13):
have to be permanently in a deficit, it doesn't have
to lose reserve currency status. But yes, I do think
reserve currency role will be a little bit more multipolar.
My dear colleague and friend, Juan Correa and I just
published a report in this and I actually really really
believe this thesis, and I think that if you're a
long term allocator of capital, you have to stop thinking
(41:34):
in terms of end states. It's not about what world
we end up living in, whether it's bipolar, multipolar, or unipolar.
Where should you put your money? Where there's technological innovation
and productivity, that's never going to change. But in a
transition between end states, that's where geopolitics will have a
(41:54):
huge implication. And so there's this very incorrect question that
I think a lot of stick it investors keep asking
what kind of a world am I going to live in?
And what do I do? Then nothing, You're just going
to keep being hit in fastor The issue is that
from here to there, that transition itself will lead to
capital relocation and out flows, and we have to brace
(42:15):
ourselves for those five six, seven years, during which yes,
I think American aasists will want to perform.
Speaker 2 (42:21):
Before this podcast, I was two and a half back
to the days when we actually worked together. That was
like eight years ago, and I know we're aging ourselves here,
but I remember one of the big trades that you
were espousing back then is defense. Docs Now, you were
pretty early on and you were talking about how we're
entering into a multipoler world and you're talking about the
need for countries to spend more arming themselves, and this
(42:45):
has really played out. I think defense is the number
one performing theme based on our analysis. It's outperformed things
like artificial intelligence. Do you still think this trend's still
going to happen.
Speaker 3 (42:56):
Wow, that's a really really deep reference there as well. John,
thank you. We started working at eighteen together, so naturally
we're twenty six. Oh it doesn't work. I already said
I was forty three. So yeah. So what I would
say about this is, I do think innovation in defense
space is going to be huge. But you got to
be careful now, right, These stocks have gone up a lot,
(43:18):
and the only way to play this thesis and this
theme is to buy the incumbents. But I think there's
going to be a wave of extraordinary innovation. So if
you look at what's happening in Ukraine, Ukraine and Russia
are now the world's greatest innovators when it comes to
drone warfare, and a lot of their drones are very cheap.
(43:40):
Ukraine deployed drones that cost four thousand dollars in its
recent June first attack on Russia. The average cost of
America's most popular drone, which I still believe is the Reaper,
is thirty million dollars. So when you start thinking about, Okay,
where do I want to put the money, I think
the defense the public stocks may have gone up as
(44:01):
much as they can. I think that now is the
time to start looking at venture and private equity private
markets as an investment thesis for sophisticated institutional investors, because
there's going to be a massive disruption. And by the way,
not all of this technological innovation is going to lead
towards AI. I hear this a lot o AIAI No.
(44:23):
In many ways, for military technological innovation, you're going to
have to go backwards in terms of technology. So Russia
has deployed a drone that's tethered with a fiber optic cable.
I don't know if you're aware of this, but one
of the greatest innovations over the last three years on
the Ukrainian battlefield is that the Russians have a drone
(44:44):
that's connected with a cable. Well, why because it avoids
countermeasures designed to disrupt the electronics. When you're tethering a
drone with a cable, you can effectively avoid jamming. And so,
you know, don't assume necessarily that the public market stocks
are going to be the ones that are going to
(45:04):
be the best, because a lot of the incumbents, I
think in the defense space have learned to kind of
taste the sweet nectar of government profligacy, and they're not
at all prepared for the kind of technological innovation they'll
have to bring to the table to compete with some
of the new incumbents. Great.
Speaker 1 (45:23):
Yeah, this is a good point to leave off on.
It's been a really interesting conversation. Thank you so much
for joining us today, Marco.
Speaker 3 (45:30):
It's a real pleasure. Cutch in, John and I hope
to maybe do this in person next time. I'm in
Hong Kong, looking.
Speaker 2 (45:36):
Forward to it.
Speaker 1 (45:38):
You've been listening to Asia Centric from bluever Intelligence. I'm
Kad Dmitrieva and I'm John Lee.
Speaker 2 (45:44):
You can listen to all our episodes on Apple Podcasts, Spotify,
or wherever you listen. And this podcast was produced and
edited by Clara Chen.
Speaker 1 (45:52):
Thanks for listening, See you next time.
Geopolitics has increasingly made its way from academic and government
circles to boardrooms and investor portfolios. Advisors and economists have
always had to factor in political risk to some extent,
but the past decade of trade disruptions, conflict, and a
COVID pandemic have prompted a lot more attention to this area.
Speaker 2 (00:22):
JP Morgan recently launched its Geopolitical Unit, and CEO Jamie
Diamond issued a warning that geopolitical risks are currently the
most important to watch, and we're seeing that play out
in real time with President Trump's trade war fracturing global
commerce along strategic lines.
Speaker 1 (00:42):
You're listening to Asia Centric from Bloomberg Intelligence and Kadidum
Treva in Hong.
Speaker 2 (00:47):
Kong, and I'm John Lee also in Hong Kong, and today.
Speaker 1 (00:50):
We're talking geopolitics for investors, the emerging world order, the
biggest risks ahead, and perhaps areas of opportunity. Helping us
to unpack all of this is Marco Pappitch. She's Strategistic
BCA Research. It's an independent research firm. He's also author
of Geopolitical Alpha, so the perfect person to kind of
(01:12):
walk us through all this.
Speaker 3 (01:12):
Welcome Marco It's such a pleasure to be here with you, Katya,
and also John. John and I were colleagues before, and
so it's nice to be on the same podcast with
you as well.
Speaker 2 (01:23):
Marca, it's great to.
Speaker 1 (01:24):
See you again reunited. Shortly after recording this episode, Israel
launch strikes on Iran. Iran retaliated, and the two countries
have been exchanging missiles ever since. President Trump has found
the flames, calling on Iran's unconditional surrender and threatening the
(01:44):
country's leader. It seems things are only escalating. There's a
human tragedy here with civilian casualties and the risk that
this conflict widens. And for investors trying to navigate this landscape,
uncertainty just waste a whole lot. More So, I called
Marco again to get his thoughts. Marco, how should investors
(02:07):
be navigating this? One would assume you know long oil,
But how are you thinking about this?
Speaker 3 (02:12):
Yeah? I think that oil prices did not really have
any premium regarding this situation. And the risk now, of course,
is that Iran retaliates in a way that's relevant to
global supply of oil. Now that that's going to have
to be more than just Iranian supply being taken offline,
either by Israel or by the US, or by Iran itself.
(02:36):
It really requires Iran to cross the rubicon of retaliation
and try to interdict oil transitting through the Straits of
Hormuz or directly attacking energy facilities in Saudi Arabia, Ua
and elsewhere. So really the catalyst for a significant increase
in oil prices from here has to be Iran itself
(02:59):
deciding to retaliate outside of the tunnel of what has
effectively been acceptable retaliation from the perspective of the market,
which is retaliating against Israel.
Speaker 1 (03:11):
Can you walk through some of the potential outcomes here
and what you think as an analyst is most likely
to happen.
Speaker 3 (03:18):
So there's a couple of scenarios that can happen. One
is let's say the current trajectory continues, Israel and Iran
attack each other. Eventually Israel declared's victory, declares its operation over.
Remember Benjamin Atnaku did say that this was going to
last about two weeks and that the purpose of this
is to degrade Iran's nuclear program sufficiently set it back
(03:41):
by a lot. That's successful. I mean it's being accomplished.
Even if a FOURDO facility is not completely destroyed, there's
other ways to imperil to the centrifuges inside of it,
And of course other components of the nuclear program, including
its human capital in terms of scientists, have already been impacted.
So that's one in which case, you know, oil prices
(04:01):
are not really going to go up much more, and
you know, obviously this becomes kind of a geopolitical nothing burger.
The second is that US does get involved, particularly by
attacking Foordo. At that point, Iranian leadership has to make
a decision do they start attacking global supply of oil
or would they simply retaliate against the American military basis,
(04:24):
which carries with its other risks as well, but I
think less so than going all the way. And then
finally there's that third scenario in which Iran goes all
the way, responds either to American attack against Florida or
some sort of a wider American campaign against energy facilities,
nuclear facilities in Iran, and tries to interdict the straits
of Remus. What are the probabilities of all of these?
(04:47):
I think the last one, where Iran attacks straits of Rumus.
I think the probability of that is somewhere around twenty percent. Now,
why so low? You know, why so low when the
regime seems so backed up against the wall. Were two reasons.
First of all, we have forty six years of empirical
data for forty six years during which Islamic Republic of
(05:08):
Iran existed. They've only really attempted to ever so slightly
interdict shipping through the Straits of Romus once, and that
was by mining the straits very tentatively. One of the
mines ended up hitting an American naval vessel in nineteen
eighty eight, and this led to the Operation Praying Mantis,
where the United States of America absolutely decimated Iran's navy
(05:31):
and attack their energy facilities in karg Island. So, in
other words, the reason Iran has never done this other
than that one time is because it's such a one
or a zero. It's such an asymmetric tool. Once you
do it, you invite overwhelming American response against you, and
that's very dangerous for Iran because there's no really way
(05:54):
for them to defend themselves against the US. So what
this means for investors is that it's very dangerous to
go against the current momentum. I think oil prices have
more room to rise from here, but ultimately it's a
temporary rise because Iran cannot permanently close the straits for
moose and once they pull that card, once they pull
their card, they'll invite retaliation from the US with such
(06:16):
an overwhelming force that they would not be able to
close the straits for a prolonged period of time, in
which case any move in all prices. Almost the higher
the AILL prices go, the shorter they can stay up
there because Iran loses its capacity to really affect anything.
Their military will be degraded massively.
Speaker 1 (06:36):
I'm just pulling up where oil prices are right those.
Speaker 3 (06:41):
Second seventy five I think Brent.
Speaker 1 (06:43):
Yeah, seventy five. So we see Brent at seventy five
today Wednesday morning. Where could we go from here?
Speaker 3 (06:51):
Well, I think that we can easily be at eighty,
very easily. We could be at eighty dollars, eighty five
dollars sort of. From here to eighty five dollars, you
don't need something straordinary to happen. But for us to
go over one hundred dollars, I think it will require
Iran to clearly start attacking outside of Israel, outside of
(07:11):
US military bases. For oil to get to one hundred
dollars and above, you would have to have Iran start
attacking shipping in the Straits of Muz, interdicting shipping, perhaps
attacking Saudi oil facilities. Again, there's a reason they haven't
done that since well, really nineteen eighty eight, but even
then it was very tentative. There's a reason that the Hutis,
(07:34):
who are aligned with Iran, have not attacked Saudi Arabia
over the past two years. Since October seventh attack on Israel,
Houtis have been very active in the Red Sea, but
they have not sent any of their drones north because
Iran and Saudi Arabia also have a detent that's worked
really well for both of them. So a lot would
have to change. And of course, at this point, you know,
(07:57):
most investors are commentators simply say, well, Mark, there's a
lot going on. I mean, like there's regime change in Iran,
to which I would say, there's really only one case
I can think of of regime change from the air.
You know, you can't land in F sixteen in Iran
and impose regime change. That's not going to happen. Israel
is not going to cause regime change in Iran. The
(08:20):
only time that air strikes caused a regime change was
actually in my home country of Serbia. Nineteen ninety nine.
NATO attacks Serbia for three months. Eighteen months later there
were protests on the streets and Slovana Milosho, which was overthrown.
You could argue that that was connected to the air campaign,
but it's very difficult to create regime change when there
(08:42):
is no revolutionary group on the ground that you're actually helping,
and when the regime is very very comfortable shooting people
in the streets. You know, I don't think that the
Iranian regime feels as backed up against the wall as
perhaps some commentators have, which would prompt them to say, okay, well,
(09:02):
then in this case, let's pull out the nuclear option
and I excuse upun Obviously it's not a very good one,
but for Iran it is the nuclear card. If they
end up choosing to interdict shipping through the straits or removes,
it will be as if they were attacked by nuclear weapons.
Because the a S symmetry between Iranian and American military capabilities.
(09:26):
The golf is huge, and we know this now because
we've seen how far behind Israel they are. Their order
of magnitude even more behind the US because one thing
Israel doesn't have is strategic strike capacity. They're attacking Iran
with fighter jets. The US has strategic strike which means
that they can deliver a lot more payload per flight
(09:47):
in the US case.
Speaker 1 (09:50):
Marco, is there anything else we should be thinking about here?
Speaker 3 (09:54):
Well? I think a couple of things. One, how much
munition does Israel have to keep the conflict going? We
know how much munition Iran has. He has somewhere between
two thousand and three thousand ballistic missiles. It's probably down
a quarter or a fifth of that supply, So maybe
Iran has enough ballistic missiles for another five to ten days.
(10:16):
But how many ground attack missiles does Israel have? Because
you have to understand, Israel does not prepare itself to
affect regime change in a country of ninety one million
people's that's not what Israeli Air Force is designed to do.
And so when Prime Minister Natanyahu said that this operation
would last two weeks, I don't think he just pulled
(10:37):
that number of thin air. I think that he based
it on the ability of Israel to you know, continue
the operations based on their munitions, and so I do
think at some point the United States of America will
have a pretty significant lever where they can direct where
this goes by basically telling Israel, look, this is sufficient.
So that's the first thing I would say. The second
(10:58):
thing that I would say is just a big picture
takeaway from this is you know, where's Russia, where's China. Yeah,
we've now listened for two and a half years about
this sort of fear mongering that the West is behind,
that the West is critically low on munitions, that Javelin
supply has run out. What we found out over the
(11:19):
last five days is that basically Russian surface to our missiles,
the S three hundreds are trash, not very effective. And
that was like the big thing that Iran had, it
had the sophisticated Russian surface to our missile system that
apparently is trash. And then the second thing we found
out is that China really like, there is no China block,
(11:42):
There is no part of the world that's allied with China,
because you know, China is supporting Russia. The way that
India is supporting Russia. They're buying oil. They haven't supplied
Russia with military. Anybody who says differently is just not
saying the truth. China supporting Russia with electronics. If you
(12:03):
open up a Russian drone, you'll find a lot of
Chinese components in it. But if you open up a
Ukrainian drone, you will find a lot of Chinese components
in it. So this is nonsense. And finally, here's Iran,
which is supposedly in some sort of a Chinese sphere
of influence, and there's absolutely no help coming from China.
And so that brings up the question, you know, is
the world really descending into a Cold War? Is this
(12:27):
really a bipolar world when this supposed access between China, Iran,
and Russia is you know, it doesn't really come close
to any of the other axes that we've seen over
the past one hundred years.
Speaker 1 (12:40):
Yeah, it's a good point, and it lends itself to
this idea of entering multipolarity as opposed to going back
to the Cold War era exactly.
Speaker 3 (12:48):
In fact, you could argue that China in the US
are on some level even aligned in this particular situation
in fact, if Iran were to cross that redline that
I'm saying is, you know, kind of their nuclear option,
which would be to interdict shipping. The country that they
would be hurting, perhaps the most is actually China, because
(13:12):
China sources its energy from the Middle East, which then
begs a very interesting question. You know, it's a geopolitical paradox.
American taxpayers in American Navy are protecting China's access to
critical natural resources in the Prussian Gulf, and so in
a way, by being very firm against Iran and by
(13:34):
warning Iran not to strike shipping in the Straits or Fromoos,
the United States is protecting China, and so I'm not
you know, it's a very strange situation where the two
superpowers that are apparently, you know, sort of dividing the
world into two on some issues, including important ones, are
quite aligned.
Speaker 1 (13:55):
Yeah, there's like e ven diagram and we're kind of
in the middle right now.
Speaker 3 (13:58):
Yes, that's a great way to put it.
Speaker 2 (14:01):
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Speaker 1 (14:28):
Now back to the recorded episode, Marco, we've been hearing
a lot of our geopolitics japing Morgan open this arm.
Bloomberg has a geoeconomics unit as well. I guess, just
for listeners, if we can take a bit of a
step back, how is this analysis unique or different from
perhaps what an investment advisor or an economist would normally
(14:50):
do because they also look at current events and politics.
Speaker 3 (14:54):
Well, yes, buddy, look at them as exogenous factors. I
think that's the difference. If you're an economist, you believe
that economics is going to help you predict inflation and growth,
and then with those two variables, for the most part,
you can determine act allocation on a pretty wide variety
of time horizons. Somebody who is focused on geopolitics in
(15:16):
the markets believes that geopolitics is not exogenous. In fact,
it in many ways underpins the very growth in inflation forecasts,
and in fact, you cannot just use economics, which first
and foremost is not a science. It's not a natural science,
it's not physics. It is a social science as much
as any other social science. It's just a little bit
(15:38):
more quantitative, and so effectively, you take politics in geopolitics
seriously as inputs, not as surprises that upend your model.
Speaker 1 (15:51):
So they're not external risks, they're kind of the core
of what you're looking at. So how would the outcome,
I guess be different, Like, is there an example of
that where an economist might look at things like GDP
CPI and say, oh, while the external factor is perhaps
trade frictions versus what something like, what you would do?
Speaker 3 (16:10):
I think the pandemic is probably the easiest way for
me to explain the difference. You know, economists have been dumbfounded,
confounded by the resiliency of both acid prices, the stock market,
the rally, but also of the economy, and anyone who
takes politics seriously is not because we effectively swung the
political zeitgeist, swung away from prudence, from orthodoxy, from what
(16:36):
we have dubbed the Washington consensus. We swung very hard
to something else. And that happened pre pandemic. By the way,
that happened before the pandemic. Austerity led to secular stignation.
Secular stignation low growth and low inflation was not an
economic phenomenon. It was a political phenomenon because household balance
(16:57):
sheet repair was made more difficult bi austerity that prolonged
the pain that led to anti establishment political outcomes such
as Brexit and Donald Trump. And then what happened was
that fiscal policy became a lot more pro cyclical. And
we got the first taste of that in twenty seventeen
with the unfunded tax cut, and then the pandemic hit,
(17:19):
and then really the wheels came off, and the fiscal
policy that occurred in twenty twenty twenty twenty one was
meaningfully different from every other fiscal policy that we've had,
really maybe in history. And so a lot of the
Microsoft Excel models were basically telling you that there was
going to be a pendulum swing the other way with
fyscal thrust becoming negative. But actually that never happened because
(17:42):
that fiscal policy remained on the balance sheet of households,
It remained in the multiples of various companies and it
suppressed savings trade due to psychological sociological effect and ultimately
led to where we are today, higher nominalo GDP growth,
higher inflation, also less precautionary spending, more yolo ing, and
(18:04):
so on and so on. So that's I think the
best thing is now, Marco.
Speaker 2 (18:07):
The traditional approach by investors when they look at geopolitical
risk has been to bring in like an ex politician,
an ex government official, to try to get some you know,
inside scoop on what's happening with geopolitics. But you take
a quite a different approach. You take a constraints based mythology.
Could you go through that with us?
Speaker 3 (18:28):
Well, I have a lot of respect for Jamie Diamond.
You know, he's the CEO of course of JP Morgan,
and he's, you know, all power to him. However, I
think that the new unit that they're setting up over
there does not actually add much to analysis, you know,
just create well yeah, I mean creating an exogenous unit
(18:49):
like an Institute of Geopolitics is just going to produce
some glossy PDFs that we're all going to read with
really fancy diagrams. Doesn't mean that JP Morgan as a
financial institution as an investor, institution is going to adopt
geopolitics at the very core. And this is why John,
I focus on a framework that doesn't require you to
(19:09):
wheel in a past expiration date policy maker into your boardroom.
You know, this is very, very critical because geopolitics and
politics is too important to be outsourced. You're basically outsourcing
your fiduciary duty. It's your job to analyze politics in geopolitics.
It's not somebody else's job because they don't know your portfolio,
(19:32):
they don't know where you're exposed, they don't have time
in that one hour they're going to spend with you
to do this, and so you need to learn how
to analyze it yourself. And so yes, I generally dismiss
the usefulness of politicians, ex policy makers, ex members of
the state department or whatever. You would not hire an
ex CEO of a telco company to analyze telcos. You
(19:57):
would train an analyst on how to analyze telcos, just
like you wouldn't really take a quarterly CEO, you know,
presentation seriously. I mean they're going to be selling their book. Obviously. Similarly,
we don't sit around and like take what policy makers
say as given. I think that there's value, there's value
(20:17):
in expanding our horizons listening to a lot of different viewpoints.
But notice that most of the hiring at these institutions.
When financial institutions decide to create a little pet project
of a like institute for geopolitics, notice that the hirings
are almost exclusively out of the Western realm. So how
is that going to help you analyze China? Why don't
(20:40):
you have ex Chinese premiers or vice premiers as members
of these institutions. Why don't you have a former prime
minister of a mid level power like Indonesia or Malaysia.
In India, it's almost exclusively former politicians in the West.
And I think that's not helpful at all.
Speaker 1 (20:57):
So you're basically saying that these kinds of analyzes should
really be made at the core of a bank or
financial firm, like it needs to be integrated into all
of the investment or economic kind of research functions.
Speaker 3 (21:18):
So Katcha, I think you've nailed it. I mean, you
asked at the beginning, what is the difference between my
approach and that of everybody else, like economists or people
who are much more focused on traditional tools and I
would say that my approach is the one that investors
have used throughout human history. Everybody else is using an
anomaly that's only worked for the last forty years. In
(21:41):
other words, most investors throughout history have incorporated geopolitics and
politics at the very beginning of their assembly line. It's
only after the nineteen eighties where two things happened. One
Cold War started to freight, Soviet unions started to lose.
I mean that was what gorbe which have effectively said like, look,
(22:01):
we give up. And then also les I fair capitalism one.
The Margaret Thatcher and the Ronald Reagan revolution gave us
this kind of like les a fair view of the world.
And those were two things that combined together on domestic
political front and geopolitical front to make us believe that
to be a professional investor, you don't have to know
(22:22):
what the Senate does in America. That you don't have
to know why Romania wants to be in NATO, that
you don't have to know the geopolitical significance of Malaysia.
You know, you can just be ignorant of these things
that you can be a professional investor. You just get
your CFA, maybe you go back and get your MBA.
You're good. Don't worry about any of this other stuff
(22:44):
that's nonsense, you know. And so that's the difference. Like
the fundamental difference is that if you actually look at history,
most astute observers of markets were actually quite geopolitical, you know.
I mean, I think about, for example, people like George
Soros when he broke the Bank of England. Guess what
(23:04):
he didn't do. He didn't waste money trying to break
other central banks in Europe because he knew that the
Bundesbank would support these other banks but would not shell
out to cash for the British pound, because hey, that's
up to the Brits. The Rothschilds now Ferguson, of course,
one of the prost pre eminent historians we have today.
(23:26):
His PhD dissertation was about how Rothschilds became the family
that they are, and it had to do with their
correct read of Napoleonic warfare and when to basically lend
borrow based off of that conflict. So geopolitics and politics
has always been part of our arsenal. We just have
stopped using it, and I think it's time for us
(23:48):
to take it seriously again, not outsource it to retired
policymakers or policymakers who have to be in the private
sector for four years because they lost an election.
Speaker 2 (23:58):
So Marco, how is your approach, hoped you in navigating
US tariffs and in particular deciding whether Trump will implement
his tariffs or not.
Speaker 3 (24:07):
Well, first of all, what is the framework, right John?
I mean just to you mentioned it, you hinted at
it material constraints. I mean, very quickly, I couldn't care
less what politicians say. I couldn't care less what they
believe in or what they want.
Speaker 1 (24:19):
So like the constant stream of truth social posts.
Speaker 3 (24:23):
Yes, the cost is stream of through social posts. But
also this is important because a lot of consultants in
the political risk space will sell you their access to policymakers. Yeah,
you know, go look at my rollodex. You should wheel
me into your boardroom because you know, I know these people,
and the truth is that can sometimes be useful. But
you don't have a lot of time. You know. Look,
(24:43):
if I had all the time in the world and
all the resources in the world, I would be the CIA,
and then I would tap your phones and I would
know exactly what you're going to do. But because most
investors don't have those resources, I would say none of
us have that. We need a shortcut. And so what
is the shortcut? The shortcut is a framework that I've
developed over many, many years, and it harkens back to
(25:04):
like pure geopolitical analysis that I learned in political risk industry.
So it's not just like I invented it like sitting
around smelling flowers one day. It has to do with
this very quick notion that preferences of policy makers are
optional and they're subject to material constraints. This is true
in life too. You both have many preferences, but they're optional.
You can or you don't have to act on those preferences,
(25:26):
and they're bound by the material reality in which you live.
But material constraints are neither optional nor are they subject
to preferences. For example, I'm a forty three year old
father of three. I would love to dunk. You know,
I would love to dunky basketball.
Speaker 2 (25:44):
Yeah, we remember you liked VNBA.
Speaker 3 (25:46):
That is my preference. That is my preference. However, the
material constraint is that I can't wish away the fact
that I am six foot one, forty three year old
with an acl repaired NI. Those are realities, and so
it doesn't matter what your preference is, it's always the best.
That's right. How does this help me with something like Trump?
(26:06):
You just ignore the preferences and the question what does
he want? I don't care? Is the correct answer. It
is more what can he accomplish given the array of
material constraints. And one thing that I think is interesting
is we as a financial industry, we in finance, us,
all of us, you, John, you caught your knee, We're
actually more than qualified to assess using a data driven
(26:31):
approach how powerful these material constraints are. So we don't
actually need all these expulse makers to come into our
office and say like, well you know what, No, I
don't need you. I know how bond yield works and
how vicious it is as a constraint on policy maker behavior.
Speaker 1 (26:49):
Well, let's dive into some of those constraints you just
mentioned the bond yield. Are there other constraints like the
things that would be just a wall that Trump cannot
blast through? Because the thing with President Trump is that
he kind of goes past or blasts through a lot
of constraints. Right, He creates a new reality. So I
(27:10):
wonder if you can talk about some of those very
real constraints. I think last time we spoke you mentioned elections,
for example, and voters inflation. So what are some of
those elements.
Speaker 3 (27:21):
I So, one slight disagreement with Chikatia I would have
is that he always hints that he's going to blast
through them, or he does for a very temporary period
of time. President Trump is really good in making you
think that he doesn't care. Like that's his genius, right.
So April second is a great example. He's got Secretary
of Lutnik holding a plastic bulletin board that was produced
(27:43):
by Chad GPT. You know where they like taxes and penguins.
A lot of my clients email me or call me
and they're like Marco, like what constraints these guys are
putting tariffs and penguins. They don't seem to care about anything.
So he's very good at that. But in terms of
what are the constraints, I think first and foremost is
the bond market. Bond yields never responded to any of
this volatility in a way that I think they would
(28:03):
have hoped. You know, this is a Bloomberg Podcast, So
we don't really have to discuss that in depth. Everybody
understands how bond yields work. But I think an interesting
part of all of this is that in any game
theoretical confrontation between two sides, such as let's say China
US and trade or Europe US and trade, it's not
(28:24):
just about who's more powerful, it's also who has risk tolerance.
And I think that what most commentators just don't understand
is how little pain tolerance, risk tolerance American households have.
They don't want the trade war. This is definitive. You
can go to Ipsos, you can go to Reuter's, you
can go to Gallop. They're all very very clear that
(28:45):
out of all the issues that matter to voters, trade, tariffs,
globalization is the least important. They don't want President Trump
to focus on it by a wide margin. And the
second issue is that the sentiment towards trade and globalization
has massively increased positively in the US over the last
ten years, and I would argue President Trump in many
(29:07):
ways is to thank for that. And we can discuss
how so, what I'm saying here is that the biggest
constraint for President Trump is the median voter. If you're
offside of the median voter, you're going to be absolutely
crushed in elections, whether it's midterms, whether it's twenty twenty eight,
so three years from now. And I don't think he's
completely immune to this. The United States of America is
(29:28):
not a kingdom. He's not a king. He has many
stakeholders around him who have invested a lot in his presidency,
and so I think that he's bound by what the
median voter wants, and the median voter does not want
global trading system to be reshaped overnight. It doesn't mean
that President Trump's gut is in the wrong place. By
the way, I do think the US current account deficit
(29:49):
is way too large, but it's not going to be
corrected over six months through egregiously painful recession or trade policy.
He's going to basically negotiate deals.
Speaker 1 (30:02):
I want to get it over to John because I
know he wants to ask you a question about taco,
but I want to add just just a really quick
follow up. So you said it means that he'll have
to negotiate for deals. So is that the implication?
Speaker 2 (30:16):
Then?
Speaker 1 (30:16):
If if Trump faces the constraint of the median voter. Then
he'll have to come to the table and negotiate by
lateral deals, and the tariffs will likely not be as
high as Liberation Day tariffs.
Speaker 3 (30:29):
I think likely is a poor adjective. There's no chance. Really,
tariffs have no chance to be as high as Liberation Day.
But but notice how very few of us discussed that
ten percent across the board tariff. We just don't mention
it anymore. And that is kind of the genius of
President Trump. To be fair to him, He's made us,
(30:50):
the markets, corporates, CEOs swallow a ten percent across the
board tariff. So I do think that that will stay,
and then individual deals with individual countries would lower other
tariffs except sectoral ones. I think sectoral ones will stay
as well. So I think investors are probably going to
have to plan for like a twelve and a half
percent Like if I was a casino and I was
(31:10):
setting a line, you know, and you can take over
or under bets, I would say twelve and a half
percent across the board tariff, which is still in a
massive increase in tariffs for the US. But you shouldn't
think of it as some sort of a reshaping of
global order. You should think of it as President Trump
imposing taxes on American households, because he's effectively imposing a
vat on consumption, Which goes to my point that I
(31:33):
think the fiscal gravy train in the US is over
and there's a hangover phase coming. And that's one example
in which we're getting something that most investors did not expect.
Speaker 2 (31:44):
Yeah, and as Kati alluded to, I am dying to
ask you this question. Now. I love how the finance
industry comes up with these creative phrases and acronyms. The
beginning of this year was all about American exceptionalism and
why you should be overweight US financial assets. Then there
was like sell America trade when the tariffs came out. Now,
the latest creative one is the Taco trade. And for
(32:06):
those who don't know, it stands for Trump always chickens out. Now,
this is this idea that investors should buy on weakness
on the assumption that Trump will back down, and which
would lead to a rebound in asset prices. And you
saw that with China as well. What do you think
of this trade markat.
Speaker 3 (32:24):
Well, I think it's a pejorative term, you know, because
I don't think he's chickening out. He's just producing a
negotiated deal to his critics. Looks vacuous, you know, empty.
But fourteen months ago I presented that same strategy to
my clients. I just call it the seven steps of
maximum pressure. I'll shorten it for you, guys. This is
(32:46):
a thirty minute show. You know. The first step in
my seven steps is that President Trump always asks for
the moon and he wants you to pay for the
escalator to the moon. And then six later he settles
to the roof of his house and he'll bring the ladder.
So is that chickening out? Well, no, because it's marginally positive.
Speaker 2 (33:10):
He gets to go to the roof of his house
out of the negotiation tactics.
Speaker 3 (33:13):
You see, he gets to the roof of his house.
He wasn't able to get to the roof of his house.
Now he can. You know, he can sleep up there.
It's cooler, you can watch the stars at night, you
can watch the moon that you suggested you were going
to get. So I don't think it's chickening out. It's
just this is empirically backed. President Trump is not someone
driven by preferences. He's actually quite I think, unanchored by
(33:37):
his preferences. He's willing to try out based on material constraints,
what's the maximum he can get from the rest of
the world. And so that's how he's negotiated with North Korea,
That's how he negotiated USMCA, he negotiated Phase one deal,
he negotiated a rarer deal with Ukraine, the fentanyl tariffs
against Canada and Mexico, and now, yes, reciprocal tarifts do.
(34:01):
There's no surprise here. But I don't like saying chickening
out because chickening out would mean going back to day one.
And the truth is that he does get a deal
done is just only marginally positive for the US. It's
not like, you know, necessarily revolutionary.
Speaker 1 (34:18):
Speaking of the rest of the world, you have this
interesting view that we're entering a multi polar world, and
in one of your recent research notes, you mentioned that
a lot of your clients seem to think we're entering
a new phase of the world where it's going to
be bipolar. In other words, it's China and the US.
But you say that's wrong, and this kind of global
(34:40):
ordering goes back to I guess Kennith Waltz and the
Theory of International Politics, which is kind of this seminal text,
probably one of the most important texts and international relations.
But I want to ask you, why is it wrong
to think that we're entering a bipolar world? Why is
the case now that we're entering multipolar state? I saw
(35:01):
you pull a book out of your stack behind you.
Speaker 3 (35:04):
Yeah, well, I think that No. Kenth Walltz is a great,
great deep reference. Gotcha. I would say a much more
readable and more updated view would be Mursheimer John Murshcheimer.
Professor Murchscheimer is known for some of the controversies. He
has very interesting views on Ukraine and so on. But
he is actually the father of what we call offensive realism.
(35:25):
And he wrote the book The Tragedy of Great Power Politics.
And at the end of this book, you know, which
is very readable. I would definitely encourage everyone to read it.
He talks about these three different worlds that exist. There
are three different ways that power is distributed on planet.
Unipolar world is something we're very familiar with because we
(35:45):
lived in it from nineteen eighty five. I would argue
to sometimes in twenty ten and then a bipolar world.
Of course everybody remembers because that's what the Cold War was.
So here's China coming along, and so pretty much everybody
in the United States of America, but I would say
Western world broadly speaking, believes that, of course it's going
to be a bipolar world again, We're going to have
round two. But the reality is that if you actually
(36:08):
look at history, multipolarity, which is kind of a free
for all no one's in charge, is the most likely outcome.
So in Meersheimer's work, he goes back to seventeen ninety
two and he argues that basically a multipolar world was
in effect for about seventy five percent of that time,
(36:29):
and so it is sort of mathematically incorrect to assume
that the world is just going to there's like a
gravitational poll that will take us to a bipolar world.
And everybody thinks that the world we're in right now
where it's sort of not clear who's in charge or
what the two spheres are. Everybody all my clients, like
sort of sovereig wealth funds and pension funds. They keep
telling me, Marco, we need you to do an Excel
(36:51):
spreadsheet and put all the countries into two different rubrics.
Tell us how does the world split up? And I'm like,
it may not. Out of ten years in human history,
eighty out of one hundred years, the world just remained messy,
you know, and it was kind of a free for all.
So we should probably given just simple probabilistic math, expected
(37:15):
to stay like this.
Speaker 2 (37:16):
And Marco, if you put this into investing, most asset
owners are still heavily overweight US assets. So if we
move to a more of a multi polar world, we
also see this in terms of the flow. Do you
think the weighting of US will come down in things
like NSCI world.
Speaker 3 (37:35):
So now we come full circle and we made fun
of President Trump a little bit. But here is where
President Trump is actually not misaligned, and I think he
gets a lot of criticism. So why do I answer
your question by referring to the president? Because you can
think of geopolitics and macroeconomics as hardware and software. So
(37:59):
I would say that the planet Earth has bought some
new hardware. Geopolitics is hardware. It is the world we
live in, and we have abandoned the unipolar hardware. We've
installed a you motherboard. It's a multipolar one. But We're
still running an old operating system on this hardware, and
(38:20):
it's the unipolar operating system. We haven't upgraded, we haven't
downloaded and installed a new one. Why do I say that, Well,
because America has this enormous current account deficit. And this
is where President Trump talks about trade imbalanced current account imbalances. Okay,
the reason it doesn't make sense for America to be
(38:40):
a consumer of last resort is because it's no longer
America's world. Why should it, you know, when it's a
unipolar world and no country dares challenge the hegemon with
preponderance of power. Of course, you're going to let the
Chinese send whatever product they want because you're in charge.
(39:01):
And eventually China will be Wisconsin, which is kind of
what everybody thought in the nineteen nineties. But the challenge
is that once the world becomes multipolar, it's not that
America is mean, it's that America is no longer magnanimous.
It has to be more machiavellian. It has to think
a little bit more seriously about who accesses American markets.
(39:24):
And so President Trump is not incorrect to focus on
narrowing that current account deficit. However, and this goes back
to that amphitheater we all sat in when we were
nineteen years old. What is the flip side of a
current account. It's the capital account. So if America successfully
(39:45):
narrows its current account deficit, and I don't think it's
going to get into surplus ever, and President Trump doesn't
want that, but as this enormous current account deficit narrows
over the next five years, capital account surplus has to
come down. So America hasn't just been a consumer of
last resort. And this is where President Trump and his
various economists who work for him, like Steven mirran I,
(40:08):
would take issue with them. They keep indexing on the
current account deficit, but they don't talk enough about the
capital account surplus of America, which is a benefit. America
is like the world's sovereign wealth fund. Everybody sells to
America takes the money they make reinvested in America. I mean,
there's benefits to that. The problem over the next five
(40:28):
years is that as American current account deficit narrows due
to this software update for the new hardware, I do
think they'll be capital lot flows. This isn't the end
of America. It's not the end of exceptionalism, it's not
the end of innovation. It's just a transitionary period during Yes,
I want to be on the way to American assets,
that's it, yep.
Speaker 2 (40:48):
And at the fringes, they'll be less demandful of, say
American treasuries.
Speaker 3 (40:52):
Naturally, because in a multipolar world, John right, it's not
that America loses reserve currency status. And by the way,
the United Kingdom, the British pound remained both reserve currency
and was used in financial transaction even as the United
Kingdom actually had a current account surplus. So America doesn't
(41:13):
have to be permanently in a deficit, it doesn't have
to lose reserve currency status. But yes, I do think
reserve currency role will be a little bit more multipolar.
My dear colleague and friend, Juan Correa and I just
published a report in this and I actually really really
believe this thesis, and I think that if you're a
long term allocator of capital, you have to stop thinking
(41:34):
in terms of end states. It's not about what world
we end up living in, whether it's bipolar, multipolar, or unipolar.
Where should you put your money? Where there's technological innovation
and productivity, that's never going to change. But in a
transition between end states, that's where geopolitics will have a
(41:54):
huge implication. And so there's this very incorrect question that
I think a lot of stick it investors keep asking
what kind of a world am I going to live in?
And what do I do? Then nothing, You're just going
to keep being hit in fastor The issue is that
from here to there, that transition itself will lead to
capital relocation and out flows, and we have to brace
(42:15):
ourselves for those five six, seven years, during which yes,
I think American aasists will want to perform.
Speaker 2 (42:21):
Before this podcast, I was two and a half back
to the days when we actually worked together. That was
like eight years ago, and I know we're aging ourselves here,
but I remember one of the big trades that you
were espousing back then is defense. Docs Now, you were
pretty early on and you were talking about how we're
entering into a multipoler world and you're talking about the
need for countries to spend more arming themselves, and this
(42:45):
has really played out. I think defense is the number
one performing theme based on our analysis. It's outperformed things
like artificial intelligence. Do you still think this trend's still
going to happen.
Speaker 3 (42:56):
Wow, that's a really really deep reference there as well. John,
thank you. We started working at eighteen together, so naturally
we're twenty six. Oh it doesn't work. I already said
I was forty three. So yeah. So what I would
say about this is, I do think innovation in defense
space is going to be huge. But you got to
be careful now, right, These stocks have gone up a lot,
(43:18):
and the only way to play this thesis and this
theme is to buy the incumbents. But I think there's
going to be a wave of extraordinary innovation. So if
you look at what's happening in Ukraine, Ukraine and Russia
are now the world's greatest innovators when it comes to
drone warfare, and a lot of their drones are very cheap.
(43:40):
Ukraine deployed drones that cost four thousand dollars in its
recent June first attack on Russia. The average cost of
America's most popular drone, which I still believe is the Reaper,
is thirty million dollars. So when you start thinking about, Okay,
where do I want to put the money, I think
the defense the public stocks may have gone up as
(44:01):
much as they can. I think that now is the
time to start looking at venture and private equity private
markets as an investment thesis for sophisticated institutional investors, because
there's going to be a massive disruption. And by the way,
not all of this technological innovation is going to lead
towards AI. I hear this a lot o AIAI No.
(44:23):
In many ways, for military technological innovation, you're going to
have to go backwards in terms of technology. So Russia
has deployed a drone that's tethered with a fiber optic cable.
I don't know if you're aware of this, but one
of the greatest innovations over the last three years on
the Ukrainian battlefield is that the Russians have a drone
(44:44):
that's connected with a cable. Well, why because it avoids
countermeasures designed to disrupt the electronics. When you're tethering a
drone with a cable, you can effectively avoid jamming. And so,
you know, don't assume necessarily that the public market stocks
are going to be the ones that are going to
(45:04):
be the best, because a lot of the incumbents, I
think in the defense space have learned to kind of
taste the sweet nectar of government profligacy, and they're not
at all prepared for the kind of technological innovation they'll
have to bring to the table to compete with some
of the new incumbents. Great.
Speaker 1 (45:23):
Yeah, this is a good point to leave off on.
It's been a really interesting conversation. Thank you so much
for joining us today, Marco.
Speaker 3 (45:30):
It's a real pleasure. Cutch in, John and I hope
to maybe do this in person next time. I'm in
Hong Kong, looking.
Speaker 2 (45:36):
Forward to it.
Speaker 1 (45:38):
You've been listening to Asia Centric from bluever Intelligence. I'm
Kad Dmitrieva and I'm John Lee.
Speaker 2 (45:44):
You can listen to all our episodes on Apple Podcasts, Spotify,
or wherever you listen. And this podcast was produced and
edited by Clara Chen.
Speaker 1 (45:52):
Thanks for listening, See you next time.
Hosts And Creators
John Lee
Tom Corbett
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