4/14/25: Wall St Panic Amid Tariff Flip Flop, China Bans Rare Earth From US, CEOs Say Recession Is Here, Consumer Sentiment Plunges

Ryan and Saagar discuss Wall St panic amid tariff flip flop, China bans rare earth minerals to US, CEOs say recession already here, consumer sentiment plunges.

 

To become a Breaking Points Premium Member and watch/listen to the show AD FREE, uncut and 1 hour early visit: www.breakingpoints.com

 

Merch Store: https://shop.breakingpoints.com/

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
Hey, guys, Saga and Crystal here.

Speaker 2 (00:01):
Independent media just played a truly massive role in this election,
and we are so excited about what that means for
the future of the show.

Speaker 1 (00:08):
This is the only place where you can find honest
perspectives from the left and the right that simply does
not exist anywhere else.

Speaker 2 (00:14):
So if that is something that's important to you, please
go to Breakingpoints dot com. Become a member today and
you'll get access to our full shows, unedited, ad free,
and all put together for you every morning in your inbox.

Speaker 1 (00:25):
We need your help to build the future of independent
news media and we hope to see you at Breakingpoints
dot com. Good morning, everybody, Happy Monday. We have an
amazing show of everybody today. There it is people Live
for the pound Bro Show. Christal will be in for Rott.
What is She's feeling for you? On Wednesday?

Speaker 3 (00:43):
Ladies Day on Wendess All right, what do they call it?

Speaker 1 (00:46):
Who knows? That's that's for the other room, that's for yeah,
that's for them to decide. That's for the audience to decide.
I did not even coin Bro show that was.

Speaker 3 (00:53):
An audio choice room.

Speaker 1 (00:54):
Maybe it was you actually, I don't know, but anyway, Yeah,
that's right. We believe in women's choice here on the show.
So that's what you're going to see this week. Let's
go ahead and see what the hell do we even have?
All Right, come up on me. This is the toughest
part of the job here, actually saying what we have
to do today. We're going to start off with tariffs.
There's clues at the bottom, I know, but Ryan, the
amount of high end eye coordination that this all requires

(01:15):
is unbelievable. Okay, So we're going to be starting off
with tariffs. We're going to talk about some major flip
flops from the administration. Nobody knows what the hell is
going on from industry to Wall Street. People are dizzying
in their reactions. The dollar is sinking to new lows.
We're going to talk about China. This specifically is very interesting.
Some major new initiatives from the Chinese to ban rare

(01:37):
earth mineral exports to the United States, trying to choke
off critical American industries. We're going to talk about Recession
Watch and how many CEOs on Wall Street and others
responsible unfortunately for many of our fates in terms of
employers now already believe we're in a recession. Next, the
Consumer Sentiment Index from the University of Michigan, one of
the most watched studies there in terms of indicators how

(01:58):
Americans are feeling about the economy, mortgage rates, and others,
just came out. The response is absolutely devastating for the
Trump administration. A rare spot of good news here the
Iran negotiations appear to have gone well with the presidential
Envoy Steve Whitcoff some interesting stuff from behind the scenes.
The pro Israel lobby is absolutely freaking out over these developments.

(02:20):
Will break some of that down for you. Then there
is Bucel, the President of l Salvador, is currently in
Washington today. There's been some developments there with the Trump
administration appearing at least not to comply with the Supreme
Court order, or at the very least complying in their
own way at Ryan break a lot of that down
for you. And then finally some really devastating and terrible news.

(02:41):
It appears and arsonists tried to assassinate Governor Josh Shapiro
and his family in the Governor's mansion. Some of the
images that have come out are absolutely harrowing. We do
know that suspect has been arrested. We have some video
there from the Governor, Josh Shapiro breaking down the incident.
We don't have full details yet, but Ryan, it is
obviously you know, political mind and it's awful, but more

(03:01):
so it's just, you know, horrible. The images coming out
of that are horrible, and it does look like it
was a lot closer than anybody initially thought from the
initial results.

Speaker 4 (03:08):
Yes, the police are saying that the man intended to
beat Shapiro with the hammer if he had gotten to him.
The family got out, he didn't catch him.

Speaker 1 (03:17):
But the close call, like very close call, too way
too close, way too clear. The images of it are
genuinely crazy. So some questions about the governor, security, detail
about who this suspect is, and more. We're going to
try and break some of that down for you with
the latest developments that we have here. Thank you to
all of our premiumsubscribers Breakingpoints dot Com people who are
supporting the show, some expansion efforts and other things they're
going to see here behind the scenes. We will have

(03:38):
some big announcements this week tomorrow when Crystal is back
here at the desk, so we will bring that to
you then, so you could stay tuned. Actually, if you
want to become a previous describer today, you'll be the
very first to hear about it. Breakingpoints dot Com. There
you go. All right, let's go ahead and start off
with these tariffs. This is just the most insane thing
that we have seen yet, honestly from the Trump administration,
since the announcement of these reciprocal terrors. So Mark is

(04:00):
absolutely exploded with optimism over the weekend from this announcement
from the White House has put it up there on
the screen. Apple and Vidia score relief from US tariffs
with exemptions. Now you might be asking how exactly that
makes sense when the Commerce Secretary, Howard Lutnik had said
that we as a country actually want to build the iPhone,
and how we want a nation of people to screwing

(04:23):
what was it screwing tiny little screws to assemble them.
But clearly what happened is that there was an immense
pressure campaign from the White House or to on the
White House, from the consumer electronics industry ninety percent of
which comes from China, both smartphone and smartphone and laptops,
that were basically telling the White House they're like if

(04:45):
you do this, it will make it genuinely impossible to
be able to afford these electronics. Now, at that time,
it was already completely out of step with the White
House's discussion saying consistently there will be no exemptions. Exemptions
are impossible, don't even think about it. And actually the
net result of that tar or exemption would have meant

(05:05):
that children's toys and textiles and small business commerce goods
which are cheaper actually would go way up. So would
have devastated small businesses while protecting Apple and Nvidia's bottom line.
And so initially that was a pretty insane announcement. Markets
were set to shoot up dramatically, the NASDAK and other
tech focused industries. But then the Trump administration in only

(05:27):
a way the Trump administration can literally the next day
reversed course. Put this up there on the screen. Please,
this is from Trump, who now says this was on Sunday.
Nobody is getting off the hook for the unfair trade
imbalances that other countries have used against, especially China. Quote,
there was no tariff exemption announced on Friday. Now this

(05:49):
is news to all of us. Ryan, because the release
from the White House is not a joke from white
House dot gov was titled exemptions. Oh yeah, and it's
so funny because what happened is the exempts were announced
at people. Rightfully, I think smaller importers, non electronic importers,

(06:10):
were furious about it. And then the White House came
outs and actually there were no exemptions. And Howard Lutnik
gave an interview on the Sunday Shows where he completely
reversed course from just twenty our earliers about the so
called non exemptions. Here's what he had to say.

Speaker 5 (06:25):
So, you're saying that the big tariffs on things like
smartphones and laptops, iPhones, all those iPhones built in China,
that those tariffs are temporarily off, but they're going to
be coming right back on in another form in a
month or so or what are you saying?

Speaker 6 (06:44):
Correct?

Speaker 1 (06:44):
That's right, that's right.

Speaker 6 (06:46):
Semiconductors and pharmaceuticals will have a tariff model in order
to encourage them to re sure to be built in America.
We need our medicines and we need semiconductors and our
electronics to be built in America. We can't be to
hold and rely upon foreign countries for fundamental things that
we need. We can't be relying on China for fundamental

(07:09):
things that we need. Our medicines and our semiconductors need
to be built in America.

Speaker 7 (07:14):
Donald Trump is on it.

Speaker 1 (07:15):
He's calling that out.

Speaker 6 (07:16):
So you should understand these are included in the semiconductor
tariffs that are coming, and the pharmaceuticals are coming. Those
two areas are coming in the next month or two.
So this is not like a permanent sort of exemption.
He's just clarifying that these are not available to be
negotiated away by countries. These are things that are national

(07:37):
security that we need to be made in America.

Speaker 1 (07:41):
The present's mini So how can consumers and businesses make
decisions when it seems as though the president's trade policies
are shifting at a moment's notice.

Speaker 5 (07:51):
So this is unfolding exactly like we thought it would
in a dominant scenario.

Speaker 1 (07:57):
Got it makes a lot of sense.

Speaker 3 (07:58):
Ryan.

Speaker 1 (07:58):
We had exemptions and we we don't have exemptions, and actually, well,
there is a temporary exemption. That exemption will be gone
in a month.

Speaker 3 (08:05):
The exemption that doesn't exist.

Speaker 1 (08:06):
The exemption that we've never announced, where we lifted. That's
where we're at. Got that I mean people, it's not
funny because what does it mean for industry? Ryan, What
would any business watching this do right now?

Speaker 4 (08:18):
Just hold your cash and probably get it out of dollars. Yes, actually,
so it's not just rush to cash. That's what's so
sad about all of this is that the three hundred
million people in the United States, across the board, whether
you voted for Trump, voted for Kamala Arris, didn't vote
at all, are all going to suffer as a result
of this. And everything Lutnik is saying there is true.

(08:40):
We should be making our chips here, we should be
making our medicines here. Yes, that's absolutely right. None of
this is going to lead to that. And we're going
to talk about a little bit about how it's actually
going to get us further away from that, and we're
going to find out what it means to deliberately break
our own supply chains without how having any backup plan.

(09:01):
The monkey, you know, they always say, if you're a monkey,
you grab the next vine before you let go.

Speaker 3 (09:05):
Trump just let go.

Speaker 4 (09:07):
It's a good and he thought that they thought that
the falling to the jungle floor would be the leverage. Instead,
we're just going to wind up on the jungle floor.

Speaker 1 (09:14):
Yeah, and my friend Ryan Peterson, who had on the show.
You guys might remember him, the port expert, and he
tweeted this As a result, he said, quote, tariffs on
semiconductors and electronics will be introduced in about a month.
Quote those products were exempted from tariffs just yesterday. The
whole system seems designed to create paralysis. So it is
now clear if you're a CEO and if you green

(09:35):
lit a major investment decision, you should short that person stock.
That person should be fired as a shareholder. I would
vote to fire any CEO who greenlit a major investment
in the United States over the next ninety days while
all of this tariff stuff is happening, especially if you're
a Nasdaq investor for any of these major technology companies
and manufacture anything. Same with Apple. If you're Apple, you

(09:57):
know what you're going to do for the next ninety days.
We're not important shit, literally just gonna sit on our iPhone.
We were gonna hustle much as they can. We're gonna
as much as me. Except wait, but no, there is
a twenty percent tariff. It could go to one hundred
and four. Nobody knows, right, no, right, now, we'll just
let that sit here. Everybody else is good luck.

Speaker 4 (10:13):
You see the cargo planes, they had like four cargo
planes smuggling in iPhones. And I saw you tweeting about
this as well, that the Nvidia CEO, Jens Wang had
a you know, paid his company paid a million dollars
to go to a Trump Super pac dinner. It's unclear
if he talked with Trump or whatever. But you know,

(10:34):
if I pay a million dollars to get into a party,
I'm I'm gonna talk to that. Oh we're talking. Yeah,
we're talking. We're gonna do a couple of minutes. Yeah,
and then boom, all of a sudden. The chips, the
chips like Nvidia makes the chips that like make the
world run, and we'll make deep seat run a little faster.

Speaker 3 (10:50):
Oh yeah, we're gonna carve those out though. That's cool.

Speaker 4 (10:53):
So we're talking about a multi trillion dollar restructuring of
the economy. That the most important chip maker can get
a car about four after paying a million.

Speaker 1 (11:02):
Dollars, which is nothing for them, right right, This is
a multi right, the market cap and Endvidia is larger
than the entire stock exchange in the United Kingdom.

Speaker 4 (11:11):
They lost like billions. Yeah, in the last couple of
weeks exactly like a million.

Speaker 1 (11:14):
Yeah, a million is absolutely nothing. This gets to the
issue which again you know, look, n Video, they're going
to be fine.

Speaker 4 (11:22):
Oh and it's a million dollar dinner. Yeah, he may
have given a lot more than a million.

Speaker 1 (11:25):
Yeah, yeah, probably did so. Uh, you know, Nvidia, they're
going to be fine. Apple, they're going to be fine.
These people have hundreds of billions of dollars in cash,
market cap, all this other stuff. But all of these
other smaller importers. Let's say that you're a company, I'm
gonna you know, if you ever read about the history
of the iPhone, they're you know, the people that made
the glass for this phone that's in front of me,
of the laptop that's in front of me. Over ninety

(11:47):
percent of these products are manufactured in China, and entirely
in China. There are a lot of actually small businesses
and others. Let's say you make iPhone cases on ens
or something like that. Right, all of these input costs
and around the ecosystem and things, those people actually their
inputs under these exemptions would have skyrocketed and actually will
continue to be subject to the tariff regime and they're

(12:09):
the very ones who will be the most devastated. And
also because the way our economy works with just in
time delivery and no government incentive to do anything about it,
means that you are inflicting an incredible amount of suffering
to any D two C brand, somebody running e commerce,
even you know, just general like a bike shop is

(12:30):
always a classic example. A lot of those metals, we
don't even have them period, or if we do, let's
say Australia has them, they don't refine them. They have
to send them to China, and China aster to refine it,
and they have to send it over here for the
ability for fabrication purposes, et cetera. All of these are
exactly the type of businesses which are about to see
a massive increase. Now I can be conceptually supportive of tariffs,
just as you said, pharmaceuticals, great example. Why did China

(12:53):
dominate in pharmaceuticals? Why did Chinese and the Europeans dominate? Well,
the Europeans have the legacy, you know, kind of design framework,
very much like we have with Intel. But then China
of course saw it as a national strategic industry to
have all of these plants which create and can what
is it compound pharmaceuticals to be able to make all

(13:14):
this stuff. They don't do it because it's profitable per se.
It helps to you know, make a little bit of
a profit. But they do it because they know that
it's vital to their own strategic autonomy. We as fools,
of course, just allow this to be outsourced. Now, the
MAGA folks would say, yeah, of course, soccer, that's why
we immediately need to bring it over here. I would say, yeah, great, Well,
then you need to offer let's say a dollar for
dollar tax credit. For every dollar that you're going to

(13:35):
lose in business, you're going to get x amount of
tax credit for your capex, which is the amount that
you're about to invest here in the US. Everybody, it's
a win win situation. Instead, what we're going to saying
is we're going to increase your cost by one hundred
and forty percent and by the way, maybe and maybe not,
you know, in the next ninety days. So what do
you do as that person with that possible cash outlaw
If you're lucky enough to even have cash on your books,

(13:55):
which many businesses do not because they run on such
a tight margin. You aren't going to hoard that as
much as possible. In fact, you're probably going to fire
some people to free up a little bit of cash
flow for let's say you take a sixty percent haircut
or whatever. Not only are going to fire people, you
need even more cash on your balance sheet to make
sure you can prepare for the future. So this is
a contractual effect across the entire economy.

Speaker 4 (14:15):
Yeah, and currently, if you are a business like let's
say Apple that mostly that makes your entire product in China,
puts it in the box, puts a little cell of
fane on.

Speaker 1 (14:24):
It, puts shined in Cupertina.

Speaker 4 (14:26):
Y design sign you right, design it. You know, you
put it on a ship and you come over here.
You're exempt from these one hundred and fifty percent tariffs
or whatever. If you're a company that is in Columbus, Ohio,
and has been trying to bring back like serious jobs
to Ohio, and you bring you get something like you
were saying, you get some inputs from China, but then
you assemble the rest of the pieces in Columbus and

(14:49):
you're working with, you know, a distributor in Toledo and
like you, you are paying the tariffs.

Speaker 1 (14:55):
Yes, that's right.

Speaker 4 (14:56):
But if you take everything that you do, fire every
one of your wor find some plant on TikTok and
ask him to make your thing completely in there and
then figure out a way to get in or your
Apple and you can just you'll pay you bribe your
way in.

Speaker 3 (15:12):
Uh, then you're going to do better.

Speaker 4 (15:14):
So it incentivizes offshoring, it incentivizes doing all of your
work in China, and it also is going to bankrupt
as we speak, tons of small and medium sized companies,
which will then you know, get bought up by.

Speaker 3 (15:28):
The bigger ones and we'll have more corporate concentrations.

Speaker 1 (15:31):
Oh, that would never happen except oh it happened fifteen
years ago, right, yeah, I forgot about that. Yeah, let's
go and put the futures up there on the screen.
Futures are actually slightly up today.

Speaker 3 (15:39):
Because video and Apple are like house.

Speaker 1 (15:42):
I think seven percent of the S and P five
hundred is nvideo and so videos up the Apple stock
are increasing in their futures just over the next month
when people are optimistic even about that month long exemption
in teriffs. But the irony is is that if the
White House had kept a permanent exemption, or at least
the you know idea of a permanent exemption, the Nasdaq

(16:02):
would be up way highed sixty seven percent right now
because people thought that, oh, we're going to be having
some deals. Let's go and put a four up on
the screen. This guy did such a good job of
just summarizing. This is just since Wednesday, this is five days.
This is five days in the United States of America,
we have had universal reciprocal tariffs, a removal back down

(16:23):
to ten percent, fifty percent, Chinese tariffs ninety percent, Chinese
tariffs one hundred and four percent, Chinese tariffs one hundred
and twenty five percent, Chinese tariffs one hundred and forty
five percent, Chinese tariffs electronics exempted electronics. Now back on,
as he says, if you were a CFO of fortune
five hundred, would you improve any new investment in a
country this unstable answer? Honestly no, As I said, I

(16:44):
would personally, as a shareholder, vote to fire any CEO
who made a major outlay of cash, investment or import
decision under these conditions. And we can tell you for
the people who run this business Crystal and I were like, yeah,
there's going to be We're going ultra conservative, probably even
more conservative than we ever were before, and we're just

(17:04):
going to sit here and wait to see what the
macroeconomic conditions do.

Speaker 4 (17:08):
On that point, I saw Cernovich talking about this, Yes, right,
And the connection is he did a good job the podcast,
the podcast Universe, you know, which was pretty heavily you know,
pro Trump. This this time around us, the media loves
to remind us. You know, one of the big legs
of their of their economic business model is e commerce.
And that's not just podcasters, that's uh, you know, TikTokers.

(17:29):
That's the entire kind of creator. Economy is organized around
not you know, advertising, and the advertising is about selling
stuff online. So if you just get your money from
ad revenue, you're taking a hit because companies are going
to spend less, they're going to have less to spend
on advertisements. If they have less that they're able to.

Speaker 3 (17:49):
Sell to the public.

Speaker 4 (17:50):
And then there's the direct sales that your your little
little store. You think those counterpoints and breaking points socks
are expensive now.

Speaker 1 (17:58):
Like actually know all bars are made in the USA,
so all of us are made in the USA.

Speaker 3 (18:02):
Labor, I guess we're going to find out.

Speaker 1 (18:04):
Yeah, well, I mean the way that you would say
it is that even though it is made in the USA,
and even though it is made in the USA with
union labors, at the input costs of cotton or whatever
it certainly comes from. Try I've actually learned this in
the suit industry. Actually, by the way, this is a
PSA for anybody who's out there have some friends who
are getting married. I did not realize that the vast
majority of wedding dresses are made in China. And if

(18:27):
I don't even believe it's possible to buy a made
in America branded wedding dress right now. And so if
you're getting married, you should get order that wedding dress
sometime soon and just hope and pray that you're not there.

Speaker 4 (18:37):
And if you have American made products like cars or socks,
let's say you even sourced the cotton, which unlikely here
and everything is done in here because demand is getting
theoretically in a world where things are stable, that's not
the world we're in, but let's pretend that's Let's pretend
there's some stability. Demand is getting funneled into those American products.

(18:59):
So if you if you own a used Ford, like
the price of it's going.

Speaker 3 (19:03):
To go up.

Speaker 4 (19:04):
Yeah, you're going to be able to get more for that. Yeah,
that's forwards. And wait a minute, why why is that?

Speaker 1 (19:09):
Well did you already see that? There's a story going
around of a guy who drove off the lot with
a brand new CRV and the dealer called him the
next day and he's like, hey, man, I will pay
you a lot more than you paid for this brand.
I mean, that never happens. What you're supposed to lose
twenty percent of your value the moment that it goes
pump off. By the way, CRV owners undefeated here, thank you,

(19:31):
shout out to the CRV bros.

Speaker 4 (19:33):
Account myself in your ranks. There's so much more demand.

Speaker 3 (19:35):
I mean that's so.

Speaker 4 (19:36):
The idea is then that price increase is then supposed
to incentivize more domestic production. Like that's the whole that's
the whole theory behind it. But for the very medium term,
there's not going to be that production. So you're just
going to pay fifty five dollars for those socks instead
of fIF to thirty.

Speaker 1 (19:50):
Tis rough out there, Ryan, Let's put a five guys,
can we up on the screen. This is from Charles Gasperino.
Forgive the block of tax, but actually is important. And
so he quotes a prominent investor and Wall Street tech
analysts who's been there for you basically twenty years, and
his word, it's one of those things on Wall Street,
these analysts who've been around for a long time. Everybody
really does take a listen to him. He goes, Let's

(20:11):
be clear. On Friday night, the White House excluded big
tech in the chip sector from these Chinese tariffs, right,
which would have made the tech stat for soocks rally.
As I said, initially, this is a huge victory. But now,
according to the White House and Howard Lutnik this morning,
the semiconductor sectoral tariffs will be coming over the next
month or to including smartphone and computers. So the mass
confusion created by this constant news flow is quote dizzying

(20:31):
for the industry and investors, creating a massive uncertainty and
chaos for companies trying to plan their supply chain inventory
as in demand as we are in Master's week and
in Sunday. This would be like changing the whole locations
for pro golfers in Augusta while the final round is
going on in real time. This is how investors feel
right now. What are the rules of the game, What
do earnings look like? What will the new tariffs look like?
Can they be negotiated? How can companies give guidance in

(20:53):
this environment? We are in a much better spot than
Friday and last week heading into Sunday night, but there
is still quote mass uncertainty, chaos, confusion around the next steps,
with all focused on the China tariff negotiations being front
and center, and any progress on a game, this high
stakes poker between Beijing and DC being crucial to the
markets and the economy this week. So with the chaos.

Speaker 4 (21:13):
One amendment to that, it's like changing the whole after
you swing, Yeah, like your ball is your balls look
like if you change the whole right before you right
before you take your shot, Like all right, give me
a different club and I'll take a different shot. You swing,
you hit the ball, and then they're like, oh no,
by the way, you're actually supposed to be going to
the fourteenth t.

Speaker 3 (21:32):
Yeah, you were playing at the seventeenth T.

Speaker 1 (21:34):
I don't know I watched that balls. By the way,
I don't know anything about golf.

Speaker 3 (21:37):
I didn't watch it because I don't have time on
weekends and do anything.

Speaker 1 (21:41):
I don't really get it. Macilroy, Yeah, what he want
to come back or something.

Speaker 4 (21:45):
This is the He hadn't won it, hadn't won eleven
years and he locked up.

Speaker 1 (21:49):
Really yeah, oh, good f riend.

Speaker 4 (21:50):
So he's now won all the He's got the Grand Slam,
the career good Slam. Right, what is a career Gland
Slam In golf? It means you win all the masters?
So yeah, what is it, PGA, PGA, us O Open Masters.

Speaker 3 (22:01):
I don't watch What's what's the fourth one?

Speaker 1 (22:02):
I don't know.

Speaker 8 (22:03):
You guys.

Speaker 3 (22:05):
All the big ones?

Speaker 1 (22:07):
Okay, all right, got it? Yeah, So this shows you
the extent of my my golf knowledge. There was some
There was some guy who I met what's his name,
Bryson Deshambo. I had no idea who this guy was.

Speaker 3 (22:18):
He was the guy like neck and neck with Yeah.

Speaker 1 (22:21):
Once we were at this event and he was there
and all these people were taking picture. I was like,
who is this guy. Someone was like, oh, he's one
of the biggest golfer in the world.

Speaker 3 (22:28):
I was like, oh cool, he almost almost almost won
the Master.

Speaker 1 (22:31):
Shows you the extent of my golf knowledge. So sorry,
Bryce has no offense. I promise it's It's truly not you.

Speaker 3 (22:37):
He has bigger problems today.

Speaker 1 (22:38):
Okay, there we go. All right, let's go in transition
to these China tariffs, because this is the biggest part
of the story. Let's go and put this up there
on the screen. Quote, the rift is here. This is
from Bill Ackman, who has a guess brand, kind of
a Cassandra around these tariffs in terms of being in
the MAGA orbit. He says, the rift is healing China.

(23:01):
Quote asks for relief from the tariffs, creating an opening
for a China tariff pause and negotiations. Remember previously that
Bill was one of the first big MAGA people to
call for a ninety day pause, and that did eventually
become the eventual policy. Nobody knows necessarily if he was
responsible for that, but I'm paying attention just because previously
what he had called for was something that Trump was

(23:22):
willing to listen. But the thing is is that nas
these China terrifts start to set in, and remember they
are the policy. This is the policy of the United
States government. These are being hit right now with these tariffs.
It is somewhat funny. There's been some news about how
DOGE fired the entire team to collect the tariffs, so
the amount of revenue actually coming in right now is zero.
Although my wife is a trade expert and I asked

(23:43):
her and she said that actually tariffs are liable to
It's kind of like taxes. Even if you don't pay
on you still owe it. Yeah, so they're coming. Yeah,
they're not going to forget. If you have a two
hundred and seventy days or something.

Speaker 4 (23:55):
They're trying to find those guys phone number, get them
back in, right, They're going to get.

Speaker 1 (23:57):
Him back in eventually. Yeah. So if you're an export,
don't cheat, because you will.

Speaker 4 (24:01):
If you're those fired Doge, you're fired by dos and
you worked on tariffs, right, You're getting offered many millions
of dollars to work for the private sector to show
them how to get out of there.

Speaker 1 (24:10):
I'm I'm starting a boot teek consulting firm, going to
work for video tomorrow if I'm one of those folks.
But as we said, the tariffs are now in place.
This is the policy. We have one hundred and forty
five percent tariffs. The Chinese are roughly around eighty three
percent on their tariffs say they say they won't go
any higher. There has been some quote exemption. Again, nobody
knows what's going on, but arguably it's the Chinese tariffs

(24:32):
do not matter as much as where those targeted tariffs are.
And so this was the single biggest news to me.
Let's put it up there on the screen. And obviously
we've been covering it from last week and we knew
it was coming. But China has now quote halted critical
exports as a trade war intensified. They have suspended exports
of certain rare earth minerals and magnets that are crucial
for the world's car, semiconductor and aerospace industries. Now, this

(24:56):
is a very important story because it really does reveal
the entire game. Quote. Ninety percent of the six rare
earth minerals which they have now ordered export licenses restrictions
on are produced in China and refined in China. The
metals and the special magnets made with them can now
only be shipped out of China with a special export
license for which US companies no longer qualify quote. But

(25:19):
China has barely started even setting up that system for
issuing those licenses, meaning that the concentration there is a
complete freeze. If factories in Detroit and elsewhere run out
of these rare earth magnets, that would prevent them from
assembling cars and products with electric motors that require them.
Companies very widely in their size of emergency stockpiles, so
the timing of production disruption is very hard to predict.

(25:41):
But the main flag was actually a quote that was
buried deep within which just shows either rot at the
center of the US economy quote. Many American companies keep
little or no inventory because they do not want to
tie up cash and stockpiles of costly materials. One of
the metals, for example, subject to the new controls, dysproucium
oxide trades for two hundred and four dollars per kilogram

(26:03):
in Shanghai, but much much more than that outside of China,
meaning that you first of all, you would be competing
for almost ten percent of whatever of the minerals or
the refined minerals and magnets and other inputs that you
need for your car. But second that you are in
a situation where when you create, you know a produce
over ninety percent of something and you yourself have nothing
on the balance sheet. Again, we are looking at just

(26:25):
a freeze of economic activity. I would rather shut my
entire production line down at that point and just wait
and see what the hell is going to happen. The
exact opposite of what you want in intended policy. So
remember they have a lot of cards here. You know,
the infamous line like you have no cards. That's true
for Ukraine, not true whenever it comes to China. When

(26:45):
you you said it so well, was it with a monkey.
If you're going to grab onto something you want to grab,
make sure that you have something else. If you're gonna
let go, you want to let go. We have no
planning here for US companies. We have no tax incentive,
we have no strategic stockpile. We have a street stockpile
of oil. But we've been talking about this now for
a decade. I literally know you and I how many
discussions that we had about onshoring. We went through the

(27:06):
whole COVID thing. Our trade deficits actually increased with China.
We did not bring very much manufacturing back here a
little bit, you know, with the chipsack and a few things,
but not even close to But where we're so the
number was going in the right therea it was, it
was going on the line was Remember if you go
down by ninety and you go up by five, it's like, okay,
you're still down eighty five percent. But my point is
just with these rare earth minerals, there has been no

(27:26):
plan from the government around a stockpile. It's not like
we can look to the you know, EPA or some
other agency, you know, the Energy Department and have confidence
and they're like, we have gone to Australia and we've
ensured that US companies will have preferential export agreements here
with our allies. No, instead, we're actually hitting Australia with
ten percent tariff. At the same time, why would they

(27:47):
give you anything? They don't want to give us anything.

Speaker 3 (27:49):
And we also we print the world's currency.

Speaker 4 (27:51):
If we wanted to go into a trade war with China,
knowing that they control all of these refined rearers that
we need, knowing that in twenty nineteen they threatened to
do this, knowing that they did this to Japan when
they were in a trade war with Japan. For fifteen years,
the Pentagon has been talking about how this is an
issue for our defense industrial base, and that we should

(28:12):
do something about it. We could have, if we chose,
created a strategic reserve of these elements.

Speaker 3 (28:19):
So you get a bottom up. We do it like
you said, we do it with oil. We decided not to.

Speaker 4 (28:24):
And then and then we went in and started this
trade war without the cards. Cards made in China, and
here we are before the show, I was mentioned we
talked about this on the show on Wednesday because China,
I think it was on Tuesday at China announ said
they were going to slap these export licenses on these products,
and so it was clear. It was only in the

(28:44):
trade press at the time, but it was clear like, oh,
export licenses.

Speaker 3 (28:50):
I don't think you're going to be able to get
an export license.

Speaker 1 (28:53):
I think I broke it down on Tuesday. Yeah, people
can roll the tame. It was in the financial time.
It's there, but they're not.

Speaker 4 (28:59):
But then the main mainstream press is picking it up
like a week later, and the US being like, oh,
oh wait a minute, we didn't see this one coming.

Speaker 3 (29:07):
Now you need a disprosium guy. If you're gonna like keep.

Speaker 1 (29:11):
Your lines running, I hope we have a good disproceed
You have a good disprosium guy. Yeah, do you have
your dispris? I don't, I confess, you know, hope one
of the cameras in this studio doesn't break, by the way,
But I wonder where they're all made from.

Speaker 3 (29:21):
Yes, go down to a what camera show can we.

Speaker 1 (29:24):
Put let's see a nine, Please up on the screen.
Because this does a really good job, this Financial Times
tearsheet of showing where all of the like the major
concentrations of goods from China. It's still it's even more
shocking sometimes even when you look at it. Eighty percent
of smartphones, sixty six percent of laptops, and that is
only the finished product. I'm not even talking about the

(29:44):
input products. Some sixty nine percent of lithium ion batteries,
you have, three quarters of all children's toys, you have,
fifty percent. Of headphones, you've got, but fifty six percent
of sports footwear you've got fifty three and of rubber footwear,
ceramics sinks. I mean, you know, you can go down
the line for video game consoles eighty six percent, electric

(30:09):
fans eighty eight percent, Christmas festivity goods eighty seven percent.
I guess we won't be saying Merry Christmas. In December,
stainless China World on Christmas eighty six percent. You know,
plastic kitchen where eighty percent? Now do you need to live?
Do you need to fulfilled life and have plastic kitchen?
I don't even use plasticichen word. I can tell you
that because I'm concerned about some of the inputs and

(30:30):
all that. But yeah, is it that easy to buy? No,
it's not, you know, but you know why people use
it because it's convenient and because it's cheap. Can we
blame them? No, not in the occurrent economy that we're in.
If we want all as a country to be buying
like lodge, you know, cast iron, steel pans and stuff like,
I'm all for it, but you know, you need a
real cultural revolution, I think in terms of convenience, in

(30:53):
the way that our entire society and daily life and
all of that is structured.

Speaker 6 (30:57):
You know.

Speaker 1 (30:57):
Right now it's like weirdos and crunchy granola mo who
are into that stuff. But the rest of the world
is or the rest of the country is trying to
eat and they're trying to make sure that you can
work two jobs and not be bankrupt, you know, rather
than have to rely on a lot of these other
health concerns or whatever. And that's kind of my point
around the entire thing. We are so dramatically reliant on China,
and I would love to be able to change that.

(31:18):
I don't think it's made our lives materially much richer. However,
with no government dollar for dollar policy, industrial policy, I
mean just general like theory about preparation, how can the
public not conclude that this is not just a chaotic
process that with a net effect that will just make
everybody much worse off in the immediate term. That's effectively

(31:39):
what has happened here.

Speaker 4 (31:39):
Yeah, And the structure, the structure of the deal that
we had cut with China was effectively, like you said,
designed in coopertinos. So Coopertino's gonna do a lot of
They're gonna have the nice, cushy laptop jobs. Yes, and
China's gonna make those laptops for those laptop jobs, and
the Cupertino people are gonna make most of the money.

Speaker 8 (31:58):
Out of that.

Speaker 4 (31:58):
Like this is a you know, Intel is the same
thing all the what the major amount of wealth is
going to flow to these vice presidents, these middle managers,
service and then and then to the the Apple store employees.

Speaker 3 (32:11):
Who are you know, an Apple Store employee makes more.

Speaker 4 (32:16):
Than if you if you if you open a factory,
and we're paying somebody just screw in like the screws
into the iPhone, you're actually paying more for that person there. Uh,
so that's the deal now, and you're seeing this on
TikTok all over the place.

Speaker 3 (32:31):
China's like, you know what, how about we rip that
deal up? Like are it wasn't that great a deal
for us?

Speaker 4 (32:36):
Like this this whole thing where we do the work
and we take like a tiny margin on top, and
you take everything else. So you have the military and
you have the intellectual property. So we were comfortable with
this arrangement for now because it was helping us develop
our manufacturing capacity. But now, you know what, we can
just go ahead and make the stuff. We have smart

(32:56):
executives here, we'll just keep that. We'll steal your IP
and we'll just sell the stuff.

Speaker 1 (33:02):
How do you like that?

Speaker 3 (33:02):
And we're like, oh, you can do that.

Speaker 1 (33:05):
Yeah, Well that's kind of the issue is, yeah, we
got some of these tiktoks right about. Yeah, let's play
one of these tiktoks there's a hilarious there's a guy
who has apparently so TikTok, and they're not just him.
There's many others who are just blowing up on TikTok
right now. I hate that I even have to say
those words, but you know, let's talk about this before
we can. You know at the very same time that

(33:27):
the TikTok is obviously putting his finger on the algorithm
of trying to undermine Trump's tariffs, He's trying to save TikTok, right,
So a little ironic there. Some of us have warned
about that, but oh he got won the youth boat
or whatever, so that was worth completely reversing his position
on it. So these are the types of videos that
are going megaviral all across the country right now. Let's

(33:50):
take a listen. Hello from China. Let me show you
the United States products in my home? Nothing. Do you
have something from China in your home? You gotta give
it to the guy he's right, Yeah, I mean what
does he have? Nothing? Yeah? He doesn't mean, he doesn't
need anything, right, he's living He's living a fine enough
life there.

Speaker 4 (34:09):
Max said he was talking about the move bombing in Philadelphia.

Speaker 3 (34:12):
He's digging up our history?

Speaker 1 (34:13):
Is he really?

Speaker 6 (34:14):
Wow?

Speaker 1 (34:15):
I mean all right, like we can trade insults or whatever.

Speaker 3 (34:20):
About China. That's why there's fine the US. What does
Trump say, We're not We're not innocent either.

Speaker 1 (34:25):
Yeah, yeah, that's right. Look, I mean when you go
over there and you talk to I've met many Chinese
people who are just like wholehearted CCC believers, and they're
always like, they're like, you're gonna lecture me. They're like,
what about Chicago? What about And I'm like, yeah, it's
got a good point. Yeah, it's one of those words.

Speaker 3 (34:40):
Listen.

Speaker 1 (34:40):
I do encourage people to visit China if you're able to,
and to talk to Chinese people, especially around this because
a lot of them don't care nearly as much actually
as some of the people over here. And part of
the reason why is it's pretty clear as you could
see where he just said, He's like, we don't have
any products from you that's made in my own No,
I may not technically be true, you know, design in Kupertino,
et cetera. We can hit them back, we're like, oh

(35:02):
you never designed that. It's like yeah, but they've also
got it's not like we have a monopoly on smartphones.
They've got Wildwei phones. They're pretty good.

Speaker 4 (35:09):
Actually, yeah, and at least we don't like sweet people
off the streets just for writing op eds.

Speaker 3 (35:14):
Oh right, oh wait, no, never mind, all right.

Speaker 1 (35:17):
All right, it's a little different, but we'll get to that. No, no,
it's okay. It's not different per se in this case,
but on a mass scale level.

Speaker 3 (35:24):
Perhaps we do allow people to criticize our country just not.

Speaker 1 (35:27):
Is Yeah, that's right, there you go. Okay, So that's
an important cave yacht in the point. Finally, around all
of this is just to show people how they have
a tremendous amount of leverage on the like the refined
rare earth minerals. They have incredible state capacity. And this
is one thing I do not want people to miss.

(35:48):
Let's put this last part up on the screen A
ten please, So this I mentioned this on our Friday show,
but I really want to underscore JD dot Com, which
is one of those massive e kermis giants. It's one
of the biggest companies in the global five hundred. It
says they are going to purchase two hundred billion one
equivalent to twenty seven billion dollars of goods from Chinese

(36:08):
exporters Quote to help manufacturers shift to the domestic market.
The Chinese company also said Friday it would provided training, subsidies,
and other support for export oriented manufacturers to sell their
products in China. That is what a functioning state looks like.
So you're in the middle of a trade war. Your
greatest importer and relying reliable quote trading partner cuts you off.

Speaker 3 (36:32):
So what do you do.

Speaker 1 (36:33):
You mobilize the full capacity of the state and you
order your equivalent of like Amazon or whatever Wayfair, etc.
One of those types of company actually frankly bigger in
terms of market cap. And you say, hey, we've allowed
you guys to operate. Now for some years, you're going
to pump twenty seven billion dollars.

Speaker 4 (36:51):
Into the economy.

Speaker 1 (36:52):
And now you multiply that times one hundred, and you
have a state which is able to mobilize the full
force of so called private government, which is in tech
or private industry, not really private. It's government controlled, the
full government already. If you read again, all you have
to do is go read what they say they're going
to do. They have full control over their currency. They're

(37:12):
going to manipulate their currency. They have full control over
their interest rates. They're going to drop interest rates make
borrowing costs much easier. On the overall domestic They're going
to pump billions of dollars into their domestic economy to
make sure that their manufacturers do not miss a bait
and can continue to supply the Chinese market. They're currently
on a global campaign trying to strike deals with US

(37:33):
allies exporters who feel very snubbed. President Chi Chingping will
be in Vietnam today. Remember, Vietnam is the number eight
trading partner of the United States of America, and Vietnam
actually was a major success story in overall US efforts
to try to cultivate a manufacturing base outside of China.
There have been accusations, there's been a trans shipping hub, etc.

(37:54):
But you know, sixty percent of the Vietnamese people, even
after what we did to them, are actually very approving
of the United States of America and we're ready to
do business. It's called the Communist Party in the same
way the Chinese are. But that's what they're doing over there.
And meanwhile they strike deals with the Europeans about byd cars, right,
So they have a full strategy. They know exactly what

(38:14):
they're doing over here. We've got Howard Lutnik and Trump
change in their mind every twenty four hours. What are
who would you rather do business with today? This is
not caping for China. I just respect them. You have
to respect competence. What we see here is a complete
incompetence with devastating results for real people. These are people's lives.

(38:36):
Screw even the retirement accounts and all that stuff. People
just can start gettinglaid off like in the next month.
It's that's and that's step one. You know. And there's
no private compat there's no CCP to pay for your
health care or make sure you get an apartment. You know,
you're on your own in this country.

Speaker 4 (38:51):
Yes, And the move that is available to them that
they're wisely taking woodn't isn't available to us on the
flip side. In other words, we have to try to
increase supply. We have to try to build manufacturing capacity overnight.
They have to just find demands somehow. It is much easier,

(39:13):
think about it. It's much easier to increase demand. And
that's a great example of how they did twenty seven
billion dollars. You made a bunch of crap that you
were going to sell to the United States, but now
you can't sell it. We're going to buy a bunch
of that stuff, and they're going to get creative, and
they're going to find other places. They'll be with currency
manipulation and with state subsidies. They will move it into Africa,

(39:35):
South Asia, Europe, like you just mentioned South America.

Speaker 3 (39:40):
A lot of these countries are going to get some
real good.

Speaker 4 (39:42):
Deals on some Chinese stuff and maybe that produces long
lasting relationships, and then it could, let's say, in peace
to Africa, it could end up, you know, with a
little bit of economic stimulus, because then the products come
in and then the products get resold on the secondary market,
and that creates jobs for people, and it creates and
it creates a chain between those those countries and China.

(40:02):
That's so much easier to think through and to do,
especially if you're planning it from the top, than it
is to create supply overnight, especially when the inputs to
make that supply are controlled by China. It's so comically
stupid that it could never have worked in this way.

(40:23):
The only thing the US could have done and could
still do, is invest in its own manufacturing capacity, invest
in educate, education and building up a trade workforce. UH
subsidize the construction of manufacturing facilities, and then use American
diplomatic power to create markets for the for those companies.

(40:46):
And then down the road, if they're deeply struggling, you
can do targeted tariffs, you know, on the particular industry
that that could work.

Speaker 3 (40:54):
Like that's that's that's that's not doesn't take a genius
to come.

Speaker 1 (40:58):
Up with that.

Speaker 3 (40:59):
But this never was going to work.

Speaker 1 (41:01):
No, so let's go to recession, shall we? And miss
major titans of Wall Street are now saying recte. Now,
I want to be clear, I don't like these people,
Ray Dalio, Larry Fink, all these other folks. You still
have to listen because Wall Street is an expectations game, right,
so fu gets it's all fake. And so whenever somebody

(41:23):
who is a global market player says we're in a recession,
it can actually become a self fulfilling prophecy. So even
if we don't like these people, we don't like what
they represent, and we think they're responsible for a lot
of bad that's happened in the country, it doesn't matter
because when you control hundreds of billions of dollars literally
at your disposal, not to mention, you know, basically an
arm of overall UF soft power of market activity of deals.

(41:47):
If you say that there's going to be a contraction
in recession on CNBC, it will cause all your peers,
also titans of industry, to do the same thing. So
that's why we have to pay attention when these people speak.
Let's take a listen Larry Fank, CEO of Black Ride.
Here's what we had to say.

Speaker 7 (42:01):
The United States post World War Two was a global stabilizer.
We are the global destabilizer right now. That's a very
you know, that's a very hard thing to say because
I pride ourselves of being, you know, bringing the leadership,
bringing the conversations, celebrate. Yes, I do believe we're probably starting,

(42:23):
if not, we're in a recession. Yes, I think the
market is still anticipating underestimating how high inflation can get.
If you factor in all the terraces, right, you factor
in all these other issues, it's going to be quite additive.
I mean I read in a report that if you
just take the terrace in the cost of home building,

(42:46):
the average new home could be up as much as
twenty six percent. We already have a housing affordability problem.

Speaker 4 (42:52):
None of this sounds any good to me, all right,
I mean, and it's all self inflicted, by the way, none.

Speaker 6 (42:56):
Of it needed.

Speaker 7 (42:57):
This is not a pandemic, This is not a financial
price is. This is something that we've created.

Speaker 1 (43:02):
So you can see from his comments there specifically about
recession and about contraction increase of goods, that this is quote,
if we are not in a recession, if you factor
in all the terariffs, is going to be quite additives.
I do believe we are probably starting so you could
see from him. We also have Ray Dallio, the quote
legendary investor. I'll tell you more about Dalio in a

(43:24):
little bit, but you got to hand it to him.
He actually wrote a decent enough book and as always
as worth listening to. Here's what he had to say.

Speaker 8 (43:31):
I think that right now we are at a decision
making point and very close to recession, and I'm worried
about something worse than a recession if this isn't handled well.
A recession is two negative quarters of GDP, and whether
it goes slightly there, we always have those things. We

(43:51):
have something that's much more profound. We have a breaking
down of the monetary order. We are going to change
the monetary order because we cannot spend the amounts of money.

Speaker 1 (44:02):
So we have that problem.

Speaker 8 (44:03):
And when we talk about the dollar and we talk
about tariffs, we have that we are having profound changes
in our domestic order, how ruling is existing, and we're
having profound changes in the world order. Such times are
very much like the nineteen thirties. I've studied history and
this repeats over and over again. So if you take tariffs,

(44:25):
if you take debt, if you take the rising power
challenging existing power, if you take those factors and look
at the factors, those changes in the orders the systems
are very, very disruptive. How that's handled could produce something
that is much worse than a recession.

Speaker 3 (44:44):
Much worse than recession. Yeah, that's n I want to
hear for no reason.

Speaker 1 (44:47):
And specifically, what he's talking about is the dollar market.
So like we're literally right as you and I are speaking, Ryan,
there's been a huge decline in the dollar globally. People
are fleeing the dollar and the currency is now now
Basically the reason why it matters is that not only
do we have an import shock in terms of tariffs,
but now those imports priced in foreign currencies will be

(45:08):
more expensive with relatives. So there's been an overall slight
increase in the currency exchange rate that is being added
on top of the tariffs. At the same time, we
have the bond market problem that is happening right now,
increasing the amount of costs for borrowing from the United
States of America and debt servicing, So bond market yield increases,
dollar decreases the overall imports. Here, you have a contractual environment.

(45:32):
This is genuinely akin to like the nineteen seventies in
some sort of stagflation level crisis. The only thing that
we are missing is high unemployment, and luckily we are
not there yet, but we have all of the ingredients
to create high unemployment if we do not back away
and change this policy. Look, let's also say this Trump
has the off ramp any time that he wants it
can be like, look, we're going to do bilateral negotiations

(45:55):
and it's going to take a year, right, but this
current idea is ninety days. The current ninety day hypothesis.
I looked it up. The average bilateral negotiation between the
United States and another country takes one to five years.
One to five years for a bilateral trading goes. So
the idea that you're going to do seventy different negotiations
over a ninety day period preposterous. We can't even do

(46:18):
one with the UK, with our greatest allies in years,
and we still don't even have a freaking violence make anything.

Speaker 4 (46:23):
Yeah, and yeah, you're right, they don't even do anything.
All they do is send is scotch right. Yes, it's
not even difficult.

Speaker 1 (46:29):
To figure out. I'm joking my good friends over there
combat we love you.

Speaker 2 (46:36):
Yeah, I know.

Speaker 4 (46:36):
It's like, let's put up Charlie Gasparino the next element
here too, which is you know, and he's saying that
what what Sager is saying is reflected in all of
the conversations that Gasparino is having with the investors and CEOs,
that all of these factors are are coming together to
produce a recession. And my quibble with Sager's point is,

(46:58):
so you're saying that Trump could Trump could end this.
Yes he could, and there would be a nice, nice
spike and we'll start to pick up the pieces again.
There's already and it's hard to maybe even explain this
to people. There's already significant damage done. Businesses are you
know some I'm sure there you can if you run

(47:20):
one of these businesses. Let us know, like businesses are
going under, like companies that run in this just in
time cash flow fashion, which is basically any company under
like Apple.

Speaker 1 (47:30):
Uh.

Speaker 3 (47:31):
Those are those are struggling.

Speaker 8 (47:32):
Uh.

Speaker 4 (47:33):
And then the other question is, okay, Trump, will Trump
could make a decision here? How does China respond? Is
chairman she merciful? Because maybe Chairman she is like, you
know what, we've got our boot on their neck right now,
and we're actually liking the soybean deal that we're getting

(47:53):
from Brazil Argentina.

Speaker 3 (47:55):
Yeah, I saw Mike Grounds.

Speaker 4 (47:57):
Complaining in a political article this morning because they're getting
absolutely wrecked. Something like twenty eight percent of commodities exported
out of South Dakota go to China. It's over a billion,
you know, more than a billion dollars like this, this
is just one little state. What so does China have

(48:20):
to automatically immediately be like all right, you know, it's cool.

Speaker 3 (48:23):
You guys had a bit of a temper tantrum.

Speaker 4 (48:26):
All's well, we're back all the deals that we had
before back on. And that's on the on the fantasy
kind of that Trump just immediately buckles on everything is
Trump just keeps coming back with, Oh, well, well guys,
I'm not done with this, Like.

Speaker 3 (48:43):
We've been getting ripped off for decades and I'm going
to do this.

Speaker 4 (48:46):
Like Trump seems deeply committed to this bit, like all
the all the way down to me, you'd have to
have Congress step in and be like, no, president doesn't
have the authority anymore to just move tariffs around. Yeah,
I'm sure, and that needs two thirds. That needs two
thirds because Trump is going to veto. Then do you

(49:07):
have any idea where the doubt would have to be
for that to happen? Yeah, there's a place you have
to be.

Speaker 3 (49:12):
There's a spot.

Speaker 4 (49:12):
I'm thinking seventy and seven percent on employment.

Speaker 1 (49:15):
What do you think seventy percent? Seventy percent drop?

Speaker 4 (49:17):
Yeah, maybe a seventy I think three fourths drop.

Speaker 1 (49:20):
In the three fourths drops because even fifty oh, two
thousand and nine we came back, it would have to
be yeah, I think seventy percent.

Speaker 4 (49:27):
Or you lose eight hundred thousand jobs in a month, right,
and and you lose you know, five thousand.

Speaker 1 (49:33):
Mass unemployment, thirteen percent interest right, yeah, maybe, and.

Speaker 4 (49:36):
Then Congress is like, okay, you know what, Actually, we're
taking these toys away from you. You can play with
these matches.

Speaker 1 (49:42):
I mean, that is one fantasy. I keep seeing people saying,
oh my gosh.

Speaker 4 (49:45):
We did not want that fantasy to come true because
it means that we will have marched right through.

Speaker 1 (49:50):
Well. I meant people have this fantasy that Congress is
going to do something. No, they're not. Okay, Congress is
currently the Republican Congress is currently trying to cut one
trillion dollars from the overall government spending, meanwhile also increasing
the amount spent on the Pentagon. Just so everybody understands,
that's the stated goal. I'm not kidding. Trump said, let's
cut a trillion. He said that, yeah, all right, and

(50:10):
the the Republicans are the currently. By the way, the
only way to do that actually would be to reduce
overall manufacturing tax credits.

Speaker 4 (50:16):
Just so you all though, so a sort of borrowing
really genius baring costs, like you said, are going through
the roof because our cost interest rates are going up.

Speaker 1 (50:22):
That's storing thirty thirty.

Speaker 3 (50:23):
Her mortgage rates are at their highest levels, which.

Speaker 1 (50:26):
Is I think they're at like seventy percent. Yeah, it's
a disaster. Yeah, so yeah, things are not good. And finally,
B three, let's put this up there on the screen.
This is very important and this kind of gets to
your point, Ryan, quote Trump tariffs on China will soon
bring irreversible damage to many businesses. And the reason why
is that, you know, anybody who's ever run a business,

(50:46):
can you really take a ninety day freeze to your books?

Speaker 6 (50:49):
No?

Speaker 1 (50:49):
I mean the vast majority of people cannot survive that. Yeah,
if you're Apple, sure, if you're Meta, yeah, and you
have you know, this business that spits off all this cash.
That's not what most people do. Is actually smaller businesses,
e commerce businesses and more. You know, if you look
at here, quote canceled freight orders and abandoned freight from
China are quickly becoming the norm. According to supply chain executives,

(51:10):
furniture producers in China have seen a quote complete halt
in orders from US importers. We are seeing the same
across toys, apparel, footwear, sports equipment. We have had same
across Southeast Asia. Now we may have some restart because
of the ninety day pause. Almost everything is on hold
as it relates to China's business. Basically, it will stop
all trade between the United States and China. These are

(51:32):
all people I'm quoting who are supply chain and logistics experts.
I also, you know, we had Ryan Peterson on the show,
who I previously mentioned, and Ryan is just constantly flagging
about how difficult it is for all of these people
to do business, you know, under these current economic conditions.
And look, there are some who are able to take

(51:52):
advantage with some decent enough cash that are on the books,
but there are not enough people who are able to
survive any of this. Are simply having to freeze everything.
And we are seeing already the stories come out. You know,
across the board of e commerce businesses, smaller people who
produce things limited an amount of cash, can't afford lots
of inventory. You know, they didn't do anything wrong, right,

(52:15):
and if you're going to kill their business overnight, I
think the government should give you something for it, kind
of like COVID, you know. And look, you can you
could disagree with lockdowns and all that, and you're right,
if we didn't do lockdowns, and I guess we wouldn't
have had to do bailouts or any of that. But
can we all agree that if we didn't lock you down,
then the government of course owes you some renunration. If
they're going to explicitly tell you that, then of course
you can't just kill somebody overnight, you know, whenever you're

(52:37):
doing business and not just you know, and just take it.
But apparently that is that is the current state of
where things are.

Speaker 4 (52:44):
That's what a strategic approach to a trade war would
look like to say, oh, which is what the Chinese
are doing right exactly, like this is going to be
hard for one hundred and eighty days. Yeah, and this
is how we as a government are going to help
our people. Whether this because this is important for all
of us and we're in this together in Yeah, we're
not getting that.

Speaker 3 (53:03):
Yeah, well they are, okay or.

Speaker 1 (53:04):
Not they are?

Speaker 3 (53:05):
Yeah, that's right.

Speaker 1 (53:06):
Yeah. Actually, I'm really curious to see, let's say this
last year, we need to compare the material life of
the American after one year and the average Chinese and
not just some guy inching in like an actual like
a normal middle class Chinese person, And I would love
to see how that actually, I mean Look, it's possible
they're bluffing, right, It's technically possible. Yes, they have high

(53:26):
amounts of state capacity. They still have a billion people.
They have you know, they're addicted to six to eight
percent economic growth. They had the zero COVID nonsense, which
really exposed like the fragility of the overall Chinese system.
For all the BYD talk and all that, you still
have a lot of people who are very concerned sociologically
about mass unemployments.

Speaker 3 (53:46):
Worries that they yeah, AI bubble right.

Speaker 1 (53:49):
I mean, but just generally I would still rather be
them than I would rather be us right now, at
least in terms of how things are working out. Okay,
let's go to consumer sentiment, and this is kind of
what we were teasing, and this really does demonstrate some
of the issues where these are always filming prophecies. So
if people have less consumer sentiment and want to spend money,

(54:11):
then they will spend less money, which will lead to
an overall economic contraction. Let's go and put this up
there on the screen. Quote from anxious to petrified, consumer
sentiment plunges further. The University of Michigan's Closely Washed index
has now hit its seconst lowest reading on record, Dragged
down by fears of higher prices and unemployment, Americans turned

(54:32):
much more pessimistic about the economy. In April, the University
of Michigan Consumer Sentiment Index nosedive to fifty from fifty
seven just last month. Sentiment has been falling steadily through
twenty twenty five, and expectations for inflation have now hit
the highest level in forty four years. According to the survey,
sentiment is now at its second lowest in history, only
slightly lower in June twenty twenty two, when inflation was

(54:56):
soaring thanks to snarl supply chains and pandemic buying. Back
in twenty twenty two, the index actually did touch fifty,
which was the lowest reading on record going back to
nineteen fifty two. So that's basically where we're back at
in terms of inflation expectations. The survey basically what they
do is it actually took place over the Turff time.
So it's important to note that that a lot of

(55:16):
this is in real time data. People are, you know,
accepting this, and what you're watching in the data is
that people are very concerned about their ability to buy things,
and specifically about the expectation for inflation hitting some forty
four year high, which means they are going to keep
cash or cash if you've got it, not spend it,
not do any normal economic activity, not make any major plans.

(55:39):
And in a seventy percent consumer based society, that is
the worst possible thing you can do. In China, you
can get away with a lower consumer sentiment. You're not
as hooked on it out manufacturing, we got a lot
more fundamentals. And in America with cheap TVs and all
this other Walmart and all these other countries that are
all these other companies good luck, you know, talking about
what Easter's coming up? Are people going to be buying

(55:59):
present we're going to be traveling or people you know,
these are all decisions that people make already. Delta Airlines
came out and said, we have seen a mass cancelation
of bookings across the board. We are watching economic activity
go down. We have to revise earnings. Walmart actually is expecting,
hilariously enough increase business on the theory that they always
do well during recessions. So keep that in mind. You know,

(56:22):
the companies or what is it, Walmart, McDonald's always did
well tree, dollar Tree dollar general. The recession proof industries
not recesion proof. Of the people we thrivesion. They're actually thinking, oh,
actually we're going to see more low price customers. All
of the data out there for forecasts on the books
shows that consumer good retailers, and they're getting crushed at
the stock market level. I mean, Nike is down some

(56:42):
twenty percent or something like that. I resolved of a
lot of these tariffs at one point. Even with Vietnam,
things have changed a little bit for them, but you
can just see that the danger lurks for all of
them in this consumption based society.

Speaker 4 (56:54):
That word, yeah, this is the whole thing. And so
that that's all well said on the economic model. My
colleague Mobs is saying over drop Side is I've seen
him often make this point that, and you know he's
he observes a lot of different cultures around the world,
and one thing that he talks about with the United
States is that we are, as much as we love

(57:17):
to like hate on ourselves, one of the most successful
pluralistic societies. Like, yes, we have our divisions, people don't
like each other, but like not compared to other countries,
like we have a multicultural society that gets along relatively
relatively well and definitely relative to other countries. The glue
that stitches all that together is our consumer society. We

(57:39):
all love stuff, and we love the shows that are
organized around us buying stuff. We love events that are
built around stuff like Friday. And also you go to
like parties at the in the US, like there's the
cheap stuff everywhere there consumer driven things, like everybody's buying
stuff for these events. Like the culture is tied together

(58:01):
by the consumer society and it is effectively done so too.
You don't have to love the consumer society, but it's
laudable that you can have a multicultural, pluralistic society that
isn't breaking out into sectarian violence in a in like
a routine way.

Speaker 3 (58:19):
Pull that away, good luck.

Speaker 4 (58:21):
So like just like no matter how bad you think
things are, like, they can always get a lot worse.
And so you've you ripped the rug out from underneath
that we might be at each other's throats.

Speaker 1 (58:32):
What's the quote, It's like it's always darkest just.

Speaker 4 (58:35):
Before if we can't have like the Sunday NFL, Yeah,
that's Thursday night.

Speaker 1 (58:42):
Well, that's why I was saying about Easter, I mean
Eastern candy. Right, Let's say you even see a ten
percent drop in overall, that's a lot. I mean, you know,
that's a lot of inventory. Now I got a discount
and I got to house it. You got all these problems,
what do you do? You know, people are going to
try and drop the price on the sixty seventy percent.
People usually go home for Easter Sunday or so they're

(59:03):
not buying gas if they decide not to decide to
cancel their travel. Or sometimes you give gifts to your
nieces and nephews. This year, you're gonna give a little bit,
Like these are all these decisions compound, you know. For example,
I was talking to my barber and I was like,
I'm just curious. Have you seen anything goes? Yeah, I
have noticed that people who used to come in every
three weeks are now going five, you know, and that's

(59:24):
sounds like it doesn't sound crazy to you. Individuals. A
compound that over your entire customer base and you're seeing
a turn of a pretty serious hit to your bottom line,
and you multiply that across the entire economy.

Speaker 4 (59:37):
And the NFL, for instance, like the whole reason that
it's able to be the league that it is is
because of the advertising revenue, right, that comes in, and
if people are not buying the stuff that's advertised on
those commercials, then you're not gonna pay You're not gonna
pay the advertising rates anymore.

Speaker 3 (59:54):
And then the thing starts to collapse, starts to go backwards.

Speaker 1 (59:57):
Actually, we can serve as a good indicator as well
because of our YouTube back end. I remember, I will
never forget what the YouTube backhand over at Rising looked
like back in March, and in April of twenty twenty
it evaporated, right, It was like this gone over, probably
like ninety percent of the revenue. So yeah, I can
Unfortunately we can tell.

Speaker 3 (01:00:17):
You really, have you noticed anything.

Speaker 1 (01:00:19):
I'm taking a look now. No, I actually think it
seems fine and tight. Things seems fine.

Speaker 3 (01:00:24):
We're still buying stuff. Fu I think seems.

Speaker 1 (01:00:26):
Actually, you know, this is a good time to say this.
So you know our premium show that we send out
to people, this is a good Uh, yeah, this is
I've always noticed this our premium show which we send out.
It is an unlisted link and also available on local Spotify,
et cetera. One of the places people watch it is
sometimes an unlisted YouTube video that is available. Our premium
describers have been telling us that even though we earn

(01:00:47):
again we earn no money from this. We are not
turning monetization on. YouTube reserves the right to monetize that
if they want to, and it's always a recesion indicator
to me when they start doing that, because I remember
right back in twenty twenty two when we launched a
show immediately when the gas price is skyrocketed and we
saw the pullback. That's when they started doing it a lot.
They stopped. Now recently, just in the last two weeks,

(01:01:10):
people have been complaining at an auseum, saying, oh my god,
because they're paid. Yeah, of course it should. I'm not
mad at them. I'm telling you is that that is
a major sign to me that they're trying to fill
as much inventory as possible to blast it and satisfy
some of their advertising. And again, we make not one
dollar from that. We don't want them to do it,
So I guess that's a shout out if you do

(01:01:30):
want to watch it totally add free. Spotify is still
there and locals is still there as well. But unfortunately,
if you watch it on YouTube. There is nothing that
we can do, and it's infuriating, but that is a
signal to me. You know that YouTube is basically throwing
everything they've gotten, a little bit, all inventory that they've
got there, thrown as many ads into that as possible.

(01:01:51):
And when they do that, it means that they're probably
making less in terms of their CPM, so they got
to fill it up with more ad blocks than normal.
So just a little bit of insight behind the scenes.
Let's go to the last part here. Just see three. Please,
This is just about the bond market. This is the
same thing that we have been looking at. But you
can really see that those yields continue to increase to
levels which they really do not want them to. They're

(01:02:11):
very worried about going to a yield of some five
percent with a point five percent increase of a percent,
which is not supposed to happen really if you look
at the overall long term trends and that right now
with the current stated goal of bringing that yield down
and being unable to be to do so, if there's
a worry about some runaway you know, basically selling of

(01:02:32):
US bonds, which would make it so that the yield increases,
borrowing costs, and mortgage rates and interest rates and all
that continue to go very high, and it would very
much cripple the administration. So that's another feedback loop where
mortgage rates continue to go up. I actually think they're
I think they went down after they were up at
some seven percent or whatever. Again, if everybody continues to so,

(01:02:52):
but people are still watching, right for the Federal Reserve,
and if the Federal Reserve and Jerome Powell and them
decide not to do any sort of emergency rate cut,
we really are stuck in this for a long time.
And there's a lot of things six point.

Speaker 3 (01:03:06):
You don't want that UH.

Speaker 4 (01:03:08):
And there is some question about how organized this is UH,
and we're still trying to sort sort this out. But
there was reporting that Japan was dumping UH, that Japan
was dumping bonds.

Speaker 1 (01:03:22):
And Japan is.

Speaker 4 (01:03:22):
Obviously one of the biggest holders of bonds now, China
huge holder of bonds as well Canada. So we are
out there antagonizing all of these countries while they literally
hold our cards. And if and if they take our
cards and they just start selling a few of them,
that that drives down the price of our bonds and

(01:03:43):
then drives up the yield. That's just mathematically like, there's
no other's that's that's that's how it's going to work
if there's a.

Speaker 3 (01:03:49):
Sellouf and it's never worked that way before.

Speaker 4 (01:03:51):
For the most part, you have a crash in the
stock market, that that means people are selling stocks and
moving to the safety of treasury bonds. That is the
orthodox understanding of the global economy that's broken right now,
and it's probably a combination of people.

Speaker 3 (01:04:07):
Leaving the kind of structure of.

Speaker 4 (01:04:09):
The American dollar economy and our adversaries like Japan, who
should be our friends, but we've turned them into adversaries,
deliberately bringing pain to us so that we will back
off of this because it costs them too. They don't
want to do this, because if you are a holder
of American treasuries right now and you're selling into a

(01:04:29):
down market, you're losing millions and billions of dollars, but
you're costing us a lot more. So, You're you're you're
prioritizing geopolitics over your bottom line and the interests of
your bottom line doing better down the road. And it
is what like Trump was asked when he caved, why
did you do this? And he said his exact quote was,

(01:04:52):
the bond market is a very tricky thing.

Speaker 3 (01:04:56):
In it. James Carville famously Nippy James Carville.

Speaker 4 (01:05:00):
Famously in nineteen ninety three said he if he was
ever reincarnated, he wanted to come back as the bond
market because it was the most powerful world. I didn't
know that because it's what what's the context?

Speaker 1 (01:05:10):
Right?

Speaker 4 (01:05:10):
So Clinton came in with grand a grand economic vision,
and Larry Summers and his and his buddies told him,
if you do this, the bond market is going to panic.
Interest rates are going to go up, and you'll have
a recession. They're like, so you're telling us we ran
on this whole thing that we want to do and
we can't because of the bond market. They're like, yes,

(01:05:31):
that's what we're telling you, huh. And so that's the
Carbo was like, when I get reincarnated, I want to
come back bond market.

Speaker 1 (01:05:36):
I need to go back and just slap Trump back
into line. So do you have any good books on
the history of the Clinton administration? I only read My Life,
which is complete propaganda. Yah, it's just laughable.

Speaker 3 (01:05:47):
Clinton's book let me think on that. I'm not sure.

Speaker 1 (01:05:49):
I don't know any decent ones. I still can't believe
I even waste my time reading.

Speaker 4 (01:05:54):
It's seven hundred pages, two lifetimes.

Speaker 1 (01:05:58):
Yeah, it's two volumes. It's so big anyway, all right, long, long,
long time ago

Speaker 5 (01:06:16):
M.