May 28, 2025 • 48 mins
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The Ukraine conflict shows no signs of resolution despite early predictions, with Russia taking a long-term strategic approach that suggests we may be only halfway through what could become a six-year confrontation.
• Russia's aggression extends beyond Ukraine with increased military presence near Finland, telecommunications sabotage, and cyber warfare against Europe
• Ukraine is developing a powerful military force with homegrown equipment and innovative tactics, potentially becoming a major NATO contributor
• Europe is shifting from ESG-focused spending to military expansion, with Germany committing 5% of its budget to defense
• Defense companies with diverse military offerings and less dependence on US government financing present long-term investment opportunities
• Ukraine's rare earth mineral reserves represent strategic assets coveted by both Russia and Western nations
• Energy security has accelerated Europe's investments in alternative sources, creating opportunities for American LNG exporters
• Long-term investment in defense requires tolerance for significant volatility driven by geopolitical developments
Join us next time with special guests Rich Weiss and Marcus Sturtevant as we continue exploring investment opportunities in an increasingly complex global landscape.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hello everyone and welcome to Skeptic's Guide to
Investing.
I'm Steve Davenport and I'mhere with Clem Miller and we are
going to talk to you todayabout the issue that doesn't
seem to go away Ukraine and theEU and Russia.
How does this all affect the USeconomy, the military sections
(00:27):
of our industrial sector, and isthis an opportunity for weapons
?
Or is this something that isgoing to go away soon and by the
time you get into the militarystocks, they will probably have
gone down because Trump willhave negotiated a new peace?
I'm not sure that anybodyexpected on the first day, as
(00:51):
Trump promised, he would callPutin and they would have a
conversation and the Ukrainebattles would end.
It hasn't happened.
It doesn't look to happenbecause Trump is now stepping
away from the peacekeeper roleand the Pope or Turkey's Erdogan
are stepping into that void andtrying to figure out a way to
(01:15):
stop what is the most violencein Europe that we've seen many
years.
So I guess I have to ask youKlan, is this war, which was
supposed to be over onInauguration Day, going to see
the next inauguration, or do youthink we'll see something that
(01:35):
will bring it to the peace tableand allow us to say that there
is peace in Europe again?
Speaker 2 (01:44):
So if you look at World War II from 1939 to 1945,
world War II in Europe that is,it was a six-year war.
So we are now halfway towardsthat six-year period.
So I think that and you knowPutin and the Russians they tend
(02:10):
to look sort of long-term.
You know they don't look atthis as, oh well, we failed to
go in for three days, we failedto take Kiev in three days,
therefore we're going to end thewar.
They don't think of it that way.
They think in terms oflong-term strategic objectives,
and so my guess is that thisthing is about half over at this
(02:32):
point.
That would be my guess, and Ithink that what we're seeing is,
you know, you got to look atUkraine as not just a contained
issue.
I think you need to look atUkraine as part of a bigger
(02:54):
puzzle which includes activitiesthat Russia is engaging in
against other European countries, against other European
countries.
So, for example, beefing upforces along other parts of the
border, especially with Finlandrecently, also being a little
(03:19):
bit more aggressive in theBaltic Sea and, in addition to
that, doing things like cuttingtelecommunications cables that
go from, you know, westernEurope up to Scandinavia.
So I think there's a bit andyou know, some cyber activity.
So I think there's this is partof an overall aggression aimed
(03:42):
at trying to weaken Europe and,to some degree, weaken the
United States as well.
And I think the Russians, uhPutin is counting on Trump's
impatience, uh to try to uheither uh put him to the wayside
(04:04):
so that he's irrelevant to thisequation, or bring Trump on
their side.
And I don't think the Russiansare quite succeeding in that.
I mean, they're trying toexploit the fact that Trump
wants you know, says he wantspeace in Ukraine.
(04:26):
So they're trying to exploitthat.
But at the end of the day, Idon't think, I think the
Russians are not going to dothings that actually, you know,
bring a permanent peace toEuropeMAN.
Speaker 1 (04:41):
Doesn't it feel, though, that if the Europeans
can have to deal with Russia ontheir own, without US heavy
involvement, both fromfinancially and from resources
that Putin has won Because heknows how to distract and
(05:03):
approach Europe, because heknows that they've been mainly a
pacifist consumer of his energy, if he can just take away the
US's involvement?
If the US hadn't been involvedfor the last three years, where
would we be in Ukraine today?
I think it would have been over.
I agree with that.
(05:24):
I agree with that.
So I agree with that.
I guess I'm saying that ifTrump is becoming neutral, then
that's a very pro-Putin move,and so, even though it allows
him to not do anything and thensay, hey, I tried to make a
peace, but nobody would make thepeace and therefore the blood
(05:45):
is not on my hands, yeah, usneutrality plays into Putin's
hands, and the main reason itplays into Putin's hands is
because the US is likely tostart moving away from sanctions
, and it's US and Europeansanctions that have really hurt
Russia.
Speaker 2 (06:06):
And Putin is playing into Trump's deal-making kind of
philosophy.
The Russians have sort ofdangled energy resources and
other things in front of Trump,and so Trump wants to try get
access to those, and you knowPutin is using that to sort of,
(06:35):
you know, push the US into aneutral position.
But I'd also say another thingtoo the Ukraine we see today is
not the same Ukraine that we sawin 2022, and certainly not the
same Ukraine we saw in 2014,before Crimea.
All throughout this time,ukraine has been getting
stronger and stronger andstronger and developing its
(06:56):
military and expanding it and,you know, bringing it up to
speed technologically and doinga lot of homegrown military
issues, military equipment,namely drones, for example and
also adopting new militarytactics.
(07:18):
Ukraine is going to end up withthe most powerful, I believe
you know, outside of, you knowcertain areas of, of technology.
I think Ukraine is going to endup having the, you know, the
most powerful army in Europe atsome point, if it doesn't
(07:42):
already, and that's why you knowI, that's why I sometimes tell
people and I'll say it againhere that I think the EU needs
Ukraine just as much as Ukraineneeds the EU.
Because even Zelensky has saidthat once we're in NATO this is
Zelensky and his desire tobecome part of NATO Once we're
(08:04):
in NATO, we are going to makeone of the we, ukraine, are
going to make one of the biggestcontributions to the NATO
alliance.
Because of their frontlinestatus and huge army, I mean
NATO.
Nato, I mean NATO, is a verydifferent place.
You know European NATO that isin a very different um position
(08:26):
than it was, you know, fiveyears ago.
You've got ukraine's army,you've got poland's big army,
you've got finland and its bigarmy.
Now in nato it's a uh.
You know, the eastern front isvery um is very militarized
right now.
The Eastern Front of NATO isvery militarized right now.
Speaker 1 (08:51):
Is this a short-term reaction or is this a long-term
trend?
That's what I have a problemwith with military stocks and
this whole discussion aboutmilitary usage and as an
investment.
Military usage and as aninvestment Is it a short-term
opportunity or is it a themethat you could invest in over
(09:13):
years?
Because it feels to me likeEurope had a movement towards
ESG and environment and theyfocused their energy in the
economies and the environmentand now, all of a sudden, merck
has turned a corner and saidwe're going to make the budget
and allow for the debt to moveup because we are going to
commit 5% to the military, and Ijust don't.
(09:37):
It's hard for me to determine.
Is this a short-term reaction?
That could turn just as quicklythe other way if there were a
peace in Ukraine.
But if we don't believe thatpeace is really able to be
maintained, then we willconstantly see the demand for
military weapons and thereforeit's a better investment theme.
(09:59):
I hate to break it down toinvestments when we're talking
about the lives of Ukrainiansand Russians.
I hate to break it down toinvestments when we're talking
about the lives of Ukrainiansand Russians, but I think that's
what's been a struggle for me.
Going forward is how heavily doyou want to invest in military,
and is it really a long-termtheme?
We've had peace for so long,relatively speaking, around the
(10:22):
world that to think that we'regoing to move into a military
age feels a little bit lesslikely, do you agree?
Speaker 2 (10:34):
um, I think we are going into a military age, uh,
and so let me, uh, let me giveyou a few reasons for that.
One is, I do think to yourpoint about the EU sort of
switching gears from sort of anESG orientation to a military
(10:55):
orientation.
I think the EU folks think theycan walk and chew gum at the
same time.
Oh, that's ridiculous walk andchew gum at the same time oh,
that's ridiculous, and no, andin fact, in fact, I think that
(11:17):
you know one of the reasons whythe EU has been trying to
promote green energy and natural, and you know green energy wind
, solar is because they weredependent on Russian natural gas
, and so I think and they'vebuilt some facilities to take US
(11:37):
natural gas as well, so I thinkthat reducing a dependency on
your enemy is something theythought was a good thing, and
the ESG, you know, you knowgreen energy, allows them, as
you know, one part of theirstrategy to deal with that.
(11:58):
So I don't think, I don't thinkthe two, those two things are
are inconsistent.
I really don't.
Speaker 1 (12:05):
So I think that, in terms of well, if they wanted to
be more independent and thatwas the reason then wouldn't you
have kept nuclear?
Because it feels like if if you, when you're saying is true
they wanted to separatethemselves from russia.
The fastest way is to developnuclear, not to develop solar
(12:25):
right.
Speaker 2 (12:27):
Well, yeah, that's a technology that already exists.
Speaker 1 (12:30):
Yeah, you would think so you can't really, I don't
know.
I look at nuclear and I thinkthat has to be part of your plan
.
Speaker 2 (12:41):
Right, it should be, and it still is very much a part
of the French plan.
The French have never gottenrid of nuclear.
But Germany I don't know howfar they have denuclearized, but
you got to remember Fukushimawas 2011.
And that's what started theGerman denuclearization and
(13:07):
that's 14 years ago, and so theyprobably made already some
progress on that and they didthis before 2014,.
The Crimean invasion theycertainly did it before 2022.
So they probably made someprogress already toward
denuclearization.
(13:27):
But you know, still, I thinkthat you know this emphasis on
green energy is part, you know,is connected to this plan for
trying to become less dependenton Russian natural gas.
That's not to say they're notdependent on natural gas.
They're getting natural gasfrom North Africa, for example.
(13:49):
They're getting LNG from Qatar.
They're getting LNG from theUnited States.
Speaker 1 (13:55):
That's not somewhere where Europe was still getting
natural gas from.
Speaker 2 (13:58):
Russia.
They have a little bit comingin from the South, not from Nord
Stream, of course, which wasblown up, but from the south,
not from nordstrom, of course,which was blown up, but from the
south versus, uh, I believe,something called turk stream, um
, but through the south, uh, wasit another country, and russia
(14:20):
supplies their country.
Is that?
Well, it's uh, this, this, this.
It relates to the fact thathungary andvakia, I believe, are
still getting natural gas fromRussia versus the southern
pipeline.
Speaker 1 (14:40):
Okay, it feels like the US is trying.
I mean, there's a bill in theSenate with 80 co-authors who
wants to increase the tariffs onRussia to 500% and harden the
economic damage to Putin, and ifthat bill were to ever get
brought up, I think it would getpassed and it would get passed
to the House, and the House hasa majority to pass it and put it
(15:04):
on Trump's desk.
Do you think that's where we'regoing?
Is it when he starts focusingon these tariffs for Europe as a
trading partner and starts tolook at what's our common enemy,
that will start to?
I mean, do we have thebandwidth in Congress to walk
(15:25):
and chew gum and do a tax billand a uh, a bill on
international affairs, or do wehave to pass one before we can
move on to the other?
Speaker 2 (15:37):
Well, you could put uh, you could put one inside the
other, for example, or youcould do them in parallel, but
you know, it isn't a bigbeautiful bill?
Already the big beautiful bill,and if you can't change, well
you'd have to go back to theHouse and get you know and get
some changes to it.
Now I think it's more likely itwould be a separate bill.
(15:59):
But the problem is with that iswe already have and so does the
EU we already have veryextensive sanctions on Russia
and tariffs are being enforced.
Oh yeah, oh yeah.
And tariffs are just aridiculous concept when it comes
(16:21):
to Russia, because they don'texport anything to us.
So it's just the idea,ridiculous concept when it comes
to Russia, because they don'texport anything to us.
So it's just a.
It's the idea.
I know Trump likes to think oftariffs as being the solution to
everything, but you know,tariffs there's, they're
irrelevant when it comes toRussia.
I mean, the fact that he mightbe talking about tariffs and
with regard to Russia to mesuggests possibly that he's just
(16:46):
trying to.
You know, he's being, you know,subtly pro-Putin by actually
recommending something thatactually has no impact on Putin.
I could see that.
Yeah, so it's sanctions thatreally matter, the, the, the two
(17:06):
things that really um, well,three things.
There's three things that couldreally hurt russia.
One is giving more and moreweapons, and more advanced
weapons, to ukraine.
That's the second.
That's number one.
Number two is allowing uh rallowing Russia's seized foreign
(17:28):
assets, western seized foreignassets, to be used to pay for
weapons and there's a lot ofthose for a lot of those assets
right now.
There, the West is allowing theinterest earned on those assets
to be used by Ukraine.
But if we were to actuallyallow the bulk, the corpus, so
(17:52):
to speak, of those assets to beused, that would be a huge thing
.
And the other thing, the lastthing, would be to really crack
down on this so-called shadowfleet that Russia is using to
secretly export oil.
And if we really crack down onthat, that would be.
Speaker 1 (18:16):
That's what I meant when I said that we need to
crack down because everybodyknows there's this additional
fleet of oil moving around thatis not being captured by these
sanctions.
Speaker 2 (18:28):
But can I take you back to the US, for example?
Speaker 1 (18:32):
Yeah, tell me why we're going to see this bill
pass and it's going to make animpact on what's happening in
Russia.
Do you think there's courage inthe Republican side to actually
do something on their own,without the leadership of Trump?
Speaker 2 (18:49):
You know.
I mean he still has to sign thebill or get a super majority.
So I don't think anything'sgoing to happen on Russia unless
you know, unless you know fromthe US standpoint, unless the
Trump administration isconvinced to do it.
So I don't think that's thecase.
But but let me, let me justdive into that a little bit more
(19:11):
.
You know there's, there's thethere.
You know there's the types armssales to Europe, or US arms
deliveries, and US arms sales toUkraine and also to the rest of
Europe.
There's really three types.
(19:33):
One are ones where we'reactually financing the arms
sales.
The US government is financingthe arms sales.
The second is where the USgovernment is giving away or
financing, on very, veryinexpensive, cheap financing
(19:55):
terms, unused stocks that wehave that haven't been used, in
other words, surplus that wehave that haven't been used, in
other words, surplus right,military surplus.
And the third type would besort of ongoing sales that
aren't financed by the USgovernment.
So my guess is that we're goingto see much less of the first
(20:18):
kind.
In other words, I think that USfinancing of arms sales to
Ukraine might diminish a lot.
But does it get replaced byEuropean arms dealers?
Well, it would be.
No, I think it.
I think what's going to happenis the US is going to say to our
, our defense companies we'renot going to pay for it anymore,
(20:42):
so you have to make commercialdeals with ukraine and ukraine's
going to have to come up withthe money, probably through
these seized foreign assets, inorder to pay.
Or the europeans would have topay for it and they would pay
for, uh, commercial weaponssales from the US to fit gaps
(21:05):
which exist within the Europeans.
Speaker 1 (21:08):
Wouldn't they want to use European companies?
If they're going to have to pay, wouldn't it be better to pay
them?
Speaker 2 (21:15):
Well, I mean, there are certain things that Europe
has, that the US has, and thereare certain things that Europe
doesn't have, that the US has,and just one example for that
would be the Patriot defensesystem Europe doesn't really
have something of thatcapability and so Well, that's
(21:40):
one question.
Speaker 1 (21:40):
I have two or three questions that I just need a yes
or no answer Will Ah, there'snever a yes or no answer.
Speaker 2 (21:44):
There's never a yes or no yes there has to be.
Speaker 1 (21:47):
We can't have these podcasts go on forever.
There needs to be some yes orno's.
So first, yes or no.
Germany will release anddeliver the Taurus missile to
the Ukraine.
Yes or no?
Speaker 2 (22:00):
Yes.
Speaker 1 (22:02):
The US will pass the bill in the House and Senate to
increase sanctions againstRussia, yes or no?
Yes, trump will sign said billto deliver sanctions against
Russia.
Yes or no.
Speaker 2 (22:26):
I don't think so.
Okay, well, it depends onwhat's in the sanctions bill.
Speaker 1 (22:36):
Well.
Speaker 2 (22:37):
The reason I think Trump may not sign it Is that
Trump Sees dollar signs and hedoesn't want to be.
You know he may not liftexisting sanctions but he wants
to leave open the possibilitythat you know he could make you
(23:00):
know for the US and perhaps forhimself, money in Russia.
He's, regardless of what peoplemay think about you, know about
whether Trump is in Putin'spocket and it's kind of hard to
know whether that's the case ornot.
He's been very interested inRussia since it was the Soviet
(23:21):
union.
You know going over theretrying to build a Trump Tower.
That's all public record.
He's been very interested indoing business in Russia.
I don't think that's gone away.
Speaker 1 (23:36):
It seems to me that the biggest opportunity for the
US in the next, when I look atthe energy space, is to become
the natural gas supplier toGermany from the East Coast
ports of LNG and from the WestCoast ports to Japan with LNG.
If we became an LNG power,wouldn't there be two huge
(23:57):
allies who would start to bedependent upon us for their
energy supplies, and aren't we abetter supplier in terms of
stability than what they'redoing with Russia?
It feels like everybody talksabout the US making more money
and the US having more.
You know Trump wanting to havemore consumption of the US
products.
(24:17):
And we have this natural gasthat we're just burning off into
the environment here in the US,gas that we're just burning off
into the environment here inthe US.
Why wouldn't we take thatenergy and put it to those two
allies and say we want to have along-term trade imbalance
adjusted and we're going to doit with LNG, and that solves a
(24:42):
lot of the questions about ourimports and our exports, doesn't
it?
Speaker 2 (24:51):
Well, it certainly adds to exports and reduces
overall trade deficits, right,but the crazy thing, one of the
crazy things about the Trumpadministration's tariffs is that
he always looks at it on abilateral basis and not on a
multilateral basis.
There was this so-calledtemporary deal with the UK, and
(25:17):
the UK has a trade surplus.
Us has a trade surplus with theUK, and yet we're still putting
10% tariffs on them.
Go figure, right.
Speaker 1 (25:32):
Yeah, I can figure out.
It's just you figure out wherepolitically it's popular and
then you go for that.
Do you think any of thesedecisions by the Trump
administration have not beenpulled across their voter base
in those states?
I mean, everything is nowpulled before it is decided,
isn't it?
I don't think so.
(25:53):
I think.
Speaker 2 (25:55):
I think.
I think Trump is pulling a lotof this crap out of his brain.
Ok, I think that's what's goingon.
Okay, and he's advised, he'sgot you know.
You know the old imagery of theangel on one shoulder and the
devil on the other shoulder.
So he's got, he's got on oneshoulder, he's got Peter Navarro
(26:16):
, and, and then on the othershoulder, he's got Scott Besant.
Scott Besant's the angel, scottBesson's the angel, peter
Navarro's the devil, and thenyou've got, you know, the local
joker, who is Howard Lutnick.
Okay, so running around, andRubio Rubio is, I think, rubio's
(26:39):
with Besant.
I agree with that.
Speaker 1 (26:43):
Okay, and Lutnickick, I agree, would go on the double
shoulder, but uh, navarronavarro, navarro and letnick and
letnick, yeah and um, and so itall.
Speaker 2 (26:54):
You know, like they say, it all depends on, uh on.
You know who's whispered intrump's ear last and uh, trump's
ear last.
And if Navarro is that person,then you know Trump is going to
keep doing these crazy things.
If it's Scott.
Speaker 1 (27:13):
Besson, he's going to be more reasonable.
Okay, from an investmentstandpoint, if you had a young
person who was asking you whatto buy in this chaos that is the
markets right now and I'd usethe term chaos a little bit
loosely because it's been allgood for the last month after
kind of a bad April but let'slook at the question about would
(27:35):
you invest in US arms LockheedMartin and Raytheon RTX now, yes
or no?
Lockheed Martin and RaytheonRTX Now yes or no?
Speaker 2 (27:50):
Yes or no, yes or no we're going to get some yes or
no's in there.
You can ask me a yes or no.
Yeah, sure yeah.
Speaker 1 (27:56):
You think so?
Speaker 2 (27:57):
Yeah, I would, so this is not a short-term
investment.
This is something you can holdfor a while, because this is
Well, I would say it's actuallymore long-term than short-term
investment.
This is something you can holdfor a while because Well, I
would say it's actually morelong-term than short-term.
Okay, because I think there's alot of volatility in terms of
the Trump administration couldsay okay, we're going to reduce
our arms sales and then it'sover, right for these companies.
Speaker 1 (28:22):
Well, if they're looking to export, what do you
have in the US that we'releaders in?
You have technology, you havesome arms, you have energy, you
have consumer companies, youhave media.
I'd say that we're probably theleader.
Speaker 2 (28:41):
A lot of it's services and it doesn't even go
into the the trade deficitcalculation.
Speaker 1 (28:46):
I know that the calculation is wrong and I know
that, but but I guess I point tothings that people can put
their hands on, understandingwhy I invest in this.
Because I see demand coming foryears and years for this part
of the world who will continueto need the US as a supplier,
(29:06):
and that's where I thinklong-term defense is an area to,
is an area to go to.
Okay.
Speaker 2 (29:14):
And I think you need to look at.
I think you need to look atprogram companies that have
defense companies that have abroader array of programs, so
like RTX, which combinedRaytheon and United Technologies
(29:34):
, I think, is.
I mean, I don't want to, I'mnot going to recommend a stock
on this call, but I think youwant something like an.
You want something like like anRTX which, something like an
RTX which is uh, is morediversified, uh in terms of its
uh military product offering.
But again, this is a long-termthing.
(29:56):
There's going to be a lot ofshort-term volatility because,
depending on what, um, you know,the current uh geopolitical
winds are and you know, Iwouldn't assume you know these
geopolitical winds are, you know, are sort of stable in one
(30:16):
direction.
I think they can move around.
Speaker 1 (30:20):
I think this is you know.
To me, this is one of thoseareas that is very hard to pick
and if you agree it is a longerterm, then I think you know.
I saw Europe as not moving inthis direction, so I was
surprised by Mertz and thecurrent European actions
(30:45):
companies would be good.
Speaker 2 (30:46):
And also back to my prior point if you're going to
pick, I think you would have todo some research into those
defense stocks that are lessreliant on government financing
and are more able to makecommercial sales.
So I would look at that.
Speaker 1 (30:59):
Sure, I mean, I think that brings us to the Middle
East and some other things,especially Taiwan.
So let's just try to wrap onemore topic into this Ukraine
question, because the firstthing that Trump did and tried
to do or is trying to do withUkraine was the concept of
signing a rare earth agreementto have the US be one of the
(31:24):
firms or countries that doesmost of the rare earth work in
the Ukraine, and the rare earthcapacity or ability in the
Ukraine seems to be a very largereason for the US to be
involved.
I guess is it really a goodmove for us to be looking at
(31:46):
rare earth from the Ukraine,which is between Europe and
Russia, versus looking at rareearths from Canada, which is
right across our border and alot closer in this hemisphere?
It feels to me like signing abill in the Ukraine is like
signing a bill in Gaza andsaying I want to build condos on
(32:06):
the water.
It's like you're going to haveto really deal with a lot of
effort to create rare earthindustries in the Ukraine,
whereas Canada, which has workedhard to produce energy and does
a lot in the smelting andaluminum space, would seem like
a much more likely partner forus to pair up with.
(32:30):
Why are we chasing rare earthsin the Ukraine?
Is it just a reason for Trumpto sign a bill and say, hey,
this is another win for the US?
Couldn't we find an easierpartner?
Speaker 2 (32:47):
So China is not an easy partner when it comes to
rare earths.
Speaker 1 (32:52):
Correct.
We're looking for a substitutefor China Right.
My question is wouldn't it justbe easier to reach across and
talk to Canada about rare earths?
Speaker 2 (33:01):
So here's the thing that we need to understand about
rare earths and to go so, so,so here's.
Here's the thing that we needto understand about rare earths.
I think very few people reallygrasp, um, or few people, I
should say, really grasp.
Rare earths are not uncommon.
There's a lot of rare earths inthe United States, uh, in other
(33:22):
countries.
The reason why China produces alot of rare earths in the United
States, in other countries, thereason why China produces a lot
of rare earths, is becausethey're willing to put in the
extremely environmentallyunfriendly facilities that are
needed in order to produce rareearths, in order to refine them.
And Canada, they might bewilling to do it because, after
(33:48):
all, they're willing to do thetar sands right in alberta, so
do the smelting for the aluminum?
Yeah, so they might be willingto do it, uh, but it all depends
on finding countries, uh, thatare, you know, in, you know that
are willing to take or absorbsome of the environmental damage
(34:10):
from you know, from doing, fromprocessing the rare earths, and
that the reason why Chinaproduces so much rare earths is
because they don't really careabout the environment too much,
or they didn't actually at thetime when you know they put in
this rare earths processingcapacity.
Speaker 1 (34:29):
Is Russia's engagement in the Ukraine not
really about history and aboutsomething like rare earths and
the wheat basket that is theUkraine in terms of resources
for the rest of Russia?
Or is it really based on this6,900-page diatribe that Putin
went on about how important Kievis to the history of Russia?
Speaker 2 (34:52):
Well, it's both.
So the Donbass region is reallythe most resource-intensive or
mineral-intensive region ofUkraine.
So that's why, in part, whythat was a focus and a lot of
(35:13):
Russian speakers in the Donbass,so that's why there was a
particular focus there and onCrimea, which also has a lot of
Russian speakers and at variouspoints has been a part of the.
You know, it was part of theRussian SFSR, the Russian part
of the Soviet Union, for a longtime until Khrushchev gave it to
(35:36):
the Ukrainian part of the USSR.
But I also think that the whole, you know, question of origins
plays a role too, in the sensethat long before there was a
Moscow, you know, which, by theway, was founded by, or at least
(36:00):
in part by, swedes coming downfrom you know.
They were called the Varangians, the Swedes who came down to
help found Moscow, long beforethat there was Kiev, which was
the heart of the Eastern Slavsat the time and also of the
(36:23):
Eastern Slavs at the time andand also of the Eastern Orthodox
church and Keeve split off intothree different groups, ethnic
groups with somewhat differentlanguages the Russians, the
Ukrainians and the Belarusians.
(36:43):
And those three constitute, youknow, if you look at it from a
linguistic standpoint, that'sthe East Slavic language group,
those three countries, thosethree languages, and they split
off into different languages andthen ultimately into different
(37:04):
countries.
But essentially, from Putin'sstandpoint, he wants to control
all of the Eastern Slavic region.
So he already controls, sort ofindirectly, belarus.
He wants to control Ukraine,belarus, he wants to control
(37:29):
Ukraine, and by doing that hewould then control all of the
Eastern Slavic domains.
Now the question is whether hewants to go even further and
control, you know, the WesternSlavic domains, which are Poland
and Czech and Slovakia, andthen, you know, control the
Baltics, which obviously arevery close and have languages
that are much more distantlyrelated, but still kind of
(37:53):
related to the Slavic languages.
Speaker 1 (37:57):
Yeah, it's hard for me to see this as that
historical reunification that hebelieves is important.
I come down to economics anddollars and cents and it feels
to me like Putin wants that areafor its resources, and those
resources is what Trump istrying to put in some
(38:21):
administration of, because thenif the US is developing those,
those assets, then it would beimpossible for it to happen in a
conflicted area, like they'restill fighting in those areas.
They need peace in order forthose industries to succeed.
In order for those industriesto succeed, I think Trump it's
not a bad theory, but I'm notsure the application is entirely
(38:46):
feasible.
It's not, I mean do we buy rareearth companies that are gonna
start in the Ukraine.
Is that the investment thesisfor us in 2025?
Speaker 2 (38:55):
Look look, I would draw an analogy to the fact that
you had so many, so muchWestern investment in Siberia,
in Sakhalin Island, in Russia,and all of that had to be walked
away from by Western energycompanies because of sanctions
(39:19):
and reputational issues havingto do with the Russian invasion.
So just because you know, thefact that there was all this
Western investment in Russia didnot dissuade Putin from
invading.
He may have thought that theWestern have thought that the uh
(39:40):
Western energy companies uhwould side with him, you know,
for commercial reasons, butultimately they didn't.
So I, I I don't think resources, uh, yeah, they play a role,
but resources are notdeterminative of whether you
(40:02):
have conflict or not.
Okay, that's my perspective onthat.
Speaker 1 (40:08):
Yeah, it just feels a little bit like I see what's
happening in Gaza, I see what'shappening in Taiwan and I see
what's happening in the Ukraine,and all three have this
underlying.
We need to write this for ourcountry and our national history
.
These areas and territories areimportant to us, whether we're
(40:32):
talking about Taiwan's island orwhether we're talking about the
religious significance ofJerusalem.
There is this historic kind ofdiscussion and I've always
thought that history andeconomics, you know, are kind of
.
You know, one leads theeconomics usually, in my mind,
(40:52):
lead the history, and it's notusually in people's best
interest to go after somethingbecause of some historical
concept, unless there's aneconomic benefit.
Isn't that usually how, ifcountries need resources,
countries act in aggressive waysto achieve it.
It's not like they say hey, Ithink I want to reunite with
(41:15):
Kyiv because historically it'sgot a lot of significance and
we'll just do this as anexercise to right historical
wrongs.
Am I being naive to thinkeconomically and I need to go
back and read my history books.
Speaker 2 (41:36):
I think you know, from a US perspective
perspective, we don't seehistory the same way that people
in other countries do.
People in other countries havea much longer uh perspective, uh
, on history well, yeah, we're.
Speaker 1 (41:56):
We're a newcomer with only 200 years.
Speaker 2 (42:00):
And Latin America is a newcomer too.
I think that we have tounderstand that Russia takes a
very long view on things, and sodo other European countries.
Our allies in Europe take avery long-term view of things.
And some of the Asian countries, you know, despite colonialism,
(42:23):
they have much longer historiesthan that and they take a, they
take a long-term view of things.
So, yeah, I mean, I think, Ithink history can be an excuse
for the pursuit of of economicends, suit of economic ends.
But you know, history alsostands on its own as well, and I
(42:52):
think that you know, I thinkthat a lot of people don't you
know, don't realize that youknow, and then they're sort of
conflicting historicalnarratives as well.
Speaker 1 (43:01):
Right, we just talked about Leif Erikson discovering
America long before.
They're sort of conflictinghistorical narratives as well.
Right, we just talked aboutLeif Erikson discovering America
long before the pilgrims, right?
So I guess I'd like to wrap uptoday's call with, just you know
, one kind of theme, which is dowe think there are investment
opportunities in the actions ofUkraine and if so, what would,
(43:25):
what would you invest in to takeadvantage of it?
Speaker 2 (43:33):
So so I would look long-term at defense companies
that have a more commercialorientation and are not entirely
dependent on on us militarycontracts.
So I would take a look at that.
Um, you know we talked aboutrare earths.
(43:55):
Uh, you know, I think it'sgoing to be a long time before
rare earths are exploited in theUkraine to any big degree.
But I think that rare earthsand lithium copper, I think
offer a lot of opportunitieselsewhere in the world.
(44:16):
You know Canada, the Andeancountries offer a lot of this as
well, australia, but I wouldn'tcount on Ukraine and I wouldn't
count on China.
Speaker 1 (44:35):
I think for this call , and you can write down the
state.
I'm going to agree witheverything you said, so I don't
have any.
I think there are this call andyou can write down the state.
I'm going to agree witheverything you said, clint, so I
don't have any.
I think there are opportunitiesin defense and I like to see
them be broad based.
I would probably limit myself toUS-based military corporations,
(44:55):
because I think there's a lotof politicization of these and I
think it's going to be helpfulto have companies that are based
in the United States, because Ithink our use of and our demand
for weapons is going tocontinue to grow.
So I believe that US companiesare a good place to play that
(45:17):
and I do think it's a longerterm trend place to play that
and I do think it's a longerterm trend.
I agree with the investment inraw materials the Rio Tintos,
the Newmont those companies tome, are always given the low
interest compared to theexcitement of AI, but they
produce a lot of dividends.
(45:38):
They produce a lot of materialsthat are critical to our
overall economic success.
So I would agree that althoughthey're boring and although
they're basic materials, they'restill pretty important
materials.
I think it's an area thateverybody should make part of
their portfolio.
If you're building a portfoliofor the future, you have to
(45:59):
think about the building, copperand steel as important elements
of every economy andinfrastructure.
So anything else to add today,clem as we head off.
Speaker 2 (46:10):
No, I think that's it .
It was a great conversation,Steve.
Speaker 1 (46:15):
And I'll tell everybody that I think that
Clem's taking a trip up toNewfoundland.
He may come back a differentman.
He may start to wear horns ahat with horns on it and he
could start to look a lot moreNordic on these calls.
So I'm looking forward.
I hope you have fun and I thinkthat everybody would love to
(46:39):
have your support and continueto call us, continue to text us,
continue to let us know whichof the podcasts you liked and
why, and what we can do to tryto deliver and make.
Look forward to gettingtogether again soon.
We've got some great guestscoming up Rich Weiss and Marcus
(47:08):
Sturtevant.
So thanks everyone, and weappreciate you listening.
Hello everyone and welcome to Skeptic's Guide to
Investing.
I'm Steve Davenport and I'mhere with Clem Miller and we are
going to talk to you todayabout the issue that doesn't
seem to go away Ukraine and theEU and Russia.
How does this all affect the USeconomy, the military sections
(00:27):
of our industrial sector, and isthis an opportunity for weapons
?
Or is this something that isgoing to go away soon and by the
time you get into the militarystocks, they will probably have
gone down because Trump willhave negotiated a new peace?
I'm not sure that anybodyexpected on the first day, as
(00:51):
Trump promised, he would callPutin and they would have a
conversation and the Ukrainebattles would end.
It hasn't happened.
It doesn't look to happenbecause Trump is now stepping
away from the peacekeeper roleand the Pope or Turkey's Erdogan
are stepping into that void andtrying to figure out a way to
(01:15):
stop what is the most violencein Europe that we've seen many
years.
So I guess I have to ask youKlan, is this war, which was
supposed to be over onInauguration Day, going to see
the next inauguration, or do youthink we'll see something that
(01:35):
will bring it to the peace tableand allow us to say that there
is peace in Europe again?
Speaker 2 (01:44):
So if you look at World War II from 1939 to 1945,
world War II in Europe that is,it was a six-year war.
So we are now halfway towardsthat six-year period.
So I think that and you knowPutin and the Russians they tend
(02:10):
to look sort of long-term.
You know they don't look atthis as, oh well, we failed to
go in for three days, we failedto take Kiev in three days,
therefore we're going to end thewar.
They don't think of it that way.
They think in terms oflong-term strategic objectives,
and so my guess is that thisthing is about half over at this
(02:32):
point.
That would be my guess, and Ithink that what we're seeing is,
you know, you got to look atUkraine as not just a contained
issue.
I think you need to look atUkraine as part of a bigger
(02:54):
puzzle which includes activitiesthat Russia is engaging in
against other European countries, against other European
countries.
So, for example, beefing upforces along other parts of the
border, especially with Finlandrecently, also being a little
(03:19):
bit more aggressive in theBaltic Sea and, in addition to
that, doing things like cuttingtelecommunications cables that
go from, you know, westernEurope up to Scandinavia.
So I think there's a bit andyou know, some cyber activity.
So I think there's this is partof an overall aggression aimed
(03:42):
at trying to weaken Europe and,to some degree, weaken the
United States as well.
And I think the Russians, uhPutin is counting on Trump's
impatience, uh to try to uheither uh put him to the wayside
(04:04):
so that he's irrelevant to thisequation, or bring Trump on
their side.
And I don't think the Russiansare quite succeeding in that.
I mean, they're trying toexploit the fact that Trump
wants you know, says he wantspeace in Ukraine.
(04:26):
So they're trying to exploitthat.
But at the end of the day, Idon't think, I think the
Russians are not going to dothings that actually, you know,
bring a permanent peace toEuropeMAN.
Speaker 1 (04:41):
Doesn't it feel, though, that if the Europeans
can have to deal with Russia ontheir own, without US heavy
involvement, both fromfinancially and from resources
that Putin has won Because heknows how to distract and
(05:03):
approach Europe, because heknows that they've been mainly a
pacifist consumer of his energy, if he can just take away the
US's involvement?
If the US hadn't been involvedfor the last three years, where
would we be in Ukraine today?
I think it would have been over.
I agree with that.
(05:24):
I agree with that.
So I agree with that.
I guess I'm saying that ifTrump is becoming neutral, then
that's a very pro-Putin move,and so, even though it allows
him to not do anything and thensay, hey, I tried to make a
peace, but nobody would make thepeace and therefore the blood
(05:45):
is not on my hands, yeah, usneutrality plays into Putin's
hands, and the main reason itplays into Putin's hands is
because the US is likely tostart moving away from sanctions
, and it's US and Europeansanctions that have really hurt
Russia.
Speaker 2 (06:06):
And Putin is playing into Trump's deal-making kind of
philosophy.
The Russians have sort ofdangled energy resources and
other things in front of Trump,and so Trump wants to try get
access to those, and you knowPutin is using that to sort of,
(06:35):
you know, push the US into aneutral position.
But I'd also say another thingtoo the Ukraine we see today is
not the same Ukraine that we sawin 2022, and certainly not the
same Ukraine we saw in 2014,before Crimea.
All throughout this time,ukraine has been getting
stronger and stronger andstronger and developing its
(06:56):
military and expanding it and,you know, bringing it up to
speed technologically and doinga lot of homegrown military
issues, military equipment,namely drones, for example and
also adopting new militarytactics.
(07:18):
Ukraine is going to end up withthe most powerful, I believe
you know, outside of, you knowcertain areas of, of technology.
I think Ukraine is going to endup having the, you know, the
most powerful army in Europe atsome point, if it doesn't
(07:42):
already, and that's why you knowI, that's why I sometimes tell
people and I'll say it againhere that I think the EU needs
Ukraine just as much as Ukraineneeds the EU.
Because even Zelensky has saidthat once we're in NATO this is
Zelensky and his desire tobecome part of NATO Once we're
(08:04):
in NATO, we are going to makeone of the we, ukraine, are
going to make one of the biggestcontributions to the NATO
alliance.
Because of their frontlinestatus and huge army, I mean
NATO.
Nato, I mean NATO, is a verydifferent place.
You know European NATO that isin a very different um position
(08:26):
than it was, you know, fiveyears ago.
You've got ukraine's army,you've got poland's big army,
you've got finland and its bigarmy.
Now in nato it's a uh.
You know, the eastern front isvery um is very militarized
right now.
The Eastern Front of NATO isvery militarized right now.
Speaker 1 (08:51):
Is this a short-term reaction or is this a long-term
trend?
That's what I have a problemwith with military stocks and
this whole discussion aboutmilitary usage and as an
investment.
Military usage and as aninvestment Is it a short-term
opportunity or is it a themethat you could invest in over
(09:13):
years?
Because it feels to me likeEurope had a movement towards
ESG and environment and theyfocused their energy in the
economies and the environmentand now, all of a sudden, merck
has turned a corner and saidwe're going to make the budget
and allow for the debt to moveup because we are going to
commit 5% to the military, and Ijust don't.
(09:37):
It's hard for me to determine.
Is this a short-term reaction?
That could turn just as quicklythe other way if there were a
peace in Ukraine.
But if we don't believe thatpeace is really able to be
maintained, then we willconstantly see the demand for
military weapons and thereforeit's a better investment theme.
(09:59):
I hate to break it down toinvestments when we're talking
about the lives of Ukrainiansand Russians.
I hate to break it down toinvestments when we're talking
about the lives of Ukrainiansand Russians, but I think that's
what's been a struggle for me.
Going forward is how heavily doyou want to invest in military,
and is it really a long-termtheme?
We've had peace for so long,relatively speaking, around the
(10:22):
world that to think that we'regoing to move into a military
age feels a little bit lesslikely, do you agree?
Speaker 2 (10:34):
um, I think we are going into a military age, uh,
and so let me, uh, let me giveyou a few reasons for that.
One is, I do think to yourpoint about the EU sort of
switching gears from sort of anESG orientation to a military
(10:55):
orientation.
I think the EU folks think theycan walk and chew gum at the
same time.
Oh, that's ridiculous walk andchew gum at the same time oh,
that's ridiculous, and no, andin fact, in fact, I think that
(11:17):
you know one of the reasons whythe EU has been trying to
promote green energy and natural, and you know green energy wind
, solar is because they weredependent on Russian natural gas
, and so I think and they'vebuilt some facilities to take US
(11:37):
natural gas as well, so I thinkthat reducing a dependency on
your enemy is something theythought was a good thing, and
the ESG, you know, you knowgreen energy, allows them, as
you know, one part of theirstrategy to deal with that.
(11:58):
So I don't think, I don't thinkthe two, those two things are
are inconsistent.
I really don't.
Speaker 1 (12:05):
So I think that, in terms of well, if they wanted to
be more independent and thatwas the reason then wouldn't you
have kept nuclear?
Because it feels like if if you, when you're saying is true
they wanted to separatethemselves from russia.
The fastest way is to developnuclear, not to develop solar
(12:25):
right.
Speaker 2 (12:27):
Well, yeah, that's a technology that already exists.
Speaker 1 (12:30):
Yeah, you would think so you can't really, I don't
know.
I look at nuclear and I thinkthat has to be part of your plan
.
Speaker 2 (12:41):
Right, it should be, and it still is very much a part
of the French plan.
The French have never gottenrid of nuclear.
But Germany I don't know howfar they have denuclearized, but
you got to remember Fukushimawas 2011.
And that's what started theGerman denuclearization and
(13:07):
that's 14 years ago, and so theyprobably made already some
progress on that and they didthis before 2014,.
The Crimean invasion theycertainly did it before 2022.
So they probably made someprogress already toward
denuclearization.
(13:27):
But you know, still, I thinkthat you know this emphasis on
green energy is part, you know,is connected to this plan for
trying to become less dependenton Russian natural gas.
That's not to say they're notdependent on natural gas.
They're getting natural gasfrom North Africa, for example.
(13:49):
They're getting LNG from Qatar.
They're getting LNG from theUnited States.
Speaker 1 (13:55):
That's not somewhere where Europe was still getting
natural gas from.
Speaker 2 (13:58):
Russia.
They have a little bit comingin from the South, not from Nord
Stream, of course, which wasblown up, but from the south,
not from nordstrom, of course,which was blown up, but from the
south versus, uh, I believe,something called turk stream, um
, but through the south, uh, wasit another country, and russia
(14:20):
supplies their country.
Is that?
Well, it's uh, this, this, this.
It relates to the fact thathungary andvakia, I believe, are
still getting natural gas fromRussia versus the southern
pipeline.
Speaker 1 (14:40):
Okay, it feels like the US is trying.
I mean, there's a bill in theSenate with 80 co-authors who
wants to increase the tariffs onRussia to 500% and harden the
economic damage to Putin, and ifthat bill were to ever get
brought up, I think it would getpassed and it would get passed
to the House, and the House hasa majority to pass it and put it
(15:04):
on Trump's desk.
Do you think that's where we'regoing?
Is it when he starts focusingon these tariffs for Europe as a
trading partner and starts tolook at what's our common enemy,
that will start to?
I mean, do we have thebandwidth in Congress to walk
(15:25):
and chew gum and do a tax billand a uh, a bill on
international affairs, or do wehave to pass one before we can
move on to the other?
Speaker 2 (15:37):
Well, you could put uh, you could put one inside the
other, for example, or youcould do them in parallel, but
you know, it isn't a bigbeautiful bill?
Already the big beautiful bill,and if you can't change, well
you'd have to go back to theHouse and get you know and get
some changes to it.
Now I think it's more likely itwould be a separate bill.
(15:59):
But the problem is with that iswe already have and so does the
EU we already have veryextensive sanctions on Russia
and tariffs are being enforced.
Oh yeah, oh yeah.
And tariffs are just aridiculous concept when it comes
(16:21):
to Russia, because they don'texport anything to us.
So it's just the idea,ridiculous concept when it comes
to Russia, because they don'texport anything to us.
So it's just a.
It's the idea.
I know Trump likes to think oftariffs as being the solution to
everything, but you know,tariffs there's, they're
irrelevant when it comes toRussia.
I mean, the fact that he mightbe talking about tariffs and
with regard to Russia to mesuggests possibly that he's just
(16:46):
trying to.
You know, he's being, you know,subtly pro-Putin by actually
recommending something thatactually has no impact on Putin.
I could see that.
Yeah, so it's sanctions thatreally matter, the, the, the two
(17:06):
things that really um, well,three things.
There's three things that couldreally hurt russia.
One is giving more and moreweapons, and more advanced
weapons, to ukraine.
That's the second.
That's number one.
Number two is allowing uh rallowing Russia's seized foreign
(17:28):
assets, western seized foreignassets, to be used to pay for
weapons and there's a lot ofthose for a lot of those assets
right now.
There, the West is allowing theinterest earned on those assets
to be used by Ukraine.
But if we were to actuallyallow the bulk, the corpus, so
(17:52):
to speak, of those assets to beused, that would be a huge thing
.
And the other thing, the lastthing, would be to really crack
down on this so-called shadowfleet that Russia is using to
secretly export oil.
And if we really crack down onthat, that would be.
Speaker 1 (18:16):
That's what I meant when I said that we need to
crack down because everybodyknows there's this additional
fleet of oil moving around thatis not being captured by these
sanctions.
Speaker 2 (18:28):
But can I take you back to the US, for example?
Speaker 1 (18:32):
Yeah, tell me why we're going to see this bill
pass and it's going to make animpact on what's happening in
Russia.
Do you think there's courage inthe Republican side to actually
do something on their own,without the leadership of Trump?
Speaker 2 (18:49):
You know.
I mean he still has to sign thebill or get a super majority.
So I don't think anything'sgoing to happen on Russia unless
you know, unless you know fromthe US standpoint, unless the
Trump administration isconvinced to do it.
So I don't think that's thecase.
But but let me, let me justdive into that a little bit more
(19:11):
.
You know there's, there's thethere.
You know there's the types armssales to Europe, or US arms
deliveries, and US arms sales toUkraine and also to the rest of
Europe.
There's really three types.
(19:33):
One are ones where we'reactually financing the arms
sales.
The US government is financingthe arms sales.
The second is where the USgovernment is giving away or
financing, on very, veryinexpensive, cheap financing
(19:55):
terms, unused stocks that wehave that haven't been used, in
other words, surplus that wehave that haven't been used, in
other words, surplus right,military surplus.
And the third type would besort of ongoing sales that
aren't financed by the USgovernment.
So my guess is that we're goingto see much less of the first
(20:18):
kind.
In other words, I think that USfinancing of arms sales to
Ukraine might diminish a lot.
But does it get replaced byEuropean arms dealers?
Well, it would be.
No, I think it.
I think what's going to happenis the US is going to say to our
, our defense companies we'renot going to pay for it anymore,
(20:42):
so you have to make commercialdeals with ukraine and ukraine's
going to have to come up withthe money, probably through
these seized foreign assets, inorder to pay.
Or the europeans would have topay for it and they would pay
for, uh, commercial weaponssales from the US to fit gaps
(21:05):
which exist within the Europeans.
Speaker 1 (21:08):
Wouldn't they want to use European companies?
If they're going to have to pay, wouldn't it be better to pay
them?
Speaker 2 (21:15):
Well, I mean, there are certain things that Europe
has, that the US has, and thereare certain things that Europe
doesn't have, that the US has,and just one example for that
would be the Patriot defensesystem Europe doesn't really
have something of thatcapability and so Well, that's
(21:40):
one question.
Speaker 1 (21:40):
I have two or three questions that I just need a yes
or no answer Will Ah, there'snever a yes or no answer.
Speaker 2 (21:44):
There's never a yes or no yes there has to be.
Speaker 1 (21:47):
We can't have these podcasts go on forever.
There needs to be some yes orno's.
So first, yes or no.
Germany will release anddeliver the Taurus missile to
the Ukraine.
Yes or no?
Speaker 2 (22:00):
Yes.
Speaker 1 (22:02):
The US will pass the bill in the House and Senate to
increase sanctions againstRussia, yes or no?
Yes, trump will sign said billto deliver sanctions against
Russia.
Yes or no.
Speaker 2 (22:26):
I don't think so.
Okay, well, it depends onwhat's in the sanctions bill.
Speaker 1 (22:36):
Well.
Speaker 2 (22:37):
The reason I think Trump may not sign it Is that
Trump Sees dollar signs and hedoesn't want to be.
You know he may not liftexisting sanctions but he wants
to leave open the possibilitythat you know he could make you
(23:00):
know for the US and perhaps forhimself, money in Russia.
He's, regardless of what peoplemay think about you, know about
whether Trump is in Putin'spocket and it's kind of hard to
know whether that's the case ornot.
He's been very interested inRussia since it was the Soviet
(23:21):
union.
You know going over theretrying to build a Trump Tower.
That's all public record.
He's been very interested indoing business in Russia.
I don't think that's gone away.
Speaker 1 (23:36):
It seems to me that the biggest opportunity for the
US in the next, when I look atthe energy space, is to become
the natural gas supplier toGermany from the East Coast
ports of LNG and from the WestCoast ports to Japan with LNG.
If we became an LNG power,wouldn't there be two huge
(23:57):
allies who would start to bedependent upon us for their
energy supplies, and aren't we abetter supplier in terms of
stability than what they'redoing with Russia?
It feels like everybody talksabout the US making more money
and the US having more.
You know Trump wanting to havemore consumption of the US
products.
(24:17):
And we have this natural gasthat we're just burning off into
the environment here in the US,gas that we're just burning off
into the environment here inthe US.
Why wouldn't we take thatenergy and put it to those two
allies and say we want to have along-term trade imbalance
adjusted and we're going to doit with LNG, and that solves a
(24:42):
lot of the questions about ourimports and our exports, doesn't
it?
Speaker 2 (24:51):
Well, it certainly adds to exports and reduces
overall trade deficits, right,but the crazy thing, one of the
crazy things about the Trumpadministration's tariffs is that
he always looks at it on abilateral basis and not on a
multilateral basis.
There was this so-calledtemporary deal with the UK, and
(25:17):
the UK has a trade surplus.
Us has a trade surplus with theUK, and yet we're still putting
10% tariffs on them.
Go figure, right.
Speaker 1 (25:32):
Yeah, I can figure out.
It's just you figure out wherepolitically it's popular and
then you go for that.
Do you think any of thesedecisions by the Trump
administration have not beenpulled across their voter base
in those states?
I mean, everything is nowpulled before it is decided,
isn't it?
I don't think so.
(25:53):
I think.
Speaker 2 (25:55):
I think.
I think Trump is pulling a lotof this crap out of his brain.
Ok, I think that's what's goingon.
Okay, and he's advised, he'sgot you know.
You know the old imagery of theangel on one shoulder and the
devil on the other shoulder.
So he's got, he's got on oneshoulder, he's got Peter Navarro
(26:16):
, and, and then on the othershoulder, he's got Scott Besant.
Scott Besant's the angel, scottBesson's the angel, peter
Navarro's the devil, and thenyou've got, you know, the local
joker, who is Howard Lutnick.
Okay, so running around, andRubio Rubio is, I think, rubio's
(26:39):
with Besant.
I agree with that.
Speaker 1 (26:43):
Okay, and Lutnickick, I agree, would go on the double
shoulder, but uh, navarronavarro, navarro and letnick and
letnick, yeah and um, and so itall.
Speaker 2 (26:54):
You know, like they say, it all depends on, uh on.
You know who's whispered intrump's ear last and uh, trump's
ear last.
And if Navarro is that person,then you know Trump is going to
keep doing these crazy things.
If it's Scott.
Speaker 1 (27:13):
Besson, he's going to be more reasonable.
Okay, from an investmentstandpoint, if you had a young
person who was asking you whatto buy in this chaos that is the
markets right now and I'd usethe term chaos a little bit
loosely because it's been allgood for the last month after
kind of a bad April but let'slook at the question about would
(27:35):
you invest in US arms LockheedMartin and Raytheon RTX now, yes
or no?
Lockheed Martin and RaytheonRTX Now yes or no?
Speaker 2 (27:50):
Yes or no, yes or no we're going to get some yes or
no's in there.
You can ask me a yes or no.
Yeah, sure yeah.
Speaker 1 (27:56):
You think so?
Speaker 2 (27:57):
Yeah, I would, so this is not a short-term
investment.
This is something you can holdfor a while, because this is
Well, I would say it's actuallymore long-term than short-term
investment.
This is something you can holdfor a while because Well, I
would say it's actually morelong-term than short-term.
Okay, because I think there's alot of volatility in terms of
the Trump administration couldsay okay, we're going to reduce
our arms sales and then it'sover, right for these companies.
Speaker 1 (28:22):
Well, if they're looking to export, what do you
have in the US that we'releaders in?
You have technology, you havesome arms, you have energy, you
have consumer companies, youhave media.
I'd say that we're probably theleader.
Speaker 2 (28:41):
A lot of it's services and it doesn't even go
into the the trade deficitcalculation.
Speaker 1 (28:46):
I know that the calculation is wrong and I know
that, but but I guess I point tothings that people can put
their hands on, understandingwhy I invest in this.
Because I see demand coming foryears and years for this part
of the world who will continueto need the US as a supplier,
(29:06):
and that's where I thinklong-term defense is an area to,
is an area to go to.
Okay.
Speaker 2 (29:14):
And I think you need to look at.
I think you need to look atprogram companies that have
defense companies that have abroader array of programs, so
like RTX, which combinedRaytheon and United Technologies
(29:34):
, I think, is.
I mean, I don't want to, I'mnot going to recommend a stock
on this call, but I think youwant something like an.
You want something like like anRTX which, something like an
RTX which is uh, is morediversified, uh in terms of its
uh military product offering.
But again, this is a long-termthing.
(29:56):
There's going to be a lot ofshort-term volatility because,
depending on what, um, you know,the current uh geopolitical
winds are and you know, Iwouldn't assume you know these
geopolitical winds are, you know, are sort of stable in one
(30:16):
direction.
I think they can move around.
Speaker 1 (30:20):
I think this is you know.
To me, this is one of thoseareas that is very hard to pick
and if you agree it is a longerterm, then I think you know.
I saw Europe as not moving inthis direction, so I was
surprised by Mertz and thecurrent European actions
(30:45):
companies would be good.
Speaker 2 (30:46):
And also back to my prior point if you're going to
pick, I think you would have todo some research into those
defense stocks that are lessreliant on government financing
and are more able to makecommercial sales.
So I would look at that.
Speaker 1 (30:59):
Sure, I mean, I think that brings us to the Middle
East and some other things,especially Taiwan.
So let's just try to wrap onemore topic into this Ukraine
question, because the firstthing that Trump did and tried
to do or is trying to do withUkraine was the concept of
signing a rare earth agreementto have the US be one of the
(31:24):
firms or countries that doesmost of the rare earth work in
the Ukraine, and the rare earthcapacity or ability in the
Ukraine seems to be a very largereason for the US to be
involved.
I guess is it really a goodmove for us to be looking at
(31:46):
rare earth from the Ukraine,which is between Europe and
Russia, versus looking at rareearths from Canada, which is
right across our border and alot closer in this hemisphere?
It feels to me like signing abill in the Ukraine is like
signing a bill in Gaza andsaying I want to build condos on
(32:06):
the water.
It's like you're going to haveto really deal with a lot of
effort to create rare earthindustries in the Ukraine,
whereas Canada, which has workedhard to produce energy and does
a lot in the smelting andaluminum space, would seem like
a much more likely partner forus to pair up with.
(32:30):
Why are we chasing rare earthsin the Ukraine?
Is it just a reason for Trumpto sign a bill and say, hey,
this is another win for the US?
Couldn't we find an easierpartner?
Speaker 2 (32:47):
So China is not an easy partner when it comes to
rare earths.
Speaker 1 (32:52):
Correct.
We're looking for a substitutefor China Right.
My question is wouldn't it justbe easier to reach across and
talk to Canada about rare earths?
Speaker 2 (33:01):
So here's the thing that we need to understand about
rare earths and to go so, so,so here's.
Here's the thing that we needto understand about rare earths.
I think very few people reallygrasp, um, or few people, I
should say, really grasp.
Rare earths are not uncommon.
There's a lot of rare earths inthe United States, uh, in other
(33:22):
countries.
The reason why China produces alot of rare earths in the United
States, in other countries, thereason why China produces a lot
of rare earths, is becausethey're willing to put in the
extremely environmentallyunfriendly facilities that are
needed in order to produce rareearths, in order to refine them.
And Canada, they might bewilling to do it because, after
(33:48):
all, they're willing to do thetar sands right in alberta, so
do the smelting for the aluminum?
Yeah, so they might be willingto do it, uh, but it all depends
on finding countries, uh, thatare, you know, in, you know that
are willing to take or absorbsome of the environmental damage
(34:10):
from you know, from doing, fromprocessing the rare earths, and
that the reason why Chinaproduces so much rare earths is
because they don't really careabout the environment too much,
or they didn't actually at thetime when you know they put in
this rare earths processingcapacity.
Speaker 1 (34:29):
Is Russia's engagement in the Ukraine not
really about history and aboutsomething like rare earths and
the wheat basket that is theUkraine in terms of resources
for the rest of Russia?
Or is it really based on this6,900-page diatribe that Putin
went on about how important Kievis to the history of Russia?
Speaker 2 (34:52):
Well, it's both.
So the Donbass region is reallythe most resource-intensive or
mineral-intensive region ofUkraine.
So that's why, in part, whythat was a focus and a lot of
(35:13):
Russian speakers in the Donbass,so that's why there was a
particular focus there and onCrimea, which also has a lot of
Russian speakers and at variouspoints has been a part of the.
You know, it was part of theRussian SFSR, the Russian part
of the Soviet Union, for a longtime until Khrushchev gave it to
(35:36):
the Ukrainian part of the USSR.
But I also think that the whole, you know, question of origins
plays a role too, in the sensethat long before there was a
Moscow, you know, which, by theway, was founded by, or at least
(36:00):
in part by, swedes coming downfrom you know.
They were called the Varangians, the Swedes who came down to
help found Moscow, long beforethat there was Kiev, which was
the heart of the Eastern Slavsat the time and also of the
(36:23):
Eastern Slavs at the time andand also of the Eastern Orthodox
church and Keeve split off intothree different groups, ethnic
groups with somewhat differentlanguages the Russians, the
Ukrainians and the Belarusians.
(36:43):
And those three constitute, youknow, if you look at it from a
linguistic standpoint, that'sthe East Slavic language group,
those three countries, thosethree languages, and they split
off into different languages andthen ultimately into different
(37:04):
countries.
But essentially, from Putin'sstandpoint, he wants to control
all of the Eastern Slavic region.
So he already controls, sort ofindirectly, belarus.
He wants to control Ukraine,belarus, he wants to control
(37:29):
Ukraine, and by doing that hewould then control all of the
Eastern Slavic domains.
Now the question is whether hewants to go even further and
control, you know, the WesternSlavic domains, which are Poland
and Czech and Slovakia, andthen, you know, control the
Baltics, which obviously arevery close and have languages
that are much more distantlyrelated, but still kind of
(37:53):
related to the Slavic languages.
Speaker 1 (37:57):
Yeah, it's hard for me to see this as that
historical reunification that hebelieves is important.
I come down to economics anddollars and cents and it feels
to me like Putin wants that areafor its resources, and those
resources is what Trump istrying to put in some
(38:21):
administration of, because thenif the US is developing those,
those assets, then it would beimpossible for it to happen in a
conflicted area, like they'restill fighting in those areas.
They need peace in order forthose industries to succeed.
In order for those industriesto succeed, I think Trump it's
not a bad theory, but I'm notsure the application is entirely
(38:46):
feasible.
It's not, I mean do we buy rareearth companies that are gonna
start in the Ukraine.
Is that the investment thesisfor us in 2025?
Speaker 2 (38:55):
Look look, I would draw an analogy to the fact that
you had so many, so muchWestern investment in Siberia,
in Sakhalin Island, in Russia,and all of that had to be walked
away from by Western energycompanies because of sanctions
(39:19):
and reputational issues havingto do with the Russian invasion.
So just because you know, thefact that there was all this
Western investment in Russia didnot dissuade Putin from
invading.
He may have thought that theWestern have thought that the uh
(39:40):
Western energy companies uhwould side with him, you know,
for commercial reasons, butultimately they didn't.
So I, I I don't think resources, uh, yeah, they play a role,
but resources are notdeterminative of whether you
(40:02):
have conflict or not.
Okay, that's my perspective onthat.
Speaker 1 (40:08):
Yeah, it just feels a little bit like I see what's
happening in Gaza, I see what'shappening in Taiwan and I see
what's happening in the Ukraine,and all three have this
underlying.
We need to write this for ourcountry and our national history
.
These areas and territories areimportant to us, whether we're
(40:32):
talking about Taiwan's island orwhether we're talking about the
religious significance ofJerusalem.
There is this historic kind ofdiscussion and I've always
thought that history andeconomics, you know, are kind of
.
You know, one leads theeconomics usually, in my mind,
(40:52):
lead the history, and it's notusually in people's best
interest to go after somethingbecause of some historical
concept, unless there's aneconomic benefit.
Isn't that usually how, ifcountries need resources,
countries act in aggressive waysto achieve it.
It's not like they say hey, Ithink I want to reunite with
(41:15):
Kyiv because historically it'sgot a lot of significance and
we'll just do this as anexercise to right historical
wrongs.
Am I being naive to thinkeconomically and I need to go
back and read my history books.
Speaker 2 (41:36):
I think you know, from a US perspective
perspective, we don't seehistory the same way that people
in other countries do.
People in other countries havea much longer uh perspective, uh
, on history well, yeah, we're.
Speaker 1 (41:56):
We're a newcomer with only 200 years.
Speaker 2 (42:00):
And Latin America is a newcomer too.
I think that we have tounderstand that Russia takes a
very long view on things, and sodo other European countries.
Our allies in Europe take avery long-term view of things.
And some of the Asian countries, you know, despite colonialism,
(42:23):
they have much longer historiesthan that and they take a, they
take a long-term view of things.
So, yeah, I mean, I think, Ithink history can be an excuse
for the pursuit of of economicends, suit of economic ends.
But you know, history alsostands on its own as well, and I
(42:52):
think that you know, I thinkthat a lot of people don't you
know, don't realize that youknow, and then they're sort of
conflicting historicalnarratives as well.
Speaker 1 (43:01):
Right, we just talked about Leif Erikson discovering
America long before.
They're sort of conflictinghistorical narratives as well.
Right, we just talked aboutLeif Erikson discovering America
long before the pilgrims, right?
So I guess I'd like to wrap uptoday's call with, just you know
, one kind of theme, which is dowe think there are investment
opportunities in the actions ofUkraine and if so, what would,
(43:25):
what would you invest in to takeadvantage of it?
Speaker 2 (43:33):
So so I would look long-term at defense companies
that have a more commercialorientation and are not entirely
dependent on on us militarycontracts.
So I would take a look at that.
Um, you know we talked aboutrare earths.
(43:55):
Uh, you know, I think it'sgoing to be a long time before
rare earths are exploited in theUkraine to any big degree.
But I think that rare earthsand lithium copper, I think
offer a lot of opportunitieselsewhere in the world.
(44:16):
You know Canada, the Andeancountries offer a lot of this as
well, australia, but I wouldn'tcount on Ukraine and I wouldn't
count on China.
Speaker 1 (44:35):
I think for this call , and you can write down the
state.
I'm going to agree witheverything you said, so I don't
have any.
I think there are this call andyou can write down the state.
I'm going to agree witheverything you said, clint, so I
don't have any.
I think there are opportunitiesin defense and I like to see
them be broad based.
I would probably limit myself toUS-based military corporations,
(44:55):
because I think there's a lotof politicization of these and I
think it's going to be helpfulto have companies that are based
in the United States, because Ithink our use of and our demand
for weapons is going tocontinue to grow.
So I believe that US companiesare a good place to play that
(45:17):
and I do think it's a longerterm trend place to play that
and I do think it's a longerterm trend.
I agree with the investment inraw materials the Rio Tintos,
the Newmont those companies tome, are always given the low
interest compared to theexcitement of AI, but they
produce a lot of dividends.
(45:38):
They produce a lot of materialsthat are critical to our
overall economic success.
So I would agree that althoughthey're boring and although
they're basic materials, they'restill pretty important
materials.
I think it's an area thateverybody should make part of
their portfolio.
If you're building a portfoliofor the future, you have to
(45:59):
think about the building, copperand steel as important elements
of every economy andinfrastructure.
So anything else to add today,clem as we head off.
Speaker 2 (46:10):
No, I think that's it .
It was a great conversation,Steve.
Speaker 1 (46:15):
And I'll tell everybody that I think that
Clem's taking a trip up toNewfoundland.
He may come back a differentman.
He may start to wear horns ahat with horns on it and he
could start to look a lot moreNordic on these calls.
So I'm looking forward.
I hope you have fun and I thinkthat everybody would love to
(46:39):
have your support and continueto call us, continue to text us,
continue to let us know whichof the podcasts you liked and
why, and what we can do to tryto deliver and make.
Look forward to gettingtogether again soon.
We've got some great guestscoming up Rich Weiss and Marcus
(47:08):
Sturtevant.
So thanks everyone, and weappreciate you listening.
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