April 14, 2025 • 15 mins
Dive into why current U.S. trade policies are failing with Christopher Markowski. From flawed vertical integration dreams to the pitfalls of tariffs, discover how these strategies hurt small businesses and ignore economic realities. www.watchdogonwallstreet.com
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
I wasted a large part of my day yesterday, large
part of my day trying to parse Howard, Lutnick, Navarro
and Hassetts statements on the various different talk programs that
took place yesterday. And when eventually it hit me, it
(00:36):
hit me like I've got smacked up side the head.
It reminded me of the movie Billy Madison. And if
you're familiar with this movie, I'll just run it by
a really quick It's Adam Sandler movie. Billy Madison. Is
this really really, really really rich adult young adult that
(00:57):
is a moron, and rather than father's not going to
let him inherit anything, sends him back to school. He's
got to do everything over again. And then there's a
scene in the movie where Billy is doing a debate,
like a game show type of a debate, and he
gives this answer that is just you know, stupid, stupid,
(01:20):
and the guy running the debate it's a great line.
Great line, he's I had to pull it up. He says,
what you've just said is one of the most insanely
idiotic things I have ever heard. At no point, and
you're rambling incoherent response, were you even close to anything
that could be considered a rational thought. Everyone in this
(01:42):
room is now dumber for having listened to it. I
award you no points, and may God have mercy on
your soul.
Speaker 1 (01:50):
Yeah.
Speaker 2 (01:51):
That came to me yesterday when I was trying to
make heads or tails and parse what was going on,
and I just said, you know what, why bother? Why bother?
It just I'm wasting my time, wasting my time trying
to make sense out of absolute utter nonsense. I don't know.
(02:13):
I mean again, uh batn us back and forth with
the Markowski brain trust, and uh, I mean, it's so dumb,
so ridiculous that it has to be by design. That's
the only thing that we're kind of thinking at this
point in time, this trade policy that they keep pushing for.
Speaker 1 (02:38):
See.
Speaker 2 (02:38):
Andy Kesser did a really interesting piece and we've discussed
this before here on the program. This the idea and
using history as a guide too.
Speaker 3 (02:49):
Ah, we're gonna do everything in here in America, and
we're going to be completely vertically integrated. We're not going
to need anybody for anything. Let me ask the question.
You think that's how I think that's how countries or
empires have gotten rich throughout history.
Speaker 2 (03:09):
Putting a wall up. No, no, we are. We are
not a vertical country, nor do we want to be. America.
America first is a vertical models where you do everything.
It doesn't work. You can even the examples of this.
(03:31):
In business, IBM. IBM was a vertical company. They made
the chips, they made the software, they assembled the computers,
they wrapped the plastic around them. AT and T back
in the day they provided the phones, the wires, the local,
all the long distance calls, everything. Thank god that went away.
(03:55):
Vertical gave way to horizontal industries, which or andized by
layers of expertise sorted by value added. Intel and Microsoft
own layers in a horizontal stack that made up personal computers,
which crushed IBM mainframes. The Internet became a horizontal stack
(04:17):
of router, servers and applications, up ending AT and t's
network AI horizontal Silicon Valley's Open AI uses in Vidia
chips made by Taiwan's TSMC Taiwan Semiconductor using Dutch ASML's equipment. Again,
(04:37):
this is how wealth is created. Now to the Navarro
and Lutnik types out there, they get freaked out over
trade deficits. Again, doesn't matter. You want to take a
look at the margin of the products that are flowing
(04:58):
across the border. Apple say, nice business, thirty four percent,
operating margins thirty four percent. You want to guess what
the operating margin is for fox Con, fox Con, the
ones that are assembling the iPhones and the iPads, all
(05:18):
that good stuff. Three percent? Which business would you rather have?
The one with a thirty four percent margin or the
one with a three percent margin? All the stuff, whether
it be televisions, cars, clothes, toys, they're all low margin,
(05:39):
labor intensive businesses. Again, I railed against this. We've discussed
this before here on the show. When Trump, uh, you know,
Trump got all excited about his all excited about his
fox Con plant they were going to make in flat
screen TVs in Wisconsin, and we called it out right
here on the program that that was never going to happen.
(06:00):
That was never going to happen. And guess what, it
didn't didn't say low margin business. What do we do?
We export high margin software, financial services, drugs, AI applications,
all intelligence intensive businesses. Now, you know, Lutnick and I
(06:26):
got a lot of people are gonna be yeah, I'm
screwing in on iPhones there, they're gonna be manning the robots. Okay, right,
Horizontal makes our country, makes our society wealthy. That's what
we want. It's interesting talk about trade deficits since nineteen
(06:50):
ninety nine. We've run cumulative trade deficits since nineteen nine nine,
fifteen point four trillion dollars. Okay, you want to know
what equity prices did over that period of time. They
rose by forty five trillion dollars US household net worth
(07:11):
at the end of nineteen ninety nine to forty one
trillion end of twenty twenty four, one hundred and sixty trillion.
Think about that. Get your arms around that again. You know,
low way jobs they're not the American dream. They're just not. Again,
(07:37):
the amount of technology that's coming down the pike. Most
machine and mental working shops now use programmable machine tools again.
Factories are going to involve people working and operating robots. Again.
We've discussed this here on the program. You want to
change the dynamic here in this country, you better start
(07:57):
in the eighth grade. You start in the eighth grade.
Our economy is massive, massive. Think of it as like
an aircraft carrier for crying out loud. It's not going
to turn on a dime. Okay, we are going to
have to make some fundamental changes. You don't have to
(08:19):
send every Tom Dick, Harry Sally Jane to college. Just
doesn't have to not necessary for crying out loud. I know,
I know it's a lot. College and university's big business
here in this country. But we need to get away
from that some of the other issues that we're going
to see just from this this past weekend. It's good
(08:44):
to be a you know, a big multi national tech
company because you just got yourself an exemption. You just
got yourself an exemption. How about small businesses? Are they
getting any exemption? No they're not, they're not. Did you
understand how again, this is the crony nature of this.
(09:12):
It's going to be you know, carve outs, carve outs
and deals and all sorts of stuff. If you are
a favorite company, now what do we call that here?
What if We've explained this here on the program. It's
called regulatory capture. It's not right, it's not fair, but
it most certainly is a way to invest. Most certainly
(09:33):
is a way to companies that are protected because of
the fact that they are connected and they can get
these carve outs and handouts, whatever it may be. Buffett
knows this. He invests in the same way. What I
mean again, Apple, Dell, Hewlett Packard, Taiwan, Semi in video
(09:55):
almost companies, they're okay, But what about all of the
smaller businesses here in this country that are importing things
from China. They didn't get an exception. They're hurt. They're hurt.
Alyssa Finley, I want to share with you this. This
(10:16):
was genius and she's one of my does a great
job at the Wall Street Journal, very very clever columnist.
She channeled C. S. Lewis's Screwtape Letters. It's a book
I happened to love and if you're not familiar to
Screwtape Letters, it's basically a conversation between a couple of
(10:40):
demons and how to go about how to go about
tempting tempting a human being. They called the human being
the patient and the book excellent book, highly recommend it.
So she wrote a story here and how screwtape. Okay,
Screwtape is the mentor demon Wormwood, which is his nephew
(11:02):
demon to lead Donald Trump astray on tariffs. My dear Wormwood,
do not despair about your patient Trump's capitulation to the
globalist enemy. His tariff for treat is a transient setback
the enemy prevailed by appealing to his rational side. Mister
(11:23):
Trump doesn't want a recession, and the swooning markets made
him yippie. He is particularly vulnerable for the entreaties of
business titans. You need to stroke mister Trump's irrational, self
defeating instincts. How so you ask, the following methods could
prove useful. Keep them focused on the false dichotomy between
(11:44):
helping Main Street and Wall Street. Do not let his
mind dwell on the costs of his tariffs to small
businesses and middle class Americans. Remind him that the Wall
Street globalists who opposes tariffs also opposed his reelection. There
are few things your patient hates more than being taken
advantage of. As a real estate man, he sometimes refused
(12:06):
to pay suppliers and contractors he thought were ripping him off.
The enemy will try to appeal to his conception of
himself as a deal maker to get him to negotiate
lower tariffs and trade barriers with other countries. If he succumbs,
and hell forbid strikes, deals remind him of the gargantua
trade deficits US runs with other countries. Of course, the
(12:27):
trade deficit is a meaningless number. That's the point. It
will distract Trump and make him think the US is
being taken advantage of. Our purpose is to increase US
trade barriers, not lower foreign ones. Mister Trump's dislike of
being exploited is only matched by his pride. Recall how
(12:49):
Vice President JD. Vance riled him up in the Oval
Office meeting with Zelenski by calling the Ukrainian president ungrateful
for usaid, Who do you think put the idea to
do that in JD's head? Yours? Truly? My point is
you can work on your patient by working on those
around him. Jade Vance is politically ambitious, which makes him
(13:12):
vulnerable to your designs. He will say and do what
he thinks will help him to get ahead. Before he
ran for political office, he opposed tariff's but I have
made him think that supporting tariffs will endear him to
Trump voters. Reinforcement from mister Vance can help mister Trump
from succumbing to the enemy. Don't waste your energy is
(13:33):
working on the boot liquor, Howard Lutnik. His opinions carry
little weight with Trump. The President respects Scott Bessant because
of his business success. Mister Benant knows tariffs are harmful,
but doesn't offer candid advice because he fears losing his job.
Keep it that way by playing on mister Besant's insecurities.
Peter Tomorrow is our strongest ally in the White House.
(13:56):
He reinforces mister Trump's worst or from our stand point,
best instincts. Mister Mvarro resents not receiving the respect he
thinks he was due as an economist, and now Relis
is serving as Trump's resputant. Nurse. Navarro's grievances against the
enemy keep him close to Trump. Your affectionate uncle, Screwtape.
(14:18):
Great job, Alyssa on that column, genius, Gotta leave you.
One more thing. This is from the Cato Institute. Pole interesting.
We want to talk about dichotomy here. Question America would
be better off if more people worked in manufacturing. Eighty
(14:40):
percent of Americans agree, twenty percent disagree. Same poll. I
would be better off if I worked in a factory.
Twenty five percent agree, seventy three percent disagree, and two
percent currently work in a factory. Watchdog on Wall street
(15:04):
dot com
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it will have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.
Speaker 2 (00:16):
I wasted a large part of my day yesterday, large
part of my day trying to parse Howard, Lutnick, Navarro
and Hassetts statements on the various different talk programs that
took place yesterday. And when eventually it hit me, it
(00:36):
hit me like I've got smacked up side the head.
It reminded me of the movie Billy Madison. And if
you're familiar with this movie, I'll just run it by
a really quick It's Adam Sandler movie. Billy Madison. Is
this really really, really really rich adult young adult that
(00:57):
is a moron, and rather than father's not going to
let him inherit anything, sends him back to school. He's
got to do everything over again. And then there's a
scene in the movie where Billy is doing a debate,
like a game show type of a debate, and he
gives this answer that is just you know, stupid, stupid,
(01:20):
and the guy running the debate it's a great line.
Great line, he's I had to pull it up. He says,
what you've just said is one of the most insanely
idiotic things I have ever heard. At no point, and
you're rambling incoherent response, were you even close to anything
that could be considered a rational thought. Everyone in this
(01:42):
room is now dumber for having listened to it. I
award you no points, and may God have mercy on
your soul.
Speaker 1 (01:50):
Yeah.
Speaker 2 (01:51):
That came to me yesterday when I was trying to
make heads or tails and parse what was going on,
and I just said, you know what, why bother? Why bother?
It just I'm wasting my time, wasting my time trying
to make sense out of absolute utter nonsense. I don't know.
(02:13):
I mean again, uh batn us back and forth with
the Markowski brain trust, and uh, I mean, it's so dumb,
so ridiculous that it has to be by design. That's
the only thing that we're kind of thinking at this
point in time, this trade policy that they keep pushing for.
Speaker 1 (02:38):
See.
Speaker 2 (02:38):
Andy Kesser did a really interesting piece and we've discussed
this before here on the program. This the idea and
using history as a guide too.
Speaker 3 (02:49):
Ah, we're gonna do everything in here in America, and
we're going to be completely vertically integrated. We're not going
to need anybody for anything. Let me ask the question.
You think that's how I think that's how countries or
empires have gotten rich throughout history.
Speaker 2 (03:09):
Putting a wall up. No, no, we are. We are
not a vertical country, nor do we want to be. America.
America first is a vertical models where you do everything.
It doesn't work. You can even the examples of this.
(03:31):
In business, IBM. IBM was a vertical company. They made
the chips, they made the software, they assembled the computers,
they wrapped the plastic around them. AT and T back
in the day they provided the phones, the wires, the local,
all the long distance calls, everything. Thank god that went away.
(03:55):
Vertical gave way to horizontal industries, which or andized by
layers of expertise sorted by value added. Intel and Microsoft
own layers in a horizontal stack that made up personal computers,
which crushed IBM mainframes. The Internet became a horizontal stack
(04:17):
of router, servers and applications, up ending AT and t's
network AI horizontal Silicon Valley's Open AI uses in Vidia
chips made by Taiwan's TSMC Taiwan Semiconductor using Dutch ASML's equipment. Again,
(04:37):
this is how wealth is created. Now to the Navarro
and Lutnik types out there, they get freaked out over
trade deficits. Again, doesn't matter. You want to take a
look at the margin of the products that are flowing
(04:58):
across the border. Apple say, nice business, thirty four percent,
operating margins thirty four percent. You want to guess what
the operating margin is for fox Con, fox Con, the
ones that are assembling the iPhones and the iPads, all
(05:18):
that good stuff. Three percent? Which business would you rather have?
The one with a thirty four percent margin or the
one with a three percent margin? All the stuff, whether
it be televisions, cars, clothes, toys, they're all low margin,
(05:39):
labor intensive businesses. Again, I railed against this. We've discussed
this before here on the show. When Trump, uh, you know,
Trump got all excited about his all excited about his
fox Con plant they were going to make in flat
screen TVs in Wisconsin, and we called it out right
here on the program that that was never going to happen.
(06:00):
That was never going to happen. And guess what, it
didn't didn't say low margin business. What do we do?
We export high margin software, financial services, drugs, AI applications,
all intelligence intensive businesses. Now, you know, Lutnick and I
(06:26):
got a lot of people are gonna be yeah, I'm
screwing in on iPhones there, they're gonna be manning the robots. Okay, right,
Horizontal makes our country, makes our society wealthy. That's what
we want. It's interesting talk about trade deficits since nineteen
(06:50):
ninety nine. We've run cumulative trade deficits since nineteen nine nine,
fifteen point four trillion dollars. Okay, you want to know
what equity prices did over that period of time. They
rose by forty five trillion dollars US household net worth
(07:11):
at the end of nineteen ninety nine to forty one
trillion end of twenty twenty four, one hundred and sixty trillion.
Think about that. Get your arms around that again. You know,
low way jobs they're not the American dream. They're just not. Again,
(07:37):
the amount of technology that's coming down the pike. Most
machine and mental working shops now use programmable machine tools again.
Factories are going to involve people working and operating robots. Again.
We've discussed this here on the program. You want to
change the dynamic here in this country, you better start
(07:57):
in the eighth grade. You start in the eighth grade.
Our economy is massive, massive. Think of it as like
an aircraft carrier for crying out loud. It's not going
to turn on a dime. Okay, we are going to
have to make some fundamental changes. You don't have to
(08:19):
send every Tom Dick, Harry Sally Jane to college. Just
doesn't have to not necessary for crying out loud. I know,
I know it's a lot. College and university's big business
here in this country. But we need to get away
from that some of the other issues that we're going
to see just from this this past weekend. It's good
(08:44):
to be a you know, a big multi national tech
company because you just got yourself an exemption. You just
got yourself an exemption. How about small businesses? Are they
getting any exemption? No they're not, they're not. Did you
understand how again, this is the crony nature of this.
(09:12):
It's going to be you know, carve outs, carve outs
and deals and all sorts of stuff. If you are
a favorite company, now what do we call that here?
What if We've explained this here on the program. It's
called regulatory capture. It's not right, it's not fair, but
it most certainly is a way to invest. Most certainly
(09:33):
is a way to companies that are protected because of
the fact that they are connected and they can get
these carve outs and handouts, whatever it may be. Buffett
knows this. He invests in the same way. What I
mean again, Apple, Dell, Hewlett Packard, Taiwan, Semi in video
(09:55):
almost companies, they're okay, But what about all of the
smaller businesses here in this country that are importing things
from China. They didn't get an exception. They're hurt. They're hurt.
Alyssa Finley, I want to share with you this. This
(10:16):
was genius and she's one of my does a great
job at the Wall Street Journal, very very clever columnist.
She channeled C. S. Lewis's Screwtape Letters. It's a book
I happened to love and if you're not familiar to
Screwtape Letters, it's basically a conversation between a couple of
(10:40):
demons and how to go about how to go about
tempting tempting a human being. They called the human being
the patient and the book excellent book, highly recommend it.
So she wrote a story here and how screwtape. Okay,
Screwtape is the mentor demon Wormwood, which is his nephew
(11:02):
demon to lead Donald Trump astray on tariffs. My dear Wormwood,
do not despair about your patient Trump's capitulation to the
globalist enemy. His tariff for treat is a transient setback
the enemy prevailed by appealing to his rational side. Mister
(11:23):
Trump doesn't want a recession, and the swooning markets made
him yippie. He is particularly vulnerable for the entreaties of
business titans. You need to stroke mister Trump's irrational, self
defeating instincts. How so you ask, the following methods could
prove useful. Keep them focused on the false dichotomy between
(11:44):
helping Main Street and Wall Street. Do not let his
mind dwell on the costs of his tariffs to small
businesses and middle class Americans. Remind him that the Wall
Street globalists who opposes tariffs also opposed his reelection. There
are few things your patient hates more than being taken
advantage of. As a real estate man, he sometimes refused
(12:06):
to pay suppliers and contractors he thought were ripping him off.
The enemy will try to appeal to his conception of
himself as a deal maker to get him to negotiate
lower tariffs and trade barriers with other countries. If he succumbs,
and hell forbid strikes, deals remind him of the gargantua
trade deficits US runs with other countries. Of course, the
(12:27):
trade deficit is a meaningless number. That's the point. It
will distract Trump and make him think the US is
being taken advantage of. Our purpose is to increase US
trade barriers, not lower foreign ones. Mister Trump's dislike of
being exploited is only matched by his pride. Recall how
(12:49):
Vice President JD. Vance riled him up in the Oval
Office meeting with Zelenski by calling the Ukrainian president ungrateful
for usaid, Who do you think put the idea to
do that in JD's head? Yours? Truly? My point is
you can work on your patient by working on those
around him. Jade Vance is politically ambitious, which makes him
(13:12):
vulnerable to your designs. He will say and do what
he thinks will help him to get ahead. Before he
ran for political office, he opposed tariff's but I have
made him think that supporting tariffs will endear him to
Trump voters. Reinforcement from mister Vance can help mister Trump
from succumbing to the enemy. Don't waste your energy is
(13:33):
working on the boot liquor, Howard Lutnik. His opinions carry
little weight with Trump. The President respects Scott Bessant because
of his business success. Mister Benant knows tariffs are harmful,
but doesn't offer candid advice because he fears losing his job.
Keep it that way by playing on mister Besant's insecurities.
Peter Tomorrow is our strongest ally in the White House.
(13:56):
He reinforces mister Trump's worst or from our stand point,
best instincts. Mister Mvarro resents not receiving the respect he
thinks he was due as an economist, and now Relis
is serving as Trump's resputant. Nurse. Navarro's grievances against the
enemy keep him close to Trump. Your affectionate uncle, Screwtape.
(14:18):
Great job, Alyssa on that column, genius, Gotta leave you.
One more thing. This is from the Cato Institute. Pole interesting.
We want to talk about dichotomy here. Question America would
be better off if more people worked in manufacturing. Eighty
(14:40):
percent of Americans agree, twenty percent disagree. Same poll. I
would be better off if I worked in a factory.
Twenty five percent agree, seventy three percent disagree, and two
percent currently work in a factory. Watchdog on Wall street
(15:04):
dot com
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