Episode 223

full
Published on:

7th Mar 2025

David Woo: Trump’s Trade War Playbook – How to Profit From It

In this episode of ReSolve Riffs, renowned economist and strategist David Woo—CEO of David Woo Unbound and a veteran of global finance—dives deep into a multifaceted discussion on current global economic and political trends with Mike Philbrick and Adam Butler. Drawing on decades of experience at institutions like Bank of America and the IMF, Woo unpacks themes ranging from shifting U.S. trade policies and the fallout from the German election to disruptive advances in technology and evolving fiscal strategies.

Topics Discussed

• U.S. Trade Policy and Shifting Global Alliances: Analysis of the transition from Biden’s approach to Trump’s competitive strategy

• German Election and European Economic Adjustments: Examining the impact on manufacturing competitiveness and embedded fiscal constraints

• Tariffs and Trade Warfare: Insight into the deployment of steel, aluminum, auto, and reciprocal tariffs across regions

• Market Rotation and Investor Flows: The dynamic shift from U.S. retail-driven buying to increased global and emerging market exposure

• Fiscal Discipline and Inflation Management: Strategies to curb deficits, rein in spending, and mitigate inflationary pressures

• Emerging Markets and Currency Strategies: Evaluating opportunities in emerging market local currency debt amid global real yield shifts

• Technology Disruption in Cloud and Semiconductor Industries: The implications of innovations like DeepSeek and evolving AI dynamics

• Japanese Economic Outlook and Structural Reforms: Assessing Japan’s monetary policy, automation, and progress in semiconductor manufacturing

Transcript
David Woo:

You have to understand, like under Biden, there was this insecurity

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about China, that China is going to

overtake us, this and this and that.

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But Trump doesn't quite feel the same way

about America vis a vis China, he believes

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that if America is actually, you know, is

in power, okay, to the extent unencumbered

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by regulations and then all sorts of

government interference, that the U.S.

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is the most competitive

economy in the world.

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So from that point of view, he

is not trying to keep China back,

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he's just trying to propel the U.S.

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forward to allow the U.S.

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to realize its full potential.

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And I think that is a

very constructive world.

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Mike Philbrick: All right.

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Welcome to ReSolve Riffs.

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We have, I think a

humdinger of a guest today.

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We got the ceo David Woo of David Woo

Unbound a global forum for dedicate,

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dedicated to promoting fact-based debates

on markets, politics, and economics.

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That's something we love to do

around here at ReSolve for sure.

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And prior to establishing Unbound,

David headed up the Global Rates and

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the Foreign Exchange and Emerging

Markets, Fixed Income Strategy and

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Economic Research at Bank of America.

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His career includes stops at

Barclays, Citigroup, and beginning

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his career as an economist at

the International Monetary Fund.

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Also, side note, PhD in economics

from Columbia, mathematics from Tufts.

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So, you know, pretty steeped individual

that we're going to be talking to

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today about global markets, politics,

the impacts on markets, and, uh,

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great to have you here, David, and

looking forward to your insights.

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Yeah.

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Is there anywhere you want

to start in particular?

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You've got a, an absolute, um, you

know, net of, of interconnected

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relationships across countries, regions.

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Maybe we can start with some of your

thoughts and your outlook in:

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In some of the discussions you've

had recently, you've highlighted some

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significant macroeconomic themes in 2025

and I'm wondering maybe we can start there

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and you can elaborate on some of those and

some of the primary drivers you might see

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influencing markets as we come into 2025.

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How

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David Woo: want to start maybe

since, you know, we just had

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the German election yesterday.

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I want to just basically take a

minute and talk about the German

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election because I think this was

a watershed event in many ways.

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And I think to a great extent, I

think, you know, it does signal a

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massive, how would you say earthquake?

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And I think, and especially in light of

the JD Vance speech in Munich last week,

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I think from that point of view, I want

to start there only because it's topical,

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but also because it's very important.

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I think, you know, I think to understand,

I think, the implications with the

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market implications of the of the

German election, we have to realize

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that Germany has been a collateral

damage of the US foreign policy

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over the last two administrations.

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You think about this under Trump 1.

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0 the US went out to China in a very

big way when it comes to tariff and

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that forced China to move up the value

added in the manufacturing supply chain.

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And that no question put tremendous

pressure on Germany, right?

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I mean, Germany used to dominate the

car market in China, which is the

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largest car market in the world today.

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But Germany has been steadily

losing market share in China

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over the last three, four years.

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In fact, actually BYD after having

overtaken Volkswagen last year, as

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the number one, you know, basically

most popular, car sellers in China.

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You know, BYD's gone on to basically

grow another 35 percent last year,

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while Volkswagen was down 7%.

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And so there's no doubt

in that respect that U.

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S.

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trade war against China sort of

intensified Chinese competition

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for German manufactured goods.

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And that was happened under Trump 1.

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0.

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And then came Biden, who was even

more, it was even worse for Germany.

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Because in my view, the Ukraine

war is nothing more than a proxy

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war that Biden declared on Russia.

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And there's no doubt that the casualty

is once again, the German economy,

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because the result of the war is that

the relative price on energy that Europe

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has to pay has gone through the roof.

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I mean, before the war, Germany was

paying about twice as much as U.

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S.

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for natural gas.

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Now it's paying four times more.

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I mean, it was at 1.

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8 times, only a couple of years ago, it's

come down, but still four times more.

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As a result, you know, all the energy

intensive sectors in Germany, whether

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it's chemical, whether it's steel and all

that, has become completely uncompetitive.

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As a result, German companies have

been like picking up and relocating

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elsewhere where energy is cheaper.

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So from that point of view, U.

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S.,

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despite U.

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S.

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claim as being German

ally and this and that, U.

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S.

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foreign policy in the last eight years

really screwed Germany, the largest

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economy, in every possible way.

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Now comes Trump 2.

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0.

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And by the way, for all, you

know, I'm actually a Trump

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supporter, so don't get me wrong.

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You know, there is no question

that, you know, if you think about

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what, you know, basically Trump 2.

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0 for Europe and for Germany in

general, I mean, you just have to

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listen to what JD Vance had to say

in Munich, I mean, which I thought

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was no less than earth shattering.

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JD Vance, rightly said that Europe

that has been cracking down on free

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speech that has been suppressing

democracy no longer has shared values

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with the U S and in that respect, U.

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S.

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no longer feels that it needs to

actually can justify, okay, spending

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national resources to protect Europe.

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And this is actually very important

because you have to remember under Biden,

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even though Germany got screwed over by

Biden in a very big way, at least Biden

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pretend the world was divided between

democracies and authoritarian regimes.

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Therefore, for Biden, the world consists

of American allies and American enemies.

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And Germany was an American ally,

whereas China was an adversary.

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So from that point of view, Germany was

treated relatively better than was China.

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Now JD Vance comes along and basically

spells out the worldview that's exactly

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consistent with Trump's basically

worldview, which is that, you know,

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Trump doesn't see the world in terms

of democracy versus authoritarianism.

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In fact, JD Vance will basically

argue that Europe today has become

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so totalitarian that actually

it's practically indifferentiable

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from the point of view of China

and Russia, to the extent they've

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been cracking down on free speech.

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The fact that you can call a politician

ugly in Germany and get arrested

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and get put in prison, that just

tells you how far they've gone.

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Just like in China, you wouldn't say

that Xi Jinping is ugly, you might get

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arrested, but Germany too apparently.

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Now, so why is that important?

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Because what this basically

means is that the U.

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S.

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No longer is going to

treat Europe as an ally.

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It's as far as the US is concerned.

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You guys now have to look after yourself

if you're going to if we're going to do

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anything for you You're going to have

to pay for it in a very big way now So

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I think from that point of view, this

is a very important realization, which

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is that you know, Last eight years.

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I mean the Germany has gone from like,

you know, really a great manufacturing

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powerhouse steadily declining due

to US foreign policy and in many

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great ways the US foreign policy has

Dramatically weakened Europe and I

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think that's not going to change.

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Now the reason why this election is That

took place yesterday in Germany is going

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to make things so much worse for Europe.

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Is the fact that Anchilles produced, a

government, okay, the Christian Democrats

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are going to be, you know, essentially

running the show for the most part,

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you know, Frederick Mertz, who is the

chairman of the party of CDU, who's

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going to be the next chancellor, most

likely, he happens to be a Russia hawk.

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He happens to be someone who thinks

that Europe needs to basically

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stand up on its own two legs.

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He happens to believe that Europe needs to

have its own independent security policy.

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And in that respect, he's very

likely to join forces with France,

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with Macron, to actually tell Trump

You know, to go fuck off, okay?

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I think actually this is going to be

very interesting because this will be

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obviously very bad news for Europe.

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Because at the end of the day, Europe

is still more dependent on the U.

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S.

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than U.

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S.

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is dependent on Europe.

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In that respect, I do think that

with a much more hawkish, You

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know, sort of like Germany that

also hates Russia, by the way.

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It's actually very interesting.

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Frederick Merz hates Russia.

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I mean, to the extent that he's willing

to in fact, send long range German

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missiles to Russia, something that his

predecessor was not prepared to do.

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So he wants, he could, we could very

well see this Germany in it, while

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he's flexing his muscles, it's going to

potentially prolong the war in Ukraine,

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which is going to be bad news for Europe,

but at the same time, they're much more

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likely to go head to head with the U S.

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Especially over the tariff war.

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And this is the most important

thing because remember, Trump's 25%

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steel and aluminum tariff is going

to go in effect essentially in the

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beginning of, uh, at the end of March.

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And that's gonna hit Europe very hard.

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Trump's wants to unleash more

tariff on reci, on, on what, what's

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called the reciprocal tariff.

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And right now, Trump has decided

to view Europe's 20 percent tariff,

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20 percent VAT as a form of tariff.

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Which, I mean, I'm not even going to argue

with that, but that's how he sees things.

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And on top of that, Trump just

announced that he's going to be soon

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unleashing tariff on imported cars.

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And guess what?

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Which is the car company, country that

has the biggest car export to the U.

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S.?

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Course it's Germany.

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So in my view, all this basically

means is that Europe, it's actually

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is going to end up with the short

end of the stick under Trump 2.

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0.

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They're going to get screwed over again.

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And because of the people they

just elected into government.

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The clash with the U.

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S.

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is going to be even more frightening,

I think, in terms of Europe is

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going to really take it on the chin.

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The reason why I'm saying this is that

DAX has been one of the best performing

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stock markets over the last four weeks.

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It's been like on a tier.

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Everybody's piling, buying German stocks.

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And I think this is going to be a very,

very, I think there's going to be a

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bad surprise coming for the market.

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Adam Butler: so that the DAX is up

1 percent on this news after, as you

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rightly say, rallying very strongly

so far this year on, you know, what

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many might perceive to be some hostile

rhetoric from the Trump administration,

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how are you squaring that circle?

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David Woo: I mean, the fact

the market's up today by 1%.

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Adam Butler: Well, I mean, it's,

it seems like, why do you think the

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market, the German market's been

rallying, it's not just Germany either.

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It's, you know, Europe in general, it's

rest of world in general, versus U.

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S.,

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uh,

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David Woo: it's very simple I

mean, it's very simple why the

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market's been rallying in Europe.

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The reason is the big story.

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I mean, I, you know,

I look at fundamental.

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I look at, flows and everything.

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The big story in the global markets

in the last three months is that U.

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S.

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retail investors decided to

pile in a big way into U.

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S.

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stocks.

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Since more or less December, we've

seen massive inflows into the U.

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S.

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stock market.

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inflows Almost as soon as the US

election, you know, basically was

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over, we saw this massive flows.

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And now what happened was in the, in

view of the massive retail inflows

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in the US stock market, institutional

investors who are indexed or benchmarked

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to the world stock market, decided to

lighten up their US exposure to the

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extent that we're selling US stocks.

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And guess what?

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They increased their exposures to the rest

of the world, to the non US equity market,

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whether it was in Europe, whether it was

in China and Asia and so on and so forth.

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So we've seen this big rotation driven by

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the post election massive retail inflows

into the, by retail US retail investors

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into US that actually facilitate this

rotation of institution investors away

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from the US and the rest of the world.

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As a result, the rest of the

world have actually outperformed.

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If you look at MSCI.

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Ex USA has actually outperformed the U.

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S.

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steadily, actually since

the beginning of February.

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And I think that has been basically

the rotation I'm talking about.

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But I think to the extent that DAX has

already big run, Europe has already

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had a big run and so on and so forth.

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And then the U.

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S.

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looks definitely very, very vulnerable.

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I'm generally of the view that the market

is due for a pretty significant correction

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and essentially in the next four weeks.

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And then I think to the extent that,

you know, every year we see the same

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story in January, in December and into

January, everybody and their grandmother

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put on these so called year ahead trades.

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And then they get very crowded

by the end of February.

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And then by March you

see a big correction.

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And I think that is what the

market is set up is for right now.

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Adam Butler: So, how would you react

to the view that what Trump has done is

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convinced Germany, that they need to,

that they need Europe, that, Europe as

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a continent, as a monetary union, as a

political union, they need each other

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more now than they have in many decades.

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And also that Europe, certainly France,

and I, you know, in many ways, Germany,

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already have been describing how they

need to reindustrialize, how they

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need to expand their fiscal balance

sheets, how they need to remilitarize,

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and that this fiscal expansion is a

tailwind for economic growth in Europe.

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David Woo: There's not

going to be any tip.

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I mean, fiscal expansion.

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That's another thing.

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The most important takeaway from the

German election is that between the

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AFD and the left party, you know, is

almost ensured that Germany would not

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be able to cancel its debt breaks.

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Which requires a two third

majority in both the upper house

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and the lower house to overturn.

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So from that point of view the you know,

The cdu csu the spd and the green party

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together do not have two third majority.

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So as a result, they won't be

able to overturn this debt break,

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and that's why they're screwed.

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And in fact, actually just for

your information, and a lot of

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people don't understand this

because like the mainstream

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media doesn't understand either.

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The BSW, which is the other leftist

party, okay, basically got 4.

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97 percent of the votes.

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Okay, so they're literally just 0.

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03 percentage point away from

crossing the 5 percent threshold.

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Okay, and let me tell you this right

now I mean, I just you know following

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the story this morning that the BSW

actually they're consulting with

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their legal advisors to basically

whether to challenge the results.

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If they cross over the five percent,

then actually it's going to be almost

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impossible for the Germans to even form a

government, let alone basically with a two

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third majority to over, to override the

uh, the fiscal you know, the debt breaks.

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So no, no, you're wrong.

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I mean because, you know, in

that sense that actually the most

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important result of this election is

that they do not have a government.

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A two third majority.

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Adam Butler: Well, much of the

fiscal constraint in Europe is

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a result of the EMU constraint.

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What is it?

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The stability and planning Actor,

whatever it is that limits,

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David Woo: No, it's not

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anymore missed there anymore.

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There's a lot of room around that.

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The, the, the thing about Germany,

it's some very, very specific

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Germany in view of the Mustry Treaty.

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They basically passed a constitutional

reform, I think it was back in

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2017 that says Germany has to

run a balance, basically budget.

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At least on a cyclically adjusted basis.

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And this is why Germany

is in a class by itself.

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Of course, if everybody else is easing

their fiscal policy, but Germany

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cannot, then it sort of becomes, you

know, counterproductive to the extent

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that Germany is the largest economy.

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So, and I think for all the other

countries, I think at this point, they

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have zero room in terms of fiscal easing.

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I mean, France is already like

budget deficits, almost as big

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as that of the U S and elsewhere.

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So I think, you know, again, okay.

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One of the reasons why DAX did so

well heading into the election was

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because people thought that Germany

was going to be able to get this

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two third majority to override this

constitutional debt break that has been

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built into the German constitution, but

it doesn't look like it is gonna happen.

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Adam Butler: Well, one of the things

that we've noticed, I don't know if

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you've noticed this, but I have, given

Trump's bellicose, you know, rhetoric

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and hostile, attitude towards, you

know, Canada, Mexico, Europe, China, et

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cetera, is it seems to have galvanized

national nationalism in, in all of

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these different countries where,

I mean, Canada was falling apart.

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Everyone hated Trudeau.

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they were, they were looking

for train for change.

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You know, they were calling,

they were, they were.

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You know, with pitchforks

looking for, for Trudeau's head.

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it seems like Canada's totally

rallied around the, the

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Maple Leaf now with, uh, with

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David Woo: no evidence of that.

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I think if you look at the conservatives

are still leading massively in the poll.

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I mean, unfortunately, the election

won't, the general elections

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won't be held until October.

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But there's no doubt, like,

if the election is held today

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or tomorrow, like, the Liberal

Party is going to be decimated.

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Sure, within the Liberal Party, you've

got like that woman, I can't stand,

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Christia Freeland, who's like rallying

the basically the troops on the base

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that we're going to stick it to Trump.

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We're going to take it to

him and that kind of thing.

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But again, I think the Canadians can see

very clearly what this is about, actually.

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I mean, the Canadian government, this

government has done a terrible job.

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It's been a total disaster, what

they've done to the Canadian

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economy over the last four years.

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So yeah, it's actually very interesting

that notwithstanding what Christie

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Freeland has been throwing at the

Conservative, calling them names,

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saying that as soon as they win, they're

going to be basically like licking

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Trump's little boots, whatever it is.

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So far, it hasn't really taken

the shine off the Conservatives.

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Because I think the Canadian voters

are a little bit smarter than that.

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But in general, I would say

this is what we're looking at.

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Different countries are reacting to

Trump policies very differently, and

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some are being smarter than others.

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For example, I think the Canadians

absolutely are being totally idiotic in

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the way they deal with, you know, Trump.

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Trump, whereas the Mexicans are absolutely

like, they should, they're serving as

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the model actually for the Canadians

in terms of how to deal with Trump.

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I mean, it's pretty amazing.

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I mean, Claudia Sheinbaum, but

again, Trudeau, who is Trudeau?

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I mean, he's like, you know, nothing.

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Basically, Prime Minister.

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Whereas, you know, Claudia Sheinbaum

has a PhD, President of Mexico.

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This woman, just think about this.

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I don't have to tell you the story.

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two days after Trump got elected, Claudia

Sheinbaum did a call with Trump, okay?

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And then the next day, Trudeau was

seen as flying down to Mar a Lago

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to basically bend his knees, right?

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He was like, oh, well, the Mexican

president spoke with Trump already,

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now I better get in the car.

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It was actually when he returned,

sounding like a total idiot,

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that Chrystia Freeland resigned.

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Right.

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If you recall, okay, that was how it went

because she thought that he was like,

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literally just capitulated like without,

but the Mexicans have been doing all

368

:

this planning very, very methodically.

369

:

And they've been dealing with Trump, very.

370

:

Think about this a week after

basically Trump got elected.

371

:

The Mexicans came in and seize a

million, a ton of basically fentanyl,

372

:

which was worth about a million pills.

373

:

Okay.

374

:

And then they started to literally like,

you know, Since the Trump got elected,

375

:

they've arrested 40, 000 drug dealers.

376

:

Since Trump got elected, they have

built 10 different essentially camps

377

:

along the Mexican US border with

thousands of beds to potentially

378

:

accommodate deportees from the US.

379

:

Okay.

380

:

Since Trump got elected, the Mexicans

have revamped their entire custom

381

:

system whereby like today, like, you

know, Chinese goods, especially fake

382

:

Chinese goods, they're trying to make

their way into the US through Mexico.

383

:

It's no longer possible because the

Mexicans basically closed that door.

384

:

They, in fact, even basically impose a

tariff, a big tariff on Chinese imports.

385

:

Okay.

386

:

So from that point of view, like

this is why I have little doubt that

387

:

next week, I have no doubt that Trump

is going to do a deal with Mexico.

388

:

I have no doubt about this.

389

:

In fact, Trump needs Mexico.

390

:

I would argue Trump actually,

at this point, understand

391

:

just how much he needs Mexico.

392

:

In fact, Trump needs Mexico to

make a security policy a success.

393

:

Whereas Canada has been so behind

the curve, okay, that I think it's

394

:

much less likely that I think Trump

is going to do a deal with Canada.

395

:

In that respect, I think, at least

for the next 10 days, between now

396

:

and the day that the delay tariff

is going to go into effect, I would

397

:

expect the Mexican peso to dramatically

outperform the Canadian dollar.

398

:

Adam Butler: Yeah.

399

:

I think where I was going with

that was, Trump has, has declared

400

:

the intention for the U S to focus

on the U S and to back away from

401

:

many of the support relationships

with, with its global allies.

402

:

And that has engendered at the margin a

more national attitude among historical U.

403

:

S.

404

:

allies and also the recognition

that if they cannot rely on U.

405

:

S.

406

:

support, if that deal is now being

unwound, then they have no choice

407

:

but to revise many of the constraints

and the rules that are self imposed.

408

:

Let's face it, these are just,

these are artificial constraints.

409

:

That have been self imposed in Europe

and Canada, et cetera, and they're much

410

:

more likely to recognize that there's no

choice but to, you know, revise their,

411

:

their fiscal terms, you know, back away

from these constitutional constraints.

412

:

And begin to grow their own economies,

autonomously without relying on this sort

413

:

of, you know, global support relationship

414

:

David Woo: I think, you know, like, in

a very long term, possibly, but right

415

:

now I don't see this as being, I don't

see Trudeau and Freeland and all of a

416

:

sudden they're gonna basically, like,

close the door to immigration, they're

417

:

gonna crack down on whatever it is,

they're gonna now all of a sudden be

418

:

deregulating, I don't see that happening.

419

:

Yeah, you're right, the Conservatives,

but the Conservatives would have

420

:

won a massive victory in Canada,

even without, you know, Trump.

421

:

So from that point of view, I don't

think that would have had a major impact.

422

:

And Europe is not clear.

423

:

So I would say that you're

right in a very long term.

424

:

I can see that if Trump is successful,

and I think I have no doubt he will

425

:

be successful, I think in the second

term, I think it's going to make a lot

426

:

of people question what they're up to.

427

:

I think to the extent that I think, you

know, You're going to have Germany's

428

:

talking about, Oh, well, we're

going to make Germany great again.

429

:

Or Canadians, maybe like, you know,

the conservatives, you know, when they

430

:

come into power in Canada, they could

talk about make Canada great again.

431

:

So I think there is an element

of that, but I think that

432

:

is, that's very long term.

433

:

It's untradeable.

434

:

And it's actually, you know, I think

from the point of view of the investment

435

:

strategy at this moment, I think, you

know, I mean, you, you, you need to, I

436

:

mean, there will be a lot of things that

are more important than that consideration

437

:

in terms of guiding investors, basically

trading and investing right now.

438

:

Mike Philbrick: does, how does Canada's

energy sector play into all that?

439

:

into these tensions.

440

:

I mean, isn't, isn't that a

primary driver for the U S

441

:

David Woo: Canada's energy sector.

442

:

We're talking about the oil, sand,

basically sector is a very expensive

443

:

oil producing sector in Canada.

444

:

I mean, this is also, by the

445

:

Mike Philbrick: let's broaden

it to hydrocarbons and the

446

:

natural gas and pipelines.

447

:

David Woo: sure, no doubt.

448

:

But what I'm just saying, the decoupling,

there was a time that the Canadian dollar

449

:

was very correlated with oil price.

450

:

This is no longer the case.

451

:

And that just tells you the whole story.

452

:

Because Canadian basically cost of

producing oil from oil sand is so

453

:

high, they need really much higher

oil price to actually, you know,

454

:

essentially, you know, encourage more

investment in CapEx spending in the

455

:

Canadian oil sand, basically project.

456

:

I'm not saying, listen, I went

down playing Canada's role, I

457

:

mean the dependency of the U.

458

:

S.

459

:

on Canada in terms of like,

you know, provider of minerals

460

:

and so on and so forth.

461

:

And I'm not even telling you that,

you know, like, you know, in a

462

:

trade war that somehow the U.

463

:

S.

464

:

has the upper hand over

Canada and so forth.

465

:

I think it's a bad situation.

466

:

But I, I do think that Trump right

now thinks he's going to win this one.

467

:

But I think on this issue, I am not

quite so sure because, with Canada

468

:

and Mexico, because I mean, listen,

I'm a professor here in the country.

469

:

I mean, I'm in Israel.

470

:

I'm a professor of economics

here, and I teach game theory.

471

:

The reason why I'm, you know, I'm in game

theory is a very big part of what I do

472

:

is because I love game theory because.

473

:

You know, in game theory, there's no such

thing as an Adolf Hitler or Mother Teresa.

474

:

There are only good

players and bad players.

475

:

And some countries play the

games better than others.

476

:

The reason why Trump is such a predictable

actor, as far as I'm concerned, is

477

:

because he, he's a great player.

478

:

Because in game theory, there's

only good players and bad players.

479

:

I mean, Trump is a great player.

480

:

To the extent everything he does comes

right out of the, basically, textbook.

481

:

And there's no doubt, in the first round

on the Fentanyl border security tariff

482

:

and Mexico tariff, and Canada, he played

this divide and rule strategy, right?

483

:

I mean, so you had Canada and

Mexico, and then he knew that he

484

:

already had Mexico in his pocket.

485

:

So you use Mexico to

put pressure on Trudeau.

486

:

And then Trudeau blinks right, but I

think you know, that's how far Trump

487

:

is gonna play this because in my view

now You're talking about a different

488

:

different situation because the steel

and aluminium tariff, for example, you

489

:

know Canada's obviously It's gonna be the

hardest hit but after that is basically

490

:

Brazil and then you have Germany.

491

:

So there are many more countries are gonna

be affected and then from that point of

492

:

view It'd be much more difficult for Trump

to play the divide and rule strategy.

493

:

So if Europe decides to be stick it

to Trump is decided to basically like

494

:

retaliate and just not cut a deal.

495

:

And then, you know, I think the Canadians

might decide to go there with them, and

496

:

this is where I think it's going to be

most interesting to see whether actually

497

:

these countries decide to join forces

to basically, um, to push back on Trump.

498

:

And I think this is why I think the

market until now, it's like, well,

499

:

you know, listen, I've been saying

for the last three months, the market.

500

:

You know was giving much too much

importance to the fears about tariff

501

:

on day one Because i'm actually very

constructive on China because I think

502

:

trump China's a totally different

situation In fact, actually most of the

503

:

tariff trump has been threatening with

none of it actually touches China, by the

504

:

way It's interesting, but the point here

is that So because, you know, from until

505

:

now, except for the 10 percent tariff

on China has not really gone on ahead.

506

:

And, you know, so in that sense,

the market was positioning for big

507

:

tariff war, the market was short

race, long dollar and all that stuff.

508

:

And then it so far hasn't transpired.

509

:

Therefore I think the market

has gotten a bit complacent.

510

:

Okay.

511

:

So I think that's why if I'm right

over the next three weeks, we're going

512

:

to see the, you know, Canada is not

going to cut a deal with Trump over

513

:

the fentanyl, and then we're going to

have steel and aluminum tariff, and

514

:

Europe is not going to cut a deal,

and then you're going to have the

515

:

reciprocal tariff, and then you're

going to have the semiconductor tariffs.

516

:

I think all these things are coming

all at once, and I'm not sure

517

:

countries are going to be able to move

fast enough to do deals with Trump.

518

:

Especially these deals involve

primarily developed countries that are

519

:

going to be actually, um, decide to

work together to push back on Trump.

520

:

I think this is going to be something.

521

:

This is the, this is another reason why

I'm generally negative about the U S stock

522

:

market as we head into March and April.

523

:

Mike Philbrick: And is that

going to be pervasive across?

524

:

So you said also that the European

stock market probably doesn't

525

:

hold much promise for you either.

526

:

Is there, is there any geopolitical region

that's going to be a benefactor of any of

527

:

this from a, from a equity perspective.

528

:

Is there some, some areas of the market

that we should see that we should be

529

:

looking at and focusing on sectors

that, that might benefit from this?

530

:

David Woo: I mean, right now I'll

just tell you my own position, right?

531

:

I mean, so I run a big institutional

business where I, you know, I basically

532

:

provide, I serve as some of the

biggest, macro investors in the world.

533

:

My clients, I would combine,

combining by AUM over 4 trillion.

534

:

And I can tell you that the way

I'm trading, this is very simple.

535

:

I'm long Chinese stocks.

536

:

Okay.

537

:

And I'm short NASDAQ and basically DAX.

538

:

I mean, these are position

I put on three weeks ago.

539

:

I mean, obviously it's

done very, very well.

540

:

Now so from that point of view right now,

I'm looking at this like as a relative

541

:

value position to the, in so far, I think

Chinese stocks, if there's anything to be

542

:

said about one stock market, even though

it's done very, very well in the last

543

:

three weeks, that may still have some room

to squeeze hard this Chinese stock market.

544

:

And the reason is because first of all,

as I said before, if you look at it,

545

:

You know, what is going on right now?

546

:

It's like, well, under Biden, all right.

547

:

the U S was trying to rally

everybody in the world to hit China.

548

:

And right now under Trump is that China

is being treated like everybody else.

549

:

Okay.

550

:

So from that point of view, to the extent

the market was very underway, China.

551

:

heading into Trump's election I think

still probably remains the case.

552

:

I think there's a lot to be said that

Trump, Trump's basically era is about

553

:

leveling the playing field that, you

know, countries are going to be, you

554

:

know, I mean, at the end of the day,

it's, it's not a question that what

555

:

kind of political system you have, but

what you can actually offer up to Trump.

556

:

What, whether you are a loser or a winner.

557

:

And by the way, like Trump see

Canada and Europe as complete losers.

558

:

And he's absolutely right.

559

:

Whereas he sees China as a winner.

560

:

Trump obviously, it's

a very American thing.

561

:

Obviously, you probably know, like,

you know, like Americans like winners,

562

:

and I think from that point of view,

I think especially with, you know, so

563

:

I think, I think there is more room

for negotiation between US and China.

564

:

And by the way, this is something very

important for your viewers to understand.

565

:

With geopolitically

speaking under Biden, the U.

566

:

S.

567

:

saw the world as a zero sum game.

568

:

Okay, so if China wins, then we lose,

then if we win, they lose, which is great.

569

:

This is why you want to

make sure China lose, right?

570

:

Under basically Biden.

571

:

Trump sees the world very differently.

572

:

He doesn't see the world

as a zero sum game.

573

:

He sees the world as a A lot of

opportunities of win win situation.

574

:

This is why for Trump, a

deal is better than no deals.

575

:

And Trump understands that any

deal for it to happen, there has

576

:

to be something in for everybody.

577

:

Okay.

578

:

And this is the reason why I think, you

know, there is a lot of, there are a

579

:

lot of chips on the table between China

and the US, but this is not to say that

580

:

US and China will not remain strategic

rival for the next hundred years.

581

:

No doubt about it.

582

:

No, but that will be the case.

583

:

But in the short term, I think there

are so many chips on the table.

584

:

I think that's how they're going to play.

585

:

So I think that's constructive on

China, at least relative to expectation.

586

:

And I think there's

also the DeepSeek news.

587

:

I mean, I think the DeepSeek

news, I don't know to what extent

588

:

people quite fully appreciate the

transformative nature of DeepSeek.

589

:

For me, DeepSeek is not proof of

China's technological prowess.

590

:

It is proof that just how

easy it is to copy AI.

591

:

I mean, to the extent that, you know

what, DeepSeek can copy from OpenAI,

592

:

it's just like in the year 2000 or

whatever, in the late 90s when Microsoft

593

:

first rolled out Microsoft Office,

it was possible to copy and paste

594

:

the Microsoft Files on the CD ROM and

sell it for 3 dollars on the street.

595

:

It's the same kind of thing.

596

:

Now, one is more extreme than the other.

597

:

But it's a general point of view.

598

:

So I think all of a sudden, this is the

reason why like the French, who hosted

599

:

the uh, the annual AI summit last week in

Paris, literally like they were welcoming

600

:

the Chinese delegation because all of

a sudden, they see China as helping the

601

:

rest of the world to defeat America's

technology monopolies, because they're

602

:

right in this one respect, which is,

you know, under Biden, even though this

603

:

whole thing about Europe is an ally and

all that, in reality, the America's never

604

:

treated Europe or Canada as an ally, by

the way, under Biden, they just want to

605

:

strengthen the U S basically, you know,

hold over this AI, it had very, very

606

:

stringent policy in terms of who gets it,

who doesn't get it, because they wanted

607

:

to make sure that the big Magnificent

Seven, the tech monopolies in the U.

608

:

S.

609

:

are going to be able to

sit on this thing forever.

610

:

And making the rest of the

world pay a tax to the U.

611

:

S.

612

:

through these Magnificent

7 for accessing A.

613

:

I.

614

:

That was how the Americans actually saw.

615

:

People like, you know, the Commerce

Secretary, who is a real idiot.

616

:

And Biden, that's how they saw it.

617

:

They built Fortress America

with this technology.

618

:

The fact that DeepSeek is now possible,

all of a sudden, it's like the whole

619

:

world has breathed a sigh of relief.

620

:

I mean, to the extent that, you know.

621

:

Now, especially DeepSeek is open I

don't think it's not for you, like,

622

:

this is actually very informative.

623

:

I think that, in general,

is going to be a place.

624

:

Especially with respect to what's

going to play out next, over the next

625

:

four and 36 months, with respect to

autonomous driving and the human noise.

626

:

Robots and all these other fun things

that are in the pipeline, but China

627

:

is now very, very well positioned.

628

:

And I think that has to be worth

some money in the stock market.

629

:

Mike Philbrick: Also, the, uh,

the scuttlebutt over the weekend

630

:

is, is, Microsoft, cancelling some

data centers and things like that.

631

:

So is that a result of that?

632

:

The putting

633

:

David Woo: I love that.

634

:

I love I just loved it because that

was part of my predictions, by the way.

635

:

That's, that's one of the

reasons why we're short NASDAQ.

636

:

Because that's exactly the point.

637

:

Just think about this.

638

:

Mike Philbrick: maybe maybe a delve

delve into it for the listener

639

:

delve into the the logic be

640

:

under under

641

:

David Woo: the logic is great.

642

:

Right.

643

:

Even like, you know what, you know,

the, the clown service business,

644

:

it's a bullshit business, right?

645

:

It's a very high margin business.

646

:

And then I don't have to tell you it

was dominated by three big players.

647

:

I mean, that is Microsoft, Amazon, and

Google, and a bit of Facebook, right?

648

:

And they wanted to keep it this way.

649

:

I mean, I can tell you, I have a

client, I mean, a big US corporation.

650

:

We told me it was very bitter about this.

651

:

This is their like chief technology offer.

652

:

He told me like, Oh, four years ago,

Microsoft came along and say, you

653

:

know what, we're going to offer you

this amazing package, we're going

654

:

to basically offer to take your I.T.

655

:

off your hands.

656

:

We're going to help you basically

migrate everything to our cloud

657

:

and at a fraction of the cost.

658

:

it's going to basically cost you

right now to run your IT department.

659

:

So the CEO thought it was a great thing.

660

:

So they literally did this.

661

:

Okay.

662

:

Just imagine, right?

663

:

Because cloud essentially allows you to

outsource your IT to one of those cloud

664

:

source, the cloud service providers.

665

:

And then the CTO of this company, S& P

Binary company was telling me recently,

666

:

it's like, well, you know, David, you

will not believe this because Microsoft

667

:

just came back to the office to negotiate

because like their contract just had, you

668

:

know, just expired, it had to be renewed.

669

:

He said that Microsoft just said, okay,

we're now raising the price by 500%.

670

:

That's what you need to understand.

671

:

This is what most people don't understand,

which is that these companies, once

672

:

you've already destroyed your entire

IT department, they're going to come

673

:

and they're going to crucify you.

674

:

They're going to charge you

through the nose for it now.

675

:

So this is the reason.

676

:

And the reason why you have to

pay is because like, You don't

677

:

have your IT department anymore.

678

:

And then for you to rebuild

from the ground up, it's like

679

:

almost going to be impossible.

680

:

This is why you have no choice but to pay.

681

:

So from that point of view, to me,

the growth, the revenue growth of the

682

:

data, you know, basically the, um,

I mean the cloud data business for

683

:

Microsoft, Amazon to a great extent,

it's not just about like, well, the unit

684

:

sales that was going up, but because

their pricing power was going up.

685

:

And then the last two years, These

guys decided to go all the way, they

686

:

say, well, this AI is an amazing thing

because they're gonna, AI is going to

687

:

provide additional reason for, for them

to get people to migrate to the cloud.

688

:

So what they did was like, they

went out and bought all the

689

:

Nvidia chips possible in order to

essentially corner this market.

690

:

Because the idea was, well, if You haven't

got enough computing power, which is very

691

:

capital intensive, and you need hundreds

of billions of dollars, you need deep

692

:

wallets to be able to play in the sector.

693

:

They thought they had this

goddamn entire thing cornered.

694

:

Until DeepSeek came along because what

DeepSeek basically shows is that you

695

:

don't even need that much computing

power if you have a more efficient

696

:

model and it doesn't matter if it's

original or not, that kind of thing.

697

:

So all of a sudden these 50, 60,

000 dollar chip that they are

698

:

buying from NVIDIA, you know, which

they've only started to depreciate.

699

:

Just think about this.

700

:

They only depreciating them 15

percent a year, which is nothing.

701

:

All of a sudden, they can say,

well, maybe we need to mark

702

:

to mark, mark to market value.

703

:

These basically, um, these

chips, which are probably not

704

:

going to be worth that much.

705

:

Okay, if you can if you don't actually

need that much computing power to

706

:

generate, you know, what you need.

707

:

On top of that again another thing

that Trump did which is that tells

708

:

you the kind of person he is, a great

person by the way, is basically the

709

:

announcement of the Stargate deal.

710

:

I mean just think about this What

is Stargate at the end of the day?

711

:

It's about a Japanese company,

SoftBank, that wants to invest

712

:

in building data centers in the

US with money from Abu Dhabi.

713

:

In other words, Trump was basically

like what this basically means is

714

:

that Trump is applauding as foreign

investors come into the US and take

715

:

a whack at the high gross margin of

the likes of Amazon and Microsoft.

716

:

Trump doesn't, has no love for

these big tech monopolists.

717

:

He just wants competition.

718

:

And he doesn't even care if the

competition is going to be U.

719

:

S.,

720

:

is going to be foreign.

721

:

As long as it's creating jobs in the U.

722

:

S.,

723

:

that's what he cares about.

724

:

And that's a great thing.

725

:

And that obviously is not

good news for Microsoft.

726

:

So from that point of view, I would

argue that Microsoft, Amazon, these

727

:

companies are trading at Impossible,

basically valuation, especially

728

:

given to be honest, they're not real

innovators, actually, by the way.

729

:

I mean, I've been using

Microsoft product all my life.

730

:

I mean, how little progress they've

made in terms of innovation is truly

731

:

striking that they should enjoy the kind

of monopoly status that they have today.

732

:

And that's shocking.

733

:

But the point here is that I think

there's no doubt DeepSeek, the

734

:

combination of DeepSeek and Stargate,

I think that combination is definitely

735

:

not a positive combination for

the likes of Microsoft and Amazon.

736

:

Adam Butler: Dr.

737

:

Woo, do you think that, Trump is

going to roll back the restrictions

738

:

on two and three nanometer

chip exports to China then?

739

:

Are the, they're going to, he's going to

provide China or allow companies provide

740

:

China with the more advanced fabs and, um,

other equipment so they can begin to scale

741

:

David Woo: I don't think so.

742

:

I mean, there are certain things

that it's like Trump shouldn't

743

:

do and he wouldn't do it.

744

:

I mean, this is a, this is a case in

point that, by the way, this whole

745

:

idea of 2mm, 3mm, by the way, like,

for most computing purposes, like,

746

:

the size doesn't matter that much.

747

:

The only thing that

matters is for your phone.

748

:

By the way, if you're talking

about, like, you know, chips that

749

:

go into your cars, for example.

750

:

In your fridge, they don't

have to be that small.

751

:

I mean, they could be actually

large ish because there's plenty

752

:

of room to basically host them.

753

:

But I do think that you're right.

754

:

I don't think, I don't think, I think

there's a certain limit Trump won't go.

755

:

Especially given, as you know, Trump

wants to bring back semiconductor

756

:

manufacturing to the US.

757

:

And this is actually very important.

758

:

This is why I do think that, I

mean, one of the stocks I like

759

:

is actually Intel right now.

760

:

Not because I, not because

it's a great company.

761

:

It's a shit company.

762

:

It's completely it's become a second

tier technology company to the extent

763

:

it completely missed a whole everything.

764

:

And, you know, I mean,

but there is no doubt.

765

:

I can imagine that Trump wants to save

Intel because without saving Intel,

766

:

it's kind of difficult to envisage

that the US is going to bring back

767

:

semiconductor manufacturing in the US.

768

:

And this is why there's all this

talk with Broadcom and others.

769

:

But I have to believe,

just think about this.

770

:

I mean, Intel's worth a hundred

billion dollars right now.

771

:

It's like no money, right?

772

:

Because like, NVIDIA is

worth three trillion dollars.

773

:

So NVIDIA can spend like 5 percent

of its, you know, just basically like

774

:

throw away 3 percent of his stocks.

775

:

Like for stock swap, they can

basically take over Intel.

776

:

So I think this is going

to be very interesting.

777

:

What happens to Intel is going to

be fascinating because in a way

778

:

that, you know, like, Gelsinger

was really not given a proper

779

:

chance to really turn Intel around.

780

:

And I think I would argue that,

like Intel is very crucial.

781

:

I mean, I personally think that, you

know, they should sell it to, uh,

782

:

You know, a Nvidia or a Microsoft or

Amazon, but I can imagine there will be

783

:

a lot of interest in Intel, actually.

784

:

Just not because it's a great

company, because it's cheap.

785

:

Cheap relative to

valuation of these big U.

786

:

S.

787

:

companies right now.

788

:

Okay.

789

:

And I think for Trump, especially,

I think without Intel, it's

790

:

difficult to see how he's going

to really turn this thing around.

791

:

The U.

792

:

S.

793

:

semiconductor industry.

794

:

Adam Butler: I'd love to pull on

that thread of, um, the, the Chinese

795

:

investment theme a little bit.

796

:

We've seen very public photographs

and videos of Shi shaking the hands

797

:

of Ma and other tech leaders and

other industrial leaders in China

798

:

inviting them to to meetings obviously

acting very supportive and friendly.

799

:

does that factor into your, your

calculation in terms of, you know,

800

:

wanting to be long Chinese stocks and

is the Chinese stock story a strategic,

801

:

like, a secular theme do you think for

you or do you view it more tactically?

802

:

David Woo: Listen, I mean, I run I, just

so that your viewers understand, so like,

803

:

my biggest clients are all like, you know,

big macro hedge funds, you know, sovereign

804

:

wealth, pension funds, mutual funds.

805

:

Like, I run, I think long term,

but I trade very short term.

806

:

I mean, to the extent that

that's when my, that's my thing.

807

:

This is why in the institutional

space, you know, if you don't make

808

:

money in the next three months, like

you're done, I mean, you're a real

809

:

money, you're going to get fired.

810

:

Hedge fund, you're gone, you know?

811

:

So that is the sort of the general

horizon I have, which is, you know,

812

:

think as long as you want, but.

813

:

Basically make money the next few weeks.

814

:

And then in my, my, and I, my, my,

my strategies is, a, it's a basically

815

:

absolute term strategy, which is

benchmarked a three month treasury bill.

816

:

So I'm just trying to outperform

three month treasury bills, you know,

817

:

at a reasonable, basically sharpe

ratio last year, my sharpe ratio

818

:

was over two, but the point here

is that the way I think about this

819

:

China trade is that, you know what?

820

:

I think it could be a long term trade.

821

:

But I think you know from that point of

view for me the China trade is I think

822

:

it will be I will be going in and out.

823

:

Okay, I can't tell you like i'm gonna

right now I I have my full position

824

:

on and i've had it for three weeks

and then whether i'm going to keep

825

:

the full position I don't know.

826

:

I think it depends on a

lot of different things.

827

:

But, but the point here is that I think

China has gone from a basically, you know,

828

:

sell on rally story in the last three

years to now a buy on sell off story.

829

:

That that much I would say I mean

to the extent that I think you

830

:

know again to the extent that Trump

may be here for four more years.

831

:

Let's assume that he survived the next

four years because i'm sure there'll

832

:

be a lot of people want him dead.

833

:

But assuming Trump survives for four more

years Okay and see through this thing.

834

:

I think yeah, I think you know, I

think because the bottom line here,

835

:

this is not about, Oh, Trump is going

to be, he's going soft on China.

836

:

Or that he's going to sell out to China.

837

:

It's not that.

838

:

It's that Trump is much more

confident in the ability of the U.

839

:

S.

840

:

to compete with China.

841

:

You have to understand, like under

Biden, there was this insecurity

842

:

about China, that China is going to

overtake us this and this and that.

843

:

But Trump doesn't quite feel The same way

about America vis a vis China, he believes

844

:

that if America is actually, you know, is

in power, okay, to the extent unencumbered

845

:

by regulations and then all sorts of

government interference that the U.S

846

:

is the most competitive

economy in the world.

847

:

So from that point of view, He

is not trying to keep China back.

848

:

He's just trying to propel the

US forward to allow the US to

849

:

realize its full potential.

850

:

And I think that is a

very constructive world.

851

:

Especially given that, you

know, he's got Elon Musk.

852

:

I mean, Elon Musk clearly is

not afraid of any country.

853

:

Okay, I think when it

comes to competition.

854

:

So I think this is the right, But of

course, what this basically means is that

855

:

US is going to become more competitive.

856

:

China is going to become more competitive.

857

:

That's just going to leave

everybody else in the dust, right?

858

:

I mean, that's the bottom line.

859

:

Right now, if you look at per capita

GDP in Germany, I mean, most Americans

860

:

don't even realize this, like per capita

GDP in Germany right now, it's just

861

:

slightly above that of Mississippi.

862

:

Which is the poorest state

in the United States.

863

:

And Canada is collapsing in terms of

relative income relative to the U.

864

:

S.

865

:

So from that point of view,

what is actually happening

866

:

right now is that while U.

867

:

S.

868

:

and China move ahead to engage each other

in competition, the rest of the world

869

:

is just going to be left in the dust.

870

:

Because they haven't quite figured it out.

871

:

And in some ways that the competition

we're talking about right now, You

872

:

know, you cannot just basically join

the competition and expect to basically,

873

:

uh, to catch up with the, with the

front runners in the, in one year, two

874

:

years, or even 10 years for that matter,

because everybody else is moving ahead.

875

:

It just basically means a lot of

countries are going to be left behind.

876

:

And in particular Europe and

Canada, I'm afraid to say.

877

:

Mike Philbrick: How does how does

so you've got the the the game

878

:

theory the tariffs being used as a

as a method of negotiation you've

879

:

also got this proliferation of

technology, cheaper technology.

880

:

What, what are the

implications for inflation?

881

:

Is that something that's

gonna fall by the wayside?

882

:

Is that something that's gonna continue

to have the laser eyes on, on inflation

883

:

as a driver of, potential, returns?

884

:

How's inflation play in all this?

885

:

David Woo: I think obviously when

we talk about inflation, there

886

:

are many aspects to inflation.

887

:

And different countries obviously

have very different experiences

888

:

right now with respect to inflation.

889

:

For example, I'm much less concerned.

890

:

I mean, I think in Canada, for

example, there are definitely

891

:

clear signs of deflation going on.

892

:

The U.

893

:

S.,

894

:

I think, you know, again, we got

to basically take everything with

895

:

respect to, the context, right?

896

:

I mean, obviously last month's U.

897

:

S.

898

:

inflation came in stronger

than expected, but again.

899

:

I'm less concerned about, you know, some

of the one off factors that contributed

900

:

to the surprise because, you know, like

drug prices went up a lot in January.

901

:

Now, I'm not, I didn't predict it, but

it didn't surprise me in so far that

902

:

I know that, you know, if you're a

pharmaceutical company, you know that

903

:

Trump was going to nominate Kennedy.

904

:

As the health secretary and you know

that Kennedy is going to push for

905

:

essentially collective bargaining, to

get lower drug prices using Medicare

906

:

Medicaid like you're going to be

raising prices, like in January.

907

:

Okay, so things like that is going

to happen It's like you know what

908

:

if you tell me that used car prices

went up in January in the U.S.

909

:

Which was another thing

that went up a lot.

910

:

I I you know, it's kind of difficult

for me, that is the beginning of

911

:

the sustainable, inflationary cycle

for used cars because I know like

912

:

for new cars, I mean, there's very

few, new cars being sold because

913

:

people have bought a lot of cars.

914

:

And in fact, you know, inventory

is very high among sold cars.

915

:

So right now, for me, the most

important thing with respect to US

916

:

inflation is the fact that housing

inflation is clearly stabilizing, and

917

:

this is very, very, very important.

918

:

Okay, because housing inflation as

you probably know is the biggest,

919

:

it's the biggest component of core

CPI, okay, and PCE for that matter.

920

:

And so the combination of healthcare

inflation slowing and housing

921

:

inflation slowing that makes me feel

quite good I mean to the extent that

922

:

those are sort of more the underlying

inflation that is more important.

923

:

So I don't want to get too hung up

on the sort of the one off thing.

924

:

Now there's no doubt trade war is going

to be somewhat inflationary I mean, but

925

:

this is also the reason why I don't expect

Trump to basically, you know, to put a

926

:

blanket tariff, because if you remember

before Trump got elected, he was talking

927

:

every day about this blanket 10, 20%,

you know, tariff on all imported goods.

928

:

Now if he does that, that would

be clearly very inflationary.

929

:

And that's also the reason why I

don't think he's going to do it.

930

:

And I'll tell you why I say this.

931

:

First of all, I think what everybody,

I think Wall Street doesn't understand,

932

:

and we have to forget about Main

Street, is that as much as Trump talks

933

:

tariff, in my view, tariff is plan B.

934

:

Plan B with respect to

universal blanket tariff.

935

:

Plan A is actually spending cuts.

936

:

And the reason why I

say this is this, right?

937

:

You know, the U.

938

:

S.

939

:

budget deficit is at 2 trillion

dollars, as you all know.

940

:

You know, to me the biggest constraint,

okay, for the entire Trump presidency

941

:

is the fact that interest payment on U.

942

:

S.

943

:

Treasury securities is now at 1.

944

:

2 trillion.

945

:

And Trump knows this, Scott Besson

knows this, anybody who knows how

946

:

to do some numbers knows this.

947

:

Which is that unless the Fed cuts

interest rates more aggressively

948

:

than what it's currently pricing

by the bond market That 1.

949

:

2 trillion dollars is

going to go to one 1.

950

:

5 trillion dollars already by the

end of this year And let me tell you

951

:

this if interest payment and us debt

with the go up by 300 billion dollars

952

:

this year Trump knows that everything

is promised during his campaign,

953

:

he can just kiss them goodnight.

954

:

Goodbye.

955

:

Whatever it is Okay So from our

point of view in my humble opinion

956

:

This is everything that the Trump

team is trying to do is trying to

957

:

basically bring down that interest

cost that is firing out of control.

958

:

So what do they have to do to

bring down the interest costs?

959

:

Very simple.

960

:

They need to cut spending because

much of that interest cost is due

961

:

to the so called term premium.

962

:

You know, that is the, the premium

that long term bond yields are trading

963

:

relative to short term bond yields.

964

:

And because people think, oh, wow, the,

you know, people think that the debt is

965

:

so big and this thing is gonna blow up.

966

:

So investors require high

risk premium for holding U.

967

:

S.

968

:

assets, in particular U.

969

:

S.

970

:

treasuries.

971

:

And what I'm telling you is this.

972

:

Trump understands the only way he can

do this, he can bring down basically

973

:

this risk premium that the U.

974

:

S.

975

:

government is paying on servicing and

not to mention issuing new debt, is by

976

:

essentially restoring credibility to U.

977

:

S.

978

:

fiscal policy.

979

:

This is the reason why for all people

in the world that Trump basically

980

:

You know, brought in Scott Benson,

the biggest, I don't know, listen,

981

:

I've been in this business for many

years, 25 years on Wall Street.

982

:

I was, you know, I mean,

I know all the big guys.

983

:

Okay.

984

:

And Scott Benson, let me tell you this.

985

:

If I've ever met a bomb vigilante

on Wall Street, and that has to be

986

:

basically Scott, I mean, for the 15

years I've known Scott, like every time

987

:

I talk with him, he's been expressing

his clear concerns about the U.

988

:

S.

989

:

deficit, U.

990

:

S.

991

:

debt, and so on and so forth.

992

:

But what I'm telling you is this, the

only, only reason why Trump decided

993

:

to make Scott Bess involved people as

treasury secretary and has given Elon

994

:

Musk a free hand in terms of cutting

waste and fraud is because Trump

995

:

understands that basically this is what

you need to do if you want to, if you

996

:

don't want a fiscal crisis on your hand.

997

:

Because All these successive US

president in the last 40 years, they

998

:

paid lip service to fiscal health

and responsibility, but they've

999

:

always in the end kicked the can

down the road because they can.

:

00:52:32,831 --> 00:52:35,661

But Trump understands that

he's not in a situation.

:

00:52:35,751 --> 00:52:38,631

The French said, you know, there's

a very famous French saying that's

:

00:52:38,661 --> 00:52:40,311

attributed to basically Louis the 15th.

:

00:52:42,001 --> 00:52:43,941

After me, the great deluge.

:

00:52:44,911 --> 00:52:45,271

Okay.

:

00:52:46,421 --> 00:52:50,721

The, unfortunately for Trump, again, he

cannot kick the can down the road because

:

00:52:50,761 --> 00:52:54,431

the crisis literally like around the

corner if he doesn't take care of it.

:

00:52:54,711 --> 00:53:00,291

So this is the reason why this government

is so like i've i've been doing this for

:

00:53:00,291 --> 00:53:02,231

a very long time I've never seen a U.

:

00:53:02,231 --> 00:53:02,371

S.

:

00:53:02,371 --> 00:53:07,221

Presidency Including Trump's

first term that is that focus

:

00:53:07,431 --> 00:53:09,851

on fiscal spending cuts.

:

00:53:10,541 --> 00:53:13,211

And so from that point of view

that's going to be the big story

:

00:53:13,211 --> 00:53:17,441

for me, because that is going

to be a disinflationary story.

:

00:53:17,901 --> 00:53:23,541

I mean, so again, you know, whatever Doge

is doing and then the budget battle that's

:

00:53:23,561 --> 00:53:28,601

going to unfold this week and next week

and the week after that ahead of the March

:

00:53:28,611 --> 00:53:33,761

15 deadline for funding the government

before we, the government shuts down.

:

00:53:34,051 --> 00:53:39,261

I think all that is going to tell

you about, you know, how tight the

:

00:53:39,261 --> 00:53:43,741

fiscal situation is and then how this

administration has decided it's got

:

00:53:43,741 --> 00:53:45,551

no choice but to bite the bullet.

:

00:53:45,821 --> 00:53:48,131

And I think from that point

of view, this is why I'm not

:

00:53:48,151 --> 00:53:49,241

too worried about inflation.

:

00:53:50,031 --> 00:53:54,541

Again, the whole point is like last

year, the Biden government's, you

:

00:53:54,541 --> 00:53:56,351

know, literally opened the spit guard.

:

00:53:56,351 --> 00:53:59,371

They were spending money like there was

no tomorrow ahead of the U S election.

:

00:53:59,551 --> 00:54:02,511

Even after the election, they

were practically spending pushing

:

00:54:02,511 --> 00:54:03,281

the money out of the door.

:

00:54:03,281 --> 00:54:05,891

Whatever money that hasn't been spent,

they were trying to get it out there.

:

00:54:06,071 --> 00:54:06,431

Okay.

:

00:54:07,061 --> 00:54:08,191

Before Trump comes in.

:

00:54:08,421 --> 00:54:13,231

So you went from extra remarkably

easy fiscal policy in the second

:

00:54:13,241 --> 00:54:16,661

half of last year, to my view is

going to be very tight fiscal policy

:

00:54:16,661 --> 00:54:17,721

in the first half of this year.

:

00:54:18,041 --> 00:54:18,601

And that.

:

00:54:18,966 --> 00:54:22,516

You know, with that, I'm not that

worried about inflation, and then,

:

00:54:22,766 --> 00:54:26,966

and I suspect that once that starts to

be, felt in the economy to the extent

:

00:54:26,986 --> 00:54:31,136

the bond market right now wants to

see the data, okay, before it actually

:

00:54:31,186 --> 00:54:35,056

acts on it, I think even the Fed is

going to start to sound more dovish.

:

00:54:35,496 --> 00:54:39,256

So, I would be worried about

inflation only if they fail.

:

00:54:39,931 --> 00:54:45,571

In cutting spending because if they

fail if Trump fails in basically

:

00:54:45,581 --> 00:54:50,811

bring about real spending cuts then

he will have to resort to tariffs.

:

00:54:51,241 --> 00:54:55,141

Universal tariffs in order to

finance the extension of the tax cut.

:

00:54:55,641 --> 00:54:57,431

Okay, and that will be inflationary.

:

00:54:57,821 --> 00:55:02,921

But I think that's going to be, that's

Plan B, right now Trump is still operating

:

00:55:02,951 --> 00:55:07,591

under Plan A and the market gets this

confused market thinks tariff is point

:

00:55:07,991 --> 00:55:12,111

Plan A and the spending cuts is Plan B,

but you know, the market doesn't know

:

00:55:12,111 --> 00:55:15,801

shit about american politics or politics

in general But i'm telling you that's

:

00:55:15,851 --> 00:55:19,581

that's the plan And then um, and that

makes me quite, you know to the extent

:

00:55:19,581 --> 00:55:23,758

that that makes me less I think the

US economy is set to slow quite a bit.

:

00:55:24,518 --> 00:55:26,918

But that's also the reason

why I actually like loan.

:

00:55:27,138 --> 00:55:28,528

I like owning bonds right

:

00:55:28,688 --> 00:55:31,478

Mike Philbrick: Yeah, I was just gonna

say, so that's obviously bullish bonds

:

00:55:32,468 --> 00:55:34,718

less constructive on equity assets.

:

00:55:35,225 --> 00:55:35,735

David Woo: Exactly.

:

00:55:36,185 --> 00:55:36,675

Exactly.

:

00:55:37,725 --> 00:55:41,745

Adam Butler: So what and where are

you in the currency markets then if if

:

00:55:41,745 --> 00:55:43,825

you're anticipating some weakening of U.

:

00:55:43,825 --> 00:55:44,015

S.

:

00:55:44,015 --> 00:55:44,155

growth?

:

00:55:45,265 --> 00:55:47,075

Do you expect there to be some contagion?

:

00:55:47,085 --> 00:55:49,375

You know, the rest of

the world catches flu.

:

00:55:49,645 --> 00:55:55,215

or is there more heterogeneity

about the fiscal, space in other

:

00:55:55,215 --> 00:55:57,315

countries and maybe less constraints?

:

00:55:57,315 --> 00:56:02,945

And so you're likely to see a more

heterogeneous response function from

:

00:56:03,235 --> 00:56:04,584

different countries and different regions.

:

00:56:05,301 --> 00:56:06,051

David Woo: a good question.

:

00:56:06,051 --> 00:56:09,071

I, I don't like the dollar, so

I wouldn't, I wouldn't be buying

:

00:56:09,221 --> 00:56:12,625

the dollar, but again, you know,

but which currencies do you buy?

:

00:56:12,895 --> 00:56:14,879

That's why it's not that

straightforward to me.

:

00:56:15,850 --> 00:56:16,790

I'll tell you what I like.

:

00:56:17,250 --> 00:56:19,760

I like EM currencies in general.

:

00:56:20,030 --> 00:56:20,300

Okay.

:

00:56:20,300 --> 00:56:23,133

So I'm long the, uh, I mean, you

can, I mean, there's an ETF out

:

00:56:23,133 --> 00:56:27,693

there called, EMLC, which is linked

to the, uh, the JP Morgan global

:

00:56:27,693 --> 00:56:29,693

emerging market, local currency index.

:

00:56:30,083 --> 00:56:33,953

Which is basically like, you know, local

currency bonds of a wide universe of

:

00:56:33,953 --> 00:56:38,643

emerging market currencies and countries

debt issuers I I like that because it

:

00:56:38,723 --> 00:56:42,353

means that I don't have to basically

like take a huge bet about one country

:

00:56:42,353 --> 00:56:44,223

with or two countries or so forth.

:

00:56:44,243 --> 00:56:47,103

I I think EM is going to

be a net beneficiaries.

:

00:56:47,473 --> 00:56:51,738

And the reason why I say this is

because again You know, like EM in

:

00:56:51,738 --> 00:56:53,408

general, right now people are short EM.

:

00:56:53,538 --> 00:56:55,758

I mean, investors are very

underway EM right now.

:

00:56:55,758 --> 00:56:56,338

And that's the beauty of this.

:

00:56:56,558 --> 00:56:59,508

I generally like to buy

something that everybody's short.

:

00:56:59,538 --> 00:57:02,148

I like to basically sell something

everybody's long, but my mother

:

00:57:02,148 --> 00:57:03,228

brought me up very badly.

:

00:57:03,228 --> 00:57:06,008

So I'm a bit of a contrarian,

but the point here is that EM.

:

00:57:06,253 --> 00:57:10,093

has been very unloved over the last three,

four years, partly because, you know,

:

00:57:10,173 --> 00:57:14,653

EM was China to a great extent and Biden

just basically like destroyed China.

:

00:57:15,003 --> 00:57:19,303

And so, so if China is going to basically

be easier, it's going to be better for EM.

:

00:57:19,583 --> 00:57:22,543

EM also is very sensitive to

real interest rates in the U.

:

00:57:22,543 --> 00:57:22,813

S.

:

00:57:22,883 --> 00:57:24,783

I'm talking about real

yields on TIPS, right?

:

00:57:24,803 --> 00:57:26,413

Right now, you know, 10 year U.

:

00:57:26,413 --> 00:57:26,753

S.

:

00:57:26,793 --> 00:57:29,273

real yields on TIPS is around 2%, right?

:

00:57:29,313 --> 00:57:33,133

I mean, you know, In fact right now

there's like, what, 85% sensitivity of

:

00:57:33,163 --> 00:57:37,523

EM to basically, weekly changes in 10

year TIPS yield, which is the, it is

:

00:57:37,523 --> 00:57:42,270

the most sensitive asset in terms of,

you know, sensitivity to US real yields

:

00:57:42,390 --> 00:57:47,040

to the extent I think real yield, real

yields are gonna come down that alone,

:

00:57:47,070 --> 00:57:51,720

that is a being long EM, local currency

debt it's a very good, I think, you

:

00:57:51,720 --> 00:57:54,180

know, way to play for lower real yields.

:

00:57:54,180 --> 00:57:55,710

Now you can basically play

a lot of different ways.

:

00:57:55,710 --> 00:57:58,290

You can, I mean, that's why I'm, I'm also

long treasuries and that kind of thing.

:

00:57:58,600 --> 00:58:02,350

But you can basically, uh, you can

buy TIPS and so on and so forth.

:

00:58:02,446 --> 00:58:07,016

but I think, that, that EM local market,

you know, I think currencies debt, I

:

00:58:07,026 --> 00:58:11,346

think it's actually a very nice exposure

to, uh, another way to basically think

:

00:58:11,346 --> 00:58:14,426

about this exposure to lower real yields.

:

00:58:14,686 --> 00:58:18,166

Because again, the high real yields

of the last two years in the U.

:

00:58:18,256 --> 00:58:18,376

S.

:

00:58:18,426 --> 00:58:22,016

was a result of very stimulative

fiscal policy under Biden

:

00:58:22,596 --> 00:58:24,336

and this whole AI story.

:

00:58:24,531 --> 00:58:28,741

Which basically dramatically raised

this perception that US somehow

:

00:58:29,371 --> 00:58:32,131

was going to actually be able to

grow faster than everybody else.

:

00:58:33,231 --> 00:58:37,101

But I think both of these, you know, I

think DeepSeek has DeepSeek has burst

:

00:58:37,101 --> 00:58:41,911

the, the AI bubble to a great extent

and I think US fiscal is going from

:

00:58:42,591 --> 00:58:44,591

expansionary to now contractionary.

:

00:58:44,791 --> 00:58:48,321

I think that combination should give

us basically lower real yields and

:

00:58:48,321 --> 00:58:51,451

lower real yields should be pretty

constructive for EM fixed income.

:

00:58:52,208 --> 00:58:54,868

Adam Butler: Yeah, I mean, it's

just, it's a, it's a strange

:

00:58:54,868 --> 00:58:58,548

phenomenon to be, concerned about U.

:

00:58:58,548 --> 00:58:58,698

S.

:

00:58:58,698 --> 00:59:03,418

growth at the margin and then also be

bullish emerging market currencies.

:

00:59:03,428 --> 00:59:07,138

Maybe just continue to kind of pull

that thread and unravel that for

:

00:59:07,258 --> 00:59:11,368

David Woo: Again, I know we tend to,

in the past, we tend to think of EM

:

00:59:11,368 --> 00:59:14,128

currencies as being counter cyclical.

:

00:59:14,195 --> 00:59:17,995

to the extent that when the world goes

down, like EM tends to suffer, right?

:

00:59:18,005 --> 00:59:21,525

I mean, because EM tends to be

very dependent on exports, right?

:

00:59:21,615 --> 00:59:25,285

So from that point of view, you

have basically a big slowdown around

:

00:59:25,285 --> 00:59:29,025

the world that emerging markets,

you know, are going to slow more.

:

00:59:29,115 --> 00:59:31,495

I mean, so from that point of view,

you can look at developing countries,

:

00:59:31,495 --> 00:59:34,575

emerging market countries as being

a leverage play on global growth.

:

00:59:34,645 --> 00:59:37,818

So when global growth, you know,

accelerates, they tend to grow faster.

:

00:59:37,828 --> 00:59:40,618

If global growth slows, they

tend to decelerate faster.

:

00:59:41,125 --> 00:59:43,425

But this has not been the

case in the last four years.

:

00:59:44,415 --> 00:59:47,545

EM actually, even though, you know,

I mean, I don't tell you in the

:

00:59:47,545 --> 00:59:51,485

last three, three years, the U S has

been the best performing countries.

:

00:59:52,460 --> 00:59:56,843

I mean, basically, like, because again,

China, because China has been, you

:

00:59:56,843 --> 00:59:58,333

know, we know what happened to China.

:

00:59:58,393 --> 01:00:01,923

but, but the point here is that this is

why it's a very different, this is why,

:

01:00:01,923 --> 01:00:03,523

you know, history never repeats itself.

:

01:00:03,593 --> 01:00:09,233

I mean, history will only repeat itself

if you have the same sort of like, if you

:

01:00:09,233 --> 01:00:13,123

have the same leading indicators, if you

tell me that EM is done very well until

:

01:00:13,123 --> 01:00:16,973

now, and that therefore US is about to

slow and global is going to slow, that EM

:

01:00:16,983 --> 01:00:18,333

is going to go down, I can totally agree.

:

01:00:18,608 --> 01:00:20,128

But right now it's the opposite.

:

01:00:20,368 --> 01:00:24,098

And by the way, also with Trump, I'm not

going to assume that we're going to go

:

01:00:24,098 --> 01:00:25,528

into a recession or anything like that.

:

01:00:25,578 --> 01:00:27,448

It's not going to be like a

Lehman collapse or whatever.

:

01:00:27,708 --> 01:00:31,278

It's going to be a slowdown, but

the, which, but I see that as

:

01:00:31,338 --> 01:00:33,938

the Fed cutting interest rates

aggressively into that slowdown.

:

01:00:35,438 --> 01:00:38,308

And Trump is going to keep

basically be a cheerleader of

:

01:00:38,318 --> 01:00:39,578

the market for the stock market.

:

01:00:39,578 --> 01:00:40,978

So it's not going to go down that much.

:

01:00:40,988 --> 01:00:43,628

So again, I'm just basically

saying that we're going to see

:

01:00:43,628 --> 01:00:47,278

a slowdown, but the slowdown is

not going to be a scary slowdown.

:

01:00:47,938 --> 01:00:48,128

And

:

01:00:48,218 --> 01:00:50,118

Adam Butler: you don't see

a global rate cutting cycle.

:

01:00:50,128 --> 01:00:51,698

You see a rate cutting cycle in the U.

:

01:00:51,698 --> 01:00:52,228

S.,

:

01:00:52,288 --> 01:00:55,548

in, in some Western countries, but,

:

01:00:55,980 --> 01:00:56,460

David Woo: Exactly.

:

01:00:56,645 --> 01:00:58,255

Adam Butler: emerging markets

have more fiscal space.

:

01:00:58,255 --> 01:01:01,055

They've gone through 10 years

of fiscal consolidation.

:

01:01:01,465 --> 01:01:03,345

They have the ability to stimulate.

:

01:01:03,780 --> 01:01:08,150

And, China has declared its

intention to, and so there's the,

:

01:01:08,160 --> 01:01:12,820

the dynamics at the moment are more

favorable for Chinese growth or not.

:

01:01:13,280 --> 01:01:20,290

And, you know, related economies relative

to US and other Western countries.

:

01:01:20,916 --> 01:01:22,206

David Woo: I think

that's exactly the point.

:

01:01:22,286 --> 01:01:25,246

I mean, again, you know, as you

know, US and China have been

:

01:01:25,246 --> 01:01:28,396

in a divergent business cycle

in the last three years, right?

:

01:01:28,656 --> 01:01:30,976

China was slowing, the US

was accelerating, right?

:

01:01:31,426 --> 01:01:34,496

I think, you know, I don't want to say

that, you know, like, we're not going to

:

01:01:34,496 --> 01:01:38,536

see China accelerating, US decelerating,

but I think something of that effect

:

01:01:38,926 --> 01:01:41,006

could very well play out here, okay?

:

01:01:41,436 --> 01:01:42,576

Adam Butler: What about the Euro?

:

01:01:42,636 --> 01:01:46,136

I mean, you've been pretty bearish

on, on, on Europe, you know, for

:

01:01:46,136 --> 01:01:49,366

the reasons we discussed very

early on, Australia, Canada,

:

01:01:50,359 --> 01:01:54,131

David Woo: I think, you know, like, I

think Canada, you know, I want to go

:

01:01:54,131 --> 01:01:59,491

long Canada, but not before, not until

we get closer to the general election.

:

01:02:01,146 --> 01:02:05,274

Because first of all, like, you never

want to sort of get too far ahead into the

:

01:02:05,274 --> 01:02:09,718

future, like in terms of the market really

cannot think about a lot of things like

:

01:02:09,788 --> 01:02:13,668

more than a month at a time, maybe two

months at a time, you know, like I think

:

01:02:13,668 --> 01:02:16,738

the market only started to focus on the

German election about like a month ago,

:

01:02:16,778 --> 01:02:18,458

something like that, maybe six weeks ago.

:

01:02:18,458 --> 01:02:18,858

That's it.

:

01:02:19,796 --> 01:02:22,666

I think we still don't even know

who's going to be actually the,

:

01:02:22,666 --> 01:02:26,416

uh, heading the liberal party

until actually next month, right?

:

01:02:26,456 --> 01:02:28,546

I mean, is it going to be,

you know, if it's going to

:

01:02:28,546 --> 01:02:30,006

be Freeland or somebody else.

:

01:02:30,431 --> 01:02:33,941

But I think, you know, like I

would be looking to buy Canada

:

01:02:34,111 --> 01:02:36,211

when we get closer to the general

:

01:02:36,481 --> 01:02:39,751

Adam Butler: what, what, what

policies might Pollieve, if let's

:

01:02:39,751 --> 01:02:44,361

say the Conservatives, are in power

after the election, what policies

:

01:02:44,361 --> 01:02:50,231

might he enact that would give

Canada, you know, more prospective,

:

01:02:50,931 --> 01:02:52,781

optimistic standing in your view?

:

01:02:53,811 --> 01:02:55,821

David Woo: I think Canada just

has to deregulate right now.

:

01:02:56,011 --> 01:03:01,511

I mean, it seems that Canada is

overburdened by regulations and as a

:

01:03:01,511 --> 01:03:04,814

result, the economy has been stagnant.

:

01:03:05,209 --> 01:03:08,689

Not to say the least, as you know, like,

you know, I mean, per capita GDP has

:

01:03:08,689 --> 01:03:09,949

been falling and so on and so forth.

:

01:03:10,186 --> 01:03:14,556

honestly, in my humble opinion, what

made Canada very successful until Trudeau

:

01:03:14,556 --> 01:03:19,816

came along, was that Canada had the

right kind of immigration policy, whereby

:

01:03:19,826 --> 01:03:21,666

Canada encouraged skilled laborers.

:

01:03:22,236 --> 01:03:22,496

Okay?

:

01:03:22,746 --> 01:03:27,316

That was the reason why, like, I thought

Canada, I, for years, I was arguing that

:

01:03:27,476 --> 01:03:29,436

Canada should serve as a model for the U.

:

01:03:29,436 --> 01:03:29,636

S.

:

01:03:30,231 --> 01:03:30,731

because the U.

:

01:03:30,731 --> 01:03:30,921

S.

:

01:03:31,331 --> 01:03:34,691

had all these lottery systems where they

were bringing in, you know, basically

:

01:03:34,721 --> 01:03:38,311

people to ride taxis, okay, in New York

City who have no college education or

:

01:03:38,321 --> 01:03:42,161

nothing, okay, just because they get into

the door because they won the lottery.

:

01:03:42,511 --> 01:03:48,021

Whereas Canada was able to poach the very

best from all over the world because they

:

01:03:48,021 --> 01:03:49,581

had this policy and so on and so forth.

:

01:03:50,061 --> 01:03:53,431

I think that's the, that what

Trudeau did in the last three

:

01:03:53,431 --> 01:03:55,471

years is completely inexcusable.

:

01:03:56,006 --> 01:03:59,806

To the extent that Canada has been

flooded by all these, like, you

:

01:03:59,806 --> 01:04:02,676

know, without going into names of

countries where they come from, but

:

01:04:02,826 --> 01:04:04,626

clearly, you know, unskilled labor.

:

01:04:05,106 --> 01:04:05,416

Okay.

:

01:04:05,666 --> 01:04:09,726

So from that point of view, like if for

Canada compete in the world, like, and

:

01:04:09,726 --> 01:04:14,176

we're talking about catching up to the U

S and China and really be able, Canada's a

:

01:04:14,176 --> 01:04:18,466

small country, so maybe, you know, Canada

doesn't even have to do that much to

:

01:04:18,466 --> 01:04:21,976

really be able to like, you know, Canada

doesn't have to excel in everything.

:

01:04:22,226 --> 01:04:25,736

They just have to basically pick the

right area and just basically go for it.

:

01:04:26,016 --> 01:04:27,916

But for that, they need skilled labor.

:

01:04:28,296 --> 01:04:31,116

And so from that point of view, like,

I think, you know, that would be the

:

01:04:31,116 --> 01:04:32,456

first thing the Conservatives should do.

:

01:04:33,126 --> 01:04:36,036

And the second thing Conservatives

should do is to basically, like,

:

01:04:36,046 --> 01:04:38,146

you know, break a lot of this D.

:

01:04:38,156 --> 01:04:38,166

E.

:

01:04:38,186 --> 01:04:38,376

I.

:

01:04:38,376 --> 01:04:42,341

woke stuff that uh, Jordan Peterson has

talked about in the Canadian context,

:

01:04:42,361 --> 01:04:44,691

which is just it's it's it's incredible.

:

01:04:44,971 --> 01:04:50,031

So I think Canada under Trudeau had just

basically digging his own grave and I

:

01:04:50,061 --> 01:04:54,591

think i'm just I just can't wait until

the Conservative gets in and cleans house.

:

01:04:55,041 --> 01:04:58,361

But again, I just don't think the

market can get ahead of that that

:

01:04:58,361 --> 01:05:01,751

quickly I mean, you know, you don't

buy Canada like because as you know,

:

01:05:01,781 --> 01:05:06,181

the election doesn't have to be held I

think until the 21st of of of October.

:

01:05:06,751 --> 01:05:09,651

So, and then before they take power,

it's going to be like January.

:

01:05:09,651 --> 01:05:12,941

So like, this is going to be like a,

we're still talking about a year away

:

01:05:12,951 --> 01:05:14,481

before anything's going to change.

:

01:05:14,511 --> 01:05:17,221

And meanwhile, Canada, just nothing's

going to change because nobody has an

:

01:05:17,221 --> 01:05:19,261

incentive to change anything right now.

:

01:05:19,541 --> 01:05:19,911

Okay.

:

01:05:20,194 --> 01:05:25,184

and I don't, I think Carney is, was a

decent central banker, but I don't think

:

01:05:25,184 --> 01:05:26,754

he's going to make a very good politician.

:

01:05:26,754 --> 01:05:27,154

Certainly.

:

01:05:27,154 --> 01:05:31,094

I don't see him as being, I

don't, you know, we've seen a

:

01:05:31,094 --> 01:05:34,054

lot of this type of technocrat,

like Draghi was a good example.

:

01:05:34,054 --> 01:05:35,544

Draghi was actually very lousy.

:

01:05:36,029 --> 01:05:39,419

You know, Prime Minister of Italy, after

having been the president of the ECB.

:

01:05:39,769 --> 01:05:41,179

And I think Carney is

going to be the same.

:

01:05:41,259 --> 01:05:43,609

I mean, central bank, central

bankers don't know anything.

:

01:05:43,679 --> 01:05:44,439

I mean, basically.

:

01:05:45,803 --> 01:05:49,583

and I don't know, like he's

going to turn things around.

:

01:05:49,803 --> 01:05:52,243

You know, even if he

wins the leadership race.

:

01:05:52,493 --> 01:05:55,973

I think Australia, the problem

with Australia, also a little bit

:

01:05:55,973 --> 01:05:58,483

like Canada, is that productivity

growth has been extremely slow.

:

01:05:59,168 --> 01:06:05,481

I mean, to some extent, it has to do

with immigration policy, but it has, it

:

01:06:05,481 --> 01:06:08,801

goes a little beyond that because, you

know, Australia is really very far from

:

01:06:08,801 --> 01:06:12,741

everything and, and so from that point

of view, like, it doesn't really enjoy

:

01:06:12,781 --> 01:06:17,611

the mobility of international capital,

international labor, international,

:

01:06:18,188 --> 01:06:20,008

basically, uh, markets, trade.

:

01:06:20,458 --> 01:06:23,501

So as a result, when China was growing.

:

01:06:24,113 --> 01:06:25,303

Australia did very well.

:

01:06:25,323 --> 01:06:27,853

Simply, they saw massive

terms of trade, right?

:

01:06:27,893 --> 01:06:32,043

You know, shock improvement in terms of

trade shock that they were able to sell

:

01:06:32,043 --> 01:06:34,313

more stuff to China at higher prices.

:

01:06:34,923 --> 01:06:39,093

But now that Australia wants to reorient

itself away from China, that's a

:

01:06:39,093 --> 01:06:42,953

problem because I think this is why the

Conservative Party, you know, before

:

01:06:42,953 --> 01:06:46,353

the labor, I actually think the Labor

Party has done a decent job, but the

:

01:06:46,353 --> 01:06:47,953

Conservatives made a huge mistake.

:

01:06:48,013 --> 01:06:51,243

I mean, under, they thought that

they were going to reorient away

:

01:06:51,243 --> 01:06:53,213

from China towards the U S market.

:

01:06:54,148 --> 01:06:57,524

But what the Australians don't

realize is that they make

:

01:06:57,534 --> 01:06:59,924

very similar stuff as the U.

:

01:06:59,924 --> 01:07:00,134

S.

:

01:07:00,134 --> 01:07:00,524

does.

:

01:07:00,774 --> 01:07:01,094

And the U.

:

01:07:01,094 --> 01:07:01,224

S.

:

01:07:01,224 --> 01:07:02,564

is very far away, and the U.

:

01:07:02,564 --> 01:07:02,704

S.

:

01:07:02,704 --> 01:07:04,663

is never going to buy

that much from Australia.

:

01:07:05,351 --> 01:07:08,851

So to think that, for the Australians

to think that they were going to

:

01:07:08,851 --> 01:07:11,111

replace, you know, China with the U.

:

01:07:11,111 --> 01:07:11,611

S.

:

01:07:11,871 --> 01:07:15,461

as their biggest potential

export market, that was like,

:

01:07:15,516 --> 01:07:16,886

literally, like they were dreaming.

:

01:07:17,006 --> 01:07:20,386

I mean, they were just

completely unrealistic because U.

:

01:07:20,386 --> 01:07:20,576

S.

:

01:07:20,576 --> 01:07:23,106

is a major agriculture producer, exporter.

:

01:07:23,116 --> 01:07:23,406

U.

:

01:07:23,406 --> 01:07:23,566

S.

:

01:07:23,586 --> 01:07:25,906

basically produce a lot

of raw material as well.

:

01:07:25,926 --> 01:07:27,096

So what, you think the U.

:

01:07:27,096 --> 01:07:27,206

S.

:

01:07:27,206 --> 01:07:30,826

is going to start importing coal from

Australia or wheat from Australia?

:

01:07:30,996 --> 01:07:32,946

The Australians were

completely unrealistic.

:

01:07:33,396 --> 01:07:36,966

And they were, unfortunately, like,

they were just blindsided by their

:

01:07:37,416 --> 01:07:38,936

fear of China, which I understand.

:

01:07:38,996 --> 01:07:41,716

I mean, they were, they were afraid of,

they were afraid of China taking over.

:

01:07:41,726 --> 01:07:45,506

There was also basically this huge

political rivalry between the Conservative

:

01:07:45,506 --> 01:07:49,176

and the Laborer that, that, that pushed

the Conservative in a certain direction

:

01:07:49,176 --> 01:07:54,301

because for one, for a while, it was

very, politically, you know, it was

:

01:07:54,311 --> 01:07:57,181

very populous in Australia and like

in a lot of other places to beat up on

:

01:07:57,201 --> 01:08:00,201

trying to say well China they're gonna

take over Australia that kind of thing.

:

01:08:00,341 --> 01:08:03,181

So we now need to spend 300

billion dollars on submarines.

:

01:08:03,663 --> 01:08:07,174

which is gonna cost Australian through

his noses for the next hundred years.

:

01:08:07,174 --> 01:08:09,794

Let me tell you this It's not even

the next 10 years next hundred years.

:

01:08:10,104 --> 01:08:13,374

But all in all I think you know

I think the fact that China will

:

01:08:13,374 --> 01:08:16,283

be doing a bit better, probably

oil has been equal, is probably

:

01:08:16,283 --> 01:08:17,754

somewhat constructive for Australia.

:

01:08:18,434 --> 01:08:21,594

But, but I think, you know,

in terms of iron ore prices.

:

01:08:21,774 --> 01:08:24,754

But, you know, you can see copper

price, iron ore prices have actually

:

01:08:24,764 --> 01:08:26,594

firming a little bit lately.

:

01:08:27,154 --> 01:08:32,859

But again, but I don't, I don't quite

see China about to take off in that way.

:

01:08:33,279 --> 01:08:35,738

This is not going to be about, oh,

well, you're going to see housing starts

:

01:08:35,738 --> 01:08:39,669

in China ramping up again or whatever

it is that I doubt you will see.

:

01:08:39,689 --> 01:08:43,118

Cause I think the Chinese real estate

situation is so bad that, you know, I

:

01:08:43,118 --> 01:08:46,359

don't think they're going to be building

any, that, that real estate, it's not

:

01:08:46,359 --> 01:08:50,109

going to be come back as a driver of

Chinese economy for the next 10 years.

:

01:08:50,618 --> 01:08:53,149

So I think from now, from that

view, it's difficult to get

:

01:08:53,149 --> 01:08:54,269

too optimistic about Australia.

:

01:08:55,294 --> 01:08:55,953

Adam Butler: Yeah, I agree.

:

01:08:56,804 --> 01:08:56,924

Mike Philbrick: O

:

01:08:56,984 --> 01:08:59,334

Adam Butler: I mean,

my, my, oh, sorry, Mike.

:

01:08:59,453 --> 01:08:59,693

Yeah.

:

01:08:59,693 --> 01:08:59,953

I was just

:

01:08:59,953 --> 01:09:03,464

saying my my general thesis on

effectively the Commonwealth.

:

01:09:03,783 --> 01:09:09,334

so Australia, UK, well, not Commonwealth,

but Canada, Australia, and also the

:

01:09:09,334 --> 01:09:14,354

UK is just that we've had 15 years

of profound over emphasis and over

:

01:09:14,354 --> 01:09:19,493

investment in residential real estate

sector at the expense of any other

:

01:09:19,504 --> 01:09:21,094

productive element of the economy.

:

01:09:21,104 --> 01:09:24,334

It's going to be, it's going to take

a long time for them to unwind that.

:

01:09:25,094 --> 01:09:30,448

You know, those excesses and there's a

lot of, a debt overhang in the private

:

01:09:30,448 --> 01:09:33,809

sector and increasingly in the public

sector as the public sector begins

:

01:09:33,818 --> 01:09:38,919

to take that debt off the balance

sheet of the private banks over, you

:

01:09:38,919 --> 01:09:40,988

know, the next 2, 3, 5 years, right?

:

01:09:41,733 --> 01:09:45,023

So, which is why I just,

I don't buy the fact that.

:

01:09:45,486 --> 01:09:48,926

This was really a Trudeau thing

other than the immigration mistake,

:

01:09:48,926 --> 01:09:50,145

which is absolutely massive.

:

01:09:50,595 --> 01:09:54,326

I think it's just generally a Canadian

thing and an Australian thing and a UK

:

01:09:54,326 --> 01:09:59,976

thing where everyone just preferred to

trade houses and try to earn lottery

:

01:09:59,976 --> 01:10:05,401

winnings off of increasing, you know,

condos and housing prices instead of

:

01:10:05,401 --> 01:10:10,441

actually building real businesses and

entrepreneurship and, and productive

:

01:10:10,441 --> 01:10:12,141

strategic sectors of the economy.

:

01:10:12,591 --> 01:10:18,371

So I, I, I struggle to see how, how

shifts in governance are going to make

:

01:10:18,371 --> 01:10:21,761

much of a difference in the intermediate

term to any of those countries, frankly.

:

01:10:21,761 --> 01:10:22,421

Yep.

:

01:10:22,761 --> 01:10:24,101

David Woo: I think that's

an excellent point.

:

01:10:24,131 --> 01:10:27,761

I think if you look at Canada in

terms of debt to GDP ratio, I mean,

:

01:10:27,761 --> 01:10:30,371

it's one of the highest in the world

in terms of household debts, right?

:

01:10:30,431 --> 01:10:35,421

I mean, and I think that is the real

big problem that Canada faces as

:

01:10:35,421 --> 01:10:37,421

an economy and so on and so forth.

:

01:10:37,501 --> 01:10:41,396

And I think from that point of

view, You know, it's not like the U.

:

01:10:41,396 --> 01:10:41,636

S.

:

01:10:41,666 --> 01:10:42,756

as you know, like U.

:

01:10:42,756 --> 01:10:42,926

S.

:

01:10:42,936 --> 01:10:46,416

actually saw deleveraging in terms

of household debt because after

:

01:10:46,766 --> 01:10:47,956

what happened with Subprime, the U.

:

01:10:47,956 --> 01:10:48,096

S.

:

01:10:48,366 --> 01:10:51,306

household just defaulted

on their mortgage debt.

:

01:10:51,586 --> 01:10:54,076

So the banks took a hit, they

had to be recapitalized, but

:

01:10:54,076 --> 01:10:54,706

it doesn't really matter.

:

01:10:54,706 --> 01:10:59,246

But in the end, as a result, like,

and then the millennials had no love

:

01:10:59,246 --> 01:11:01,226

for owning a roof over their head.

:

01:11:01,356 --> 01:11:02,416

So as a result, U.

:

01:11:02,416 --> 01:11:02,826

S.

:

01:11:03,086 --> 01:11:06,186

households, you know, like the

debt to, you know, disposable

:

01:11:06,186 --> 01:11:10,046

income ratio is relatively low,

actually, within love countries.

:

01:11:10,086 --> 01:11:12,256

And then I think that,

that, that is a plus.

:

01:11:12,546 --> 01:11:14,896

But you're absolutely right about

Canada, Australia, and in the U.

:

01:11:14,896 --> 01:11:15,036

K.

:

01:11:15,036 --> 01:11:15,406

as well.

:

01:11:15,406 --> 01:11:19,276

Because in the end, what these three

countries have in common, as you know,

:

01:11:19,306 --> 01:11:23,736

is their mortgage system, you know,

favors basically floating rate mortgage.

:

01:11:24,031 --> 01:11:26,651

Floating rate mortgages

tied to basically front end.

:

01:11:26,651 --> 01:11:29,871

So when interest went down to zero,

literally it was like, it was free money.

:

01:11:30,421 --> 01:11:31,471

And, and whereas the U.

:

01:11:31,471 --> 01:11:31,831

S.

:

01:11:31,871 --> 01:11:34,481

still like, people like to basically

borrow 30 year, that kind of

:

01:11:34,481 --> 01:11:35,761

thing, that never went to zero.

:

01:11:36,061 --> 01:11:37,521

And I think that has a lot to do with it.

:

01:11:37,581 --> 01:11:42,741

So I think from that point of view, like,

in some sense that these countries really

:

01:11:42,791 --> 01:11:47,171

got the worst in terms of the excess

associated with, you know, Zero interest

:

01:11:47,171 --> 01:11:49,398

rates and QE and so on and so forth.

:

01:11:49,398 --> 01:11:49,531

But

:

01:11:50,046 --> 01:11:50,766

Mike Philbrick: You know, one area, we,

:

01:11:50,811 --> 01:11:53,781

David Woo: UK, of course, UK, the problem

in the UK is a bit different also because

:

01:11:53,791 --> 01:11:57,001

the the problem in the UK also, there

wasn't enough building, by the way.

:

01:11:57,081 --> 01:11:58,431

I mean, this is actually

one of the problems.

:

01:11:58,441 --> 01:12:01,091

There's a real acute housing shortage.

:

01:12:01,591 --> 01:12:06,901

And, um, so prices go up also

because regulations have prevented

:

01:12:06,911 --> 01:12:10,351

the supply side response, you

know, in the UK housing market.

:

01:12:11,141 --> 01:12:13,641

Adam Butler: Well, it's similar

in Canada and Australia too,

:

01:12:14,171 --> 01:12:15,691

because of the immigration, right?

:

01:12:15,731 --> 01:12:20,651

I mean, you let 3 million

people a year into Canada, add

:

01:12:20,671 --> 01:12:22,011

10 percent of the population.

:

01:12:22,021 --> 01:12:23,671

They all want to live in the cities.

:

01:12:24,306 --> 01:12:28,546

You've had this exact same issue, just

a scarcity of, of residential housing.

:

01:12:28,546 --> 01:12:33,146

And yet, you know, they still are

so expensive because those who own

:

01:12:33,146 --> 01:12:37,486

their homes are so in the money that

there's no pressure to, to, to sell.

:

01:12:37,536 --> 01:12:37,846

Right.

:

01:12:38,006 --> 01:12:40,036

So it's a strange situation.

:

01:12:40,434 --> 01:12:41,144

David Woo: Exactly.

:

01:12:41,274 --> 01:12:41,654

No,

:

01:12:41,859 --> 01:12:44,259

Mike Philbrick: the one thing we we

haven't come around to is, uh, the

:

01:12:44,259 --> 01:12:50,696

yen, uh, the Nikai, JGBs and, and some

thoughts on that, area of the world.

:

01:12:50,756 --> 01:12:53,336

'cause it's a, a pretty

substantial area of influence.

:

01:12:53,336 --> 01:12:54,266

Any thoughts on that?

:

01:12:54,801 --> 01:12:59,671

David Woo: I think Japan, listen,

I mean, I think Japan, you know, I

:

01:12:59,671 --> 01:13:01,251

think there's some hope for Japan now.

:

01:13:01,341 --> 01:13:03,521

I mean, to the extent that,

like, inflation is coming back.

:

01:13:04,588 --> 01:13:08,278

The reason why, there's only one

good thing associated with inflation.

:

01:13:09,008 --> 01:13:11,648

Which obviously, because it

helps deflate the debt, right?

:

01:13:11,688 --> 01:13:13,878

Because when the interest

rate is at zero, Right.

:

01:13:13,918 --> 01:13:15,658

I mean like inflation was negative.

:

01:13:15,688 --> 01:13:18,668

They were paying positive real

interest rates on their debts, right?

:

01:13:19,088 --> 01:13:22,268

The fact that they are still paying less

than one percent in inflation at two

:

01:13:22,268 --> 01:13:26,038

or three percent That just means that

they're able to grow out of their debt.

:

01:13:26,318 --> 01:13:27,368

I mean, this is actually very important.

:

01:13:27,378 --> 01:13:29,808

This means that the Japanese yen

is going to remain a weak currency.

:

01:13:29,808 --> 01:13:30,538

There's no doubt about that.

:

01:13:30,538 --> 01:13:34,104

I mean, this is why the central bank

governor said this yesterday that you

:

01:13:34,104 --> 01:13:38,734

know if long term bond yields were to

not cooperate that the BOJ wouldn't even

:

01:13:38,734 --> 01:13:42,784

think twice about coming in and resuming

large scale, basically JGB purchases.

:

01:13:43,044 --> 01:13:46,264

So I think from that point of view,

like the way I think about this is

:

01:13:46,304 --> 01:13:52,584

that JGB, I mean, BOJ's number one

job is to actually make sure that

:

01:13:52,684 --> 01:13:56,144

Japanese debt dynamics don't go crazy.

:

01:13:56,984 --> 01:13:57,424

Okay.

:

01:13:57,654 --> 01:13:58,974

Don't go explosive.

:

01:13:58,974 --> 01:14:01,693

And I think that is

really the BOJ's only job.

:

01:14:02,044 --> 01:14:05,484

I mean, the reality is that about

Japan, it's difficult to get bullish

:

01:14:05,504 --> 01:14:09,579

on Japan because the Japanese, yen

has been the weakest currency in the

:

01:14:09,579 --> 01:14:11,359

world in the last four or five years.

:

01:14:11,419 --> 01:14:14,759

I mean, in fact, the Japanese

yen right now on a trade weighted

:

01:14:14,769 --> 01:14:17,739

basis in real terms is weaker now.

:

01:14:18,089 --> 01:14:18,409

Okay.

:

01:14:18,429 --> 01:14:20,449

Then it was before the Plaza, the court.

:

01:14:20,539 --> 01:14:22,139

I mean, just put that

in perspective, right?

:

01:14:22,139 --> 01:14:24,099

I mean, if you think about this,

it's pretty amazing, right?

:

01:14:24,139 --> 01:14:27,419

I mean, it's like the Japanese

yen is extremely weak.

:

01:14:27,419 --> 01:14:30,639

This is the why the whole world, like,

especially the Chinese in Asia, they

:

01:14:30,639 --> 01:14:35,219

just piling the Japan as tourists because

like Japan is like dirt cheap, right?

:

01:14:35,259 --> 01:14:36,829

I mean, Literally.

:

01:14:37,289 --> 01:14:43,239

And so, but what is interesting is that

being cheap hasn't given Japan anything.

:

01:14:43,849 --> 01:14:46,499

Because if you look at Japanese

exports, we're talking about in

:

01:14:46,509 --> 01:14:49,949

volume terms, it's been a flat

as a pancake the last four years.

:

01:14:50,689 --> 01:14:54,029

In other words, that the fact

that Japan's gotten cheaper hasn't

:

01:14:54,089 --> 01:14:58,599

really made Japan more competitive

in terms of selling more stuff.

:

01:14:59,709 --> 01:15:03,379

And that to me is one of the most

shocking things about the global

:

01:15:03,389 --> 01:15:07,159

economy from a macro perspective in

the last basically three or four years.

:

01:15:07,529 --> 01:15:11,209

And I think that is largely the result

of the fact that Japanese companies

:

01:15:11,209 --> 01:15:14,989

spent the last 20 years, you know,

building these global supply chains.

:

01:15:15,744 --> 01:15:20,074

Okay, so the Toyota, you know, is now

basically building cars everywhere in

:

01:15:20,074 --> 01:15:23,541

the world, for the US they're building

in US, for Europe they're building in

:

01:15:23,541 --> 01:15:26,941

Europe and wherever they're basically

building what I'm saying is that these

:

01:15:26,951 --> 01:15:29,778

supply chains were so expensive to build.

:

01:15:30,327 --> 01:15:34,598

The Japanese companies have decided like,

you know, we're not going to take apart

:

01:15:34,898 --> 01:15:38,838

you know our supply chain just to return

basically to Japan to produce stuff

:

01:15:38,838 --> 01:15:40,258

just because it's cheaper in Japan now.

:

01:15:41,088 --> 01:15:44,128

So as a result, I think one of the most

interesting thing about the Japanese

:

01:15:44,128 --> 01:15:51,077

economy is the lack of responsiveness of

Japanese export to a weak yen, whereas

:

01:15:51,077 --> 01:15:55,118

a weak yen to the extent it's been

inflationary has actually eroded household

:

01:15:55,558 --> 01:15:58,503

real purchasing power and this is why

household spending has been so weak.

:

01:15:59,043 --> 01:16:02,452

So right now the way I see this

is that maybe there's a sweet spot

:

01:16:02,452 --> 01:16:05,993

somewhere for Japan Which is somehow

if they can get inflation expectation

:

01:16:05,993 --> 01:16:09,383

back at 2 percent and then stabilize

the yen, the Japanese economy will

:

01:16:09,383 --> 01:16:12,513

do okay, okay, but not like amazing.

:

01:16:12,873 --> 01:16:18,673

Okay, but that that said there are

pockets of the Japanese economy

:

01:16:18,713 --> 01:16:20,283

that I think will do very well.

:

01:16:20,813 --> 01:16:24,863

For example in semiconductors, I think

Japanese the Japanese have decided

:

01:16:24,863 --> 01:16:28,321

to go back to semiconductors after

having basically taken itself out

:

01:16:28,321 --> 01:16:29,681

of competition the last 30 years.

:

01:16:29,721 --> 01:16:32,951

Because remember, like only in the 80s,

Japan was number one in semiconductors.

:

01:16:33,501 --> 01:16:37,071

And then, and then came, you know,

Taiwan, South Korea, and then China.

:

01:16:37,071 --> 01:16:40,341

The Japanese decided to go

back to semiconductor, and I

:

01:16:40,351 --> 01:16:41,741

think that is a huge thing.

:

01:16:42,361 --> 01:16:45,631

I mean, I mean, we're talking

about basically, you know, like

:

01:16:45,631 --> 01:16:49,931

a culture that is really about

engineering, miniature engineering.

:

01:16:49,931 --> 01:16:53,731

The Japanese are not great innovators, but

they're very good at, you know, perfecting

:

01:16:53,761 --> 01:16:57,861

things at a small scale in terms of

anything that requires detailed attention,

:

01:16:58,091 --> 01:16:59,291

that's what the Japanese are very good at.

:

01:16:59,511 --> 01:17:03,771

I think they're going to be a major

powerhouse, I think, in semiconductor,

:

01:17:03,771 --> 01:17:07,431

especially given some of the stuff that's

come out of Japan in the last six months.

:

01:17:07,431 --> 01:17:08,550

It's really been very impressive.

:

01:17:08,981 --> 01:17:12,041

I think the second thing I

think, you know, Japan would be

:

01:17:12,050 --> 01:17:13,361

very good at is in automation.

:

01:17:14,001 --> 01:17:17,151

I think the world is going

towards automation with AI, you

:

01:17:17,151 --> 01:17:18,001

know, and so on and so forth.

:

01:17:18,300 --> 01:17:19,741

The Japanese have led the world.

:

01:17:19,821 --> 01:17:22,451

in terms of robotic technology,

automation technology, that's

:

01:17:22,481 --> 01:17:23,861

Fanuc, Yaskawa and all that.

:

01:17:24,061 --> 01:17:25,361

Those companies are going to do very well.

:

01:17:25,571 --> 01:17:28,401

The third area I think Japan is going to

do very well is in defense technology.

:

01:17:29,306 --> 01:17:31,626

I mean, the Americans can

make shit these days, right?

:

01:17:31,656 --> 01:17:34,846

I mean, just look at, you know,

these F 35, the ship planes, okay?

:

01:17:34,976 --> 01:17:38,016

Boeing planes are dropping out of

the skies, every basically, uh, the

:

01:17:38,016 --> 01:17:42,166

Japanese, if the Americans are going to

basically have a competitive, you know,

:

01:17:42,166 --> 01:17:45,956

sort of defense, you know, relative

to China and Russia or whatever,

:

01:17:46,246 --> 01:17:49,556

they have to become, they have to

really join up with Japan much more.

:

01:17:50,026 --> 01:17:54,686

The Japanese are just, when it comes

to manufacturing among the major

:

01:17:54,686 --> 01:17:56,886

economies, I'm not talking about China.

:

01:17:56,916 --> 01:17:57,736

We're talking about.

:

01:17:58,218 --> 01:18:00,318

economies that can potentially help the U.

:

01:18:00,318 --> 01:18:00,468

S.

:

01:18:00,468 --> 01:18:02,428

revive its own manufacturing

and so on and so forth.

:

01:18:02,688 --> 01:18:03,458

It's obviously Japan.

:

01:18:03,458 --> 01:18:06,804

And this is why I think Trump

really wants Nippon Steel to

:

01:18:06,804 --> 01:18:08,634

make a big investment in U.

:

01:18:08,634 --> 01:18:08,744

S.

:

01:18:08,754 --> 01:18:09,023

Steel.

:

01:18:09,314 --> 01:18:13,824

I mean, and I think there's no doubt

that Nippon Steel, can offer, you know,

:

01:18:13,834 --> 01:18:18,773

superior technology to US steel to

essentially upgrade its manufacturing.

:

01:18:18,844 --> 01:18:20,704

And I think that's what

the US really needs.

:

01:18:21,004 --> 01:18:22,273

And it's easier said than done.

:

01:18:22,434 --> 01:18:26,523

In fact, that's probably going to be the

most challenging aspect of Trump's agenda,

:

01:18:26,744 --> 01:18:31,014

which is that, you know, like the US has

retreated so much in manufacturing the

:

01:18:31,014 --> 01:18:35,664

last 30 years to get back into this game

is going to, it's going to, you know,

:

01:18:35,704 --> 01:18:37,314

it's not going to be a piece of cake.

:

01:18:37,924 --> 01:18:40,773

Regardless how great a

genius Elon Musk may be.

:

01:18:42,219 --> 01:18:42,789

Mike Philbrick: Oh yeah.

:

01:18:42,849 --> 01:18:44,619

And we've, uh, we've

covered a lot of ground.

:

01:18:44,619 --> 01:18:46,329

We've been at it for about

an hour and 20 minutes.

:

01:18:46,329 --> 01:18:50,282

Is there anything that, in your work,

David, that we missed that you think is.

:

01:18:50,778 --> 01:18:53,228

Critical that you'd like

to share at the end.

:

01:18:53,228 --> 01:18:55,178

No, great conversation.

:

01:18:55,271 --> 01:18:56,561

Really appreciate your time.

:

01:18:56,851 --> 01:18:58,161

And then where can people find you?

:

01:18:58,161 --> 01:19:02,511

So it's David Woo Unbound and his

website, Twitter, social media.

:

01:19:02,511 --> 01:19:03,951

Where are you present in the world?

:

01:19:04,851 --> 01:19:07,431

David Woo: So, I mean, again, I, you

know, I, you know, you can check me

:

01:19:07,431 --> 01:19:11,191

out for free on, I've got a YouTube

channel, you know, uh, David Woo Unbound.

:

01:19:11,461 --> 01:19:16,101

So, in which, I mean, I talk about, I

mean, I share, I mean, I sort of set

:

01:19:16,101 --> 01:19:21,411

out with this mission that, You know, I

spent 25 years as my wife for 25 years,

:

01:19:21,421 --> 01:19:25,061

was always very embarrassed to introduce

me to her friends in social circles.

:

01:19:25,401 --> 01:19:28,761

My husband makes a living by helping

rich people become even richer.

:

01:19:29,001 --> 01:19:32,341

So I've decided that after I retire from

Wall Street, I'm going to share some of

:

01:19:32,341 --> 01:19:34,581

my knowledge with everybody for free.

:

01:19:34,861 --> 01:19:38,171

So you can look me up on

YouTube, what it was worth.

:

01:19:38,381 --> 01:19:39,381

David Woo Unbound.

:

01:19:40,671 --> 01:19:41,221

Mike Philbrick: Amazing.

:

01:19:41,296 --> 01:19:42,481

Adam Butler: You're not on Twitter at all.

:

01:19:43,411 --> 01:19:45,341

David Woo: I am also on

Twitter, also David Woo Unbound.

:

01:19:45,361 --> 01:19:49,861

So I, I put on, you know, I, I put

up stuff on, on Twitter as well.

:

01:19:49,881 --> 01:19:51,061

Thanks

:

01:19:51,121 --> 01:19:51,601

Mike Philbrick: Wonderful.

:

01:19:52,271 --> 01:19:54,651

Adam Butler: No, very, very

educational, very illustrative.

:

01:19:54,731 --> 01:19:55,951

thank you for sharing this.

:

01:19:56,061 --> 01:19:58,781

You dumped a lot of knowledge

on us today and, I think this

:

01:19:58,911 --> 01:19:59,831

will be a valuable episode.

:

01:19:59,831 --> 01:20:00,981

So thank you very much for coming.

:

01:20:02,081 --> 01:20:02,831

David Woo: for having me again.

:

01:20:03,261 --> 01:20:03,601

Okay.

:

01:20:04,731 --> 01:20:05,341

Take care.

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About the Podcast

Resolve Riffs Investment Podcast
Welcome to ReSolve Riffs Investment Podcast, hosted by the team at ReSolve Global*, where evidence inspires confidence.
These podcasts will dig deep to uncover investment truths and life hacks you won’t find in the mainstream media, covering topics that appeal to left-brained robots, right-brained poets and everyone in between. In this show we interview deep thinkers in the world of quantitative finance such as Larry Swedroe, Meb Faber and many more, all with the goal of helping you reach excellence. Welcome to the journey.


*ReSolve Global refers to ReSolve Asset Management SEZC (Cayman) which is registered with the Commodity Futures Trading Commission as a commodity trading advisor and commodity pool operator. This registration is administered through the National Futures Association (“NFA”). Further, ReSolve Global is a registered person with the Cayman Islands Monetary Authority.