Demarcation – The Global Economy, EU & US trade relations, Nunes memo, the Super Bowl… and more

Demarcation – The Global Economy, EU & US trade relations, Nunes memo, the Super Bowl… and more


Hello, hello. Welcome to In Honor of the
Olympics Beginning Demarcation. Oh. I mean, it’s subtle, but this
came from one of our listeners. So we– Thank you. Thank you for that. I was thinking Korean
Peninsula or something. Yeah. Well, we did the call
to our listeners. They gave some good ones. I thought this was
extra witty given where we are, just waiting for
the sister to arrive in Seoul. Kim Jong Un has a new sister– Of course, right, right. –to represent– She’ll be dead in a month. –his family. Right? With the two hands
on her cheeks. Remember what happened
to your brother. Seriously. Lots to talk about. A lot has happened. I wanted to start off, since
you’re the global economics expert here, so I just want
to understand the narrative of what’s happening. So we had the State
of the Union address, and the president
of United States talking about a booming stock
market and how up, up, up. And then, seemingly, a few days
later, we’re very, very low. And I guess from the
political side of me I thought, well, of course,
this is why no president ever really talks about
the stock market, because he doesn’t really
have any control over it. But I guess, bigger
picture maybe is what is happening
with the stock market right now from an
economics point of view, not from a political
point of view? All right so before we get
into that, let’s do this one. Are other countries
also in an upswing? Yes. Does President Trump
run those countries? No. QED, he can’t be responsible
for the upswing in our market if all markets
simultaneously are going up. Now, here’s another thing. Why are all markets
simultaneously going up? I think is because
everybody’s buying ETFs– Exchange Traded
Funds, exchange traded notes, automated programming,
algorithmic program and all this sort of stuff. Because if you look at sort
of the compound rate of growth in the stock market over the
past 18 months, it’s insane. It just goes straight up. And a lot of this has to do with
these robot programs basically that are programmed in certain
ways to buy an [? deps. ?] They can’t hold
cash, and they just have a momentum behind
them that pushes them up. Now what that does is the
thing called the VIX index, the volatility futures index. So what does that do? It’s the measure of
fear in the market. So basically, like,
how much does it cost to buy an option
the right to buy or sell something in the future. And if it costs a
lot, fear is high. And if it costs very
little, fear is low. So basically option
traders have been doing what they call buying
and selling volatility. And volatility is at an all
time low in terms of price. Now you could actually
bet against this or bet on this with a thing
called betting on the VIX with options. And there’s a thing called
an inverse option on the VIX where you are basically betting
that this trend would continue. So here’s the thing, the
trend is your friend. Things continue till they don’t. So guess what happened? People started to pile on this,
because, hey, next month will be like last month because it
was the same the next month and then they go
utterly [? spark. ?] So two of these funds that
basically sell these things have went bust. And that was called
the VIX shakeout. And that’s what’s happened. Now this is the
first shock of what I think are quite a few to come. And the big one
happens with ETFs, because their
share of the market is approaching
50% of all trades. So if the same thing
that happened the VIX happened with ETFs
in general, woohoo. So that brings us
to Trump, right? He owns the upside. Is he going on the downside? I don’t think so. He’s trying to run away from it. So this sounds like a
great romance novel– For Valentine’s Day,
buy your partner VIX. VIX, sounds amazing. Have you seen your VIX today? That’s going to be a
bestseller, I’m sure. But it’s so interesting in terms
of that this is a global trend that the president
seemingly doesn’t recognize as a global trend. Right, so I mean, it’s
kind of stabilized. I mean, it went up and up
and up, and it went wah and it went a [INAUDIBLE]. So you know, we still
got a week or so to see how this one shakes out. You know, things
can go up, down, and very often they kind of stay
the same, so we’ll need to see. But this is the
future, in a sense. You know, this is baked into
the cake for where this goes. Well, I think in celebration
of either the up or down of the economy, I’m not
sure, or the stock market, the president wants to
throw a military parade. This is awesome. He’s told the Pentagon
to start planning. This is great. So basically it’s
sort of like, I am in control of the stock market. And now what we’re
going to do is we’re going to have a
big military parade. It’s kind of weird. It’s like, I’m not
really looking forward to living in the Soviet Union. Yeah, it’s going to
be long bread lines. You know, so maybe he’ll
start wearing big glasses. El Presidente
salutes the troops. And he himself is, I think,
a five time draft dodger. I think so, yes. Wow, that’s going to
be an interesting one. You know, that’s sort
of like me standing up as greatest lover of all time. There’s not much
evidence for that claim. With your Fabio hair. Yeah, exactly. There really isn’t much
evidence for that one. But this is all lining up,
to your point for the El Presidente moment,
that he called those who didn’t clap for
him at the State of the Union treasonous. He’s called the Democrats
all sorts of other, you know, they should be like,
you know, their citizenship taken away, un-American. It goes on and on and on. So he’s setting himself
up for this moment. No, absolutely. I mean, you know,
for a long time I was able to see the funny
side of many of these things. But treason is a serious thing
which is punishable by death. And if you’re standing
in front of an audience and you just say, you know,
some people think that, I don’t know, treasonous, could be. You don’t just throw
that word around. Yes. That’s serious stuff, right? So you know, words
have consequences. And, you know, when you’ve
rather a random word generator, they can have rather
random consequences. Well, I was thinking a lot
about– because of course, the news about the Nunes
memo and the Democratic– I don’t know if it was exactly
the response to the Nunes memo, and of course the
Mueller investigation. It’s unclear to me. They want to schedule
interviews with the president, and the president’s
lawyers are saying no. I mean, all of this seems to be
building to something, and yet, is it going to be a smoking gun? It doesn’t seem like it. But I think this is the part
about the treasonous thing is that it’s going to– this case is going
to rise or fall on very small
pieces of evidence. It isn’t going to be
some big gotcha moment. And I think that it’s
interesting to think about the Mueller case really
building from the bottom up, like, really getting the
low level guy, the Papadopoulos guy, and then moving it up. And thinking about, has the
president already sunk himself with this kind of talk,
just the blabbering talk that they can bring
and use as evidence. So, as you know, I’ve been
somewhat skeptical on this because my client as
you know has been– it’s a bunch of
bozos from Queens. If the combined arms of
the CIA, FBI, and the NSA can’t bring down these
guys after 18 months, maybe there’s no data there. Now, what’s the Mueller
investigation doing then, if it’s not actually showing
collusion with Russia? Is it basically kind of
pushing things in a certain way so that things that happened
after that, when he’s actually in power, start to become
obstruction of justice, right? Then you really are going after
someone on a different pretext, right? Now, that could all
play out, right, but I’ve actually got, of
course, a slightly different perspective on this. So the way this
has played out, why would you basically try and
throw the FBI under the bus? Why would you try and
politicize this investigation? It signals that maybe
Mueller has got something, or something else. And here’s the something else. Maybe it’s the following. Shortly before all
of this happened, Mueller wanted the president
to testify under oath. So imagine putting that guy
in a room for three hours and just asking him to talk. God knows will come out
of his mouth, right? I mean, danger. And it’s all under
oath, and that’s when words have consequences. So maybe part of this is, let’s
just get that off the table. Let’s make sure he never has to
testify by any means necessary, because that could just be
a random outcome generator nobody wants to deal with
in the administration. Well, I thought it
was also interesting, because it’s been a pretty
tight investigation. I mean, we’ve heard about
the arrests, or the deals, as they happened. It hasn’t been a
real rumor-based sort of investigation. So I thought it was interesting
that this even came out about Trump’s lawyers trying
to tell him not to testify. Because, and I know this is
all hearsay and rumor and stuff now too, but, I mean, that
in and of itself I thought was an interesting piece to
just see which direction, to try to guess or
predict which direction the Mueller investigation
is actually going. It looks like the chancellor
has a government in Berlin. Yeah. At last we have the government. Politics makes
strange bedfellows. Yeah, I mean, they’ve been
working on this for a while, so the closer they
got to an agreement with the Social Democrats, the
more the Social Democrats poll numbers one down,
so they’re actually managed to get into
the teen figures now which is truly
catastrophic for what was one of the great parties of
European center left politics. So, you know, they destroyed
the party in the process. They still have to get it
approved by the party members. So there’s a very strong chance
they might go nine, right? But assuming it goes through,
it’s very interesting what they held out for. Martin’s played an
interesting game here. German political
power is concentrated in the finance ministry,
not the economics ministry. And that was run for a long
time by Schauble, the finance minister who was Mr.
Austerity– if you tighten the belts– right? Regardless, and
now you’ve given it to the Social Democrats
whose agenda is more Europe, more transfers, which is
deeply unpopular with Merkel’s own party and with the majority
of the German population. However, it’s
exactly what Europe needs if it is to survive. So it’s going to be–
if he gets through, if he gets past the vote
and they form a government, it would be really interesting
to see how this works out. For the mainstream
center left and center right in Germany
and in France, this is their Hail Mary pass moment. It really is. And if it works out the
way that the one that was at the end of the
Super Bowl did, not good. So, hang on. Stay on this for just a second. So the new finance
minister is possibly outward looking, as
opposed to inward looking and wanting to keep
everything in– Yeah, or at least, you know,
what do you do with Europe? Well, we’ll have no transfers
to the lazy southerners, right. The [INTERPOSING VOICES]
of changes which is we need to share risk. We need to have common bonds. We need to have a finance
ministry with a budget for all of Europe. We need to be able to
deal with economic shocks rather than just kicking
the Greeks one more time. Right, right. So staying in Europe
for just a second, I just saw a headline of the
EU saying that they’re only going to do trade
deals with those that were part of the Paris Climate
Agreement, which excludes the US, surprisingly enough. It’s an interesting way
to think about the EU actually, like, taking
a stand on something. Absolutely. And we don’t often
hear of the EU taking such a strong position. Absolutely. Well, one way to
think about this is, you know, the Transatlantic
Trade Agreement that failed that both Senator Clinton
disavowed at the last minute and Trump scuppered
the minute it came in. This was designed to
make the two big trading blocks of the world,
the two richest parts of the world, the
United States and the EU, trade a little bit more. And what one of them has
now done is to turn around and say, no I’m sorry. We’re going to treat you
like Burundi if you basically do this, right? All of the sort of preferential
access, all the [INAUDIBLE],, all the stuff that
we’ve negotiated, if you’re going to basically
do this on climate– because we’re serious
about this stuff. We actually think it’s real. We believe in evidence
of hundreds of thousands of research papers. It’s not a conspiracy. Then basically, if you’re
on that side of the fence, we’re not going
to play with you. And apparently the European
Commission has come out and said, Yep this is true. This is the way we’re
going to play it. So this is really
hardball from the EU and we hardly ever see that. Well, and it makes the US
again, one of the only Western industrialized nations
that we are still debating whether it’s a hoax or not. And meanwhile, the
rest of the world has accepted, fully accepted,
and moving on to actually try to see what they can do. We spoke about this before. I mean, and you can see part of
where this comes from in terms of the interest behind it. So countries like
India and China have gone through rapid
industrialization, particularly China, and the air
quality, water quality environmental quality
is obviously terrible. So they have every
incentive to change that. The people who can help them do
this is the German engineering and scientific sector. So if we basically say, if
you come and join us, fine. If you don’t,
you’re on your own. Our attention’s
going east anyway because that’s where the
demographics and the growth are. So if you want to be just angry
old white people screaming off there about why everything’s
a hoax, knock yourself out. The rest of the world is
going to go on with it. But in this regard, I
mean, the US should be– I mean, angry old
people in Miami Beach are not going to have a condo
anymore in like 10 years. And it’s going to become–
well, actually, about 25– but it’s going to
come as a great shock to their descendants who
they’re going to leave it to, thinking it’s a $5
million asset and it’s going to be half underwater. And if you think about
real estate in Florida, if half of Florida isn’t
there in 25 years, I mean, that’s big hit. Don’t tell me about it. I’ve got a house in Naples. Oh, boy. no more. Visit it while you can. But you see, this is it. Maybe I actually don’t believe
that the whole thing is actually real and I’m doing a
long shot on the real estate market. So you can never tell. So it’s talking about
long shots that we’re sitting here in
Providence, thinking about the loss the Patriots
the solver to the Philadelphia Eagles. So I used to like Tom Brady. I’m a big University
of Michigan fan. But I hate Tom Brady
because he’s too much. Like, he only eats,
like, you know, plants grown in particular parts
of the garden or something. Oh, really? Is he one of those? Yeah, he doesn’t eat like shade. Oh, he’s got this
diet book, right? Yes, that’s what it is. But is it like
alkaline foods and all? Yes, he only drinks,
like, [INAUDIBLE].. Anyway. It’s not true. But if you like the
person saying it, you can believe it’s true. Right. So I’m probably the
minority here at the table, but I was happy to see Tom
Brady actually lose something. Shame on you for living on
the Northeast and saying this. This is absolutely ridiculous. But, of course, who
cares about the game. What happened during
the halftime show? I know. The backlash against
Justin Timberlake. Things you can’t
script, the backlash against Justin Timberlake. I mean, it’s one of those great
lines that came out in the Iraq war when there was a
senator after Abu Ghraib who was on the ropes about all
these pictures coming out. And he came up with the
best line ever, which was, “I’m outraged
about the outrage.” Yes, yeah. Well, this is this one
where I’m kind of outraged about the outrage, because at
what point in human history did, like, the graduate of
Disney, who’s been around for 30 years, who does
singing and dancing and seems like a
kind of a nice bloke become the vector of
people’s political fantasies and agendas. Let me just list his– He’s meant to be,
like, responsible– you don’t share my politics. You’re a bad person. You’re responsible for the
death of Janet Jackson’s career. What? Well, he had other offenses. He had an ugly outfit. He had no– the Prince duet
did not go over very well. And no reunion with his
former boy band, NSYNC. And these are severe. The best one of
course was, like, when he ran up the stairs at
the end singing, which first of all, great cardio, right? But he ran up the
stairs singing. And then he’s talking to that
kid who takes the selfie. Yes, the selfie kid. And the best– the selfie kid,
the best one from selfie kid was, I just met Conor McGregor. But anyway, Justin, I’m outraged
about the outrage directed to you as outrage,
because in no way are you responsible
for the things that you’re meant to
be responsible for. If we are, we’re
basically saying that Katy Perry is a leading
political activist, at which point, sell everything. And I like her music. One last fun note, which really
tickled me with the Grammys. And, of course, the
Grammys had their moment. I saw a hashtag of
Grammys so old because U2 was on three different times. Combined age like 190. Yes, and Twitter seemed to think
they had no one else to, like, award the trophies
except for U2. So I just thought that
was a funny thing that [INTERPOSING VOICES]. I was walking around in
the cold the other day and I have this black sort
of raincoat I got in Germany. It’s waterproof. And I had on a black beanie hat. And you can’t see me,
but I have a goatee. And I walked into
this environment where I knew some people. And somebody I barely knew
walked up to me and said, are you hoping that somebody
in U2 dies and you get the job? I guess. 50-year-old white guy
in a beanie, you know. There we go. Oh, time’s up. It’s the xylophone from hell. Satan’s xylophone is with us. So just a reminder
to our listeners, this is our new gimmick
for the next few times for us to have a fun
noise play us out. Yes, and that was
Satan’s xylophone. Could you imagine listening
to that for all eternity? That actually would be hell. Well, thank you everybody. We will be back in a couple
of weeks with some more items to discuss. Yes, including whatever
happened to [? Camille ?] [? Twinkies’ ?] sister? Yes, can’t wait. Bye. And listeners, don’t
forget to send us a title for our next show.

5 thoughts on “Demarcation – The Global Economy, EU & US trade relations, Nunes memo, the Super Bowl… and more

  1. I have a question for Mark Blyth. With 3.5 million baby boomers retiring a year. 2 million jobs hiring a year. 1 million immigrants coming in to the country a year. With the Trump administration scaring off the immigrants. Could a shrinking job force lead to inflation a few years down the road.

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