YouSaid · the spoken record

Peter Tchir

lines on the record: 68
first: 2022-11-07
most recent: 2022-11-07
sittings or episodes: 1
sources: podcast

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“So, I think domestic politicians are going to start focusing on this much more after the election. Somehow we made inflation the only thing for this election, at least in terms or a key point. I think as we get through that, people will be like, this seems insane that we want to put 1.5%. Probably early next year, very early, maybe even later this year. The economy's in worse shape than we thought. And so you're going to see yields actually go much lower. And that initial wave is yields lower stocks higher because that's what we've been addition to. But I think it's going to then go yields lower and stocks much lower as people realize we have just screwed things up. We've broken all these connections and nothing's working quite as well as it should.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“The Federal Reserve and the Treasury and the US government have historically had a chummy relationship in that they help each other out, so to speak. But at what point does the Federal Reserve's tightening Induce a recession and cause politicians to become very unpopular. And, you know, is JPAL going to soon become bashed by more and more politicians? I think we already saw John Hickenlooper, a Democrat, say, you know, I mean, the UN is already calling on the Federal Reserve months ago to stop hiking. At what point does the Federal Reserve's actions become so unpopular that you start to see sort of a brewing war between politicians and the Fed?”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Because of the size, scale, and might of Japan versus some of these other countries, right? It might be one thing for China to go and influence a Cambodia or a Thailand. It's going to be a very different thing for China to try and influence Japan. And so I think Japan could be a real beneficiary of this reshoring or onshoring or however you want to describe it, friend shoring. So I'm kind of excited by that.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“That reaction right now because everyone's like, okay, maybe this is a temporary phenomena, so I don't want to overreact. But if it continues, then it becomes very problematic. And again, I think that some of the reglobalization reshoring, which was coming here, is going to go elsewhere. And I actually, I really want to invest in Japan, I think, because more and more, not only has it become cheap to produce there for a long time, they still are very low levels of inflation. But what I've been talking to companies is I think if you go back a year and a half ago, as people were getting frustrated with China, the natural reaction was, well, I'll produce in Thailand, Cambodia, Vietnam, somewhere there where it's relatively cheap and you're kind of in that region because you want to be in that region. I'm hearing more and more companies talk about Japan.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“You're right. It's one of the reasons the US markets, I think, have been reasonably weak, right? You are seeing this pressure and this earnings translation. And again, I think it's very difficult for companies to hedge these large moves, right? Again, we're talking about nations that typically would trade in relatively narrow range are gapping. And again, a lot of the corporations try and manage their FX rates quarterly and stuff. So I suspect we've only begun to see the real impact. So those that have been trying to manage, it's getting harder and harder to manage given this volatility. So I think it gets worse. And again, it's going to change boardroom decisions, right? What does Netflix do? Now does Netflix maybe just you brought them up. Do they shift production over Europe if they have to? It's changing this. Those things tend to, and that to me is the problem is there's all the immediate impact from this volatility that's really short-termism. And then there's how do people react to this, which could take two years. I suspect we're not seeing much.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Right. You said that the US is exporting inflation to other countries because of the strong dollar. You're absolutely right. We're exporting inflation to foreign consumers, but the reverse side of that is that foreign countries are exporting deflation to US producers. And you see that like Netflix, they're going to lose a billion dollars this year because they're selling their subscription programs to Europeans who are paying in euros. And the euro is weak. So it's actually really bad for American companies and it's really good for foreign companies. Are you seeing that as bad for the stock market of the US and good for the foreign markets or is it sort of is that overadjusted for by the fact that the currency is dominated a currency that's so weak?”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Thinking about it as oh, default would be bad for China. I think China is much more like a vulture borer who's buying this stuff and saying, go ahead, I want you to default because I want to come over and take over this entity.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Do this with Sri Lanka recently and other countries, they give them this project loan for something and then it starts going bad and then they start asking for well okay we can restructure this we'll cut your rate a little bit but we need to be able to put a ship into your harbor at any given time we need to do this and they are encroaching on effectively the sovereignty and so I think China, I completely agree with your point that China can absorb these losses but they're actually not even really losses because China will extract value from these countries in other ways that will more than offset any debt related losses so I think part of China's grand strategy is sure we'll take these losses as they're our own currency but we will extract more value than people realize and it's going to encroach on these countries sovereignty on these countries natural resources that they have to commit to China so I think that's part of China's much more broad strategy and that's where we make a mistake of”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“It's almost like, whoa, what are you doing? And that's partly, they're definitely screaming at us that part of their inflation is higher because the dollar and all the energy things that trade in dollars has moved against them. So I think the debts can be a longer term issue. It's going to be, though, right now, I think inflation is the immediate feedback loop. And it's the fact that we're causing inflation to be higher than it would otherwise in countries, which is then causing them to take policy action that might be contrary to what they would do otherwise. And the one thing I do want to highlight is I know you mentioned Chinese debt. So I am a huge believer and I hear a lot of people say, well, all these countries default on Chinese debt. China could care less if they default. In fact, I think China would be welcoming default, right? This goes back to investing 101 and capital structure 101 is if you are the debt holder, you eventually become the equity holder. And you've seen China.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“So, I think a great point. It's places like Turkey, for example, do have a lot of large. So that to me is one of those Cuspie countries where not only the country issue a lot, their banking system issued a lot of non-Turkey's denominated or non-Turkey's Lira-denominated debt. So places like that, I think we'd look to. But I think right now it's even slightly more problematic sooner because of inflation. We're effectively exporting inflation to these countries, right? It's UK, part of the inflation thing is their currency is so much weak, the euro, yen. So we are kind of exporting our inflation problems to them. And they have to now react to this inflation. So I agree that traditionally it's more that they have dollar-denominated debt, but right now is they have to see this inflation. So they're hiking into the UK is just a mess, right? They basically said yesterday they expect a two-year recession, and yet they're hike.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so Strong Dollar is really important in the global financial system, as you mentioned, for that plumbing thing and for people who have non-dollar-denominated assets. It's obviously bad. But Peter, when I think of a strong dollar causing an economic crisis, I close my eyes. The thing that appears to me is an emerging market country or a country that has borrowed a lot of money in dollars. Oh, Japanese company, it's borrowed a lot of money in yen, no problem. Just print yen. I mean, the central bank will have to print yen or the Japanese government will have to print yen. But you can get that yen. But if they owe dollars, no one in Japan has the ability to print dollars. So that's a huge, huge problem.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Think countries are struggling with this, and I don't think we're anywhere close to meeting another Plaza accord or anything, but it is a little bit awkward that we are so one-sided. And it just reminds me of the things that we just did with the strategic reserves or with the Saudis. And it's almost as though we don't have a memory that goes beyond two years and expect that no other country has a memory that goes beyond six months. And it feels that's where I see policy mistake after policy mistake is that we're acting so short-termism and somehow expecting other countries not to see it. And maybe we could get away with that at one time. It doesn't feel like we get away with that right now.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“I think we're being a little bit short sighted here where the Japanese in particular, I think the UK a little bit, even the ECB have been talking about the strong dollar. And I think they were hoping that we would do something. And we've decided both Yella and a said stuff, Powell, that we have to do what's right for us. And yet we're probably asking these countries for support in Ukraine or supporting something else. I think at some point they're going to turn around like, whoa, whoa, whoa. We ask you for something. You say no. And you come and ask us for something and expect us to just give it to you. And that's that whole era of deglobalization. So I think it's becoming a little bit problematic for our companies. I think it's becoming problematic for ourselves as foreigners. And again, that's to me this deglobalization. If other countries are selling their treasuries or investment-grade bonds because they can't do this, you further decouple, right? There's less and less linkage. And I think that's problematic for overall yields, but also for our global future.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“At you know, do I want to invest in the UK? And maybe you always thought you'd have some sort of narrow range of volatility. Now you're looking at it trading like an emerging market. You're getting these 10, 20% swings. It becomes much more difficult to make a $10 billion investment in a country with that because your hedging costs have gone up. So it starts really disrupting how or where people are going to do business. It may also right now, wow, maybe we shouldn't build a plant in the US. Maybe we should wait and build it in France. And I know we got to go back to square one, but maybe it's cheaper now. So it changes a lot. I think for Japan in particular, it's problematic because they are a massive importer of natural resources, right? They are probably the outlier in terms of the whole world, in terms of a big economy, but almost nothing in terms of natural resources. They're heavily, you know, almost all of their energy needs, I think, get imported, right? So they have this issue. So a weaker currency actually hurts them. And again,”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think the strong dollar is a problem for all sorts of reasons, and not just the countries. So I can start even with our own markets, right? A lot of investors buy U.S. Treasuries or U.S. investment-grade debt, and then they hedge out the FX risk. And they tend to hedge that out for three months or so at a time. That's kind of just a standard contract. And so what's happened, though, is all of a sudden because the cost of this hedging has risen a lot. They're looking at these assets and they may be forced to sell dollar assets. So you may be seeing part of the weakness I think we see in treasury markets and maybe even investment grade is this force selling by foreigners where they can no longer hold on to their dollar assets and do the hedge. So it's just easier for them to sell those. So I think that's putting some pressure on yields for all of us. So it's not just a problem for the other country, it's a problem for us. But I think it's very difficult for corporations to manage where they're looking.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“As well. So that's another huge drag when we look at what the economic risk is how do we do well if China doesn't care about us as much, the autocratic nations are pulling away and Europe's a disaster.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“It's not like Yeah, no, that's a great point. Again, I think the European economy is struggling. Their manufacturing is a disaster. They're also having to deal with an influx of 5 million or more Ukrainians. And that level of migration supposedly, it's probably the biggest forced migration in Europe since World War II and maybe even including parts of World War II. So you have never seen this number of people displaced in such a short period of time. That puts stresses on all the systems. Even if you're living in Dublin, right? The Dublin food system was not set up to distribute to this many more people. And I think there's stress throughout all of Europe. I think it's a disaster, which is another reason I don't think we can remain an island to ourselves. And their problems are going to become our problems.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, definitely want to get through this winter. There will be a 2024. It's not like tie tops. However, yeah, so, okay, the Germans aren't mowing their lawns. That's all good. Companies aren't, you know, zinc smelters, maybe they're not turning on their factories. All right, that's good for the country in terms of energy independence, but it's not great for the zinc smelters. It's not good for the economy. I mean, you're seeing the German manufacturing PMI start to dip pretty sharply. How severe of an impact is this already having on the European economy? And yeah, how bad do you think it gets? Because the better that the more hardened the German people are in German government is at not using natural gas and oil, probably the worst that is for the economy, right?”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And it's just going to have to be this commitment. Where do we head? Where do we go with nuclear? So I think we probably get through this winter because I think people were overestimating, but I don't think the problem goes away come March. We're going to have to make sure year in, year out, Europe figures something better to do.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“If it gets really cold, they're going to have to draw on this much faster than they would have thought. And then the other part of this is clearly, for me, how windy Germany is. Germany relies very heavily on wind. And last winter, you had this weird situation where it was very cold without much wind. So you had this increase in demand on energy usage and less supply from their wind. So hopefully you get a more normal weather pattern and it breaks this a little bit. But this is a multi-year problem. This is something that's not going to be solved necessarily by Russia coming back online because Russia's found new customers for their energy products. They're going to sell to other countries that are more friendly to them, that aren't hacking with them. I think China, India, India, again, has just made a clear decision. They want cheap energy. They want cheap commodities and they will do what it takes. So I think we have to figure out a better strategic solution. Some of the things like more LNG imports is good, but that takes years to build.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think you brought up a point earlier, you got to buy whenever selling. I think maybe some of this is, I think people underestimated what Europe can do. In Germany, it was interesting. I talked to a lot of people who've been traveling through Germany. People haven't been mowing their lawns this year, right? As part of their overall energy savings, they did all these little things that I do think add. I think they were very prepared. They are a little bit more, I think, able to do draconian things. Companies there have already been shifting production away. They knew natural gas was going to be tight. So I think the amount of usage that they've been able to avoid will be good. They built up more supplies during the winter. And so far, yes, we will see. It's all going to come down.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Kind of gets disallowed. And that to me is like, that should be part of this discussion, right? Not only do we need bigger strategic petroleum reserves, we need more refineries, right? The refinery capacity in this country I don't think has grown much since the 80s. And the number of people driving and the size of the country has expanded greatly. So we've got to have a bigger discussion. But I think it created a lot of weakness for us that we drove this down to this level. And so I think he's trying to sound a little bit tough and threaten OPEC plus that, hey, we'll build this back up. But I think we went overboard on using this to lower prices when it should be really to protect our integrity if something really bad was to happen. If we had a hurricane through the near Louisiana again, right? If something really disrupted our own production, how protected are we? And I think we still have room there, but we've let this.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And yes, there was some tightness. There were things, and maybe it made sense at 120, but I think there's a real concern that you drain this to a level. I think it's part of why OPEC Plus cut production. They saw us, right? We asked them to increase production. They did. We drained the SPR. And they're kind of like, okay, well, guess what? You guys have drained the SPR now to a point that you're getting dangerously low. We're going to cut production because we can. And I think we've been very naive. And this was meant to be strategic, right? It's not tactical. It's meant to ensure some degree of energy and independence. And the other part of this is, again, this seems to me these policies are very flawed is we have to ship most of it offshore to get refined anyways because our refiners are working at full capacity. We really haven't created new refineries in this country for a long time. And it kind of falls under the guise of everyone wants another refiner. They just don't want it in their backyard. So every refinery...”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think it's unless it's codified or something, it sounds like this very short-termism. Just look at our energy policy in so many ways. It feels like we went and told the Saudis that we want to make them a pariah nation. We accused MBS as being a murderer, which he may well be, but it's not the sort of thing you typically say publicly about leader of another country. And then we go and beg them to give us more production. Like, hmm, that doesn't seem like a good way. We've been beating on Maduro for years, right? Then we go and beg ham. Iran we hate. We go and beg them. So I think people look at this and saying it's very short-termism, right? He is saying something to appease us today. There's no faith in this. I would say a lot of people I think are very concerned of how we've used the strategic petroleum reserve because it is meant more to defend us against an actual oil shortage than oil prices being high.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Dangerous, far more environmentally risky than building one of these pipelines. And for the last two years, we've had problems with undercapacity and overutilization on rails and trucking. So we've been our own worst enemy on some of these things. And yes, the Keystone pipeline will take years to build. But to me, it's the sort of thing. If you sent that signal, hey, we're building this, then people who have plans that could maybe be turned on shortly for a year or two saying, well, maybe we should execute those plans because in three years, four years this pipeline is going to come through and our plan might not be as useful. So I think it would send the right sort of messaging and motivation. And I think it's something like that. If you sent a real signal that we are going to do what most people in the energy industry say makes sense, it changes, I think, the board level discussion.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Getting rid of hydrocarbons, getting rid of this. And I think the time frame they're talking about doing it is so accelerated it's impossible to do, but yet that's the messaging. So how do we create an environment that companies believe that if they put in the time and effort to develop these resources, they will be there. And I would say a simple thing. Keystone pipeline. Why isn't that signed into law? That to me, it was going to be union job so it solves that. It is about as environmentally friendly as you can possibly get, right? These are double haul pipelines, so they don't leak and they don't do all those things. And worse than that, I think, again, we've got to have better discussions. Most of the energy that would be coming through those pipelines still finds its way to the US. It finds its way, though, through rail and truck. And guess what? Shipping tar sands via rail or truck is far less efficient, far more.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“You are going to be able to execute long term plans in this country. And at the same time, we are clearly making a very strong case that we want to move away from fossil fuels, that we want to move away from these. And so I think we see that occurring. We caused some of our own problems going back to OPEC Plus. At least one of the countries has talked to this administration saying we want to work with you, but you keep sending mixed messages. And then we pass the NOPAC bill in Senate, which basically gives us the right to sue OPEC nations as a cartel. And no one's ever going to use that. It's never going to pass the House. But yet we did that. And it just alienates some of these places. But to me, I think it's this two-fold thing is we have very difficult regulations. No one believes those regulations, even if they're loosened temporarily, will be codified in a way that you can build longer-term projects on that, not when there's other parts of the world that you can go into and think about it better. And our long-term messaging, right? We keep talking about.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“So I think To me, it's quite simple. It's one, they did tighten some regulations, and there's no indication that any regulation loosening is going to be permanent. So if you're thinking about an oil field with a 10, 20-year light, you have zero confidence that any accommodations that are made to you today Will exist two years from now. If we fix this up and there's a majority one”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Field now, and it's going to be five years to open this up properly, but we're going to do it. No, we need to encourage that there's multi-year legislation that supports these industries, that we are committed to it. I think every energy person right now in the US is somewhat concerned that the minute this crisis is over, they go back to being beaten on. So they're not about to go and invest tens and hundreds of billions of dollars at the risk that once it's no longer politically expedient to say we want energy production here, it goes away.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“It's gaining a lot more discussion. Again, I hate to keep bringing up Bitcoin, but I always kind of running joke is if only the nuclear industry had hired the Bitcoin marketing side, we'd have nuclear power everywhere. But somehow it's just got this bad reputation. And if you think about it realistically, Three Mile Island was the worst quote-unquote disaster we ever had. A, no one was hurt. B, it was a bad technology even when it was built. And C, it was situated in a place that you would never situate a current nuclear plant. So we kind of have a lot of blame on this. And it was so poorly done, but it's hard to get over that. I think we're going to have to come up. Maybe it sounds really good to talk about windfall taxes and things like that, but I can guarantee you no energy company CEO hears about windfall taxes and then gets on the phone with these guys and says, okay, we need to open up, you know, some.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Wow, a lot to handle there. I think one thing that I saw immediately after the Russian invasion, it felt like there was a little bit of meeting in the middle and people understanding how important energy was. And it feels that did not last very long or get very much traction before we've gone back to kind of this bifurcated view. I think talk to a lot of people. The reality is we probably need a 20 to 30 year plan to properly transform our energy from more traditional resources to much more environmentally friendly sources. And it's not a five-year plan. It's probably not a 10-year. It's a 20 to 30 year plan that is well thought out, that's organized, and it does not seem like we get that. We lurched from this policy to that policy. I don't see any way we get to a good transformation of our needs without using more nuclear. So I think nuclear is something.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“In China, where they are going to clamp down and basically reassert everyone, remind everyone it's a communist country and the Communist Party is in charge, not rich people.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“The Communist Party to continue to exist, they can't have the poorest 80% hate them. So I think they will push down on the richer ones, which again, I think is one reason to me keep looking at Bitcoin. And I think crypto has held in pretty well because I think people in China see this and people are trying to get their money out of China to the extent they have money. Bitcoin is one of the options. I think that's going to be something the Chinese government watches for a while. But to me, it's probably the single best use case I could think of for crypto is there's enough money in China that it's material and they have no interest in keeping their money under the system if they can help it. So I think that's been a long-term support for Bitcoin. The negative side of that is China clearly doesn't like that. So China will probably try and figure out ways to eradicate that element. So I think that's a neat part that fits into all of this. But that's what I see as this wealth compression.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“No, I think we're still in a redistribution of wealth within China that I think they are going to push down on the ultra-rich and even the rich and maybe the upper middle class. And they are going to get forced to take the losses to support the mass population. And I think you're going to see, I don't know how they do it within their rule system, but I think that's what's going to happen is this recompression where they allow this class to grow and ultimately”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Talking about the Chinese real estate situation, it's been a slow motion train wreck this bond started trading off of par close to a year and a half ago in the real estate sector there What's going on? There's been a lot of bad debt. I mean, many months ago, you saw these protests' mortgage boycott people saying, oh, I'm not going to pay my mortgage if the house that I pay for it does not exist yet. So they worded it. They worded their protests in a very pro-communist Chinese party way. But yeah, I mean, how do you think it plays out over the next year or two? Because, you know, in a real estate situation, ideally there is a time to buy. There is a time where, oh, asset prices are so depressed, morale, investor morale is so low that you can scoop up things at a bargain, but it doesn't seem like we're there yet.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“I'm starting to try and insert any other conversation a lot more because I find when we talk about global, it's always the Eurozone, it's China, and India, I think to me, is going to be a really compelling opportunity.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Issue ADRs effectively through the VIE process, which I think was the variable interest entity where they set up a trust somewhere. And those were already done under, you know, did they follow the law or not in China? I could see at some point China saying we're done with those and U.S. shareholders, you're screwed. So I think to me it's not just about the economic performance there. It is about their interest in participating in global economy and global markets. And I think that's waning and getting worse. And I think they're going to go more inward looking. I think their housing market, for example, is a disaster, but they're not going to handle it by own.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“I think there's a couple things within that. One is China from a demographic standpoint is awful, right? It's very heavily CO2, an elderly population, and the youth is still skewed heavily towards male, all kind of a legacy of the one-child policy. So I think they've had a lot of problems with that. They're having some real estate issues. Having said that, I think the stock market is partly our own fault because we believe that China wants to be like us, that China wants a capitalist system. China does not want a truly capitalist system. So I think part of this is our own belief that, oh, they want to be like us. This is the opportunity. China is becoming much more inward-looking. I can't remember the last time I heard of Jack Ma or someone like that, right? They allowed those people to flourish when it kind of suited their agenda and they've been cracking down on that. So I think China has no real interest. I would be very concerned about some of these Chinese companies that”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Line of sight to them, and yet they agreed to buy Russian diesel during this recent crisis. And they did that while the leader of Hungary was there, who's a NATO member. So we have to be engaging countries that we can deal with. I think it's been almost shameful that we're out there begging Iran and Venezuela, but particularly Iran for oil, when there's all sorts of other ways that we could be doing this and should have been doing this both domestically and figuring out longer-term relationships with countries we can work with.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And they've done it through the Belt and Road Initiative, where they ultimately, I view it as much more almost as economic colonization. If a country chooses not to deliver to the goods that they promised China, I don't think China takes that laying down. So I think they've invested in these countries. They own a lot of the infrastructure. They put a lot of their workers in cases. So I think that's going to be the harder part. We're going to have to do is figure out, okay, we have a lot of these rare earths and critical minerals between us, Canada, much of South America. How do we do a better job with that? But what scares me is we continue, I think, to pull back from the globe. We tend to be very focused on our own internal needs at any given time. And what struck me as incredibly scary is I think Brazil, for example, that's a huge opportunity for us. It's a country that still struggles, that is close to us proximity. We have much more.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“That we're processing is probably the easiest thing to fix a little bit where we allow China to develop. The harder thing, though, is going to be the fact that they've secured the supply chains from a lot of these countries. And one of our generals does a great story. And back in the early 2000s, his job was to go and try and get some of these agreements done with African nations. And we would go in and say we want your cobalt or whatever it is. But you need to do this, this, and this. And the country would say, no, thank you. Two years later, we'd go back and say, well, we want your cobalt, but you need to do this, this, and this. And they'd say, no, thank you. They'd go back two years later and like, hey, we want your cobalt. No, no. We've already agreed to sell our cobalt to China. China's come in. They're going to do that. So I think that is going to be one of the problems. It's not that China necessarily has the cobalt or all these internally, but they've secured agreements with a lot of these other countries.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“So I think it's twofold. I do love your idea, the concept. The refining is a big part of it, that they did a lot of this, just had a really interesting conversation with the CEO of a company in Australia. And it's not his company, but they were big miners of lithium. Then they load all the lithium into boats, ship it over to China. China would process it into, I think it was lithium dioxide. I might have the chemical term. And then they would ship that back to Australia, who would then pay 10 times the amount for all of this. The inefficiencies were insane, right? You're shipping this back and forth. So you've got that cost. China's doing the refinery, which you could easily do in Australia. And you'd probably have, and I think one of the initial reactions is, while the processing is so dirty, right? It's carbon intensive. Okay, well, how does that fix the world if it's just getting done in China? Whereas at least if you do it in Australia, in theory, you're probably going to monitor it better and you're going to do a better job. So I think you're going to see some.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Three or four months ago now, right, they signed a deal with the Solomon Islands to use them as a base. They're now talking about building up military bases in the Solomon Islands. And in the last month and a half, the Solomon Islands have refused entry to a U.S. Coast Guard ship and a UK naval vessel. So all of a sudden, you have this expansion of China where they can project much more power over there. And then I think the sad reality of this is China figured out about five years ago that this is a strategic competition for natural resources and particularly critical earth and rare minerals, right? Rare earths and critical minerals. It's the lithiums of the world. It's the cobalts. China figured it out this five years ago. I think India figured it out two or three years ago. Russia figured it out last year. And we are just in the middle of figuring out, oh my gosh, we are way behind on securing, and not just securing, but actually processing all the things we're going to need to make our sustainability dreams come true.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“We need to make sure we have better drug capacities, better healthcare capacities here. So that's going some of this away both from China and India. And then I think with the Russian attacks, that made everyone further aware of what's going on. And then the final piece, which doesn't get anywhere near the attention that it should, is so we told China, right, don't expand the South”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Be there. And so I think that occurred. Then the next big thing was during COVID, when we realized all of a sudden we don't have our own PPE. We don't have things that we need for a national security level. And Honeywell and 3M made N95 masks in China and China would not let them export them to the US for safety concerns. And as far as I can tell, China's never let anything leave due to safety concerns. So I think there's a big awakening on this. The U.S. military receives about 90% of their antibiotics from China. So not just the country as a whole, but increasing military. So I think we always have as part of our national defense policy kind of this wartime production view. And it's one reason we're always going to support the Fords, GMs, the automakers, the Boeings, because if and when we need wartime production, we want to ensure that we have some of that capacity. I think a huge realization hit that we're going to probably be in more is more likely with a pandemic or something like that.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“So, I think depressingly, we've been very negative on our relationships with China, and the market's been about two years behind. And every time the market starts catching up, I think we re-escalate how bad we think our relationships are with China. And it goes well beyond what's just going on with Taiwan. I think the seed started back in, even under the Trump administration, right? We went under tariffs. And I think a lot of companies at the time wouldn't support tariffs publicly, but I think they were already getting tired of dealing with China. We dealt with a great cable company and sending a meeting in 2019 or 18, and they're complaining about their business dealings with China. I'm like, what's a cable company have to do with China? Like, oh, well, we build theme parks and we built a theme park in China. 51% has to be owned by the Chinese. You go to these meetings. All these people show up who you're not sure who they are. And in the end, you feel like you've just taught China how to build world-class theme parks. And they never opened as many cities as opportunities as you were told or led to believe.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Conductor manufacturers are going to have to manufacture more outside of Taiwan. The bad thing about all of this is I think it's good for our economy in many ways. We'll create more jobs over the longer run. It makes Taiwan much more susceptible to folding into China at times because they lose some of their global importance.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“Down in Arizona. I think Intel announced one in Germany. So what you're going to see is people realizing it's highly unsafe for your business to be relying on chips from Taiwan given their proximity to China. And I think that has really been eye-opening to a lot of people. That was one of the switches that triggered, I think, when Russia invaded Ukraine. People obviously have to deal with that. But I think people are taking a much more serious look and saying, what does the supply chain look? How safe is it? or secure is it. And I think you're going to see a lot more being done domestically in Mexico. I think people feel comfortable. I can get in my car, drive down to Mexico, and check it out. And the first shift was out of China where with COVID zero, people got nervous. But I think Taiwan, right? Basically you were embargoed for a couple days when China was performing all their exercises in the Straits of Taiwan. Do you really want all your high-end gear coming out of Taiwan? So I think even the Taiwanese...”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“And I take it even more broadly whether you look at the pelotons, the sofas, the palantiers, that was the whole disruptive industry was a massive consumer of these items. And that's shifting a little bit. And again, I think how much did people double order over the last two years, right? Again, the response is we don't have enough supply. So we're going to do two things. We're going to change our product mix so we don't need as many of these. But in the meantime, we'll order more so we don't get caught short again. So I think there's a lot of misreading of the data out there. And then one of the things that I think is happening geopolitically is, and we talked about this, right, this kind of deglobalization, and we're seeing nearshoring. And I think, unfortunately for Taiwan, people are now trying to break the grip of Taiwan semiconductor. And whether it's building factories in the US, I think there's at least two, if not three, large chip factories announced. I think Syracuse is going to get a micron one. There's been some.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT
“A six to two month to two year period. And I think that's what's going to happen in the commodity, in the chip space, is it may not have been the biggest component, but at the margin, you're going to lose this 5%. And if the auto industry does the same thing where they cut back the number of chips or, and again, really on the high special highs, because that's where the profit margin was for a lot of these companies, I think there's going to have to be some restructuring done along that.”
2022-11-07 · Forward Guidance · The Economy Is Slowing Much Faster Than The Fed Thinks | Peter Tchir · IDENTIFIED FROM THE TRANSCRIPT