Transcription
David. >> Hello, Mario. Thanks for having me back. Good to see you.
>> Always, always a pleasure. Um, I was praising you before we started. I'll do it again. You're really good at explaining things. I, I, uh, I enjoyed our last conversation. I'd love to keep doing it because I learn a lot and I think the audience does as well. Um,
>> Thank you.
>> I want to ask you about the Strait of Hormuz closing again. I know you've been covering a lot, the, the G7 summit, the FOMC obviously with Kevin Walsh, Walsh, and um,
>> Gold. I saw on your channel you've had a few, a few of the, the big voices in the, in the gold sector talking about the price of gold recently. I had, um, um, man, I am so freaking bad with names. The biggest name, what's his name? The, the, the biggest hawk when it comes to gold, the biggest bull, sorry, when it comes to gold, the one and only,
>> Chef.
>> Yes, yes, he was on the show a couple of days ago. Yeah.
>> He's the gold bull. At least he's the one I know the most because, because of crypto.
>> Um, on your show, that's, bring it up.
>> No, you don't bring it up. It's a good sentiment indicator. The amount of hate he brings on Bitcoin, I think is a good sentiment gauge.
>> I'm actually, I'm going to, I'm going to get a, sorry to interrupt you. I'm going to put a point to actually ask you about the, about crypto and Bitcoin. But let, let me jump straight to the Strait of Hormuz. What do you make of it? When you saw the news today that it was closed, it's been weaponized. We're just talking about Muhammad Ali, who's been talking his biggest concern is how, um, this war and the closure of the Strait is the weaponization of the Strait kind of shakes up the status quo of what happens to other straits, what happens to in the Red Sea, what happens to the, the Malacca Straits. That is a concern that he has, as well as the impact this is going to have on de-globalization or at least speeding up the process. Um, so that was a big discussion we've had. Um, but I want to ask you, how concerned are you on these topics? And also, if the Strait of Hormuz continues to be closed and opened up and closed by Iran whenever there is an issue, what does that mean for global energy markets? What does that mean for inflation? What does that mean to for, for the global economy? And also the, the international system that we've all operated under, which includes, uh, freedom of navigation in the seas.
>> Yeah. First of all, the Strait was open for what, 72 hours? Not even like, four days. I don't, I can't remember exactly, but it was like, the, the norm that we've been living, we've been living in, Mario, is the closure of the Strait of Hormuz, not the opening of the Strait of Hormuz. That's the norm the last three months. So to say what's going to happen once the economy, once it closes again, well, nothing changes because it was open for what, three days. I just share my screen if you allow it. This is the least surprising piece of news that I've heard all week. And I, I bring this up because the markets didn't expect the Strait of Hormuz to stay open for long. And I, and I know this is easy to say in retrospect, but if you take a look at the CME FedWatch tool, which is what I have on my screen, this predicts the probability of a rate hike by the end of the year at any given, uh, FOMC press conference. Now, Kevin Warsh, and we'll talk more about the Fed in just a minute, I'm sure. Um, at the press conference on Wednesday, it was, it was announced that nine governors, nine members of the FOMC wanted to raise rates. And immediately after, of course, reporters pressed Kevin Walsh, the new Fed chair, on expectations of forward guidance. He didn't give any. And, uh, it was, it was, it was immediately clear that the Fed had turned hawkish. And it was immediately clear to the markets that rate hikes would be most likely inevitable by this year. Take a look at what happened to the percentage or the probability of a Fed hike by July, which is 48, 40%, 38%. By September, that moves up, uh, the, uh, 73%. So 51% of a 25 basis point hike and 22% chance of a 50 basis point hike. By October, that moves up to, uh, more than almost 80%, and by December, 90% chance of at least one rate hike. Now, Mario, why do I bring this up? Well, if the Strait of Hormuz were to remain open, presumably inflation expectations would fall and presumably the Fed would have less of a reason to stay hawkish. That was not the case. The probabilities of a Fed rate hike did not fall after the Iran deal. You, you, the notice of the, uh, memorandum was reached. That was not an indicator or a factor for whether or not the Fed would rate raise rates later this year. Which is to say the markets, being a lot smarter than me, had already anticipated that perhaps nothing would change permanently with the Iran-US situation. Until I see the bond market, which is what ultimately this on the screen is based on, until I see the bond market react meaningfully to a lower probability of a Fed rate hike, I do not expect the Iran Strait of Hormuz crisis to be resolved anytime soon. I'll let the market indicate to me what's about to happen. The market's a lot smarter than me. I'll stop sharing my screen now.
>> Interesting. So, the markets are telling us they don't expect, uh, the Strait of Hormuz to open up, like they were, for at least not the foreseeable future. Is that fair to say?
>> That's, that is fair to say. And, you know, the geopolitics side better than me or most people. I mean, you tell me, is that, is this deal rock solid here? Is this, you know, is this seamless? They signed an MOU, which I think everyone knows is meaningless. It's not ironclad. And even pieces of paper with a deal written on it don't.
>> Not only, not only this, it's an MOU that involves a party that needs to abide to it, that hasn't signed to it, and that is Israel. So, it's, it's an MOU with one of the signatories missing.
>> So, I'm not an expert. I can't tell you if Hezbollah is going to, uh, cease its hostilities against Lebanon, which I think is the, uh, uh, pickle here in the jar, so to speak. Um, so I can't tell you what that's going to happen on that front. All I can tell you is what the market is indicating. The markets do not indicate that there's going to be a permanent ceasefire, which is, I guess, a permanent ceasefire is an oxymoron. I guess that's just called peace. The markets do not anticipate peace to be reached anytime soon.
>> Interesting. Okay. And you started talking about Kevin Walsh. What else can you tell us about the FOMC?
>> Well, many things. Um, the most, a few, uh, important changes were made. First, the Fed has stopped issuing forward guidance on their statements. You'll recall that, um, on Wednesday, the Fed's statement, uh, the PDF that's on their website at every single FOMC conference was significantly shorter than the last one. It was only two pages and it removed any language of forward guidance. Reporters then asked, well, uh, how were we supposed to get any hint of forward guidance then from the Federal Reserve? Uh, to which Kevin W said, you know, we'll, we'll play it by ear. I'm paraphrasing. And they also asked if the Fed dots are now the de facto, uh, forward guidance tool. Fed dots are an indication of where the Fed rate is going to be indicated by each of the FOMC members. Importantly, Kevin Worsh did not give his own dot. He didn't give his own prediction. So, he didn't want to indicate or reveal what he was currently thinking. But the markets, which so far have always been right, um, are, are predicting rate hikes. Uh, so that's one, one major change. Kevin Worsh is also setting up a series of task forces: five communications, the balance sheet policy, data collection, uh, productivity and jobs, and inflation framework. These are the five task forces that he's going to assign. Um, and work on each of those categories that I mentioned. Uh, he hasn't officially set up a team for each one. He said he's still hiring people for that. Uh, what he, I think what he's signaling is that he wants to eliminate some of the inefficiencies that the last, um, FOMC prior to him had been evident. Now, uh, in terms of inflation expectations, he was also, um, very, uh, he kept that close to the chest. Now, it was immediately after the press conference, the two-year yield shot up. Uh, so again, the markets are expecting rate hikes. Uh, Kevin Worsh importantly said that, uh, he reiterated that inflation is a choice, which may, which means that the Federal Reserve can choose at any given point to move their inflation target from 2% to 3%, 2.5, whatever the case may be. If they had moved their inflation target from 2% to 3% and say, we're going to accept 3% as a new norm, the bond yields would have ticked up even more, uh, than we have seen. But that wasn't the case. He said, "We're sticking to our 2%." Uh, "We're going to, we're going to double down on our inflation-fighting mandate." And, um, that was more or less expected. So, he, he's not making any changes there. Kevin Walsh fundamentally is a different type of person than Jerome Powell. Jerome Powell has a legal background. Kevin Walsh has a business and economics background. He's also married to Jane Lauder, who, as you know, is a daughter of Ronald Lauder, who was a good personal friend of Donald Trump. So, I'm not, I'm not trying to insinuate. He was hired because of his personal family relationships. Obviously, he's very qualified. He was also a Fed governor between 2006 and 2011. He oversaw the financial crisis during 2008. And, um, Kevin Walsh has a business background. He's also, uh, what he believes is a monetarist, and he, the media have called him a monetarist. What does a monetarist mean? You've had a monetarist on. We've talked about Steve Hanke. He was on my show. He was on your show, uh, Professor Steve Hanke. A monetarist is somebody who believes in the quantity theory of money, which is to say that the money supply, um, expands and contracts and impacts the inflation rate based on the expansion and the contraction of the money supply. Kevin Walsh has famously, um, quarreled with Ben Bernanke, Fed chair during the financial crisis, uh, about the expansion of the money supply after 2008, 2009. He opposed the rapid expansion of the, uh, bank balance sheet, central bank balance sheet, known as quantitative easing, and he left in 2011, as what many people saw as quiet protesting against QE. So, it's unclear as to what he's going to do with the bank, with the balance sheet this time. As you know, it's been expanding. The, the Federal Reserve balance sheet has been expanding by low single digits in the last couple of months, year to year. But not once did the FO, in during the FOMC press conference, and I listened very closely, not once was the balance sheet brought up. So, he did not indicate he's going to resume quantitative tightening, which monetarists believe, monetarists like Steve Hanke believe, has a greater impact on the inflation rate than simply moving the interest rate. I've talked to several guests on my show this week, including Sri Kumar. Sri Kumar, great economist, and the view, the consensus view is that the economy right now is at a point where it probably cannot absorb higher interest rates, meaning that if interest rates do go up, we can expect either a slowdown, if not outright contraction. The labor market growth could slow down a bit more. But I asked the question, which is the lesser evil here? A slowdown in the economy or fighting inflation? And it's discussed by the guests on my show, uh, that inflation is probably the bigger risk that needs to be addressed by the Federal Reserve right now, because if you don't address inflation, then people's wages wouldn't keep up with their cost of living anyway. Therefore, a recession will probably be induced by higher inflation. So, either way, the economy is not going to be in a great shape this year.
>> So, high inflation will eventually lead to a slowdown of an, of the economy. So, that's why it should be dealt with with more priority.
>> That is the consensus view of the economists on my show. Yes. And I remember in the last discussion, you were talking about how people's wages have gone up by whatever X, but whatever multiple, which seemed good. I think it was 8X, whatever it was, over a period of time. But then you're like, Mario, but if you compare it to how much the price of a car has gone up, the price of a house has gone up, the price of whatever else has gone up, that's where it starts to look very concerning. And you have to understand that the central bank's policies don't affect everybody equally. Some people want lower interest rates. If you're Donald Trump and you have a real estate background, you want the interest rate to be as low as possible. If you're a retiree over 65 years old and most of your money is in savings or your Roth IRA, you don't want inflation at all because you're not working right now. Your source of income is probably interest on your savings or perhaps passive income from other investments. So, you want the inflation rate to be as low as possible. So, the value of your savings was not, would not be eaten up. If you're somebody your age, you know, peak earnings potential, you probably care a little bit less about inflation than you do about the growth rate. And so, if you were you, or possibly me, you would want the interest rate to be a bit lower. Uh, but at the expense of perhaps a higher cost of living, because people in our prime working age can, can probably afford to absorb the higher cost of living, at least in their short term. Uh, but inflation, um, can be a runaway problem if it's not addressed right away. And, uh, in the US, it's important to note that because people keep bringing up hyperinflation risk, the US has never technically experienced hyperinflation. The academic definition of hyperinflation is 50% month-over-month inflation. Um, the closest I think the US has gotten is during the Civil War. I have to drop my memory, but in modern times, it's never happened.
>> Doesn't count. Civil War doesn't count. What's the worst? What's the worst it has gotten to in modern times?
>> I cannot tell you off the top of my head. I have to look that up.
>> 70s, the oil, the oil shock. Yeah, probably late 70s, early 80s, and the interest rate went to double digits. Um, but it's important to note that the Fed was aggressive in the late, the early 80s to fight inflation. Volcker raised the interest rate to double digits. So, um,
>> Have you spoken to any guests about, um, I should be the one telling you about crypto, but I've been out of the loop for so long. Have you spoken to any guests about crypto and the, the latest correction as well, or are we just going through, are we going through the four-year cycle again? Is there any concerns? Bitcoin and the rest of the markets. Any thoughts?
>> Um, uh, I've spoken to several guests. One that stood out was Michael Turpin, who, uh, CNBC coin is a godfather of crypto. He also wrote a book on Bitcoin cycles. He believes that we're going to be in a short-term correction based on his cycle's analysis. He explains it much better than me. Um, I encourage people to check out that interview on YouTube, but, uh, basically he said that according to his analysis, the four-year cycle indicates that we're still in a bit of a slowdown right now, and then it'll eventually pick back up. A lot of people believe the short, the four-year cycle is dead for various reasons. You follow this space better than me, so I, I'll defer to you on that thought. But based on what people have been telling me, there is no short-term bullish sentiment right now, uh, on my show, at least, unless you speak to the perma-bears on on Bitcoin, Michael Saylor, so to speak. I have Michael Saylor on. He was not, he was not bearish on Bitcoin.
>> Michael Saylor will never be bearish.
>> No, no, but, but, but technically he is because he sold Bitcoin for the first time since 2022. And actually, I interviewed.
>> There was a reason. There was a reason he sold it, wasn't there? Can't remember what the reason was, but like a logical explanation other than being bearish. Can't remember what it was.
>> I don't think he'll ever admit that he's, he was bearish on Bitcoin. I don't think he is. Um, the, uh, STRC, STRC, it pays a dividend, and he has to, he announced two days before he, a couple days before he did that, he sold. He announced during his earnings call that he may, he didn't say he will, but he said he may sell Bitcoin to finance STRC dividends. So that was the reason. Yes.
>> Got it. Um, gold. Um, what are the guests saying about gold? Anything interesting?
>> Yeah. Um, how do I summarize this? Because different people have different sentiments. By the way, personally, if you were asked my personal view, I personally think that the fact that everyone's bearish on Bitcoin is a buy signal. Um, the fact that people think it's going to keep lower, keep going lower is usually a buy signal for me. When it reached $100,000 and everybody, you know, wanted to buy more because everyone thought it was going to go to 250, that's when you should have been selling in retrospect. Uh, but anyway, on gold, um, I'm getting a similar vibe. Gold, uh, has a very predictable track record of how it behaves during a market top. If you look at, there were only two structural bull cycles in its history since Nixon removed the dollar off the gold standard in 1971. First was 1980, the second was 2011. So from 1970, it went from, I think, um, uh, it went from single digits to, uh, $400. And from, uh, from 2011, uh, from early 2000s to 2011, it went up another 10x or so. And each time it went up and peaked around 1980 and 2011, it went down by the order of at least 50%. Uh, let me just pull up the exact number so I can find the exact number, uh, find the exact pullback. So, uh, yeah, here, let me share my screen one more time on on gold. This is my gold chart. Here we go. Uh, if you look at from 1970 to, yeah, it went to, oh, my bad. It went to actually above $400. It went to 829, almost 900 bucks in 1980. And then from, uh, early 2000s all the way to 2011, it went up another 500% uh to, yeah, 1,600. Not quite 2,000. Each time it's fallen at least 50%. So in the early 80s, it fell, peaked to trough about 67, 70%. Peaked to trough from 2011 to, uh, 2015, the infamous almost one decade of no activity in the gold mining space, fell about 40% from its peak, and now it's corrected about 20%. And it's behaving exactly as it did in the last two bull cycles, which is correction, probably go up a little bit, retrace its highs, and then, uh, and then it'll, uh, fall another 40%. So, that's the question I've been asking my, uh, the analysts on my show, whether or not this is a structural repeat of 2011 and 1980. Um, most people say, uh, yes. The, um, uh, I had Leo Tigra, who's a well-known person in the precious metal space, and he, he said that yes, he doesn't, his audience doesn't like it when he says that because the gold bulls want this price to keep going up, but you, you can't deny history. It's on the verge of going down another 40% if it repeats what it's done in prior history. Now, I've also had guests say that once it hits $4,000 technical resistance level, then perhaps they'll buy more. Currently, it's at $4,200. But gold has lost a lot of steam. Um, the gold bullishness index, which is for the gold miners, is at a multi-year low despite the fact that the GDX, which is the gold miners index, the VanEck Gold Miners ETF, only corrected about 35% or so from the tops. That's a lot, but still, it doesn't warrant a, I believe, it doesn't warrant a multi-year bearish sentiment. And so, sentiment in the gold space is very, very bad right now. It looks like everybody has short-term memory. And yes, gold has fallen about 20% from its top, 25% from its top back in late January. But you have to understand that compared to a year ago, it's still up 22%. Compared to five years ago, it's up, I'm looking at my chart right now, it's up 128%. So, yes, gold has fallen from its highs. It's still very high compared to where it was before. It is showing signs of another retracement. I personally would avoid buying it at this level.
>> Oh, yeah. My next question. What are you more bullish on, gold or Bitcoin? I knew the answer, right?
>> I would be more bullish on Bitcoin, given how sentiment is really terrible for both. But, um, I think Bitcoin has shown that it's already retraced 50% from its highs, which is what it's typically done in prior bull cycles, bull and bear cycles, and gold has not yet retraced to its full downside potential. That's my opinion. I could be wrong. And to the gold bulls out there, I hope I'm wrong.
>> Yeah, I, um, like for me, the, the rules, I, I kind of follow as someone who, who doesn't trade anywhere, but if I needed to trade, if anyone asked me anything, what two things? History repeats itself. That's why I go by the four-year cycle, no matter what people are saying when it comes to Bitcoin. Number one. And number two, go against human emotions. When there's greed, it's very difficult to, to spot it and not, you know, get it wrong a lot of the times. But when everyone's very bullish on something, or, you know, go against it or avoid it. And when everyone's extremely bearish about something that has proven itself like Bitcoin, that's when I get bullish, which, um, resonates with what you just said as well. That's like, for me, it's all the simpler because obviously I don't have the time or capabilities or knowledge to do what you and others do. So I'm like, let me just go by these two basic rules. History repeats itself and avoid, you know, becoming a sheep. Um, only that that does 80% of the work for me.
>> On the Strait of Hormuz crisis, um, I can tell you the effects of it staying closed for long, but I can't tell you if it's going to stay closed. Let me just ask you because you.
>> This is the second time. This is, this is the second time I when I mentioned something, you bring it up. I wanted to ask about what you think of the price of gold. You answered it. I'm like, "All right, I wrote a note. How concerned are you about the war restarting and Strait of Hormuz closing?" That was my next question to ask. You could bring it back to that.
>> Yeah, I, yeah, where I, I can read your mind, Mario. Um, I don't mean to front your question. I apologize. But yeah, that that's the next logical step here. How concerned am I? Um, very concerned. Um, the, the, the, I, I don't, I don't think that the economy has fully priced in yet the negative effects, the downside effects of higher oil. And I, I say that it's been three months, more than 100 days since the war began. Uh, but it takes a little bit longer usually for the, you know, for a shock to be fully absorbed. Um, I do think that the economy is less dependent on the price of oil now than it was in the late 70s, which is to say that a major oil shock today will probably not have the same kind of effect as it did on the early 80s and, uh, late 70s. Uh, a lot of people have different modes of transportation now. There's electric vehicles. Not everybody has an electric vehicle, but that does absorb some of the shock. Now, most of the S&P is now in tech, and tech's margins aren't significantly affected by a higher fixed price of oil. And so, I think markets overall would not be as impacted on the price of oil.
>> What about the gas? What about the LNG that comes out of the Strait of Hormuz? How does that have much of an impact on the tech sector?
>> Helium that is needed for the chips?
>> Okay, so let me just talk about helium. So 40, more than, I don't remember the exact number, but it's between 45 to 50% of Taiwan's helium comes from the GCC countries. Uh, 40 to 55, 40 to 50% of South Korea's helium comes from the GCC countries. Now, helium is an important input on the production of semiconductors. It's used for cooling. I don't know exactly how much helium is needed. Uh, I just know that about half of the helium from the two largest countries of semiconductor production come from the GCC. So that's been choked up. Um, LNG is mostly for Asia and Europe and North America. Um, it's, uh, it's, and I saw comments from my show last year. I said the, the US, uh, you know, produces a lot of oil. They also import a lot of oil. Yes. But they're still big exporters of oil, and there's a lot of production from the US that goes into domestic consumption as well. So, yes, the US imports oil, uh, and refined oil of different refinement qualities. But they do also consume the oil that they produce. Now, your question was, what happens to LNG and and helium? Yeah, a lot of that goes to Europe and, and Asia. The biggest movers I expect, uh, this Monday would probably be the Korean stock index and the Taiwanese stock index, uh, that responded as well to the, the, the, the closure of the Strait of Hormuz more aggressively, uh, than US markets did the first time. I think that, uh, the longer, here, here, here, here's the bottom line for those of us watching at home. How does the Strait of Hormuz impact us in the West? I'm in Canada, but Americans as well. It impacts us is through the financial system. The longer the Strait of Hormuz stays closed, the higher we can expect inflation expectations to go, and the longer we can expect higher inflation expectations to stay longer. That means higher bond yields. That means the Fed will raise interest rates. That means the 10-year yield, which we talked about extensively last time on your show, will stay high, go towards 5%. It's currently at five and a four and a four, four and a half. And that impacts borrowing costs. Your credit cards, um, will probably be more expensive. Your mortgage won't go down. It'll go up if you're getting a new mortgage rate. If you're in Canada, if you have a variable rate, we Americans don't have a variable rate, but in Canada, we have a three to five-year variable rate. If you're up for renewal or refinancing, you're not going to get a lower rate. You're going to get a higher one. It impacts monetary policy, uh, around the world, not just in the US. The ECB just raised rates for the first time in years last week. The Bank of Japan was already raising rates. This impacts monetary policy globally. It impacts, uh, mon, uh, the money supply globally. We're in a global monetary tightening regime, which means less liquidity for the banks, which means less loan issuance, uh, loans issued by the banks, and which means higher borrowing costs for everybody, including the everyday person. It just means that everybody has less liquidity at the end of the day. So the faster this gets resolved, the sooner we have a normalization, which is to say, um, lower inflation expectations. Now, if you're of the view that inflation expectations shouldn't impact monetary policy the way that it has, meaning that the rate should go up anyways, that's a different story. There are some people who believe that even at, uh, the current inflation rate, even a bit lower, the Fed should have a higher interest rate. Um, perhaps that's true. Uh, but, but it's fair to say that the Fed is doing what they believe is right, not what they believe economists say is right. So some people say that, by the way, Jerome Powell lowered interest rates, um, last year or two years ago, right before the election because they wanted to, he wanted to help the Democrats. That's a common viewpoint by economists that he, that Powell was acting politically, and so interest rates higher anyways.
>> I think there is no direct evidence to support that, but based on circumstantial evidence, I think we can draw that conclusion. Uh, there was no reason for the economy, the economy wasn't showing signs of a recession in 2024. The stock market wasn't collapsing. People weren't losing their jobs left and right. The unemployment rate wasn't rising. And so why did he need to lower? The inflation was not collapsing. I mean, it was, it was, you know, above 2%. It wasn't below two. So what was the actual reason for lowering interest rates? I personally can't find any good reasons for lowering interest rates. The timing was a little bit suspicious. Why lower interest rates the fall or a couple months before the election? I don't know. No direct evidence to support that, of course, but circumstantial evidence points to the fact that he didn't need to lower interest rates back then. And now, of course, they have to play catch-up to redo some of the things that Powell did. I'm not saying Powell caused inflation. Powell didn't cause the Strait of Hormuz to close. I'm just saying that lower, his aggressive, or I would say his looser monetary policy certainly didn't help the inflation rate that we're seeing today. Now, back to your question. Yes, the Strait of Hormuz closure does worry me to the extent that higher inflation expectations would put more pressure on central banks all around the world to keep money supply tight, which is ultimately bad for businesses and bad for the consumer.
>> That's a great overview. You're, you're really good at this. You should do less interviews. You should conduct less interviews and be, be an interviewee more often.
>> I, I, I feel like my guests are a lot smarter than me, which is why I, I, I suggest people listen to the guests on my show and yours for even better analysis. But thank you. Appreciate that.
>> Um, last thing I'll ask you about, uh, briefly is the G7 summit. I think you covered that on your show as well. Anything interesting, Dan?
>> Uh, besides Trump proclaiming that he's the boss.
>> Besides that. Beside them. Have you seen him now? He's fighting with Maloney from Italy.
>> Yeah. I don't know what's going on there. Um, no. I, I think again, you cover the political side better than me. You understand the nuances better than me. I'll defer that. I'll defer to you to comment on what happened on the political side. Um, I listened to parts of Trump's speech, um, when he made an hour-long speech on stage at the G7 summit. Several highlights stood out. First, he said that it's important for the Strait of Hormuz to remain open. He highlighted the fact that higher oil causes inflation. Now, that's up to great academic debate. I'm just telling you that's what he said, and that's his justification for signing the deal. But of course, that's all in retrospect. We know none of that matters anymore as long as Israel keeps bombing Lebanon. So this is a moot point. And what he said on stage, um, I agree with him that he needs to resolve this issue for the sake of global stability as soon as possible and for the sake of, um, everybody's living standards to improve. This, this needs to be resolved. It's going to take a while before, uh, oil pipelines bypassing the Strait are completed. You're in the UAE, and the UAE is currently building a pipeline. I don't know if you've been following that story. So you'll know better than me when that's going to get completed, but not anytime soon. So, yes, um, he needs to work something out with Israel, otherwise we're all gonna, businesses are gonna, businesses worldwide are gonna not do well.
>> And and Iran, just for, and Iran's using. Go ahead. Finish your point first.
>> No, that was it. Now, please continue.
>> Yeah. And I was just going to say, just some funny things that Iran strategically, Iran knows this. They're very astute, and they're trying now. They shut the Strait of Hormuz and they blamed Israel. Technically, Israel, who didn't sign the MOU, is breaching the MOU, but they blamed Israel, and they want, they're trying to paint Israel as a villain or blame the economic issues around the world on Israel, um, to try to cause that split politically between the US and Israel. I know it's a political discussion, but it's just linked on the economic impact of the Strait of Hormuz. And you just said it yourself, for Trump to be able to deliver on his promises, he needs to sort Israel. And that's the exact messaging that Iran wants to achieve by doing what they're doing and the, the, the statements they are making.
>> It's just been fascinating, um, to watch from a political.
>> Let me just ask you. I know, I know this is your interview, but I'm just very curious to know your standpoint because I, I, you know better than what does Israel want at this point? Because from the conversations I've had with economists, the US has failed in reaching a strategic objective to overthrow the regime of Iran. They decapitated leadership, but the regime is still there. So at this point, what else can be done? Right? They're just so, you can ask what Israel wants and what Netanyahu wants. Netanyahu is trying to achieve a political win. Um, Iran has been a disaster. Gaza is not going too well. So he needs to get something in Hezbollah. Putting aside the legal issues he's facing, and if he stops the wars, he has to face.
>> Yeah. He has to, to, to, to, to have his day in court. But he needs to achieve a political win before the elections in October. And the only win he could achieve now, after the losses in, in Iran and the lack of achievements in Gaza, is in Lebanon with Hezbollah. So that's what Netanyahu is trying to achieve, and that's the issue because Iran doesn't want to allow him to achieve it, and Trump is stuck in the middle trying to stop Netanyahu.
>> While trying to get a deal with Iran. So Trump has made it also very clear prior to the G7 summit. Uh, I know your question was on the G7, but before he said that, look, the, the, the rest of the world needs the Strait of Hormuz more than the US does. He, I'm paraphrasing, but he's basically asking the allies to step in. He was asking the French, the British to send warships. They're like, no, we're not going to do that. But he's right. Europeans need the GCC countries more for oil. The Asians need the Strait of Hormuz more than North Americans do. So, you know, he's stuck between a rock and a hard place at, you know, he, he wants to continue the pressure, but at the same time, his allies are saying, "No, no, like, let's, let's fix this and let's move on so everybody doesn't suffer from $100 a barrel, which is what's going to happen. I promise you, if the Strait of Hormuz stays closed, we're going to see $100 by September. If it stays closed again, that's my bet."
>> It's wild we're in June and we're still talking about the Strait of Hormuz being closed. If someone said that to you a year ago or six months ago, the Strait of Hormuz will be closed for, what are we now? Uh, the war started in April, March, April, May, June, for four months. You would say that would be, that would be impossible for the global economy to sustain.
>> People tell you why it's, it has been sustained. People thought that there would be less supply than what inventory showed, that we had, because a lot of analysts on my show last year were speculating if this Iran situation ever played out, which it eventually did, we would see $250 a barrel. Um, so that never happened.
>> True. True. Uh, David, always a pleasure to have you on. Thank you so much for your time.
>> Always a pleasure to contribute my time. Thank you very much for having me.
>> Thank you, David. All right, guys. Um, check out David Lynn's YouTube channel. He does great interviews. I love him as a guest, as an interviewee, but he's also a great interviewer. He's been doing this for a long time, and he's got some great guests. So, highly recommend you check out his channel. I'll be live again in 23 minutes with Larry Johnson, our final interview for the day, and then I'll get ready for bed, go through all your comments, see what you think of today's guests. It's been a, a great variety today. I, I love the variety of guests. It's not always the same voices. Different people, different experts with different opinions. The last interview before David with Muhammad, um, you would know him from, um, the 2008 financial crisis. That's at least what I learned about him when he was very, uh, vocal and and made some great predictions there. Um, and then before that, I had Karen Katovski, Miad Maliki from the FDD. Again, I'm having more guests from the FDD because I strongly disagree with their policy. Always makes for a great debate. I've had the CEO of, of FDD, the Foundation for Defense of Democracies, Mark Dubois, as well. Before that, I had Lieutenant Colonel Daniel Davis. It's been a while we haven't had him on the show, a couple of weeks. And before that, uh, we had Nima, who's got his own YouTube channel that covers geopolitics. So, incredible guests, incredible voices. And for the final voice, we'll be in 22 minutes with Larry Johnson. Thanks, everyone.