China Just Revealed The Global Economy Is Already Broken — And Nobody Was Supposed To See It

All of the economic analysts covering All of the economic analysts covering the war in Iran got it really, really the war in Iran got it really, really the war in Iran got it really, really wrong. They were expecting oil to hit wrong. They were expecting oil to hit wrong. They were expecting oil to hit $200 a barrel, but it's now much lower, $200 a barrel, but it's now much lower, $200 a barrel, but it's now much lower, even though the war is still raging on. even though the war is still raging on. even though the war is still raging on. The question we have to answer now is The question we have to answer now is The question we have to answer now is why? How did they get it so wrong? why? How did they get it so wrong? why? How did they get it so wrong? >> Most estimates were to put us at this >> Most estimates were to put us at this >> Most estimates were to put us at this point in this war, we'd be looking at point in this war, we'd be looking at point in this war, we'd be looking at almost $200 a barrel. almost $200 a barrel. almost $200 a barrel. >> China is certainly a big part of the >> China is certainly a big part of the >> China is certainly a big part of the story, but it's only part. We need to story, but it's only part. We need to story, but it's only part. We need to start with the timeline so we can see start with the timeline so we can see start with the timeline so we can see the glimpses into the real health of the the glimpses into the real health of the the glimpses into the real health of the global economy that the war in Iran has global economy that the war in Iran has global economy that the war in Iran has given us. On February 27th, Brent crude given us. On February 27th, Brent crude given us. On February 27th, Brent crude closed at $72 a barrel. The next closed at $72 a barrel. The next closed at $72 a barrel. The next morning, the war begins. Within days, morning, the war begins. Within days, morning, the war begins. Within days, the IRGC declares the straight of Hormuz the IRGC declares the straight of Hormuz the IRGC declares the straight of Hormuz closed and tanker traffic through the closed and tanker traffic through the closed and tanker traffic through the world's most important oil choke point world's most important oil choke point world's most important oil choke point collapses to almost nothing. By March collapses to almost nothing. By March collapses to almost nothing. By March 9th, Brent hits $119 a barrel. The 9th, Brent hits $119 a barrel. The 9th, Brent hits $119 a barrel. The International Energy Agency calls it the International Energy Agency calls it the International Energy Agency calls it the largest supply disruption in the history largest supply disruption in the history largest supply disruption in the history of the oil market. And analysts respond of the oil market. And analysts respond of the oil market. And analysts respond by publishing scenarios with oil by publishing scenarios with oil by publishing scenarios with oil near-term at $150 a barrel and possibly near-term at $150 a barrel and possibly near-term at $150 a barrel and possibly reaching $200 and potentially staying reaching $200 and potentially staying reaching $200 and potentially staying there for as long as the straight stays there for as long as the straight stays there for as long as the straight stays closed. By April 30th, it seemed like closed. By April 30th, it seemed like closed. By April 30th, it seemed like that may really come to fruition with that may really come to fruition with that may really come to fruition with Brent going above $126. Brent going above $126. Brent going above $126. At this point, everyone is holding their At this point, everyone is holding their At this point, everyone is holding their breath, assuming that prices will breath, assuming that prices will breath, assuming that prices will continue to climb if the conflict continue to climb if the conflict continue to climb if the conflict continues. continues. continues. >> Well, oil prices are rising again. >> Well, oil prices are rising again. >> Well, oil prices are rising again. >> US oil prices have topped $100 a barrel >> US oil prices have topped $100 a barrel >> US oil prices have topped $100 a barrel for the first time since 2022. Oil for the first time since 2022. Oil for the first time since 2022. Oil prices are taking a hit as the US and prices are taking a hit as the US and prices are taking a hit as the US and Iran have that tug of war over the Iran have that tug of war over the Iran have that tug of war over the Straight of Hormuz, Straight of Hormuz, Straight of Hormuz, >> but it doesn't thankfully. In midJune, >> but it doesn't thankfully. In midJune, >> but it doesn't thankfully. In midJune, the US and Iran signed theou. Iran the US and Iran signed theou. Iran the US and Iran signed theou. Iran agrees to reopen the strait and the US agrees to reopen the strait and the US agrees to reopen the strait and the US agrees to lift its blockade on Iranian agrees to lift its blockade on Iranian agrees to lift its blockade on Iranian ports. Oil drops like a rock, giving up ports. Oil drops like a rock, giving up ports. Oil drops like a rock, giving up $17 a barrel in just four trading $17 a barrel in just four trading $17 a barrel in just four trading sessions. By early July, crude had sessions. By early July, crude had sessions. By early July, crude had fallen back below its pre-war price. And fallen back below its pre-war price. And fallen back below its pre-war price. And this gives us our first glimpse into the this gives us our first glimpse into the this gives us our first glimpse into the fact that something is impacting prices fact that something is impacting prices fact that something is impacting prices other than the war. Because here's the other than the war. Because here's the other than the war. Because here's the catch. The strait still hadn't gotten catch. The strait still hadn't gotten catch. The strait still hadn't gotten back to normal operation, but the prices back to normal operation, but the prices back to normal operation, but the prices made it look like it had. And then the made it look like it had. And then the made it look like it had. And then the ceasefire blows up. Ships start getting ceasefire blows up. Ships start getting ceasefire blows up. Ships start getting attacked again. The US and Iran go back attacked again. The US and Iran go back attacked again. The US and Iran go back to launching missiles at each other. And to launching missiles at each other. And to launching missiles at each other. And we get glimpse number two. Oil jumps, we get glimpse number two. Oil jumps, we get glimpse number two. Oil jumps, but only by 4.4% and then goes right but only by 4.4% and then goes right but only by 4.4% and then goes right back down within 24 hours, settling in back down within 24 hours, settling in back down within 24 hours, settling in at its pre-war price. Then just this at its pre-war price. Then just this at its pre-war price. Then just this week, the biggest escalation of the week, the biggest escalation of the week, the biggest escalation of the entire war. The US Navy reimposes its entire war. The US Navy reimposes its entire war. The US Navy reimposes its blockade. Iran declares the strait is blockade. Iran declares the strait is blockade. Iran declares the strait is closed until further notice and super closed until further notice and super closed until further notice and super tankers start getting hit again, killing tankers start getting hit again, killing tankers start getting hit again, killing at least one mariner. That causes oil to at least one mariner. That causes oil to at least one mariner. That causes oil to climb, but only into the mid80s. That's climb, but only into the mid80s. That's climb, but only into the mid80s. That's a far cry from where it was in March a far cry from where it was in March a far cry from where it was in March when it spiked. Incredible people were when it spiked. Incredible people were when it spiked. Incredible people were predicting $200 a barrel for as long as predicting $200 a barrel for as long as predicting $200 a barrel for as long as the straits closed. So, what gives? Did the straits closed. So, what gives? Did the straits closed. So, what gives? Did everyone learn to stop worrying and love everyone learn to stop worrying and love everyone learn to stop worrying and love the bomb? Or is something else going on? the bomb? Or is something else going on? the bomb? Or is something else going on? Unfortunately, something else is going Unfortunately, something else is going Unfortunately, something else is going on and it's much bigger. What the data on and it's much bigger. What the data on and it's much bigger. What the data shows is that analysts were missing a shows is that analysts were missing a shows is that analysts were missing a problem with the global economy itself problem with the global economy itself problem with the global economy itself that's so big even the war couldn't that's so big even the war couldn't that's so big even the war couldn't obscure it. As with most things in the obscure it. As with most things in the obscure it. As with most things in the economy, it is a complicated confluence economy, it is a complicated confluence economy, it is a complicated confluence of things. But every time the economy of things. But every time the economy of things. But every time the economy fails to respond to the war in the fails to respond to the war in the fails to respond to the war in the expected fashion, it makes it easier to expected fashion, it makes it easier to expected fashion, it makes it easier to see what's actually driving what is see what's actually driving what is see what's actually driving what is essentially a global recession. At the essentially a global recession. At the essentially a global recession. At the beginning of the war, most analysts were beginning of the war, most analysts were beginning of the war, most analysts were still using a 50-year-old assumption, still using a 50-year-old assumption, still using a 50-year-old assumption, not realizing it had already stopped not realizing it had already stopped not realizing it had already stopped being relevant. For 50 years, every being relevant. For 50 years, every being relevant. For 50 years, every model of an oil shock has assumed that model of an oil shock has assumed that model of an oil shock has assumed that energy needs are non-negotiable. energy needs are non-negotiable. energy needs are non-negotiable. Historically speaking, energy needs are Historically speaking, energy needs are Historically speaking, energy needs are considered to be inelastic. Countries considered to be inelastic. Countries considered to be inelastic. Countries need what they need. So, if you reduce need what they need. So, if you reduce need what they need. So, if you reduce the supply, the price is going to go up the supply, the price is going to go up the supply, the price is going to go up as a matter of course. It's as a matter of course. It's as a matter of course. It's straightforward supply and demand. If straightforward supply and demand. If straightforward supply and demand. If energy demand is constant, when supply energy demand is constant, when supply energy demand is constant, when supply varies, the price will move accordingly. varies, the price will move accordingly. varies, the price will move accordingly. Factories need to run, trucks need to Factories need to run, trucks need to Factories need to run, trucks need to move, plane needs to fly, and all of move, plane needs to fly, and all of move, plane needs to fly, and all of that requires oil. And none of that is that requires oil. And none of that is that requires oil. And none of that is going to change, certainly not quickly, going to change, certainly not quickly, going to change, certainly not quickly, just because something interrupts the just because something interrupts the just because something interrupts the supply chain. In 1973, we had a perfect supply chain. In 1973, we had a perfect supply chain. In 1973, we had a perfect example of how true this is. When the example of how true this is. When the example of how true this is. When the Arab oil embargo removed roughly 4 Arab oil embargo removed roughly 4 Arab oil embargo removed roughly 4 million barrels per day from the market, million barrels per day from the market, million barrels per day from the market, about 7% of the world supply at the about 7% of the world supply at the about 7% of the world supply at the time, the price of oil quadrupled in time, the price of oil quadrupled in time, the price of oil quadrupled in just a matter of months. The shock was just a matter of months. The shock was just a matter of months. The shock was so bad, it was a major factor in pushing so bad, it was a major factor in pushing so bad, it was a major factor in pushing the US into the deepest recession since the US into the deepest recession since the US into the deepest recession since the Great Depression. But even all of the Great Depression. But even all of the Great Depression. But even all of that economic trauma wasn't enough to that economic trauma wasn't enough to that economic trauma wasn't enough to reduce overall energy demand and bring reduce overall energy demand and bring reduce overall energy demand and bring the price back down. People needed what the price back down. People needed what the price back down. People needed what they needed, so reduced supply drove they needed, so reduced supply drove they needed, so reduced supply drove cost up exactly as you would expect. cost up exactly as you would expect. cost up exactly as you would expect. That's what makes today so surprising. That's what makes today so surprising. That's what makes today so surprising. The 73 oil embargo pushed us into a The 73 oil embargo pushed us into a The 73 oil embargo pushed us into a massive recession, but still couldn't massive recession, but still couldn't massive recession, but still couldn't kill demand. Yet here in 2026, a totally kill demand. Yet here in 2026, a totally kill demand. Yet here in 2026, a totally different story is unfolding. The different story is unfolding. The different story is unfolding. The straight of Hormuz carries roughly 1 of straight of Hormuz carries roughly 1 of straight of Hormuz carries roughly 1 of the world's oil. When Iran shut it down, the world's oil. When Iran shut it down, the world's oil. When Iran shut it down, an estimated 10 to 14 million barrels an estimated 10 to 14 million barrels an estimated 10 to 14 million barrels per day, two to three times the size of per day, two to three times the size of per day, two to three times the size of the 1973 shock, went offline. When you the 1973 shock, went offline. When you the 1973 shock, went offline. When you run those numbers through the standard run those numbers through the standard run those numbers through the standard model, $200 for a barrel of oil, starts model, $200 for a barrel of oil, starts model, $200 for a barrel of oil, starts to seem pretty believable. And at first, to seem pretty believable. And at first, to seem pretty believable. And at first, the physical oil market behaved exactly the physical oil market behaved exactly the physical oil market behaved exactly the way the standard model predicted. the way the standard model predicted. the way the standard model predicted. While paper oil futures traded in the While paper oil futures traded in the While paper oil futures traded in the low 100s in April, the actual delivered low 100s in April, the actual delivered low 100s in April, the actual delivered cost of oil was as much as $150 a cost of oil was as much as $150 a cost of oil was as much as $150 a barrel. Economists at Brookings barrel. Economists at Brookings barrel. Economists at Brookings described the market at that time as a described the market at that time as a described the market at that time as a race between temporary buffers, so race between temporary buffers, so race between temporary buffers, so inventories, pipeline workarounds, the inventories, pipeline workarounds, the inventories, pipeline workarounds, the episodic tankers that were actually episodic tankers that were actually episodic tankers that were actually slipping through and the duration of the slipping through and the duration of the slipping through and the duration of the closure. their projection in May of 26. closure. their projection in May of 26. closure. their projection in May of 26. If the straight doesn't reopen soon, the If the straight doesn't reopen soon, the If the straight doesn't reopen soon, the buffers will be depleted and prices buffers will be depleted and prices buffers will be depleted and prices could approach $150. The buffers could approach $150. The buffers could approach $150. The buffers argument initially seemed to explain why argument initially seemed to explain why argument initially seemed to explain why prices rose more slowly than the old prices rose more slowly than the old prices rose more slowly than the old model predicted, but over time became model predicted, but over time became model predicted, but over time became more and more obvious that even the more and more obvious that even the more and more obvious that even the buffers couldn't explain what was really buffers couldn't explain what was really buffers couldn't explain what was really happening. The straight never returned happening. The straight never returned happening. The straight never returned to normal operation, but prices not only to normal operation, but prices not only to normal operation, but prices not only didn't level off, they tanked. They fell didn't level off, they tanked. They fell didn't level off, they tanked. They fell back through $100, then $80, then all back through $100, then $80, then all back through $100, then $80, then all the way back to the pre-war price. Even the way back to the pre-war price. Even the way back to the pre-war price. Even though, as I write this, the US is though, as I write this, the US is though, as I write this, the US is actively and aggressively bombing Iran. actively and aggressively bombing Iran. actively and aggressively bombing Iran. To explain the fact that the market is To explain the fact that the market is To explain the fact that the market is just shrugging that off, you have to just shrugging that off, you have to just shrugging that off, you have to stop looking at the supply side of the stop looking at the supply side of the stop looking at the supply side of the equation and start looking at a far more equation and start looking at a far more equation and start looking at a far more terrifying side of the ledger, demand. terrifying side of the ledger, demand. terrifying side of the ledger, demand. China, the largest oil importer on the China, the largest oil importer on the China, the largest oil importer on the planet, reduced its purchases at a scale planet, reduced its purchases at a scale planet, reduced its purchases at a scale the best commodity desks in the world, the best commodity desks in the world, the best commodity desks in the world, didn't think was possible. The ship didn't think was possible. The ship didn't think was possible. The ship tracking firm Kepler estimates that tracking firm Kepler estimates that tracking firm Kepler estimates that China accounted for roughly 74% China accounted for roughly 74% China accounted for roughly 74% of the total decline in global crude of the total decline in global crude of the total decline in global crude trade during this disruption. That is trade during this disruption. That is trade during this disruption. That is staggering. China did by choice what a staggering. China did by choice what a staggering. China did by choice what a massive recession couldn't get the US to massive recession couldn't get the US to massive recession couldn't get the US to do back in 73. China can use top- down do back in 73. China can use top- down do back in 73. China can use top- down authoritarian rule, sure, but you would authoritarian rule, sure, but you would authoritarian rule, sure, but you would expect there to be some push back to a expect there to be some push back to a expect there to be some push back to a pull back of this magnitude, but so far pull back of this magnitude, but so far pull back of this magnitude, but so far there's nothing. And to make it even there's nothing. And to make it even there's nothing. And to make it even more confusing, China can access cheap more confusing, China can access cheap more confusing, China can access cheap oil again, but they don't appear to want oil again, but they don't appear to want oil again, but they don't appear to want to. They didn't even return to where to. They didn't even return to where to. They didn't even return to where they were just a few months ago when the they were just a few months ago when the they were just a few months ago when the price was back down to pre-war levels. price was back down to pre-war levels. price was back down to pre-war levels. Between February and May, China's Between February and May, China's Between February and May, China's seaborn crude imports fell from 11.4 4 seaborn crude imports fell from 11.4 4 seaborn crude imports fell from 11.4 4 million barrels to about 6.4 million per million barrels to about 6.4 million per million barrels to about 6.4 million per [music] day. That's a drop of more than [music] day. That's a drop of more than [music] day. That's a drop of more than 40% 40% 40% to the lowest level in nearly a decade. to the lowest level in nearly a decade. to the lowest level in nearly a decade. State-owned refiners cut processing to State-owned refiners cut processing to State-owned refiners cut processing to 66.3% 66.3% 66.3% of their capacity. That's a record low of their capacity. That's a record low of their capacity. That's a record low according to data going back to 2021. according to data going back to 2021. according to data going back to 2021. And instead of buying more crude at And instead of buying more crude at And instead of buying more crude at normal prices and ramping back up, normal prices and ramping back up, normal prices and ramping back up, refiners instead chose to run down refiners instead chose to run down refiners instead chose to run down China's strategic stockpile. That is a China's strategic stockpile. That is a China's strategic stockpile. That is a very surprising choice when crude is very surprising choice when crude is very surprising choice when crude is available at good prices. Analysts at available at good prices. Analysts at available at good prices. Analysts at Societ General estimated that China's Societ General estimated that China's Societ General estimated that China's pullback did more to cushion the hormone pullback did more to cushion the hormone pullback did more to cushion the hormone shock than the coordinated strategic shock than the coordinated strategic shock than the coordinated strategic reserve releases of the United States, reserve releases of the United States, reserve releases of the United States, Europe, and Japan combined. On the Europe, and Japan combined. On the Europe, and Japan combined. On the surface, it's tempting to read that as surface, it's tempting to read that as surface, it's tempting to read that as strategic mastery. It's tempting to see strategic mastery. It's tempting to see strategic mastery. It's tempting to see that as a country at the height of its that as a country at the height of its that as a country at the height of its powers. They were able to bank a billion powers. They were able to bank a billion powers. They were able to bank a billion barrels and now they're reaping the barrels and now they're reaping the barrels and now they're reaping the rewards by being able to switch off rewards by being able to switch off rewards by being able to switch off imports on command. Now admittedly, some imports on command. Now admittedly, some imports on command. Now admittedly, some of that is true. China was very wise to of that is true. China was very wise to of that is true. China was very wise to build up an enormous stockpile, but the build up an enormous stockpile, but the build up an enormous stockpile, but the stockpile only tells you how China was stockpile only tells you how China was stockpile only tells you how China was able to stop buying and still avoid able to stop buying and still avoid able to stop buying and still avoid catastrophe if demand was elevated. It catastrophe if demand was elevated. It catastrophe if demand was elevated. It doesn't tell you why even when the war doesn't tell you why even when the war doesn't tell you why even when the war was paused and oil was back below its was paused and oil was back below its was paused and oil was back below its pre-war price, they didn't start buying pre-war price, they didn't start buying pre-war price, they didn't start buying again. As of early July, cheap crude was again. As of early July, cheap crude was again. As of early July, cheap crude was available to anyone who wanted to buy available to anyone who wanted to buy available to anyone who wanted to buy it. And yes, as Bloomberg reported, it. And yes, as Bloomberg reported, it. And yes, as Bloomberg reported, China still did not resume buying at China still did not resume buying at China still did not resume buying at anything close to its original pace. anything close to its original pace. anything close to its original pace. There are several reasons why China There are several reasons why China There are several reasons why China might make the decision to prolong its might make the decision to prolong its might make the decision to prolong its reduced accumulation of oil. But as reduced accumulation of oil. But as reduced accumulation of oil. But as we're going to go through each of these we're going to go through each of these we're going to go through each of these possibilities, I think you're going to possibilities, I think you're going to possibilities, I think you're going to see there's only one explanation that see there's only one explanation that see there's only one explanation that holds up under scrutiny. But let's walk holds up under scrutiny. But let's walk holds up under scrutiny. But let's walk through them. The first possibility is through them. The first possibility is through them. The first possibility is the buyer strike argument. China is the the buyer strike argument. China is the the buyer strike argument. China is the largest crude oil customer on Earth and largest crude oil customer on Earth and largest crude oil customer on Earth and the biggest buyer in any market has the biggest buyer in any market has the biggest buyer in any market has pricing power if they're willing to pricing power if they're willing to pricing power if they're willing to strike, not buy, and walk away. This strike, not buy, and walk away. This strike, not buy, and walk away. This theory adopts the frame, China is merely theory adopts the frame, China is merely theory adopts the frame, China is merely negotiating. By delaying, they're able negotiating. By delaying, they're able negotiating. By delaying, they're able to take advantage of Iran's already to take advantage of Iran's already to take advantage of Iran's already weakened position and leave them hanging weakened position and leave them hanging weakened position and leave them hanging just long enough that they'll consider a just long enough that they'll consider a just long enough that they'll consider a price that they otherwise wouldn't. Once price that they otherwise wouldn't. Once price that they otherwise wouldn't. Once China gets the more desirable price, China gets the more desirable price, China gets the more desirable price, then they'll restock. There is even then they'll restock. There is even then they'll restock. There is even precedent for this strategy. In 2021, precedent for this strategy. In 2021, precedent for this strategy. In 2021, when prices ran up, Chinese refiners when prices ran up, Chinese refiners when prices ran up, Chinese refiners deferred purchases, lived off their deferred purchases, lived off their deferred purchases, lived off their inventories for months, and then bought inventories for months, and then bought inventories for months, and then bought the dip. Kepler's analysts are leaning the dip. Kepler's analysts are leaning the dip. Kepler's analysts are leaning towards this interpretation today. But I towards this interpretation today. But I towards this interpretation today. But I think the data proves that isn't true. think the data proves that isn't true. think the data proves that isn't true. They're warning that the real oil shock They're warning that the real oil shock They're warning that the real oil shock is going to be when China comes back is going to be when China comes back is going to be when China comes back into the market at full force and the into the market at full force and the into the market at full force and the whole industry has to repric to whole industry has to repric to whole industry has to repric to accommodate their pent-up demand. Think accommodate their pent-up demand. Think accommodate their pent-up demand. Think that's crazy, though? Here's the problem that's crazy, though? Here's the problem that's crazy, though? Here's the problem with that story. If China were just with that story. If China were just with that story. If China were just refusing to purchase in order to get a refusing to purchase in order to get a refusing to purchase in order to get a lower price, you wouldn't expect them to lower price, you wouldn't expect them to lower price, you wouldn't expect them to also reduce their processing. If their also reduce their processing. If their also reduce their processing. If their economy is working like normal, everyone economy is working like normal, everyone economy is working like normal, everyone still needs fuel. Given that, you'd still needs fuel. Given that, you'd still needs fuel. Given that, you'd expect China to maybe delay buying, but expect China to maybe delay buying, but expect China to maybe delay buying, but keep running their refineries to process keep running their refineries to process keep running their refineries to process the billion barrels of crude that they the billion barrels of crude that they the billion barrels of crude that they already own that are in their stockpile. already own that are in their stockpile. already own that are in their stockpile. But they're not. Instead, China hasn't But they're not. Instead, China hasn't But they're not. Instead, China hasn't just reduced their purchases, they've just reduced their purchases, they've just reduced their purchases, they've also cut their refinery runs to record also cut their refinery runs to record also cut their refinery runs to record lows at the same time. A buyer that's lows at the same time. A buyer that's lows at the same time. A buyer that's simply striking with healthy demand simply striking with healthy demand simply striking with healthy demand wouldn't do that. The second argument wouldn't do that. The second argument wouldn't do that. The second argument for China's behavior is the commercial for China's behavior is the commercial for China's behavior is the commercial argument. The thinking is that oil argument. The thinking is that oil argument. The thinking is that oil refining is a margin business. Given refining is a margin business. Given refining is a margin business. Given that China is artificially holding the that China is artificially holding the that China is artificially holding the price of gas low to keep their citizens price of gas low to keep their citizens price of gas low to keep their citizens happy, it doesn't make sense to buy oil happy, it doesn't make sense to buy oil happy, it doesn't make sense to buy oil until the price comes back down. at until the price comes back down. at until the price comes back down. at least if they have the reserves to hold least if they have the reserves to hold least if they have the reserves to hold out and they do. Otherwise, if they buy out and they do. Otherwise, if they buy out and they do. Otherwise, if they buy at the elevated prices but keep the cost at the elevated prices but keep the cost at the elevated prices but keep the cost at the pump low, they could lose money at the pump low, they could lose money at the pump low, they could lose money on every barrel of oil that they buy. on every barrel of oil that they buy. on every barrel of oil that they buy. Now, that's super logical, but as we Now, that's super logical, but as we Now, that's super logical, but as we have discussed and as Bloomberg's have discussed and as Bloomberg's have discussed and as Bloomberg's reporting indicates, China has been reporting indicates, China has been reporting indicates, China has been cutting due to tepid demand for oil at cutting due to tepid demand for oil at cutting due to tepid demand for oil at home, not because of the supply shock. home, not because of the supply shock. home, not because of the supply shock. The math backs that up because with The math backs that up because with The math backs that up because with crude at $72, a refinery would be making crude at $72, a refinery would be making crude at $72, a refinery would be making money hand over fist if there was demand money hand over fist if there was demand money hand over fist if there was demand for the oil. If the demand is there and for the oil. If the demand is there and for the oil. If the demand is there and the price is right, which it was, then the price is right, which it was, then the price is right, which it was, then they're just leaving money on the table. they're just leaving money on the table. they're just leaving money on the table. And it's not like China's refineries are And it's not like China's refineries are And it's not like China's refineries are reduced by a little. They're at record reduced by a little. They're at record reduced by a little. They're at record lows despite the prices coming back lows despite the prices coming back lows despite the prices coming back down. If the margin argument were the down. If the margin argument were the down. If the margin argument were the real story, cheap crude would have fixed real story, cheap crude would have fixed real story, cheap crude would have fixed the problem and returned at least their the problem and returned at least their the problem and returned at least their refining back to normal. But nothing has refining back to normal. But nothing has refining back to normal. But nothing has changed. And that's likely because the changed. And that's likely because the changed. And that's likely because the problem was never the cost. problem was never the cost. problem was never the cost. We'll get right back to the show in a We'll get right back to the show in a We'll get right back to the show in a second, but right now I want to tell you second, but right now I want to tell you second, but right now I want to tell you about a $6 million government problem. about a $6 million government problem. about a $6 million government problem. The Department of Defense needs soldiers The Department of Defense needs soldiers The Department of Defense needs soldiers to perform at their cognitive peak even to perform at their cognitive peak even to perform at their cognitive peak even under extreme conditions, sleep under extreme conditions, sleep under extreme conditions, sleep deprivation, high stress, life or death deprivation, high stress, life or death deprivation, high stress, life or death decisions. They needed a solution that decisions. They needed a solution that decisions. They needed a solution that wasn't stimulants because stimulants wasn't stimulants because stimulants wasn't stimulants because stimulants create a crash, also can be very create a crash, also can be very create a crash, also can be very jittery. So, they funded a $6 million jittery. So, they funded a $6 million jittery. So, they funded a $6 million research contract to find something research contract to find something research contract to find something better. What they found was ketones. better. What they found was ketones. better. What they found was ketones. That research became ketone IQ, and now That research became ketone IQ, and now That research became ketone IQ, and now anyone can use it. Your brain runs on anyone can use it. Your brain runs on anyone can use it. Your brain runs on ketones more efficiently than anything ketones more efficiently than anything ketones more efficiently than anything else. They cross the bloodb brain else. They cross the bloodb brain else. 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We'll get back to the show in a moment, We'll get back to the show in a moment, We'll get back to the show in a moment, but first let's talk about the thing but first let's talk about the thing but first let's talk about the thing your business just can't survive your business just can't survive your business just can't survive without. I go live 3 days a week at 7 without. I go live 3 days a week at 7 without. I go live 3 days a week at 7 a.m. And every morning you guys, you a.m. And every morning you guys, you a.m. And every morning you guys, you incredible people out there show up. incredible people out there show up. incredible people out there show up. You're there. You're ready. And if my You're there. You're ready. And if my You're there. You're ready. And if my connection drops in the middle of that connection drops in the middle of that connection drops in the middle of that live stream, that moment is gone live stream, that moment is gone live stream, that moment is gone forever. You do not get a second take forever. You do not get a second take forever. You do not get a second take when it comes to live [music] content. when it comes to live [music] content. when it comes to live [music] content. And I know a lot of you are in the same And I know a lot of you are in the same And I know a lot of you are in the same position, whether you're running live position, whether you're running live position, whether you're running live events, processing transactions, or events, processing transactions, or events, processing transactions, or managing a remote team. Your business managing a remote team. Your business managing a remote team. Your business depends on staying connected. Not depends on staying connected. 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And most strategists agree that in a Taiwan scenario, agree that in a Taiwan scenario, agree that in a Taiwan scenario, America's first move will be to choke America's first move will be to choke America's first move will be to choke off China's seaborn energy supply. When off China's seaborn energy supply. When off China's seaborn energy supply. When you look at the last four months through you look at the last four months through you look at the last four months through that lens, you can see China's just that lens, you can see China's just that lens, you can see China's just running a dress rehearsal and one that running a dress rehearsal and one that running a dress rehearsal and one that went incredibly well. China was able to went incredibly well. China was able to went incredibly well. China was able to absorb the loss of the vast majority of absorb the loss of the vast majority of absorb the loss of the vast majority of its Gulf supply and was still able to its Gulf supply and was still able to its Gulf supply and was still able to keep fuel flowing at home and do it all keep fuel flowing at home and do it all keep fuel flowing at home and do it all without any visible social disruption. without any visible social disruption. without any visible social disruption. The problem with that reading is that if The problem with that reading is that if The problem with that reading is that if this was really a dress rehearsal, you'd this was really a dress rehearsal, you'd this was really a dress rehearsal, you'd expect to see China drawing heavily down expect to see China drawing heavily down expect to see China drawing heavily down on its reserves and rationing very on its reserves and rationing very on its reserves and rationing very carefully in order to endure the carefully in order to endure the carefully in order to endure the hardship. But that's not what they did. hardship. But that's not what they did. hardship. But that's not what they did. They were holding prices artificially They were holding prices artificially They were holding prices artificially low and burning through their stockpile low and burning through their stockpile low and burning through their stockpile and not upping their purchases so that and not upping their purchases so that and not upping their purchases so that they could refill their stockpile. they could refill their stockpile. they could refill their stockpile. They're acting like reducing their They're acting like reducing their They're acting like reducing their stockpile is part of the point. What stockpile is part of the point. What stockpile is part of the point. What actually is happening in China is that actually is happening in China is that actually is happening in China is that they took a 40% import cut and barely they took a 40% import cut and barely they took a 40% import cut and barely needed to touch their reserves. In fact, needed to touch their reserves. In fact, needed to touch their reserves. In fact, through the first two months of the war, through the first two months of the war, through the first two months of the war, they were still adding to their reserves they were still adding to their reserves they were still adding to their reserves because demand was so low that even with because demand was so low that even with because demand was so low that even with reduced imports, they could keep adding. reduced imports, they could keep adding. reduced imports, they could keep adding. By late May, the pile was down about 20 By late May, the pile was down about 20 By late May, the pile was down about 20 million barrels from its all-time high. million barrels from its all-time high. million barrels from its all-time high. That's less than 2% of a draw down. Now, That's less than 2% of a draw down. Now, That's less than 2% of a draw down. Now, the fourth take on this situation is the the fourth take on this situation is the the fourth take on this situation is the substitution argument. This may be the substitution argument. This may be the substitution argument. This may be the most popular hypothesis, but it too is most popular hypothesis, but it too is most popular hypothesis, but it too is going to fall to the evidence. It goes going to fall to the evidence. It goes going to fall to the evidence. It goes like this. China's oil demand is going like this. China's oil demand is going like this. China's oil demand is going down, but it's going down as a part of down, but it's going down as a part of down, but it's going down as a part of their larger strategy to transition to their larger strategy to transition to their larger strategy to transition to solar and other forms of energy. EVs are solar and other forms of energy. EVs are solar and other forms of energy. EVs are around half of their new car sales. LG around half of their new car sales. LG around half of their new car sales. LG is displacing diesel and trucking. And is displacing diesel and trucking. And is displacing diesel and trucking. And even China's own major oil companies even China's own major oil companies even China's own major oil companies have said publicly gasoline demand is have said publicly gasoline demand is have said publicly gasoline demand is already at or near its structural peak. already at or near its structural peak. already at or near its structural peak. If this theory is true, then falling If this theory is true, then falling If this theory is true, then falling imports are just evidence of a imports are just evidence of a imports are just evidence of a successful energy transition strategy successful energy transition strategy successful energy transition strategy arriving at the perfect moment. Now, arriving at the perfect moment. Now, arriving at the perfect moment. Now, they really are transitioning their they really are transitioning their they really are transitioning their energy supply, but the numbers don't add energy supply, but the numbers don't add energy supply, but the numbers don't add up with the rate of decline that we're up with the rate of decline that we're up with the rate of decline that we're seeing now. They are dramatically far seeing now. They are dramatically far seeing now. They are dramatically far apart. China is moving fast, but the apart. China is moving fast, but the apart. China is moving fast, but the energy substitution rate is only moving energy substitution rate is only moving energy substitution rate is only moving at about a few percentage a year. We at about a few percentage a year. We at about a few percentage a year. We just saw a 40% drop in a few months. To just saw a 40% drop in a few months. To just saw a 40% drop in a few months. To transition away from one fuel source to transition away from one fuel source to transition away from one fuel source to another is not just about having the new another is not just about having the new another is not just about having the new energy supply. You have to physically energy supply. You have to physically energy supply. You have to physically turn over your entire fleet first. You turn over your entire fleet first. You turn over your entire fleet first. You can't just dramatically cut oil imports can't just dramatically cut oil imports can't just dramatically cut oil imports and hope for the best. Plus, an EV and hope for the best. Plus, an EV and hope for the best. Plus, an EV transition would first show up as a transition would first show up as a transition would first show up as a gasoline plateau, then a decline. We're gasoline plateau, then a decline. We're gasoline plateau, then a decline. We're just seeing a decline. And part of just seeing a decline. And part of just seeing a decline. And part of what's driving that decline, at least in what's driving that decline, at least in what's driving that decline, at least in China's diesel needs, is China's housing China's diesel needs, is China's housing China's diesel needs, is China's housing crisis, which has huge implications for crisis, which has huge implications for crisis, which has huge implications for trucks, construction sites, and trucks, construction sites, and trucks, construction sites, and factories. Gasoline and jet fuel were factories. Gasoline and jet fuel were factories. Gasoline and jet fuel were still growing in 2024, but diesel fell still growing in 2024, but diesel fell still growing in 2024, but diesel fell so hard that it drove the total refinery so hard that it drove the total refinery so hard that it drove the total refinery output down with it. If this was EVs output down with it. If this was EVs output down with it. If this was EVs coming online, it wouldn't affect coming online, it wouldn't affect coming online, it wouldn't affect diesel. Certainly not first. But diesel. Certainly not first. But diesel. Certainly not first. But construction sites going dark because construction sites going dark because construction sites going dark because they're in the middle of a housing they're in the middle of a housing they're in the middle of a housing crisis, that would. Here's the harsh crisis, that would. Here's the harsh crisis, that would. Here's the harsh reality for China and the entire global reality for China and the entire global reality for China and the entire global economy. Frankly speaking, China's oil economy. Frankly speaking, China's oil economy. Frankly speaking, China's oil pullback did not start with the war. pullback did not start with the war. pullback did not start with the war. Imports peaked in 2023 and fell in 2024. Imports peaked in 2023 and fell in 2024. Imports peaked in 2023 and fell in 2024. Refinery runs peaked in 2023 and fell in Refinery runs peaked in 2023 and fell in Refinery runs peaked in 2023 and fell in 2024. Diesel consumption declined 2024. Diesel consumption declined 2024. Diesel consumption declined outright. And all of this is in the outright. And all of this is in the outright. And all of this is in the EIA's published data and has been by the EIA's published data and has been by the EIA's published data and has been by the way since before a single shot was fired way since before a single shot was fired way since before a single shot was fired in Iran. So whatever has been eroding in Iran. So whatever has been eroding in Iran. So whatever has been eroding China's demand for oil, it was already China's demand for oil, it was already China's demand for oil, it was already eroding it in peace time. All the other eroding it in peace time. All the other eroding it in peace time. All the other arguments are just likely cope. So why arguments are just likely cope. So why arguments are just likely cope. So why did China keep buying, importing, and did China keep buying, importing, and did China keep buying, importing, and refining oil prior to the war in Iran if refining oil prior to the war in Iran if refining oil prior to the war in Iran if demand has been eroding since 2024? In a demand has been eroding since 2024? In a demand has been eroding since 2024? In a word, optics. The CCP lies endlessly word, optics. The CCP lies endlessly word, optics. The CCP lies endlessly about their data. And the oil import about their data. And the oil import about their data. And the oil import number is a single figure that the number is a single figure that the number is a single figure that the entire world watches as the proxy for entire world watches as the proxy for entire world watches as the proxy for Chinese oil demand, which is itself a Chinese oil demand, which is itself a Chinese oil demand, which is itself a proxy for economic activity. As long as proxy for economic activity. As long as proxy for economic activity. As long as the buying continued, the Chinese the buying continued, the Chinese the buying continued, the Chinese economy looked healthy and they could economy looked healthy and they could economy looked healthy and they could just keep building up their oil just keep building up their oil just keep building up their oil reserves. But then the war came and the reserves. But then the war came and the reserves. But then the war came and the buying [music] stopped. And for once, a buying [music] stopped. And for once, a buying [music] stopped. And for once, a collapse in Chinese imports needed no collapse in Chinese imports needed no collapse in Chinese imports needed no explanation at all. Everyone credited explanation at all. Everyone credited explanation at all. Everyone credited the war. Much like people that overhired the war. Much like people that overhired the war. Much like people that overhired during COVID used AI as an excuse to during COVID used AI as an excuse to during COVID used AI as an excuse to dramatically trim their staff without dramatically trim their staff without dramatically trim their staff without hurting their reputations. The supply hurting their reputations. The supply hurting their reputations. The supply shock from the Iran war didn't cut shock from the Iran war didn't cut shock from the Iran war didn't cut China's demand. That was not the cause. China's demand. That was not the cause. China's demand. That was not the cause. The war just gave them the sufficient The war just gave them the sufficient The war just gave them the sufficient cover story they needed to stop using cover story they needed to stop using cover story they needed to stop using the stockpile to hide their economic the stockpile to hide their economic the stockpile to hide their economic slowdown. That's why they burned through slowdown. That's why they burned through slowdown. That's why they burned through it and weren't racing to replenish. it and weren't racing to replenish. it and weren't racing to replenish. There's obviously no way to prove that There's obviously no way to prove that There's obviously no way to prove that Beijing planned it that way, but no one Beijing planned it that way, but no one Beijing planned it that way, but no one argues that the demand indicators peaked argues that the demand indicators peaked argues that the demand indicators peaked in 2023. The stockpile buildout massed in 2023. The stockpile buildout massed in 2023. The stockpile buildout massed the decline, whether it was an the decline, whether it was an the decline, whether it was an international strategy or not, and the international strategy or not, and the international strategy or not, and the war gave them the cover story they war gave them the cover story they war gave them the cover story they needed to pump the brakes. So to answer needed to pump the brakes. So to answer needed to pump the brakes. So to answer the question from earlier, why isn't the question from earlier, why isn't the question from earlier, why isn't China buying $72 crude when they were China buying $72 crude when they were China buying $72 crude when they were previously? They're not because they previously? They're not because they previously? They're not because they don't have the need. Oil imports are don't have the need. Oil imports are don't have the need. Oil imports are what economists call derived demand. what economists call derived demand. what economists call derived demand. Nobody wants crude for its own sake. Nobody wants crude for its own sake. Nobody wants crude for its own sake. Refiners buy it to make gasoline and Refiners buy it to make gasoline and Refiners buy it to make gasoline and diesel and they only make what they diesel and they only make what they diesel and they only make what they believe people are going to buy. Cheap believe people are going to buy. Cheap believe people are going to buy. Cheap crude solves a cost problem. But it crude solves a cost problem. But it crude solves a cost problem. But it doesn't seem that China has a cost doesn't seem that China has a cost doesn't seem that China has a cost problem. It has a demand problem. And problem. It has a demand problem. And problem. It has a demand problem. And that is far more consequential for the that is far more consequential for the that is far more consequential for the global economy than whether the strait global economy than whether the strait global economy than whether the strait is open today or not. It may end up is open today or not. It may end up is open today or not. It may end up being more consequential than whether or being more consequential than whether or being more consequential than whether or not Iran is getting bombed. Now, it's not Iran is getting bombed. Now, it's not Iran is getting bombed. Now, it's all going to come down to what problem all going to come down to what problem all going to come down to what problem China is actually trying to disguise. Is China is actually trying to disguise. Is China is actually trying to disguise. Is it just a housing slowdown? Have they it just a housing slowdown? Have they it just a housing slowdown? Have they managed a soft landing? Or are they, as managed a soft landing? Or are they, as managed a soft landing? Or are they, as I'm saying, in a recession? Or, as I'm saying, in a recession? Or, as I'm saying, in a recession? Or, as economist Jeff Snder says, are they in a economist Jeff Snder says, are they in a economist Jeff Snder says, are they in a depression? Let's look at the stats. depression? Let's look at the stats. depression? Let's look at the stats. China has been in or near crisis-led China has been in or near crisis-led China has been in or near crisis-led deflation since 2023. They have falling deflation since 2023. They have falling deflation since 2023. They have falling prices across much of their economy. If prices across much of their economy. If prices across much of their economy. If that were because of widespread that were because of widespread that were because of widespread innovation, it would be great. But while innovation, it would be great. But while innovation, it would be great. But while China certainly has pockets of China certainly has pockets of China certainly has pockets of innovation, innovation is never spread innovation, innovation is never spread innovation, innovation is never spread evenly across the entire economy, and it evenly across the entire economy, and it evenly across the entire economy, and it certainly doesn't move in a matter of certainly doesn't move in a matter of certainly doesn't move in a matter of months like it would need to to account months like it would need to to account months like it would need to to account for the rapid and dramatic demand for the rapid and dramatic demand for the rapid and dramatic demand destruction we see in their oil usage. destruction we see in their oil usage. destruction we see in their oil usage. The nature of China's falling prices is The nature of China's falling prices is The nature of China's falling prices is best understood as the classic signature best understood as the classic signature best understood as the classic signature of weak demand. The hard truth is that of weak demand. The hard truth is that of weak demand. The hard truth is that China's property sector is still working China's property sector is still working China's property sector is still working through a massive multi-year downturn through a massive multi-year downturn through a massive multi-year downturn that is in the process of wiping out that is in the process of wiping out that is in the process of wiping out roughly $18 trillion of household roughly $18 trillion of household roughly $18 trillion of household wealth. That's equivalent to an entire wealth. That's equivalent to an entire wealth. That's equivalent to an entire year's worth of China's GDP. While the year's worth of China's GDP. While the year's worth of China's GDP. While the CCP obviously tried to downplay the CCP obviously tried to downplay the CCP obviously tried to downplay the magnitude of this crisis, this is likely magnitude of this crisis, this is likely magnitude of this crisis, this is likely a massive part of the oil decline story a massive part of the oil decline story a massive part of the oil decline story we're watching unfold now. When a we're watching unfold now. When a we're watching unfold now. When a similar crisis hit Japan in the '90s similar crisis hit Japan in the '90s similar crisis hit Japan in the '90s after their real estate bubble burst, it after their real estate bubble burst, it after their real estate bubble burst, it had a dramatic impact on people's buying had a dramatic impact on people's buying had a dramatic impact on people's buying power and psychology. Whenever the asset power and psychology. Whenever the asset power and psychology. Whenever the asset holding the majority of someone's net holding the majority of someone's net holding the majority of someone's net worth falls for years on end, they just worth falls for years on end, they just worth falls for years on end, they just stop spending. When this happened in stop spending. When this happened in stop spending. When this happened in Japan, consumption fell even in places Japan, consumption fell even in places Japan, consumption fell even in places where the bank stayed healthy and the where the bank stayed healthy and the where the bank stayed healthy and the effect ended up sweeping across the effect ended up sweeping across the effect ended up sweeping across the entire economy. Fewer cars were bought, entire economy. Fewer cars were bought, entire economy. Fewer cars were bought, fewer goods were shipped, fewer fewer goods were shipped, fewer fewer goods were shipped, fewer buildings were built, and every one of buildings were built, and every one of buildings were built, and every one of those declines decreases the amount of those declines decreases the amount of those declines decreases the amount of oil that's needed. It's likely playing oil that's needed. It's likely playing oil that's needed. It's likely playing out exactly like that in China. If out exactly like that in China. If out exactly like that in China. If economists like Kenneth Rogoff, the economists like Kenneth Rogoff, the economists like Kenneth Rogoff, the former IMF chief economist, and Yuen former IMF chief economist, and Yuen former IMF chief economist, and Yuen Chen Yang are correct, and this really Chen Yang are correct, and this really Chen Yang are correct, and this really is what's happening in China, they could is what's happening in China, they could is what's happening in China, they could be in for a very rough road ahead. be in for a very rough road ahead. be in for a very rough road ahead. Property in China is almost 70% of the Property in China is almost 70% of the Property in China is almost 70% of the average Chinese family's wealth. And the average Chinese family's wealth. And the average Chinese family's wealth. And the property sector has been going up in property sector has been going up in property sector has been going up in flames for years now. That would flames for years now. That would flames for years now. That would certainly go a long way towards certainly go a long way towards certainly go a long way towards explaining why in April investment in explaining why in April investment in explaining why in April investment in China was declining and retail sales and China was declining and retail sales and China was declining and retail sales and industrial output both came in below industrial output both came in below industrial output both came in below forecast. Bloomberg reported tepid fuel forecast. Bloomberg reported tepid fuel forecast. Bloomberg reported tepid fuel consumption in China and that erosion consumption in China and that erosion consumption in China and that erosion started well before the first bomb fell started well before the first bomb fell started well before the first bomb fell in Iran. China's in a lot more trouble in Iran. China's in a lot more trouble in Iran. China's in a lot more trouble than people think. They have a banking than people think. They have a banking than people think. They have a banking crisis and a property crisis that are crisis and a property crisis that are crisis and a property crisis that are going on in parallel. The 5-year plan going on in parallel. The 5-year plan going on in parallel. The 5-year plan that just came out just completely that just came out just completely that just came out just completely omitted their employment targets for the omitted their employment targets for the omitted their employment targets for the next 5 years because they're not really next 5 years because they're not really next 5 years because they're not really sure they can actually hit them. That sure they can actually hit them. That sure they can actually hit them. That intentional omission has now been intentional omission has now been intentional omission has now been confirmed by Bloomberg. For the first confirmed by Bloomberg. For the first confirmed by Bloomberg. For the first time in at least 30 years, China's time in at least 30 years, China's time in at least 30 years, China's 5-year plan contains no numeric target 5-year plan contains no numeric target 5-year plan contains no numeric target for urban job creation. The previous for urban job creation. The previous for urban job creation. The previous plan promised 55 million new urban jobs. plan promised 55 million new urban jobs. plan promised 55 million new urban jobs. This one promises the ever so vague This one promises the ever so vague This one promises the ever so vague considerable scale. Beijing's official considerable scale. Beijing's official considerable scale. Beijing's official framing is the uncertainty is due to framing is the uncertainty is due to framing is the uncertainty is due to AI's effect on employment being hard to AI's effect on employment being hard to AI's effect on employment being hard to pin down. But whatever they say pin down. But whatever they say pin down. But whatever they say publicly, it is a red flag that publicly, it is a red flag that publicly, it is a red flag that historically they've published that historically they've published that historically they've published that number through every crisis since the number through every crisis since the number through every crisis since the early9s and are now declining to do so. early9s and are now declining to do so. early9s and are now declining to do so. Countries don't hide good economic news, Countries don't hide good economic news, Countries don't hide good economic news, especially not China. Everything we've especially not China. Everything we've especially not China. Everything we've walked through so far makes this sound walked through so far makes this sound walked through so far makes this sound like a story about China, but like a story about China, but like a story about China, but unfortunately the story is much bigger unfortunately the story is much bigger unfortunately the story is much bigger than that. In fact, the two biggest oil than that. In fact, the two biggest oil than that. In fact, the two biggest oil markets in the world, China and the US, markets in the world, China and the US, markets in the world, China and the US, are pointing in the same direction, and are pointing in the same direction, and are pointing in the same direction, and it's not a good one. To understand it's not a good one. To understand it's not a good one. To understand what's really going on, let's look at what's really going on, let's look at what's really going on, let's look at the shape of the oil futures price the shape of the oil futures price the shape of the oil futures price curve, not the price itself, the curve curve, not the price itself, the curve curve, not the price itself, the curve from near-term to long-term. Oil trades from near-term to long-term. Oil trades from near-term to long-term. Oil trades on a curve. There's one price for things on a curve. There's one price for things on a curve. There's one price for things that are going to be delivered next that are going to be delivered next that are going to be delivered next month and separate prices for delivery month and separate prices for delivery month and separate prices for delivery month by month for every month after month by month for every month after month by month for every month after that, stretching out years in the that, stretching out years in the that, stretching out years in the future. If what we were witnessing was a future. If what we were witnessing was a future. If what we were witnessing was a genuine shortage of oil, the front of genuine shortage of oil, the front of genuine shortage of oil, the front of that curve, the near-term, would be that curve, the near-term, would be that curve, the near-term, would be trading at a premium. Why? because now trading at a premium. Why? because now trading at a premium. Why? because now is when the supply shock exists. So, is when the supply shock exists. So, is when the supply shock exists. So, people are going to be competing for a people are going to be competing for a people are going to be competing for a scarce supply and driving the price up. scarce supply and driving the price up. scarce supply and driving the price up. That's exactly what the war produced at That's exactly what the war produced at That's exactly what the war produced at first. In early June, a barrel for first. In early June, a barrel for first. In early June, a barrel for near-term delivery costs around $90, near-term delivery costs around $90, near-term delivery costs around $90, while that same barrel promised for while that same barrel promised for while that same barrel promised for December went for far less. But this December went for far less. But this December went for far less. But this didn't happen because we are facing a didn't happen because we are facing a didn't happen because we are facing a legitimate shortage. It happened because legitimate shortage. It happened because legitimate shortage. It happened because very few people understand how weak the very few people understand how weak the very few people understand how weak the global economy actually is. So they were global economy actually is. So they were global economy actually is. So they were expecting there to be huge demand, but expecting there to be huge demand, but expecting there to be huge demand, but there wasn't. That's why about 3 weeks there wasn't. That's why about 3 weeks there wasn't. That's why about 3 weeks into the war, the price hike that was into the war, the price hike that was into the war, the price hike that was supposedly due to the supply shock supposedly due to the supply shock supposedly due to the supply shock largely vanished. The front of the largely vanished. The front of the largely vanished. The front of the curve, the part that would be strongest curve, the part that would be strongest curve, the part that would be strongest in a genuine supply crisis, collapsed. in a genuine supply crisis, collapsed. in a genuine supply crisis, collapsed. And by early July, the whole curve had And by early July, the whole curve had And by early July, the whole curve had essentially gone flat with near-term essentially gone flat with near-term essentially gone flat with near-term barrels even briefly trading below later barrels even briefly trading below later barrels even briefly trading below later ones. That is insane and breaks the ones. That is insane and breaks the ones. That is insane and breaks the entire supply shock narrative. In a entire supply shock narrative. In a entire supply shock narrative. In a normal shortage environment, what we'd normal shortage environment, what we'd normal shortage environment, what we'd expect to see is near-term oil prices expect to see is near-term oil prices expect to see is near-term oil prices trading at a premium to those further trading at a premium to those further trading at a premium to those further down into the future. Instead, in the down into the future. Instead, in the down into the future. Instead, in the space of just a couple weeks, we've seen space of just a couple weeks, we've seen space of just a couple weeks, we've seen these curves collapse and twist into a these curves collapse and twist into a these curves collapse and twist into a shape that suggests the market is now shape that suggests the market is now shape that suggests the market is now saying we're on the cusp of having too saying we're on the cusp of having too saying we're on the cusp of having too much oil. Now, as I record this, the war much oil. Now, as I record this, the war much oil. Now, as I record this, the war has escalated again. Who knows where has escalated again. Who knows where has escalated again. Who knows where it's going to be in a few days when you it's going to be in a few days when you it's going to be in a few days when you actually hear this, but right now the actually hear this, but right now the actually hear this, but right now the blockade is back, tankers are being hit, blockade is back, tankers are being hit, blockade is back, tankers are being hit, and the front of the curve has jumped and the front of the curve has jumped and the front of the curve has jumped back up a little with the headlines, but back up a little with the headlines, but back up a little with the headlines, but nothing like it did at the beginning of nothing like it did at the beginning of nothing like it did at the beginning of the war before people realize just how the war before people realize just how the war before people realize just how weak global demand really is. The real weak global demand really is. The real weak global demand really is. The real smoking gun to all of this is what's smoking gun to all of this is what's smoking gun to all of this is what's happening at the back of the curve, happening at the back of the curve, happening at the back of the curve, where real long-term demand sets the where real long-term demand sets the where real long-term demand sets the price. Right now, even in all of this price. Right now, even in all of this price. Right now, even in all of this chaos, it's anchored down in the 60s. chaos, it's anchored down in the 60s. chaos, it's anchored down in the 60s. The market will pay a slight premium for The market will pay a slight premium for The market will pay a slight premium for this month's barrels given that tankers this month's barrels given that tankers this month's barrels given that tankers are actively burning in the straight, are actively burning in the straight, are actively burning in the straight, but the premium is a small fraction of but the premium is a small fraction of but the premium is a small fraction of what it was at the beginning of the war what it was at the beginning of the war what it was at the beginning of the war when people were still confused and the when people were still confused and the when people were still confused and the long tail is just pinned down. Traders long tail is just pinned down. Traders long tail is just pinned down. Traders apparently are not worried about finding apparently are not worried about finding apparently are not worried about finding enough barrels of oil in the future to enough barrels of oil in the future to enough barrels of oil in the future to meet the demand. [music] In fact, the meet the demand. [music] In fact, the meet the demand. [music] In fact, the price seems to indicate that traders are price seems to indicate that traders are price seems to indicate that traders are more worried about there being too much more worried about there being too much more worried about there being too much oil available. And OPEC seems to agree. oil available. And OPEC seems to agree. oil available. And OPEC seems to agree. It's now cut its 2026 demand growth It's now cut its 2026 demand growth It's now cut its 2026 demand growth forecast two months running, most forecast two months running, most forecast two months running, most recently down to just 800,000 barrels recently down to just 800,000 barrels recently down to just 800,000 barrels per day. The buyers of US treasuries are per day. The buyers of US treasuries are per day. The buyers of US treasuries are also pointing to a weak economic also pointing to a weak economic also pointing to a weak economic forecast. The gap between normal forecast. The gap between normal forecast. The gap between normal treasury bonds and inflation protected treasury bonds and inflation protected treasury bonds and inflation protected ones known as tips is called the break ones known as tips is called the break ones known as tips is called the break even rate. It functions as the bond even rate. It functions as the bond even rate. It functions as the bond market's live forecast of future market's live forecast of future market's live forecast of future inflation. And that live forecast right inflation. And that live forecast right inflation. And that live forecast right now is calling for much lower inflation. now is calling for much lower inflation. now is calling for much lower inflation. And that's despite the fact that And that's despite the fact that And that's despite the fact that inflation spent the entire spring inflation spent the entire spring inflation spent the entire spring surging. It hit 4.2% in May, which was a surging. It hit 4.2% in May, which was a surging. It hit 4.2% in May, which was a 3-year high. But regardless of that 3-year high. But regardless of that 3-year high. But regardless of that elevation, the 1-year break even sat at elevation, the 1-year break even sat at elevation, the 1-year break even sat at just 1.94%. just 1.94%. just 1.94%. That's the bond market betting that That's the bond market betting that That's the bond market betting that inflation will fall by more than half inflation will fall by more than half inflation will fall by more than half within a year. That would be below the within a year. That would be below the within a year. That would be below the Fed's own target. That begs the obvious Fed's own target. That begs the obvious Fed's own target. That begs the obvious question. If the Fed is just holding question. If the Fed is just holding question. If the Fed is just holding rates still, what force exactly are rates still, what force exactly are rates still, what force exactly are traders expecting to cut inflation in traders expecting to cut inflation in traders expecting to cut inflation in half? The answer, they see oil demand half? The answer, they see oil demand half? The answer, they see oil demand fading and demand destruction that has fading and demand destruction that has fading and demand destruction that has already made its way to energy will already made its way to energy will already made its way to energy will inevitably kill inflation. In fact, it's inevitably kill inflation. In fact, it's inevitably kill inflation. In fact, it's already starting to. The economy is already starting to. The economy is already starting to. The economy is getting so weak, the June CPI report getting so weak, the June CPI report getting so weak, the June CPI report just came out and it shows that prices just came out and it shows that prices just came out and it shows that prices fell by 0.4% on the month. That's the fell by 0.4% on the month. That's the fell by 0.4% on the month. That's the largest one-mon drop since April of largest one-mon drop since April of largest one-mon drop since April of 2020. The annual rate is already down to 2020. The annual rate is already down to 2020. The annual rate is already down to 3.5%. The headline move was mostly oil 3.5%. The headline move was mostly oil 3.5%. The headline move was mostly oil unwinding, but if you look under the unwinding, but if you look under the unwinding, but if you look under the hood at the parts of the inflation that hood at the parts of the inflation that hood at the parts of the inflation that run on demand rather than on energy, run on demand rather than on energy, run on demand rather than on energy, you'll see that core prices were flat you'll see that core prices were flat you'll see that core prices were flat for the month. Services excluding energy for the month. Services excluding energy for the month. Services excluding energy were also flat and shelter was up but were also flat and shelter was up but were also flat and shelter was up but only by 0.1%. The demand-driven half of only by 0.1%. The demand-driven half of only by 0.1%. The demand-driven half of inflation has stalled out exactly like inflation has stalled out exactly like inflation has stalled out exactly like the break evens predicted and the Fed the break evens predicted and the Fed the break evens predicted and the Fed hasn't done anything that would have hasn't done anything that would have hasn't done anything that would have caused that. So something else has to be caused that. So something else has to be caused that. So something else has to be driving it. If you need even more driving it. If you need even more driving it. If you need even more evidence that the economy is cooling off evidence that the economy is cooling off evidence that the economy is cooling off independently of the war in Iran, here independently of the war in Iran, here independently of the war in Iran, here it is. In February, the US government's it is. In February, the US government's it is. In February, the US government's annual jobs benchmark revision cut 2025 annual jobs benchmark revision cut 2025 annual jobs benchmark revision cut 2025 job growth from 584,000 job growth from 584,000 job growth from 584,000 down to 181,000 down to 181,000 down to 181,000 for the entire year. for the entire year. for the entire year. 181,000 jobs used to be a disappointing 181,000 jobs used to be a disappointing 181,000 jobs used to be a disappointing month. Now it's the full year. That is a month. Now it's the full year. That is a month. Now it's the full year. That is a brutal downturn. It's the weakest brutal downturn. It's the weakest brutal downturn. It's the weakest nonrecession year since 2003. and it nonrecession year since 2003. and it nonrecession year since 2003. and it came on the heels of the largest came on the heels of the largest came on the heels of the largest downward payroll revision ever recorded. downward payroll revision ever recorded. downward payroll revision ever recorded. Then this June, the household survey Then this June, the household survey Then this June, the household survey showed US employment falling by 57,000 showed US employment falling by 57,000 showed US employment falling by 57,000 in a single month and labor force in a single month and labor force in a single month and labor force participation dropped to 61.5%, participation dropped to 61.5%, participation dropped to 61.5%, the lowest in 50 years outside of COVID. the lowest in 50 years outside of COVID. the lowest in 50 years outside of COVID. And just to stick a finger in the wound, And just to stick a finger in the wound, And just to stick a finger in the wound, according to the National Association of according to the National Association of according to the National Association of Realators, the median firsttime home Realators, the median firsttime home Realators, the median firsttime home buyer is now 40 years old with firsttime buyer is now 40 years old with firsttime buyer is now 40 years old with firsttime buyers at 21% of the market. That's the buyers at 21% of the market. That's the buyers at 21% of the market. That's the lowest share ever recorded and roughly lowest share ever recorded and roughly lowest share ever recorded and roughly half of what was considered normal half of what was considered normal half of what was considered normal before 2008. Something is very, very before 2008. Something is very, very before 2008. Something is very, very wrong with the US economy. Both China wrong with the US economy. Both China wrong with the US economy. Both China and the US are mired in economic and the US are mired in economic and the US are mired in economic illness. China's dealing with a property illness. China's dealing with a property illness. China's dealing with a property crash that has vaporized $18 trillion of crash that has vaporized $18 trillion of crash that has vaporized $18 trillion of household wealth. But the question is, household wealth. But the question is, household wealth. But the question is, what's America's issue? Our home prices what's America's issue? Our home prices what's America's issue? Our home prices are sitting near record highs. So you are sitting near record highs. So you are sitting near record highs. So you see this big phase shift in 21 and 22, see this big phase shift in 21 and 22, see this big phase shift in 21 and 22, which is consistent with a supply shock. which is consistent with a supply shock. which is consistent with a supply shock. And then prices kind of level off, but And then prices kind of level off, but And then prices kind of level off, but incomes were supposed to rise not to incomes were supposed to rise not to incomes were supposed to rise not to just where prices were, but to then go just where prices were, but to then go just where prices were, but to then go above them. And that was the expectation above them. And that was the expectation above them. And that was the expectation that we were given in 2022. A lot of that we were given in 2022. A lot of that we were given in 2022. A lot of people bought into it and companies people bought into it and companies people bought into it and companies bought into it. Amazon, some of the big bought into it. Amazon, some of the big bought into it. Amazon, some of the big tech companies. Once you realize as a tech companies. Once you realize as a tech companies. Once you realize as a business your nominal revenues are business your nominal revenues are business your nominal revenues are rising but you're not actually selling rising but you're not actually selling rising but you're not actually selling more goods, you don't actually need to more goods, you don't actually need to more goods, you don't actually need to rehire the the workforce that you had rehire the the workforce that you had rehire the the workforce that you had beforehand. Let's go through what he's beforehand. Let's go through what he's beforehand. Let's go through what he's calling a phase shift. It is a huge part calling a phase shift. It is a huge part calling a phase shift. It is a huge part of the story. In 2021 and 2022, the of the story. In 2021 and 2022, the of the story. In 2021 and 2022, the price of everything jumped up because of price of everything jumped up because of price of everything jumped up because of the supply disruptions from COVID. The the supply disruptions from COVID. The the supply disruptions from COVID. The overall price level leapt by somewhere overall price level leapt by somewhere overall price level leapt by somewhere between 25 and 30% and it's never come between 25 and 30% and it's never come between 25 and 30% and it's never come back down. Our slowing inflation rate back down. Our slowing inflation rate back down. Our slowing inflation rate never meant that prices were actually never meant that prices were actually never meant that prices were actually falling from the CO spike. It just meant falling from the CO spike. It just meant falling from the CO spike. It just meant that they were climbing less fast. And that they were climbing less fast. And that they were climbing less fast. And the new level is so high and is stuck the new level is so high and is stuck the new level is so high and is stuck around for so long it's causing people around for so long it's causing people around for so long it's causing people to slow their buying. Wages spent years to slow their buying. Wages spent years to slow their buying. Wages spent years trying to catch up, but while they're trying to catch up, but while they're trying to catch up, but while they're currently even with our current currently even with our current currently even with our current inflation rate, they've never made up inflation rate, they've never made up inflation rate, they've never made up for the phase shift that happened in the for the phase shift that happened in the for the phase shift that happened in the wake of COVID. The ground that wake of COVID. The ground that wake of COVID. The ground that households lost during that period then households lost during that period then households lost during that period then marries with the downturn in the jobs marries with the downturn in the jobs marries with the downturn in the jobs market. And that means that corporations market. And that means that corporations market. And that means that corporations revenues were going up while their revenues were going up while their revenues were going up while their headcount was being reduced. That's how headcount was being reduced. That's how headcount was being reduced. That's how one economy produces a poultry one economy produces a poultry one economy produces a poultry 181,000 jobs over a full year, hits a 181,000 jobs over a full year, hits a 181,000 jobs over a full year, hits a 50-year low in labor force 50-year low in labor force 50-year low in labor force participation, but still record stock participation, but still record stock participation, but still record stock prices at an all-time high. But the prices at an all-time high. But the prices at an all-time high. But the party couldn't last forever. The reason party couldn't last forever. The reason party couldn't last forever. The reason people have been able to keep up this people have been able to keep up this people have been able to keep up this long is they were spending down their long is they were spending down their long is they were spending down their savings and running their credit card savings and running their credit card savings and running their credit card bills up. And now they're finally bills up. And now they're finally bills up. And now they're finally hitting their limits. And the economy is hitting their limits. And the economy is hitting their limits. And the economy is starting to show its true weakness. And starting to show its true weakness. And starting to show its true weakness. And that's why the price of oil is nowhere that's why the price of oil is nowhere that's why the price of oil is nowhere near $200 a barrel even as tankers burn near $200 a barrel even as tankers burn near $200 a barrel even as tankers burn in the straight of Hormuz. The two in the straight of Hormuz. The two in the straight of Hormuz. The two biggest economies in the world are both biggest economies in the world are both biggest economies in the world are both struggling. And it's highly likely that struggling. And it's highly likely that struggling. And it's highly likely that they're not the only ones struggling. they're not the only ones struggling. they're not the only ones struggling. And that's why I say we might have a And that's why I say we might have a And that's why I say we might have a very rocky road ahead of us and why my very rocky road ahead of us and why my very rocky road ahead of us and why my levels of paranoia over the economy just levels of paranoia over the economy just levels of paranoia over the economy just continue to rise. We may be looking at continue to rise. We may be looking at continue to rise. We may be looking at something more severe than a recession. something more severe than a recession. something more severe than a recession. And you can almost certainly forget And you can almost certainly forget And you can almost certainly forget about a soft landing. about a soft landing. about a soft landing. >> When you say depression, a lot of people >> When you say depression, a lot of people >> When you say depression, a lot of people think what you're saying is it's a big think what you're saying is it's a big think what you're saying is it's a big recession because you think, you know, recession because you think, you know, recession because you think, you know, 1930s you had the great collapse between 1930s you had the great collapse between 1930s you had the great collapse between 29 and 32. No, the depression was not 29 29 and 32. No, the depression was not 29 29 and 32. No, the depression was not 29 to 32. It was 32 to 41. It was the lack to 32. It was 32 to 41. It was the lack to 32. It was 32 to 41. It was the lack of upside. So you look at where payrolls of upside. So you look at where payrolls of upside. So you look at where payrolls are versus the trend. It's 8 million are versus the trend. It's 8 million are versus the trend. It's 8 million jobs short, which means that's 8 million jobs short, which means that's 8 million jobs short, which means that's 8 million people who aren't working that probably people who aren't working that probably people who aren't working that probably should be. Maybe you make an adjustment should be. Maybe you make an adjustment should be. Maybe you make an adjustment for demographic shifts or something like for demographic shifts or something like for demographic shifts or something like that, but it's not 8 million. that, but it's not 8 million. that, but it's not 8 million. >> We remember the Great Depression as a >> We remember the Great Depression as a >> We remember the Great Depression as a crash of 29, but the real hardship was crash of 29, but the real hardship was crash of 29, but the real hardship was the decade after. You don't need a the decade after. You don't need a the decade after. You don't need a single dramatic collapse like they had single dramatic collapse like they had single dramatic collapse like they had leading up to the Great Depression to leading up to the Great Depression to leading up to the Great Depression to have a problem. If the upside of real have a problem. If the upside of real have a problem. If the upside of real wage growth for the middle class never wage growth for the middle class never wage growth for the middle class never comes back, you are going to feel it comes back, you are going to feel it comes back, you are going to feel it across your entire economy. And when you across your entire economy. And when you across your entire economy. And when you put all of this together, the back end put all of this together, the back end put all of this together, the back end of the oil curve starts to make sense. of the oil curve starts to make sense. of the oil curve starts to make sense. It's signaling that the world is going It's signaling that the world is going It's signaling that the world is going to need fewer barrels of oil than it to need fewer barrels of oil than it to need fewer barrels of oil than it needs today with or without the war in needs today with or without the war in needs today with or without the war in Iran because everybody is pulling back. Iran because everybody is pulling back. Iran because everybody is pulling back. There's going to be less economic There's going to be less economic There's going to be less economic activity. The bond market is pointing at activity. The bond market is pointing at activity. The bond market is pointing at the same thing. It's saying that the same thing. It's saying that the same thing. It's saying that inflation is going to go down regardless inflation is going to go down regardless inflation is going to go down regardless of what the Fed does because demand is of what the Fed does because demand is of what the Fed does because demand is going to be destroyed. Longtail oil going to be destroyed. Longtail oil going to be destroyed. Longtail oil prices aren't remaining low because the prices aren't remaining low because the prices aren't remaining low because the market stopped fearing war. They're market stopped fearing war. They're market stopped fearing war. They're staying low because the global economy staying low because the global economy staying low because the global economy is sick. The war just made it easier to is sick. The war just made it easier to is sick. The war just made it easier to see. Since paranoia is useless unless it see. Since paranoia is useless unless it see. Since paranoia is useless unless it turns into action, let's make this turns into action, let's make this turns into action, let's make this information useful. The takeaway here information useful. The takeaway here information useful. The takeaway here isn't a crash is coming, sell isn't a crash is coming, sell isn't a crash is coming, sell everything. But in an economy where everything. But in an economy where everything. But in an economy where demand is weakening, the safety side of demand is weakening, the safety side of demand is weakening, the safety side of your portfolio should not be an your portfolio should not be an your portfolio should not be an afterthought. While diversification afterthought. While diversification afterthought. While diversification isn't sexy, the deeper I dive into this isn't sexy, the deeper I dive into this isn't sexy, the deeper I dive into this moment in economic history, the more I moment in economic history, the more I moment in economic history, the more I become convinced that being broadly become convinced that being broadly become convinced that being broadly allocated with a keen focus on downside allocated with a keen focus on downside allocated with a keen focus on downside protections is more important than ever. protections is more important than ever. protections is more important than ever. Now, I understand why people would still Now, I understand why people would still Now, I understand why people would still want to own risk-on assets. I certainly want to own risk-on assets. I certainly want to own risk-on assets. I certainly do. But personally, I am slowly do. But personally, I am slowly do. But personally, I am slowly rebalancing away from a heavier rebalancing away from a heavier rebalancing away from a heavier expectation of continued growth and I'm expectation of continued growth and I'm expectation of continued growth and I'm increasing my cash and cash equivalents increasing my cash and cash equivalents increasing my cash and cash equivalents to maintain my optionality. I'm also to maintain my optionality. I'm also to maintain my optionality. I'm also looking at AI's near performance with looking at AI's near performance with looking at AI's near performance with more skepticism and making sure that I more skepticism and making sure that I more skepticism and making sure that I can weather a prolonged storm that's can weather a prolonged storm that's can weather a prolonged storm that's measured in years, not months. It also measured in years, not months. It also measured in years, not months. It also seems very prudent right now to pay seems very prudent right now to pay seems very prudent right now to pay attention to the pricing curves much attention to the pricing curves much attention to the pricing curves much more than the headlines to get a better more than the headlines to get a better more than the headlines to get a better read on the market's long-term prognosis read on the market's long-term prognosis read on the market's long-term prognosis of the health of the economy. Headlines of the health of the economy. Headlines of the health of the economy. Headlines help track the front of the oil curve, help track the front of the oil curve, help track the front of the oil curve, for instance, but there's a much clearer for instance, but there's a much clearer for instance, but there's a much clearer signal in the long tail of the curve. If signal in the long tail of the curve. If signal in the long tail of the curve. If the long end of the oil curve starts the long end of the oil curve starts the long end of the oil curve starts rising and stays high, great. The rising and stays high, great. The rising and stays high, great. The weakening demand that we just walked weakening demand that we just walked weakening demand that we just walked through may be reversing. But for now, through may be reversing. But for now, through may be reversing. But for now, the market's bet is that demand is going the market's bet is that demand is going the market's bet is that demand is going to stay low. And where people actually to stay low. And where people actually to stay low. And where people actually put their money is going to be far more put their money is going to be far more put their money is going to be far more helpful than what any pundit say. Next, helpful than what any pundit say. Next, helpful than what any pundit say. Next, watch China's imports and ignore their watch China's imports and ignore their watch China's imports and ignore their statements and ignore what Trump says statements and ignore what Trump says statements and ignore what Trump says for that matter and watch what he for that matter and watch what he for that matter and watch what he actually does. He is very good at actually does. He is very good at actually does. He is very good at creating noise and short-term moves. But creating noise and short-term moves. But creating noise and short-term moves. But as you look farther out on the curve, as you look farther out on the curve, as you look farther out on the curve, the noise should fall away. And finally, the noise should fall away. And finally, the noise should fall away. And finally, on a personal level, in an economy that on a personal level, in an economy that on a personal level, in an economy that now produces in a year the number of now produces in a year the number of now produces in a year the number of jobs it used to produce in a month, jobs it used to produce in a month, jobs it used to produce in a month, optionality really does seem like the optionality really does seem like the optionality really does seem like the key asset. Predicting the future is hard key asset. Predicting the future is hard key asset. Predicting the future is hard at the best of times. When more and more at the best of times. When more and more at the best of times. When more and more people are opting out of the labor force people are opting out of the labor force people are opting out of the labor force or just can't get in, optionality is how or just can't get in, optionality is how or just can't get in, optionality is how you avoid catastrophe. All right, if you you avoid catastrophe. All right, if you you avoid catastrophe. All right, if you want to see me explore ideas like this want to see me explore ideas like this want to see me explore ideas like this in real time, be sure to hit the in real time, be sure to hit the in real time, be sure to hit the subscribe button and join me live subscribe button and join me live subscribe button and join me live Monday, Wednesdays, and Fridays at 7 Monday, Wednesdays, and Fridays at 7 Monday, Wednesdays, and Fridays at 7 a.m. Pacific time. I hope to see you a.m. Pacific time. I hope to see you a.m. Pacific time. I hope to see you there. Till next time, my friends, be there. Till next time, my friends, be there. Till next time, my friends, be legendary. Take care. Peace. legendary. Take care. Peace. legendary. Take care. Peace. >> If you like this conversation, check out >> If you like this conversation, check out >> If you like this conversation, check out this episode to learn more. this episode to learn more. this episode to learn more. >> The stock market has become one big bet >> The stock market has become one big bet >> The stock market has become one big bet on AI, and something just happened that on AI, and something just happened that on AI, and something just happened that makes that bet look a lot riskier. makes that bet look a lot riskier. makes that bet look a lot riskier. >> They've got $50 billion a year. They're >> They've got $50 billion a year. They're >> They've got $50 billion a year. They're spending $1.4 trillion a year. What do spending $1.4 trillion a year. What do spending $1.4 trillion a year. What do they think they're going to do? How are they think they're going to do? How are they think they're going to do? How are they going to make up the money?