What are your leaders at Academy Securities saying how they think these things will play out? Because again, the market seems to be looking past them un- until it doesn't, I guess.

And I think that's probably the advice we've been giving to our clients.

I think we probably missed an opportunity when we did the initial ceasefire, waited a few weeks, then did the MOU, um, which then we waited a few more weeks to discover was, you know, worthless.

Uh, that was probably a lost opportunity where maybe if we pressed harder, we could have driven this to a better conclusion sooner.

Right now, I think we're in the status quo.

We are gonna try and blockade them.

We're gonna put some financial pressure on them.

How do you guys think about that going forward?

I mean, he worked with Besson.

So, you know, obviously reluctant to ever go against Druckenmiller, but the reality is I think we're going to have yield curve control at some point.

We've been going down the slippery slope from the GFC to... where we get more involved.

We've had QE.

We've had Operation Twist.

So I don't think it's this unique thing that Besson pulled out of his hat to, we're going to buy treasuries.

Now, whether he's going to be successful or not, I don't know.

Iran, as you say, with respect to the rate trajectory, whichever way it goes, China, how does this all factor into the midterm elections? I mean, does this pose a hurdle to certain outcomes throughout the rest of the year?

Give us a little sense on where you think we are in here, and then we'll take it from there.

Perfect.

I'll give that a go.

One, it fits my firm very well.

So Academy of Security is a veteran-owned firm.

About half the staff is veterans, but we have 40 retired generals, admirals, CIA people who form our geopolitical intelligence group.

So this has kind of been near and dear to our heart.

Fed will probably stay put for the rest of the year.

Mm-hmm.

I, I felt that we had a bigger lead on where we stood on AI, and it feels like the average AI is catching up, and China has the advantage that they distill models.

So I'm watching that closely.

And then the other big trend that I think is really finally catching steam is that production for security or production for national security, production for resilience.

What's-- might strike you as odd, 'cause we've been talking about this for quite some time now.

It's when you talk, I would say, particularly to large asset managers, there's still a reluctance almost to believe that the end of global trade, um, and globalization is over.

And many of the people who are senior rose to those levels because they embraced globalization.

So even though you think the Fed may not tighten, uh, or maybe it's less likely to tighten than the market thinks right now, um, does that necessarily mean you think that yields will go down, or could they be, you know, continue to be pressured up by this crowding out effect?

Let's talk about that

... and, you know, uh, so a, a couple things I think.

To me, I- I'm really focused on it because every time you see kind of this very large actor, and we've been talking for a while, right? You have the ETFs in the semi space, and there's been so many flows in and around that.

There's all these leveraged ETFs both on the SOXX index but also the single stocks.

You've had these magnified moves, and now you start piecing it back together, and I think situational awareness had a huge role to play in the move up as well as the move down.

And so, you know, Thursday and Friday we had what? Microsoft, Amazon, um, you know, Apple move 10 to 20%, which is unheard of for companies that size.

I think the combined movement was $1.3 trillion.

Uh, Peter, you were last, but what, what, what, what, what are you thinking about or what do you think we're gonna be talking about in a week and in a month?

Is that a positive? Is that a negative? Is that a bear sign? Is that just a natural evolution where everything is AI?

I think it's a natural evolution.

Look at Apple, for example, right? Apple did not invest a ton in AI, right? They kind of let the market develop.

Their stock's doing high.

I believe they're just off all-time high.

So the market's trying to figure out who's winning, who's losing, what's priced in.

Again, I was really excited about earnings about two weeks ago until what we've seen, and I go back to Micron.

Do you think a high correlation ac- accident is brewing here?

Yeah.

[laughs] Yeah, no, it's, uh, you know, again, I think one of these weird things...

So again, I work with, like, 40 retired generals, admirals, CIA people.

So, you know, from my standpoint, it seems like the ceasefire's broken, and they all explain, no, a ceasefire is kind of whatever someone wants to say it is.

And so neither side has actually technically said we're out of a ceasefire really.

So we're kind of still within that framework, as weird as that seems to me.

And you could tell the second it came out that the mediator was kind of, you know, interested in, you know, setting up negotiations, the markets calmed down.

Yep

Peter?

Yeah, I wanted to go back.

Mike, I, I'm kind of with you.

Like, what's gonna make this market roll over or do something? 'Cause I think first everything is tied to equities right now, and even within equities it's tied to a relatively small handful of things.

I think we got really three pieces of information Thursday that I think are kind of important.

I think first and foremost, like Meta actually announced the selling of, quote-unquote, "excess compute." And, you know, the positive spin would be they built up this compute and they can get more money selling it to whatever agentic AI company.

But until y- that time, all we've been talking about is you can't spend enough on this.

Good.

Is the trade about to flip?

Phew.

You know, I, I feel maybe everything kind of slides for a little bit, right? Everything's kind of been pretty highly valued.

We've been building out.

It's ...

We've had this kind of almost two-tier economy, right? The AI build-out, everything associated with the AI build-out, and everything else.

And the everything else is doing okay.

If they start pulling back on spending, do we have a macro risk starting to build here?

Just walk us through how you're thinking about that.

Yeah, so one, we've been complaining about the data for a long time.

And you can look at OER, owner's equivalent rent.

No one can figure out how that's calculated.

Obviously, someone can, but it really doesn't make sense in this day and age.

Maybe it made sense at one time when people rented one-bedroom houses or two-bedroom homes.

That's not how the world works anymore.

What do you make of that, given the market's conditioning with those press conferences, Peter?

I mean, I don't know if you've got somebody that-

Yeah.

No, I think it's a mix of things.

I think one is, you know, adding, to the extent that places are running at peak, it's difficult to add more.

Um, the grid though is definitely a major problem.

And again, you're seeing companies I think move, and w- uh, our biggest theme is in terms of, you know, growth in America.

It's happening in the heartland.

Yeah

It's expanded it.

It changed it, and again, I think all the taxis adapted to an Uber-like sort of thing.

So it's grown.

It's good.

Um, but again, like, that's one job, and again, that was ...

It, it didn't feel like it was revolutionizing anything.

It was still p- how you get your taxi.

That's what I'm watching for, just if the Republican Party starts to get, starts to get along with the idea that that's the next step of populism, that you have to do something about corporate taxes.

Do you agree that credit and equity are better hedges for the inflation risk, and that is where people should be looking?

So I, I th- I, I like credit on that perspective.

I think it's kind of an interesting place to be.

Again, I, I...

We're not seeing recession, though there is this tale of two economies.

Again, I, I feel like what you're seeing is in the rates market, if you went back three months ago, and I thought before the war started we could cut, and if we cut, even if it was an aggressive cut, we could control the long end of the bond market.

Right now, I don't think we can cut without controlling the long end of the bond market.

What's the policy response gonna be to all of that if that is indeed the end destination?

Yeah.

Almost exclusively, which is absolutely insane.

Um, so [laughs] you know, I, I, I think that's still the stranglehold we are trying to break.

Um, you know, when I look at the production for security, one of my top picks had been Intel, right? 'Cause again, I, I think we wanna make sure people understand that this is very broad, right? This is production for national security on a really holistic basis.

It's not about just defense.

I think defense will be a part of it.

Electricity generation is high on that list, and you're seeing a lot of the electricity generation companies do well.

Yeah.

You go.

Yeah, I would just say I, I like your copper chart, and I do think that picks up a little bit that we have this data center/AI part of the economy that's driving everything, and that's enough to pull copper up.

At the other part of it, housing, all the things that would normally push copper up as well if everything was humming along just isn't there.

Like, people are losing confidence about, "Am I going to make a big investment in my home for, that's gonna cost a bunch of money if I'm not sure where my job is three to five years from now," right? And you look at the layoffs that have been happening, whether it's Meta and some of these places, right? It's not, you know, low income earners.

It's, like, people making 150, $200,000 who are very unsure where their next 150,000 to $200,000 per year job comes from.

So I, I, like, this weighing down on the economy is there, and what I don't understand fully but I think it will play out is I think our market structure's been so, you know, messed up with leveraged ETFs, so many ETFs.

The, everyone treats it as passive, but it's really not, right? Almost every single trade now is a momentum trade.

What are we in, man? What are we doing?

Yeah.

You know, there's kind of been this lurking fear, you know, that we might be the only, you know, species to ever extinct ourselves, so, um, and, you know, I, I think we're a long way from that.

But if you get a few more kind of white-collar layoffs coming, I could see some pushback.

Whether it's warranted or not, I don't know.

Um, but I feel like there's a public nervousness that is going to feed directly into politicians.

And, you know, politicians don't seem to be known for taking the right line.

They take often what's the easiest line, uh, you know, to get re-election.

I don't- I'm not used to hearing this.

Yeah.

Right.

It's one step removed from actual yield curve control where they sp- set a specific target for yields, but it moves you along that path, right? That they can try and pick and choose where on the curve they want to identify, you know, weak spots where maybe they feel they can press.

Um, and again, I think it will be more organized than the traditional Fed, where I think Powell and the prior Fed have all been kind of very regimented.

I think they will take a little bit more of a trading, you know, attitude towards this and look for opportunities when markets are liquid, look for, you know, maybe right after an auction when markets already have a propensity to go higher.

Um, month end tends to have this index buying.

So I think they will be more clever about how they do this Operation Twist if they get there, um, to kind of really take advantage of the situation with a kind of trader's mentality, which Bessent does bring to the table.

And-

What's your best bet in the market? How are you allocating capital? What are you advocating for?

Well, as you know, we've been talking about this production for security, so we love that, and Intel was actually one of our names of effect because we did think that the US had to grow chip business organically, domestically.

I think now that's almost...

You know, I've got to admit, I started selling a little bit ahead of earnings.

I'm probably gonna be closed a bit more.

It's better lucky than smart sometimes.

But, you know, we've had that great play.

To Lisa's point, when they feel like it's existential, and they've got the balance sheet to carry on spending, are these trades you wanna be on the wrong side of to get on the other side of at the moment?

Here, Peter Scheer.

But I think the reality is if this blockade can be implemented in such a way that the ceasefire is not broken, it's fine.

I think that's the risk, though, is that this just causes some degree of escalation.

Stock markets do well in military conflict, don't they?

They have in the past, and I think they could do again over time with this one as well.

We-- Again, we've-- Russia-Ukraine have been in conflict and stocks have generally done pretty well.

I think this time, though, we've got to be a little bit cautious because I feel like this is more, once again, a shifting of the world order and some of the prior conflicts actually shifted the world order heavily in favor of the US.

W-where are people diversifying, if you will, away from exposure to equities?

You know, things that I still like are what we've been calling production for security.

So anything that the US needs to produce domestically, they should be buying.

You look at Intel.

Intel had a phenomenal week.

That would be in there.

I think energy companies, rarest critical minerals.

Is that diminishing or are we gonna have a Mag 7 earnings growth this time around?

YOU KNOW, I'D LOVE TO HEAR MORE ABOUT HOW YOU'RE FEELING ABOUT MOMENTS AGO WITHIN THE LAST HOUR THAT HE THOUGHT IRAN WAS NEGOTIATING IN GOOD FAITH THE IRANIAN PEOPLE SHOULD RISE UP BECAUSE THEY SORT OF HAVE A NEW REGIME THERE BUT THAT 8 PM IS THE DEADLINE NOW TOMORROW NIGHT WHAT DO YOU THINK WHAT ARE YOU WATCHING HERE EVERYTHING AND WHAT WHAT SPECIFICALLY

Yeah, I think we've been kind of stuck in this little bit of, you know, Yogi Berra sort of thing where, you know, we won't know this the end until it's the end.

But having said that, I think we are highly suspect that there will be a ceasefire.

So right now I'm a little bit bearish.

I'm selling into this kind of rally that started this morning.

And the reason we would like a ceasefire, it would be great, I think, for us.

I'm not sure why Iran would agree to one, right? If we get a ceasefire, the U.S.

What happens to commodities? What happens to the 10-year and the S&P?

Your thoughts.

So one, I do have the pleasure, I work with 30 retired generals, admirals, and some former CIA directors.

So I think we've got pretty good insight.

I think at this point, I think the market might still be overreacting a little bit.

We priced Brent crude from 60 to 72.

It's up a little bit today.

Yes, we're worried about how this goes.

In the meantime, when you think about your vantage point as an investor, near term and long term, near term opportunities, long term opportunities.

Um, what do, what do you and your cadre of, of, uh, department of war, uh, specialists and whatnot think about what's going on in Iran? Um, I guess we'll start there, but then the next question I wanna ask is, if there were to be a regime change there, how much of a game changer would that be if that new regime was a little more friendly to the West?

Yeah.

It's a great question.

So I think how we're seeing it is it's probably two weeks before anything happens, so the Ford was just kind of announced that it's gonna transfer over.

It probably takes two weeks for it to get into the theater, and you really need to have the two aircraft carriers to properly be able to defend yourself.

Um, and then I think our assessment is you probably see some minor attacks done if necessary.

So during this two weeks as the, you know, Ford is kind of progressing towards the region, negotiations are gonna be ongoing.

Can, can you explain why?

So, from your lens, looking at things on the macro level, inflation, GDP, interest rates, does this market have what it takes to, uh, to give us, uh, returns similar to, to 2025?

Yeah, I think there's that potential.

I think, one, yields are gonna be under control.

I think we are gonna get cuts.

Um, the new administration, they're gonna push people through the Fed that want to keep rates low.

There's all this concern about the long end of the yield curve getting away from itself.

I think they will do Operation Twist or anything else necessary to keep, you know, the 10-year under 4 1/4, 4.50, and they're actually gonna try and push it under 4%.

What's your view f- towards some of these, you know, big areas of interest like Ukraine here and the Mideast and, and maybe what are you telling your clients these days?

Uh, Mr. Prosek, let's put that hat on because ultimately this really does go down to what is your takeaway? Does this have more consequences potentially for Ukraine-Russia or potentially for Taiwan?

I think probably more for Taiwan.

So when we're looking at this, and again, I work with, um, 30 retired generals and admirals, a couple CIA people, so we spend a lot of time on where this is all playing out.

And I think as we're having conversation with clients, we're reminding, one, Xi said he wants his military to be ready by 2027.

It's not a sign that he's gonna do anything in 2027.

But we've always thought what's gonna happen is there's gonna be a multiple, you know, application of the levers of power.

So the levers of power are diplomacy, information, military, and economics, so the DIME framework.

Is there still an inflationary overlay to this that's the reverse of what globalization provided?