Is there a barter going on here? How do you connect those dots?

Yeah, Sean, I guess what I would just sort of start with in terms of common ground is to pick up on something James just said, you know, a Middle Eastern solution.

But just to highlight, I just published a piece on weaponized economy, my sub stack about takeaways from Climate Week.

And one of the big sort of messages I think people here in the U.S. heard from those visiting from the different gulf states was that you know the the the straight of hormones couldn't be dead that it wasn't dead that there was still you know that there couldn't be full replacements obviously some parts uh there's there's a lot of infrastructure sort of going in this leads me to a point that one thing the us and china agree on to some extent is the need for some degree of freedom of navigation.

The Chinese get prickly whenever that's extended to critical minerals.

Of course, the U.S. has not necessarily had a strong commitment to freedom of navigation that we've expected from previous dynamics on.

But again, both of them and many countries around the world really have this interest in having fuel flowing Now, China's not particularly participating in maximum pressure.

I mean, this is not minor.

Which one do we believe right now? What charts are you looking at?

Yeah, so I think in a way, like you were saying with your colleague just now, at best, we might be kicking the can on this, right? If there is some sort of return to an MOU and ceasefire, we might be looking at it as a sort of Trump side.

There's definitely an interest in buying time through the midterms, trying to bring tensions down.

On the Iranian side, if anything, their timeline and considerations would be the opposite, right? So I think where the hopes are coming from is the fact that you have Iranian officials and some of the Gulf intermediaries present in New York at a time where, if not the president, obviously is in Washington today, but he was in New York and some of his staff, his negotiators like Wyckoff and Kushner are there.

But I still think the challenge is that the two sides are still quite far apart here.

And so I don't see the space for a lasting peace.

Now, I will say on the LNG stat you quoted, the highest in two months is not a high bar, unfortunately.

So what do we anticipate to get out of this meeting today?

But ultimately, the midterms become very relevant, don't they? Because if the Congress, if the House does shift to the Democrats, there is impeachment, there is great, uh, accountability, authority that goes into the, into the s- the, those who chair the, the committees in the House.

That's right.

Um, and that would be one of the biggest things.

Um, you know, I wouldn't make a call on whether we see impeachment again.

It's not clear that the American people, enough of them sort of really care about impeachment, but I think we would see investigations.

That's also something that could be a concern for count- for companies and countries around the world that have gotten so close, not just to sort of the US, but to members of, of the Trump administration.

And something that I think, um, any negotiating partner of the United States is really looking and watching.

To refill the SPR?

Right

... which is something obviously Warsh is gonna have to deal with.

You know, Greenspan and thinking about, you know, it, it sort of, you know, he presided over this period of needing to think differently about, you know, balance sheets, other things like that.

I mean, look, I think Warsh and the new Fed, they have in a way gone back to some of the systems that were maybe in place early on in Greenspan's, you know, you know, reign, so to speak, uh, c- pulling back on forward guidance.

Yeah

...

I think we would be in a pretty s- pretty damaging economic situation in a month or two, um, and, and, and the like.

What I think the challenge is, is whether we're just going to end up in some kind of ceasefire MOU situation through the midterms, maybe for much of Trump's term.

Your thoughts on where we're at.

Yeah, and, and, you know, paradoxically, you know, this lower oil price environment, I mean, uh, is meaning that US gas prices have been trickling down a little bit, reducing some of that political pressure.

I mean, they're still up, um, compared to where they were, considerably up on the State of the Union, uh, which was a couple days before this war kicked off.

Um, you know, where really the only disinflationary outcome Trump could trot out was that gas prices had come down since the start of his term.

Um, so, so look, I, you know, I'm hesitant to call it really a master class, but, but I think you're right.

This whole, you know, dribbling out the, "Oh, a deal is almost here," especially in the last few weeks.

Um, you know, this is all happening at a time where there is at least officially an investigation of what's going on in market manipulation.

Yes, he's taken a bit of a bashing, but, uh, where do you see the sort of picture there for Trump to do a deal, not to do a deal, to, to make the concessions necessary that everybody says he has a bad hand but yet isn't playing it? Where do you think this is at from a domestic American political point of view?

And as we look at the war and when we're actually going to see the stag show up versus deflation component of stagflation, when do you anticipate that?

Yeah, so I think we'll see the stag part sooner in Asia than we will here in the United States.

Now, that's going to feed in.

And there might be a differentiated story here.

The tech sector has been booming.

not just in sort of U.S. equities and the U.S. economy, but also in South Korea and even Taiwan.

These are companies that are able to charge what they like for memory chips.

I know you highlighted some of the potential ripple effects already, but why is the prolonged messy nature potentially far more damaging? And how long could we see the impacts really play out here?

Has anything changed in terms of the leverage that one company ha- that one country has over the other now versus when they were previously going to be meeting?

Um, I think the main area is probably one of almost the polit- the political and strategic elements.

Um, I think, what was it, economists or, or others who have said that this, you know, don't get involved with your enemy when they're doing something that undermines them, and I do think that was China's original focus there.

Um, uh, what, what's changed now is that the economic costs, the real economic costs are mounting, right? Um, I was talking just before I came on to chat with you guys about how, um, uh, plastics and the downstream effects of this crisis are, are really increasing.

Um, you're right, um, Lisa, the, um, uh, oil and the water, we don't know exactly what those volumes are, but what we do know is that today we have countries ranging from India to Australia, big allies of the United States at times, uh, are preparing for even more rationing.

So I think the industrial impacts are, are, are mounting.

In terms of leverage, if anything, China's trying to exert more leverage over critical minerals, critical supply chains.

Do both countries have the same approach of trying to stave off any kind of political pain in the form of, uh, consumer displeasure about higher prices? In other words, is the response from both sides to subsidize different things and potentially increase fiscal spending?

And so I'm struck by something, uh, that you had just posted a few days ago, and, uh, maybe to comment on that as well as the meetings you're having now and what you're hearing, which is, uh, that we've had, as you said, uh-We've seen a flurry of critical mineral announcements, uh, about, uh, governments getting involved, governments pledging money, sovereign wealth, uh, funds pledging money, uh, but now trying to sort out a bit of the, of the noise from the reality, which is it's great to have an announcement, "Oh, uh, you know, we're gonna create this new project, and a sovereign wealth fund has pledged X amount." But what are you seeing now in terms of this sort of state, quasi-state capitalism, uh, that's emerging that the US seems to also now be embracing, uh, to some extent of, of having, uh, state money or quasi-state money, uh, to prime the pump for projects to essentially signal to the private sector that someone has skin in the game here? Uh, but what are you seeing? I mean, how much of, how much of this is still noise? How much of it is still PR? And what's actually happening? And, and, and are people actually delivering on their commitments? Uh, are, are, are the wire transfers happening?

[chuckles] Yeah.

I think, I think, um, number, the wire transfers are happening, though, though not as much has been pledged.

We have-- And, and, and I, and I've, I have tracked this more in the critical mineral space, um, which of course is a broad set of minerals, right? The US has about 60 on its priority list right now.

Um, at which point, um, you know, at what point, you know, I mean, if everything is critical, is nothing critical? Or, you know, or just there's an element where there are different solutions for different minerals, right? Some are traded, some are not, some are, some are more diversified in their supply chain.

But quite a wide variety of them, you have a Chinese processing choke point whereby China control or sort of China accounts for 85, 90 something percent of processing.

And it's not just [lip smack] basic processing, but the, the sort of the supply chain thereafter.

So again, what, what are you hearing? What are you seeing? W-what, what's the, uh, reaction on the business side?

Well, maybe not nieces, but as Rachel Ziemba says, it is definitely a valued ally.

The UAE has been one of the biggest investors in the United States.

They continue to pledge that they'll make good on their pledge to invest, I think, 1.4 trillion.

There's also projects the UAE, uh, members of the royal family or even government actors have gotten involved with those close to members of the Trump administration.

I'm thinking about digital assets, agreements, uh, and the like.

The UAE is a large buyer of US weapons.

And the UAE, of course, is one of the few countries in the Arab world that is signatory to the Abraham Accords that were negotiated in the first Trump administration.

But Rachel says there's another, more subtle message buried in the request.

Rachel, what do you expect to be the outcome of this shift in strategy?

Yeah.

Well, the US government...

Thanks for having me, John.

Um, the, the US government is really hoping that this blockade will bring Iran to the, not only back to the table, but make more concessions.

I would note that the Iranian response to the US twenty-year, um, moratorium has been to come back with another five-year one, which I think is similar to what they were offering back in February before this war.

Um, so we'll see how much movement we've seen.

Rachel, speaking of that blockade, if the United States does take over a tanker, is it clear to you where exactly they would bring it?

When does demand destruction kick in?

in?I think we're starting to see it already.

Um, maybe more so, uh, in Asia, we're seeing mandated moves across Southeast Asia, uh, to reduce demand, and we're seeing it even in Europe, I think, on the power side.

Uh, the gas, natural gas spiked even more quickly than oil just once the Qataris started to shut in production, and we saw TTF spike up, uh, was that last week? Um, and now we're sort of seeing it flat, in part 'cause at those prices, people don't want to buy.

Um, and that's gonna kick in, especially later this year when normally, uh, producers would be, uh, injecting more fuel.

It's, uh, storage time.

So I think we'll start seeing some switches to coal where that can happen.

And then I think about spring break and how a number of people are saying, "I'm not gonna fly anywhere because the prices have gone up 40%, 30%, and it's not worth it." I mean, are we already seeing that start to trickle in on the margins in the US or is that mostly an Asia story, a Europe story for now?

But it's, it's just interesting that I'm hearing some, some echoes of that argument.

Yeah.

I think that's right, and I think, uh, you know, one of the lessons learned, and we're too early to learn too many lessons, but is the, the risks of, uh, supply shocks for, for net importing countries.

I do think that may be one of the dir- the, one of the directions.

So, um, you know, but based on, on, on this, uh, country, you know, Asia is the primary buyer of fuel and, and oil products going, you know, coming out from, from, from the Strait of Hormuz.

Uh, countries without sort of stockpiles and quite reliant include India.

Makes sense.

So when do you think this will end, and what does end look like?

A small number of ships do risk transiting it each day, but Rachel says many of those vessels aren't insured.

Many of the vessels that are still transiting the straits are ones involved in illicit shadow trade that were already working without insurance and were already involved in the kind of evasive techniques and tactics that allowed them to, uh, evade sanctions.

You know, the kind that read the liability notice on their Instagram update from top to bottom every time.

There's a, a number of things that haven't been resolved yet, and a number of questions about the fine print and whether companies would actually be able to collect on and be refunded the full costs.

The devil's always in the details, but I would be looking particularly closely at these contracts.

What's the big theme moving into 2026 now, as you mentioned, as this whole conversation around valuations and bubbles has now shifted to one of debt and how these companies are actually getting their hands on the financing to fuel these AI ambitions with the big question mark out there and the caveat Do we have enough energy to power at all?

And I think the short answer to that question is not yet.

Right.

And we're already seeing, you know, power costs, electricity costs have gone up across the country.

I would say it was a big underlying theme in this year election cycle from a few, you know, a few weeks ago.

And I think it's going to be even more as we head into the midterms.

We are seeing some hyperscalers sort of roll up more slowly because of the power issues.

Where do you see

But what really got the market seemingly was the two dissents that obviously we had Myron wanting more, but then Schmidt basically saying that they should sit on their hands and then Powell putting a huge question mark come December.

Yeah, Sam, pleasure to be with you.

And this is a good day to be in D.C., right, with the FOMC.

And I know the rest of town's a little quiet because of the shutdown.

But, yeah, I think you're right.

I think this hawkish dissent was a little surprising to the markets.

And, look, I think Powell is trying to keep options open.

What's your assessment of all of this right now? You know, where the economy is at and, you know, even some of these thoughts that we could even be cutting into a potential for a reacceleration.