Bits + Bips: What Happens to Markets Now That the U.S. Has Struck Iran?

0:00America leads the world in medicine development. It matters. We get new medicines first, nearly three years faster. Five million Americans go to work because we make medicines here at home, and not relying on other countries keeps us safe. But China is racing to overtake us. Will we let them? Or will we choose to stay ahead? When America leads, America cures. Let's tell Washington to keep us in the lead. Learn how at americancures.com, paid for by pharma. Hi everyone, welcome to another episode of bits and bips, the interview. My name is Steve Relic, head of research at sharp link and also your host. And I've got a really exciting guest for for you today. We have Charles Myers, the founder and CEO of Sigmund Global Advisors. Charles is an experienced foreign policy executive. He has a long bio, which I'll ask him to provide in a second, but he was a senior foreign policy advisor to Hillary Clinton in 2016, Joe Biden in 2020. And he also has, he has had a distinguished banking career,

1:04among other, among many things, he was the vice chairman of the investment bank evercore. So welcome, Charles. Great. Thanks for having me. Yeah. I've actually, as you know, I've been wanting to have you on the show for a little while now because the intersection of geopolitics and the economy, it's always hard to ignore it, but I wanted to wait for a time that that really made sense. And with everything going on in the world today, both domestically in the US and then around the world, there were high stakes diplomacy in Geneva yesterday related to Iran, stuff going on in Venezuela. There's a summit in China. Next, I think it's in April and just everything in the US again, like this seemed to be a perfect time to bring on someone with your your type of expertise. So before we dive in, I just have to take a very quick break so that we can hear from the sponsors who make the show possible.

2:20All right. So Charles, I mean, before we dive in, I mean, just just quickly, is there anything else in your bio? I didn't ask that you think is relative to the conversation. And I'd love for you to just spend 30 seconds explaining what your firm does. Yeah, absolutely. So we are a geopolitical and macro risk firm given what's been happening in the world for the last sort of three to four years. We're spending a lot more time on the geopolitical risk part of the business, but we're 22 partners in seven offices around the world. And we focus on all of the big volatility events that are happening, whether it's what we're about to maybe do in Iran, whether it's leadership change in Venezuela, Cuba, Greenland, tariffs, elections, the midterms, anything that is driving volatility in markets, asset classes, or economies, we cover and we focus on and help our clients try to figure out what's going to happen next. Yeah. And it's funny. I actually remember, I mean, almost a decade ago, when you're first launching the firm with a mutual friend of ours, Angie Dalton,

3:21and the growth, I mean, I've been falling progress for years on LinkedIn every, seems like every of the year, new office, a new partner, new continent. So the growth has been impressive. All right. So let's really kind of dive in here. First, I guess my first real question is, how do you make sense of everything? In my lead, and I mentioned like five different hotspots, and there's plenty of others I did not mention. I mean, there's all these shoes in the US, all the questions about what's going to happen with the Fed. I mean, the Supreme Court overturning Trump's tariffs, and then we might be at war with Iran again, I guess for the second time in less than a year. How do you make sense of all that as you're trying to understand the interplay with markets and provide advice to your clients? Yeah. Well, I'd say, you know, each situation is definitely different. The dynamics are different, the players typically are different, and the outcomes can be very different. And so in geopolitical risk, there's a tendency because people like certainty, investors, especially like certainty, to want to find patterns. It's also why, you know, we hear quite often from people, you know,

4:24you've got to figure out AI for your business. You've got to figure it out. The truth is AI, as you know, ultimately just recognizes patterns. There are no patterns to answer your question. There really are no discernible patterns in geopolitical risk because again, actors, motives, objectives, and outcomes are always different. Yeah. Well, I guess, I mean, I don't know if challenge is the right word, but I mean, I actually studied, we may have talked about this years and years ago, I actually studied geopolitics in graduate school. I worked for a political risk firm before I really got into crypto and spent years working at the Pentagon. I mean, you've studied this, obviously, extensively too. There are patterns. I mean, whether it's like realism or neocon, liberalism, and people are trying now to make sense of Trump's foreign policy. What does America first mean in a world where we're kidnapping Venezuelan leaders, launching, I guess, preemptive or preventive strikes in Iran? I know Marco Rubio, I guess a couple of weeks ago in Europe was discussing sort of this new sort of like empire building type of strategy. Like,

5:27I'm sure your clients ask you to sort of provide your formulation of what the Trump foreign policy is and how that sort of relates to great power rivalries in this new century. So what do you say? Yeah, absolutely. So just to pick up on that first point that you made, in the past, there were frameworks, historical frameworks that actually did work in geopolitical analysis. The problem is with the challenges with Trump being back, a lot of those frameworks you have to throw out the window because this is the president and an administration that doesn't follow rules, laws, convention, sometimes the constitution, but also doesn't respect treaties necessarily. And I'd argue that even before Trump or during Trump won, but since COVID and the invasion of Ukraine, the world has changed so fundamentally. The United States today's engaged in classic industrial policy to help secure our supply chains, reshore, protect American industry, we're engaged in extreme protectionism as well. So those historical frameworks or patterns

6:29actually, it's very risky. I think you try to use those and apply those at your peril in a way. The one framework that we use that I think is very relevant. And it's one that's been really hard for, I'd say, a lot of people in the US and especially people outside the US to really get their heads around is something we've been saying for 13 months now, which is that America first was always going to be and has been now proven to be, but was always going to be about more than just domestic priorities. Most people assume because President Trump ran for a second time as an isolationist and on America first that he would focus primarily on domestic issues. The truth is, America first was always also going to be about foreign policy and within that pretty aggressive protectionism, again, a tariff policy that's been very aggressively applied around the world. And secondly, a much more assertive muscular and I would argue expansionist slash imperialist foreign policy. I think looking back three years from now, we will probably have realized that

7:34we will realize that the Trump administration has been the most imperialist, expansionist and imperialist since George W Bush. So on this broader question of frameworks or trying to analyze what's going to happen next, keep in mind the one one constant is America first also includes foreign policy, which also includes regime change and the use of military force if necessary. Yeah, it certainly seems that way and we're going to get into a few of those hot button issues, but before before we do, I'm just curious, I mean, your client base, it's a diverse, it's across the diverse set of industries, but I mean, there's a few big trading trends that I've been hearing about and this cuts again, this is mostly a crypto show, but bits and bips is meant to be sort of crossed over between broader macro, trad fight trends and crypto. I mean, what are you seeing in terms of the sort of defensive and offensive positioning among your clientele? I mean, we've been tracking, I mean, obviously gold, precious metals, surging, what's going on with the dollar and treasuries, I mean, clearly again, because this is mostly a crypto show, there's a bit of,

8:40I guess, this heartening among the crypto industry because Bitcoin and other assets have not quite moved in a, I guess, in a commensurate way with precious metals, even though the assets are supposed to sort of fall along those lines, what are you seeing and how are your clients really can ever approaching some of these safe havens in a world of turmoil? Yeah, so I'd say at the moment and really for the last couple months, the two biggest trends that we're seeing with global investors, including US, but US and global investors, is first this serious questioning about the safe haven status of the United States. And within that, it's everything from concerns about what we have an independent federal reserve, through to election integrity, all the way through to is Trump going to try to stay in office for a third term in his democracy debt in America, the answer of no, of course, but really deep concern about some of the institutional damage that's being done by the Trump administration and ultimately, is that undermining the safe haven status

9:48of equities, US equities, the dollar, and treasuries. And so that theme is now, as a name, which is South America, I just got back from three weeks literally through the Middle East and seven cities in Europe. I've never seen sentiment this bearish towards the United States, really, and it's not just unique to Europe, it's much broader than that around the South America theme. And so we're not seeing it yet really in action, the data doesn't suggest yet that they're really, the investors are taking their US overweight down necessarily, but I think there's a lot of concern. So, I'm sorry, I was going to just follow up on that because I remember South America was a really big deal during Liberation Day back in April, and then it kind of, I guess, fell away a little bit when I guess some of the deals started rolling out or, or I guess, the taco trade quote unquote, sort of showed itself again, and people remain overweight to the US in particular because of tech stocks. So, I guess what you're saying is that sentiment is there,

10:51but people are not quite ready to fully de-risk from the US. Yeah, I think any investors that took some of their US overweight down a year ago into April, into Liberation Day, they did that, but still remained mostly overweight. And since then, that's been the right call because from the low in the US equity market in April, the markets had an incredible run. And so I think that what has changed, though, is that the concern about the US, there's been more perceived institutional damage since last April, and that in the governance part of ESG, the governance part of any investor's investment process in terms of looking at country risk, the perception is higher. It hasn't yet translated into actual selling or taking that overweight down. So, and if I can't really quickly, I think that the concerns I understand them, and I answer all of them, I spend a lot of time trying to answer them or address them, but I think those fears are overdone. We will have an independent Fed, we will have free and fair elections, and the US economy is in very

11:51good shape and probably going to grow about 3% this year. So, but just to say that's been one of the biggest trends. The other big trend is the AI displacement trend or fear of displacement, which is basically a very painful but in a way healthy rolling correction through the AI space that is primarily in software, it's made its way through parts of financial services. I think the AI infrastructure piece is next, which is going to be bigger and more painful. But those are the two big themes that we're seeing from investors at the moment. And along those lines, I mean, right before we went live, you had Senator Raphael Warnock from Georgia, a Democrat in your office, and I know you mentioned that you guys were discussing some of these key issues. I would imagine a lot of people watching here would, I guess, be heartened to hear that there is going to remain a quote-a-quote independent Fed. I guess, perhaps that depends on if Kevin Worsh's approved to replace Jerome Powell. And it seems like that made the panel what happens with the investigation into Jerome Powell. I mean, what is your

12:55sense on that? And maybe you could just share a few other key insights that you got from Senator Warnock. Yeah, well, first just on the Fed, I think Kevin Worsh is an excellent choice. I think he's going to be a great Fed chair. And the Fed will remain independent. It will remain data dependent. And I feel very good about that. I think that the other kind of related question, though, and it came up in our meeting with Senator Warnock, is the, and again, comes back to that key or central concern about governance in the U.S. and the Safe Haven status, which is why aren't more of the guardrails working in the U.S. The only guardrail that's really working in the U.S. today and for the last 13 months has been the bond market. The Trump put in Trump, too, is the 10-year yield. In Trump, one, the Trump put was equities. Whenever equities correct at three or four percent, the Trump administration would course correct. Today, they care about equities, but what they really care about is the bond market. When the 10-year goes to four and a half, they will, they get nervous at five, they will course correct on almost anything. And so that's

13:57the guardrail that's working. A second guardrail kicked in just last Friday with the Supreme Court's decision on Aiba and tariffs ruling against the president. Again, the Supreme Court proving that on key issues, they are guardrail. And then third, and it came up in our meeting with Senator Warnock, is the Democrats are very likely to take the House and a Democratic House next year could serve as another guardrail. We'll see if the Senate's actually in play or not. So I think that, again, some of the most bearish assessments of the U.S. are overdone, and the guardrails are kicking in and will work. Okay. Well, that's good to hear. And I guess maybe then you kind of have an all-specious outlook for the U.S. Let's turn internationally in time we have left, because that's really interesting. And speaking with you about, there was a high stakes meeting on Iran yesterday, I guess, between the U.S. and Iran. And I believe Amani diplomats were in the middle because of the U.S. and Iranian delegates didn't actually speak with each other. And I'd love to just kind of get your sense of what's happening there.

15:01I mean, I know there's going to be more talks next week, but Trump certainly likes to surprise sometimes with attacks. It's the largest, I guess, military build up in the region since the early 2000s. And I know some people are wondering if President Trump is really willing to theoretically walk away if he gets what he wants from negotiations with that much firepower in the region. Yeah, I would say on Iran, first the meeting yesterday in Geneva led to an agreement to continue talking and meeting again next week. So I don't there was no great breakthrough. There was no major moment, but the two sides are still talking and have agreed to continue. The broader question on Iran and whether the U.S. is going to strike militarily, I think just to first make a sort of important context point, which is President Trump to his credit in this situation as in almost all situations has defaulted to his primary objective or his primary mo, which is to negotiate.

16:04He always wants to negotiate first. He would like to get to a new nuclear deal with Iran. And again, to his credit, they are trying very hard the U.S. to get to a new deal, to avert the alternative, which is a military strike. And I think that in the very short term given that not much progress is being made diplomatically, there could be a smaller military strike to try to force Iran's hand a bit more. But if diplomacy fails between now and say right after President Trump and President, she's meeting in early April, again, because China doesn't like what we might be doing in Iran, I think we should expect a major military strike. So diplomacy is still very much on the table. It could see a smaller strike, but if we don't get to a deal where Iran essentially agrees to no enrichment and a much more limited ballistic missile program, expect a major strike, which will ultimately lead to decapitation of the regime. Obviously, a few follow-ups there. And I wish I could honestly speak with you for hours about

17:07this topic, because that's what I used to do for my previous job in grad school. But I mean, what do you mean by, like, for instance, a limited strike versus a major strike? A lot of people are trying to draw parallels between what happened in Iran and then in Krakow's, but Krakow's, I think, is 10 miles from the ocean. Tehran is deep into the internal part of Iran. And then, again, I mean, not to tie, we're going to have to vent as well on next anyway, but the U.S. seem to be pretty successful at getting President Maduro's, I believe, as Vice President to kind of play ball, whereas in Iran, with decapitation, as we both seem time and time again, that doesn't necessarily mean regime change. It could just, I told him, an A is 87 years old, something like that. So there has to be a successor plan in place, and it's not like the IRGC would just go away. So, I mean, what do you see there? And again, because this is a macro trading show, what are you seeing in the markets? How are clients reacting?

18:09And are there any, aside from just the impact on oil, energy commodities? Are there any sort of real takeaways that our listeners viewers should keep in mind? Yeah, so I'd say a couple of things in there. First, the very stark differences between what we did in Venezuela and what we are likely to do in Iran, just highlight again that there are really no discernible patterns in foreign policy and geopolitical risks. They're very different situations and both our strategy and possible outcomes are very different. On Iran, a limited strike, I think, means somewhat surgical ballistic missile strikes on key government buildings, nuclear sites and some military sites to force Iran to move faster on getting to a nuclear deal. I don't think that's going to work in the end, so I think it probably leaves on the table a larger military strike in April. And what that looks like, I think, is to your question on, are the markets

19:09trading this correctly or how to trade it? I think the oil markets have been trading the situation in Iran so far very well or correctly, which is we have an elevated price of oil, meaning geopolitical risk is now there's a geopolitical premium in the price of oil and has been for the last two months because of the possibility of a strike. I think what was, and so I think oil trading where it should, based on the information we have. Now, if we get to a major military strike, which we think again would be more like April, once Trump has exhausted all diplomatic and other options, I think what's underestimated there is how big it will be and I think it'll be two weeks, ten days, two weeks of shock and awe, meaning hitting everything from nuclear, government, military sites combined with a huge surgeon in cyber and other asymmetric warfare, including a wave of assassinations, including the religious leadership. So the goal there to just on the third party were questioned on decapitation, what that means is ultimately trying to identify a group of generals

20:16that will ultimately negotiate with the U.S. agree to what the U.S. wants and be much more outwardly engaged. The challenge here is identifying who those people are and so one last quick point, decapitation of the regime is actually regime change unlike in Venezuela. That was leadership change. The risk of it in Iran going incredibly wrong is much higher and I think that's where looking out a month and a half, we could see a much bigger risk off move and I think oil spiking probably higher than people expect. And it's, I was going to say, and it's interesting too, I mean, America first and Trump is certainly shown a liquidity to U.S. military power, but at the same point, he tries to shock and awe quick strikes, but so far as managed to avoid protracted conflicts and to be perfectly honest, I mean, when he took out the head of the IRGC last year, I thought that was going to be a big problem. I mean, even something like moving the U.S. embassy from, I think it was television to Jerusalem during, I guess, his first administration.

21:20I thought that was going to create a huge problem and it didn't, so maybe some of us do overestimate the risk. I do want to ask you one, I guess, one question though. I'm curious what you think of polymarket and prediction markets because as you were talking, I pulled it up on my screen and there are dozens, literally dozens of different markets where you can bet on U.S. strikes on Iran by March 15th. Next U.S. strikes, strikes like today. We'll come in a, be out a supreme leader by the end of the month and there's lots of different examples there. I'm curious your thoughts on that. I mean, do any of your clients trade on these markets? Please, please. Well, let me just say, I personally, this is not a house view, but I personally am a big fan of the betting markets. I think that, you know, predicted it's been very good. They've gotten better at predicting our election results and now with polymarket and Kalshi, these betting markets have been, they were very precise and very good at the 2024 election and kind of a mixed bag on some of

22:22those other stuff, including probably some of the hits on Iran, but I'm a fan of it. I think, I do think they're going to run into some regulatory headwinds on some insider trading issues. And that's a regulatory issue, but overall, you know, being able to make bets on political or other outcomes, not just sports, for example, I think is a good thing. So, no, I'm a fan. I'll give you one trade that I think is really a no-brainer on the end of many markets. You know, and it's political, but Don Jr. has a 1% on polymarket on Kalshi, I think it's 2%, but a 1% probability of being the Republican nominee in 2028, that is way too low. That's the same odds today on polymarket as Kim Kardashian has for president. And I'm here to tell you, he's got a 10,000, at least a 10,000 higher percent probability. So, I would make, I would take that trade if, even if the contract goes from one cent to 10 cents, you've made money. Don Jr. is a very, very viable possibility for the Republican ticket, top of the ticket in 2028. So, now I'm a

23:26fan of the betting markets. Again, it's not for everyone. I don't think gambling is good, but it needs some regulation, but I think it's been a really interesting indicator. And to your question, a lot of our clients now follow the betting markets very closely. Yeah. I mean, it's funny, I think I remember the odds on Aaron Rodger as being the vice president. Who was it for? It was the vice president's nominee for RFK Jr. Was that, I think there was a... Possibly. Yeah. Anyway, but yeah, I'm curious. I mean, just the prediction markets. I don't know how deeply you studied them. I mean, insider trading is obviously a concern, even though the law is on insider trading for what's something, quote, unquote, regulated by the CFTC is different than traditional insider trading laws with the SEC. But yeah, I mean, according to Polymarket, Israel is going to strike Iran by March 31st. There's a 63% chance. 23% hominase out of Iran by March 31st. There is, it's a 50-50 probability, basically, that US is going to strike Iran by March 15th.

24:33Do you foresee any issues with, like, perhaps the tail wagging the dog here? Or, like, I mean, there's been so many issues, our examples of people front-warning certain trades and making a city of economic amount of money. And I wonder, too, sort of, I guess, like the morality of betting on things like this. Yeah, I think, you know, again, just whether it's our firm or the vast majority of our clients, to the extent that we do follow the betting markets very closely, it's one input. And I think everyone understands that, right? It's one indicator. It's not an overarching indicator. It's not necessarily the most accurate, but it's a really interesting indicator and certainly should be looked at. Secondly, there is blatant insider trading. If you look at the one, there was one person that made a huge amount of money betting on the door being out. Yeah, I think it's hours before something. Yeah. Yeah. And there's been some front-running of some economic data. So there's clearly some need for a little more regulatory oversight.

25:35I will argue. So, but, but, barring that, you know, on the morality question, look, financial markets and morality have never really intersected. I don't know to say that diplomatically, but, you know, at the end of the day, people are going to invest and bet mostly on where they're going to get the highest return. And I think the betting markets are kind of an extreme example of that. Yeah. So, that's funny. I'll give you a funny example from a crypto point of view that you may not have seen. So there's kind of this online sleuth. He goes by Zach, he's pseudonymous, and he published a big investigation yesterday into some serious insider trading allegations at a crypto exchange. And then apparently there was a polymarket market on which exchange was going to be made. And somebody made a very advantageous trade at the right time. So there was insider trading on the insider trading. Yeah. That is, it's fascinating. But I think, by the way, the regulation will come or the oversight will come. Yeah. I do think that the future is very bright for these companies. Also, Don Jr. is a paid advisor

26:37to Colchian, the Trumps. He's on both. He's on both. Yeah. They own part of polymarket. So I would say for the next three years that a minimum, the outlook is pretty bright. Okay. I know we only have a few minutes left. I want to turn to the Venezuelan quickly. From last I heard, you're going to be leading, I believe, the first foreign business delegation into the country next year, just briefly kind of just talk about what you're looking to accomplish. And I think, again, bring this back home to my audience. I mean, the US is selling Venezuelan oil. How could all that sort of impact the US economy, the US deficit, especially in the world where Trump's tariffs were just, I guess, invalidated. And the US could have to pay 100 billion plus back in tariff rebates. Yes. So first of all, Venezuela, let me just say at a broader level, part of the theme that I mentioned earlier, that America first now absolutely applies to more than just domestic policy, also in corporate foreign policy, including a much

27:39more assertive or aggressive one. And within that for our hemisphere, the Monroe doctrine is back. And they've renamed it the Don Road Doctrine, which I'm convinced the president named himself. But the Monroe doctrine is back, which stipulates that the United States can use, has every imperative moral and other to dominate our hemisphere economically and militarily, including regime change, if there's any perceived threat to the national security threat. So on Maduro, specifically, or on Venezuela, Monroe doctrine was somewhat invoked. The other thing I would just say on Venezuela is, and this is somewhere, and where I give the Trump administration a lot of credit, because any other US president would have really to harped on what we needed to do, or did in Venezuela, by saying it was about democracy, human rights, if it was about drugs, it was about getting Cuba out of and rush out of our hemisphere. It was about all of those things, but actually the Trump administration will have to deal with it. It's about oil. And let's be clear, Venezuela was about oil. And it's partly to your broader

28:42question of how the markets might view this over time. But the Trump administration have had a very explicit and very clear strategy, energy policy to bring the price of oil down into low 50s. I think oil, once we get through what we do in Iran, or don't do, but oil will be trading in the low 50s later this year. And part of that is bringing much more Venezuelan production on stream, ultimately getting to a new nuclear deal with Iran, either this government or a different one, Iran can export more oil legally and a ceasefire in Ukraine, possibly by the end of this year, more Russian oil. The world is a washing oil. I think there's actually a lot more supply coming on. And that's an intentional part of the US strategy to bring down the price of oil, to address the number one issue in our midterm, which is affordability. And the Trump administration is doing a pretty good job of bringing down the price of gasoline because of the price of oil. So I think that Venezuela is central to that. Last quick thing on Venezuela, we are taking now 55 clients, and we turn it into a conference in Caracas, March 22nd, because of huge demand.

29:49Any crypto clients? Not crypto, interestingly, I think it's just a bit early. There is use of stablecoins in some crypto in Venezuela, but it's just a bit early. It's mainly oil and gas infrastructure, insurance banks, chemicals, and asset managers that own the defaulted bonds. Well, there's rumors that the Venezuelan government is sitting on billions and billions worth of Bitcoin. So maybe you guys can find it while you're down there. I will ask. I will ask you no more on the ground, but I think the outlet for Venezuela is incredibly bright, whether you agree or disagree with what we did. There is no scenario in which the Venezuelan people would have been better off under Maduro. So I think the future from here on Venezuela is they have a guaranteed income stream, which is oil. The only question, and only variables, how fast that income stream grows. I think it'll be faster than most estimates. A huge win for Venezuela. Cuba's next, there will be government or leadership or regime change in Cuba. We are going to get to a deal on Greenland, and we will have regime change or leadership change in Iran. So a lot happening

30:54in geopolitics, and I think the one constant is keep in mind this is a much more imperialist and expansionist administration. I would argue the most expansionist since George W. Bush, and they're just getting started. I know we're just about a time. Do you have time for one or two more questions? Please, because yeah, there were two other things I wanted to ask you before we'll wrap up. One, I mean, we're talking today on a day when open AI just announced 110 billion investment. I saw plenty of this. Dr. Evil means like 100 billion. But it did get me thinking, again, I mean, last couple decades, they were dominated by the Googles and Facebook's, those that the GAFA companies or whatever the acronym was, where they became state actors in their own right because of the power. Today, it's AI companies, the voracious appetite for data centers, energy, et cetera, and they're going to be the new GAFA companies. How do you see them sort of playing in a world of now like great power, power rivalry? And especially now, like

32:00Donald Trump, I think the rumors they were going to, it was reported in the F.T. I think right before we came on that they're going to try to spin out truth social and kind of lean into nuclear energy. So they're getting involved in all this. Like, how does that dynamic play out? And then I guess just to again be considered of your time, the other thing I was going to ask too is in this world of like Trump capitalism with US government has golden shares in things like US steel and it's taking 10% of intel and I think it's getting royalties from Nvidia sales into China. Like, how does all that play, I apologize, I know it's a bit of a long question, but I just wanted to get this thing out. It's a lot in there. Let me answer them in the reverse order because the second part is a shorter answer. But again, as I mentioned earlier, the United States today is engaged in classic industrial policy. It started under Biden with chips IRA and infrastructure. Trump came in, kept most of that and then has put industrial policy on steroids, which is protectionism, tariffs and government taking stakes in companies. You mentioned a bunch of them.

33:03There's also the rare earths companies that the government's taking direct stakes in. And I think we will continue to do more of that. So again, it's very much a part of the industrial policy that began under Biden and is being accelerated by Trump in part out of national security to secure our supply chains, encourage reshoring and reviving the manufacturing base of America, protecting American industry, protecting American jobs. So expect a lot more of it. It brings me to your first question, which is open AI and AI companies generally. I have a very unpopular view of this controversial view. Open AI does not have the most advanced or sophisticated technology. And I think ultimately, when the CFO last year in November said they made me the government backstopper, they would get one. I think that if necessary, the government would take an equity stake and open AI. They just raised the 110 billion, but from three existing shareholders, three shareholders that have the most to lose if things don't go well. And they also raised it

34:04at a lower evaluation that they initially had hoped to, which is $730 billion, not the $850 they were talking about a month ago, not a good sign either. And they're preparing for an IPO. Maybe they do IPO. They'll buy even more time. This caprice gives them time. We have a long history of U.S. companies IPO-ing that have no path to profitability. But on open AI specifically, the math is just science fiction. There is no mathematically, I mean, I'm willing to debate anyone, either be proven right or wrong in the next six to nine months. Mathematically, these open AI will not be able to deliver, forget about earnings. They're not going to be able to deliver on sales estimates to justify the valuation at which they're raising capital today. So I think that AI is so critical to everything we do and to national security. I think you could see the government become a bigger player there. Not in terms of regulation. This is a very regulation light administration, but probably needing to backstop, potentially take a stake in open AI, which would be very controversial, but they would do it. Although I think the markets would

35:07appreciate it because if AI goes down, if it goes down, the rest of the market goes down, so I guess. Absolutely. Probably not. The reason the U.S. will backstop open AI is exactly what you said. And by the way, if open AI needs a backstop, ultimately, and that would be six to nine months from now, it's interesting. It would not be a credit event for open AI. They have almost no debt. It's the collateral damage to everyone else. Amazon, Microsoft, Oracle, the collateral data centers, real estate developers, the collateral damage would be absolutely very painful. And secondly, open AI is the centerpiece of Trump's AI moonshot, which is Stargate is open AI and soft banks. So it will be bailed out for the right reasons if necessary. Overall, I'm incredibly optimistic as most people are on AI. I think the displacement trade, which is playing out now, is a little overdone, meaning people are just selling everything

36:08first and then trying to ask questions. It's going to create some really, if it hasn't already interesting buying opportunities selectively within software, within parts of financial services that have been hit. And ultimately, like post the internet bubble, what's going to emerge here through some of this somewhat painful correction is we'll be two or three national champions. And Google, by the way, is absolutely one of them. They have incredible technology, and they have the resources to keep building. But there will be others. And Thropic is good. I worry about anthropics taking on the Department of Defense or Department of War. I understand why they're doing it. I admire them for their principal position on this. Taking on this administration, though, is usually not been a great strategy. So we're going to see how that plays out. Yeah. And actually, I think opening AI just, again, right before we came on, it was reported in the Wall Street Journal that they're having similar discussions now with the DOD so they can take on classified information. But Simultman seems to want the same types of restrictions. I'm not quite sure how that's going to fit understandably. But yeah, I mean, otherwise, Charles,

37:10thank you for joining. I mean, before I let you go, I just want to give you the chance to share any other final thoughts on what's going to happen in the rest of the year, other domestically or internationally, or again, I know your firm doesn't primarily focus on crypto. So I didn't want to labor that topic too much for you. But if you do have any thoughts on Bitcoin and how it's alongside gold or other types of equities, I'd love to get your thoughts on that as well. Absolutely. I have again a very unpopular view on crypto generally. And you know, when you're, if you're old like I am and you have remotely skeptical, everyone just assumes, you know, they say you're too old. You don't understand it. But let me just say on crypto, I think Bitcoin has a big future. I'm much more optimistic by the way on stablecoins. I think the genius act was absolutely brilliant. I have seen incredibly important to ensure that the most liquid stablecoins going forward will be dollar pegged, very positive for the US, the reserve currency, the dollar as a reserve currency. And I think stablecoins will be the

38:12overall adoption is only going to accelerate. On crypto itself, look, where I've come out on this is where I always do, which is, you know, it doesn't trade on fundamentals. It is not a risk hedge. It's not an inflation hedge. It is not a store of value. And it is not a medium of exchange. No one really buys anything with Bitcoin. The average person doesn't maybe many people in your audience do. But, but, you know, these currencies do not trade on fundamentals. They have incredible moments of bullishness. And then they have incredibly painful periods of, of correction. I don't know what it's going to take to finally clear some of that out, but given the huge amount of retail and other often speculative money that drives these, especially the bull runs, I'm not very optimistic on the outcome. It doesn't mean it can't be back up at 120,000 at some point, but it will not be on fundamentals. I'm very skeptical on these cryptocurrencies. I mean, that's something that I think most responsible players in the industry would like

39:14to see change. I mean, speculation can be a good thing, but it also can have perverse incentives. And I think the goal is to find those, like, those real monetary premiums or use cases for different assets so that you can sort of build models and find out what those fundamentals are. I know that's something that people are working towards, but I do appreciate your honesty. Can I have one more thing on this? Because, again, you know, I came from the sell side. There's a number of sell side, very smart sell side analysts that cover crypto. The reports they've been putting out in this most recent correction have been, you know, saying, trying to explain why Bitcoin has sold off so much, have been things like, oh, because of Iran risk or oh, because, you know, it's for all the reasons that Bitcoin was actually not supposed to correct. It should actually be going up. So, so, you know, I think that until the average American, not even the average, until, you know, a majority of Americans can use Bitcoin, for example, to go out and seamlessly

40:14buy something that they need every single day. It will continue to trade as a very speculative asset. Yeah, I agree with that. I mean, Bitcoin safe haven, but sometimes it's kind of like the doomsday haven, like safe haven may not be as strong enough of word. And then again, I mean, there's other assets, Ethereum, Salana, like other ones that are focused on other use cases that aren't meant to just be a safe haven, but it's early. And I do appreciate your your candor on the subject. Anyway, Charles, I mean, thank you so much for for joining. We'll have to have you back when there are other geopolitical factors that play, hopefully not war with Iran, because I think we both agree that there's going to be repercussions that no one can anticipate there. But otherwise, again, thank you so much for the time. Thank you to everybody for watching and listening, and we'll be back next week with another episode of bits and vips the interview. Great. Thanks for having me, Steve. Good to see you.