Bloombergs No. 1 Forecaster Predicts: The BIG 2024 Election Bet | Paradigm Press

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Summary

➡ Sean Ring, the editor of the Rude Awakening, introduces Andrew Led Zatlin, the newest editor, in a video on the Paradigm Press YouTube channel. They discuss Andrew’s educational background, his time in Japan, and his unique approach to economics, which he calls “moneyball economics”. This approach involves focusing on the right data and using it to predict future trends, rather than just understanding current situations. Andrew also shares his views on the current state of the U.S. economy and its potential direction in the next six months.
➡ The economy is becoming leaner and less dependent on the rest of the world, with growth expected in the future. Companies are waiting for interest rate cuts to start spending their capital, which could happen in the next few months. Artificial Intelligence (AI) is becoming a significant part of the economy, replacing some jobs but also creating new ones. The situation in Ukraine could also impact the economy, with potential for increased spending in defense and rebuilding efforts.
➡ The text discusses the impact of political leadership on the economy and investment strategies. It suggests that regardless of whether Trump or Biden is in power, there are ways to create a portfolio that is resilient to election outcomes. The text also highlights the importance of defense and copper as strong investment areas due to increasing global tensions and rising electricity demand. Finally, it mentions the author’s current reading, “The Great Game,” which explores historical power struggles and their relevance to current geopolitical situations.
➡ The text discusses the idea of shared growth and benefits, using India’s desire for a better quality of life as an example. It contrasts two approaches: one that is self-centered and aggressive, and another that promotes cooperation and mutual benefit. The text also mentions a book about the strategic importance of Tibet. It concludes with an introduction of Andrew Zatlin, a new editor for Strategic Intelligence with Jim Rickords.

Transcript

Hello, everyone. Welcome back to the Paradigm Press YouTube channel. I am Sean Ring, the editor of the Rood Awakening, and here today with me is Andrew Led Zatlin, who is our newest editor, and I’m looking forward to getting to know Andrew as rich as you are. So, Andrew, welcome, Sean. Thank you. Rude awakening it is. How are you doing? Fine. Wasn’t too much of a rude awakening here. We’re here at the Watergate Hotel. The whole scandal itself. In the United States, history happened here. Well, not in this room particularly, but in this hotel, this was history.

Is this right? It’s the point. We now have a new suffix in the english language, thanks to Watergate. To be watergated. That wasn’t what we were talking about. Not that. Fritz. So how are you? I stuck a little peek on your resume. I noticed that you studied at Emory, at undergrad, but then you went to Japan and you studied Japan. Can you tell us, like, how about the experience and how that may or may not have changed you in any way as a young man? It was huge. Okay, so I go to college, and I was really.

I loved history, right? That was my thing. And current events. And I happened to, this is. I don’t know if destiny is what it is. There was a teacher there who had founded something called the Journal of Economic History. Rondo Cameron. This guy was a nut. He was crazy. But his whole view was history and economics are not disconnected. History is often driven by economics. Alexander the Great, how did he go forward? Well, his dad conquered the silver mine, so now he had money to hire mercenary armies. Boom, boom, boom. Where are cities built? They’re untrained.

So economics drives history. They’re not de linked. And at the time, Japan. We’re going back to the eighties. This was Japan. I was so fascinated that this small country with no resources was dominating the world economically. I mean, how do you do that? How do you go into that place? How does the US fall apart such that we’ve become a deader nation? This is the eighties. I was fascinated. So I ended up going to Japan, not speaking a word and just sort of learning it while I was there. I was a bartender for a while in Japan after studying there, and I liked it.

And I went back after graduating with a degree in economics and history. And I was part of a special program to go work for their foreign ministry and domestic industry, assuming ministry. And I was posted to this remote area called Uchima. Awesome place if you want to be somewhere that’s outside the mainstream. And I spent two years there. But then made my way to Kyoto University to study economics, because you had seen this pivot. All of a sudden, Japan was going from being this massive exporter to a consumer country, and you were starting to see that.

So my fascination with Japan started off in college. The whole idea of things change. They don’t come from nowhere. But more interesting to me was, where are they going to go? Trying to sit back and say, if this is happening, and we know historically this isn’t the first time, where are things going to go? Because people are people. Doesn’t matter if you’re a Roman in sandals or an American. And Atlanta. We’re all people. We have the same motivations. And. Yeah, so I answered your question. No, no, no. I love, you know, I visited. I didn’t study Japan, but I am amazing.

And Japan is my favorite country in Asia. It’s just one of the most great countries. Japanese people. Great. Yeah. That’s fantastic. So you studied, you did a master’s degree there, and then you kind of moved through industry, and you arrived at what is what you call moneyball economics. What’s. What’s that all about? Well, one of the things I started to do in Japan was I’m an argumentative kind of guy. I admit that. I’m very back driven. And so I started to look at what was going on in Japan, this transition. My professor that I was assigned to here, and I would get into debates about, you would pay $150 for a bottle of Jack Daniels that I could get over here for $20.

And there was this thing in Japan where you had people willing to pay that, and I said, no, once you have more japanese getting outside of Japan, pre Internet, obviously they would start to realize, wow, we’re getting ripped off left, right, and center. Consumers. Consumers will try to save money. He disagreed. That was one time that I was right, one of the many. But in any case, so using data, I was always like, hey, no, let’s look at what’s actually happening, not what you’re being told is happening, but what’s actually happening. And I found that a lot of people were kind of crap.

They didn’t see the information or they didn’t see it the way I saw it. So I started to. I don’t want to get interested in industry, so I went to industry. But I’ve always had this fascination, no matter what job I took, of what’s the data telling us? I mean, if you’re a business person, it’s what’s the data telling us? Are we on the right path? Are we on the wrong path. What markets should we be going after? Well, how do you decide you should do something? Well, is there money there? Well, how do we know if there’s money there? Well, let’s look.

Moneyballs. The book. Michael Lewis, amazing moneyball. What’s going on there is it starts off where this guy is saying, you’re looking at the wrong data. And that’s, that’s the critical thing, is what’s the right data? Because we get ossified. If you go out there today, for example, I’m going to fast forward and then come back. Most conventional data that we use, so and so says consumer sentiment, is this or manufacturing information came out like this. These metrics are 50, 60, 70 years old. They don’t even take into account the Internet era a lot of the time.

That’s right. You have to throw out that data and you have to start fresh. Coming out of corporate America, one of the advantages I had was, well, I know what data companies are looking at. So if companies in the private sector are driving a lot of our economy, and we want to know where they’re going with their spending, well, what are they paying attention to? I found that what they were paying attention to and what Wall street was paying attention to, there was too big of a gap. So I went on and said, well, it’s sort of been a moneyball thing.

Look, you need to be paying attention to these things, not those things. For example, coming out of Silicon Valley, I knew firsthand that you should be focusing on semiconductors. I would go out and meet portfolio managers and say, oh, we’ve got our intel guy. I said, no, no, no. This is a macroeconomic signal. The industrial era, it was coal, it was steel, it was cement. In the digital era, it’s semiconductors. If a chip isn’t in what you’re buying, it was in the thing that made the thing you’re buying, and it’s just becoming more and more so.

So, and there are elements of the semiconductor industry that make it even more of a great sensitive finger on the pulse thing. So I started taking that information and saying, if you really want to know if manufacturing is ebbing or flowing, you don’t want to look at gas. Who cares about fuel consumption? I mean, is our society that driven these days by factory manufacturing that requires fuel and driving? Now look at semiconductor. So I was always looking at, from a moneyball perspective, what is the data that matters, and then not looking backwards, but trying to project outwards, not just getting that insight, but going for the foresight and so therefore, what does this tell us about what you can do? Right? That’s amazing.

And you project down, I imagine, like Monte Carlo Sims and all that stuff. We don’t need to get into your secret sauce, but what is the data telling you today about what’s going on in the US and the wider world? Do you have any view there? That’s a, that’s, narrow that one down, man. We’re talking. What’s my bet with Nate Silver on Trump, you know, or Biden? What, you know, what do I think is going to happen in Ukraine, Kyrgyzstan, Kazakhstan? What do we want to, let’s, let’s immediately look at the economy up to the election.

I mean, let’s say next six months. How do you, we have a lean, relatively lean economy when you think about it. Where’s Greg reset? Covid? We fired everybody. And then companies took a step back and said, what do I need? And they messed up along the way. They extrapolated from this bubble that happened. And they said, we saw this last year with the mass lay off, some high tech where the facebooks of the world sat back and said, well, for a couple of years, everybody’s been in their living room gaming and messing around and not socializing.

That’s going to continue. We’re going to see just as much gaming and just as much social time, and it didn’t happen. Okay. So we’ve done a little zigzag, a little adjusting, but our economy at the heart is lean. That’s a good starting point. Meanwhile, manufacturing, we say lean inventories have been flush. Suddenly, after that great reset in 2020, you have another kind of a reset that we’re going through right now, but we’re emerging from all this pretty lean, not as dependent on the rest of the world. We’re the only economy out there that really seems to be growing.

And into that leanness, you can go one or two directions. You can grow or you can get even leaner. I think we’re going to do both. I think white collar jobs are going to be shaved a little bit throughout the rest of the summertime. They just are. There’s still a little bit more fat, a little bit more trimming. Look, by and large, I think we’ve got, we’re waiting for the tailwinds, right? We don’t really have tailwinds yet, but I do see some emerging. I don’t see headwinds. The tailwinds I see are, there are a lot of companies that are waiting for interest rate cuts in order to spend their capital and you know it’s going to happen.

You know it’s going to happen. It might not be now. And that’s part of the problem today, is they’re waiting. Right? So they’re not yet spending. But once they do, and I think the idea is in about three, six months, companies are going to start spending a lot. So now you got a little tailwind, little buildup. Your inventory is flushed. You got to redo that. Yeah, four years post Covid. You know that couch is stained. Go get a new one. You know your PC is now obsolete because it doesn’t have AI on it. And speaking of AI, that’s another one.

That’s a real. I mean, that’s a. That’s not a fad. No, that’s real. Yeah. And now you have to take a step back and recognize it’s real because companies see a payback and that, that pay off for tens of billions of dollars. And by the way, that’s not a made up number. The semiconductor industry alone in the first three months of this year generated $23 billion more. They did same period last year. That’s AI. That’s Nvidia. Nvidia’s coming out. Earnings. It’s going to be whatever it is, you know, it’s going to be monstrous. Telephone number. Now, you don’t spend tens of billions of dollars without seeing a direct connection to the payoff.

And that payoff is fewer white collar workers. We don’t want to have call centers whatsoever. It’s not about having them in the Philippines at $3 an hour, a buck an Allen. No, we don’t want them at all. It’s a cost. Citibank doesn’t want to have thousands of accountants on the payroll who are just confirming that the transaction took place. And it’s clean. Automate that AI. Get in there, man. Blockchain technology, whatever you got to do. So we do also have a further leaning. It’s the lamplighter situation. Gas lamps went to electricity, you lost jobs, but you transitioned and you got new jobs.

A lot of those new jobs are going to be coding, managing data systems and stuff. Okay, that’s fine. But it’s not like it’s a net loss. But the transition is always painful. The biggest one, though, I don’t see anybody talking about this, is Ukraine. Ukraine has kind of two components that are good for our economy. One is. Yeah, yeah, yeah. We’ve given 5100 billion dollars of military equipment support. But that was on the shelves. That had no economic impact. Well, now you gotta restock the shelves. Yeah. So I’m surprised that defense industry stocks are as low as they are.

But while that goes underway, I mean, basically we had a period of peace. It was artificial. We had two generations of peace. We’re back into a war footing. Russia and China put us there. Okay, fine. Well, that means you’re going to have more spending in those areas. But the second part of the Ukraine war is when it ends. Okay. This is going to be the Marshall plan. It is. You are going to see. And what makes it so delicious is you see it already emerging. Ukraine is going to need, let’s put a number out there, half a billion dollars.

You got to rebuild schools, hospitals, whatever it is. Who’s going to write that check? Russia is. How are they going to write it? The west is sitting on $300 billion of their money. Who knows how much more valuable it is since they gave it to us? Oh, yeah. No, Russia. Everyone’s going to be willing to write that check because they don’t have to cash it. Russia does. And we’ve got the money. There’s nothing they can do. And already that’s being not just floated. You’re already seeing the baby steps. Oh, we’ll take the interest from that 300 billion.

It’s not going to stop there. But what that means is, let’s call it the spoils of war, because that’s really what it is. In a world where you’ve got a Trump who’s a very transactional person, we already are clear that if he gives anything to Ukraine, it’s not a gift. It comes with strings attached. I’m not going to give you the money. I’ll loan it to you. But you’re going to buy GE hospital equipment when you rebuild your hospitals. Now, Biden might be doing the same thing in the background. I don’t have a lot of faith, but at the end of the day, half a billion, half a trillion dollars, or whatever that money is that starts going in is probably going to happen later next year.

I’m assuming next year is when this war winds down. I could be wrong, but we’re talking tailwinds. That’s a huge tailwind. You spend half a trillion dollars and you get that magnifier effect, knowing it’s also going to come. I mean, there’s a reason why France, for example, is now jumping into the war and say, we’ll get more equipment. Hell, we’ll even fight that fight. Because what they recognized is a, they’re not worried about Russia. Russia’s several countries away. They have to go through Germany to get to France. So they’ll fight as hard as they can to let the german troops happen.

But they see the spoils of war. They see the war dividend, and they want french ammunition being selected by the Ukrainians. This is not moral. This is the real politic. This is what college students in America are so ignorant about is reality. This is the way the world operates. Now you can sit back and say, I don’t want to participate. Oh, my goodness. Oh, oh. Hey, Russia, what are you doing over here? How’d you get there? Well, wait a second. Or you could say, okay, if this is the way people are, I may not want to be that way.

But it’s ignorant not to know that if you’re going to go, if you’re Jake Paul going up against Mike Tyson, you better know how to punch. Right? You just sit there and say, you better, Mike, can we hunt it out? You know, I mean, you better know how to do something. Exactly. And carrying on from that, and I hate to ask this because no one really knows, but we’re an awakening, man. You don’t need it. This election. Which way do you see it going right now? Not held. Anything like that. But anything can happen. Anything. You could have that, that September, October surprise, Gavin Newsom instead of Biden, who saw that coming.

Right. But it’s Trump all the way. And it’s Trump all the way for some very basic reasons, which I could share, but feel free to. I don’t want to bore you. No, no. You sure? Yeah. Talk baseball. Why Trump? Okay. It’s basically the model mechanics. I’m a data guy, and this isn’t popular vote, it’s electoral vote. And the last election was lost for a couple of reasons, but it came down to which state. And the losses in those states were very slim. Yeah. So number one, we’ve got Trump leading in those states. Okay, we know this.

It’s a shame that it all comes down to like five states, right? But it does. Okay? And you’ve already seen these guys. You know, Biden was in Georgia at Morehouse College for a reason. He wants that Georgia vote. You know, he’s kowtowing in Michigan, you know, brow beating Israel. Why? Because he wants that Michigan vote. Okay, so Trump is going to take it simply because he’s going to take these swing states. What’s interesting, though, is I think we were talking about this earlier. Biden, Trump are known factors. We know who these guys are. We know what they’re going to do.

Yeah. There’s going to be campaign promises, I’m going to give everybody minimum wage. That’s dollar 50 an hour, whatever. We know what they really can and can’t do, but we also know where they’re focus is and where it isn’t. And so that definitely highlights certain industries and pulls down certain industries. And if it’s a Trump, I’m confident it’s going to be Trump. But whether or not it’s Trump or Biden, the place to go, there’s a universal place. You can have a Trump proof portfolio. You can have a Biden proof portfolio, or you can just say, I’ve got an election proof portfolio.

And if you want an election proof portfolio, that means it doesn’t matter who’s elected, these are going to be the ones. But I think Trump, knowing that they’re known factors, knowing that what you have is an alignment, going back to why Trump, you have an alignment between what the populist concerns are and what we know has been delivered, what they’re going to say. Economics matters. Well, Joe Biden, 20 what? Percent inflation? You know, Trump unleashed powerful economic growth through a variety of things. Biden, you know, you can’t talk. He inherited, every president inherits cards that they can play.

He inherited a recession. There was nowhere to go. But he created jobs. No, he didn’t. He goes back to pre Covid and then a little bit. Trump literally created more jobs and the economy was slowing, but he created a lot of jobs. Okay, economics matters, security matters. We have a porous border around the world. You know, Biden going do. And they do. I mean, come on, nobody takes us seriously on the foreign stage to the degree that they were taking us seriously with Trump when Trump took out Soleimani. What are you going to do? Hey, what are you going to do? Nothing.

That’s what I thought. Okay, so Americans, it’s been a few years and they’re looking back. There’s a lot of muckraking, a lot of campaigning to do from here on out. But bottom line, we have a track record where Trump’s priorities align very favorably with the national concerns. Biden’s dough. But going back to. So what do you do? All right, well, you know, if you’re an investor, you know about risk management, maybe you put a little bit on a Dem victory, maybe put a little bit on the republican victory. I mean, this is what edge funds do, right? I got both guys in my pocket.

I don’t care. Right. But I mean, the two areas I like that are just fundamental. One is defense. Look, we know this is real spending that’s happening here and abroad. Japan’s going to ramp up to $30 billion a year in spending. Who are they going to buy? They’re going to buy our weapons. Same thing with Saudi Arabia. Same thing around the world. Russia and China are forcing us back onto a war footing. Great. That’s hundreds of billions of dollars more being spent on us armaments. Right. Okay. I think now’s a good time to get in because I don’t think the stock prices have priced it in yet.

Okay. So that’s one. But I think ultimately the preeminent stock I would pick report back more. Okay. And here’s why. You have a convergence of multiple trends driving copper right now. I’m not a commodities guy, I’m a numbers guy, but what do I see? I see electricity demand surging. Yes. Okay. Now it’s surging for a variety of reasons. We’ve got electric vehicle demand and that’s sucking electricity. We’ve got data center. Okay? AI is a big energy suck. Okay? We already saw that with crypto and data centers, how they are just sucking up. They are basically driving most of the growth in electricity consumption.

Third, and you’re going to see this in Texas, you’re going to see this in Southern California. You’re going to see heat waves knock out the grid. Right? This is the way of the world. Okay. So you need just fundamentally more electricity being provided. Okay. So you need the infrastructure. The grid is going to get, just going to be ongoing. Supply more, supply more, supply more. So you have oligopolies. People aren’t going to cut their demand if prices go up. They can raise their prices. It doesn’t matter. They can guarantee. So you can go out there and buy a utility.

Semper is one that I have will transparency. I own semper because they dominate southern California. Southern California. California alone has all the dominant share of data centers, but you’ve got electricity demand there from the heat waves. Electric vehicle adoption is high and so on. Texas, another great one, but a little dicey which utility you go for. But at the end of the day, as more equipment is going to be ordered, as more demand is going to be needed, you have copper sitting right at the middle of that. Oh, inflation. Inflation is a problem. Everybody rushes to the door for commodities.

That’s how you hedge inflation. Another reason for copper, China going up. Copper is going up. So just everything just says to me, copper, I love it. Let’s just turn our attention. Final thing we’ll talk about. What book are you reading right now? That’s that’s crazy. You ask, because I’m actually rereading the book. You’re not supposed to, right? Love it. No, you should. All right. You should. That’s a great habit. And this is, this is crazy because it’s a historical, it’s called the great game by a guy named Peter Hopkin. Oh, I love that book. Noah, you know this? Yes.

All right. Absolutely. Okay, so this guy’s like, straight out of the pay dike punch. Richard Kipling. He’s like Smiley’s people, right? He’s one of these spies, but he’s a journalist. Yep. But the reason I’m rereading it is it’s that classic. The more things change, the more they stay the same. I mean, we’re talking about Russia, the great game being the Russia UK, trying to elbow for position in Central Asia. Asia and Iran and India, where we are today. It’s the same old. This is roman times. You have three poles, you have China, India, western Europe. And everybody feeds into that in some way, shape or form into that trade route.

Well, when Britain in their heyday was around, they dominated China, East India Company. All the riches that Britain needed came out of India. And here’s Russia going, we’ve been left out of the colonization, imperial thing. PETeR the Great’s like, let’s just take everything on the top of the world. Oh, wait. If we keep doing this, we’re going to bump into Britain. So we’ve got a muscle for control. This is one to one, the reason I’m rereading it, this is one to one with what we’re experiencing today. Swap out the United Kingdom, put in America. It’s the same motivations, the same fundamental players trying to jockey for position.

Oh, it’s changed. Well, instead of it being whatever resources out of India, now we’ve got oil in the Middle east. But you still have the same cultures, you still have the same problems, and you still have Russia trying to jockey for position, the west trying to jockey for position and resources and battling it out in that area. And the reason I’m reading it is it’s a great book. It’s like, it’s so fun. Is it a spy novel? Is it real? It’s real. It’s real. But what’s fascinating is, again, I want to project out where are we today? Where are we going to be tomorrow? Is the goal.

Hey, if youre an investor, thats what youre doing. What is going to be happening? And can I get there a little ahead of others so that Im positioned well or, hey, if Im in solar stocks right now, I would be dumping them because we know Trump isnt going to support solar stocks the way Biden has. I want to get away from, I want to go to whatever it is. Im rereading this book because Im trying to figure out recall, I guess. So what happens when you push back? One of the fascinating things is when Russia is just accelerating.

Georgia. We got Georgia. What’s next? Boom. They’re just going to talk. No one’s confronting them until the british stop. No, no, we mean it. Russia stopped. Finally, like we all going to fight you in as usual with bullies. Russia’s like, oh, hey, misunderstanding. It was a miscommunication, friend. I don’t see it. Let’s have some bull, you know, that kind of bullshit. We’re in the exact same place. So how do you push back? Do we want to push back? Why are we there? Expenditure of capital and you have the same kind of problems also in the back home where you’ve got this disconnect the powers that be, the people who are required to do forward thinking and to plan for this economy.

Hey, I’m the United Kingdom, okay? This pox Britannica, I’m going to protect the seas. It sounds so familiar, doesn’t it, Sean? It’s the same thing. We have pox America, right? We’re going to protect the sea lions and as a result, we’re going to have more trade. And at the end of the day, you really have to look at this in terms of mercantilist. I mean, I don’t want to go off academic, but the reality is you have countries like Russia and China who think it’s all about me. It’s a zero sum game. If you win, it means I lose.

Opposite that is this system. And I would say it really is a british system. The Romans did it, too. That’s why it was so successful is, yes, we’re going to dominate, but everybody can win. It’s not a zero sum game. Our share of the pie, it’s going to be big, but we’re going to grow the pie. So you benefit too, okay, we all benefit. Yeah, I benefit more, but so what? We’re all growing, right? We’re all participating, we’re all extracting. India wants the quality of life that America and the west have. Do they want to do the exact same things? No.

What? They want clean water, they want electricity, they want healthcare, that works. They want minimal corruption. That’s where they want to go. And so we have really a fight, right? Now between basically the mongolian horde in Russia, a rapacious, it’s all about us, and we’re going to take and seize whatever we can, and we’re going to keep you out as much as we can. And a value system, a cultural system that says no, you know, let’s all engage and let’s all work together. Fantastic. May I recommend to you flashbit and the great game, if you want the fictionalized version of that really brilliant book.

All right, I’m going to go. I don’t want one up you. But did you read Hopkirk’s other book? Was it top of the world now? I haven’t yet. It’s a little bit more of a focus on why Tibet is so important and why you have like Russia, China, India, everyone just kind of like going, we want Tibet. Yeah. Fantastic. Andrew Zatwin, thank you so much, man. That was brilliant, really. Far from a rude awakening. Far from a rude awakening stuff. Everyone, thank you very much for joining us. Andrew Zatlin, our newest editor, you’ll find him in strategic intelligence with Jim Rickords.

Have a great day and thanks for being with us.
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