Shownotes
Jacob and Marko tackle the results of the 2024 election as only they can – in a 2 hr+ episode, they discuss what happened in the election, what Trump’s agenda will mean for the economy and markets, how to understand the geopolitical impact…and what his victory might mean for the future of the United States.
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Timestamps:
- 00:00 - Intro
- 01:17– Realignment or flash in the pan?
- 15:25 – Domestic agenda
- 40:40 – US-China Relations
- 1:03:40 – Mexico
- 1:13:20 – Ukraine/EU
- 1:27:51 – MENA/Iran
- 1:40:25 – Future of the USA
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Jacob Shapiro Site: jacobshapiro.com
Jacob Twitter: x.com/JacobShap
CI Site: cognitive.investments
Subscribe to the Newsletter: bit.ly/weekly-sitrep
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Cognitive Investments is an investment advisory firm, founded in 2019 that provides clients with a nuanced array of financial planning, investment advisory and wealth management services. We aim to grow both our clients’ material wealth (i.e. their existing financial assets) and their human wealth (i.e. their ability to make good strategic decisions for their business, family, and career).
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Disclaimer: Cognitive Investments LLC (“Cognitive Investments”) is a registered investment advisor. Advisory services are only offered to clients or prospective clients where Cognitive Investments and its representatives are properly licensed or exempt from licensure.
The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor
This podcast uses the following third-party services for analysis:
Podtrac - https://analytics.podtrac.com/privacy-policy-gdrp
Transcripts
Hello, listeners.
Jacob Shapiro:Welcome to another episode of the Jacob Shapiro Podcast.
Jacob Shapiro: ld Trump is the winner of the: Jacob Shapiro:And who better to talk to about this election than cousin Marco Papage from BCA Research.
Jacob Shapiro:We've had this on the calendar for weeks and plan to do a long episode talking about it.
Jacob Shapiro:Buckle up.
Jacob Shapiro:It's a two hour plus episode.
Jacob Shapiro:We talk about everything from what happened in the election, what some of Trump's domestic agenda are going to mean for economies and for the economy and for markets.
Jacob Shapiro:Marco and I have some disagreements about that.
Jacob Shapiro:Dive into geopolitics.
Jacob Shapiro:So everything from tariffs and China to the Middle east to the future of Ukraine.
Jacob Shapiro:And we close with some thoughts about the future of the United States.
Jacob Shapiro:As always, we are trying to stay objective and as Marco said at the end, irreverent.
Jacob Shapiro:As we deal with this topic, I know that it creates lots of emotions and I'm sure, I'm sure listeners know I also have emotions about this election.
Jacob Shapiro:But it's my job to put the emotions on the shelf and talk about what happened and try and get a sense of what's going on.
Jacob Shapiro:So Marco and I try to do that and we hope you enjoy as always.
Jacob Shapiro:You can email me@jacobognitive.investments if you have questions about anything.
Jacob Shapiro:Otherwise, take care of the people that you love.
Jacob Shapiro:Cheers and see you out there.
Jacob Shapiro:All right, cousin.
Jacob Shapiro:We are, we're back at it.
Jacob Shapiro:It's, it's November 6th.
Jacob Shapiro: you think is going to win the: Jacob Shapiro:Too soon.
Jacob Shapiro:Too soon.
Jacob Shapiro:We have, we have so much to talk about.
Jacob Shapiro:Sorry, go ahead.
Marco Papage:Not Kamala Harris.
Marco Papage:That's.
Jacob Shapiro:That would be my Kamala Harris.
Jacob Shapiro:No, probably not Kamala Harris, although she can use the blueprint that Trump just used to roar back to life.
Jacob Shapiro:So we're going to talk about everything.
Jacob Shapiro:We're going to talk about his agenda, we're going to talk about geopolitical impacts, we're going to talk about long term implications.
Jacob Shapiro:I think we're going to do a lot of scenario planning and things like that because there are multiple ways that this could go.
Jacob Shapiro:And I think on a few of these scenarios, you and I are on different pages.
Jacob Shapiro:But I think the first thing I wanted to ask you, or at least that we should talk about, is that we still don't have a clear definition of the results for the House race.
Jacob Shapiro:I mean, so there's a small chance here that the Republicans could pick up the House if some of these things go in their favor.
Jacob Shapiro:And it's probably going to be days or even weeks before we get the final turnout on all of the different House races.
Jacob Shapiro:So I guess just.
Jacob Shapiro:I'm saying this for myself and also for the listeners.
Jacob Shapiro:I think in everything that we're talking about, we have to keep in mind that there's a scenario if the Republicans can eke out a small majority in the House versus if the Democrats keep it, because if the Republicans can win the House too.
Jacob Shapiro:Suddenly this is a much different kind of conversation.
Jacob Shapiro:This is about Trump being able to push through an agenda with relatively little opposition, whereas if the Democrats can hold onto the House, he can say and bluster and try and do lots of things.
Jacob Shapiro:But there's a lot of power in the House if the Dems can.
Jacob Shapiro:Can push it.
Jacob Shapiro:So I thought I'd start there.
Jacob Shapiro:Do you have anything to say about.
Jacob Shapiro:About the House race itself, Marco?
Marco Papage:I mean, yeah, I would be very surprised if the Republicans don't get it.
Marco Papage:That's always been my view, by the way.
Marco Papage:Like, if Trump wins, I think he wins the House.
Marco Papage:And, you know, you see the.
Marco Papage:The popular vote has swung pretty strongly to Trump, so it would be very strange for us to have this sort of a pretty definitive victory and then him not be able to hold the House.
Jacob Shapiro:Yeah.
Jacob Shapiro:Some of the data that I was looking at that I think is important to frame our conversation with.
Jacob Shapiro:So Kamala only outperformed Biden in 58 counties.
Jacob Shapiro:Apparently in all of the United States, Donald Trump was in the thousands for that number.
Jacob Shapiro:If you look at where people shifted Republican versus Democrat, there are only two demographics that I could find where people started voting more Democrat.
Jacob Shapiro:It was people over the age of 65 and white college women.
Jacob Shapiro:But you go through the rest of the demographics.
Jacob Shapiro:White non college men, white non college women, Hispanics, Asians, blacks, young people 18 to 29.
Jacob Shapiro:Like, just, I mean, go down the entire demographic list.
Jacob Shapiro:I mean, it was just a complete and total sweep from Trump.
Jacob Shapiro:And I think both you and I were on the same page.
Jacob Shapiro:I think we both thought that Trump was probably going to win, but I was pretty shocked by, by some of those statistics and what that says about the demographics of the United States going forward.
Jacob Shapiro:Forward?
Marco Papage:Yeah, I think it's, you know, it's a pretty interesting.
Marco Papage:I think Trump called it realignment in his victory speech last night.
Marco Papage:And, you know, you have to, you have to give it to him.
Marco Papage:It is kind of correct.
Marco Papage:I mean, especially on the Hispanic vote.
Marco Papage:And it's also very interesting how much Democrats and their allies in the media tried to, you know, emphasize how all sorts of comments made by, you know, the comedian ads, Madison Square Garden rally were going to make a difference and none of them made any difference, especially with Hispanics.
Marco Papage:So I do think that this is a very important point, that the Democrats are at risk of basically becoming the party if they're not already of the haves.
Marco Papage:What is interesting about college educated women?
Marco Papage:Well, they have the luxury to make the election about abortion.
Marco Papage:And then what is interesting about Those who are 65 years and older?
Marco Papage:Well, they probably own their homes.
Marco Papage:So they made like, you know, a lot of money over the last four years.
Marco Papage:And so all the other demographics that you cite, they don't really have the luxury to be single issue voters.
Marco Papage:So when the Democratic Party tries to figure out why did that, why Hispanics voted more for Trump, well, that's because they don't have the luxury to just think about immigration.
Marco Papage:And it's, for them, it's more about the economy, it's about opportunity, and it's about those issues where the Republicans basically had a beggar, better campaign.
Marco Papage:So, yeah, I think that's a big one.
Marco Papage:But I would also not underestimate the importance of candidates.
Marco Papage:And this is something that I see the Democratic Party trying to make this election about.
Marco Papage:You know, how the African American voter voted, how the Hispanics voted, how, you know, the Arab Americans voted, how Joe Biden was an albatross around Kamala Harris.
Marco Papage: fact that we all Knew that in: Marco Papage:30 days is all it took for the Democratic Party voters to realize that she couldn't put three sentences together.
Marco Papage:So maybe it's that simple.
Marco Papage:You know, maybe what's really simple here is that the candidate was, you know, very suboptimal.
Marco Papage:And when Democrats allow competition, when there is like a free market, go figure, they tend to produce really good candidates.
Marco Papage: Barack Obama in: Marco Papage:I mean, he outperformed with white voters.
Marco Papage: As an example, in: Marco Papage: f you remember the primary in: Marco Papage:And he obviously came and won.
Marco Papage:And when they do that, they produce a very good candidate.
Marco Papage: In: Marco Papage: comparing her to Joe Biden in: Marco Papage: Well, Joe Biden in: Marco Papage:You know, I mean, he's past expiration date, clearly.
Marco Papage: But in: Marco Papage:And the fact that they moved so diametrically to the other side with Harris, it just shows a complete lack of understanding of what matters, what country they're running, you know, So I don't.
Marco Papage:I don't want to make this really more about sort of profound things.
Marco Papage:It could be very petty.
Marco Papage:It could be just like, look, you picked the wrong horse, and that horse underperformed.
Jacob Shapiro: Well, I think the: Jacob Shapiro:You could see that in McCain flailing around at the end and trying Palin and trying all these crazy things.
Jacob Shapiro:It was just a layup because people thought that the economy was terrible.
Jacob Shapiro:And this, to me, is the crux of the things.
Jacob Shapiro:And this is maybe where we get into our conversation about Trump's agenda and what's going to happen and whether this realignment has any legs or whether it's just a disillusioned flash in the pan because things are going to get worse as a result of some of the things that he's going to push through.
Jacob Shapiro: In: Jacob Shapiro:It was the great financial crisis.
Jacob Shapiro: some ways, they were ceded in: Jacob Shapiro:And the great sort of mystery to me in all of this is the economy is good, unemployment is fine.
Jacob Shapiro:Like, yes, inflation has cut into things, but it's.
Jacob Shapiro:It's balanced with wages going up.
Jacob Shapiro:It's balanced with inequality falling for the first time over the past couple of years.
Jacob Shapiro:So one of the things I know we want to tackle is how is Trump's domestic agenda going to impact the economy and markets?
Jacob Shapiro:But I sort of want to split that into three different categories, because I think we need to talk about how is his agenda going to affect the economy and then how is it going to affect markets?
Jacob Shapiro:Because I'm not sure that markets and the economy are on the same page here.
Jacob Shapiro:And then the Third thing is, how is it going to impact people's perception?
Jacob Shapiro:Because the most confusing thing to me about this race was not that Trump won.
Jacob Shapiro:If you look at the polls, and I put this out a couple of weeks ago to some of my readers, it was the economy, stupid.
Jacob Shapiro:It was a 9 or 10% clip of people saying that they trusted Trump to run the economy better than Harris.
Jacob Shapiro:And that was their top issue in the election, full stop.
Jacob Shapiro:That's easy to read.
Jacob Shapiro:But the confusing thing about that was the economy wasn't bad.
Jacob Shapiro: There wasn't any: Jacob Shapiro:Like all these things were sort of good.
Jacob Shapiro:So I'll let you attack that question however you want, but let's maybe start diving into the domestic agenda and that economy's market's perception triumvirate that I'm trying to lay out.
Marco Papage: ck to why Barack Obama won in: Marco Papage: goes back to why Trump won in: Marco Papage:I mean, Joe Biden is, you know, he ran on a pretty populist platform.
Marco Papage:Populism just keeps winning in America for the past 20 years.
Marco Papage:And so it's not about the last four years of inflation.
Marco Papage:I think a lot of Republican strategists and supporters would say, well, it's inflation, it's that simple.
Marco Papage:And I would say, yes, you're right, but it's inflation over a very long period of time.
Marco Papage:And it's income inequality.
Marco Papage:America has an income inequality problem that it just hasn't solved.
Marco Papage:And so whoever's the incumbent, whoever is in charge, and they don't solve it, they get basically punished.
Marco Papage: I have a chart going back to: Marco Papage: do is I anchor everything to: Marco Papage: So real wages from: Marco Papage:Oh, good.
Marco Papage:Wow.
Marco Papage:Like, it increased like 30% over the course of, you know, 30 years.
Marco Papage:And then what I put is what I consider middle class goods.
Marco Papage:So childcare and nursery education, medical care services, shelter.
Marco Papage:And the CPI, the actual CPI, the actual measured inflation has gone up 230%.
Marco Papage:So that by itself is a lot.
Marco Papage:But forget CPI.
Marco Papage:Who cares about CPI?
Marco Papage:When you look at shelter, it's at 270.
Marco Papage:When you look at childcare and childcare and medical services, there are 350.
Marco Papage:And if you look at education, it's a 400 from 100 to 4X.
Marco Papage:You know, so like, the point is it's impossible to be member of the middle class.
Marco Papage:You cannot measure it by income because every other, every good that makes you middle class, every service that makes you middle class has gone up 3, 4 times.
Marco Papage:Your wages have gone up 30% over the last 30 years, but the cost of being in the middle class has gone up 400%.
Jacob Shapiro:Yeah, I 100% agree with you.
Jacob Shapiro:But the irony there is that Trump 1.0 was part of that story, cutting the corporate tax rate and pro fiscal policies.
Jacob Shapiro:At the end of the cycle, he pushed things out a little bit and then we had Covid at the end of it that really blew things out.
Jacob Shapiro:So there is something happening in the perception of the electorate where I think you're absolutely right to talk about the pain of the middle class and that they are looking for solutions, but that they are casting about for solutions with somebody who already tried this and is promising all sorts of different policies that we can talk about.
Jacob Shapiro:Like, how is that, Like, I mean, think about what he was talking about.
Jacob Shapiro:Literally the day before the election, he was in North Carolina at a rally and he just decided to say, you know, what if the Mexico, if the Mexican government doesn't get control of the border, I'm going to give him 25% tariffs.
Jacob Shapiro:And if that doesn't work, it's going to be 50 and then it's going to be 75 and then it's going to be 100.
Jacob Shapiro:I thought LeBron and D.
Jacob Shapiro:Wade were going to come out and be like, yes, like, it's going to be all the way up.
Jacob Shapiro:Like, what would that do?
Jacob Shapiro:What would just that do to the US Economy?
Jacob Shapiro:Like, I don't know.
Marco Papage:Yeah, I mean, of course, like, I'm not saying.
Marco Papage:Look, his policy mix right now is, you know, is very interesting and we're obviously going to talk about it.
Marco Papage:So your question is, why did the middle class then vote for Trump when he's already kind of tried this?
Marco Papage:Tariffs are not going to help you with inflation, I think.
Marco Papage:I think the middle class is basically saying, like, look, we want to punish the elites for not taking care of us or taking our interests seriously.
Marco Papage:And there were two candidates and only one of them would have punished the elites.
Marco Papage:You know, it's that simple.
Marco Papage:Somebody once said, I don't know who it is, but I don't want to make it my own statement because I don't like to take credit Somebody once said, like, Trump is just a human middle finger, you know, and so, like, I think that's a really good point.
Marco Papage:You know, so, like, he sets elites, he makes them go crazy.
Marco Papage:And so if you just can't be middle class and you're just angry, you're just going to cast that vote.
Marco Papage:You're not going to sit there and do like, hey, let's do a mathematical calculation of how much 25% terror from Mexico is going to impact my take home pay.
Marco Papage:You know, like, nobody's doing that.
Marco Papage:This is an emotional sort of look, he's anti elite, he's stalking how elites have done this.
Marco Papage:He's right.
Marco Papage:Last 30 years have really not been very pleasant for me.
Marco Papage:So I'm going to vote for him.
Marco Papage: f he just does what he did in: Marco Papage:On the other hand, it's his last term, so, you know, maybe he won't care.
Jacob Shapiro:Yeah, it cuts to the question of whether this is truly a realignment or whether this, like I said, is this just another flash in the pan and the middle is going to be up for grabs again in two years or four years again, and that we're going to get more populist candidates that are coming and a lot will depend on what happens over the next four years.
Jacob Shapiro:Well, let's talk about some of his domestic agenda.
Jacob Shapiro:So how do you think, and it's hard to read what is true and what is not true in his domestic agenda.
Jacob Shapiro:What parts of it are for public consumption, what parts of it are negotiating positions that he's going to draw with foreign countries, but sort of, what do you think are the key proponents of his domestic agenda that he's actually going to push through?
Jacob Shapiro:And what is that going to mean for the economy?
Marco Papage:That's a great point.
Marco Papage:Let's caveat this as you just did.
Marco Papage:Politicians say things in order to get elected.
Marco Papage:So Trump is no different.
Marco Papage:But also they're not myopic, they're not zealots.
Marco Papage:When they're faced with new information, they adjust their views.
Marco Papage:Right.
Marco Papage:Now, if you were to put all of Trump's proposals and he's kept making them more and more populist, more and more profligate throughout the campaign.
Marco Papage:He and Kamala Harris were like, trying to outdo one another.
Marco Papage:He would say, I'm going to stop taxing tips.
Marco Papage:She comes out a couple of weeks later like, I got an idea.
Marco Papage:We're not going to tax tips.
Marco Papage:It's like, well, he just said that.
Marco Papage:And then he's like, oh, yeah, well, I'm not going to tax overtime pay.
Marco Papage:And it just kept going, going, going to the point where Kamala Harris at the end was, like, making, you know, a specific proposal for, like, African American men.
Marco Papage:You know, it was just like, you know, I was just waiting for a proposal for geopolitical strategists living in Santa Monica.
Marco Papage:I was waiting for that one.
Marco Papage:Like, what do I get?
Marco Papage:So, okay, so you can sit here and you can say, wow, oh, my God, there's going to be so much gravy coming in.
Marco Papage:We're not going to take any lessons.
Marco Papage:We're just going to keep spending money.
Marco Papage:You know, federal Debt is at 37 trillion.
Marco Papage:Nobody cares.
Marco Papage:I'm not sure about that, because bond yields have just gone from 3.5 to 4.5.
Marco Papage:We're up 100 basis points in a blink of an eye because Trump's odds kept rising to win, and then he won.
Marco Papage:I think we could be at 5.5%, another 100 basis points from here very quickly.
Marco Papage:And that would constitute what Wall street people call a bond market riot.
Marco Papage: nited States of America since: Marco Papage:That was the last one, and that was the one that caused Clinton to become a centrist.
Marco Papage:Clinton wasn't a centrist in 92 when he ran for president.
Marco Papage:He was actually an Arkansas governor that came in, disrupted the primary in the Democratic Party.
Marco Papage:He won it, and it was like, oh, my God, he's gonna.
Marco Papage:He talked about the Cold War dividend.
Marco Papage:Like, hey, Cold War's over.
Marco Papage:Let's take care of people at home.
Marco Papage:And then the bond market was like, nah, you can't.
Marco Papage:Debt is too high.
Marco Papage:And so then he had to sit down with New Gingrich.
Marco Papage:This is where James Carville's quote comes from.
Marco Papage:When I die, I don't want to be reincarnated as a ball player or a Hollywood movie star.
Marco Papage:I want to come back as the bond market because everyone's afraid of you.
Marco Papage:So I think that when we look at his policies right now, Jacob, you know, we're seeing, like, he's going to do all this stuff.
Marco Papage:I don't know.
Marco Papage:I think that you could have a really significant surprise where Donald Trump actually has to do the painful work of consolidating deficits and debts, and that will be a profoundly different outcome from what the market is currently pricing.
Marco Papage:You know, forget like, Bitcoin or Tesla, what the market is telling you right now, there's going to be Growth.
Marco Papage:It's going to be awesome.
Marco Papage:Small caps are going up.
Marco Papage:You know, small caps, America is sort of like, like you're not the Magnificent Seven man.
Marco Papage:Small caps are extremely sensitive to rates, to borrowing rates, because they actually borrow.
Marco Papage:You know, Google doesn't need any cash or they don't need to borrow.
Marco Papage:They're sitting, they're swimming in it.
Marco Papage:But small caps do.
Marco Papage:And those corporations, if the yields continue to rise, are going to get clobbered.
Marco Papage:So I think the market is focused on Trump and his policies and just taking him for what he says.
Marco Papage:And I think that there's going to be constraints to that.
Marco Papage:And I actually think when Elon Musk starts talking about deficit cuts and some austerity and rationalization, I actually think they're going to have to end up doing more of that that people think.
Marco Papage:And that could be very profound.
Jacob Shapiro:This is why the House is so important.
Jacob Shapiro:And in some ways, if you're Trump, I think you want the Dems to keep the House because then you can just spend the next two years railing on the Democrats in the House and how they're obstructing you from doing all the things that you need to do, rather than saying, okay, you have control over all the levers of government.
Jacob Shapiro:Why aren't you doing these things?
Jacob Shapiro:But I take your cousin Jacob, this.
Marco Papage:Is why the yields are settled at four and a half right now.
Marco Papage:You know where they went from four, three to four five, which is a big move for a bond market.
Marco Papage:And I think it's because of your point.
Marco Papage:You led our interview, our podcast with the House.
Marco Papage:It's like, what do you think about the House?
Marco Papage:Well, I thought it wasn't really in contention, but it is like Democrats could pull this off.
Marco Papage:And so the bond market is saying, like, wait a minute, maybe I shouldn't panic so much because maybe there will be guardrails if the House goes Republican, that there are no guardians, guardrails.
Marco Papage:And then the bond market is going to have to do the guardrailing itself, you know, and that's where.
Marco Papage:And that's where the, the really vicious move in equities.
Marco Papage: bullish, like, let's go, it's: Marco Papage: ke, well, it's not because in: Marco Papage:So when it went up, like, nobody really cared.
Marco Papage:Like, meh, you know, you go from 1.7 to 2.5.
Marco Papage:Not going to break the bank if it goes from 4.3 to 5.5.
Marco Papage:Like, whoa, wait A minute.
Marco Papage:Now we're in recession territory, you know, and by the way, the Fed is cutting rates, but the Fed cuts the short end.
Marco Papage:Nobody borrows at that rate.
Marco Papage:You know, like I don't borrow at the fed funds rate.
Marco Papage:We all borrow at the long end.
Marco Papage:And so that's why this, this move really matters.
Marco Papage:It could be very disruptive to some of these reflation pro growth trades.
Jacob Shapiro:Well, and to your point, long end yields are actually going up faster than short end yields.
Jacob Shapiro:So the 10 year has gone up, you know, 21 basis points or something like that overnight.
Jacob Shapiro:It's the highest since it was in July.
Jacob Shapiro:But if you look at 30 year, it's going up even more.
Jacob Shapiro: iggest daily jump since March: Jacob Shapiro:So you're getting that kind of freak out.
Jacob Shapiro:To your point, a riot in the bond market, which, you know, probably not a lot of people are focusing on bond yields, but it's absolutely what they should be focused on.
Jacob Shapiro:To your point, the bond market is telling you that, you know, something is up here.
Jacob Shapiro:And I, I agree with you.
Jacob Shapiro:I think things could go up significantly from here.
Jacob Shapiro:What, what do you think about what the Fed is going to have to do here?
Jacob Shapiro:I mean, it seems to me they are caught between like a rock and hard place.
Marco Papage:Yeah.
Marco Papage:So they have to cut now.
Marco Papage:They have to this upcoming meeting.
Marco Papage:If they don't, they'll be just accused of massive wanton political like interference.
Marco Papage:You know, oh, you cut 50 basis points before the election for Harris, but you can't cut now, even though you said you would.
Marco Papage:So, yeah, you're right, they're gonna have to cut.
Marco Papage:And I think, you know, they're going to have a very difficult time if over the next couple of months, bond yields go up.
Marco Papage:Here's a quirk of American politics that makes this worse.
Marco Papage:Most other countries, when you win, you win, you assume power right away.
Marco Papage:Except in Latin America and in the U.S.
Marco Papage:and so now until January 20, if the bond market is reacting to Trump's victory, it's kind of unfair to Trump.
Marco Papage:He's not in power.
Marco Papage:Why does he calm down the bond market?
Marco Papage:He's not in power.
Marco Papage:The other quirk of American politics is that he doesn't have a shadow cabinet as you would in Canada or United Kingdom.
Marco Papage:So who's the Finance Minister of the United States of America, or as we call it, the Treasury Secretary.
Marco Papage:Who is it now?
Marco Papage:We assume it's Scott Besant, a Wall street veteran, you know, a really, really smart man who knows how to calm down the bond market.
Marco Papage:But is he, you know, this is Donald Trump, man, he could like pick you for Treasury Secretary, you know.
Marco Papage:And so the problem is that it, how do you calm down the bond market?
Marco Papage:Jay Powell is going to have to basically prove his worth, I think to Donald Trump over the next couple of months.
Marco Papage:And I wouldn't be surprised if the Fed ends up helping Trump to anchor the yields through active management of the bond market, which is what we call yield curve control.
Marco Papage:But not, not as overt, more something like what the ECB did during the euro area crisis, you know, where they basically said like hey, bond yields don't reflect market fundamentals.
Marco Papage:That was the euphemism Mario Draghi used for effectively saying Anglo Saxon traders in New York and London hate Europe.
Marco Papage:So I'm going to step in.
Marco Papage:And so similarly Jay Powell could do that.
Marco Papage:But again I go back to my point about fiscal spending.
Marco Papage:Jay Paul is not just going to do that.
Marco Papage:Just like Mario Draghi didn't just do that.
Marco Papage:Remember what he asked for?
Marco Papage:He asked for, hey, can you consolidate your deficit plans?
Marco Papage:Can you do structural reforms?
Marco Papage:And that's where Elon Musk and Donald Trump are going to have to sit down and they might have to do some homework for Jay and say here's our plan.
Marco Papage:And that plan may take out a lot of the promises he made during the campaign in order to calm down the bond yields because ultimately bond yields go too far.
Marco Papage:They could actually cause a recession for Trump early in his term.
Jacob Shapiro:Is there a world in which the Fed becomes more contrarian and says no, we're data driven and we're not going to cut?
Jacob Shapiro:Like you don't think that's possible at all?
Marco Papage:I mean that's dangerous game for Jay Powell to play.
Marco Papage:But I also don't think the cuts or hikes matter anymore, Jacob, because they've lost control of the long end.
Marco Papage:That's why a bond market ride is so dangerous.
Marco Papage:You lose control.
Marco Papage:You know, what are you going to do?
Marco Papage:Like the long end is trading off of the term premium, not growth.
Marco Papage:It's trading off of like basically the premium you have to pay to hold a long dated security which has been suppressed so long by qe.
Marco Papage:And the only way for them to re regain control of it is to start actively buying the log end.
Marco Papage:And so I think that they've just lost control and cuts or hikes, you know, people ask me oh my God, there's meetings coming up.
Marco Papage:What do you think about?
Marco Papage:I don't just, I just don't care.
Marco Papage:The 10 year yield the log.
Marco Papage:And as you said, the 30 year mortgage rates, man.
Marco Papage:Mortgage rates, they've cut rates.
Marco Papage:They promised us 100 basis points of cuts.
Marco Papage:Is it easier or harder to buy a house now since they've cut massively harder?
Marco Papage:Why?
Marco Papage:Because that's the real economy.
Marco Papage:The real economy trades off of yields that the Fed doesn't control.
Marco Papage:And so I think that, I don't know really how to answer your question other than to say, I don't think that they're going to try to control Trump.
Marco Papage:I think they're just going to say like, hey, listen, we can help control the long end, but you got to give us something, you know, like you need to, you need to do deficit shaving.
Marco Papage:You need to like, do something about that.
Marco Papage:And what I would say here is I know he's a populist and I know he campaigned on $15 trillion of extra deficits and all this stuff, but there is this weird thing coming up that we should talk about, which is this narrative like government is inefficient.
Marco Papage:Elon Musk is on board.
Marco Papage:There is, I think, an opening.
Marco Papage:There's an opening for Republicans to return to their original sort of Republicanism on deficits.
Marco Papage:And one of the reasons why the voters voted them in is because inflation.
Marco Papage:And voters are not stupid.
Marco Papage:They do understand that there's a connection between fiscal spending that didn't go into their pockets anymore.
Marco Papage: You know, the: Marco Papage:Chips act, inflation reduction act.
Marco Papage:Like, how does this really benefit me?
Marco Papage:What have you really done to curb inflation?
Marco Papage:Is basically what the electorate said.
Marco Papage:And so I do think, and also I think there was a lot of latent anti government from the pandemic, from government overreach.
Marco Papage:I think that played a role as well.
Marco Papage:And so I do think that there's this coalescing of potential narratives that would allow Donald Trump to make a pivot towards fiscal consolidation.
Marco Papage:Modestly, I'm not talking Tea Party style at all, of course, but, you know, that's what Bill Clinton ultimately did.
Marco Papage:I mean, in 94, again, he pivoted away from populism towards centrism.
Marco Papage:We today remember Bill Clinton as a laissez faire right wing, honestly, on, on, on the economy.
Marco Papage:But he didn't campaign like that.
Marco Papage:Bond market hit him upside ahead and then he went to the middle.
Marco Papage:I think Trump can probably do the same thing.
Jacob Shapiro:I hear you.
Jacob Shapiro:I'll push back against you a little bit though, because I think you're right that uncertainty around holding longer term bonds is probably what's happening here.
Jacob Shapiro:But the argument that a Trump populist could make back to that when he's sitting down with Elon and telling Elon, shut up, I'm now the President, you have to listen to me, I no longer need you.
Jacob Shapiro:He could say, look, I'm just going to make growth go up.
Jacob Shapiro:So I'm just going to stimulate the economy and we're going to grow out of it and I'm going to get a bunch of tariffs, so I'm going to get a bunch of revenue from tariffs and I'm going to make sure that China comes here and does a deal with me.
Jacob Shapiro:Like we, we are just going to grow this thing the fuck up.
Jacob Shapiro:And if you don't like that, Elon, I will give you a special budget just to go to Mars.
Jacob Shapiro:Because I got what I needed out of you on X.
Jacob Shapiro:Like, I mean I think that's, that's maybe in the cards here now.
Jacob Shapiro:I think that probably to your point, like if we're calling this a bond market riot, if you saw that, like the riot would probably become, I don't know what's stronger than a riot, like an all out revolution or something like that.
Jacob Shapiro:And then, and then maybe Trump would have to run it back.
Jacob Shapiro:But why do you think it's not about trying to boost growth?
Jacob Shapiro:Why are you going towards the fiscal, not conservative but you know, reining it in a little bit?
Marco Papage:Well, because you know, we have plenty of growth.
Marco Papage: That's the difference between: Marco Papage:You're saying like, hey man, wait, hold time out.
Marco Papage:Unemployment is at what growth is it?
Marco Papage:What, what the heck is going on?
Marco Papage: cted to get us more growth in: Marco Papage:I think he was.
Marco Papage: In: Marco Papage:Right.
Marco Papage: So in: Marco Papage: od in the market like that in: Marco Papage:I think it's more complicated than that.
Marco Papage:And so yeah, I mean I think, I don't think the electorate wants more growth.
Marco Papage:They just had all the growth shoved down their throat.
Marco Papage:They're swimming in growth.
Marco Papage:Growth is not what I think.
Marco Papage:I think he's smart enough to know that that's not what he is really elected for.
Marco Papage:So I don't think it's going to be that simple.
Jacob Shapiro:He's elected well.
Jacob Shapiro:And this goes to the question of perception versus the economy and versus markets.
Jacob Shapiro:Because if people are dissatisfied with the economy and it's inflation that is upsetting them, he's been brought in to lower prices.
Jacob Shapiro:So how, how is what you're talking about going to lead to lowering prices?
Jacob Shapiro:Because if we get here two years from now and inflation has popped, I mean, maybe he'll do his weird Trump charisma thing and he'll be able to change perception in ways that are beyond my ability to comprehend.
Jacob Shapiro:He's already done that so many times.
Jacob Shapiro:But it seems to me that the perception of the electorate and what you talked about earlier was, hey, I can't afford childcare, I can't afford education anymore.
Jacob Shapiro:I can't afford to go on vacation, I can't afford a house.
Jacob Shapiro:Like, great.
Jacob Shapiro:So I can buy an iPhone for $500 and I can have subscriptions to five different streaming platforms so I can sit on my couch and watch it.
Jacob Shapiro:Thank you.
Jacob Shapiro:Globalization.
Jacob Shapiro:Like, I'd like my, like, you know, you start building out that narrative.
Jacob Shapiro:I think he's been brought in to cut prices.
Jacob Shapiro:I mean, I guess what you're talking about maybe gets you there.
Jacob Shapiro:I don't know.
Jacob Shapiro:But isn't that the perception thing that he's going to have to work with?
Jacob Shapiro:Or is it literally just going to be, I saw somebody on X posting, you know, what Republicans think of the economy versus Democrats.
Jacob Shapiro:Maybe we're just going to crisscross and in six weeks, Republicans will be like, this is great.
Jacob Shapiro:He, like, is not even in yet and he's already transformed things.
Marco Papage:I think some of that will be definitely happening.
Marco Papage:That's, that's, that's a fact, my friend.
Marco Papage: think we're over indexing of: Marco Papage:The macro context is completely different.
Marco Papage: In: Marco Papage:This is just an economic fact.
Marco Papage: In: Marco Papage:And so I think that, you know, that's the first issue to just keep in mind, macro context matters.
Marco Papage: p, and they're just replaying: Marco Papage:I'm not sure that's correct.
Marco Papage: tively saying, as they did in: Marco Papage:Now they're already approaching it and they're saying to Donald Trump is like, we don't need growth.
Marco Papage:This is, this is not what's needed.
Marco Papage:I think he's going to adjust to that reality.
Marco Papage:The other reality he's going to adjust to is that, you know, I have this, I think the Cato Institute or somebody put together a list of like a, a survey.
Marco Papage:What are the most important issues right now.
Marco Papage:And it was 30 answers, I believe.
Marco Papage:And trade and globalization was by far the.
Marco Papage:At the end, you know, and like, nobody really cares about trade.
Marco Papage:Nobody.
Marco Papage:Like voters.
Marco Papage:This was not an issue at all.
Marco Papage:And if they do, to your point, it's about inflation.
Marco Papage:And I mean, American voters are not dumb.
Marco Papage:They know that if you raise tariffs, you're raising prices.
Marco Papage:Like, duh, like, obviously.
Marco Papage:And by the way, the total that you can get if you raise tariffs in China to 60%, you're going to get $300 billion in revenue.
Marco Papage:Did you know that?
Marco Papage:Did you know it's that small?
Marco Papage:300 billion.
Marco Papage:It's a drop in a bucket.
Marco Papage:The Fed bought $400 billion worth of corporate debt in one day during the pandemic.
Marco Papage:You know what I mean?
Marco Papage:300 billion.
Marco Papage:That's how much you're going to raise.
Marco Papage:Get out of here.
Marco Papage:So what am I getting at here?
Marco Papage:I'm getting at the fact that I think Trump can sense that.
Marco Papage:He can sense that.
Marco Papage:It's just not going to give him any political capital to start a trade war.
Marco Papage:And so I actually think that because there's no demand for it.
Marco Papage:And I think he's going to leapfrog Democrats and their position, as I think we've discussed before, this is where I have a heretical view.
Marco Papage:I think that he's going to make a deal much faster than people think.
Marco Papage:And I think that he's going to index on, you know, tariffing companies in order to bring manufacturing back to the US Rather than tariffing countries, which will be a massive change in what a tariff war means.
Marco Papage:I mean, from a macro perspective, if you put tariffs on John Deere, you know, you're not going to, like, trade bonds and currency off of that.
Marco Papage:And I think the Chinese are going to love that deal because it allows everyone to win without there being a real disruption to the economy.
Marco Papage:What I mean is, like, some economist is going to come and say, like, hey, but that's impossible because supply chains can't really be relocated to America.
Marco Papage:That's my, by the way, standard voice board of commerce.
Marco Papage:And so he's not going to try to move the entire supply chain to the US we don't have workers, but he's going to get to cut a ribbon on a nice $10 billion BYD EV plant.
Marco Papage:It's a JV with GM in Ohio.
Marco Papage:Everyone's gonna applause and it's gonna, you know, like, it's gonna meaningfully change the lives of some people in Ohio.
Marco Papage:That's cool.
Marco Papage:But if he shifts to that policy, that type of a trade war, I think that that takes away a lot of the people's concerns about global trade, about emerging markets.
Marco Papage:The dollar is reacting now as if he's gonna, like, impose these broad tariffs on everyone.
Marco Papage:And I just don't see that happening.
Marco Papage:Because what's, what's the, what's the return on that political investment for him?
Jacob Shapiro:Yeah, all right, put a pin in that.
Jacob Shapiro:I want to come back to that because there's one more thing I want to touch on the domestic economy, and then we'll come back into that.
Jacob Shapiro:And the question I'm going to ask you might bleed into it anyway.
Jacob Shapiro:Oh, and also, I don't ever strongly disagree with you.
Jacob Shapiro:I'm usually playing contrarian.
Jacob Shapiro:But there is one thing you said in there that I 100% wholeheartedly disagree with.
Jacob Shapiro:You said American voters are not dumb.
Jacob Shapiro:Sorry, they're dumb.
Jacob Shapiro:All voters are dumb.
Jacob Shapiro:This is why the Republic was structured the way that it was.
Jacob Shapiro:Weber's definition of charisma, I'll paraphrase here, is that a charismatic politician is somebody who can convince people to vote against their own self interest.
Jacob Shapiro: that definition, Trump since: Jacob Shapiro: ng people around Obamacare in: Jacob Shapiro:So I think there are people who believe the whole tariff taxes nonsense.
Jacob Shapiro:And I can say that because I've been out there listening to them.
Jacob Shapiro:So, sorry, American voters, if you think that you're smarter than you are, I think you're stupid.
Jacob Shapiro:But so the one question I want to ask you on domestic politics.
Jacob Shapiro:Yeah, well, what can I say?
Jacob Shapiro:Like, it's.
Jacob Shapiro:And by the way, this is not special to America.
Jacob Shapiro:This is like most people are not politically informed.
Jacob Shapiro:Most people are voting with their guts and things like that.
Jacob Shapiro:They're not thinking about these things.
Jacob Shapiro:I think as deeply as we are.
Jacob Shapiro:And I think that's one of the reasons the information economy and the media gets all of this wrong, because they're not actually indexing on the things that people care about, they're indexing on, oh, I read this book, or I compared this to the Grover Cleveland election, or, oh, I have this fancy poll model.
Jacob Shapiro:It's like, no, like, that's not actually what people are thinking about.
Jacob Shapiro:But the one thing we haven't touched on, on the domestic economy before we move to our bread and butter, butter of geopolitics and China trade war is immigration.
Jacob Shapiro:Because if you look at inflation, like, it seems to me that the most, the one thing that has bothered me the most in the economic data is about labor.
Jacob Shapiro:Because, because you have all these migration issues and because you've got the border all clogged up.
Jacob Shapiro:And because, because this has become a political football.
Jacob Shapiro:Labor rates for all the things that they don't tell to the Bureau of Labor Statistics, whether that's farm workers or the guy who's going to work on your house or all the sort of un, you know, unacknowledged people who actually make the US Economy work like that is drying up.
Jacob Shapiro:Us, you know, population growth rates are at their lowest in 120 years.
Jacob Shapiro:Like, how do you think about immigration policies and the labor market?
Jacob Shapiro:Because that's the one, especially at the lower end of the labor market, where I'm sort of most concerned, because I don't know how you fix that problem anytime soon, especially with what Trump's been talking about.
Marco Papage:Yeah, you nailed it.
Marco Papage:I mean, there's two things that we basically have talked about now, immigration and fiscal policy.
Marco Papage:Those are the two things.
Marco Papage:And so, yeah, I think that immigration will clearly, like, if you look at contribution to the labor market, actually, you know, domestic population, like native population, has been flat in terms of its contribution.
Marco Papage:It's been migrants who have increased.
Marco Papage:That's where the US has had almost all of the labor force growth, which is critical to GDP growth.
Marco Papage:It's not just about keeping prices low or wages low, inflation low.
Marco Papage:It's also about just growth, Jacob.
Marco Papage:You know, like, human beings show up, they do a job, they make money, and then they buy stuff with it, you know, so it's, it's, it's actually generated GDP growth.
Marco Papage:So that's that kind of gravy train.
Marco Papage:I think there's a gravy train of American exceptionalism where America has just crushed the rest of the world.
Marco Papage:And there's like three cars on that train.
Marco Papage:One is that America is just awesome.
Marco Papage:It's got innovation, entrepreneurship, you know, it's just like, great country.
Marco Papage:Like, yeah, mirror.
Marco Papage:And by the way, that can't explain why American stocks have done so much better because America's always had that.
Marco Papage:It's always been the most pro business country in the world.
Marco Papage:It's always been innovation, technology.
Marco Papage:So like.
Marco Papage:But there is that, right?
Marco Papage:So like, it's like a pie chart of reasons why America has outperformed.
Marco Papage:A big slice is just America.
Marco Papage:But there's two other slices that we just talked about.
Marco Papage:One is the fiscal gravy train and the other one is the migrant gravy train.
Marco Papage:The U.S.
Marco Papage:the United States of America has by far outperformed any country on the planet in terms of how many migrants have just shown up relative to population other than Canada.
Marco Papage:And then the fiscal policy, which where America's just gone nuts, you know, and this is juiced up returns in equity markets.
Marco Papage:Yes.
Marco Papage:In equities.
Marco Papage:I can prove it to you with data and charts.
Marco Papage:Fiscal policy has correlation to markets.
Marco Papage:And I think that if the takeaway from what just happened, and what will happen is that Trump will himself abate the migration gravy train and will be forced to abate the fiscal gravy train due to the bond market, then isn't a takeaway here that the two pillars of American outperformance, what made America different, what made American assets great again over the last eight years, isn't the takeaway that it's actually going to reverse.
Marco Papage:That's to me, the big takeaway here is that you should not be long $, you should not be long small caps in the United States of America because the two pillars, engines of growth are actually going to dissipate.
Marco Papage:And I wrote about that yesterday before I knew the result.
Marco Papage:I mean, I was in the Trump camp, like you said, not massively.
Marco Papage:I didn't expect him to win the popular vote, but I expecting him to win handsomely.
Marco Papage:So like in the swing states.
Marco Papage:And so I was preparing for this and so I was thinking to myself, what do I send to my clients?
Marco Papage:What is the big profound beyond the bitcoin move and like, you know, the dollar or whatever, beyond practical trading of the election, what is really, what do we look at 12, 18 months from now and when we look back and say, oh man, I did not expect that.
Marco Papage:And I think the big takeaway is like, no, Trump is going to take away the two pillars of American exceptionalism that have allowed assets to outperform.
Marco Papage:So yeah, your point is great.
Marco Papage:Migration is part of that.
Jacob Shapiro:All right.
Jacob Shapiro:Well, I think that's a way to back into, back into what's going on in the rest of the world.
Jacob Shapiro:Because part of the I would argue that part of the gravy train here is because of the alignment between the United States and China.
Jacob Shapiro:You're right that the United States has always been the country of innovation and technology and things like that.
Jacob Shapiro:But the United States stopped being the country where things were made 30 years ago, maybe 40, 50 years ago, when they offloaded a lot of it to Japan and Germany before it went to China.
Jacob Shapiro:But there's been this symbiotic relationship to where innovation is still happening in the United States and in the countries that are allied with the United States.
Jacob Shapiro:And that China gets to assemble lots of these things and steal as much of the intellectual property as they can while they're doing the assembly.
Jacob Shapiro:And obviously that relationship started to break down.
Jacob Shapiro: I would argue around: Jacob Shapiro: Then Xi Jinping comes in in: Jacob Shapiro:Like, it's a longer story.
Jacob Shapiro:It's not just one that belongs solely to Donald Trump, but he has talked on the campaign trail about 60% blanket tariffs against everything that is coming in against China.
Jacob Shapiro:And I was trying to sit down myself this morning because I have to give a presentation to a client tomorrow about sort of different scenarios for specifically the US China relationship.
Jacob Shapiro:And I mean, the three scenarios that I have.
Jacob Shapiro:Tell me, tell me where.
Jacob Shapiro:I think I know where you are, but tell me if you can think of more.
Jacob Shapiro:The first is, you know, the art of the deal, that this really is all part of a negotiation process where Trump will make some sort of deal with China and will move forward from there.
Jacob Shapiro:The second would be full on trade war.
Jacob Shapiro:And that would be getting US Allies on board to isolate China and thinking the way really the Biden administration has thought.
Jacob Shapiro:And I think how Harris would have governed.
Jacob Shapiro:And then I think door number three is just full on isolationism, like just closing up everything and say, no, it's not just China.
Jacob Shapiro:It's tariffs against everybody.
Jacob Shapiro:And we're going to bring all these things back home.
Jacob Shapiro:And I mean what I say, and I'm going to push everything through.
Jacob Shapiro:And, you know, sort of that would probably mean a rapid spike in inflation followed by a deflationary crisis.
Jacob Shapiro:Anyway, so let's, let's back into the tariffs and let's talk about it in the context of China and also the rest of the world.
Jacob Shapiro:Where do you think this is going?
Jacob Shapiro:Because Trump has said some pretty, I mean, I don't want to say crazy.
Jacob Shapiro:He has said some pretty aggressive things on the campaign trail and hasn't backed off of them and I think you are willing to call his bluff.
Marco Papage:Yeah.
Marco Papage: rail that like I think in the: Marco Papage:Yeah, Federal government was like three dudes and a horse.
Marco Papage:You know what I mean?
Marco Papage:Like the White House did like the White House didn't have walls built, you know, like, come on.
Marco Papage:One thing that I love about Trump, by the way, is that he loves charts.
Marco Papage:You know, as a, as a member of the sell side research community, I find it endearing.
Marco Papage:It saved his life.
Marco Papage:Like a chart actually saved his life.
Marco Papage:If you want to subscribe to my research, very chart heavy, like the tagline should be, it may save your life because it literally saved his.
Marco Papage:He'd like tilted his head to look at the chart, to point in the chart.
Marco Papage:So anyways, someone's going to show him a chart, Jacob, of how much he can raise through tariffs and how expensive is the US Government.
Marco Papage:So like no, I, I don't think that there's.
Marco Papage:The autarky is going to happen.
Marco Papage:And then I think it's between your first two scenarios and I assign like, like 80% to the first one, that it's the art of the deal.
Marco Papage:So why, number one, voters are not really motivated, passionate about China.
Marco Papage:I think Americans are miffed about trade with China.
Marco Papage:They definitely want it to be improved and more fair and more favorable to the United States of America.
Marco Papage:But there isn't an overwhelming anti globalization view.
Marco Papage:And you can see that in the polls.
Marco Papage:People still believe in free trade.
Marco Papage:They think it benefits voters.
Marco Papage:They just want it to be fair for Americans.
Marco Papage:And it also didn't motivate this election.
Marco Papage:Like nobody was talking about TPP as Clinton and Trump.
Marco Papage:There was no mentions of nafta.
Marco Papage:Like during his convention speech he mentioned tariffs twice.
Marco Papage:Twice the word tariff was mentioned twice in like 17 hour speech that he gave.
Marco Papage:So just slightly over exaggerating there.
Marco Papage:So I think that there's no political gain for being really tough on trade.
Marco Papage: They just, it's not: Marco Papage:That's not the narrative.
Marco Papage:The third thing is no one's listening to Trump.
Marco Papage:Nobody's listening to him at every turn.
Marco Papage:Watch the Bloomberg interview that's on YouTube that he did before the election.
Marco Papage:Two weeks, two, three weeks before the election.
Marco Papage:Watch his entire convention speech, watch a rally, find it on YouTube, watch what he said.
Marco Papage:He hasn't been talking about 60% tariffs in nine months.
Marco Papage:What he's talking about is specifically tariffing individual companies in order to force them to move production to the US That's a profound change from this.
Marco Papage:I'm going to blame.
Marco Papage:I'm going to impose 20% tariff on all Japanese goods.
Marco Papage:Now he's saying, I'm going to impose tariffs on Japanese companies so they move to the U.S.
Marco Papage: that's the: Marco Papage:So that is.
Marco Papage:He's already pivoted to this.
Marco Papage:And so Goldman Sachs, JP Morgan, my firm, BC Research, we.
Marco Papage:We kill thousands of poor, innocent Excel cells in the efforts to compute the mathematical impact of a 60% tariff that we're basing off of a February interview he gave to Fox News where he was barely caffeinated.
Marco Papage:You know, and so.
Marco Papage:And so the emphasis in every speech he's made since then has been like, no, I'm going to tell byd, you can't build a factory in Mexico, you got to build it in Ohio.
Marco Papage:And no one's pushed him on this.
Marco Papage:No one's asking him, like, well, wait a minute, so you're okay with Chinese fixed asset investment in the US and the answer is like, yes, yes, I am okay with that.
Marco Papage:That's profound.
Marco Papage:And it's going to cause the American national security establishment, which is already extremely nervous about Trump, is going to cause them to light themselves a fire.
Marco Papage:Because what they've done is that the American military intelligence complex has made, has made this alliance with trade protectionism, so they've basically fused American national security policy with trade.
Marco Papage:And so everything is a risk to America.
Marco Papage:You know, like, Chinese car software is a risk to America because it will, like some suburban mom driving a minivan becomes like an autonomous drone that mows down the children in the case of a war with China.
Marco Papage:You know, like, all sorts of stuff is going through Congress, man.
Marco Papage:Jacob, I'm telling you, cousin Jacob, I really feel high conviction of you.
Marco Papage:Trump is going to show up, he's going to say like, this is nonsense.
Marco Papage:I want Chinese companies sinking tens of billions of dollars to our country.
Marco Papage:And listen, I'm going to force them to do JVs.
Marco Papage: s and the: Marco Papage:Oh, you want to come to China?
Marco Papage:Give us your ip.
Marco Papage:Oh, looks like the Chinese know how to build an ev.
Marco Papage:Looks like Detroit doesn't maybe give us that EV technology and then you can sell cars here.
Marco Papage:So, yeah, byd, you know, car is going to have to be the GM car.
Marco Papage:And so I think that you're going to See a real flip on this because there's just no upside to being a really dramatic.
Marco Papage:And one of the things about Trump you have to understand is he's always looking to differentiate himself.
Marco Papage:I mean, come on, in his first term, he was doing stuff just to piss off Obama because Obama made fun of him at the press, you know, at the dinner.
Marco Papage:So anything that Obama did, anything he had to redo, even though his deal was the same as Obama's deal.
Marco Papage:You know what I mean?
Marco Papage:So anyways, you think he's going to now be tough on China?
Marco Papage:Why?
Marco Papage:The Democrats are as tough on China as anybody.
Marco Papage:He gets nothing.
Marco Papage:He doesn't get differentiated.
Marco Papage:He doesn't get any political pat on his back.
Marco Papage:The voters are not going to be like, that's why we put you in power.
Marco Papage:So I think you're going to see a dramatic shift in this.
Marco Papage:And I think we're all way over indexing on it.
Marco Papage:And the dollar is shooting up right now and foreign currencies are falling.
Marco Papage:Emerging markets are vomiting almost exclusively because of this issue.
Marco Papage:And so I do think that that's, that's, that's a fade.
Jacob Shapiro:Yeah, I'm taking the other side of this with you.
Jacob Shapiro:I mean, I'm open to it being on the scenario list.
Jacob Shapiro:But let me throw four things at you that I think, or try to poke four holes in your argument.
Jacob Shapiro: e's been a massive shift from: Jacob Shapiro:So whether it's young people, it used to be that young people liked China and old people didn't like China because of the Cold War and memories of the Cold War and communism.
Jacob Shapiro:That's not true anymore.
Jacob Shapiro:There's been a massive shift in the US Electorate on being skeptical of China, of China posing a long term security threat.
Jacob Shapiro:And that has something that has been pushed through at the top levels of both parties.
Jacob Shapiro:It's one of the reasons why the only stuff that gets through Congress is stuff that is framed as this is anti China.
Jacob Shapiro:So the CHIPS Act.
Jacob Shapiro:Yeah, it was because of China.
Jacob Shapiro:Like the things that actually work in government right now are because you can make China the boogeyman.
Jacob Shapiro:The second thing on Trump, what he says, I'll push back against you here too because I think you're missing, you know, some of the campaign rallies that he does because as I already referenced, the day before the election, he was saying blanket tariffs on Mexico, 25%.
Jacob Shapiro:And if that's enough.
Jacob Shapiro:I'm going to push them up.
Jacob Shapiro:And there would be other campaign rallies where he would say he would do the China stuff again.
Jacob Shapiro:So you're right that he didn't do it at the Bloomberg interview because he was trying to bat his eyelashes at the Bloomberg audience.
Jacob Shapiro:But like, you know, no convention too.
Marco Papage:At a convention, at the convention he didn't do it.
Marco Papage:And in campaign rallies, he's literally telling audiences in Ohio he's going to bring Chinese companies back.
Marco Papage:But by the way, the Mexico thing, I agree, that's a great example of where he will continue to use tariffs as a tool of policy.
Marco Papage:But for what purpose?
Marco Papage:In that particular case, it's immigration.
Jacob Shapiro:Yeah, that's what he wants.
Jacob Shapiro:But he also, like in those very long like rallies and speeches and things like that, there are always sections on tariffs and he will say if 60% is not enough, we'll do 100% and if that's not enough, we'll go up.
Jacob Shapiro:He has said that about China over and over and over again.
Marco Papage:Companies, but in companies.
Jacob Shapiro:No, I know, on China, in general blanket on China.
Jacob Shapiro:Like I got, I got the tape.
Jacob Shapiro:We'll go back and watch the tape if you want.
Jacob Shapiro:Like he's saying this bullshit.
Marco Papage:Okay, we can watch the tapes because I can tell you the two speeches that were very important in televised.
Marco Papage:Okay, Bloomberg, fine, you can say, well, that was for the business community.
Marco Papage:Fair.
Marco Papage:But the convention speech, here's your opportunity to set your agenda.
Marco Papage:Right.
Marco Papage:It's like the most important speech you're going to make before the election.
Marco Papage:And he used the term tariffs twice.
Marco Papage:Wanted relation to Iran.
Marco Papage:Again, similar to your Mexico example, using tariffs to get non economic outcomes as a tool.
Marco Papage:And the other time when he mentioned it on China, the only time he mentioned tariffs in a convention speech, three hour speech, plenty of time to say you're going to raise tariffs on all of China.
Marco Papage:And he only used it in conjunction with bringing Chinese factories that are being built in Mexico into the U.S.
Marco Papage:but okay, I mean, look, it's fair.
Marco Papage:Like, I mean, you know, we'll see.
Marco Papage:Like, obviously, no, you got to listen to him going forward.
Jacob Shapiro:So I mean, well, and so this is the third point because I think it's really hard to take anything he says that seriously.
Jacob Shapiro:I don't know if you read the McMaster book about what it was like to work in that administration.
Jacob Shapiro:I don't normally read those tell all books, but I read that one because I have some respect for McMaster and the environment that he described.
Jacob Shapiro:I mean it was absolutely Batshit.
Jacob Shapiro:And he also, he painted a picture of Trump as much more intelligent than I have ever given Trump credit for, especially in the sense that he sort of describes Trump as a reflexive contrarian.
Jacob Shapiro:So if you go to him and say, hey, this is what I want to do from a policy perspective, even if it's exactly what he asked for two days, he's like, nope, I'm going to do it.
Jacob Shapiro:Something different, because you're wrong.
Jacob Shapiro:I don't trust the experts.
Jacob Shapiro:Like, I'm smart.
Jacob Shapiro:And he got to the point where he was even trying to couch things to, like, make up for the contrarian nature that Trump has.
Jacob Shapiro:And I think you can see that in the unpredictability of his policies the first time around.
Jacob Shapiro:And I.
Jacob Shapiro:That's one of the reasons why I think that long that, you know, that the long end of the yields are rising because there's uncertainty.
Jacob Shapiro:Like, you don't know exactly what this guy is going to do based on what he's saying.
Jacob Shapiro:But all of that is fine.
Jacob Shapiro:I think actually, like, your points might defeat all of my first three holes.
Jacob Shapiro:The fourth one, I think this is the one that I'm most interested in you giving me.
Jacob Shapiro:Why you think that this isn't right.
Jacob Shapiro:Why on earth does Xi Jinping agree to this?
Jacob Shapiro:I don't see any incentive for China to say, sure, dude.
Jacob Shapiro:Like, why?
Marco Papage:No, that's the easiest one to disagree, actually.
Marco Papage:The first one actually is problematic because you're arguing that, like, look, there's a consensus.
Marco Papage:Everybody hates China.
Marco Papage:And we can look at the Gallup poll.
Marco Papage:Like, China is clearly, I think Gallup or Pew, China's, like, just skyrocketed as the, you know, like, in terms of how.
Marco Papage:What's the term?
Jacob Shapiro:Unfavorability or something?
Marco Papage:Unfavorability?
Marco Papage:Yeah, it's through the roof.
Marco Papage:All I would say about that one, like, I don't have a counter.
Marco Papage:I would just say, like, yeah, I think everybody's absolutely miffed about China.
Marco Papage:Like, those polls don't measure intensity.
Marco Papage:And when Americans are actually asked, what is America's number one enemy?
Marco Papage:Their China's actually fallen significantly.
Marco Papage:You know why?
Marco Papage:Because it's just been a very bad villain.
Marco Papage:Like, if we were living in a movie, which we freaking might be, I think China would have been fired by now by the producer.
Marco Papage:Like, hey, listen, man, you're not, you know, we hired you as a villain, but you're just.
Marco Papage:You're just not cutting it, man.
Marco Papage:Like, you're, you're just not carrying the role.
Marco Papage:You know, like, hey, Russia, Iran, you Guys are on.
Marco Papage:And China's like, oh, man, I tried, you know.
Jacob Shapiro:Well, the, the ironic thing there is that Xi Jinping himself fired the people who were doing a good job.
Jacob Shapiro:He had his wolf warriors out there for like a year or two and then he was like, hey, guys, this is too much.
Marco Papage:But that's exactly it.
Marco Papage:But that's exactly it, because China understands that, right?
Marco Papage:So they, they, they've bitten more than they can chew.
Marco Papage: d of the Beijing consensus in: Marco Papage:So I think that, like, I completely concede that there's consensus that China's arrival, but the question is, how intense is that and to what extent?
Marco Papage:I do think some of the policies that national security establishment and protectionists have come together and there's just try.
Marco Papage:They're starting to overshoot.
Marco Papage:And one example of this is like TikTok.
Marco Papage:You know, Trump is the one that proposed a TikTok ban and during the campaign he reversed it.
Marco Papage:And it's very interesting, Jacob, because, listen, why, why?
Marco Papage:Like, because one of his donors invests in TikTok?
Marco Papage:Come on.
Marco Papage:No, to me, to.
Marco Papage:Because that's the liberal kind of, you know, Main street media explanation.
Marco Papage:It was such an easy thing.
Marco Papage:Even if you're going to do your, your donor's bidding, even if you're going to do it, if being tough in Chinese companies is politically good, why would you just not lie during the campaign?
Marco Papage:Why not say like, oh yeah, man, I'm going to crush Tick Tock.
Marco Papage:You just wait until I become president and then you become president, you forget about it and you shove it in the drawer.
Marco Papage:And it's because I think that Trump, the one superpower he has, and I mean, he has a superpower.
Marco Papage:Jacob, super pump is his gut, just feels where the median voter is.
Marco Papage:He just feels it just feel.
Marco Papage:He just knows where they are.
Marco Papage:And the media voter, like on the curve is like here, you know, on like trade relations.
Marco Papage:The Democrats have gone way over there.
Marco Papage:They're like, yeah, we're with you.
Marco Papage:China's evil, you know, And Trump is like, I'm going to go right here.
Marco Papage:We're going to get closer to.
Marco Papage: s what he did, by the way, in: Marco Papage:You know, the Democrats were way too free traders.
Marco Papage:He identified where the media voter was and now he's doing the same thing.
Marco Papage:So I think he understands that everybody dislikes China, but just not enough to have like a massive abrogation of all trade with China.
Marco Papage:And that, and what I keep telling to my clients is don't forget Robert Lighthizer.
Marco Papage:There's a picture of him.
Marco Papage:There's a phase one deal still on the USTR website.
Marco Papage:You can go to USTR website, and here's a smiling Robert Lighthizer next to Juha and Trump.
Marco Papage:Like they're signing it.
Marco Papage:These guys signed a deal.
Marco Papage:I think he's going to get another deal.
Marco Papage:That's definitely that one.
Marco Papage:Even though they guess everyone's kind of miffed.
Marco Papage:Your final point was.
Marco Papage:Sorry, I forgot.
Marco Papage:What was the big one?
Jacob Shapiro:Well, I'll ask you in a second, but I will just say that the commitment on that deal that you're talking about was $275 billion worth of Chinese imports.
Jacob Shapiro:And it came out to about 155.
Jacob Shapiro:So there was a deal and China literally stole their lunch money.
Jacob Shapiro:And that was the last question.
Jacob Shapiro:Why on earth should China do this?
Jacob Shapiro:And if China does agree to this, that means they're probably getting the better deal.
Marco Papage:So, no, I mean, I kind of did the math on this and yeah, I do think China will probably get the better deal.
Marco Papage:Like, let's not, let's not fool ourselves.
Marco Papage:I mean, Trump's deals are not the greatest deals ever.
Marco Papage:That's what he calls them.
Marco Papage:But they're just deals, you know, like the NAFTA deal.
Marco Papage:Canada, I would argue Canada wiped the floor with Robert Lighthizer, just crushed him in those negotiations.
Marco Papage:Most of the provisions that, by the way, Trump campaigned, he campaigned on these pro union, pro labor provisions, they were Canada's asks, not America's.
Marco Papage:Anyways, doesn't matter.
Marco Papage:Look, to your point, okay, so why would China agree?
Marco Papage:So I've run the math, right?
Marco Papage:And moving car assembly to the United States would imperil something like a million jobs in China.
Marco Papage:That's it.
Marco Papage:So it's, it's an easy deal.
Marco Papage: a deal that Japan took in the: Marco Papage:It's an obvious yes.
Marco Papage:It's an obvious yes.
Marco Papage:Because when you think about cars, you know, the reason countries want to build, like the fact that Malaysia has a car or my former country where I was born, Yugoslavia, had a freaking car, right?
Marco Papage:Called Yuga.
Marco Papage:The reason.
Marco Papage:But every laughs like Malaysia's Proton.
Marco Papage:Terrible car, right?
Marco Papage:Yeah.
Marco Papage:False.
Marco Papage:What the car lets you do, even if it's terrible, is it allows you to have.
Marco Papage:It's the tip of the pyramid, right?
Marco Papage:So you have all these supply chains.
Marco Papage:You get to have an industry that makes car seats.
Marco Papage:You have the industry that makes Car gears, you have the industry that makes chassis and then you can pair up with other parts of the world and produce those things for them without a label.
Marco Papage:The fact that you actually then assemble everything domestically into a vehicle is irrelevant.
Marco Papage:You know, for China, it's not irrelevant.
Marco Papage:They're trying to actually build nice cars.
Marco Papage:So I'm not saying that, but the point is that car assembly, when everything is get put together, is kind of the least relevant part of it.
Marco Papage:It's really the supply chain.
Marco Papage:It's the entire ecosystem that you've built in order to have a car industry.
Marco Papage:And so if the United States of America says, hey, assemble these EVs in Ohio, China's going to be like, no problem.
Marco Papage:If that's the price to pay for us to have a car manufacturing ecosystem, that's fine.
Marco Papage:Because that car in Ohio, the BYD Slash GM JV that's going to be in Ohio, is still going to have a tailpipe built in China and just shipped to the US but you think.
Jacob Shapiro:China is going to do that without asking for a concession?
Jacob Shapiro:Because let's say China does that.
Jacob Shapiro:What if they say, OK, we'll do that, Mr.
Jacob Shapiro: , that have been put up since: Jacob Shapiro:Trump, we would like your blessing to take Taiwan.
Jacob Shapiro:Will you do that for the car industry?
Marco Papage:No, I think I can do it to calm down the tensions with the US because you don't have any ability like what you, the reason you do it, in my view, is so that you don't get more tariffs imposed on you.
Jacob Shapiro:I think that you don't think there would be more on all the different industries where China has become a dominant producer, like whether it's solar inputs or whether, whether it's feed or whether it's amino acids and vitamins or tires or toys, like you go down the list, like China makes all these things.
Marco Papage:So I'm sure that there will be isolated anecdotal examples where Trump like succumbs to a particular, you know, lobby group.
Marco Papage:So I'm not saying that there will be nothing, but yeah, I think that blanket tariffs against China will be taken off the table as a tool going forward.
Marco Papage:I'm not saying he's going to lower the current tariffs.
Marco Papage:I think China will take that deal.
Marco Papage:They will take the deal.
Marco Papage:Because you know what China's been doing over the last four years, and you know this as well as I do, they've been moving production to other countries to get under the US tariffs.
Marco Papage:2024 was the biggest year in history of China in outward fdi.
Marco Papage:And no, not some Communist party led like one belt, one road.
Marco Papage:It's all corporates actually just doing FDI abroad because they're going under U.S.
Marco Papage:tariffs.
Marco Papage:Vietnam, Mexico, I call it enemy shoring.
Marco Papage:Right.
Marco Papage:It's been happening.
Marco Papage:2024 was the biggest year.
Marco Papage:It's 80 billion.
Marco Papage:Never in Chinese history, even at the height of one belt, one road, have they ever exported that much capital.
Marco Papage:And Trump is essentially saying like, wait a minute, I want a piece of that pie.
Marco Papage:I want that FDI to the US that's what he's going to get.
Marco Papage:What the Chinese are going to get is to continue to spread out their supply chain, which by the way benefits national security of the US If China moves supply chain to Mexico, that is beneficial.
Marco Papage:Mexico is a geopolitical ally of the US if there's a war with China, you know, US is seizing those fixed asset investments.
Marco Papage:We all know that.
Marco Papage:So like all of this is kind of, not to use Xi Jinping's term, but it's kind of win, win.
Marco Papage:You know, America gets a national security win because a lot of Chinese supply chain is then distributed across allies.
Marco Papage:And China gets a win because they continue to access American market.
Marco Papage:And yeah, they'll probably have to pay more than just fdi.
Marco Papage:I think they'll have to buy some of, you know, agricultural products and so on.
Marco Papage:But I think there is a way in which both sides are satisfied.
Marco Papage:China will lose some manufacturing labor.
Marco Papage:Yes, yes, they will have to get some people lose their jobs because the plant is now in Ohio.
Marco Papage:But it lowers the tensions and it allows both countries to kind of land the plane which otherwise would have taken the two countries into complete bifurcation and decoupling.
Marco Papage:That like doesn't stop.
Marco Papage:And under Harris, the big risk was your second scenario, not the third.
Marco Papage:Right.
Marco Papage:The third scenario would have never happened under Harris.
Marco Papage:But actually the second scenario leads us there anywhere which is ever raptured intentions on all products.
Marco Papage:And that's by the way, not working.
Marco Papage:And it's not working because as I've been arguing for four years, American allies are just not going to do it.
Marco Papage:You've got Californian semiconductor companies.
Marco Papage:There was a great Reuters article about this lobbying the Democratic Party, like, hey, your high tech export controls are hurting our competitiveness because Europeans and the Japanese are not abiding by your rules.
Marco Papage:You know, they're cheating, they're lying.
Marco Papage:So you need to give us a leg up.
Marco Papage:And Trump is going to listen to that.
Marco Papage:He's going to listen to the Semiconductor industry and say like no, we are going to send Capex machines to China that produce 20 nanometer chips.
Marco Papage:Who cares?
Marco Papage:They're chips in washing machines, also cruise missiles.
Marco Papage:But you know, like if they don't have 2 to 4 nanometer chips, like who cares?
Marco Papage:Like life will go on.
Jacob Shapiro:So anyways, in North Korea probably washing machines and cruise missiles can be the same thing.
Jacob Shapiro:They just put the washing machine on to increase the load.
Jacob Shapiro:Well, okay, so like I'm very skeptical of your argument, but I do think that it is one of the scenarios.
Jacob Shapiro:But I think one of the questions then that we have to ask is what does that mean for US allies then?
Jacob Shapiro:Because if you're going to do this with China, like one of the reasons you're doing this is because you're mad at Mexico because things have been coming in through Mexico.
Jacob Shapiro:You might be mad at India for recently, you know, making up with China.
Jacob Shapiro:And maybe India is looking at all of this China outward, FDI and saying we want a part of the pie as well.
Jacob Shapiro:Canada, the eu.
Jacob Shapiro:Yeah.
Jacob Shapiro:So you know, well I think, look.
Marco Papage:I mean, look, this is, but this is where my constraint framework comes in.
Marco Papage:You know, Donald Trump can wish to be a bird, but he's not.
Marco Papage:You know what I mean?
Marco Papage:Like he can Wish to add $15 trillion to the deficit, but the bond market is going to say something about that.
Marco Papage:And he can wish to have an autarkic economy but like India is going to be like, cool, bro, see you later.
Marco Papage:Why?
Marco Papage:Because India cannot industrialize thanks to America.
Marco Papage: It's not: Marco Papage:You know this nonsense about Apple being built in India.
Marco Papage:Get out of here.
Marco Papage:That's just a freaking, we all know that's just a cosmetic like hero project.
Marco Papage:The only way for India to industrialize, the only way is by having a good relationship with China because guess what, America doesn't have the iPad.
Marco Papage:For the type of industries that Indians can actually participate in, they need low cost, low value, you know, refining dirty stuff.
Marco Papage:That's what needs to move to India for them to move up the value.
Marco Papage:They're not gonna start making fucking cell phones overnight.
Marco Papage:That's not how the world works.
Marco Papage:So like yeah, Modi is not dumb.
Marco Papage:And then yeah, that's why he's solving the problem.
Marco Papage:And yeah, that's why the quad is probably going to fall apart like obviously.
Marco Papage:But, but Trump has faced that like American allies are just not following America on all this stuff like ASML and Tokyo Electron.
Marco Papage:Again, Reuters article.
Marco Papage:Great.
Marco Papage:Like a week ago just basically said California has semiconductor capex companies like lam and so on.
Marco Papage:And these companies are dying.
Marco Papage:They're dying because ASML and Tokyo Electron were gorging on China's 20 nanometer industry push.
Marco Papage:You know, China basically decided to give up the high tech and just go into the middle ground, which is very important because our cars, our washing machines use these sort of legacy chips as they're called.
Marco Papage:So the point is that America can't push against that.
Marco Papage:This isn't about like how smart you are or how like sneaky Jake Sullivan is going to be or how smart Matt Pottinger is going to be designing policy.
Marco Papage:This is about massive constraints.
Marco Papage:The rest of the world is just going to tell America, sorry, but I'm just not going to abide by your rules.
Marco Papage:So what are you going to do?
Marco Papage:You're going to like, like take away my dollar financing to France because I'm selling Airbuses to China?
Marco Papage:Get out of here.
Marco Papage:What the rest of the world is going to tell America is something very simple.
Marco Papage:Like, do you want me to fight on your side in World War 3 against China?
Marco Papage:Is that what you want me to do?
Marco Papage:Cool.
Marco Papage:Well then I'm going to need to make some money to pay some taxes to develop cruise missiles to help you in case of that war.
Marco Papage:Okay.
Marco Papage:And for that I need to sell legacy technology to China.
Marco Papage:Sorry, Like, I'm going to have to sell an Airbus.
Marco Papage:ASML deduct you're going to have to sell a machine that produces a 40 nanometer legacy chip.
Marco Papage:And that's where I think the Harris view has run its course.
Marco Papage:Like the Democratic Party view that you can just keep exporting controls and forcing allies to participate in your blanket.
Marco Papage:Like, it just, it hasn't worked.
Marco Papage:It just hasn't worked.
Marco Papage:And I think Trump, what he's realized is that there is another path.
Marco Papage:It's like, okay, fine, fine.
Marco Papage:I see what China's done.
Marco Papage:I see what they've done in reaction to my tariffs.
Marco Papage:They're going under them by putting all these buildings and all these factors.
Marco Papage:Error.
Marco Papage:I'm just going to take that and I'm going to force them to do JVs like they did with us.
Marco Papage:It's going to be a fixed asset investment into the U.S.
Marco Papage:you know what's important about that phrase?
Marco Papage:It's fixed.
Marco Papage:I can nationalize it.
Marco Papage:I can like grab it.
Marco Papage:If China is naughty, that's a, that's not.
Marco Papage:You know, the national security hawks in America are so kind of dumb because they're like, oh, it's a security threat because they can put like little cameras and like stuff.
Marco Papage:It's like, no, no, no, no, no, no.
Marco Papage:It's a threat to China.
Marco Papage:I have $10 billion of your stuff in Ohio.
Marco Papage:You know, like, I'm gonna seize that if there's a conflict.
Marco Papage:If you're naughty on Taiwan and you just sign $30 billion worth of investments in Ohio and Michigan, like, that's mine.
Marco Papage:And so that's, that's where I think Trump is going to be a lot more pragmatic and a lot less, like, led by what the Economist or Foreign affairs says, which would be like, no, no, no, all of this has to end.
Jacob Shapiro:Well, what is, what does that mean, though, in practical ways for, say, the US Mexico trade relationship, which is arguably the relationship I am most worried about in the context of a second Trump administration?
Jacob Shapiro:Because there, the United States has significant leverage, leverage over Mexico.
Jacob Shapiro:Mexico has some leverage over the United States, especially in terms of whether it's manufacturing or a lot of U.S.
Jacob Shapiro:exports.
Jacob Shapiro:If you look state by state, you know, the amount of states that depend more on Mexico than on any other economy in the world, like, it's a really big deal.
Jacob Shapiro:So how do you think about, you know, what you're talking about in the context of what would that mean for US Mexico relations?
Jacob Shapiro:Do you think that this was all just a big threat and he's going to go into the USMCA renegotiation in 26 and everything's going to be fine?
Jacob Shapiro:Or do you think that, like, there actually is problems for a Mexico or, say, a European Union?
Jacob Shapiro:I know in Europe, they're running around, you know, lighting their hair on fire because they're afraid of what's next.
Marco Papage:Well, China's not really putting factors into the EU other than Hungary.
Marco Papage:So I don't think that.
Marco Papage:And remember, those factories are not for US Consumption.
Marco Papage:They're really for European one.
Marco Papage:So Mexico is the one to really focus on from the narrative that we're having here.
Marco Papage:And I think your initial question about Mexico is far more important than Chinese FDI to Mexico.
Marco Papage:Chinese FDI into Mexico is at all time highs, but it's still like, not like a game changer.
Marco Papage:You know, your initial question about Mexico is really about immigration.
Marco Papage:So what I would say is, like, I hope Shinbaum has a lot of barbed wire, you know, because, you know, like, she better secure that southern border.
Marco Papage:That's what I would say.
Marco Papage:I mean, that is her prayer.
Marco Papage:National security priority, national economic priority number one.
Marco Papage:You know, they, they, they need to build a wall.
Marco Papage:They need to arm it, because Trump is going to be tough on Mexico.
Marco Papage:Far More because of that point you raised, I think, on China.
Marco Papage:Yeah, they're going to lose some factories.
Marco Papage:There was, there was a byu.
Jacob Shapiro:No, no, no.
Jacob Shapiro:But forget about China for a second, though.
Marco Papage:Yeah.
Jacob Shapiro:So Mexico doesn't have the capability to do what you're talking about.
Jacob Shapiro:They can't do that.
Jacob Shapiro:So what happens when they can't do that?
Jacob Shapiro:And Trump gets mad about the fact that they're not doing that on the campaign trail, he's threatened everything from the deployment of the US Military onto Mexico, Mexican territory, to the tariffs that we've talked about and the US Mexico trade relationship, that's a really, really important relationship for many US Companies.
Marco Papage:So I would say that on that issue, I think we're aligned.
Marco Papage:In other words, I think that this is an unequivocal, like, negative for Mexico because they're, you know, like, Trump doesn't actually care about East Asian geopolitical security that much.
Marco Papage:I mean, he's going to support Taiwan.
Marco Papage:Like, I don't think he's going to change that, despite his, like, weird statements in the past.
Marco Papage:But for him, like, with China, he's very mercantilist with China.
Marco Papage:With Mexico, he has other goals, as you, as you've pointed out.
Marco Papage:And I'm not going to disagree with that at all.
Marco Papage:So, like, yeah, Mexico better figure out a way to help the US Stem the flow of migration, whether it's, you know, asylum seekers sitting in Mexico, whatever it is.
Marco Papage:Because you're like, you're absolutely right.
Marco Papage:That is the critical.
Marco Papage:And so I think we're in alignment.
Marco Papage:Like, if, if the United States of America steals like $30 billion worth of FDI that was going to go to Mexico from China, you know, like, let's say, I think that's unlikely, but that's a lot of money for Mexico.
Marco Papage:You know, that's, that's unfortunate.
Marco Papage:But your bigger point is that there is something non economic, non trade related where he's going to use tariffs.
Marco Papage:And this was my point earlier, like, when he talks about tariffs, he's often talking about them in solving the Iran issue, uranium enrichment, Mexico migration issue.
Marco Papage:And so I think Mexico is just in his heights and there's no way.
Marco Papage:That's why it's difficult to make a case for like, you know, the Mexican peso, despite the carry and everything else.
Marco Papage:Like, it's, it's, it's clearly going to be under the gun.
Marco Papage:So you're right.
Jacob Shapiro:Well, yeah, and I'll zoom back a little bit.
Jacob Shapiro: untries that did best between: Jacob Shapiro:And if you get some type of deal between the United States and China going forward, probably the United States and China will be the ones that do the best.
Jacob Shapiro:The countries that got left out in that period were your countries, like Mexico, like Brazil.
Jacob Shapiro:These were the underperformers and never really realized their potential.
Jacob Shapiro:And we've seen in the last couple of years no gdp trade as a percentage of GDP has been going up in Mexico and Brazil and in some of these areas of the periphery.
Jacob Shapiro:So doesn't your scenario lend towards a view of not good for those countries, or are you thinking of a world in which actually things are going to be good for them in that scenario?
Marco Papage:I think things are going to be amazing for them.
Marco Papage:But Mexico is a unique situation because of the points that you're raising.
Marco Papage:It's.
Marco Papage:It's like Brazil doesn't have this problem.
Marco Papage:It, you know, with Brazil, Trump can be mercantilist, he can be transactional.
Marco Papage:Brazil can negotiate.
Marco Papage:Mexico can't really negotiate with Trump on a purely mercantilist basis because of this immigration issue.
Marco Papage:And immigration was a top issue in the election.
Marco Papage:So I'm just worried that Mexico is going to have different rules imposed on it.
Jacob Shapiro:I mean, Brazil is going to be tough too, because if he really, you know, he ran it up in the rural counties of the United States and Brazil has become the low cost producer for corn and soybeans and is making waves in US agriculture.
Jacob Shapiro:So there's also, you know, arguments to be made there as well.
Jacob Shapiro:We've gotten an hour and 12 minutes in, Marco, and we haven't talked about Ukraine once.
Jacob Shapiro:Maybe we should talk about Ukraine and what this means for them.
Marco Papage:Yeah.
Marco Papage:So, I mean, you know, I think that the world was going towards some sort of an imposition of a ceasefire anyways.
Marco Papage:So if Harrison won, I think initially there would have been one last massive push.
Marco Papage:But look, remember when main battle tanks were the big game changer?
Jacob Shapiro:Remember the F16s and then F16s and then the Sidewinders and then this thing and, and now it's North Korean troops are going to be the thing that's going to swing it in the opposite direction.
Marco Papage:Yeah.
Marco Papage:I mean, look, I think, I mean, you know, a lot of liberals who I respect and who are very smart and who are very well informed will argue that the best thing that ever happened was Ukraine war because it's allowing the US to drain Russia's, you Know, power.
Marco Papage:And the problem with that view is that if you are looking at the war of attrition, unless we're going to start sending troops to Ukraine, it's clearly impossible to sustain that kind of a strategy.
Marco Papage:So when American sort of national security hawk slash, liberal progressives, Harris supporters tells me, like, the Democratic Party has the right view on Ukraine.
Marco Papage:It has drained Russian power.
Marco Papage:My point is always like, yeah, that's in a past tense view.
Marco Papage:You cannot project that into the future because Ukraine is the one that cannot win a war of attrition, you know, and, and what Russia has done is it's managed to kind of turn Ukraine into their Iraq, which is obviously a bad thing, and it will have very bad consequences for them.
Marco Papage:See the future.
Marco Papage:But what I mean is that it's been able to do it without mobilization.
Marco Papage:And so they're reaching into these various kind of ethnically heavy parts of Russia to mobilize troops, convicts, non North Koreans.
Marco Papage:It's been able to kind of replenish its troops without impacting the St.
Marco Papage:Petersburg and Moscow middle class reliefs.
Marco Papage:And so my point about this is the writing is on the wall, man.
Marco Papage:European politics are turning against the forever war in Ukraine.
Marco Papage:Ukrainian politics are turning against it.
Marco Papage:I mean, nobody in the west says this because it's politically incorrect, but Zelensky has been called an authoritarian dictator by the mayor of Kiev, former heavyweight boxing champion Klitschko, who is not pro Russian, you know what I mean?
Marco Papage:Like, this guy is pro Western and he's calling the president a dictator for not running the election.
Marco Papage:The mobilization bill barely passed in the Ukrainian parliament in the Rada.
Marco Papage:So when you put all that together, I think the writing is on the wall, whether Trump wins or not.
Jacob Shapiro:Well, I guess there's two questions there.
Jacob Shapiro:The first, and this again.
Jacob Shapiro:So does Putin take some kind of deal and what does that deal look like?
Jacob Shapiro:And then the second question is, is there any chance that a second Trump victory and the flailing of the German government, maybe we'll get a new German government?
Jacob Shapiro:Is there any chance that this is the sprint that Macron has been waiting for?
Jacob Shapiro:He was out there immediately saying, hey, this is why we need a strong sovereign Europe.
Jacob Shapiro:Should we maybe think about doing that?
Jacob Shapiro:Like, is there something in there?
Jacob Shapiro:Or do you think it's just like Europe?
Jacob Shapiro:It's.
Jacob Shapiro:It's too late.
Jacob Shapiro:It's too little too late.
Jacob Shapiro:Like, Russia's going to grind this out as much as they want, and Trump's going to want to make a deal anyway that's not going to be favorable he probably doesn't really care in the end.
Jacob Shapiro:He's got bigger fish that he wants to fry, so take that however you want.
Marco Papage:Yeah, I mean, I don't know.
Marco Papage:I think any fair, any deal is favorable to Europe because if the war ends, the war ends.
Marco Papage:You know, what you said first is really the critical point.
Marco Papage:Does Putin take the deal?
Marco Papage:There's, again, this very kind of a liberal, internationalist view using kind of IR theory here.
Marco Papage:Like, well, you can't trust Putin.
Marco Papage:He's Hitler.
Marco Papage:Munich leads to World War II.
Marco Papage:Well, Hitler was kind of good at war.
Marco Papage:So I'm not sure that if you make a deal with Putin, he's like, ooh, what's next?
Marco Papage:Like, really?
Marco Papage:Really?
Marco Papage:That's what he's thinking is going to be.
Marco Papage:He lost, like, 300,000 human beings, 600,000 casualties in total.
Marco Papage:Like, in terms of injuries, like, this is.
Marco Papage:This has not.
Marco Papage:They're importing butter from the United Arab Emirates because, you know, all those cars, you know, like, what?
Marco Papage:Like, come on.
Marco Papage:Like, Russia has not benefited from this conflict.
Marco Papage:I mean, I'm sorry.
Marco Papage:Like, anyone who says otherwise is just so far up.
Marco Papage:Putin is.
Marco Papage:But they're eating breakfast twice.
Marco Papage:You know, like, I mean, come on.
Marco Papage:This is, like, ridiculous.
Marco Papage:It's just not like, Putin is not going to take from what just happened.
Marco Papage:And this is where I kind of disagree with this view.
Marco Papage:In Washington, in the Beltway, you cannot make a deal.
Marco Papage:Once you make a deal, it'll incentivize Putin to take Finland next.
Marco Papage:Okay, so anyways, what are we talking about here?
Marco Papage:Putin needs somebody he can talk to, you know, And I mean, like, not to defend the man who, like, invaded a country illegally.
Marco Papage:But the truth is, if you label him as a Hitler, like, you're basically saying to everyone, I can't negotiate with him.
Marco Papage:And the west has done that.
Marco Papage:The west has overly moralized Ukraine.
Marco Papage:And I would say that that's my biggest, you know, sort of an objective criticism of the Harris, Biden, Blinken policy.
Marco Papage:American allies get blank checks.
Marco Papage:American rivals are Hitler.
Marco Papage:And it's like, well, the world is unfortunately multipolar and complicated, so you're going to have to get over yourself.
Marco Papage:Barack Obama did not run foreign policy like this.
Marco Papage:He was far more realist.
Marco Papage:I would say that Trump and Obama are actually far more similar.
Marco Papage:Trump is just a really mean, uncouth, crazy version of Obama.
Marco Papage:But the.
Marco Papage:The fact of the matter is, like, you're going to have to sit down with Russia.
Marco Papage:It's a nuclear power.
Marco Papage:Like, yeah, yeah, you're going to have to Sit down with them and negotiate.
Marco Papage:And no, it's not going to be up to Zelensky.
Marco Papage:Like, what?
Marco Papage:Like, you know, the White House view has been like, well, it's going to be up to Ukraine.
Marco Papage:Like, no, no, no.
Marco Papage:Ukraine is the client state of the United States of America, and so is Israel, by the way.
Marco Papage:They're not allies, they're client states.
Marco Papage:And so, no, it's not going to be up to them.
Marco Papage:It's going to be up to Washington, D.C.
Marco Papage:the taxpayers who pay for their defense, who voted you into power.
Marco Papage:You're going to have to go in there and figure stuff out, obviously, defend Ukraine's interest, but it's not going to be up to Zelensky, because if it's after Zelensky, and God bless him, obviously this is his view, obviously you have to respect this.
Marco Papage:He wants every square inch of Ukraine back.
Marco Papage:Naturally.
Marco Papage:Obviously he wants it tomorrow.
Marco Papage:That's what he should want.
Marco Papage:You know what I mean?
Marco Papage:But that's not necessarily what is in America's interest or Europe's interest.
Marco Papage:And so I think that one of the problems is that over the last four years, the Democratic Party has swerved away from Obama's realism almost purely to differentiate itself from Trump's realism, which is a mistake.
Marco Papage:Trump's realism is perhaps grating and aggravating, but it is just the way you have to conduct foreign policy in a multipolar world.
Marco Papage:It's not a unipolar world.
Marco Papage:America can't just decide to do humanitarian interactions because that's not the world we live in anymore.
Marco Papage:So, long story short, I think that your first question is most important, and I think Putin can talk to a realist.
Marco Papage:He did talk to Obama.
Marco Papage:He talked to Hillary Clinton.
Marco Papage:They tried a reset, by the way, which failed, obviously.
Marco Papage:But I think that the problem that if Harris had gotten elected, and even if Harris came to a point where she was like, you know what?
Marco Papage:We got to talk.
Marco Papage:I don't think Russia would have engaged in those talks because they would have said, well, we can't trust you.
Marco Papage:You're going to do orange revolutions.
Marco Papage:You want regime change in Russia, you're going to do this and that.
Marco Papage:You don't believe in spheres of influence.
Marco Papage:As Hillary Clinton famously said, America doesn't believe in sphere of influence, which is the most unipolar hegemonic statements to make.
Marco Papage:Well, I'm sorry, but in a multipolar world, eh, Trump believes in spheres of influence.
Marco Papage:He definitely does.
Marco Papage:And he's totally cool saying, like, Donetsk, Luhansk, yes, 99% of my voters don't know where that is.
Marco Papage:So whatever.
Marco Papage:Now at this point, everybody always says, but will Ukraine take that deal?
Marco Papage:And I just don't understand why a deal has to involve definitive decisions on territories.
Marco Papage:I mean, I'm blue in the face saying this.
Marco Papage:Plenty of wars have ended without a definitive territorial exchange.
Marco Papage:But just like a decision to disagree, you know, let's agree to disagree, let's put a line of control and that's it.
Marco Papage:And we can focus on rebuilding Ukraine over the next 10 years because that's actually from a Western perspective and from Kiev's perspective, a sustainable way to regain those territories when 10 years from now, Ukrainian GDP has doubled and Donetsk and Luhansk are stuck in the sphere of influence.
Marco Papage:I mean, there's, there's a scenario here where things go badly in Moscow for the regime and 10, 15 years from now, Ukraine regains some of these territories without a shot fire.
Marco Papage:Like how, how is it that nobody has presented that plan?
Marco Papage:Like instead of shoving $100 billion into Ukraine, so basically we're doing vendor financing for attempt to buy our weapons so they can go die in the front line.
Marco Papage:So instead of that, let's give them $100 billion a year for the next 10 years.
Marco Papage:Let's see what happens to infrastructure, to innovation, to technology, to migration, to demographics of Ukraine.
Marco Papage:And then boom, you know, 10 years from now, what are people, Is a Parisia or Kherson going to say, like, well, that place over there looks awesome, this place here doesn't?
Marco Papage:That's an alternative that I think that Trump now brings forward.
Marco Papage:And I think that Putin will have to deal with him because at least that he will have more of a sense that, you know, the US will abide by the deal that it signs with him.
Jacob Shapiro:Yeah, to your point on Putin and the Munich comparisons, I mean, if he, like Putin, like, go ahead, invade Finland, like see what happens, invade Poland, like see what happens to your country if you decide to go there.
Jacob Shapiro:It's not the sort of situation where like Germany was expanding against, you know, neighboring countries that weren't able to fight it.
Jacob Shapiro:But the part of the question that I think is more important is what does this mean for Europe?
Jacob Shapiro:Because I can imagine perfectly what you're saying about, you know, Trump working with Putin and getting to some sort of deal.
Jacob Shapiro:But the only way it works for Kiev to survive 10 years from now, the way that you're talking about is that Europe is going to support Ukraine and is going to have a long term plan for reconstruction and is going to be willing to sort Through Zelensky and whoever else comes afterwards.
Jacob Shapiro:And all the corruption that's within Ukraine itself and that requires political will in Europe to say no, like, we are, we are going to stand up this Western Ukrainian rum state into something that can, that can live beyond, like this war in general.
Jacob Shapiro:Does that happen?
Jacob Shapiro:Because there's a lot of, There's a lot.
Jacob Shapiro:I think the consensus view right now on Europe is so pessimistic, and it's always pessimistic.
Jacob Shapiro:Bearish.
Jacob Shapiro:For years, you and I are like very lonely on Europe island, talking about, like, how great Europe is, but I will say they haven't done enough.
Jacob Shapiro:And it's like, if you don't do it now, like, I don't know when you do it.
Jacob Shapiro:So are you still.
Marco Papage:We're eating those Airbnb costs, man, right now because we've got, you know, you and I, we went in, we renovated a nice Greek style villa, we've got it posted on our Airbnb and no one's coming to our.
Jacob Shapiro:No one's coming.
Jacob Shapiro:Interest rates are going up, but I still have to build, like, what, what am I doing over here?
Marco Papage:You're a pilot, man.
Marco Papage:It's a very lowly island, you know, like, we're the only ones basically taking advantage of that Airbnb.
Marco Papage:So it's, it's very unfortunate.
Marco Papage:But listen, in Europe, there's a very clear, you know, downtrend in support for military, continued military operations.
Marco Papage:But I think that Europe already has a plan for Ukraine and it's called EU accession.
Marco Papage:You know, I mean, EU accession, just the process itself has benefited Central and Eastern Europe.
Marco Papage:Now, yes, countries are souring on this.
Marco Papage:You know, the Croatians are like, oh, maybe we shouldn't have entered the eu.
Marco Papage:You know, the Romanians in Bulgaria, everyone's like, everyone was pessimistic.
Marco Papage:That's because they're Eastern Europeans.
Marco Papage:I mean, I'm East European.
Marco Papage:I can make fun of it.
Marco Papage:Like, it is an unquestionable fact that EU accession is the best thing that's ever happened to Central and Eastern Europe.
Marco Papage:Like, anyone who says otherwise, like, is just an old guy who, like, hates the transitions.
Marco Papage:Drinking a coffee in a nice coffee bar and saying, like, ah, you know, back when we were a communism, it was so much better.
Marco Papage:Get out of here.
Marco Papage:Look at GDP per capita.
Marco Papage:Look at GDP performance of any country in Eastern Europe.
Marco Papage:Those that entered the EU crushed it.
Marco Papage:Those that didn't, you know, like, are behind, fell behind.
Marco Papage:And so what I would say is that clearly there is a path for Ukraine that is Already created, Jacob.
Marco Papage:Like, it's, it's been in operation for 30 years, which is you enter the EU accession program and slowly you fix all sorts of chapters you have to pass.
Marco Papage:In Ukraine's case, I do think a simple way, a simple exchange is neutrality.
Marco Papage:This is something Zelensky was going to sign when he was under the gun.
Marco Papage:And I think that in exchange for neutrality, which, by the way, is defended, it can be a bastion of Western military technology.
Marco Papage:Like Israel is.
Marco Papage:Israel's not part of NATO, you know what I mean?
Marco Papage:Like, but hey, it's very, very powerful.
Marco Papage:So, so strong armed neutrality complemented with EU accession, which is already a plan.
Marco Papage:Like, they have the playbook.
Marco Papage:It's there.
Marco Papage:Yeah.
Jacob Shapiro:I mean, just to say very quietly, though, like, that plan depends on Ukraine having nuclear weapons, because that's what Israel has.
Marco Papage:Yeah.
Marco Papage:I mean, like, you know, I mean, that's, that's a very good point.
Marco Papage:That is a big difference.
Marco Papage:There will always be a threat.
Marco Papage:There will always be a threat of Russia coming back.
Marco Papage:But you know what?
Marco Papage:Look at South Korea, man.
Marco Papage: economic development story in: Marco Papage: ou know, the famous, like, in: Marco Papage:And look at where South Korea is right now.
Marco Papage:And it's constantly living under the gun of now a nuclear rival.
Marco Papage:So, you know, like, when people say, well, you can't live like that.
Marco Papage:Well, I mean, yeah, Israel, South Korea, here are two countries that have lived under constant threat of existential crisis, and they have produced incredible innovation due to that pressure.
Jacob Shapiro:Yeah.
Jacob Shapiro:Although, again, like, South Korea, and this might change very, very soon, but what South Korea had was a defense treaty with the United States and US Military bases and promises that the United States would come defend them.
Jacob Shapiro:And if that goes away, which might go away under Trump, then South Korea will talk about what they've been talking about very lightly in their domestic media over the last 12 to 18 months, which is, again, nuclear weapons.
Jacob Shapiro:So we start talking about nuclear proliferation all over the place, which is also interesting.
Marco Papage:You know, at the end of the day, maybe that's where we're headed.
Marco Papage:And hey, it's going to be like, it's going to be like, like the Dune, the Dune trilogy, where because of nuclear weapons, we're back to fighting with.
Jacob Shapiro:I look forward to getting a banner to put behind your head that says nuclear weapons.
Jacob Shapiro:Not such a bad thing.
Jacob Shapiro:Marco Papage.
Jacob Shapiro:That's the hot.
Marco Papage:Let's, let's, let's talk about that for a second, because a lot of clients ask me you know, my thesis has been for the past 12 years, we're in a multipolar world.
Marco Papage:In a multipolar world, the frequency of conflict goes up, but not each one of those conflicts is easily grafted onto some sort of a bipolar structure.
Marco Papage:So they can sometimes remain relatively constrained.
Marco Papage:Like, there's not a simple alliance structure that just immediately shows up.
Marco Papage: nd you know, like, I refer to: Marco Papage:It was a very, very positive kind of a world for investors.
Marco Papage:Even though there were wars all over the place, they just weren't between the great powers.
Marco Papage:They were proxy wars.
Marco Papage: l, that's cool, but are we in: Marco Papage:And so my answer has always been like, hey, hey, hey, hey.
Marco Papage: , you know, like, but if it's: Marco Papage:But you know what?
Jacob Shapiro: Oh, I think we're in: Jacob Shapiro:I'll take your clients.
Jacob Shapiro: clients want to Hear why it's: Marco Papage:And I think so too.
Marco Papage:I think so too.
Marco Papage:But let me twist that answer.
Marco Papage: What if in: Marco Papage:And here's what I think happens.
Marco Papage:I think Germany tells Austria Hungary, like, look, man, you should be able to take care of Serbia on your own, right?
Marco Papage:Like Russia, United Kingdom and France enthusiastically supports Serbia in the war.
Marco Papage:And we obviously kicked Austria, Hungary's ass.
Marco Papage:I mean, like it, it becomes a massacre.
Marco Papage: they invaded Serbia twice in: Marco Papage:And then they conquered Serbia on the third attempt when Germans showed up.
Marco Papage:But what am I getting at?
Marco Papage:No one's going to nuclear war over Bosnia Herzegovina.
Marco Papage:Like, what?
Marco Papage:No way.
Marco Papage:Serbia and Austria want to duke it out over Bosnia.
Marco Papage:Like, go ahead.
Marco Papage:So I think that we are, you know, sometimes it's that simple.
Marco Papage:I think that the conflict doesn't become world war.
Marco Papage:I think it becomes a regional conflict and eventually Austria, Hungary has to like lick its wounds.
Marco Papage:And then there's like a, you know, like some sort of territorial arrangement.
Marco Papage:But the point is that we keep thinking that everything has to end in a global war.
Marco Papage:But maybe it doesn't.
Jacob Shapiro:Well, yeah, let's put that to the test.
Jacob Shapiro:And this is the last thing we'll do with our geopolitical tour of the world, because I do want to make sure we talk a little bit about the future of the United States before we close.
Jacob Shapiro:But let's put that to the test, because I think we may have a test case in the second Trump administration sitting there in Iran.
Jacob Shapiro:In some ways, the Middle east is the most boring thing to me in all of this, but it's also the one that is most active.
Jacob Shapiro:And you could definitely envision a Trump policy stance, which is regime change in Iran, and they will have a very strong and foaming at the mouth Israel to support.
Jacob Shapiro:Support them and Gulf states that might be interested in that.
Jacob Shapiro:And the Iranians, you know, are either close to nukes or maybe could flip a switch and maybe they could have a couple of crude weapons on that point.
Jacob Shapiro:So what if that.
Jacob Shapiro:What if that happens?
Jacob Shapiro:What if you get.
Jacob Shapiro:Or do you think that's just completely impossible?
Jacob Shapiro:But do you think that there's a world in which Trump decides that getting rid of the regime in Iran is something that he wants to do from a foreign policy perspective?
Jacob Shapiro:And we start getting exactly the questions that you're talking about.
Jacob Shapiro:Who's willing to use nukes over Iran?
Jacob Shapiro:Is Iran willing to fire something off because the regime is a next existential security?
Jacob Shapiro:Like, how do you think about that question?
Marco Papage:You know, recently, I think it was in that Bloomberg interview or maybe it was in another interview, I'm not sure.
Marco Papage:But Trump actually said something that he has never really said openly, which is that he was close to getting a deal on Iran, you know, and that the pressure worked.
Marco Papage:So.
Marco Papage:And then he also on Passant mentioned like, John Bolton, and he said, like, well, everybody who criticized me for hiring John Bolton, and I think John Bolton is an idiot, he said something like that.
Jacob Shapiro:But what they don't understand Trump on that.
Jacob Shapiro:What a walrus.
Jacob Shapiro:I can't believe he still has a job.
Jacob Shapiro:Anyway, sorry, go ahead.
Marco Papage:But yeah, but when I go into negotiations with someone and John Bolton's on my side, like, it's such a huge advantage.
Marco Papage:And I wouldn't.
Marco Papage:I've written this to clients saying that this is how Trump does his job, but I never had confirmation from Trump himself.
Marco Papage:A good example is Peter Navarro, too.
Marco Papage:So, like, when you go into a meeting with the Chinese, Robert Lighthizer starts looking like a Sinophile next to Peter Navarro, who is the author of a book, Death by China.
Marco Papage:So Trump's like use of humans as negotiating chip stacks is interesting, but it reveals that he was.
Marco Papage:He hired John Bolton to scare the Iranians into a deal.
Marco Papage:He was tough on the Iranians to get a deal.
Marco Papage:It's maximum pressure, 101.
Marco Papage:This is what he does.
Marco Papage:And he does it successfully.
Marco Papage:Like he got North Korea at the table, didn't lead to sustainable peace.
Marco Papage:But then, you know, he didn't follow through on it.
Marco Papage:So anyways, I think that.
Marco Papage:I don't think that he will seek regime change in Iran.
Marco Papage:You know, I mean, he.
Marco Papage:I think he will seek a deal.
Marco Papage:And to get the deal, to get that deal, I think we're going to have tensions, serious tensions.
Marco Papage:So I've been telling clients for the last 12 months, don't worry about Israel Hamas and Israel Hezbollah.
Marco Papage:It's not going to lead to oil price increases.
Marco Papage:I'm changing that view now because, you know, I'm very confident that Iran will end up agreeing to a deal.
Marco Papage:I think that they have no alternatives to that.
Marco Papage:But I don't think the median investor is going to have that confidence because Trump is going to come in and he's going to be very tough day one, and he's going to look like he wants regime change, like he wants to attack them.
Marco Papage:But I think he will do that to get a deal from them and they have to give it to America.
Marco Papage:They have to give that deal because I don't see what else they do.
Jacob Shapiro:I hope you're right about that.
Jacob Shapiro:The flip side, I have two sort of rejoinders to that, which is he did try regime change in Venezuela.
Jacob Shapiro:Now, he tried it, you know, in a sort of convoluted, it made the Bay of Pigs look, you know, competent by comparison sort of way.
Jacob Shapiro:But he did try regime change in Venezuela.
Jacob Shapiro:It just fell in his face and he didn't really commit fully to it.
Jacob Shapiro:But the second is, you know, I know some folks who were sort of close to North Korea policy at the time that, you know, he was trading all those barbs back and forth with North Korea.
Jacob Shapiro:And maybe this proves your point that he's willing to use humans that way and take things to the brink.
Jacob Shapiro:And that makes him a better negotiator than all of us.
Jacob Shapiro:But I had sort of, at the time, pooh, poohed the idea that the United States was going to go after North Korea, that it was all part of a negotiation.
Jacob Shapiro:And I know somebody who told me who was close to policy at the time, like it was a lot closer than you think.
Jacob Shapiro:Like we, there were plans there Were things in motion?
Jacob Shapiro:Like, there were two aircraft carriers there, like, things were moving in that direction.
Jacob Shapiro:And if things had gone a little bit differently, like, we could have woken up in a very different world.
Jacob Shapiro:And I've been very sobered by that take for a while because, you know, if the thing that makes me uncomfortable about the type of negotiating tactics that you're talking about is when you get into, you know, when it's really nut crunching time, like when it's time for Kobe to come out, like, like, are you going to see it through?
Jacob Shapiro:Is the other side going to freak out and, like, try and punch you in the, in the balls, like Draymond?
Jacob Shapiro:Like, it's, it's really like you don't exactly know what's going to happen in that moment, so.
Marco Papage:Well, I agree with that.
Marco Papage: er, that was also the case in: Marco Papage:I mean, he was, he was dead set that the trajectory of uranium enrichment couldn't go on.
Marco Papage:So something had to happen.
Marco Papage:And he basically convinced Iranians he would let Israel in his case.
Marco Papage:It was really.
Marco Papage:He used Israel, Trump as the bludgeon.
Marco Papage:I mean, Trump is going to use himself.
Marco Papage:He's not going to.
Jacob Shapiro:In the context of North Korea, he used two aircraft carriers and the threat about.
Jacob Shapiro:I have the bigger button on my desk, Kim.
Jacob Shapiro:Like, it was.
Jacob Shapiro:It was.
Marco Papage:Yeah, no, exactly.
Marco Papage:But, but listen, here's what I would say about that.
Marco Papage:That is the only really way this is.
Marco Papage:This is the problem.
Marco Papage:I think with the read of the four years of Trump presidency, I'll be very honest.
Marco Papage: I mean, I wrote to clients in: Marco Papage:But he used credible threats really correctly, from a game theoretical perspective.
Marco Papage:You know, he just did.
Marco Papage:And I think that nobody's giving Trump credit for this.
Marco Papage:Nobody.
Marco Papage:Everyone just.
Marco Papage:I mean, there's been so many articles, Jacob written where it's like, oh, we're lucky we didn't have a World War 3.
Marco Papage:And it's like, no, actually, to avoid World War 3, you actually have to have credibility so that your opponents know that you will defend your red lines, that you will not just, you know, like, the United States has lost that in some ways, especially with allies.
Marco Papage:You know, like, what.
Marco Papage:What credibility does the US have with Israel or even Ukraine?
Marco Papage:I mean, they're pretty much running U.S.
Marco Papage:policy, and U.S.
Marco Papage:opponents just don't know.
Marco Papage:Like, they don't know if they're going to be able to talk to the US because number one, US hasn't really threatened them.
Marco Papage:And number two, you know, US has painted them as like monsters and evil rogue states.
Marco Papage:And that's where Kamala Harris and Joe Biden in a weird way are kind of like neocons in that ideology.
Marco Papage:Right.
Marco Papage:Ideology matters so much.
Marco Papage:So I would say that, you know, Trump's point is like, I've got a big red button.
Marco Papage:It's bigger than yours.
Marco Papage:I'm going to nuke you.
Marco Papage:But I'm a realist and a fair guy, so if you sit down with me, like, we can make a deal.
Jacob Shapiro:Yeah.
Marco Papage:And it's not going to be a good deal for you probably.
Marco Papage:But hey, man, that's, you know, I'm the U.S.
Marco Papage:you get a deal.
Marco Papage:And that's that combination of like, I'm crazy, I'll bomb you.
Marco Papage:But also you can sit down with me and we can, like, we can sit down and negotiate.
Marco Papage:That is, that prevents wars, you know, and again, we have a four year track record.
Marco Papage:And this is where Trump is, right?
Marco Papage:I mean, he didn't start any major conflicts.
Marco Papage:He didn't extend any ones that were going on, you know, like, I mean, I don't understand why we, like, I mean, I understand why mainstream media doesn't want to give him credit for that, obviously.
Marco Papage:But again, like, I am a data driven analyst.
Marco Papage: Pre: Marco Papage:You know, it's like for a policy novice, doesn't know anything about anything.
Marco Papage:And his advisor list at the time, like Michael Flynn is, isn't like outright.
Marco Papage:His book on Iran was like Islamophobic.
Marco Papage:Like, this guy thinks Iran is like super evil.
Marco Papage:So, so, you know, those were all.
Marco Papage:And then four years of data, you know, what are you gonna, like, you're just gonna keep saying like, oh, well, he got lucky.
Marco Papage:Oh, he got lucky.
Marco Papage:No, no, no.
Marco Papage:Or maybe you don't know what game theory is, you know, or maybe you had never negotiated for anything in your life.
Marco Papage:And one thing that I didn't really accept is all the people who said, oh, he's a great negotiator, like real estate.
Marco Papage:I was like, really?
Marco Papage:Yeah.
Marco Papage:Okay, cool.
Marco Papage:I mean, hell, like, I guess it carries, I guess it carries it through foreign policy negotiating with plumbers and like contractors, you know, on a site.
Marco Papage:I guess it's kind of similar because he did a pretty good job of that.
Jacob Shapiro:Yeah.
Jacob Shapiro:I mean, it's easy to have, it's easy to be a good negotiator when you have no moral center.
Jacob Shapiro:And so you are willing to walk away from something or to destroy something, because you don't give a shit.
Jacob Shapiro:If you are looking on YouTube here, you can see there is a bust of Lyndon B.
Jacob Shapiro:Johnson right behind my head.
Jacob Shapiro:Another great example of a wonderful negotiator because he had that skill where he didn't give a shit.
Jacob Shapiro:Like if he wanted something, he was going to drive it all the way there.
Jacob Shapiro:And Trump definitely does have that.
Marco Papage:But here's the thing, Jacob.
Marco Papage:Here's the thing.
Marco Papage:I know we're going to talk about the future of America.
Marco Papage:This is part.
Marco Papage:Why do we have technocrats with PhDs in economics running our interest rates policy?
Marco Papage:Is that not unequitable?
Marco Papage:Should we not consider climate change and gender issues and income inequality to our interest rate policy?
Marco Papage:Should we or should we not have political people like, you know, just like Nancy Pelosi should be the head of the Fed?
Marco Papage:You know, why not?
Marco Papage:Why have we decided that this realm, the realm of interest rates is for technocrats, but the realm of foreign policy is like, not.
Marco Papage:You know, it's like everybody.
Marco Papage:Twitter gets a say.
Marco Papage:And that's where I would say that there is a skill that we have forgotten about, because we've been in.
Marco Papage:Basically, we've been just swimming in the waters of unipolarity for too long.
Marco Papage:And I think America has become intoxicated with morality.
Marco Papage:Foreign policy and diplomacy is as technocratic and should be as expertise driven as something like setting interest rates.
Marco Papage:It's not the realm of Twitter.
Marco Papage:Jay Powell is not sitting there looking at what Twitter thinks of his visit to the Middle East.
Jacob Shapiro:Yeah, well, I mean, the reason that it is that way, I think, goes back to.
Jacob Shapiro:I forget the name of the author, but he won the Pulitzer Prize for it.
Jacob Shapiro: nd how central bankers in the: Jacob Shapiro:And there was this idea that, okay, there should be this independence carved out for central banks or for monetary policy that should be separate from everything else.
Jacob Shapiro:I think that's where that idea begins.
Jacob Shapiro:And I think you can argue that maybe it's been infected by other things.
Jacob Shapiro:But I also, I just want to underscore your point about neocons and.
Jacob Shapiro:And I rarely show my own political cards.
Jacob Shapiro:I hope that Biden is the last gasp of the neocons, because he certainly is a neocon.
Jacob Shapiro:And if I, If I boil down the disagreements you and I have had on this podcast, I think Directionally, you and I are on the same page and we agree on lots of different things here.
Jacob Shapiro:It's about whether Trump, you've used the word realist.
Jacob Shapiro:The other, you know, leg of US Foreign policy tradition is isolationist.
Jacob Shapiro:And I think I take his isolationist tendencies a little bit more seriously than you do because I don't see a realistic, I see somebody who ping pongs back and forth between realism and deep seated isolationism and that he is willing to go down that isolationist rabbit hole than maybe any other US President certainly in our lifetime.
Jacob Shapiro:I can't remember the last time you had a truly isolationist figure that was in the White House.
Jacob Shapiro:But, but yeah, I mean, that's, let's back in there to the future of the United States.
Jacob Shapiro:I don't know if you, I went back and listened to our reaction podcast to the January 6 riots.
Jacob Shapiro:I don't know if you remember doing that podcast.
Jacob Shapiro:You had some, you had some great lines there.
Jacob Shapiro:You called it the cherry on the pop of a cherry on top of a populism Sunday.
Jacob Shapiro:You also talked about how you didn't take the riot so seriously because of the relative fat to muscle content of the shamans versus your normal Serbian thugs that would have overthrown different governments.
Jacob Shapiro:I really, really enjoyed that.
Jacob Shapiro:You also, you also ruled out the possibility of any kind of stab in the back myth that would bring back these forces into our political forefront.
Jacob Shapiro:I don't know if you want to call this stab in the back, but I don't know.
Jacob Shapiro:What are you thinking about the future of the United States here and what this means?
Marco Papage:I mean, Trump just won the election with the most like ethnically diverse coalition, I think, in a long time, other than Obama.
Marco Papage: I think Obama: Marco Papage:So it's certainly than any Republican president.
Marco Papage: I don't know if he beats: Marco Papage:Bush, that would be interesting to see.
Marco Papage:But yeah, I mean, like, I think, I think the future of America is, I think, brighter.
Marco Papage:You know, and the reason I say that is my biggest concern about the US has been this one chart from Pew Research that I wish Pew Research had not discontinued.
Marco Papage:They had this value survey and I love this chart.
Marco Papage:And it basically they ask, you know, me and you and other people, they ask things like do you spank your children?
Marco Papage:Do you believe the government should help?
Marco Papage:You know, like these kind of non political but kind of value questions and then they, they correlate your answers with your demographic profile and then see what across the population of The United States matters for what kind of a human being you are.
Marco Papage: t, like, you know, and in the: Marco Papage:It was very difficult to do that race and education were kind of correlated the most.
Marco Papage:But then everything else kind of blended.
Marco Papage:And over the course of the last 40 years, the one line that just skyrockets up in importance is party identification.
Marco Papage:And I got goosebumps just saying this.
Marco Papage:I don't know if our listeners understand the profoundness of that.
Marco Papage: It means that in: Marco Papage:Thanks.
Marco Papage:But I don't know what to do with that.
Marco Papage:Like, I don't know what he believes in.
Marco Papage:It's difficult.
Marco Papage:And that's great.
Marco Papage:That's beautiful.
Marco Papage:That's what America is like, maybe he's a Democrat, maybe he's conservative, maybe he's not.
Marco Papage:Maybe socially, he's actually really, really liberal, but he just votes Republican because, you know, like, he wants his taxes to be low, whatever.
Marco Papage: s and early: Marco Papage:He's a Democrat.
Marco Papage:Okay, then I know everything about him, like, done.
Marco Papage:And that means that our party identification in the US Became more important than any other demographic quality, which means that our party identification ceased to be a party identification.
Marco Papage:It became an ethnicity, like serving crot.
Marco Papage:It became everything.
Marco Papage:Democrats are not just party.
Marco Papage:They're an ethnic group.
Marco Papage:And you cannot show up at a cocktail party here in Santa Monica and be like, well, I don't know, climate change might have some benefits.
Marco Papage:Done.
Marco Papage:You're dead.
Marco Papage:Get out.
Marco Papage:You know, dead.
Marco Papage:Well, maybe we shouldn't have really masked kids in schools.
Jacob Shapiro:Oh, my God.
Marco Papage:You know, like, you're shunned because you are anti tribe.
Marco Papage:The tribe believes in tribal totems.
Marco Papage:And so what's actually really great about this, this election is the realignment we've seen.
Marco Papage:I think now, you know, you may disagree with Trump on a number of things, but the fact that he's been able to expand the Republican Party in really weird ways where people who, like, believe climate change is real, but are like, man, maybe we shouldn't, like, just focus on EVs or, like, you know, like, there's.
Marco Papage:There's this realignment going on that makes me very hopeful that we are not ethnic groups as Republican or Democrats.
Marco Papage:And obviously, I'M bathing aloof indifference.
Marco Papage:So I'm observing all of you as if you're in a petri dish, by the way, just to be very clear.
Marco Papage:And so, like, I think to me, that is what's hopeful about this, man.
Marco Papage:You know, and I, you know, like, Trump might mess it up.
Marco Papage:And by the way, when presidents win giant sweeps and landslides, they tend to mess it up.
Marco Papage:The hubris gets to their head.
Marco Papage:They're like, I have a mandate, you know, and then they go too far without whatever it is that they want to do.
Marco Papage:So I'm not saying about whether he's going to be successful or not.
Marco Papage:I'm just saying the fact that he was able to cross traditional party groups and get some of these people on board just makes me hopeful, man, that saying you're a Democrat or Republican may not mean as much as it did four years ago.
Marco Papage:And that's good.
Jacob Shapiro:Yeah, I think part of what you're.
Jacob Shapiro:So I'll engage in your optimism for a bit and then I'll give you the pessimism because you bathe in indifference and I bathe and emotion.
Jacob Shapiro:And then we both sort of, you know, dry ourselves off and come and do this.
Jacob Shapiro:So I can tap into it a little better than you can sometimes.
Jacob Shapiro:But I agree, probably a great image.
Jacob Shapiro:But I think you're absolutely right.
Jacob Shapiro:When you look at rise of independent people who identify as independence over the past 10, 15 years, that's been rising and that's the chart that I've been using for the last 12 months, which is if there is a silver lining to this.
Jacob Shapiro:No matter who wins, a majority of the electorate do not like these candidates, whether it's Trump or Harris.
Jacob Shapiro:And yes, Trump won with a landslide.
Jacob Shapiro:And yes, it's an incredible political, political comeback.
Jacob Shapiro:Generally speaking, people still find him odious.
Jacob Shapiro:They just found him better than, you know, a late stage Democratic candidate who didn't run through a primary, who was using all these sorts of things that didn't actually land with the electorate, that couldn't talk about the economy without sounding like a robot, like he beat that person handily.
Jacob Shapiro:I do think that there is this large swath of Americans who are sick of the movie that they've been watching for the last 812 years and want something different.
Jacob Shapiro:And maybe this next election cycle will be able to see this.
Jacob Shapiro:I'm cutting against what you said.
Jacob Shapiro:The New York Times had a study a couple weeks ago that was really interesting, tracking where people are moving based on voter preference and people were moving.
Jacob Shapiro:It'll be interesting to See how they update, update that data after 24.
Jacob Shapiro:But based on the 20 data, people were moving to neighborhoods where people who voted like them were also already there.
Jacob Shapiro:And so you were getting this self segregation between Biden voters and Trump voters, which cuts against what you're saying.
Jacob Shapiro:I think for me, I think for me, the biggest, you know, the pessimistic question that I would offer is, and I don't think this is controversial, although it will be controversial to anybody who drinks the Trump Kool Aid.
Jacob Shapiro: Democratic election result in: Jacob Shapiro:He absolutely tried to do that.
Jacob Shapiro:And he had no idea what he was doing.
Jacob Shapiro:And also US Institutions are extremely strong and extremely resilient and resisted that attempt.
Jacob Shapiro:But he's coming into power now with a lot more power.
Jacob Shapiro:He won the popular vote.
Jacob Shapiro:He might have the House, he's going to have the Senate, he's going to have the list of mistakes that he made before.
Jacob Shapiro:And I absolutely think that he will try to go after the system so that whether it's himself or a handpicked successor, that he can start to mess around with American democracy.
Jacob Shapiro:And I think that US Institutions are probably up to the task, but I think they're about to be tested in a meaningful way, in a way that they really haven't been tested before.
Jacob Shapiro:The only analogy I can think of in US History is if Huey Long had not been assassinated and had won the Democratic primary and that had become president, maybe we could have had this sort of similar situation.
Jacob Shapiro:But we've never had a sitting president who has talked, you know, fairly openly about how he thinks an election was stolen from him when it wasn't, and who actually tried to do things to overturn the results of a Democratic election.
Jacob Shapiro:And it'll be really interesting to see what happens over the next four years and whether US Institutions, which have weathered so many different problems, are able to weather this challenge, too.
Jacob Shapiro:And then the last thing I'll just say is he's 78 years old.
Jacob Shapiro:He's the same age.
Jacob Shapiro:You know, my father passed away late last year, same age as Donald Trump.
Jacob Shapiro:I know plenty of 78 year olds in my life who are really not that, not all that with it, and at least one, not to be morbid, one of the scenarios that you have to have on your board here is what if the guy has a heart attack in two years?
Jacob Shapiro:What if he slips on a banana peel?
Jacob Shapiro:And what if we get a President J.D.
Jacob Shapiro:vance two years into this experiment and does that upend everything that we've talked about?
Jacob Shapiro:Are we all, like, you know, we think everything's going in the Trump direction, and maybe this is the end of Trump and maybe something else is bubbling beneath the surface.
Jacob Shapiro:So that is one thing I've been trying to think about, too, and what that means for everything.
Jacob Shapiro:So those are my thoughts about America.
Marco Papage:You know, one thing I would say is that January 6th, obviously, like, he could have acted much, much better during that.
Marco Papage:Like, massively, like, you know, National Guard could have been called much earlier.
Marco Papage:I mean, there's their stock that he didn't even call it.
Marco Papage:It was actually Pence that called the National Guard, which would actually be unconstitutional.
Marco Papage:There's all sorts of, like, things that went massively wrong there.
Marco Papage:On the other hand, he did not prosecute Hillary Clinton.
Marco Papage:And we might say, well, what would he have prosecuted her for?
Marco Papage:But, you know, there's indications that he, she did, you know, commit some, like, you know, like, crimes, you know, like.
Marco Papage:And he didn't because it was stupid to prosecute her for that.
Marco Papage:Why would you, you know, did she really keep those emails?
Marco Papage:Did she use a personal email because she's like, like, nefarious Russian spy?
Marco Papage:No, she was just probably, you know, I'm Hillary Clinton.
Marco Papage:I can do whatever I want, which is fine, whatever.
Marco Papage:I'm not making a judgment.
Marco Papage:I'm just saying she probably did break some laws and, you know, he could have prosecuted her for it.
Marco Papage:And so I think the Democrats have made a mistake, you know, and they made a mistake.
Marco Papage:I mean, clearly they had.
Marco Papage:It's.
Marco Papage:It's clear.
Marco Papage:And then one of the mistakes was to prosecute the former president on some of the charges were pretty, you know, I mean, again, like, did he break the law?
Marco Papage:Probably, but.
Marco Papage:Well, do you have to prosecute him and try to put him in jail?
Marco Papage:Same with, you know, jailing Steve.
Marco Papage:Stephen Bann was, you know, again, like, he could have been, like, handled differently.
Marco Papage:You know, J.D.
Marco Papage:vance made a point.
Marco Papage:Eric Holder was held in contempt of Congress.
Marco Papage:Like, nobody, I mean, it held by Congress.
Marco Papage:It didn't go to court, but nobody even thought of, like, them pursuing Eric Holder for contempt of Congress.
Marco Papage:Like, come on, like, why would you, like, he got enough, you know, I'll slap on the wrist, you're in contempt.
Marco Papage:Bye bye.
Marco Papage:Have, you know, it's all good.
Marco Papage:So my point is that it's, you know, when Democrats look at, when the Democratic Party under Biden and Harris looked at Trump, it immediately labeled him as a threat to democracy, you know, and pursue that.
Marco Papage:And I do think that that ended up helping Trump because a lot of the charges were just convoluted, you know, campaign financing.
Marco Papage:He paid off a porn star.
Marco Papage:And then that's actually legal and cool.
Marco Papage:You can pay porn stars, apparently, but you need to report it as a campaign.
Marco Papage:You know, like, he was just like.
Marco Papage:I mean, I could just see someone in Ohio or the Midwest being like, you know, like a Democrat being like, man, I just don't care.
Marco Papage:We all know he had sex with a porn star.
Marco Papage: We knew that before the: Marco Papage:And then what are we.
Marco Papage:What is this court case about?
Marco Papage:And so I think that, you know, it cuts both ways.
Marco Papage:That's what I would say.
Marco Papage:And let's observe what Trump does now, because if he goes after his opponents the same way, then I have a very, very.
Marco Papage:I would be in your pessimistic camp.
Marco Papage:This will not stop.
Marco Papage:You know, and then the Democrats, when they come back, they'll be justified in doing it, like, back and forth.
Marco Papage:But if.
Marco Papage:If he can be magnanimous over the next four years, like, I do think that would be a good point.
Marco Papage:And one thing I would say, watching that JD Bands Waltz debate was really endearing.
Marco Papage:Like, two Midwest dudes just disagreeing.
Marco Papage:When, you know, when J.D.
Marco Papage:vance whipped out, like, an online forum that he wanted to talk about, that was such a great moment because it was like, hey, let's talk about policy.
Marco Papage:Like, here's this thing.
Marco Papage:And Waltz was ready to counter him.
Marco Papage:But then the idiotic media, like, silences JD Vance, you know, and it's.
Marco Papage:And, like, I, as an observer, was angry at that because I wanted to see Waltz's reactions to J.D.
Marco Papage:vance's point.
Marco Papage:Like, here are these two Midwest dudes who don't really hold any ill will towards each other, and they were about to engage in a policy debate.
Marco Papage:For the first time in the last 20 years of US debates, we're going to have something other than a dude following his opponent weirdly, like a shark, you know, like, we finally.
Marco Papage:And so I would say that that makes me hopeful that, you know, like, maybe we have gone crested over this, but it will take a lot out of Trump to prove that.
Jacob Shapiro:Yeah, I just want to underline what you said, because what you said really talks about a decline in faith in US Institutions, which has been steady since Gulf of Tonkin and since Nixon's impeachment.
Jacob Shapiro:And I think you're absolutely right that the system went after Trump.
Jacob Shapiro:We never actually dealt with the things that were important.
Jacob Shapiro: Georgia election officials in: Jacob Shapiro:What was he trying to do?
Jacob Shapiro:Was he really Trying to change the vote.
Jacob Shapiro:We never had that trial.
Jacob Shapiro:We're talking about porn stars.
Jacob Shapiro:What did he actually do in helping organize 1-1-6?
Jacob Shapiro:Was that treasonous?
Jacob Shapiro:Have we ever had that conversation?
Jacob Shapiro:No, we're talking about obscure campaign finance things, or like that case in Georgia that got thrown out because it turned out whoever was prosecuting it was sleeping with her assistant or something like that.
Jacob Shapiro:Like, and also, like, things not being applied in an equal way on the other side.
Jacob Shapiro:So we never actually got down to the hard questions, just like we never got down to the hard questions about Hillary.
Jacob Shapiro:Like, what did she actually do?
Jacob Shapiro:What was her complicity in Benghazi?
Jacob Shapiro:Was there any.
Jacob Shapiro:I don't know, because we spent so much time talking about her damn emails.
Jacob Shapiro:To quote Bernie Sanders, like, we're not actually sort of doing the things.
Jacob Shapiro:And to your point, like, I would be surprised if Trump prosecutes his enemies.
Jacob Shapiro:The thing I would be watching for is what is he going to do in state election boards?
Jacob Shapiro: kes that call that he made in: Jacob Shapiro:That's the nightmare scenario for me.
Jacob Shapiro:And I think there's enough, there's enough lack of faith and enough anger in US Institutions.
Jacob Shapiro:And to your point, we've watched how political power has been manipulated in all these different ways and unfairly, if you're coming from that point of view, like, maybe there's an opening to screw with the system.
Marco Papage:But listen, again, I like to look at America the way somebody would have looked at my homeland of Serbia.
Marco Papage:And we joked when we worked together at Stratford for.
Marco Papage:We used to, we used to write those pieces kind of like, you know, from that perspective, like, strong man, you know, like, just using these terms.
Marco Papage:And so when I look at the United States of America from, like, a very bizarre, I think, objective, nihilist bait in aloof indifference perspective, I see that both parties have engaged in this Trump in a haphazard, far more coopy way.
Marco Papage:The Democrats in a far more insidious Southern District of Manhattan kind of way, you know, and so it's like, yeah, but both sides are engaged in this.
Marco Papage:And, and the voters, I mean, clearly spoke on November 5th what they kind of thought about that.
Marco Papage:Your point?
Marco Papage:Voters being stupid and stuff like that.
Marco Papage:Like, I think you're right about specific policies, but I think the gut, you know, directionality, like, Tariffs will produce inflation.
Marco Papage:I can kind of get that as a voter.
Marco Papage:And I think, like, prosecuting Trump for some bizarre thing is political lynching.
Marco Papage:I think those are the connections that they have made.
Marco Papage:And I, you know, like, I wonder if they take any lessons now.
Marco Papage:It's easy for Republicans to be magnanimous after a big victory, right?
Marco Papage:So does it really mean anything?
Marco Papage:Even if Trump is magnanimous now, does it mean anything?
Marco Papage:I think we'll see.
Marco Papage:But I think that, you know, at the very least, when I see that debate between the two vice presidents that, you know, a lot of people watched and said, like, wow, that was civil, you know, and there was like this disagreements, but, you know, it was okay.
Marco Papage:I think maybe we're moving towards a positive direction.
Marco Papage:I think race is important, you know, very important.
Marco Papage:And it's very important that Trump has managed to expand his coalition.
Marco Papage: r a second, you know, because: Marco Papage:Fine.
Marco Papage: In: Marco Papage:You know what I mean?
Marco Papage:So it's, you know, those kind of are small snippets of optimism.
Marco Papage:But I guess I will say I do have a bias.
Marco Papage:You know, I do have a political bias, and my political bias is towards optimism.
Marco Papage:And it's probably because of where I grew up, you know, like, I mean, like, I saw like real polarization, real ethnic conflict, and like just complete another collapse of society where a country goes from first world, near first world to non in 12 months.
Marco Papage:12 months like this.
Marco Papage:That's how quickly it happened, you know, And I don't see that happening in the US Because I think we do have these guardrails of professionalism in the U.S.
Marco Papage:and so if I can like impart that bias on your listeners, you know, American, like, situation may be terrible relative to itself, but in the broad sweep of global affairs, it's not that bad.
Marco Papage:I mean, the French are famous for like every express that gets thrown into a corruption trial.
Marco Papage:You know why Nobody.
Marco Papage:Nobody on this planet can name the French intelligence agency?
Marco Papage:Nobody.
Marco Papage:You know why?
Marco Papage:Because they change it every four to six, eight years as a new president comes in and cleanses the entire, entire domestic law enforcement, intelligence community in order to put in, and this is France, a nuclear power, a liberal place.
Marco Papage:Paris is a wonderful place.
Marco Papage:You know, they have freedom of speech, blah, blah, blah, blah, blah.
Marco Papage:And yet they go after the presidents every time.
Marco Papage:Every time there's a corruption charge.
Marco Papage:And they, you know, they go for trial and nobody can tell me what's the CIA equivalent or FBI equivalent in France because they keep reforming them for these reasons.
Marco Papage:So, you know, the threshold for, like, collapse of America, I think, is much higher than, I think maybe what both Republicans and Democrats think.
Jacob Shapiro:Look, I also.
Jacob Shapiro:This is one of the reasons we get along so much, because my bias is also towards opposite optimism.
Jacob Shapiro:But let's see what happens over the next four years.
Jacob Shapiro:I think American institutions are up to the test, but I don't think there's any denial that they're about to be tested and that Trump is arguably their biggest test in 150 years.
Marco Papage:We also agree because we are learned nerds and we're cousins in that way.
Marco Papage:And you referenced Max Weber earlier and.
Marco Papage:Yeah, I mean, people should read that essay of, you know, legitimate power.
Marco Papage:I forgot what the title is, but it's about legitimate authority.
Marco Papage:Where does legitimacy comes from?
Marco Papage:And your point was that charismatic authority is taking over.
Marco Papage:I mean, that is correct.
Marco Papage:And that happens in societies when institutions and sort of the legal bureaucratic authority wanes.
Marco Papage:And that is not a good thing.
Marco Papage:That is not a positive thing.
Marco Papage:If you're an investor, you want to invest in countries that are run by legal bureaucratic authorities, because you don't need Jacob Shapiro and Marco Papic in that world at all.
Marco Papage:You don't need.
Marco Papage:Everything is on paper.
Marco Papage:You can just hire a lawyer and you know where the world is going.
Marco Papage:And so that.
Marco Papage:That would be where I would agree with your pessimism, just the fact that we have charismatic authority taking over.
Marco Papage:And again, I know for a lot of listeners who haven't read Weber, this might be like, what are they talking about?
Marco Papage:Go read it.
Marco Papage:It's like a page and a half essay.
Marco Papage:And we are experiencing definitely a tilt towards charismatic authority right everywhere.
Jacob Shapiro:I mean, it's not just the United States.
Jacob Shapiro:I mean, it really is just about everywhere you turn.
Jacob Shapiro:Like, charismatic authority is what.
Jacob Shapiro:I mean, can you think of a country in the last year where that hasn't been?
Jacob Shapiro:What won the day?
Jacob Shapiro:I can't.
Marco Papage:Yeah.
Jacob Shapiro:I mean, Modi Sheinbaum, I mean, you just sort of go down in Indonesia, Prabowo.
Jacob Shapiro:I mean, it's all.
Jacob Shapiro:I guess Japan's the only one that's out in the cold because they have this.
Jacob Shapiro:I love him, too.
Jacob Shapiro:That's probably why he's my favorite leader in the world right now.
Jacob Shapiro:Shigeru Ishiba.
Jacob Shapiro:We actually have a whole episode about him coming out next week with your boy Tobias.
Jacob Shapiro:Not the NBA, Detroit Pistons star.
Jacob Shapiro:But he turned me onto this book about the archetypal Japanese hero.
Jacob Shapiro:It's a book by Ivan Morris.
Jacob Shapiro:And apparently the Japanese have this concept of a hero who.
Jacob Shapiro:He's a hero precisely because he failed at everything.
Jacob Shapiro:He rises because he believes so passionately about something and then he epically fails.
Jacob Shapiro:And so they're looked at as a hero because of their epic failure.
Jacob Shapiro:I can't help but think of Joe Biden in the context of that.
Jacob Shapiro:Like he worked so hard for everything and got to the pinnacle and then everything just destroyed for him.
Marco Papage:Anyway, by the way, how do you think Joe Biden feels right now?
Jacob Shapiro:Man, I think he's got to feel a combination to vindicate it.
Jacob Shapiro:He probably is sitting there thinking, I would have won this.
Jacob Shapiro:And I mean, we'll never know.
Jacob Shapiro:But I don't think he's necessarily wrong if people don't care about all the other stuff.
Jacob Shapiro:Like, I'm not sure they would have cared about him doing his thing.
Jacob Shapiro:I think the economy was more important.
Jacob Shapiro:And on the flip side, I mean, he, if he had just walked away and, you know, gotten another Democrat in the door, he would have had this self narrative of I'm the guy who defeated Trump and returned America's soul to herself and I passed the biggest spending deal since the New Deal and now he's going to be the four year aberration between Trump that, you know, tried to build, tried to build a dam against these populist forces and was completely overcome.
Jacob Shapiro:So I got to think he's, I gotta think he's pretty glum right this second.
Jacob Shapiro:What about you?
Marco Papage:I think you nailed it.
Marco Papage:Those are the two, those are the two stories, right?
Marco Papage:I don't think he could have won.
Marco Papage:I think he would have lost even worse because of his mental condition today.
Marco Papage: he was the right candidate in: Marco Papage:But at the same time he made a mistake that also Ruth Baines Ginsburg made, which is they stayed too long and they imperiled the Democratic Party due to that.
Marco Papage:And so those are the two kind of things.
Marco Papage:But I think some schadenfreude.
Marco Papage:Is that how you say it?
Marco Papage:Did I say it correctly?
Marco Papage:I think some of that is in there because it's like, hey, you know what?
Marco Papage:Because you know what?
Marco Papage:You know what was wrong?
Marco Papage:What was wrong was the enthusiasm for Harris right after they picked her.
Marco Papage:There was this whole like, well, you can't say anything wrong about her because you're politically incorrect and she's the right candidate and Joe Biden is the wrong candidate and she's going to be so much better.
Marco Papage:And then, you know, my daughter comes down the stairs, shows me a TikTok video, says Harris is awesome.
Marco Papage:I'm like, oh my God, she's going to lose because you don't vote.
Marco Papage: throat when the playbook from: Marco Papage:And I say unfortunately because yeah, it would be great if it didn't matter who the person was, but is old white dude.
Marco Papage:That's what works in the Midwest, you know, and that's why Joe Biden was designed in a lab to beat Trump.
Marco Papage:And all the enthusiasm about Harris was just based on like vacuous non objective criteria.
Marco Papage:And like this, you know, what CNN called brat energy in an article which was just like, what does that even mean?
Jacob Shapiro:Well, it lends some credence to when, when the right is talking about the way that the media eco system is structured because the overnight the media almost was writing Joe Biden out before the decision had even been made.
Jacob Shapiro:And then as soon as he was out, they had all the columns ready like, oh Joe, he's giving it to this new heir apparent and now she is rising.
Jacob Shapiro:And you know, the media was trying to convince everyone that there was this groundswell of grassroots support and that her rallies were great, they were better than his rallies.
Jacob Shapiro:And like all the things that you talked about and it just wasn't true.
Jacob Shapiro: in the Democratic Party since: Jacob Shapiro:You could tell the Obamas were not happy with the coronation of Harris, that they wanted the open primary.
Marco Papage:This is why we're close, man.
Marco Papage:This is why this was like literally my talking point.
Marco Papage:Right after you were done.
Marco Papage:He hesitated, you know.
Marco Papage:Yeah.
Marco Papage: ause we all watched Harris in: Marco Papage:One moment in the debate went after Biden for busing became rocketed to double digit support.
Marco Papage:And then at the very next debate, I mean, go ahead and look at it, the camera was on her, she was in the middle, right next to Biden, couldn't put two sentences together.
Marco Papage:So why was that going to change?
Jacob Shapiro:Well, and to your point, like, you know, I just talked about concern about the future of the Republican US Democracy.
Jacob Shapiro:There was nothing democratic about the way that Kamala Harris was chosen as the Democratic nominee.
Jacob Shapiro:Nothing like.
Jacob Shapiro:So, like, you can sort of, if you're trying to look at it from that point of view, like, in some sense, the Democratic Party was also trying to usurp democracy as well.
Jacob Shapiro:I don't, I don't want to establish a moral equivalency there, because I do think that the things that Trump did around January 6th, I do think they're unprecedented.
Jacob Shapiro:I do think they are worth calling out as unprecedented and teetering on treasonous.
Jacob Shapiro:But, like, the Democrats were not exactly the knights of democracy.
Jacob Shapiro:Like, they had an incredible opportunity to run an open primary and let the best person rise to the top, and they just did.
Marco Papage:I wouldn't listen.
Marco Papage:I don't think you have a Democratic prerogative to run a primary Democratic democratically, just to like, I.
Marco Papage:It's up to you.
Marco Papage:I wouldn't.
Marco Papage:I would.
Marco Papage:You know, like, J.D.
Marco Papage:vance has attacked the Democrats for this a lot.
Marco Papage:Like, well, they just anointed her.
Marco Papage:Like, that's non.
Marco Papage:Democratic.
Marco Papage:Hey, listen, man, like, the Constitution doesn't tell parties how to elect candidates.
Marco Papage:So if they want to do it through like chicken, I mean, it's fine.
Jacob Shapiro: No, since, since what,: Jacob Shapiro:Was that when it was passed?
Jacob Shapiro:Like, when you get direct election in primaries, like, the Constitution did weigh in at a certain point, that's when you get away from the back room.
Jacob Shapiro:People chosen in rooms to.
Marco Papage:We didn't really do that until the 68.
Marco Papage:Right.
Jacob Shapiro:But there is, there is constitutional law on the books that says that it should.
Jacob Shapiro:It should be that.
Marco Papage:But my point is, if you had super electors, you had all sorts of ways to get around, like, populism, you know, and like one vote, one person.
Marco Papage:So how you structure your primary is kind of up to you.
Marco Papage:And so all I'm saying is that what I would say is that it's up to the Democrats to be, like, imperiled for their choices.
Marco Papage:And the reason the primaries matter and the reason the competition matters is that it's a way to have the, you know, free market and competition, have the best challenger rise to the top.
Marco Papage: We did it in: Marco Papage: It's not like it was: Marco Papage:It was five years ago, four years ago.
Marco Papage:Harris was terrible.
Marco Papage:Terrible.
Jacob Shapiro:No, no.
Marco Papage:Miss me.
Marco Papage:Otherwise, like, terrible.
Marco Papage:They couldn't put three sentences together.
Jacob Shapiro: ated the mistake they made in: Marco Papage: And in: Marco Papage:So each step of the way, every time that the Democratic Party has decided to withhold competition, it's not about democracy.
Marco Papage:This is why I want to say I'm okay with it not being Democratic.
Marco Papage:I am.
Marco Papage:It's up to you.
Marco Papage:You do whatever you want.
Marco Papage:But we know that when you have competition, it tests the candidate.
Marco Papage:And so I'm with Nate Silver.
Marco Papage:Nate Silver proposed that they should have had an open convention.
Marco Papage:I went even further, said it should have been like the voice.
Marco Papage:You know, have the judges and have them tap dance, have them sing, have them recite the Constitution, have them solve mathematical equations, make it fun, make it cool, televise it, make a three day televised event, have voters vote in, have a demo, demo, have a Republican, have Liz Cheney or Mitt Romney or maybe Dick Cheney, because now Democrats apparently like him.
Marco Papage:Whatever.
Marco Papage:He can be one of the judges that turns around and says, like, ah, you, like, will you invade Iraq?
Marco Papage:You know, all that stuff.
Marco Papage:It could have been so much more fun and it would have produced, I think, look, if Harris had won that it would have helped Harris, you know, and, and it was just such a myopic way to do this that fed into the Republican narrative that this was not meritocratic and this was about demographics and this was about, you know, certain groups.
Marco Papage:And, you know, that's where we got it.
Marco Papage: sociated with white voters in: Marco Papage:Just think about that for a second, what that kind of says about the poor choices that the Democrats make.
Marco Papage:So, and you know, the problem is that they're starting to blame other, other reasons.
Marco Papage:You know, like the blame is now on Joe Biden.
Marco Papage:Like that, that's, that's who's going to be thrown under the bus, even though.
Jacob Shapiro:Absolutely.
Jacob Shapiro:Well, I mean, to your point, about, like, what is Joe thinking today?
Jacob Shapiro:Like, the history books will write this as Joe Biden's fault.
Jacob Shapiro:Yeah, for sure.
Jacob Shapiro:Yeah, he's, he's such a tragic figure.
Jacob Shapiro:I have sympathy for him.
Jacob Shapiro:I mean, you could just tell that it was something he wanted his whole life and he just, he was past his prime, but he couldn't help himself.
Jacob Shapiro: ke, like, like you said, like: Jacob Shapiro:And that.
Jacob Shapiro:That guy just was gone.
Jacob Shapiro: He was already going in: Marco Papage:Well, that recipe was still there.
Marco Papage:Like, that's.
Marco Papage:That's what I don't understand.
Marco Papage:That.
Marco Papage:That particular recipe of who would have done better against Trump was there and it was just ignored.
Jacob Shapiro:All right, well, Marco, anything else we should tell the listeners?
Jacob Shapiro:This was a Joe Rogan level episode.
Marco Papage:Well, why not?
Marco Papage:I mean, he decided a presidency, so maybe we should adopt his model.
Marco Papage:Let me say one thing.
Marco Papage:I think that way, too.
Marco Papage:There's too much focus on short.
Marco Papage:So here's a swerve at two hours at 13 minute mark.
Jacob Shapiro:Great, great.
Marco Papage:All right.
Marco Papage:Because this is what we need.
Marco Papage:We need more of this.
Marco Papage:What I think is interesting is how much emphasis there is on short content.
Marco Papage:You know, short content in everything.
Marco Papage:Writing, Twitter, podcasts.
Marco Papage:Oh, make it 15 minutes.
Marco Papage:Make it so that people.
Marco Papage:But the truth is, if you have meaningful quality, people will bookmark something you've written online.
Marco Papage:Like, there was this amazing Atlantic artist article, clearly written, by the way, by the campaign head of Trump.
Marco Papage:Like, clearly as a.
Marco Papage:As a hedge against losing.
Marco Papage:I don't know if you've read it.
Jacob Shapiro:It's.
Marco Papage:It's an incredible Atlantic article that basically says a disarray, you know, in the Trump campaign.
Marco Papage:And it was like.
Marco Papage:I don't know, it was like 10,000 words.
Marco Papage:It took me 45 minutes to read.
Marco Papage:But it was interesting.
Marco Papage:It was.
Marco Papage:It was good.
Marco Papage:And, you know, you bookmark it, you come back to it.
Marco Papage:Same with.
Marco Papage:Same with podcasts.
Marco Papage:If you have something meaningful to say.
Marco Papage:Maybe we don't.
Marco Papage:Maybe everyone's lost it.
Marco Papage:But I think that long form is not dead.
Marco Papage:As everyone runs towards short content, there is actually an opening space for long form.
Marco Papage:It just has to be good.
Jacob Shapiro:No, I agree 100%.
Jacob Shapiro:All of the media companies, and this is true of the newspapers right up into TikTok, they just get.
Jacob Shapiro:They monetize on clicks.
Jacob Shapiro:And if you want clicks, you do need the shorter content with the catchy titles and the images and things like that.
Jacob Shapiro:And there is, you know, when you're thinking about younger generations and how young minds who are growing up now in a social media environment.
Jacob Shapiro:You and I didn't grow up with social media.
Jacob Shapiro:We grew up with big black floppy disks and all sorts of other things that kids have no clue about.
Jacob Shapiro:But so we have, like, our brains developed in such a way that we didn't need that sort of thing.
Jacob Shapiro:Whether that's true going Forward as children grow up around all these devices.
Jacob Shapiro:I don't know.
Jacob Shapiro:I think that's interesting, but I think you're right in the media ecosystem right now, which is where all the most of the big media companies, they profit off of clicks, so they're optimizing for clicks.
Jacob Shapiro:But if you can give people the content that they want, if it's good and long, they will absolutely consume it.
Jacob Shapiro:The difficult part of that is getting people to find you, because there is so much noise from all the clicks that it's really hard for people to go and look.
Jacob Shapiro:And the moment they go online and give a phone number or an email address away, suddenly they're getting advertised for penis pumps and everything else.
Jacob Shapiro:So they don't want to do anything online.
Jacob Shapiro:They just want to go back to what they're doing before.
Jacob Shapiro:And they also like TikTok.
Jacob Shapiro:Like, I go through Instagram reels too.
Jacob Shapiro:It's kind of fun.
Jacob Shapiro:So it's that being able to find people in the marketplace is really different in an environment that is so loud and so optimized for clicks.
Jacob Shapiro:But I agree with you 100%.
Jacob Shapiro:I mean, this podcast exists entirely because there are people who will put this on for an hour and a half, drive around the Midwest as they're going in their farm or they're in the field or something like that, or they're at their desk on a Friday afternoon, and they want to listen to us.
Jacob Shapiro:Although I do have one friend shout out Harrison, who said he only listens to the podcast because the sound of my voice helps him fall asleep.
Jacob Shapiro:So there's also that, too, an incredibly soothing voice.
Marco Papage:Like, it's.
Marco Papage:It's shocking.
Marco Papage:Like, I mean, I know you in person.
Marco Papage:Who has a better voice on microphone?
Marco Papage:Like, you know what I mean?
Marco Papage:Like, it's.
Marco Papage:It's very soothing.
Marco Papage:But before this gets weird, I do want to ask you one final question.
Marco Papage:You know, we end.
Marco Papage:We do have to end with basketball.
Marco Papage:So let's each pick one surprise.
Marco Papage:Just one.
Marco Papage:One surprise.
Marco Papage:After the first.
Marco Papage:What is it, two weeks, I think of games.
Jacob Shapiro:Well, I'll give you.
Jacob Shapiro:So I'm not surprised that the Pelicans are already injured and fumbling everything.
Jacob Shapiro:So my optimism is already gone.
Jacob Shapiro:But the Suns have shown more life to me than I thought.
Jacob Shapiro:They were sort of a hot pick going in, and I was like, really?
Jacob Shapiro:Like, I feel like KD is kind of just this, like, perpetually depressed, like, you know, thinking about the blog boys and on his burner accounts, and he's looking pretty good.
Jacob Shapiro:And the Suns are the Suns are looking pretty good.
Jacob Shapiro:They might be a force to be reckoned with.
Jacob Shapiro:What about you?
Marco Papage:Well, mine is the Dubs, the Warriors.
Marco Papage:I mean, what.
Marco Papage:How are they winning?
Marco Papage:You know, I mean, but he was, like, injured, you know.
Marco Papage:Buddy Hilt has now become like.
Marco Papage:I mean, he's going to win six man of the Year.
Marco Papage:Like, I'm taking it right here.
Marco Papage:Done.
Marco Papage:End of story.
Marco Papage:Buddy Hill is playing amazing.
Marco Papage:He's playmaking.
Marco Papage:He's not just a Reggie Miller type.
Marco Papage:He's playmaking.
Marco Papage:And Draymond Green, man, it's that old man power, you know, like, just, like, just.
Marco Papage:He shut down your boy Zion, and it was such a.
Marco Papage:It was like a pickup game.
Marco Papage:You know, I was watching this game.
Marco Papage:It was like one of those pickup games where, you know, a guy of our age with a little bit of a flabbiness just, like, puts that, like, dad strength length into a cut.
Marco Papage:Dude in his 20s, and it's just like, nah, man, it just doesn't work.
Marco Papage:Basketball's a game of angles.
Marco Papage:It's a game of girth.
Marco Papage:It's a game of who has a bigger ass sometimes.
Marco Papage:And Draymond, man, just like art.
Marco Papage:That.
Marco Papage:That game was art, you know?
Jacob Shapiro:Yeah.
Marco Papage:Let it go.
Marco Papage:Fame right now shut down.
Jacob Shapiro:Thanks for bringing that up.
Jacob Shapiro:I'll say that.
Jacob Shapiro:You know, Anthony Davis injuring his foot already was also art.
Jacob Shapiro:That's.
Jacob Shapiro:I'll throw that back at you.
Marco Papage:First of all.
Marco Papage:That was just.
Marco Papage:I was waiting for that and the way he did it, and then he dunked on the next play.
Jacob Shapiro:Yeah, yeah.
Marco Papage:You know, like, come on, man.
Jacob Shapiro:Anyways, did you also see that, that, that.
Jacob Shapiro:Did you see that great statistic of top father son scoring combos in league history where it's like, number three is Dell and Steph Curry, number two is Kobe and his dad, I think Joe was his name, and number one is LeBron.
Jacob Shapiro:And Bronnie, even though Bronnie has zero points, just because LeBron scored so many points.
Marco Papage:Excuse that slander.
Marco Papage:You take that back.
Marco Papage:He scored two.
Jacob Shapiro:Did he?
Jacob Shapiro:Oh, mazel good.
Marco Papage:He.
Marco Papage:He scored, like, to stick that back, right?
Marco Papage:Like, come on.
Jacob Shapiro:I actually.
Jacob Shapiro:I have a lot of respect for him.
Jacob Shapiro:He's.
Jacob Shapiro:He knows what he is.
Jacob Shapiro:He's going to be like, his best uses as a three and D sort of guy.
Jacob Shapiro:Like, like, props on him for making.
Marco Papage:It as far like the Derek Fisher, you know, like somebody who plays on a team where you don't need a point guard, but you focus all your energy on hitting the open three and play defense.
Marco Papage:Like, Derek Fisher made a career out of that.
Jacob Shapiro:Yeah, he could.
Jacob Shapiro:He could totally.
Jacob Shapiro:He could totally do that.
Jacob Shapiro:I mean, it must be so hard to be LeBron's son, too.
Jacob Shapiro:Can you even imagine, like, the.
Jacob Shapiro:Yeah, I mean, he seems like a good kid, so I won't.
Jacob Shapiro:I won't throw any shots at him, and he also won't get any shots in the bat.
Jacob Shapiro:Anyway.
Jacob Shapiro:Sorry.
Jacob Shapiro:All right, let's.
Jacob Shapiro:Let's get out.
Marco Papage:Listen, I have no problem upsetting the Democratic Party, American national security, the Republican Party, but I'm not going after LeBron James, okay?
Marco Papage:He runs the media in many ways, so.
Marco Papage:Hey, LeBron, you get yours?
Marco Papage:King?
Marco Papage:Like, go Lakers.
Jacob Shapiro:You heard it here first, guys.
Jacob Shapiro:LeBron 20, 28.
Jacob Shapiro:We will see you.
