Bizarro World Podcast
with Nick and Gerardo
Dec. 20, 2021
Congress is getting rich off stocks and has severe conflicts of interests. Shock.
Big banks are circumventing regulators by using WhatsApp. Surprise.
It's one big club and you ain't in it. So you have to get in there and profit alongside them.
Inflation is here and commodity prices are on the rise.
We're having a Smallcap Commodity Supercyle Summit this week to help you profit from it.
All that and more in this week's episode.
Gerardo Del Real: Jerome has spoken. Does it matter? Jerome's going to learn who's in charge. The major U.S. indices took a hit this week. Gold can't hold that $1,800 level, closed at $1,799. Cryptos, they seem like they're not on stable footing. We're going to talk Powell, we're going to talk the Fed meeting, we're going to talk the hypocrisy as we always do of politicians on both sides. We're going to talk about JP Morgan and WhatsApp. We're going to talk about the dollar flirting with the 97 level. A lot to get to. I am Gerardo Del Real, along with my co-host, Mr. Nick Hodge and this episode 148 of Bizarro World. Nick, I always say there's a lot to get to because there's always a lot to get to. How are you doing?
Nick Hodge: I'm good. I'm recovered from the COVID. Still don't know if it was the Omicron, but would bet that it was. Seems to be sweeping the world and certainly the nation. I'm feeling good. A busy week in the markets, busy close to the end of the year. A lot to talk about. How are you doing?
Gerardo Del Real: I am well, thank you for asking. I am happy that you are well, that you are recovered. How is your family?
Nick Hodge: They're all doing good. They're still in the house. They weren't able to go to school this week, the kids. So they've been raising hell with their mom there at home, but they're good.
Gerardo Del Real: Excellent, excellent. Let's get right into it. Tough week for the major U.S. indices, tough week for the TSX Venture, tough week for all, but a few select names. What stood out to you this week, Nick? Obviously, the tax law selling season coupled with what people are trying to interpret as a hawkish Powell, which I thought was hilarious, but the combination of those things has led to a dollar that's perked up pretty well here, flirting with the 97 level. What stood out to you, Nick?
Nick Hodge: What stood out to me is a very broad question. And I guess I would have to just think about what I was buying and selling. So I think you're still very much in tax loss season. I know there was a fed meeting and that's probably a bigger theme in the macro sense, but it's tax loss on the NYSE and NASDAQ as well, and if you remember, there were some high-flying names, meme stocks is how we started the year. So there's been some, let's call it, volatility, selling pressure that is, call it, a side car to the Fed meeting that we had this week, which we'll get to.
So what was I buying? I was buying cannabis stocks and I told you. That's how we ended the podcast last week. You asked me what I was looking forward to, that I was going to watch cannabis stocks and I was. And they're getting absolutely decimated. Some of the largest multi-state operators in the U.S., even Canopy Growth (NYSE: CGC)(TSX: WEED) is down at a 52 week low as we speak, put in this second, third week of December here. So I was in the market buying cannabis stocks. I don't think you're getting a real clear picture of the entire market right now, given that it was Fed week, given that I don't think the market believes what Jerome was saying, given that there's... The world's about to shut down for two weeks. So I don't want to base a lot of longer term or even medium-term comments on the action of this week. I think that you should be doing typical year-end stuff, right? Getting your portfolio ready for a new year in as much as buying and selling tax loss positions, cannabis on the buy-side and then on the tax loss side, mining names for me that didn't quite do as well. What stood out to you?
Gerardo Del Real: Again, wrote a big check relative to my waiting already in my portfolio for a Patriot Battery Metals (CSE: PMET)(OTC: RGDCF). It now looks like the labs are a bit delayed and we're going to get results here the first week of January on three additional holes. I continue to insist that that company's on to what I believe will end up being a pretty significant lithium discovery at a time where we absolutely need and the market is rewarding significant lithium discoveries. It's funny. I had a conversation with the gentleman from, well, I'll say one of the bigger institutions, very well known in the resource space, right? And mentioned Patriot, I mentioned the news release and the institution said, "Well, if that's accurate if what's in that news release is accurate, then they're on to something significant, but we want to see cross-sections."
Right? So I immediately reached out to the company and the company was very receptive and said, "Yes, we rushed the news out and we didn't get the cross-section out because of how meaningful we thought that first hole was, but the next release, you can definitely expect those." The comment that was made to me by this institution was if they step out as they apparently did in hole one, which was a 30-meter step out, but if they step out from that 500 meters and they hit and it's similar grade and it's similar widths, he said, "Given where the market cap is, that thing's going to run." So not a coincidence that a big group came in offering flow-through financing and I believe it was C$0.61 cents with a $0.75 cent warrant to the tune of C$11 million.
It initially wasn't going to be C$11 million. It was going to be a little bit less, and even with the upsized financing, a lot of people were left out. When they announced the financing that morning, I joked on Twitter that people are going to start figuring out really soon that they're not going to be able to participate. That's exactly what happened. The stock sold down to C$0.33, $0.34 cents, right? Where the financing was on the hard money, right? The non-flow-through, which was a small percentage of it, but immediately they went in and they bought it back up and it closed today here at the C$0.46 cent level and look, C$11 million of flow-through tells me one thing. It tells me the company is dead serious about drilling this lithium discovery out and don't discount the potential for a gold and or copper discovery, which is actually where the bulk of the 14 holes went.
10 holes went towards the gold and the copper, though the geology there is less understood than on the lithium side of it, but right now rightfully so, the Lithium's getting the bulk of the attention and looking forward to that. So bought them in the market, wrote a hefty check in the financing with a voluntary 12-month lockup. This isn't something that we're going to four-month and a day it. The big group that wrote the $11 million check also voluntary 12-month lockup. That tells me they're serious about financing and helping move this project forward and I am pretty convinced that this group's going to get the word out once we get the next set of results. So a long-winded way of saying, "Buy, I bought more Patriot Battery Metals." That's what I was doing this week.
Nick Hodge: It's almost like the long-term bullish on commodities, Gerardo.
Gerardo Del Real: Gerardo, imagine that. And speaking of long-term bullish on commodities, Leading Edge Materials (TSX-V: LEM)(OTC: LEMIF) has been a frustrating holding for me because it's one, so undervalued, but it's been so undervalued for a long time, right? So it was nice to see that stock up some 13, 14% here at the close during tax-loss selling season. That touched a 52 week high. Very few stocks are doing that. And it did so on the back of an announcement by Northvolt that it'll be building Europe's biggest lithium plant. So Portuguese oil and gas company called Galp is joining forces with Northvolt to develop the largest lithium processing plant. Now it's 50-50 joint venture. They're targeting annual production of 35,000 tons of battery-grade lithium hydroxide, which is enough for 50 gigawatts of battery capacity that could power roughly 700,000 electric vehicles according to the Financial Times.
So that project bodes well for Leading Edge because they not only have a world-class rare earth asset, which you need in order to make these electric vehicles, but they also have a world-class graphite asset and a production facility that's fully permanent that's just waiting to be turned back on, and that is now joint ventured with a group that's doing due diligence to potentially bring battery-grade graphite to market. So I suspect that the market finally is starting to connect the dots with Leading Edge Materials. It would not surprise me to see that stock run much higher from current levels, and again, this is something when the stock was C$0.13 cents. I was telling people, "This is the way it's going to go." It didn't matter back then, because you couldn't convince anybody to buy it at 13 cents. Everybody loves it at C$0.45, C$0.46 though. Odd how that works, huh?
Nick Hodge: Well, that's how these stocks go higher in bullish commodity environments, right? When the herd comes running and piling in, whether it's for a new discovery or for a catalyst like you just mentioned with the construction of a new battery plant. So yeah. Touched on multiple commodities there and multiple large institutions that are comfortable writing checks, because I think they see the, like I say, the bullish environment for commodities in the cycle we're in.
Gerardo Del Real: Well, and look, this is what I enjoy the most, right? I enjoy having a macro setup that is favorable, right? That provides tailwinds because when you couple that with a network that you and I are fortunate to benefit from that allows us to pick up a telephone, call a CEO, call a geologist, call a Patriot Battery Metals, and figure out exactly what the business plan is before writing a check, having that type of network with the kind of macro backdrop that we have now, coupled with tax law selling season, I am absolutely giddy and excited for the Smallcap Commodity Supercycle Summit that we're going to be doing here on Wednesday, December the 22nd.
We'll make sure to put a link up, but trading around these events is what I absolutely wake up in the morning for. I wake up in the middle of the night, I check my phone, I look to see what's happening overseas. Can't wait to get up and get at it, and I think 2022 is going to be absolutely spectacular and profitable, and I hope anybody that's interested in trading or speculating in these commodity mining stocks, specifically the smaller ones, right? I hope you join us on December the 22nd, because I think it's going to be fun.
Nick Hodge: You mentioned the macro, and that's one part of the strategy that we will go over in that summit or that event that as you mentioned, is on December 22nd. And then there's two other parts, obviously, of a three-part strategy. There's what we're calling the micro, and you described some of it there, the network, some of the company-specific stuff, and then there's the trigger or what you look for. Like you said, trading around some of these catalysts that are ongoing, whether it's drilling or whether it's economic assessments, whether it's partnering with a battery maker or a larger company to help process whatever you're working on. That's one thing. And then the other thing is that it's ongoing in two ways. One, the Supercycle itself lasts for years, typically, 10 to 15 years on the upswing before selling off.
But then with individual companies, there's often multiple opportunities, right? Because it takes a long time to bring a mine online. Certainly from a greenfields discovery, there's a whole, oftentimes 10-year checklist of things that you have to do from drilling and proving it up to working with local communities to gain approval, to getting financing, et cetera. So those are the catalysts that we look for when trading around these positions and those will be what we're highlighting and what we're revealing in the Smallcap Commodity Supercycle Summit. And then you're going to go over a couple of the names that you like here in late 2021 and headed into at 2022. I'll be sending it out to everyone on the 22nd. So they should make a note to keep an eye for their inbox. It'll be in the morning 11:00 AM Eastern Time, and look forward, obviously to having as large of an audience as possible.
Gerardo Del Real: Absolutely. Excited for that. Again, I think the timing is absolutely perfect. There's a gold stock in there that's trading your 52-week lows. That's going to have a very busy 2022. There's a copper-gold stock that has 4, 5, 6 rigs turning in 2022. I think it's on to be taken out here in the next 12 to 24 months. We're going to make money on that before then. I could go on. There's commodity exposure ranging from gold to silver, to lithium, to copper. A lot to like, excited for 2022. I almost don't want to go away for the break. Although I'll enjoy the family and friends time, but it's going to be a long week with the markets being quiet and the lack of new flow. Obviously, it'll allow us to get a lot done as we tidy up loose ends here for 2021, but yeah, 2022, I think it's going to be phenomenal.
Nick Hodge: I'm with you. I mean, I got a lot of food to cook on Christmas Eve, but certainly going to be working next week and chomping at the bit the week after that to kick off 2022 and get tax loss behind us and get back to doing what we do.
Gerardo Del Real: Absolutely. Looking forward to it. Gold, it held in there despite a rising dollar, right? It bounced back to that. And we said this last week, it seems like $1,800 is like the magnet, right? If it goes too far one way, it pulls back. If it goes too far the other way, it pops right back up. Sure enough, it closed at $1,799. Copper had a nice little resurgence back to $4.31 after touching lows of... I believe it hit as low as $4.22, $4.23 earlier in the week. The dollar, again, as I mentioned, flirting with that 97 level, 96.66 is where it closed today. I know we're bored with the gold price, but are you impressed with the resilience given the dollar strength that we've seen?
Nick Hodge: Yes. And I think you saw strength this week. If it's been trading in a range, it went to the top end of its range this week back up closer to $1,800, like you say. So it's down 8% for the year, I think right around there, give or take a percent on today's action, but you've got to remember, and we've said this a lot, that it's historically high, right? You're still seeing M&A in the space, you're still seeing good earnings from the gold mining companies, but nonetheless, relative to other sectors, crypto, tech, energy, gold has just been left out this year. So in that respect, a lot of names have been left out that have quality results, right? And it's still not breaking out, right? Like you mentioned, it gets right to the top of that range, but fails to break out above it. So that's obviously what needs to happen for gold to get some attention and it is not happening yet. But to answer your question, it hasn't broken down in the face of a dollar that's strengthened and rates that are still going sideways, if not weakening as well.
Gerardo Del Real: No, look, and again, take advantage of these rates. I not only refinanced one place here recently and immediately put it into the market because that's what I do. I'm doing it onto my second place. I mean, with property values, being what they are, if you're fortunate enough to have some decent equity and your rates a little higher, because maybe you took on a mortgage years ago when rates were higher, rates are falling. And again, given the macro setup that we have now, it's not extremely difficult to do well for yourself, speculating in the commodity space and or other sectors like you do, Mr. Hodge. Or the other thing that you can do is you can just be like Nancy Pelosi, right? Where you just get to be a member of Congress and you get to directly influence law and legislation that affects companies, not her, of course, right? That your husband owns, which it's absolutely nuts to me that this is still legal.
I applaud AOC, Alexandria Ocasio-Cortez. Earlier this week, she broke ranks with the party and criticized Pelosi for not reporting insider transactions. There's information out there that her husband is making millions of dollars exercising options and tech companies that she regulates. I applaud AOC for break and rank. As I mentioned, she said the access and the influence we have should be exercised for the public interest, not our profit. It shouldn't be legal for us to trade individual stock with the info that we have it. I mean, this is as a fuck you to the American people as it gets out there short of not funding veterans or not funding firefighters or we'll get to this Oklahoma bill on the way slavery is taught where they're threatening to cancel funding from schools, but close to those things, this is just a slap in the face to me as an American citizen, as a taxpayer. I don't want my elected officials trading or their spouses trading on stocks that they are affecting legislation on.
It seems so out of tune and it just shows you that neither party really cares. Nobody really cares, right? There's the occasional AOC that'll call out the hypocrisy and a couple of others that I actually have some respect for, but Speaker Pelosi, Speaker Pelosi, let that sink in, for her to respond that it's a free market and that she should be able to do this, come on. Do better, do better. Thoughts on that, Nick?
Nick Hodge: It's more of the same, but it's worth touching on for a second, just for principal's sake. It's right up there with term limits, right? Something that everybody wants and agrees on, but none of your "leaders" or governors want for themselves on either side, because that would limit the amount of time they get to spend enriching themselves in the Senate or the House of Representatives. So this is one of those things everyone knows and comes up from time to time and is back in the news this week. I think you mentioned AOC, but she was probably reading some of these articles that Business Insider was putting out over the past week of which they did two dozen. So I'm just going to read some of the bullet points.
- 49 members of Congress and 182 senior-level congressional staffers who violated federal conflicts of interest law
- lawmakers and top congressional staffers faced minimal and inconsistently applied penalties for violating The Stock Act, and it's nearly impossible to comprehensively obtain public records about their personal finances
- 75 federal lawmakers held stocks in COVID-19 vaccine makers, Moderna, Johnson and Johnson, or Pfizer in 2020 with many of them buying or selling these stocks in the early weeks of the pandemic
Remember, that was before they were telling us that there was a pandemic. We covered that on the podcast a while ago, because well, it's been a while since the COVID started at this point.
Gerardo Del Real: Fucking twilight zone.
Nick Hodge: And then of course, dozens and dozens of lawmakers that own stocks that either are in industries that they regulate like you say, defense, or that own stocks and things that they publicly oppose like members owning tobacco stocks who've publicly opposed smoking in bills and things like that. So I just rife with hypocrisy, rife with lack of oversight and yeah, like you say, a slap in the face because everyone knows and no one does anything about it and even the speaker just told you that, "Shut the fuck up. I'm trading my stocks."
Gerardo Del Real: Exactly what she did. I'll get to Oklahoma and Kentucky in a little bit and the hypocrisy there. I want to pivot back to Jerome, right? We had a Fed meeting and decision, which some people apparently took as hawkish, Nick. I mean, we're serious about fighting inflation. So we're going to signal that we're going to keep real rates negative for another couple of years at the very least. Does that sound hawkish to you? Am I crazy in interpreting what he said on Wednesday as not hawkish?
Nick Hodge: I mean, he says that they're going to do three rate hikes next year.
Gerardo Del Real: Watch.
Nick Hodge: Right. So we'll see where that gets us. Real rates didn't see to a budge and might end up doing the opposite and as we well know, it's watch what I do and not what I say, right? So we'll see what happens next year. The stock markets are telling him he better not do that and honestly, what can he do? Everyone knows he's painted back into a corner. As I watched the press conference the other day, it just makes less and less sense and sounds more and more like word salad when he is trying to explain the inflation of duration and, "This isn't the inflation we were looking for." It's like Star Wars, right? He's waving and saying like, "This is not the inflation you're looking for." I don't know. It just seems like he's lost credibility and will ultimately cave to the pressures, not of the market, but specifically to, let's be frank, his buddies, former employers in the private equity space, at cetera, pointing back to how it's one big club with the Pelosi and trading stuff we just went over.
So, no, it doesn't even really matter. I didn't write about it this week, in fact, because it's one of those things that's everywhere, right? I mean, everyone waits with bated breath to see what he's going to say. All the journalists are... Most of them at least are sycophantic and giddy to be able to ask him a question at the press conference, and I don't think it's going to be actual hawkishness. I think, he tried to take that stance. He didn't wear the purple tie. That was a funny tweet I saw. No purple tie. It's like Groundhog Day, right? Did he see a shadow? What color tie did he wear it? So he was trying to be serious with the markets and be hawkish because he wasn't wearing his soft purple tie, but anyway, I'm rambling and I'm don't think Mr. Powell has much credibility left.
Gerardo Del Real: I agree. 100%. Oh, by the way, global debt just hit a record of $226 trillion. That was last year. I was before this year. How much wiggle room do you think The Fed and other central bankers have to raise rates? Now there are a couple of central banks that have started to nudge rates higher. Again, the strength in the dollar and the bond market tells me it's not believable and it's not sustainable and if the bond market and the dollar is any indication, you're not going to see three rate hikes. And even if you do, it's going to be 25 basis points at a time and it's not going to mean much. So yeah, we'll wait for Mr. Powell to get a reminder from the bond market and the major us indices.
We'll wait for that reminder to tell him who's in charge because it's not him folks and it's not Janet Yellen and it's not Lagarde and it's not any of these other people. That ship has sailed. It's now a race to the bottom and it will be for several, several years, which again, is why I'm so excited to be launching this Commodity Supercycle Summit here next week. I think it's timely and I think it bodes well for what we want to do in 2022, given the policy, fiscal, monetary and the political situation that we have around the world.
Nick Hodge: Yeah. And we're going to see if the growth can keep up. And obviously, it was a bullish into the year, not in the last couple of days, but the S&P still up to 20 plus percent for the year, which is a fantastic year, twice an average return, and that was in the face of what a lot of people thought, if you remember, right? Thinking back to August when gold had a little bit of a run and we were in the peak of Delta when people were scared again, and we ended up going back to all-time highs. That might not be the case again in the new year, right? We'll get a new GDP print. We're going to see. And you could really get an actual pullback in stocks, which we haven't had for a bit now and that would be further pressure on Powell. So yeah, we're going to see.
Gerardo Del Real: Well, and it would probably lead to some sector rotation where capital and to the gold space, you would think there would be some rotating of capital into the gold space and the equities given the attractive valuations of even the major producers. Right?
Nick Hodge: And also, and I'll make a segue here, given some of the money that's coming out of cryptos over the past couple of weeks, right? So not a knock on them, but that money's got to go somewhere and certainly the crypto side of things has been soft. If I'm a crypto investor, look, these are my crypto soldiers for the gold army. Right? And I now understand inflation. I've now read up on Fiat and I know why I own crypto and it comes into some softness. Perhaps I do go into the resource space a little bit with some of those profits. Look, they know about "hard assets," right? They're already buying digital real estate and stuff like that. They obviously know what mining is. They mine their fucking coins. I mean, and this has gone back years. I've always said this, how ironic is it that the logo for a Bitcoin is a gold coin, right? Anyway, it's not a far stretch to see some of the crypto money coming into the resource base, specifically the precious metal space for the same reasons that they're in crypto, and there's a lot of that money. Look, you've got crypto cities being built, people talking about... There's an article I was reading this week about Puerto Rico's back in the news because the nouveau crypto rich are figuring out it's a tax haven. They've got some money for sure.
Gerardo Del Real: Let's pivot a little bit. Let's talk about the hypocrisy again of lawmakers, right? Obviously, there was a horrific tornado in Kentucky and all the best to everyone there that was affected, I think, the death toll is near or surpassed 100, countless left homeless. I definitely want to start with that energy there. Separate from that, I want to talk about hypocritical lawmakers who make it a point to talk against federal dollars, taking federal dollars and campaign against the other party for wanting to provide funding for situations like this. And then when something happens, senators like Rand Paul, who once upon a time had some integrity before he started getting beat up by his neighbors, fucker, this is a guy that-
Nick Hodge: He did fall from grace, man.
Gerardo Del Real: My God, used to like Rand Paul. Rand, what happened? Who hurt you? Not literally, who hurt you emotionally, right? You used to have a soul and a spine and I thought, "Hey, chip off the old block like his pop," and nothing could be further from the truth the past decade or so, but Rand Paul is a great classic example. Cruz is the other one, but this is a guy that's just... Every single chance he had, would rally against and campaign on independence and not ballooning the deficit and we don't want to appropriate federal funds for disasters. People got to lift themselves up by their own bootstraps. The minute Kentucky gets hit, right? Not only is he accepting of federal help from the federal government, us, but then they go off and they go and they visit people that have been hurt physically, emotionally and economically and campaign as if they're the ones bringing the bacon home and helping with disaster assistance when nothing could be further from the truth.
Again, however you feel about deficits and getting your house in order and lifting yourself up by the bootstraps and all by your own bootstraps and all that, let's save that for another day, be consistent, be accountable. It's all I ask out of people, whether it's myself, a politician, a friend, whatever, just be accountable. And this, again, just like the Pelosi thing, it just doesn't pass basic decency test, right?
Nick Hodge: Last week, we talked about Bob Dole and getting the free lunches for kids in Kansas and this is what I was talking about, right? Where you've got people who rail against government spending and handouts on the one hand and then seek them with the other hand. I mean, that's the definition of two-faced, right? Saying one thing and doing the other. And unfortunately, happens all too often with politicians. So I was going to talk about the Black Rifle Coffee Company (NASDAQ: SBEA). I don't know why that popped in my mind. Do you know what that is?
Gerardo Del Real: No.
Nick Hodge: Have you seen the Black Rifle Coffee Company? Well, it's a stock and I actually didn't know that until recently, but it came public recently. It's a coffee company that's like, for lack of a better explanation, bills itself as sort of the anti Starbucks. Right? So it's like conservative coffee basically. They sell it at Cabela's and they have a whole apparel arm. Like a lot of people, you'll see conservatives who now wear the thin blue line shirts and Gadsden flag shirts, which they've completely usurped and bastardized, but that's another conversation too. They also wear Black Rifle Coffee Company shirts, BRCC. Is that right? Black Rifle Coffee Company. Yeah. That's the acronym and they also have a logo. So it's a whole culture thing, right? If you were to just imagine like Trumpsters or the January 6th crowd, Black Rifle Coffee is their coffee. It's like the militia coffee. It's founded by a former veteran and he leverages that veteran status to sell his coffee, basically, and it's getting really popular. Like all these big time... Sorry, I'm going on about this, but it's going to be interesting.
Gerardo Del Real: No, no, no, this is great. This is interesting.
Nick Hodge: All these big time hunters and conservative people, country singers and things like that co-op to this. They help them brand it and then they're helping them push it and the sales have been obviously going quite well. The stock might even be a good one to buy, but I just love the positioning of the culture. The culture of it is that even our coffee is partisan now. Right? You have an anti-Starbucks coffee brand that's super popular. The point I was making is that I was reading an article and I don't know why my brain tied this together about how Cabela's and Bass Pro Shops are the subsidized corporations. They get federal dollars, because they're considered regional anchor stores, so people drive over a certain number of miles to go to them.
So they get federal dollars because of that. And anyway, it's like that's the main outlet for selling this coffee, right? So do you think the Black Rifle Coffee crowd is the federal subsidy crowd? No. But do you think they realize that they're buying their conservative coffee from the most subsidized retailers in the country? No. And that's what I was talking about with the ranchers last week. Right? They rail against certain things and don't realize that in some cases, it's their conservative elected officials that are helping the meat packers and processors squeeze them out, squeeze the ranchers out, right? So it's just misguided. And when you talk about the federal pork in Kentucky, I just... I think about the Black Rifle Coffee consumers for some reason.
Gerardo Del Real: Very, very interesting. Yeah. Again, I've said it a hundred times on this podcast. If there was an ETF that I could have created or a product I could have created to short the political class, mostly on both sides, I would absolutely, absolutely be writing checks for that. Speaking of checks, JP Morgan (NYSE: JPM) just got hit with a $200 million fine. What's $200 million to JP Morgan? Right? Did you hear about this one, Nick?
Nick Hodge: I did. And it's also more of the same. Go ahead.
Gerardo Del Real: Yep. Nope. That's it. You nailed it. You hit the nail on the head there. I was gonna say, it's not just politicians, it's not just Republicans and it's not just Democrats. It's the corporations too and it's the banks. So what they did is they allowed employees to use WhatsApp. And WhatsApp, for those of you that aren't familiar, is an app, as the name suggests, that allows for or allowed at one point for encrypted communication. So JP Morgan now is having to pay $200 million in fines to two banking regulators to settle charges that its Wall Street division allowed employees to use the app and other platforms to circumvent federal record-keeping laws. Think about that, federal record-keeping laws. So back to the different tiers of justice in the United States of America. If you're wealthy and connected enough, you can break federal laws and just get away with paying a fine that I almost could guarantee is a lot less than the amount of money they were able to make by being able to circumvent federal record-keeping laws. Sick, little circle jerk, if you ask me.
Nick Hodge: That's exactly it. So I've been rallying against this for a decade now, right? Where there's a million things you could cite going back to manipulating LIBOR and other subprime mortgages and derivatives that led to the global financial crisis, to HSBC (NYSE: HSBC) and others laundering money for terrorists and drug lords, Wells Fargo (NYSE: WFC) creating accounts or the countless other scandals that that bank has been involved in and it's always a snafu or a skirted the regulations or evaded federal oversight. It's never broke the fucking law, right? And no one is ever sent to jail. And this is a theme, right? Nobody went to jail for 2008 either, unless you ran a giant Ponzi scheme, but not members of banks. So yeah, you get to pay a fine and it's another one of those things. Everybody knows that it's out there, just like everybody knows that people will go to Congress to get rich and a trade on insider information and the industries that they have oversight of.
And then from there, you have to talk about the revolving door, right? Because who do you think are the oversight bodies? Who fined JP Morgan? The SEC? Well, who's the head of the SEC? The guy that was formerly at Goldman for 20 years, right? And just like Powell, I was talking about his private equity connections, right? And that's your revolving door where it's like you go on, after you put in your little bit of time on the private banking side or the equity side, then you go to the regulatory or the oversight side and in some cases, and I've talked about this on the podcast, that's the strategy of the companies, is to send mid-level bankers or insurers or whatever it is into the government, into government agencies that regulate those industries so they can learn all the loopholes and that's how the revolving door goes back and forth. So, yeah, I mean, that's exactly what it is. JP Morgan gets to pay a fine as they always do for manipulating precious metals and interest rates or whatever it is.
Gerardo Del Real: And, and for the kind among you that look at this bastion of... It's an institution, right? This bastion of financial innovation that is JP Morgan supposedly, and are thinking, "Well, I'm sure it was just some low level employees that were just not compliant." No, it was the managers and the senior personnel responsible for compliance that use their personal devices to communicate sensitive business matters. That's what the SEC said. So this is going on at the highest levels. The Pelosis of the world, they don't even try to play it off anymore. The JP Morgans of the world, they don't even try to play it off anymore. They just wait for their buddies to tell them what it's going to cost to make it go away and they make it go away.
Nick Hodge: Like the Epstein a where there was bankers and politicians names that came up in there? It's interesting how that happened.
Gerardo Del Real: Like the files, the hard drives that are not going to be released in court and not going to be made available? Yeah, I could go on. Don't get me going there. Yeah, I'll leave it alone there. It's getting long and I don't want to get on a rant because it's going to be a long one if I get going.
Nick Hodge: Well, we can do it next week because we'll have to follow up on the Maxwell trial. We won't let that slip away, which they're obviously trying to do here during the holiday season, and we've got awards to give out. So no lack of things to talk about in the next couple of weeks.
Gerardo Del Real: No lack of things to talk about at all. Did you hear about the Oklahoma Republican who introduced a bill to limit how slavery is taught in schools and is threatening to pull funding from schools that don't teach it the way he wants it taught if this bill passes? Did you read about that?
Nick Hodge: I did not. How does he want it taught?
Gerardo Del Real: So a new bill that was proposed in the Oklahoma State Legislator would limit how slavery is taught in schools and ban teach teaching that one race was the unique oppressor. It also wants to ban... The phrasing is that another race was the unique victim in the institution of slavery. I will let the brightest amongst you figure out who he thinks would be the unique oppressor and who one would assume was the unique victim in the institution of slavery. He also wants to prohibit the use of the 1619 Project, which was a journalism project, a long form one by the New York Times that examined slavery's role in the founding of America. That's a no-no for him. You're not getting to make up your own mind about who was right and who was wrong and why it happened and God forbid, you form your own opinion and actually pick up different types of literature to try to figure out, make your own mind about what happened and why. Right? So public schools that fail to comply would see the State Department of Education withhold up to 5% of their monthly state funding under the bill.
Now, if you play nice and you comply after a violation, then the funding can be restored. This is just utter bullshit and good on the University of Oklahoma Chapter of the American Association of University Professors. That's a mouthful. I get it. But they came out and said, "Look, we're slamming this bill. It disturbing." This is the quote from them. "They are cranking this legislation out faster than the courts can keep up. In the meantime, we have no intention of lying to our students or bowing to this assault on truth in academic freedom." Another representative, a Democrat this time, called the bill embarrassing and a waste of time. He said, "This doesn't help people. It does nothing to further the conversation about race, which is an important one to have, and it distracts from so many of the other issues that are facing Oklahoma today." I'll put a link up. Any thoughts on that, Nick?
Nick Hodge: So wait, did it pass? Is it actual that's the law now?
Gerardo Del Real: It has not passed. It's being proposed. It's being proposed. But again, the fact that they're even proposing this now, back to the Pelosis, back to the JP Morgans, back to the Rand Pauls, they're not even pretending anymore, right? They want to pretend like slavery wasn't what slavery was. And then let's be clear, it was different in different parts of the world, but you have... This is documented. These aren't things that can easily be made up and there's curriculums in place to make sure that things are fact-checked and then you can propose multiple opinions to want to dismiss one viewpoint or two viewpoints or three viewpoints from the dialogue in the conversation and then twist the way you can speak about a thing that happened is so nefarious to me. It's sick. It's nasty.
Nick Hodge: Yeah. It sounds like a version of book burning, right? I mean, why you want to control information and education like that, unless you have an alternative agenda. Right? So how does that relate to the stuff in Florida? What's the other education thing that has been in the news recently? I'm blanking on the name. It's not like anti-woke, but it's... What do they call that curriculum? You know what I'm talking about?
Gerardo Del Real: The Critical Race Theory curriculum, is that what you're talking about?
Nick Hodge: Yes.
Gerardo Del Real: Yeah. Again, and we've touched on this here before on the podcast. Why would... It's very similar and again, I hate to just say, well, this is a Republican issue. The only people that seem to be having trouble with talking about race and the institution that was slavery in America and how it came about and who supported it, now, everything else seems to be the people that were against the way back in the days, the Republicans, right? That was a party of Lincoln. So, yeah, no, look, Governor DeSantis proposed a bill, a Florida bill, allowing parents to sue schools that teach critical race theory. This motherfucker had the nerve to quote Martin Luther King Jr. while he proposed it.
Nick Hodge: I saw.
Gerardo Del Real: I mean, you got to be fucking kidding me. You can't make this stuff up. It's called the Stop the Wrongs to Our Kids and Employees, or the acronym, you guessed it, the Stop W.O.K.E Act. And the fact that Americans are distracted by this bullshit and actually give this serious debate and thought, we're having a conversation of how stupid it is. There is a lot of people that actually are in the streets marching for the Stop W.O.K.E Act that think this is the way to go. Right? So DeSantis said, "In Florida, we are taking a stand against the state-sanctioned racism. That is critical race theory." So he's calling critical race theory the state-sanctioned racism when critical race theory seeks to talk about the institutional racism that occurred, talk about fucking the rabbit underneath the hat. Holy smokes.
Nick Hodge: I mean, in some respects, there's nothing new under the sun, right? This is like Lynyrd Skynyrd and Neil Young, right? Southern men and stuff like that and in other respects, but still in similar veins, it's classic divide and conquer, right? And that's what I was... Or at least it's what I intended to hint at with that Black Rifle Coffee thing. Even our coffee is divided now. Right? Now, we have to have-
Gerardo Del Real: Our coffee is divided.
Nick Hodge: ... protests about how to teach history and social things and stuff like that and yeah, meanwhile, they're what? Inflating the costs of goods, profiting from it, et cetera. It's sort of like, "Look over here, look over here." And at least that's how I view that because so much of that stuff is inconsequential to your ultimate upward mobility and quality of life, at least how I view it and what do I know?
Gerardo Del Real: This is to me, the modern-day Coliseum, except instead of bodies fighting against other bodies and the people in the Coliseum being entertained by the violence and the brutality that that was, this is the 2021 version with people's minds, right? Where they try to tell you that the sky is green and even if you see that it's blue, no, it's really green and you have two groups that end up fighting about whether the sky is green or blue and it turns out it's fucking nighttime, right? Critical Race Theory. Critical Race Theory, just for anyone that is unclear about what it is, it's a decades-old academic concept and legal framework that examines America's history of racism and how it continues to affect the U.S. That is it. Now, we can have a conversation about what should be included, what should not be included. That's not what's being voted on or being voted.
No, they don't want to have the conversation, period. And in places like Oklahoma, they want to have a firm grasp on the words you say, the ideas that you put out into the world and the way that students are taught and learn about history, and it's a slippery slope, it's dangerous, and again, I think it's the modern-day Coliseum just using people's brains or lack of.
Nick Hodge: Brean and circuses, stimulus checks and protests. Yeah.
Gerardo Del Real: Yeah. Did you see the Nancy Reagan memes?
Nick Hodge: I haven't. I've been so out of it this week.
Gerardo Del Real: Okay. So I won't get into it because she's probably somewhere resting in peace and she taught me to just say no, but apparently, Nancy didn't say no often in her younger days, pre-Ronald.
Nick Hodge: Surprise.
Gerardo Del Real: There's a quote that was floating around and just for... If you have kids, ask your kids to turn this down right now and if you're a kid, cover your ears. Kids, five seconds. All right. So for the rest of you, oh, if you're easily offended, you should go away now. It was nice of you to listen to us this week. I'll wait another two seconds. All right. So apparently Nancy Reagan was a throat goat.
Nick Hodge: So who says this? Is there corroborating evidence?
Gerardo Del Real: Yeah. I just Google Nancy Reagan, Throat Goat, everybody, and you'll get the full breakdown of Miss Reagan's many talents, apparently. I mean, pretty well documented, pretty well corroborated, and man, I tell you that there's a lot of pictures now, and then this is where the memes just had me dying. That was in stitches, Nick. There's so many different pictures of Nancy Reagan sitting on Mr. T's lap or Ray Charles or Sammy Davis Jr. both next to her on each side with just the biggest smiles on their faces and Twitter being Twitter is going to do what Twitter does, but it was absolutely hilarious. So this comes from a book, from a lady that did a documentary on her. So supposedly, she had the best blow job game in Hollywood's MGM backlot. That was what was documented in the book. So, yeah, I'll put the article up. I asked the kids to go away, I asked the sensitive people to go away. I thank them for listening. So I will put the link up after saying that I wasn't going to do so and not talk about it.
Nick Hodge: She knows about the trickle-down as it were.
Gerardo Del Real: The little guy... Little tingly thing on the back of her throat, Nick. There's one of her holding hands with Pete Davidson that just had me dying.
Nick Hodge: Oh, that's funny.
Gerardo Del Real: Oh man, Mr. Hodge, it's been almost an hour. I know people have things to do. The holidays are coming up. I hope everybody has a phenomenal Christmas, a phenomenal holiday. Whatever it is that you celebrate, just be kind, have a great time. Please be safe. You won't listen to us until after the holiday next. So I wish everybody all the best and just the great end to the year and get ready. Get ready for an exciting 2022 and please by all means, put December 22nd on your calendar for the Commodity Supercycle Summit, because I think it's an important one and I think it's going to make us some good money here in 2022. Nick, anything to add to that?
Nick Hodge: That's it. Same sentiments from me. Happy holidays to everyone. Get your last-minute shopping done, get your grocery list made and crossed off and get your butt in front of the computer on December 22nd at 11:00 AM Eastern Time.
Gerardo Del Real: Do it. Rest in peace to Vicente Fernández. For those of you not familiar, this was a childhood icon, a hero of mine. He was a gentleman that had a seven-decade singing and acting career, over 56 million album sold, was an over 36 movies. Very few people captured what it was to be Mexican from a rural community, from someone that was seeking upward mobility as he did and it's almost unrivaled for anyone to have a 70-year career in the business, both in the movie space and with the music. I've fallen in love to this man's music, I've fought to this man's music. I've had one too many drinks to this man's music. A true legend that will absolutely be missed. Rest in peace to him and at a happy note, everybody have a great Christmas. Enjoy the holiday. Nick, say something nice. Send us off. This was Gerardo Del Real along with Mr. Hodge on episode 148 of Bizarro World. Send us off, Nick.
Nick Hodge: Feliz Navidad.
This transcript is unedited. Please excuse grammatical errors and run-on sentences.