Bizarro World Podcast,
with Nick and Gerardo
Aug. 8, 2022
A bear market rally continues with stocks moving higher throughout July and early August. Is it a bear trap? Oil prices going well below $100 say a recession is here and demand will wane. Politics are heating back up with midterms approaching and the Inflation Reduction Act becoming law. Is World War III starting now? Plus a green battery metals update on copper and lithium.
0:00 Intro
1:01 What Happened to the $100 Oil Floor?
3:05 Bear Market Update: Dollar Strength, Gold, Earnings
7:06 Mid-Term Political Update
11:56 The So-Called Inflation Reduction Act
21:12 Alex Jones’ Lawyers Accidentally Hand Over His Phone Records
25:22 Cops Who Murdered Breonna Taylor Arrested
34:53 World War III: China, Taiwan & Nancy Pelosi
37:58 Green Battery Metals Update: Copper & Lithium
Gerardo Del Real: China, Taiwan, US, Russia. As if 2022 wasn't bizzaro enough, we've got that to talk about this week. Gold looks good again. Where's all my oil experts at? Where's my, "Hundred dollars is the new floor," oil experts at? We'll get into that, with Mr. Nick Hodge. We'll talk Alex Jones. We'll talk about the brilliance of the Inflation Reduction Act, brought to you by the brilliant Biden administration. Hi, I'm Gerardo Del Real, along with Mr. Nick Hodge. This is therapy session number 180, otherwise known as Bizarro World. Señor Hodge, ¿cómo estás? buenas tardes.
Nick Hodge: Buenas tardes, Gerardo. Muy bien. ¿Y tu?
What Happened to the $100 Oil Floor?
Gerardo Del Real: Muy muy bien. Doing well, fighting the good fight, as I told you off-air. Pushing through all the things, and happy to be here. I look forward to these, as you know, so it's good to be here. Let's start with oil. You tweeted earlier, and I thought it was appropriate. You said, "Where's all my, 'hundred dollars is the new floor,' oil experts at?" And I thought it made a good point, not just to pick on the so-called experts, right? Because we have 400 PhDs that work for the Fed that didn't see inflation coming, now inflation's enemy number one. And now they're saying they'll continue to hike aggressively, no matter what happens. And frankly, the bond market's calling bullshit. Right? So we'll get into that part.But let's talk about experts, and the oil experts and the contrarian signal that is consensus, right?
Nick Hodge: Yeah. I mean, oil hasn't been as high as it was in March at $125 a barrel. And you can talk about OPEC, and you can talk about supply and demand, but really what you've got to talk about is recession, and commodities selling off. So when you get gas at $5 or $6 a gallon, and when you get oil at $125 a barrel, that exacerbates recession even worse than it would've been. You think back to March, the yield curve was inverting, we knew that recession was coming, and then high oil just sort of put the nail in that coffin, right? You can't have people paying $6 a gallon, and also putting food on the table and also paying for childcare and also doing X, Y, and Z. And so, it was pretty easy to see that oil prices couldn't maintain that level. And certainly, that they couldn't continue screaming higher, like many so-called experts were saying was going to happen. And so, not to say that I'm an oil expert, but I did sell oil stocks while they were on their way up, not while they were on their way down. And so just staying in tune with, I think, the ebb and flow of the market is important. And knowing that trees don't grow to the sky, whatever that tree is, in this case it was oil. And it just seemed to me like there were a lot of Johnny-come-latelys in the space that once oil got to $120, they were calling for $150, $200 a barrel. And it was pretty easy to see that an economic slowdown was coming, and that wasn't going to be the case.
Bear Market Update: Dollar Strength
Gerardo Del Real: Somebody tweeted that stocks jumped higher this week on fears of recession and World War III.
Nick Hodge: And it's true. And it's slowing earnings growth, which we could get into, but yeah, the S&P earnings, we're halfway through them and they're the worst since Q4 of 2020. And you got, whatever, all the stuff you talked about in the beginning. Ongoing Russian war, Europe getting ready for winter. I'm sure we'll get into some of these topics in this podcast, but stocks... And to be fair stocks, relatively, haven't gone up this week. They started last week, when you would've watched this. The early part of the week, they closed down. Marginally, not a lot. Not these big point down days like we've had, but you certainly had stocks run up since mid June.So it's sort of an epic bear market rally, as it were. If you look at the chart they're just now knocking on the door, I'm talking about the S&P now, where they've really got to put up or shut up. And I continue to believe that the broader indices are going to shut up.
Gerardo Del Real: Well, let's talk about the dollar a little bit, because I continue to believe this is the recent pullback. It's right below the 106 level, now. I continue to believe we're going to have another big capital allocation into the US dollar, in the not-too-distant future. Bond yields are down, the inverted curves, the 69 curves continue to 69, almost on a daily basis. Volatility is lower, and gold looks fantastic. I'm sure some of that is because of the dollar index coming down a bit, but it's been on pretty solid volume. So, dollar strength, dollar weakness. Are you bearish? Are you bullish? Where do you stand on that one? You know what I think.
Nick Hodge: It's interesting. I mean, cleanest dirty shirt is what you're going to say. And if we continue to be in a recession and in a bear market, which I believe we're going to be in both for a couple of more quarters here, then the dollar is where it's at. Look, I need dollars to pay for my kid's school, which starts here in a couple of months. I need dollars to pay for this house I just bought, I need dollars to pay off this pool that I built over the past couple of months. And people are in the same boat, that sort of speaks to the wealth effect, right? You don't feel as rich as you did a couple of months ago. And when you're feeling that way, you want your hands on those dollars. You want them in your bank account, and other people are feeling the same way. And so, bullish on the dollar, for sure. And it's interesting about gold, it had the bounce, which we talked about, off $1675. And then here we are back to positive for the year. Not hugely positive for the year, but anything really above $1805, $1808 is positive for the year for gold. It's handily outperforming the S&P and looks like it wants to continue going higher. Even the related equities have had a bounce, though they've still got to bounce further to be in breakout territory. But you could get into that thing that you've long said: The dollar rising, gold rising, and especially if longer term duration yields continue to fall. You mentioned the inverted yield curve. Well, the longer term duration, the 10 years, the 20 years, continue to come down. I mean, they have their updates here and there, but on the whole, they sort of peaked out as well. And you've got the shorter term, rising high. You can even look at some inversion among three month yields, on T-bills, for example. And so, recession and bear market are going to continue, and I think that's good for the dollar, first. And then gold, second. I was looking again, and we've talked about this before, the last time the Fed raised rates, in 2015, and then what gold did in 2016, you had the GDXJ up like 150%, in a couple of months. And I can see that happening. I'm not sure that will happen this summer, or even this fall, but certainly into the winter and into 2023. I think you get that sort of gold environment.
Mid-Term Political Update
Gerardo Del Real: I've been very amused with Twitter this week, and statements. The Trumpster is back. He had me cracking up, earlier this week. I mean, Trump being Trump. And we'll talk about his endorsement of Eric, a little bit later. It was classic Trump. And say what you say about that guy, he's entertaining as all hell. The other one that's entertaining is Elon Musk. Lucid, speaking of earnings, Lucid reported earnings, and analysts tweeted that they missed Q2 badly. And Elon Musk tweeted, "I had more kids in Q2, than they made cars." That guy is the best billionaire troll on the planet, man. You say what you say about him, think what you think. A lot like Donald Trump, say what you say, he's entertaining is all hell. I want to talk about Trump a little bit. Did you see that? Did you see the...
Nick Hodge: No.
Gerardo Del Real: All right. So there's two MAGA candidates, both named Eric, in Missouri's Republican primary for the Senate. And Donald Trump sent out an official Donald Trump statement saying, "I endorse Eric. Eric has my complete and total endorsement." But he didn't specify which Eric. Eric Schmitt or Eric Greitens. And so both of these chumps, they decide they need to start licking boots, and try to get that endorsement. And Trump did what Trump does. He loved it up. He told one of his staff members that, "The president thought it was a thing of beauty and too goddam funny to endorse Eric in the Missouri primary. And then to watch two MAGA candidates, both named Eric, scramble to claim his favor." I thought it was absolutely hilarious. I think it's classic Trump. Politics aside, that guy is entertaining as all hell.
Nick Hodge: You think... I'll talk politics for a little bit. It's not my favorite topic, but do you think Trump runs in the 2024 presidential election?
Gerardo Del Real: If he's alive. I mean, look, this is an overweight, late 70s man, running around in the middle of multiple pandemics. I don't know that he'll be alive in 2024. If he is, I think his ego's too big not to. And I think, frankly, like my father just passed.. if you're going to go anytime soon, and you think that might be happening, what a great way to go. Get elected twice. Right? And you know that man craves power, and he needs his ego stroked. And there's nothing that's going to give him that more than running for president of the United States against the wishes of half of his party, which clearly don't want him to run again, because of all of the negative baggage that comes with Donald Trump. Right?
He's still under indictment and investigation for multiple things. And we just, it's so commonplace now, to have Donald Trump under investigation for a litany of things. And a part of that is the Democrat's fault, because they want to investigate him for everything. Same way they try to do Hillary, on the other side. And so, you just kind of become desensitized to it as a citizen, as a voter, but he is still under indictment, multiple indictments, and being investigated by very serious committees. He seems to be bulletproof, on that front. And again, the ego's too big. I do think he runs in 2024, if he's around.
Nick Hodge: Yeah. I wonder how many challengers he's going to get. Six months ago, I would've said he's probably the presumptive nominee, but it seems like his brand is wearing off a little bit, for some of the reasons you mentioned. Even Fox News. He was giving a speech the other day, and Pence was giving sort of a competing speech. And Fox News aired the Pence speech, and not the Trump speech. And then I saw Dick Cheney, who is still alive, if you didn't know. Made a video...
Gerardo Del Real: Those fuckers don’t die.
Nick Hodge: Made a video today about Liz, and how she won't back down from a fight, and it's good to stand up for the truth. Talking about the election, and the January 6th stuff. And basically saying that Trump's time has gone, and he's not the leader of the party. So there's definitely some infighting over there. Gosh, I hope it's just someone new that rises up, on either side. Speaking of health, I think Biden has, COVID definitely for a second time, maybe a third time I saw, before we started recording. That's like the trifecta, three times in a row. And I just think people are done with that guy. I think he's made his bed as the Jimmy Carter of this era, and the stuff I see coming out of the administration is just complete lies and deflection, man. Bragging about gas prices falling when they're still up significantly. Calling it the Inflation Reduction Act, telling us it's not a recession. It's... Come on.
The So-Called Inflation Reduction Act
Gerardo Del Real: The Inflation Reduction Act, where you're going to increase taxes and also simultaneously run up the budget, and also simultaneously put more money into the system. And then call it the Inflation Reduction Act. Like, who are you talking to? Who is giving you these messages to try and communicate? You're already not the best communicator. We can forgive that in a politician. But to just blatantly lie to the people as if they are stupid children, not even children, dumb children, is just insulting to say the least. I will say this, the one thing that his administration did very well, and credit to him on this one, is killing Ayman al-Zawahiri, who was one of the masterminds of 9/11. It's just one guy who was chilling on his porch, and got a Hellfire missile landed. But he is dead. Somebody put an article up that said, "Who was this guy?" I said, "He was alive." Fucked around and found out, right? The one thing the US does well is run up a military budget and kill some people. A lot of innocent people, but in this case, glad to see that guy gone.
Nick Hodge: For sure. And I almost think that, they said they were tracking this guy for a while, and he had his little routine on the balcony. It seems the timing was necessary for the Biden administration, to serve as a bit of a distraction from everything else that was going on. And to be frank, it was short-lived. I mean, 9/11 was 20-something years ago. And so, yeah. Kudos. You got him, that's it. But I don't think it is, for Biden, what killing Osama was for Obama. Right?
Gerardo Del Real: No.
Nick Hodge: So I think that news story is, actually, it's already worked its way through the system. I'll be frank, I didn't even know who that guy was, if I'm being honest. So I think a lot of people are in that boat, but back to the Inflation Reduction Act. Yeah, it's disingenuous to call it that. Now that's not to say it's a bad bill, and it's not to say that we don't need the things that are in it, the support for nuclear, the support for clean tech, all that stuff. But call it what it is. Call it an energy bill, a tax and spend energy bill. Don't lie to my face when you've got all these independent bodies out there telling me that it's going to increase costs, and that it's not tax neutral for the first couple of years. I mean, come on. And so yeah, for that reason, I think that people are definitely jaded with the Biden administration. For sure.
Gerardo Del Real: They make it hard to root for them, even when they put together a bill that is actually, like you said, it's a good bill. There's some really good things in there. Wanting to bring drug prices down. That's one of the biggest monopolies in the country right now — pharmaceutical companies being able to charge $2,000 for a pill that cost 10 cents to make. And so, there's so many good things in this bill, if you actually go through some of the talking points. But don't tell me that it's deficit neutral. Frankly, I don't care at this point. Just get some good things done. There's some manufacturing initiatives in there, some clean energy initiatives in there, there's a couple of other things.
Nick Hodge: Some nuclear.
Gerardo Del Real: Some nuclear. I really, actually like the bill. But man, do they make it hard to root for them. Do they make it hard to root for them. I tell you who is not hard to root for, is Jon Stewart. We were talking about the PACTAct last week, and the opposition from the Republican side, and to Jon Stewart and those veterans' families' credit. They said they weren't leaving Washington until the Republicans came back and voted on it, and they finally voted on it and passed it. And days later, you can go on the Veteran's Affairs website, and all of a sudden these veterans can finally get the attention and the care they deserve. Decades later, and too late for a lot of them, by the way. Several, several, several people have died, as a result of lack of care. Several have been bankrupted, but better late than ever. And so kudos to Jon Stewart, easy to root for that guy.
Nick Hodge: Oh, yeah. When you're standing in front of the Capitol building, calling the senators ‘cowards’ and ‘motherfuckers’ on multiple occasions, that's good stuff. Like you said last week, speaking truth to power. And then Mr. Stewart went on Meet the Press this past weekend, which I happened to catch. And I mean, he was just laying it out there. Ted Cruz made a couple of rebuttal videos, and I'm no fan of Mr. Cruz. And Jon Stewart was saying, "No that's completely, again, disingenuous. He voted for this bill. These Republicans voted for this bill once already, and then they were trying to say that the bill changed, and that it was allocating pork," and this and that. And it was the same bill that they had already voted once for.
Gerardo Del Real: Verbatim. Word for word, it was the exact same bill they had just voted for.
Nick Hodge: It was a complete temper tantrum because Manchin flipped, or whatever, on the Inflation Reduction Act. Which by the way, still isn't through, we'll see. Again, I don't really like wading into the tit-for-tat politics, but Ms. Sinema is apparently not happy with some of the tax provisions in there. And so we'll see, if that one can even get done.
Gerardo Del Real: Let's keep it to politics. We talked about Roe versus Wade being overturned. We talked about the lack of access to abortions, and women not being able to make their own healthcare decisions. The very first state just voted on whether or not abortions should be allowed or made illegal. And that was Kansas, and Kansas, for those of you that are outside the country or a different part of the world, is a very, very Republican, conservative state. And they overwhelmingly voted against changing the constitution to make abortion illegal.
Nick Hodge: About 60, 40. Yeah.
Gerardo Del Real: The vote was 58.9% to 41.1%, a difference of almost 200,000 votes. That came as a shocker to a lot of people on the right. A lot of conservatives that thought, "This is a great starter case that's going to set up a domino effect with states around the country." Looks like it may have backfired, very interesting to me that Kansas of all places overwhelmingly said, "No, we're not going to make abortion illegal. No, you're not going to take the decision away from a woman. Find somebody else to pick on." That could have big implications for the midterms that are coming up.
Nick Hodge: Yeah. I don't know what the implications are, but it was good to see. And I think people are of the mind where they don't want the government to regulate their bodies. They don't want the government to regulate their freedoms. It's that sort of age-old thing about third parties and independents, right?
Gerardo Del Real: Yeah.
Nick Hodge: Like, "I like the fiscal conservative part of things, but dude, stay out of my personal life and my vagina, and don't tell me what drugs I can smoke," and all that sort of stuff, right?
Gerardo Del Real: Yep.
Nick Hodge: So, a social liberal, fiscal conservative. And I think people, on the whole, do sort of fall that way. And they've been forced to choose between two parties that don't allow a lot of wiggle room on either side of those things. And as you've seen, not the juxtaposition, but as you've seen people get entrenched on the extremes of those issues all the way to turning over Roe versus Wade at the Supreme Court. I think people are saying, "No, that's not the direction we want to go. Let people decide for themselves."
Gerardo Del Real: Yeah. And that's where I see the implications for the midterms. There were so many candidates on the right that immediately embraced the overturning of Roe versus Wade and made it a primary campaign issue, going into the midterms. I think they thought they were pandering to their base, and maybe they really feel that way. But now that Kansas has voted against this, if this is going to be a trend in other conservative states, a lot of those Republican candidates better start pivoting and embracing, "I'm against abortion, but women should have the right to make their own decisions.” You can have both positions. The extreme position of, "Absolutely not. We're going to make everything illegal. Doesn't matter if it's cases of rape or incest. I'm pro-life," that could have implications for the midterms. We'll see how these candidates fare here, over the next couple of months. But I thought it was interesting for a conservative state like Kansas to vote overwhelmingly against making abortion illegal.
Nick Hodge: What was I going to say? I was going to change topics, but stay on politics. So I told you on this podcast, several, several, several issues ago, about the guy from Arizona who won his primary. The guy that Peter Thiel was backing, Blake Masters. And then I was going to mention, here in Washington, we've got Senator Patty Murray, who is like 70-something years old. She's been in office for a long ass time. And there's this young woman running against her named Tiffany Smiley, whose commercials locally are all about how, basically, we just got to get rid of career politicians. And she's gaining significant traction here in Washington. So, a red wave, blue wave. I don't care. It's more about new blood for me. And I think you're going to see some new blood come out of these elections here, over the next couple of months.
Alex Jones’ Lawyers Accidentally Hand Over His Phone Records
Gerardo Del Real: I absolutely agree. I want to laugh this week, because it's in a tough couple of weeks for me. Did you see the Alex Jones fuckery with his attorneys?
Nick Hodge: Yeah.
Gerardo Del Real: For those of you not familiar, Alex Jones is an Austin based shock, not even jock. Just a shock TV and radio personality, who has gone out of his way to really embrace white supremacists and conspiracy theories, and really speaking to the point that we were just talking about. People being so entrenched and polarized, and just sticking to their tribe. Alex Jones has been one of the people that has done a very effective job of dividing people against each other, and putting them in, "You're either in this box, or you're in that box. There's no gray area." So much so, that after the Sandy Hook massacre, where something like 26 children or 21 children... I get all my school shootings confused, because in America, we have so many where babies were slaughtered. But to the point that, after those kids were murdered, he went on his radio show and started telling everybody that it was a hoax. That they were actors, that those kids weren't real, that the parents weren't real. And so, I have zero sympathy for this guy. I wish this guy all the reciprocity in the world. To attack grieving parents, and then to weaponize your audience against parents that had just lost their children, has to be one of the most vile things that you can do as a human being. Right? And so, he was dealt a severe blow earlier this year when a jury voted or ruled against him and told him, he's got to pay $150 million in damages to these families for the trauma that they went through. That he inflicted, that he caused. And so, he's on trial now to see how much of that he's actually going to have to pay. And he's sitting there on the stand, and it was just... It was so good, it was comical. If it wasn't so tragic for the parents. He's sitting there on the stand, and the attorney for the prosecution is asking him whether or not he's ever sent text messages about Sandy Hook and the massacre — disparaging messages. And he says, "No." And the attorney goes, "That's just a lie." And he goes, "I've never sent any text messages." So the attorney tells him, "Do you want to know why I know it's a lie? Because your attorney accidentally sent me every single text message from your telephone for the past two years." And we'll put a link to the clip, to see Alex Jones start sweating profusely. His eyes lit up. And, I can't wait to see what's in those text messages. It's two years of now legally admissible discovery that will allow everyone... Unless the judge decides not to make them public. But will allow at least the attorneys and the families to go through those text messages. I got to believe there's some famous personalities that are probably scared right now about what's going to be leaked, because I can't believe that Alex Jones is the only nut case willing to embrace these crazy theories. And clearly not, because so many of these families were harassed by a lot of the Alex Jones followers over the years. It's despicable, it's disgusting, it's nasty. I'm glad to see that man squirm, and I hope he has everything coming to him that he deserves.
Nick Hodge: I saw someone say that, "Hopefully his lawyers are also representing the Secret Service. Maybe we'd be able to find those texts."
Gerardo Del Real: That is hilarious. I saw somebody else say that, "Maybe his lawyers are just good humans."
Nick Hodge: Oh, man.
Gerardo Del Real: And we're like, "You know what? You deserve this. Let me give this to you."
Nick Hodge: He was turning red though, for sure.
Cops Who Murdered Breonna Taylor Arrested
Gerardo Del Real: It was fun to see him squirm. I can't say I didn't take pleasure in it. So yeah, I'll leave that there. What else is going on? It's been a busy news week. Breonna Taylor. Now we've talked about Breonna Taylor, we talked about a young lady that was sleeping in her home next to her boyfriend, when her door was kicked in the middle of the night. The boyfriend believed there were intruders, because nobody announced that they were officers, and there was no reason for them to be there. And eventually the officers murdered Breonna Taylor, and the gentleman that was laying next to her shot, I believe, one or two of the officers. But Breonna Taylor ends up dead, bottom line. And look, the state refused to prosecute these officers. The only officer that was ever charged with anything was an officer that fired a bullet that ended up in another apartment. That officer was charged for what essentially is a property crime, damage to property. So you have a dead woman who did nothing wrong — a young, beautiful professional woman that was working, just to live the American dream and have a better life. And working hard at that. Now we find out that the four officers that participated in that no-knock raid that ended up killing Breonna Taylor falsified statements to get the warrant. They shouldn't have been in there. The person they were looking for wasn't even in there, didn't even live there anymore. And so you have, again, another dead American killed by American police officers. And to find out that they falsified evidence to the degree now that we know, or it looks like. It's alleged. They falsified evidence. I'm glad that the Feds stepped in and said, "No, you guys are getting prosecuted for this. I don't care how much your fucking governor covers up for you. That's not going to fly." And again, I wish equal reciprocity to those officers as well. Everything they have coming.
Nick Hodge: Well, last week we talked about the George Floyd case, and the additional police officers that were charged there. And I said, "The tide seems to be turning for holding police accountable." And here just a week later, you have another really big case. I mean, both these cases are what fueled the protests, the people in the streets in 2020, the Black Lives Matter protests that were in cities. And in fact, not just across the country, but across the world. And so the veil is really being pulled back on these police. Like you said, but it's worth repeating. I mean, they're falsifying information. They were using the quote here is, "false, misleading, and out of date information to acquire the authority," to go do this no-knock warrant. And so, I've long said it, and then I'll continue to. The policing institution in America is rotten. It's a failed institution. And we see it in case after case. These guys weren't going in there on anything that was legitimate. They made up, in fact, the reason to go into this house.
Gerardo Del Real: Yes.
Nick Hodge: And then someone ends up dead. And that's a culture thing, man. If you think this is an isolated case, then you are naive. This is going on across the country. And police are falsifying reports all the time. They're planting evidence all the time. And it's time to clean it up. And kudos to this Justice Department. You got to continue holding these police accountable, because it's reached... Talk about extremes. The policing and unaccountability in this country has reached an extreme, and it's time to rein them in. They work for us, we pay their salaries, and you can't be going around making up reasons to go invade people's homes, and shooting people without any accountability. Certainly, people who weren't involved in any crimes. And so, I'm glad to see it. Yep. Hope they're held up to the full extent of the law.
Gerardo Del Real: Agree. It's a little disheartening that it's the Justice Department that's having to act in so many of these cases, because the state won't. And again, it just speaks to how corrupt and how entrenched the corruption and the cover up culture is, alive in this country. It's the Justice Department. And again, maybe one day we'll figure out who else, out of Mr. Epstein's friends, were pedophiles and were trafficking young girls, and raping young woman. And I still can't believe that hasn't gone anywhere. I still can't believe it's 2022, and here we are with one woman in prison for 17 years, or however much time she got. And we know nothing else, about anyone else. This was a global sex trafficking ring. We don't have one other name yet? But again, back to the kudos. Kudos to the Justice Department on this. Go get the Epstein people, and then go figure out something that Hunter Biden did wrong. Just so we could be equal on both sides of it. Saw a video of him, this past week.
Nick Hodge: Oh, man.
Gerardo Del Real: Look, man. He had a couple girls in there, he was doing his thing. He was hitting the pipe. I mean, technically with the stuff in the video, he wasn't really doing anything that I think should be illegal if we're being frank. If you want to sell sex for a living, and it's consensual, have at it. That's your problem, not mine. If you want to smoke crack, smoke crack. That's not that's not anything I have an issue with. Obviously the implication is that, with all the vulnerabilities, he was prone to be blackmailed. And because of his ties, obviously to the president and then senator, yes, it's dangerous. I agree. I'm not minimizing that part of it, but it's a bit comical to me, the stuff that some people get hung up on. And yeah, go get Hunter Biden, too.
Nick Hodge: He's broken some laws, to be sure. And yeah, usually... Anyway, the media just seems to ignore him less than they ignored the Trump brethren, but...
Gerardo Del Real: And that's why I bring it up. Absolutely.
Nick Hodge: And I'm no fan of either, so yeah.
Gerardo Del Real: Me neither.
Nick Hodge: They should cover that case, not case. But they should cover those antics a little bit more. They definitely avoid it in the mainstream press.
Gerardo Del Real: It's all the stuff the media loves, right? You got drugs, you got girls, you got nudity. I mean, you got the president's son smoking crack. You got the president's son going into trap houses to get some crack. I mean, you can't make this up. If this was a Chappelle skit, people would say, "Okay, Chappelle, you took it too far. That's not believable." They would say, "It's not believable." They would say, "You took it too far." So yeah, no. Somebody go cover that.And while we're at it, let's talk about Brittney Griner, she was just sentenced. This is the WNBA star that had 0.07 grams of cannabis oil in a pen, in Russia, and was just sentenced to nine years for her cannabis oil. Clearly it's a ploy by Russia to get back someone that, for whatever reason, is very close to them. That gentleman is known as the Merchant of Death. There's a great movie based on his life, a character played by Nicholas Cage that's entertaining as all heck — semi-documentary on this man's weapons trafficking history. And funny, not funny, but when you look at this guy... Sometimes you can look at a person and just know, you should probably leave that one alone."You should probably leave that one alone. Like if you see him at a bar, you should probably just have manners and leave that one alone." He looks like the Merchant of Death. He absolutely plays the part. In every picture I've seen, looks like the prototypical Russian weapons trafficker. But look, Russia wants him back. They're using Brittney Griner as leverage. Biden has supposedly approved of a prisoner swap that would allow Brittney Griner to come home and give Mr. Victor his freedom. And obviously, we're trying to add another name, Mr. Paul Whelan, who was an American “consultant” with technology and defense contractor ties, who had three passports and happened to be in and out of Russia. He was sentenced to 17 years in jail several years ago, accused of spying. And so at this point, Brittney Griner is the face because she's the celebrity, she's the WNBA star.
Nick Hodge: Right. But she's the side piece. I mean, she's not important at all.
Gerardo Del Real: Absolutely. Absolutely. We have a good old fashioned, "You give us our spy, we'll give you your spy," type of situation." And let's use the celebrity as the pawn and the leverage." It'll be interesting to see how that plays out. I hope that young lady is allowed back home soon. I don't care what your take on drugs is, nobody deserves nine years for having a oil pen in your luggage. Yes, I understand she's in another country. Yes, I understand they have laws. But come on. I mean, let's be real. We know what's going on here, right?
Nick Hodge: But again, the media's running with that story. I mean, God, she's fucking trending on Twitter every day, like there's not more important things that matter than Brittney Griner. Who no one had ever heard of before this incident. And so, I am a bit tired of the trope just being cycled around and around, especially because as we just said, she's sort of the least important person in this prisoner menage. So hopefully, we could just get this wrapped up and move on from the Brittney Griner story, because it's eating up a lot of press time that could be better allocated elsewhere.
World War III: China, Taiwan & Nancy Pelosi
Gerardo Del Real: I agree. I agree. Did you have China, US, World War III on your 2022 bingo card? We talked about this, I think six months or so ago. I said, "Watch out for China, watch out for Taiwan." And here goes Nancy, and I'm going to give Pelosi some credit. I agree with her on this one. We spend seven, $800 billion on our defense budget every year. In a couple of years, we're not even going to be able to service the debt. So what are we doing all that for if we're not willing to say, "Hey look, Taiwan is an ally. We got your back on this one. We're not just going to allow China to run the board on everything. They're already kicking our ass on everything from commodities to manufacturing to IP. You name it. You can't lose, on the military side of it. At the very least, you can't sell out one of your allies to what will be the next world superpower, give it, give it 7, 8, 9 years. There's no way that China with that economy, and the population base, and the way that they've played the game brilliantly for the past 30 years, isn't going to be the leading superpower in the 2030s. I'm convinced of that. But you can't go quietly when we're spending $800 billion a year on a defense budget. And again, to Pelosi's credit... And I like to bash Pelosi as well, because I have no fan of her either. But I think she's right on this one, and I'll give the Biden administration credit. I think on this one, they're supposed to hold their ground. And yes, it probably will lead to confrontation, because China surer than heck is not being soft on their rhetoric. They have made it pretty clear that, that is the red line and that they are not Obama. If you cross that red line, there would be consequences. We're going to have to see what that is.
Nick Hodge: They said “grave consequences.” Yeah. And so far, it's just been a military display, a parading around of some war planes and buzzing of Taiwan airspace, et cetera. Yeah. And I'm no geopolitical analyst, so it remains to be seen, but I'll fall back to Mr. Dennis Gartman on this one, and the two words that keep us strong, at least for now. And you know what they are, Gerardo. It's aircraft carriers. So we have those, and China doesn't, and the military might is no match at least right now. So we'll see what comes of it, and I tend to agree with you. If Nancy Pelosi wants to go to Taiwan, I don't think that there's a reason for her not to go.
Gerardo Del Real: Agreed. Also, if I'm the US, and again. I'm no geopolitical analyst or expert either, but I would want to fight the war when we're cashed up and got the best military in the world. Why wait? If you know that's where it's going and you think it's inevitable, why would you wait? You don't want to wait till you're old and broke. You want to make sure you got some money to put some bags down, and go do some things. So if it's going to happen, I just say, let's get it over with. I certainly hope it does not. I could use some peace, and we could use some tranquility. I said it was going to be a hot summer. I think it's going to be a hot summer every summer, for the next 10 years.
Nick Hodge: Wow. No, you talk about this Fourth Turning, and some event that needs to happen for it to culminate. A war with China would certainly be one.
Green Battery Metals Update: Copper & Lithium
Gerardo Del Real: Yeah. Agreed. Back to markets. Copper, copper's back above $3.50. Head fake, or you see some support? We got a good jobs report this past week. We got some good economic indicators that demonstrate that maybe the recession is going to be milder than a lot of people are predicting.
Nick Hodge: Oh man, we're going to have a soft landing?
Gerardo Del Real: I don't know about a soft landing. Those are two different things. The economy and the stock market are not the same thing. You know this, Nick. But what are your thoughts on copper and the base metals, and where that goes?
Nick Hodge: So it sort of depends on this recession. It depends on how big China's problems are. They've had a little bit of a slow down here recently. And so, if anything, this weakness in copper is a short term thing having to do with that, and having to do with the slow down economically that we're having here in the US. If I look at a copper chart, copper consolidated around this level, around the $3.50 level, between, I don't know, call it December of 2020 and March of 2021. And so, there's a bit of support here. It could consolidate at $3.50. That's probably a relatively fair price for copper. I think, in the long term, copper heads back higher. We've got the electrification story. That's not going anywhere. There was a report out from the IEA this week or the last week of July, talking about all the resources we needed for this transition. Which is not a new story, and something that you and I have been talking about for years, but the amount of lithium and cobalt and copper and nickel that we need is such that there has to be long term support in the price. And so $3.50 for now looks like it could consolidate around there. What I will say is, just like gold is not gold stocks, apparently copper is not copper stocks. You had a big miss from Rio Tinto, when they reported earnings. Other majors, like Ero Copper, took a 10% haircut here in the past week. And so while the copper price can consolidate here, it's been a little bit weaker for the copper-related equities. In fact, I took the liberty to sell Rio Tinto. We had been in it since 2019, in Foundational Profits. And so we were up about 15%. More, if you include that hefty dividend, which was around six or seven or 8%. Anyway, I don't know if I really gave you an answer there, but copper looks like it could hold up around here in the long term, much higher for copper. So you've got time to get back into the equities, if you want to.
Gerardo Del Real: So, bullish, battery metals, for sure. And fuck Goldman Sachs.
Nick Hodge: Absolutely.
Gerardo Del Real: And speaking of battery metals, it wouldn't be a podcast without an update from Patriot Battery Metals. But got to give it to y'all. More great news, right? They're producing what looks to be, or sampling not producing, excuse me. Sampling what looks to be potentially some of the cleanest, hard rock lithium out there. The news that we can put a link up to was, one, very well received. And two, importantly, if you're a major looking for the kind of asset that could be transformational, that can last for generations, and it also happens to be in one of the best mining jurisdictions... And oh, by the way, the lithium concentrate that they're able to produce is amongst the cleanest in the hard rock lithium space. There's a lot to like there. So for anybody that's wondering, still holding, not selling. I'll sit until I get my $20.
Nick Hodge: The lithium story is not going away anytime soon. I just mentioned that IEA report. They said we need 50, five-zero, new lithium mines to come online to support the sort of EV forecasted growth that's been laid out there, through like the middle of next decade. And what else was I going to say? Oh, if you're looking for a contrarian play in the resource space or the cleanest dirty shirt in the resource space, it's certainly lithium. I just mentioned the copper majors were struggling, but the lithium majors are not struggling. You had Albemarle (NYSE: ABL) report earnings this week, increased guidance...
Gerardo Del Real: Big bags.
Nick Hodge: Yeah. A profit beat means prices are strong, and so that sort of lifted up the entire complex. And that's going to be the case here going forward. We continue to say it. There's no new battery chemistries in sight. There's no alternative to lithium in sight. The gigafactories are built to produce lithium batteries. And so, you've got to get the inputs for those batteries. Even Elon was saying last week on the Tesla (NASDAQ: TSLA) earnings call, that refining lithium is basically printing money. And that's a quote. He said, "It's basically printing money." And so, these battery manufacturers and auto manufacturers are desperate for the lithium. You had Ford (NYSE: F) out a couple of weeks ago, partnering with multiple people to secure supply. GM (NYSE: GM) was the most recent one to do that. And so, we were talking about Robert Friedland a couple of weeks ago saying, if five or 10 battery makers or automakers call in to get their battery supply, it's sort of like a game of musical chairs. It's like, "Oh yeah, we'll keep that in mind and we'll get back to you," because there's not enough to go around. And so, anyway, all that to say that lithium is in a bull market. What did you want to add, there?
Gerardo Del Real: No, I just wanted to reference the release, and just the importance of that 6% lithium Spodumene concentrate grade. It's important because that is the benchmark for what the majors are looking for. The reason being, the GMs, the Fords, the Teslas of the world, the people that are looking for the supply, that's kind of the threshold that you have to meet for it to make sense on the battery grade side of it. And so for that to be the initial result, with the group that did the study, which is the top group in the space. Really, really, really bullish for de-risking that project, at this early stage.And look, the lithium majors are cashed up. Anything would scale out there, like this, is going to be bought at a substantial premium. And I can tell you, it's not going to be in the hundreds of millions of dollars. The market cap right now, it's about $175-$200 million, the last that I looked. It's going to be a lot higher than that. Billions. Bs, not Ms.
Nick Hodge: You keep pounding the table on it. I'm a happy shareholder, for sure.
Gerardo Del Real: Got to do it. Got to do it, when it's $20 I don't want anybody telling me that. "Oh, I missed out. You said that you had already made 10 times your money, or 20 times your money." Yes, I have. And I'm going to do it again, if I get this right, and with some luck of course. But no, they're doing everything right. Results have been spectacular. Should have assays every week, I think until at least October. September, October. And then we'll see how many rigs they get on there, we'll see how long this thing lasts before it's taken out at much higher prices. But it seems to me still like the most obvious trade to be in out there, right now. And again, remains my single largest allocation. So, yep. Do with that what you will, people.
Nick Hodge: Yep. Well, the battery metal story is not going away. We've got a new nickel related story that we're going to start talking about here soon. And so all those resources are going to be in great demand here, for the next couple of decades.
Gerardo Del Real: All good things. Anything else to add, Nick?
Nick Hodge: No, I think that's it. That was a pretty wide ranging conversation. And I was glad to have it, as I am every week.
Gerardo Del Real: As am I. Appreciate the therapy, sir. I'm Gerardo Del Real, along with Mr. Nick Hodge, this was episode number 180 of Bizarro World. Go do something nice for you and your people out there, people. Say something nice, Nick.
Nick Hodge: That's it. No, do the same. I'll be taking my wife to a concert tomorrow night, and we haven't been to one in a while. So, looking forward to that and yeah, you got to spend time with the ones you love. And as we say, that's an allocation you can make, as well.
Gerardo Del Real: Absolutely. Take care out there, everyone.
Nick Hodge: See ya.